tv Power Lunch CNBC February 16, 2016 1:00pm-3:01pm EST
than 2%. qualcomm, micron upgrade. >> i'm tracking win. have you wchd win over the last month or week. steve within buying shares three times in a short period of time. keep an eye on the casinos. >> friday was plus 300. dow at this moment is backing it is up. "power lunch" picks it up now. and welcome to "power lunch" i'm brian sullivan along with melissa, mishal and tyler mathisen. welcome, everybody. good to have you with us on this tuesday. we kicks things off with what might be the single most important chart for your money as the dow hits its highs of the day. this the dow and wti krut oil. you will notice they are largely not moving together. stocks are pushing higher even as oil drops. this might be important. is the great decoupling finally happening? let's start things off with bob
pasani. for a year, it was oil, dow. last couple trading sessions we've seen them maybe move in a different direction. is this something people are talking about on the floor? >> yes. it's encouraging that the s&p is near the highs of the day with oil generally down for most of the day. there are four things worrying the world. one of them of course is oil. we've had word that russia and saudi arabia may be agreeing on limiting production. that's certainly a production freeze. but that's a high level discussion. the other thing is china. the pboc defending the yawn saying unlikely we are going to do serious devaluations. that's the other thing worrying the world. the third thing is bank in europe and bcd draghi saying they are going to do whatever it takes. deutsche bank may do some buying back. that's the third one.
finally, the fed. nobody said anything at the fed but basically we're implying right now no hikes for the rest of the year. so big movements overall. >> how are traders taking the bounce this the bank stocks? is it vince convincing in their view? >> no. citigroup is up 12% since the bottom on thursday. we need a three-day rally. we have not had a three-day rally in the dow and snap 500 since december 21st. there hasn't been one this year. right now we've two and a half if you count the fact we have moved off of the thursday bottom. every time we've had a three day rally there has been selling into it the next day. let's see in the next 48 hours if we can get a move up you will see believers. >> we've seen notes from different houses thinking there has been capitulation perhaps in europe. is that a broadway of thinking? are there a lot of houses like that or a few brave individuals coming forward? >> nobody believes it yet. i thought the deutsche bank
comments were the first sign. it's just talk. but it's high level talk. when you have got deutsche bank saying it. rumors of the eye talialian central bank. this is high level talk. now you have got to follow through and actually do something. when you see real buying then i think you will get believers. there are still a lot of concept ticks. today we saw aek weak innocence the european banks but not seriously. it could go either way. >> babb, thanks very much. let's take in more on oil. so much for the big opec rally we had earlier this morning. that was after numerous reports that saudi arabia, russia, venezuela, and qatar would agree to freeze oil production at january levels. why exactly does the market remain so bearish on oil? let's find out. kyle cooper. kyle, is it simply because
everybody nobody believes it or because the levels they may freeze them is at record output or is it c, iran? >> i think a combination of all of the above. they are freezing levels at as you mentioned record levels. that's not really a less bearish scenario. number two, iran hasn't chimed in of the all and they are still actually clamoring for increased output. they are freezing levels that are still oversupplied and number two you don't have buy in from somebody who wants to ramp up output. >> are we in a situation where we could see opec freeze. 500,000 barrel a day off the market but iran really want those 500,000 barrels and have basically said it. >> absolutely. and we are still oversupplied. still producing and supplying more to the market than is needed. if you had hopes of a rebalance in the middle portion of this year, freezing levels that are
still oversupplied says you don't have a rebalance coming any time soon. >> implicit in your comments, oil prices could go lower? >> absolutely. i think there is a 50/50 chance we test the 26.05 from last week. and then $2223 dollar range is possible f. this doesn't clean up -- what you alluded to is opec said they will freeze it at these levels. they might not. if you continue to so inventory builds here and abroad. i think something sub20 is not completely out of the question. >> kyle, i've seen reports that iran plans into increase production and they have been unloading barrels that were in storage. to do that, they are discounting 35 to 45 cents per barrel. have you seen those numbers? where are we in the iran cycle? moug how long the do we have to go with them cutting prices?
>> i have not seen those prices but they are believable as there were numerous reports that the iranians had lot of oil stored on ships. those could be sailing. whether or not the discount is 35 or 50 cents or whatever, clearly the iranians are looking to take back market share they lost as a result of the sanctions. it's my expectation that even though i don't expect iranian oil to come directly to the u.s., i expect imports to remain robust. >> robust imports, we'll leave it there. kyle, thank you. >> kyle. >> is now the time to buy some of the battered oil stocks? jerry castle ooeny joins us. i know you have identified four picks within the oil company. most of them are e and p companies. what kind of risk ability to
have to have. are oil stocks riskier than bank stocks, than solar stocks. >> if you look at the way the markets agented in the five or six weeks essentially all stocks have become oil stocks. deutsche bank, demora and importers of energy are down at all-time lows it suggests if whole global economy is exposed to this mid 20s oil pricing level. whether that gets cleaned up in the next six weeks or six months it clearly has to get cleaned up. i don't think it is a question of oil classes versus anything else. i think it is the rate at which the oil producers come together and bring barrels off the market. and we clearly see evidence of that happening right now. >> why do you like -- i want to put up some of your picks. pioneer natural, conch. a lot of e and p companies. what does profile the e and p
company? >> the biggest thing that happened over the last six week is we have now priced into the broad brush of energy companies the ones that really have balance sheet risk of oils staying down in the 30s for a great deal of time. none of the four i gave you have that downside risk. these are solid balance sheets. all four of them have substantial positions in the personalient basin horizontal oil play. that's the lowest cost ole producing basins. and those will be the barrels that will come out at the highest profit over the next knicks months. and the companies that have that exposure and the capital to put in them, those four as an example, will always do better. as we watch this drama unfold with opec i think you are going to see investors more and more focused on the low cost producers in the united states and will want to go to those names first. >> how long might i have to wait
for those stocks to pay off? number one, how much volatility should i expect during that holding period, number two. and third did i hare you just say that you are confident that oil production is going to come off the market? there are going to be barrels that are going to come off? that's certainly not what was implicit ofn the statements of this agreement or conversation, it was they were going to have a stasis, basically a static level of production. >> let's cover the third question first. this dialogue that's happening now is what precedes a much bigger agreement. they have to first agree the talk. the saudis and the russians haven't talked since the fall of 2014. the fact they sat and a cheery hour of conversation today today about a freeze is a huge watershed event. and it actually happened. that's not something we can discount. it's in process. the next event is obviously bringing the iranians to the table. both iraq, russia, and venezuela
are going to bring to bear lot of pressure on the iranians and they have every bit of upside to agreeing to something with their allies. so the question of something happening, i don't think, is even valid anymore. >> did you just say iran and saudi arabia are al ayes? >> >> i'm sorry. i meant iran and russia. >> so this conversation has begun. don't look at each day's conversation to give you a signal. the fact is, everyone's a winner with the 5% production cut that's supposedly on the table. expect that to happen over the next five to six months and now focus on why the forward curve is pricing oil in the $40 levels in 2017. and then move back to the individual stocks. in the 40s, those four stocks we talked about can make profitable investments in personalian basin oil. buy those stocks today. accept the fact they can have 10 to 15, 20% volatility but you
are never going to pick the bottom. >> basically the payoff is a year out? am i hearing you right, on those stocks? >> absolutely. the worst case pay off. the near term could be in the next six wiest. >> jerry. thank you. here's what's on the menu for the rest of the hour. coming up next we're looking at big opportunities abroad. right now could be the perfect time to get into the european banks. plus one wall street pro says tom stocks are in for a ten% bounce. and investors are loving co 2, the queen city and spam in today's session. we'll explain when "power lunch" returns. is mold-breaking. its intelligent drive systems... paradigm-shifting. its technology-filled cabin...jaw-dropping. its performance...breathtaking. its self-parking...and self-braking...show-stopping.
