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tv   Power Lunch  CNBC  April 20, 2016 1:00pm-3:01pm EDT

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i asked donald trump what's up with your relationship? he said we just like each other. so it was an interesting evening to be around a big win last night. >> you're such a big shop. hobnobbing with the best. >> thanks for being here. >> great job. >> thanks for watching. pl power lunch starts now. >> that's quite a bromance. stick around, we have a classic bull-bear showdown on "power lunch." welcome, everyone. melissa lee is on assignment. we're at an all time high watch. the dow and the s&p 500. the magic number for the dow. 18,351. we're just about 1% away from that potential new high. the magic number for the s&p 500, 2134. that's about 30 points away. >> all right. so let's pick it up right here, jeremy siegel is professor of finance at university of penn
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school. we should see 19,000, maybe even 20,000 on the dow by the end of the year. jack admiral is executive vp of a bank. he thinks the markets are overvalued. that's the collision. that's what makes a market. professor siegel, what causes you to feel that we can move, not just a little bit higher, but rather more significantly higher between now and year end? do you see the economy as that strong? >> well, what i see, i mean, i will admit, i mean, we have moved up in price ahead of the earnings increase. i originally thought we would have to wait until the second half of the year to see that earnings. but let me tell what you i think stock investors are cueing off of. i look at sensitive commodity prices. we're seeing increases in iron ore, aluminum, nickel. the agriculture sector is beginning to boom. these sensitive commodity prices, i think, are a signal to an increase in world demand, a better second half and i think
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that's what stock investors are looking at as a clue to get in before the earnings actually increase. >> so they're really looking ahead, discounting those future earnings. jack ablin, you see it a little more cautiously. answer the professor. >> i do. well, first of all, the professor ever went bullish -- i mean bearish, i think i'd fall out of my chair. but that said, we are -- you know, keep in mind what is leading the market higher right now, staples, utilities, a lot of the belt and suspender stocks on a momentum basis which certainly don't seem to be the underpinnings of an earnings turn around. we have a forward pe that has continually bumped off of 18 with a low of about 15 1/2 for the last couple years. right now we're in 17.7. so if we do bump off 18, that gives us another maybe 1% to 2% upside at the most right now. the quality of the earnings
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underpinning these pes that everyone is embracing is the lowest that it's been since 2008. the difference between what's reported and gap earnings is 33% difference. that is just a remarkable spread and the quality is, as i said, undermines the quality of what is being told to investors today. >> professor, you have been bullish. you have also been right the last number of years. we're nearing the 52-week high again. i think jack brings up a good point. what would it take to make you bearish on the stock market? >> well, first let me talk about the quality of earnings. a lot of that is because of the writedowns in the energy sector. and in some of the materials that are related to the energy sector, that's why you have that big difference. the energy sector had a loss for last year and they wrote down reserves and that is what gives you that big gap. that gap is expected by every analyst to close dramatically this year and especially if oil
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stays in the $40 and plus area. so -- and secondly, i think what's really has changed, people are beginning to say, you know what? even if the fed notches up once or twice, that long term interest rate, the ten year is 170, 180. hey, i can get two and 2%, 2.25% on the s&p 500. i don't think this migration to dividend playing stocks is just a momentum play. i think it's people saying, hey, this is where i'm going to have to get income in the future and i think we're closer to the beginning of that shift than we are towards the end of it. >> you didn't say what would make you bearish. go ahead. >> no, i think that the professor seeing profess siegel is absolutely right. where relevance you going to go? given that where we currently are, you know, we are higher levels than what, you know, greenspan said was irrational exuberance back in 1996.
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now granted, we were able to get to 1999 before we collapsed. but the point is if we're investing in equities because it's the only thing palatablpal i'm not sure necessarily that's the underpinning for, you know, long term prosperity. at least over the next 12 to 18 months. >> jack, is your concern -- professor siegel might fall out of the chair if you turned really bullish, jack, by contrast. i'm not sure. but let me ask you, is your concern about the stock price rooted in a concern about the overall u.s. or global economies? i don't sense that it necessarily is. >> no. it is not. i would tend to agree with professor siegel and just about every other factor. funnel fundamentally, we're in great shape. the u.s. is best positioned globally to adapt to the on going challenges of dem graphics and everything else that we're facing. but i think it's really just a matter of, you know, sizing up
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the numbers. >> all right, gentlemen -- >> based on price to sales, we're looking at negative returns for the next three years. >> and nobody fell out of their chair and was injured, folks. thanks very much. jeremy siegel, professor jack ablin at bevo private bank, we appreciate it. and bob pisani is with us. what stocks are on your radar? >> the shot we have to hit new highs rests on the industrials this week. they're all reporting, the big ones. take a look at what is going to happen on friday. you're going to have general electric, caterpillar and you're going to have honeywell all reporting. if you get somebody like ceo jeff immelt at ge saying this is better than it was three or four months ago that, could get you a 2% or 3% move on the upside. that can get you to new highs easily. here's its problem for the industrials. we have this big down turn in the markets. lower spending on energy and mining. all of these guy has trouble with these. the inventories built up.
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yet, people continued to buy these stocks because they have had modest growth. we have a slow growth, no growth world and people are buying them. the other big problem is they're very expensive right now. caterpillar is 22 times earnings. ge is at 20 times earnings. honeywell is at almost 18 times earnings. the s&p 500 is 17 times. might wonder why. because in a slow growth world, say anything about modest growth and investors will buy you. this happened today. look at illinois tool works. big industrial. they reported earnings a little better than expected. they beat. they raised guidance. the organic growth is measly 1% to 3%. look at this stock price. it's at historic high yesterday because investors are willing to pay up for any kind of growth. guys, that's what you get in a slow growth world. 2% gdp and people will pay up any signs of growth. back to you. >> thank you very much. united continental airways settling a board dispute with inest i ininvestors. the ceo joining halftime report less than an hour ago.
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he discussed why the former couldn continental ceo's involvement. >> as gordon said from the start this was never about him. it was never about any one person. as he said, he was in this to help improve an airline he loves. >> let's bring in our cnbc contributor, former continental airlines ceo and joining the conversation, phil lebeau. gord gordon, bases on the three board members that are retiring and leaving, and maybe what you know about the three coming in, what can we expect as far as changes from united continental? >> well, i think you'll see a revitalization of obviously oscar munoz is a wonderful man but not a veteran of the airline business. so you've got two really highly experienced airline employees, one of which mr. milton will be chairman and you also have ed schapiro from par is one of the brightest people i know in the
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20 years in the business about airlin airlines. and some people with some real expertise, the ex-ceo of orbitz. you have this knowledgeable board with a good ceo. i think you'll see a lot of good come out of it. >> we don't need to tell you, i mean, the airline industry is extremely unique. i mean, the way you guys work and the things you have to deal with are different from nearly every other industry. so oscar munoz could be albert einstein. but with the reaction that investors and passengers had to a former lawyer, jeff smiseck now a train guy coming in, why can't united fill this role with somebody who is actually, you know, a lifetime airport or airline employee? >> i think that was one of the concerns that both of them had. he was left alone because the board itself had no airline experience.
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this remedies that. oscar is a very likeable person who will humanize the management which i think needs to happen at united. and there are people in the company that just need to be able to do their job and i think we're going to get that. the right metrics will be measured and the right outcomes will occur. >> gordon, it's michelle here. you're supposed to be on the board i thought. that is part of the whole pitch with him. what happened? >> i think they used me as a credible alternative. they illustrate they really need someone of my background and experience. united picked two other people the night before that had similar backgrounds. that's fine with me. just one of us knows somebody on the board needs to know how to fly the airplane. it will be helpful. they have a couple good guys so they don't need me. i think what they have -- >> did you want to do it? >> no. >> are you at all wounded that you're not the chairman?
