tv Power Lunch CNBC April 17, 2015 1:00pm-3:01pm EDT
-- will you have the support from president obama maybe using drones? >> can we expect any time soon specific counter terrorism action for the united states in libya? and then concerning russia president has been the last of seven leaders in moscow. do you think it was useful and did you ask and get any specific commitments for the renewal of the sanction against russia? thank you. >> translator: well, let me talk to you about the question on libya. i will repeat what i said. obviously all the countries in this region are countries that are interested in looking and finding -- looking for and finding a solution barring none. we appreciate the work that certain countries are finally doing in the mediterranean area northern africa starting by
egypt. so all the countries are part of this huge undertaking. but please allow me to be very clear. peace in libya, either the tribes do this or no one is going to do this. no one is going to achieve this. the only way to reach peace is that the tribes finally accept that they're going to go toward stabilization and peace. and our work is that of looking for this to favor all this at all levels so that this effort does indeed lead to peace the the diplomatic initiatives you are aware of. they're the ones that we are doing. and they're the ones that the foreign ministers are also trying to support and to study. obviously, this is not a job that starts in libya. i would like any italian journalist friends to understand that libya which we consider
because they're across from us. they're the main problem. but they're part of the a more complex, greater problem that has to do with the risk of terrorist infiltrations in africa. we are feeling the pain for what happened at the university of carissa in kenya. this regards africa as a whole, as a continent. a few days ago we remembered that a year has gone by from when some 100 girls were kidnapped by koeboko haram. remember the hashtag bring back our girls. this is a moral imperative for all of us. therefore, the issue of libya is something that we have to place in a wider context. the technical solutions, our teams are looking at them every
single day. they're obviously technical solutions in which there is a full awareness. the united states is next to the united states -- europe is next to the united states in a huge challenge that will bring the troops in our country to spend more months, more time in afghanistan, much more so than he had thought. because if the coalition with the united states considers that the process has to continue well italy will do its part. obviously, in terms of the technical solutions that i mentioned this is not something that has to do with political debates. it has to do with our technical teams, with their expertise. i have to be sure that i have priority and assurance from the united states that this is not something in which italy is working on its own. i can tell you that as far as we
are concerned, the cooperation and the work together with you, both in the natural diplomatic way and in the constant work which is done every single day, which is a job which is done silently quietly in everyday life which takes us to her roeoism. i'm thinking about the coast guards, the men and women that saved those people at sea that allowed a young women to give birth on the boat. she was dying and they saved two lives. at the same time we also have to be fully aware of the fact that the work we do together is a job that not only regards libya, but all of africa. i might say the whole world. and allow me to say this without taking the floor too long this is a job that we are doing everywhere from russia to latin america, afghanistan to the
middle east. the cooperation and work which is done between the united states and italy is something out of discussion that cannot be discussed. >> we are consistently looking where terrorist threats might emanate. and libya obviously is an area of great concern. isil has been very explicit about wanting to use the chaos inside of libya as a potential justification for putting some of their personnel there. and so the coordination with litly and some of our key partners is going to be very important. we will not be able to solve the problem just with a few drone strikes or a few military operations. you have a country that has been broken into a number of trible
factions. we still have to guard against the use of the territories in libya as safe haven for terrorist operations. much in the way we've done with respect to sewomalia for many years. to have a government that can control its own borders and work with us. that's going to take some time. but we will combine counter terrorism efforts in cooperation with italy and other like-minded nations with a political effort and we're going to have to encourage some of the countries inside of the gulf who have i
think, influenced over the various factions inside of libya to be more cooperative themselves. in some cases, you've seen them fan the flames of military conflict rather than try to reduce them. with respect to russia mateo and i agree that we need imply -- imp implementation. until we've seen full implementation of the minsk agreement. there will be a vote coming up this summer in the european council. and my expectation is not only lit ly italy, but all countries in europe will recognize that it
will be a wrong message to send to reduce sanctions' pressure on russia when their key implement implementation steps don't happen until the end of the year. at minimum, we have to maintain existing sanction levels until we've seen they've carried out the steps they're required to under the agreement. and one of the things that mateo and i share and i think the italian people and the american people share is a sense of values and principles. that sometimes override political expediency. that's part of our dna. that's part of our memories because of the history of both our countries. and, you know i think we have to be realistic and practical in how we look at a problem like
ukraine. but we have to also recall that the reason there is a unified and prosperous europe is because enormous sackrifices were made on behalf of ideals and principles. and if those principles of territorial integrity and sovereignty start getting ignored, then that carries a cost for europe and for the world. thank you very much. thank you. >> the president and the italian prime minister wrapping up their joint news conference in the east room of the white house, one which gave iran the issue of trade and greece's future top billing. and perhaps it was the comments from the italian prime minister renzi today that best reflect the sentiments we've seen in the markets and some of the
nervouses. renzi said i am confident of a greek deal but i am worries. that pretty much sums it up about why the markets are reacting the way they are, as we have one eye here and one eye on europe. >> performance has been tremendous. it's off today quite a bit around this. greece is clearly an acute issue. we put the default probability at 50%, not a big issue because most of the debt is held by the greek banks. we put an exit probability at 25%, which is a big issue, because of the symbolism behind it. >> i got you. >> i think the most important thing here though in the real investment story is transitioning from usaausterity to growth. >> my thanks to rob and michael
block. i'm going to step over and join mandy in just a minute. "power lunch" begins now. >> as you can see, the markets are down big. the dow is down about 240 points right now. the nasdaq is falling about 71. the s&p is down about 1%. you can see the etfs as well moving to the downside in tandem. the question is of course what has behind today's drop? we're going to explore that in great detail and examine whether this also presents the best buying opportunity in weeks. we'll also looking hard at two big caps. ge for one producing solid growth on the industrial side. it is the only dow 30 stock that has been higher for most of the day. it's also a really big win e.r. in month. and then there is disney. we have an analyst who says you
might want to be ware of the mouse strap. we do begin with the big sell-off on the street. give us the run down. >> good morning ran ging mandy. the important thing is a lit of china, a little bit of european worries. the hope had been that once europe closed there would be a little bit of a bounce. as you see, nothing. what we've got a basically flat lining here. i would say we have very heavy volume. much heavier than recently. we've already done 75% of the normal daily volume. you see some heavy volume here in some of the european etfs. there you see that drop. it's recovered a little bit. there were some headlines that
s&p might down grade russia if the economy deteriorates a bit. that may have been a factor there. but you see russia down as well. china another issue. regulators issued a crack down on stock margin trading after the close in china. the china market is not reflecting that. but the etfs here to the downside about five %. really not a lot of moves. >> let's head straight over to the nasdaq at times square. bertha has been following the big moves there. >> biggest movers today are the bio techs. they're the worst perform hers on the day. and one of the things to watch as well in terms of bio techs is coming off a huge week last year with 5% gains for the week. they're kind of dplatflat. we've got a lot of catalysts next week and also some big cap
earnings on the deck. meantime you've also got the chips today that are down. they are the week's worst performers following the low. in terms of the sector performance. amd really is ground zero there for today's decline. but over all we haven't been getting very good news out of the chip makers on their earnings. and mattel and seagate are the only things with strong earnings. western digital going along for the ride. >> certainly found the bright spots out there. it's been a really big week for oil. crude is under pressure as we speak right now sitting at $56. it's down by 1.2%. first, morgan give us some new numbers on the u.s. rig count. are we still dropping? >> we are still dropping. the latest numbers from bukker erbaker hughes shows that oil riggs declined to 734.
