Transcripts For CNBC Power Lunch 20151223 : vimarsana.com

CNBC Power Lunch December 23, 2015

Better performing housing sector . We well, it really feels like a santa claus rally is getting under way. Stocks are up for a third day. As we stand, lets take a look at the numbers. The dow is currently sitting at 17,559. It is not break even get for the year but it is up. The s p 500 is one point in the green for the year. Its crossed over that break even line so many times. Were rich, were rich, were rich. I never thought santa was going to come, and i still believe in santa. Oil soaring. New data showing a big drop in inventories. Crude up more than 4 , about 3. 9 for west texas. Highest levels in more than a week. Gasoline up 5 tracking for its biggest oneday gain since last november. Well, as for chipotle, those shares are edging higher this hour by 0. 2 , but the embattled mexican fast food chain has been taking drastic steps as the restaurants try to contain the e. Coli crisis. Morgan brennan has more details on this. What are they doing . On the heels of the outbreak that sickened at least 50 people in october and november. They are trying to reduce the risk of contamination to a level near zero where its food preparation is concerned. Among the new measures, tomatoes, cilantro, will be chopped in centralized locations rather than in the restaurants as before. Onions will be dipped in boiling water to kill germs before theyre chopped at storms. Raw chicken will be marinaded in resealable plastic bags instead of bowles. Cilantro will be added to freshly cooked rice so the heat kills my kroicrobmicrobes. And 60 samples of every 2,000 pounds of steak will be tested before it heads to location with similar plans for chicken as well. The cdc hasnt identified what trig tgered the outbreak and its investigating five more cases tied to the company but chipotle is sampiramping you have safety recover from the headlines that have triggered analyst down grades including one from jpmorgan just yesterday. Shares are up slightly today, almost half a percent, but they are down about 22 since early november, november 2nd, when the first cases of e. Coli came to light. Guys, back to you. All right. Thank you very much. Michelle carusocabrera is with us now. She found someone who has been through something similar to what chipotle is going through. Michelle . Yeah, thats right. Thanks so much. Jim thornton ran a private label Natural Products company botanical laboratories which did a voluntary recall of some of its products due to salmonella and e. Coli back in 2012. Good to have you here, mr. Thornton. Thank you, michelle. Merry christmas. Merry christmas to you. Were you able to track down the cause of it . If yes, how hard was it and how did you do it . It was very difficult. You have to have a very solid recall plan and thats run by a qaqc operation and you look at all the microbial testing, look at all the batches, determine where the ingredients came from, whether its a farm or other place, and really run through the entire process right back to the shelf, and its a very tedious process. Its painstaking, but if you have a plan as we did, you can really get at it and try to get it down to a few areas where the vulnerability might be. And where did it finally come from . No one really knows. And in our case it was a complaint out of minneapolis, and, you know, we tested all the batches, and you do 100 testing at this point of all your bottles and all your ingredients. We really couldnt find any incidents of crypto support rid yum or salmonella. The cases dwindle. The case gets large. You end up with a finite amount of infections but its very, very difficult because people do other things during the course of their day whether they live in a rural town and maybe their water system in a rural area is compromised or maybe theyre changing diapers and they dont wash properly. It could be from dozens of exposure so when we look at chipotle and they havent figured it out yet, youre not i cant imagine youre surprised that theyre having difficulty nailing this down. Im not surprised at all. Its a needle in a haystack, and it really could come from someone handling it at the distribution center. Maybe just didnt wash his hands or some table wasnt cleaned properly where the fruits and vegetables are handled. Is the ceo handling it correctly . 100 testing. I think its an allout effort. Even going down to the small organic farms and asking them whether or not theyre using procedures and looking at the Water Systems and purification systems in compliance with the food safety modernization act, for example, which has just come into existence. Chipotle is so focused on organics. Organics are meant to be healthier, better for you, safer, but yet is there a tradeoff there. Is chipotle more vulnerable because theyre mostly organic . Well, there havent been any definitive studies comparing conventional farming to organic farming and which is higher risk. University of minnesota tried to do it in 2004, but the fact is youre using manure and feces in your composting and in your soil, and, you know, youre using a higher element of it although there are waiting periods before you can pick it, pick the fruits and vegetables, but from what ive observed there might be a slightly higher risk in my opinion, but no one has really done a study on which is potentially more dangerous. Let me jump in on the conversation. Do you think this is potentially a setback for the organic movement, we might see fewer mainstream food chains around the country going the organic route as a result of this . Hi, mandy. I think whats going on in my opinion once again is that weve had an Enormous Growth in the number of farms, organic farms in the country. Its almost 20,000 today and its a burgeoning business, its a 45 billion market, 20 billion of which is fruits and vegetables, and i think the fda particularly with respect to produce and the food safety modernization act is trying to catch up. And i think its really great chipotle is using small farms and locales and supporting them, the farmtotable concept, but i think whats happening is regulation once again has to really catch up particularly with Water Systems and soil systems and verification and oversight and