welcome back to "power lunch." i'll tyler mathisen. apollo global will buy adt in a deal valued at $15 billion. azt has a 40-day go shop period in which it can seek out a better offer. animal health care provider zoitus sites increased efficiencies in business operations for an earnings beat. and you are having a great day if you are invested in hormel. cincinnati financial and airgas, what do they have in common? all three of them are touching all time highs in today's session. european banks surging
higher earlier today after an extremely volatile week last week. lloyd's banking up 2.5%. society general up over 3%. nick nelson is head of european equity strategy at ubs and they have got a note out today saying they see six signs of ka patlation in the european markets. nick, great to have you here. >> hi there. >> it's cable, we don't have time for all six. but can you make your case. i mean, that suggests you may have bought them. >> let's hit three points. the first three points, firstly specifically around the banks, as you say, these things have been massively volatile in the last couple of weeks. we through our flows have seen the biggest net selling of banks for five years. that smells like ka patlation. secondly, the net leverage is down lower than it was in march of 2009 for hedge funds. that's where hedge funds are
positioned now in europe you were. and thirdly u.s. investors have been the swing investors. and they have turned sour this year. if you put those things together it suggests a huge amount of ka patlation, specifically around banks. >> how much convincing do you have about this? i mean that in terms of similar to the conversation we were talking about oil stocks. what kind of risk profile do you have to have when it looks so frightening? >> i think the risk point is you have to be able to hold these for a period of time. the conversation about the oil stocks has been spot on. would have a seen volatility. this is not a trading call. this is a nine to 12 month type investment. i think when you look at the banks they have rebuilt capital, they have better capital ratios. we are seeing improvement in the european economy. we are seeing nonperforming loans actually falling. all those macro factors will
help. and more broadly for european actors as a whole this will be the first time in five years for earnings growth. we have got companies with margin expajd, low cost and more top line income. >> i wanted to post honey in on the etf trade. does -- what kind of impact to of that on the upside? >> huge in -- it did put a upward pressure on stocks. her that qe rally last year. this year has been the opposite. watch' seen net redemptions from etfs in the u.s. that invest into europe. normally you would start is to see structural inflows because people are investing more and
more in etfs. those are growth products. this time you see them net selling. what we can tell is part of the reason why europe down is not because of domestic investors it's because of u.s. investors taking money out of the margaret. >> to that note, i can tell maybe what you do is you sell a lot to european investors who are buying in the euro. as an american investor you have to be worried about what is going to happen with the currencies. which haven't acted the way people have thought. if you are an investor, what do you have to do in terms of hedge hadding the currency. >> we wouldn't hedge it. the euro is up, 111, 112. we think it strengthens to 116 by the end of this year. that's a none consensus view. what we are seeing is strength relative to the u.s. we know there is a bit of a slowdown in u.s. yes, the u.s. may be growing more quickly than in your opinion but the momentum is actually for the first time in five years with europe.
so actually, unlike q 12015 you don't have to hedge the currency. we think you can buy the stocks as they are and you will get a kicker from the currency. >> you win both ways, if you are right, both with the stock and the euro. >> exactly. >> thanks nick. >> pleasure. thank you. after a horrible, terrible no good, very bad start to the year for your money, are things finally turning around? we are going to dig into just that ahead. plus -- >> coming up, a start-up shaking up a new sprorts drink. >> made with no artificial anything. >> will the panel say game on? >> there is 100 of these. and they all look the same. >> how do you get me to buy this? >> are you going after the athlete? the gym rat? or are you really trying to cross straight to mass? >> or game over? stay tuned to find out.
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drink. we're ready to take on the traditional sports drinks. they are made from 1960s science. they are made with artificial ingredients and high fructose corn sir up. nth degree has no artificial anything. by $20171 trillion is going to be spent on healthy items. 80% of the people are willing to spend more money for healthier products. nth degree is sweetened with a sweetener derived from sugar beats. it increases energy and endurnsz. it's packed with potassium, magnesium and calcium, which are great for rehydration. my pal says what he puts in his body matters. people will put in nth degree. >> let's meet the panel. joining us on set. gene term nello, cofounded the
big beverage company which she brings start-ups to market. she has 20 years of coke coalal under her belt. and alisa is yourette, a board mm of the new york angels. advises and invested in over two dozen start ups. and david maveron. more than 30 consumer investments in his portfolio. >> peter, love your passion. i would give your pitch an a. >> thank you. >> you mentioned a new sugar a smart should goer generates longer lasting energy and endurance. but on your label you really scream out low glycemic index tested. why not scream out longer lasting energy and endurance on the product label? >> we are sticking with the simpler message right now. as a new product we want to make sure the consumers understand what we are.