that represents a slower pace than we saw last week when u.s. oil rig count fell by 32. in terms of a year ago, u.s. oil ribs are down 776. in other words we're down by more than half. again, taking a look at the baker hughes numbers, down by 26 for this week. >> thank you so much. let's get a check now on oil action. trading is back on those latest rig numbers. what a week for oil. jackie? >> it's been another wild ride. actually prices just broke under the $56 level. when we do get those rig count decline numbers we usually see them supporting prices somewhat. but we have seen big moves to the upside so it's not surprising to see some selling pressure here. we did hit yearly high this is week and also on track for five straight weeks of gains. we haven't seen that since february of 2014. what was interesting is city's head of energy in europe making some comments saying there is still the potential that we
could see prices go lower. we could have a rocky kind of a fourth quarter. we might just be trading in some ranges here. this is not the first that i've heard of that. city one of the most bearish on the street. we do have a little bit of a stronger dollar today seeing that correlation come back as well. >> thank you so much. let's take a look at the dow heat map. only one stock in the green today. and it's general electric. the company reported earnings this morning 6.5 million shares of the stock just last week. why are you convinced the stock isn't moving higher patrick? >> well here at brandywine we're a value firm. for us it's all about the price we pay for a company that really determines it. it was up almost 10% i think on friday. where we end up is not a lot of upside from there, maybe five or 10% more to go. when we look at the business we see downside risk. part of the our concern was we
looked ahead to earnings. what's going to happen is they did a dramatic action last week announcing it. was that foreshadowing bad earnings? clearly not. one of the interesting things this morning was they expect their oil and gas business to be down less than 5% this year. is that a realistic outcome? i'm not sure. aviation had a great quarter. >> they reaffirmed their earnings guidance, though? >> yeah. >> do you think you sold too soon? >> no i don't. you know we're still below the price where we sold for the most part. i think they reaffirmed their earnings guidance but they were breszed ed pressed on the call. if their business is down more than 5% can they make that guidance? i'm not sure it was an entirely convincing answer. i think that's really the controversy on the industrial
side. can they make their guidance if oil and gas business is down more than they expect? whanchts >> what's a fair price for the stock? >> i think a fully valued price is probably 31. again that's less than 10% upside. today in the mid 27's. that's not attractive enough for us as downside holders. fairly balanced risk reward. that's not the kind of thing that we really want to see at this point. >> i appreciable it very much. we're talk to you soon. >> well, how much is a movie teaser worth. a couple of billion dollars for disney stock yesterday. when they released "star wars: the force awakens" during power lunch yesterday. and there are five more episodes of the film as well. it's already up more than 30% year to date. so why maybe you should not get so excited. that's coming up next.
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that small glimpse of what's to come is enough to send up disney's stock. david miller who has a hold rating on the stock. thank you very much to both of you for joining us. david, i live in an old boy household. i get it. star wars is big. it's a seminal event. it's bigger than anything out there right now. but at the same time i believe that fill. is only about 11% of disney's over all revenues. are we getting two caught up in the hype? >> that's correct. we have a disney hold target of 99. we've modeled out every film including star wars. we're modeling a 2 billion dollar global ultimate for star wars. stocks already trading at 20 times that number. >> right, okay. you've got a hole and a price tag of $99.
and nonetheless i've been speaking to a lot of over analysts about that. do they say the same thing as david? >> i think the key thing here is that the reason why this stock went up yesterday because not because of what star wars will mean just to the movie studio at disney. star wars was part of the $4 billion lucas film acquisition. star wars is more than just a movie. it's a franchise. it's a piece of intellectual property that disney will expand. if the movie is a success, then disney will be able to potentially build a star wars theme park. it could expand the star wars brand in many new ways. it means that consumer products will be huge. it means there's potential to expand some of the smaller star wars characters to their own series on netflix the way it has the marvels daredevil character. so i think the potential is much bigger than just the movie
studio itself. and that's what's reflected in the stock move yesterday. >> even if it is so much bigger than a movie, is it big enough to move the nededle on the stock? >> we've modeled out that long tail. clearly this is not just a cultural seminal the event and it's not just a film. disney is the best out there at leveraging sbek leveraging intellectual property. you've got to go back to be kind of the dotcom bubble to see that kind of valuation historical in the regime disney's been -- call it a revenue grower leverageable to earnings growth. 15 times 553 gets you to around 5 85 bucks a share. stocks at 107.
it's a little rich. >> julia, before we let you go what's this we're hearing at batman versus superman? it's like two good guy us going at it. >> that's right it's a huge movie. batman versus super manman coming out next year. the trailer was leaked. it's in portuguese. it's not scheduled to premier in theaters until monday in imax three threeeaters. and game of thrones was leaked extensively before it hit the air on hbo next week. >> nothing special these days. >> now on the same day the star wars teaser is out. hm. very interesting. a sell off on the street today. all ten s&p 500 groups lower.