compliance. Keep in mind, the usda has certified 80 agencies to go out and do field testing and oversight of all these farms in the country of the 19,000, 20,000 farms, so is it really being done . Just some questions but i have always had that its always lingered in my mind. Mr. Thornton, thanks so much for joining us. Really appreciate it. Live from seattle. You bet. Thank you. Happy holidays, everyone. You, too. Back to tyler. Michelle, thank you. Dominic chu now, news alert. So due to the Christmas Eve and Christmas Day holiday s, the baker hughes weekly rig count is released today at 1 00 p. M. We have u. S. Oil rigs down three to a total of 538. Again, u. S. Oil rigs, a threerig decline to a total of 538. Oil rigs are now down 961 rigs on the oil side for the u. S. From the same time last year. So, again, were watching reaction in the oil markets here. A lot of things going on with whats happening in the oil trade. Also of note, mandy, next week because of the new years holiday, baker hughes weekly rig counts will be released on thursday, new years eve at the typical 1 00 p. M. Eastern time. Crude is moving to the upside again today, and, of course, its flowing through to the Energy Sector which is one of the leading sectors in trade. Nike also delivering with its latest earnings. Profits soaring 20 and future orders surging as well. Theyre down by 2. 5 today, but it is the best performing stock in the dow this year. Sara eisen has more on whats been fueling nike. Mandy, nike just did it again. A Strong Quarter and outlook. Most impressive to wall street, futures orders, an indication of growth six months out, up 20 globally driven in part by 34 growth in china. On the outlook a few key events, the rio olympics in august and a big european soccer championship in june. Jay sole, an analyst at morgan stanley, said theyre key and do tend to be drivers of sales growth and catalyst for stock moves higher. One concern, nike forecasting Gross Margins to be down a bit next quarter as it deals with extra inventory issues in north america. Still, the company has a tendency to forecast conservatively. Credit suisse, deutsche bank, tellse, Goldman Sachs all raising their target. The average target 146. Its trading just under 130 right now. Interesting to note the turnaround. You mentioned nike shares under pressure after surging at the open, but keep in mind it is the end of the year and it is the dows best stock of 2015 up more than 30 . Also keep in mind that stock price will change tonight when nike splits. Shareholders will get two shares for every one they hold after the bell today, and then the new nike, half the price, looks like in the 60s will begin trading tomorrow. Mandy . Good thing to note down. Thank you for that, sara eisen. Stocks higher again today. Is this our santa claus rally finally . Is it under way. Today gains fueling the s p 500 to break even for the year but where are the opportunities for next year. Thats the question. The four stocks that should be in your portfolio. That is next. Youre watching cnbc, first in business worldwide. Zapped it right to our house. Ws and thats how they got it here. Cool. The magic of the season is here at the lexus december to remember sales event. This is the pursuit of perfection. Even tempurpedic mattress sets getat low clearance prices c, save even more on floor samples, demonstrators, and closeout inventory the year end Clearance Sale is on now at sleep train your ticket to a better nights sleep welcome back to flunpower lunch. The dow transportation index coming off the best levels of the day, up 1 . Leading the transportation stocks higher names like kirby, ryder systems, kansas city southern, union pacific, up 2 to 4 . Aside from todays gains theres a good amount of negative momentum behind the transportation stocks as a whole. The index is down 16 , a laggard so far this year. Back over to you. Thank you very much, dom. Church and dwight moving higher. They will be replaced in the s p midcap 400 by synnex. Those shares also moving higher and up about 20 so far this year. Amazon reportedly trying to cut back on ties with u. P. S. The wall street journal is reporting that amazon is looking for alternatives to deal with increasing package volumes and higher costs. Amazon is down just marginally. U. P. S. Is down 0. 8 . Our next guest expects the market to climb even higher over the next few months. Joining us with his 2016 playbook is hank moldehill live from dallas. Good to have you here. You see the market going up 5 to 8 between now and early march. What drives it . I think the fundamental thing is going to be the fact that Global Capital can come to the United States and be extremely well treated. If you had 100 billion euro to invest at a negative Interest Rate at a declining currency, wouldnt you invest it in the u. S. . I think theres an incredible support of equities and all Asset Classes from Global Capital seeking better returns in a safe environment. You like big cap tech. It is an extraordinary sector. Those are your words and you like two in particular. Amazon and alphabet. Two that begin with a supplanting in your view another that begins with a, apple, as the place for money. Why . Oh, i think that those two companies are growing faster than apple. Apple is going to be around for a long time. Nothing is going to happen to it. Its going to remain a very large dominant cash flowing company, but the other two are gaining market share. 80 android, 20 ios. I think that puts that conversation to rest. Amazon dominates everything it touches and will continue to grow, and i think amazon ends up being the Worlds Largest company. Bigger even than apple is today in market value . I think its number four or five now. Absolutely. What are the risks that you four see in 2016 and do you think you chose your words carefully. 