Now. And welcome to power lunch. Im milissa lee. Holding steady this hour, dow managed to hit another record high right at the open before pulling back here. Apple one of the biggest drags in the session this after the company acknowledged cellular connectivity problem with its new watch annadarko, a massive buy back and fifth straight day of gains and near session highs on pace for a fifth positive day in six we begin here with a developing story. President trump announcing new sanctions on north korea eamon javers has the latest. Hi milissa. Alongside south koreas president moon at an event in new york city. The president saying, first, the United States had put new sanctions on north korea and also that the chinese president had told chinese central bank, told banks in china not to do business with north korean entities indicating the chinese are getting serious about exactly what he wants them to do in terms of north korean trade what the president had to say thanking chinese president xi. Again, i want to just say and thank president xi of china for the very bold move he made today. That was a, somewhat unexpected move, and we appreciate it the president offered details of what the United States new sanctions were remember, these are different from the u. N. Sanctions which were put in place back on september 11th today the president saying the United States is going to take some additional action a new order will give the Treasury Department the discretion to sanction any foreign bank that knowingly conducts or facilitates significant transactions tied to trade with north korea the United States had been a little frustrated at the u. N. Not getting exactly what it wanted in that round of u. N. Sanctions. But clearly willing to step it up unilaterally and also willing now to work with the Chinese Government in terms of the banking relationships between north korean entities and chinese banks. The big question now, how serious are the chinese about this is this a message delivered from Chinas Central Bank with a wink and nod to chinese banks or actually the start of a new partnership in terms of Global Finance between the United States and china and cracking down on north korean finance milissa . Eamon, thank you. And eamon, the first question ill ask our next guest, professor of korean studies. Sir, thanks for joining us. Thank you. You could hear eamon, i assume what do you think . The cooperation announced by President Trump not to facilitate north korean transactions a start of something new or a wink and nod making it look like theyre doing something . Its too soon to tell history suggests, however, well have to just wait and see, because we have seen this kind of compliance from the Chinese Government, and chinas biggest banks in the past. For example, when north korea conducted its Third Nuclear test on february 12, 2013, right in the middle of chinas most Important National holiday, the Lunar New Year celebrations which was the first in the xi jinping era, certainly the message intended for china xi jinping incensed, in the proliferation activities, chinas biggest banks, four of them, entry agriculture bank, Construction Bank and bank china voluntarily cut off all relations with that designated north korean bank because big banks are conservative and risk averse however, after the first few moss those Financial Institutions went back to supporting north korea, doing business with north korea. So its too soon to tell. Foreign banks any foreign banks that facilitate any kind of trade with north korea can be sanctioned by the u. S. Government is that going to stop russian and african and malaysian banks, we know have been involved in this according to the u. N. Panel of experts it depends on the magnitude of fines levied in the future against chinese banks and russian banks and big banks, that willfully violate u. S. Sanctions authorities. Im talking about the kind of fine that the Treasury Department inflicted on the biggest bank in france, enp paraba for willfully violating unsanctions against iran, sedcua and we have yet to see those fines on chinese. Could this backfire do you think north korea responds with another Missile Launch in anger . Oh, absolutely. But north korea conducts these things, weapons tests, provocations, on their own time schedule we tend to think north korea is so poor and backward it merely reacts to what we say the big powers say or do thats simply not true north korea provokes on a major holiday, both theirs as well as americas and chinese. They have a compelling need to conduct more missile tests and Nuclear Tests and, you know, the fiery rhetoric, even by President Trump this week at the u. N. , all of that will be just an excuse for north korea to say were doing this for selfdefense, and that fake message will probably resonate all around the world as nation states feel that its really the United States that is the party being motivated by aggressive behavior rather than north korea. So theyll do it, yeah north korea will provoke once again. Playing politics internationally. Got it thank you, at the pletcher school probably more details seeing secretary mnuchin around 3 00. Following another story involving the s. E. C. Getting hacked and eamon javers doing double duty. Right big difference about what this hack and didnt say. First start with what the s. E. C. Put out in a press release went out about 8 00 p. M. Last night saying the incident was detected in 2016 but not until august of 2017 the s. E. C. Learned it may have provided the basis for illicit gain through trading