tv Power Lunch CNBC May 5, 2016 1:00pm-3:01pm EDT
benefit from baba today. it's a chinese online reseller, or seller of electronic gear. bought that one, judge, earnings monday, i'll probably hold it through monday. go pro and wynn tonight. we'll talk about those on the other side. that does it for us. power starts now. and we are following a big story out of canada at this hour. tens of thousands forced for evacuate their homes as a massive wildfire burns unchecked in the heart of canada oilsands region. crude oil rocketing higher on fears that the blaze will disrupt the flow out of the country. i'm michelle caruso-cabrera along with melissa lee and tyler mathes matheson. brian is on assignment. deidra? >> reporter: we can see and
smell the fire from here. we are about 15 miles south of fort mcmurray. the winds have changed making these masks necessary. we also have developments from the oilsands just north of fort mcmurray, rear learning that reuters that conoco phillips is the latest company to shut some of its operations in the region and learning from canadian press that oilsands executives are worried that the wildfire could create gaps in the northern alberta power grid. that would lead to more closures of operations in the region. this is a developing story. officials say that the situation and conditions remain extreme and winds are helping to spread the blaze. still we are about 15 miles south of fort muck murray where the fire began. we'll continue to monitor. woo currently on highway 63 --
>> i think we're having trouble with her mike. >> thank you. that sparking a big reaction in the oil markets. we are actually off the lows of the session. what needs to be ton to contain that massive blaze? joining us on the phone is chief tom porter, who heads the california department of fire protection protection in the southern region. let me start with a random question, am i wrong? or are they fires just getting bigger every year? >> that's a very good observation. let me first say, our hards here
in california and fire service are with those in alberta and fort mcmurray. we're really concerned for everything that's going on up there. as you stated, fires have been growing. we have seen in the last ten years, firing in california, texas, oregon, washington, idaho, and now alberta, really, really massive proportion. >> why is that? why is that, do you think? >> we're seeing the effects of a change in climate. we're seeing fire seasons grows in length, starting earlier and ending later. these are condition that is our generation and probably several generations prior to us have never seen. >> i guess the most important thing, if you are unfortunate
enough to be caught in the line of fire quite literally is to heed the calls by the fire officials to evacuate and evacuate early. the last thing you want to do, right, is hang out? until the last minute? absolutely. >> when evacuation orders come, that's a serious order. what we really want people to do, and unfortunately we're a bit further along the line in alberta, but what we like people to do is be ready and be set, and then go. ready means have a plan, have all of your important papers, your medications, dog food, cats, other animals, have a plan, and then set means when you see smoke in the air get prepared to leave. when that evacuation order
comes, we need you to go right away, not wait around. we're seeing that the evacuation times -- or the time that fire is burning into evacuation areas is shortening. so that's one of the things we're trying to do is really get out ahead of these fires and make sure people are out of their way, so firefighters can come in and do what they can and fight the fire without impeding their progress by running into traffic jams and firefighters could be impeded as people try to flee. let's talk about the strategy as a firefighter that one employs in a situation like this, are you actually trying to put the fire out or trying to redirect it into areas where they might
be less fuel for the fire to consume? >> yes. in these massive fires, there is little that we can do at what we cause the head of the fire, where the growth is extreme we tend ton people out thor areas and focus our amendments on areas of the fire that is less intense. we do that because of the wind shifts. as we've seen in alberta, there's been wind shifts, and when we want to make an attack where a fire is of a size a proportion that we can make an effective attack on it. >> it was truly amazing. i happened to be in seattle last summer when the fires were burning way east of seattle, by 100 or 150 miles, you could see and smell the smoke in the air just because of the way the winds were blowing. on the next day as the winds
changed, it moves in a completely different direction. it's a very unpredictable thing, isn't it, thom? >> very much. we can-looking at the fuels and anticipate where fires were gro absent of wind or slope kind of effects, but when the wind kind of shifts on us, that really pushes fire in all different directions, and weather is something that we watch very close closely throughout an eye vent. thank you, chief. thom porter in southern california, and like you, we wish the people out there the very best and safest. the ongoing strike in verizon, it's been nearly a month, the slow down of about 2% in that time. today protesters demonstrated outside of the company's annual meeting in albuquerque new mexico, our own jane wells is there with more. jane? >> reporter: yeah, michelle,
veld different from outside briefly inside all the directors were reelected, the compensation packages approved. all the shareholders proposals were voted down, including one to separate the chairman and ceo roles, another to require shareholders approval for so-called golden parachute severance packages, as verizon management left the east coast to descend on albuquerque, are things sully breaking bad? [ chanting ] >> the unions representing the 30,000 members claimed to be holding 400 protests around the country today, including the large one here. the main sticking point isn't pay or health care, but verizon wants the flexibility to move customer calls to call centers outside regional center. the union says that means moving jobs overseas. there appears to be no movement there. >> we're actually concerned about the future of the company. we they it's good for the public
and good for the company to invest in good jobs, to business fios, the high-speed broadband product, instead of spending $8 billion on yaw hughes which is a failed brand. >> i did speak off camera with the ceo who said they have a nondisclosure agreement and are in the second round, but can't say anything about it, because they just don't have enough data, quote. and more than 1300 have crossed the picket line to go back to work. >> jane wells, thanks very much the company said ted make a half million cars -- than originally forecast, then on the conference call, he raised the bar even more, forecasting a million vehicles annually by 20 to. >> that's my best guess, that for half a million in 2018, and sort of riverly 50%-ish growth
from there, then it's probably around a million in 2020. >> needing some additional capital, so that could be what is weighing on the stock today. sanofi, saying it may raise the ovr. the stock is you can abouting the trend in the past month alone. can m & a by a lifesaver for biotech? guys, great to have you with us. >> i'm going to start out with you. there does seem to be so many reports out there. whether it's reuters city saying that astrazeneca could be a suitor. >> i think they are going to be
acquired. i think it's just a matter of time and price. sano sanofi, if they're serious, i would say that they should raise their bid. we've been in print saying that, you know, we could justify a 70-plus dollar valuation on the company just based on their lead drug for prostate cancer, and they also have a wonderful pipeline, so i think there's a higher bid to come. >> is this a specific case in the center, do you think there's more deals to come? merck's ceo saying that they're specifically looking for more deals, but they're not looking for consolidation deals, though they would be open to a biggest deal than the cube is last year. >> right. i think this is he specifically med i vation. as far as we're concerned the later-stage assets are more likely to be acquired, so we are picking through the rubble of biotech toss if there ares in late-stage companies that have -- >> have you found any? >> we're still looking.
