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tv   Power Lunch  CNBC  February 9, 2016 1:00pm-3:01pm EST

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on the closing bell to discuss the quarter. certainly, everybody is going to be focus on what is happening at espn? >> i like the risk reward of disney at 91, yes. >> selling pressure has returned today. "power lunch" picks up the story right now. ladies and gentlemen, thank you very much. welcome to "power lunch," everybody. along with a melissa, susan, and brian, welcome, everybody. stocks taking another leg down this hour. the losses compared with losses yesterday and back on friday not as drastic. nevertheless, the dow down about 80 points a half a percent. the nasdaq down two thirds of a percent. and the s&p off a half a percent. crude down under $30 a barrel.
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iea saying the global glut -- say that ten times fast -- is bigger than thought. and the risk of oil prices falling further has increased. that this has nearly every oil company stock lower again today despite some of the bigger names likes exxon, chevron, shell and others being in the middle of a mini rally this month. self ron up 2% this past week. and exxon mobile up about 6%. >> joining us now chris kelly, he covered the oil sector for janice. chris, listen, let's try to focus the whole story through one stock. that is a name you like. enterprise products, he pd. their numbers weren't terrible. their earnings per unit down a little bit but better than expected. volumes, okay. gross margins, okay. yet the stock is being absolutely pumeed. are we seeing -- and this maybe is just one example of it -- indiscriminate selling at this
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point without regard to fundamentals? >> hi brian thanks for having me. i think we are having some technical macro-driven elements of the market outside of fundamentals. to be clear, the fundamentals aren't great in the short term. in our view, there's kind of a trifecta of three thing that don't set up well for the next four to eight weeks. demand has softened, the supply has yet to roll over. then you have a seasonality factor with the refineries going into maintenance season. there is a technical piece, a macro piece, and also a fundamentalist piece. in the intermediate term, we're pretty strong believers that supply will correct this and that over the next 12 to 18 months prices are going to have to go back to $50, $60 a barrel because you are going to have to incentivize the u.s. stail shale companies to start drilling again. >> i question the use of the word have to. want to, need to, would like to.
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the market's going to do what the market's going to do, chris. you know that better than anybody. why dues half to? >> well, over the short-term, i completely agree with you. but if you look at the market today, and we're 1.5 million barrels a day oversupplied. if the you get a reasonable amount of demand growth, you get 1.2, 1.5 million barrels a day of demand growth, you fix this through demand and a little bit of supply discipline over 12 to 18 months. and then if you look at the cost curve, u.s. shale's right before opec. and opec does not have that much more that they can produce. going back to where is the supply going to come from? in our opinion it has to come from u.s. shale at least through the end of the decade. >> chris you are coming on with recommendatio recommendations, epd, and a darko as well as darko hughes. in this kind of market in which we are seeing oil prices today, brent trade, down 4%, w tex i
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down 4.6%. this on top of a weaker dollar. are you recommending these stocks because you have got to be invested in our portfolio in energy or because you like them? >> frankly, i absolutely like them. to be fair you have to have a longer term view. we are long term investors at janice capital. we have a two to three-year outlook. it comes back to where is the incremental barrel going to come from? we think that's u.s. shale. those three companies are set up well to that development over the next two to three years. >> where do you think oil is by the end of the year at this point? >> it's hard to safe. things seem to be getting pushed more into 2017. but i think it's reasonable to expect 50 to $60, somewhere in there. >> chris kelly, janice caplan, hey, chris, it was a pleasure to get your views today thank you very much. >> thank you. a news alert in the bond
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market. three year notes up for auction. rick? >> hello there. well, we had 24 billion three-year notes just hitting the street. the week is 62 billion in entirety. this particular auction yielded.844 that the the did you have auction. that is well above the offered side of 83 in the when issued market. so some points off there. i gave this auction a d plus, d, as in dog, plus. so you had pricing issues. let's look at bid to cover. only $2.74, jason, every dollars worth of securities available. that's the weakest ratio since july of 2009. 49.5 on indirects. weakest since just november of 2015, but well below the ten option average of 50. the only bright spot were directs. there were 15 versus a ten auction average of 12. 43.5% go to primary dealers. not a great week to start an
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auction. considering all the issues of global policies and outcomes by central banks this is the shortest maturity. makes some sense they would have a bit of a rough auction. back to you. >> good point. shares of deutsche bank getting slammed today, down 40% so far this year. it's coe-ceo sending a memo to employees saying the company is quote absolutely rock solid. his message trying to reassure staff that things were going well and the market is misreading the bank's health. if you look at the chart over a long term period it looks frightening. this is the cost of buying insurance for deutsche bank's debt. it's becoming much more expensive. other major european banks also taking it on the chin today. is contagion back in the central banks? will fred frost is here. >> good to be here. >> everybody who went through 2008, 20 09d, you see the credit
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default swaps, you start to get agitated. are we going to go through this again? are the financial sell off in europe selling us a major crisis is coming here. >> i think the sell off has been sharp and quick. but the investors i have been talking to don't think it is a systemic credit crisis. two key factors that applied with the mortgage backed security crisis that don't apply now. one, they were complicated securities that no one knew had a value. the second is it affect everyone from consumers because their house prices were falling to hedge fund who bought the products. the second factor, in 2010-to 12 in the euro crisis, the fear then, that the euro might again collapse. that's not happening here. rather than being a credit crisis, this is a capital crisis. do they have to raise capital. these guys have all raised capital over the 18 months.
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deut . >> if it's not mortgage backed securities causing the banks to erode, what is it? what is the toxicity on their poirks? >> i think it is a profitability issue. investment banking business has been crushed over the last four days. in europe much more than the u.s. they are more stringent and trying to compete with the u.s. as well. look at the negative rates, that's a de facto tax on the retail parts of the business. any generalist out there is questioning why do i need to own a bank is this they are being hit in the short-term because of high d term market nofs and in the meantime where is-year-old going to come from. >> cocos convertible contingent capital has been selling off. we have a chart. that chart looks really ugly right no. >> it does. >> what is that chart telling us about these particular bonds?
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>> this is interesting, and it came up in crion's message to staff. we have got a quote here that says deutsche bank remains absolutely rock solid. on monday he said we took advantage of the strength to reassure the market of our capacity in market to pay cou n coupons to investor who told our convertible tier 1 capital, that's these convertibles. the cfo did mention at the end of that, by the way, we can pay the coupons on our cocos. everyone started to question why did he mention it at all. that was one of the sparks that started the whole process. bottom line of all of it is people have questioned do they need to raise capital again forward to do this. they say they don't need to stereo the concern is over derivatives, is it not? we have got a lot of derivative exposure. we don't have a bank like deutsche bank in america. this the de facto german national bank in many ways.
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during if krilsis they absorbed a lot of stuff. some of the stuff may be coming back to bite them. compared to their highs of 2008 it looks safe for now. >> the cds are painting a grim picture. >> a long term chart goes like that, and then like this. >> i don't think this is a fear among investors i've been talking to that it is a systemic credit crisis. >> that's rational. but as a investor you don't take a bank like that down 50% in market cap. and today i think the statements coming not just from the ceo, but also merkel's bloch saying deutsche bank doesn't have a problem -- doesn't this remind you of lehman brothers. >> the bank has a problem. >> right. >> that stepping in is an extra worry. and you say 50% over the last 12 months. it's down 38 year to date.
