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tv   Power Lunch  CNBC  March 24, 2016 1:00pm-3:01pm EDT

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ties into what todd does. >> there are values there. looking at the e-mail space. >> end of the quarter is coming. health care financials will go on sale. >> have a great long weekend. all you've as well watching. see you on the other side. "power lunch" starts now. good afternoon, everybody. welcome to "power lunch." along with melissa lee, i'm brian sullivan, i'm tyler mathisen and will get to michelle caruso-cabrera live in brussels in a moment. we begin this hour with a big warning to all you potential home buyers out there. right now could be the absolute worst and it is underscored here. worst time to buy a house. diana olick is live in washington with the whys and wherefors. diana? >> because affordability is tanking fast. short supply of homes for sale still very low production from the home builders have buyers in a crunch. we hear more and more of bidding
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wars as demand heats up with the temperatures. all right, so how bad is it? 9% of the 456 u.s. counties measured by realty track are now considered not affordable by historical standards. that's up from just 2% last year. median home price growth outpaced wage growth in more than 60% of counties. and where is it the worst? counties in denver, dallas, austin, new york city, san francisco, omaha, and st. louis, would you believe? affordability is best in baltimore, birmingham, providence and chicago. weakening affordability in midsize cities, many of which are undergrowing a great rebirth is pushing people out. red fin, a real estate brokerage, says the typical home sold in 2015 was about 4% farther from a city center than in 2011. they also say their agents are reported back that would be sellers are not listing because they're afraid they won't be able to find or afford their next home. and one last note, we reported
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this morning that the palo alto city council is considering subsidizing affordable housing for people who make up to a quarter of a million dollars a year. that's how bad affordability has gotten in palo alto. that one is heating up on the twitter feed. back to you. >> diana, thank you very much. well, this is an important conversation because millions of people think about buying a home every year. so let's dive more into it with neleh richardson, chief economist for red fin. you heard diana's report, citing you in part. what is your take? to me, i get the palo alto stuff. that's so far out of the norm. 9% still doesn't seem like that high of a number. >> well, what we're seeing is that they're starting to be a growing disconnect between where the high paying jobs are, like in palo alto and where it is affordable for people to live. and that disconnect is actually having implications on economic growth. look, recently we have seen a new listing surge of 12% year over year in february. but a lot of those new listings
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come at the higher levels of affordable -- of home prices. for the low income or middle class buyer, still not a lot out there for sale. >> there is two things that jam item, right? somebody who may move from atlanta to silicon valley, new entrants into the market. and then somebody who is living in silicon valley and looks around and says we would like a bigger home but we can't afford anything. how do we block those out? how do we fix those problems? >> well, it not just home prices, it is rental prices, so you have two problems to fix. and it is really about connecting people, whether it is transit, zoning, density, some of those are bad words in some sectors of the american economy, but all of these things need to be considered because the new housing policy issue of this century, of this year, is how do you connect the jobs and people and make housing affordable where the growth is. we're seeing too often that cities are not able to keep up with the demands of the people
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who live there. >> hold off for one second, neleh. i'll come back to housing. it is the rig count, i won't ask you to comment on oil, don't worry about this. normally friday we get the baker hughes rig count. tomorrow is good friday. markets are clez osed. down 15 rigs in the united states from last week. we were down 12 weeks in a row. last week we gained one rig. that descent continuing, folks, down 15 rigs. basically at an all time low for the number of drilling rigs out there. we'll do more on this, more on oil, oil down now 1%. we'll watch it. we have something coming up later on in the show. let's get back to our housing conversation. rejoining neleh richardson of red fin. neleh, in manhattan anyway, probably along with silicon valley a place where it is stupidly expensive in certain parts, they are building more huge apartment buildings. do you see any opening up of regulation of being able to have more density so that we can have more units and thus maybe prices
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will come down a little bit. >> we're seeing some cities experiment with density. and new york in seattle, there are some moves under foot to make sure that some of those units are targeted for affordable. but it is a short-term fix. what is going to be needed is prolonged new construction of starter homes and affordable rentals. and that's going to take some really strategic rethinking at the local level on how we zone land in this country. so it is a big picture, there is still a lot of work to be done both in local governments and across the country. >> in your area too, neleh. my hometown of winchester, virginia, is a suburb of washington, d.c. neleh richardson of red fin. thank you very much. so let's move on. continue this conversation. but maybe more from an opportunity perspective because even if you're not thinking of buying a home, you might be thinking about buying stock in some of the home builders. by the way you wish you would have bought kb home yesterday, those shares up 5% now. 12% on the year. some pretty good numbers last night.
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rbc's bob wettenhall covers the home builders and joins us. you disagree with diana olick's thesis on pricing and affordability. how come? >> yes. hey, brian, good afternoon. i actually think it is the best time to buy a house because if you look today, you got a couple of things going on. number one, principle and interest payments on an inflation adjusted basis are now 15% of disposable income. down from 25% before the bubble. so affordability is very high right now. second point, inventory in the system of existing homes is down to four months of supply. usually sits at six when things are working correctly. what does this mean? tight supply, a lot of demand, prices are going up. if you want to think about it differently, you probably want to buy a house now before the prices move higher. >> you're on the radio, but i'm going to show our viewers and explain to our own radio listeners what we're looking at. if you have only been tracking
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housing starts for five years, you may say what are you talking about, we're building more homes. we're going to show a 20 year start of housing starts now and you know what it looks like by heart, bob. we may have built more than four years ago, but we're building about half the number of new homes that we were just ten years ago. do you see a meaningful uptick in that and what does that mean for the home building stocks you cover? >> slow, steady, upward progression, we like the trajectory of the housing recovery. very healthy labor market. low interest rates. things progressing in the right direction. it is a terrific setup for the large public home builders that are well managed. names like lennar, dr horton. we see a ton of upside in the stocks as they're leveraged to the recovery. trends are in tact and they're going to continue. >> we have to leave there. another idea, your best idea still door, masonite? >> masonite, we love the story, great manage , terrific execution, we think the stock is going to rip to 80 bucks.
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>> wow. big call on masonite. ticker is door. bob, thank you. neleh, diana, if you're still out there, thank you. market volatility sitting around the lowest levels of the year. is the market becoming too complacent? is this a bad sign for stocks? let's bring in ron insana and tim seymour with us on our -- with us is our own bob pisani. good to have you with us. ron, i'll start with off with you. isn't this a bad thing, investors sitting around, happy where they are? >> i'm not sure how happy they are. we had two big move and retracements in the space of five months. volatility is reduced now, but it has been elevated twice since november. so, you know, to me this is a choppy difficult market. i'm not sure how complacent people are. i think it is just that we had such a snapback that the vix just fell. >> and, tim, you know, we're talking last night on fast money about how we have what seems to be a quiet equities market. we have extreme volatility in a lot of the other asset classes,
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whether it be gold or the bond market or other commodities like oil. and how when you see volatility to those extremes and those classes, usually that filters into the equity market at some point. >> it created opportunities. as ron is referring to, we had a place where we had extreme pessimi pessimism, created volatility. volatility should be high, it will go higher. the vix compressed down to 14, 14 to 16 is where it is bottoming. i think we'll see the vix north of 30, but you referenced gold, referenced oil. the ovx we talk about, oil volatility is down. is oil leading markets? if you think about the contagion into credit or they -- the extrapolation people are making to credit markets, what it means for banks, let's file the ovx around 34, 35. it is very difficult, you referenced the rig counts just now. the data series remains very, very choppy. it is probably kind of a saw toothed recovery. i think you have to follow oil, gold is also going to be a major
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kind of read on where volatility is. but it has been opportunities and created major opportunities. i want to see more volume and more fed equals more vol and more fed in our future. >> how is this being reflected in the volumes that we're seeing in terms of trading? >> volumes have been very light for the last couple of weeks. if you think about what is going on, the three things that matter to the market have calmed down. china has calmed down. oil has calmed down. and the concerns about big spikes in interest rates have also calmed down. that's why we're seeing the vix wn at 14 or 15. but i agree with tim, the risks are are on the upside regardless. the vix has been -- the vix has been 12 to 15 for four or five years now. it doesn't go lower than that. but it spiked dramatically higher. if any of those three components, china, oil, interest rates, the issues surround them change. the vix is going to spike very, very quickly.
