Transcripts For CNBC Power Lunch 20170810

And welcome to power lunch, the bears are out today. The dow and s p 500 having their biggest oneday slide since the beginning of july. The s p 500 in fact falling below its 50day moving average for the first time in a month. Wall streets socalled fear index, the vix soaring hitting the high in five weeks gold meantime, hitting a twomonth high retail to blame. Macys is down 9 . Kohls and dillards also getting whacked. Jc penney being taken down here, brian. We begin with your money and investments. North korea, of course, grabbing all the headlines, but the defense stocks are mostly lower today and apple is the biggest drag on the dow. So is all the saber rattling really to blame . Live in washington with the latest on north korea, bob though at the nyc, bob, let us start with you how much are you hearing is north korea, is valuation, or maybe just a normal, healthy august pullback . You know, id say 75 is concerns about north korea, but we do have some High Expectations on the earnings season, largely fulfilled and now i think people are taking some chips off the table, particularly on the retailers. Take a look at whats going on with the fang stocks for once the s p is underperforming the dow jones average, thats been happening notably today. So facebook, apple, amazon, netflix, netflix had issues with disney, of course, but theyve been weak throughout a good part of this week here. Weve had big sectors that did well in july and early august that are also slowly rolling over here. Since the end of july, semiconductors, biotech, farm suit cams, these were all strong, theyve been slowly rolling over even the airplanelines, this is a correction territory, were not near is yet, these are the market Leadership Groups that are now slowly now not market Leadership Groups. Mention the retailer, macys and kohls were good dillards was worse than expected however, i want to point out that we had a huge runoff in these stocks in the last month in anticipation that you would get better comp store sales, and we did overall look at these department stores. Before the open, the last four weeks, dillards, kohls, pennys, macys, and we got it from kohls and macys, not from dillards, now people are taking profits on that. Finally i want to point out, these declines historic high on wednesday, folks, were only 1. 2 off of that nasdaq is only 1. 3 . Russell 2,000, down about 5 if its his or it highs back to you. Bob, thank you. We have breaking news now. Hi melissa, thats right, ryan graves, early uber employee, once ceo, most currently is stepping away from that role. He will still continue to be a board member, cnbc has obtained an internal email that he sent to uber staff today which he says that in every positions hes held, remember, hes been gm, ceo, and Global Operations he says its really important to me, quote, that this transition doesnt take away from the importance of the on boarding process of our new ceo whoever they might be. So again, ryan graves, he was one of ubers earlier employees. He is one of the Board Members in addition to Ariana Huffington and others at the board that is searching for a new ceo. He is stepping away, guys, back over to you. A lot of news out of Silicon Valley the last couple of weeks. Trumped by north korea thank you very much. Lets get now the latest on north korea and iowa man javrs in washington, iowa man. Thats right. We believe that right now the president is having lunch with the Vice President , mike pence, in bedminister, new jersey, the white house initially said wed see pictures of that, then decided not to he has a security briefing with general hr mcmaster, general john kelly, also the Vice President and presumably some others in that security briefing as well. We will see some pictures of that later on this afternoon, not clear what the white houses strategy going into north korea is going to be this afternoon, well get a sense of it maybe once that meeting breaks up. We will have an opportunity to hear perhaps from the president if he wants to talk to reporters who come into the room to get some pictures of that. Meanwhile, the president continuing to fight with leaders on capitol hill, specifically Mitch Mcconnell, the Senate Republican leader sending out two angry tweets about mcconnells leadership after the failure of obamacare this going into the battle for tax reform this fall the president tweeting, can you believe that Mitch Mcconnell who has screamed repeal and replace for seven years couldnt get it done must repeal and replace obamacare. The president just moments ago adding an additional tweet, mitch, get back to work and put repeal and replace, tax reform and cuts and great infrastructure bill on my desk for signing, you can do it so a little bit of a maybe passive aggressive encouragement there from the president toward the Senate Republican leader well see how that relationship continues to unfold as they get to work on tax reform, which is coming up this fall, guys, back over to you. Like he was talking to senator mcconnell as if hes the little engine that could yeah, thats right. Maybe a little kond sengs there from the president im sure thats wellappreciated on capitol hill where senators love that sort of thing. Ill bet. Thanks stocks are down for the Third Straight day what do markets fear the most . Earnings, north korea, or the gridlock in washington richard is with American Century investments and laurie, deputy global cio, ladies and gentlemen, good have you here. Thanks. Most of the concerns, 75 is related to north korea, i guess i understand that. Nuclear war is a threat, however, its conceived to be a low probability event, a high probability event which thought to be tax reform and you see now whats happening between senator mcconnell and President Trump. Whats dragging the markets lower here right now, laurie well, certainly the scare around korea is something thats immediately there. Were in august when we have relatively low volumes and trading anyway thats likely to be exacerbated. But we think these are good opportunities to buy on the dips here we see improving earnings and better global backdrop as being constructive for equities in the second half. How about you, when the leaders are lagging, when you see a technical breakdown, s p trading below the average for the first time in a month. Do you take that as an opportunity to get in or a signal that somethings wrong. Were a little less about the markets right now. Weve had concerns since the beginning of the year on the fundamentals, geopolitical issues and tax policy aside, i mean, right now, the u. S. Is real Economic Growth is hovering maybe around 2 , no major economist has been raising their expectations even with the prospect of tax cuts you have the fed shrinking our Balance Sheet and Foreign Exchange traders running from the dollar these are not good signs, its really hard to see where the fuel for further Earnings Growth is going to come from. How are you derisking how are you positioning if youre less enthusiastic well, the natural of course, we were overweighted in equities for several years, but we took all of that off the table. We were not redeploying new moneys into equities so its fixed income, its a sets, risky outsets outside the u. S. , and most importantly, some alternative assets, anything thats long, short, or Market Neutral tends to show very well in many these volatile times with this directionless markets or negative markets. You know, michelle mentioned laurie, the threat of nuclear war. To me, its a binary outcome, either things are okay, or things are really horrific i mean, if anybody really believed we were going to go to nuclear war with north korea, wouldnt the dow be down like all of it . Well, sure, nobody wants to contemplate were going to fall 6 10ths of 1 . We all hope as Winston Churchill counselled that ja ja is better than war war despite all of this rhetoric, we all hope that clearer minds prevail and that you dont have that sort of, you know, first launch if you will that clearly is something we cant take completely off the table, but its hard to trade or position a portfolio against that quite frankly you said people should get into the market, where you heard what richard said, would you follow any of his direction, equities outside the United States or stay domestic absolutely, weve been constructive on developed Market Equities with an emphasis on nonu. S. Developed market because we see relative valuations being attractive there. In general, were about 10 overweight to equities across our balanced portfolios and we think thats because of the better growth prospects, better earnings prospects, and the potential for return for capitol hill to shareholders in sectors like banking okay. Good to have you on this day, appreciate it. Thank you thank you all right. Lets get a news alert in the bond market right now. Rick santelli is the bond market acting like nuclear war with north koreas eminent . Not really. Sorry. It really isnt. Thats a subjective a call as i can give you as a matter of fact, if Nothing Happened this week with korea, north korea, and i looked up at the boards, i dont know that i could tell having said that, it did have a little effect when you matched up the headlines to current events, but were talking small. Usually you get a rally pushing yields down after 62 billion in supply, not much today on that front either, quickly, we had 15 billion, 30 year bonds, 2. 