i should say we're spending a lot of time -- those without regulatory risk, or with clinical trial risk, i should say. once you finish a clinical trial, assuming there's no terrible side effects and it works, you're likely to get approved. that's where we're focusing our attention in the biotech space, though i think medical devices are more likely as is sector to do well than biotech. >> do you think it would be m & a that helps the sector out of its funk? >> i hope so. >> is the sector undervalued right now? >> we think the large-cap stocks are close to historic low. >> such as? >> but they're relatively attractive on a valuation basis by the way we track it. i would say the one dysfunction between the desire and the actual realize sag of m & a is the bull market of 2013 to 2015, where managements and boards saw
their stocks at, you know, $40, $50 a share. >> but you don't have stock as currency to buy another stock? >> yeah, the prices are in the single digits, and everybody remembers the salad days when they were 40 and 50, which maybe tripled the current market cap, so that's the real sticking point but they generate a lot of cash. can't they tap the debt markets to find a deal if they really, really wanted to do a deal? >> yeah, they could, but again, like mike said, a lot of these boards are anchored to price far far away, and so if they don't want to sell, the only option really is to go hostile. i don't really detect an appetite on the part of big farmo for hostile transactions. i think they would rather by friendly.
i think there will be an increase in deal activity after the election once we have gotten past some of this. >> yeah, i agree with lester. a lot of questions of the managements of boy tech companies during the first quarter asking specifically will you go hostile? pretty much everybody was begging off of that. >> going to leave it there. thank you for joining us. melissa, i have a question. in brazil, it became a proxy for the election, and i wonder if the biotech index which got hit hard this week, is that a reflection of the presumptive nominee being hillary clinton and donald trump? i wonder if it starts to trade exclusively on the expectations about whether or not hillary clinton will be president? >> i think that's a difficult call to make. we have seen it take a tumble when the candidates started to talk about price controls, what is it, last summer? >> right. >> the decline has extended ever since. i don't know if it's -- if you take a look at the chart, it's
been a pretty depressed chart. >> right. i wonder if that means more and more people thinks she might win. >> expect for the fact that donald trump, we don't know where he stands at all on this. >> on a lot of things. >> right. that would be even perhaps a bigger wild card out there. >> low interest rate guy. >> that's true. >> low interest rate. >> very different things. >> very different. >> all right. in the meantime we're coming up amazon a multitrillion dollar company? a big silicon valley investor says yes. do the analysts agree? we'll talk about that, plus donald trump is a businessman, but will business get behind him? what ceos think about the primpive nominee. we're back in two.
welcome back. i'm tyler mathisen, along with michelle caruso-cabrera. michelle lee is also in the house. america's top ceos are all across the municipal in terms of support. in just the past 24 hours billionaires barry diller and -- spoke very candidly about mr. trump. >> there's nobody i've ever known in politics, ever that has risen to national -- i mean, to the presidency that was actually of evil washington. i think he's going to the
the president. whoever he has around him will be people who will help get things done. >> well, there you would see a bit of a division. let's talk about it with sydney final stein at dartmouth, his book is called request super bosses." and on theie ignatius two of the best business schools in the country represented here. you know six or seven years ago president obama was roundly criticized for poisoning the well against business, for using a phrase "fat cats" in referring to bankers. mr. trump, as he speaks about certain businesses hack even more pointed, calling out those businesses, whether it's carrier air conditioners or caterpillar by name, is mr. trump going to be accepted by business ceos if
he so pointedly criticizes companies by name? >> i think that ceos don't have much of a choice. if it happens to be a president trump they'll have to deal with him. i find it fascinating with the clip of barry diller to actually say what he said in public, that is really something. but the truth is they have to deal with him, have to work with him somehow, and president obama was really criticized tremendously for that. somehow candidate trump is not getting criticized quite the same way. >> why do you think that is? >> we have a teflon ceo in ronald reagan a while ago, and people are saying maybe we'll have the second coming. the teflon part is sticking. >> otty ignatius, he has many ideas that mike cause problems for lots of business. 35% tariffs on goods made outside the united states,
criticizing companies like apple. can he be a business friendly president? >> i think we don't know. i think we don't know very much about donald trump. at one point there was a sense to support trump was to fail a litmus test, that history would -- we have six months before this election. i think the questions you are asking will disappear, because he is the nominee, representing the republican party. he may well this thing. i think people will adapt and find ways to work. some ceos will support him, some won't, i don't see him beings on ra sized as inappropriate by a big group of ceos out there. >> though -- and certainly i would think that business would like a lot of his tax proposals, lowering the corporate tax rate, making it presumably easier to repatriate dallas and profits
held overseas. that would work in his favor, right, addadi? his policies will have advocates and detractors. professor f oor final steen, do have the characteristics of a super boss? >> i don't think that would be the word to describe him. the key attribute is the ability to adapt, adjust, be agile, and that's been shown throughout history. i go back to president obama and say if we knew that the financial crisis was going to be as severe as it was. >> gentlemen, thank you. we've got to leave it there. sydney finklestein and amount di ignatius, thanks very much. ♪
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take a look at the price of oil. we're hitting session lows. we lost about a percent from the very top of the show, and take a look at what's going on in the markets. on the s&p 500 we are also hitting session lows here. down by about 0.2 of 1%. it is worth watching. we do seem to be tracking -- as for the sectors, there are huge declines in consumer discretionary sector -- actually not anymore, but health care and energy are leading the ways.
