tv Power Lunch CNBC April 29, 2016 1:00pm-3:01pm EDT
going and toward internet and web services but if you own the name, they didn't give you a reason to sell it. i wouldn't run after it to buy it like a give and good, but it's a better hold than sell. >> thank you for joining us. bill actionman monday. thank you very much. hi, everybody. i have driven everyone else away it appears. everyone else is off today. michelle will join us shortly in iran. i didn't run kayla off apparently. she'll -- >> i would never run from you, tyler. >> for the next two hours from the nyse. we're tracking the volatile trading but we start with breaking news. >> we have more details now officially from the cdc which just released the latest morbidity and mortality report. it says that we now have in puerto rico one confirmed zika
death. puerto rico has 683 confirmed cases of the zika virus including 65 pregnant women with symptoms of the virus and that one death. five patients with suspected syndrome of paralysis. the cdc also says one patient with a confirmed zika infection died from severe an normally low blood platelet levels. and the cdc is saying deaths from zika, all though they're rare highlights the possibility of severe cases as well as the need for continued outreach to raise health care providers awareness of possible complications that might lead to severe disease or death. so as we start to find out more about zika and how it works its way through the system, the cdc is now saying you need to watch for some of the other issues
that occur when someone is infected with zika such as the low platelets and the paralysis syndrome. >> coming closer to name. meanwhile one health care stock getting approval for a zika virus test. and dom has that story. >> we're watching a couple of stocks with the first confirmed case of zika virus and a death in puerto rico. if you want to look at a quest diagnostics, that would be one that investigators look toward. it has an approved, perhaps emergency testing methodology, testing mechanisms in case zika virus is feared in a patient or location. so quest, one to watch. also another one to watch, intrexon, possibly in the early stages of a zika virus vaccine. >> joining us on the news line is a resident medical fellow at the american enterprise
institute. dr. gotly, how is the u.s. going to respond to this growing threat of virus? >> well, i think the significant growing concern is not only is it spreading which we expected. we're learning the impact on some people is more profound than what we previously thought, particularly the con jgenital effect on growing babies. or whether there are affects that are subtle that we're not seeing. it's probably the case that a virus powerful enough to stump the development of fetal brains is having subtle affects in other babies. if there's any reassuring news here, the mainlands u.s. this summer, it's likely to be isolated, the impact on the whole. we'll have pockets of outbreaks. i think the key to the question is to defect the outbreaks quickly through mosquito control
and warning the public to contain the outbreaks and the risk. my concern as a physician is we're not going to be in position the ability to detect the outbreaks quickly. everyone is going to be worried this summer just to sum up the risk it's probably greatest in the south and the gulf regions. it's also greatest where there's a lot of travelers returning from the areas with epidemic. in new york we have a lot of travelers returning from south america and puerto rico. our risk is probably higher than you'd expect based on the migration of the bug. >> what i'm hearing you say is that we are finding new things about this illness that are more serious affects of it, some that we might have anticipated, others we might not, and you expect in terms of mainland u.s. there will not be, is not now, and won't be a, quote, epidemic,
but there will be big outbreaks, playly in vulnerable areas in the south? >> that's right. on the first point it seems that the studies are showing that the impact on fetal brain development is more profound in some women and some babies than what we previously thought. we don't understand why, and we don't understand who is at risk and who is not. and when they're at most risk. and on a second point, it's likely that this is going to follow the pattern of other mosquito born illnesses like yellow fever where you have outbreaks in the u.s. but you don't have an epidemic and local authorities are able to contain the outbreaks through mosquito control. i think what we should be doing is in parts of the country that are at risk, we should be doing what we did in new york city when west nile was here which is catching the mosquitos and testing the bug so you can have a realtime predictor of when an outbreak is occurring. >> would you, doctor, quickly, yes or no, would you travel
yourself to one of the zika hot zones whether it's in rio or not, and what would you say to a woman on childbearing age? >> i would travel myself. i think a woman who is pregnant, particularly it appears in the first trimester, should be cautious about traveling to a very affected areas and if you have to travel there, take precautions to mitigate the risk. >> doctor, thank you very much. we appreciate you being with us. kayla. >> thank you tyler. meanwhile we're keeping an eye on a volatile trading day. the dow is the only average positive for the month of april. it's off the lows of about 178 points. currently down by 198 points. the s&p and nasdaq negative for april. both the averages on pace for their worst week since mid
february. >> one stock on fire right now is amazon. as you probably know the company crushing earnings estimates. and surprising investigators with a bigger shift to video to take on netflix. julia taking a closer look at the new rivals in tech. hi, julia. >> well, that's right. in the earnings call yesterday amazon cfo saying the company is planning to, quote, significantly increase money on video. saying it's helping convince people to renew their subscriptions to amazon prime. saying subscribers can look forward to a lot of new content in the next few quarters. amazon is already one of the biggest buyers at sun dance this past year. when amazon launched original vide videos, it was another way to drive people to prime service. but now that amazon has broken out video from shipping and also is offering it on a monthly basis, it is directly taking on
netflix. netflix, they were peppered with questions about amazon. he said they're one of a number of competitors doing great work. he also said it's natural that everyone is realizing the future is internet tv. now, in a twist to this rivalry, netflix and amazon work together. amazon web services provides all of netflix's cloud services. back over to you. >> yeah. that has always been an interesting wrinkle. stay with us. we want to talk more about netflix and amazon. we want to bring in some analysts. both of you, welcome to power launch. tony, i'll start with you. if you had to choose between investing in netflix or amazon, both of them currently trading at sky high valuations, one is more diversified than the other. which one do you pick? >> i think netflix. it's price elasticity.
there's a huge opportunity in international and inside the u.s. they've grown. they're going to make a tremendous amount of money as they get the price increase through the end of the year. >> barton, how do you feel about amazon? tony laid out the case for netflix which is the pure play in this space. amazon has a lot of other business lines which earn a lot of other revenue but cost a lot of extra money. what do you think? >> well, i'm kind of nervous about amazon's impact on netflix. i think amazon's model is differentiated. they can use video as a loss leader or slim margin service to grow other things like the milk in a grocery store. and i think what we're seeing with the success in contest is the barriers to entry are lower than anticipated. the fact that they're spending a lot more is a very different kind of competition than you've seen from the tv incumbents where they're profit con trained. amazon is not profit constrained.
if there's one guy that can present an alternative for the last kind of mile of market penetration, all of which is important for netflix's valuation argument, it's amazon, so i'm concerned. >> i think it's really interesting, guys, looking at this question of how amazon is increasing investment in content might hurt amazon's ability to drive prices higher, but i think it's not true that there's only one winner. reed hastings has been talking about the rise of the competition. there are so many rivals to netflix that they haven't had in the past. hbo now, hulu now offering an ad free service. all of the competitors haven't really hurt netflix's ability to grow in the u.s. and overseas. and the theory is that people are going to subscribe to multiple services like they have a lot of different premium cable channels. you might have hbo and show thy
time. it might be a question about how the alternatives hamper the opportunity to raise prices but so far people seem to be doing more than just one. >> i would jump in on that if i could. the thing you're forgetting leer is that contrary to what reed has predicted. people have been more loyal to their tv subscription. almost everyone in netflix has a tv subscription. i think there's a limit to how many over the top services they're going to take in addition to their tv subscription which is getting better at delivering stuff online. i think that the scenario described of people taking multiple services i think is a rosier scenario than will play out. there will be a tv component, netflix and constraints because people won't get five services on top of it. >> what's missed here is the fact that you're paying for a video service but the price is going down. more discretionary income than you have and talk about amazon spend. remember, they've had a pretty
low return on that investment. they spent an extra billion dollars but their market share as far as prime time downstream traffic has only gone down since 1.5%. netflix, over 12 times that of amazon. amazon is spending roughly half of what netflix is. it's an expensive race for amazon to keep up with netflix. >> it's going to be expensive for any player. there's a ton of bidding wars. we have to leave it there for now. thank you to all of you. >> it's the favorite time of the year for buffett. berkshire class a stock, well outperforming the major averages. becky quick is live. take a listen here.