818, down close to where the one issue was trading. C plus in terms of the grade, lets go through it. 2. 32 bid to cover down close to the ten auction average. 66. 8 is the only bragging right here for indirect, that is the best since july of 16, so 13 months, 5. 4 a little White Steelers take 27. 8 of this auction. Listen, it wasnt a bad auction. Yesterdays wasnt a good auction with tens. I really dont see that this is going to give us any new clues keep posted tomorrows cpi after todays code ppi, thatll probably be a market mover if it comes in super hot or super cold melissa lee, back to you rick, thank you coming up, the retail wreck macys and kohls beating. Theyre not the only ones falling right now. Whats going on in the space the stocks you need to watch 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. Our director dan, thank you. We had to flay we sang it. You told me chris. Yeah. Completely different. Welcome back. A busy day for retail earnings, macys and kohls both beating the streak, but their shares are sharply in the red as are dillards, theyre getting pummelled even more. Off 15 . Canada zboos lower following its earnings by more than 2 . Lets get to all of it with courtney reagan. There are green shoots in retail, the fundamentals havent changed, thats the issue, thing a investigators, the boxes, those that sell a variety of brands, those are seeing sales trends continue to fall. Beating expectations isnt really inspiring any longterm hope macys and kohls both beat on profit, revenue, and comps macys reiterated its forecast but bigger than anticipated asset tail game is embedded in the earnings once that was revealed, the shares took a further leg down i asked jeff on the phone when macys comp sales would return he says hes not ready to declare the timing on that yet, but hes encouraged by the improvement in the quarter now kohls isnt updating its forecast saying improving sales actually improved for all categories and all geographies, but those lower expenses still arent flowing through to help earnings thats an issue. Dillards puts up a decentsized loss when analysts expected a gain the merchandise cost more and sold it for less during the quarter and theres still more inventory leftover now lastly, canada goose posting a smaller than expected loss and stronger sales with much improved margins, but the Company Acknowledges some favorable timing really drove that wholesale revenue, so not necessarily a fundamental reason for the beat and maybe not something thats repeatable. Did any of these companies talk about back to school . So some of them did and saw some strong trends in what weve been talking about at leisure, denim, junior dresses, seeing some in the midwest and south have gone back to school. Some of the clothing purchases often happens later for back to school its the supplies that come first. They wait until the weather turns and or see what the other cool kids are wearing before they buy i was surprised because when we saw the numbers come out of ralph lauren, stock improved and coors they they were better than expected and sales were down their sales are all down theyre getting hammered it goes back to the fundamental story i mentioned. I think in the long run, folks just arent that positive on the department stores. Brands yes, brands are something you can go to. You could search eventually maybe some of those brands on amazon but if you are anning a investigator, physicaling a investigator of those brands, like a macys reason are you going to need a macys in the end . Right stick around, courtney, we want to bring in randall, and jan, guys good to see you. Ill start off with you, courtney brings up the point, you know, for kohls, macys, for these big box stores, they might be completely disintermediated, when you read through the earnings, are you Glass Half Full or empty on that well, i think its a mixed bag. The way i look at retail i call it all retail is not created equal. I do believe and support courtney talking about brands matter most versus the retailers, but we actually recommend kohls, we dont recommend macys today, what we like about kohls citizen offmall presence of kohls and their ability to drive brands into the stores like underarmor whereas with macys, i think the problem is theyre on mall, and theyre really are just anning a investigator that can be dising a investigated by the internet and they dont stand for anything we prefer kohls, although most of our recommendations are more brand centric and not retail centric today. Jan, i dont know if you can piece together what we heard from the various Earnings Reports, for a michael kors for instance, what happened that they took back of the inventory and took control of their channels that when you extrapolate that to macys is not a good sign well, its the future and i agree, i like the brand, i like ralph lauren, coach, phd, vf, across the board, the brands are going to win, the big strong brands and the Third Party Sellers are going to lose. Macys is probably still cheap enough to own. And i was concerned we were going to see too much enthusiasm here in the Second Quarter releases and i guess i can quit worrying about that because these numbers are better than what we thought we would see stocks are all getting hammered anyway i think im going to skip right over to nuclear war and maybe back to school, what do you think . And the last sweater, we may go to war. Jim, the respectfully take the other side of the dead trade when i dug into the income statements, kohls sales were actually up year over year, dillards fell like 3 macys fell 5 , but macys stock is down 39 . And we act like nobodys selling anything, but reality is yes they are declining they are declining, but fractionally, why is the market beating these things like somebody elses lented mule . Well, theres just no enthusiasm for anybody thats the Third Party Seller and as we were saying a minute ago, kohls is in better shape than the mallbased guys are, but its tough across the board when youre competing with online and when youre also going online and it goes down. People are pulling business away from the Third Party Sellers, directly to consumer, putting it on amazon, brands are going on amazon, nike being a good example, and then we see the big fight going on among whos left for the small market share gains that you can get i get all of that, but randall, to brians question, there was a tremendous rally in retail over the last three months if you had bought at the right time, you actually made a lot of money. We get to these moments where the pessimism is so deep that you can actually get off a trade at some point where you can make some money on the long side. Are we near there on any of these . Would you put your money down on any of them . Michelle, i agree, i think there is money to be made here we tend to be a contrarian value stock pickers and while the beginning of the year we picked names like nike, tiffany, coach, we recently downgraded coach, we put into favor a couple of weeks ago, by michael kors at the end of the day, cash flows matter look for brandcentric that have decent troughing of cash flows and we have names like kohls right now, they trade at four times cash flow. So, i think with a kohls today down 7 , with them getting underarmor into the store, with them having offmall presence, i like the risk reward here, limited downside from here and upside Going Forward id pick up some of the valid plays like kors, kohls, and underarmor randall, jan, thank you and of course thanks to courtney reagan. Thank you all right next up, we are talking high voltage investments. Can teslas latest move in the trucking space in the California Company thats on track to beat tesla to market. Those two stories straight ahead. At ally, we offer low rates on home loans. But if thats not enough, we offer our price match guarantee too. And if thats not enough. We should move. Our home team will help you every step of the way. Still not enough . Its smaller than id like. Well help you finance your dream home. Its perfect. Oh, was this built on an ancient Burial Ground . Okay. Then well have her cleanse you house of evil spirits. Well do anything, spiritual chatter seriously anything to help you get your dream home. Ally. Do it right. Upeace of mind. S we had a power outage for five days total. We lost a lot of food. We actually filed a claim with usaa to replace that spoiled food. And we really appreciated that. Were the webber family and we are usaa members for life. So thats the idea. What do you think . Hate to play devils advocate but. I kind of feel like its a game changer. I wouldnt go that far. Are you there . Hes probably on mute. Yeah. Gary wont like it. Why . Because hes gary. phone ringing what . Keep going yeah. laughs voice on phone its not millennial enough. There are a lot of ways to say no. Thank you so much. Thank you so were doing it. Yes start saying yes to your companys best ideas. Let us help with money and knowhow, so you can get business done. American express open. Looking for a hotel that fits. So you can gwhoooo. Ness done. Your budget . Tripadvisor now searches over. 200 sites to find you the. Hotel you want at the lowest price. Grazi, gino find a price that fits. Tripadvisor. Electric cars, theyre old lets talk about electric trucks tesla talking about its electric semitruck talking about their autonomous plans. According to reports, tesla may also be looking to platoon these trucks together when they hit the roads. Now, that is unlikely to happen any time soon, at least not in a commercial sense however, there is one Company Whose electric trucks could be hitting the road by the end of this year, phil lebow is live in chicago with that story, phil. And not surprisingly, brian, a company that plans to sell these trucks after they are put together initially in china and then in california and california really is the key here the name of the company is change the spelling of the company is chanje that is their work van its all electric. The equivalent of 50 miles per gallon its targeted at business and theyre on the same routes day in, day out. Theyre backed by a billion dollars from a chinese firm, and thats not surprising that theyre having that type of backing. The amount of money that is flowing into the chinese or into the ev market in the United States, whether its a startup or some other company, look at this, since 2013, its exploded. It is estimated to top 2. 