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i mean, there are a the lolot or former continental employees that would love to you have back in that chair. >> i was doing it in the spite that i didn't want to go back to work that hard. the loved the people at continental so i stepped up to it. i'm glad i was able to be solved in this way where a good compromise is reached and they have the leadership and the board of directors they need to be successful. >> gordon this is phil. what is the biggest issue at united right now, aside from the operations lagging competitors. what is the one thing that united is not doing that you see in american, that you see at delta? >> the big fix, phil, is employee morale. you have to feel valued as an employee. i often say when i was an airplane mechanic i could fix an airplane a lot faster when i wanted to fix it than when i didn't want. to you have to get that attitude back at united and you will with the right management and reward system. they need to focus on those
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fundamental things to dig out of that hole. >> separate issue just gordon. united, couldn't nental deal sh a lot of people point to that and say that's one of the reasons that continental got whacked. it was a marriage of sort of cultures that didn't fit. we just saw alaska airlines do a deal. do you think we've seen the end of airline mergers or is there one big one left out there that you think could happen? >> i don't know which one it would be, phil. the only guys left out there is the virgin american-alaska deal coming up are the low cost spirits of the world. i don't see that happening either. two properties don't make more than four. so i think we're at a good stopping place. and i think some stability would be good for everybody. >> i was hoping we would get to united-couldn united-continental-southwest- delta. >> justice would love that. that would be great. thank you very much.
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>> always glad to help. >> by the way, the gentlemen we just talked about, united airlines oscar munoz will join ""squawk on the street"" exclusively tomorrow. he'll talk about earnings. this proxy battle probably a little bit about his health. remember, he had a heart transplant. that and more tomorrow 9:00 a.m. eastern time. you cannot afford to miss that one. in any earnings season, there are winners. there are losers. there are the have notes. put another way, based on the music, there are the good, bad, and plain ugly. straight ahead, we'll lay out who is who coming up. plus, some new numbers showing a big lift and shift in the housing market with big implications for the economy. we'll let you know what part of the housing market is suddenly heating up. stick around. hat 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.
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we're going to call these the good, bad and ugly. got, discover financial. it is having the best dare in four years. the 787 is going to generate cash over the next seven years. and the ugly, coca-cola, that stock deep in the red after reporting a revenue and profit drop on flat soda volumes.
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coca-cola shares are down 4.25%. >> we're keeping an eye on oil prices. take a look at crude moving a lot. a 2016 high, higher by $1.42. we're back to $42.50. we had a slight drop in the u.s. oil production. oil market closes in just over an hour from now. we'll take you live to the nymex later in the show as that happens. in the meantime, coming up, how are socially conscious funds treating marijuana? we have the saints versus the sinner on investing in pot, plus -- >> up next, a start-up proposing the big idea. >> two days before i propose, i realize, holy. [ beep ] where am i going to hide this ning? we created the secret engagement ring box. >> how do you build a big business only selling one product? >> how do you respond when competitors create something
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very similar? >> stay tuned. . with almost twenty percent more base horsepower. once driven, there's no going back.
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welcome back to "power lunch." i'm sityler mathisen. two entrepreneurs have 60 seconds to convince a panel of experts that their proposal takes what takes to be the next big thing. >> my name is john. >> my name is ron. >> we're the founders of parker square, a boutique jewelry brand looking to innovate in the diamond and fine jewelry states. been working with clients on
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engagement rings, we discovered a pinpoint that everyone overlooks. you see, most rings come in large, bulky boxes like this. two days before i proposed, i realized, holy. [ beep ] where am i going to hide this thing. i ditched the box and put the ring in my pocket. most of the clients did the same thing. >> people spend thousands of dollars on engagement rings and they come inned adds boxes. not only is this box flat and he's whyy to conceal, it is made from genuine leather and comes with an led light for those proposing in a dark pro man tick setting. >> retail boxes online from $98 and we launched two months ago and shipped 40 boxes and can you trust your most precious memory is happening at the right moment. >> welcome to "power pitch." you just saw jon and ron's pitch. now let's meet the panel. joining us on set, a board member of the new york angefrpn.
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she invests in 40 start-ups. and also joining us is nir liberboii. from the bay area, david wu, a general partner at maveron, focusing on consumer companies withed 1 $1 billion under management. jon and ron you're in the hot seat. >> it is a cute pitch overall. i liked how you talked about traction and pricing. i would like to hear a specific number around the mark size and dollars in the u.s. as well as how you're reaching customers. i'll still give you a b. at $98 to $118 is pricey. do you justify that premium more so from the perspective of functionality of the giver or more from the perspective of it being a keepsake for the recipient? >> we think the average market of the engagement rings in the u.s. is $50. i think we offer a great
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alternative to the bulky boxes. >> so more for the functionality? >> i gave the pitch a b. i loved your energy and enthusiasm. i think you did a great job articulating your problem that you're solving. i would like to hear more about your background as founders. so hopefully consumers only get engaged once. that's a dream. but if they do, how do you build a big business only filling one product a lifetime? >> after we deliver the ring and clients get engaged, we're finding they're talking about the boxes all over the place and that one customer translates to multiple customers through word of mouth. >> for a pitch, want to hear more about the team, about the market and about what kind of company you're going to be. so i give it a c on the pitch. is this a full stack jewelry company? is this an innovation lab of jewelry accessories or engagement experience type of company? >> we have two sides to the business. on the retail end, we create a private diamond shopping experience. the lab is where the box was
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born from. we're trying to create new products that improve and solve the pin points in the overall diamond and jewelry market. >> so it's a really cool box. but it is still a box. so how do you respond when competitors create something very similar? >> we do have a design patent pending which will prevent competitors from making a similar box. we also filed for a utility patent. >> you are going to sell the box only direct to consumer for the clients or sell it to other jewelry stores? >> we're actually doing both right now. we just launched and finished a kick staf kick start campaign. we shipped 1,000 boxes to customers all over the world in over 40 countries. the wholesale side, we have probably another 1,000 in orders. >> you are discounting at all the perhaps importance the little blue box and the whole proposal process that wonderful box or the wonderful tiffany box that you can whip out and present the ring in?
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>> i think the box is really overlooked. even attive niz, they don't spend a lot on the boxes. so we're finding that the consumers are voting with their wallet and dollars. they're spending $98 on the boxes. >> so we heard what jon and ron had to say. now we want to know, is the panel in or out? >> it's a sharp little box. i think this is a viable business. there is clearly demand for the product, however, as an investor, i'm not convinced it will be the next big opportunity because i believe other people can produce similar products. so on this proposal, i'm out. >> nir, what do you say? >> i think parker square identified a tangible paint point in engagement ring product. the first product is clever. the jewelry market is highly fragmented with a lot of large jewelry companies spending money to innovate and going after the same consumer. i want to see what the next investors look like. for now, i'm out. >> i feel like you guys with only two employees are a little all over the place. you're selling to resellers,
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you're selling direct to consumers. you're inventing new product lines and in the jewelry business. i think you're doing too much. so i'm going to be out. >> all right. so three outs. guys, what is your reaction? >> just want to thank the panel for their ideas and for everyone watching, we would offer 20% on our boxes by using promo code power pitch. >> you got a deal out. there thank so much to john and ron and parker square and to our panelists. and that is today's "power pitch." >> proposal rejected! are you in or out on parker squares secret engagement ring box? thumbs down from mr. sullivan on the left. tweet us with #powerpitch. for more on "power pitch" go, to powerlunch.cnbc.com. >> $100 for the box. >> that's a lot. >> we have a market flash. let's get to susan lee. >> yes, solarcity is coming off session highs.