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>> 52 week low on the vix is about 11. we want to get to a rapid update on the economy and steve liesman with that. >> thanks very much. that disappointing durables report this morning causing the street to do a strong markdown of the first quarter tracking number of gross domestic product. it has been marked down by .3% in our rapid update to 1.5%. you can see the fourth quarter is 1%, so the bounceback from the fourth quarter is not nearly as strong as originally forecast. we had been well above 2.3. here is where various economists are from our survey of tracking, which takes the incoming data and calculates the quarter's gdp. hfe at 2.3. goldman sachs at 2. atlanta fed to 1.4 with action economics, 1.4. and morgan stanley, the low on the street at 1%. we have a stronger more in depth report about gdp in the next hour. this is the latest indication of where the street thinks growth is for the first quarter. >> steve, thanks so much. steve liesman with the rapid
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update. marking down in terms of growth expectations. we're going to get a jobs report next week. these are the sorts of things markets will hang on, right? >> great time for the fed to raise rates in april now that that's being discussed when first quarter gdp is marked down to 1.5%, makes no sense. i've been baffled by this whole conference that we have to -- after having the discussion in mark, the fed needed to wait. you have five fed officials coming out and saying they may need to go in april. i don't know what changed except for the markdown in gdp in the last couple of weeks, couple of days. >> you would think that would increase the volatility in the markets and mixed messages we're getting. >> yeah. it will push up the dollar. people think the fed is actually more divergent in terms of other central banks. i feel as if the fed is playing a game. if they couldn't raise back in september because global markets were uneasy, what are they saying about global markets now. i think that's really where they're taking their cue. and i think we have to listen to
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the fact that a lot of fed governors believe that the core inflation, let's face it, core inflation is at -- above a 20-year average. can't tell me there aren't reasons why the fed shouldn't be saying what they're saying. there is entire mosaic of where markets are. that's why every month i think the guys are in play. >> i could tell you why the fed shouldn't raise rates and cor s inflation may be an indicator. we had a rebound in oil which dominates -- >> that's not core. >> i understand that's not core. but even still, the economy is not running at the pace that you would normally associate with interest rate increases, no matter what you're looking at. inflation, even core inflation could be lagging indicator this late in the cycle. i'm still not sure -- >> ron, i think the story is that these guys feel like -- this group of people who have been out there talking about an april hike are concerned about getting behind the curve. there had been this idea that if they hiked earlier, they wouldn't have to hike quite so sharply or so steeply later on
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when inflation does show up and they also feel like they're well below the equilibrium, still very accommodative. those are reasons why they might want to hike now, but it is curious as you suggest that less than 5 days after the meeting, where they so convincingly convinced the market that they wouldn't be hiking that they come out -- >> the market changed. clearly a lot of complacency out there. and the fact that the market reacted the way it does is -- a lot of people now believe there is not even going to be a june rate hike and the fed does not want that kind of attitude to prevail? >> and this may be why volumes have been light lately. guys, thanks so much. ron, tim, bob, steve liesman. tyler, over to you. >> thank you very much. the activist investor starboard value sending a strong message to yahoo!'s board today. everybody out. off the board. latest on that brewing battle ahead. as we look out, a look at some of the stocks that might be in your portfolio. "power lunch" will be right
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1:17 pm saving humanity from high insurance rates. [ intense music throughout ] [ fans cheering ] introducing the x1 sports app. get live stats, averages, and standings. right on your tv. change the way you experience tv, with xfinity x1. welcome back to "power lunch," everybody. i'm tyler mathisen. now to the big board fight that is brewing and intensifying at yahoo! today. the activist hedge fund starboard value says it wants to remove yahoo!'s entire nine person board including one of the founders, david filo, 7% of the stock.
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starboard has 1.7% of the stock. it says that yahoo! has tried and failed and they have tried and failed to work with the current board and the board has not lived up to its promises. let's bring in cnbc contributor steve oddland, former ceo of office depot and currently a member of the board of directors of general mills. and jennifer saba is a tech columnist with reuters breaking views. she just put out a column on this topic. jennifer, let me begin with you. what is your view? >> well, basically starboard is using the nuclear option and by trying to replace the entire board. and as you noted, they only hold about 1.7% of the shares. and so that's going to be a really difficult thing to actually try and get the entire slate nominated and actually voted upon. >> would it ever be good governance, steve, to give a single shareholder and
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especially one that owns less than 2% of the stock the power to nominate and effectively name all nine directors of a company? >> well, look, i think that activists play an important role, particularly in companies that are underperforming or where their boards are unresponsive. i know there has been frustration here with yahoo! but, you know, in this case you have a 1.7% shareholder who not only wants to throw out the ceo, but also wants to replace all of the board including one of whom is a co-founder who owns 7.5% of the company. so i think it raises two issues. one is that they are essentially enacting a nonpremium takeover of the company. they'll control everything. and then second if i as a sitting ceo said i'm going to bring in an entire board and they're going to line up with what i want to do and my plan and they vote with me, that would be considered terrible governance. those two issues raise questions about this approach. >> jennifer, what do you think
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should happen here and what do you think will happen with yahoo!? >> i mean, probably starboard and yahoo! will probably start talking and if starboard wants to be more effective, they should probably begin with nominating just a few directors, versus the entire slate. that happened when daniel lowe got into the stock and installed maurice mayer as t ceo. >> that is, steve, the more traditional route that activists like carl icahn tend to take. they want a couple of seats on the board, not call for the full replacement of the board. >> and most proxy access bylaws are now being put in place to give a couple of positions. and, you know, from my experience, a couple of positions on the board can have enormous impact. these people are very smart people who know what they're
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talking about, the board has listened to them. i think that's great. but i think you've got a short-term versus long-term pressures involved here. i think the long-term shareholders need to speak up here and make their opinions known because, you know, you can't just have the short-term activists and i'm not just talking about this situation, but all of these, you can't just have short-term wagging the tail. you got to have the long-term shareholders weigh in as well. >> steve, you guys are being very polite about this. i'll be less polite. if you're calling for basically the board to be washed out, you're saying the entire corporate board and leadership of yahoo! is incompetent. >> there must be an incredible frustration here, that's something we don't know about. maybe they had a lot of discussions that have been ignored. on the other hand, you know, we don't know that. this is a case where, you know, you would hope that these companies, as jennifer said, the company, the board, and the shareholders are talking and
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that's the right way to do things. and so -- but in order to get to this point, you would assume there has been incredible frustration for them to go with what jennifer calls the nuclear option. >> jennifer, i think that steve made an interesting point and that is that this amounts to a nonpremium takeover by starboard. this was done with darden, where they took over all 12 board seats. this happened in 2012 and the stock is up ever since. >> well, they had a much bigger share with darden. and, you know, it was a smaller company. but the issue with the yahoo! is that it is going to be very, very difficult to turn it around. and even, you know, marisa's five predecessors had a difficult time doing this. she's been handed a really difficult task and it remains to be seen even if starboard gets the entire slate if they can instill a ceo who can do the job. >> jennifer, thank you very much. steve oddland, see you later, i'm told.