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>> it's not just because of a capital -- >> especially the german banks. look at the italian banks. they are selling for pennies. >> they have fallen a lot. if we step back and look at 2016 as a whole the fear for me that investors have had is central banks who have propped up markets the last several years may no longer be able to do that. >> i think there is no back stop whatsoever, and rates could go negative in europe. >> and japan today is a great example. two weeks ago we saw a three day move of yen weakness and nikkei stroeng. that eroded. we are at 114. extraordinary strength and when they stepped into negative rates we got a three day response. what more can stocks do. we got a rally the start of 2015. at the start of last year, we had a rally. people thought it would boost the sector more widely. they are seeing that hasn't
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happened. we haven't seen a pick up in loan growth and we are focusing on the key factor of negative rates, which is a de facto tax on -- >> i wonder, rather than the view of is the back stop over, i wonder if the market is realizing there never was a back stop, that in reality banks need to make money. they have to make money. it's not like an oil company. an oil company is going to pump out money even if they lose money per barrel because they need the cash flow. a bank, they don't need to make the loan. i wonder if negative rates, the market has had a awakening, where they realized, negative rates, hmm, if banks don't make money, they don't really have a reason to exist. >> and which generalist is buying banks today because of that? qe did not work in the same way in europe as it did in the u.s. >> no, because they never reformed their economies, didn't
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do what they were supposed to do. >> bond market never developed and the you didn't get a growth in loan demand when rates went down, it hasn't boosted income. so their urtd hadding. falling sharply. >> so you on the exchange tomorrow. >> bright and early. >> just stay awake, man. don't go to bed tonight. a major move in the yields, the ten year japanese treasury bond going negative for the first time. are global central banks seeing their plans undone. are they out of bullets. you are watching cnbc, we're first in business worldwide. in new york state, we believe tomorrow starts today. all across the state the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in the hudson valley, with world class biotech. and on long island, where great universities are creating
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welcome back to "power lunch." we'll check on the s&p 500. first off we're down near our worst level today. if you check it out, currently down 18 points. 1835 the last trade there for s&p 500 on the cash side of things. we're also watching other sectors and industry groups as well here. in the dow transportation stocks just turning negative now. they had been tracking for outperformance versus the broader market. it was tracking for its last positive day in the last three. airlines up between 1 and 2% helping to lift airlines higher. crude oil factoring into the trade as well. falling to a two week low. airlines moving along with crude oil. these stocks seeing a turn aurnd
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around after weighing the most on transports yesterday. small caps and transportation stocks are a big focus. over to you. >> fed chair janet yellen getting ready to testify in front of congress tomorrow. we'll get insight now on key thing to watch. steve liesman with us. drew, let me start with you. we talked just a few minutes ago, and stephanie link in the last hour said one of the key questions is are we in a recession, are we headed for one. what do you say to that? and what would janet yellen say? what you would she do if we were. >> she would say we are not a recession. point to the labor market and new research that says it doesn't matter how long you have been in a recovery, being in a
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long recovery doesn't make it more likely you are going to be in a recession later. she would point to those two things saying we are not in a recession or not going into a recession. i would say if the fed were to have to back trabs track -- >> return of bear. >> i think they would have to be looking at negative rates because everyone else is doing it. and they want to be the cool kids. all the cool kids are out having a cigarettes and they want to have one too. >> come on. >> i think that's what they would look to. quantitative easing. there is no point in taking risk premium out of the bond market anymore. there is not enough left. you go on to the next thing. and that is negative rates. >> steve. >> i think you are having at right discussion. it's important to underscore, you look at the market right now and say how could there not be a recession and the fed looks at that time numbers right now and says what recession. let's remember what happened on
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friday, 4.9% unemployment rate. we've been averaging 42 to 50,000 on jobs. set up is strong for another strong jobs report in march. cdc wrap is up showing 2 to 3% growth expected for the first quarter, a snap back. yet you look at a market that's down 20, 30% in key areas. >> how does she handle that? >> i think easily. i think she points out because the market is down, financial conditions are tighter. because oil has fallen as much as it has and the dollar has essentially appreciated, even though it's back up, it has fallen back. that has moved out my forecast for when i'm getting back to my 2% inflation target. that will be code and signal for people out there that rate hikes are coming later. >> basically, if the credit markets are tightening credit right now, why would she want to add to that at this point. >> she would point that out as a
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factor in her decision making that financial conditions are tighter. at the same time notice that she wants to keep her distance from saying i am not moving because the market sold off. that's language she does not want to use. to show that she's beholden to the stock market. >> let's take the other side. >> there is no other side. >> i'm going to particular the other side and say why not raise rates, because, and all the points are well noted but i think we've learned in the last month that the market wants banks to make money. if banks aren't making money then the market is probably going to come down. maybe the federal reserve should stand up and send a message and say, yes, coco bonds overseas are acting could could, however the joeld jolt survey was good today. let's take a stand. raise rates, maybe help banks make a little more money so they can ease credit a little more. isn't there a positive the raising as well? it's not only a negative thick, is it. >> steve and i debate this.
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steve comes down on the opposite. i think zero rates are counterproductive. negative rates are an abomination. if you want to get the biggest cohort in america to start spending more money that's the cohort heading towards retirement you have to make it look like they may be able to afford retirement. >> make savings. >> i'm not talking signature conditionally higher. i'm saying if you are too far below where you should be it's as bad as being too far above where you should be. >> cutting to zero, and making it basically impossibly -- this is where view remembers w.h.o. are antibanking are blah, blah, blah, i'm talking about make aing a loan. >> i'm not just talking about banks i'm talking about main street. >> below zero on your cd. >> the average american wants to retire with a series of ladder cds and they look at you like you have anyone heads. >> is it so much that the banks don't want to make the loans? because the rates are low right
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now. or is it that people don't want to take the loans? >> well, there is not great loan demand. >> bank lending growth is up 7.7 year to year. core bank loan growth. >> i think if she is asked she will mention negative rates. >> what do you think the reaction will be to her uttering negative rates? >> i don't know what makes this market happy. if she were to come out and the be dovish, i think the market would hate it. >> negative rates is a long shot po the federal reserve. it does not want to use negative rates. we have this market industry. >> that doesn't exist in europe. >> it doesn't exist in europe. it would be very negatively impacted by negative rates. the fed doesn't like it for a lot of other reasons, too. >> the trade off for them is too tough, in other words. >> remember, the fed is in at
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least -- this is aimable with quotes around it, aimable position up, its first line of response is to withdraw the four rate hikes on the table. they have that before they end up having to go negative. so there is a big big step before negative rates take place. >> drew you mentioned something offhand, and i wonder if it's true well, if they are dovish the market may not like it. >> for the better part of five or six years abovish is all we wanted. there was no doves dry crying, no purple rain, it was only making it rain. >> hello prince or artist formerly known as. >> i'm coming off the flu i have got every medicine in my head. >> nyquil jag. >> dayquil. that's why i'm jacked up. here's the question, how do we reach is c change. where we have flipped, five years of dovish, may be over. >> what steve says, the market wants a hint maybe they won't go four times.