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upward. but it could be speaking volumes to the fed. here are the details of the number this morning. headline up 0.2%. look at the core. up 0.2%. year on year that means it's up a tenth to 1. %8%? core inflation sticking up to a 1. 8% level. this should ease concerns at the fed that inflation will tick down in the coming months and strengthen the hands at the fed arguing to look through the recent price shocks to the economy. chris at bank of tokyo says core cpi 1.8%. close enough to 2. let's go fed. this does not fit the slow economy fears. they're pointing out that remember fed chair yellen said second support hikes even if
inflation was below target. barclays -- they see a little bit more possibility of fed hikes. ticking up there three basis points on the day since the number came out to 34. that number is tillstill low, certainly relative to where the fed thinks it's going to be. fed -- they're still going to wait. but some say it's going to wash through. others say we should be more careful. >> make lockthey spoke too soon. >> we have not seen the stronger dollar and lower oil prices show up in the core. >> it's a sea of red. a big sell off on the final trading day of the week the
major averages posting their biggest stops of the month. >> i don't know exactly, but i do know that the odds favor that some of the these stocks could be ready for at least a bit of a pull back. trader, again, no crystal ball but they point to these stocks as being ready for a possible break. we'll have all eight names after a break. but who's got your back when you need legal help? we do. we're legalzoom, and over the last 10 years, we've helped millions of people protect their families and run their businesses. we have the right people on-hand to answer your questions backed by a trusted network of attorneys. so visit us today for legal help you can count on. legalzoom. legal help is here. when a rewards card is designed to sync with your life it gets talked about... ♪ ♪ ♪
. high everyone. here is your cnbc news update for this hour. syrian president giving an interview to a swedish newspaper where he deflected responsibility for the humanitarian crisis in his country blaming it on terrorist acts. the terminals went down for two and a half hours earlier this morning due to an apparent technical problem, this prompting the british government to postpone a 4.4 billion dollar debt issue. former florida governor jeb bush spoke this morning in new hampshire. he said he will make up his mind whether to run for president in
relatively short order. jay jam jameis winston -- that's your update at this hour. >> looks like they're headed for their second weekly drop certainly after the cpi numbers today. we're holding slightly above the 1200 mark as we speak right now at 1203. platinum are all moving higher except for silver. stocks posting their biggest drops for april. we're even losing a little steam here in the afternoon trade. >> a little bit of a disappointment. the selling pressure had been coming from europe to a lesser extent china. the hope was maybe we'd get a bounce. sake a look at the s&p 500.
that's not happening. we are essentially sitting at the lows for the day. the volume is much heavier than it unfortunatelily has been. we could do 3.8, almost 4 billion shares for all of the stocks to trade down here. volume has been heavier in the high beta areas. social media stocks solar stocks, excess -- that third one there, that's semiconductor stocks. much heavier than normal volume here. it's high beta names that usually go first. huge jump in small cap stocks in china. after the close regulators in china kind of threw a curveball at everybody. they cracked down on stock margin trading an over the counter stocks essentially penny stocks. you could see some of the effects on some of the bigger names here which is a big pharmacy chain in china. finally in europe the peripheral countries are the weakest there.
that's greece portugal italy. those are again vague concerns about a greek exit. i had noted the rtx, which is the russia etf dropped in the middle of the day. there were apparently some concerns about potential downgrade of russian debt there. that has bounced back. finally i would note that while it's a weak day, i'm not seeing a lot of panic. i'm not seeing a lot of traders buying put protection. the volatile index has gone from a 13 to a 14. i don't pay a lot of attention to this until it gets around to.20. >> dow's down 282. still year to date the broader stock market managing marginal gains. the question is will those gains fade. >> so we took a look at
something statistical. they look at times and how often stocks move higher and get to a point where they cannot sustain that move before they pull back a bit towards their median term batting average. this green line is the 50 day moving archl.e inging average. every time it goes above or below these lines here what they do is they go to these levels and they near term pull back. in the case of jacobs engineering here we're about 9% above that average right now. according to this statistical measure, it typically goes back down towards the longer term average. another one we're take a look at here as we move towards the oil and gas side of things this guy here is about 11% above that shorter term batting average. >> these are some technical fire alarms, right? >> yes.
they don't know they're going to fall. but the odds say that they should be due for a bit of a pull back. that one here is about 12% above that 50-day average. maybe it's due for a pull-back as well. and then we'll end here with this look at another company that's kind of in that materials and energy space. that company is now 12% the stock above that 50-day moving average. again, a statistical measure about whether or not these guys are due for a shorter term pull-back. and we'll have more later on in the 2:00 hour. >> thank you. that story is up on cnbc probe, by the way. you could read it right now at power lunch dot cnbc.com. >> in fact today we're down by 281 on the dow. we're sitting around on the lows of the day. about 2% in fact. should we be concerned about a
global correction. joining us now bernie williams. and zach head of global strategy for invest net. bernie, let me start with you, because there are plenty of people out there thinking shucks i've been watching all these new highs being hit over in europe in asia and backing up against highs again here in the united states. they might be thinking i missed the boat. and now with a little bit of a pull back this is a good thing, isn't it? >> well it could be. but i don't think we're in a major correction right now, the start of one. simply because i think most corrections start because of fears of a recession. europe's in a recovery mode and the u.s. although it's slow and choppy growth s still relatively steady. i think we're just normal volatility associated with earnings season. >> do you agree with that that this might not be the start of
being a little bigger in terms of a pull-back? >> i'm going to agree with bernie here. and i feel like there was a slew of people this morning who called the beginning of a correction with really great certainty. which is a little like the charts that don was showing before. there may be bands of probability here. but unless you have some very evident trigger factor what's going on now is probably a trading phenomenon and some hold over from the ripple effects of asia's trade today. and nosethose announcements in china about margins and short selling, these came after the markets closed. you had to go to foreign markets to get, right? unless there's something clearly going on like greece defaults an european spreads blow out -- >> would even greece defaulting
be a trigger factor for a decent factor? >> i think a greece default in terms of the cascade effect would royal-- for a period of time. yeah, that certainly would be something. i don't know how much who anybody who's not a trader, whose bread and butter is simply trading the volatility on a day today basis. >> i see you've been -- you've been catching that nice up draft we've had year to date. do you think it's you know still time to get in? is there plenty more upside there? >> yeah. we do. valuation is still pretty reasonable. european earnings look to about 15% in year. they got a little bit of a foreign exchange tail wind along with economy that's improved and easy compares against last year.
