tv Fast Money Halftime Report CNBC March 2, 2016 12:00pm-1:01pm EST
sky the next couple of years. you mentioned some tech companies managing to hold on to gains after the big gain yesterday. >> gopro up better than 7%. that stock is up by i believe more than 20% over the past several days. >> oil holding in despite the inventory numbers. let's get over to the half. all right guys thanks so much. welcome to the halftime report from here at the new york stock exchange today where exxon ceo is meeting the media this hour. we'll bring his comments to you on oil prices and where the market is heading from here and that's our top trade this hour. crude was at the highs of the day. a little bit off now but a significant story pushing toward $35 barrel joining us is josh brown. and john is the chief market
strategist. oil moving higher within the last half an hour or so on a report that saudi arabia could be looking at a big loan. raises questions about the state of the oil market's most important player and whether crude really found a bottom. that debate begins now. what's the case here. >> have we found a bottom? >> yeah. >> that's a question that you can maybe say if we have you think the market is going to move higher or are we going to go right back down. >> 26 level i would say if that's not the bottom we have come very very close to what i would perceive to be the bottom. can we get above this range? it's very much the volatility index and the ovx. can they break through various ranges? we finally broke below the levels and after the huge run yesterday why don't we have more of a pull back today? we're not seeing it because people are looking back toward
35. pushing toward 35. that makes it very very interesting a and loi otolaryngology folks will get more bullish because of it. >> is now the time to buy some energy stocks. do you think the market has bottomed? >> the oil is trading very nicely and today's inventory numbers went down and came back up. 34-20 is a 50 day moving average in the wti. that's very positive. riggs are collapsing. down under 400 in oil riggs. we're starting to see texas production and that kind of thing but also once she was at the right line exports are huge. it's huge in terms of what natural gas is selling for in the united states compared to around the world and there's 50 tankers lined up. but rail cars are being
converted into storage bins right now. they're using old rail cars. >> is this the most important question in the market still? josh brown? two things that have been trading in tandem with one another? oil prices and whether they have bottomed or not? >> i'd say it's important. i'd say top three. china and the dollar are the top two. the real question on oil is not necessarily has it bottomed. what does the recovery look like? is it w shaped or a saw tooth which is very frustrating for a lot of people. is it l shaped where we layed down here in the 30s and never get the spike higher that so many producers need. we don't have the answer to that and i think that that's still the biggest question lingering. >> it is critical if you think that oil has stabilize if not bottomed. maybe you take some of the dividend cut questions off of the table maybe it's a cure for
the ills in the high yield market as well. there's wide reaching ramifications of the answer to the question that we ask. >> yeah. stabilization is one of the keys not just with the energy markets and materials but with currency markets around the world. whether it's our dollar or the british pound or a zone currency like the euro dollar. the fact that we have now seen a stabilization in energy and material. take a look at the british pound here. last week below 139 or 13850 or whatever. now right back to 131. instead of the biggest market in the world being that for this market it's not. it's just okay on to the next thing. what else is out there? china? not so bad this week. energy prices stable. so with that as a backdrop you can build off of this and
trading sideways is a good thing. >> let's bring in the president of oil associates. andy welcome. it's good to speak with you today. i'm wondering what you make of this reuters report that the saudis may be looking for as much as a $10 billion loan. the implication being that maybe they're starting to feel enough pain to make a difference in the oil market now. >> well it does show the amount of financial stress that the saudis are under. that's why people are agreeing to the freeze. we'll hear the word freeze for the next several months as iranian oil returns to the market and probably during the mid to late summer we'll start hearing about production cuts because it's a face saving way to let iranian oil reach to market and have an idea of how much it is and then say from this very high production level maybe we should start cutting back production to get the world supply demand better in balance. >> so venezuela is talking about a freeze or maybe other actions or maybe there's things that the
russians may be willing to do as well but how do you separate and maybe this is the most important question here. how do you separate fact from fiction because there's rumors every week that continue to drive the price in every direction. >> on the backside i look at the most hawkish members of opec are the least likely to cut production. we're not going to see it out of venezuela. another fact that i always look at is how the spread is trading whether it's going deeper in and seeing an indication of higher supply. i also look at the number of chips that are out there and what's happening as far as how long it takes for them to unload their cargoes. whether it's in europe or on the gulf coast so i look at the physical markets quite a bit for a clue as to whether things are getting better or worse and clearly this week's stats were just terrible for the oil market so i still think that we could go down another 3 or $4 before
we kind of make that substantial move to the upside. >> so the narrative hasn't changed. expect oil to move lower once we get back on message. >> the facts on the ground saying we got oil and it is everywhere and it's not only crude oil but it's gasoline even though we had a little bit of a draw refiners are making summer grade gasoline and storing that on tankers waiting for the season to begin in another couple of months. it's not good news right now. >> i appreciate your time today. thank you for joining the halftime show. >> thank you for having me. >> andy. josh, what do you do with this? >> you do what has been working and what we have been talking about. the equities act better than the commodity and that's important for the viewing audience. i'm not sure that that's speculated in the price of crude but i can tell you in the index of the large caps you're seeing a pattern of higher lows. on the dips it's dipping lower.
