Skip to main content

tv   Power Lunch  CNBC  April 28, 2016 1:00pm-3:01pm EDT

1:00 pm
new york art show. it's going to go to teenage entrepreneurs in grades 11 and 12. we showed it in miami at the art fair there. it did very well. >> good to have you here always. always great to get your insights. of course, they like the candy machine. >> i hear it going off over there. >> power starts now. ♪ >> well that muse sick very appropriate because today it is all about making a deal, hello, everybody. welcome to "power lunch." i'm brian sullivan with tyler mathisen. melissa is off today. michelle caruso cabrera will join us continuing hir amazing special reports from inside iran. it really is an all acc show today which we love. let's dive right into the deals we got today. you have abbott labs buying st. jude medical for $25 billion. that is the biggy. abbvie is buyingstemcentrix.
1:01 pm
let's bring in michael ye and another health care analyst. michael, first you to. given the deals that we have seen, not just today but in the past, why do you believe a biomarine or vertex may be takeout targets down the line? >> two reasons. one is if you looked at biotech valuations, they're down 35% off the top in the last 6 to 8 months on political rhetoric that we talked about. so asset prices have come down and become a lot more attractive. the second point is that there's no change to the fact that big companies need commercial products and they need pipeline. that's exactly what you're seeing. >> and what will those companies have that make them attractive you to or to potentially bottom? >> les, we can hear you. we'll get to you in a second. >> what makes them potential buyout candidates? >> both vertex and biomerine
1:02 pm
have real revenue. they're out there right now plus pipelines. you get both of those with that. and so both of these companies have asset value to acquirers. >> you know, les, when you look at it, obviously you want to probably own companies that get bought rather than companies that do the buying. do you agree with michael or is there anything else out there that you see as a possibility? >> first of all, in order to do an acquisition, you have to have a willing seller. and i think that a lot of the bioteches are still anchored to the two week highs. i'm not sure it's going to be that much activity in that sector. i think what you saw was st. jude and abbot today was a med tech and others have not participated in the m & a sweepstakes. i think that sector in particular is due for a catchup. and i'd say med tech in, particular because of the fundamentals are doing so well,
1:03 pm
we own boston scientific and edwards which have done well this week and the hospital stocks which benefit from utilization increases. i think you're going to see more consolidation there. towards the end of the year, i think reality may sink in with the bioteches and you might start to see more deal activity in that sector as well. >> but les, even though some of the companies may be richly valued, when you look at a deal like santa fe now cross border hostile for medevation, it looks like they're willing to pay up for companies they want. do you think that company wouldn't be a willing seller at the right price and that they wobbling to pay that price? >> you know, a lot of the larger pharmas are desperate for pipeline. to michael's point, they need products. and so they're one of them. astrozenica. they'll pay up. i'm not sure overpaying for an
1:04 pm
asset is a great strategy. you can wind up in a lot of trouble. so, yes, it will happen. but i think it will happen in a strategic way, not in a sort of stampede way. >> michael, when you look out there in your coverage universe, you gave us some names you think could be takeout candidates. we appreciate that. is there one name out there that may not be a takeout candidate but you're watching them closely now and saying, hey, down the line, they're going to be really, really valuable? >> yeah. so we would say kite another one. kite has phase three cancer assets in the pipeline. and they're hanging out there, too. it's a pretty hot mid cap stock that we have a buy rating on. so that's another one. so they have a deal with amgen. amgen talked about the fact that they're looking at things, biogen just last week said they're looking at a lot of assets. so the point is that bigger companies are saying they're looking at these assets.
1:05 pm
i it this bid spread is coming together. >> michael yee and les from esquared, good concrete ideas. we appreciate it. >> all right. >> thank you. >> meanwhile, more on the other big deals today in just a moment. first, some news in the bond market. seven year notes up for auction. how is it going, rick? >> i'll tell you, you put two central banks behind you, three including the ecb, you push yields down. you have everybody jump in long yesterday after the fed statement. you talk about the perfect landscape. this was an a. i almost gave it an a plus. this auction, they were just dying for these seven years. let's go through it. final of will 88 billion in supply today. 1.634. looked to me like 1.645. this was strong. bid to cover, 2.65. way above the 2.47 auction
1:06 pm
average and the best since february of '14. 65.5 at indirects. if you take out the three that we added in january at 69.4, this would be the best read going back to '09. if you 14.2, up 13. they take 20% are of the auction. if you look at all the charts, whether it's the sevens, twos, fives, tens, or 30s, the auction is behind us. this one went great and all yields are moving down a bit. >> thank you. let's get to the other big deal story today and that would involve cnbc's parent comcast. they are buying dreamworks animation. dreamworks at $39.98, up $7. comcast, moving higher as well. up a third of a percent. we have details live from l.a. hi, julia. >> hi, tyler.
1:07 pm
investors are certainly bullish on this deal for dreamworks animation. comcast shares budged slightly. the analysts say a deal helps comcast get established brands, greater presence in china and better exposure through digital. i spoke to nbc universal ceo about why he is paying $41 a share, a hefty premium over the $27 a share that the stock closed at on monday. he said that the deal will bolster the studio's animation business, building on the success of the franchise and plus assets such as "shrek" and kungfu panda will help the theme park divisions. it shouldn't be valued on assets and cash alone but should take into account the synergies. because of that poshs of integrating the acquisition into nbc used assets, burke says it makes sense to shift into a consulting role and focus on the digitsal division. a number of media industry
1:08 pm
insiders compared thl tis dea disney's marvel, pixar and lucas film accusations and bob eger's strategy of building and buying big family friendly brands to exploit across multiple platforms. as for what this means for other m & a, this deal bodes well for the valuations of lions gate and viacom's paramount. brian? >> all right. thank you very much. the push for electric vehicles is in full force, even in china. but plugging in can be, shall we say, baa bit of a challenge, especially for those living in high-rises. here is phil lebeau. >> how tough is it to own an electric vehicle in china? check this out. this is parked outside an apartment building. they have to run this cord to e recharge it every night across the street, up the cord yaurtya
1:09 pm
their apartment building and up here and goes up to the third floor. that's what they have to do every night in order to recharge their electric vehicle. >> that is dedication. speaking of dedicated, phil lebeau left beijing but joins us now from the chinese city of shen zen. i bet that plays out all over the city. >> it does. and we were surprised when we first heard about. this somebody said, look, there is somebody that has a stretch of cord 100 feet to charge in their electric vehicle. but that's one of the challenges here in china. that said, we're seeing growth pick up here in china when it comes to electric vehicles. sales last year outpaced the u.s. $188,000 electric vehicles sold in this country. the goal is to have 10% of all vehicles in this country be electric. that is by the new sales by 2020. byd is the largest maker in this country. last year sales totaled 62,000. one reason sales are picking up,
1:10 pm
first of all, the federal government here as well as local governments give incentives that start at $8500. those go direct to the buyer. also, the buyers get the vehicle licenses quicker, immediately. they don't have to wait for the auction or some type of lottery in order to get the vehicle licensed. however, the challenge which we just showed you is finding a place to plug in every night. >> chinese consumers generally live in large apartment complexes, not in stand alone homes where they can more easily have a charging solution. so one of the problems is where do you charge it? >> are there teslas in china? did you see many teslas? yes, we've been driving around, we have seen teslas more in beijing than down here in schenn zen. we went to a super charger network station for tesla and there were a line of teslas
1:11 pm
recharging. there were people waiting to go in and charge up their tes l.a. keep in mibld, tesla's imported in here so there is a hefty tax on them. that's limb ilimited their sale far. >> great stuff about chivenlt 1:00 in the morning, there phil. we know you've been working ultra long days. we appreciate it. really cool stuff. thank you, buddy. appreciate it. we're just getting started on "power lunch." coming up, this is big and exclusive with billionaire investor carl icahn. lots to talk about with him. scott is going to join us. going to be a big free for all. no topic off-limits. plus, more on the big nothing out of japan. trust us, that nothing is really something. but first, we're headed back to iran where michelle caruso cabrera continues her series of amazing reports from that country. >> thank you. last hour i showed you how they trade stocks in iran. wait until you see how they trade gold. coming up right after this break
1:12 pm
on "power lunch."
