Skip to main content

tv   Power Lunch  CNBC  May 9, 2016 1:00pm-3:01pm EDT

1:00 pm
and together, we're building the store of the future. digital works for retail. let's talk about how digital works for your business. all right. good stuff. thank you for being here. "power lunch" starts now. scott, thank you very much. new developments out of can d.a. a massive wildfire continues to burn unchecked. cooler temperatures and like rain are giving crews a bit of help out there in efforts to contain this epic blaze. the fire has already burned nearly 400,000 acres in the heart of canada's oil sands region. we're live on the ground straight ahead. welcome, everybody, to "power lunch." an event rarer than a total solar eclipse, all four of us are here today for the first time in as long as i can remember. brian, michelle, melissa, and
1:01 pm
i'm tyler mathisen. welcome, everybody. we begin this hour with the latest on that massive blaze. cnbc is 200 miles south of the fire line in edmonton. >> hey guys, the cooler weather and light rain is providing some respite for fire fighting officials. this wildfire is still out of control and is being referred to as the beast. now i want to put the size of it in perspective for folks watching from home. consider this. it is now twice the size of new york city, all five bureaus. twice. it is absolutely massive. 10,000 people now have been displaced. as for the city of ft. mcmurray, the gateway to canada's oil sands, the zbas shut off. the electrical grid is damaged. the water is undrinkable. that makes it very difficult to know when the thousands of displaced residents are going to be able to return home and find
1:02 pm
out if their homes are even still there m of them are behind me at the evacuation center here in edmonton. even officials here, the manager of this evacuation center doesn't know when they'll be able to return. >> we're waiting for information from the province. so they're in there right now. and the last i heard a lot of the unfrom a stru infrastructure is being looked at and the integrity is still good. so we're waiting for the word. >> now it is also hitting this region and canada's major industry. the oil sands. of course, production is at about -- has been cut by about one-third. that is about one million barrels per day of oil. and the uncertainty is we don't know when a lot of the operations are going to be able to start up again. it could take weeks or months as some analysts are saying. production takes some time to ramp back up once the smoke and fired cleared. we'll continue to monitor this very slow situation.
1:03 pm
back over you to guys. >> thank you. the pictures really shoate level of destruction that's far. and that wildfire is one of two big factors weighing on the oil market. the other is a big shower shake-up inside the world's second biggest oil producer, saudi araaarabia. this is the chairman of the state run oil giant saudi aramco. what does the change mean in power for the global oil market? joining us on the cnbc news line is the former executive with saudi aramco and president of husseiny energy. good to you have here. he was known for defending the idea that saudi arabia should not cut production in order to stabilize or even improve prices in oil. do you think now with this change, is that going to change in any way? >> no. not really. the policy is set at the national level. and the minister of petroleum
1:04 pm
normally just execute the policies. so i don't expect any changes in the international marketing strategy. this is a domestic change. >> what do you make of the overall effort thus far by the saudi government under the new deputy crown prince who has been so influential? a lot of the changes that he wants to do, many would argue, are necessary. but from the outside, he seems a bit like a bull in a china shop, especially the way he has seen to intervene during that meeting that our colleague brian attended. >> no, i think that's quite unfair. i think he came to office and he realized that there was a lot of issues that needed to be addressed. and he is taking them very cautiously. the program that's he's unfolding have been studied over many months now. and the trance fosformation is primarily in the improvement of the outlook, domestic outlook for the kingdom.
1:05 pm
he's very much focused on achieving a transformation and he's doing in a systemic manner. >> he will go to opec, but he is really there? does he have any real authority or do you believe he is only a proxy for the royal family? >> no. he is a very experienced executive. he's been in the business for many decades. he's highly respected by both prince mohammed as well as his colleagues. i think he'll bring a lot of judgment and perspective to the opec meeting. i think he's probably far more experienced than most of the ministers there. >> so can you give us any color into what is being said in saudi arabia over the weekend about this article that was in the "new york times"? profiling ben roehodes which suggests the narrative they sold to sell the deal to the american public was completely untrue and that it had nothing to do with what they said was a more
1:06 pm
reformist government? >> well, look, we've all been a little bit cynical in the middle east about some of the stuff that gets published or come out of the u.s. administration. not just now but don't forget the weapons of mass destruction that were a few years back and the devastation of iraq that followed. i think we're not surprised over here, overseas. i do hope that the public and the u.s. take that into consideration whether they hear the unusual agreements being pushed by like this iranian nuclear deal. >> before you go, a very quick question. you are former insider. what is saudi arabia's average cost per bare toll day, do you believe? -- barrel today, do you believe? >> we have a range of oil fields. some are as low as $5. i would it this most expensive ones may be $10. >> most expensive, $10?
1:07 pm
okay. thank you so much for joining us. >> we have breaking news. north carolina's governor holding a news conference right now over the so-called bathroom law. let us listen in. >> until the charlotte city council imposed a mandate on private businesses, this mandate required with potential penalty of fine access to rest rooms, locker rooms or shower facilities be based upon ones gender identity or gender expression. a similar policy was rejected just months earlier by the voters of houston, texas, by 61% of the vote. this caused major privacy concerns about males entering female facilities or females entering male facilities. our state legislature believed
1:08 pm
this was an unnecessary government overreach into the private sector imposing regulations and impacting one's personal privacy. the state legislature and this governor also believe that guidelines then need to be put in place because of the new public topic for government buildings or schools and/or rest stops to ensure privacy and expectation privacy for everyone. now just five days ago the u.s. department of justice sent letters to my office, the department of public safety, which reports to this governor, and to the university system suggesting that having government employees use the bathroom, locker room, or shower facility that correspondence to their biological sex is in conflict with federal policy. the department of justice asked
1:09 pm
all parties to set aside their constitutional duty and refuse to follow or enforce our state law. this was a substantial request with very serious implications. and the u.s. government gave us a mere three business days to respond to this letter. we asked on friday, the department of justice for additional time, in fact, we asked for an additional two weeks but they refused unless i made a statement where i would publicly agree with their interpretation of federal law and if i did, they would give me one additional week to respond. i could not agree to that because i do not agree with their interpretation of federal law. that is why this morning i have asked a federal court to clarify what the law actually is.
1:10 pm
now i anticipate our own legislature, other private sector entities from throughout the united states and possibly other states to join us in seeking this clarification. because this is not just a north carolina issue. this is now a national issue and an issue which imposes new laws on every private sector employer throughout the united states of america with over 15 employees. we believe a court rather than a federal agency should tell our state, our nation, and employers across the country what the law requires. and let me say something. our nation is one nation, especially when it comes to fighting discrimination which i support wholeheartedly. ultimately, i think it's time
1:11 pm
for the u.s. congress to bring clarity to our national anti-discrimination provisions under title vii and title ix. let me repeat that to our u.s. representatives and leaders of both the republican and democratic parties in congress. ultimately, i think it's time for the u.s. congress to bring clarity to our national anti-discrimination provisions under title vii and title ix. now right now the obama administration is bypassing congress by attempting to rewrite the law and set basic restroom policies, locker room policies, and even shower policies for public and private employers across the country, not just north carolina. now i'm still asking the north carolina legislature to reinstate the ability to sue for wrongful term inatidiscriminatie
1:12 pm
court. i encourage them to do this quickly. i also welcome additional dialogue with the city of charlotte and our state legislature which has been on going for the past week. and i want to ensure the people of our state and our country that north carolina has long held traditions of ensuring equality. the majority of our citizens and our great state and this governor did not seek out this issue. however, the state of north carolina and this governor welcome the opportunity to be part of the solution for all of the states and especially our nation. the greatest nation, the united states of america. thank you very much. >> and that was the north carolina governor asking for clarification on federal policy as it pertains to north carolina and the country behind us on the wallabee the way, more than 100
1:13 pm
companies opposing north carolina's religious freedom law that he's asking for clarification on. you can see many big names here. all right. let's get back to our saudi story and get the take of a former ambassador to the shake-up in saudi arain yas ara richard murphy, he is a scholar at the middle east institute. thank you for your patience. he is considered one of the most powerful men in the state. he is now out. does this flexing of power about it king's son mark a sea change in saudi policy or thinking? >> i don't think underlining the royal family, particularly the king and today the king is the deputy crown prince have greater power than the oil minister. the shock is that in saudi arabia, so many issues are opaque behind carried out decisions carried out behind the
1:14 pm
screen, so to speak. and naimi was interested in retirement some few years back, very respected. and it's true what your previous guest said that there is domestic change emphasized here. but the newman haas grae experience, came up the same ladder as ali-naimi. so there is no lack of technical expertise. but the current situation underlines that what wh push comes to shove, the royal family is in charge. >> ambassador, if i can move you to a slightly different topic related to saudi arabia, this article over the weekend that i referred to earlier, the profile of ben rhodes which suggests that the narrative constructed to sell the iran deal wasn't actually true which we would assume would be extremely upsetting to the saudis. how do you think it's going down there and what do you make of it? >> the iran deal continues to trouble the saudis very much.