the buyers are coming in faster. exxon is showing relative strength versus the index. in fact it's the best for that ratio going back to june of '09. so if you want to be constructive here look at the large caps with the best balance sheets those probably give you your best chance to play this if oil gets better. >> the exxon ceo in the building as we said. we hope you'll hear from him in part during this hour. the stocks that you would buy, do you agree with josh? the bigger names the exxons of the world? what's your take here? >> right now they're waiting for the shoe to drop. there's healing as the economic numbers get better. that also helps oil. they actually bought the dip the other night. the index is up like 80% in the last 14 days. i think that we're going to see a lot of m&a in this area. obviously exxon mobil has a huge war chest and you look at stocks
and market caps are under $10 billion. there's like 20 stocks in the oil index that have market caps less than 10 billion dollars that are really fallen angels. do you want to be the guy that buys it at 30 and you could have got it at pen nis or take a shot here. >> does exxon buy a distressed producer or use this to buy that stock? that to me is the question because they don't have a great hisself roif making big acquisitions. >> when you have $300 billion market cap and you look at it under $10 billion now you're getting into an area of what we're doing. we're exporting for the first time in our history. why not? i would they the assets on the ground, the capex has to be above 10 million. >> look at what they did when they bought the last big
acquisition that was their biggest acquisition ever and that one, you would much rather be loading in at these prices than chasing a high like they did in the natural gas market so being able to basically spread that out a little bit and buy several companies down here on this very significant dip i think makes all the sense in the world. >> you're talking about natural gas at 17 year lows so you're able to bottom pick on every aspect of the me tricks that you're looking for. that's probably why. that's what we're all saying on the desk here about exxon. that's why they made the moves that they made today scott. >> good conversation on the tommic of crude oil and where we think it's heading next. here's what's coming up on the halftime report. >> still ahead, exxon ceo rex tillerson on the record. >> the truth shall set you free. >> find out how the world's largest oil company is handling the tumble in crude and where he sees prices going from here. >> plus the short seller that
raised questions about valeant pharmaceuticals has another company in his cross hairs. andrew left joins us with his latest target and the shirtless models may be gone. >> do you think you could put your shirt back on. >> but sales are back at abercrombie & fitch. should you be buying the stock in we'll debate it. that's all coming up on the halftime report. (patrick 1) what's it like to be the boss of you? (patrick 2) pretty great. (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone. who better to be the boss of you... (patrick 1)than me. i mean, you...us. (vo) go national. go like a pro.
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we're back. big wins from hillary clinton and donald trump in the super tuesday vote. joining us now with where things head from here for both. >> you know, you can look at the super tuesday primaries in two ways. did they snuff out hillary clinton's competition for the presidential nomination and donald trump's for the republican nod? no they didn't but did they push clinton and trump further down the road to victory? yes they did. first the democrats. bernie sanders won colorado, minnesota, oklahoma and his home base in vermont. that's okay but hillary clinton won 7 including the biggest ones, texas, virginia, georgia, massachusetts, alabama, arkansas and tennessee. that widened her delegate lead as the contest moves midwest. now ted cruz held his home base of texas and won in oklahoma and alaska too. that keeps his nomination hopes alive. marco rubio grabbed his first win in minnesota and moves to fight for his home state of florida on march 15th.
