Transcripts For CNBC Power Lunch 20170725 : vimarsana.com

CNBC Power Lunch July 25, 2017

Welcome to power lunch. Im michelle carusocabrera. Recordbreaking day for the markets. Take a look. The s p 500 with new highs with 60 members of the index at all atime highs the russell 2,000 also at new highs. Morgan stanley is one of the winners. Its market cap for the First Time Since before the national crisis, bigger than goldman sachs. Other big movers today include aetna, cigna, boeing, carnival and royal caribbean. And one name not feeling the love today though. Snap shares falling to new lows again. Stock trading below 14 a share. This record breaking day for the markets. A year of records it has been. Driven today by a flood of earnings five dow components. New housing data and a sky high read on consumer confidence. Weve got it all covered for you. Bob pisani is at the New York Stock Exchange phil lebeau with gm. We begin with bob at the big board. 21 declining stocks. More winners than losers on the story. Lets look at several dow components caterpillar great global sales overall. Good guidance. Mcdonalds strong global same store sales and traffic. Utx had a good number, a small beat but thats not enough in this market you need to have a nice beat to get your stock moving up they didnt quite have that. Heaven help you if you missed though 3m at a small miss seagate big miss here. Weve got the 25 of the s p reporting. Whats the lesson so far more beating on the top and bottom line and by a bigger percentage thats why the markets up but prices are high. Youve got to have a really good beat, a really good guidance to move the stock caterpillar is the good example there. Heaven help you if you miss because youre penalized heavily. One big winner is an asset group here all of the Money Managers are hitting new highs. T. Rowe and eaton and frank inwill these guys are paid as a sets under management they get more money. Simple story from them back to you. All right, robert thank you very much. The democrats putting a target on the drug industry with their new socalled better deal plan meg tirrell here to take us inside the numbers hey, tyler. Bob was just mentioning eli lilly and biogen had reactions neither stock reacting largely bmo points out even though they had a beat in the Second Quarter, it was driven by older medicines. They also reported on their Rheumatoid Arthritis drug. That weighing on eli lilly and partner incyte there which is driven by better than expected sales of their new drug for Muscular Atrophy however, that stock has come down a little bit from those exciting highs earlier due to some management commentary on the call saying that growth of that drug may slow down a little bit as it will be harder to expand to certain patient populations. They did talk a lot about m a on that call there. Back to you. All right thanks ill pick it up, meg lets talk about shares of the ibb and biotech in general the etf is down more than a percent today. How much is washington a part of the equation for the companies and not just the earning data . Lets bring in eric schmidt. Good to have you here. Thanks for having me. Lets start with the macro question you saw the plan yesterday theyre not in power however, they are talking about a drug price czar. And by the way, the president of the United States is a member of the Republican Party is also negative about the growth in the cost of drugs. Have we seen this sector finally be able to shake off that Hillary Clinton tweet . Or is it just going to be just as bad when it comes to the politics of the sector well, i think were certainly seeing this specter of drug price controls fading for sure up 25 year to date. I think a lot of that is because investors are more comfortable, the fact that not much is going to happen in congress these days with regard to health care let alone with regard to drug pricing. So i dont think that the dem plan proposed yesterday is actually as vicious as we expected given what theyve said in the past. Most investors are actually rotating money into biotech on those perceived nondrug price control head winds fading. Lets drill down a little bit. Eli lilly and incyte, both of them are down. I see you cover incyte what do you think of those we like incyte but not based on the drug that had issues today. The report next week and a drug in the pipeline that looks like it could be a revolutionary drug well get some more key data on it later this fall as well as about year end we like to make money here on cnbc so help our viewers make some money on names we dont talk about as much bioveritiv, why is this name catching your attention so strongly thanks for bringing that name up it is a name we like a lot right now. Lies some scarcity value there just arent that many Cap Companies that you can buy that are profitable in this industry right now. They have a new kicker coming on a drug and late stage trials called tnt 009 for a rare disease of red blood cell. Drug goes though heart of the issue. Has terrific phase two data. Should be in phase three later this year and potentially in front of the fda in two years time a Great Growth Company with profitability that almost anyone can own here thanks so much for weighing in on that sector which has become much hotter in the last months eric schmidt thank you from drugs to cars, shares of General Motors slightly higher ahead of most expectations however, investors and analysts are still concerned about one big issue. Rising inventories especially in the highly profitable big trucks. Phil lebeau here to break down more on gm i think barkley summarized what weve seen with the gm earnings today as a set of positives likely another quarter with no love from investors. Though we are seeing shares go higher today take a look at the profits and numbers from gm. Well above street expectations earning 1. 