1:15 pm
it's seen as a gift to iran. they accuse the american policymakers back in the george w. bush administration of making an enormous goiift to iran by invading iraq. so there is -- there's a lot of uneasiness about iran's planning, iran's development and the new wealth that has come to iran as a result of the nuclear agreement. their anxiety is not new is all i'm saying. >> when i look at your biography, sir, you seem to be the example of that foreign policy elite that now it appears the obama administration has a lot of contempt for and any thoughts on that? >> well, the boss is always in the white house. there are times when i think the state department has felt in full tune with the white house.
1:16 pm
there are other times where there have been disagreements. but, you know, tend of the day the president makes foreign policy. >> he sure does. thank you, sir. >> spoken like an ambassador. we do appreciate your time on the show today. thank you very much. let's get a market flash now with dom chu. headlines on medivation. the stock is moving higher in the ten or 15 minutes or so. the headlines are coming out of roiters that the company is perhaps starting to explore the sale of itself. did it find a nondisclosure agreement with companies including pfizer and amgen. this is all source reporting. again, people familiar with the matter. nothing formal just yet. the reason the stock hasn't moved higher than is because this has already been in the news cycle, guys, over the past couple weeks tend of april. remember, there is -- there were talks that santafe wanted to pursue a deal to take over the
1:17 pm
company. they wanted to engage the o board and reporting coming out that pfizer was perhaps interested in the company. so, again, a lot of deal chatter surrounding this particular company medivation. we're seeing the reuters headlines today saying that possibly nondisclosure agreements have been signed by the likes of a pfizer an amgen, perhaps others in this battle over medivation shares. >> thank you. new develop. s in the sumner redstone trial. julia? >> melissa, after one day of trial, judge david you could enruling to dismiss the case filed by sumner redstone's ex-girlfriend. the judge saying that redstone's testimony doesn't z. in fact completely alt they are case. we caught up with her attorney, she says herser plans to sue sherry redstone for $100 million and allege that's sherry and the nurses manipulated and brainwashed her father. >> the evidence is shocking.
1:18 pm
we're confident that a jury, there is going to be a jury in this courthouse, hearing this down the road will share our feelings that what happened to sumner redstone was not the product of free will but the product of an orchestrated, devious campaign to take over her father and his empire. >> redstone's attorney issuing a statement saying "ms. herzer bet wrong when she said his difficulty communicating would result in will he instatement in his life and fortune." mr. redstone is looking forward to liberating the $150 million in gifts to ms. herzer and his friend." he plans to sue herzer and former companion to recover $150 million in gifts he gave them. he also plans to allege elder abuse. as for implications for speaking to us and viacom and controls voting stakes, there are no changes. we'll see if the testimony and the evidence presented in this
1:19 pm
trial raises any questions from shareholders. back to you. >> thank you very much. donald trump says he is willing to raise taxes on the rich. it is a change in tune for the gop front-runner and a break from gop poll sichlt will this drive an even larger wedge between thim and conservatives? he can win without them? that's all ahead on "power lunch." & in a world held back by compromise, businesses need the agility to do one thing & another. only at&t has the network, people, and partners to help companies be... local & global. open & secure. because no one knows & like at&t.
1:20 pm
they found out who's been who? cking into our network. guess. i don't know, some kids in a basement? you watch too many movies. who? a small business in china. a business? they work nine to five. they take lunch hours. like a job? like a job. we tracked them.
1:21 pm
how did we do that? we have some new guys defending our network. new guys? well, they're not that new. they've been defending things for a long time. [ digital typewriting ] it's not just security. it's defense. bae systems. welcome back to "power lunch," everybody. i'm tyler mathisen. let's turn now to the race for
1:22 pm
the white house. the reporter at the milwaukee journal tweeted to day that paul ryan would step down as chairman of the gop convention if the presumptive republican nominee donald trump asked him to do so. >> he said i'll do whatever he asks me to do. he is set to meet with him thursday. we asked the eternal question, is the gop going to get behind trump or not? with us is a former mccain adviser and also with us is ben white, a cnbc contributor. as the member of the aforementions republican establi establishment, what do you think? are you getting behind him? will other people get behind him within the gop establishment? >> i think the key issue is what he's going to say in the way of policies. there's a big disconnect between his recent statements about renegotiating the debt or raising taxes and where the policy foundation of the party has been for a long time.
1:23 pm
we'll see how that plays out. but as far as paul ryan, i think that is a really interesting development. any nominee has a huge influence on the convention from speakers to the order of the program and paul ryan's position there is essentially symbolic. it may be the best for both parties if ryan steps aside. we'll see. >> ben, your reaction to what doug just said. but also to an article you wrote, get your thoughts on this, about the number of people who are part of the republican establishment who let it be known they really don't want to work for donald trump should he win. >> right. first on the paul ryan question, i think you would translate that tweet from the paper as paul ryan signals he would love donald trump to ask him not to be at the convention and not to preside over the convention. i don't think he wants to be there. i don't think he wants any part of it. so that is that piece of it. on the administration front, doug is one of the people that i think in the -- i wouldn't call them establishment but in the
1:24 pm
group of senior officials in washington who worked in previous administrations, they -- at this point they don't want to serve under donald trump because, a, they find a lot of his positions kind of embarrassing and his comments on immigration and muslims and all that stuff, but on the policy front, the question is he for lower tax as cross the board? would he default on the debt? he would try to inflate our way out of the existing debt? and is he for free trade? this is the whole conservative economic proposals part of the republican party for decades under both bushes, romney and mccain, both, you know, the economic principles. trump doesn't have them now. maybe he eventually has them. maybe he can convince the folks to serve. >> right now they don't want to do it. >> it's pretty sweet, doug, when the president asks you to come in and take a job in the interest of the country? and so what would happen if a president trump asked you and had a plum job running omd or treasury or counsel of economic
1:25 pm
advisors? >> of course very flattering. i'll get back to my answer on. that i want to emphasize something ben said about how paul ryan would love not to be at the convention much that's not a paul ryan story. that's a lot of sitting republicans, senators, congressmen who view being affiliated with this nominee as harming their chances for re-election and cleveland is going to be absolutely devoid of any current lly elected republicans. this is about the fallout from the nomination. there has never been a republican elected president without the support of 91% of republicans. donald trump's currently polling in 78. they're very worried that he's headed down the wrong track. >> but he calls you, doug. let's say he gets leelected and calls. the president of the united states asks you to serve and that president happens to be donald trump? >> i have a very good job. and i intend to keep running the american national forum. ate louz us to comment on public policies. >> the president of united states asked you to serve, you'd
1:26 pm
say no? >> he asked me to serve in the pursuit of what? i think ben said it exactly right. what are the policies that ultimately will characterize the trump campaign? i don't know what he believes about taxes right now. he had a plan on his website. he's now contradicted that plan. i don't know what he believes about that federal debt which i think is a pressing national issue. he said he obviously is going to default and he said he is going to refinance it. i think it's important for any candidate to be very clear about what they plan to do when elected. that's how you get a mandate to govern. it's by making promises on the campaign trail, making them clear, selling them to the american people and when you serve a president, you defend the president's agenda. >> just because it's the -- >> i'm hearing you not ready to say yes to michelle and my question. but also kind of not ready to say no. are you in a show me position? >> i'm prepared to say no. don't worry. there is nothing about -- >> all right.
