Transcripts For CNBC Power Lunch 20150416 : vimarsana.com

He says the q1 data was, quote, notably weak. The march picture march jobs numbers brought the jobs picture, quote, down to earth. Now, he does talk about this issue, was it partially explained by trance tore factors, we dont know yet but lower gas prices havent as expected boosted consumer spending. He says net exports are down as a result of the strong dollar and manufacturing has softened considerably. He does see growth picking up in later quarters but he says the evidence of that is not yet in the numbers. I guess ill throw back to tyler or mandy right now but this is a bit of a change in my opinion from a guy who was talking pretty confidently about june to september now saying you know what we need to wait and see a little bit. Steve, thank you very much. Mandy and i are both here by the way, welcome everybody to power lunch. Lets go down to dom and see if theres Market Reaction from these remarks. Youre not seeing a whole bunch of reaction but the dow industrials still here off by about 7 points. Weve seen it move kind of higher towards the unchanged mark right now. The new york composite also down 5 points. Were relative flat on the day so far. Well see what happens this afternoon, but again those comments interestingly enough could have the effect that some were looking for more of a dovish stance from a fed president that maybe has not been as dovish in the past. Well see if those indices turn a little higher as the afternoon progresses. A lot of the attention here has not just been on the macro factors but also the microstories here. The ipo story is big. Party city went off this morning and again it was at one point up about 20 . Its up 19 right now so the company is now worth about 2. 4 billion. So thats a pretty decent size. I also want to point out whats happening with the nasdaq. Etsy more than doubled in trading. At one point priced at 16 a share. It got up over 32, 33. That makes the Company Worth around 3. 5 billion so thats another big story for etsy. One thats of interest to the traders down here a High Frequency trading shop called virtue financial. They have a presence down here, theyre a market maker as well. They priced at the high end of their range, 19 is where they sold shares. The stock up 17 . That makes this company a bigger valuation as well. So three ipos to keep an eye on here, guys. Back to you. Thank you very much for that. Stocks are a little changed but check out the midcaps because theyre sitting at new alltime highs and far outperforming the s p 500 year to date. So where are the bargain buys in the market . Lets get over to brian of chase midcap growth fund. Well get to the midcaps in a second but first of all maybe i can get your reaction to those very dovish comments from lockhart talking about the murky economic picture and maybe the virtue of waiting a little longer before the liftoff on rates. Mark, does this change anything in terms of the investment thesis for the market . Not for us. Before we even heard those comments, we were maybe 6040, as in 60 probability that Interest Rates would get hiked this year 40 they could postpone until next year. The fed really has a lot of room to maneuver. Economic data has been pretty much weak since january 1st and i think, you know, the fed can actually wait quite a bit, especially with the strengthening dollar. Even if you think they can wait, mark do you still believe that we have what you call a perfect storm for a ten10 or more correction this year . We have to have one at some point. We havent had one in three and a half years so yeah i do think so. Were looking at really stretched valuations right now with a forward pe ratio of about 17 on the s p 500. Weve got deteriorating earnings and weve got fading economic momentum. So when you put all that stuff together, you throw in a strong dollar and then add looming Interest Rate hikes, whether its in six months or a year yeah i do think that a pullback is very much in the cards. Okay. Lets talk about some of the divergences in the market that were seeing brian. Certain low the small and the midcaps have been managing to full forward a little more than some of the other areas in the market. Is there still room to room do you think specifically for the midcaps . I think for the midcaps there is a bit of room mandy. Those divergences, recently youve seen the transports acting a little weaker while the small and midcap spaces have been doing a little better. Thats a little bit of a flip of what we saw last fall. So that is not necessarily bad for the market. I would agree with mark that weve been a long way from that 10 correction and thats certainly not out of the range of possibilities, although were pretty constructive on the market going forward. And particularly on some specific stocks. Lets talk very quickly about those specific talks. You Like Alliance data systems, sky Work Solutions and aetna. Sky work and aetna have had big moves. Do you still like them after those big moves . We do like them. Sky works has been one of our better performers for quite some time its doing well again this year but its doing well because the fundamental growth behind the company is so strong. Theyre going to grow earnings about 50 this year, about double over where they were two years ago. As that growth continues, that leaves the stock room to run. Still trading at a relatively modest valuation. Mark we havent got time to go into details but i know you like the banks, wells, jpm and key corp need to play a little catchup. To hear more about where mark tepper has to say go to powerlunch. Cnbc. Com right now. We