utilities and discretionary are lower, the department store complex that's where we're seeing the most pain ahead of a lot of retail earnings next week. rick, what do you see going on in the bond market? >> session highs on price lows on yield. look at the intraday of 10s we have traded down to 175. should we close down there that would be the lowe yield close one day shy of four weeks. hey, i can remember 30 basis points. that's long gone. everybody's tracking together, of course, maybe year to date, ten years even more interesting. what a pattern, basically double bottoms in the mid 1610s. we're getting ever closer to that. dollar index, third day of stabilization off a count we haven't seen sis basic already our new year's eve parties, because it's the beginning of 2015. let's look at a to-years chart.
the more i stare at that, the more i show it to traders and take off what it is, they say, wow, that chart looks like tell go down further. tyler, back to you. >> rick, thank you very much. >>s make or break it for go pro. the company reporting after the bell today. the stock down 77% in a year. what is the problem there? and what will it take to turn it around? that's still ahead on "power lunch." [ soft music ]
seek federal permission to continue to market. george h.w. bush and george w. bush say they plan to sit out the general election. they say they will not endorse the presumptive nominee and they don't plan to vote in the november election. british prime minister david cameron and osborn casting votes today. local and may i don't recall elections are taking place. voters are heading to the polls on what's been dubbed super thursday. walmart is bringing greeters back to the front door by midsummer, the employed crease had been positioned throughout the store to help customers, it was so successful that walmart is moving them back to the front lines and the front door. that's the cnbc news update this hour. michelle, back to you. thank very much, sue. wow, both presidents bush not going to vote. what does that tell you? we have rolled over, starting just about 1:00, "power lunch"
won't take it personally, but the s&p 500 is at session lows, lower by more than four points. slowly by surely seeing every sector start to roll over as well. health care is positive. energy is barely positive. it lully had been negative despite the fact that oil is higher, appeared the worst performers utilities where we see american waterworks, edison, all lower by more than 1% at this hour. tyler? >> michelle, let's drill down on one of those sectors, including pet consumer discretionary. we have gary bradshaw as well, senior vice president and portfolio manager at hodges capital management. both betting on the consumer. welcome to both of you. let me start by asking, you said at the beginning of the year, saw you this as a year with some volatility, but basically the start of the year would be flat. you have been dead right, with the exception of nasdaq, s&p and
dow basically flat, do you expect it to continue? >> yes, i expect it to continue. essentially we're in a situation where the u.s. economy is not in recession but it's not fire on all cylinders, either. there's very uneven earnings growth underlying the market. this is the other thing we want, to get returns, you have to actually look within the indices because of that i uneven performance, not at the index. so it's really a stock picker's years, in other words, you can't index your way to success. >> it's an active manager's year. a lot of people rode the inadditions and rising tide lifted all boats, and we're shifting to a market where active management -- >> you think that the market is richly priced. gary, do you see it that way? and second, why do you have too
choices in the consumer discretionary area that you can get and talked about? >> well, tyler, you know, we think investors are too pessimistic. in this low interest rate environment, we think the market will do and we expect the market to be up. we think the market multiple can expand. good companies such as home depot and microsoft that we like, we think the multiples can expend as the earnings and cash flow expand. at the hodges blue chip fund, we think that home depot can be a very good stock, as they have the wind at their back, with housing doing better and home pries going up. people feel good about putting money into their homes. they just raised their dividends
a 17%. and they're buying in a ton of stock. that is quarter is down, but it's -- and microsoft has a great deal yield with $102 billion of cash in the bank. >> so, patry, you liked energy, you've been borne out on energy. energy has turned, do you think we've seen the bottom in oil. that's question one, and question two, you like consumer discretionary, what's your argument behind that? >> on energy i think we're starting toss the shakeout, so it's time to start looking selectively at opportunities.
i would like to see inventories drop off. underlying disposk growth has been pretty solid. consumer expectations have been pretty solid, so all the elements there, the ingredients are there to have continued consumers growth. the big driver of consumption growth in the united states has been steady job growth, and that's where, you know, tomorrow's job report will be significant, because what we saw in the first quarter was a dramatic fallout? business investment, so far that has not translated into a falloff in hiring. if it does translate into a falloff in hiring, that could derail the consumer growth, but so far we have november seen that. left it there. patry, thank you very much. and gary bradshaw with hodges
capital. go to cnbc.com to see another name that gary likes right now. still ahead, our exclusive interviews with john williams, his thoughts on the economy and donald trump saying he would replace janet yellen. that is straight ahead. we are keeping an eye on the nasdaq as it nears correction territory. this is just two points away from being down a full 10% from the july all-time high. "power lunch" will be right back. ...ever. get your own 24/7 dedicated business account team. and with double the lte coverage in the last year, you can get more done in more places. right now, get 2 lines with 6 gigs each for just 80 bucks... and for a limited time, get a hotspot free. yeah - free. switch your business to t-mobile @work today.
