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tv   Power Lunch  CNBC  April 7, 2016 1:00pm-3:01pm EDT

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the stock. anybody? >> no, a melting ice cube. let it do what it's doing. why would you be involved with this? >> if it was in the high 20s again, yes. >> there is not that upside speculation. >> good stuff, guys. thanks. see you team. "power lunch" starts now. welcome to "power lunch" along with melissa lee and michelle caruso-cabrera. i'm brian sullivan. tyler mathisen is off today. well, there is a lot to talk about including the weakness we are seeing in the market, the dow jones industrial average down 145 points, its worst day in more than a month. maybe oil is part of it. oil is back between $37 a barrel. we'll get to more on your markets throughout the show. we kick it off today with america's ceos hitting back. some in the sea suite are not taking campaign trail rhetoric
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quietly. pfizer and ge firing back in op-eds, defending their companies and criticizing campaign language. jpmorgan chase jamie diamond also out with big concerns about where america is headed right now. will that fall on deaf ears or impact real change on the way these companies and others are viewed? here now billionaire investor will ross joining us. you're an investor in companies, right? you got your own business. you're not a public company, what do you make of the campaign trail attacks on business and individual corporations specifically? >> well, i think there is a terrible populous sentiment that is brewing and it is manifesting itself being anti-business. but think about it. if you like employment, how can you hate employers. if you like tax revenues, how can you make life more difficult for the major taxpayers. so there is an illogic to the
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populism. and i think what is happening is middle class america and slightly below middle class have been left behind for a decade. they're angry, they're fed up with it, and that's why you are seeing the political phenomenon that we have. but it is not addressing the underlying issue which is how do you make america more competitive. >> well, i don't know if you read jeff immelt's piece in the washington post. excuse my saucy language on a family show, but he appeared to be justifiably pissed off about bernie sanders saying ge has a problem with the moral fabric of america and goes on to say, actually, that the senator has never stopped by our aviation plant in rutland, vermont, where they employ more than a thousand people. ge is one of the biggest employers in vermont. senator sanders has been in congress for vermont since 1990 and yet he has never seen this
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institution or this business at work there employing people. do you find that as astounding as i do? >> if it weren't bernie sanders, i would find it astounding. my understanding is that until he was 40 years of age, and was elected mayor of the town in vermont, he had never had a full time paying job. i think that tells you a lot about how little he comprehends about how the real economy works. let's bring in bill george as well. he's joining us, former medtronnics ceo, former ceo, currently on the boards of big and well known companies. when you see an attack like this, the ones that we have seen, what is the conversation in the board room? do you respond? do you agree with what immelt and reed have done? >> well, i feel differently about immelt and reed. i think immelt was 100% correct in defending ge. ge is a great company, done
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great things and jeff is where he's wanted it after getting out from under jack's shadow. i think he's doing the right things and investing in technology and investing in the future and investing in the future of america. this is a great company doing all the right things. i feel differently about ian reed. i think we have a fundamental problem with our tax system, corporate taxes, has to be corrected. and just cutting the inversions is not going to deal with the root cause problem. but you can't run the business primarily for tax, and i see those as very different situations. frankly there are players on the left and right. politicians on the right side -- >> is it okay -- is it okay they change the rules of the road in the middle of the game, that this -- the way this deal was -- >> really unfair. that's a very unfair thing to do. it is one thing to make a new
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ru rule, but to do it retroactively goes against the whole concept of proper jurisprudence. >> mr. george? bill george? >> i agree with wilbur on that. i think it is wrong to change it retroactively and i think that unfortunately the pfizer allergan deal was set up almost entirely on tax and it wasn't based on strategy like some other inversions have been done which have gone ahead. my former company announced no material impact. i agree with -- business people need to have some certainty and to know what the pture and the outlook is and i can tell you unless they deal with the root cause of the tax problem, we're going to have corporate tax problem, we're going to have a lot more problems coming in because people find other ways. one of the issues that no one is addressing is an american company is worth more to a european company than to american shareholders because of taxes.
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and that's not a good thing. so we got to get to the root cause of the problem and frankly i would advocate territorial tax. so we tax people where the revenues are generated. and that would clear up a lot of these problems because we can't have companies forced to keep their cash offshore because of the dual tax system. >> there seems to be an unwillingness to address the root cause of this problem here. i want to get back to this campaign rhetoric that seems to be dominating, an anti-business equating business interests would be un-american, immoral. this seems to be across the campaigns and as i understand it, wilbur, you're backing donald trump and he's one who made a big deal about saying about apple, for instance, all those jobs that exist in china should be brought back here to the united states. what would you say to your candidate in terms of talking about business? >> well, two things, first of all, i didn't say i'm backing donald trump. i said is that if donald trump were the republican nominee, i would support him. i believe in the two party
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system. and to me that means if you're part of a party and active part, whoever is the nominee, you need to support. otherwise you get a balkanized political system like they have in countries in europe and all these little splinter parties. so that is the first thing. the second, i think it is utterly ridiculous to call business inherently immoral. i think it is more immoral to be as loose with the facts as some of the campaign rhetoric has been. the idea that all corporations are evil, and everybody who is anti-corporation is well intentioned is not only not true, it just is a ridiculous assertion and i think all of it speaks is the ignorance of the person saying it. >> it is sort of a different topic. when you look at -- when you look at business and employment
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history and political candidates, it is not just bernie sanders on the left. there are candidates on the right and there are currently employed congressmen on the right who have effectively been in office for 30 or 40 years and they have not actually been in the private sector workforce for a generation or more. do you think there should be some -- you can't even get into a good business school unless you really had at least a couple of years in business, do you think there should be some sort of requirement for private sector employment in terms of high level national office? i'm being a little tongue in cheek. >> i'll tell you what the question reminds me of, remember bill buckley's characterization of jack kennedy's economic team. he said that like virginal professors of anatomy in that they read all the books, but never been there. and i think this, with particularly this populous stuff, it is just meant to appeal to the more base instincts of people pointing
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fingers of blame and saying, well, everything would be fine if you did away with big business men. really? well, if you did away with big business, who would employ everybody? >> final word, bill. >> let me pick up on that if i could. business provides the greatest capitalism greatest economic engine you've ever seen. capital is -- to fund government, to fund nonprofits, to fund philanthropy. we're biting the hand that feets us. unfortunately, everyone running for office has got on this populous kick. i think we're going to have a rough year. the issue we have is we have global companies operating with local tax jurisdictions. and so ford was criticized for taking -- putting the focus on mexico, ford focus, that is. at the same time they're adding a lot of car production in
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detroit. and think that's a very rational decision that mark fields and the ford team made, yet they were severely criticized. so global companies have to stay competitive. and the strength of america is having great global companies that can be competitive on the world front, not just in the u.s. and being able to export all over the world and repeat all over the world. >> got to keep it there. >> that's what makes america great and allowing us to employ talented people. >> appreciate your time. the ceos who are so incensed, they're calling for tax reform and not alone. key fed members are weighing in. steve liesman is here. >> you had jim bullard talking the other day and he mentioned tax reform as something that is needed. this is part of a trend that is going on around the world, where, you know, central bankers are here with the zero lower bound. they basically actually go beyond the zero lower bound, negative interest rates have done as much as they feel they can do. they look to increase the fiscal