1:13 pm
1:14 pm
gold futures are trading higher here in new york. but in iran, the gold trade is a completely different story. let's get to michelle caruso ka br cabrera who is live on the ground in tehran for us. michelle? >> hey there, yeah, if you go to the bazaar here in tehran, you'll see this, hundreds of gold traders out in the main
1:15 pm
square doing open outcry to exchange gold. who needs an exchange? very similar to say the button wood tree the way wall street trading got started in new york. now that may look very old school but there are a lot of people who think the iranian economy is changing and for the better. in fact, we have run into exiles who's family left as a result of the islamic revolution in 1979, they're thinking of coming back to iran because they think the economy is changing. al this man is an economist. he was raised in france when his family went into exile in the 1980s. he made sure he was on the very first air france flight that took off from pair tois tehran. the first one in eight years. it occurred because the sanctions had been lifted and that flight was only about two weeks ago. he said he was very, very excited. he got on that flight because he believes this is an historic time for iran.
1:16 pm
>> you can feel it. i just came from paris, france, with the first air france flight to tehran after eight years. and when i entered the flight, i was feeling the excitement of the people. >> it's not just because the nuclear deal. it's also because under the president, the president here laz made it a point that he wants to enlarge the private sector. this is an economy that still has deep, deep intervention by the government. but he wants to change that. however, he says he still has one very big concern. >> this corruption which is unfortunate system is a very, very significant constraint to the development of the country. and i think the government of iran, the current one, is very much aware of this issue of governments, of corruption. and they're trying to solve.
1:17 pm
that but this is a very difficult problem. it's going to take time. >> it is an incredibly difficult problem, especially when there are vested interests. that's where a lot of corruption comes from. we'll have to see if iran really is changing. but there is hope. back to you. >> michelle, you have explored every facet of the economy there. i know we'll get a little more from you a little later on. michelle caruso cabrera in take ra tehran. why ford shares are in overdrive right now, kusht currently up 3. full details when "power lunch" returns.
1:18 pm
1:19 pm
1:20 pm
welcome back to "power lunch." marriott adjusted profit of 87 cents per share, three cents above estimates. revenue at the company beat forecasts. ford beating estimates, revenue below forecast. the automaker saw record profit margins globally and in north america. and mastercard reporting profit that declined year over year but less than the street expected. customers are spending more using its cards and mastercard is ramping up spending on technology, did so less than expected. over to you. >> thank you. last month a security lapse in the bank of bangladesh led to an $81 million theft from an
1:21 pm
account at the new york fed. now a fed official says there's little the u.s. central bank can do to prevent something like that from happening again. alarming words. we have the story live from washington. >> the new york fed official told steve liesman and i that fed is taking this issue very seriously and that cybersecurity at the banks around the world that fed tranacts with is critical to the system. what happened in february is crooks got into the computer system and authorized transfers of nearly a billion dollars out of the bank's account. systems blocked some of the transfers but released $81 million to accounts in the philippines and slee lafrpga. some was sent on to casinos in the philippines and converted to chips on the gaming table there's. authorities don't have any idea who stole all of that money. now despite that heist, the fed official told us that the fed has no control over
1:22 pm
cybersecurity at the global banks that it does business with around the world. and that means there's potentially an enormous amount of money at risk here. now as many as 250 central banks and entities around the world have accounts at the new york fed totaling $3 trillion in assets, roughly $80 billion is wired into and out of those accounts every day, the official said. now that staggering pool of munn represents a rich and tepting target for cyber thieves. but if cyber thieves strike, it doesn't have to tell anyone about it. the official said there is no law or regulation that requires the fed to reveal the heists have occurred. steve liesman and i asked if there are other cyber thefts like at the bank of bangladesh and the official replied that there have been none in a central bank context. but the official and a fed spokesperson declined to respond to several questions about whether accounts at private banks at the new york fed have ever been victimized. back to you. >> so lots of questions arise here. sounds like there may have been other incursions into the fed
1:23 pm
one way or another. >> they don't know. >> but why -- we began the piece by saying they can't guarantee the security or that won't happen again. >> right. >> why aren't they taking steps to make sure it doesn't? i assume they must be. >> this is the global nature of this problem. they say they can't tell us any specific steps they've taken for security reasons. they also say they're ham strung by the global nature of this. the fed has that $3 trillion pot of money in new york. but the global bafnks don't hav operational control over the cybersecurity at other global central banks. and that's the key issue here. that seems to be what happened in the bank of bangladesh. someone got into their systems and then withdrew the money out of the new york fed account. >> it is just me? i know we're highlighting the story. it is 23 minutes after the hour. i think if there was somebody
1:24 pm
literally walking around inside of ft. knox that it would be this gigantic story. i feel because this is happening on computers, but effectively the same thing is going on, there is a crook literally walking around the hallway, if you were, it kind of gets pushed down a little bit. >> yeah. >> you're an a block kind of guy. >> look, what we're so used to all the hacks happening and all the news, it all blends together. but remember what the thieves tried to do here. they tried to steal a billion dollars. >> exactly! >> who can carry a billion dollars out of ft. knox. it would take up too much space. >> national news headlines, whatever is a couple million dollars at the time. we're talking about a billion bucks. but because this is on a computer, it seems to happen so much, i feel like it's not us or you, it's sort of as a country or a world we've become so sanguine so to what is true
1:25 pm
monumental crime. >> $80 billion is being wired back and forth on every single average day. that is a lot of money in motion right now. it's a lot of big hugearget for cyber thieves. >> the goal is to get a billion. this ended up getting $81 million. you say that security systems caught the others, i guess. >> yeah. and we don't know exactly what happened there. the new york fed is not providing any details about what happened. there is a member of congress opt hill in washington who sent letters to the new york fed asking why some of the transactions were approved and others were not. it may be something as simple as a spelling error in the electronic file that requested the transfer. the other question here is why aren't there human beings involved in the transactions? why is there completely electronic transaction here? there is simply so much money moving in the global economy, xrupt human beings process this every day. it's that much money. >> another check on gold price wlz they're sold at the button
1:26 pm
wood tree in eiran or whenever, up $16, almost $17. $1268 even. that is your gold check. look at silver, copper, platinum and palladium. all higher as well with copper the lagger there, up just .25%. others up more than 1% in the case of silver, palladium and platinum. big scandal at price line. we'll tell what you the controversy is that led to the resignation of the company's ceo. "power lunch" returns.
1:27 pm
1:28 pm
1:29 pm
hi, everybody. here is your cnbc news update this hour. a u.s. attorney reporting three people connected to the shooter farouk have been arrested on conspiracy, marriage fraud and false statement charges. one of them was farouk's brother. the attack last december left 14 people dead and 22 wounded. syrian rubbles blaming russia for the deadly air strikes over the last 24 hours, one of them hitting a pediatric hospital. rush yashgs however, says it was not behind the strikes which killed at least 61 people in the city of olepo in the last 24
1:30 pm
hours. >> the united nations urging north korea today to stop further provocative actions after reports it test fired two intermediate range ballistic missiles. they were detected by the u.s. last night. they pose nod threat to north america. take a look aat. this a bird strike leaving a large dent on a jetliner's nose. the dallas bound flight returned to seattle shortly after takeoff and landed safely. luckily no injuries except to the bird, of course. brian? back to you. >> guessing the bird did not have his happy outcome? just a wild speculation on my part. thank you very much. >> sure. >> all right. the bank of japan surprisingly investors by doing nothing. they did not raise rates. they did not make any additional stimulus moves. seema is here to tell us that this big nothing is actually something. >> it is. well, here's what he did. he overpromised and underdelivered which we know is never good for markets.
1:31 pm
expectations have been building ahead to have day's meeting. some economists forecasting a larger stimulus program, more negative rates, expansion of the pulled assets. he had been quoted over the past couple of weeks saying he's been watching the strengthening of the yen and is looking at further options. today's meeting came and we got no action raising the question as to whether it's simply run out of options are still trying to work out the negative rates. the yen strengthening to a 17 month high. japanese stocks selling off. dhoenlt like a strengthening currency. they're now off about 12.4% year to date. there is now an active discussion around whether central banks are losing credibility and also whether they're misguiding markets. remember, china was blamed for doing this earlier this year. now japan seems to be throwing a curve ball y does this matter? it's been a large monetary policy experiment for the world.
1:32 pm
japan, 25 deflationary trap. growth has been slowing despite the massive measures. still w have not seen the turn around in japan's economy. that's a big concern now. we're expecting both action and summer. we'll see if we get it. >> the big nothing something. also a big hair cut. a lot of the japanese companies do trade here. look at. that honda down 3%. toyota down. those are the sthookz trade here. if you export out of japan, a stronger yen is your worst nightmare. >> japan is an economy that is heavily relinlt on exports, sefkly tsefk specifically the automotive industry. >> thank you. >> thank you, brian. >> so how does the boj decision impact stocks and bonds? let's bring in a fund manager aeven a cnbc contributor. gene, i'll start with you.