john kasich finished 2nd in vermont and massachusetts and now defends his home state of ohio on march 15th but look at donald trump's list of victories. alabama, arkansas, georgia, massachusetts, tennessee, virginia, and ver monlt. north and south. trump not only leads in delegates but also leads the polls in every big state coming up. michigan, ohio, florida and north carolina. strong momentum for both front runners and two weeks left for their opponents to stop it, scott. >> big news and big night last night for both. john harwood at headquaters. tesla shares are in the spotlight today on word that andrew left's research is bidding against that company again. in a tweet tuesday afternoon that caused shares to sell off. you can see them down three quarters of 1% right now. he joins us in a cnbc exclusive
interview. welcome back. >> hi, how are you? nice to see you. >> like wise. this is not your first rodeo in tesla. you have been thrown from the bull before. so why try to get back on now? >> well, that's the amazing thing about the stock market. every day is a new day. every day you have to reevaluate every stock that you're in. every position and say is it a right time. so yes, absolutely. my first rodeo on tesla. i completely underestimated the momentum of the stock. the research that came out of wall street over the past two years. but recently as the price of oil started to increase in the past week as with the price of tesla and i heard too many commentators draw the correlation between the two i said no, this is just wrong and i thought right now would be a great time at around the 185-190 range to reestablish the short position in tesla. >> you sort of laid out at least in the tweet and maybe you can expand on it in this
conversation and this happened yesterday afternoon for those that may have missed it. you saw the the news flow is overwhelmingly negative and may be more substantially from a fundamental standpoint. you say there are supply and demand issues at the bulk of your concern, i'm wondering sort of what proof you have on this supply and demand issues because tesla doesn't exactly reveal their numbers on a monthly basis. >> well, you can just -- as for both of them, you can just read the sale side research. tesla speaks very closely with the analysts that cover the stock. so let's just say someone like morgan stanley, adam jonas that's been a complete table ponder on the stock and when he updated his research and discussed that his expectations are 50% lower than what tesla was expected after total amount of cars sold. it tells you that the intel they have goes to much lower supply
and the difficulty in producing the model x is not a surprise whatsoever and then on cnbc just last week you had specials showing people converting people that have deposits on model x to go from deposits to actual buyers and right now there's questions about the model x. i won't discuss that. it's a tremendous car. model s is a tremendous car but more importantly it's the news flow surrounding tesla. i'm constantly looking at the information that comes out of the marketplace and when i underestimated tesla the first time is when the model s was introduced 9 out of 10 stories were saying how great the car is and how great the car is and the stock just followed. right now there's more balance. as a matter of fact on the cnbc website i gave a plug to the website. one hour ago talked about
technologies and saying that it's outdated technology and they believe that they can produce better technology and it's no longer a matter of if someone will have long range electric vehicles in 2019 or 2020. it will be who doesn't have them. so right now you see more balanced information flow which is going to be more difficult to find the incremental buyer of the stock at these levels right here. >> that may very well be true but for its own part tesla though wouldn't comment specifically about your short position when we contacted them did as part of their most recent earnings report saying model s orders grew 35% year over year in the fourth quarter. model x reservations are up 75 as well and also while you site
adam jonas and morgan stanley even though he kurt his price target you do have it willing to give tesla the benefit of the doubt even though their own expectations have come in you own it for the cars or the technology or the trade you're talking about a company that won 50,000 cars so saying up 35% is really, it's not fair to say. so it's coming off such a small basis and nothing else to be said with that. and the bull case is the bull case. >> obviously. let's move the conversation to valeant if we could. a lot has happened since you put out your earlier reports and revealed your position.