1:27 pm
>> threatening the first amendment that i defend. there is nothing about threatening religious freedom that i want to defend. there is nothing about his stance on tearing up trade deals and basically contradict the rule of law which is a foundation. >> but the thing, is if he becomes president, i'd like him to have good people in there, right, who could maybe stop him from doing those things. you know? >> who could maybe stop him? >> right. we could have that conversation. i don't know. i think when i serve for george h.w. bush, when i served for george w. bush, it was in pursuit of the policies they laid out and lekted to p ed lec >> you would work for president trum s trump? >> he would never ask me. i would take a very long vacation to south america if he became president. we're not going to serve a president to try to reign him n we are to believe in his agenda. >> thank you very much. >> "power lunch" returns after this.
1:28 pm
♪ (sfx: broken glass falling) here's to breaking more glass ceilings in golf and everywhere else. the kpmg women's pga championship.
1:29 pm
this cit added this other level of clean to it. it just kinda like wiped everything clean. my teeth are glowing. they are so white. i actually really like the two steps. everytime i use this together it felt like leaving the dentist's office. crest hd, 6x cleaning, 6x whitening. i would switch to crest hd over what i was using before. i built my business with passion. but i keep it growing by making every dollar count.
1:30 pm
that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio. ♪ and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet? the decline on the day, these are the lowest levels w n we've seen gold at. this is at the strongest levels since april 28. taking a look at the metals complex, steep loss as cross the board. the steepest in the palladium
1:31 pm
market down by 3.p 7%. but more than 2% loss as cross the metals complex. tet's take a check on the bond market as well. we're seeing a lot of action there with the movement in the dollar index. and we're seeing a bit higher in the bond market with yields going lower. ten year yield at 1.76% right now. brian? >> all right. thank you very much. it is 7:30 in the morning in honolulu. let's get you up to speed on how your money is doing today. the dow, s&p 500 and nasdaq are doing kind of a whole lot of nothing. they're close to hitting new market highs a few weeks ago. a lot has happened since then, mainly the earnings that came in weaker than many expected. let's find out what might be moving stocks down the road. bob pisani, what is everybody talking about on monday morning? >> rotation in sectors. so it's very defensive tone to the market. utilities, consumer staples on the plus side. i want to concentrate on the negative side. it's the cyclical sectors getting a lot of attention, particularly energy and oil moves down throughout the
1:32 pm
morning. materials and industrials and financials all weaker. want to concentrate a little bit on the problems with the material stocks right now. we have seen a five day rise in the dollar. that is creating some problems. big issues going none china though. take a look at kline. down almost 6% in the last two days. iron ore prices and reinforced steal prices are traded limit down overnight in china. there is some alleged investigations going on to perhaps assess speculative activity. some of the futures exchanges there. demand perhaps not as strong in china as speculation. there iron ore is down 5%. copper is weak as well. aluminum is down. can you see the steal stocks down double digits, rather remarkable move. u.s. steal is down. all of the mining names, joy global and glencor weak as well. the bottom line is china's growth is still very much an issue here. back to you. >> all right. bob, thank you very much.
1:33 pm
our new highs possible at these levels? that's kind of a curious question. at these levels, they wouldn't be new highs. but i guess the question really is might we leave if the levels to get new highs? i don't know. gina martin-adams is a strategist at wells fargo securities. and allen bond is co-portfolio manager of the morning star five-star rated jenson quality growth fund. thank you. what is your overall take on equity price levels is and then just leap right into why you're so high on industrials. >> sure. our fair value estimate is $2100. that is a stone's throw away from where we are today for a couple reasons, the first is valuations have stalled. valuations have been trading in a side ways range for a couple years. thus stint with an environment which the fed is starting to incrementally tighten policy. those are baby steps. nonetheless, valuation almost
1:34 pm
always stalls when the fed starts to tighten. and then secondly, because earnings stopped rising. a lot of this is commodity and currency market disruption, certainly interest rates are disruptive as well. until the earnings environment starts to push higher, we view the market is likely to trade sort of side ways in a consolidation within the longer term bull market. >> let me turn to allen and then i'll come back you to on -- you pause there. i'm going to come back to you on industrials in a moment. allen, your thoughts here. i sense that you sort of share gina's view that abscent real acceleration of earnings growth we're in a calm spot. >> yeah, definitely. we think the growth can actually somewhat a catalyst as we get through the end of the year here. like we talked about. earnings were held back last year in a large way by the collapse in oil prices and the strong dollar. both those sense movement.
1:35 pm
they largely stabilized. we think that comps get easier as we get throughout year. earnings growth can be a positive catalyst. >> all right. that's an interesting point of view. jean yashgs back to y gina back you to and why you like industrials. >> there is a multitude of reasons i like industrials right now. we've been calling for the market to correct a little bit in the short term and take advantage of the correction to add to industrial positions. just a few of the reasons, first, industrials is the only sector in the first quarter to beat revenue expectations and post positive revenue growth. so there is something going on with top line industrials earnings strength that i think is pretty important to note. secondly, we're seeing a turn around in the economic dat yachlt the ism new orders index which correlates very closely with industrials performance turned around since december. it tends to lead industrials earnings by about 7 months. the last time we saw this type of turn around was in 2012 and industrials outperformed the index by considerable amount
1:36 pm
over the next 15 months. and then we also have very reasonable valuations in the industrial sector that i think we want to take advantage of right now. >> all right. let me go back to allen who on his buy list has one pure industrial, united technology. another that you can make a case is kind of industrial. why these three? can the trail blazers win tonight? >> yes the trail blazers can win. most importantly. let's talk about united technologies given that fits the industrial theme. really fits well, really echos the comments that were made here. industrial -- united technologies is a global industrial conglomerate with a wide range of businesses. when we look at the long term picture for united technologies, we see a company that benefits from very high barriers to entry, generates a lot of free cash flow and we think is a very structurally sound business. the stock has been under quite a bit of pressure the last couple
1:37 pm
years due to the slowdown in some of the emerging markets. and the manufacturing section in the u.s. we think for long term investors which we certainly are, this could be a great entry point. we think this is a great business going forward. >> all right. allen, thank you very much. allen bond of the jenson funds and gina martin-adams with wells fargo securities. we appreciate you being with us. go to our website right now to see what gina just downgraded. it's been a rough couple months for retailers, jcpenney and macy's down double digits. so is there a sale going on in aisle seven? the retail stocks. that's ahead. you wouldn't take medicine without checking the side effects. hey honey. huh. the good news is my hypertension is gone. so why would you invest without checking brokercheck? check your broker with brokercheck.
1:38 pm
1:39 pm
1:40 pm
hello, everybody. i'm sue her air yachlt here's what is happening. a mexican judge ruled that el chapo guzman can be extradited to face drug charges in the u.s. after he was moved to a prison near the u.s. border. mexico's foreign ministry that's 20 dies to decide whether to approve the extradition.
1:41 pm
>> david cameron set out the case for britain to remain in the european union during a speech at the british museum in london. >> if we leave, the only certainty we'll have is uncertainty. the treasury has calculated that the cost to every household in britain will be as high as 4,300 pounds by 2030 if we leave. 4,300 pounds. >> the trial of an israeli soldier charged with manslaughter after he was caught on video fatally shooting a palestinian attacker has begun before a military court. the case has divided israel with defense officials criticizing his conduct while a large segment of the israeli public rallied behind him. a recent survey by consumer reports found 70% of used car buyers haggled over the price and they succeeded in getting a better price. 83% of the time. the median savings was $900 or about will 8% less than the asking price. so it is good to haggle.
1:42 pm
that is the cnbc news update this hour. back to you. >> yeah, significant improvement if price. >> all right. thank you, sue. we're falling two big stories at this hour. first brazil. the country's lower house annulled the imimpeachment process against the president. the acting lower house speaker says a new vote must be held to procedural flaws in last month impeachment vote. the dollar rallied after that news broke. the slump has since stabilized. meanti meantime, greece, protesters rallied gets a new round of austerity measures. you have seen this movie before? all right, the new cuts come as the finance ministers meet in brus tolls decide whether or not to disperse another $5 billion euroors $6 billion to greece to help them pay their bills. zero fee trading. there is one company shaking up wall street and it's co-founder is going to join us live. plus, what this means for the likes of charles schwab, t.d.