running about half a point, 0.7 on first quarter gdp after a not to write home about 1.4% in the fourth quarter the last year, but you've been pretty optimistic about the turnaround. give us a reason why. just because you live out here in san francisco? >> no, it's not because i'm just optimistic. i think we have to be careful to not overrook on that data. we've seen first quarter data tends to come in much more even after the seasonal adjustment, and my colleagues at the san francisco fed think that the underlying growth is really around 2% in the first quarter. we'll have to watch the data as we get to march, april and may going forward to see whether it comes true. i'm not taking too much from it. >> it could be in fact a point and a half higher than actually being reported? >> actually. that would be completely consistent with the trade of what we saw residual seasonality
for many years now. the other thing i would point out is job growth has been really good during the first quarter. other indicators of the economy have always been good. i think it's the gdp data that seems to be out of the sync. >> critics say it's not really indicative of a strong economy. >> first of all, it's not all part time, it's not all low wage. we're seeing increases in jobs throughout the spectrum of low, medium and higher-wage jobs. and we're seeing the vast majority of jobs are full time jobs. still an elevated number of part tiism jobs, but those numbers have been coming down. i look at a lot of data. they're all pointing in the right direction. >> the fed held off in terms of raising interest rates in part of what is going on globally. what is your gauge of the effect or po teng as for global
economic weakness for tect it. >> we spend a lot of time studying and analyzing, and that is true in january and february, there's a lot of certainly and concern about what's happening in china, i think we have seen that calm down quite a bit, and the incoming data are consisten with reasonably good global growth. concerns i've had over global economic developments have come down and the uncertainties seems to have come down. >> you sound like a guy who wouldn't be reluctant to raise rates relatively soon. my focus is looking at our two mandates. maximum employment and price stability. we made a lot of progress on employment. the inflation data have actually been pretty encouraging regarding getting back to 2% inflation, which we want to see. i think we could stay on our bake strategy of gradually
removing policy accommodation over the next few years, and that would involve rate hike it is. >> everybody wants to know how many this year? >> data-dependent. typically people set two or three rate hikes this year. i think that's a reasonable view, but we'll be watching the data, make acquire that q1 blip or slowdown in gdp doesn't persist, making sure we're making the right call. >> here in san francisco you can't by immune to what's happening nationally on the political front. we had donald trump on this morning, and here's what he said about janet yellen and low interest rates. gives a listen. >> when her time is up i would most likely replace her, because i think it would be appropriate. she's a low interest rate person, she's always been a low interest rates person, and i must be honest, i'm a low interest rate person. if we raise interest rates and if the dollar starts getting too
strong, we're going to have some very major problems. >> so, a couple things, first of all, is it weird that a member of the gop, which has been very critical is now saying that low rates seem to be good? >> well, you know personally i think chairman yellen is doing a terrific job. she's been navigating the fed through very difficult and challenging times. i think she's not only a great economy, great policy maker, she's a great leader of the fed. i'm 100% in full support of what she's doing. in terms of politics, honestly my view is to keep my head down, study the data, focus on the goals we've been given by congress to achieve price stability and maximum employment. that's what i'm focused on. keep out of politics, stay apolitical. i get that, but if our survey, we asked economists, fund manager and, on the effect of the presidential campaign on the outlook, and many said it was
negative. it has to figure into your -- there's the data, 6 is% in april said the effect of the presidential campaign on the outlook is negative. that is seg we've been studying for many years, how uncertainly around politics do affect the willingness to invest to willingness to hire workers form that's something we have to take into account to the extent it's happening. that's going to affect obviously our assessment of appropriate policy. right now the indicators i focus on about uncertainly, consumer confident, business confidence, they actually look pretty good. i'm not so worried about that, but again we loot at a lot of data, so just focus on our job. >> i lived for six years in russia, a place that people wanted to leave. now i'm in sfanz where there was a recent poll that said 34% want to leave san francisco, because it's too expensive. is that something you think about at all in terms of what's going on in the economy of your region here? >> it's very difficult from
russia. people are coming here for jobs. job growth is fantastic. it's just gotten extremely expensive. we have a big concern about affordable housing, making sure there is house, and affordable living for people in our region, something that the fed works with local government, and with and other community organizations trying to work out solutions to find affordable housing. basically healthy, strong communities, but this is a huge challenge. this is for us it's a booming economy here, and it has gotten really expensive. >> one part of the booming economy, and we have to go here, but is this sharing or gigaeconomy, what effect is that having? >> the data that we do have including everybody, including people who are driving, you know, for uber or lyft, other companies like that. it's a tiny part, something we're trying to understand how
these disruptive technologies are changing the landscape. right now it's not a big part of it. we don't think it's a driver fundamentally of what's happening with the economy. let me go back to the big point. we have unemployment of 5%, the economy is growing, we added over 2, probably adding 2 to 2.5 million jobs the we're a very good place with the u.s. economy today. >> john thank you for joining us. >> sure. >> back to you, michelle. things seem sunnier here in san francisco than maybe the rest of the country. >> and san francisco is not russia, for sure. thanks, steve. it was an historic day. a cruiseship docking in cuba for the first time in more than 50 years, but does it dock at a port that says it doesn't belong to cuba. our next guest says yes, and that it was stolen from his family. that's next on "power lunch."
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likely they'll vote yes to proceed with the trial, which means the vote would move to the nat next week. if a simple majority recommends impeachment, he would immediately step down for trial and the vice president would assume presidential duties. brazilian stocks trading lower on the day, but still up year to date. on that note, more signs of economic trouble in brazil. car sales stalling big time. phil lebeau has the details. >> they were down 25% in the month of april. 25%, and i think they were down something like 31% in the first quarter. it's the old axiom, regardless of the market -- as consumer confidence goes, so goes auto sales. consumer confidence is terrible in brazil, which is why the expectation for this year is that sales will drop 16.5%. that means sales will likely come down to about 2.1 million this year. i think brazil is going to fall
back into the world ranking in terms of auto markets into fifth or sixth place. again, the automakers, they're not able to do too much about this. they're not predicting a bottom for the market just yet. who has the most expos injure? gm leads the market, just under 18%. they all have fairly starchal stakes. it's limited relative to how much money automakers are making here. they reported losses. fee eight, cries lir better comparisons, it -- and an except relative to their competitors. >> yeah, it's a tough place economically. thanks, phil. carnival cruise lines made history this week, the first to bring passengers to cuba in more than 50 years after
reestablishing diplomatic relations. you saw it reporting live as it pulled into port. the ship traveled not just to havana but to city including santiago. our next guest says he's the rightful owner of the port, it was seized from hi family. you and he's not. he's neurosurgeon in jacksonville, florida. thanks for joining us here on "power lunch." why are you upset with carnival? >> the fact of the matter is they're in violation of u.s. law. their trafficking with stolen superiority, in particular property with a certified u.s. claim, which means that the owner of the property at the time it was confiscated in 1960, in october, illegali i might add by cuban and international law was an american citizen. by u.s. law, the embargo cannot
be lifted and normalization cannot occur. >> for viewers unfamiliar, there are thousands of outstanding claims like this one, when fidel castrol seized, the claims were certified by the u.s. government and sit in a building waiting to be settled with companies like ibm, coca-cola, general electric, and like dr. garcia said, according to the law the way it was written, the cuban government is supposed to make efforts before the embargo can be lifted. are you satisfied with what the administration has done so far on the issue of claims? >> not at all. i would point out, michelle, that something that's very important. the vast majority of the claimants, 8 a%, 90% are individuals like me. only 10% to 12% are large corporations. they make up 85% of the value of the claims, so really the failure of the administration to even address the claims, as
required by law really is sticking it to the little guy, if you will. but no, i'm not pleased at all. the embargo most people don't realize was put into place as a measure, a sanction, an economic sanction against the cuban government for the confiscation of these properties, and by logic this should be the first issue to be addressed. >> any idea how much this port would be worth today if it had remained in your family? do you have any remedy here? >> it would probably an eight or nine-figure number for certain. it was a very profitable property not just for us, but for the entire community. this is an agricultural, an export community, sugar, citrus, cats, nickel, copper, the entire economy of eastern cuba was based on exports. this property was build -- was improved in the early part of the 20th century for that purpose, essentially's a
community service. so, you know, this is a very valuable property. not just to us but to the entire local economy there. >> donald trump and hillary clinton appear to be the presumptive nominees at this point. donald trump actually ran for president once before back in 1999. this is video from then. his one big policy speech was about cuba. he wanted to be very tough on fidel castro. do you have any reference, or do you think either candidate would be better for your claim? oh, we have lost the guest. let me just say that carnival has said they're not aware of any details concerns claims on the ports they visit. they respect and follow all the lays of every play we visit and all u.s. and maritime laws, should there be any determine ailing that we are this violation of someone ace lawsuit rights, we would clearly respect that decision.