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the surge is due to legislation passed yesterday in san francisco which requires solar panels to be installed on new residential and commercial buildings in the city. shares of silvl solarcity are s down. >> they're legislating that kind of technology into profitability. i'm not surprised. >> for the billionaire serious about security, he can't do much better than bullet proof. how the super rich keep themselves safe when power lunch returns. ♪
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hi, everybody. here is your cnbc news update this hour. criminal charges have been filed in the flint water crisis. a district engineer and a supervisor in the office of drinking water were charged with misconduct and conspiracy to tamper with evidence. flint utilities administrator was also charged with tampering.
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the supreme court ruling that nearly $2 billion in frozen iranian assets must be turned over to american familiar lives people killed in the 1983 bombing of a u.s. marine corps barracks in beirut. the ruling dealing a setback to iran's central bank. the united nations refugee agency says 500 people are feared dead in a ship wreck in the mediterranean sea last week. it says that disaster happened when the waters between italy and libya and was based on accounts if 41 rescued survivors. and cnbc confirmed the treasury secretary jack lou plans to be harriet tubman on the $20 billion. it's not sure when it will be put into circulation. lou wanted a woman to replace alexander hamilton on the $10 bill but there was outrage about. that hamilton will remain on the $10 bill. that's the news update. guys, a lot of people are crediting the success of the
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broadway hit "hamilton" for the outrage that was spurred. >> rightly so. >> i suspect that is absolutely the case. >> i think that is. >> you've seen it, right? >> i have. best american theater i have ever seen by a long shot. >> decades. >> i think you have to purchase tickets a year out now? >> yeah. >> maybe more than that. >> or pay double on stub hub. >> yes, exactly. >> my wife says that music has crack in it. it is so addicting. >> really? >> we list into it over and over and over again. i mean it is really g. >> all right. i got to get online. >> see you. all right. gold prices are closing now. we had a big rise across the metals yesterday because of the weakness in the dollar. we're seeing flat trade generally speaking for gold. it's lower by 40 cents. ditto for pretty flat trade on the palladium.
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it is higher by 3%. platinum is higher by 1%. all right. to the bond market. rick santelli is tracking the action at the cme. >> thank you. if you look at the s&p 500, we're getting awfully close to all time high closes. 2130 was exact. now we're at 2106. today was 521 of 2015. so let's keep that date and see the 500 chart there. ten year note yields are up over $1.80. there could be a lot of room. there's been a lot of pull at negative rates keeping rates well behaved. maybe what is going on with equities is about to change a lot of the charts. let's look at the hyg, barometer for high yields. it's at the best level since december. if you look at the dollar index, it's about ready to fall through some very important points. yesterday we closed under $94. very significant. the last chart this is crb index. best levels since december as well. be careful here. all got news in the stock market
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is giving way to major changes in the other markets. brian, back to you. >> all right. thank you very much, rim. for the past few years there are a few hot sectors of housing. high end, really high end and super duper high end. that pretty much sums it up. but things are changing. and new numbers are showing a big swing in the sector. joining us now are robert frank and diana olick. you have good news about the middle market of housing? >> finally. the middle sector is starting to show some big gains. the middle sector, i'm talking between $100 and $500,000 that, is 75% of home sales today. and they're seeing the biggest gains in sales year over year. up over 15%. it's the high end, that was the headline in the report from the national association of realtors. the high end really coming down. they saw growth year over year in sales of $1 million plus homes up just 4.6%. and we've seen gains of over 20% in the high end market. so that is the big shift we're
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seeing now is back to that middle range. the loaners are in deep trouble. >> there are two-ways to look at a slowdown. things are cracking, we're in trouble. number two, things are so good that there's simply no homes to buy. >> well, we're seeing this dramatic and sudden inversion in the housing market. so for years it was just the high end is doing great. mass market not so great. dianne e dianne highlighted that everyone is building for the high end. so you have the rising inventory at the high end and stock markets are volatile, overseas buyers are scarce now relative to a few years ago. so you have a huge amount of supply, not as many buyers at the top. >> diana, is this really good news? housing is a trickle up economy. the renter moves to the first time home buyer. that person sells their house. moves into the bigger house. that bigger house -- it all kind of goes up. is this movement in the middle market signalling better times for the lower end as well?
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>> no. that's the problem, brian. you still have a huge problem on the low end of the market. that's where the first time home buyers want to get in and there is incredible demand. you're seeing household formation but it's in the renter side. you see rents are going up, skyrocketing across the nation. and people do want to buy. the problem is home builders don't build entry level houses. they don't see the profit margin. you have dr horton with a small express homes cat gorey. but really they're the only big builder in that segment. you have so many investors scoop up the foreclosures during the crisis that when you look on the lower starter entry level end of the market, you are not seeing any homes for sale. that means that they can't move up. that means that people aren't selling those homes to move up into the higher priced homes because in the middle of the market where there is low inventory, prices are jacked up. >> at some point you hope the market will adjust itself and builders will say, look, there is just way too much supply on the high end and not as many buyers.
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so the low end, maybe the margins aren't at great, but at least there are buyers and a market there. >> the land prices, labor prices, the material costs, they can't make the margins. >> all right. diana and robert, we'll leave it there. i want to make a quick comment. d.r. horton express homes. i'll say this, if i'm going to get a home, don't make it express -- express is good for things like laundry and gas station retail, not house building. >> no, you don't want that house built fast. you want it built well. that's not the message they're trying to send. dry cleaning, express, go for it. major averages on track for a third weekly gain in four weeks. the dow, s&p 500, 1%. 1% away from all time highs. so is the market getting into danger territory? overvalued, joining us is a chief investment officer from atlantic trust. albert, what do you think? is the market close to a peak,
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close to being overvalued? >> well, stocks, tyler -- stocks certainly aren't cheap. on the other hand, i think that investors have gotten accustoms to the lower for longer regime that we're now in terms of interest rates. and you compare the s&p 500 with the dividend yield of close to 2.25% relative to the 10-year treasury at $180. you know, it's compelling. >> when you look at that, you think that the valuations are reasonable. how you aboabout you, dave? >> i wouldn't call the market overvalued. but we're at the top end of the valuation trade range. if you look ate, the s&p 500 is traded in a very tight range of between 15 and 17 times forward earnings really for the last three years. at the very top end of that range right now. and i don't think there is a compelling case to be made for why we're going to break out and go to will 18, 19, or 20 times.
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so that really means that way forward for the market is going to be driven by earnings which, as you know, are currently in a funk. but does it look to us like we're going to begin to see some improvement. >> i think you say the way forward for people to make a little bit more money than the market broadly speaking would be with smart sector and stock picking and you like industrials for one and railroads for two. why? >> well, industrials, of course, have been beaten up some over the last 18 months. the manufacturing sector is flat on its back. they're beginning to recover. our belief is as long as we don't actually go into a full throated recession here in the u.s., those are relatively attractive. and we actually think as mediocre as this expansion has been, it actually has a long way to run. and then more specifically with the railroads, they've obviously been beaten up because of their revenue dependency on oil. >> right. >> exactly. but those negatives are starting
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to lessen. at the end of the day, this is an oligopoly. >> your choices are much more consumer facing companies. >> that's true in terms of individual stocks. i would agree with dave entirely on his choice of a sector for the industrials. in fact, i wondered whether he had stolen my notes, in fact, in terms of the fact that sector is beaten up. we see value there. one sector we're very cautious on, energy has done well so far on a year to date basis. we think it bears watching. but we're -- we wouldn't go overweight in energy at this point. we think that the issue with regard -- regarding oil prices hasn't -- by no means settled out yet. and so we're maintaining neutral weighting on the energy. >> we have to leave it there. dave and albert, you have know how close i game to calling you
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albert brooks. thank you very much, guys. go to our website right now to see why albert brenner says oil prices will be unstable for years. that's powerlunch.cnbc.com. >> i'd rather laugh with the sinners than try with the saints. well, call it a songwriter, whatever. the sinners have much more fun. sinners versus saints wloshgs is better for your portfolio? we'll ask and answer that question next on "power lunch." i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim.