i think it's still a good place to be overweight. i think the greek, as it could cause a little bit of volatility. but you know the europeans, they've gone out of their way to keep the eu together. that's a hard one to play. >> plus the other positive you ever there is just the quantitative easing in europe. if europe follows the self-incriminate script of the united states, then the underlying fundamentals of the european structure, you do have this very accommodating system. and we saw in the u.s. for 2012 2013, 2014 -- >> bernie and zach thanks so much for joining us. have a great weekend. you can go to the website so see why bernie is bullish on cruising. >> the bond market we go. and a lot to chew on today, rick
with the sentiment inflation data and greece. >> absolutely. and not to mention the fact that we're flirting with down 300 dow. normally you'd see a lot more activity to the buy side. in essence you really are. you just have to figure out which wiggle of the conserve is representative. look at fives. they're still virtually unchanged. let's go to the extreme 30 year. what a different picture. it's found five basis points on the day. what we're seeing is a bit of flattening neutralizing. they violated five basis points briefly. there's count downs on when we're going to go negative. going over a decade back on the 13th. you could say a lot of things about europe volatility. but today it's roughly flat. can't blame foreign exchange for what's going on in equities. >> what's going on in equities is a big sell off on the street
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at mfs, we believe in the power of active management. our teams collaborate around the world, which leads to better decisions for our clients. put our global active management expertise to work for you. mfs. there is no expertise without collaboration. . welcome to "power lunch." we're taking a look at what's happening the markets right now because we do hover near our worst levels for the day so far. a seasonably strong time for the stock market typically speaking at least from a historical standpoint. if you look at what's happening right now, the dow down 298 points. the s&p 500 down about 25 points. now, let's also put this in terms of the year to date context. because this down move today for the dow jones industrial average now puts us at flat or slightly negative year to date 2015 for the dow.
if you take a look at some of the stocks that have been the worst performers year to date in that dow jones blue chip you're talking about big technology names like microsoft and intel. and proctor and gamble as well as cat terpill ler sales. we want to keep an eye on some of these bigger names that have been adding a lot of weight to the downside move. >> wait until you hear how much some in silicon valley are paying to skip rush hour traffic by flying to work instead. speaking of planes a closer look at the airline's homage the "star wars" is coming up. a cloud computing stock you're holding, we can help you decide what to do. with tools that help you see how market activity is affecting your positions. so when the time comes to decide whether to scale in or scale out...
well, here are the power points. first we learn that the dow may be tradinge inging lower by triple digits. next we learned that core inflation rose just two tenths of a percent. the core cpi has raised three consecutive months in a row, this all thanks to the strong dollar and low oil prices. finally we learned that the "star wars" teaser was viewed 20 million times lrpd ss already and is not stopping there. >> what should your strategy be amid all this market volatility? that is straight ahead on "power lunch." if you're running a business legalzoom has your back. over the last 10 years we've helped one million business owners get started. visit legalzoom today for the legal help you need to start and run your business. legalzoom. legal help is here.
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. . welcome back to "power lunch." i'm melissa lee live from the nasdaq markets. more on the downturn in the markets and why europe and asia are back in play. we'll tell you about the new hacking empire. and which stock is actually hitting new highs today all coming up in the second hour of
"power lunch." first back over to mandy and scott. >> air new zealand height have hobbits from middle ert. but the japanese carrier paying homage to "star wars" by dressing one of its plays as r2d 2. the rear of the plane will also don a large "star wars" logo. >> i wonder if all the stewards or steward ess are dressed as princess leah. let's bring in jonathan senior managing partner at meridian equity partners. and chief investment office of hue johnson hugh johnson. what do you think is your read on what's happening today and whether or not it might be something more than just a
one-day phenomenon? >> i think it's -- at least i hope it's going to be more than a one-day phenomenon. quite frankly what really touches this off is we move to a level which is in my judgment based on the earnings numbers is a little bit pricier over valued. when you start with a market that's over valued all the news has got to be good. the news had not all been really good. and that will touch off a correction. quite frankly, until we get down to four to five percent under value, stay optimistic keep your s and l -- that makes much more sense than the current level. >> the dow is now down 325 points. why do you think it's selling off the way it is today? and do you agree that if a correction does happen it is a good thing?
>> i'll answer them both in reverse format. i don't think we're near a correction. we're going to have to see multiple trading sessions of selling pressure like you're seeing today to get to that level of a correction. economic data has been okay. it has not been great. i think investors are looking for more. earnings season yes, we're early into it. but that too has been just okay. investors need to see more information. we're going to get more informing next week. that should help things. i think overall we're getting towards the weekend. this market opened low and it's stayed low. it hasn't really moved that much until we just took the last leg down in the last couple of minutes here. it's going to be interesting to see how we close it off. >> there are some suggestions in the market today that we are going to start trading more in tandem with the dax. is that the way you see it? >> no i don't see it that way. i really see the dax trading in a world of its own.
