Power lunch starts right now. And welcome to power lunch, im michelle carusocabrera. Stocks are in the red this hour, giving up modest gains they had earlier. The three major averages are posting losses for the shortened trading week. Thats right, no trading tomorrow. That would mean a second straight weekly drop the third out of the last four weeks. The big sectors in focus, the financials. Jpmorgan, citi, all beating estimates. Mixed results for wells fargo. Thank you. Im tyler mathisen. Heres what else is happening at this hour on a very busy news day. Seems like there havent been any yet lately. Yext the latest tech company to go public. They soared 30 on the first day of trading. Uber had a secret operation to track lyft drivers according to the information the ride sharing Giants Program called hell spoofed lyft accounts and tracked drivers. And samsung says preorders for its new galaxy s8 are better than the previous s7 which had to be recalled because of exploding batteries. We begin with President Trumps stunning 180 degree turn on chinas currency. On janet yellen. On the dollar. On nato. John harwood live at the white house with what hes said in the past 24 hours. Leslie picker with a big call from one of the biggest hedge funds and dominic chu on the key signs in the market to watch for. First to john harwood with some headlines crossing moments ago on the fight against isis. John . Tyler, we have seen how unpredictable and flexible President Trump is up to the moment that this show came on the air. Remember, donald trump ran as someone last year who was not going to be an interventionist candidate. Yes, he said hed go after isis, but he said Hillary Clinton is the one whose approach could lead to world war iii and now we have the news that hes just dropped or ordered the dropping of the most powerful nonnuclear bomb in the United States military arsenal. A bomb that neither president bush nor president obama during the long fight against al qaeda, against the taliban saw fit to use. We do not know the consequences of that. And what the next steps will be. Well be watching, but we have seen in the last 24 hours as you alluded to a number of places where he has outright reversed previous positions. Take nato for example. He said during the campaign that nato was obsolete. Yesterday, he had a meeting with the head of nato and came out and said this about their turn toward addressing terrorism which of course they has been addressing before. Take a listen. I complained about that a long time ago and they made a change. And now they do fight terrorism. I said it was obsolete. Its no longer obsolete. Now we have seen a whole raft of other issues where hes turned around. China currency manipulation, he said hed go after china for this on day one of his presidency. Yesterday, he told the wall street journal theyre not currency manipulators. Of course, that was true before given what they were doing with their currency before the election. Nothing really has changed there. On the dollar he said during the campaign that a strong dollar was in the interest of the United States. Yesterday, he said the dollar is too strong. Its hurting our exporters. And he blamed he blamed himself because people have confidence in me. On janet yellen he said she should be ashamed of herself and yesterday he said i respect her. And donald trump went after in the campaign, he said, well, if instinctively it sounded like a ridiculous idea, but actually, the more i have learned about it, the more i think its a good idea and what that tells us, a president , because hes not rooted in the party system or in prior experience, we dont know what hes going to do day to day. Depends often on the last person he talked to, guys. All right. John harwood. Thank you. Lets get to leslie picker with a call from one of biggest hedge funds out there. Lee cooperman out with a letter to investors saying its time for the u. S. Equity market to rest. We are in for six months of little action in the markets he says. As he put it, u. S. Shares could be quote trendless and uninteresting. And s p 500 may be at the same level in late summer or early fall as today. He expects the index to lift moderately and to continue higher in 2018. For the naysayers who point to the length of the 96 month bull market, cooperman said quote, rather than old age or extent of advance, bull markets die of excess and or are murdered by the federal reserve. He does not see a case for either of those. The biggest risks to his thesis he says are political and geopolitical. He cited areas like north korea and iran as well as brexit and how u. S. Immigration policy might strain relations with mexico. His firm omega added several new names in the First Quarter including allied financial, footlocker, netflix and wpx energy. His portfolio is all in equities or equity equivalence with 96 in the u. S. And the rest in euro shares and he plans to add euro equity exposure. The letter showed that omegas return for the quarter was more than 6. 