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down 44%. h & r block, not good. down 30% since that time. allergan, we know their problems and you have seagate down 14%. it's not all bad, guys. in the next hour, we'll show you the four best performing stocks since that february low. >> looking forward to it. today is 4/20, also known as national marijuana day. why april 20th, 4/20 became the national day to smoke pot is disputed but no matter, we are using it as a reason to ask where do investors stand on betting and putting money into the industry as more and more states legalize pot. let's bring in jerome dodson, the president of the socially responsible investments and jerry sullivan, investing in only companies like tobacco, gambling and weapons with the symbol vice x. good to you have here, guys. this will be fun. jerry, i assume that since you run a vice fund, you would be
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all in on any potential marijuana investments? >> no, marijuana is a very touchy subject. you have to be very careful how invest. if you happen to touch the wrong -- the wrong product in the wrong state and the feds come in, you could be potentially at risk. >> i read here that over the past five years, you spent more time traveling to marijuana destinations than you have gone to las vegas. >> oh, yes. >> why? >> because i had to learn about the laws. the laws are different in each state. ultimately, i had to -- it was -- it wasn't like the ole college dorm room where you go to to visit your friend. it is someone different. >> i have no idea what you're talking about. >> neither i do. >> you're not there yet, though. you don't have any issue with investing once it's workable. >> we actually made a private placement in a company that actually deals with microbial soil solutions.
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and it's -- they have a product called summer grow. and another one we've been interested in wholeganics which speeds up the time to grow and increases the yield. it does it in corn and strawberries and marijuana. so in n. some ways we're touching it in a way that keeps us from getting in trouble. >> jerome, since you run a socially responsible fund, should i assume off the bat that you would not invest in pot? >> no. we would not. it probably shouldn't be legalized. i don't think it's a socially responsible thing. i don't like people walking around stoned. i don't think it has a good effect on your health. so, no, we would not invest in a company that -- whose mainline of business or slight line of business is marijuana. >> what about medical marijuana where we hear it's done wonders when it comes to pain relief and come to issues with eye strain,
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et cetera. >> that's a good question. certainly i think if medical marijuana were controlled and used for that purpose only under care of a physician or a nurse or another health professional, i think i would think different about it. i think it's a very small part of the market. i think if it starts becoming legalized in all the states or even a lot of the states or some states like they are now, they wouldn't be for recreational use which i would oppose. >> got it. i see you like whole foods, american express, and qualcomm. tell me, sir, when do you think you might actually see something that's more investable in a traditional sense beyond the private placements? >> i think you have to wait until the federal government gets out of the way. because as it stands now, it's interesting. oregon and the state of washington are legal. can you purchase recreational marijuana in each state. but if you drive between oregon and washington, you break the
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law. so it's inner city commerce. so you have to be -- the federal government has to ultimately get out of the way and either decide that they're going to enforce the law. it's the law of the land. it's not being enforced. so, you know, i'm for -- i would be for less regulation. i think ultimately it will give a lot of choice. but i think then it will be regional to states. >> got it. all right. but clarity when it come to the federal level. gentlemen, interesting discussion. thank you for joining us. jerome and gerry, opposite sides of the pot investment. from sin invest. s to sin city. you have to see how the super rich are doubling down on vegas and luxury there. we're going to bring you inside this suite.
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security is a big concern in manufacture the world's riches and most famous. so when they worry about getting shot, they go to a shop in texas that bullet proofs luxury cars. it's part of a new episode of "secret lives of the super
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rich." robert frank back us with with a preview. >> secret lives of the super paranoid, too. we went to a texas armoring shop where he believes in his product so much he risked his life to show it to us. >> this is my ak-47. today i get to shoot my boss. >> the boss is trent kimbel. >> no penetration. >> they pay hundreds of thousands of dollars to transform the world's most expensive cars into bullet and bombproof fortresses on wheels. in san antonio, each year trenlt and his team at texas armoring perform the state of the art magic on as many as 100 luxury rides. for as much as $200,000 each, like this british super car. >> so right now the rolls royce phantom is being completely taken apart. >> first, the crew will strip this half a million dollar car
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down to the frame. and after 300 hours of intense labor, it will emerge as a bad guy's worst nightmare. as can you get, most of the clients are overseas and another big draw for overseas rich is this hotel room in vegas at the nobu hotel where they have the most amazing hot tub you'll ever see. check it out. >> because of the size, we had to helicopter it down. >> built in italy, this japanese inspired hot tub choppered 150 feet above the strip to touchdown here, a secret $35,000 a night pent house at the nobu hotel. located inside caesar's palace, it's like a hotel inside a hotel. whether guests step off the elevator, they land on the 13th floor. there's a full house of amenities that come with this
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$1 10,000 square foot villa including 24/hour access to in room sushi chefs. the fare can be eat enin four different dining areas. but the best seat in the house is still outside. at $35,000 a night, it's pretty exclusive indeed. and exclusive, guys, if you look at the celebrities who have stayed there, justin bieber, miley cyrus, p diddy. in a place with 150,000 hotel rooms, this place stands out. truly amazing. >> unbelievable. i would love to spend a night. there the bullet proof cars, reminds me of brazil. you mentioned overseas buyers. they have tons and tons and tons of them down there. >> they wouldn't say anything about their clients. but we have a sense it's brazil, all through latin america, it's the russians. it's the middle east. i mean around the world whether it's just petty thieves, kidnappers, terrorist attacks,
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the we will blalthy feel like t. this is the darkest side of inequali inequality. >> how much is it to fit those cars? >> $200,000. you add on another $200,000 to a half million dollar car, can you put a grenade, land mine, i mean that thing is built to withstand just about anything. >> you should do something on nobu, the man, i mean this guy comes over from japan. creates this restaurant empire. now he's got -- he's the mcdonald's of sushi. >> now he has his own hotel. who hasn't had that late night craving for a private sushi chef? especially on 4/20 day, right? somebody get me a mahi stacked. >> yeah, it's amazing. the first room i've seen where you have the private inroom sushi chef. >> does he hang out there? that's kind of creepy. >> maybe he's in the closet. >> time to go. >> yeah. but nobu exploded. and it's still a cash yea status
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brand. good for him. >> robert, very cool stuff. we look forward it to. >> tonight. >> by the way, speaking of tonight, tune in tonight for an all new episode filled with bullets, sushi chefs and hot tubs. hopefully not all at the same time. "the secret livesst super rich." exit polls from last night's new york presidential primary show there is only one thing less popular than the candidates. that is wall street itself. wall street's image issues and maybe how to solve them all coming up on "power lunch."
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all right. welcome back now. let's talk more about oil. crude oil is rallying again today, trading above $42. that is a new 2016 high.
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let's be clear about something. $42 a bare sell not considered a high price for most oil producing countries. they like to see it go up even more. so if oil prisdesperate the sau becoming financially. jackie? >> good afternoon, brian. there is more and more evidence that the saudis are certainly being squeezed. let's walk through this year. over the last year, the kingdom has had to slash the budget as coping with shrinking gdp. it is quietly sold bonds to the market to raise cash. and now taking a $10 million international loan. in addition to that, fitch reetly doreet recently downgrading banks. they're trying to maintain the peg to the dollar as well. in addition, the saudi ipo now looks like it could happen as early as next year. some people are saying that market is taking this as a signal that the saudis are pretty desperate whether it come to bringing cash into the kingdom. selling 5% stake is a game changing move to a certain extent.