7 billion this year. I do think in the broader finance market does see the opportunity for disruption and whenever you see like an incremental impact on operating costs, its going to disrupt and electricification enables that disruption being the keyword. How many times do we hear that and weve heard it from a number of Companies Work force we talked about them about two months ago theyre coming out with an electric pickup truck, and theres a number of other firms, whether theyre working on actual vehicles or the infrastructure whether its batteries or charging stations, they are keying in on the fact that investors want to be apart of this market, despite the fact guys that only 200,000 electric vehicles were sold in the u. S. Last year. Ev trucks, medium duty, and eventually heavy duty, thats going to be the next focus after you see so much attention being focussed initially on the vehicles that you and i drive. The startups though phil that youre talking about change as well as work force which we visited before these are mainly small trucks whereas the one that tesla wants to focus on indicates it would be more for commercial use and hauling around cargo correct and keep in mind, they met with california dmv officials and reportedly have also been talking with nevada dmv officials. Where is the gigafactory its just across the border, just outside of reno, and if you were to try to test moving products via semi, electric semi, what better route would there be than to go from the gigafactory to the tesla plant in california . Obviously there are rail lines and other ways they can do that, but that would be one area where they could potentially test. Yeah, two birds with one stone so to speak, thank you still ahead, todays disaster shares of Chicago Bridge and iron down more than 30 . Look at why this infrastructure stock is crumbling and some names in the space that are wort taking a look at plus blue apron tanking, well speak with an analyst who just heayous price target moments ag ls t the case im living that yacht life, life, life top speed fifty knots life on the caribbean seas its a champagne and models potpourri on my yacht made of cuban mahogany, gany, gany, gany, gany watch this dont get mad bell mnemonic get e trade and get invested the Energy Conscious whopeople among usle . Say small actions can add up to something. Humongous. A little thing here. A little thing there. Starts to feel like a badge maybe millions can wear. Who are all these caretakers, advocates too . Turns out, its californians its me and its you. Dont stop now, its easy to add to the routine. Join Energy Upgrade california and do your thing. Hi everybody, im sue herrara, heres your cnbc news update for this hour the Postal Service is warning itll likely default on up to 6. 9 billion in payments for future Retiree Health benefits for the fifth year it is citing a coming cash crunch that could disrupt daytoday mail delivery reported a quarterly loss of 2. 1 billion today the former Tulsa Police Officer who shot and killed an unarmed black man during a traffic stop has a new job. Reserved deputy in the Rogers County sheriffs department. I will continue to serve the great state of oklahoma and strive to improve the relationships between Law Enforcement agencies, organizations, and our community through education and community involvement. And check out this shot by the harlem globe trotters bull bull ard hes in a helicopter more than 200 feet above the basket when he shoots and he scores. And the globe trotters even went to twitter to challenge lebron james to make the same shot. You might say the shot was out of this world. Unbelievable there it goes. Cool boom. Nothing but net yeah. Melissa, back to you thats amazing. I wonder if they read about the wind, the direction of the wind youre in a helicopter and the helicopter is moving right its really amaze pg. Yeah. There you go. Harlem globe choppers oh, you are so good at that why do they have that stupid sound effect, that was funny. Was that the first try, sue, do we know i dont know if it was the first try. 4,000th try im getting tired fuel, land, and go back up. If it was, stop while youre ahead. There you go sue, thanks you got it. Check on the markets right now. Triple digit drop in the dow we are off of session lows, dow is down 120 points, s p 500 about six points off of the session lows at 2450, down 23 points, the nasdaq is the one seeing the biggest losses here 1. 5 is a loss tech is the worstperforming smh, etf on pace for the worst day in june. Apple is the worst performer in the dow. That is down more than 2 . Or about 2 right now. Stocks all in the red led by netflix, and of course its had days of losses ever since the disney news. On the flip side, soaring today in positive Earnings Results and that is leading the s p 5 u up 16 . Meantime, folks, look at cbi. That is Chicago Bridge and iron. This infrastructure stock is now down about 32 , earnings basically missing on everything. And the Company Announcing plans to sell its Technology Business and we should note, the stock was down 50 year to date, even before reporting these results so we have to ask, is Chicago Bridge and iron the canary in the infrastructure mind . Do this companys woes mean the promised infrastructure boom is simply not going to happen because of the dysfunction were joined now by Katherine Thompson from the leading voices on in infrastructure out there, katherine, what say you is cbi a single story that is just its own thing or is this kind of a harbinger of worse things to come cbi is more a companyspecific issue and not necessarily a harbinger of whats to come with infrastructure infrastructures still a very Important National issue and its still an important issue despite the gridlock in d. C. What i would say, whats really telling is what states are doing. States are not unaccustomed to gridlock because weve had it for not just the past several months, but for the past several years do you remain, katherine, optimistic that something, anything, eventually will get done on a federal level . On a federal level, it really depends on if were able to get tax overhaul because youve got to get a tax overhaul in order to fund a National Infrastructure states, however, said were not going to wait for the fed, were taking matters into our own hands. You can look at three states this spring, three states just in the month of april, that passed meaningful increases, california raised 52 billion. Tennessee and indiana each increased their funding by 35 of alone. Are there other infrastructure place, katherine, that might be benefitting . Obviously there was an anticipation of infrastructure plan, but just from ordinary Economic Growth happening in the United States as well as abroad. Well, you know, one of the really basic things. What do you use for any new construction rocks. So youve got materials, and Summit Materials other important things that go in basic building are concrete and cement and add on top of that, eagle materials, and a gcp if you want to look at just roads, what we just talked about in terms of increasing highway funding, you have highway Building Companies such as granite construction, gba and sterling construction. Which ones are the strongest and which areas of the world are providing the most growth for these companies . Is it still the United States . Yeah, this is if you look just domestically, look just in the u. S. , what the areas were seeing the greatest growth the southeast and the southwest. And its driven by a couple of basic things favorable labor, tax structure, which is driving, movement of big business to those areas which is in turn driving population growth. If you look at population growth, population growth is one of the biggest drivers of infrastructure seems obvious but thats really where the greatest areas of growth are, at least in the u. S. 85 million millennials coming down the turnpike. Remains optimistic especially on a state level. Two names we are watching. Katherine, thank you, have a great day. Great, thank you. Blue apron, ipo which has gone from bad to worse shares are down more than 15 right now. Thats after the Company Reported a larger than expected loss on its first Earnings Report since the ipo which we remind you was less than two months ago down 47 raising the question, should blue apron have gone public in the first place . Joining us