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look forward to that. brian? we talked about efforts to track terrorists across borders. some say the way to stop terrorism is to stop the flow of money across borders. idea on how to do that next. the e-class has 11 intelligent driver-assist systems. it recognizes pedestrians and alerts you. warns you about incoming cross-traffic. cameras and radar detect dangers you don't. and it can even stop by itself. so in this crash test, one thing's missing: a crash. the 2016 e-class. now receive up to a $3,000 spring bonus on the e350 sport sedan. (patrick 2) pretty to be the boss of you? (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.
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but i knew i could rely on american express to help me buy those building materials. amex helped me buy the inventory i needed. our amex helped us fill the orders. just like that. another step on the journey. will you be ready when growth presents itself? realize your buying power at ashley bryant, you are a teacher of small children. that's right. i have read it is the hardest job in the world. that's why i'm here. can you... i can offer advice from the accumulated knowledge of other educators... that's wonderful but... i can tailor a curriculum for each student by cross-referencing aptitude, development, geography... sorry to interrupt. but i just have one question: how do i keep them quiet? (pause) watson? there is no known solution. welcome back to "power lunch." rick santelli here live on the floor with the cme group. the three-day weekend is coming up.
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let's look at what markets are doing. 10s rebounded after a weak durable goods report. if you look at intraday boon they didn't rebound as well. difference between 10s and boons, highest differential. our ten year yields are much more stubbornly high than bound yields are low. we learned from s&p global defaults hit 31. and on year to date basis, that's most since 2009. if you want to look at the dollar index, let's start in the last tightening which was mid-december. since then we are a little bit higher recently, much lower than we were at that point. so even though there is less dovish talk, the dollar index seems to be snoozing through it. "power lunch" will return after this break.
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some say "free the whales." for them, nothing else is acceptable. but nothing could be worse for the whales. most of the orcas at seaworld were born here. sending them into the wild wouldn't be noble. it could be fatal. when they freed keiko, the killer whale of movie fame, the effort was a failure and he perished. but we also understand that times have changed. today, people are concerned about the world's largest animals like never before.
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x1 makes it easy to find what blows you away. call or go onliand switch to x1. only with xfinity. hello, everybody. i'm sue herera. the justice department charging
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seven iranian hackers had in a series of cyberattacks in 2013 against banks and a small dam 20 miles north of new york city. attorney general loretta lynch among the federal officials making the announcement. >> these attacks were relentless, they were systematic. and they were widespread. they threatened our economic well-being and our ability to compete fairly in the global marketplace. both of which are directly linked to our national security. >> syrian state television says government forces fought their way into palmyra as the army backed by russian air cover sought to recapture the historic city from isis militants. a monitoring group says the fighting was mostly outside of the city. authorities in california have discovered a cross border tunnel that stretches the length of four football fields. it runs from a newly built house in calexico, california, to a restaurant in mexicali, mexico. four people have been arrested with more than a ton of marijuana recovered. president obama and the
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first family wrapping up their visit to buenos aires, headed to the patagonia region in southern argentina where they will enjoy some downtime. that's the news update this hour. melissa, i think back to you. >> you are, thank you so much, sue. gold prices now, they are closing. and, of course, big driver of the trade is the dollar. today we're seeing strength in the dollar index and so we're seeing a slight pullback in the price of gold at the close. 1221.70 an ounce. this is on top of the loss yesterday of almost 2%. we're seeing losses pretty much across the board here in the metals complex, biggest decline in palladium down by 1.4%. brian, over to you. we are not even 90 days in. and already this has been a crazy year for your money. stocks tanking in january. the worst start to our year ever. and then a rally for the record books in february and early march. but the last two weeks, gone
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like kyzer sosa. time to reset and get sound advice. danning us on set, dan skelli, and bill stone, chief investment strategist with pnc investment manageme management. january was unbelievable as i just noted here. why have we suddenly gone into this sort of dead calm for the markets? i actually -- the calm makes me a little more nervous than the nervousness. >> sure. >> two points. the first is we actually saw u.s. data improve markedly. over the last couple of weeks, retail sales, or the new orders component of ism manufacturing, which had been in the doghouse for a long time. we have seen some fundamental improvement on the u.s. data front. >> the market predicted that. that's why stocks rose in february and early march. what is the driver from here? >> it is about fundamental earnings from here on out and being selective underneath that
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market rally. >> i like what -- i like what dan is saying that earnings might matter again. we have this -- i feel like we have got this awning filled with snow, hanging over our head. and you're wondering if it is going to come down on you. that is the federal reserve. what role are they playing in the market right now? >> you know, i think they were certainly part of -- come up with a few reasons why we have probably taken a step back this week in terms of the market. one was after a nice run, over 13% off the february lows, but unfortunately, i'll call it an unforced error in tennis terms, anyway. the statement from the fomc came out and i think it made the market and we know from market action it felt good. unfortunately we had the fed speakers out this week that frankly seemed to, you know, bring back up the worry with the markets that we might make a bigger policy error. we might tighten up too soon.
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i'm not sure why they necessarily decided to make that communication. but i think you point to that's one of the risks that certainly came home to roost a little bit this week. >> we pointed this out last week. i don't know if you saw the show yesterday. steve liesman and i did this semifun game, talking about the different fed speak. your clients may have investments for the retirement. can't follow the day to days of the fed. what should they be doing with their money right now? >> for us, i think it is -- we still believe it makes sense to stay invested. we would say, probably at least in terms of not changing the equity versus bond versus alternative investment mix, but we are at least in the equity side probably a bit more defensive than we typically are. so, you know, overweight staples, overweight utilities, we have gone so long, you know, had a really nice rally and we do feel, you know, you're in -- you said that overhang of the
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snowbank, but my thought is you're a little in no-man's-land at the moment, because you have to wait for real data to catch up with the expectations. i think eventually we think the u.s. economy will continue to power through as an overstatement. but make its way through so we still think you have a positive year in stocks. but not without some volatility. >> dan, listen, if your timeline is five, ten years, you may not even care, you want to buy a couple of -- go on to schwab or e-trade account and buy a couple of stocks, which ones should they be buying? >> for the foreseeable future, we see a low growth world. don't see things taking off like crazy. and in that environment, you want to own growth stocks. you want to own some of the quality names that are not just pure momentum, that got crushed frankly in january, but own quality growth, names with pricing power, cash flow generation and great management team. what do we like? we like nike. danaher and black rock. >> not pounding the table, you're tapping it.
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>> we're tapping it. >> you like those names. >> there are specific opportunities for specific stocks, particularly those well managed, taking share and that can generate positive returns in a low growth world. >> thank you, both, very much. have a good easter. >> thank you. >> go to to see why it is time to see stocks shine. to market flash now with dom chu. >> watching sturm ruger and smith & wesson. the moves could be due to some more cautious commentary out of a smaller cap sporting goods retailer calls sportsman's warehouse. they said a surge in firearm sales at the end of last year and early this year may have drawn forward some demand for firearms and the current sales trends are returning to more normal levels. for context, the shares have
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seen 50 plus percent gains since their lows in mid-january. so the down moves today means smith & wesson tracking for the first negative week in seven, rug ruger's first down week in ten. we'll be back after the break. t. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be.
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shift points, and suspension to fit the mood you're in... and the road you're on. the 2016 c-class. lease the c300 for $399 a month at your local mercedes-benz dealer. welcome back to cnbc. i'm michelle caruso-cabrera in brussels, belgium, where the investigation continues into tuesday's terrorist attacks here. the latest is there is increasing criticism of the belgian security forces at this point coming from all over the world citing what happened on tuesday as a major failure despite knowing that there were deep connections between belgium and the paris terrorist attacks. in fact, the interior minister and justice minister offered the resignation today, admitting mistakes. the prime minister told them not to resign, but the mistakes include they admitted not having very good security in the wake of the terrorist attacks and admitting they didn't handle the warning from turkey properly.