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side to step up and take that place. janet yellen is talking about that and said if there is more fiscal stimulus out there, the fed could have rates at a different level or higher level. she's also talked about structure reform being needed. nobody more than mario draghi has been looking for the europeans to step forward. kuroda in japan, come on, guys, we were going to do this as a three prong thing. infrastructure, monetary policy and fiscal policy and there ain't no fiscal policy anywhere. you see this happening. and the pressure is really being raised on these -- >> jim bullard went to tax reform. >> he talked about tax reform, education reform, immigration reform. these are all of the things that set the long-term growth of the economy. the fed -- the idea of the fed is they can use monetary policy to nudge growth back to the existing track that it is already on. but not create the existing track. and that's one of the criticisms that is out there of central bank and today, they have taken over the fiscal side of this and
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really the fiscal side, as you know in america, essentially -- >> they abdicated all over the world. europe abdicated on structural reforms, japan was supposed to allow more immigration to deal with their aging population, they don't do it, we don't deal with our key issues. >> i thought if i mentioned this, it would get you going about what is going on around the world there are ways to raise dwroetgrowth. there are issues of morality and corporations and there is an amorality of corporations which is what people confuse with immorality. >> i don't know how the rest of the audience views, but you look at a corporation, there is an easy way to say, the company. there is not company. just a collection of people. and the people will make the decisions. there is human beings, living breathing human beings in some of the board rooms, not often but -- >> mitt romney lost the election by saying that. but i agree with you you know. >> that was his point. >> if you're the cfo of a
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corporation, and you see your sources of revenue declining, don't you have an obligation to do what you can do in order to maintain those sources of revenue? this is what the u.s. government is doing right now. they see the sources going, there was a loophole. they're ex-post plugging that loophole, which i think you're right to bring up some issues there on that. however, in the absence of any ability for congress to act, the administration, i think has to -- >> we should do a twitter poll or something. very interesting sort of moral and ethical question. what would be a preferred outcome. i would love to hear from the viewers. laying off a thousand employees or moving your tax jurisdiction and tax dollars overseas. what is the more ethical decision? >> wouldn't people argue that, you know, there is an obligation of the company to pay some form of tax and revenue in the place where they grew up and where they're headquartered. >> you have a worldwide tax system, you're making american companies pay for revenues that they get overseas and profits
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they get overseas. we're the only advanced -- >> i agree. i agree. it ought to be changed. >> when we -- >> u.s. companies pay u.s. taxes and then some. that's the problem. >> right, that's the existing system. now what are they going to pay overseas? >> instead of trying to hose companies that are trying to stay competitive. >> you know the difference? three percentage points. this is why we're unable to reform the tax system. they're arguing over what happens. >> we don't have a lot of leadership on the front. >> true. coming up, the next big breakout. one wall street pro says this sector is poised to pop and very soon. we'll have more on that call. and we're over the thursday market slide. the dow jones industrial average is off 114 points off the lows, but the nasdaq is lower by 46, the s&p 500 by 17. the call just came in. she's about to arrive.
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want to look at the u.s. banks with goldman down, everything is down 2% to 3%. the bank woes, you know what is going on. rates longer. flat to declining net interest margin. slow growth economy in the u.s. no growth elsewhere. is it any wonder the banking index is down 12% for the year. these are sitting zombies these banks now. other places people can invest, not a lot of interest in owning them right now. same with european banks, the ecb is talking about maybe lowering rates even more. and they are down noticeably today. finally throw in weak oil, usual 2% 3% declines in the major oil names and overall you got a weak market. back to you. >> deutsche back at 13. bob, thanks so much. jamie diamond sending out his annual shareholder letter. he warns of increased market volatile, says it is here to stay. how should you position your portfolio if that's the case.
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joining us mary ann montain. he talks about is there enough liquidity in the market. he goes through the reasons and says, bottom line, volatility is here to stay. got to deal with it. mary ann, do you agree and how are you dealing with it? >> after about three or four years of pretty low volatility, we're seeing an elevated environment. and we think large cap and value is the place to be. and the companies that pay dividends and nice dividend yields and increase their dividends, they all reduce the volatility of those stock holdings. >> why is that? >> just by their nature, their lower beta types of stock, maybe 80% of the market volatility. and they're kind of go-to names when people are concerned and biting their nails. and that's the -- the types of names that people are looking for with liquidity and the large
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cap side. >> you say on the other hand? >> on the other hand there is also gold. gold does well in a higher volatility environment and that's why we have seen a pickup in interest in the precious metals. you know, there is many things that these very low interest rates, bob pisani was just talking about, negative interest rates overseas, you know, this is the way you preserve your capital. you have your positioned well in case of black swans. we were accumulating last year, more excited about gold and precious metals this year. >> okay. we don't hear a lot of people push for gold. there is a lot of negative things to say about it. but obviously if volatility is your concern, maybe it is one thing to do. john what do you think about what jamie diamond said. are you preparing for volatility staying for the long-term? >> if you look back, since 1950, even in up years for the stock market, you get on average a 10% correction in stocks. and in all years your average correction is 14%.
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and so what we have seen so far this year is average even for an up year. we do expect volatility to continue over the rest of the year. you have things like brexit coming down the pike, you have the presidential election. and some of the ways that we're dealing with it is we do own some gold, we're owning things that are going to benefit from the idea that the fed is going to let inflation run a bit here. we're also a lot closer to our benchmarks than we have been in the past, not taking a whole lot of sector bets, not taking a whole lot of bets overseas, not taking large bets and small bets, keeping it cleser eclose benchmark. we still like high yield and growth over value. but generally keeping close to the benchmarks and waiting for that one big opportunity which we may get if we have another 10 to 15% pullback. >> it sounds like there is the trade-off, you're not looking for the big bang, not looking for a huge move what you accept is a lower return in that face than what you might if you take more risks somewhere else. >> that's true.
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our outlook for the year still is a positive return on stocks. we see a midsingle digit return on stocks. 4%, 5% higher from here. but i think you'll be given a couple more opportunities just this year with the election coming, with the brexit vote coming down the pike. a lot of things. and the fed, of course, those three things are going to create some opportunity for active investors. >> mary ann and john, thank you for joining us. showing some of your pick on the screen as you were talking. go to powerlunch.cnbc.com to see the sectors that john is avoiding right now. that's powerlunch.cnbc.com. "power lunch" will be back in two minutes. take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure.
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welcome back. you're live on the floor. looking at the two day of 10s. you're not reading the screen wrong. we briefly breached 170. had a 169. should we close here, lowest yields since february 11. one week of bunds, eight basis points low today. all time low yield close, settle up at nine. you get the picture. they're compressing. and it looks like they're going to keep going. one week of dollar yen, hottest trade around, it just gaining momentum. 107 handle now. three year chart, clearly shows there is some people talking about 100. i call it speeding, putting the cart in front of the short, but i'll tell you one thing on the weakness in the dollar, there is not a lot of technical room to slow it down if it stays at
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these levels. melissa lee, back to you. >> rick santelli, thank you. the hottest luxury housing market in america, here is a hint. it is probably not where you think. we'll tell you where it is ahead and crude tumbling, oil down 2.5%. "power lunch" is back in two. the pursuit of healthier. it begins from the second we're born. because, healthier doesn't happen all by itself. it needs to be earned every day. using wellness to keep away illness. and believing a single life can be made better by millions of others. as a health services and innovation company optum powers modern healthcare by connecting every part of it. so while the world keeps searching for healthier we're here to make healthier happen.