now, michael graham, and also herb green, good to have you guys here they had a million customers last quarter, previous quarter, michael, now theyve only got 943,000. This is a brand new, fast growing in quotes company. Those numbers are going in the wrong direction. What happened . Yeah, they are going in the wrong direction in the short term its an unfortunate thing that this happened, you know, right around the time of the ipo basically what happened is blue apron has three Fulfillment Centers, the largest one is in new jersey and at scale, it probably services about half of all of their volume, and they had longplanned a transition to a new Fulfillment Center right about now even before they were planning the ipo they ran into some problems, not a lot of details about exactly what they were theyre delaying pushing volume into the new center. As a result of that, a lot of cascading effects have happened, including them pulling back on mark marketing. So thats why you saw the Customer Growth go negative. Unfortunate, but temporary it doesnt say a lot about the execution ability of the current management team, does it was this the right team for the company to go public should it have gone public at all. Thats another question should it have gone public, probably no . I think the really issue here is the model. I think when they had this planned reduction in marketing, and that led to fewer customers, i think that really raises question about the marketing we have something we call sometimes we see a company we red flag it, we call it a sell more lose more model, this is a sell more, spend more, lose more model. Theres so many ways of looking at it. Truly, i think about the model its being tested right now. I dont care if this is tempora temporary, and when theres not enough detail, that even raises more flags over the situation. Michael, youre a Technology Analyst in large part, thats what you cover you cover tech names internet, yeah. Internet, right so i feel like this is this was wall streets attempt of putting a label on something that should have never been considered an internet stock, yes, it sells by the internet, but why shouldnt the multiple be more like a whole foods or kroger as opposed to the internet sector . Why is it that tech analysts are picking up coverage of basically groceries sent out by box, bought on the internet, michael . Well, i think, you know, its a fair question, but i think blue apron is an internet stock as amazon, which just sells things online. You know, i think this just happens to be food and a meal kit, but all the marketing and all the Customer Acquisition and the entire way in which the customer interacts with the company and the product is online, but the real answer to your question on multiple, it comes down to growth and profitability. You know, when youre talking about multiples which are shortcut valuation methology, youre concerned with growth and this company is taking a growth hit right now, but it should grow 25 to 30 at steady state after we get out of this, this, you know, speed bump so, you know, i think that its really unfortunate timing with this push out. It really feels temporary to us which is why we still have a michael, hey, its brian, why would it grow when if theyre cutting spending you only grow by getting new people which takes a lot of money to market. If theyre cutting back on that, how are they going to get new accounts new clients . New customers . Well again, the pullback is temporary. You know, again, this is 50 of their volume that flows through center, right. So whenever you have a major dislocation with that much of your capacity, one of the natural things you want to do is pull back on your market expense so that you dont bring in a lot of customers and spend money to bring in those customers when you cant really service them effectively. So its a fair question and its a totally fair point we think this is an unfortunate temporary setback. Hey, herb, look forward to snap for us which is this afternoon and what do you think there as we watch another stock . I have to be honest i have to be honest with you, im the wrong guy about snap i have not paid attention to it, i have to beg off that one im so sorry okay, michael, you cover snap unlike blue apron, you have snap rated whole. You like blue apron more than you like snap. Well, i think for snap, the Biggest Issue is still user growth they really had a slow down in user growth as they were coming out of their ipo you know, and then they also had an issue with monetizing that user base in q1. What they really need to do is show investors they have a reliable way to keep the user base growing theyre facing tough competition from instagram and facebook and theyve got a show that theyve got a way to compete through that thats the number one thing that were going to be looking for this afternoon okay. Thanks, michael. I have to Say Something here, one quick thing, i think michael has the toughest job out there i remember in the 90s when analysts had to cover the internet stocks making no money and how tough it was because you really cant see the future here so, you know, we dont know. He doesnt know, no one knows whats going to happen with any of these, including blue apron whats tough for snap though right now, herb, there is a model that does make a boat load of money, right . Facebook its very different than the dotcom in that youve got these companies now, these internet companies, theyre just huge behemot behemoths, utilities dare we say, right and these other concert talk. And everybody thinks theyre going to be another quote unquote facebook and another this thats the problem you have a facebook. Snap isnt going to be another facebook and it has a long way to go to prove it its like twitter, twitter is not facebook its a different type of social media platform just because its social media, everyone rides the coat tails of the same way, the same concept, but theyre all different companies, one and to themselves, and this is what always happens and then the bankers come out, push the new names, the new name goes public and you have a bunch of garbage and then those that shine investors always lose sight of that long time viewer of the markets, herb, remind us, great, thanks thanks, michael. Coming up, the head of the generic drug industry is warning too much pricing pressure could lead to drug shortages he joins us live to explain, next by the way, the biotech index on pace for its worst day since late june. Stay tuned some stocks are up today, higher by nearly 17 after beating on profits and revenue analysts pointing to the strength of them over the counterdrug business and also fresh product launches also for seeing the price erosion in generic drugs and adjusting guidance accordingly to wall street but the generic market has not been kind. Earnings as downward pressure increases on Prescription Drug prices and specifically generics lets bring in meg terrell and chip davis, ceo of the association for accessible medicines. Good to have you both here chip, ill start it off with you. You say were far from the deflation their side of things, companies are saying, single digit declines, high single digit declines, teva, mylan, all indicating the same sort of declines, but an analyst that we talked to just the other day, indicated that the margins on some of these generic drugs are very high. So couldnt there be deflation their pressures but the generic drug makers could still make a decent profit off of making these drugs. Well, first of all, thanks for having me on today i think the important thing so to understand its a diverse and unique industry. For over 30 years, the generic industry has been providing safe effective and Affordable Medicines which is why were now 89 of all prescriptions in the u. S. For 26 of the cost, but the reality is, in contrary to a lot of the political discussion and Media Coverage that overall, generic prices are continuing to see deflation as opposed to inflation which significantly distinguishes us from the branded market so, i heard the comments, and heard the comments from analysts like ronny who had a different point of view and have been pointing to some of the imbalances in the generic marketplace that havent happened overnight and that are continuing to evolve, but the reality is, that sustainable robust competitive market is at risk now it really because from an our view, three main issues im sorry to interrupt, i want to get out, we have limited time here but youre saying that some drug make lers pull the plug on manufacturing generics because the pricing pressures are too great . Yeah. Look at year over year in the generic marketplace from june to june of 16 and 17. Generic prescriptions are up 1 , revenue is actually down 12 , and thats as a result of the robust competition in the market, but in order to have that and maintain that robust competition, you not only need it on the supply side which is what our members do, but you need it on the demand, and theres been consolidation in the wholesalers and the Retail Pharmacy that legitimately, theres only three or four purchasers in the market that are controlling 90 plus percent of the supply and over time, not going to have to compete for the purchasing of three or four retailers who are controlling 90 plus percent of the market youre going to see additional consolidation and work concern that thats not good for savings, patient