5 to 8 between now and early march, and then what happens . Well, you have seasonality. I made up a term and trademarked it called jason, a period of the calendar, july, august, september, october, november, weve just come out of that. These are the three or four seasonally strongest months of the year. All the new pension money has to come in. Its about 82 , 383 of the tim you will get a rise in u. S. Equities during those three months. Theres so much history there since 1950. Its a tremendous seasonality situation there. So the gains then are front loaded. The gains in any one year are front loaded, thats what typically. You will get some january exceptions, but i think that you do get a lot of push into the markets particularly this time of year. But the fed has opened up the playbook here where now more money is flowing in because it cannot get those rates of return anywhere else. All right, hank. Thank you very much. Have a great holiday. Thank you. Great program. Ha the biggest dividend payers in the group also happen to be the losers. Should be looking at buying these dogs of the dow in 2016. Up next, a power pitch startup that gives crowd sourced love advice. How are you prioritizing your road map . How do you establish trust between your customers and the advisers. Or dump it . Stay tuned to find out. Welcome back to power lunch. Rick santelli live on the floor of the cme group. Holiday week, how are the markets doing . Interest rates are moving up, stock market is still up nicely but its not on its highs. Neither are yields. Month to date chart shows kind of the upper end of the recent range considering the dynamic for december has been the federal reserve. Remember hyg, high yield junk etf and all the issues related to the fed . Here is a month to date. Its turned up a bit but when you look at it in the context of the last time we were in this neighborhood, summer of 09, the little bounce gets lost. Maybe we should revisit as we get into 2016 and we looked at a lot of currencies from emerging markets. How about a yeartodate of the dollar to indian rupee. The dollar has given up some ground as all the issues for now have melted in a light volume holiday trade. Mandy, back to you. Thank you very much, ricky. Happy holidays to you. Time for the power pitch where one entrepreneur has only 60 seconds to try to convince a panel of experts her business or his business has what it takes to be the next big thing. Lets have a listen. Im lisa, the founder of hetexted. Were pioneering a situation advice business. We believe that personalized advice is the future of web, mobile, and media. Now more than ever wee all look for answers that is specific to us individually. The millennials, hetexted answers questions they care about deeply. First has been relationships before expanding out into health and wellness, lifestyle, and beauty. Our content is highly viral. We have had over 3. 5 million young women using our products. So along with this rapidly Scaling Technology platform, were building out a global multimedia business, and we know were well on the way as we have books stocked in amazon, itunes, barnes noble, and target. We have a web presence, an ios app, and soon a film. Hetexted is the first vertical of this realtime advice revolution. Welcome to todays power pitch. Im mandy drury. You just saw hetexteds pitch. On self we have Angel Investor kelly hoey. Also with us venture capitalist Jessica Peltz and in the bay area fran hauser, Angel Investor and partner at roth. Lisa, youre in the hot seat. Kelly, would you like to throw out the first question. Tell me about your mission in creating hetexted and what youre seeing with how millennials are communicating. We really wanted to build a platform that was supportive of young women and that gave them a voice to ask the questions they care about deeply and get answers that are personalized to them and their situation, so hetexted is a realtime advice platform that gives you personalized answers and gives you the ability to talk oneonone with our advisers. Jessica. So you have done a great job in terms of building a brand and a household name along with etexted but knfocus is be so important. How are you prioritizing your road map . Our road map has been largely based around the web feature where young women when the ages of 18 and 30 are going on. Our ios app is in the app store and its also been our real focus and priority along with the book deals weve done and the upcoming film. Fran . Lisa, it feels like trust is such an important part of the value proposition. How do you establish trust between your customers and the advisers . As were screening our advisers, were looking for people who are kind, obviously, empathetic, who have a good knowledge. They probably dated a few people before themselves and they have some ideas around what everyone is going through. Kelly, another question to you. With all those fragmentation of social networks, what do you have planned next to keep your product sticky . We really believe that delivering quality content, which is curated and which demonstrates sort of the breadth of questions and issue that is millennials are going through right now is the key to keeping everyone coming back and its why weve had 75,000 young women return to our product more than 201 times each. Wow. What percentage of your total user base is actively asking questions versus also answering questions . We have around 10 of our users which is quite high actively creating that very sticky, very viral content and also answering questions and really getting involved in the community and wanting to be helpful to other young women who are going through issues quite often similar to themselves. Fran, last question to you. Beyond relationships and dating, which vertical do you think is the most promise . Health, wellness, and beauty. I mean, its really replicating the way we all speak to each other as women and we share information and we share insight and we offer our opinions, and theres a great deal of value in that. Fantastic. We all heard what lisa has to say. Now we need to know if the panel is in or out. Kelly, you first. This is an interesting market. Everyone is focused on millennials and i dont know if we figured out their behavior yet and the fragmentation of social networks and whether or not those will actually be viable business generators sort of has me kind of on the edge, but you have a determined founder and you have a sticky product so im in. What about you, jessica . I love the hustle that the founders have. They have executed on contracts that normally it would take companies years to execute on. However,

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