the idea, cyber enhanced Insider Trading a possibility. The vulnerability at the core was in the software in a test filing component of the edgar system that system is where companies file all their documents with the s. E. C. Can upload themselves, the documents in the system for a while before their released publicly if you could get access to them, thats where the Insider Trading component could take place if you knew that it was coming out, for example, potentially trade in advance what the s. E. C heres what they didnt say and these questions are pretty wide open s. E. C. Did not say when exactly this happened or what Insider Information was actually accessed was it 10ks or Something Else . Also didnt say what evidence there is of actual illegal insider trader that may have taken place in all of this and not saying what they know about who did it they say theyve launched investigations, patched the hole in this case, but not who actually did to it or what they know, best guesses and finally no idea how much money the hackers made in doing all this once you get into that s. E. C. System, presumably a license to print money effectively for a cyber criminal this is fairly close to the perfect crime, because so many levels of complexity here. Right . Ultimately, a Cyber Security story. Those are very hard to pin down and do attribution beyond that, Insider Trading story potential toly very hard to pin down and do attribution. On top of that,ing a geopolitical story, that a lot of these hacks have been taking place from entities around the world. All of that makes it very, very complicated for prosecutors to get in there and figure whats going on and actually charge somebody hackers out there eamon javers, d. C. And bring in scott kimpal for more the number one question i have, is any data at the s. E. C. , particularly in the edgar databases encrypted at all there are various Security Systems put in place but youre dealing with a system that really was built in the 1980s. Its been updated through patches over the last three decades. Certainly a sophisticated threat actor, be it a nation state or organized crime or some other person with other inclinations could easily find ways into the system that seem tos what happened here. Youre an attorney advising companies in your present day life what would you tell a company . Are they safe filing aks or sensitive filesy were the s. E. C. At this point via edgar . Is there a risk say that data could be breached . There is always that risk and the problem is, no special relief given to companies against filing in this kind of situation. They have to continue to make the filings on time. I think one of the things that well begin suggesting to companies is to make the filings at the last possible second. In other words, the test filing system that is done, those test filings are often made hours if not days before certain filings are due and really just the way to ping the system and make sure the filing will be accepted by the government if you would do a test filing at night, for example, before you file the next morning, that data sits on the s. E. C. Server for 12, 14 hours giving a cyber criminal, the ones identified here, plenty of time to play with whatever information theyre able to obtain i think the advice now is dont do the test filings until the last possible second and just minutes before youre going to make the actual scott, say a hacker gets in, gets material, nonpublic information and trades on the information illegally as Insider Trading. Whos liable correct certainly its not the companies here its going to be the the criminals themselves. Yeah, but does the government bear any responsibility for negligence for creating a system that is fairly apparently easily hackable ah you know, this is the challenge businesses across america face that theyre constantly dealing with these threats constantly making investments in data Security Systems. The government has to do the same thing the challenge is, the budgetary dollars. When i was at the s. E. C. One of the talking points on Cyber Security was that the i. T. Budget for Goldman Sachs was larger than the entire s. E. C. As the agency altogether. Finite numbers of dollars available here and subject to the appropriations process limiting their ability to spend beyond oneyear time horizons most of the sort of Security Systems that you need have to be developed over time, with vendors or other third parties who hope to develop these things hard to do under a yearbyyear basis. Ironically one of the things dodd frank did, create a reserve fund for the s. E. C had budget dollars to spend across years and, of course, that reserve fund has come under criticism as potentially being used as a slush fund for the agency. Not a lot of support for that idea, but the financial choice act which has been bouncing around congress the last few months, includes a provision repealing the reserve fund provision. A provision hopefully intended to address these situations to at least give the s. E. C. The ability to spend the kind of money they need to across oneyear cycles to develop Security Systems and well see where that bill goes. Right well watch. Scott, thank you after the break, puerto rico picking up the pieces, but a lot of work to do. Some are saying the entire island could be without power for a month. We are live in san juan with the latest. First it is not just our stock market thats going well plenty of rallies are happening both outside the market and inside it, if you know where to look well show you some of those spots coming up. 