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but if you are too dovish -- the market always thinks the fed knows more than it does. usually wrong. >> crude is at a new low here, 28.19 on the day. >> the stock market is punishing airlines for lower crude oil. >> they are going to expand capacity too much and have too many states. >> is that logical to you. >> yes. >> airlines are terrible stewards of capital. >> they have been. >> for 40 years airlines d every time the airlines have a good day they ruin it. >> i want them to have more seats. i want them to have more seats. >> back seat or in the bathroom. >> i don't want to be in the middle seat. >> because it's crowded. >> how the market is going to take the fed. >> i was going to say, has the world figured out the fed lost control and in fact the fed never actually had control.
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>> that's the problem. people started to believe central banks had control. in reality, markets and the economy is too big to be controlled. you can guide it and can set baseline prices for certain costs like financing a security. but in terms of managing the whole economy, the entire yield curve, it is a bridge too far. >> gentlemen thank you very much. we will bring chair yellen's comments tomorrow. >> we will get the first comments at 8:30 tomorrow morning, new information we just got. >> really? >> i will be in d.c. tonight. where does she hang out? i want to track her down and ask her. >> she is a home body. >> don't be a stalker, brian. >> i am a fan. that's a fine line. >> drew, steve, thank you very much. >> by the way, michele just told you oil is tanking down again. down to $28.33. stocks hitting session lows. guys, can we bring up some of the pipeline stocks we flagged earlier. some of the pipeline names are getting walloped, harder resources, plains all american.
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names we don't talk about that much are getting absolutely spanked, down 16, 20%. chevron, wall mart and ibm are down as well. >> one of those is a oil company. one of those three. >> can you guess which one. >> sarcasm noted, man. >> sorry to interrupt you. >> go back to bed. "power lunch" is back in two minutes. right after this. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.
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we. just a reminder. oil is sliding once again.
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we are now at what, gosh, the low 28s on oil. down a couple more percent today. as the numbers get smaller it doesn't take a big percentage move the get the numbers down further. we reference some of the pipelines, plains all america, targa resources, basically, any pipeline company, guys. i just picked these names out because they are getting hit so hard. in fact you see the turns are down a couple of%. in fact, 12, 15, 20% in some cases. >> let's get a check on the bond market. on the back of the three year auction. rickson santelli? >> the three year note was a d plus dauks auction. volatility at one eastern straight up. open the chart up. last time we are here for three years was around tax day of last year. hey, how about a 20 year 1e7b-year jgp chart, japanese
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government bonds. yes, that is a negative sign. less than two weeks since the japan central bank put the penalty in that's what is happening. baricallies, look at a five year chart of investment grade. this is like an tf, this is a spread. it's been that way for a few session. that is very important because as we turn the corner, these aren't outrageously wide, but definitely wider. october 1st. if you want to look at something interesting, let's look at the dollar index. dollar index is down. why is it down? well, japanese economy isn't shockingly strong. the european economy and its banks aren't shockingly strong but the currencies on the carry trade is shockingly strong. another unintended consequence of policy. >> let's get a check on gold. at the close, 1198.20 an ounce. up just barely. remember gold had seen a nice
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bid as the markets have had difficulty. today we saw a bit of a breather but it bounced back. metals complex. silver and platinum posting a gain. copper and palladium is down. oil trade is falling apart. wti down 5.1%. look of the% decline, down 7% at this hour. >> brooettle brutal time for the bulls. right now the dow and the s&p 500 down for 10% for the year. the nasdaq off 15%. but some folks see value in some pockets in the recent selloff. we'll tell you about three stocks you may want to take a look at after this.
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welcome back to "power lunch" i'm melissa lee. crude oil just hit session lows on wti, below 28 bucks a barrel. $27.96. it's now back above 28. down 5.4%. on the dow, markets on a low.
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look at losers. ibm, walmart, and chevron. and looking at some of the other indexes, s&p 500, nasdaq, russel, there you have it. nasdaq is down by.6%. let's get to sue. >> melissa, here's what is happening this hour. the flint mayor has unveiled an aggressive plan to remove lead contaminated pipes from the city. she announced the fast start plan why which employees will partner with lansing department of water and light to remove these pipes. hillary clinton was in dairy, match. she signed autographs, shook hands and took lots of selfies. a container ship that ran aground has been freed. it took 12 tugboats to release the ship, a steering defect
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caused the accident. red lobster says it is feeling the beyonce bounce. the seafood chain says sales surged 33% on sunday from a year ago after the release of "formation" in which beyonce says she took a man to red lobster after sex. red lobster is also trending on twitter for the first time. who knew? that's your news update this hour. >> think of the impact if she had taken the man before sex? >> well, there's that. >> there may not have been sex. >> oh. i'm just saying all you can -- the all you can eat -- i mean, if you eat two bowls of pasta and 700 shrimp, you might not be in the mood. >> you would fall asleep. i would. >> oh, my. stocks taking a leg down again. all the major averages are now down between 9 and 15% so far this year. long term investmentors however are saying these are the moments
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to find value. let's get some idea of what if any stocks are for value right now. ben pasz and mark travis join us now. guys, good you have to here. mark, you consider yourself a value investor, right? are you seeing this as the moment to pick and choose for value stocks right here? >> it's one of many. i mean, really the last three years with low volume it the and a steady upward march of equity prices it's hard to fine a disconnect between price and value. when you are in an environment like we've seen the last three months, year to date, things start to become disconnected from what we think are the long term values and that's an opportunity to put money to work. contrary to what many people may think. >> what have you picked up, bought or what do you like that offers value right now. >> i like any business that generates cash that doesn't have an overleifered balance sheet that we can value on their free
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cash flows. i particularly like to get paid to wait collecting a dividend north of the market. >> we are showing verizon and coach as two that you like. >> they are discounted. verizon is a large market cap. we added value in the small cap space but the russel 2000 became disconnected from economic reality. >> it has had a huge run. the right-hand side side of the chart -- >> it's up for the year. >> everybody else seems to have had this idea. >> well i'm glad they followed me. >> but you know, so i look at that with, you know, 4.6% dividend is a healthy place to wait out turmoil in what i records is a duopoly with at&t and verizon. if my kids' cell phone activity is any indication, it is a steal at $48.
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coach, interesting enough, i was read being e-bay services, and michele may know this, every eight seconds a woman buys -- or every ten seconds a woman buy as purse on line. but anyway. >> wow, i didn't know that. okay. >> coach has repositioned. it has been dragged down by slower sales in asia. but it's got new management, and some new brands. >> mark, i want to get ben pace in here. we've given you a lot of time. i'm going to cut you off. >> fair enough. >> ben, i see you are recommending potentially energy as we are looking at oil as a new session low. can we bring that up. down 6% at this point. >> michele it's the exact opposite. one of the things we have been stressing is that you have had asset class bubbles burst over the last 15 years when they build up. technology stocks early last decade, housing end of last decade and now the burst of the energy. those ten to be l shaped than v
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or u. but our clients have been asking when is a good entry level on energy sects stocks. we are stressing to be careful. take advantage of the other stocks that have come down. as mark mentioned, there are values in consumer discretionary, values in financials services, and health care, stay away from financial names. >> we had on the dax the lowest level since october, '14. terrible german industrial production numbers. what do you see in europe at this point. >> further ease coming out of the ecb. >> you believe the ecb is in control of the situation? >> not that they are in control. i think japan is the test tube example as far as monetary policy can only go so far. but europe is in the early inning of their ease. draghi was just allowed to do quantitative easing. they did the negative interest rates. they will probably do at least one more, drive the euro down,
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drive european equities up. and you've got a little bit more gdp growth coming out of the europe but it's more of a near term tech particularcal overtwait. watch' gone underwhait japan. we'll make that move with europe. the better story is in the united states. >> ben, something you just said made me nerve u.s. you said this is the third bubble bursting, you referenced technology, and housing. in the tech boom that bubble bursting cost the dow 32 pr. in the housing burst, the dow fell more than 50%. yeah we've gotten off to a crap start for the dow this year. if this is one of those big bubbles like you just mentioned, it could seem like maybe the dow would have another 20 or 30% to fall. >> the only thing breyer brian i think the magnitude of how much those sectors meant to the u.s. economy back in 2000, housing was so strong in the late part of the decade. to energy, which admittedly was a lib more of a reborn business
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over the last five or six years but still a relatively small part of the u.s. economy. so there shouldn't be as much contagion there. we are watching bank balance sheets. everybody is. but it doesn't look like the banking system has as much exposure to energy as they did to housing. >> it is a good part of the job growth. >> true. >> it was an okay part of the job growth. i think when you check it's still more of a service oriented economy. the service jobs were up. the better paying jobs i will admit were there and you are starting to lose some of those. but job growth is centered around our service economy. >> thanks for the ideas. mark liked verizon and coach, ben says do not go to energy. log on to our website to see more. tesla down 30% in just the past month. that's not the only worry for elon musk.