1:33 pm
the market acted surprised in january when the bank of japan first went to a negative bank deposit rate. they're surprised again today. is japan just not as good at job owning the market as the fed is now? >> i think what we have here is a situation where central banks, since the g-20 in february and shanghai are trying to lean less heavily on the currency devaluation lever in order to stimulate economies. and so investors expectations were too high that japan was going to go into further negative interest rate territory today. >> jack, when you look at the performance in the u.s. markets, the futures looked incredibly grim on the back of asia still being open and europe trading down. europe closed well off the lows. s&p 500 at this point is not even down one point. did we actually avoid chaos because the bank of japan held off this time? >> believe it or not, it was good news in some regards. remember, everybody was looking
1:34 pm
at what the bank of japan was doing over the course of the last couple months. and wonldering eriwondering if desperation. people are calling negative interest rates ludicrous. for them to continue to go down that path right now without letting all of that work through their economy, it would be the wrong move. the fact that they did nothing is actually, i think, looked upon favorably. what you saw happen, by the way, is that relative value trade. everything got dragged down right off of that news. but then when people realize that maybe just maybe this is not all that bad, we saw everything start to come back. now the flip side to that is that you could see that june rate hike back on the table now. and it could be a reason why you could see a bid back in the dollar which may not be good for stocks. >> gene, i'm curious this vote for the bank of japan, it was not split whatsoever. it was 8-1. they did take down the inflation estimates for the year. they said they wanted to study the effect of negative interest rates. if that decision had to be made
1:35 pm
today, what do you think the effect would have been? >> well, look, i think what they learned in january is that there is a pretty disruptive impact of implementing negative rates. what you have now is a situation where japanese bond investors are absolutely in a position where yields are negative. there is not a lot of income to be found. now you don't even have the central bank, at least today, add ago decisional qe to push up prices. you can't even play the hot potato game of pushing prices higher at negative yields. so it leaves them in a very challenging situation. and frankly, the answer is to invest elsewhere, to look for places where high quality bonds still have reasonably attractive yields and that does push you into the u.s., frankly. >> gene, where would the places be? >> i think the corporate bond market is going to be very well supported. particularly the investment grade space. we've seen a lot of flows coming from asia and there are still attractive risk premiums that flows are going to push tighter. >> all right.
1:36 pm
we'll see whether there does put any pressure on the fed in june. gene and jack, we appreciate your time today. >> thank you. all right. let's go to the bond market and rick santelli who is tracking the action at the cme. seven year auction earlier this hour. >> it was a solid auction. a for apple auction. look at intraday of seven. yields dropped at 1:00 eastern. it wasn't only sevens. two year yields dropped. let's go right on the curve, 30-year yields dropped. maybe the most significant issue today is an extension of that last conversation regarding the bank of japan. they didn't fail to deliver. they failed to deliver and add the policy that wasn't delivering. it's a good thing. let the market simmer. they have many more issues to deal with. now if we look at a one week dollar index, look at that drift. if you look at one week of the dollar, yeah, maybe that is the most significant chart of all. we're dabbling with the 107 handle. we're not far away from a close that would challenge the close
1:37 pm
on the 11th to be the lowest close since october of 14. you want to watch that dollar index. it could be next week's wood for a big equity fire to the upside. tyler, back to you. >> all right. rick, thank you very much. minutes from now, a "power lunch" exclusive with a billionaire investor carl icahn. but first, michelle caruso cabrera will report for us again from iran. >> behind this door is one of greatest modern art collections in the entire world. it is rarely seen. but coming up after this break, you're going to get to see it.
1:38 pm
1:39 pm
welcome back to "power lunch." i'm live in tehran, iran. even though iran and the united states have agreed to a nuclear deal recently, there is still a lot of anti-american sent. that is very visible in artistic works around the city. take, for example this very large poster that hangs next to
1:40 pm
a busy thorough fair in central tehran. on the right you'll see president obama, on the left you'll see what is called shem. he is an enemy of shia islam, that is the kind of islam practiced here in iran. the message is don't trust obama because he is like shem. there is another painting on the wall that's been here for decades. it says down with the usa and there are skulls where the stars would be in the american flag. and then we go to the u.s. embassy which was the flash point which ended iran and u.s. relations. that is where the u.s. hostage crisis took place. it's now a museum and there are two statues in front of it that the iraqis put there to commemorate the hostage crisis. one is the hostages with hands in surrender above his head and the other statue is the statue of liberty with a prison cell in her stomach and a dove inside. there the hostage crisis is connected to the next story that i'm going to show you. as a result of the islamic
1:41 pm
revolution, the shaw had fled iran. he was the previous leader of the country and he had taken exile in the united states. students took over that u.s. embassy and took hostages because they wanted the u.s. to return the shah to iran. that didn't happen. when the shah fled along with his life, they left behind an incredible treasure. the tehran museum of con contemporary art sits on a busy street. the spiral inside might remind youst guggenheim in new york. it leads to the museum's basement which holds a secret treasure. behind this door, one of the greatest collections of modern art in the entire world. rows and rows of paintings hidden away. the pieces were collected in the late '70s by the queen. wife of the shah of iran.
1:42 pm
when the islamic revolution swept the kun friday in 1979, she and the shah escaped. the great works of art stayed behind. the collection has been kept in the basement since 1979. it's not clear why. believed to be the most valuable in the collection, this painting worth $400 million. the cnbc team was allowed in but we were only permitted to take photos with our phones. and nbc bureau chief and correspondent shot a story here eight years ago. we believe it may be some of the only video that exists. the manager tells us there are between 1500 and 1600 pieces in the collection. there is no public catalog. now the museum displays only one at a time, currently it's this painting. however, you can buy postcards of most of the works that you cannot see. there is only one piece that is known to have left the collection and it is owned by hedge fund manager steve cohen.
1:43 pm
he didn't buy it from the iranians. he bought it in 2006 from david geffin. he bought it from an art dealer who did a bart we are the iranians. that dealer managed to get crucial pieces of leafs from the book of kings, very important document in the history of iran and he did a barter with the iranian government, two planes meeting on a runway in switzerland is how they did the handoff. pretty incredible story. it felt indecreedible to go down and see those works of art. >> that's an amazing piece, michelle. really fascinating that so much and a half is still there. that is hard to believe. >> it truly amazing. everything you've been doing is spectacular. i know it was a world of trouble to get any of this stuff on camera. what was the sense down stairs when you walked down, you know these artists, what was your first reaction? oh, my god. this is the met. >> you're right. it's like a mini met in the
1:44 pm
basement. it was incredibly exciting to be able to see it. they think -- we think they actually may get seen by the public in the next year because there are reports that there are museums in germany negotiating with the iranian government to take some of those pieces and put them on display. if they do put it on display, it would be huge. it would be first time they were seen by the world in decades. it may signal bigger things about what may or may not be happening here politically and economically in iran. >> thank you very much. reporting from tehran. >> florida governor rick scott says forget california. come to florida. how he plans to steal business from the golden state. he stops by to tell us. don't go anywhere. sic plays thr♪ the first stock index was created over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals.
1:45 pm
and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks. every auto insurance policy has a number. but not every insurance company understands the life behind it. those who have served our nation. have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life. 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
1:46 pm
on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t. man 1:man 2: i am. woman: ex-military? man 2: four tours. woman: you worked with computers? man 2: that's classified, ma'am. man 1: but you're job was network security? man 2: that's classified, sir. woman: let's cut to the chase, here... man 1: what's you're assessment of our security? man 2: [ gasps ] porous. woman: porous? man 2: the old solutions aren't working. man 2: the world has changed. man 1: meaning? man 2: it's not just security. it's defense. it's not just security. it's defense. bae systems.