>> you can't have a federal reserve if negative interest rates without creating tremendous bubbles and creating the health gap, and it's doing a lot of things that are unforeseen have unforeseen possibilities. i believe in general that there will be a day of reckoning unless we get fiscal stimulus. >> a day of reckoning unless we get fiscal stimulus. what was warren buffett say about that, becky? >> not exactly the same thing. warren buffett is an optimist. that's the case today. especially if you're looking at the long haul. that's for stocks and beyond that. it's been a volatile year in stocks and a lot of the 40,000 berkshire shareholders showing up are going to be questions as investors. that's the type of thing they'll be asking tomorrow when he takes stage at the centurylink center.
we got a chance to catch up with dr. buffett. i talked to him about what carl icahn said. i asked him if he thought the comments actually caused that sell off yesterday and whether or not he agreed with the comments that icahn made. >> there were probably 50,000 people or more that bought and sold stocks. i don't know that i'd pick out any one of them and put too much weight in what they did. no. i have no idea what the market will do day today or why it did what it did today or yesterday. >> do you share any of his sentiment when it comes to worrying about bubbles that could inflated by the low interest rate environment? >> well, interest rates act on asset values like gravity acts on physical matter, and if you had zero interest rates and you knew you were going to have them forever, stocks should sell at
100 or 200 times earnings. if your alternative is zero, and you know it will last forever. so when interest rates were 15%, that was an enormous gravitational pull on the value of all assets, not just stocks. an investment is something where you lay out money now to get more later. if you get 15%, it makes the choices different than if you get zero, and we've had low interest rates for longer than most people expected and to some extent, it's changed people's expectancy about interest rates. the 30 year bond reflects peoples view of it. >> what about negative interest rates like places in japan and europe? what does that do? >> i hope i don't live to find out. i have no idea. you can read adam smith or anybody. and you can't find a word to my knowledge on prolonged zero interest rates. that is a phenomenon nobody
deemed would ever happen, and i think it's unchartered territory. that doesn't mean i think it's the end of the world, but i don't think anybody knows exactly what the full implications are all of low interest rates, and i certainly don't. >> obviously we're going to be hearing a lot more questions about those low interest rates and negative interest rates and the stock market and economy happening tomorrow. two people with l take the stage and answer questions. they just opened up the doors and they're allowing shareholders to come in. this year they have extra skurlt. everybody has to go through the metal detectors on their way in. the reason they're allowed in here is to get a look at some of the companies of berkshire hathaway. there's a huge number of shareholders here. coca-cola is here. you can see precision cast parts. that's the newest company bought last year. they've set up some jet engines and turbines and things.
you'll see dairy queen and there are plenty of people walking around with dilly bars and other things they've picked up. this is a house that they built out of boxes here of the candy fudge. anyway, there's a little bit of a party atmosphere that's picking up. shareholders are coming in and making their way. buffett said he's expecting 39,000 to 40,000 shareholders. that's down because in this year they're streaming this live. it's the first time they've allowed live streaming of the meeting. you can see it from home on your computer, buffett, when we asked him why they did that, he said, well, with you know, when you get to his age and others, it's fair for the shareholders to want to check in on their chairman and vice chairman every once in a whiem. things are picking up and there's questions about the market. >> becky, one of the things i love about you and warren buffett is you'll do an interview in the parking lot of an omaha strip maull. thank you very much.
>> thanks, tyler. >> dom with a news alert. >> if it's friday, it's rig counts of the. oil rigs down 11, down 11 to 33 the total rigs in the u.s. for oil. the total number of rigs is also down 11. that's because gas rigs gained one and -- i'm sorry, were down one and mislain yus rigs up down. on balance, down 11 rigs for oil to 332 total. kayla, that's the news for the baker hughes rig count. back to you. >> you're on it every week. dom at head quarters with the rig count. thank you. >> the battle over drug prices j should there be more regulation? former pennsylvania governor says absolutely there should be and he joins us up ahead. first, we're headed to iran where our own michelle crew sew
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move today. the gdx on track since february. up about 25% month to date. levels 1300 certainly the next stop. doesn't look like we're going to get there today. once we breakthrough, traders saying 1330 possible from here. >> jackie, thank you very much. and power lunch will return in two quick minutes. there's a lots you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.
we're live in tehran. iran is trying to enters if i its economy with oil prices low, budgets to balance, they're trying to get foreign exchange from other sources. they're trying to increase tourism and doing that by making it easier to come to tehran and iran. they're doing that by getting a rid of a lot of visa processes. the vice president of tourism told me now there are 190 countries where you only need what's called an airport visa. that means you arrive at the airport and get a visa. some countries don't need a visa and there are some places where they've privatized the process so it's faster. it's not clear that they're dying for american tourists because of all the countries, not one of them was the united states, and they haven't got an lot of american visitors. even though they got 5 million visitors last year, only 5,000 of them were americans. that's a very, very tiny number. that is up sharply from the 1700 americans that visited two years
ago. as i mentioned, i sat down with the vice president of the country who is in charge of tourism, and i asked him a couple of questions, basically there's a lot of unique hurdles for iran for them to increase their tourism share. >> iran is a beautiful place. so many attractions. but the dress code for women, the inability to drink alcohol, are you worried that that might reduce the amount of travelers or the number of travelers who will come to iran? >> translator: tourists who come to iran know it has its own rules and regulations just like any other country. so far, especially within the recent years we've seen that foreign travelers have easily accepted those specific few limitations you mentioned and haven't violated any rules. >> reporter: young people, when they travel, love to post photos on facebook and twitter. yet those sites are blocked here.
how do you expect to attract the younger traveler? >> translator: this restriction in filtering you're talking about is not that broad in range. and people who want to share their stuff these networks, be active and express their thoughts can do it. in fact q we have not received any complaints in the tourism section. >> reporter: if you want to travel to iran, it is adventure tourism. it's cultural and no frills tourism. there's no four or five star hotels. there's only one new foreign hotel an hour and a half outside of teheran. it's evolving at this point. they're hoping to bring in more foreign exchange by some of their most famous exports which now as a result of the lifting of the sanctions and the u.s. embargo, they expect to sell more. the u.s. embargo has been lifted on carpets, pistachioing and saffron. they sell carpets rug and rugs
all over the world, and iran said they were on the verge of selling about a half a billion or carpets in 2010 in the first six months of the year before the sanctions went into place, but that really hurt sales. saffron is a huge export. 90% of the world's saffron comes from iran. it's the most expensive spice in the world. that's why they call it red gold. it can cost from 2,000 to $10,000 a pound, and then pistachios. a harvest of 230 tons. that was the largest in the world. larger than the united states which was the second largest in the world. and those are now going to compete with california pistachios because the majority of the pistachios in the u.s. come from california. maybe we'll do a taste test when i get back. there's a lot more on the other side of this break. i'm michelle caruso-cabrera. sick around. stuff. but when you're building a mercedes-benz, there really is notick around.