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hello, everyone. i'm sue herera. here is your cnbc news update at this hour. british prime minister david cameron makes no apology for sending pro european union leaflets to every household in britain. he's come under fire for spending more than $12 million on publicity ahead of the referendum vote on the future of britain's eu membership. democratic presidential candidate hillary clinton taking a campaign subway ride in new york city this morning. she says it was silly for rival bernie sanders to question her presidential qualifications. >> well, it is kind of a silly thing to say, but i'm going to trust the voters of new york who know me, and have voted for me three times, twice for senate, once in the presidential
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primary. >> a vatican spokesman says pope francis will make a quick trip to the greek island of lesbos on april 16th. it is aimed at supporting refugees and drawing attention to europe's migrant crisis. the wizarding world of harry potter at universal studios hollywood is now open. it has been five years in the making and has been re-created to include pretty much every detail. the signature ride is a 3-dhd ride that will immerse guests in the potter story line. can't wait. that's the update this hour. back to you guys. >> i detect a little skepticism in that. >> little. >> all right. thank you, sue. let's check gold prices closing now and the commodity trade specifically the metals trade being driven aboby a coup of things. the weaker dollar trade is being driven by a stronger yen. the yen reaching the highest level against the dollar since october 2014. as for the gold close, 1247.40.
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over here with the rest of the commodities complex, silver as well as platinum up by almost 1%, seeing lower trades for copper, which is down 3% and palladium down .7%. >> european banks another sector in focus today. getting hit hard again. deutsche bank, bank santander and italy's ubi bank are some of the sx the examples. tough day for the banks as they go increasingly concerned about what is going to happen with interest rates in europe. melissa, back to you. >> all the major u.s. industries are down today as investors weigh troubling data. seema mody is a look at the best and worst performing global markets this year. >> there is a fundamental disconnect between the economy and markets, but it is so evident now. if you look at global stock markets, the best performing global stock market in 2016 is russia. this is an economy in a technical recession, but investors are betting the rebound in oil prices will help this economy improve.
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the stock up 14%. turkey up 13. brazil on politics and the rebound in commodities, the brazilian up 11%. some big winners, hungary and new zealand. we're not talking about winners across the board. look at greece. one of the worst performing stock markets in 2016, down 12%, lingering concerns around greece's debt situation. china, despite the rally over the past two months up 9%. stock market year to date, still down 14%. a lot of focus on japan. it is down 17%. this is all due to the stronger yen. that is threatening the effectiveness of the boj central bank policy. now concerns as to whether kuroda will unveil further plans on april 28th when japan meets next. lastly, italy, concerns over its banking sector, italian stock market down 19% so far this year. >> some would argue a lost the trade this year has been a reversion to the mean trade. i think hungary was the best
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performing market. >> let's bring in paul christopher, the head of global market strategy at wells fargo, underweight emerging markets. why don't you like this -- it has been on fire this year? >> yes, the three main leaders right are the -- the unholy triumvirate of brazil and russia and the other one you mentioned, turkey. so, you know, the resource providers and countries that have had bad time and in 2015 have tended to lead the pack. i know you mentioned the one in hungary in eastern europe. it is true there is some lingering carry over. i just came back from india where there is no stronger sentiment story in the world than india after 2014. and even that -- even in that case it didn't last more than a year or so before the sentiment began to realize, hey, this guy is good, but maybe he has a longer road ahead of him than we
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previously thought and that sentiment has backed down too. i expect the same thing, any sort of positive sentiment story, especially on reform or leadership change in eamericans markets, that's going to give way to the fundamentals which remain negative. >> what will get you to be more bullish? what is a primary driver of your call to be underweight emerging markets? what could change that could make you more constructive? >> the two main things that we're watching are commodity prices, and debt. and the commodity prices are easy for investors to track. you just watch the price of oil, watch the price of metals. those need to rebound out of the ranges that we think they're going to remain in for this year. if they turn out to be stronger, greater momentum, that could underwhelm our call to underweight emerging markets. second one is debt. having just visited india, the problem is you got a lot of commodity companies, construction companies, that took on a lot of bank debt in the last six years. those loans have not been recognized in many countries.
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they're starting to get recognized now. it is going to take another year to clean up the books. if that process can accelerate, that would also cause us to revisit our call to underweight. >> paul, there seems to be an improvement in risk appetite thanks to better than expected data out of china. do you think investors are getting overly excited? we're still talking about five months of bad data we have gotten from china. if you look at the data from asian peers, all those countries posting slowing growth and decline in trade data and that's primarily due to china. >> right. it is -- you know, china has the advantage that its service sector is strong growing double digits. we think that will keep that economy stable. but as long as they remain committed to consolidating the manufacturing and construction sectors, you're going to continue to see weak manufacturing data leading out of china and that's going to drag down those same sectors in the neighboring countries. i'm not persuaded that china is a turn around story yet. >> let's bring in tim seymour,
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also a fast money trader into the conversation and, tim, you're just talking about china. you prefer southeast asia, though. >> and china may not be a growth story, but it is not a disaster story either. i think if we're looking at emerging markets getting china right means not getting it wrong. so southeast asia, indonesia, to me is a true consumption story, nothing changed there. indonesia, consumer -- media companies, telecom companies, consumer goods companies trading at their highest multiples ever. >> tim, emerging markets seem to be in a sweet spot. how long can this trade -- how long can this trade exist? it is inevitable the fed will raise rates and these countries hit sitting on high debt will be under pressure. >> this is not a one day trade and if we're trading at ultimately i would say em is -- it is 18, 19% off the floor.
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if we're playing this day to day or week to week, i think em can pull back here. turkey and brazil, which had a phenomenal run -- >> you changed your position. >> i think over the last ten days it has been wise to pull back. i think em will go back, trade it back through the 200 day. i think could test lower here. but china is not falling apart. the currency instability of august is something that i think actually has changed dramatically and i think if you look at the numbers and reserve numbers last night, they're much better. again, em does better typically when the fed is actually raising rates because it means the world is a better place and that's why the fed would be hiking. >> tim, see you tonight on fast. thank you. >> let's look at some of the widely held stocks you may have in your portfolio now. down arrows across the board. alphabet, known as google, down 1%. apple down 1.5%. microsoft down 1%. jpmorgan chase down 1.7%. we have much more on the markets straight ahead.
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yahoo! opening up its books to perspective buyers. as rico reported, yahoo!'s finances may be deteriorating at a faster pace than many expected. let's talk about it. colin, were you surprised at this reported 15% decline in yahoo!'s revenue. >> let's put a little perspective in this. a good company is going to be growing at market rates, which is around 10, 11, 12%. they want to be taking share. growing higher than that. that average company is growing at market rates in a poorly run company is growing 4%, 5%. now yahoo!. net revenue will decline by double digits in 2016. so this is clearly a company that is not turning around. expenses are going up. ebitda is going down and revenue is still declining and that's why it needs to be put on the
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block and sold. >> i think it was josh in fast money halftime report who called yahoo! a melting ice cube. is it that severe, colin? >> i view that they should get at least the same multiple that aol got. they also, if you're a private equity or any buyer, you're looking at that 3 billion in costs, that $750 million in ebitda and saying i could get a billion in cash flow out of this company. so if you do 8.3 times a billion, that's 8.3 billion for the firm, a decent price, might be a little bit of a bidding war because it is a top three property. you just don't get that big of a property available. the other two are facebook and google. and finally microsoft stepped in, they don't want to lose their search deal with yahoo! and they're going to maybe provide financing and that might help sweeten another bidder. >> edmond lee, you dug into some of the papers and looked at the numbers on yahoo!.