where are you today on valeant? are you still short or not? >> i don't have a position on valeant right now. >> okay. so when did you cover it? >> oh, come on. i don't like to talk about my trading. especially in valeant but i don't have a position in valeant. right now the stock is uninvestable. i wouldn't be short or long valeant. there's too much of a black box surrounding valeant right now. i would like to get more information. last time i was on your show i put a $50 price target. stock was trading 115 or 120. it's 66. pretty darn good. so right now i think it's best for me to step away. watch the regulators. watch the company. watch everyone else fight it out and i'll go as a short seller, someone who looks for truth in the markets, i'll go find a different story to expose. >> let's talk about the regulators because there was
this news yesterday that the sec is now investigating valeant. a report from reuters was out saying that valeant asked the sec to conduct the investigation as a result of some of the allegations and issues that you raised at citron. so let me ask you first your reaction to that and if you, yourself have received any sort of subpoena from the sec as a result of the investigation they're doing. >> you know, as for, everything i wrote was transparent. i shared information with the sec. i don't want to go any farther beyond that. obviously i don't have a lawyer right next to me to discuss that. what is most important scott is that the sec is hopefully looking at with valeant is not the relationship with philador but look at report 2 which is what the sec and congress says
it will determine which is that the dependence on valeant on raising the prices of pharmaceuticals to meet their earnings expectation and that's something that valeant denied for years and we laid out on the case pretty clear and i'm hoping that that's the nature of the investigation into valeant. >> let me make it clear so that we understand what we're talking about here. you have been contacted by the sec regarding this. i don't want to make you too uncomfortable because you don't have a lawyer sitting next to you but you have been contacted and you have provided information regarding the investigation? >> i mean, most definitely. i'm a u.s. citizen. if the sec asks me i have a responsibility to always write the truth or have an intention of what i'm writing in full good faith and that's exactly what i did and as everyone knows valeant cried foul. they tried to put the blame on
me and the sec in doing their job properly of course would follow up on a lead from valeant and i would provide my information to the sec. that would be standard course of business and i have no problem with that whatsoever. >> understood. some of the biggest holders of that stock remain supportive. i spoke with bill akman an evening agatha told me the following and i'd like to get your reaction to it. we expected much of the uncertainty will be resolved in the relative short-term hopefully over the next few weeks or so when we expect the company to issue results update guidance and file it's 10k. it appears that valeant's core franchises remain strong. appears to be at odds with what you're saying. you reaction to what he had to say? >> we might be look at different publicly available information. i saw cvs had a push back. i just saw yesterday hillary clinton launched a commercial where actually valeant was
almost the target in her commercial. >> not almost. it was a direct attack on valeant. >> okay. i was being soft. yes it was a direct attack on valeant. that being said as for being cleared up in a few weeks that's a bit optimistic. there's a lot to be cleared up and a lot to be understood. >> yeah. lastly, you would admit though that while you helped bring some of the philador issues out of the shadows, if you will, that there's a difference between doing that and then insen you waiting that there could be accounting fraud which would be criminal. do you still stand by your question of is this the nerxt pharmaceutical enron or have you moved beyond that? >> i didn't want to discuss
valeant today but i'll clear one more thing up. enron was the creation of off balance sheet vehicles in order to alter financial statements but then i put a 50 price target. if i ever thought this was going to be a bankruptcy like enron the price target would obviously be zero. but i never said that so i have to understand what enron is and then the perspective i put it. >> understood. andrew i appreciate your time talk about tesla and valeant. valeant for obvious reasons given the sec investigation we just talked about. we'll talk to you soon. andrew left. comment, doc. >> his don't touch statement is pretty accurate. i don't know why any investor would go scrambling into this one unless you only looked at the chart and said it's down from 120 or 115 down to 66 and somebody out there might say that looks cheap. that's not how i invest but obviously that's how some people pick stocks. i think that's a very dangerous
way to go. >> coming up is your mutual fund buying the best stocks in the market? we're debating the companies that the topper forming funds are snapping up and whether you should be doing the same thing. and as we head to break, take a look at the s&p sector heat map at this hour. there's energy telecom and financials in the green. s&p is down 5. we're back right after this. ...you guys finish the reports and i'll get the promo materials. questions? i got a question, where's my omelet!! coming right up, mr. tinsley! um. who's he? until our startup gets on its feet, money is a little bit tight. so i opened an online bed and breakfast. there's supposed to be muffins! these are scones! ok, mr. tinsley. or we can just use fedex ground shipping. they're fast and can save us money. yeah. let's do that. also i'm gonna need more towels. also the toilet is busted. also those two things are related. fast, affordable fedex ground shipping. this just got interesting. so why pause to take a pill? and why stop to find a bathroom?