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they are in talks with russia to reduce the fighting. seven days of escalating fighting have claimed at least 200 civilian lives. a military investigation has found human error and fatigue played a role in the deadly bombing of a doctors without border hospital. 42 people were killed. the pentagon says 16 u.s. milita military personnel have been disciplined. and energy approval for a commercial blood test for the zika virus will be available as early as next week. currently people can only be tested through labs that are approved by the cdc. a jacket that prince wore in the movie purple rain is hitting the auction block. the seller's sister who was a makeup artist received it after they worked together on the movie. prince died suddenly last week.
they are asking 6 to $8,000 for the blazer but bidding is expected to go much higher. and that is the news update this hour. back to you guys. i think i'm throwing it to kayla. i think tyler would look good in that jacket. >> he would if he has $8,000 or more to part with. >> hek could. we could see him in that jacket. >> his weekend attire. it's the last trading day of april. sell away and go in may. that's been the way or at least intent to avoid the volatile period in the markets from may to october. but after the selling of the past two days is that still good advice for the average investor. bob is here, and also bob landry, and nick kolis. bob landry, i'll start with you. what do you think sell in may
means this year given what we have on the economic calendar? >> good afternoon. i think the sell in may and go away adage is an interesting historical calendar anomaly. it's certainly not something we base our investment decisions on. it's not how we run our investment strategies. so we're more focussed on where the market is going in terms of corporate earnings, interest rates, fed policy, things like that, and that's how we make our investment decisions. >> bob pisani, there are all of these sort of folkloric ways people time the market. historically, though, does the data support it? >> it does. actually the market notably outperforms by about 6 % points from november through april and generally underperforms from may to october. here's the problem.
it's a crazy idea for you to go to cash beginning may first. we've been up 60% from the time from may to october. not as much as the other periods. a better piece of advice is try to rotate nature defensive names, health care and consumer staple stocks tend to do better in the month between may to october. why not rotate into health care and consumer staple stocks from may to october and then buy the s&p 500? this is a lot more sensible strategy than let's go to cash at that time. s&p capital i.q. came up with this recently. it think it makes more sense? >> it makes a lot of sense. there are a lot of longer term trends. growth is up from value over the last decade by a wide margin, as wide as it did in 2000. you can look for aversion on the mean on that trade looking for
value names like energy working well. even the financials are working better. those are value oriented names. you can play something that will make money even though the overall market might standstill. >> you have to believe the macro backdrop will remain relatively healthy. opec meetings in early june. brexit in the end of june, and a lot of data coming out and a lot of guidance for u.s. companies taken down. how does that affect the markets in the end? >> well, again, i think we're in a choppy market environment. i think growth is going to continue to be pretty tepid going forward. we're trying to keep our member's expectations in check in terms of investment returns. at least for the foreseeable future. so we think stocks are -- u.s. stocks are pretty fairly valued here. you really have to pick your spots. you have to focus on stock picking because there are always good opportunities out there in
individual names, but we think overall the market is going to be in a pretty moderate return environment for the foreseeable future. >> that is exactly the problem. the biggest enemy is the full valuations. the big industrial names, i like to watch, you watch, ge, money well, all at 19 times earnings. that's at the high end of their fully valued area. i think that's going to be the big problem. >> we have to go. gentleman, thank you so you all. go to our website to see which sector bob recommends investing in. >> to the bond market. rick santelli tracking things. what's your take? >> i'll tell you. it's been a wild week. the numbers aren't huge. intradays of ten. we're up a couple of basis points. one week of tens, down about five basis points on the week.
all the action in foreign exchange. huge week down for the dollar index and the dollar yen, as you see a huge down week against that currency specifically hovering at the weakest level since october 14th. let's make it macro. look at the five year chart on high field spreads. have we come a long way. at the beginning of the year we were close to 900. down 300 basis points nature sums up how much things have improved this week aside even for equities. >> rick, thank you very much. carl icahn warning of a day of reckoning. unless there's fiscal sim you lus, but is it possible in today's political climate in we'll bring you the debate when power lunch returns in two minutes.
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carl icahn saying the markets will have a day of reckoning. listen. >> you can't have a federal reserve if negative interest rates without creating tremendous bubbles. and creating the wealth gap, and it's doing a lot of things that unforeseen has unforeseen possibilities. i do believe in general that there will be a day of reckoning unless we get fiscal stimulus. >> unless we get fiscal stimulus. let's bring in our senior or the and senior fellow with the center for american progress and. welcome to both of you. when we had that exchange on the phone yesterday with mr. icahn. he mentioned he thought monetary policy did basically all it could and more doing of monetary policy might have bad effects.
he dropped the word fiscal stimulus. i said what are r you talking act? i fully expected him to say i'm talking about tax cuts. he's talking about infrastructure spending. >> more spending. well, look, carl has the story right on money on the fed. all right? >> enough is enough in. >> enough is enough, and probably causing damage, but he broke my heart. he's a brilliant man. we've had plenty of spending. we had a trillion dollars of spending in the early days of this recovery. we never got the growth the administration predicted. there's no fiscal multipliers. what we need is radical tax reform is what we need to improve business investment which has collapsed. so improve productivity and to improve wages, jobs and economic growth. and oddly enough, carl is an advisor to donald trump and donald trump has strong corporate tax cut. i kind of -- i was disconnected by that. >> christian, let me try to
break apart the question if i might. do you agree with larry and mr. icahn that basically what monetary policy can do, its done, question one, and number two, would fiscal stimulus in the form of spending on infrastructure and other things be a part of the recipe you would prescribe and if so, why? >> well, i agree with monetary policy. i think we've pushed that as far as we can. it has helped to stabilize the economy and done some good, but we do need more spending on infrastructure investments and others to lay an education to lay a foundation for stronger economic growth. i think we all agree that the productivity picture that we have right now is not pretty. and we do need more investment and we need more productivity growth. and that requires, as our evidence shows, public investment as well as private invest. . public investment, better roads and infrastructure and canals
and unclogging some of the bottle necks at the airports and elsewhere will ultimately lead to more investment. but that's only part of the story. i think infrastructure investment and fiscal policy as to foster more infrastructure informationme investment in road and education is important. the other piece of the puzzle is we have to have policies that address the inequality picture. i think all of this talk of more investment by itself is, we're not getting out of this slow growth pattern unless we sort of do something about excessive inequality and raise the incomes of middle class families. >> larry, address that and then i'll come back with a question about how you do that. >> christian is an old friend of mine. delighted to see him again, but i must disagree, my friend. first of all, we just had last year, at the end of last year, a $300 billion plus transportation deal stretching out five years. i don't know how much you're going to spend and it's
inefficient, wage rates are too high from davis bacon. putting that aside and even education reform with which i agree but not federal spending, local control, parental control and school choice, but putting that aside -- >> it goes beyond k through 12. we're talking college. >> we need to help business. business has been hurt. we have the worst tax system in the world and the worst regulatory burdens in the world. what we need to do for productivity, we need more business investment has collapsed. take a look at the gdp report. ? apple spending is down. >> and software, equipment, building. >> we're in the disagreeing on the numbers. >> lower the corporate tax rates. better depreciation expensing and go territorial. businesses have to -- they haven't done a thing in five, six, seven years, and that's the key to the economy right now. >> go ahead. >> let me say i think business investment we've tried this
after with the 2003 tax cuts and the evidence is it didn't do anything. the other part is businesses don't -- they respond marginally to tax incentives, but they also respond heavily to the ability of people to buy their stuff. and that's sort of where we're really stuck at this point. middle class incomes aren't growing. the middle class is heavily indebted. we've seen record levels of debt and installment credit, particularly car and student loans. so to get out of this, we need to have stronger middle class growth rates in terms of income jobs and wages. we have a lot of work to do in that, and once we get that -- in the meantime. our infrastructure is still crumbling. we have more spending on roads, but that is only addressing part of the problem. we have a lot more work to do in other areas? >> what we need which is never talked act, massive energy infrastructure. most of it can be done
privately. there is military infrastructure that's part of the proposals. the 2003 tax bill had nothing to do with business taxes. corporate stax the worst. >> it was sold as that. we have debated this multiple times. you made the argument in the 2000s of the 2030. it's the largest thing. it's a real life experiment. >> there was no corporate tax reform in 2003. and we desperately need it. we're not competitive. our own businesses are moving offshore because of that and you're not going to get better jobs and better wages unless businesses start performing and they need some new incentives. that's the bottom line. remember this. >> on the top line, i don't disagree with you. >> 18 04, supply creates his own demand. and that we need -- >> i'm not disagreeing with you on the top line.