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plus hong kong is not the place where you expect violent contests into the streets. our fear about the china slowdown spilling into the neighborhoods of hong kong. the cnbc trend tracker live data board is brought to you by the cme group. cme group, where the world comes to manage risk. it's a fact. kind of like social media equals anti-social. hey guys, i want you to meet my fiancée, denise. hey. good to meet you dennis.
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our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade. no, twitter is not an energy stock. look at it in this sell off. down more than 3% right now. down 10% in the past week. almost 40% so far in 2016. a troubled share price. >> to say the least. in fact, speaking of, take look at shares of solar city, continuing to plunge. it is down about 8.8%. this is ahead of earnings tonight for the year. it's down by about 50%. also look at shares of tesla.
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the thing that's interesting about tesla, it fell below the 150 mark yesterday. we are trading at levels not seen since 2013. if you look at the intraday chart it was up as much as 7.7%. now it is down by a percent, which is telling. this major reversal is an indication that investors are not getting in and they are not staying in. if it can't hold on this game. of course we are looking at elon musk. elon musk essentially runs both companies, chairman of solar city, tesla reports tomorrow. can he manage to turn this around? >> this is all about the gull wings that they can't get to work properly. >> for tesla, there are a lot of questions going into the earnings report on the execution of the model x, the gold wing. love, that i want them to work. >> even the biggest bull on the street, jonas over at morgan stanley raised that question again for the second time in a couple of weeks, maybe suggested
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that tesla should outsource production of the car because of execution issues. they may have demand for the x but don't have the kpblts. the three has been delayed by as much as a year. and by the way, that year is when a lot of the other mass market car make remembers coming out with their own electric vehicles. there is going to be more competition if tesla can't move the three onto the market. >> delay hits it hard. >> absolutely. >> rioting breaking out until the middest of chinese new year's sell the brags in hong kong. hundreds of vendors were rioting because hong kong cleaned out because they didn't have proper permits. more violent than the domestic
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protests. you don't see this in hong kong. this is not typical. >> you do see it in hong kong. >> things that change. >> the youth are not the youth of yetter the year. >> firing off a gun. >> you also wonder if the lieu nar new year, holiday, people not working, more people are out on the street. >> is this also a sign of a weak economy, if you are trying to make a living and they are coming down on you. >> oil has been -- >> hitting the bottle, too, year of the monkey. having drinks, getting angry. >> looks like post super bowl. >> i guess, yeah. >> let's talk about oil, down below $28 a barrel, at least at one point today. let's look at west texas right now, at $27.92 off another nearly 6%. gold steady at $2900 or thereabouts. yield on the ten-year treasury falling to 1771%. coming up, gloom and doom. where are american ceos, young ones so down in the dumps?
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>> "power lunch" will be right back.
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welcome back to "power lunch." want to take a check on the markets. just off session lows. start over here. off of session lows for these guys. wti down by more than 6%.
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10 cents a barrel off the lows. the dow is down by.7%. the dow down more than 1%. s&p 500, keep in mine it had been down almost 1% in the session. down three qurtsz of a percent right now. safety doing well today. utilities and consumer staples. materials, health care popping into the green. among the worst performers, energy, no surprise with the decline in oil prices we are seeing today, telecom being weighed down by verizon. down by 1.4%. big interview coming up at the closing bell. the disney ceo bob identifyinger. after disney releases earnings report. stay tuned. you are watching cnbc, first in base worldwide.
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welcome back, everybody. a new survey find that ceo economic confidence is down once again. that is for those who are running companies in the united states. but for ceos in return and asia there is actually a slight increase in confidence. the survey, conducted by the young president's organization, shows the confidence level hitting its lowest level since 2011. safe dave mainy is founder and ceo of deep digital.
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good to have you with us. >> good to be here. >> who did you survey? how many of them were they? and tell me about the split between u.s. and not in the u.s. ceos. >> we have 23,000 members around the world in the young president's organization. it is an alumni organization. we ask ourselves once a quarter, in a very simple way, what's your sentiment, somehow your business, are you hiring people, do you think sales are going to be up or down? this is the closest thing there is to a gut level economic indicator of growing companies and their ceos. so not that many giant public guys. mostly private. and so you get a real picture of kind of how people who are making the decisions, the growth decisions around the world economy, how they are feeling. >> are more of the u.s. ceos less confident than they have been? describe the lack of confidence in the u.s. and contrast it with the relative seeming confidence
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in europe and asia. >> yeah, what you are seeing is, in my opinion, having looked at the data -- but it looks to me like the resource intensive and the developing economy ceos are kind of the most bummed out. the two most pessimistic regions we have are africa, of course very resource driven, and can dark believe it or not. where all kind of seems to be gloom and doom at the moment, the canadian dollar is awful, and oil is completely on its butt. what you see in the other ceos, is you know, western europe in particular looks like they are growing in confidence. maybe that's, you know, some reaction to their -- what they perceive to be the changing fortune of the eu. it could be that the asian ceos are seeing a little bit over the horizon where they saw this coming and they are feedly badly before and this is part of the economy. but that overall is low as it's
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been since 201. >> apart from cheering the broncos in your part of the nation there, how is your business? >> it is an interesting time to be a innovator. when things aren't going that well, when markets are a bit on their behind it's not a bad time if you can get the capital you need to grow it's actually a phenomenal time to start the business. the problem is, you have to be in something that doesn't require a lot of capital or you are going to have to pay dearly to get it. >> is this survey a predictor of some sort when it comes to business spending or other metrics out this. >> i like to think the ypo crew is a leading indicator. because what you get from -- we are in a world of public company battleships, we are the speed boats. we are companies that, you know, ypo qualifies members with companies that start at $10
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million in revenue, and the largest are multibillion dollar corporations. but you are going to see, you know in the curve of distribution of size it's around the small to probably 10 to $200 million in revenue. so you get a much purer picture. we have to make decisions with our guts. we have to be more nimble. i ten to think when you see those guys in china turning up they are probably reacting a little bit faster than the chinese government. >> if you were to strip out some of the soft spots, obviously playing with stat stits. if you took out the resource oriented ceos in africa, and i'm going to assume some of the negative sentiment in canada has to do with the currency, but if you were to take those big picture thing away how different would the picture look. >> a little different. what i fine is smaller company american ceos, you know, while they have a -- while any love learning more about
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international stuff, you would still find we are doing a lot of business here domestically. and i can't tell whether we are just, you know, we haven't -- we are shock absorbed and haven't quite felt it or whether we are just feeling those four shocks and ignoring it. probably one or the other. >> dave, thank you very much, ceo of defect digital. it is 2:00 p.m. on wall street. tough day if you are a bull. the s&p, the nasdaq and the dow are all off. one of the big reasons is wti, crude is loir lower now by 1.50. 28 high pressure 13, that's off the lows of the session because it had fallen below 28 to 27.56, we are seeing energy, technology and financials all get hammered today. let's talk more about this big 6% drop in crude at one time, jackie deangeles? >> we were down about 6.5% at
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the session lows that you mentioned, $27.74 and this is all on iea report that was out earlier this morning. i want to go through some of the headlines. it is a confluence of circumstances but certainly things we have been discussing throughout the weeks and months. the iea is saying the global oil glut is worsening. that an opec deal is unlikely. remember all that speculation lifted the stocks last week. lowered the forecast down as well. when you take this together, supply continues to rise, demand is expected to wane a little bit and opec isn't going to take action. opec production cited in the report increasing 32.6 million barrels per indicate, up for january. this is a dramatic increase. we'll get inventories, apiafter the close of today and department of energy tomorrow. >> with oil down, big oil stocks are getting hit as well.