access, and ultimately for the level of savings that the industry has been able to provide for patients and provide percent. Hey, its meg, lets put a fine point on this, people have trouble understanding why lower drug prices would be bad at all. Are we talking about shortages here hi meg, look, theres a potential risk moving forward if we dont address three things. One, some of the market imbalances that i just talked about. Two, the fact that there have been policy missteps both here in washington and state level by trying to treat generic drugs which again a vast majority of which are seeing deflation as opposed to inflation, and third, were seeing an increased practice and the fda commissioner was on cnbc just a couple of weeks ago talking about an increase in the anticompetitive behavior of certain Branded Companies trying to keep off the markets. All of this making it challenges to get to the market and stay in the market with a sustainable reimbursement rate shortages especially with vaccines because they dont cost a lot of money so a lot of people dont produce them so there is a minute when a factory goes down or something happens or some sicknesses arrive. Meg, thats a good analogy, we want to make sure we dont see the same time of concerns that we did. The robust level of competition per se is a good thing the new fda doctor gottlieb should be applauded for his action plan and not just on innovation we want to make sure that we dont have just competitions but sustainable cold timpetition. We need policies here thatll encourage general manufactures to go through the regulatory process which is design to be effective. We look forward to implementing them once theyre in the market, for a period of time or else we run out thank you, chip thank you for your time coming up at street talk. Well tell you a stock thats upgraded today because analysts say it respects its customers. Thats why its got the upgrade and other stuff, well tell you about that, coming up you always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. 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Youll be able to choose any doctor or hospital that accepts medicare patients. Whether youre on medicare now or turning 65 soon, its a good time to get your ducks in a row. Duck quack call to request your free decision guide now. Because the time to think about tomorrow is today. Welcome back, President Trump is fighting on two fights. Rising tensions of korea we ask which one is the biggest risk for your money . Cannot recommend Consumer Reports on a ska on laptops this stock is 25 this year where some of things can go up to another 20 this year well reveal the second hour of power lunch begins right now lets get a check in the mark, s p 500 is having its worst day since june the dow is down by 138 points. S p 500 is off four points nasdaq is taking on 1. 6 and 62. 49 is the level there micro on materials and retail continues to be in focus. Macys and kohls and dillards are all moving lower and take a look at chipotle as it hit as fouryear low session. Lets get to bob pisani hi bob. So of course, look at the faaang stocks. N netflix are having problems with disney semiconductors and pharmaceutical and airlines, these are all leader groups a few weeks ago. Moving to the downside we talk a lot about the retail earnings the porn thiimportant thing is nice rally in these Retail Stocks these are hoping for improving sales. The sale numbers were less bad and they were still down yes, they were better expected so macys and kohls already still down they sell off on the news and some of the other names out there not having any earnings out there like ascena and Urban Outfitters we are a small numberoff of th historic high, only 1. 2 of the s p 500. Guys, back to you. Bob, thank you very much. If we are on edge in north korea right here imagine how they may feel in south korea. Bill neely is in seoul looking at that country. Reporter in seoul, this is a deeply unsettled city after President Trumps threats and new threats from north korea south koreas president is saying the countrys defenses need to be strengthened and they also had a message for north korea stop the provocations. Although he said the door to dialogue from south korea, another warning awar warning adversary. 23,000 american troops, of course, station here, south korea is under Americas Nuclear umbrella deep unease here of the war thats continuing, not guilty just between the u. S. In north korea but across this border a border thats still one o f the most dangerous borders in the world. Back to you. Thanks bill. Back here in the u. S. , two officials tell nbc news, the pentagon prepares a specific plan for a preemptive strike on north korea preemptive strikes. Theyll test on testing growunds and launch facilities. Joining us now is ash carter, it is good to have you here you had me all worry now. What are the chances of a conflict, a military conflict right now . There is always a chance for conflict with the North Koreans. E used it is bound to be one of those days from something is heating up on the Korean Peninsula just a little bit in the sense where i think we have been here before we have seen different administrations handled these situations where they can help the North Koreans to get the rhetoric down and get back to the constant roar that we have in the peninsula i was concerned of this report on the pentagon preemptive strike i dont think there is much wisdom in a preemptive strike. The fact that someone would deliberately put out from the administration of a specific plan instead of speaking in generalizatio generalizations, i am not quite sure what that is about. Especially when President Trump does not tell anyone what he will do in advance, can i press you a little bit many. Sure. I am sure there is some kind of preemptive plan we have been preparing for this, have we, for some possibility . There is work plans and contingency plans with regards to the North Koreans there is broad base and contingency plans. You dont plan your exit from a fire before you see whats coming at you. It does not make much sense. Tough adjust to the specific situations for someone to say this is exactly what we are going to do and not only that confuses me but the wrong messages to the North Koreans. If we want to maintain our credibility then how do we not follow through on doing something so specific. What if you have to attack in a different way. But, again, my bigger point is we are in sort of a self generated prices to do largely to the president s unplanned statements the other day got it. George bush brian got a question north korea quietly released the canadian prisoners they have been holding for two years maybe there is an olive branch in that perspective. If you look back of the history, this country, the only thing that a leader like more is pressing the people. Dictators that do that kind of stuff dont like to go to war because that means they wont have that anymore. Is there any symbol that kim jongun or anyone in his circle of power have any indications o losing power because thats what he would do and he knows that if something were to happen if we start a military confrontation, we are in a situation where they would feel theyre out of power secretary defense mattis puts it clearly of a sort of war would result in the end of the north korean regime. You are right. They are about keeping themselves in power. Theyre beigetting something doe secretary tillerson suggests direct talks and thats what we need to do so to brians point, thats the process for more than 30 years now, right i have tried this now everyday for nearly a week the world is going to live with it absolutely. We have lived with russians and soviet and Chinese Nuclear weapons for a long time. The idea is to deter them from being united natised. We are really good at that we can be perfectly fine in a world where the north was that the attitude of the Obama Administration i think so. If you look at the alternatives, both clinton, bush, and obama, the cause of going to war, a general war or god forbid of of a nuclear war in the peninsula are not worth of preventing if North Koreans from having north korean weapons if you go to war and end south korea if we know it, if you see the North Koreans attacking japan, think of the cost and human life alone, much less of what it does for the global economy. The whole idea is to deter and prevent from happening if you decide that you are going to have a preventive war, i mean thats ridiculous as i just mad it sound mark, thank you for joining us today. My pleasure the other rattle is going o President Trump and Mitch Mcconnell. John is joining us republicans are putting their hope on the prospect of over seawalling t hauling the tax system and movimov moving, you have the president of the United States going after the leader of his own party. Mcconnell does not have much wiggle room in terms of fashioning a plan and getting support. It is hard to see how the po performance so far how President Trump and Mitch Mcconnell is going get better by him tweeting insults at Mitch Mcconnell the president s expectations have been too high and the president rebutted that. They had a phone call yesterday while mr. Trump was on the golf course and did not sound it was a friendly call. I dont know what legislative strategy the Trumps White House is following here or this is the president doing things that staff cannot