the biggest boldest call we have haered for a long time. is the company headed to $3 trillion? that debate next when "power lunch" returns. [ male announcer ] eligible for medicare? that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they could save you in out-of-pocket medical costs. call today to request a free decision guide. with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients...
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welcome back to "power lunch." we're keeping a close eye on this market. as you see, the dow is down by just 0.1%. take a look at we can at oil. that's where we first saw cracks in the market as we saw wti and brent boll roll over. we're only seeing less than 1% gains on both. remember at one point in the seg we saw wti up by about 4%. on the nasdaq, that is what we are watching closely, about seven or eight points amp from correction territory. we're watching that index very, very closely at this hour. to seema mody for a news alert. . new york city recommending the approval of cablevision's sales to europe's altize, a draft resolution is going to be voted on next week on may 11th. this follows the fcc's approval of this deal last night, now new york state is the only approve needed to get this deal
solidified. we're looking at cablevision up fractionally on the day. back to you. >> got it, seema. thank you. a massive wildfire burning in canada today, in fort mcmurray part of the the country's oilsands region, forcing evacuation of at least 80 thousands people. 1600 homes or buildings burned. no indication of injuries or death related to the fire. the disruption to oil production pushed oil higher today by almost 4%. also companies have cut output because of the fire. deidra bossa is live in alberta. first let's bring in jeffrey grossman, an oil trader and president of brokerage. oil production is falling. jeffrey, why are we rolling over with oil today, considering we have what appearing to be very bullish news. the iranians are sabre rattling
again when it comes to the strait of hormuz, and more. >> the fire, of course, gave it a bit of impetus this morning is a very small facto in at global market. again, what we have seen more than any, the market is going in lockstep pretty much with the stock market. the stock market weakening this part of the day really took it with it. again, i'm still very friendly to the market. i think it's a healthy market in general and probably to be bought on dips, but the news of the fire has a very small effect. >> interesting you had, for months almost from january 1, it seems to be that the stock market would mott higher if oil moved higher. that was the tail wagging the dog, so to speak. that's been reversed? somewhat, yes. i had my doubts of who wall street leading who. i always thought the stock
market was more of a leader on that. you can take bets on both sides there. the reaction was understandable, and after a big of absorption. we have a market that's quite well supplied. we're moving -- we're higher, and the market is not certainly collapsing by any means. there's support levels that have been held. right here, it's still acting in a fairly healthy manner. >> we got it. thank you, jeffrey. jeffrey grossman.
e a very fluid situation. we so see some plumes in the distance that weren't there a few hours an. the updated numbers are staggers. now coughs an area 210,000 -- sorry, the noise behind me we also have an estimate on how much this all might cost. they estimate it could cost as much as $9 billion canadian. they calculate there is 640,000 barrels per day is off-line.
there's still about 25,000 evacuees that are north of fort mcmurray. because fire has been blocking the highway. back over to you guys. shares of amount zone up 14%, but today the worst day since march. that's pressuring the nasdaq. yesterday. he said am sob could be a $3 trillion company. s a satire that's just the beginning. carlos kirshner is a stop ranked -- and jason el stein, carlos, i'm not sure if you have a model up to 2025. but retail would be a dlsh aws, amazon weapon services to be 1.5 trillion can you see a path there, even?
>> i agree hole heartedly, with this comment, which is there's tremendous value, and the treatment underestimates the potential. >> i think the message here is there's a lot of value that is under-appreciated and underestimated. i do have a model for 2025, but i don't think it's that helpful to it's just a much bigger opportunity that is the -- much betteren than what the stock is reflecting. >> doing see a bath to $3 trillion? i know you don't, because of what you stole -- >> i think you are get something. 850, 900 million.
i think the concept is there. they just put up one of the greatest quarters they have ever done. carlos, would you agree in terms of the relative value that he's putting on the businesses. the value. amazon web services is supposed to be the crown jewel. could it be more in terms of the -- >> i think both -- it kind of doesn't matter, right? both agreed businesses that have tremendous value. i think the street, for example grossly underestimate the margin potential for both businesses. to give you a sen. consensus missed consensus
numbers are way too low. and this stock is going to go higher in an intermediate to long term. if it's $3 trillion, 2.5 trill chron, i think that's less important that is the fact this is one of the greatest companies of the in era. with this concept of a tax, the content of amazon has figured out how to make a model particular laically at a low margin. that's really not a lot. so i think what ultimately, the reason why the street has missed the gross profit is ultimately they move it more and more to --
and control that last mile. ultimately they -- brea even, probably stays break even for a while, but ultimately there's such a moat around this company, and aws is fundamentally different business. >> it's a tax on the interned held by a for-profit key company that we can all own right now. is that the company saying low on margin, but just expanding the market? key point is that it's ever expanding. >> it depends on how much capital is investing. i believe that amazon's retail business is fundamentally more cost official than brick and mortar retailers.