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no group getting hit as hard as someful pipelines. plains gp, targa resource partners, plains down 12, 14, and 20% respectively just today. all but four pipeline stocks, energy transfer systems, boardwalk and chaneer down today. let's talk about banks stocks. banks may be the new oil, by that we mean the focus of global concern for the markets. we present a financials triple play, the risks and the opportunities in banks. to start you off we have three top analysts with us. let us again abroad. the s&p goble financial etf, the ixg down 18% this year. eron davis covers that group at morning star.
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eron, these banks are supposed to be better capitalized. not supposed to have the crummy home loans like we had in 2007 and 2008 on their books. yet when i look at the credit default swaps on deutsche bank it seems like the market is thinking this is seven years ago. is it? >> hi, brian. yeah it's ugly out there. i think it's not seven years ago. i don't see any big asset class that's likely to taus the kind of losses we saw on u.s. subprime bonds. with that said, i do think for companies where there is material capital questions like deutsche bank that the questions themselves can become a self reinforcing cycle. and so i'd stay away from those kinds of names. i think this downturn is a good opportunity to buy some of the best quality names that are trading down with the worst of them like ubs and lloyd's. >> let's talk about deutsche bank, the poster child, because it's big and global bank and the
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de facto bank of germany s. deutsche bank just a one off situation? or is it deutsche bank endemic of others? >> i think deutsche bank is more of a special situation s. what's really unique about deutsche bank is that it doesn't have any good businesses. when i look at the work that ubs did -- >> that's not the kind of uniqueness you want. you don't want that. >> no, no, you don't. but that doesn't mean it's necessarily worth nothing. but its retail business isn't very good. germany is very overbanked. its investment bank isn't good. and regulatory environment is making investment banking in general much worse business than it was ten years ago. and deutsche bank's asset management business is struggling, too. in general, it doesn't have one great business it can focus on the way that some of the bank
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that have turned themselves around have. >> do you believe the coe ceo who says that it is rock solid? >> i don't cover doyle bank myself. i covered another bank who issued reassurances before they went to capital raises. i think we should be concerned. >> some estimates are 55, some 75 trillion risk exposures. compared to banks that you like, does it stand out in that way? is there an exception when it comes to exposure. >> deutsche bank has a huge investment bank. that's a difficult business right now. i think that some of the more attractive businesses are the safer businesses, more like private wealth management. although that's very driven by market values and can be hard. and outside of germany, i think that retail and commercial banking is still a pretty safe
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business in europe. >> all right, erin, we'll leave it there eastern, i think you have the line so far of the year. the unique thing about deutsche bank is they have no good businesses. thanks for your time. >> let's move on to the big u.s. banks of many are in the financial spider etf xlf. down 15% this year. chris wheeler covers them at atlantic equities. these guys are supposed to be better capitalized than the european banks. we don't have negative interest rates yet they are performing just as poorly, maybe not just as poorly but very, very poorly here in the u.s. compared to the european banks. why is that? >> let's put an interesting point to bed here. a chart showed u.s. banks are trading at an all-time high against their european counterparts. the good news is people recognize u.s. banks have been
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pushed along more quickly and these banks are in a much better position and further down the line as opposed to deutsche bank and swe stwis and barically's. >> they are trading at a all time high relative -- you are talking about the spread. >> >> no the u.s. bank groups are trading as an all time high against the european bank index. >> you are talking about the spread between the two indexes, correct? >> yeah. >> okay. but they are still down. like a u.s. investor who holds them would not find much consolation in that statement, right? >> you are absolutely right. and i mean, i think what we are looking at here is an interesting situation where we have a whole bunch of items coming to bear. obviously energy losses, worrying about carpet american. worrying about recession. what are we going to be in a low inflation rate environment. u.s. recession, global recession. none of it has about itten.
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negative interest recession we touched upon. i agree with your earlier speaker when you asked is this 2008 again, most definitely not. nevertheless, do you need to own an asset like a bank stock when you see so many risks circling around although none have bitten yet. >> do you think some of the pricing in this index has to do with fears of counterparty risks to european banks. >> i covered european banks for 30 years before i covered u.s. banks. i have an opinion. in fact i would rather say what lloyd said today at in a conference when he said that european banks have access to plenty of liquidity. so he seems confident about that. i think i feel the same. nevertheless, the fear around the sector is palpable.
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>> all right, chris, thank so much. >> pleasure. >> joining us on the big u.s. banks. >> let's run out our financials triple play with the regionals, the kre getting clobbered this year. down 18%. paul miller covers them at fbr and coe. i fifth third for one said it has $2 billion in energy loans. 2% of its portfolio. regions financial, 4.3% of its loans outstanding are energy related. why are the stocks then getting so punished? is it the perception that 100% of that energy loan exposure is going to zero? >> some of it is i don't want to own any stock that has energy exposure or cre exposure in the texas market. that's what's going on. the fundamentals have disconnected to the reality.