89 a share. And t with the estimate on the street. The revenue was hit by the fact that we are seeing slower u. S. Sales. We were expecting that the street was expecting that. But the north american Profit Margins in the Second Quarter . 12. 2 . Folks, those are sensational margin profits the concern comes on the inventory side inventories are starting to back up at 105 days on july 1st then it brings up the question will gm have to change its production forecasts so far its saying no. Earlier today on squawk box when we talked with chuck stevens, he was cagey about talking about whether the company will end production of certain sedans due to slow sales. We are always going to be focused on supply and demand as weve seen she shift from pattern cars to crossovers, weve taken proactive action to reduce the production of cars. Were comparing it here with the s p 500 over the last three years. Sure its come back a little bit but overall this stock has done nothing compared to the market overall over the last three years. Guys, we should also point out on the Earnings Call several analysts asked about whether General Motors will move away from productions of certain sedans because of slower sales time and again, mary barra said she likes where General Motors is positioned when it comes to the car side of the business around the world back to you. All right, phil thank you skrr much. Joining us to further discuss this is u. S. Equities analyst at ubs. The stocks not done badly its up 4 for the year. Why do you think gm is not getting more love from investors to phils point. Also are you concerned about this inventory buildup i do think theyve been very clear at the start of the year that q3 was going to be a bit tough in terms they were probably expecting double digit declines thats going to go a long way of getting those in line. Theyre launching their new suv and that should help the market share a bit. I think the combination they seem to feel confident theyll end inventory in line. I think thats fairly reasonable still going to be a challenge. But i dont think theyre going to be too off the mark General Motors has some very good sedans. The malibu, the chevy impala very highly regarded and very successful but it sounds like the era of the sedan is waning. Agree . And not just at gm. Thats absolutely true. If you look at year to date, cars down 10 . Trucks up 6 one of the reasons we like the auto names is theyre still truck heavy. I actually, you know, tend to agree that as phil mentioned, theres going to be announcements later this year of more car cuts. Maybe reducing while you might keep the cruz and malibu, you may cut certain models and versions and you also may actually relocate production to other parts of the world ford recently announced theyre moving the focus to china. And that actually could help it trades at a big discount when it comes to its pe. Why is that . Do you expect that to turn around at this point where do you get growth in this stock . Absolutely, i do expect it to turn around. If you look at the Free Cash Flow yield, this thing is actually skraz cheap the problem here is youre lo fighting the cycle even today they had a solid quarter and they continue to remain skeptical they have to remain moving forward. I think what would really help in the interim is announcing a small car strategy yield of more than 4 i shouldnt kb worried about that at all, right what was that i shouldnt be worried about the yield of 4 . Thats a great amount in this environment. I think theyre doing well in the vierm theyre in today which of the auto stocks do you like the best . In our pecking order, we buys on ford and gm were slightly more positive on ford its the opposite of gm. Their comps get easier also well get the strategy from the new ceo i think from ford in the second half of the year as well. Colin, good to see you. Thanks for joining us. News alert on the bond market right now Rick Santelli tracking the action on the cme. Whats the demand like i gave demand an a as in apple. Thats the grade of demand 26 billion 2year notes. The first of 88 billion in supply 1. 395. The one issue was trading lower yield higher price im sure the three base Point Conception pushing up three basis points that might have been one of the reasons it was solid lets go through it quickly. 3. 06 bid to cover over 3 going for every dollar available best since november 2015 58. 5 on indirects. Thats the second best number in eight years on indirects 16. 9 indirect. Well above the 13 option average. And fanlly dealers only take 24. 