5 , surpassing the s p, guys. Leslie, thank you. Now lets get to dominic chu with a key market warning to watch for. Theres a whole bunch out there, but lets put up five on the board because thats all the real estate ive got up there. If you look at the warning signs they have been developing for the last few weeks know. Well start with gold prices first of all. Always viewed as a safe haven trade. People go there in times of distress. Theyre wavering today, but maybe we see a bit of a safety trade coming on that front here. Also treasury yields moving lower. We have said that people are buying up the safety of longer term u. S. Government debt. The japanese yen, strengthening, the dollar losing steam against the yen. So thats something to watch too. It could be a risk proxy out there. People are looking at that. Also the volatility index for the u. S. Stock market on the rise and trending higher. See if it stays that way. It has been low for quite some time. Tech stocks overall. Theyre hovering around some Technical Support levels. Some traders are watching that closely. These are all warning signs. For more on that story we have the full details here on cnbc. Com. We have got another take. We have an investment strategist talking about why you should buy a dip in the market. I have tweeted out links to both of the stories. We have both sides represented. I saw it go by. Thanks so much. President donald trump changing his message on Economic Issues ranging from the strong dollar to the chair of the federal reserve. How is this going to impact the trump agenda . Lets bring in an Economic Policy analyst with the American Enterprise institute, and its good to have you here. Thank you. Theres a lot of criticism, guffawing, listen to the president shifting his position. He said this on the campaign trail, now hes saying this. Heres the thing, a lot of the changes are moves to more conventional positions. As a result, does that get us any closer to Corporate Tax reform as we see these shifts . The way i look at it, you have three camps in the white house. You have sort of team populist, people like bannon and miller. You have sort of team conservative, reince priebus, and the Vice President pence. Then you have more of the team ceo, team goldman led by gary cohn. Its obvious that team ceo goldman is an ascendant. Thats pro Corporate Tax cut and the republicans are more in control. But what i think it means that if youre expecting a giant Corporate Tax cut long, if youre for the replace reflation trade i think its less likely you get budget busting fiscal stimulus. But on the other hand i think were looking at a looser fed. Easier fed potentially and also less concern about trade. That is always really the last point is the big concern is trade. I think you need to be less worried about that right now. So when it comes to actually passing legislation, when you have to do the math of oh, he likes the import export bank and the Freedom Caucus hates that, but is there enough on the other side we like that, so therefore its easier for him to get other stuff done . Listen, i think ideally, you have the president be bipartisan. A lot of democrats are under pressure not to cooperate with this president on very much. They might be for infrastructure if it was all for direct spending. On Corporate Tax cuts its hard to get democrats and hard to get republicans if its not a deep cuts and some dont want a big budget buster. So its a narrow path they have to travel. But well see. Can i just ask one quick question before we go, jim. The president s rhetoric on the campaign trail was rigid and absolutist. Those are my words but it would seem to me that the flexibility, the change that we have seen over the last ten days on a variety of things could be a good thing. It shows that hes really tackling his job and diving in and looking at things in a more nuanced way. Am i taking it a leap too far or not . Listen, i think one big criticism youre right hes rigid. He doesnt read, he cant learn. But i think particularly on the china currency issue its obvious that hes been talking to experts. Hes been talking to ceos. He has taken a radically different position and he basically said, you know, i have learned something here. And if that continues i mean, i think thats a good sign. Yeah. Jim, thank you. Appreciate it. A warning from bill gross today. He tells the investors that equity markets are priced for too much hope and all asset prices are elevated to artificial levels. Bill gross joins us now. Welcome. Good to have you with us. Hey, tyler, thank you. Its good to have you here. What have you seen recently that leads you to these conclusions about stocks, about high yield bonds and about other asset prices . Well, in general, and this is in general, you know, stocks and risk assets are priced on growth assumptions. You know, trump and his administration suggest 3 is a possibility. The problem being that over the past five years growth which is a function of productivity growth for the most part, you know, has been abysmal. Been about 2 and productivity growth has been about half a percent for the last five years so whether or not trump policies, whether they be deregulation or tax cuts or repatriation of funds from abroad, et cetera, et cetera, can generate a 3 rate of growth which i think markets up until the last week or so have been anticipating, you know, the problem becomes where does it come from and what stimulates productivity growth over the next several years . I think other institutions other than the fed like the imf and Robert Gordon at northwestern have said that its the low hanging fruit thats already been picked and the financial crisis itself has lowered productivity and its not likely to return. So these are the questions that even trump reversals like you just talked about in the last few minutes, you know, continue to be addressed. So theres so much to talk about today, bill. If im a person who buys your thesis as millions of investors have over the years, what do i do with my money right now . Well, thats the question, you know, over at the country club across the street from me, basically say what else are you going to do . Thats sort of your question. Although you havent answered it. What do you do . What else are you going to do besides putting it in the stock market . You know, i think you simply derisk in terms of bonds instead of extending