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do you think the numbers are bad enough it would scare off potential buyers or you believe in your reporting there are big companies, microsoft, google, whoever it is, that would be interested in buying yahoo!? >> i think it is really bad. i think also just the perspective on potential buyers, there aren't that many who would -- for whom yahoo! would make sense. partly declining business, ebitda line is going down, expecting 750 million this year from our reporting. more than that, what do they really have? they have a sizable audience, yes. that's declining. they have got ad tech, which is buying and selling ads on mobile and on desktop, that's important. that's why verizon bought aol. i don't know why they would need more. it doesn't necessarily easily slot into existing systems. you have one system. i think they're very limited number of buyers for this. >> you know, ed, the article that kara wrote was really shocking. she said, unusually confusing, talking about the book, perhaps
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purposefully so. at this point, so few buyers out there, what are the choices that yahoo! has in your view. could it be a situation where it just sells off pieces and then it just goes away? >> i think selling off pieces is probably the best bet. there is another thing we saw in the books, you know, yahoo! japan, contributes a lot of money to their profit line. it is a search deal and a licensing deal. those deals are running out. i think they're contributing about 250 million a year to yahoo! just in those -- just on those terms. if you really look at the core business, it is even less than the books are showing. again, it is like sell it off for pieces. i think the ad tech is valuable, but only to a few players and they have a sizable web audience. i don't know who would go for that now. it is better in pieces than a whole. >> how much of the $36 price in yahoo! is discounting in. if yahoo! said, we change our mind, we're not for sale, would you think the stock would fall? >> it would fall from the
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current levels. but there is so much upside on some of the parts. that's the story known for quite some time. i still think you're going to see there is interest in private equity bidders for this company. $7 billion to $10 billion is a sweet spot for pe. makes a lot of sense for microsoft to be involved with a potential bidder. >> i don't understand. some of the parts, we're talking about parts in decline. what does that -- what is that sum? >> it is the assets on the balance sheet, right? and the core business, which could range anywhere from 6 to $10 billion in our view. depending if there is a premium paid for it. >> the core business is declining. audience is declining. their ad tech is not clear what that value is. >> if ali baba stumbles, that could reduce the stake. we have to leave it there. good discussion. yahoo! saga, nowhere near being over. to market flash now from seema
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mody. >> in a beaten down market day, there are some bright spots. look at shares of wynn resorts, up better than 10%, hitting the highest levels since august of the company was upgraded to outperform by tellsy. after newmont mining wynn is the best performing s&p 500 stock this year up 43%. >> all right. seema, thank you. the markets are coming back just a bit. we are down, but off our lows of the session. let's get a look at some more stocks that might be in your portfolio. cisco, wells fargo, gilead sciences and our parent company, comcast. more markets, more discussion, just more. "power lunch" returns. you pay your car insurance
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welcome back to "power lunch." medical device maker medtronic, taking a look at shares, down by 1 it is 4%. sprint will sell $3 billion in equipment to newly created entities which will lease the equipment back to sprint. it will allow the mobile services company to obtain a cash infusion with better terms than it might get in the debt
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market. sprint shares down by more than 3%. mcdonald's chairman andrew mckenna will not run for re-election to the board. he has been chairman for 12 years, board member for 25 years, mcdonald's shares are higher by .7%. as you know, all the major averages are lower now. we have seen all ten s&p 500 sectors go into the red. utilities had been positive. still the least negative at this point. and industrials also just generally flat. worst performers are financials. on the down days you see utilities are the positive, or least bad. along with telecom. telecom hard hit today with financials as well. industrials, energy, health care consumer staples, a sector like consumer staples, often considered a place where you might look for safe haven, it is lower by 1%. now over to seema mody, she's got a market flash. >> let's look at shares of hanes up 4% after the company announced it acquired champion europe which owns a trademark
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brand for the champion brand international europe. the middle east and africa. the all cash deal is expected to close midyear in 2016. the stock bright spot in today's trade up by 3.8%. well, there is so much irony dripping out of this next story that you can probably smell it through your car radio. according to moscow times, the russian communist party would like to copy right the red star. they claim it is their logo and their intellectual property. if they did it, it would ban foreign companies that use a red star like macy's or heineken from using it unless they paid. i would assume being communist friends they would just lease it to north korea. >> or china likes to use it as well. unbelievable. they don't believe in private property -- >> state owned property, except for the logo that defines the state. >> foreign entities probably can't use it. it is okay for anybody in china to use it.
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>> the concept of private property works to their advantage. >> the chinese government. >> all right. there you go. all right, let's get another look at stocks that might be in your portfolio. couple of names there. pfizer. verizon. merck. royal dutch shell. all down. speaking of oil stocks, a guy coming up that says firms, one of his firms top picks, sees about 30% upside in this oil name. that name and why he's bullish on it coming up in a few minutes. stick around. everhas a number.olicy but not every insurance company understands the life behind it. for those who've served and the families that have supported them, we offer our best service in return. usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life.
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check this out. a tesla model s facing off against a qantas. the car hit a top speed of 155 mile an hour as compared to the 737's 161 miles per hour at takeoff. >> it beat it? >> that's a pretty amazing speed. >> look at that. >> to go against a jet plane? >> you got about 54,000 pounds of thrust in that 737. but she's heavy too. >> that's true. that is true. she's far heavier than the
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tesla. >> exactly. tesla didn't -- i think a fee ought fiat 500 would beat it off the line. let's do it. tesla is lower today. numbers continue to roll in on reservations for the new model 3. phil lebeau joins us with the latest, not just the numbers but implied revenue numbers based off that number. >> we won't talk about brian wanting to race. what did he want to race? >> the fiat. >> versus a 737. i think the fiat would take it for 20, 30 feet. >> 161 miles an hour? >> let's get to something that people are interested in, and that is the reservations for the tesla model 3. updated number coming today from tesla. 325,000 reservations in one week. remember, it was last thursday night that elon musk unveiled the model 3, the potential
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sales, if all 325,000 people who put down a thousand followed through and actually buy this karsh the potential sales, $14 billion. now, a lot of what happens over the next several years depends on whether or not tesla can produce these models as quickly as many people are hoping. keep in mind, if you order one now, you're going to likely not get in until the end of 2018, 2019, because model three deliveries, they start in 2017, will be contingent upon manufacturing capacity. that's going to be the big focus, guys, how they can ramp up production and look at shares of tesla, under a little pressure today. >> what is interesting, phil, is that elon musk after the first number came out on that very first day had said something to the effect of having to rethink production levels on the tesla blog along with the number. and you had the barclays note saying they may are to do a capital raise in the third quarter, $3 billion, to fund production. at this point, what are the thoughts on how fast they can
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get this factory up and running? >> well, first of all, you have to look at what the capacity is at the numi plant, the plant in fremont, california. about a half million vehicles. 500,000 a year. that's where it was when it was toyota and gm owning it more than a decade ago. now, their annual production will be a little over 85, 90,000 for this year. he th so they have room to grow at that facility. the question becomes, as sales grow, in china, and in europe, do they add another manufacturing plant somewhere. china would make sense because you right now have the restriction on importing a vehicle over there. there is a tax. and that's go to limit your sales there. so a lot of questions there. and with regard to this talk that they're increasing their production plans, we don't know what their plans were before. so they say we're going to increase production. what does that mean? there is no basis of number that we can look at and say, okay, i get this. >> the model s, i believe,
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originally debuted at 49,000. that was the sticker price they announced. you know can't get a model s new for anywhere close to realistically, are we looking at a 50 to $55,000 car? >> 42 was the rate? >> well, the base -- >> it is 75. >> guys, if you take -- if you take 325,000 and divide it into 14 billion, works out to about 43 grand. that's what they're saying. the implied sales would be for those vehicles. remember, when somebody takes a reservation, and converts it to a firm order, that's when they have to lock in their options. and that's when you often have people say, okay, yeah, i do want this. i want the bigger battery, i want x, y and z in a car. that's what pushes the price up higher. you don't have to commit to anything now other than a reservation. >> so at this point, you don't have to -- there is no chance --
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there is some kind of secondary market going on in terms of signing up? is there a line here? if you're on the first day, are you first, could you flip that position in line? >> you can't sell your reservation. it is locked into you. now what you could do is if you have a friend or know somebody, and they really want to be one of those first ones, you could say, okay, i'll order it, i'll pay for it, then you're going to have to buy it from me. you cannot sell your reservation. >> go by me the car, i'll pay you back later. >> promise. >> i'm good for it. >> all right. phil, thank you so much. phil lebeau. we're coming up on 2:00 on wall street. here -- let's see where the markets are trading on this thursday. we have the dow jones industrial average down 175 points. the brunt of the pain today is felt in the tech heavy nasdaq, down by 1.4%. 48.50 is the level there. financials big loser on the sector here in the s&p 500. look at the losers within
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financials, charles schwab among the worst. goldman sachs and jpmorgan down across the board. healthcare a bright spot lately. it has been the best performer this month, up 3% in april. and look at the nasdaq, up 8% in april. is this the next big breakout? let's bring in matt maily, managing director with miller tayback. yesterday we saw the best day for the ibb since september. you don't think this is a head fake? >> well, it still could be. but the thing is the group had already -- a lot of this had to do with the allergan, pfizer deal falling down and the ceo talking about other purchases they might make. a lot of takeover speculation. the group had been forming a nice base on a technical level, technical basis.