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turkey told the world yesterday that they deported one of the bombers last year and knew that he had been involved and had trained in syria. the other big event today is the interior ministers and justice ministers across europe have all gathered here in brussels. this is the capital of the european union. this is a city full of european bureaucrats on any given day. this was an emergency meeting to discuss what happened on tuesday. what should be done that can increase the level of security? and something also being discussed beyond trying to increase cooperation between intelligence services, how do they have such powerful weaponry and firearms on a continent where there are incredibly strict gun laws? >> how come in one -- some people can carry all this type of weapon and material to
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explode? >> this is -- we live in an open society. and we don't live in a police state. so it can happen that people indeed do horrible things. >> we live in an open society, we don't live in a police state. it can happen. it is a very parallel discussion to what often happens in the united states when we talk about guns and arms and the trade-off between security and also freedom. back to you. >> michelle, thank you very much. you, i'm told, will stick around as we continue our conversation. turning to one of the most daunting issues in the fight against terrorism, related, of course, to what michelle was just talking about, the ability to procure and get weaponry and chemicals and bomb-making supplies. and how do they do that? it is related to money and the flow of money. representative steven lynch of massachusetts is the ranking democrat on the task force to investigate terrorism financing. joins us from boston. also with us is david philips,
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columbia university institute. welcome to both of you. let's start with one of the sources of isis' money and that is the oil trade. how do they do it? how do they get the oil, transport the oil, get it sold and get money back for it? >> well, most of the oil that they're selling, it is an ongoing problem, they have got mobile units that actually will extract the oil, and refine it. they have portable refineries. they did have control of taji, the major oil refinery, northwest of baghdad. and they have had a history and we have got, you know, strong intelligence on this that shows the tanker trucks going over the border into turkey.
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now, since turkey has become more serious about interdicting the traffic across the border, beginning about eight months ago, they have done a much better job. but for a long time, they're very slow to act. once the attacks happen in istanbul, in ankara, i say the turkey is all in now. they're trying to do a very good job. but still, the syrian border with lebanon, syrian border with iraq, syrian border with turkey are still fairly porous. >> let me turn to david before i come back to you, congressman. so the congressman just described apparatus to extract oil, to refine it. trucks to transport it. how did that fall into isis' hands? how did they get the money to buy those things or did they just take them? >> turkey is an accomplice in the transport and sale of oil. isis has been generating $500 million a year from oil sales.
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they do that in plain sight. they move the oil across the border from syria to turkey. it goes into the pipeline. it then is boarded on to turkish tankers including some that may be owned by the son of the president. the congressman says in the past eight months turkey has done a better job, they're all in, prior to that they were all invested in isis oil. so there is a lot of room for improvement. >> michelle? >> i was going to follow up on exactly that. when we hear the leader of turkey say yesterday, comes out very blustering and says we warned europe about one of these jihadists, we deported them and they should have known. i can't figure out erdogan and turkey. friend or faoe at this point? how should we think of them being an ally in the fight against terrorism? >> turkey improved the perfo performance in the past few months, but we have to recall
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that beginning 2012, turkey ran the jihadi highway. across the border from turkey to raqqah. there was systematic transport of fighters, weapons, equipment, wounded warriors ended up in turkish hospitals. erdogan has not proved himself to be a reliable ally. it took a year to negotiate. let's give them credit for improving their performance of late. but their performance from the beginning of the counterterrorism effort has been seriously lacking. >> why don't you pick up on that point and either agree or disagree. >> that's exactly right. they were very, very slow to the fight. and they were complicit in many regards. i've been at the turkey probably half a dozen times in the last two years dealing with interior minister, dealing with their security officers, and that border -- they were complicit in
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helping isis in many respects. they saw anyone who was going against assad as being an ally including al nusra, isil. also, their main enemy has been the syrian kurds. that's the folks they see as most dangerous to erdogan and his regime. >> so who is striking back then, congressman, at turkey? there have been multiple attacks in ankara. are these kurdish fighters or is this isis who is annoyed that turkey is no making it harder for them to transport oil and get money flowing or what? >> well, i think isil has been responsible and taken a credit for a number of the attacks inside turkey, but also you do have the most recent attack in ankara where the pkk or somebody affiliated with the kurdish syrians has taken credit. it has been a mix of both. but what these attacks, it is forced -- it is forced erdogan's
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hand and he's had to become more decisive and more active against isis in recent months. >> we have to leave it there to get to a market check. congressman steven lynch of massachusetts. good to see you. appreciate your time. to dominic chu for a quick market flash. >> what we're watching now, shares of red box, outer wall, if you will. the company that owns red box dvd kiosks shares spiking up by nearly 4% at their highs now. they were as high as 4%, up by 1.5%. the story could involve headlines out of variety magazine that say the company is preparing to possibly test an onlie video streaming service. this could be red box's second high profile entry into streaming. they had a joint venture with verizon called red box instant. they scuttled that two years later. the stock up by 1.5%. more on "power lunch" coming up.
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an ad by starbucks ceo harold schulz calling for more civility in the current election cycle. that is words against words followed here on the next page by a letter about how he and starbucks sees america today. he says concludes by saying this is not about the choice we make every four years. it is about the choices we make every single day. he basically is decrying the vitriol of the election cycle and cheering the decisions that individuals make in their lives in america every day, which he sees as -- you see it in the volunteer who mentors youth and those helping america's veterans, et cetera. steve oddland is with us. joined by cnbc contributor jared bernstein. gentlemen, welcome back, both of
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you. jared, let me just start with you, the election cycle has taken on the -- some of the shades of a jerry springer show. >> unfortunately true. if we heed his words, this would be a much better campaign season and better country. unfortunately i'm afraid he's whistling past a campaign that is, i'm afraid going to be unreceptive to the kinds of things he's asking for. our story, the american story is not bound by party affiliations or religious beliefs, in fact, part affiliations and religious beliefs are hugely dominant in politics now, more than i've ever seen it, in terms of partisanship. great sentiment but not sure much traction. >> we would we be better off if our corporate leaders, and there are many of them, if they got
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more public spirited and left their jobs and went into politics, would we be better off if that was the case. we had an opportunity to elect one four years ago in mitt romney. i wish we had more interaction between the private secretator the public sector. i think there are real skill sets and experience that is necessary to be president. that's why fu if you talk to mo ceos, there are people that have shown the ability to work across party lines, to work with the legislature to get budgets passed and to make things happen at that level. just like you wouldn't take a politician and drop them into a ceo position. but having said that, i completely applaud howard schulz for stepping up and saying civility needs to come into this debate. all the ceos i talked to both in the u.s. and abroad are very
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concerned about the tirades on both sides. both parties. and the anti-business sentiment, the anti-trade sentiment, the tax sentiment. >> they're not going to run. the cool thing about this job, you meet the great women and men who build industries and companies. ski the i ask them, please run for president. they say no way in hell. >> they want to get stuff done. >> i thought steve was about to announce his candidacy there. he turned you down. >> i think that -- i worked with people from both the business sector and political sector. and they're very, very different creatures. i completely agree and in terms of applauding where howard is coming from here, he's exactly right. the problem is that the difference between politics and business right now is a huge gulf as you'll hear if you listen to the candidates. and in fact one of the problems you have is a guy like donald trump who claims to be a great dealmaker, even if he were, and
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i don't know if he is, you don't come to washington and make deals the same way. it is just a very different beast. >> very different thing. folks, thank you very much. steve and jared, steve, we'll see you in the next hour. jared have a great weekend. tesla, dyson, two fine pieces of machinery. i own one, not the other. guess which. they may be in direct competition. that's next on "power lunch." so what else is new? how's your mother? umm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. i'm spending too muchs for time hiringnter. and not enough time in my kitchen.