i think incentives have to be both domestically as well as internationally stronger sales growth for businesses. there's no reason for them to invest. we can give them all tax cuts that they want. they're sitting on oodles of cash. they're not going to spend it just because there's a nice tax cut. they need to see the customers domestically and internationally. we also have problem on the expert growth side. that's another piece we need to have fairer trade, better deals for american businesses and make it easier. >> interesting. >> donald trump. >> he's not for exports. he's anti-imports. that's the wrong conversation. >> i need a chris answer here. you said earlier we have to address inequality, income wealth inequality. is that code for saying raising taxes on the wealthy or not? >> no. i think it's a battery of issues. it's part of raising the -- it's partially raising the minimum
wage. it's partially making it easier for people to join a union. it's partially insent vising corporations to take a longer term look. it probably requires some sort of tax reform in terms of generating more revenue, but also making the tax code fairer. on a corporate side, a lot of inefficient stuff we don't need. >> only disagreement, i believe that growth is the problem, not inequality. that's my take. we need more growth. >> growth solves inequality. >> growth helps to solve poverty. growth solves a lot of problems. >> that's not what the data. poverty is one thing. >> final thought, chris, quick. >> the data is clear that faster growth doesn't necessarily lead to less inequality. there have been 30 years disrupted by five. the majority of the last 30 years has seen decent growth and
rising inequality. that's holding us back right now. >> larry is going to stay here. we wants to say more. christian, thank you very much. trump is in california, but he may see some of his biggest resistance from the tech sector. why? we'll bring you that story when power lunch continues. my mom loves giving me advice. she even gives me advice...
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donald trump was in california campaigning ahead of the primaries. polling currently indicates donald trump has a lead but he may not be doing so well among the tech brass. josh is live in san francisco with that story. josh. >> reporter: well, kayla, trump has a lot of fans in california. at least among republicans. as you point out, trump is currently beating ted cruz by more than 17 % points according to real clear politics. he also has critics out here in force today. >> we're here because of donald trump's racist rhetoric and
actions and because we believe that black communities and communities of color deserve respect. >> america is still very j very deeply embroiled in anti-black sentiment anti-brown sentiment, anti-immigrant sentiment. he's providing a platform for that hate to come to the surface. >> reporter: beyond protesters, trump also finds himself fighting tech elites. he criticized jeff bay soes a few months ago. basos said he'll reserve trump seat in space. even one who suggested he might suggest for hillary clinton. trump is speak in about one hour. it's getting more heated. you have a couple hundred protesters. i saw a trump supporter get in a shoving match with some of the protesters. we're going to be here and brick you guys more headlines as they
come. >> we'll check in with you a little bit later on. josh limiten in california. thank you. >> let's turn kayla to larry cud ler who is with us. what do you make of the idea that people in, i'm not sure that those were really silicon valley people. those were people who largely from the african american community don't like some of his rhetoric. does he have a problem in tech land, born of the idea that, oh, my goodness they make a lot of these devices overseas? >> he may. i think in some cases he may. i think in some cases he may be right. in other cases he may be wrong. i'm more or less a free trader. i don't like protectionism. as far as i know, the tech guys love his corporate tax cuts and want it and have been lobbying heavily for it in washington and they would like to have less regulation. trump agrees with us and so does cruz. in that regard, i think an
economic policy, i think techies probably like those guys. there may be differences on social policy, and we will see. i think trump is going to win california easily. as the polls show. >> why would he be there when the real fight is indiana? >> i don't know his schedule, but, yes, he started out in indiana right after the north eastern primary. spent a lot of time there. trump is running a lot of ads in indiana. it's the first time he's had a real solid media campaign. and i think that shows he wants to win that state. i think he's up six or 7 points on the average. i don't know much about indiana. but i do want to say this. i think trump's foreign policy speech is starting to resonate even among the so-called establishment. i have a general who is a trump major critic coming on my radio show tomorrow. and john mccaffery liked the
foreign policy speech and liked the idea of no new nation building and liked the idea of beefing up if military and of having negotiations with some of our let's say competitors. i think trump did himself some good, and i think there's an economic policy speech that's coming the same way. >> as we were saying, we have to leave it there. it was a more thoughtful donald trump, not the reactive donald trump that we've grown accustomed to. we'll be right back. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.