1:47 pm
natasha stewart was famous for physical assets but when they worked with tracy lyn garner to sell illegal butt injections, the back room procedure cost a woman her life. >> she exploited a model for money by referring her to tracy lyn garner, a provider of the
1:48 pm
illegal silicone injections. ? this case came down to two people who planned, two people who plotted eastern they were all about making a profit. >> investigators believe that garner is performed the same injections on other women. so attorney general jim hood makes a public plea for victims or their families to come forward. >> maybe the procedure done on other people and didn't kill them. i suspect there were more here in the jackson, mississippi area. >> cautionary tale that back room cosmetic procedures can have devastating results. more deadly tales from the cosmetic surgery underground on an all new episode of "american greed" tonight at 10:00 p.m. eastern and pacific on cnbc. arguably the first and hopefully the last time the phrase back room butt injections will ever be used. >> let's hope so. >> on cnbc. >> you did it brilliantly, my friend. >> her upper lip was quivering. >> you could see it. >> let's move on to more mundane
1:49 pm
topics. >> not really. that's not mundane. >>, no you got that right. ceo scandal rocking the price line group. the ceo there darren houston stepping down today after an investigation revealed his relationship with another priceline employee. actions out of bounds under the company's code of conduct. so where does priceline go from here? we're joined by dean ted snyder of the yale school of management and anthony deangelo from syracuse university's newhouse school of public communication. dean, let me ask you first, is this a case where the company in a textbook fashion handled a problem and i say that because they seem to dispose of the problem before we knew there was a problem. >> probably textbook, yes. everybody is in favor of finding love. but it's got to be found in the
1:50 pm
right place. a relationship between a ceo and employee is typically not the right place. it tends to be corrosive for three reasons. one is the other party is an employee. and how corrosive depends on where that employee is and i don't know the facts here. but that is typically an issue. >> is it always out of bounds then for a ceo to have a close or maybe romantic relationship with anyone in the company? or it is just bad practice? >> it's not -- it is a bad practice. i think, you know, it's aggravated if there are company resources involved. it's aggravated if the person is a direct report. but i think the only way it's going to fly is if a ceo goes to his team and goes to the board and says, listen, i found love.
1:51 pm
and discloses it because otherwise, it's just going to be a lie after a lie, hiding, hiding, hiding. >> actually, you know, ted, it's interesting you said direct report. our story said it. i don't want to knock our own storey. they said well this person was not a direct report. if you're the ceo, everybody is a report. right? they may not be directly, you know, suborder nant reporting you to but you can't distinguish. everybody works for you. >> that's why it's typically out of bounds. and that's the thing. if you're the ceo, even though ceos work long hours and they're around people close by and further down in the organization, you really have to find love somewhere else. but if you end up in a relationship with somebody inside the company, the right thing to do is to then take it to the board, take it to your
1:52 pm
team. don't hide it. because you probably got a company policy in place that says it's not right for other folks. >> professor, i want to bring you in. did priceline handle this the right way in -- from a communications public relations standard? and what does the company need to do now in the aftermath of this? >> yes. i would second what the dean said in terms of them first of all, they had a code of conduct in place. that code of conduct was parentally violated by the ceo and they moved very quickly. clients that i've counselled in the past, my advice is typically easy to say, hard to do which is rip the band-aid off. it looks like thafr done that. as a next step, a question that i would have if i were a shareholder of priceline, is there bench strength? is there couldn't neutral now in the plan? and they brought this their chair, the former ceo, jeffrey
1:53 pm
boyd, to man the ship at this point. so it looks like there is continuity. and i think as a result they bought themselves some breathing room. >> professor, does the fact they brought back the old guy tell you that their bench may not than strong? >> not necessarily. i think that that's an immediate move and so that's understood. it's also, i think understood that this is an interim arrangement. the next step will be what is the plan going forward? and they will be called to task on that. >> ted snyder, answer brian's question, do you see that as a strength or weakness or neutral that they brought back the old guy? good thought. >> yeah. i'd have to go with the professor. i think it's neutral. it's an interim step. and we'll see how it goes. but the right -- it was clearly the right thing to do and then you've got to figure out the next step in terms of
1:54 pm
leadership. >> syracuse and yale did very well in the ncaa tournament this is year, didn't they, brian? >> well, the nakt yale mafact te it was very good. >> and syracuse beat virginia in an epic come back. >> we did. >> and he's a cavalier, he's weeping. >> thank you very much. all right n a few minutes from now, a "power lunch" exclusive. carl icahn will be here. stick with us. what are you doing right now?
1:55 pm
1:56 pm
making a cake! ayla reminds me of like a master chef and emiana reminds me of like a monster chef. uh oh. i don't see cake, i just see mess. it's like awful. it feels like i am not actually cleaning it up what's that make mommy do? (doorbell) what's that? swiffer wetjet. so much stuff coming up. this is amazing woah. wow. now i feel more like making a mess is part of growing up. stop cleaning. start swiffering.
1:57 pm
welcome back to "power lunch." we're watching shares of hanes brands. they're the second best performing stock in the s&p 500. this on the heels of an announcement it purchased pacific brands which is the biggest maker of underwear in australia for about will $800 million u.s. so those particular bits of news helping to send the shares higher to be the second best performing stock in the s&p 500 and what is interesting about this as well, hanesbrand, one of the few existing s&p 500 companies right now that has outperformed facebook since facebook went public back in 2012. so as interesting look. now let's get a check of the broader markets overall.
1:58 pm
we'll head to the floor of the new york stock exchange. bob pisani is standing by with a look at the markets. >> thanks very much, dominick much the important thing about today is we started off a down side, disappointment over the bank of japan's lack of stimulus. we have briefly gone positive at the s&p 500. we opened down about 10 points. the low was right at the open. you can see we moved into positive territory briefly. down negative and now also positive. social immediate yashgs the key about today, facebook and relief on facebook really helping the overall markets. you can see up 7%. we'll get linked in tonight. they issued a very disappointing earnings outlook a few months ago sparking a big decline. we'll see if they come up with positive commentary after the close here. sectors to day, a number have gone positive. health care, consumer staples and in particular, notice energy has gone positive as oil's moved into positive territory today. now we have -- we're starting to get some energy stocks. conoco phillips came in a much
1:59 pm
smaller loss than expected here. they did reduce the capital spending. the stock up is 2% now. you see that big move. almost 50% from the february bottom. so energy stocks have had a significant come back. we're going to be hearing in the next couple days exxonmobil and chevron as well thursday and friday. and we'll see exactly what they have to say, of course, everybody is making sure that that dividend is safe for both of those companies. tyler, back to you. >> thank you very much. it's coming up on 2:00 p.m. on wall street. and this hour we're going to be joined by two big guests, steve mcmillan, chairman and ceo of homelogic and billionaire and investor carl icahn. scott has covered carl icahn for years on cnbc. he joins us as well. >> good to be here. >> we're going to begin plchlt eye can is going to phone in we're told, or we're going to call him back and bring him in to talk about his investments and more in this political season, i'm sure. but first, let's get to steve and brian and wholeogic.
2:00 pm
>> one reason he is joining us in addition to his relationship with scott sbauz of the relationship to the guy to my left who is steve mcmillan. he is the ceo of hologic. what do they have to do with carl icahn? >> a lot. >> he took a big stake in your company. i guess some of the board got replaced. >> yes. >> you came onboard. carl is leaving the board ammicbly and they call it -- what do they call it? an activist that -- a nice activist situation? >> there you go. >> a ceo's dream. >> he's not on the phone yet. >> tell us about your experience with carl icahn. what exactly did he bring? what happened behind the scenes? >> sure. as you know with hologic, there was a troubled history that overpaid for a couple acquisitions. and i think this is one of those true cases where he provided a
2:01 pm
shot. and it precipitated a change that board brought me in. actually the board and his two people on the board actually ended up working very well together. and you think about in turn arounds, so many things you want to do is change the culture. i would tell you by having him involved, it made it that much more apparent to everybody, the board all the way through the employees that we needed to change. >>, no but i mean take us inside, steve. in that board room when mr. carl icahn sits there -- he is a very plain spoken guy. scott knows. >> a the love people think it's a nightmare, not a dream. >> what did he do and say? did he bust throughout doors this company sucks? >> he started with. that but the first time i met with him and most of the time my meetings with him are outside the board room. they were in his office, at his apartme apartment, whatever. just good plain spoken what's going on. and not just to focus on the next quarter or. two i it this biggest surprise and the board room, the very first board meeting they were in
2:02 pm
we were focused on quarterly issues and his representatives said, look, who cares about this quarter or next quarter? how do we create value? and i that i is truly a wear the shed moment and was unexpected relative to what everybody thinks about the short term focus of the activist. >> did he push to do things you knew you needed to do? things you didn't want to do? or -- >> the best part i found with carl is he had a very clear point of view. i also had a different point of view that is different from him and he list ebbelistened. he wanted to break the company up and cut costs. we needed to accelerate our top line and invest in the business. what i found from the very outset where it started out kpative, he listened from the outsaid. he gave me the latitude to pursue my plan. he said, okay, you think you got a different plan. if it works, great, i'm behind you. by the way, i'm going to be
2:03 pm
watching. and the great part was by the second quarter i was there we started to get it turned around. and he changed his thesis. and then started to really support the direction. so i think instead of coming in with a formula, what i found best part of dealing with him was he was willing to say, yes. hey, if you you have a better plan and it works, great. and he got totally behind it. >> and i know we're going to talk a lot more about that. in fact, i know we have carl icahn now with us on the phone. carl, you're. there welcome to "power lunch." thanks for being here. >> okay. good to talk you to. >> you as well. as it always s we'll get back to the hologic story in a moment. i want to ask you if i could about what has been undoubtedly the biggest market story this week and that is the aftermath of apple's earnings, the impact of the earnings on the stock, the way it sold off so dramatically, carl. you said in a filing in february that you had cut your position in apple. you haven't said anything since.