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hello, everybody. here is your cnbc news update for this hour. senate democratic leader harry reid says president obama is close to submitting to the senate a supreme court nomination to fill the vacancy. reid says it is the chamber's duty to perform a confirmation process on that nomination which it should receive in a week or so. bill cosby's efforts to have his criminal trial kicked out of court has new life. the criminal sex abuse case against him in pennsylvania will pause while a state appeals court takes up whether to throw out that case. >> the transportation department announcing it has banned the use of electronic cigarettes on commercial flights. it took the action to eliminate any confusion over whether it's existing ban on smoking on
flights includes e-cigarettes. lindsey vonn's ski season is over. she is leaving the racing circuit because her left knee which as you can see there, she took a tumble. it was damaged in a super g race on saturday and that injury was more serious than originally thought. so she said any further damage could hurt her chances of skiing in the future. so she is done for the season. we wish her a speedy recovery. halftime sbak is back in just a minute. e*trade is all about seizing opportunity. so i'm going to take this opportunity to go off script. so if i wanna go to jersey and check out shotsy tuccerelli's portfolio, what's it to you? or i'm a scottish mason whose assets are made of stone like me heart. papa! you're no son of mine!
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and your ear. >> the super majors are built for conditions like these but the last decade has been rough for the companies. they haven't been able to grow production. their returns of decline. their valuation has declined and their capitalization is doubled so these companies are in search of a better path forward and i think with exxon mobil they're in a superior position. part of the reason why is they have done a better job of managing their capital than all the other companies have done and they're in a really strong position from a financial perspective so probably the most interesting part of the meeting today and a lot of the questions related to the meeting today is what is the company going to do with it's balance sheet and the cash that it's building and you may know they cut their capital expenditures by around $11 billion recently. they reduced their chair repurchase plan by $4 billion and earlier this week they raised $12 billion in debt so when you put all of that together we're getting close to $30 billion and that's a war chest that is a pretty healthy one so we think that acquisitions may be forthcoming.
>> do you mind it ironic that activist shareholders pushed all of these companies to die vest midstream assets and had they kept some of that stuff it might have offset the issues with production? mainly the fact that nobody needs any production and the refiners have done better than the majors. what do you think about that concept? are the activists wrong? >> no, the activists weren't wrong and it's always right to manage your cap tanld all different part of the cycle. after having said that when you think about it, the refining a marketing business is only about 10 to 15% of big oil companies. they're dependent on the upstream business and they managed it pretty well but my industry wasn't built for $35 oil so it's challenging for everybody at this time and this is a company in the best position to really improve their outlook through consolidation and mergers and acquisition. >> you point out that the strength of the balance sheet and the business, couldn't you make the argument that yes, of
course you're right but isn't it a strong but yet weakening financial position? the longer oil stays at this level if not move lower? >> there's no question about that. but let's remember that they're the strongest of the strong. they do have a aaa rated balance sheet and besides johnson & johnson they're about it so they're in a fantastic position from a financial perspective but what rex was clear about today is that buyers and sellers are still far apart. this could take longer but we need consolidation in this industry before we can return to happier days so hopefully it will be ahead. >> did you think that it was odd that moody's chose now or days ago to downgrade them from stable to negative given that aaa balance sheet that you're talking about? given some of the other positives that they have done as far as capex cuts and all of that. >> the timing was interesting but to be fair they really downgraded or suggested they were going to downgrade a lot of the different companies in the industry. but at the same time, they are
dealing from a position. there's no two ways about that and one of the things that's different and a lot have much lower returns and valuation and they can't use their equity as currency for acquisitions this time around so they'll be disadvantaged because there's a lot of opportunity in the industry when you consider that s&p reserves are trading at about $14 for boe in the stock market and these companies are able to find oil for $27. they can purchase reserves. much more unexpensive than they can find them for. this is a natural condition for consolidation. we think it will be healthy for the industry and we think it will unfold. >> let me ask you lastly if i had asked you say two months ago if you thought they would cut a dividend or we would start seeing that thing, you probably would have told me no. >> i probably would have told you no. we didn't think they were going to cut the dividend. we were wrong about that. after that the reason that i'm
recommending exxon is chevron and bp is because we think that those dividends are safe. >> and conoco. >> i am. >> but we think the dividends are safe. they're yielding between 4 and 8%. not that optimistic about the stock market this year so those stocks should perform well in an environment like that and at the same time if we're correct and through mergers and acquisitions they transform themselves this year they're going to end up being pretty good stocks and they already have been. would you believe that the super majors matched the markets since march of last year? hard to believe. >> what would it take for exxon and chevron to have to cut their dividend? >> oh, gosh. it would take a lot. especially when you consider their balance sheets are as strong as they are today. my gosh, 15 to $20 oil for some period of time. if we have 15 to $20 oil we have pigger problems than that. some type of upside down recession and what have you. >> thank you for coming
downstairs and sitting with us. evercore isi. the top rated energy analyst on the street. coming up, teenage wasteland no more. amb ambercrombie with raises for the first time. that continues in a halftime portfolio competition. john making moves. his trades are coming up next. you're watching cnbc. first in business worldwide. ♪ i built my business with passion. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one.