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. For tech advice. Dell Small Business advisor with one phone call, i get products that suit my needs and i get back to business. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. All right. Welcome back if you think this stock market is boring because it barely moves every day you may not be looking in the right places. Bob pisani, nyse looking at rallies many people may have missed bob . And i get complaints about the low volatility, this low market volatility. I know making investors a bit crazy. Look below the hood, showing healthy rotation and no signs of breaking down at all the past month, look here. Big rallies. Weve talked about it in Energy Stocks and material stocks biotech and semiconductors reasserted market leadership and banks. A huge underperformer throughout the year even the banks, look outperforming with s p only up 3 all of this is happening with the s p, moving four, five points from high to low on intraday basis the last few weeks. It makes people crazy but wrongly makes it look like the market isnt doing anything. Look how narrow the range has been in the last two weeks with the s p. A real dynamism in the market just below the surface that isnt captured just watching the s p 500. Two problems i see first, investors used to investing in etfs need to get their eyes off the s p 500 and focus on market nuances to see the changes we see investors need to understand no law says the market needs heavy volume or high volatility to advance. None whatsoever. I have an old friend if all youre doing is looking at s p and volume youre not going to understand whats going on in the market more on this Dynamic Market in my trader talk column. And just need a little more aggressive with people and explain to them when the market rotates like this how important that rotation is back to you. All right bob, thank you bob pisani. As bob mentioned the, the semistocks rallied Big Semiconductor etf, sosx, up 20 year to date one name in the etf in the red joining us with more on the rally, whether it will continue, chris, great to see you. Hi. Thank you so much. A neutral on the group. How long have you been at neutral and does that imply the group is simply overvalued here . It doesnt imply too much overevaluation but seeing a couple head winds. One, Earnings Growth of 20 a year at this point we think its unsustainable. We think that comes down to something more like 15 a year the other part, a tremendous amount of consolidation in the industry last year we saw 20 of all u. S. Publicly traded accesemis taken. Thats slow. And were below 10 . Another head wind we think puts this into neutral. Something more in line with the market is there a risk, chris, that more companies, like lets say tesla, may look to become more vertically integrated . We saw it happen with apple. Makes its own for the latest phone. Cnbc report ed amd is working with tesla others say its not true regardless, is that risk there that risk is salve luteally there. We see it all over the place not only apple now seeing it with amazon. Seeing it with google. With their tpu2 and other products theyre creating themselves samsung does a lot of their own products wallway, another big company doing it themselves. That is indeed a head wind and risk for semis. What about the recent decision by the committee on Foreign Investment by the u. S. Government saying Lattice Semiconductor could not be taken over by canyon bridge because backed by chinese money . The chinese would like to be aggressive but the u. S. Government clearly sees the Semiconductor Sector as sensitive. Do you have to take out some, a lot of takeover premium doesnt look like a lot of foreign in this space . Yes definitely a sign semiconductor land, there are few acquisitions that are going to pass through the process. As a result, it does two things. Number one, takes bidders out of the market number two, takes that highest bid, that chinese bid in the case of lattice, 8. 30, off of the table. And that second bidder is probably in this case something closer to 7, lets say so not only does it decrease the probability that something gets bought here, but it lowers that overall premium at well. Chris, thanks for your time from susquehannsusquehanna. And hurricane maria. Trying to pick up the pieces live in san juan, we have the latest reporter hey there in a neighborhood called via palmeras three cars under water, people trying to make theyre way across the street. People wading through water all afternoon and people stuck in homes here the only way to get out is to wade through kneehighdeep water. I spoke with a lot people in this neighborhood. One woman whos lived here 50 years, and she tells me theyve never, ever seen flooding like this before. The family on their porch over here, we spoke with them its a family of four. They told us they bought provisions to last them for two weeks. But now theyre being told they wont have power for two months. And so weve spoken with other people that were leaving on foot to try and find just a simple loaf of bread. I dont know if we can turn up there. The roof was ripped off of this house, completely off the first story. Every single house almost on this neighborhood has something wrong with it. Has a tree down. Has a roof off a whole lot of damage here and this is one neighborhood this is playing out all over puerto rico. How are you holding out generators gasoli gasoline. Reporter we had power earlier because we had a generator. Yeah theyre saying power is out 100 across the island a