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even after -- it sold off for almost a year. and then it bottomed out and really went sideways for two months. so it bought -- it broke sharply out of that range yesterday. so on a technical basis, that's the kind of thing -- sometimes you get a v-shaped one-day breakout, it is not as impressive. you have that kind of sideways move and breakout, it tends to be much more positive. so a lot of volume as well. so we'll still see -- need to see more upside follow through, but it is overbottomed. but little lower, little higher or low and another breakout, people will be forced in the groups even more. >> it sounds like you think your sector is a head fake now. it is based on election year performance. what have you found in the past and are you concerned that perhaps the election year correlation in terms of being a bad year for biotech, that the biotechs have fallen into anticipation of the election year this time around? >> we have been keeping track of
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biotech forum a tectech perform election cycle for the last four to five election periods. and what we found is biotech does tend to underperform. and if you go back to the 2008 election cycle, when health care reform was such a hot topic, and the follow through was obamacare, the group that underperformed, probably the worst period for the biotech index what we're finding today is the group is underperforming even those levels. and the reason for that is the focus is no longer health care reform, it is on pricing reform. and that is specific to the drug and biotech industry. so we do expect the group to continue to be volatile to trade sideways and one of the metrics we used to track or call the bottom is growth. that goes back to the analysis, 1996 period. and what i would take away from that analysis is, whenever the group traded one times growth, pd growth of one, that's
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representative and the group bounced back. we're around 1.15. >> let's talk about individual stocks. i think that's what a lot of investors would like to know about. with this push on pricing, does that push some of the bigger biotech stocks to look for innovation, to look for that next drug in the pipeline and therefore put a higher preem m on the higher tech stocks. >> there is always a willingness to pay for good products, and we saw quite a bit of m&a last year. if you're a buy toward, you get stocks in companies that are discount and the cost of capital is still pretty low. if you look at the innovation, in smalled my cap biotech, that doesn't change. what has changed is the slowdown in the rate of new product approvals, specifically in 2016, but as we move through the calendar year, into 2017, we're going to see data from phase three clinical trials and that
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gives us a preview, a prelude to new product launches in 17 and 18. there is this period of low where, you know, where a choir could take advantage of. >> 2016 is a low. if you believe biotech is breaking out, roughly 20% of health care. is health care next? >> it certainly could be. it formed the same kind of base if you look at the xlv or the s&p health care index. they both have seen a nice bounce, along with the biotechs. they haven't broken out to the same degree. they're right up against the key resistance level. if you look at a log chart, going back from the highs of last year, it is right up against that trend line. it is also right up against the 200 day moving average. it tested that 200 day moving average six different times. seventh time. so if it can finally break it, you'll see a lot of money moving into that group. let's face it, the overall
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market has done nothing for 18 months. a stock picker and group picker's market. if that looks like it is breaking out, it will attract a lot of money from the side zblnz tha lines. now to seem why moda mody for a alert. >> a road show in the u.s. and the uk for a $12.5 billion bond. this meeting, investors next week in new york and london. this would be argentina's first global debt offering since the 2001 debt default. the past two months, argentina's government led by mauricio macri has come to a deal with its bond holders and those four hedge funds and now it seems like according to the report they're getting ready to internationalize their financial market and get and sell their bonds. >> thank you very much. let's get more of a trader's take on this market sell off. art cashin joining us now.
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and, art, i'm not a huge discusser of currency. i leave that to people like sarah who knows more than i do. but the yen seems to be mattering today. >> we had the yen is up now about 10% on the year, very dramatic rally overnight. and the point is that mr. abe and mr. kuroda had promised their people that the economy would pick up and whatever. their program has gone nowhere. and now with the yen rallying in their face, it is feared that they will do something perhaps a bit more drastic. take negative interest rates to a very deeply negative level and that would hurt the banking system. and that's why you can see the financials today being hurt and that's all about the rally of the yen. >> do you think we'll see a turn if the yen turns?
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japan cannot have a strong yen, period. they have been intervening in the markets over and over again for the last 20 or 30 years. when they do that, would you expect any turn positive for the u.s. financials? >> well, it will be interesting to see if they do that. there is some feeling that at recent accords, the imf, the g-7 and g-20 all agreed not to use competitive devaluations. so might not be there. the market for the last week and a half -- the s&p found support at 2040, to 2045. the viewers should pay attention to that. >> the european banks looking messy again. u.s. banks not looking great either. that all because of negative interest rates. is that going to be something that starts to really -- >> they can't generate any profit margins. it is not beginning to pick things up.
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the upcoming ltros, the paying people that take money to lend out is starting to look like it might not have a dramatic effect. we'll know that in june. it looks like the central banks are basically helpless here. >> do you feel like looking back on this rally from the february 11th lows what we have seen is really a short covering rally? this past week, did it make you believe that even more so? >> i would say at least half of it looked like a short covering rally. if you look at the great beneficia beneficiaries, they were all of the stocks that were either heavily short or had been beaten up the most in coming. that's usually a sign that the shorts are covering. they don't walk in with a sign that says i'm covering. but you have to discover that from how the market particularly trades. >> if the central banks are helpless, talked about how the ltro doesn't seem to be working. the yen goes the opposite direction. what part -- do you get worried about the fact that the central
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banks appear to be helpless since they seem to have been the only game in town or is it a relief? do we start paying attention to other things knowing that they just don't have the power anymore? >> the problem in europe is difficult, you can't get a fiscal policy going because they're not truly united. you know, germany still has its interests. greece has its. france has its. so they can't get going. down in washington, we can't get our congress together along with the president. so we won't have any fiscal changes and policy. so the fact that they're helpless does not bode well for what may happen over the next year and a half. >> art cashin, always a pleasure. we'll see you again soon. take care. we are now at session lows on the dow. down 200 points to 17515. the dow now down 200 points. here's what's on the menu . consumer staples one of the better performing sectors this
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year. if you missed the run, is the run down? we'll have a strategist who says yes, another one who says, not so sure. the former finance minister of panama will join us. how big of a hit are the panama papers? he hates that name. steve wynn with interesting comments on rich and poor. you're going to want to hear those when "power lunch" returns. at ally bank, no branches equals great rates. it's a fact. kind of like social media equals anti-social. hey guys, i want you to meet my fiancée, denise. hey. good to meet you dennis. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
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as we noted, the tdow was a session lows. the dow down to 17516. let me give you the worst performers. two down stocks are higher. mcdonald's and united technologies. if you own those, you're doing all right. gold man saks down 3.3%. verizon, jpmorgan chase and apple down more than 2%. the biggest s&p 500 drags are those names. free port mcmoran, car max, f5 networks, long day. >> it is a lip balm. >> if people are tuning in, i sliced my lip open. this made for an interesting first hour of "squawk box". >> procter & gamble's mach 3 razor blades are sharp. >> earnings and sales beat wall street forecasts. the company says it will start paying a dividend.