1:43 pm
ameritrade and the big banks. we'll be right back. wrely on the us postal service? because when they ship with us, their business becomes our business. that's why we make more e-commerce deliveries to homes than anyone else in the country. here, there, everywhere. united states postal service priority: you
1:44 pm
1:45 pm
free stock trading with zero minimum deposits, sound to too good to be true? it's the premise behind robin hood. joining us now is the co-founder of robinhood and michael wong. great to you have both with us. rod, i'll start off with you so can you understand the product a little bit more. you're not charging anything. so how you are going to make money? >> that's right. and thank you for having me, melissa and tyler. so what a lot of people don't understand about our industry is that brokerages actually make the majority of the revenue not from trading commissions. so they function in a similar way to banks. they lend out stocks that are held. they can sweep uninvested cash into money market. and those types of other services including premium features like marge sin how the
1:46 pm
bulk of the revenue is generated. now how we can offer no commissions and forego that rev snu because we operated much more efficientlily than a traditional broker where a technology company, we automated all the traditional touchpoints with a human would be involved in the brokerage process. >> sure. >> and replace that with computeral ga rhythms. >> you want to make money on margin, i suspect. are you also -- does this mean you have to become a bank in that you have the fdic ensure the accounts? >> so the actual regulatory process behind being a bank is separate. we don't need to become a bank to offer margin. that is something that a lot of brokerages offer. and that is currently in beta. it's for professional, more seasoned investors. and fdic insurance applies to some of the products that we sweep customer uninvested cash in. >> you raised some money. >> but i can -- what has the reception to these since you
1:47 pm
know it been among the major brokerages that see what you're doing and might feel threatened by it? >> you know, our focus as a company has been really on putting customers first. listening to our users, building an awesome product. and i do think that the industry is headed towards lower and lower fees and we kind of put a stake in the ground and say the fees should be zero. this is actually something that's been keeping a lot of people from participating in the equity markets. and i think that's part of our mission, making equity markets accessible to everyone around the world and the fees are a big part of that. >> three is better than 795 a trade, i guess. >> fee is better than $1.95 a trade. >> it can't go lower than that unless, you know, we start paying people. >> michael, your reaction to what he is talking about? can it work? >> it can work. that said, it will be very difficult. we don't see the business model
1:48 pm
as particularly disruptive. it's not like disruptive technology. it's really much more of a marketing strategy in order to gain access. i think if we look at what is offering free trades and mobile phone trades, only about 45% of charles schwab trades are free. they're related to an active base relationship. they may be related to a promotional offering or they could be related to a no transaction platform such as charles schwab's mutual fee one source f you look at t.d. ameritrade, 18% of the trades are done by mobile phones. >> yeah, that's because they have an older -- you know, don't have a dog in this fight, obviously. i don't trade either. but is that because they have an old eer demographic? the average age of robinhood is 26 years of age. this is a demographic that the charles schwabs of the world would love to get ahold of. >> it is a very interesting demographic. we have seen this trend where you have places like merrill
1:49 pm
lynch when merrill would hedge and get investors in the door early and hopefully they grow up to have more assets. that said, if you look at, i'm assuming the dem graphics of robin hood, it's for low balanced casual traders. and those really are not the most possible traders for the discount and on line brokerages. >> that's a good point. because you're 26%, 25% of your customers are first time traders. >> that's correct. >> so they're not necessarily sticky. they're getting in and seeing what happens. they may not even get to the point of initiating marge clin is how you have to make money. >> well, i will say this robin has been growing tremendously quickly. we've been live just a little bit over a year. we have almost a million customers. >> what is the average balance? >> you mentioned three billion transactions the while it may be lower that some of our competitors because we have younger investors, a lot of first time investors, you know, people really enjoy using
1:50 pm
robinhood. i think that if we become the default investment platform for the customers and grow with them, that's something that -- >> very quickly, whether you hear michael say this is the a marketsing push to get assets in the door. nothing really disruptive here. how do you respond? how do you react? >> i disagree with that completely. i think that there's very little marketing involved in what makes robinhood interesting. we're the first real technology company in our space. part of the reason we're able to do this is because of features like robinhood insent where we can onboard a customer go, from nothing to placing the first trade in a few minutes. and not very many of our competitors can do that. the only way we can achieve that is by full automation using technology. >> okay. thank you for coming by and sharing what robinhood is. vlad and michael. >> thank you for having me. >> main street versus wall street. main street, apparently is winning. we'll tell you how that kim pact
1:51 pm
this presidential race. that is next on "power lunch." ♪ i could get used to this. now you can, with the luxuriously transformed 2016 lexus es and es hybrid. ♪
1:52 pm
1:53 pm
all right, everybody. welcome back to "power lunch." there is a big theme emerging on the corner of main street and wall street. they actually don't intersecretary.
1:54 pm
picture that they do. it could impact the presidential race. nbc's mike santolli is with us to explain. >> not too many are talk bigt right now. main street has been outpacing wall street by some measures i'd argue for the past year and a half. just consider, the stock market has gone exactly nowhere since thanksgiving 2014. that's when the s&p 500 first reached today's levels. quarterly corporate profits are down double digits from that quarter. and wall street and goldman sachs stock off by 17%. now as for main street, since that point, more than four million new jobs have been created. average hourly pay up is 4%. real personal spending and consumer confidence and all these things have picked up pretty nicely since stock prices began stalling back then. so this, of course, the big reversal from the first few years following the great recession. that's when stock prices and corporate profit surged. they supplied easy money and also americans didn't really feel the benefits of that recovery the economists were talking about. so now why is the current political season all about economic insecurity if that's
1:55 pm
the backdrop? seems the recent pickup on main street, too little too, late to turn a decade's long trend of income inequality and wage stagnation. also i would argue, too, economic story lines and politics tend to operate with quite a lag. can you recall that bill clinton went in 1992 saying it's the economy, stupid. in retrospect, we knew a recovery was pretty well under way at the time of that campaign. now, of course, unclear if main street can maintain this recent economic momentum. you have more big companies defending the bottom lines, cutting jobs. and the energy bust, of course, has yet to work its way through the economy there is also a chance that all the campaign talk of a structurally broken economy could drag on consumer and business confidence through the summer an beyond. that's what we'll have to be watching. >> it makes me wonder if there is a lag. we know in the election to voters actually start to feel better eventually based on all this data and does that help the incumbent party versus the republican party? >> i wonder like so many things about this campaign, it's hard
1:56 pm
to hanty cap it based on the old rules. if you said a year or two ago we'll have a 5% unemployment economy, are goug win an lection or run on the idea of a dark economic time? i don't think you would have said that back then. >> yeah. no. i know. it's pretty astounding. >> all right. thank you, mike. >> all right. >> mike santolli. >> twitter is blocking the government from using a tweet mining service to gather intelligence. it is the latest a battle between silicone valley and the government. very interesting story. watch your tweets. the story coming up on "power lunch." aren't getting the most out of it. the ibm cloud is uniquely designed for all kinds of data. like data from the weather company for 2.2 billion locations. or billions of health-related data points. even social sentiment in real time from hundreds of millions of people. it's all in the ibm cloud. if you combine that with the data your business already has- then things get interesting.
1:57 pm
so right now we're working with a retailer to blend social and inventory data to help predict demand. we can help a hotel chain match weather and local event data so they can adjust room prices from minute to minute. and another company we work with can apply analytics to sensor data to save millions in energy cost. today, every business runs on data. that's exactly why we built the ibm cloud. as long as you love me, it's alright bend me shape me, any way you want me... shape the best sleep of your life. sleep number beds with sleepiq technology adjust any way you want it. the bed that moves you. only at a sleep number store.