and low glycemic content is important with obesity on the upward trend. >> peter, i give your pitch a c. i thought you were good in the delivery, talked about the product and you cited the marketing and the is celebs. houfrs you didn't talk about your background. you talked about outsciencing the big players out there. but what happens when they decide to develop their own low glycemic product and come straight for you? >> first, we are the only low glycemic and functional carbohydrate that promotes fat objectionization. if they get into the business, this is going to be enhancing the category. >> david, have you got a question. >> i also if the like the pitch unsoelt sold what you are trying to do. i'd like to hear less about lie glow seemic index and slower to metabolize and hear about real benefits and why you have a differentiated brand. i'd also give this c. on that note, tell me more about
the bran identity and what it stands for. >> the brand identity. basically there are lot of people who think what they put in their body matters. marriano rivera is an owner. that's where we got the catch phrase, what he put had nis body matters. there is a lot of people reading lals and we are taking advantage of that. >> i am a consumer. i go to the beverage case. there is 1 hundred of those, they all look the same, the packaging, the colors, the flavors sound the same. how do you get me to buy this? >> the hardest part is to make sure the consumer can see your productle we own distribution here in new york which is the number one in the country. when we own new york we are going to own theestr rest of country. >> what are your plans beyond new york to get the product on the store shelves? >> we are working on chains, and seeding southern california, florida, and other cities. >> peter you've had 3 million of investment that has gone into the business. what can you tell us in terms of
revenues generated. >> a few hundred,000 in revenues. that was by design. we did our research and development in the city of new york. and it's new. >> david? >> are you going after the athlete, the gym rat or are you really trying to cross straight to mass? >> right now we are going after that serious athlete. >> how many bottles have you actually sold? >> about 100,000 bottles, and we've also given away about 100,000 as well. we've got it in 200,000 consumers' hands. >> we heard peter. now we want to know whether the panel is in or out, jean? >> the other bigger brands are going to be coming out. i know gatorade talked about coming out with an organic. i think speed to market is going to be critical. despite that i think your product is hitting the sweet spot in sports drinks. for that reason i'm in. >> alicia? >> he is operating in an intensely competitive industry. the health trends are no surprise to some of the big players out there. i would need to see more
traction, him about beyond a life-style business territory to really go in. so unfuncally for now i'm out. >> david? >> i like the background of feert and the team and think that gives them a unique advantage in this market. but at the same time, in such a competitive crowded market i'd like to see a brand identity that really differentiates itself from the aisle and aisle of competition. so i'm going to be out. >> peter, you have got one in, and two outs. what is your reaction? >> we feel pretty good about our brand preposition. i'm glad we got one. thank you very much, i'm happy with that. >> peter, thanks to nth degree and our panelists, jean, alicia, and david. that's today's power pick. >> are you in or out on nth degree? tweet us using #power pitch. and visit "power lunch".cnbc.com. >> did you taste it? >> i did. and it tasted like any other sports drink on the market and i'm not a fan of them. >> the discussion reminded me of
the way you talk with ligor. all marketing. >> and branding. >> he said we own distribution in new york. i don't know what that means. >> how do you own it? do you own the trucks? what? >> and think about a shelf at a supermarket, how many brands there are already. how do you get yours to get squeezed in there. >> that's what my wife did for 20 years for a consumer products company. it's hard. you have got to offer a lot back. and there is fighting. >> shelf space. >> you want eye level. >> eye level. >> if you are down by the ankles. >> not working. >> you are not selling to the dog or the cat. >> i'm not reaching down there for a sports drink. i'm too lazy. >> but they are in a growing category, sports drink, noncarbinated. carbonated beverages have been on the downturn for the past decade. >> but there is so much competition. >> i'm waiting for zima to make a comeback. >> i had someone offered me randomly a coconut water martini. >> did you taste sit in.
>> which they said would hydrate me as i dehydrate. that was the pitch and i bought in. >> you had it? >> it was all right. >> i like coconut water. >> i locate coco, i think it's good. >> i think it tastes like sock. >> tastes like dirty sock water. if i look after a rainstorm at the street of new york it has that green water by curb. >> it's coconut water. >> that's how i envision coconut water to be tasting. >> you clearly don't need a sports drink. >> i don't know what we're doing now. >> bond report. >> bond report? >> yeah. >> let's go to the bond report, and rick santelli. or maybe i'm doing it. no rick santelli. all right. there is the two year note. >> do the bond report coconut water man. >> the yields i guess you would say are higher, the ten year at 1.79%. based on the green numbers that
means they are all just a little bit as the safety trade lessens just a bit as equities move higher. the s&p up 1an 5%. nasdaq up close to 2% at my last check. there is your bond report. >> now we'll check on the metals market. call this the gold report. guess what. gold is not loved today n. fact we are seeing the price of an ounce of gold down $31.50. of course with all the volatility we have seen globally, currenciwise, central bank wise gold caught a huge bid. not today. down $31.30 per ounce. silver down 3%%. palladium down 3.3%. the big decliner today. all the gold is down. nonprecious metals are higher. aluminum, copper and nickel are up. melissa, you were desperate to know how nickel was trading? >> i was. >> 5% gain, up $400 per ton to
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i'm sharon epperson. here's your cnbc news update. turkey's prime minister condemning russia's role in syria's civil war accusing the syrian regime of soliciting mass could you's help to massacre civilians. a special tribute to late supreme court justice antonin scalia. in a court tradition dating back to the 19th century, black wool has been draped over his courtroom chair, court berch, and the door leading into the marble courtroom. scalia died saturday at age 79. severe weather rolling through southern florida this morning ripping the roofs off some buildings and turning over tractor trailer on the highway
that caused a massive back up during rush hour traffic. the storm left some 55,000 people without power. a new study reveals the misuse of the adh drug at roll is rising among young adults, 67%. and echl rechlt visits witness up 112% postr percent. most of the rise is attributed to use by college students trying to stay awake while they are studying. a bit of a strong rally today. despite today's move higher the major averages haven't posted a monthly gain since november. that would be december and january. where can you find value. joining us hue johnson, and sanny villery. gentlemen. welcome to both of you. hugh, your view of where the market sits now and the implication for where it may end
this year caught my eye. you think it's undervalued now and will end decidedly higher by the end of the year. explain. >> i certainly do, tyler. you know, i was so tired. last year we talked about it being overvalued right throughout 2015 and saidic but these stocks. but i kept saying drag your meet, drag your feet, drag your feet. i'm no longer saying. that we've had a decline in stock prices which is not a lot of fun but we've declined to a level which in my judgment is 10% undervalued which puts the upside value between now and the end of the year at 1%. i might add, tyler, which is an important part this current configuration, the level of pessimism, especially among small investors is extraordinarily widespread. so when you get a market that's this unvalued and you get a lot of pessimism that's a combination you rarely see. in my judgment that's going the
pay out not in a straight line but pay up in the market going significantly higher and again, i use those numbers, 10%, 13% return. those are attractive numbers. i don't see those very often. >> sanny, do you want to jump in to this discussion here where whether the market is undervalued and where it might go? or are you just going to focus on pigging the good stocks that you think are going to pay off no matter what the market does. i have to agree, he says small investors. it's small companies in a have been largely overlooked and thrown out and left for dead. i think there is a lot of value in small caps in particular. the fed said they were going to raise rates probably fewerr four times in 2016. you look at fed fund futures and they are talking about rates may not go up until 2018. i think that's setting the market up for a nice recovery and probably what we saw not only friday but today is people are raising the rates may be lower for longer and it's going to help small caps and market in general.
i'm optimist as well. >> hugh, you like ane. you talk about it so much. are you seeing this as a value trade at this point? >> oh, yeah it's real value trade. in other words it's very undervalued right now. the upside potential in my judgment is at least 30%. i know everybody's worried about the fact that we have a slowdown in smart phone sales. >> i was going to ask you about that. you are not worried about that? >> not only a slowdown in smart phones but also a slowdown in china. and i understand. that we are actually using numbers to get the valuation numbers of decline in revenues of 2% in this fiscal year. and still, keep in mind, we're talking about a company that has $230 billion in revenues. 50 plus billion dollars in net income. those are extraordinary numbers. even if you get a slowdown u i've got a lot of money there, which adds up to a lot of free cash flow which they can do things with, such as increase
dividends. i know china slowed a little bit but keep in mine we are going from 50 million middle class buyers of iphones and other phones up to about 500 million in the next five queers. >> okay. >> think about those numbers and what that might mean for apple. >> finally, sanny, we love you when you bring new saims names, small cap names. talk to us about to you. they are an online education provider. make it possible to teach remotely. $700 million market cap. what makes this company attract of to a value guy like you? >> it's the opposite of apple in terms of being completely underfollowed, underloved, unknown. yet they are growing like a weed. they are going to be growing revenue 30 to 35%. they essentially partner with major universities such as yale, georgetown, berkeley, university of north carolina. and they come up with basically a virtual classroom for graduate programs so that now colleges can expand their programs globally, really.