2:04 pm
i along with so many others in the market have been wandering what the status of your position is, frankly if, you're even still in apple. can you tell us today what your position in apple is, if you even still have one? >> yeah. i figured you'd start by asking me that. and we no longer have a position in apple. to start, i think tim cook did a great job. i have a great relation with him. i called him this morning to tell him that and he was a little sorry, obviously. but i told him i think it's a great company. and, again, just you find in this world an economy, great ceos, steve mcmillan on this call did a great job for us. tim did a great job. the issue with apple is we were
2:05 pm
in it for about three years. i mean we are short term oriented and we were it in and we liked it a great deal. i put thought tweet 2 1/2 years ago. if you bought the stock then, figure you made 48% or 50% return in the 2 1/2 years. we obviously made a great deal of money. but it was sort of no surprise that we got out of some outside of february. we have to put the 13 on the up side. and we will be putting in the stock. it's not like we sold it higher than the public has a chance to sell it. i mean we sold it and take a point or two right here with the market today. >> i think you mentioned tim cook. not sure what he may be thinking
2:06 pm
at this very moment. i think a lot of people may be wondering how a stock like this goes from a no-brainer at one point with a price target you saw as realistic of $240 or so to being completely out of it in what i think is fair to say a relatively shorter period of time than maybe people expected. how do you get from that point? how does it go from no-brainer to now? >> i will tell you this. what i like to buy and have done successfully is one, buy what i call no brain we are a risk reward is greatly in your favor. where you almost -- i know this is anti-intuitive and it's very hard to follow is, but almost hope what you buy a stock it's going to go lower. if you don't have to worry about short term, which we don't, we kept our stocks. if you look at our whole portfolio over the years, 7 1/2 year average which is huge, we
2:07 pm
don't look at the short term orientation that everybody sort of says the activist does. one of the problems with the hedge fund it is forces a short term orientation. you have to worry that money will be pulled out. we don't worry about that. so we look at the big picture. in april toll day as opposed to six months to a year ago, in this one, there is no need for activism assuming you can even do it. in this one, they worry a little bit and maybe more than a little about trying attitude and what you've been seeing. they give it to china and they give them a great many jobs. they assemble in china. you hope there won't be a problem. but they do make a great deal of
2:08 pm
money from china. so it's not the no brain wert kind of thing instiktively you love whether you see an investment. >> so you're saying, though, that you're worried about what's going none china and the impact it could have on apple. i thinkmade $2 million in the stock. we wonder if apple's best days are behind it. is that what you're thinking as well and wondering today as you get out of the stock? >>, >> no, i'm not, scott. i think apple has, which we said all along, great barriers to entrance. you can't go into that business unless you're like samsung which is really like a country backing it. a lot of people tried, a lot of people failed. you cannot get into that position unless in china, for instance, they will come in and make it very difficult for apple to sell there.
2:09 pm
they could theoretically, you know. they're basically in some instances, perhaps benevolent. i don't know if benevolent is the right word. so you can do pretty much what you want there. but what i'm saying is, and i believe china is a great turn around story in itself, but that is the risk that -- can you look ahead and you might see three, four, five months at all and china and apple, a great together and then it becomes a no-brainer again. because i am not worried about barriers to entrance. i think they're a great company. one of the greatest our economy has seen. >> forgive me for interrupting, carl. tyler mathisen here. so is china and your worries about the longevity of its success there and maybe government interference or is that the main reason you're -- you sold or are there others?
2:10 pm
when you make the kind of return, you look at it and, obviously, when the stock is this much higher that when i said it was a no-brainer, that means it's a no brain are by definition, right? the company is not selling -- you know sh it's gone up a great deal. so i'm a little against it. but the real thing i worry about, tyler, is the relationship. and i really don't know bmuch about that relationship. that makes it difficult for me. i think you'd have to speak more to tim about his views of that. and i think he would probably -- i'm not going to speak for him. i don't think he's quite that concerned about it. but being that said, the one
2:11 pm
hand we have this huge profit so by definition, it's not the no-brainer it was. but, two, if china was basically steadied, i would probably go back into it. i mean it's not something that i feel is anything wrong with the basic company or its management. >> mr. carl icahn, thank you for joining us. i want to follow up on that point exactly. i know you bought -- i don't know the entry point originally, i know around may of 2014 you said you bought some more. that was about 7$75 per share. the stock falling on your comments. what price point would be attractive to you to re-enter apple? >> i don't think it's a price point. i think it's my opinion about what is happening with china. it's not the price point. i think the stock is very cheap still on a multiple basis.
2:12 pm
in fact, one of the cheapest. in fact, i also think that eventually that they have $2.6 trillion abroad. on a fundamental basis, you know, within 10, 15 points it's cheap in my opinion that way. the other way is china, obviously, could be a shadow for it. and we have to look at that. i'm not the great expert on china. i don't pretend to be. and that bothers me. i like to go into a company that i say to myself, this is great. as i said before, intuitively, you know, you don't mind buying more. you're not worried about it. and you sort of feel that you have a pretty good grasp of the fundamentals. you could be wrong. secular changes come. we got badly hurt, i mean not for us, we have so many -- we really have so many capital related to the investment world
2:13 pm
related to a lot of the other funds. but from our point of view, we certainly had a bad year because of energy, mine a bad year for us. and that -- that is a secular change. that you can't foresee. you look at the oil and energy companies and i mean nobody would have foreseen, i don't think, maybe some did but we didn't. you know, saudi arabia would be throwing all that oil out. we saw it as an opportunity to buy. so that is different than what i'm saying. but when you look at an investment philosophy and activist, say i'm going to go in and i can make changes here. this is a great company. it's a no-brainer. i know you're going to bring up other companies. that's a no-brainer. you have to make changes in management. that's what we do. now if apple, it's unlike the energy thing, it's not a tsunami that hit it. i worry a little bit could a
2:14 pm
tsunami hit it? and that's one i'm sort of aware of more than i was on the -- look, you can't be perfect in these things. >> if my math is right, carl, your cost base sis somewhere around $68. as i said, you made $2 billion off of this investment trade, whatever you want to call it. >> i think can you back into it. i think that's probably correct within a few bucks. >> do you think -- do you think that apple is still an innovative company? >> i think it's a great company. i think tim is doing a great job. i wouldn't say that if i didn't mean it. very few ceos i say that about. i think this company has tremendous future. i mean they're going to have ups and downs, sure. they'll come up with some innovation. i don't agree with the naysayers, they have problems here and. there you can't break into the iphone ecosystem and i think
2:15 pm
they have the opportunity to go into many things and i think they will. i think they'll be successful. so don't take it -- look, i would tell you that if i thought something is wrong. i got out for the purpose of -- because i'm worried about china and i have this huge profit. being that said, i hope one day to get back into it. >> does the fact that you have been negative on china and you're now out of this, are you worried about the u.s. stock market today? you have been negative on the market. i wonder -- >> it's a good question. the thing that i'm worried about here in china doesn't affect the whole market. you could worry about china in general. i'm not talking about china's economic status right now. i'm talking about what are they going to do -- could this thing with apple escalate a little
2:16 pm
bit? and if it does, what does that mean to apple's profits for the near term? i'm not here talking about what you could talk about and there is another question. but it seems to have been taken care of somewhat. you know, china's economy itself, you know? i think they're -- i'm no expert on it. that's not what i'm talking about here. i'm talking about the facts that you see. that china is sort of looking at apple and saying, well, can you do this? should we let do you that? should we let you do this? and it may really blow over. look, it's blown over certainly in other areas and it certainly could blow over here. >> but you've been worried and negative and you've been outspoken about what you think about the u.s. stock market. worrying about the market. >> that's a different question. >> you are still -- we can answer that, though. when it pertains to the market, you are still worried about the u.s. stock market?