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the portfolio owners don't want to own anything that has expose oar to energy. however we've been saying it's overdone for a few weeks and these continue to trade down. the ten year is down over 50 basis points. since january 1st. that's a huge problem for these institutions. that's telling you they need help from the fed and i don't know if they are going to get ittot or not. >> we saw the sell off most focused on the ones that have exposure to texas. the texas capital bancshares. at this point it is a wider swath. what do you say to the investor out there? why bother owning the regionals? because you have that unknown of not really knowing how much of that energy loan portfolio should be written off. and then you also have the unknown of hey you know what, the yield curve looks like it's going to invert? they can't make anyin money in this environment? >> it's very difficult. what we are telling guys is, listen, a lot of this is already factored in. they are not going to lose 100%
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of the energy book. they are not going to lose is00s of cre posure in the texas market. these are not first and second loss positions. this is not like the housing crisis in '07 and '08 when they had the first, second and third loss positions and tail wind with the funny and freddy. you don't have that risk out there. however, nobody wants to hear it right now. they want to play it conservative, very nice and don't want to own these things at this point. i think a lot of guys are going to make a lot of money on these things once you get it all together. but right now nobody wants to get in front of it. >> that's right. paul, we are looking at all the things, cdss and deutsche bank and talking about oil and energy, it seems like everything is doomed. the jolts number was good, jobs was weak. overall the economy is doing okay. car sales and loans are up. we can argue about subprime all we want. but there are solid points this the economy. one of two things is going to happen, either they are trite
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and the banks are doomed or we are going to realize the mistake and start bidding them back up? which one is going to happen? if it's the second, when and who is going to win? in we get stabilization in the ten year and the oil price you will starred to see these bounce nicely. when that happens, i don't know. i think you have got to take ownership here and nibble on some of the names. >> why is some bank in the middle of nowhere who has no exposure to oil and gas getting whacked on oil and gas. >> every bank has their own reasons why they are done. zi yons has a 27book trading at 20 bucks. yet again it's getting hacked. right now, nobody wants to own these things. if you have somebody unwinding some portfolios it doesn't make any sense to us but that's what happens. that's where i think the valuing investors who have discipline are going to do well once the market starts to turn. >> paul, thank you for joining
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us. paul miller, fbr. >> from the financials to a sector that has been holding up nicely this year, better than that, actually making money. we will talk about big opportunities and risks in utilities. also keeping a close eye on oil with just about 15 minutes to go before the crude close. west texas now down more than 4 pr. plus, big calls today on barbie and glam burgers. we'll plain explain what that's all about. and the markets are making a big run off of session lows. last year we were down more than 100 points on the dow. right now still in the red there, down 15. much more on the markets coming your way when "power lunch" returns.
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welcome back to "power lunch." i'm michele cabrera. stocks are bouncing off their session lows. the major average is still in the red. but we have seen a mini rally in the past 20 moins. right now the dow is down 14 points. the s&p down only 3. and the nasdaq down 17 points. the russel 20 # 0 lower by half a percent. 5.5 points. coca-cola beating estimates by a penny. coke says global volumes grew 3%. in its latest quarter. the stock is in positive territory. cvs is up thanks to a 5% increase in pharmacy same store sales lastie year. a pair of stocks hitting all
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time high this is session. utilities. investors piling into utilities. coned and nexterra at up with of their highest numbers on record. >> we'll got to that and more here with all time highs in some of the utility stocks. they have been a bright spot in what has been a disturb len market. one of two sectors. the best sector performer of the year, up 7%. the other one that is up is telecom. where might you find the best opportunities in the the group? what do you need to doe about risk. dan eggers joins us. a lot of people have been piling in here. valuations have gotten by some measures a lint stretched. tell me about what the risks are of chasing the run-in utilities right now. >> the run-in the group, fed today for lack of a better word b has been compelling.
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a great run. when you look at the screens from a a valuation perspective. relative pe multiples are above historic averages or below the peaks we've seen four times over the last four years. you probably have somewhere between 5 and 10% room to get back to the peaks assuming the earnings stilts hold to be true if my colleagues are correct and there is a flat year for earnings in the market for 2016 our valuations don't look nearly as bad as they do even after this run. against interest rates as the ten year continue to fall we are not cheap against interest rates. also certainly not at an expensive or peak stretch valuation. as we said in a note a week and a half ago, they are b students. certainly an advantage and an opportunity to do better but is lot has to be based on the peers. you need to be agile but there is room to make more money.
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>> smartest kids in the classroom of dim wits? >> i wouldn't go that far. >> i was looking at the spreadsheet of the coverage universe and the multiples you put forth for 2016 and 2017. assuming the s&p is 1.8 times 2016 pe ratio, assuming small rate cap is 17.7, should we be concerned about that premium? you mentioned we could did go higher historically. what is the highest pe that we've seen? even in 2017 the s&p earnings multiple goes down to 14, but utilities hangs on in the 17 level. >> if you look at the valuation on an absolutely pe multiple basis we've seen higher than where we are a couple times. 1.5 pe multiples to hit all-time highs, not a lot when you look
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at the absolute. today we're probably app somewhere around a 15% premium, trending toward those past peaks. not all the way there. part of the question is what is the earnings estimate for the s&p 500 obviously is our strategists have laid out. they have put a flat number out for 16 versus 15 n. that case, four or five% down relative multiples, 12% premium. then you will have more room. a lot of this as we said is a fung of how well is the market going to be done as much as how great are my stocks going to be do. >> talk about your four picks, pinnacle, dte, exellon and the nextera. >> pinnacle and dte, the large cap or the ultralarge caps have done quite well the bid to safety has been there. opinion call and dte, 6% a year
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earnings, 4% dividend yield. good regulatory constructs in both territories and they are not trading at premiums, a little bit of a discount. we are wiing quality at a better price. on the other side of it, necks terra, it is an interesting beast, at an all time high. growth 6 to 8% target. we think they are going to push to the upper end of that bounds. win and solar and with the credits from the government the opportunity for them to extend their growth platform in wind and solar is going to be good. we will hear more about that on thur first quarter rnings call in april. last, on he willelon, hybrid, part regulated utility, part generative collaboration. we have been pushing that on the
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basis that in a low natural gas low commodity base we are paying two to three times earnings for their generation fleet, which to us seemed like an unactionable price. but when we comp this against the whole energy complex, we still see a lot of value in those generation assets plus a very good base of utility earnings. there is a nice combined value in that story. >> dan, thank you. dan egers of reswiss. utilities have been holding up this year. we found another investment year that might be on more solid ground. it is today's miss tree chart. this is the best performing stock in the s&p 500 this year. yes, there are some stocks higher this year. that's the best one. do you know who? it is take some guesses. the answer coming up. a few names holding strong. the markets recovers a bit. rumors deutsche bank will do a multimillion dollar bond
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buyback. dow barely down. if it wasn't for chevron we might be positive. martin marietta makes paving rock and owens illinois makes bottles, firmly in the green. "power lunch" will be back as the dow struggles to recover. particular around.
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we have a market flash about deutch bank. >> the financial times has put out a story talking about this idea that deutsche bank may be looking to use some of its cash to buy back the debt, senior debt, that it has outstanding it. has a lot of it, close to $50 billion says the story here. again, this helped provide a bit of a pop. you can see on the right-hand side to deutsche bank shares and u.s. trading so far today. as for the longer term trend, of course we know deutsche bank one of the many european banks that faced stress here. guys the issue is whether or not we know anything more about the overall picture financials, deutsche bank has been at the epicenter, the heart of a lot of this financial stress in europe. if they are going to retire some of that debt. >> remember, that's a debt not the convertible.
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>> right. these are not those coco bonds, contingent convertible bonds. >> we have shown that. fallen off a cliff. but the senior debt. >> coco bond are bonds that can be changed into equity in times of stress to short that's balance sheet items. remember, when you are going to buy back your own debt it means spending cash on your balance sheet to reduce the liabilities on your balance sheet. again you are trying to strengthen things out snooshs ultimately you have to improved the capital picture. >> this is about debt equity, how you want your leverage profile, risk profile to look to. >> like a household savings, taking cash and paying down a debt. and what does that do for my overall picture. >> this is what it looks like.