welcome back. stocks have been falling through most of the morning the second straight day. right now the dow is down 131 points off the lows of the session, but still most major averages exemcept for the dow i negativer the doir. dom joins us with some of the mig movers. >> it's broad based in terms of the selling. these are the 500 issues in the s&p 500. each row accounts for 50 stocks. just about only one row slightly more than that in the green so far today. very broad based selling. take a look and drill down a little more toward the sector level to see what's happening or at least go out. sis cession n
discretionary showing signs of life, and it's up fractionally. telecom utilities helping to lead the way in terms of not losing as much money. health care, technology, financials, the three biggest sectors in the s&p 500 leading the declines today. if you go up and check out some of the other areas in the markets that are at least some hot spots today. check out what's happening with the small cap stocks. so far today near the session lows. the russell index showing the sign at least for the downside move today. check out what's happening with transportation stocks as well. sympt some people look at them as an indicator of the economy. transportation stocks near the lows of the day. going down for traffic stocks. also one more, biotechnology stocks. check this out. biotech stocks showing signs of weakness as well. we are off our worst levels today. the nasdaq, biotech, etf, ticker
ibb off by almost 3%. you can see a longer term down trend off by 2r2%. >> energy a big focus with crude and brent touching fresh 2016 highs. just look at the gas pumps, folks. prices going up. both up more than 35% in the past three months. big oil earnings out today. chevron posting its second straight quarterly loss. the first time that's happened since 2002. they still made plenty of money. we have an overrate rating on exxon. and one is bullish on oil in the long term. mr. cooper, why don't you take it first? why are you bullish oil? >> sure. unless everybody just quits
driving cars, we're going to have global command growth. u.s. production is down from last june's peak to 8.9 million barrels. it's fallen 13 of the last 14 weeks. the price is having an impact. unless we see global growth go to nothing, eventually we tighten up. it might be a year or two down the road. >> stuart, what's your thought? >> i'm bearish near term on crude prices. storage levels are too high. the last time we saw crude in this 35 to $40 range was early 2009 aerj storage right now is about 40% higher. i think there has to be a stronger blood letting of production to support these kinds of prices. i'm afraid that a lot of companies are going to kind of dip their toes back into production once we have prices
in the 40s. the last time we were here was about a year ago. and they did the same thing. crude went up to $60 and back down to 30. >> what went right for exxon and wrong for chevron and which of the two do you like better? >> i don't look at any particular stocks. exxon and mobile are integrated. exxon pulled out a profit because of refining and downstream profits that that were losses in upstream. when you look at everything, these lower prices are providing excellent margins for refineries and the chemical units. in the last two weeks over 1 140,000 barrels of capacity has been added to the u.s. refining system and the u.s. is now a net exporter of gasoline. it's clearly in the downstream units and the downstream business segments of the companies helping to provide profits and offset the losses in the upstream areas.
>> stuart, does kyle have it right that because of the structural differences, the way those two companies are built, basically, that's why exxon was able to do what it did and chevron, and what's your view on big oil? which of the big integrateds so you like globally? >> i agree in part with kyle. the upstream was weak for both companies. but the loss was narrow for for exxon. between the companies i have a buy or four stars opinion on exxon and only a hold or three stars opinion on chevron. i think key difference is that exxon's ability to generate positive free cash flow, i think is stronger. and i think it affords them the luxury of maintaining their dividend more easily as well as spending for upstream production growth down the road, and i think chevron is trying to balance both of those goals at
the same time, but i think they're going to have a harder time with it. >> let me probe a little bit there. exxon announced a dividend hike the day after their credit rating was lowers. are you implicitly saying you're concerned about chevron's dividend, something the ceo says they stand ready to defend almost to the death? >> no. i'm taking chevron at their word that they intend to defend the dividend, but i think the other shoe to drop is that if you are going to defend the dividend and make the prioritity, by extension, if you don't have enough operating cash flow, you're probably going to have to pull in the reigns a little more than you'd like to on [ expletive ] ecap ex. i think that weighs in over the long time. >> thank you for your time. we appreciate it. >> tyler, puerto rico is at risk of registering its biggest default to date as $470 million in debt payments are due to bondholders on monday. joining me now is the ceo of ambac. one of the largest insurers of
puerto rico's debt. and our resident expert, kate, is here as well. thanks to both of you. nader, let's start with you. this is the largest default, but it's certainly not the first. i understand you won't be directly affected but what are the indirect affects of something of this size and scale happening? >> thank you for having me again. as we talked in the past, ambac is -- has exposure of the island, about 2.2 billion of the net par exposure as we've spoken in the past. that's the origin issue amount of the bonds we have guaranteed. we don't have any exposure to the payment on monday. it's unfortunate as we've said in the past, we think the path for puerto rico is toward regaining credibility and access to the markets. we think the beth wst way is co sense wall relationships with the creditors. they have been in conversations
with the commonwealth to try and work out a deal. unfortunately, it doesn't look like they're going to get all the way there, and it appears there's going to be a default on monday. >> the governor effectively said as much the other day. it kind of looks headed in that direction. the big e issue, perhaps, is the july 1st set of payments due to which you have exposure of $2 billion. how concerned are you about that given what we're kpnting for monday? >> we're concerned. of the $2 billion, we have about $120 million of exposure. it's not the full 120 we're at risk for. i think the more important risk is the governor and his advisors seem to have adopted a narrative of detaufault. it seems as though the default on the appropriations bill was training wheels. we're hoping before the july one date, either a bill that we
think is a constructive bill will get implemented and/or at the same time a creditor foundation to try to restructure some of the debt so there's not a unilateral default on that date. >> the bill you mentioned for the mention would do two key things, one establish a financial control board over puerto rico similar to what happened in washington d.c. in the past successfully. also it would allow some sort of renegotiations with creditors to take place, and those have been a little bit controversial. are you largely in support of the bill, nader? >> we are directionally in support of the bill. we applaud the congressmen for the hard work they've done together with treasury to try to come up with bipartisan framework, and we think the oversight board to critical that's going to help puerto rico correct some of the structural imbalances that have caused the
current problems. we think that's really the most important aspect of this bill. but we also recognize there may be restructuring needed at the end of some assessment by the board and we're willing to participate and agree to that in terms. we think the bill needs tweaks. we've been working closely with staff own others on the hill to come up with the right balance. we think people need to compromise. we think creditors need to compromise. people need to not let perfection get in the way of the good here, and we think with congressman bishop is working toward the direction of good. >> there's been a lot of attention turned toward puerto rico. headlines at the top of the hour about some 6 00 plus cases of zika virus in puerto rico. there's an episode of john oliver's weekly show talking about puerto rico. do you think the perception will change, that this is a bailout? that's what the perception has been in washington so far. >> it's unfortunate. we think the bailout talk and some of the ads that have
appeared on your station as well are quite unfortunately. we think it's a narrow group of creditors that are funding that for the most part. and we think this is far from a bailout. there's no taxpayer dollars in congressman bishop's bill whatsoever, but these three and a half million americans, this is a place we've controlled since 1898. we have a responsibility to try to make life better for them, and we think we can do that without any taxpayer money being involved. as far as zika virus is concerned. it's unkrfortunately. i understanding is that there is some conversation going on about a round a special appropriation bill to address zika virus. i think health care is one area where we have an obligation to make sure puerto ricans are treated fairly. >> there are a lot of moving parts in this situation. nader, kate, thanks to both of you. >> can i slip in one final question to nader? you've been in the midst of a proxy fight with canyon capital.
thoughts on where you stand ahead of the annual meeting, may 18? >> conditianyon is trying to di or chairman who has done a phenomenal job. we've had really substantial success at the company. we've created $2.5 billion of operating income since the may 2013 emergence. last year we made about a billion 2 of operating income. and we've created a tremendous foundation for a prosperous future for the company. what canyon wants to do is an expedited liquidation of the company for their benefit. we really think it's inappropriate, and not an example of good activism at all. >> we're out of time. for context, they have proportionally the same stock as bonds. it's not like there's a mismatch. >> it's not proportionate. they own $35 million of stock
and about $375 million of bonds. >> 5% versus 5%. >> if they get a so cent pay down on the bonds, that's the equivalent of their stock position doubling. >> may 18th is the date of that meeting. nader, thanks again. kate, thanks so you as well. here's what's on the menu for power lunch. valeant finally releases its annual report, overhauls the board as well. we'll talk to an investor who has been holding the stock and buying more all the way down. plus the battle over drug prices has become a campaign issue. does the government need to step in? that and more. lexus is 300 all-wheel-drive. with twenty-five percent more base horsepower. once driven, there's no going back.