i see europe in a world of its own. i think you're going to get better relative performance when we take a look at some of the northern european stock markets. france, u.k. germany, you take a look at europe overall. i think that's going to post better relative performance than the s&p. i don't think they're going to march in tandem. again, when we get back to our markets, the s&p, and you take a look at the anemic growth of earnings, not just now, but right through 2015 and 2016. you look at the fact that the federal reserve might be raising interest rates, it's hard to make a case for anything better than a 5% average annual return in the u.s. stock market. you've got to be good on your entry points. this is not a good entry point. i cross my fingers and i hope for a sharp decline to levels
that make more sense. we're not at that level yet. >> the dow is down about 320 points. if you did want to find an entry point, what do you think act the energying ingsector? >> there are things you can do at a 5% very low return market there's things you can do to try to enhance your returns. i look at energy. i ask myself what sector is it that's the cheapest that's gone down the most thece of oil does not fairly reflect in my judgment and doesn't accurately reflect supply and demand conditions. i think that's an of opportune place. you've got to look for opportunity in a low return environment. energy is one of them. the most important thing i'm saying is all of these are opportunities but drag your feet before you make any commitments. because i think we're going lower as a part of the process
of a fairly sharp correction to levels that make more sense. >> thank you very much. >> thank you. >> that's it for me. you're going to stick around with melissa. >> have a great weekend. thanks for filling in. >> thanks. >> okay. i'm sticking around. melissa lee, we've got the second hour now. it is 2:00 p.m. on wall street. 11:00 a.m. in san jose. and completely different time on the other side of the world. you're watching the second hour of "power lunch." >> we're just about at session lows. three big stories we're following for you at this hour the markets deep in the red, all three major averages seeing their biggest one-day decline since march 25th. hitting chinese stocks while european markets were dragged down by greece fears. inflation higher with the consumer price index moving higher,.2%. let's dig into these markets right now. the dow seeing its worst day in the month of april, down nearly
2%. now in negative territory for the year. the biggest losers on the dow right now, american express, travelers, united health. down nearly 1.5% at this hour. checkpoint software and discovery. >> let's get more on the sell-off and also some advice for your money. we're talking to michael far. you always have a unique take on what's happening in the markets. what is that unique take today, sir? >> well mandy, my unique take today is days like this make your nervous. they make old hands like me and -- we get nervous because of friday set up into weakness when we're going to see a change particularly in european markets and in china over the weekend. it could look like an ugly monday. we look back to 1987 and others
in history. i think that's why we're seeing the markets start to go even lower. monday will tell the tale. it's going to make for a nervous weekend. >> do you think it's justified? i know there are a number of factors that are contributed to this? but do you think it's justified? >> absolutely. i think it's very justified. i think what's going on in china, reducing the availability of margin means that chinese investors can't boarrrow as much money to invest. things that are gotten expensive and have been bullish for a long time, a lot of those markets are going to be shorted. we're going to see some selling pressure probably. greece is not going away. look x look, our markets have been way high for a long time. we've been above 18,000. we haven't had a 10% correction in years. you let a little bit of air out
of this thing. i'm going to relax and look to buy. >> at the same time let's take a look at why europe is actually declining here. we've seen the german down about 5% for this week. do you think it's because of fears that there's actually going to be a -- what are the odds that you're placing on that? or that qe over in europe is not going to work. are any of those two scenarios for reel? i -- real. >> i would say it's not a buying opportunity yesterday. i love the term. that's fabulous. they should be booted out, if you will. excuse my pun there with greece anyway next to italy. okay. but they have some real concerns. moreover there's not a big problem. qe has worked in europe. we've seen those markets go up some 14%, 15% for the year. now down 4%. that's a little bit of a pull
back and a pretty good bull market. they are continuing with qe. and we have seen what happens when the central bank starts applying a lot of qe. so i think that's probably still intact. there's reason for some concern. and it's unfathomable. but when you look at the german bund. that's their government bond that's paying.07 of 1%. that means when you buy a million dollars of german at the end of one year they're going to give $700 back. and people are buying them. i think it's going to put a downside and a floor underneath potential drops. be patient here. don't panic. be disciplined. >> stick around. tim, i want to go to you. the part of the puzzle that we haven't touched on is china. chinese regulators are saying go in and short the market.
we're okay with that. it's amazing how the core of fears were rising into this announcement. china has gone vertical in the last two days and that's after being up 70% in the prooefrsevious six months. chinese futures are down 5% after being up today. we have the greece news. we have the chinese futures being down. there's a lot of reasons why markets are reacting here. i don't think china is an isolated case as reason at all for the s&p to be down 1.5%. i think you look at this as an opportunity i think largely on a day when friday liquidity is not so good. >> it's a potpourri of concerns. >> that's a great word. >> it is time to buy protection. but on a day like today, that's not the time to buy protection. so what do you do now? >> agreed. that's why we've been talking about this theme of portfolio protection. obviously, the vix, a big jump
in the vix. tim was right. that disparity between china, japanese and the dix. that's what's making people nervous. i want to see follow-through. for the short-term trader how do you play it in europe? it's very challenging. those advicers don't have access to options, they don't have access to futures. that gives you short expose your to europe today. it's a short-term trade. i think a lot of people have to think outside the box. as you know coalition goes to one. when they start selling, every market will go down. >> i want to ask you about what's going on with china, because yesterday -- he was saying forget reality. the biggest bubble of them all is probably the chinese stock market. you know, if that pops who
recollects knows-- who knows what's going to happen. what do you think? >> i think the chinese local stock market is not a domino p that's going to knock the rest of the world out of an interesting up trade. to the extent that china has also been pushing around hong kong stocks that start to include a broader investor base. look at the liquidity they've been pump spooging into their markets. that's how you trade china. i guess i'm not terribly concerned about the move in china. you sold your position in chiena two days ago. >> this is a stock for the last five years that has been trying to break through at 46 48. the relative strength indicators in this were over 80.
it was time to take something off the table. >> mike. >> i think there's some good news, bad news here too. i china is basically letting their markets free up. they're letting the markets reach an appropriate level. and free markets work more. it could be painful. it could also be a foreshadowing of what we're going to see in the u.s. when the fed begins to withdraw and actually lets rates go a little bit higher. you get the government a little more out of the way and let free markets work. it could be ugly to start, but it's the right thing to do. >> the are you trying to compare a captive audience in china with what the fed has done here? because i think the parallels of people doing that right now are not even close. you have people that are forced into only one asset class because they've taken the reality market away from them and you have investors that are very unlike the folks you're advising. these are not educated and
they're inexperienced investors. >> it's the role of government. which the role of government becomes too large in any market it begins to distort things. >> mike you were saying earlier that you hope that maybe the u.s. stock market sees a little bit of air taken out of it and then you would be a buyer. what would you be a buyer of? >> i would continue to be defensive because a little bit of air out i think still leaves us in a precarious position relative to the economy. i continue to like healthcare. i continue to like consumer stap staples staples. you have to take a cloersser look at some of the financial.sfinancials. we're not high yet still on energy. so pay close attention there. >> tim, earlier michael said that he would not touch germany yet. and yet you say you would. why? >> i look at the fundamentals