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this is a nation that is proudly kept control of its oil and one that isn't particularly transparent as you know. the sale would include the saudis oil reserves, it still makes a statement to investors that cash is king in this environment. and all of this coming after doha, no production freeze in the short term. oil prices are bouncing around this $40 range. the saudis have an ace up their sleeve that nobody knows about and they can withstand the prices as they have said to the market or they're being squeezed. >> all right. jackie deangelos, thank you very much. we'll see you in a bit. as we noted, the president is on the ground in saudi arabia. however, a proposed bill in congress threatens to add tension to the saudis that already have a strained relationship with the united states. amon is in washington with this side of the story. >> yeah, that's right, brian. take a look at the pictures of president obama in saudi king
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walking together after their meeting today in saudi arabia. the two leaders met for just over two hours, we're told, or two hours there abouts. what we don't know is what they said in that meeting. we're waiting now the official white house readout of what they said. but one of the key sticking points in this has always been this 9/11 bill that is moving on kpil. this is something that saudis have expressed extreme objections to. it would allow americans for the first time more ability to sue the saudi government for any damages they can prove as a result of the 9/11 terror attacks. the president yesterday before departing for saudi arain yashgs put a little bit of cold water on that idea saying that he opposes that bill. here's what he said on cbs yesterday. >> this is a matter of how generally the united states approaches our interactions with other countries. if we open up the possibility that individuals in the united
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states can routinely start suing other governments, then we are also opening up the united states to being continually sued by individuals and other cut i countries. >> that was not good enough for john cornian, a republican of texas. also senator chuck schumer, a democrat of new york state are pushing through that bill up on capitol hill. it looks like the white house at this point though is set to veto it, meanwhile, on the house side, speaker of the house paul ryan has also expressed some doubts on this raising questions about how it would impact the u.s.'s relationship with its ally in saudi arabia. >> all interesting stuff right now and such a key date. thank you so much. joining us now to discuss the president's visit is ambassador lincoln bloomfield who specializes in political military affairs. and james smith, former ambassador to saudi arabia from 2009 to 2013. to date president arrives. if you were in saudi arabia and
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watching national television, you would see every other leader from the gulf states arriving but you would not see this video. they did not show president obama arriving in saudi arabia. in fact, while the king was there to meet every other leader, they did not send the king to meet president obama. what should we read into that? >> well, ambassador smith can talk more about the protocols inside the kingdom. there is a gcc summit. the president came to speak with the king of saudi arabia and he'll meet with the gcc leaders tomorrow. united states is partst gulf cooperation counsel. we do our best work in other cultures privately. we don't do things, not everything has to be done in the full glare of the public eye. >> ambassador smith, i'm getting the idea this is pretty much an insult, isn't it? certainly a diplomatic message, right? >> no. you're reading way too much into the optics. >> okay. >> king abdullah was the king, he did not meet people at the airport generally it is the foreign minister. and escorted dignitaries to him.
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don't so for a second see this as a slight. if you're going to read anything into it, i suggest something about king solman's health. >> but he met the other leaders who arrived. >> again, i wouldn't read into it what we seem to be. >> are there tensions between the two countries right now, sir? >> there is stress in the relationship. i would argue that it's a buy product of engage. with iran. saudi arabia has the next door. so they feel every day the tension of iran's destabilization. so much of it healadz to do wit different perspective between our two governments and it caused some stress in the relationship. but that's why this trip is so very important for two days of
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conversation. >> ambassador bloomfield, the president maud a point that you cannot, and he referenced this, a lot of americans may not realize this can you not sue the united states federal government. so the president's point was, hey, if we're allowed to sue iran or saudi arabia or anybody else, what's to stop that door from opening for suing the united states or trying to? do you agree with that point of thinking? >> well, i think it's worse than that. because when a foreign policy issue gets into the courts in this country as it did with the lockerbie airline shootdown and the bombing, the foreign policy bureaucracy sits on their hands. they won't risk doing anything that can interfere with the court case. it freezes and paralyzes u.s. policy. the message is governments have a responsibility, whether it's saudi arabia or the united states or the two of them together to get in front of this issue, figure out what the truth is, take appropriate action but don't let the matter be taken out of your hands. >> so i'm curious, ambassador
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bloomfield. we hear today that u.s. supreme court will allow some two plus billion dollars of frozen iranian assets to go to compensate victims of the beirut marine barracks bombing as a result of the lawsuit. i assume that it was brought against, in one court or another in, one form or another, the iranian government. so i don't know the history well enough to provide the distinction there between the idea that we would be allowed -- that there is a law that would allow the united states victims of terror to sue saudi arabia and this one. can you shed light? >> i was the pentagon's lebanon desk officer when the events happened in the 1980s. i can shed a little light on it. we had no relationship with iran whatsoever. and when american victims of the hostage taking and the other beirut bombing in this case went to court, the iranians would not show up and protest. they just boycotted it. so the district court judges took action in favor of the
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plaintiffs. i'm not a lawyer. i can just say that happened. we had no other channels of give and take with iran. so if you want to isolate u.s. relations with a foreign country and you want to do it on a wide scale, you will very quickly see all sorts of knock on effects we can't predict. >> gentlemen, thanks so much for joining us. both ambassadors. >> thank you. all right. so saudi arabia embarks on the first international deal with debt marketses in 25 years, where does that leave other global oil producers like the united states? let's bring in john killdof and brian bush, director of oil markets at genscape. we hear about saudi debt sales, a $10 billion bank loan. my first thought is, hey, they're settling in for lower for longer, building up a cash war chest if oil stays down or maybe if they want it to stay down they can ride it out. what is your take? >> that is my take. i think they are certainly
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hunkering down for a battle. an epic battle for market share among the u.s. and iran. >> which means maybe keep prices down. >> absolutely. >> weed out the -- we've already seen 60 u.s. bankruptcies so far since the beginning of last year. do you think they want to push the u.s. industry down, push out some of the weaker producers, wait for higher prices then come in with an even higher global market share than they have right now? >> i do. and they're also not unsophisticated, brian. this offering started at $4 billion and went to $6 billion. they had the buyers for $10 billion. and they took it. they don't know what the future holds for them or oil prices. so they're getting ahead of it, making sure they can stay liquid. making sure they can stay forward leaning in this whole -- >> i will say this, though. $10 billion is a lot of money. >> they're annual budget is hundreds of billions. it's a small percentage, right? >> it seems weird, $10 billion. >> michelle, i can borrow $5? >> yes. the mere fact of borrowing is significant. they haven't done it in 25
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years. >> it's a start. i keep saying u.s. is $19 trillion in debt. >> so brian bush, pick up on the conversation here. are the saudis trying to stick it to the u.s. producers which is what brian was referencing there or are they really trying to stick it to iran? >> i think -- >> or both? >> i think it's both. i think they definitely were upset with exactly how much production was starting to come out of north america and the u.s. you know, we're down almost a million barrels a day of production from our high back last april. by thend of 2017, we'll be down 1.5 million barrels from the high. on the other hand, coming out of the doha meeting, it was very, very obvious that iran was not about to back off on their statement that they wanted to get back to presanction levels. and the saudis basically said, if they're not going to freeze or cut, neither are we. and if anything, the saudis may
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actually increase production. i think they are hunkering down. they still have some of the cheapest production in the world. and they're not going to give up market share. >> why is oil at $42 again today? why is it rallying so hard? >> you know, i think there's a real strong sent. of people wanting barrels higher. one of the things that really turned the market today is for first time if you net out crude and distalate, it's net been a build. today we saw a net draw in crude and distalates. we've seen the growth in stocks, even though we see crude still growing in the u.s. in storage, we've seen that rate slow down over the last couple of weeks. and even though two weeks ago the big million and a half barrel drawout of cushion, you needed to know the whole supply chain. we had a major pipeline out of
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canada go down. the draws we saw out of kushing were more than offset by builds that we saw on the texas coast and in canada. >> okay. but here's the problem, brian. i hear what you're saying about u.s. inventories. that's good news. but if saudi arabia goes on a market share grab, drive down the price. our imports are still upped 1dz million a day, more than they were this time last year. won't those increased imports mitigate that inventory drawdown that you just talked about? >> certainly. and don't misunderstand me. i'm still not bullish on this market. but i'm certainly a lot less bearish than i've been in probably about a year and a half. there's some evidence that we're seeing not only cuts in north american production but i'm hearing talks about cuts that are taking place in south america, places like venezuela and colombia. so we may be seeing some cuts, some other places. but if we see a true market share war between iran and saudi
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arabia, then this market could turn up side down fairly quickly. >> we'll leave it. there a note this morning, two floaters, two oil rigs off shore brazil, capped today. they pulled them offline. so the u.s. is in and out leader in deep shore off water exploration. all right, john and brian, thank you very much. coming up, five energy and commodity stocks that have done the best since aur february 11th lows. some of the gains you have to see to believe. plus, intel and yahoo, two of the so-called old tech firms struggling to keep up. it's time to prove ourselves as men!