got the margins higher than what we see on brick and mortgage an details. on the gross merchandise volume. that would be north of 6% gross margins, and the way they book it could go north of 10%. given the highly capital -- that is in the fullness of time. we want them to address in growth. on a very low capital basis, tremendous returns. >> gentlemen, thank you for your insights. we appreciate it. >> new out trump campaign,
naming a -- and some are raising red flax. now that everyone else has dropped out, will conservatives start to back him in a meaningful way this that debate coming up. try the superior hold... ...of fixodent plus adhesives. they help your denture hold strong more like natural teeth. and you can eat even tough food. fixodent. strong more like natural teeth. fixodent and forget it. (ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...)
raising questions about his business background and history. julia boorstin has more. is then founded and became ceo of one west bank. selling the bank to the cit group last all. he also formed do you know capital this then partnering with bret rack ner now han embarrassing chapter, relative media. ryan calf non-is cochairman of the bore. he left on the heels of the company fids for channel 11 last year. reportedly losing as much as 80
million. as well as the president atrun, a toll of 64,000 to democratic cases and len that is 40,000 to republicans over the past two decades, according to open secret. michelle, back over to you. >> thanks, julia. donald trump speaking on cnbc about a host of issues facing the country, even as he becomes the likely nominee. there are new pops showing he would face po templeal a dramatic loss against hillary clinton. i conservatives and business people going to get behind him finally? so jimmy p., what do you think? anybody by hillary? or will they really get in there or sit it out just like we heard the bushes say they're going to sit it out?
>> i think the bushes mike an exception. i think people who makes money off the republican party, i think most of those people will back donald trump. whether it's sort of your more outside the beltway conservatives, i think there will be a lot of defection shuns, and trump is making it easy to defect. he's already said now he's talking about raising the minimum wage. i think there will be large defection shuns. >> what do you think? are conservatives going to get on board? >> i think what they'll do is back republican senate, make sure they can protect that senate majority. right now republicans have 5 had seats in the senate, seven
senators up for reelection. they might walk out, focus more on consequence. >> i assume you're talking about big donors and we can name some of the names that are in the headlines like the koch brothers, singer and so forth. you think they might not be active donors? maybe not only because they don't necessarily agree with some of the mr. trump's positions, but also because they may figure he's got the money, he doesn't need ours. they believe in free markets. trump is kind of the opposite of that. he was economic government intervepgs, so i think what they'll do is focus on their own great roads business, they'll stay out of the trump/hillary think. >> they have hitted that
possibly they -- i think it's more likely they take out of it all together. >> i don't guess that many of the evangelical conservatives who might have been drawn by ted cruz will you particular energized by trump in any ways. but as far as people who actually, let's say go to church like, you know, once a week, that may not be a particularly large group. it's going to be those people, a lot of economic free market types, i think they may stay at
home, as well as people who don't like the way he's carried himself. and we'll sigh into the general election. evangelical voters, make they don't like trump, even though we saw on some of the primaries, i don't think they're going to vote for hillary. or does trump, from the union vote, is he able to offset that? this whole idea of the evangelical votes. when they say how much of thunderstorms people voting for trump or hillary? a lot of people who identify aren't the ones going to church ever week. the voting patterns are different from the people who
self-identify. those are the ones who are more open to the trump area. woe, interesting. i didn't know that. all right. let's talk about oil. it is -- it is slightly higher today. massive canadian wildfires disrupting production out there. to what extent we are not exactly sure. we're going to get the closing tratsds on oil, but using virtual reality to sell restade. they're battle it out next.
coolest fae further in this car, china is now lading the industry. gaming and entertainment, but apparently also doing well in one surprise industry. a manhattan apartment that was using virtual reality to attract potential buyers. now one start upis taking that technology and applying it. deciding to take a virtual tour. ♪ >> this technology is being used
in a number of different ways. we're able to show up and able to capture 3-d, 360 photography, to show a place as if you were there. i would put it right here. we would have to hide behind walls or out of view, right? because everything is in frame. >> hitting the red button. >> let's plug it in. we're empowering people to have an informed buying decision, severalally asaving them teem and money, but it doesn't come cheap. it can cost up to 15,000. obviously you're working with real estate -- are you going to cut out the middle man? >> i think it's going to enhance the ability to help the consumer. >> this is my first vittual reality experience. >> you can look up, down, all around, those pulsating mark will take you to all the
different locations we shot within this department. >> wow, cool. >> so is virtual reality the future of home buying? he says vr is the future. >> and bianci is featured on "million dollars listing miami" she says not so fast. ryan, i get it, it's cool, but do i have to own a par of those glasses in order to like at real state this way. >> i think that most people will. i think turning your head is kind of like turning your head to zillow or turning your head to the internet in the '90s soon they'
they'll. >> it seems like maybe not now, but soon. it's not a matter of ifs but when. >> correct, 100%. i think that virtual reality is great, a great 2508, but that's where it stops. it's a tool. so say people can quickly look on wle it's myself, ryan, whoever it is, explain it, show the difference between what that virtual reality is, it's virtual, it is not reality, and i think that's where the issue lies. for example, i know a developer who has built a great marketing strategy, used virtual reality's amazing renderings, animation, and when the product was complete, it looked like eye kia, not to put down eye kia. >> if i'm a buyer in new york city and want to look at properties in florida, but i don't want to go to florida and go around to 20 properties, but
i can experience some by vr and narrow it down, isn't that a more valuable experience more efficient mosh likely you'll make a sale. you need me on the phone or me flying to new york, meeting you in person the old-fashioned way. >> my point is that before i go down, i can narrow the field of properties that i would actually spend my weekend looking at. >> rye. >> ryan, do you think you are get more foreign buyers thanks to vr? >> of course. look at new construction or a speck builder. you can walk in that home without ever having to go there.