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encryption. back to you. >> we'll see you soon. thank you so much. former chesapeake energy ceo has been charged by the justice department for conspiring to rig bids for oil and gas leases. scott has the details. hi, scott. >> hi, scott. this thrusts one of the most controversial and sort of high flying players into a new controversy about allegedly rigging bids with an unnamed other company coconspirators from 2007 to 2012 deciding who would not bid it and in the process of potentially ripping them off and the charges are outrageous and he's been singled out and it's speculation to his co-founder who then went on to
found sand ridge energy and that company disclosed it too was under investigation but this indictment does not name the co conspirator and you fight find them fighting back hard. >> thank you so much. scott with the latest on that very big and interesting news. regarding that. meantime breaking news now from exxon ceo. morgan has the details. he has been speaking upstairs. morgan what is he saying? >> just answered questions about cap c capex cuts. it will take place in the upstream but the objective is not to keep production flat even though that is the current forecast right now through 2020.
the continue will pay a growing dividend that he continues to run the business but on the heels of the bond sale and borrowing specifically to invest and this is not capital being raised to write a check to somebody lastly in response to a number of analyst questions and there's a lot of value but some of the expectations has not changed. right now they're focused on asset deals and they're being patient. back over to you. >> thank you morgan with the latest from upstairs. pretty much i think expected as to what our analyst was expecting to come out of that meeting today. we'll see if m&a is in the pipeline or not moving forward for exxon mobil. coming up, gaming the market you might not be able to play fantasy football in your state but there is a new or daily
>> american express is the first one. >> what we think the best of the best has been buying. >> american express is the first one were me. we were talking about this last week in front of warren buffet coming up for his meetling and all the rest of it. the desk maybe i look at it still, scott, this is a company that is in decline. and that's the problem that i see, still, for american express. their co-branded partnerships are not there anymore like they were. one of the other names, mastercard, does stand out for me. they're not only doing that, but they're exploding globally and getting themselves more involved, talking about the recoveries in europe, in terms of how they're doing there and spend there, i think there are names on this list that i love and some of the names i maybe not so much and american express would be in the not so much category. >> amex? >> i'm more of a macro guy. i look at it in terms of market cap. look at visa, 175 billion, mastercard, 100 billion. american express drops to $50 billion which is, you know, very low historically.