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the iran hostage crisis from 1979 to '81 was a huge market mover, especially in the gold market. the iranian student who was known in america as the spokeswoman for the hostage takers is now serving in iran's government. let's go to michelle crew have a imprier ra in iran with that story. >> reporter: we ran into her on the first day we were here in iran by coincidence. we wanted to interview her. she was part of the event that ended diplomatic and economic
relations between the u.s. and iran. it happened in 1979. that's when iranian students took over the u.s. embassy and -- the american public knew her as tehran mary. because she was the student's spokesperson for those students. we've got a sound bite from her in 19979 along with another student when she was given an interview. >> let us unite together and by prosecuting the criminals of our time establish peace and calm. we peoples of iran, you peoples of america and all peoples of the world. let us unite hand in hand to establish justice. >> she is now a vice president of the country in charge of the environment. i asked her, you of all people, are you interested in american
investment. >> yes. the country is open to american investment. actually, they have been american firms directly and endirecte indirectly coming and looking for opportunities and business opportunities. >> it's astounding to me to hear from someone who's been involved in the revolution for so long to say that you now welcome american investments. why does -- should it not sound astounding? >> it couldn't sound astounding. the problem we've had and many countries, many nations of the world have is the aggressive and military attitudes of the politicians who have sometimes led american politics into military adventures, into interventions in other country's affairs. but on the other hand, dealing with the american nation, dealing on a scientific level,
cultural exchanges, business level, i think there's no, there's basically no problem. >> the vice president falls in the reformist camp. shorthand means she's more interested in more engagement with the west compared to hard liners in the government. she mentioned the iran hostage crisis was painful and a market moving event. a guy who was there was rick santelli. he joins us now. he was a gold trader during that time. we have talked about this before. what was it like when you were trading gold during that time frame? >> it was amazing on one hand and also dress depressing on the other. i started trading in early '79. at this point gold made a run over 200 for the first time. when the hostages were taken it started to go through 500. in january, 1980 it reached the all time high in features around 850 adjusted for inflation about 2400 today. and then it started to come
down. and then around 1980, september, the iran, iraq war started. everybody got long at 700. it never traded higher and waffled. spent 20 years under 500. what i remember when you were long gold during that period of 14 months with the hostages, you were looking at the news. every time there was a rumor hostage was hurt, the gold went up. it was long gold the entire run. it's something i'll never forget. >> yeah, because to be long gold meant that you were better off if something bad happened to the hostages. what was the intraday volatility like on the gold exchange that day -- on those days? >> when i first got on the floor it was $5 limits. by the time they were trading toward their all time highs in september of 1980 it had $50 limits. and there's three guys on the floor trading with me then.
we remember at least twice where it hit the up and down limit twice in the same day. that was volatility. >> wow. >> unbelievable. rick, thanks so much for bringing us up to date or telling us about that time period. guys, back to you. >> michelle and rick thank you very much. michelle, we look forward to your safe return. chairs of valeant falling today. again the stock is down 80% in a year, and up next, we'll talk to a person who has been holding it and even buying a little bit more. did anything he heard from the company today change his mind? that's next.
let's take a look. right now happening in california in the san francisco area, an anti-trump protesters gathering in advance of a speech that he will make within the next couple of hours in a hotel that is, i believe, just out of frame there. our josh lipton is monitoring the situation and will bring us reports if and when anything happens. but, of course, last night there were some outbreaks of pushing and shoving and some violence
there. kayla. >> all right. thanks, tyler. checking on commodities, gold hitting a 15 month high. getting near 1300 bucks an ounce. we'll ask the trading nation team if now is the time to get in. we're also watching oil. these final trades crossing in a couple of minutes. much of the commodities complex being move bid the weaker dollar. we'll give the moves coming up next. from virtually anywhere. it's been smashed and driven. dollar. we'll give the moves coming up next. bid the weaker dollar. we'll give the moves coming up next. d bid the weaker dollar. we'll give the moves coming up next. the weaker dollar. we'll give the moves coming up next. y the weaker dollar. we'll give the moves coming up next. ro it's been in the rain... and dragged through the mud. the 2016 gle. it's where brains meet brawn. lease the gle350 for $599 a month at your local mercedes-benz dealer. ♪jake reese, "day to feel alive"♪
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hello, everyone. here is your cnbc news update. paris attack suspects as arrived at a prison. earlier this week he was extradited from belgium to france where he'll face trial for his alleged role in the november 13th paris attacks. he's due to appear in court may 20th. at home the u.s. supreme court refused for now to block a strict voter identification law in texas. the justices turned down the appeal from civil rights lawyers who said the court should put on hold the requirements for showing a u.s. passport. critics say it will make it harder for voters to cast bo
ballots. at the white house, the president and first lady hosting a international jazz global concert. some high school students got to go and learn jazz history. performers include arena franklin and sting. a delaware couple facing criminal charges after a woman upset over a wrong chicken wing order brought out a gun at a local restaurant. according to police he received boneless wings after ordering bone wings. police found her in the parking lot with the gun. no no sign of the wings. she ran afowl of the law, apparently. that's the news update, kayla. back to you. >> that's quite a story. she must like her order just so. >> exactly. >> sue, thank you. meanwhile shares of valeant lower after the drug company
reported delayed earnings. is it now time to buy more valeant stock or should you stay away? patrick kazer is a portfolio manager. patrick, you've been a shareholder through thick and thin. stocks still down 68% this year. why are you holding onto it? >> well, let's define thick and thin. it's not like we bought it at 250. it was overvalued then. but right now we believe it's dramatically undervalued. i think valeant is worth 70 to 90. the interesting thing to me with the stock down again today is we look at the bond market. the bond market has recovered almost all the losses in valeant. i looked this morning, 20 178 18 bonds have almost completely recovered to the levels of last fall and the stock has not. it's an unusual disconnect.
i think the interesting thing with the annual report this morning is what wasn't there. you didn't have a qualified opinion from the auditors. the auditors gave it a clean bill of health. cash flows weren't restated. there's a lot of positives out there. if you were looking for negatives, there are some people finding negatives in anything valeant does. there's things to point to, but a lot of the worst fears aren't being realized. >> so there is a silver lining or at least you're finding a silver lining in the report that was filed today, but the company did restate 2014 earnings, taking a knock of about nine cents a share. they disclosed new investigations -- and laid out a breadth of investigations they're under. >> that doesn't worry us. that's not new information. the investigations, yes, there are investigations. they're a popular target. frankly, probably would have surprised us if there weren't additional investigations.