>> so you're using it in all projects. and the cost there was something like 15 grand, she said. is that accurate? have you evidence made a sale entirely on the use? >> if you're going to do one home, one apartment will it cost 15,000? it depends on what you said to do. >> we did a virtual -- on tribeca, and really nice notos will cost jump as much. >> having sold anything sight unseen? >> we sell things sight unseen in new york all of the time. >> it's great. how about you, sam? >> i have as well. again, i think it's great to have from the marketing and pr
standpoint, but it wasn't just the virtual reality that sold it. it was me explaining the virtual reality, and then saying, look, look at this. here's another example, kind of explaining against from a personal standpoint pros and cons. going back to will it take the place of an agent? i think if you're a great agent, we're advisers, we're advising you, showing you all of the marketing, all of the virtual reality, whatever it is, but you still need us to hold your hand and explain if this is the right property for you. >> i agree. we are never going away. >> that's something you'll never be able to do. >> we're never going away. >> thank you. i like that confidence. >> thanks, guys. now sue has the update. here's your news update at this hour. at an event at the white house this morning, michelle obama
announcing that private companies have committed to hiring 110,000 veterans, as part of the white house-sponsored joining forces initiative. >> these people have done their jobs in some of the most challenging environments imaginable, so just think, if they can set up wireless networks in baghdad or do satellite reconnaissance in the mountains of afghanistan, i am pretty confident that they can handle whatever is happening in silicon valley, right? >> north carolina's how speaker says the state will not be bullied into meeting the justice department's deadlines for allowing transgender people to use rest rooms of their choice. tim moore saying they will no action by monday even if they lose money. the autopsy reportedly found percocet in his system. that's according to the minute mrs. tribune, a spokeswoman for
the local medical examiner's office, however, that conducted the autopsy, decline to confirm those reports. the rolling stones want donald trump to stop using their music at campaign events. in a statement the band says they have never given permission to use their songs, trump telling cnbc he had no hard feelings about the snub, as he likes mick jagger a lot. that's the news update. ty, back to you. >> it is a great song for those kind of occasions, i have to say. >> high energy. >> it's high energy. >> that's right. sue, thank you. oil closing for trading, prices mover higher, but given up most of the gains of the day as the huge wildfire disrupts production. the fire is moving south today, forcing the evacuation of more towns along the way, and emergency operations center has been forced to move as well. to further discuss how the fire
may impact production, le's bring in kyle cooper, president at iaf advisers. kyle, what are you sensing about the impact that these the fires may or may not be having on the price action on oil today and this week? >> certainly that was i think a primary impetus to the rise this morning. what it really impacts over longer terms remains to be seen. the oilsands are in proximity, but not directly in the path, so we're just going to have to see sow the fire progresses and whether or not it approaches some of the production facilities. >> so why did the bigger gains of earlier in the day, as we look at the intraday chart, why did they melt away? it's not that they seemingly feel more under control. >> probably just a realization that the overall market is still supplied, and there were other reports about possible disruption in libya. libyan production is down already so much, too. we've come quite a long ways
from february, even as the total inventories continue to rise. i think it's a balance in the market trying to stabilize and find out where it wants to be. >> where do you think the market wants to be? >> it looks like right around here. the world was obviously long of oil at $100 back in '14. certainly the world looks shower, in the low 30s, as production as finally started to roll over. however, as we see the company reports come out, costs are coming down. whether or not we're long or short i think remains to be seen. just the efficiency gains is something we're going to have to see how the production holds up. >> kyle cooper, we appreciate you being with us. should apple buy tesla just to get the hands on tesla's biggest asset, elon musk? we'll talk to a man who says the move would benefit everyone involved, coming up on "power
merck and caterpillar leading the way. and speaking of tesla, would an apple takeover of tesla makes sense for both companies? and both ceos? it may sound crazy, but tesla's market closing is colloid to a billion. we have a guess that says apple really niece elon musk to replace tim cook. we discuss next on "power lunch." this clean was like, pow!
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sharing of tesla are lower today despite meeting earns expectation and bullish outlook. on the conference call last night elon musk talked about production of the new mowedle 3. >> would aim to produce 100 to 200,000 model 3s in the second half of next year. that's my expectation right now. >> as tesla ramps up production, does it make a more attractive takeover? he thinks apple should buy tesla and make elon musk the ceo. and also drew cu p.
ps. this is a pretty tough thing to say. what you think is basically that tim cook isn't good enough and elon musk would be better for apple? >> yeah, tim cook is a great operations executive, one of the best in the world, however, when it comes to vision, being able to come up with new ideas and gets products out the door, he's not very competent. elon has big ideas, he dreams big. he is literally shooting for mars. he could come in a brand-new vision and really whip the company into shape as far as getting technology out the door goes, and elon's problem is he doesn't have the money or the ability to deliver. >> i don't get this at all. i mean, i get he's a visionary, but i don't get why an apple shareholder would want the company to actually own at motive manufacturing facilities at this point? that would be just a dri gression here at this point.
apple is a computer company. a smartphone company. >> apple is building an apple car, because it's realized that a car is simply an iphone on wheels. you pet put a motor on it and a body around it, it's a -- >> if it were that easy, drew, there would be no concerns about execution right in the ramp to 500,000 vehicles by 2018. >> yeah, i think that tesla and musk have a better iphone car probably than apple will have, and they're very, very focused on it the i think any distraction from that or added responsibilities puts that vision and that competitive advantage in jeopardy. >> i was going to say, vivik., are you throwing tesla under the bus if you put elon musk in charge of apple? he's already running tesla and
spacex. it sounds like the casualty here would be one of the two smaller companies? >> no, i would have the tim cook do the operations, he's very good at that. i'm doubtful that elon will meet his goals of getting the model 3 out next year. i think it's going to be a year late like everything else. he's not good at details following up. cook is excellent at that. so you let cook be the operations executive. >> i take some exception to that. i think that the goal setting that elon has done is more of a mo dulles op ranti than a set of failures. he's missed several targets. i think the way he uses targets is they are, you know, somewhat ludicrous targets. he advances the ball
substantially, but to produce the best car ever made, according to "consumers reports" within a year or so of when you intended it is spectacular. i think he has real manufacturing chops as well as visionaries chops. >> are you say that tim cook should go this is that the bottom line? >> no, he should do what he does best. >> he's an operations guy. you need them there, but you need ha visionary there, a steve jobs there. they haven't released any new products for a long time, so steve was focused too much on perfection. elon, the way he got the model s self-driving software out. he got it out there and let the users perfect it. >> i don't know if i were tim cook and suddenly am answering to elon musk, i proprobably quit. >> i wouldn't sell my company.