i think two things buffett is in it, american express, they have a great franchise, they're working for the costco problems now. i think that you look at the stock, 55 is -- 50, 55 is a pretty good -- >> what do you mean? are they trying to save that? >> i think they're working through fact they're not going to be with costco anymore. >> you're making essentially a case that one of these mutual fund managers would look at why they have been buying a stock like this, which is off 32% from its 52-week high. apple is on this list as well. it is down 26% from its 52-week high. and you have according to morning star the largest number of funds within its survey, it seems, are the ones who are buying. >> yeah. >> what is the trade here on apple at 100 bucks? >> well, pete and josh are long-term bulls on the stock. i love the product. but ahead of the cycle, the upgrade cycle for the 7 that we anticipate is probably going to start getting hotter and heavier
from june, july, august as it feeds into that september time frame, judge. i think you're early on april buying that one here. i would buy unh, i would buy master, and i like allied financial, alli on this list. i like all three of those to outperform apple between now and when the rumors really get hot and heavy about the apple new iphone 7 in july and august. >> josh? >> i'm not a fan of american express because i think there are some secular issues that the company has not yet figured out. and i don't think that it is very easy comp against mastercard and visa. remember, the big difference here, american express is taking the credit risk for their customers, where as visa and mastercard are basically in the interchange business. they're clipping a little piece of each transaction, but it is the issuing bank that takes that credit risk. >> what about apple? >> i like apple better than the other three. i think apple you buy in this period where earnings are flatted out, they're in between major cycles for the iphone,
back into the 7 cycle soon enough. you have to anticipate it. can't buy during. and every time they launch a phone, every single time they launch the next model in the series, 4, 5, 6, 7, they manage to find a way to blow people away. i'm not sure why you want to make the opposite of that in this stage of the game. >> good having you here. thanks so much. >> thank you. >> see you back on the desk soon. coming up, fantasy for stock pickers. we'll tell you about a new app letting you bet on what stocks you think will outperform each week. that's coming up next. people talk about "deals"
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sounds cool. >> it is a competition for stock market fans. and each week we have a certain number of competitions in different sectors industries. so we give you the ten stocks, so apple, google, facebook, whatever -- >> you give the player the stocks. >> they don't pick the stocks. they rank the stocks in order of how they believe they'll per foreign minister over th form over that week. if they're correct, they get points and we add up the points at the end of the week and see who wins. >> you play for real money. what is the minimum -- what is the minimum bet? >> the entry fee is $5. there are contests that are $5 or contests with $100 entry fees, so you can decide how much you want to put on the line. >> what is the difference between a $5 competition and a $100 competition? >> no difference, some people want to play for $5 and some people want to play for $100. >> a matter of what your risk appetite is. >> exactly. i think the fun part of the competition is the fact that, you know, the way we think, we're talking about this before, when we think about how to discuss stocks, we don't say how
is groupon going to do next week. we say do you like groupon better than amazon. that's the natural way that investors think about this stuff. the problem is that, you know, the sell side publishes ratings in buy, sell, hold, which has no meaning to -- what does a buy mean? that data set is worthless. the way we set up this competition, i think, is the natural way that investors think about how to, you know, analyze stacks. >> is this -- since the participant is not picking the stocks, is this skill-based or just luck-based? >> we have been running in private beta among my company and about a couple hundred other people that we invited for about six weeks. and beyond a shadow of a doubt, we found certain people are winning much more often than other people and that proves it is a skill-based competition. >> i'll tell you why i love it. young people might not have the money to put $5,000 into google, but if they could say, hey, google reports earnings this
week, i bet you it does better than, you know, four, five other names in the group. that's a great entryway for them to learn about the market and feel like they're involved. >> when does this start? >> it starts now. it will be open now, on monday, competitions will start, but, yeah, i think you make a good point that, you know, i think the average investor is really great at equity selection. but they're table at risk management and market timing. and this takes away all the other variables and says do you know how to pick stocks better than everybody else? >> i have somebody e-mailing me now that says if this is not the sign of a bubble, i don't know what is. we have gotten to this point. but, anyway, it is interesting. thanks for being here. lee droughn, ceo of estimatize. cnbc has a data analysis providing partnership with estimatize but we do not have any involvement in this force rank product. good luck if you're playing. final thoughts. pete najarian, a day where we're coming off a massive super tuesday rally. >> i think my final thought
would be the volatility itself in the marketplace, the way it is completely just disintegrated over the last two and a half weeks or so including yesterday and staying underneath the averages today, that's saying a lot about what everybody's sentiment is now. >> the dow is down by 12 points. that does it for us here. "power lunch" starts now. welcome, everybody, to "power lunch." thank you, scott. along with michelle caruso-cabrera and melissa lee and brian sullivan, welcome back, brian, i'm tyler mathisen. one step forward, one step back, the major averages with very modest losses right now as you see there. about .05, 9 points on the dow, .9 points on the s&p 500 and 11 points on nasdaq. stocks down, but oil up today. rebounding. you'll see west texas up 27 cents a barrel at 34.67 and brent at $37 even, 19 c