it's -- i think it's going to work extremely well. and they've got 26 programs right now. and a program would be like nursing school at georgetown, or mba at university of north carolina. 26 now. they are going to add six in 2016. nine in 2017. and it's growing quite rapidly. so i'm looking forward to watching this really unfold over the next three to five years, which is really find of our holding period. >> hugh, give me another pick there. i know you like a couple of other ones that nobody has ever heard of, walgreens and lowe's, these tiny companies. just like sandy's. >> yeah. both, both good value plays. i think the lowe's, i mentioned it for a lot of different reasons. value certainly number one. but unof the sectors of the u.s. economy which looks right to me, in fact the brightest sector of the u.s. economy is the housing market as well as commercial real estate, about you the housing market. and lowe's will participate in that in 2016 and 2017.
you are going to see farley good numbers. the thing is about 33% undervalued as i see it. wallgreen's, they are going through some struggles. 31% undervalued. this is value in this market. when you get an opportunity like an undervalued market, lots of pessimism, you should buy some stocks. >> hugh, sanny. thank you very much. we appreciate you being with us. >> thank. >> go to "power lunch".cnbc damn right now to see why hugh is -- >> what you are driving? >> go now. i don't care. pull over. >> pull over, use your smart phone, and go know. see why hughes is seeing positive signs in china. that's "power lunch".cnbc.com. big buy calls on debt cards and outlet malls. and bank of america, freeport, mcmarran, freeport and citigroup are the most actively
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all right. wechlkt if you are just waking up, perhaps you are saying micronesia, socks are in rally mode. dow up under 200 points. nearly all the companies are up higher today. what about yahoo? that's an interesting story today. that stock is up about 8%. you've got alley baba action going on there. not a huge news plug on yahoo. that stock up 8%. congratulations if you own it. media stocks in general are outperforming the market in today's session after what has been a difficult start to the year. cbs up 3.5%. 21st century fox up 3.5%. they had a huge opening with dead pool opening this weekends. viacom up 5%. up next, five reasons to be bullish on china right now.
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shortest way i can do it, last summer, a lot of republican officials in connecticut and washington, senators and friends of mine urged me to run for the senate in connecticut. and judy and i looked at this thing, exploring every angle really for about seven months talking to friends in and out of politics by the way. everybody was very helpful. and at the end of the day, we decided against it, that the best course for me was to do exactly what i'm doing, which i love. i mean, that was the bottom, bottom line. you know? cnbc is like extended family to me. i love being a broadcaster. you all taught me ton to be an anchor. i'm now commenttating, i'm getting extended coverage for the elections. i love it. of lo it. i don't want to give it up. and i love doing the radio show on saturdays. we build that thing from one station in new york to almost
180 stations around the country. i don't want to give that up. i just love it too much. >> you know a lot of people are going to be very disappointed. i have ebeen at events with you where many have come up to you and said larry, please run, willing to write you checks on the spot. they are going to be disappointsed. art are you disappointed? part of you wanted to do this? >> part of me. and i will tell you over the course of this there were times i'd wake up in the morning and i'd say yes, yes, because i don't like the direction of the company. i am a riggan republican, i believe in free market growth. i don't like what's going on in connecticut or what's going on in washington. having said that, this broadcasting and the radio gives me platforms. >> you have a platform. >> so i can discuss that. >> yeah. can you envision a place for new washington under the right circumstances? in, let's say, an administration that you feel comfortable
working for? >> it's always possible. always possible. i don't want to open or shut any doors. >> i'm not asking you to campaign for a be skro but i could see you in some job in d.c., not that we wouldn't like to see you -- >> it's funny. i've been an advise or on the economy for many people. i worked for reagan and been an adviser to candidates since them. being in politics is different. i've never run for anything before. i wouldn't rule it out. it will be what it will be. >> the nice part of those jobs, among other thing, you can affect policy, that's number one. number two, you don't have to do fund-raising which you do have to do if you are running for office in a state like connecticut. >> you know that's a important part of this -- >> do you think bloomberg is vulnerable. >> i do. i think connecticut has gone in
the wrong direction. i want to get into one other thing. you two know me very well for many many years. lot of my life is involved in the 12-step program and the church. and it's part of my return to faith. and it has sustained me. and i don't want to even think about either giving that up or interfering with it. it's so important to me. i mean, including this network, which gave me a second chance many years ago after my crash and burn -- it's why i this it as family. i just -- i say to myself, this is great. i am blessed. stay with it. >> this works. and you know, and i will say something on the air that i have not said before, you have been an incredible friend to me to to my older son. >> thank you. >> who is in a similar program. i was with him this weekend. >> thanks. >> and i said to him, don't do anything that will disrupt the momentum, the progress that you have.
nothing to distract you from that. and i think that's a really important message. >> that's a great message, tyler. >> and you know, i share that message. >> you do. you do. >> you sit back. judy and i -- i don't know, maybe a few weeks ago -- i'm not sure. we just sort of looked at everything, said look, you love this, you love tv, radio, you love your church work. you love your aa work. why mess with it? it's not like i'm unhappy. i'm blessed to have this. and that was the driving reason behind that. >> and politics sucks, larry. >> yeah, face it. >> brutal, dirt auto. the house of cards is popular for a reason. can i switch to politics because of the death of antonin scalia. >> i was just going to say as someone who was honored to write the intro to your book -- go ahead, anything want. >> antonin scalia is dead. there is a battle in the
republican party whether or not they should even give a hearing to whoever president obama would like to nominate. this is talk of trying to prevent anybody from taking that seat that position for nearly a year. the democrats say that will help republicans lose seats in congress if they take that stance. they call it obstructionist. what do you think about it as political move? >> here's my take. the president has constitutional rights to nominate a justice, number one. the senate has a constitutional right to confirm, advise and consent. that's number two. i don't know why they just don't go through the process. in other words, president obama nominates somebody next week or whenever. i think the senate should hold hearings, should take it up, and then if they don't like whoever it is. >> reject them. wouldn't be the first time. >> reject them. that's -- i would play out the process. i wouldn't thwart the process. but you know there are a lot of angles here. i mean, you don't know if there is going to be a republican president next year. you don't know if there is going
to be a republican congress. you don't know. >> michele said there is going to be a debate within the republican party whether they should entertain that. i haven't heard anybody in the republican party take the other side and say he should go ahead and nominate. >> even rand paul went so far as to say he doesn't have the right to nominate. >> i wouldn't take that posture. i would go through the normal process. if the republican majority of the senate believes obama's nominee is too liberal then you reject him. it's simple. >> no sure thing that a republican nominee is going to win the election. >> that's what makes it so interesting. >> or that the republicans will hold the senate although that seems likelierish. >> might be tough. they may not do as well in connecticut as i might have. i would just tell the public we are going to go by the rules. to me that's always the best way. >> could obama be incentivizes
to bring somebody who is more to the center. it could be a republican who wins and he wants to make sure he gets somebody in there. >> a moderate, somebody like srivasan who would be a fairly moderate business oriented guy by reading. >> so many of us have hope that mr. obama would have listened to the election returns in 2014 and even 2010 and gone centrist. hasn't happened. to your scenario, it's possible. i'm not particularly expecting that to happen. i'm just saying gop should play by the rules. that's all. and i haven't heard otherwise from senator mcconnell. we'll see how that plays out. scalia, i met him, had a couple dinners with him a while back. brilliant guy. i'm not a jurist, but a very funny guy. wonderful with it. >> people who were opposed to him philosophically loved him, loved languaging out with him,
he was self deprecating, fun, a brilliant writer. you read some of his opinions. they are worth reading for the intellectual rigor. >> and plain spoken, too. >> plain spoken guy. people loved him. >> he in many ways was the backbone of servetive thinking these past 35 30 things. it doesn't always agree with the gop political position but he speaks his mind. we need to find somebody who is a great man, like scalia, fill those shoes. just run through the process it's going to be fine. meanwhile, i look forward to reporting on it, to talking to you guys on it and for thing, i love being in iowa. i love being in new hampshire covering this. >> my home state. >> i loved it. we had donald trump on. we had bush on. >> you did that great job. >> i have got to tell you, personally, i loved doing it. and you know what? with your permission i'm going to keep doing night we're glad you are going to keep doing night so happy about that? we like having another guy who speaks his mind around here.