prevent it is something that if you want tax reform enacted you got to be concerned about it all right, overall, stocks for your money, is down for a Third Straight session we thought this is a perfect time for a quiz investment officer, sandy spring trusted. I know you gentlemen can handle. If you had to pick one of the biggest reasons we have been weak in stocks the last few days, which would it be, a, dysfunction and c, north korea and valuations and d, pull backs are normal what happens to e, all of the above . It is based on evaluations. You have to factor in we are about 1 high. Off market thats trending around 19 times. Thats on projected earning and on, you have a quiet market and volume is low and people on vacation we have a lot of big names on cnbc you have another one in the early hours saying this is a reason top get a little bit cautious and concern i think it comes together to sort of weigh on peoples physche. Which one is it i go with the pull backs are normal none of these items are going to influence Earnings Growth in the longterm and the next several quarters are still looking pretty good and stocks will follow Earnings Growth thank goodness we are getting these back giving us a wall of worry. We are far from a europhoric stage. Rob, are you buying today yeah, we would certainly over weight stocks of most of the sectors that we like tends to be some of the Sectors Technology and consumer discretion and financials and those are the three laggers today. We are enthusiastic. Bob, what woipoint would you say . Thats what everybody is coming on and say i guess that north korea of their threat of the probability is very low. You got to think of whats going to stop this rally and is this going to be different this type around or when is it going to be a different . What keeps me up at night is the concerns of the overall economy. We have a slow growth economy, probably growing, in my estimation around 200 quarters of a percent. We dont have any help from dc we dont have the consumer adding and zero inflations and the federal reserves coming with the unwhining of its Balance Sheet. We dont have any idea how the mark is going to handle artificial supply. You put all that in the mix and what when you really have to throw in the towels, it is quite a way away you can continue at two and a half or gdp growth, you can continue to see earning growth at around 9 i have a target for year end of 25 and 35. I have a 170 year out target i dont think you have to be a buyer today or right now we are only about 1 from the all time high. I think you have to look at the support levels of around 24, 48, thats the 50 days moving average. Got it. Thank you, both, rob and bob thank you, we have so much more to do here on power lunch. Consumer reports on microsofts tablets and laptops the. Consumer reports will be here and firing back at ackman, saying hes acting like a spo spoiled brat and he does not know what hes talking about and Goldman Sachs of a Personality Test it is coming up on power lunch. Hey. Hi. Hi. You guys going to the Company Picnic this weekend . Picnics are delightful. Oh, wish we could. But were stuck here catching up on claims. But we just compared historical claims to coverages. But we have those new audits. My natural language api can help us score those by noon. Great. See you guys there. We would not miss it. Watson, you gotta learn how to take a hint. I love to learn. Watson, you gotta learn how to take a hint. Whuuuuuat . Rtgage offer from the bank today. You never just get one offer. Go to lendingtree. Com and shop multiple loan offers for free free . Yeah. Could save thousands. You should probably buy me dinner. No. Go to lendingtree. Com for a new home loan or refinance. Receive up to five free offers and choose the loan thats right for you. Our average customer could lower their monthly bills by over three hundred dollars. Go to lendingtree. Com right now. Theyve changed and how we meet. Our phones have evolved, isnt time our networks did too . Introducing americas largest, most reliable 4g lte combined with the most wifi hotspots. Xfinity mobile. Call or go to xfinitymobile. Com. Welcome back to power lunch, i am lesley picker dalio is saying the protective risks are rising it is pointing to two rising risks. Number one, there will be a war between north korea and the u. S. And that Congress Fails to raise the debt ceiling hes urging investors to be allocating to gold it would seem that gold is more than any other safety even in assets and treasuries would benefit. If you dont have 5 or 10 in gold as a hedge, we suggest you relook at this hes not alone of his bullish stock in gold. Back to you guys. He thought the market was expensive, too ray dally live on our conference on september 12th always interesting Consumer Reports advising people to ignore laptops glenn, welcome, i know microsoft which has a statement and well get to the end of it disagree your findings these are not your findings, are they they are surveys of people who have bought surface tlaptops. And, we have 90,000 plus respondents to our laptops and tablet surveys and microsoft had a breakgage rate in two years. Thats significantly higher. So this is 25 and thats pretty concerning whats your highest rate of device and how did the break compare to that highly rated device well, the highly rated, these are highly rated they do quite well in our performance tests. This applies to the Service Books and pros and laptops theyre actually innovated devices that they worked dpragr until they dont the problem is what there is a host of things we asked people to rate the brick but we also ask for some sort of open end feedback. People say they have problems with devices crashing on them and some unresponsiveness of the touch strecreens and things like that we do with most of products that we rate is that we are assessing two things and you know, you could our labs are testing things orr performing things and screen and resolution and responsiveness in the lab. You cannot get that stuff when it comes to performance through times. It is similar in a way to survey Cars Companies take a while to develop a reputation, gathering enough data frankly to really assess how reliable products can be microsoft has not been in the hardware business for a long time theyre well known for software and define the computer revolution throughout much of the 80s and 90s. Their first product really came out in 2012. Interesting good point. Glenn, thank you very much. We appreciate you coming on. Thank you we noted. We reached out to microsoft putting out this lengthy statement. Well read it all. While we respect Consumer Reports, we dont believe these findings reflect experiences or made with every service. Last thing i will say on this guy, it does seem like a disconnect between microsoft and consumers. Microsoft seems to be going after Consumer Report Consumer Report is saying this is not us this is the people that bought the device and told us lets check our market he t s p 500 is down more. Psychology of the markets are coming up. Welcome back defense stock of rising attentions of the u. S. And north korea. Now as we show you they are in the way staying with defense, Morgan Brennan is at the air force space in new mexico. Morgan reporter hey, michelle the air force space is home and the vast majority of pilots trying to fly zones. Something else is a foot here right now. As tensions escalate with north korea, there is been so much focus on military readiness. The air force is experimenting new ways to streamline its procurement process. That holomon theyre testing jets this marks a big potential shift in the way the market can make puch congresswomen and tman, te that the goal is easier to ladies to work with the grove. Were not going to spend a whole lot of team to come up with specific environments all right, lets see what people have and lets touch it and thats lauren from that and well see where we go. This except except striifts you have three elements and also tech hchlt tron. All three of those contractsers have put up money to be here and theyre doing it without any guarantee that any of this could actually materialized into an official program of record guys. Sorry, i want to shake sure if i once it in tr ohe old days, aircraft spending parttimes developing and years of something coming into year head loegets go to the industry a see what we got and see if we can use it that tactic is not going to make sense for every Weapon Program this is called an oax experience you are talking about claims that would fight in afghanistan and fighting against isis. This could make a lot of sense if you drive down cost and you can get a future past like this to the mark, much more quickly. This is the first of what could be be mamany more on this market sells hitting Technology Just for a break down, you should have 10 or 5 in your portfolio. Is he right . Dependent discuss it hello everyone, i am sue herrera, here is your update at this hour. British police rescued of the shooting of the london bus the bus stopped just before hitting a woman. Day days after a 2. 