1:58 pm
1:59 pm
cool rain and cooler temperatures are helping firefighters on the fire in canada. it is still growing. just more slowly. and it's now more than of 600 square miles in size. we have a reporter live in edmonton, alberta, with more. >> michelle, that's right. the cooler weather and light rain is helping. but this thing has a nickname. it is being referred to simply as the beast by people who have been evacuated by the officials as well. and by the fire fighting
2:00 pm
officials who continue to bat this will beast. keep in mind that it is still twice the size of new york city. imagine more than 620 square miles in size. and take a look at some of the images. you can see why so much has had to have been deployed to fight this thing called the beast. more than 1500 firefighters, 150 helicopters, 200 pieces of heavy equipment and more than 28 air tankers. now assistance has been offered from countries like russia. but just recently canada's prime minister saying that at this point further help from international helpers is not needed. now even with the better weather though, officials say that the fires could continue to blaze for months. that is creating a lot of uncertainty for the nearly 100,000 evacuated residence as well as a lot of uncertainty for canada's major industries, the oil sands. so back here at the evacuation
2:01 pm
center behind me in edmonton, uncertainty is building into frustrati frustration. a lot of people want to know when they can go home and what is await them in ft. mcmurray. >> thank you very much. been a rough couple months for jcpenney. the stock down about it 25% as you see. there 26 in the last two months. similar story for macy's, down about 15% over that span. so what's going on with the traditional department stores? courtney reagan joins us now. >> there's been a lot of chatter. it started around march when traffic started to slow shopping traffic. clearance merchandise build up. weather wasn't so great it in some places, easter early, tourism and the spending still sluggish and gas prices increased 50 cents per gallon since mid february and amazon recently launched its own private label clothing line. rbc analyst knows department
2:02 pm
stores invested more than $4.5 billion since 2013. but the return of that investment is so far uncertainty if not at all favorable. now there are other worrysome signals. l brands is one of the few retailers left for leasing monthly sales. april was a rare and wide miss. knowing that the parent of strong hold victoria secret and bath & body works is faltering and adds to mounting concern ahead of macy's, coakohl's, nordstrom and jcpenney. they're trying to give investor comfort saying they're pleased with the first quarter performance which so fab has been exceeding expectations n response to a report last week that, really is what that statement came from, the retailer was instituting why cost cuts feel pretty mum on. that analyst as j.p. morgan and others lowering earnings estimates for both the full quarter eastern actually following through for the rest
2:03 pm
of the year in some cases and next year as well for these department stores. >> you really do wonder about the future of the department store and the mall as a destination for shopping. courtney, thank you very much. >> brian, over you to. >> you were wondering about the future of the department stores. so we assembled a panel in the three seconds since you said that to talk about the future of the department store and whether they will be a future for the department stores. so many questions we had to bring in an entire mall full of guests. we have jan rogers with us, liz dunn and matt moss, research analyst and institutional investors number one ranked retail analyst. melissa is here as well. got everybody. jan, courtney is walking throughout stock prices. that is one thing. operational performance, maybe another. do you believe they're getting better despite what is the stock is doing? >> there's no question they're getting better. >> there, is the stock is down
2:04 pm
15%. >> the company is running better than it was. they're doing a better job of merchandising, the stores look better. yes, the business is getting better. and they're doing better with profitability and they're doing better with ability to pay down debt. all that is going the right way. in the short term, they're going to have a pretty tough first quarter so most people in retailing. sales are really slow. they've been slow since the first of the year. they've gotten worse due to the weather. and that hasn't turned around yet. so can you sell all the guys off? sure. can you buy them back in three months when we decide the back half is good? yes. some of these guys are going to be fine. some retailers aren't as you said. these guys were talking about here are going to get better into the fall. >> matt, we were chatting on friday specifically about j.c. penny. you said you like the off site retailers better s this a permanent shift in the way we shop or a temporary phenomenon
2:05 pm
where department stores are out of favor and the off prices that are doing better? >> we put a note out this morning previewing the first quarter and the title was times are changing. i think there are two areas that are gaining market share right now. it's online which that ties into amazon and the second is off price. and i think, you know, the department stores and a number of the mall based retailers are really caught in the middle right now. there are three things you need to win. i think you need conveniencconv. you need price to value relationship and innovation. the department stores have a hard time checking off many of those boxes right now. >> i think to matt's point, you know, one thing that we're seeing a need continue to vest in these areas. so that's the big challenge. i think profit margins in the department store space over the long term go lower. they're investing in digital. that is expensive. they're looking at ways to innovate the stores. they're chasing the off price trend. we're seeing macy's and kohl's open their own off price stores. >> is that liz -- is that very dangerous? when you start offering products, by the way, this goes
2:06 pm
to the media as well, if you start offering products for highly discounted or no cost, aren't you just destroying the value of your actual valuable items? >> well -- >> why would i go to nordstrom if i can go to nordstrom rack? >> there is differentiation between nordstrom and nordstrom rack. some argue that macy's and kohl's are deeply discounted stores. there is no pricing integrity there anymore and they're seeing that they're losing market share to tjx and other off pricers. so they're trying to play that trend. >> has it gone to the point where we're going to see department stores closing stores and that affecting the malls? >> clearly. i mean, i came on a year and a half ago with an apocalyptic view of retailing. i said we need 350 macy's, not 800, and we needed not 2200 penneys and kohl's. so longer term, i'm agreeing with matt all the way. yes, the malls are in trouble. the bad malls. got malls will be better. the top 250 are still going to
2:07 pm
gain share. >> and will that space remain vacancy or does tj max come in and take the lease? >> they won't remain vacant. but when you look at t.j.maxx or burlington stores, yes, that sector is winning right now. but there is not bullet proof versus the internet either. >> i don't want to get too wonky, but a lot of the malls, they have sort of occupancy requirements, right? if it goes below 85% occupancy, the other tenants have the right to break the lease. >> if an anchor leaves, so you know, you think about going to the mall and you have this empty department store three or four other stores go out, you're not going to that ball. h -- mall. how bad does this spiral become? >> i think you'll see mall that's won't make it through this. i it this one point we didn't even really touch on is the cost of doing business. the cost will doing business across the board continues to rise on the brick-and-mortar retailers. i think that's the next issue here. you know, we hosted a panel last
2:08 pm
week that, you know, talked about brick-and-mortar retailers i think today probably talk about one-third e-commerce and two-thirds brick-and-mortar. 50/50 may be the way of the future. if that's the case, conversion online is 2%. conversion in brick-and-mortar stars is closer to 15%. to capture that customer online with more competitors day in and day out, it becomes that more -- that much more costly to get that top line and that's really what you need to leverage the models. >> all right. we're just about out of time. on a day when we see retailers do very well following a week when they did horribly, matt, i wonder going into this very heavy retail earnings season, who is going to beat? what is the biggest miss? >> off pricers on the long side. tjx and burlington. dollar stores, we like dollar tree and dollar general. and then third is athletics. i think we're nearing a bottom for nike, foot locker and lulu lemon. those are the three areas.
2:09 pm
off price dollar stores and athletic retailers. >> quick? >> the only guy in the mall i like is foot locker. i would still buy pennies on the turn around. i would buy macy's on the real estate play. i agree with matt. it's go to be you tough to beat the off price guys. >> a lot of the department stores are going to lower the back half. it sets up for a pretty choppy couple of months coming ahead. >> nothing more attractive than a half empty mall. matt boss, liz, jan, thank you all very much. >> thank you. donald trump, you may have heard of him. unveiling new detafils of his tx plan. we'll speak to an adviser of hillary clinton about the two candidates. can you take a guess as to which one he prefers. we're back right after this. over time, your money could multiply. hello, all of you. get organized at
2:10 pm
e.t. phone home. [ soft music ] when you find something you love,
2:11 pm
you can never get enough of it. change the way you experience tv with xfinity x1. man 1:man 2: i am. woman: ex-military? man 2: four tours. woman: you worked with computers? man 2: that's classified, ma'am. man 1: but you're job was network security? man 2: that's classified, sir. woman: let's cut to the chase, here... man 1: what's you're assessment of our security? man 2: [ gasps ] porous. woman: porous? man 2: the old solutions aren't working. man 2: the world has changed. man 1: meaning? man 2: it's not just security. it's defense. it's not just security. it's defense. bae systems. we're always looking for ways to speed up your car insurance search. here's the latest. problem is, we haven't figured out how to reverse it. for now, just log on to plug in some simple info and get up to 50 free quotes. choose the lowest and hit purchase.