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it is higher by .4%. ionis pharmaceuticas is falling. that stock is down by 9%. and lexmark is rising today. the printermaker is in talks to be bought by a chinese company. that's higher by almost 3%. we'll focus in on the consumer staples sector. on a day like today, maybe seek safe haven consumer staples. the second best performing sector month to date, third best year to date, is there more room to run? or has it become too expensive? peter townsend is overweight the sector. kevin karen, he likes it, but he's a bit more cautious, worried about the valuation. why? >> we started to get readings in our macro data a year and a half ago that the economy was slowing down. consequently we have been more cautious in portfolios and in the tactical asset allocation portfolios that we have run
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there is a bit more -- there was a bit more emphasis on things like utilities and staples. but we have now come a long way. we have been 12 months to 18 months since we started to get more bullish on this sector and what we have seen is a fairly decent run in a lot of these more safe areas which we traditionally like. but for us, when we sit and go through individual companies, we look at valuations, and we ask what the forward returns are from here, they're significantly less than we were 12 or 18 months ago. we like the consumer sector, long-term, but we're a little more cautious because we think the returns from here are going to be less. >> what is the average pe within the sector versus the overall market at this point? >> well, if you look at pes, they're higher. higher by about 20%. if you were to factor in debt, however, and look at what is called an enterprise value, multiple, what you'll find is they're cheaper relative to the
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s&p 500. so it really depends which one you look at. multiples have grown relative to the s&p 500 over the last 12 to 18 months. >> kevin, you still -- pete, excuse me, you still like them even though they have appreciated a lot. why? >> we like it for several reasons. first of all, you have to remember that markets occasionally fall sometimes. and we like the defensive characteristics of a lot of companies in this group and we also like the dividend yields of some of the providers in this group. >> so, for example -- >> well, three stocks that we like or two and a half, spectrum brands be, the $6 billion market cap consumer products company should have 8% sales and earnings growth this year. similar number next year. trading for about 20 times earnings. but they're rapidly deleveraging and trying to improve their margins as well. secondly, tyson food, the
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chicken producer, is, you know, converting from a pure commodity type company to a more value added company and we think it is multiple rise over the next few years. it is kind of trading for 17 times issue -- >> up 73% in a year. >> yeah. well, you know, their earnings and their outlook has risen dramatically, trading for 15 times next year's earnings. we think that number next year, right now about 45, could end up being closer to $5 per share if chicken prices and margins hold up. >> and what is the half a stock? you got me very -- 2 1/2 stocks, that's like half pregnant. >> the half a stock is constellation brands. if we were talking before constellation's big move up, 6% yesterday, i would be a little bit more enthusiastic on it. it is having great growth for a beer and wine producer, 10%
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organic growth. but it is matched by a farley lofty pe now. that's a stock i watch and take advantage of pullbacks to acquire. >> all right, peter, kevin, thanks so much. we'll get back to the regular markets as we see in bigger sell off. >> we're just about at session lees. look at the s&p 500. down by 30 points or 1.4%. looking at across the secotors here, all in the red. utilities best performing monday the ten major s&p 500 sectors. financials faring the worst. that's masking a lot of the pain felt in the financials because where that is is in the regional banks. take a look, the kre, etf that tracks regional banks, down by 2.8% at this hour. up next, where the analysts find opportunity. street tech is on deck. stick with us. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day
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or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td amerie.
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stocks at session lows. dow down 200 points. the s&p 500 is weaker as well. we had a sea of red. the s&p 500 is lower by 31 points. the nasdaq is lower by 83. 1.7%. and the russell 2000, small caps selling off by 18 points.
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some of the worst performing sectors in the s&p 500, retail sector, oil services. etf movers. the bank index lower by 3%. and the materials spider lower by 1.75%. even on a down day, we got to find some opportunity, maybe lower prices or better entry point. let's do street talk. five analyst calls you need to hear about. stock call number one, mattel. jpmorgan starting coverage with an overweight, analyst says they're positive on the toy industry overall. they think toy business growth will be led by continued parent focus on early childhood development and strong international growth. their target, 38 bucks, 15% upside and begin coverage on hasbro, but with a neutral rating. >> second sector, apple, cutting price target on the stock to $130. that's down from $141. the analyst says he no longer expects apple to return to revenue growth this fiscal year. forecast of 4% decline in
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revenue for the year. >> are you allowed to cut your target price with apple? sketchi sketchi skechers. like a game show there are prizes behind all three doors. door number one, growth domestically and internationally. door number two -- margins are inching up. door number three, scale bringing sgna leverage. the analyst call, a lean, mean, sneaker machine. $45 target imemploys about 50% upside of skx. >> a long way from the shapeup shoes. remember those? fourth stock, verizon, jeffries downgrading from a hold to a buy. $53 price target. not far from where it is now. verizon well positioned long-term but doesn't seem to be near term catalyst. there is downside protection
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given the 4.2% dividend yield. among the top 40 on the s&p 500. it is worth noting. the spread between the yield, the dividend yield and ten year yield is consistent with the five year average, which means share prices are where they are, which supports exactly the analyst view in the $53 price target. >> second high northwest the dodo second highest in the dow. do you know what the highest is? always be careful on the yield. the smaller cap name, the other company based in bristol, connecticut, behind the giant sports network. barns group. b, a connecticut-based plastics maker for industrial and aerospace. deutsche pabank upgrading from buy to a hold. the call may be early but the current evaluation is compelling. thinks sales can grow. noting a big win on the 320
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aircraft, first significant placement in a narrow body plane. had 42 bucks. >> barns group. >> that's it for street talk. let's talk about oil. oil down once again today. once again, supply fears are taking hold, sending oil down. we're going to find out how much it falls when we give you the closing oil price coming up after the break. the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.