let's take a breather and get a full cnbc market check. the dow is having a solid start to the shortened trading week. we are seeinget just off the highs. but the dow jones industrial average is up 205 points right now. caterpillar, boeing, cisco are the big dow winners. and the snap and nasdaq are also up. melissa not a bad day to start the week. >> we got bounce today, on friday, too. and over the weekend we heard reports that the people's bank of china would df its currentsy and the ecb who institute more stimulus. do you believe the bounce? >> melissa, there are a few reasons to think this bounce ob could be better than others we've seen so far this year. one reason is now negative investors have gotten. let's look. the american association of individual investors week' poll had fewer people sake they were bullish 18%. merrill lynch also saying today that fund managers in its survey
have more cash than they had since 2001. flip side of that fear trade is a rush in to safe haven. we saw treasury bonds and gold increase last night. the second highest influx into gold funds in an the last six years. also, corporate earnings analysts are lowering the bar. this is a post-2011 low for basically downward earnings rescissions. all this put together means investor attitudes and expectations have been reset low. often that precedes a durable bounce. >> mike santoli, believe the bounce or not, you can still trade the bounce. joining us tim see more and mike ko. good to see you. >> i'm going to kick it off with you mike. i believe you think this bounce is not believable. what are you doing today? >> well, actually, i think there is some hope here, actually. >> really? you are a bear?
>> no. i think i would describe myself as a skeptic. i like to be skeptical about investing. let's look at a couple of interesting things. one of them certainly is that we've had a relatively prolonged period of an elevated level in the vix. what this is telling us is that the optionness markets, what mike santoli was talking about earlier, expressing a great deal of skepticism. the truth is we don't that generally unless there are catastrophic events taking place. i'm talking about concerns about a grexit and the tech wreck and the russian default in the late '90s. those are the types of things normally you would see this. right now i'm not sure we necessarily have economic data that is as bad as that. >> tim, do you believe the bounce? that are you doing today? >> everyone is talking about how sentiment measures got oversold. if you look at stocks and the stocks that have the biggest rally back, but what is
interesting to me is things like the transplants and industrials, a lot of these stocks are up year to date. kansas ci kansas city krks su, ups, john deer. the mining complex where you haven't seen the recovery. i think you have a combination of one i think this dollar is going to have to tough time getting through the 100 level. 97 there. kissing on the dixie is a important level. weaker dollar. ultimately had people pricing defaults and bankruptcies in some cases. preport mack is a classic example of a company of i get why you lean on the company, they have a massive debt load. but the pressure is more around their licenses in indonesia. if you think some of that stuff is overdone. i think some stuff you have to lock below the surface. >> wti down 3% right now. energy stocks are higher on the whole. mike ko do you think this is a sign that the energy stocks and
trade have decoupled enough so you can get positive on the equities? >> i think there are a couple reasons we might think that's the case. one thing, there is a steep decline in oil prices already. how much lower can they go. but we are also seeing signs in the other equities that maybe oil prices are not going to be down here forever. look at the valuation of toxilike general motors. general motors benefits when oil prices are low. yet that stock looks absurdly cheap. airlines would be another good example. a lot of them are trading at mid to low single digit earnings multiples. again, big beneficiaries of low oil pricing, not pricing in the low oil prices. chevron. >> guys, i've got to leave it there. tim see more, mike ko. china imports and exports both fell in january.
foreign exchange reserves declined by $100 million. still the shanghai shot higher tavern country's currency moved higher and the head of the central bank interviewed saying the currency will remain stable. dr. scissors joins us now. you have a contrarian position to a lot of the big traders we've heard from lightly, kyle bass and george sorrows who say it's inevitable that china has to do a devaluation to bail out the banking system. you think that's completely wrong. whether? >> i mean i understand why people get negative because the chinese have mismanaged their economy for a while and have been mismanaging their exchange rate for eight or nine months. there is a possibility of another mistake. but sorrows and company are treating china as if it has a commercial banking system. it doesn't. the strains on the chinese banking system are nothing like the strains on western banking systems in 2009. there is a lot more control of
the banks. so the pressure that they are discussing is not as high. and the idea that devaluation will benefit china is just wrong. the chinese already rang up last year the biggest trade surplus in history. their partners won't put up with another 30, 40% devaluing aon top of that. both sides -- some exaggeration on the domestic finances and complete mischaracterize igs of the devaluation are incorrect. >> you said the partners in trade are not going to put up with a devaluation. but we are their biggest trading partner. wouldn't we benefit in many ways from a devaluation because of the amount of goods that we import? >> it's certainly -- a chinese devaluation would benefit a number of consumers because it bo make chinese goods cheaper. those goes are concentrated on the low end, they make things cheaper for poor people.
but lets he not forget we are in an election year. you and i might want to sell the idea that the devaluation doesn't hurt the united states. but the trade surplus is going to rise and the candidates are going to pounce all over that. >> let me ask it a different way. if china came to d.c. and said, hey, we're going to devalue by 20%. do you believe that somebody in the administration would say, please don't do that? >> absolutely. unless the administration wants the democrats to lose the national election, someone in administration is going to say -- auto that's not a political statement. that's just a fact of who the incumbent is. someone in the administration is going to say do not put a large devaluing aon our watch. there is too much sensitivity to globalization and as a side note we are going to have a ton more capital flying out of china which means you are going to destabilize global stocks at the same time. it wouldn't make sense for the u.s. politically or
economically. >> you say it would hurt china as well. why? >> what's the threat here? is the threat that china has a weak trade surplus? again it has the biggest trade surplus in world history. that's not the problem. the threat is capital flight. if you weaken the currency you are going to get more capital flight. sorrows and bass are identifying a real problem and coming up with a terrible solution that's going to make the real problems for china, ka tal outflow worse and boost their trade surplus if only for a short bit of time because the retaliation is going to be inevitable. >> does china have a big debt problem? if they do, what should they do about it. >> right, they have a massive debt problem. there is no question about it. i'm not here apologizing for the chinese economy. i've been criticizing it for years. and you know, one answer is the
flood the economy with more liquidity. china's money stock is already 90% larger than america's money stock. more liquidity is not going to solve anything. the real answer is they have to shrink the state sector, the excess capacity, kill the zombie companies, let the zombie banks fade away. that's going to deal with their debt. there is no short-term solution to the debt problem. it's too big. more credit is not the solution. the medium term solution is to get rid of the companies incurring the debt in the first place. >> they have the ability to do that. >> they were going to cut capacity in the steel industry in 2004. not 2014. 2004. we hear them talk. they have been talking for a long time. they tonight have the will as of right now. >> no, they don't. >> but they are not alone in that. >> no. >> no, they are not.