2:12 pm
now...if you'll excuse me, i'm late for an important function. saving humanity from high insurance rates. shares of chipotle are up by 4%. value hunters short covering all of those worked its way through the story line today. volume was relatively in line. 950,000 shares trade sod far. $1.2 million shares on average traded over the past three months on a full day. the stock is trading up a couple p
2:13 pm
per centage points. it's whether they have something to hang their hat on. 28% over the past 12 months over that e. coli stuff. you have to wonder whether there is funneled. al value. there. >> there doesn't seem to be any need. william blare had this kind of interesting survey where they said that number people who are concerned about food safety issues at chipotle reached a high. so the thesis is that the concerns are abating at this point. >> absolutely. but there are also people who say that they had a huge promotion where trying to promote at least giving away free burrittos and trying to get people to get traffic back in the stores. there was some analyst commentary whether or not that was actually working or driving people back towards the stores. the longer term thesis is it is working. we're 2% from the average target price. the question becomes whether or not they up it from the levels
2:14 pm
here. >> right. all right. interesting move in chipotle. shares of apple near 52-week lows s this a buying opportunity? speaking of opportunity, five stocks you need to know about. "street talk" is back and coming up next.
2:15 pm
2:16 pm
2:17 pm
let's start up, first one. truck and engine maker car. they upgrade to a buy. target boost, 70 from 55. that is 25% upside. they say the time to buy the stock is when class 8 orders are bombing. those are the big heavy trucks like 18 wheelers. you can't see orders getting much worse. ininvestors believe in a coming bottom. he is raising -- basically, things are so bad they can only get better. >> there you go. >> famous last words. >> second stock, salon prosthetics. the driver is called a sharp run. the stock is seen in the past three months. the multiple of 28 times 27 earnings is now above recent historic averages. the analyst still believes stle strong momentum and the most compelling names in retail. >> you know, at the bottom of the cycle, the recessionary bottom in march of 2009, this
2:18 pm
was a $4.40 stock. it is now at $208. a 4,000% gain. third stock, workday. green capital says sell this stock. now the stock up is 45% over three months. but the analyst says the run is done. it's a little long. keep it here. they show that there is apparent plajor accounting change coming up. and by 2018 that, is going to affect companies from contemplating about migrating to workday solutions. that is basically a direct quote from the analyst. no one is going to update the system according to yong kim. and that means bad day for workday. not nobody is going to update but a big portion of this mark. as the accounting rule change, may delay the purchase. >> it is so dramatic in terms of
2:19 pm
the incompetent pachlt. >> they're moving to letters from numbers. >> golar lng. they're separating them from outperform to neutral. the price target is $30 from $20. they signed a deal with schlumberger to cooperate the development of gas reserves. the stock since then soared 50%. they think the best from this partnership is yet to come. golar which has been an lng shipper is now transforming itself into an lln mid player. this is an influction point for the stock and perhaps good timing. >> remember, we talked about a jeffries upgrade on the stock from april 22nd. i have correct you. you said the company name is wrong. golar. >> i forgot that. >> golar. finally, today's under the radar name, comm. north carolina based communication infrastructure
2:20 pm
company, they upgrade from a buy to a neutral. they see an 18% potential return. a $35 target. they say that small health, small self and -- let me try there again. small self for 5-g and fiber optic growth will drive the company. there you go. bottom line, goldman sachs likes comm. >> my mind has gone to swamp w that, we swamp out of "street talk." >> all right. try to clean up the swamp. thank you. >> twitter reportedly blocking u.s. government's intelligence agencies from using a data mining service to provide access to the tweets sent by users. we're following that story. >> yeah. this is a fascinating one. it may be another flash point here between sill con valley and washington, d.c. law enforcement and intelligence officials. dow jones industrial average reporting yesterday that twitter has taken steps to block a firm with which it has sort of an arm's length relationship called
2:21 pm
data miner from selling twitter data fees and analytics to the u.s. intelligence community. it's not exactly clear when this decision was taken or what exactly this private feirm calld data miner was selling to the intelligence community. we've been asking to everybody involved in the storey. here's what we can tell new terms of the statements from the people involved. start with twitter. dat why miner uses public dweets to sell breaking news alerts to news rooms and government agencies such as the world health organization for nonsurveillance purposes. we have never authorize data miner or any third party to sell data to a government or intelligence agency for surveillance purposes. that seems to be the key part of this statement. now if you look at what the k-kay told us earlier today, cia says while we can't comment on your specific questions, we can tell thought value of open source to c.i.a.'s mission has
2:22 pm
never been greater. so clearly the cia is saying that this kind of open source information is valuable in the selection of intelligence overall. they can't answer our specific questions about what it was that the intelligence community was buying from data miner and incorrectly from twitter that has caused this seeming conflict between twitter and the intelligence community. so a lot of questions in this one. we'll have to follow it. >> just so i understand. data miner is an independent company which has managed to -- or buy all of this data feed from twitter. twitter sells according to dow jones industrial average, data mine certificate only company that allowed to bite entire twitter data feed and then resell it to clients adding theiral ga rhythmic insites into what is hot for that particular client. also, we slu say that twitter had the 5% stake in dataminer. so it's an arm's length
2:23 pm
relationship. they are attached in that ownership structure a little bit. >> some agency dozen buy it such as presumably organization that's twitter would not have a problem with. >> presumably. in fact, twitter spokesman told me that there are ways for the government to use this kind of analytics that they don't object, to for example, the department of homeland security twor buy their data, they said they wouldn't have any problem it's they were to buy the data to track the disaster preparedness type of information for had dhs. they said they would have a problem, for example, if a u.s. government entity -- >> how are they going to know? how do they control that? >> well, that is the key question. someone at twitter, apparently, according to dow jones industrial average, objected to whatever it was that dataminer was doing here. dataminer has not returned my calls today. the u.s. intelligence community is not saying what it is that it was objected to here and neither is twitter. so we don't know. but twitter told me that if a u.s. government entity, for example, was using this type of data to track members of the black lives matter movement, for
2:24 pm
example, for surveillance purposes, they would object to. that that is the key phrase in what twitter put out in the statement. they say they object to any kind of government entity using this for surveillance purposes. you wonder then reading into this a little bit if they are implying here that the u.s. government was using this data somehow for surveillance purposes which is which is what they're singling out here. and nobody involved is saying anything about what exactly happened here and why they're objecting to it. >> whether i tweet, i can opt out of saying where i am. but that does not necessarily mean that my tweet doesn't have geo tagging in it and that everybody who presumably pays a price or has access to that data can still figure out where i am. >> exactly. and there are other elements of twitter as those about to use it a lot know you can have direct messages. it's not clear at all how direct messages would come into play in was the united states government
2:25 pm
able to get access to that information through buying it from dataminer which got it from twitter. it's not at all clear here what exactly was in the package of information that was being sold by dataminer. that's why we have questions for the folks over at dataminer. i would love to have them call us back. >> yeah, whether tlerp selling raw data or whether they were selling analyzed data on a sort of custom base tois whatever the intelligence gathering entity was. >> tyler, what they said in the past is that their analytics that they use to look at the data is incredibly powerful. they were able to stop the death of osama bin laden in advance. they were able to stop the brussels attacks and paris attacks in advance. they said they saw a spike in tweets, theal ga rhythm he is spotted it and able to inform the customers. so that can be really powerful for intelligence agencies trying to monitor events around the world as they happen. the question you shear was there some kind of abuse of power or
2:26 pm
is this reflection of a larger battle that is going on behind the scenes that we can't quite see? >> we don't know. okay. thank you. oil prices falling today. they're dealing with the canada wildfire and the big shake-up in saudi arain yachbiarabia. the final oil trades are crossing in a few minutes. stay with us venls. you both have a perfect driving record. >>perfect. no tickets. no accidents... >>that is until one of you clips a food truck, ruining your perfect record. >>yup... now, you would think your insurance company would cut you some slack, right? >>no. your insurance rates go through the roof. your perfect record doesn't get you anything. >>anything. perfect!