duration. You hunker down and take low duration, short duration vehicles that basically dont return as much. In terms of high yield bonds yeah, you reduce some of them. You reduce your return because the spreads are tight. In terms of stocks, you know, if theyre really based on a 3 growth assumption which leads to 5 to 10 corporate growth, then you reduce your equity holdings. So its reducing risk as opposed to anything else. So the ten year Government Bond has gone down from 260 or thereabouts a couple of weeks ago to 220 today. What happened, daddy . Well, you know, perhaps the markets are beginning to anticipate a lower growth as well. But todays global bond market yields represents severe policy distortions that present an obvious risk reward imbalance. You know, central banks, the bank of japan, the bank of england theyre all extending quantitative easing programs. Heres an example. 0 ten year yields in japan and 0. 9 returns in the uk. 2. 25 in the u. S. You know, theres nothing there for an investor basically in terms of return. Relative to the risk. So what happened, you know, perhaps theyre derisking so to speak. But they take additional risk in terms of buying bonds that can go down in price as well as up. Im going to end with a two for one question. Question one of two, what did you make of the president s remarks about chair yellen yesterday . And what did you make of the article in the wall street journal, the study indicating that active management simply doesnt sustain over the long term. Well, addressed the last one first, i think thats true. That was a Standard Poors survey over a ten year period of time. Other institutions, active managers have suggested over short periods of time they do outperform. I would be the first to admit they do. But for the most part, they do not outperform indices and their fees are higher so the jack vogel vanguard thesis comes into play from my standpoint. In terms of yellen i think its interesting that hes reversed there as well. He likes yellen now. He thinks that maybe hell reappoint her. Hes got three to five appointments Going Forward in terms of the fed. You know, i would expect him to appoint dovish types of governors and president s so expect a dovish fed Going Forward and easing money policy as well. Thanks a lot, appreciate it. Bill gross. Burger kings new commercial not exactly playing out as planned. Thats because google wont let it. We have that story ahead. But first, the big banks kicking off earnings with mixed results. A closer look at who did well, who missed the mark and whether the sector is a good bet for you, next. [and her new business i do, to jeanetgo. Jeanette was excellent at marrying people. But had trouble getting paid. Not a good time, jeanette. Even worse. Now im uncomfortable. But heres the good news, jeanette got quickbooks. Send that invoice, jeanette. Looks like they viewed it. 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Joining us now is jason goldberg, analyst. Good to have you with us. In particular for jpmorgan and citi why do you think the stocks are trading lower . Three reasons that the stocks have been under pressure with the group off about 10 . One was fear that the quarter would not live up to expectations i meant today. Because the quarter met expectations and then some and theyre not gaining any traction. Because the other two factors are still with us. One was a more challenging than expected rates. And the fed cut it down to 25 basis points and then the other reason is lack of traction in washington and you havent made much Progress Given the agenda that the administration has laid out. The results we thought were fine, in line with a better than expected in soeveral areas. If we had this conversation yesterday, we both would have said that the yield curve was flattening. We both would have said that things in washington arent going as smoothly as expected and yet, theres a surprise here. Why do you think the onus is on the bulls here for the banks at this point . You have a strong buy on jpmorgan as well as citi, so whats the thesis at this point . It posted as good of a result as they could, so whats next here . Are we waiting for the yield curve to improve and for policy to happen in washington . I think those are two pieces of it. You know, First Quarter is always the toughest quarter of the year for the group. You know, owing to seasonality and we expect improved growth loan growth has been a factor. We think the rate hikes should be a bigger benefit in the next three quarters so i would say this quarter is kind of mixed results. You know, we are looking out and doing not only a result to improve, but we think theres potential for the administration to make progress on some of the stuff. What if it doesnt what happen . It would be the same environment we have seen in the last three or four years where the group grinds it on the expense side as well as, you know, trading capital i guess as a shareholder, is there Downside Risk or just flat from here . If those two things if we dont get Corporate Tax reform, if we dont see the yields curve improve, if we dont start to see loan growth improve, do they just i mean, what is my potential loss . Yeah, i think as long as the u. S. Economy continues to expand, you know, we think the downsize is fairly limited. Then your upside is quite a bit both, if the economy accelerates. Then if some of the financial roll back gets done. But this group has had a challenging environment and eked it out each year to the expense side and through capital return and then Going Forward, you hope to see an acceleration in revenue growth. One from the Interest Rate environment and then secondly from more pro growth agenda from the