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people that have volkswagens are that are not in kblins with emissions standards this is a settlement agreed to and will be presented to a judge in san francisco this afternoon. we reached out to the epa. we've not been able to reach anyone. and officially volkswagen is not
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commenting. again, guys, it looks like vw, according to this german newspaper, agreed to pay all affected customers $5,000 each because of their vehicles not meeting emissions standards. >> phil, are we also to assume that would on top of fixing the problem because if i've got a $40,000 tdi passat, $5,000 is not going to make me whole until i get a fix. >> we've not seen all the terms of the settle diagnosement. part of this is the question is do you let the vehicles continue to not meet emissions standards? can they be fixed? can they be repaired in some fashion? how much will that cost? will it cost the company something? we're waiting to find that ought as far as the terms of the settlement and the epa declined to comment. we expect this to be offered into the judge's chambers and be officially announced this afternn. >> they don't really have a fix
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it that they can rollout in broad fashion like that. >> right. >> but let me ask you this, for the 6,000 people who own the cars -- >> 600,000 -- >> okay, of 600,000. excuse me. can they still drive them? >> they're driving them right now. it's whether the epa and the california air forces board look at each other and say we can live with the cars not income compliance. but brian brings up a good point. if you have one of these, let's say they cut a check for $5,000. a couple years down the road, you want to sell your car, who is going to buy that car? who is going to say yeah, you give me that $5,000 check and then i'll buy your car. >> why wouldn't somebody be willing to buy it at a certain price? i just find it astounding that it's $5,000 for a customer who baust h. bought a car whether it's the environment that is in theory been damaged by this. i don't quite understand. is there precedent for this? >> i don't know if there's press
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de dent or not. why wouldn't someone buy one of these vehicles? i can tell you right now in california, most people who are interested in a diesel vehicle do it because they believe they're helping the environment. so now you pretty much cut that segment of the population out when you want to sell your voekz wag ne -- volkswagen in the future. maybe they'll make a partial remedy that can bring down the emissions to a certain extent but not completely into compliance. we still need to see what they say. but it you have a vehicle and they're not going to alter that at all, ghooz that's going to i the resale value. >> because there's no fix, right? >> or that volkswagen is afraid that they would be sued for selling a fraud, basically. they're compensating them for the idea we sold you a car that you believed complied with american or global emission standards. but it wasn't. we knew it wasn't. >> yeah. tyler, make no mistake, just
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because they reach a settlement with the u.s. government doesn't mean that if you own one of the vehicles and are ticked off, i know a few people that work at cnbc that own the vehicles, they're not happy. they can go to court and say i'm filing a lawsuit. >> i just looked. i was looking down, the camera caught me looking down. i went on kelly blue book.com, the bible of what your car is worth. i put in a 2012 top of the line passat which i believe would have retailed for $40,000. >> clean diesel. >> tdi with all the options, with low mileage. with the car in excellent condition. do you know what the value is on my car? $12,000. basic -- no one is going to buy one of these cars, are they, phil? >> at the right price they will, of course they will. >> well, at the right price. >> michelle, that's the question. what is the right price? what's the right price? the right price before the scandal was much higher than it is going to be after the
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scandal. >> if you're driving this car, and let's say they got a fix but to phil's point, we haven't seen it. if there's no fix, you can't pass inspection which means your car is illegal and cannot be driven on the roads. so you have -- >> is that true, phil? are they not going to be able to pass inspection? that means it's not drivable. $5,000 isn't enough. >> that's when it gets worked out with the court here. theoretically, remember, the california air resources board is part of this as well. theoretically, they're going to have to have a fix here so that if joe smith is driving one of these vehicles and he sells it to somebody and it's still not in compliance that that person will be able to register that vehicle. that remains to be seen. >> but there are yearly inspections in some states. >> there are yearly inspections. >> whether the standards are the same as those that were applied by the federal government whether they were doing the testing, the standards that the software aimed to defeat, right? >> that what's the whole goal.
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when you drove your car into that bay to get it inspected and plugged computer on it, what this software did, i hate to say this it is rather ingenious in a devious way, is to tweak the emissions to trick the computer to thinking you are cleaner than re. were. so if you need to be clean to pass inspection, not being clean means the opposite. >> it only went into effect when the car was being tested, guys. that's the key here. the rest of the time you're driving it around. it wasn't tricking the car into emitting lower emissions. >> if you can't pass inspection, it's worth zero, right? it's not drivable. >> right. >> michelle, the one caveat here is we don't know if the california air resources board or the epa will say, look, we'll make a special compensation for these vehicles that are impacted here and, therefore, alert all of the motor vehicle departments around the country. there is always that possibility. many doubt that's going to happen. but that's a possibility that's out there. >> all right.
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cool. thank you, phil. we'll be back in two minutes. don't move.
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it's been a very positive day for oil. up $1.65.
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intraday up almost 4%. today, highest levels of the year for oil. we'll take you live to the nymex for the close of trading when "power lunch" continues. you ppremium like clockwork.