guys, interesting discussion. thank you so much. >> provocative, huh? >> it was. josh lipton has a news alert. >> michelle, we know apple is decided indicated to trying to be much more of a powerful and influential player. news that speaks to that. apple and s.a.p. have announced a new partnership. they say this effort is going to deliver a new ios software development kit so developers and partners and customers can more easily build native ios apps tailor to do their business needs. in other words this will allow s.a.p.'s nearly 3 million developers to create apps that run on ios devices. partnering with one of the biggest players in the enterprise. this following similar partnerships we've seen apple team up with ibm and cisco. guys, back to you. jeff gunlock saying get out
conference yesterday. >> utilities are up like 40% and mortgage reits are slightly negative over that period. so the valuations have gotten incredibly stretched. if you o. reits, you have a yield of 11-plus. if you own the utilities, you get three. i will bet dollars to doughnuts that the two prices converge. >> is that a smart trade? dave see burg, head of, and kim force a portfolio manager. good to have you with us. would you follow his advice? >> we would not. we think a lot of especially retail investors get a little confused about about what a reit is and what the dividends represent. first of all, anything with a high dividend, there's a warning that there's some risk in that instrument. so i don't think regular retail
investors understand is that the reits pay out the dividend based on the operating cash flows. they go up, they go down. this isn't a steady eddy different like they're a big no >> seibert, thoughts? >> look. you're asking where to go with the yields? i do agree. i think as well we talked about this weeks ago, melissa. the mlps. if you're a believer that we receive at least some stabilization, right now it's just under 8%. you know, i think if you're a believer in the bottom, you could see this thing move in price and see -- have a nice yield return there. so i'd be looking at that. but there's no question, i do believe with jeffrey, i do believe the fact that if you go after a search for yield, i'd be better off buys the reits over
shares of gopro down 3%. the earnings report due out after the bell. the stock is out 37%. down more nan 75% in the past year. what is the problem at gopro and what should investors be focusing on in the numbers? josh lipton joins us now from san francisco. josh. >> well, melissa, analysts not expecting much when they hear results. they think the top line is going to drop about 50%. you mentioned the numbers of what the stock's done. the one question for investors is what do you think the real pressure is coming from? do you think it's coming from a saturated market? do youly if you want a gopro, you have one? if you cover the analysts covering the stock, not just
bulls but concept tif skeptics well, they mispriced that camera. they had to ultimately knock down the price not once but twice by 200 bucks. analysts will say volumes from that will say they mismanaged it. that a lot of consumers didn't want that cube-sized camera. the question is where can the stock go from here? what knick woodman and tony bates do if anything to win back investsers when you have a stock. you're going to have a tough time winning back credibility. the few remaining bulls on the street will say, listen, you look for a couple of catalysts. we've been waiting for the drone to come. they did put that self-imposed deadline on themselves.
do we hear nick talk about that drone? is it still on target, and secondly what can he do for his next act. when they finally refresh it in the fall, one what are the features, bells and whistles that could bring people back. >> how does it going from bgs a one-up software company or an interface that keeps people using it. that as opposed to the one-on product sales which is as you mention vd not been executed well. >> they're going to launch this karma drone that is a sizeable potential opportunity for them. granted, that's also a competitive marketplace. we'll see if they stick to that target they have. you bring up a good point. software on that last call when they were talking about their own problems, what did they pin
it on, melissa? woodman said we're not making it simple enough. it's still too hard to edit and share cob tent. now, they've taken steps to try to address that. we saw a couple of acquisitions they did. but certainly that's another big hurdle. you have to have an easier way if you want to reach a bigger audience. >> josh lipton, thank you. josh lipton on the gopro earnings. tyler. >> melissa, thank you. two former presidents, both named bush, planning to sit this one out. our chief correspondent john harwood joining us. john, welcome. it is quite, let's say, unconventional in this year of unconventional politics for former gop presidents not to endorse the candidate of their party, especially since both george w. bush the 43rd president and the 41st, george herbert walker bush, have
endorsed all other republican candidates since they left office. >> that's true, tyler. but it's also the case donald trump attacked george w. bush for failing to keep the country safe before the 9/11 attacks while president. i'm not surprised what he did to them and jeb bush, those family tice would dissuade them from getting involved in the race. it's beyond the bushes, really. mitt romney mass said, for example, he's not going to the republican convention. the 2012 nominee. extremely rare for the previous nominee not to show up. mick romney gave a speech previously calling donald trump a phony and a fraud. he failed. in the april wall street "wall street journal" general poll, there wasn't enough to support him. it's a challenge for donald trump to unite this party.
>> does this help or hurt donald trump? >> if donald trump cannot amass a broader ray of support within the republican party, he's not going to have a chance to beat hillary clinton. that lack of republican support only validates the doubts of independents and others about donald trump. remember, donald trump -- >> do you really think so, john? i remember when mitt romney made that speech and thought this is going to help him. it brings to melissa's more point, maybe even more people to him. >> within the republican primary, but it's a much different story when we talk about a general election. entirely different electorate. he's got huge negative ratings among women, white college graduates, his spainics. all of these are big trouble for donald trump. if you have those saying that
does not help donald trump in the general election. >> john harwood, thank you very much. we'll be talking about this a lot in the next coming months. >> ah, yes. thanks for watching "power lunch." >> "closing bell" starts right now. hi, everybody. welcome to the closing bell. i'm kelly evans at the new york stock exchange. >> welcome back. i'm bill griffeth. oil in the green today. well off the highs right now. one of the reasons given is the major wildfire moves moving closer to the sands. i have a bone to pick, but that's for another time. we're live on the ground in alberta, coming up in a moment. >> we have an exclusive interview with dennis lockhart coming up. we'll talk to him whether a rate hike is in the cards. >> stay tuned for the news. earnings, wynn resorts,