70, at least 20 people were killed and nearly 250 people were injured chipotle chosed the restaurant the company will assess the construction of the building and where the restaurant is held before deciding to whether or not or where not are not using it about near of out as workers a are, one and four making 75,000 slars a yarnell fi dollars are working side job back to you. Sue ter Jackie Nespral opec on firmed that the production of cartel is leaked level in july. There is been a lot of talk about combine but it does not seem like the group has been ail to rear in those out liners. Yesterday, it was a gas. Pretty much flat and just 200,000 a deal. Bottom rain, trading them in for their tlas reemerge take a look at gold rising por man 100 week. Last hour, the sharm of bridgewater saying investors should have faif five o dennis, it is good to have you here good to be here a lot of people argued that you got tofb something what do y what do you think of this call i think hes late to the party. I do agree and you should have at least five percent in goal because one never knows when something unfortunate kply the stock markets are looking vulnerable so i think that you probably have to bring that up to 10 or 15 rather than five to 10 take it out the position that you have in eequity. It is bumping um of tl level that we are seeing it is going to guy higher or buy gold because of political attention because you got to have it justice cocaine. We have been in the mashlgt for gold almost 20 years it is unrecognizable as i was explaining to my pr producer, the Great Movement occurs 60 of the action the last 10 or 25 the beginning is a bull market it is difficult for business to move backup and down we dont make new lays thats whats happening. Gold was about to break down. We cannot and running out of labor in the United States thats is going to put up the pressure on Monetary Authority haves been expanding supplies for a period of time we got breaking news. We got to cut you off. Comments from north korea. I want to give you the headlines from the president hes speaking at a pool spray at the top of the briefing with National Security officials. He said that his comments on fire and furry, the warning that he issued to north korea, maybe that statement was not Strong Enough that was a remark that was confusing one for many of the officials who felt like they did not have a hand in helping to draft that or fell off guards. Lawmakers felt the rhetoric was potentially dangerous to put forward to a nation as dangerous to north korea thats the first headlines we are getting from the president when he says fire and fury the other day, we already had tensions the markets had not moved much and he used that word. We saw the markets going lower well watch to see if the same thing is happening a couple day is a sell off thanks cayla Defense Sector has been on a tear this year of many of names sitting at an all time high our Senior Analyst joining us now, peter, it is great to have you with us. We have more comments from President Trump saying that statement may not have been tough enough what does that create of a defense stock when we see them hit high is on the safe and rattling atmosphere what we are seeing is the threat environment and we have seen, you know, kind of entering an era where we are recapitalizing the u. S. Asset. The one thing that makes it different where we are entering is the low upturn, led by the u. S. The middle east continuing to build out and looking at their current capabilities you make the point that business from over seas, thats a higher margin business so with this environment going on right now, are there countries you think is taking a look at the environment, maybe well up spend it or decide for this contract over the other one which maybe a higher dollar amount yeah, absolutely. I think we are seeing that and we are hearing that from Defense Management team that they never seen an environment like this where they are having many conversations with different countries. They never would have thought romania with the involved of ordering the Missile System several years ago. So there is no question of International Activities peter, here is the best question you got secretary of defense, jeff mattis, was at amazon today. Jeff bezos tweeted out a picture of them walking. Is there any risks of the industry, i dont want to say amazon, having somebody coming into it thatll completely change the way thing havs have done in 40 years i dont think so. In the early 90s, there were 20 contractors and today is 5 it is an industry with massive consolidation. It is hard for someone new to enter in i saw your segments of looking into commercials off the shel shelleveshelve of capabilities. I dont think anyone is coming in great, peter. Yes, it is. We raised our price tag today at 200 peter arment thank you we want to let you know of the headline of what President Trump said related to north korea. You can ask the question as to whether senator mcconnell should step aside if he want deliver on the agenda wow, directly calling Senate Leader Mitch Mcconnell related to there is another statement of north korea, trump tells north korea to quote, get their act together. We are waiting for play back of the stapltements from presidt trump. There are reporters there who are reporting on what happens. We can debate of the next 60 hours of get your act together really means mi uright, we got a lot more congp after this, dont move amazing trad ledge. 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. David is joining us now with more of his exclusive interview with the ceo tough talks from rodriguez. Bill ackman is seeking three seats on automatic board of directors. A request from ackman that they extend the nominating window something that adp was unwill to do after speak to ackman a couple of times. Mr. Rodriguez in the interview explains why it reminds me of a sport brat in school asking an extension for their homework it does not work. I have been the ceo for six years and i had close to 30 board meetings and 24 quarterly calls and 10 ks and i have never asked anybody for an extension our board for six years have never asked for an extension for anything they show up on time and prepared one of mr. Ackmans key is while stocks is doing well, they can be doing better. Well hear more from him next thursday when hes expected to give detailed presentation that hes known for hes seeking those and putting his focus, it would seem on what he believes is the margin opportunities for this opportunity in terms of savings that it can get while it is achieving great scale, of course, and so much processing for so many of businesses acros the country. Something mr. Ackman wanted was a new ceo. Something mr. Rodriguez made clear during our conversation this morning he was quite cordial and he thought that i needed to be replaced it was a surreal experience. I met him once 31 years ago back in college hes been saying that we are Close Friends or classmates and so forth, i am not his holiday greeting card list as far as i can tell the whole thing has been baffling and surreal experience for someone to say that needed to be replaced annual meeting is going to be held early to mid november, it would seem there is a lot of rhetoric between now and then. It is rare to see a ceo coming on mr. Ackman, i bet you are going to see this chart a lot more the performance of adp stocks verses the performance of s p and the purging head funds, i think we do have it for you. We are showing it of 117 in the last five years and there is the bar chart. 202 verses 128. We know it is not good performance at all from mr. Ackman thank you, david from that war of words that david was talking about to the other one thats going on right now between President Trump and north korea. Well get a play back of the tape pretty soon i know you got to be watching a couple others and we have a lot of people here today a lot of subjects and discussions including venezuela and north korea, and other things and i think we are making tremendous head way. Well be spending quite a bit of time here and during the weekend, as you note, towards the end well go to manhattan where i have a lot of meetings scheduled in manhattan any questions do the north korea saying your words were nonsense, did you have any response to that . Well, i dont think they mean that frankly, the people that were question that statement was not too tough or maybe was no t tough enough they have been in our country for a long time for many years and it is about time that someone stuck up to the people of this country and for the people of other countries. If anything, maybe that statement was not tough enough and we are back by 100 by our military and backed by many other leaders. I know that many senators and others today came out in favor of what i said that statement may not be tough enough what would be tougher you will see. We dont talk about that. I am months i dont talk about it. Well see what happens, but i can tell you that what they have been doing and what they have been getting away with is a tragedy, and it cant be allowed. Mr. President , if everything is a negotiation sure, well always continue negotiations they have been negotiating for 25 years look at clinton. He folded on negotiations and he was weak and ineffective you look what happened with bush and with obama obama, he didnt even want to talk about it, but i talk. Its about time. Somebody has to do it. Somebody has to do it. You talked about your relationship with senator mcconnell. I just want him to get repeal and replace done ive been hearing repeal and replace now for seven years, but ive only been doing this for two years, and ive really only been doing this for six months, but ive