2:17 pm
>> i still am very cautious, yes. i'm extremely cautious about the market. that is not so much related to china as related to the experiment that we're doing and i'm not the only one that believes this. you can't have a better reserve to low interest -- negative interest rate without creating tremendous bubbles and creating the wealth gap. and it's doing a lot of things that are unforeseen, has unforeseen possibilities. it doesn't keep me from investing and we have a lot of long positions, but then we have a huge short position on. and the short position obviously is not working that well. but i'm not changed my opinion that -- i do not believe that all these commodities stocks are not a bit too low. i think they overdid the
2:18 pm
commodity stocks. i think there you have a definite opportunity still perhaps. but i do believe in general that there will be a day of reckonning unless we get fiscal stimulus as well as -- >> it's brian again. can i go back to the commodity story? do you still own chesapeake energy, cvr energy or free port mack moran? >> i still do. i haven't sold. obviously, could i have bought them cheaper? sure. but i think at this point that i haven't sold any of them. i think that it doesn't mean i wouldn't sell them if they went up or changed my mind. but i think there that they just were way overdone on the down side. and -- >> did you add at all, as the price fell, did you add to your positions? >> i'm not going to go into, you
2:19 pm
know, a daily trading or weekly trading. i'm talking about apple because it's coming out anyway in a few, you know, in a week. but as far as all these companies, i personally at this point think that, again, there's a little bit of china in fr freeport. i do think that there is need for copper for the grid there. and so i think that these commodities, you know, you got a huge short position in all these companies. you know, a lot of traders love to go with the trend. an old friend of mine used to say it was very wise. the trend is your friend until the end. so you know, when the commodities got killed, they kill and kill and kill and kept shorting and shorting and shorting much that's one things
2:20 pm
that going to keep pushing them off. >> let me go back to your question. you say you'd like to see more -- you'd like to see some fiscal stimulus as one of the things that would help or turn your view of the u.s. market in a more direction. what's the combination there? i think you certainly could do more spending. and republican party, i used to be more sympathetic with. i'm right in the middle now as you know i'm for donald trump. but i would say is congress is in this massive gridlock, obsessed with this deficit to i point that i think it's almost pathological. that you just worry about a deficit when you don't have inflation and you're the reserve currency of the world. and, i mean, some of the politicians you talk to have no -- i mean a lot of them are
2:21 pm
great guys. but they have really no concept of what it means. you know, a country is not a company. you know, they keep saying we owe all this money to china. but we're really not going to pay it back ever in the normal way. so trying to decide i want my money back. how do you want it back? you want dollar bills or treasuries? what do you want? so i don't understand this obsession that they have. now being that said, i'm not saying you got to go crazy to borrow money and have money floating around and have inflation. and, yeah, the fed is there. and everything is equilibrium. everything has a middle ground. and we're so obsessed with that deficit that, you know, i never thought i would agree completely with guys like krugman. but in this sense, he's sort of right. you absolutely need to have
2:22 pm
fiscal stimulus in this economy. this economy, i don't think, companies are not doing well at all. >> i hope the comments don't get back to mr. donald trump , carl. is paul krugman on any of the dinner party lists? i don't know. >> i will tell you this, i think donald certainly, you know, i read it all the time and the establishment doesn't like the republican party the right-wing establishment. i think he should do for this economy what should be done. i'm not speaking for him at all. but i think you have to do fiscal stimulus. can you do a lot of other things in this economy. you have to make companies more accountable. make the ceos more accountable. what is interesting is i said it before, you know, you go in and this is really a good criticism
2:23 pm
of what is going on. you lowered interest rates. but yet, you're janet yellen and she is trying to do her job and the fed is holding this whole thing up. you know what? we're doing this. we're doing this. and then you look at them and say productivity for workers is not going up. and true -- you know why? because a lot of these guys, you'd be surprised i'm saying this being an activist, but i as an activist am not for buybacks except that a company like apple that has so much cash around. you have companies today take advantage of low interest rates by going and borrowing money and buying their stock back. you know, coincidentally, if you noticed, those buybacks are coming at the time that the ceo's options are invested. i made this criticism. it's not true of every ceo by
2:24 pm
far. and there are ceo's that do it that are good ceos. but i'm saying we have a problem. and lower money does not stimulate productivity because the money is not going to the capex when they borrow cheaply. it's going into buybacks. so you see equities wid willing. and this is the problem. if you want me to go on, i can go on and on for hours. >> no we're happy to you have stay as long as you want. we just looked at a picture -- >> it's not what you were wanting to hear anyway. you got me going on it. >> let's bring in steve mcmillan into the conversation here. i mean, you're very complimentary towards him. he towards you and what you brought into the board room. so, carl, why don't you -- you talk a little bit about steve and his business and what you brought to the table then as you now exit? >> well, i think he's an example
2:25 pm
of what an activist looks for. meaning, dwoent like to micro manage if we can help it. we went into this company knowing we thought it was very cheap. we thought they had great products. and it wasn't run properly, obviously. so what you look for, it's very hard to find, by the way, a really good ceo that can just take it over and do it and, i love it where i have very little to say. steve has been complimentary in saying i was helpful. i thank him for it. i think i was by saying, once you talked to him, i said, steve, you go and do it and i'm watching it. let me see you do it f you do it, i love you. you're not going to hear from me. >> steve? >> that's exactly how it's been. we had the discussions early on. we had different thoughts as to how to create value. i had one plan. carl had another. carl totally listened to mine. he endorsed it but held our feet to the fire and created that great sense of you are general
2:26 pm
sichlt urgency. >> i'm hearing you say that activist investors like carl can be very positive. it all depends on how you approach it. >> it is. i think it's situational. >> as the executive. >> yeah. i think it works well. we were talking to a bunch of sales leaders the other day. they were asking me about the whole relationship with carl. i said there are two ways. some people go in and just absolutely are not listening to the other side. and just fight the activists. you know, i happen to realize, you know, carl is breaking up companies and doing stuff when i was in college. this is a man i could probably learn a little bit from. by the same token, i know about running companies and health care. >> here's the thing, i'll ask carl this, steve. we're running out of time. carl, you're a very smart guy, very successful guy. but you're not a medical device guy. how do you know when you go into a company like hologic what to do and ask about because this is not your specialty, medical
2:27 pm
devices. >> you don't. i think people -- maybe activist, many activists with an exception, i think see their role wrongly. the role is you go into a company, there are too many in our country, many are great ceos, but you go and you look and say what is wrong with this company? and it's obvious the ceo is what's wrong with it. i mean, i think you can count the ones we turned around by getting a new ceo in. or the ceo gets religion. in other words, the problem that i don't know about a medical device company. i know a little bit but not much, but you know there are great products. i can go into, you don't want to go into details. ge was run, we should have done it this way instead of that way. you needed somebody to come in and cut the cost and also, though, fix the company up. and, yeah, i had certain ideas going in why don't we do this, do that. but, hey, i talked to steve.
2:28 pm
my job is if you bring in a ceo, i believe this completely, if you bring in the right ceo, he runs with the ball, not me. and if he says we ought to do it this way, he has much more knowledge of that company than i ever will. and if he wants to do it his way, as long as you bring home the bacon and make this company productive, i'm with you 100%. and he did it. and we have other examples like steve. it's great if you can find a guy like that. and he did a great job. he never heard from me. >> you seemed to have -- or developed a very constructive relationship with tim cook. i'm not sure it began in the most friendly ways. >> i think it never began with any animosity. i had dinner with him. i said you ought to be doing more of a buyback. i don't think he disagreed. i mean, yeah, you have that $200 million sitting over there. what does he do? borrow a little money and do it. and he did it. i think it was profitable for him. but that is the only time i talked to tim about how to run the company. you know, if you don't really --
2:29 pm
this is what i tell guys on boards that i'm on, these guys on the board, too many of them, not all of them, come in with great ideas. now, you know what? if you're a nobel prize winner and you're a biotech company and you're on it, sure you should have something to sachlt but most guys on the boards, there are companies and you say, look, why it is being run right? what are all the crazy costs? and you want a ceo that knows the areas that he's getting into. the perfect example where that wasn't working and we had to change it was at janire and, you know, he had a -- there was an interview with him -- >> two nights ago with jim cramer. that's where i wanted to ask you about it. to respond to some of the things that mr. suki said about you. we're going to listen, actually. we're going to listen, carl. hang on just a second. we'll listen to mr. suk wichi w
2:30 pm
cramer. >> there was an opinion that you founded the company. it was your vision. who with differ in opinion with you enough that they would tell you differently. >> carl icahn. >> just like thathe? joins the board. he says this guy is not doing his job even though he created the company. >> no, this guy is not doing what i want him to do. which is -- >> slow down? >> no, pay dividends and use the cash to return it to the shareholders. he doesn't want to distribute cash to the shareholders. we disagree. so on an ammicable basis, you have a different view. you're better off going off and doing something else. >> he wanted to give cash back. you wanted him to give cash back, he said no. how do you respond to what he said? >> no. let me -- like all things, completely out of context. to begin with, i love jim cramer. great respect for him. but i wish he would call me.