2:27 pm
for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. and if you do have an accident, our claim centers are available to assist you 24/7. for a free quote, call liberty mutual at switch to liberty mutual and you could save up to $509 call today at see car insurance in a whole new light. liberty mutual insurance.
2:28 pm
2:29 pm
i had sh everybody. here is your cnbc news update at this hour. north carolina governor holding a news conference after his administration sued the justice department over a state law that restricts the use of public bathrooms by trans gender people. >> our nation is one nation, especially when it comes to fighting discrimination which i support. ultimately, i think it's time for the u.s. congress to bring clarity to our national anti-discrimination provisions under title vii and title ix. >> democratic presidential candidate bernie sanders says his fight for the democratic nomination is an uphill one but
2:30 pm
he's going to battle for every last remaining vote. he made that statement in new jersey. japanese auto parts maker takata is projecting a loss of $120 million because of ballooning costs from a massive global air bag recall. it will release the earns report on wednesday. and the 1983 north carolina basketball team finally visiting the white house today 33 years after winning the ncaa championship under their late coach. the remaining members of the team were invited to spend a few minutes with president obama and vice president joe biden and utah senator orren hatch. that's the news update this hour. back to you, when they won, it wasn't envogue to go to the white house if you won the title. they're catching up. >> thank you. >> the oil market is closing for the day. let's get the nymex. >> good afternoon. looks like we're going to close under 43 1/2.
2:31 pm
oil taking a hit today along with the rest of the commodities base. that was sent in the last two minutes. you can see the selling pressure intensifying there. a couple reasons for that. people are starting to discount the impact of the canadian wildfires. looking at more as a short term blip, not that it's not a serious issue and something to think b but also the saudi arabian news about the oil minister as well, seeming not to impact this market because it doesn't appear that we're going to see a policy change. finally, the dollar index moving up like this, sending oil lower. back to you. >> all right, thank you very much, jackie. she mentioned the devastating wildfire. let's get the latest here. it is going on in the heart of canada's oil sands industry. cooler temperature have officials optimistic they reached a turning point in getting a grip on the blaze that started a week ago in ft. mcmurray. their sending officials to the fire site to evaluate the damage. the wildfire destroyed 1600 homes and building torching more than 600 square miles. damaging the power grid and forcing almost 100,000 people to
2:32 pm
evacuate. >> all right. so two big factors playing in the oil trade, the fires in canada and the shake-up in saudi arabia. let's drill down on both of these. michael cohen at barclay's, michael, price of oil is below where it was before the fire began. why is that fire not having a greater impact on the price of oil? >> i think what's going on now is what up in canada they have, you know, about a 1.1, 1.5 million barrels of oil. i think some of the sprouctipro is off line. we don't think it's the end of it all. there is a clear labor constraint in getting some of the production back up and running. so i don't think that we're out of the woods yet in terms of seeing these fires stop being an issue for production in that part of the world. >> do you think they could eventually impact price? if we draw down inventories enough if, they go on long
2:33 pm
enough? >> yeah, we've seen pipelines damaged. i think, as i said, the labor issues are our concern. the other thing you have to think about is how much more oil could we have seen from some of the facilities if they take time to get started back up? so it could conceivably threaten the reservoir pressure. so the pressure seeing in the facilities and it may mean that ramp up is not as quick as people expect. >> can you imports minimize some of that loss? can the jump of imports to ab soared any lost volume coming out of canada? >> yeah, we're seeing very high levels in the gulf cost. stock levels in canada are very high. and just stock levels in general in north america are very, very high levels. and take up the biggest portion of global stock levels are actually here in north america. so i think that's part of what the market is trying to grapple with is that, yes, we have the short term disruption. but the inventory levels are still pretty heavy.
2:34 pm
>> you got brent crude prices at around $44 for this year. to quote the who will meet the new boss, same as the old boss, does it change at the top if saudi arabia's oil game change your price target at all? >> no. i think it's more of the same from the policy perspective. i think the issue that we have to be watching is not necessarily the change at the top but what is involved in this vision 2030 plan that he has put forward? i think this is part of a larger generational shift that's going on in saudi arabia. i think the issue of the change at the top in term of the personnel is not the most important thing. i think we actually have to be concerned about is this entire ministry of petroleum is renamed the ministry of energy and mineral resources. so this is a broader -- putting p petroleum in the energy package means what saudi arabia used to prioritize in terms of trying to put a dialogue together with
2:35 pm
other opec smemembers is not go to be the highest priority in the years ahead. >> michael cohen, we appreciate your insight. thank you. >> thank you. >> all right. brian, thank you. when it comes to the tax plans of hillary clinton and donald trump, there is not much common ground or might there be? let's hear now from clinton adviser jean sperling and also with us is formerly with kato and aei. welcome to both of you to "power lunch" mr. sperling, let me ask you since we're a business network, what mrs. clinton's tax plans specifically would do to the corporate tax rate? i realize that lots of corporations mae complain about the rates don't pay the full rate but some do and it bears on american businesses competitiveness, where they locate, where they locate jobs. that's question one. and question two, what would she
2:36 pm
do about profits held overseas to avoid u.s. tax? >> well secretary clinton put out a lot detailed proposals in the area of corporate taxes where she put the greatest focus is on reorienting and reforming the tax code so that there is a greater incentive to create jobs in the united states and there is more of a disincentive to move jobs and profits to simply -- for tax avoidance purposes. she put out a detailed proposal on an exit tax. she called for the treasury department to crack down on inversions and earnings tripping. and on the other hand, she also put forward affirmative tax cuts that would give greater incentives for people to locate in manufacturing and hard hit areas, low income and call. so i think what you're going to see from her as you see more details coming out in the general election is that her
2:37 pm
proposal is going to reform our tax code so that there is a greater incentive and reward for deploying capital and research and jobs in the united states. and going to shut down what has become unfortunately a global race to the bottom which i think is also bad for business and bad for innovation. you do not want the top people in our country's greatest companies focusing on international tax arbitrage instead of how they're going to innovate and how they're going to create jobs. and you want, i think, most people in our country believe that a u.s. company should still care about how many jobs they are creating in the united states of america. >> but can we agree that one of the reasons that they pursue that tax arbitrage is that rates are so much lower in other countries? and i didn't hear your answer to my question about what would she do specifically on the top rate for corporate taxes. >> well, i -- i think that the
2:38 pm
right answer is in the united states you have a problem where some companies probably do pay too much and are noncompetitive and some don't pay at all. don't pay enough. so you have over and under payment. and i think what she would like to do is have a tax reform where you're not giving them an overall tax cut but simplifying the system so that you could have a lower rate. and there is more reward for investing in the united states. >> what do you think of the tax plan? >> i think she established herself as again the establishment candidate. there is nothing bold. i mean we just heard on the corporate income tax, the reason why we have inversion is because we have this pretty horrible corporate income tax system with high rates, worldwide tax system
2:39 pm
p. but at the same time, a system that basically encourages companies in order to avoid this high rate to parse their money outside the u.s. and this plan doesn't address this problem. all that it tries to do is increase the punishment for inverting, for reacting. so, you know, it's like -- there's a bipartisan -- there's a bipartisan which is not very common on tax issues as we need to reform the corporate income tax and lower the rate and drop the base and bring money home. >> what would you -- what do you think of the economy? >> again, it's not a bold plan at all. i mean it would barely raise -- it would moderately raise income. it would slow down the economy likely. i mean it is the same old kind of increased taxes on the rich a little bit of surtax here and it
2:40 pm
has kind of the -- if you -- according to the tax foundation, it would slow down the economy slightly. it would cut wages by 11%. it would cost some jobs, not a huge amount but still some jobs which i think we can't afford right now. but it's not a bold, it's not a plan that will reform our horrible tax code. it increases, in fact, the complexity with six new tax credits and expending other tax credits. so it's -- >> i want to get back to mr. speak sperling. he would say that mrs. clinton's plan is not bold enough. gene, let me phrase the question this way. a lot of the points you made in your earlier answer about how she would disincentivize corporations to relocate jobs overseas or move their headquarters overseas, does sound to me like she would not make the tax code simpler but to
2:41 pm
do that she would have to make it more complicated. would a clinton corporate tax code be more complicated and is it bold or not bold as she said? >> i think -- as i said, i think that she is open to the type of tax reform that would lower rates to make it more competitive for u.s. companies. but i think that type of reform that she wants is very much what the republican -- what the american public would like to see. they don't want to see a tax code that makes it -- makes larger companies indifferent to where they locate research and vpment or jobs. they certainly don't want one that incentivizes, again, kind of global race to the bottom. but remember, this is part of, for her, a detailed pack thaj is about raising middle class incomes, about ensuring that we as a country are growing together, experiencing shared economic growth. seen this isn't just about her
2:42 pm
plan is not just a -- about just what you do on corporate tax reform much it's about having a plan where we emphasize creating jobs in the united states. and that means a major infrastructure initiative. that will help tighten the labor force but also make us more competitive, dealing with issues from instra structure to water, that encourages people to locate manufacturing and innovation jobs and energy innovation jobs back in the united states. that is what the american public would like to see. they would like to see a bold, aggressive plan to help create middle class jobs that will raise wages and help us have shared growth instead of the growth we've had which is too often left the middle class out. >> we have to leave it there. thank you both very much. >> apple trading around its 52-week low. is the stock maybe a buy at these levels? we'll talk to one shareholder who is adding to his position and another who says hold on a minute. that debate next. ♪
2:43 pm
♪ for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20.