begin with the force that is star wars. When disney bought lucas films for 4 billion two of any years ago it acquired an army of devoted fans. Today those diehards are gathering for a massive star wars pa loselooza. Julia is there with them. Reporter thats right, im here with these lifesize star wars characters the sand crawler, r2d2. Theyre all created by star wars fans. All the fans they have not around me right now because theyre inside the panel with director j. J. Abrams and katherine kennedy, president of lucas films and are waiting to unveil some new foot annual from star wars, the force awakens scheduled to hit theaters december 18th. Many of the 40,000 fans expected here over the next four days lined up some of them even waiting overnight to be first in line to get into that panel happening right now. In addition to that theyre here for autographs exclusive merchandise, even a Jedi Training session. The real Main Attraction here though, is a sneak peek at the future of the franchise which disney has been working on since acquiring lucas films for 4 billion in 2012. Ive been here for eight hours and im here for a celebration. Im dressed up as a custom mercenary and i picked it because i like it the outfits are awesome and the ideals are awesome. Represent the Star Wars Celebration for the largest jawa ever made. Starting with its november release of a 90second teaser for the upcoming movie, disney has been working hard to reassure diehard fans that the franchise is in good hands under its new ownership. Disney shares are up about 36 over the past 12 months and this year its one of the best performing stocks of the dow, up about 14 near an alltime high. Now, with all those films, merchandise, plus the potential to have a big presence the multimedia conglomerate is expected to earn back more than its investment in lucas film and star wars. Well be back with the headlines from the panel, plus a look at some of that new footage were expected to get from j. J. Abrams and katherine kennedy. Plus well have an interview with disney ceo bob iger. Tale of two drug stocks. Check out merck up 2 and pfizer up about 13 . Whats ahead for these two pharma giants . Meg is about to speak exclusively with the ceo of the two companies here on power lunch. Hi, meg. Reporter yes, were here in washington for the annual pharma Board Meeting where later well talk with pfizer ceo ian reed. The Company Stock in the last year is up 17 so well talk with him of course about the year behind for the industry and for pfizer and whats coming up in terms of where the industry and pfizer will find growth. Then well talk to mercks ceo ken frazier. That stock up about 3 over the last year. The company has doubled down on research and is at the forefront of this area of cancer immune owe oncology so well talk with them both about whats exciting for the year ahead, whats challenging and whether we should see a consolidation in health care to continue. Thats been driving a lot of the valuation. A lot to talk about. Tune in later this hour. So many big ceo interviews during these two hours of power lunch. It is the Million Dollar Housing Market that just keeps on getting hotter and hotter. Josh lipton is in, yeah you knew it San Francisco with the very latest on the staggering stats, josh. Well mandy, just when you thought bay area home prices couldnt get any more nuts we have some brand new data that is going to blow your mind. That coming up right after, on power lunch. I love my mileageplus® explorer card. Were saving our united miles. For a trip to hawaii. We love free checked bags. Ive saved 75 in checked bag fees. No foreign transaction fees means real savings. We can go to any country and spend money the way we would in the u. S. One of the best things about priority boarding is you can just get on the plane and relax. I put everything on the explorer card. I really want my united miles. Im kate rogers welcome back to power lunch. Were watching housing for you. All down over 2 in the wake of disappointing housing numbers. Housing starts rose in march but by far less than economists were expecting. Permits, which are an indicator of future Building Activity recorded their largest drop since may. Back over to you. Thank you very much kate rogers. Tobacco producer Philip Morris beating the street. The company raising its 2015 Earnings Guidance above consensus estimates but diageo reporting an unexpected drop in global sales due to lower demand. Go figure. Coach is higher barclays upgrading the retailer to overweight from equal weight point to confidence about the success of turnaround efforts. And citi posting the highest quarterly profit in eight years with a 16 jump. That is thanks to falling legal and restructuring costs. All right. Need another example of just how crazy the San Francisco Real Estate Market has become . Half the home sales now, over a Million Dollars. Josh lipton has that story for us from our new bureau at one market plaza. Josh. Reporter well, tyler, if you want to buy a home here you better move fast and have cash in hand. This is the first time the median sales price in the San Francisco metropolitan area which also includes san mateo and marin counties has topped 1 million. And that is a nearly 20 jump year over year. Thats according to a new report from redfin the real estate brokerage. For someone thats in the business all day every day, im not terribly shocked. But just to say a Million Dollars median home price in the San Francisco metro area is a little bit shocking to say. Reporter the seller of this 1 million house we visited yesterday actually bought another home before putting this