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big recall. if you're driving a 2011 to 2016 porsche cayenne or volkswagen toureg suv, your car has just been recalled. they're recalling 800,000 of those models for the year 2011 to 2016 because aparentally a clip is coming off some of the break pedals. break pedals are much better when attached than disattached. if you drive one of those two models now, your car has just been recalled. speaking of driving, i want to show you two vehicles. which one would you drive? it is there is a tesla on the left. and the dyson vacuum on the right. tesla doesn't suck.
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>> the dyson vacuum doesn't -- oh. that's the worst joke you've told this week. >> they're not mating. there is a serious story here. dyson, the company most famous for that vacuum on the right, is reportedly close to securing or already secured nearly 1.5 billion to develop advanced batteries to potentially either compete with or get into the market for batteries or cars against tesla. could have this great battle of entrepreneurs. elon musk versus chris dyson, well known to tv viewers for the dyson. >> getting backing from the uk government as well to develop this eb. >> vacuums v. cars this is the third war between the uk and america. >> tesla does have a leg up on -- >> we won the previous two. >> on the competition. >> thank you very much. it is 2:00 p.m. in new york city. 10:30 p.m. in tehran and 7:
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iranian hackers indicted. the u.s. government says the hackers were very sophisticated and working for the iranian government. eamon javers has more on the story. >> that press conference happened earlier today. and the officials said iranians hacked into 46 american financial institutions and the fbi director explained how dangerous all of this can be. here is what he had to say earlier today. >> people like to travel for vacation or education. and we want them looking over their shoulder both when they travel and sit at a keyboard. that's the message of the case. there is no place safe on this increasingly small world. >> one of the issues that was so concerning to law enforcement officials was that hack attack on the dam in new york state. u.s. attorney explained why officials are so concerned. >> the penetration of the dam
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which represents a frightening new frontier for cybercrime. though no actual harm resulted from that, the potential havoc that such a hack of american infrastructure could wreak is scary to think about. >> i'm sitting here at the department of justice with assistant attorney general john carlen. thank you for being here on cnbc. you indicted five chinese hackers. members of the chinese military who participated in similar attacks. what have you learned from that indictment and are you trying to apply those lessons sneer. >> as we said at the time that indictment was a sign of a new approach. that approach to do unleash the prosecutors around the country, to make sure we hold accountable those who steal or commit attacks against american companies, and people. and what we said then was we can investigate and figure out who did these types of theft or attacks. when we do, we'll be public. number three, we'll impose
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consequences and this week you've seen that. >> in the past, though, intelligence officials told me you don't want to reveal too much about what you know, how you can figure out, how much you can understand about the attack that happened to you and the danger of going puck like this is -- are you worried about that at all? >> can't let the status quo stand. we can't let people hiding behind the flag of a nation staid think that they can get away scott free with their activity, this he can hide behind the keyboard. we can tear away that anonymity. you can figure out who you are by name, by face, and bring charges. you saw that today against seven iranian hackers who caused millions of dollars worth of damages and affected hundreds of thousands of consumers but you've seen it all week when we charged members of the syrian army for their activity, both to cause stock market scare here on the united states by saying the white house had been attacked to
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their own criminal activity and you saw it on colorado this week when individual california business men who had hacked into boeing pled guilty and will be facing prison time for his offenses. >> you've indicted chinese officials, you indicted iranian figures, who is more dangerous for american business? the chinese hacker or iranian hacker? >> this is a new world for american business. we need to work together with you in government because unfortunately regardless of your industry, whether it is entertainment, as we saw with sony, and north koreans, finance as we have seen today with the iranians, or the defense sector and traditional sectors, every business is now in the front lines of national security threats from terrorists and nation states and just not a world they had to deal with before. >> you see so much of the stuff in private at the us government that we can't see publicly. tell me what your take is now.
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is this problem getting better or worse? >> the cyberworld is the wild west. we need to bring a sheriff into town. we have to figure out how they took what they took and hold them accountable like we do in every other area. what we're showing is whether you're in malaysia, germany, canada, iran, china, we can still figure out exactly who you are, and what you did. and that's vital if we're going to reach a world where people know there are consequences and stop routinely conducting these attacks. right now, though, it is a risky world. >> that's probably a good place to leave it. john carlen, thank you for being here. >> thank you very much. the treasury department has also sanctioned two iranian companies it believes are supporting iran's ballistic missile program. iran stepped up its testing in the last few months. new developments now in the planned multibillion dollar merger between office depot and staples. the federal trade commission has
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been firmly opposed to the takeover on antitrust grounds even going so far as to file a lawsuit against staples last december. this week, though, a federal judge said he was disturbed by allegations that the government was trying to alter testimony in that case. office depot's former ceo is with us, steve oddland, still holds stock in the company. julie bril with the federal trade commission, heading for private practice next week ending her time there and congratulations on that. we're happy to have you with us. i realize you may be somewhat constrained in what you can say about the matter that is before us. the staples office depot merger. where are you on it and where do you see the judges' concern about altering testimony in the case. >> so thanks so much for having me on. look, this is going to be adjudicated. we're in front of a judge. the judge will assess all of the
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evidence, not just this one piece of evidence, but all of the evidence. i'm sure it will be a fair and full hearing and we're looking forward to seeing what the judge's determination is. i can't comment on any particular piece of evidence, any particular part of the trial. we all need to sort of take a step back and give the judge a chance to assess the evidence in its fullness. >> your position on whether the deal should go through or not is -- >> my -- i and my fellow commissioners voted to challenge this merger because we felt it would be -- it would lead to too much concentration in certain business markets. >> let's hear from mr. oddland who knows about that sector. >> thank you for all your years of service in the government. i think the ftc has done a marvelous job over the years of protecting the consumer making markets fair and so forth. i have to admit i am a little confused on this one.