across europe and i think the currency weakness is a total tail wind that a lot of these companies haven't even prices in. obviously we're going through an earning season where people are concerned here. 3% earnings growth with 1.9 to the u.s. if you look at valuations it's -- 1.9 here. there's reasons to me that i actually think you haven't even gotten the benefit of the currency weakness. i look at greece as noise. i'm frustrated it's front page news like everybody else. they're going to get a deal done. 5% on the dax is a place to buy these stocks. >> when you sea theseay these stocks you mean specifically exporters? >> we are seeing the lowest volume in many pits. everyone is having their hand in their pocket. there's all this liquidity with washes. where is it going? it's not hitting the u.s. stock
market despite the fact the air is moving it higher. the volume is not supporting your position. >> the push back is what? europe can't go higher because -- i'm trying to understand what you're saying. >> no. i'm saying we're seeing a big turn on the decks, a 5% hair pin turn. that is going to be a big headwind. specifically in u.s. stocks. >> on a relative value what i'm saying is i think europe is more interesting here. weave had 14 straight weeks of fund inflows. if you think that greece is leaving the euro and happening you should mark down the s&p by 250 points. put the dollar to 1.10. and the markets aren't believing like that right now. what they are doing is taking profits. and there's a difference here. >> we're now down about 90 points on the nasdaq. the dow is down about 347
points. it's about 1.9%. >> you can't give up on the european markets even with this kind of a pull-back. any markets that have the central bank support and the pledge central banks going forward. we've learned that lesson. >> why are you saying don't buy germany yet? >> actually i don't care i said that. >> you could take a break, michael. you could take a break from all this buying. take a little breather here. >> amen. and the choir says amen. >> okay. on that note -- >> yeah. >> amen. thank you. >> thank you very much everybody. let's get to market flash now. >> melissa, we're watching a can you believe big cable companies here comcast, which is the parent company of nbc universal and cnbc. this on bloomberg headlines that u.s. antitrust lawyers working for the justice department may be leaning towards blocking or recommending a block of the
proposed acquisition of time warner cable by comcast. so if you're watching those shares comcast was down about 2.5% before these headlines. you can see they're recovered most of those losses during that time. however f you look at time warner cable shares they are hovering near their low points today so far. down about 5.5, 5.25%. this again on a bloomberg report citing sources that perhaps antitrust lawyers at the justice department may be leaning towards blocking the proposed merger. >> stocks again at session lows. we've got much more on the market slide when "power lunch" comes back. [ male announcer ] your love for trading never stops. so if you get a trade idea about, say organic food stocks schwab can help. with a trading specialist just a tap away. what's on your mind lisa? i'd like to talk about a trade idea. let's hear it. [ male announcer ] see how schwab can help light a way forward. so you can make your move wherever you are.
. what happens happening in the energy sector right now, crude is sharply lower on the session with about 15 minutes to go before oil closes out for the week. morgan brennan is joining me here. we've got some new numbers on the rig count. what's the key take away for the market here? >> these are the numbers according to baker hughes. we continue to see a decline, 19th straight week of declines. but that pace of decline is slowing down which has been the case for the most part over the last couple of weeks. you take a look at the u.s. oil rig count. we dropped 26 to 734. just to put that in context it's the lowest number we over seen
since november 2010. to put that in larger context we are now down 55% from the peek, the highest number we saw of u.s. oil riggss. backer hughes said we've seen u.s. oil rig counts drop -- we're now down 55%. the expectation is make we're going to start to see the slow down and hit the bottom. the next thing you're going to want to look at is still high. that number in general has been flat lining. that's going to be the next thing. >> thank you very much for that. >> let's which i can check out some big movers in the energy sector right now. some of the integrates chevron, exxon, lower by just 1.5%. bp is the only stand out there bucking the trend. it is higher by one-tenths of a
percent. rig or transocean down. they control nearly half the u.s. digital ad market. where does that leave microsoft, yahoo, aol and twitter that want a piece of the ad pie. going to start with you because you've got this great article on cnbc.com sort of recapping it. we always knew these two were the big kahunas out there. >> the issue is when you log in to a mobile or to a website, mobile account or a website with facebook or google those two companies have all of this information about you. and they're tracking you everywhere you go on the web and on the device. that's incredibly powerful data for marketers. and frankly nobody else has that. so everyone is trying with very
valuable web properties to get marketers onto their site and to give them the data and reach that they want. but if you have a limited ad budget and you're trying to think where are you going to spend that next incremental dollar, you've got to really have something as a property that's particularly attractive to get people to spend off of google and facebook. >> and you talked to some smaller business owners who say we get the most bang for our buck with facebook and/or google and that's just the way it's going to be. >> yeah. they'll throw a few sbrarsdollars at pinterest or pandora. it's just really hard to compete with the numbers and data that google and facebook have. we're looking at a duopoly. >> does it really matter that google and facebook are sumch
huge players? >> well that's true. i think a smaller player can always carve out a nearbyiche. from vantage point of the investors -- >> which ones in your view are hitting a wall? especially when we hear that twitter is a incident third or really far bheendehind the pack. >> take twitter as an example. twitter has a wonderful business. it's a totally different medium when you compare it to facebook or google. the problem comes if you think that twitter can do exactly what facebook or google does and your expectation is they can sustain growth. that's totally unrealistic. >> which ones are your topics? >> facebook in fact is my top
pick. i recently upgraded google to a buy. it hit below $500. it was too cheap. right now i'm favorably disposed toward that one too. >> thank you, ari and brian. the nasdaq bio tech index is down about 2% on the sexssion. we'll tell you what has happening this weekend that could send some of the stocks higher on monday. since the end of march. we've got much more on that market slide.
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. . stocks are sharply lower today with little more than 90 minutes left in the tradinge inging week. look guys absolutely no green whatsoever. when we started the show ge was up here because it was the only stock that was holding its head above water for most of the day. now it is currently down by 1%. it's lost its gains. and the biggest loser on the dow is american express down by 4.3%. >> thank you so much. we are just getting news in on mylan. want to go down to meg in
washington, d.c. >>, the teva is considering a bid for mylan. remember, that mylan has made an offer to buy or said was trying to buy. neither side has agreed to anything. but then seeing them fall in this news than teva is apparently considering a bid for mylan. >> i'll pick it up from there. we've got a big jump in the shares of mylan on the back of that. it is the final count down. we're minutes away from the oil market closing out for the week at 2:30 p.m. eastern. crude is down on the day, but it is still up big on the week. boy, what a week it has been. we're currently at 55.59, down about 2% for wti crude.
jackie. >> hey. good afternoon to you, mandy. it was a wild week for crude oil. selling pressure intensifying at the close. but what's going to happen next week? traders telling me we're setting up technically. i'll have that for you when we come back on "power lunch." but the m-class sees in your blind spot... pulls you back into your lane... even brakes all by itself. it's almost like it couldn't crash... even if it tried. the 2015 m-class. see your authorized dealer for exceptional offers through mercedes-benz financial services.