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look at the yield, 1.692%. moments ago, it hit 1.687%. and that would be the lowest yield since february 25th when it was at 1.67%. this is a remarkable move we're seeing this part of the curve. >> and intraday. look at that. as we see the sell-off in stocks. >> in surprise we're seeing financials really taking it on the chin, particularly the regional banks which really depend on that yield curve being steeper from where it is now. let's head to sue herera for the news headlines. >> here is your update at this
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hour. chicago tribune is reporting four people made credible allegations of sexual abuse against former house speaker dennis hastert. the newspaper also reported it had determined the identities of three of the accusers, all of them men, whose allegations stem from when they were teenagers and hastert was their coach in yorkville, illinois. one of them is deceased. james comey says his agency's secret method for unlocking the iphone 5c will not work on newer models. he made the comment at a conference on encryption and surveillance at kenyon college in ohio. iraqi shiite militia members say they have taken control of a village south of kirkuk from isis. their claim is backed up by an officer in the iraqi army and also an iraqi politician. as los angeles lakers great kobe bryant wraps up his career, you can buy a commemorative gold study kobe cap for a mere $38,000 or a diamond version for
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$24,000. they go on sale at 8:24 next wednesday, the day of his final game. all right, 8 and 24 are the numbers that kobe wore. i'm not sure why the diamonds are less expensive than the gold, but back to you. >> i was just wondering the same thing. smells like a barringen. >> absolutely. 24 k what the heck. >> thank you. bob pisani joins us with more from the nyse. >> let's look at and correctly pointing out that client weaknesses in the bank stocks, bank index what you want to watch. regionals and the money center banks. you see the drop we saw a little after 1:30. there was a headline out of the white house, the white house press secretary was speaking to a group of reporters and he noted that the u.s. treasury department was working on more steps to counter tax avoidance.
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that may or may not have been a factor in the sell-off. you see the banks and the banks have been weak all day. we have been talking about the weakness in the banks overall, so citi and bank of america and regions financials, put up that full screen or the intraday, banks, you see what is going on. all of them are down 2% or 3% there. you see the major groups here. and in addition to perhaps some comments made out of the white house, we have been talking about this yen carry trade. strength in the yen has been a major problem for the last several days. the yen was at 113 to the dollar. now it is back at 108. and that's been a major problem. so the yen carry trade works very simply. they borrow cheap in japan with the yen weak and investors borrow it and take the proceeds and invest in higher yielding assets. when that trade goes against them, they have to cover that investment by selling those stocks, that puts pressures on european and u.s. stock markets and that's what we have been seeing in the blast few days and bank stocks very heavy part of the whole trade have been selling off on all of that.
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we're seeing weakness in energy skoks today. energy stocks down as oil was weak and major energy names as well. back to you. >> thank you, bob. crude falling. let's get to jackie deangelis at the nymex. >> we did go under $37 today and that took the market down with it. but also closing today at wti, $37.26. rebounding a little bit, giving back the gains we saw yesterday. no one is talking about $26 oil for this foreseeable future period. we're talking about $30 in the near future. the down side pressure is on. you can see the weakness in the dollar, boosting other commodities like gold, not being able to help oil out. even goldman sachs is saying this $35 mark is the goldie locks scenario now. 37 point was key as i mentioned,
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we could keep breaking and trying to test until we sort of break and hold. that's the kind of pattern we have been seeing with oil lately. a lot to watch in the space. back to you. >> jackie, thank you very much. let's stay on this oil theme right. rbc is out with their best stock ideas. there are 20 names on that list. we don't have time to go to all 20, but we have one name to dive into right now and it is an oil name. brad heffern joining us now. on the rbc best ideas list is marathon petroleum. welcome to cnbc. let's talk about this. jackie hits on global supply. too much oil, particularly low quality, heavy sour crude. why is that good news for marathon petroleum? >> hey, brian. i think the main point to make here is that falling oil prices don't matter for refineries like marathon petroleum. you have falling oil prices, it increases demand, especially for things like gasoline.
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at the same time, you have global oversupply crude markets, it allows refiners to buy crude more cheaply. that increases the profitability. >> you also think that cash returns while goodwill slow down. but how come that slowing in the cash return is not enough to dissuade you off of marathon petroleum? >> sure. marathon had the best capture returns in the group. of late they decided to invest more into midstream. recently sponsored mlp acquired mark west and so some of the cash they were just returning to shareholders through repurchases is going to go to the mlp strategy. it is probably a little bit of a head wind in the short-term because investors are not liking mlps as much these days, but longer term, it is a good move for the company. >> here is the most interesting thing to me in your call on marathon. we never talk about retail. a lot of viewers and listeners may not realize that marathon
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owns the speedway brand retail store at the gas stations. bought a bunch of hess assets. you say this is the most attractive retail franchise in your coverage universe. how come? >> yeah, that's exactly right. speedway has been a midwest focused, you know, basically gasoline station. recently entered the east coast through an acquisition of hess' retail assets. they do a fantastic job with merchandising. that's the real differentiator for retail. anybody can sell gasoline, but the prmerchandise if an art. if you look at marathon compared to peers, other refiners, or versus the c stores, they really compare the best of anybody. so you're presented with the situation there where throughout the u.s. most gas stations are owned by someone who only owns a couple of them, and if you're marathon, you can buy those underperforming gas stations, bring them up to your specification and have instant value there. it is a very underappreciated part of the marathon story, but
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a differentiator for them. >> stocks of 37 roughly. you have a $58 target. bullish on mpc. brad, thank you. have a great day. tomorrow we're going to have another name off this rbc capital best ideas list. this stock, though, the analyst says, has a 58% likely upside. that name is, well, you got to tune in tomorrow. governments around the globe launching investigations following the leak of millions of documents on how the world's rich and powerful hide their wealth. known as the panama paper. the former panamanian minister of economy and finance weighs in on why he hates that name. as we head out, look at the financials now. bank of america down 3.5%. jpmorgan down. citigroup down nearly 4% now. tough day for financials. a lot of concern about yields and the japanese yen.
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tavi gevinson. trendsetter, tastemaker, and teenager. watson, you sound like a fan. millions look to you for advice. i know... i can't believe it. i am learning to analyze social media to spot trends and predict demand. sounds like you spend a lot of time online? i constantly absorb online content to follow shifts in pop culture. so... you're learning to think like a teenager? yes. how am i doing? well... uh...