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hello, everyone. ash carter calling for gulf states continue to crease military and political support to sunni areas of iraq to defeat isis. he spoke at a joint news conference after a meeting with the secretary-general of the gulf cooperation council in riyadh. russian president putin claiming that russian actions in syria helped prevent the country from disintegrating. the statement came during a speech at the ceremony of presentation of credentials by foreign ambassadors in moscow. >> gop presidential candidate t ted cruz campaigning in hershey, pennsylvania. >> you may have heard there was an election yesterday. as the media are reporting,
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donald trump won his home state. truly a remarkable achievement. >> nasa releasing this footage showing the northern lights from space. the time lapse video shot from the international space station shows the light formations passing across the night side of the planet. the aurora borealis is caused by atomic particles interrupting with the earth's magnetic field. there will be a test on that coming up. that's the news update this hour. back to you. >> our kids would know. >> our kids would know. you're right. you're right, ty. >> thanks, sue. oil market closing for the day. who else but jackie deangelos is there to cover it. >> about a 4% pop in prices to day, brian. just under $43 a barrel. that's for the may contract. we're going to roll over to the june contract. the inventory numbers this morning, they appear bearish. u.s. production going down. that's a bullish sign. also street account reporting headlines that it's possible for another producer meeting in the next coming weeks or potentially
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in the next month. citing iraqis and citing russian oil minister who said on monday that certainly there was a possibility for talks to be on going. so this appears to be something that doesn't have too much umph behind it now. we have to see what happens. certainly added momentum to the market. >> venezuela, wanted the same thing. you're hearing more commentary. >> they're so desperate in every single way. thanks, jackie. >> time now for "street talk," our dive into the recommendations we think you need to know b number one, global payments. gpn, sun trust reiterating a buy. raising the price target by $8 a share. that target goes to $90 from will $82. the deal to buy heartland payment system should be a joyous event. they also boost the next two years of earnings estimates. they see $50 million in cost savings next year, $125 million the next year. also more customer retension. >> stock isn't moving much on. that the next one is interesting. this tl is this big deal between starwood marriott and raymond james cuts it to a market
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perform, basically neutral. shares are reasonably valued. not a message to sell but be careful about buying. that stock is about .5% higher. >> you made your money. now look elsewhere. all right. not good for pennsylvania. look at this one. hershey, bank of america slashing this stock to an underperform basically a sell from a buy. the analyst says there is a lack of catalyst to drive earnings. valuations are also an issue. and apparently there's a sluggish start to the chocolate selling season this year. in part because of price hikes last year. bank of america cutting the target to $92. the stock is at $92.25. they see no upside. there j.p. morgan downgraded hershey back in january and apparently, michelle, because it's been so warm, it was a recent article about a hershey is struggling to ship chocolate. >> i thought it was supposed to be in your hand? >> another upgrade for a big steel stock.
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jeffries boosted it to a buy from a hold. the analyst says that they've already successfully recovered from weak overseas markets and also the turn around in the undervalued european market. that's going to drive the company's price higher in the future. target price was raised to $7 from $6.11. they're expecting a whole 75 cent upside. >> third upgrade for them in three weeks. all right. finally, under the radar name of the day, pennsylvania real estate trust. ticker, pei, not prince edward island. it's a philadelphia based reit. they own several malls. upgrating pei to a buy from a hold. $27 target. they've been selling assets. they've also got the cash to strengthen up their balance sheet. he says the transformation is complete and this company should continue to benefit from favorable supply/demand.
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target, $27 implies about a 19% upside. >> trading at $22.80 right now. higher by .5%. it's up more than 6% for the year so far. >> and a 3.7% dividend yield. >> i love my muscles w that, we wrap up "street talk." it is now time for our other daily segment, "trading nation." today, let's talk about silver which up is 11% this month. a portfolio manager joins us. chad with, silver mshgs of the silver stocks have also done well. are you a buyer of either the commodity or the stock names? >> well, i would be over the next three to six months. but i would emphasize that we believe that as monetary policy over the course of the next nine months becomes more hawkish and the dollar starts to strengthen, then this trade is going to start to unwind rapidly. also, keep in mind that silver has been riding high because of
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fiscal response from china. we believe that global growth is going to see sell rate. so we would be somewhat more bearish when it come to the next 12 to 18 months for silver. for the next three to six months, if you want to trade it for a 5% or of 6% return, be my guest. >> there you go. all right. looking at the charts. the silver charts look good. look in the last couple months here, does it still look good to you? do you agree with chad's view about gains ahead? >> we would agree with chad. this is a nice trade here. very clearly defined reversal of silver's multiyear down turn here. the breakup point was at $16. that $16 is going to act as a level of support. we think the trade is up to $18.50 resistance. that's the real next important level on the upside, brian. >> all right. so fundamentally and technically, they like silver, gentlemen both, thank you. and reminder, everybody, for more trading nation, head to our
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website, tradingnation.cnbc.com. we do two more of those every single day. >> thank you, brian. volkswagen and the united states agreed on diesel compensation, that is for the owners of those affected diesel cards that had the software that tricked the emissions test standards. they're going to get $5,000 each in compensation. let's bring in cnbc contributor bill george. $5,000 for the 600,000 people who own one of these affected cars. they've got a car that lost a lot of value, in many cases a lot more than $5,000. >> right. >> is this a gesture or a solution? >> it's a way to buy them out, try to avoid the big liability suits that are coming. they're going to hope people will take this offer rather than -- >> then not sue or join a class action suit? >> yeah. this is the price you pay for unethical behavior. it's like british petroleum and general motors and the ignition
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switch, if you don't do the right thing in the short term and you capitulate to try to make short term earnings -- >> what do you mean capitulating in the short term? they did this instead of? >> putting in the right emission system. bmw, mercedes put in the right emission system. i talked to them. they're horrified at what happened. just put in the right solution, protect people. meet the standards. >> much more expensive cars, right? >> i got you. but if you try to -- same thing with general motors ignition switch. they knew what to do right. they just didn't do it. >> should v.w. have offered as brian was saying to buy back all of the cars that are on the road? >> that would have cost them a lot more money, yeah. that might bankrupt them. so i think they're just trying to avoid big -- they're scared of u.s. liability suits. they're going to see if you can get people to take the money now as opposed to try to hold out for something. >> they can buy back the cars and presumably resell some of them in countries where the emissions were less stringent. >> a the love the standards are
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different. you have to go through a rework. i wouldn't want to buy them back. i wouldn't want them back. i don't know what i'm getting. so, yes, this is a good step. but it's a short term step to correct what is a much bigger problem. is he going to change the culture? >> the big problem is cheating. >> the big problem is cheating. >> it's a culture. well, you know, i think general motors didn't cheat. they're really working hard to change the culture s mueller going to do that? is he going to let the same culture exist? you either go in and have to really rip out the culture and change it. >> what about the whole idea of incentivizing all the auto industry, right? smaller and smaller cars, smaller and smaller cars? so overall in the industry, we see all kinds of behavior that's trying to offset these demands from government, right? so they make small cars that don't make any money and people don't actually buy very often to offset the big vehicles. there's an overall problem. cheating is not right. but can we acknowledge -- >> they're not incentivizing cheating. >>, no but they're incentivizing
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a lot of behavior that is uneconomic. this is the fallout. >> that's why you need strong leaders at ford. they would stand in there and get it right. he brought the small cars back. previous generation said -- >> but they don't make that much money. they wouldn't do it unless the government insisted on it, right? >> can you make money if you do the right thing from a productivity and from an employee standpoint. can you make money. you know, you're choosing the price of those cars. you don't have to give them away. can you set a good price for your cars, create value like toyota has done with the lexus. >> intel doing a large number of layoffs. 10% of the workforce. what is the problem there? they're not growing enough, are they? >> they're not growing. and they had, you know, they had the sweet spot with, you know, the ramp up of pcs. the customers are not growing. they didn't move fast enough to put growth vehicles in place a long time ago. that's where they failed. and, you know, there is like 50 to 100 great franchises in the world. vw is one of them. is intel being depleted with the layoffs? this is the first of many? they talked about it earlier today. you know, we'll see.