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. hello, everyone. here's your cnbc news update at this hour. president obama hosting italian prime minister renzi at the white house earlier today. afterwards the two held a news conference in which the president discussed trade. he said trade politics are difficult but opposition to a new trade agreement only helps china. more than 4,000 people gathered in seoul south korea for the victims of the ferry disaster that killed more than 300 people a year ago. it's also to demand that the government salvage the sunken ferry. >> nissan is adding cars to a previous recall of some 52,000 vehicles to fix potentially faulty air bags made by that, the
takata. look at that. a 100 carat white diamond. it is expected to fetch between 19 and $25 million when it goes on the sotheby's auction block. it's a little big for my taste, but you know. >> maybe we could suggest it to our kids. put it on the list for mother's day. >> and it's white. it goes with everything. >> it really does. thanks, sue. crude, as we saw a moment ago s lower today, but closing higher for the fifth week in a row now. let's get the closing prices. >> down about a dollar here at the close. we're closing under 56. traders were saying they wanted to see us hold that level going
to the weekend. now, we had the head of energy from citigroup telling our european counterparts they're still bearish on here. usually when we see the rig counts continue do decline, it is supportive. also want to point out that we're going to have an owepec meeting in early june. opec's output went up. unless we start to see the u.s. output decline, we're back to this story about supply and demand. we've got the dollar correlation back here. we've got a lit of a stronger dollar here today. could be adding some pressure to crude. and by the way, that diamond was definitely big enough for me. >> good to know. good to know. thanks for the tip.
>> let's get back to the breaking story we mentioned just a few moments ago. mylan shares are in fact spiking. teva pharmaceuticals is considering a bid for mylan. mylan has a $29 billion bid on the table for perrigo. the stocks are moving as if it has made a bid because we are seeing perrigo shares to the downside right now. the stocks you need to know about. and wynn resorts. we've covered the macau casinos quite a lot. the results will actually get worse before they get better. and there's a risk at the dividend dividend. >> the second stock here melissa is sandisk. it's getting downgraded left right and center.
and also by credit squeeze. it was downgraded to sell. the price tag was cut to 60 bucks from 80 bucks. it's scently lycurrently sitting there at 66 66.60. >> they had taken down to revenue guidance just about a month ago. this stock has been in a world of hurt since then. raymond james pounding the table ahead of them due on april 28th. the analyst saying the intraquarter data -- but raymond james is sticking with its market rating because shares are priced at a premium to its growth peers. >> this is hersheys. the stock was removed from u.s. focus list with analysts noting the week environment. however, the buy rating remains the same. the price tag in here is $120. so sitting there at 99 and
change. there's still a fair amount of upside to get to that price target. also, city was seeing some reduced growth at the moment. but they see those gross margins reaccelerating later on. >> yeah. and the company's already affirmed full year guidance. it could be in good shape for the rest of the year here. talk about high flying bio tech. intercept is up this year. it's still a buy here. there's a scarcity of drugs that actually work in liver disease. and intercept is selling its drug to treat liver disease. that is about 65% higher from yesterday's close. >> great. okay. it's been a pretty tough day for stocks out there, guys. let's bringing in the trading nation. andrew keen is an options trader with keeng on on the market. how much should today's drop
concern investors? >> you know tough day in the market. it's actually the type of day which i think is the day you want to buy stocks. here's how we see it. and the reason i say that is if you dig under the surface a little bit more and look at participations at stthe stock level, what's the breadth of the market doing? it's improving. here's the chart that i brought. look at the lower panel. and from this very low level, it's actually recently pushed out to its best level since now september. conditions are improving at the stock level. we think this leaves the stock market averages to new highs. buy today's weakness. >> what about you, andrew? are they sort of seeing a similar situation? >> no no concerns no panic here. we saw the volatility index spike about 10% up to 14.5. i totally agree with ari here.
traders don't want to hold their long positions over the weekend. you see a lot of this also april expiration. options expiration is today. so maybe a little manipulation here. the market is still up on the year. we haven't had a 10% correction in over year years. this is a pull back. >> what are you see in terms of volatility for future months? in june or perhaps pushing that out now that there's this article over at the "wall street journal" saying a june hike is probably off the table. >> yeah. if you look at the way the curve trades, most of the times it's where the back bonds are always higher. so we see the vix futures. every month is usually a point higher than the month before. so when you're trading the vix, you can't look at the spot so much. you have to line it up for the vix. i'd have to look at the future price and line up call spreedsads
accordingly. we have vix expiration coming up very soon. there is more volatility expects going forward, but that historically is how the vix trades. >> i mean are there sectors that are in fact vulnerable at this point? >> on the downside here i'd be a little bit concerned maybe with some of the metals and mining sectors. the stocks within those, within the materials sector maybe some utility stocks as well. one sector that has been a headwind and beaten down a lot is energy. we like the fact that action in these groups has actually been improving. so overall slowly but surely we think participation is going to be improved. perhaps the stock pickers market. but nonetheless we think there's going to be some opportunities on this pull-back. >> andrew, finish it up for us. >> oil is something i always look at. the three main things i look at
is the vix the, thelt for the ten year bond. and also oil. oil looks like it may be reversing and is moving higher. >> thank you very much so ari and andrew. for more trading nation head to our website. >> we are all over this big market sell-off. take a look at the dow right now. we are down. we are just about off of session lows right now. "power lunch" will be right back. tdd# 1-800-345-2550 [ male announcer
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covering rally that we're seeing. the average netflix user actually watches two hours a day, which is up 15% from its previous survey. >> let's get back to the big market sell off. we're down still by about 300 points on the dow. let's wring in ken of -- you were saying look what we're seeing here is not your grand father's market. explain what that means to our viewers. >> yeah. it used to be that money managers, people that played the market owned individual securities in individual portfolios. so i as a manager would have anymy 52 stocks. today that's not really what's happening as a happening as etf's dominate the market. 27% of all the money in united states etfs are in the top leethree
s&p 500 funds. not these disparate portfolios that i just talked about. it's no wonder we're seeing the markets move 300 points one way or another on a regular basis. >> how can we give some predictive analysis of what the market is going to look like? >> i think the big message is there's nothing wrong with owning e strks ftfs at all. they're really momentum traders in these etfs certainly in the s&p 500. the dominance is such a small amount. the ten ten stocks represent 18% of the money in all these etfs. you have to understand that. >> do you think that for the united states we're going to be higher or lower at the end of year? >> i think the market is going to look much better in the
second half of the year? >> we bring in peter costa. pete, i image on a friday afternoon volume is kind of low. people just want to get small as they get into the weekend. what's going on there? >> i think that's a lot of it. it started off poorly and it never gave itself sa chancea chance as the day went on. as you get closer to the close, less and less people are going to be trying to get risk on. the anything the market will continue to drift at this level, possibly go a little bit lower. the close doesn't look like -- there's no indication on the close either way. sometimes with this kind of market there's a lot to buy because the pricing is such but we're not seeing any of that today. >> peter, i'm just curious. in the next couple of hours or so and over the weekend will you be watching adds ging as indicators as how we will trade on monday.