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in this case, if i understand the arguments, it is not related to the consumer. it is related to the b to b and the argument is by putting together staples and office depot, that in fact they will have pricing power for their largest customers and in fact it sounds like we're trying to protect the largest companies in the world so the jpmorgan and b of as will not have negotiating -- enough negotiating strength over what will be a relatively small company, with hundreds of competitors. that's where i'm confused in this. we're trying to protect the largest companies who are arguably some of the best negotiators in the world. >> well, let's be -- i don't think we should be litigating this right here. we have a court hearing going on down the road. the judge will be able to assess this. just to take a step back. the federal trade commission is for protecting consumers. we're also for protecting small businesses. while some of our cases certainly are focused primarily on consumers like individuals, there are a lot of issues that
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small businesses have and they skb scammed and harmed and subject to anti-competitive practices. that's a big part of our job too. >> that would have been my rejoineder if i might say so, that big businesses are customers too and don't they deserve -- >> the arguments haven't been about small business, they have been about the largest business, the contract customers and that's what -- i understand the inability to discuss certain points in the case. i respect that. but that's where the arguments have been. the largest -- 100 largest companies in the world, hundreds of billions of dollars that they're not in negotiating power which is just false. there are hundreds and hundreds of internet based companies, fedex and u.p.s. deliver overnight. i worry more about staples and office depot's ability to exist in the face of this internet competiti competition. >> i say this with all due respect to you and your former company, i feel like this is microsoft netscape browser antitrust all over again. the government adjudicated it
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for years. and by the time the thing was done, microsoft's browser was basically irrelevant anyway. amazon is pretty much eating the world, steve. maybe commissioner bril this is better for you. why is the government taking on this case. a preliminary injunction hearing. let's see what the judge does. let's see how all the evidence comes in and we commissioners, well, it probably won't be me, i'll be gone at that point, but the commissioners, my colleagues will take a step back and analyze the evidence in its fullness. i want to make one thing clear, not talking about this case in particular, but talking about why we focus on these transactions that affect sort of upstream markets, the reason we do is because the costs get passed on to consumers. so if you're talking about fedex or some other large company and their costs go up, they only have one place to go, again, not talking about this case, but any
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case, what do they do with those costs? they pass them along to consumers. and that's the problem. that's what we have to do, we have to protect competition in the marketplace. i really can't talk about the specifics of this case. >> i want to follow on ryan's point, though, and that is, you know, whether or not staples office depot combination will actually create any sort of monopoly in the marketplace given the online competition out there. when the ftc commissioners take a look at this, they decide to temporarily block this merger, what sorts of evidence are they looking at in terms of pricing. are they finding there is less competition on price out there these days and that if these two entities merge, there would be less competition on price. what are we looking at? >> the case is focused on business customers, the business community, that enters into long-term supply contracts with respect to office supplies. so we looked at a great deal of
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evidence before we ever decided to vote out this case. and i assure you that the amount of work that our staff did, the amount of work that the commissioners did, what is happening in court now is the tip of the iceberg of the amount of evidence we have looked at in order to decide whether or not to bring this case. >> that's the last word on office depot and staples for now. i'm sure we'll return to it as this case proceeds. steve, thank you. but commissioner, stay with us if you wouldn't mind for a moment to talk about something that happened to you personally. and that is that -- something you talked about, a phishing scam you fell victim of. tell us what happened. >> absolutely. so, you know, one thing i want to -- the reason i talk about this is because i think it presents some really important lessons for consumers. i'm not a technologist, but i'm tech savvy. i have to be tech savvy, much of what we do at the federal trade commission is we're dealing with
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rapidly changing technology, whether it is privacy, data security, or frankly in many of our competition cases. so i'm pretty tech savvy. i received an e-mail from a friend, that had an attachment. i was very busy. i had, like, my three or four screens open, looking at that e-mail, a bunch of other things. i can't get to it on my office system so i transferred it over to my personal system, it wasn't opening on my office system and that happens a lot. i get to my personal system, i'm able to open the document and it is a document that then starts asking me for information. now, it appeared it was a very, very sophisticated attack. and it wasn't just spear fishing me, it was phishing for all the individuals who received this e-mail from my friend, his account was attacked and these e-mails went out. so i'm looking at this page, it looks very official, i put in my e-mail, my password, and then i
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realize something was funny about this. and it was at that moment i realized i had given my e-mail and password to an inappropriate person and probably a hacker. but luckily, and this is the important lesson, you know, the human element will always come into data security. it is a very, very important aspect of ensuring we do what we to protect our own information. i had triggered to authentic, so i knew that hacker would not be able to get into my account. i went ahead and changed some critical passwords but i felt much more comforted knowing that even though i gave out my e-mail and password, the hacker would not be able to get in. and that's the critical lesson. >> we have to leave it here. do we know who the hackers were and have they been apprehended? >> no, we don't know yet. >> all right, julie, thank you very much. and congratulations on your term at the ftc.
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>> you have a question? >> no, no, no. i was just picturing the judge in this case, sitting down to review the case as he orders highlighting pens. from his amazon account on google chrome. tomorrow, the monthly gdp number. guess what, that number is quite often wrong. by a lot. can you trust the gdp number?
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tomorrow, we're going to get the final read on fourth quarter gdp. even though it is the third revision it may be horrifically wrong. steve liesman has done the analysis here. if i told my parents i'm going to get a c in math, and i come home with either an a or an f, i wasn't even close. >> pretty much. debend pends how you gauge it. here is the way to think about it. instead of calling it gross domestic product, let's call it gross domestic problems. large and persistent errors should give everyone from investors to business executives to policymakers pause and relying on this data for key decisions. we went back to 1990. found an average error rate of 1.3 percentage points in the initial gdp report compared to
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where it was advised to with more complete data. initial report of 2%, it could be 3.3. or 0.7. a or an f. the research does not show any systematic understatement or overstatement of growth. we found 30% of the time the government gets the direction of growth wrong. if it is initially shown to be higher than the previous quar r quarter. he says the government agency that produces the gdp report says we're working to try to get more accurate data in time to improve the advanced gdp estimate. they represent improvements to the gdp estimate as more information becomes available and they have gotten more information sooner in the past several years. the error rates don't improve over the decade. despite big improvements in computing power and communication, the size of revisions, it is the same as those from 1990 to 1995 and the
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error rates in the second and third estimates you think those would be better? no, they're the same as the first. despite more data, more time, just as large three months after the end of the quarter as they are one month after. a lot of economists we talked to didn't know if this was the case. we said do you know what the gdp error rates are, they sai said .2, .5, .8? 1.3. one way to do better is if you average the four quarters, closer picture to where it will be revised to. in subsequent years. >> 100% error rate. >> it is an $18 trillion economy. it has become much more xlecomp and esoteric. we're more services than manufacturing. so gauging the value of a service is harder than gauging the value of -- >> the technology is not improving the accuracy is
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shocking. >> the more shocking thing is the revisions they have to do to government. right. government, big part of gdp. have to go back and revise that too. you would think government can account government. >> let's bring in another voice to this conversation because i need to make sense of it all. my head wants to spin off. nairman, we have been speaking since gdp was created, a measure of the government. we pay attention to gdp. should we start ignoring it? >> we can't tally ignore it. everybody else is paying attention to it. but there are three different kinds of problems. i think steve alluded to some of them. the first is seasonality. huge swings in seasonality. for example, the first quarter is always underestimated. they really don't know how to deal with it, the bad weather, you go back in history and look at the first quarter, it is way off. especially the first quarter.
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so they got seasonal adjustment problems. secondly. they allow basically allow -- but what happens is the inventory cycle which we're in the middle of now swings the top line up in all over the place. got a lot of volatility in that number. if you look at gdp, bounces around, you look at employment, fairly steady. strong steady. how to reconcile these two, i look at a different measure that commerce department puts out called final sales to domestic purchasers. takes out exports, takes out inventories, much more stable. but nobody pays attention. the third problem is this is a framework designed for the industrial age. we're in the information age. we do not know how to measure the output of information companies. so this is -- i'll not sure what we're measuring anymore because that sector has grown so much. >> you started off this whole list of, you know, short falls in the gdp by saying we don't --
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we shouldn't pay atenstentioatt. you say you hardly ever look at gdp. >> it is true. i look past gdp. there is gdp. >> you look at it, just to know what it is. but then you firmly ignore it. >> basically. >> i want to tell melissa and brian, a lot of the fed guys i talked to say when the data -- the jobs and the gdp data conflict, they go with jobs. they feel like that's more accurate. >> i want to ask you the question, what does it mean to be dependent in an era where you can't depend on the data. >> right question to ask. i'm not sure what it means. that's one of the things that the fed is wrestling with. i think clearly as you just said, they are paying much more attention to the employment data, even though that's got some issues as well. i think in a sense it is a more
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reliable guide to what is going on in the underlying economy. >> nairman joining us. good luck. thank you very much. steve liesman, appreciate it. gold is on track for its worst week in four months. but still up 15% so far this year. we're going to tell you the one metal that could outshine even gold coming up. there's no one road out there.
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take a check on the markets now. and really across the board we have the major indices down by a fraction of a percent. interesting moves, though, within the s&p sectors. financials clearly the worst performer of the day, down by 1.1%. we're seeing the gains, telecom and utility, safe haven bid within the market. two of the three sectors that are actually posting gains on the week. that third sector would be health care which is down by just about .4% today. we're also watching oil today, off its lows of the session. but still down 1%. possibly headed for the first weekly loss in more than a month. we have the final oil trades crossing shortly. we'll take you live to the nymex when "power lunch" returns. (patrick 1) what's it like to be the boss of you?
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(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, (vo) go national. go like a pro. and that a tired dog is a good dog. [ dog barking, crashing ] so when you need a dog walker or a handyman, we can help you get the job done right, guaranteed. get started today at angie's list. with extraordinary offersmance on the stylish, all-new rx... and the dynamic nx. ♪ this is the pursuit of perfection.