been running, so now its almost two years, and all i hear is repeal and replace, and then i get there and i said wheres the bill i want to sign, it first day and they dont have it and they passed repeal and replace, but they never had a president frankly or a senate that was going to do it, but they never had a president , so it didnt matter so i say very Simple Police where is repeal and replace . Now i want tax reform and tax cuts were going to reduce taxes for the people we pay more tax than anybody in the world, hand were going to reduce taxes so i say tax cuts, tax reform, and i want a very big infrastructure bill where were working on that very hard already, and we can do that, and we may even get bipartisan on infrastructure, but we want to have it, but i said, mitch get to work and lets get it done they should have had this last one done they lost by one vote. For a thing like that to happen is a disgrace, and frankly it shouldnt have happened, that i can tell you it shouldnt have happened. Should senator mcconnell step down as majority leader . Some conservative analysts saying sean hannity its time for him to retire. Well, ill tell you what. If he doesnt get repeal and replace doesnt and if he doesnt get taxes done, meaning cut and reform, and if he doesnt get a very easy one to get done, infrastructure, if he doesnt get them done, then you can ask me that question. What does that mean can you ask mow the question. It means ask mow that question lets hope he gets it done. [inaudible question ] the Opioid Crisis is an emergency, and im saying officially right now its an emergency. Its a National Emergency. Were going to spend a lot of time, a lot of effort and a lot of money on the Opioid Crisis. What do the Emergency Powers entail were going to draw it it up and well make it a National Emergency. Its a serious problem, the likes of which weve never had you know, when i was growing up, they had the lsd and certain generations of drugs theres never been anything like whats happened to this country over the last four or five years, and i have to say this, in all fairness. This is a worldwide problem, not just a United States problem this is happening worldwide. But this is a National Emergency, and we are drawing documents now to so attest. Mr. President , are there mixed messages coming out of your administration on north korea . Secretary tillerson soaked to advocate for diplomacy and secretary mattis there are no mixed messages i heard, to be honest, general mattis may have taken it a step beyond what i said there are no mixed messages, and rex was just, you know, stating the view look, heres the view i said it yesterday. I dont interest to say it again, and ill tell you this. It may be tougher than i said it, not less it may very well be tougher than i said, it okay . How about one more. Can you offer any assurance to the American People who are understandably anxious about the situation with north korea, they see images of the threats and the statement about fire and fury should they be comfortable the people of this country should be very comfortable, and i will tell you this if north korea does anything in terms of even thinking about attack of anybody that we love or we represent or our allies or us, they can be very, very nervous. Ill tell you what, and they should be very nervous because things will happen to them like they never thought possible, okay hes been pushing the world around for a long time, and i have greatrespect for what china and what russia did and those 15 we got a 150 vote i have Great Respect for china and russia, what they did on sanctions. I believe that well have an effect i dont think it will have the kind of effect, even though i was the one we were the ones that got it, and nikki haley did a great job. We all did a great job, but i have Great Respect for what they did. I have Great Respect for the 150, but probably it will not be as effective as a lot of people think it be, unfortunately can they do a lot more . I think they can do a lot more, and i think china will do a lot more look, we have trade with china we lose hundreds of billions of dollars a year on trade with china. They know how i feel its not going to continue like that, but if china helps us, i feel a lot differently for trade, a lot differently for trade. So we will do i think the people of our country are safe, our allies are safe, and i will tell you this. North korea better get their act together or they are going to be in trouble like few nations ever have been in trouble in this world. Okay thank you very much. Were going down to the other side, and we will were going to take a few more questions, okay thank you, thank you all right President Trump not using this as a moment to roll back any of his earlier statements, instead doubling down on what he said earlier about fire and fury when it comes to north korea. He said maybe that statement wasnt enough. He repeat that had multiple times. Maybe it wasnt tough enough weve been negotiating for 25 years. When it comes to market response, 30year yield move low, dollar index moved lower, but not a whole lot of moves in the averages at all at this point when it comes to stocks. China can and will do a lot more we are offthe session highs that we had earlier in the session. Take a look at the s p 500 were holding on to 2451, as michelle said. Very strong reaction to the strong statements that the president continues to make regarding north korea saying that north korea should be very, very nervous if they do something to the United States. I would say, i mean, it would seem, and the market can react, that these comments were not a walkback but certainly saying if something happens to us, if something happens to our allies, he appreciated the work of china and russia he stayed tough with the language but almost seemed like a little bit of a walkback sort of conditional statement. He also said that they are always open to negotiations. Still throwing that in there in case there is that hope for something to be negotiated prior to any kind of strike. Kayla tausche, what did you hear well, the president , again, michelle, was putting north korea on alert, reiterating those comments that he made earlier in the week. He did not he did not accept the notion that there are mixed messages coming from the Administration Secretary mattis, of course, is pushing the military angle, but secretary tillerson, as the president said, can share his vows as well he would not address the question of whether there would be a preemptive strike from the u. S. , but as brian just said, seemed to be in a reactive mode and suggesting that if north korea were to continue provoking the u. S. And were to strike, the u. S. Or any of its allies, that it would be in trouble like very few countries in the world have ever been. A couple other points of note on legislation and this feud with Senate Majority leader Mitch Mcconnell. He suggested asking about leader mcconnells future after tax reform, after infrastructure, after repeal and replace, if you cant get any of that done, then talk about the futurech leader mcconnell, and finally officially declaring a National Emergency on the Opioid Crisis in this country that was a suggestion, a recommendtation that was made by a commission on that topic, but earlier this week secretary price did not actually declare that state of emergency. Thats something that will free up some resources to that effort. The john harwood, what do you make of the president s statement about leader mcconnell . It almost seems like hes giving him a little bit longer of a lifeline at this point. It doesnt really make any sense for President Trump to be attacking leader mcconnell, who, of course, is a fellow republican and is trying to move through his program. In fact, if he keeps suggesting that mcconnell will lose his job if he doesnt accomplish those things, he may ensure that they dont accomplish those things. And on north korea, we just havent had a president talk like this in ways that is so susceptible to misinterpretation. I think brian was on to something in the sense that President Trump was trying to walk back a little bit, but he couldnt quite pull it off because then the part of him that wants to be tough took over and he mix that had message. He said there were, as kayla just indicated, he said there werent mixed messages from the administration but there have been you had the cabinet aides walking back the statements the other day and just this morning sebastian gorka, who is a white house aide, gave an interview in which he said its nonsensical for rex tillerson, the secretary of state, to be talking about military matters, and that kind of discordance is something that cannot be reassuring to people watching this crisis weve had an odd tit for tat issue where the president said, you know, they will get fire and fury if they threaten and then the North Koreans threaten and then the United States came back rhetorically the North Koreans then detailed how they would hit qualm and then today we heard from u. S. Officials how they would hit north korea, and then you had President Trump kind of rhetorical frosting on it. All of those things thank you so much, john harwood. Bill and kelly when the fire and fury statement happened the other days the markets took it lower. Today, not so much well, its not just stocks, as you well know, michelle, and you guys have been itemizing this the vix, almost