one up for sale. How come . Because the market is now so competitive that she was afraid she wouldnt be able to find a new place to live. In march, 47 of homes sold in four days or less. With about threequarters selling above the listing price. Thats in part due to the lack of inventory with the number of new listings down 12 year over year. And Real Estate Agents attribute the skyhigh prices to demand from a thriving tech industry. Unless theres an increase in inventory, Real Estate Experts dont see this trend changing. If anything its spreading with san Jose California nearing the Million Dollar mark as well. Tyler, back to you. All right josh thank you very much. Well etsy ipo priced at 16 a share, opens at 31 giving it a nearly 4 billion valuation overnight. To some it feels like a dotcom flashback, but not to Venture Capitalist tim draper. He says hang on baby theres plenty of room to run. Welcome back to power lunch, tim. Back in october you told cnbc were nowhere near a bubble in technology. Has your thinking changed at all since then . No. I actually think etsy was clearly priced wrong. I think people really need to focus very much on fin tech, new financial technologyies that make it so that kind of irrational pricing doesnt happen anymore. The bankers are pricing these things way too low and i think its clear the market is very interested in new technology companies. This is a great time. Why are they pricing them so low . These are not stupid guys. They dont have to make any phone calls to just sell the deal. Aha, all right. You mentioned fin tech. Thats really no coincidence, is it. Youre talking your own book here because i understand you try to get financial startups to move largely from this side of the world over near wall street over to your side of the world in Silicon Valley with a new incubator. Tell us a little bit more about that and why do you think its going to be successful . Yeah. At Draper University weve started to attract entrepreneurs from all walks of life. And fin tech seems to be a very hot area for these startups and its natural, because all of these other industries have been attacked by the internet whether its music or entertainment or technology or your industry the journalism industry. The internet has really gone after all those. Now, there have been some laggard industries and finance is one of them. I think banking is ripe for the picking. Those margins are very high. Investment banking, theyre very high. Venture capital, theyre very high margins and theres a great opportunity for technology to dis disintermediate all of us. I think this is a great time for Financial Technologies to make a big difference and thats everything from bitcoin to the block train to electronic shares with eshares and cap share. All of these interesting technologies are starting to happen and theyre coming dg together in a great way. Its going to be great for the shareholder and great for the company. I was going to ask you how would finance be disrupted by technology but you just enumerated a couple of ways so let me turn to the question that was in the news a few weeks ago and that is diversity in valley, the ellen powell case at another company. Where do you think the valley and private equity and Venture Capital stands on this . What are you guys doing to improve diversity to the extent you think you need to do it . Just sort of get your thoughts on where things are. Oh i mean i think youre talking specifically probably about women. And women weve had women in our partnerships from the word go and they have been fantastic. Whats great is that different people from different points of view make up a great partnership. And i encourage all Venture Capitalists to do the same. And also its interesting that its very few women that are starting businesses but the ones who do are quite extraordinary. Elizabeth holmes for instance we backed theranos. It has turned medicine completely on its ear and become a major breakthrough company. Shes actually i guess, the first under 30 selfmade woman in the forbes billionaire list. I gave her, her first Million Dollars. So im very proud of that. Im glad you brought up bitcoin a moment ago because i think you won 19 million of bitcoin in a government auction last year. If you take a look at whats happened to bitcoin, back in late 2013 it was above 1,000 so a lot of people feel the bitcoin may have a murky future. What do you think now . Are you still a believer . Oh, absolutely. Bitcoin is here to stay. Its the pricing has stabilized. I didnt know where the bottom was going to be. Now it seems like weve been on the bottom for a while and it is starting to stabilize. There are some extraordinary technologies that are making bitcoin it enables all sorts of new vehicles that are going to make it so much easier for us to do remittances or do sending like micropayments. Micropayments are going to be so much easier with bitcoin. Thats going to be good for journalists too. You guys are going to be much better off. We do receive micropayments. [ laughing ] but not in bitcoin. Tim weve got to leave it there. Every time somebody reads something you can easily get a piece of a bitcoin. And i expect that bitcoin is poised for a big breakthrough. This is like all technologies that are controversial. Right. End up making big impacts on the world and on society and i think bitcoin is one of those. Tim draper thanks as always. Always a pleasure to have you with us. We appreciate it. He grew up in Silicon Valley when it was just apricot groves. Well be back after the break. More and more, data is visual. 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