6 . Tomorrow would be 34 billion 5year notes back to you. Well be watching for that. Thank you. Big evening on tap for President Trump. He is set to meet with the Prime Minister of lebanon shortly. Then hell talk health care. This comes off a morning and overnight tweet storm that targeted so many people. Jeff sessions, Hillary Clinton, amazon, the Washington Post. This is a wall, a big beautiful huge wall that we have built of as many trump tweets that we could fit. They do not all fit. Because he just did so many tweets in the last 12 hours. He was not sleeping no. This was a sleepless night. If youre on the radio which a lot of the audience is, theres a lot of stuff on the wall and so many topics and so many exclamation points. What do the 85 of american who is are not on twitter do they look at our wall they sign up. I dont know i said to michelle earlier, we need to take away his exclamation points thats basically its not twitter. And the capital letters. That would be like cutting off a dogs tail, though, right . Its such an expression of their joy or anger yeah. But if some dogs need their tails cut off. Elon is live with the latest. Today is a perfect example of the difficulty this administration has had in stays focused on their key agenda items. That tweet storm on the wall set off a Heated Exchange with a member of his own party. Republican senator Lindsey Graham it started with trump attacking Jeff Sessions calling him very weak in investigating Hillary Clintons email and stopping Intelligence Leaks that prompted this reply from senator graham who tweeted out himself prosecutorial decisions should be based applying facts to the law without hint of political motivation now, the white houses official schedule here today is dominating by that meeting with the Prime Minister of lebanon. That will be followed by a press conference in the rose garden at about 3 00 p. M. This afternoon meanwhile, over on capitol hill as we all know, the senate is poised to take that Critical Health care vote dont worry. Donald trump tweeted about that too. He said that his pen is in his hand and he is ready to sign any bill if republicans can just pass it and get it to his desk back over to you a consequential day at the white house and on capitol hill. Thank you very much. From surviving the Great Outdoors to using it as a laboratory, the new set of skills americas girl scouts are learning the ceo joins us straight ahead. But first we may be sitting at market highs, but august and september, they are risky months historically the two worst market months of the year coming our way. So where do you put your money now . Thats next. 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. Thats why at comcast were continuing to make4 7. Our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Welcome back, everybody. A record breaking day on wall street the russell 2000 hitting new highs. Dow going along for the ride up 133 points names like mcdonalds, aetna, boeing, honeywell among the 60 names in the s p 500 now at alltime highs despite the recordbreaking performance this month, folks, analysts warn that two of the markets worst months of the year august and september are right around the corner. We cannot avoid them august is going to happen whether we like it or not. Is now the time to bail or buy lets ask Richard Bernstein and jason ware richard, let me go with you first. You think that investors have remained too conservative throughout all of this why do you think that is and what would get them to change particularly heading in as we point to the two roughest months of the year historically well, tyler, good afternoon i think that why have people stayed so conservative is really the hangover from 2008 i think people have throughout this whole bull market have been very concerned that for some reason or another 2008 was going to reoccur despite the fact that the fundamentals couldnt be more different than what led us into 2008 people have that concern and so i think youve seen that not only among individual investors, but youve seen that among pensions and endowments and Hedge Fund Positions youve seen that in a lot of different groups that theyre very conservative and have no time in the bull market have embraced the bull market which is remarkable jason, your view here i mean, personally i dont think trying to do something because two historically rough months are ahead of us is a good reason to do anything so what do you agree with that disagree with that where do you think we are . Well, i absolutely agree with that i think if youre a longterm oriented investor and whatwe tell our clients is you want to stay the course. You want to have a sound Investment Strategy. You want have an appropriate Asset Allocation and you need to ignore the noise. While its true if there is some seasonality in the market particularly in september, the reality is with that knowledge theres very little actionable information. Most investors should retain that high Quality Investments orientation in the portfolios to benefit from what the market has to offer i think over time its time in the market not timing the market thats going to make the most impact on the average persons returns. Do you think theres an issue right now with time . Put aside august and september are there issues in the market that make you worry . You know, michelle, i think its a matter of this point in the cycle you worry about what you always should worry about at this point in the cycle. And that is whether Central Banks whether it be the fed or ecb or whoever, Central Banks tighten too much now, i think thats kind of a silly worry right now. But i think thats the next important thing to worry about you know, august, september, i mean, if youre off by a day the returns could be very, very different. I dont think too many people are very good at timing in shortterm anyway. You heard our previous segment. Does a price matter for a stock market thats a question we get a lot. Obviously given how much this president is in the headlines every day and oftentimes not favorable, we get that question a lot. The reality is the impact of any one president , they get much more credit than they deserve and get too much blame when things go wrong. Congress is really controlling the pursestrings and a lot of what were seeing with regard to fiscal policy and the president will sign depending on, you know, whether poli

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