>> chief economist for china beige book international. incumbent coming up next, one part of the retail sector could see very big gains in 2016. we'll tell you which sector it is straight ahead. then bill lebeau kicking the tires on the brand-new tesla model x. we'll go to illinois for one of the very officers test drives. and to ipo or not to ipo? that is the question for many promising start-ups. a top venture capitalist gives us his read on ipo market. all that and more when poufr pow lunch returns. the kitchen...that's home. that's like my grandma cooked, my mom cooked. i make a lot of banana bread because the baby likes bananas. (laughs) whatever home means to you, we'll help you find it.
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man 1: he just got fired. man 2: why? man 1: network breach. man 2: since when do they fire ceos for computer problems? man 1: they got in through a vendor. man 1: do you know how many vendors have access to our systems? man 2: no. man 1: hundreds, if you don't count the freelancers. man 2: should i be worried? man 1: you are the ceo. it's not just security. it's defense. bae systems.
we've got the dow up 200 points. a lat of parts of the margaret are up. look at the retail etf, the xrt, it is making steady gains. the overall market value etf is tracking for its best day since all the way back in october of 2011. meantime, shafrs groupon helping the most, up 40% on a news a stake of the company taken by alley babby. dress barn and outer wall up double digits. >> this winter has been enough to drive the retailers nuts. first off the northeast didn't have a winter so all the cold weather stuff got marked down huge to get out the door. they started putting out warmer weather stuff and half the country suddenly goes into a deep freeze.
this makes jan ripen optimistic about one group of consumer related stocks. jan, thank you for joining us. why do you believe that the suppliers, the people that put the stuff in the stores, could have a huge 12 months? >> you have to believe a few other things. you have to believe we'll have not as warm a winter as last year. the otsds of that are 1 in 100. you have to believe more people are going to be working, wages will continue to rise, that petroleum is going to stay cheap, cotton is going to stay cheap and we are not going to go into a recession. >> that's not too much of a stretch. >> i also believe we'll continue to see the transference of stales from stores to online and more and more gets done by the suppliers themselves. when that happens they sell at full gross margin instead of the wholesale to the retailers. all of those things work the suppliers day. it will be good for retailers
but better for suppliers. >> columbia does well because they sell right through their website right to me. a louganis lemon does well if they are selling direct to me as opposed to through a third party. >> my list is ralph lauren, p , pvp,, bf, columbia, haynes brands. it applies to all the sploois suppliers. i'm not a fan of louganis right now. because i believe athleteser is topping out and i think we are going to see a trend back to denim, wider legs, things like that. so we'll see other people do better. in general suppliers will do well. >> you think athleisure is.toing out? that would mean a dramatic shift in buying patterns and the death of the skinny jean, that would also be a huge change within women's buying patterns for
sure. >> not what i came to talk about but absolutely what i believe. yes, i think athleisure is topping out, becoming a look not so much a product. all the growth we've seen -- all the 100% growth 234 in women's i have peril has been from athletes ear we are going to be seeing a transition to denim, wider legs and they that happens. >> mom jeans is what i'm reading. that's what i'm seeing. i'm seeing mom jeans. >> no, no, not mom jeans. fashion, denim and flares. >> what does this do when it comes to nike, and the ones that get the incremental growth, calvin klein within pvh. some of the brands that sort of saw that -- why are you shaking your head like that? >> i don't understand the term athleisure. it's like your an athlete, but
sitting on the copy of couch. >> it's when you wear athletic clothes to the grocery store. >> lets about multiple cole presidential. let's talk about thy compression. that's what i'm talking about. >> seriously. we saw a lot of stocks gain on this incremental athletesure boom. what happened to them. >> having said all that, yes, you will see some people start to struggle a little more. i think lou lieu memberon is in that category because i think they really lived with that. in the case of athleta, it's part of gap. gap is going to do how they do. that's a small component of their business. inside of victoria's secret we have got a big athleisure line. those lines will struggle. the people that will benefit will be the suppliers that can provide something else besides athleisure. all the guys i just named. people like macys and coles and
penny's, people that live off of women's apparel. it has been very tough. and part of the reason has been this piece that's all been athleisure. and the other thing that's been the a problem is deflation of course. deflation would be less bad if we didn't have athleisure. >> year over year comps are going to be screwy because of the port disruption a year ago. >> now you are in the rest of my thesis. the port is not going to a be pro like it was a year ago. we are not going to see increases in costs for shipping because petroleum is so cheap. all those thing that went the wrong way and fouled up the system for lack of a better term in the last year are not going play out again this fall. it is a going to be tough for spring. there is mark down money being pushed into the system right now. it hurts the vendors. witnesses they report and tell us how tough spring is the world is not going to be ready for the fact that fall is going to be
better. >> one of the best chirons is on our screen right now, death of yoga pants with a question mark. this is stuff -- how many canada goose coats can be sold? are there enough geese to fill them. >> they are small enough that they can continue to grow. >> the owner of the boston celtics. >> owns those coats. >> they own that company. we interviewed them in january in the boston storm where the storm was taller on the my head. and they own it. that's not brand that in other words people could take advantage of. >> it's tough to stay on message with this group. >> i'm thinking about by jeans wardrobe. >> we did squawk box. we have an excuse to be loopy. >> one other thing i would like to add about the suppliers. when we get into fall the weather woenlt be as tough.
we won't see the problem of the port strike events. and we won't see all the markdown money we've been seeing this year because the input pressure is going to stay low if the dollar stays strong because we al bhi in dollars and that will get pressed into the margins of the vendors faster than the retailers. >> if you are wrong i want you to come back wearing yoga pants. >> or skinny jeans. >> do you think i don't wear yoga pants. >> the companies you like, ravel lauren, phillip van hughesen, columbia, and haynes brands. athleisure, when you are sitting on the couch thinking of exercising but the sea salt and vinegar chips are way too good. >> eating cheps in my yoga pants. >> good to see you. coming up, the tough analyst calls and the stocks you need to know b. it's street talk. it's straight ahead, on "power lunch."