2:31 pm
if he was doing an interview, i say this to jim in all respect, he should have called me to answer the stuff he was doing. i think it would have been more interesting interview being that i'm not criticizing jim because i think he's a great guy and done a lot of good stuff. now let's go with giving the cash back. so, yes, i wanted a cash back. you know when? in 1919. in other words, you're buying a company here, this is what he is not saying and what jim didn't hit him with. you're buying a company, it's a great company. almost no-brainer. this is one of the ones that i call no-brainer because, you know, i disagree a little with jim chenos who i respect because if the contracts, i mean sbent a great deal of time. we do. this we do our research intensely. those contracts are pretty damn good. very good. so when cheniere and when it sold to shareholders and what the shareholders believe is not
2:32 pm
what suki is delivering. the shareholders believe you have the companies, you have the trains, we're going to make lng and sell it over to europe where they need the lng and it could compete with oil and this is what we bargained for. we get into this company. it's down. chenos is saying you should short it. he had a good point. the company had tremendous cost. he looked at it as cap ex-. suki looking to go into all these -- i hate to say it but hair brain ideas, you know? he was going to buy oil. if you look at suki's record, he was going to buy oil companies. he bought oil companies a10 or 15 years ago, what does he know about buying oil companies to the point that you would just ask me what do i do about medical? i'll tell what you he knew. he knew how to go almost bankrupt much that's what happened to him. so now you go in there and he's buying these oil companies. well, whatever hair brain idea,
2:33 pm
i call it hair brain, maybe that's unfair. i'm sure he is brilliant. i never met him. i only talked to him maybe once or twice on the phone. he invited me on the board. i said okay. but i'll tell you this, what you have there is a company make nothing revenue at this point which is true what chenos said. that's true. you're buying a company that is almost like a toll bridge. literally like a toll bridge. a great paying toll bridge that you couldn't buy anywhere else and you know in 1919 you're going to get a $5 dividend here. you need somebody there is a ceo is somebody that really is going to be watching over how you build it. now suki is there saying, hey, look, we're going to go and borrow. first of all, suki was taking $80 million a year. that sun heard of. okay. he built the company. he took it public. if he wanted to take $80 million
2:34 pm
out go, do it but don't go public. he is taking $80 million out. and any stock he could sell, he sold. i do own stock. so here he is doing this, going in to one idea after another, loaning a friend of his $80, $90 million to go into some company. i don't know the details. i looked at this and said, this is insane. this is the problem with this company. this is keeping it from being a great, great company. i think this is a no-brainer. whether you get a company that you get a $5 -- you're selling at $38. you get a $50 dividend and a huge kicker. the kicker is if oil goes up, you getting that dividend only using about 85% of your capacity. so you can have 15% less breadth that you got free. and if oil goes up, lng will go up. you have a free option on. that couldn't be better except you had suki. and suki is there saying -- in
2:35 pm
fairness to him, he said, yes. i did say, yes, i want you to stop this nonsense. i want people to understand they have a toll bridge that you're going to be paying $5 dividends. so, yes, that would -- give the money back in dividends but that would be in 1919. you have to do a present value calculation. there is a lot of other good stuff. there i think he's right. i was very instrumental in getting him out. no question about it. and the board listened. and i'm proud of the board. i applaud them for listening. and they got him out. and that is -- so i say, yeah, i take full responsibility for it. but i don't -- but it's wrong in saying i want to gift money back. there is no money to give back at this point anyway. therefore, i would say why the hell if there's no money there is suki, even if he is a genius at buying oil companies, go in and buy oil companies that make the loans to people when there really is no money there?
2:36 pm
so the whole thing is absurd wlae was sayi what he was saying to jim. and in the interview, i would argue with jim saying making it sound like poor suki came in. he's taking $80 million a year. he's taking the money out and sells the stock. it's analogous for somebody who, you know, we can do a deal with someone who says i'm great at gambling or rolling dice and something and i'll take the profit if there is a profit. if there's a loss, it's your loss. that's what he was doing. >> all right. carl, thank you very much for all your time today. we appreciate it. it's always interesting to you have on. and, scott, thank you for -- >> thanks for letting me in the sand box. >> great. steve mcmillan, thank you for joining us. we appreciate it. again, the news there that carl icahn is out of apple. >> yeah. big news. >> thank you. >> all right. it is now time for "trading nation." take a look at facebook soaring today after reporting the earnings. partner at flight vc and gina
2:37 pm
sanchez. you've been a long time owner and holder of facebook. you have sold any on this strength? you are buying more or just holding? >> i have holding it before it was even a public company. i think it's a company like facebook comes along once in a generation. and you hold itd and run it with as long as it goes. >> and does that mean you're buying more or just keeping what you got? >> it's an out side proportion given how much it's run. but again, i think it's a tremendous company. i think it's still by a lot of people underappreciated in terms of the impact it's going to have. they're still growing users, growing engagement, driving innovation at a pace i think the world's never seen before. >> all right. gina sanchez, no doubt facebook is killing it. operating marge sin like 55%. i've argue foded for years facebook is becoming the internet. it's just where you go. it's bigger than johnson & john
2:38 pm
sob s johnson. is there anything that worries. >> you >> can you always look to me for worry. i'm a professional worrier. look, facebook is an interesting story. obviously, facebook has benefitted from a structural shift in how companies spend their ad dollars. and so while most, you know, companies at this point are suffering in sales, they still find social media and facebook in particular an important ad spend. now whether or not that continues to be the case is the big question. and that's what, you know, worries me in the long run. you know, you can always argue that there could be competitors. but facebook is incredibly resill yenlt. facebook also has an incredible data base now that no other social media platform has. meaning, their ability to sort of target ads and sort of -- they don't even really know what the value of that data is yet. so you can say that there is a lot of option value there as well. but i think the bigger shift that i'm concerned about is we continue to go into a slowing
2:39 pm
environment for sales, for earnings, the reality of earnings is starting to bite. and i'm not saying this is going to be the case forever. but it certainly going to be the case for a few more years. and that's going to be the challenge is to be able to sort of compete for a dwindling ad spend. >> through go. they know a lot us about. maybe big brotheresque. i'll on there like everybody else, i guess. gina, thank you very much. do appreciate it. for more "trading nation," head to our website. we're back in two minutes.
2:40 pm
2:41 pm
2:42 pm
we're at the session low for the dow at this hour. just a little more than an hour before the closing bell. apple is taking about a 11 points off the dow. of course, moving lower on that conversation with carl icahn that just finished. the nasdaq is also close to session lows for the day.
2:43 pm
shares of st. jude medical are soaring on news it's being acquired by abbott labs. we spotted some unusual activity in the options market before the news broke. what did you find? >> when you look at this stock, it trades by appointment. traded only about 3,000 options in the entire month of march. but then you look at monday this week, just out of the blue, somebody steps in and buys almost 2100 of the may 60 calls. now they paid $1.54 for each call. you can see them there on our heat seeker. those calls went to $20. so, in other words, if you multiply that, the 2100 that traded, basically control 210,000 shares of stock, they went from 1$1.54 to $20 that, i 300,000 investm hechlt nt. someone is going to look into
2:44 pm
this one. this is a very well timed bet just two days ahead of this announcement. >> yeah that, volume would make it seen like there is no algarythm behind the scenes. >> okay. florida governor rick scott hitting the trail in a campaign against the $15 minimum wage in california. governor scott's economic development organization launching a new radio ad that will air in los angeles and san francisco. >> the minimum wage hike hurts the same people it was supposed to help. >> it's time to leave california. >> you got that right. >> this place is beautiful, but you just can't afford to live here. >> ready to leave california? go to florida instead. >> and we're joined now by florida governor rick scott. governor, welcome. that's an aggressive play. i know you guys are always out lobbying to bring business to your state. but that's a pretty aggressive ad. what is the minimum wage in florida? >> it's $8.05.