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welcome back. we're keeping a close eye on this volatile market. the dow was down more than 200 points earlier today. but not only down by 100. bright spot in the tough market
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day, conagra, up 2% after the package food company beat q 3 profit and sales expectations. the company saying it is preparing to spin off its frozen potato business this fall which will eliminate 1500 office jobs. stock up 1.4%. governments around the world looking into possible illegal or unsavory financial activity after 11.5 million documents from the panamanian law firm were leaked this past weekend. earlier today the u.s. treasury department released plans to release a rule forcing banks to seek identities behind shell company account holders. still need to be presented to the white house for review. we'll see if that happens. let's bring in former panamanian minister of economy and finance, mr. delima. you know why you're here. as a result of this past weekend, many people around the world, they think of panama, they may think, wow, this is a
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country that helps corrupt russian politicians hide the money they have looted from their people. i gather you take issue with that. >> well, i like most panamanians feel offended that the documents have been dubbed the panama papers, they were documents taken from local law firm call ed fonseca. most of the corporations weren't panamanian corporation scorpora. the other fact is the monies that these individuals or corporations are hiding is not in panama, it is in other banking centers. our reputation as a country has taken a hit because of this. and we feel it is completely unfair they refer to this case as a panama case when really you talk about tax evasion and money laundering, it is a whole
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network. >> what would you say to critics who argue it was panama's laws that allowed a law firm like this to exist and to do what it did? or does, actually, and still defends, by the way. >> since 2009, panama has been implementing new laws to meet global standards and tax transparency. they were removed from the gray list and earlier this year, panama passed the first phase of the global peer review and global forum. our legislation meets international standards in regards to tax transparency. these documents date back 40 years also. what happened before the laws were put in place, i mean, it is hard to criticize then the fact that if corporation was sold 30 years ago, used for illicit activity that today panama is responsible for that in some sort of way. >> does there need to be more changes to panama's laws now, do you think? you highlight that a lot of the
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documents are old. there has been a huge evolution in know your customer and money laundering laws. is there more that needs to be done? >> we were removed from the watch list on money laundering and financing of terrorist activities and we implemented new legislation and created a new regulatory division that will be monitoring also the resident agents that issue the corporations so they know they have implemented and know your client policy. we also, starting first of june, january of this year, we -- which also allows for further tax transparency in being able to find out the beneficial owner of a corporation. >> it is brian sullivan. is there any indication of who did this? >> sorry, i lost your audio. >> any indication of who did
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this and how it was done? >> of what? the leaking the information or -- >> yes. how it was done. >> we have no idea. i know that they put out a statement in regards to the -- how they -- in regards to how the information was accessed. i know they're investigating, but we don't have any idea who would really -- some say it was a disgruntled employee. others say foreign government. we don't know yet. >> is there any defense of banking secrecy from your eyes, and the reason i ask, i brought this up before around the air, venezuela, a lot of legitimate business people, that hugo chavez taxed them at 100%. he took things from them. and it certainly would have been enormously helpful to them, their security and their families if they had a place to secretly hide money. we start forcing everyone to reveal everything, i think in the united states we live in
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what we consider to be a country with a great amount of rule of law and that we can trust our politicians to a greater degree than in other parts of the world. that's not true for other people. is there any defense of banking secrecy from your point of view? >> in the case of panama, they talk about bank secrecy, but since 2001, panama's banks implemented a rigorous know your client policy. and for you to open up a bank account in panama, you have to document your beneficial owners, if it is a corporation, where the income is coming from, and much harder to open up an account here than in the united states. so that's why also we take offense to the fact that they say panama is part of the problem in regards to the panama papers when i mention at the beginningmonies aren't in our banking center. >> they'll see you were arrested last year in connection with
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some kind of potential scandal related to food welfare program. what would you say to people who are wondering about that? where does that case stand? >> well, we're awaiting a date for trial because we are confident, that we will declare innocent and the charges against me are of a administrative nature and the way the budget allocations were transferred to the entity that supposedly misappropriated the funds. >> you're saying you did nothing wrong? >> i'm saying i'm not charged of doing anything wrong from receiving any type of benefit, the charges against me are administrative in nature and there is no penalty in panamanian law in regards to the charges that have been made against me. >> mr. delima, thanks so much for joining us. >> speaking of venezuela, every friday, now a holiday in venezuela. for the next two months, fridays
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are nonworking days in order to save electricity. businesses and factories are being asked to conserve electricity or generate their own power. the country is falling apart. just amazing. >> amazing we can enact that and it will -- >> they don't have a choice. they have got such terrible problems when it comes to infrastructure. can't invest. they're running out of cash. >> they screwed up. they're sitting on all this oil, but because, you know, hugo chavez basically eliminated all foreign investment, all the oil assets there, if they're not inoperable, they're close to it. they did not invest anything back in the country. took it all out and getting their oil industry back up and running to help fund the government is going to be a pretty epic task. >> jamie diamond in his letter to shareholders says does policy matter? he says, yes, it does. let me give you examples of how bad policy can go and points to
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venezuela. >> interesting. >> giving people stuff works for a short time until there is nothing left to give. >> let's take a check of the markets. the s&p 500 at session lows, down 31 points or 1.5%. check this out, we're now negative on the year. down by .4%. so we will be watching this as we enter the final hour of trade. >> slamming the brakes on transports, melissa. the group taking a hit today, down 3% so far in april. the group is still outperforming in 2016. should you still ride the transports, or time to get off the bus or the truck or the train. we'll debate it next. for fastidn emily skinner, each day was fueled by thorough preparation for events to come. well somewhere along the way, emily went right on living.
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say spiking but they are positive. we talked about verizon earlier in the session. interesting idea if you think about verizon and to some extent our parent company, what they are looking for, not just eyeballs. they've got those. they need the portal and content. >> they need the technology. >> did i hear seema correctly? it's not clear what they would be bidding for? >> yes, including japan assets, although alibaba was not mentioned. >> you have to wonder if perhaps the revelations by re/code yesterday if that is accelerating the process saying we will take bids, whatever the bids may be. >> and that's a very important point. i could bid on your apartment but if i bid $100 you're not going to accept that. exactly. >> let's see where this supposed or reported bid might come in at. the intellectual property of yahoo! some say it could be
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worth 3 to $4 billion. there are tan ingibles but it's difficulties to value. >> if i'm a verizon, fios user, they get yahoo! and they do what with it? data, for searches? >> as we see the continued integration of the internet and television, basically the same thing. you wonder what fios's plans migts be as far as creating the original destination portal for the company. they have one now. >> when bright an sullivan logs in, how do they customize those ads to you? >> back of the envelope, build it into a netflix competitor, maybe. but you're also -- >> just data mining. >> a couple hundred million e-mail addresses too. you have a built in intellectual capital acquisition as well. this is just a report. we'll see what happens. >> we've always known there's an
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asset there it's just declining and we don't know how much it's worth. >> yahoo! is up a bit right now. time for trading nation let's look at dow transports, falling for the sixth straight session. erin gibbs and dennis, i want to begin with you, volatility is in the name of your company. 16% jump for the vix today. it's not high but it's 16% higher than it was, you have a lot of concerns about the yen and taxes and whatever. give us the sort of risk on version of what's happening today? >> the risk on version happening today, if in terms of the vi vix and what it's done, it's working, vix below 15 is an area where you should be buying stocks and put against the portfolio. the market rolling over and you're seeing vix go higher, value of puts goes higher. a pop in the vix in the sell-off like we're seeing today, it's
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doing what it's supposed to do. >> let's go to transports, lower gas supposed to help this group. guys like a couple of names, specifically a name like delta airlines. >> yeah, when you look at the transports, there's a big difference between your marine and road and rail versus airlines and air freights. the infldex looks better when i comes to growth an and val yau but that's because of the airlines, we would say rather than buying index as a whole. look at those airlines instead. >> looking at the airlines and watching the volatility, a lot going on there. do appreciate that. for more trading nation, head to tradingnation.cnbc.com. reports out that verizon is thinking about buying part or all of yahoo!. we're back with more right after this.
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receipts continue with news breaking on yahoo! perhaps ver size zon is looking to bid for all or part of yahoo! and this
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is new, google is reportedly also looking at or considering a bid. this is why this makes it even more interesting, not just yahoo! yahoo! the technology uses bing, microsoft search technology on the back end. they've got a content and ad sharing partnership. don't know what would happen if google wanted to come in there but you wonder if this could force microsoft's hand as well, force them to take a closer look at yahoo! >> why would they bother? because they've already got the relationship. >> but if that was to be broken up by this -- >> if you like the relationship and someone is like i'm going to take you away, maybe you'll jump in. >> the other reason the bids might be filtering in, not just the re/code article but the bids are due on monday. there's an element of time here with the bid. >> the buyers have to get in before there's no revenue left. >> that would be the reporting
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lately has been that it has been -- >> that was a little snarky. >> broader check on the markets, s&p 500 sitting at session lows right now as we enter the final hour of trade financials the worst performing sector today. >> thanks so much for watching "power lunch". >> "closing bell" starts right now. >> welcome to the closing bell, i'm sara eisen in for kelly evans. >> i'm bill griffeth, we have a lot to get to. stocks are extending their sell-off in the last hour or so. a couple of things going on, many but two big things weighing on the market today. we've got oil and according to sara the yen as well. >> according to everyone right now. >> oil breaking below $37 a barrel intraday. >> and the yen storming ahead, breaking earlier below 108. nc

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