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♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. hi, everyone. i'm sue herera. here is your cnbc news update at this hour. russian president vladimir putin
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and secretary of state john kerry meeting in moscow, crediting cooperation between the two countries for some successes in the syrian conflict. secretary carrey saying the u.s. looks forward to makie ining prs in peace talks in geneva. observances continuing today. dozens of people gathering outside the belgian parliament building to observe a minute of silence for those killed and injured. greek volunteers holding a protest. more than 2,000 have been arrested since sunday. they are being detained at registration centers on greek islands near the turkish coast. and the cleveland browns have signed free agent quarterback robert griffin iii. he didn't play a down in 2015 and was released by the washington redskins. he led the redskins to the nfc east title in his rookie season in 2012. that's the news update this hour. brian, i think i'm sending it back to you. >> that's good. i was worried if the browns didn't have a different starting
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quarterback every year for the last 20 something might be wrong with the universe i'm glad to know everything is still wrong with the browns. >> it is consistent, exactly. >> consistently inconsistent. thank you very much. the oil markets set to close for the day. to jackie d. at the nymex. >> looks like we'll close under $40 for the second day in a row. more selling pressure on oil. we did rebound toward the close off of those session lows. i will say this, we'll be down 2% for the week. still, up 20% for the month. the dollar is a large piece of the story. this week straight of dollar index gains pushing the commodity down a little bit. the other part was the inventory number, greater than 9 million barrel build was huge and surprised the market. people are cautious had it comes to the trade. in terms of gas prices, we crossed the $2 mark for the national average according to aaa. you can expect these prices to rise as we head into the summer driving season. we were at $2.42.
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still a little bit of savings for consumers. >> thank you, jackie. as jackie mentioned, down 2% this week, crude rallying 20% on the past month. where do we go from here? john la forth says every day we can't break the $42 level, gets more bearish. great to have you, john. you say a run to 50 is possible. >> quite possible. the fundamentals are getting much better. if you look at the data, the global data, not just the u.s. data, if you see supply and demand growth, they're beginning to match up quickly. if we get over the 42, 43 level, you could easily see a five handle. you're a believer in this notion of a self-defeating rally. oil prices will get high enough and they'll bring rigs back on. that will lower prices. >> absolutely. i'm a big believer in commodities running the long
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super cycles. if we use data back to the 1700s, we're now in that 20-year bear period, in five of possibly a 20-year bear. when you get a rally out of commodities, it is time to start lightening up. >> where do you expect oil to be and how important is the u.s. dollar in this scenario with interest rates expected to rise. the dollar should follow suit. does that necessarily mean lower oil prices? >> not necessarily. i'll answer both of those questions. the first one is where i do think we end up. i think we're looking between 35 and 55, probably over the next decade. we're just going to bounce up and down as we work off that excess supply of the last bull market. as far as the dollar is concerned, the dollar always has an impact typically on commodities. what i found in my research is when commodities are in a bull
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market, the dollar has more of an impact. so now that we're in a bear market with commodities, the dollar's impact doesn't necessarily have that same translation to the negativity. you could have the dollar move up from here. and commodities don't necessarily have to go down. probably sideways. >> what happens with gold. that's what a lot of people want to know. that is one of the best performing asset classes this year. >> gold is one of the trickier ones because it didn't float freely prior to 1971. but if you look at since 1971, gold acted very much like the commodity complex. so if you take that and apply it to history, gold is probably going to continue to go sideways to down for the next 10 to 15 years. i would use these type of opportunities to lighten up on gold. >> sell gold. great to have you with us. thank you. >> thank you very much. >> it is time now for trading nation because traders do trade better today. let's talk about the financials. as an investment, the financials
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have been anything but bankable lately. the sector down 5% of the past 90 days. nick colus. we know the fed will raise rates. we're not sure when. i thought the financials were supposed to benefit in a rising rate environment, but yet they're being treated like somebody else's old dog. >> that's absolutely right. the bottom line on financials is that rising yield curve, steepening yield curve gives a nice tailwind but does so more in the early part of the cycle versus the later part of the cycle. the bigger problem with financials is the roes are still substandard, not earning more than 6% or 7% on capital. cost of capital is 8%. that's what investors expect to receive. even in the current environment, not bad, they're not really creating value for shareholders. that limits the amount of interest shareholders and investors have. on our desk, we're not see much
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interest in financials in the last couple of weeks, partly because they underperformed so badly and who wants to own them going into the quarter. >> they have rallied back with the overall market. since everything has, i'm not putting too much weight in that. do you believe that if we get rate hikes this year, that ultimately people realize that the net interest margins will go up and therefore maybe banks can actually make money as banks by lending money? >> yeah, i think, you know if rates do go up 50 basis points, it will wash away a lot of sins and probably bank stocks are going to react to it much more positive than they have now. nick talked on another interesting point. it is not just the fact you have a flattening yield curve now. also a big secular impact of technology. banks are just too inefficient and getting attacked from fintech, all sorts of other areas. the whole issue may be going through a wrenching period of adjustment.
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there are two factors that could be impacting it. in the near term, i think if the fed does raise rates twice, it is going to help bank stocks for the near term. >> little bit of endorsement for the group here. we appreciate it. nick and boris, thank you. >> for more trading nation, go to our website, authorities in brussels say three of the people who carried out the attacks are dead. two others are still at large. michelle caruso-cabrera is live in brussels with the latest on the manhunt and news we just saw. i don't know whether you've seen it. reuters reporting that belgium has lowered its terror alert status by one notch. >> at the maximum level and now one notch below that. in addition to that the state department just said in the last few minutes that two u.s. government officials or their family members are still unaccounted for in the wake of the bombings and in addition to that, they know of about 12 americans who were injured in the bombings. we get more details about those
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two americans that are missing, well, we'll bring them to you. also new, nbc news learned that the two suicide bomber brothers were attempting to spy on a scientific researcher here in belgium, a nuclear researcher, because they wanted to create a dirty bomb. they planted a hidden camera outside his house and recorded ten hours worth of footage of his comings and goings. they believe what they wanted to do was blackmail him or kidnap him in order to get information or obtain isotopes he worked with at a research facility here, some of the largest numbers of radio isotopes in the world are here in belgium and they can be used for health reasons, research reasons, but also used for dirty bomb. the existence of the ten hours of footage, the world knew about those back in november, because they were seized in a raid. what we learned today, nbc news has spoken with a former french intelligence official who is now in the private sector and says the two men who planted that
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hidden camera were two of the suicide bombers, the two brothers who died, one in the airport and one in the train station. just mentioned tyler they lowered the alert level by one step. still the city feels like it is on high alert. look at the lines going into the subway stations here. they are searching everyone before they go in. it is really led to a very, very tough commute and when you speak to people here, they take it with resignation. they see it as almost necessary in the wake of what happened tuesday. >> safe all the time. everything is fine. but now is -- >> i want everyone arrested so i can live a normal life like before. >> what do you think about the long line. >> i think it is just necessary, but can also be unnecessary because terrorists can also come here and get -- kill more people than in -- >> not just the public sector area like trains where you see
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increased security. supermarkets, we have seen them searching people going in and out of supermarkets, the hotels have now set up machines to search for bombs. it is very, very tense here still. >> any word on when the airport will reopen. >> well, now it is closed at least until sunday and a lot of the international airlines are saying, you know, we have gotten word that even they're not waiting for the airport to reopen. they said already they're going to cancel flights through monday at least at this point. brussels airlines are two smaller regional airports where they started to put flights out there. international airlines are still canceling flights. >> thank you very much. michelle caruso-cabrera in belgium. >> trading around 16 bucks a share. and one analyst says the stock could be worth 7 or 70. we'll explain. plus, new date why on gender pay gap and one big company says it doesn't have that problem. that's all coming up on "power
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but nothing could be worse for the whales. most of the orcas at seaworld were born here. sending them into the wild wouldn't be noble. it could be fatal. when they freed keiko, the killer whale of movie fame, the effort was a failure and he perished. but we also understand that times have changed. today, people are concerned about the world's largest animals like never before. so we too must change. that's why the orcas in our care will be the last generation at seaworld. there will be no more breeding. we're also phasing out orca theatrical shows. they'll continue to receive the highest standard of care available anywhere. and guests can come to see them simply being their majestic selves. inspiring the next generation of people to love them as you do.