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i think it's a great company. >> can you ut your way to profitability. you can't cut your way to growth. >> you cannot. by the way, in the end, the market is going to pay off for growth. med tronices went through a bad patch. now they're coming back zblchl yahoo salvagablsalvagable? >> no. sell it off. whatever can you get it for. frankly, this shouldn't be a single stock position. if you want to buy alibaba stock, go and buy them. now i agree the rest of it is undervalued. sell it for whatever you can ge move fast. as i said before, it's a wasting asset. >> can anybody else fix it? >> no veshgs eyrizon and aol. they're trying to put -- the people that did it right. it's like what zuckerberg did, he missed out on mobile. he moved so fast to correct it. okay? and they got there with mission impossible. it was too late for her. past the point of no return with all this stuff with jerry lange and all. that. >> or emission impossible. george, thank you. >> thanks. all right. surprising poll results show
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even new yorkers still haven't forgiven wall street for the financial crisis. do the new big banks need new pr and reboot of the brapdinding? that's next on "power lunch." >> and now the latest from trading nation and a word from our sponsor. i asked my dentist if an electric toothbrush was
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i'm never going back to a manual brush.
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new york exit polls show that wall street hurts the economy more than it helps. this despite corporate profits and bonuses on a steep decline s wall street in dire need of a rebranding? probably yes. we have a crisis management expert and author of glass jaw. and bob dylan schneider is founder of dylan schneider group. they were both very negative about wall street hurting the economy. what should wall street do right now? >> well, the answer to that is probably so what? there's a reason why some
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companies and some individuals keep a low profile. and that is because what they do does not lend itself to a big pr campaign. it doesn't lend itself to a better reputation. in the case of wall street, you have people making billions of dollars in ways nobody understands. and it is simply, number two, against human nature to ever feel good about a small elite making a lot of money. wall street -- >> come on. bob, let's pretend wall street is monolithic. do you take his advice and just give up or if they came you to and said here's money, let's help us. >> i didn't say give up. >> you said so what, right? >> well, wall street has done a really bad job in telling its storey. wall street has to find a way to create a coalition of the big banks, of the hedge funds and once doing that, they have to tell a story of jobs they're creating, businesses they're creating sh opportunities they're creating. people are bringing to the marketplace. wall street isn't doing that. wall street also needs to find a
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way to demonstrate that the philanthropy there advancing is really significant. serious people in wall street are giving back a lot. they need to tell that story. >> i don't know, bob. you know, every time they do that, everybody -- the critics will say, yeah, that's because they feel guilty about the money that they make and they're trying to make up for it, you know? >> the biggest issue in the united states today is the 99% versus the 1%. and that's not going to go away. and wall street has got to figure a way to deal with that. otherwise, there are going to be serious, serious problems for that 1%. >> i think it's kind of utopian. i mean, i think the simple fact is never in the history of capitalism have we gotten people to feel good about a small elite making a lot of money. wall street's goal is not to be well loved. that game is fought out in a very, very difficult level. it is fought out in politics and legally and in communities. the thing that a lot of people don't realize about -- that my industry doesn't want you to
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know about reputation management campaigns is most of them fail, fail catastrophically but they make people at the companies that are being advertised feel better about themselves for a while. but i think that this would be an enormous goose egg if anybody ever tried to campaign like this. >> if donald trump has done one thing, he has demonstrated to the american public that there is a huge body of people out there that are angry. and that body of people is going to take its pound of flesh from the politicians, from the regulators, and from wall street. and that's not going to go away. there's going to have to be a come to jesus on this. there has to be a way found to deal with the 99%. in a positive and constructive way. giving them jobs, giving them opportunities. moving people from 99% into the top 1%. that has to be found. >> i feel like there have already been consequences. you said there is going to be a moment where they have to pay. i feel like they pay every day. >> they do pay every day.
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but, look, the opportunities that wall street creates are huge. everybody knows that. everybody watching your show knows that. i think that wall street needs to tell that story. if they don't tell that story, they're leading with their chin and offering themselves up. >> i think a lot of people believe that's what wall street should be doing anyway. they shouldn't be rewarded for it. it's just something that good people are supposed to be doing. and i haven't found in the decades i've been doing this, it's very easy to get people to appreciate a very small elite that makes a fortune. and so the goal really is to avoid being hit as much as they are hit versus trying to come up with the utopian scheme to get people to feel good about an industry they'll never feel good about. >> all right. >> we should feel good about wall street. we should feel good about wall street because if wall street wasn't there, with would have a problem. >> very good point. good discussion. thank you so much, eric and bob. all right, one man's trash
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trash is another man's profitable business. apparently. we'll talk to a man who can recycle anything and make money off of it. don't move. with booking.com's free cancellation, you could just forget the beach wedding... and the beach booty... you could just book a different resort. like in alaska. they've got igloos.
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aurl the products that you're theoretically looking the now are recycled. bags and bottles. things like that. let's talk about the man responsible for this, it is earth week, the guy getting into this, tom zaky. his goal is to recycle everything that is unrecyclable. thomas, thank you very much. >> what makes something recyclable or not is more the techniques of doing it. it's really like aluminum, it off yets is cost of the processing. what we do, we recycle everything from cigarettes, to
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chewing gum. it simply costs more to process this material more than it's worth. the way we make economic sense, we find company, retailers, who foot the bill to make these recyclable. >> i am actually in central new jersey. i know the cost of the garden state close to both of our hearts, how are you able to make money not only in recycling but in a state like new jersey? >> teracycle is all around the world. we collect and recycle 2% to 3% of all america's juice pouches. all of america's pens and so on. it comes from getting funding from conscientious funders. like colgate, l'oreal, png and so on. >> recycling makes good
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environmental sense. it probably makes good moral and ethical sense. does it make economic sensy. >> that's a great question, especially with oil at an all-time low in modern history, recycling is going down. recycling rates for the past 40 years used to be increasing to about recycling one in four soda bottles. in the past four year, traditional recycling has become bad business. doesn't see it as a profitable enterprise. the key to recycling is that you need somebody to fund it, many times the materials itself that you recover won't cover the cost of actually running the platform. it can drive foot traffic to retailers and do other fantastic things but you can't rely solely on the material value that you recover? >> the biggest hurdle to recycling is what, tom?
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>> basically having someone willing to fund it. once you have that in place, basically everything becomes recyclable. there's nothing we've seen, from plastic guns to chewing gum, and dirty diapers. >> tom also doing good work in trenton, new jersey. glad to hear it, tom. appreciate it. >> thanks for having me. did "hamilton" the musical just save hamilton, the man? literally, the cash in your pocket. that's coming up next. ♪ [engine revving] the all-new audi a4 is here.
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go long. ♪ not going away there it is. broadway hit "hamilton" did it save alexander hamilton. the treasury department announcing today that alexander hamilton, one of the founding fathers will stay on the front of the ten dollar bill. without a father who worked harder -- those are the lyrics. i can't remember them all. andrew jackson is off the 20. i think there's no doubt it helped. >> there's so many messages within the musical that are so wonderful about immigrants. about being able to make it in
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america no matter where you're from. and how tough your circumstances. >> founder of the natural system of the country. >> yes, we are so lucky to have alexander hamilton. he's in the middle of the revolutionary war. and reading books of how to create a fiat currency to when he's there, they'll know what to do with it. amazing. >> i'm reading a book about the fed. the fed is now actually our third incarnation of the fed. >> you know what, andrew jackson going away, the people who hated the federal reserve are going to be angry. he hated the federal reserve. there's a secret message in that. >> apparently, jackson may stay on the back. >> on the back side. >> harriet tubman on the front. we haven't seen the mock-up of that. >> i don't know why they can't have multiple people on the bill. >> i would put you on a one
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million dollar bill. >> we'll see you. "closing bell" starts right now. ♪ alexander hamilton waiting in the wings waiting in the wings ♪ welcome to "closing bell" everybody. i'm kelly evans. we've got a big show here at the new york stock exchange. >> and i'm mike santoli. >> yes, alexander hamilton will remain on the ten dollar bill. and harriet tubman will replace andrew jackson on the 20. warning signs, high yielding coca-cola getting hit on the back of others today. >>

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