but the audit committee went through, didn't find, the ad hoc committee went through and didn't find anything else to restate. people with incentive to find things, the ad hoc committee, they said there's nothing else out there. so, yes, there will be investigations, but that's the same headlines we've been dealing with since 200 a share and $150 a share. i don't think there was a lot new in today's filing. >> so patrick, you put a pretty benign, maybe even favorable reading on today's file and the news of the day, but the market is. what is the market not understanding here? >> so i'll admit to not understanding. one of the things we looked at when we first thought valeant was let's suppose things are worse. let's suppose they're $10 or $9. what we got wrong is we didn't think the market would put a three or four p/e on the earnings. we thought the bottom was six or
seven p/e. it's been worse than that. i can't tell you what the market is thinking other than i talked to other professional investigators in the industry and say are you looking at valeant. they'll tell me these things usually work out pretty well, but i don't want to own it. i don't want to say to my clients we're buying valeant. there's a lot of professional investigators that call themselves fundamental analysts that are staying away because they're afraid of the negative the portfolio. >> it's not a stock for the faint of heart. we tip our hat to your conviction. patrick kazer of brandy wine global. coming up monday, another big valeant shareholder you won't want to miss, bill ackman. that happens at noon eastern on cnbc. gold hitting the highest level in more than a year today. what's driving the gold gains?
here to discuss is the trading nation team. kim forest and max wolf. kim, we'll start with you. it would seem, at least this week, that much of the gold rally is driven by the weak dollar. how much do you chock that up to? >> well, for this week, we think a lot. here's why. we are an ria, and we have clients, and there hasn't been anyone really asking about gold at this point. that wasn't so back in february. we did get some call for very nervous investors asking what we thought about gold, going to cash. that's that hangover from 2008 that when the markets really declined rapidly that drives people into the yellow. but that doesn't seem to be happening. our guess is the falling dollar is boosting gold at this point. >> max, what would you say about
that? the fact that gold moves both because of investor nervousness and also because of the weak dollar and the fact that silver is performing better than gold year to date. how would you read all of that? >> it's great to be here. i think silver is a little bit of a leverage play on gold unless there's a specific demand for gold outside of the investment thesis. we think it's investor demand driving gold up. gold is an underperforming asset during a giant asset price inflation and gold is there when you're scared and when you're worried about price uncertainty in the future. and right now gold is there because you're scared and probably should be just because the equity markets are ignoring bad news doesn't mean everyone wants to. and if other reason is it's not a guaranteed negative return. asset demand from gold as opposed to cash. fear about negative news flow is probably driving people into gold even though it's not driving them out of equity markets for now. that makes us nervous and makes us look at gold.
>> so far gold up 22% up in several up 29%. kim, max, thanks to both of you on trading nation today find more market incites. drug prices are a political hot topic this election, and some big companies have been caught in the middle of that. does big pharma need more regulation? that debate up next. >> i like to refer to it as market uncertain if i. an elevated mix may show moves to the downside or up side.
all the services of the post office right on your computer. get a 4 week trial, plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again. zblanchts little more than an hour of trading left to go for april. but there is a lot to work forward to next month. we have a look at what to expect in the month of may, and that old cliche. >> should we sell in may? >> and go away. >> before we get to may, let's wrap up april. it was a big month, and yes, we saw recovery in stocks here at home, but there are a lot of global indexes that are outpacing the gains we're seeing
here. the best performing global market so far in april -- >> russia. >> it is. wow. i am impressed. rts moscow up 12.5%. the commentary from the fed also helping lift sentiment. there are other standouts in april including brazil on the prospect of a leadership change. argentina opens up its economy to investors. china, notable improvement in chinese day in. it's down about 2% in april. strategists say the health of china's economy continues to be a central focus for investors. will the rebound continue? we get china pmi on sunday night. likely something to react to on monday. in brazil, voting on an impreachment on may 11th.
politics will dominate the conversation in europe. spain holding new elections after coalition talks failed. a debate continuing to fire up ahead of a june 23rd referendum. a lot to keep an eye out as the events play out. these are the charts you want to keep an eye on. the japanese yen hitting an 18 month high. does this mean investors are losing confidence in the bank of japan and their rate policy, and gold, a lot of it tied to fed policy. it could potentially mean if we see the japanese yen and gold continue to rally, a certain level of risk aversion in the markets and perhaps a rotation out of equities. that will be the question. >> thank you. have a great weekend. kayla, over to you. >> let's keep the market conversation going. our next guests have thoughts on whether or not you should sell in may and go away. with us is paul hiki, and jeff knight.
gentlem gentlemen, thanks for joining us. paul, if you had told me three months ago that industrials would have been the best performing sector, i don't think i would have believed you. we've seen a turn about in u.s. equities. do you think it's time to reallocate or allocate to cash? what would you do right now? >> kayla, you're right. a lot of things that have happened in the market you wouldn't have predicted. i think just because we always track the seasonal patterns, they're low on our list of priorities. as we go into next week, what's changed from this week? not much. the two big forces at play in the market right now are the fed and oil, and then other factors impacting them. but oil is working. it's stable. it's trending higher. and the fed has basically told us that they're in no rush to hike rates. and the slow economic data that we've seen relative to expectations this week certainly
isn't going to give them any predilection to getting more aggressive. i think we're a little bit overbought here. the comments yesterday from carl icahn give retail investors an excuse to sell after big gains. i think for the summer months, you shouldn't necessarily be trying to go to all cash here. i think that would be a little bit extreme to understate things. >> jeff, the market has been able to diverge from this oil drip, but paul mentions we have the fed meeting in june. we have opec meeting in june. we have earnings guidance for the second quarter that's not necessarily great, and then you have the brexit vote on june 23rd rd. from a calendar perspective, would you be nervous buying into that? >> not necessarily. remember the phrase sell in may and go away? it comes from a study that says most of the stock market's gain
accrue from november through may. you don't sell at the end of april. you sell at may. at the end of may we had a couple of bad mays a few years ago. i think everybody is now accelerating their seasonal r e rhyming. that's not a great reason to sell. if anything, the things you mentioned are part of what has subdued investor optimism and subdued equity market performance. it's created room for upside surprise. >> jeff, no one is inclined to get in front of a bullet train, the japanese yen. an 18 month high against the u.s. dollar. how long do you think this trade will last when general consensus is that the bank of japan at some point will camp ramp up stimulus, perhaps even this summer. >> the boj seems to enjoy surprising the markets. i was surprised they need something this time around. one would have to begin to think that it's only going to take a little bit more yen strength
before the surprises start to go forcefully in the other direction. that's what i expect. i think the stronger the yen gets, the more problematic that becomes for the japanese economy. i would think that's policy priority over the summer if anything. >> unfortunately, we have to leave it there. thanks to everyone. the rising cost of prescription drugs, does big pharma need more regulation? that debate coming up next.