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if you look at the opportunity, you've come to the right place, because it is time for street talk. the stock one alphabet, known as google, reiterating the very bullish vu on alphabet. two day cloud conference going on now, james liked what he heard yesterday. it was the first appearance of google's cloud and while google is just third in cloud behind amazon and microsoft, he quote came away impressed and says google apps are underappreciated. and executive chairman eric schmidt said machine learning
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should become the next category of startup innovation. >> what is important on day one of the cloud conference is that google announced a new customer and that would be home depot. that was seen as a major win. seeing the cloud business gaining a lot of momentum under diane green who they hired, used to be the co-founder of bm ware. high profile hire. >> i argued two years ago and will say it again, can we get rid of the word cloud computing. it is just computing. >> that's why there is hard disk drive makers. >> they're doing great. >> that's not a name. >> there are still some native programs. >> there are. raymond james making moves on two airlines. upgragd american to an outperform from market perform, downgrading american, so swapping ratings. raymond james saying american's greater potential for upward earnings revisions and the recent recovery and the introduction of the second half of what is being called basic
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economy which is something worse than economy, if you can imagine that. raymond james saying it likes the pass by oscar munoz, but thinks the activism will be a distraction here. >> the europe thing too, diab d get a lot of attention, a pretty major travel advisory/warning/don't go to europe. if we see a slowdown of 10%, goes to height dollar customer too, the front of the bus. next stock, range resources. if you own this stock, pay attention. barclays cutting it to an underweight from an equal weight, cut theirarget to 24. stocks up 30.5 bucks, 20% drop seen by barclays. again, 20% drop. they say the financial challenge may be overlooked, they note that cash flow before hedges is negative. with the hedges, their cash flow positive. the hedges roll off at the end
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of the year, this is something we talked about a lot. barclays is worried about going in a negative cash flow. growing faster. so that higher multiple puts it more at risk according to barclays. >> this is the one year chart which doesn't look so hot. year to date, month to date, the stock has done well. interestingly, even with the price target being lower, they're saying we are accounting for its continuing to trade at a are premium multiple. that's how worried they are about -- next up, twitter. this is an interesting call from mkm, saying it could be a 65 to $70 stock by 2019 or a $6 to $7 stock. can you imagine? to get to 70. >> in other words, zero visibility. no clue. >> to get to 70, twitter has to turn user growth and engagement around. the downside is in the valuation. and take a look at yahoo! this is an interesting comparison, an audience two times the size of
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twitter, core valued at 3 billion, twitter at 9. >> and the stock has quietly resumed its decline. i've been critical. medium is actually gaining. a lot of competition out there. if you don't know 65 or 6 bucks, don't cover the stock. i don't understand. >> they have a mutual -- they're saying there is a path, you know. >>, mtch, a well known company. the sort of the dating site, whatever. >> tinder. >> they own a lot of stuff. under the radar name, sun trust robinson, buy rating, $15 target on match. they call the company on leader in the heavily fragmented market, worth $4 billion annually. about 45 online dating brands, owns a ton of them. they like also the potential for incremental montiization, i did not know this, also
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owns the princeton review college study courses. $15 target on match, 30% upside. >> that is an interesting one. you got to wonder if synergies, study group, meet somebody. >> that's so 1993, melissa. let's meet in the study hall. coming up, a new study showing that women still only get 76 cents on the dollar for every dime that a man makes. but, one company says it is pretty much wiped out that gap. who and how coming up. ♪ in new york state, we believe tomorrow starts today. all across the state, the economy is growing,
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welcome back it "power lunch." hi, seema. >> this is in regards to playboy, reports indicate that playboy may be looking to sell itself. dow jones reporting that they are advising "playboy" on a possible sale and could be valued at over $500 million. it is potentially open to selling the company in pieces. so that is the latest from dow jones. this comes as the storied magazine publisher ditched nude
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photos and launched a revamp of the digital age. that's the latest for now. >> this would be a sale of the intear company, not just -- >> potentially the whole company, or specific pieces of "playboy". >> seema, thank you. new data has been released from the salary pay transparency website, called glass door, that's quite a title for a company. confirming in country after country, there is still a major pay gap between genders and that gap is greater in certain select occupations. i guess it should come as no surprise but as we look from country to country, the united states still women earn about 76 cents for every dollar men earn. australia the pay gab is narrower, 82 cents, in france, 85 cents for every dollar. >> amazon said they pretty much eliminated it. >> one of the things the story showed that the study sthoeed, it was different greater or lesser in certain professions
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and -- >> and geographgeographies, if in the same title, in the same company, at the same location, the pay gap basically disappears. distinctions between how companies and similar industries -- >> there's the full screen showing the greatest disparities and they point out that typically these are areas where there's a disproportionate area of men in those -- and the data is not as robust there as well. so ceo was at the -- one of the top five. >> interesting i guess, what amazon did, they looked at total compensation, staalary and stoc and said for them, women make 99.9 cents per dollar. >> and kudos for amazon for that. >> so they say. >> women and amazon. amazonian women. >> you don't have to be tall to work there. i've been there. there are some non-tall people.
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>> not all amazons. >> there are people shorter than you. >> that's most people. >> the dow and s&p posting losses for a third day in a row and gold turning in the worst week of the year. caterpillar and ibm and chevron leading the dow right now. "power" back in two.
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after the fund lost 11% in one week. mostly due to its stake in the drug maker and year to date und underperformed 98% of its peers and at one point last year valeant was 30% of this mutual fund. >> i think mr. gold farb was a morning star fund manager and had been there a long, long time. if you let a position expand to 40 some percent of your portfolio, that is in a mutual fund -- >> it's irresponsible. >> they may have made some money. they started buying it in 2010 when it was below its current price. so maybe they got greedy because there are some sequoia investors who may be in the money on valeant but i don't know how much more they bought. they did buy it -- >> they were buying as recently as last fall and that's when two independent board directors, two
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of five stepped down after contentious meeting where it was revealed that the fund managers were continuing to add to their positions in valeant. >> and we've known problems about valeant for at least -- >> quickly, separate note, wmb williams, no news but supposed to be bought by energy transfer. there's been filings going back and forth. williams committed to the deal. the stock is the biggest declining in the s&p 500 today. they are supposed to get bought. i don't know anything, not suggesting anything. the market is trading williams with some concern over this deal, something to pay attention to. >> tonight on "fast money", the brand spanking new iphone, we're going to check it out. we've got the new ipad pro. tonight on "fast money". >> how do you know it's the new one? >> we know. >> it looks like the old one. >> seema? >> i want to point your attention to shares of game stop
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it is reporting earnings after the bell. revenue of $3.57 billion. it is up 10% year to date. we'll see what happens when it reports tonight. >> thanks for watching guys. >> happy easter, everybody. see you monday. >> hi, everybody, welcome to "closing bell." i'm kelly evans. >> and i'm bill griffeth, stocks on track to break the five-week winning streak. we're down for the week and this is the last trading day of the week and last trading hour. we'll look at what's causing the five week rally to fizzle out. >> new rules to curb wall street bonuses are expected next month. we'll tell you what they are and which firms could be impacted the most. >> now, would you pay 10 cents to read an article online? how about 50 cents? we're going tont


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