>> china is actually what started this little bit of a row. next week we're almost through the financials. and there's going to be some significant earnings out next week. we'll see what happens then. i'm not too concerned. if i really wanted to jump back into this market if i don't just yet, this would be the time to do it. i think we have a little bit more of a move on the downside going forward for the next couple of weeks. >> certainly that would be good for the people who completely missed the boat right? what is your reasoning? >> i think the consumer is yet to really wake up. i think it was a bit of a surprise, the consumer numbers we're recently seen. you're starting to to see wage gains, not just job gains. we're also seeing oil prices remain down at the pump. that's certainly a return of money to the consumer. >> is it? because it hasn't really shown
up in retail sales. >> that's where i was going. when it's first starting someone saving $50 it's not a big deal. but when you save $50 over the course of a year you now have the money to buy that new washing machine or driveyer. once we start seeing that dividend paying off to where people are saving money to be able to use it on long-delayed purchases -- >> do you think the u.s. is going to give you better returns than europe, which admittedly has had a good round? >> i think now is the time to be broadening out your portfolio. if you're not in overseas shock stocks -- small cap stocks sell less goods overseas.
i'd be spreading things out. if you're saying the domestic market includes small cap domestic that's an interesting place to be. but you've got to understand how concentrated you are. now is the time to be broadening out your allocation. many people say we're going to a stock pickers maktrket. >> peter, how are you feeling about the u.s. markets right now? you said you're reluctant at this moment in time to get in or to get a bigger position in the u.s. markets? what are you waiting for? >> i hate to bring that stock picker's market up. but that's what i overi've been doing. when i got out of the market a while ago, i felt that the market was fairly priced. everything looked good. to me the upside potential was very limited. until i get that feeling where
there's going to be some upside potential, i'm not really going to be jumping into anything full steam. i still think if we do have a correction which i've heard people say this might be the beginning of it. i don't think so. there's a potential for a 5% move at some point. that's when i'll probably get back in. otherwise at 300 points or 1.5% it's not really enticing me just yet. i'm waiting for a bigger move. >> i know you've been in the markets a long time. and you learn to not let yourself be worried by too many things. what keeps you up at night if anything? >> people's emotions. due to this herd mentality that we were talking about earlier, headlines are going to get ahead of the market. my message to everyone would be make sure you take a deep breath before you click the mouse to make a trade. that's the thing that will potentially blow up your financial future.
thing for the long term. >> it's important to sleep well at night. >> it really is. >> thank you very much. >> we've got more breaking news on that teva/milan story. >> milan executive chairman robert corey says we do know there's been media speculation although it's been company policy not to comment on media speculation given current circumstances we are going to do so. milan is fully committed to its stand-alone strategy including its proposal to buy perrigo and today's speculation has no impact whatsoever on this strategy. we've studied the combination of milan and teva for some time. we believe it's without sound industrial logic or cultural fit, strong words. further, there would be significant overlap in the company's businesses and we believe that it is unlikely that any such combination could ever obtain antitrust regulatory clearances. they are coming out with a statement saying they are going to at least for now, dampen any
kind of speculation about a combination between themselves and teva. they do go on to say if any party should make an actual offer to acquire milan, the board would consider those particular options and exercise it's fiduciary duties. right now, it looks like mylan is going on record. >> certainly peared eded eded eded -- pared some of their earlier gaines. this is the heat map of all s&p 500 stocks. you can see it is mostly red today. somewhere among those are eight that could be due for a fall. we brought you four in the last hour. the rest of that list is coming up.
cnbc pro story looked at stocks that have extended gains above where they typically trade on a shorter term basis. that's represented by this green line 50-day moving day average. when it gets too far above some of the statistical measures like we were seeing right here it could be due for a pullback below average levels. baker hughes is 14%. may be perhaps due for a pull back. another name in terms of the oil and gas sector in the energy patch overall, you go from baker hughes to halliburton who is trying to buy baker-hughes. some of the levels peaking above where it should be trading on an average basis on the 50-day moving average. halliburton one of those as well. another one, helmerich & payne. trading above levels that suggest a statistical pull back toward the average over the last
50 days. the last one is cimarex, an independent gas driller. a solid rise over the past few weeks or so it's now trading well above its 50-day moving average to levels that statistically suggest, the odds suggest it may be due for a shorter term pull back. some traders look at the odds and say, melissa, these stocks may be due for a bit of a pullback towards traditional or more average levels. back over to you. >> thank you, dom chu. if you didn't catch all of those, don't worry, head to powerlunch.cnbc.com. all ten s&p sectors in the red. much more on friday's sell-off after this quick break. stay tuned.
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and apply online. creditcards.com. [ male announcer ] legalzoom has helped start over 1 million businesses. if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom. welcome back. okay you have here the s&p very near the lows of the day down by 29 points. all ten s&p sectors are in the red right now. the least in the red if you want to put it that way is utilities is down by 0.5%. the biggest losing sector is technology. let's get out to melissa now. >> mandy, at the top of the hour we are talking about how a lot of this started in china when security regulators said to institutional investors go ahead and short the market. that came out at 6:00 a.m. eastern time. we'll see the impact on monday morning. tonight on "fast money,"
jpmorgan's chief e.m. strategist the chiefation asian equities strategist will also weigh in. "closing bell" starts right now. have a great weekend, everybody. welcome to the "closing bell," everybody. i'm kelly evans, here this friday afternoon at the new york stock exchange where we are seeing a big sell-off bob. >> no real sign of a bounce. i'm bob pisani in for bill griffith. we've been done all day. hoping for a bounce. .entire mark set down roughly 1.5%. this is a uniform sell-off volume is heavier than normal but not dramatically so. the vix is up but not dramatically, 13 to 14. the nasdaq sitting at lows for the day. >> it will be a heavy day. glad to have you along.