a neutral. a good defensive retail stock. they like the stable insfernl and external growth as well as the strong balance sheet with no meaningful debt maturities. stock is down 5% this year. the targeted, 34, about 12 percent% upside. >> i'm still thinking about replacing skinny jeans. >> it's really traded in lock step with the broader seconder here. next stock. l.p.l. financial. 24, down from 28. that stock is up 16%. the analysts says the decision to lever up to stock repurchases was an error but the 35% decline in the shares wrasse overdone. theed a viery business, now 50% of growth profits is a mine drive of quality. there is relaunch of essentially
managed platform supports more growth in advisory. >> i tell you what, when you see -- this is a company that advises us, not us but people on their finances and the stock is down 58% over 12 months. if your financial adviser, that's not the kind of stock price you want the see for your own shares. >> good opponent by you. >> you sound surprised. auto zone, outperform from a neutral. auto zone is one of the most consistent earnings growth stories in retail. they like a new distribution strategy. this is auto parts. the target boosted to 800 from 775. 10% upside. >> we have been remarking so long their peak auto sales last year in the auto stock, the automakers haven't done well but
this is one area that does well. new car or old car you need wiper blades. >> these roads you need everything. >> micron getting an upgrade to a buy. the analyst says shares will outperform without the dram and the 3d dram ram. up 7% today. >> not a bad day. a $36 stock two years ago. you know more about micron. if you own it, you have to be a d ram trader. d ram memory is a commodity, it trades, you can buy and sell, there are website. you are betting on owning micron is not different than owning a freeport, mcmarran. you are owning a technology commodity. >> last stock, green dot.
california based distribute card company. upgrated from a buy to a neutral. $23. there were reports on friday that said the company may be looking at strategic alternatives. the analyst says whatever happens, sort oft just the talk to be the catalyst to unlock value. he adds the outlook remains murky around any possible deal but sees upside. $23 target. >> this company is not just looking at strategic alternativ alternatives. >> green dot under the radar. t street talk, the five analyst recommendations of the day. >> up next we are kicking the tires on the tesla model x. phil lebeau is going ride
welcome back to "power lunc lunch". the oil marketing closing for day, posting a lost. wti finishing just before $29 a barrel. let's go to sharon epperson. >> here is your update at this hour. we are looking at gop presidential front-runner donald trump campaigning in south carolina this morning. he stopped offa for breakfast at a diner in greenville and posed for photos with diners. he visited his headquarters thanking the volunteers for all of their hard work. rival marco rubio also in south carolina blasting ted cruz as a candidate who is lying and accusing him of having a campaign strategy to, quote, not tell the truth. he made the comment following a town hall meeting in booford.
powerful storm sweeping through georgia this morning leaving a lot of damage in its wake. eight homes in a local home park were damaged. and no injuries were reported with the storm. the agricultural department is proposing a plan to require stores that accept food stamps to offer healthier nutrients including vegetables, fruits, and meats. it would not not require the food stamp recipients to actually purchase the healthier food. >> sharon thank you very much. today is the day that interested buyers who made a reservation for the new tesla model x. they can test drive the car. we are riding shotgun along with a model x reservation holder. what are your impressions so far? introduces to your glorified uber driver here. this is bob drucker. bob is a model x reservation
holder. bob tell us a little bit about why you put the reservation in for the model x now. and at 91 years old, you are loving this, aren't you? >> absolutely. why did we put the reservation in? aside from the fact that my wife wanted to. >> and that's rosie. sitting back there. >> right. i also wanted. because we already had a model s it's an enjoyable car. we feel so safe in it and in a way we feel good about driving an electric car. all electric. prior to that we had a preyum for number of years. we loved the prius but the chance to have a family sized car, electric, all electric, that we could drive easily from our house in willamette to our farm 160 miles west -- >> sure but you know a lot of people are saying $5,000 deposit? many of people have had them for several years and they are
wondering when their xs will finally be delivered. have the delays made you think twice about making that deposit? >> no. that's part of the game. hasn't bothered us at all. >> what's your kbreg of falcon wing doors as well as the canopy windshield here? it's phenomenal. i never imagined this sort of visibility. i'm anxious to drive this car in full sunshine and see how you can block the sun with these visors. >> quite a bit different than the first car. >> what was the first car he had? >> bob, what was your first car? >> the car i learned to drive in was a 1937 buick convertible. when i was 12 years old. >> you were 12 when you learned to drive? >> what's that? >> you were 12 when you learned to drive? >> in those days, you didn't get a license when you were that
old. but -- >> things were different in 1937. >> by the time i was 15 in 1940, you could get a license and drive it all the way from chicago to boston without any problems. an exciting car. >> now you have auto pilot with the poll x. and you haven't tried it out yet. >> right. >> do you have any concerns about doing that? or do you look at it and say, it might make it easier for you to get around at your age. >> if it could make it any easier, i'm sure. i look forward to using it primarily on the highway like this, a motorway. because as you all know, you drive on the motorway, you can start thinking of others thing and not concentrating. >> sure. >> like you have to in traffic right now. >> michele, i know you have a question. go ahead. >> can you try it right now? is the car set up where you can try the automatic driving or no? >> he hasn't had the briefing on how to do that yet.
that is something he is looking forward to try later on this afternoon. once he gets briefed on it he is looking forward to trying it. >> mr. drucker, it's brian sullivan. if you don't mind me asking, what did you do for a living? or what do you still do for a living? because that car is not inexpensive. >> i was involved in a family business, manufacturing. and in a farming business, which is part of our family, and managing high-rise apartments in chicago -- family residential. and with the help of sons and sons in law, i'm still involved with everything except the manufacturing business. >> good for you. >> bob drucker thank you for allowing us -- >> oh, we're not done. we're not done, wait a minute, we're not done here. >> oh, no. i've got a question for bob.
>> wrap, schmat. >> we're going to have to go beyond dem dempster street. >> you have got a full charge. go to boston. you are good. i'm curious, bob, do you consider yourself a tesla maniac. you said you enjoy an electric vehicle. but if bmw came out with an electric car next year would you try it. >> would you try other electric vehicle if it was from mercedes or bmw or are you a tesla maniac. >> i would try other electric vehicles. i would enjoy the opportunity to buy one at a less expensive price. >> my final question, bob, do you happen to remember how many miles per gallon or gallons per mile that '37 buick you drove
got. >> >> do you remember the mileage on your '37 buick. >> before we had the valves ground, it was up to 90,000. and with handing it down to some of my kids it got 200,000. >> how many miles per gallon would you get. >> i would presume i used to white it tun we got 17 or 18. >> that's not bad. >> there are lots of cars on the road today that i'm very happy to get that on. >> it was probably a flat six, four speed? >> what was that -- should we turn off here. >> guys, we're pulling or to have lunch. >> coolist live shot ever. >> that was awesome. >> that was great. >> back to the markets here. stocks are firmly higher. oil is down. how are traders navigating the volatile markets? we'll got the read from two top traders. trading nation is on deck when
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begin the year, gold turning dramatically lower, down more than $30 an ounce today. goldman sachs saying it is time to get short. what does siree think? apparently we're going to find out. somebody's phone is on. eric gibs is with s&p investment advisory, genus sanchez joins us from london. eric, do you agree that now is the tomb to short gold? and can you tell us why the nearest sushi restaurant is? >> i think it's time to short gold. i can't tell the nearest sushi right now. i completely agree with goldman. we are seeing a change in investor preference. we have seen investors push up the gold prices. obviously it's about volatility. its a not because there is a change in demands or a cutback in production. another thing we've been looking at is actually the gold miners of the right now they are trading at 20% disquount to the net present value for the value of their assets. which is unusual. for us, this says that gold is
overpriced and it could come down from here. >> gina sanchez, agree or disagree with that, gold is overpriced? >> i agree with that. i've never been a great fan of gold, particularly in this environment. in order the see gold rise you would need to see a few things, one you would need to see some kind of systematic kind of crisis. or you would need to see a prolonged dollar weakness. or you would need to see the fed not just slow down but actually reverse their entire stance on tightening, meaning they'd have to go back into easing. i don't see those thing on the horizon. for that reason i think that i agree with goldman sachs and erin, i think that gold probably is done for now. >> erin and gina say gooed gold is too pricey. they would agree with goldman to short it. remind you folks, two additional trading nation segments a day on the internet. go to trading nation.cnbc.com.