2:45 pm
the campaign is basically moved to florida. if you want a job, if you want to build a global business, florida is the place where you want to build your business because we understand what business people need. >> and you've had a lot of success doing it. it's been either you or texas sort of in a friendly competition over the past few years. >> we're actually leading texas in job creation now. i called governor perry once a month and let him know we're beating him now. he remundz me he is no longer the governor. but we added eed 1.6 million jo. our wage growth rate is better than 40%. the labor force growth rate is 50% faster. so we're doing really well. but i want to keep it up. i want every florida family to have a great job. >> and you believe dsh, i would assume, that raising the minimum wage by large increments if at all means lower employment
2:46 pm
overall. >> the study that says california's raise will -- they'll lose 700,000 jobs. and it hurts the people they say they're going to help. i want to make sure everybody has a job. i grew up in -- i lived in public housing growing up. i grew up in a family that struggled for work. i want to make sure every business has the opportunity to succeed because they're the ones that create jobs. >> should there be -- it's something we talked about from time to time here on cnbc -- should there be a minimum wage at all? >> well, here's what we know. we know that as we raise it, congressional budget office raised it and it would be 500,000 jobs lost around the country. now we know in california, if they raise it to $15 that, 1700,000 jobs. so what i want to do is focus on what do we do to compete globally? we have to have lower taxes. we have to have less regulation. we have to give businesses the opportunity to compete globally. if we do, we're going to get more jobs. that's what i want in my state.
2:47 pm
>> philosophically, i'm asking a broad question there. should an employee be able to work for whatever wage they think is fair for the job that's being offered to them and should an employer be able to pay whatever they think would attract the kind of worker they need? >> well, we already have the minimum wage. i don't think the minimum wage is going to go away. my focus is puts us in a position that we're in the best position. i don't think the minimum wage is going to go away. i know what california is doing with their taxes, with their minimum wage and regulation, they're the worst state to do business in. they are going to continue to lose jobs. florida is going to continue to win jobs. >> i see that you're in one of my favorite cities in the whole country, naples, florida. let's talk politics, governor. you're one of only three sitting governors to have endorsed donald trump. why do you think he has so few endorsements so far at your level? >> you know, what's interesting is you go back to 2010. i got the fewest endorsements
2:48 pm
but most number of votes. so i became the governor. donald trump is in the same position. he has the fewest endorsements but he has the votes. he'll become the next president. endorsements don't change races. what changes races is who can get to the voters donald trump believes in job creation. he believes in securing our border. look, there is between donald trump and hillary clinton. we know her position. she's not going to secure borders. she's not going to build our military. she's not going to destroy isis and she doesn't care about job creation. >> what do you think of the alliance oorearlier this week o governor kasich and mr. cruz with respect to dividing up their campaigning concentration in an effort to deny mr. trump a first ballot win and second, your reaction to mr. cruz's choice of carly fiorina as his potential running mate? >> the alliance sure didn't seem to help anybody on tuesday other
2:49 pm
than donald trump. if you look at his big wins on tuesday. i met miss fear evcarly fiorina time. donald trump will be close or at 1237. we've got to stop trying to stop trump. all that is doing is helping hillary. we've got to focus on winning november. we can't have -- we can't have four more years of barack obama's economic policy, health care policy, all the things that have damaged this country. >> let's talk a little bit about business people in politics. you ran a very successful business. you founded it and made it a large business. and now we have carly fiorina, former business person. we have mr. trump, a business person. what is the transition like? what do you have to learn that you didn't know as a business person that you have to know as a governor, an executive of a
2:50 pm
political organization? >> here's what's similar about it. you have to surround yourself with the best people you can find. you've got to be very focused on what you're going to accomplish. i focused my entire entire time how do we make our state the best place for jobs. you've got -- you know, you do have more media. you'll have a congress if you're president, in my case i have a legislature which is different than in business. but if you focus on what you want to get accomplished, if you're clear with everybody you work with, if you hold people accountable, surround yourself with good people, you can have the same success in politics that you can in business. >> mr. carl icahn was just on our air a few minutes ago. somebody mr. trump -- who has endorsed mr. trump and who mr. trump has mentioned as the kind of guy he's like to have as his treasury secretary. mr. acaan favors stimulus, spending, and politicians particularly are way too concerned about the size of the
2:51 pm
u.s. debt. would you be comfortable with a large stimulus as part of a way to get the economy moving forward, and are you as unconcerned about debt as mr. icahn is? >> i can tell what you i have done in our state. we've cut taxes 55 times. in the last two years over $1 billion in tax cuts. i have cut 4200 regulations. i have traveled outside the country and around the country to get jobs. we've added 1.61 million jobs. the four years before we got le elected, we lost jobs in florida, we've paid down debt, and we've almost doubled our transportation funding. we have the highest education funding in the history of the state. so the path of making it a better place for business means we get more revenues we can spend. >> governor scott, thank you, as always, for being with us. we appreciate it. >> nice seeing you. >> thank you for your time. >> move to florida. >> save me a place in napele.
2:52 pm
"power lunch" is back in two minutes.
2:53 pm
2:54 pm
billions are spent to confuse and, dare i say it, flummox the american public. "save 16% on car insurance." "switch now..." well at, we say enough's enough. so we constantly scrutinize millions of rates... answering the question once and for all, who has the lowest. just go to and get up to 50 free quotes. choose the lowest, and hit purchase. so you can get back to whatever it is you civilians do when you're not thinking about car insurance. hp stocks. . stocks have been improving, but after hearing carl icon ecan
2:55 pm
exited apple, that took the market lower. apple, cisco systems, and home depot all leading the dow lower. up next, one of the big airlines getting a big upgrade. "street talk" is on deck. real is touching a ray. amazing is moving like one. real is making new friends. amazing is getting this close. real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing you ppremium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again.
2:56 pm
why pay for insurance if you have to pay even more for using it? if you have liberty mutual deductible fund™, you could pay no deductible at all. sign up to immediately lower your deductible by $100. and keep lowering it $100 annually, until it's gone. then continue to earn that $100 every year. there's no limit to how much you can earn and this savings applies to every vehicle on your policy. call to learn more. switch to liberty mutual and you could save up to $509. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance.
2:57 pm
♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ time for "street talk." our daily dive into the key calls of the day. who is this? melissa is off and it's bring
2:58 pm
your kid to work today. and this is my sixth grade daughter, shea. first stock -- don't jump on my lines. this isn't home. facebook, you know the story. earnings crushing the stock story. deutsche bank bumping their target to 160. that's another 30% upside. gold mman sachsis bullish. operating margins were a stunning 55.3%. by the way, good call by argus research's joe bonner who upgrades facebook back in october when it was 96 bucks a share. that is a 25% gain since then. >> the second call today is an american airlines morgan stan lie upgrade to stock overweight. the price target was cut to $46, but that is still 25% upside. the analyst says american can benefit the most of any airlines
2:59 pm
if things continue to improve. raymond james also upgraded on march 24th with a $52 target. >> nice work. yeah, raymond james upgraded the stock. he likes the legacy carriers saying if things continue to do well, american has the most revenue growth opportunities. nice work. all right. our third and final stock, service corporation. this is your under the radar name of the day. sci, it's a houston. based funeral and cemetery service provider. credit suisse upgrading the stock. the credit goes from 32 to 25. they see about 23% upside on service corp international, sci. so i don't know, tyler, what do you think? >> well done, shea. well done. and you stepped on his lines just the way i step on his lines practically every day. thank you very much. you're lovely. it was fun to see you do it. all right. kayla has se news on paypal. >> just watching shares, tyler, after earnings beat on the top and bottom line. beat on almost every metric except margins. the company said they're onboarding so many large
3:00 pm
merchants they pay less so they make less profit but they get a lot in revenue. investors like what they saw. stock up 1.5%. >> as we wrap it up here, the hour's big news, carl icahn exiting apple. kayla, shea, and brian, "closing bell" starts right now. hi, everybody. welcome to "the closing bell." i'm kelly evans at the new york stock exchange. >> i don't want any jokes about me bringing my kids to work today. i'm bill griffeth. facebook shares popping today after the social network bucked the trend and beat earnings expectations last night. now the attention turns to amazon. you know there's always another one after that, and that will be after the bell tonight. we'll wonder whether that e-commerce giant can deliver. we'll tell you what to expect. in the meantime, coming up in a little bit, kelly -- >>


info Stream Only

Uploaded by TV Archive on