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deutsche bank shares are not green. >> we were looking at the intraday chart. it tried to go positive. and it certainly hit the high of the session but it's not in positive territory and pulling back a little bit. >> you have got a fundamentally flawed company, and their balance sheet thinks the business is getting in pain. they can do a stock buy back and that's going to alleviate some of the share concern and capital ratio but it's not fixing the problem. >> not fixing the business. >> with deutsche bank you look at the derivatives exposure and the legit mad concerns i don't think a bond buy back. >> we had a guest who said the problem with deutsche bank is they don't have any good businesses. >> financial engineering. >> i think the concern here is that deutsche bank would have to do a capital raise. here they are buying back debt with their capital.
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for them, it doesn't alleviate that concern, does it don? >> no. no. what's interesting is this idea that as we talk about the broader picture for what's happening with these banks both on that side of the atlantic and here as well. over the past several years certainly since the financial crisis there have been a lot of super regulatory bodies around the world trying to get banks to improve their capital ratios. raise capital,ity keith keep it on their balance sheet so they can sustain some stresses. you wonder whether or not the current environment for banks both this the u.s. and abroad is a stressible situation something they would have allotted forgiven those simulations that many of these central banks imposed on banks within their borders. >> i think, too, we need to be careful in just the sense that because there are some similarities in terms of the credit default swaps and stuff deutsche bank to seven years ago, we keep coming back to one
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bank. seven years ago we were talking about every bank. we just keep talking about deutsche bank now. it feels like a it is a one troubled bank world. >> i think the question we keep asking is are they going to have to raise capital? years ago we were asking are banks going to fail? and every person we have on says that's not situation we are talking about at this point. it's more about raising capital and figuring out how to be profitable. >> it doesn't feel like a lehman moment. >> don't tempt fate, don. >> i didn't mean to do it. i'm crossing my fingers. the oil market is closing for the day. let's get to jackie deangeles. >> looks like we are going to close under $28 a barrel. selling intensifying as we headed into close there. i'll recap the bullets from the iea report that spooked the market today. global oil glut is worsening, opec deal is unlikely, trimming the 2016 oil product. morgan stapply cutting its oil prices this year to the low 20s.
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remember there were a lot of people out there saying by the end of the year back-loaded we could see the prices back to 50 or 6 # to. people are definitely changing their tune, this theme of lower for longer definitely becoming a reality hoar. after the close we will get numbers from the api setting us up for inventories from the department of energy tomorrow looking for a 5 million barrel build for crude oil and a 1 million barrel build for gasoline. crude oil moving 6% or more in half of the trading sessions so far this year. certainly adding to that, people expecting that volatility to continue, today is another great example. >> jackie. thank you very much. time now for street talk, our take our the analyst calls. cheese cake factories, maxum starting with a buy. they say the restaurant remains a viable story and given its economics they believe it could have more than 350 stores in the u.s. they note above average same store sales and a long runway
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for overseas expansion. maxim has a $57 target on cake. 20% upside. >> i think the concern for a lot of the names in the restaurant group are valuations. the pe on cake is 20. mcdonald's is 24. dri is 20. and that's a premium to the s&p 500. in this environment investors are willing to pay up. second stock, ken ross gold. credit swiss raising to 275 from 225. ahead of the observance and guide. the analyst says he sees expansion because of its high leverage to the gold price, low reserve risk of declining balance sheet risk as gold prices climb. second upgrade in two days. >> it's nice if you are a ken ron shareholder, but it has had a 40% move in a monday. you are upgrading on what has been short-term momentum anyway.
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>> the analyst yesterday made the note that it is trading at a discount to its pierce. >> fair enough, it was a $10 stock two years ago and now it's $2.50. >> so are others. you name it. >> bury all the canadian gold companies. next up, info blocks. guggenheim securities making positive comments post earnings: company made a deal for a privately held research company. blocks has had a stral i thinking start to the year but now is the right time to be adding security capabilities. $30 target. >> this whole sector has been terrible. the security stocks. >> from they supposed to be in danger. it is a big deal. >> few, palo alto has been a win he, but recently this year, people have been taking profits justlike we've seen with facebook and google. thing that have been working have been used as an atm machines.
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>> 100 companies, you are going to throw tap capital at them and five are going to live. >> five or six right now. >> i'm ten years ago. >> has bow, mk is cautious after the toy maker reported a solid fourth quarter. revenue trends appear healthy. head wince winds, increase in spending. premium valuation, it's not cheap, specifically in a market where valuations are contracting. hasbro is trading at 19 times mkm's estimated 2016 eps. we should get more details on spending initiatives. toy fair is on friday. you are not going, are you? >> i wish i was. i could use the levity. listen, hasbro, not bad run over the past 12 months. matel has done okay recently. every time you get a slight move up you get an analyst saying the stock is overvalued.
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the toy industry can't get out of its own way. >> ss and c technology. it is a connecticut based maker of software for financial services companies. raymond james upgrades it to an outperform from a market perform. they like a recent deal the company made. they see significant upside from it. they have a # $6 target on the name. it trades at 55. about 20% up side on a name i had never heard of prior to seeing this call on the wires today. >> the analyst points out the fees are based on assets under management. you would think that's terrible in this environment. but actually these particular assets are not really market dependent. so that's a good thing about this one. >> portfolio analysis, stuff like that. so ss & c tech is your under the radar name. crude oil now dipping lowe below $28 a barrel. sitting right around there. big opportunities in the oil
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patch? we have got names for you to consider if you are bold enough. new video from inside that cruise ship that got cause in a big storm on the atlantic ocean. you have got to see this incredible and scary video. we'll have it when power returns. that's one of the big, big boats.
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hello, everybody. i'm sue herera. here is your cnbc update. the world health organization says it won't issue specific recommendation regarding travel regarding the finding the zika virus in the americas. people should kultd their specific health authorities in their countries for travel advice. gop presidential candidate john kasich serving coffee while talking to people at a diner in new hampshire. it comes as the pollsters took to the polls to vote in the state's primary. kasich surged to third place in some of the preprirmary polls. the number of americans who don't have medical insurance has dropped dramatically in the last two years. more than 7 million fewer people
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were without insurance in the first nine months of last year compared with 2014. and carolina panther quarterback cam newton met the media for the last time this season, defending himself amid criticism for his walking out of the post super bowl press conference after losing super bowl 50. >> you know, if i offended somebody, that's cool, but i know who i am and i'm not about to conform nor benld for anybody's expectations because your or anybody elt else's expectations would never exceed mine. >> that is the cnbc news update at this hour. in lista, back to you. >> thank you sue herera. >> we have turned positive on two of the major indexes, the dow and the s&p 500 -- well, we had the dow. it is basically flat lining. a turnaround happening on the nasdaq where we were down well over 1%. now just about at the flat lines crude oil still down big on the day. crude oil is down by 5% right
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now. our next guest says short-term oil prices may get worse before they get better. darren, how confident are you when it comes to predictions about oil prices or the stocks stock indexes when you see the velocity of decline and the weaker dollar. it's not just a display -- demand driven trade here. >> you bring up a good point. i think for a while everybody thought that oil prices were going to hold this inverse correlation to the u.s. dollar. one of the things that i think the market was banking on at least for the short-term was the fact if the dollar ended up being weaker because the fed's monetary policy was to bake off what they had previously said around rate hikes maybe that would provide a tail wind. but i think at the end of the day you have got to circle back
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from the fundamentals. from the structural perspective we have a mismatched oil market. everybody wants to point to the fact that the cure ends up being lower oil prices. to your point, and i think right, a prolonged period of lower energy pricis going to take equities with it. >> you cover mlps. >> i do. >> and you make a point in your note that there are significant head winds for mlps. what are they? i always already the impression these guys were sort of toll road operators. >> i think from a contractual perspective, you know, that's how the model is set up. but more importantly, if you think about it from a capital al kapgs perspective, there are some structural changes in this type of environment from a fubd and commodity priced perspective coupled with this type of cost perspective there isn't enough capital to pay distribution asks
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dividends, fund the growth cap exand deliver the balance sheets. a lot of these partnerships came into the downturn with too much leverage. they got used to the fact that you could leverage with the housing market. they were also putting the pedal down with regard to their growth capital spend. >> darren? >> yes. >> if we were having this conversation three months from now, how different would it be? it's gag to be very different. more exand p producer bankruptcies, more distribution dividend cuts. and lower valuations. >> we are going to feel it's worse, not better? >> i think it has to get worse before it gets better. i think what's going to happen with the market is the margaret will use this opportunity to rashl rationalize some. weaker hands. i believe over the next three to five years this is a market that's going to come out stronger and more balanced from the capital structure into darren, thank you for joining us. >> thank you.