welcome back to "power lunch." i'm melissa lee. we have a rally on our hands. the stocks are just off of session highs. the s&p 500 is up a firm 1.5%. we had been up as high as 1.6% up in the session. all ten s&p sectors in the green at this hour no. surprise here, also utilities and telecom, the so-called safe havens, those are doing the
least well while discretionary is up by more than 2% at this hour. up next is the party coming to an ep in silicon valley? the view from one cop venture capital firm when "power lunch" returns. ♪ every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation
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compare that to last year when two dozen companies went public and those initial public offers raised 5 billion in the first two months of last year. let's talk about what's going on with tech with the early backers of uber. >> is it simple as the fact that there's been tremendous volatility and volatility usually means a bad market and hence why would you want to go public in this kind of environment or is there more to it than that? >> i think one of the macro conditions are a factor but when you think through the end of the year, companies will have to go public and companies will go public. the long-term opportunity in venture capital and startups has never been better. >> why do you say that right now when it feels like everything is moving against it, that investor sentiment is so negative that it's risk off and we see in the private sector, in the private traded market that the
valuations are coming down? >> it's a beautiful day in february and love is in the air and spring is not too far away. you have to look past the immediate and see the future. we've been doing venture capital for 42 years, up cycles and down cycles. look at the core trends as driving disruption, the mobile cloud internet, those things are intact. we are a little bit of inflection point at the late stage guys have gotten too far, too much too far ahead but the early state venture capital remains very much intact. >> did you see the facebook post by tim draper. why would any company want to go public today? it doesn't make any sense, it cost the company as much as $5 million a year to comply with regulations now. that sounds incredibly expensive for a startup. why would you want to -- >> when you talk to ceos who
have gone public and you ask them would you do it again? most of the ones i talk to say no, they would much rather go back to the way it was when they were public. not that they don't like having the money. they love having the cash but they don't love the other parts of it. >> and you see this periodically. i call it the peter pan syndrome. pe people don't want to grow up. if you want to create a sustainable long-term company, you have to deal with the transparency and openness of the financial ipo market involves. to me that's important. that's an important product growing up. i think like parents we've been doing helicopter parents and investors are koig helicopters investing and part is to let your kids grow up in the real world. there have been ups and downs -- >> you're one optimistic guy in silicon valley. twitter is the poster child of perhaps the company that maybe should not have gone public.
it's down what, 66% in the past 12 months. that's got to have an impact to valuations and fund raising that you're seeing? >> just for the record, if you would have seen me in 2014 and 2015, we had been predicting this late stage pull back but i'm a big believer darkness through dawn. i'm excited -- >> does that mean it's dark now? >> well, it is dark from a public market standpoint from a macro standpoint but it's exciting from an innovation standpoint. >> we look at twitter and go pro and others that have not done well, are they bringing everyone else done. high profile ipos don't do well, what is the ripple effect through the rest of the market. there's got to be an impact? >> there's absolute impact in late stage. i think every late stage investor is looking at those valuations and there's a late
stage going on. when you are two gals or guys in a garage thinking to the next big company, the next uber, there's no implication to what the stock market is doing or public markets are doing. you want to look at the real disruption you're doing. when we look at the opportunities coming down the pike, it's a pretty exciting time for us. >> give us an example. how much and what are you putting money? >> i recently put money in up counsel, think of it as uber for lawyers, and allowing you to hire the best lawyers you can at a dramatically better price -- >> put it in your phone and lawyer shows up at your door within eight minutes. >> well, or invest in a company called realty, gives investors an option for a much better investment than the public markets where you can invest in real estate. we look across our portfolio and
revenues growing and companies that are continuing to make progress and that's interesting for us. is there pull-back in the late stage market, absolutely but that's opportunity. >> you mentioned uber for lawyers, what do you think uber is worth right now? >> look, we invest in the company doing less than a million dollars a more than. doing a little bit more than that. from our perspective, we think this company will be a game changer. every decade there's one company that truly changes the landscape. uber is one of them. >> what should we be concerned about right now? >> we are invested in betterment. if you look what betterment is doing to fees and financial asset companies it's incredible. they are crushing down fees and create a portfolio at 14 basis points, fidelity, vanguard, 80 to 90 basis points.
that we think is a game changer. >> rewind the tape -- finish your thought, please. >> no, go ahead. >> i was going to ask you, our producer suggested we rewind the tape to the year 2000 where a lot of high flying internet -- tech companies not justin ter net companies saw their public market value shaved by 60, 70, 80, 90% or more. do you see any similarities to today? beyond that? >> the 2000 bubble, it happened in the public markets. these companies went public too early. pets.com going public and having the retail investor bear the price. this time all of the investing happening in the late stage with sophisticated investors. to the extent it doesn't work out there's not going to be an impact. that's one. second and the most important thing, the companies here are real companies, even if they are overpriced they are real company.
this was not the case in 2000. to me this is not 2000. i know history doesn't repeat, it rhymes, i think we have a tendency to go back to the past. this is not quite exactly that. it rhymes but doesn't repeat. >> remind me of having the optimism of a real estate agent, always a good time to be in real estate, right? we appreciate your optimism from sunny san francisco today, good to have you on. >> thank you. >> we should get jack on because he said vanguard is too expensive. we got to get to seema for a marketplace. >> biotech, the battered biotech making gains. the main etf that tracks the sector stocks up about 2%. among the big names lifting the etf higher are biogen and amgen seeing a boost as aneemia drug met its primary goal to reduce the need for red blood cell transfusions in certain anemia
patients, that stock higher around 1%. >> thank you so much. see you at 5:00. "fast money", looking forward to it. >> "closing bell" starts right now. ♪ ♪ i wish that i had jesse's girl ♪ >> such a great song. welcome to "closing bell" i'm kelley evans. >> and we're up 195 points on the dow but we're not just talking about what's going on with market rally. rick springfield is going to be here at the new york stock exchange to tell us about his new album and his singing and acting career and how it's affected by the explosive growth of streaming music and video. his new album, how will he make money off the album, is it going to be from streaming, sell albums themself or touring? >> i heard he played in a small music store over the ek