>> the issue of drug prices is a big one in the election for president. democratic front runner, hillary clinton saying the biotech and pharma industry needs more regulation. but critics argue that's not the answer. hear to weigh in, ed rendel and jim green wood. meg and mr. greenwood. people are concerned about this. mr. ackman in testimony the other day and the former ceo of valeant both side, basically,
hey, i wish we hadn't done it the way we had and relied so much on raising prices. so what's the solution here? >> well, i wish they hadn't done it either. because that's not what our industry is about. our industry is about innovation, new products not taking old products that have been on the market forever and gouging the prices. when you say what about this and this meaning the spiraling cost of drugs, let me give you a statistic that most people don't acknowledge. in 2015 the net increase in pricing for drugs was 2.8%. 2.8%. so that's less than premiums, insurance premiums are increasing. that's less than people's out of pocket caused by insurance premiums systems is growing. so when we hear politicians and others talking about the skyrocketing drug prices, it's not really accurate. >> the narrative we often hear from the drug industry is the
valeants and tur its are bad actors. when you see the 500% price increases, do we need regulation to take care of that? >> what regulation will do is our industry -- i mean, think about where we are. first off, our industry has solved some of the most incredible health problems we have faced. aids used to be a death sentence. now, if you get aids in your 20s you live to your 70s. hepatitis "c" is cured. we have done amaze things. we are going to get started. we'll use cell therapy, precision medicine. but all of that is only possible if investors want to invest in us. it's tough to invest in us because we're one of the most risky things you can do. and so the basic economics are, high risk, high reward, you have to have that. >> let me bring in your fellow
pennsylvania, mr. greenwood, governor rendell to sort than. >> hi, governor. >> do we need price controls or some sort of regulation that says you can only raise prices this month -- this much, depending on what level of competition there is for a particular kind of therapy? >> well, i empathize with what jim said. look, every country in the world price controls except the united states. so the drug companies are forced to make a lot of the money they use for r&d here in america by charging prices that are excessive, when other -- what other developed countries get their drugs for. we don't want to stop r&d but the government is a significance contributor to r&d funds. research hospitals, medical institutions do it as well. and look, there are bad actors and the bad actors have to be
controlled. and what secretary clinton has proposed is not just regulation, but it's more competition. speeding up generics to speed up competition, allowing medicare to negotiate prices with the health insurance companies. where she would like to see regulation is in capping out of pocket costs that insurance companies charge to consumers. she would like to eliminate the write-off -- the corporate write-off for advertising from direct advertising to consumers. use that money to bolster the r&d to make the r&d tax credit permanent. she wants some level of controls, not much. mostly expanding competition because competition in our marketplace in a free enterprise system drives down prices. >> well, we favor generic competition and in fact we were the lead advocate for the bio similars to make generics of biologics so there's price
competition. we support that. >> bio does, but pharma doesn't. >> pardon me? >> i said bio does support that, but pharma doesn't. >> that's not true, governor. pharma was a very strong advocate along with bio for bio similars. that was incorporated in the affordable care act several years ago. we're seeing the first bio similars beginning to get on to the market now. as far as the governor's point with regard to nih funding, yes, nih provides $30 billion plus a year. our industry spends twice that amount. actually turning some of that basic ideas into real medicine for patients. and that's as i said a highly risky venture. 90% of the projects fail. but we don't quit because the need is so immense. >> i want to follow up on the governor's point about hillary clinton's proposal to limit co-pays to patients. because this is that patients feel. what they're paying at the pharmacy and when it's such a
huge percentage of the overall cost of the drug that's hugely influential on how they think of the price of drugs. what should we do about that? >> that's right. the insurance industry has made it a point to charge people these ridiculously high co-pays and coinsurance. i mean, it's not insurance if somebody tells you have to come up with $5,000 or $10,000 or $20,000. now, you can say -- let's say they're charging a 30% co-pay. you could say -- that he's $30,000 for a $100,000 drug that may save your life. that's because your drug is so expensive, but if we cut the price of the drug in half, it's still $15,000 which is not affordable. if we cut it 75% it would be a $10,000 co-pay so i think something has to be done about the co-pays. they're not really insurance and they're unnecessary. >> well, governor i know we're
almost out of time. but i want to pose the same question to you. do you think it owns the drug companies to lower the overall list price of the drugs or something to be done in shifting the burden of how insurance works with co-pays? >> well, jim makes a good point. and the insurance companies certainly bear some of the blame for this. look, i think what secretary clinton will do if she becomes president is convene a real quick down and dirty summit on this and figure out where the pressure points are. and try to get everyone to cooperate to significantly reduce out of pocket costs because it's tough to tell an american senior they have to pay twice as much for a drug or three times as much as a canadian senior. >> and we have -- i'm not sure about the done and dirty part, but we're up for that conversation. >> and an all pennsylvania segment there. thank you very much. mr. greenwood and mr. rendell. now to sue herera with some breaking news. >> yes, you're looking at a live picture of california. that's the grounds of the hyatt regency hotel where a trump
campaign event is taking place and mr. trump is expected to speak at this event. there are several hundred protesters that were behind barricades a short while ago. they rushed the barricades, broke through the barricades and then the riot police, they were in riot gear moved forward and tried to push them back. obviously a very fluid situation at the hyatt regency hotel. we're continuing to monitor it. however, it is a crowd that i have been watching this story for much of the day. started out relatively small and now they they're saying it's several hundred proertd -- protesters. it's starting to get bigger. these people oppose donald trump. he's scheduled to speak to california republicans. there is large contingent of police trying to head off potential violence which of course we saw last night at a rally in southern california. costa mesa in particular.
this is burlingame, california. i wanted to bring it to your attention. they did rush the barricades before. you see that police officer he has the baton out. they managed to push the protesters back but it's obviously a very fluid situation. i don't know whether mr. trump is at the hotel yesterday, but he is scheduled to speak to california republicans this afternoon. in southern california last night, there were several arrests. there was damage done to cars and it became a situation that became quite unruly. the burlingame police are trying to avoid a repeat of that situation from southern california. so we're going to monitor the situation. they broke through the barricades a short while ago. they're continuing as you can see in this live picture to try and push people back. we will follow it for you, and in the meantime, i'll send it back to you. >> where are these situations have -- obviously, these are protesters, you know, exerting their rights to protest and so
forth. where are these situations that have seemingly gotten out of control is when the protesters have come into contact with, sue, the trump supporters. we don't know whether they're trying to keep them apart or whether there are trump supporters who are going to the event who might come in contact here. words get exchanged, tempers get heated. >> yes, tempers flare. you can see in this particular crowd, a number of people not only have placards with statements on it, but a number of people have flags. specifically the mexican flag. and mr. trump has made some controversial comments in the past of course about hispanics. it was expected that there would be a large contingent turn out for this, that the hope was that it would stay peaceful. right now, it's getting a little bit unruly. >> obviously i'm not hearing the audio there. what you -- what we all support as americans is the right to have your point of view heard.
obviously to demonstrate in a peaceful way. but if you see images like that where individuals seem to be trying to go out of their way to be provocative with respect to the police officers who are trying to maintain order, that is where it can run out of -- run off the rails as well. let's go to josh lipton who is on the phone and i gather on the scene there in burlingame. josh? >> yes, so right outside this hyatt, in burlingame which just north of silicon valley. trump should be arriving any minute. as i'm sure you saw, what looks like -- listen, there are hundreds and hundreds of protesters here and it looks like there was a group that tried to get through the barricade into this hyatt. at that point, riot police did step up. the police are out in full force here and you saw them push these protesters back. they have now pushed them back again. so we're waiting here, awaiting trump's arrival. he was scheduled to speak at
3:00 p.m. eastern. we'll bring you the headlines as soon as they cross. >> all right, josh, we'll be following that story presumably for the rest of the afternoon, as protesters i would say looking provocative with respect to law enforcement there. and hopefully everything will resolve in a peaceful way. kayla tausche, thank you for joining me on "power lunch." thank you to you. good to be with you. thank you all for viewing as well. "closing bell" starts right now. all right, tyler, thank you very much. bill griffeth and kelly evans, getting ready for the last hour of trading for the month with the dow down 133 points. we continue to watch the developments there in burlingame, california, as they await the arrival of donald trump for a rally at the grand hyatt hotel that already is finding some controversy, sue herera as the protesters