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>> darren horowitz, raymond james. let's look at the mystery chart. we told you this is the best performing stock in the entire s&p 500 this year. here's another clue, according to company lore the name of the company is a combination of the state where the founder grew up and the state where he launched his invention.
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it is now time to reveal today's mystery chart. this is the top performing stock in the s&p 500 this year. as tyler just said, the company name is a combination of the state where the founder dwru up and the state where he made his fortune. it is new mont mining. the founder made his for tuning in new york but grew up in montana, hence new mont. >> i mentioned it in street talk. when we were talking about gold miners, i said throw in new mont. >> you 38%. >> she looked in our system and saw the mystery chart. it was no mystery to melissa lee. >> will the gold miners keep outperforming? let's ask the trading nation team. dennis dafity of harvest, max wolf of manhattan venture
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partners. max, they have had a nice run as gold as done okay. do you expect that run to continue on the miners. >> yes, longer term we think the miners and the gold are heading up for the sam quasi unfortunate reasons. the drivers aren't pretty. that being said the miners are far out in front of where they should be ahead of their skis. more expensive than the gold. we like the metal better than the miners. but they should continue to head up. >> if the overall market keeps dropping will gold and the miners keep rising or eventually fall with it? >> that's a good question. people look at gold as a hedge against their equity portfolio. if you are worried about your ekd equity portfolio going lower you buy gold as a hedge. if you did that january first this year, it worked wonderfully if you did it a year ago it's still down. and s&p is still up over a year ago. gold is a trading tool more than
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an investing tool. >> dennis and max, guys when we said keep it short and sweet, you did that. we appreciate it. there is a few on the miners. we'll be right back. >> announcer: now, the latest from trading nation and a word from our sponsor.
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disney shares are now down ahead of earnings after the bell. the company releases quarterly numbers today, bob iger will be on. the conference call is where the action has happened, when iger made court cutting elements that royaled the entire media center. >> what's you're about to see is not a disney ride or ship much it is video from a royal
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caribbean cruiseship that got caught in a big storm in the atlantic. people were having difficulty walking. this is before the cocktail hour. violent waves and 30-foot high tossing the ship. it is coming back to port in new jersey. bill nelson of florida wants the national transportation safety board to investigate why the shift left the port in the united states in the first place and headed directly into a storm that apparently was well forecast. >> there you go. >> i'd be asking the same thing. >> like you're on a boat. >> something else we're asking, what happened to charity, we explain in two minutes. don't move. ♪ ♪ for your retirement, you want to celebrate the little things, because they're big to you. and that is why you invest. the best returns aren't just measured in dollars.
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td ameritrade®. [bassist] two late nights in blew an amp.but good nights. sure,music's why we do this,but it's still our business. we spend days booking gigs, then we've gotta put in the miles to get there. but it's not without its perks. like seeing our album sales go through the roof enough to finally start paying meg's little brother- i mean,our new tour manager-with real,actual money. we run on quickbooks.that's how we own it.
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. the dow is at session highs and the bad news, it's up only 15 points. we were down pretty big earlier today. we have come back the reason we came back largely being atribt buded to deutsch bank which was the reason we were down a couple of hours ago. reports that maybe they are going to do a multibillion dollar bond buy back. in a dramatic way dragging the entire dow with it up. >> health care wasn't the financials, just turning positive right now. >> owens, illinois, biggest bottle maker up 9%. that could be the reason, bottles. >> extra drinking going on. >> on that cruise ship. >> volatility in the stock market may be giving some america's biggest
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philanthropists pause. some indicators that high net worth individuals are not only not giving money to charity, they are choosing to take it out of the united states all together some of them. our wealth editor robert frank is on the case. this is quite a change. i thought we were very generous? >> we had been but the top 50 givers donated 7 billion to charity, that sounds like a lot but down 30% from 2014 and lowest since 2010 according to the philanthropy 50, kron keled by the -- 33 million last year to be in the top 50. gifts from silicon valley, to 1.9 last year. new york is now topping the silicon valley in giving with big gifts last year from hedge fundsers and people in finance. the top giver last year, richard melon gauge much of had to
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conservative causes and seconds was john santikos, he ran a texas theater chain and gave 605 million. the third we all know michael bloomberg gave 510 million and paulison gave 400 million to harvard. the number of americans renoupsing their citizenship hit an all time high last year, over 4200 americans giving up citizenship or their long term residency according to the treasury department. they blame new irs rules for taxes for filing for overseas americans. it's not like rich americans are packing up louis vuitton bags -- >> why would they pull back on charity last year? is it stock related? >> lack of ipos and lack of big stock appreciation. those are two things that drive silicon valley. >> zuckerberg said he was going to donate but that doesn't count. >> it was just a promise, didn't give away anything and secondly giving 99% of shares to an llc,
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not a charity. >> it doesn't count. in that -- >> you were making a point -- >> still a generous guy. >> making a point about the number of americans, not like they decided the taxes are too high and want to move my house and family overseas. >> there are some of those, teeteen tina turner, on the list in previous years, for some reason having a dual citizenship, living all their life overseas now the irs is telling them, you have to file a tax return and saying, forget it, i'll give up my citizenship. that's what causing this. >> i heard that from expatriots that live overseas, they have to pay local taxes and u.s. wants them to pay as well. >> the choice is clear, just no longer a u.s. citizen. >> not good for tax receive news. >> no, thank you, robert. >> next time we'll talk about
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the $700 million ranch apparently. thank you all for watching "power lunch." good to be back. >> glad to have you back, ryan. "closing bell" starts right now. don't move. >> thank you and welcome to the closing bell. i'm kayla tausche. another wild day for stocks but you couldn't tell it from the dow right now, which is up only 17 points. but global bank fears continue to weigh on this market. it happened earlier this morning but we are on the komtback trail and oil was dropping as the international energy agency warned the demand for oil will ease considerably this year. >> no investor wants to make a move ahead of tomorrow when janet yellen will be testifying on capitol hill about whether the market turmoil could


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