2:44 pm
hii'm here to tell homeowners that are sixty-two and older about a great way to live a better retirement... it's called a reverse mortgage. call right now to receive your free dvd and booklet with no obligation. it answers questions like... how a reverse mortgage works, how much you qualify for, the ways to receive your money... and more. plus, when you call now, you'll get this magnifier with led light absolutely free! when you call the perts at one reverse mortgage today, you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage
2:45 pm
payments and give you tax-free cash from the equity in your home and here's the best part... you still own your home. take control of your retirement today! apple stocks taking a beating to day. should you own apple at these levels? let's bray in david katz. he started a small position in apple at current prices. also with is is jason ware. he is a bit more cautious near term but remain long term
2:46 pm
bullish. great to speak with you. david, you initiated that small position recently. you said that sub95 is interesting. does it concern you as a longer it stays sub-$95? >> the more it is sub-95, the more interesting it gets. catalyst is the iphone p 7 which will take place this fall. we establish positions under $95. whether it's at $92 or $9 o, we would build the positions. by the time there is clarity the new phone will be hot, the stock will do well. we say we like apple on interimmediate term basis. we think the stock can get to 120, $130. but longer term, there are questions about the type of growth company this is going to be. >> why is it assumed that iphone 7 is going to be hot, jason? i'm curious. yes, they've had, you know sh a lot of different it ragss of the iphone. but with etch even every new one, there are more questions about how transformtive that new
2:47 pm
generation actually is. >> i think the answer there is that it doesn't have to be really hot in order to make the stock work. you know, looking at where apple's come from with the strong iphone 6 cycle and growth they've had off the back of that, we're really in the donut hole right now and investors are straching heads on whether is apple going to reignite growth? it doesn't need a lot of growth at the current pe for that excitement to come back into the shares. so we think even without this hot sh has to be better than the 6, it doesn't have to be better than the 6, you just have to get people reignite the growth again. >> you know, david, jason mentioned the donut hole. you said that this is a sort of company where you don't have a lot of visibility because you're waiting for that next launch. in the meantime, there are lots of surveys out there, we have a lot of data points from the various apple suppliers that may indicate that first half sales may be slowing. just in the past half hour or so, nikkei released a survey
2:48 pm
saying that shipments are expected to shop 10%. how much of a donut hole are you willing to weather at this point? the reason why i ask you if you're concerned the longer the stock stays below $95 is that would indicate not very good price action. why couldn't you just wait until august to buy ahead of the 7? >> if you go back to february and march, we started buying sub-$95. there was not a lot the certainty. then it went to $105 and we had a three or four analysts say the stock is going to be 15% higher. it is very important to put apple valuation in perspective. it sells at eight times earnings, to $28 cash per share, a 2.46% dividend. you have to have perspective on this company. s is a six or 12 months holding. if you wait for clarity, it's going to be 10%, 15% higher. we don't think it's got too much more down side. >> jason, you're short term and
2:49 pm
more cautious. at some point are you willing to sell some of your stakes? >> not at current. i'm going to introduce a new category to cnbc, near term realistic. we're not cautious. we're not overbully but as we're saying, they had a really big product cycle will. and to expect that is going to continue at 20% growth rate is just not realistic. so we're looking at the donut hole and saying we knew it was coming. it's not a surprise. but to be a long term investor and that sin veis investor in t stock, you have to look at the funnele fundamentals, that's where we are. >> near term realistic. i like it. "power lunch" will be back in two.
2:50 pm
the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.
2:51 pm
2:52 pm
welcome back, everyone. i'm sue herera with this breaking news. alonso knowles has pled guilty to scripts and things that had not aired as well as identification information from various celebrities all of which he gained access to by hacking into e-mail accounts of numerous
2:53 pm
entertainment sports and music industries. he pled guilty this afternoon. once again alonso knowles who comes from the bahamas has pled guilty. this goes, of course, back quite aways. there were a number of celebrities who basically got their e-mails hacked and then when those scripts were accessed by mr. knowles, he then offered to sell them to various public entities in order to reap rewards from them. brian, i'll send it back to you. >> sue, thank you very much. the debate between what has been better for you has been around as long as the stockmarket. most advising you to bet on growth. guess. what boring old value stocks have been kicking old stocks in the teeth this year. they join us. eddie, campbell's soup is outperforming netflix by 40%
2:54 pm
this year. is value the place to be right now? >> i think it is right now. you know, it's been -- value has not been the place to be for the last ten years. it's been a lost decade for value. i'll give you a gutstadt to show you how bad it's been. the s&p 500 have merely kept pace with the growth stock index over the last five years, then the s&p 500 would be at 3,800. that's how much it's weighed down the entire index but since late january everything has changed and it's once again popular. value provides less volatility, you get better dividend yields, and it's also better if the economic outlook is uncertain. there are a lot of good things pushing toward value right now. >> all right. ari wall from a technical perspective. does it match eddie's fundamental thoughts? >> to answer that question it
2:55 pm
depends on it. having a very good start to the year and the benefit of a terrific starting point. coming off its worst level in ten years. so i think near term indeed the charts do support eddie's thesis that there's near term stabilization going on. it's been so banged up they're due for it. in my terms it favors growth. i wouldn't write off growth just yet. really amid these mixed signals you want to have a little bit of both. >> we call that a hedge to answer. all right, that inch you very much. a little bit of bought. thank you very much. for more "trading nation" head to our website >> and now a word from our sponsor.
2:56 pm
2:57 pm
2:58 pm
sotheby's is up. >> the bidding started for the spring auction. one bidder may be eyeing
2:59 pm
sotheby's itself. reporting a net loss in the first quarter compared to a profit. they're off their lows because during a conference call cfe mike goss said they may bring purchases of their stocks to a hold. this may be someone interested in taking the company private but this week sotheby's and christie's goes head to head. that's half of last year. the top estimate is $4 million. last year eight pieces sold for over 50. christie's kicks things off last night with this feature. hitler praying. that's above the estimatestimat. it will be this expected to fetch over $40 million. so 40 is the new 100 in the art
3:00 pm
market. >> is this because the market has soured or because of what's up for sale? >> both. it's a different market from where it was last year. >> all right. thank you very much. appreciate it. >> hey, world. thank you for watching "power lunch." >> "closing bell" starts right now. hi, everybody, and welcome to the "closing bell" on this monday. i'm kelly evans of the new york stock exchange >> and ai'm bill griffeth. commodity stocks are the big story. getting hit on the back of a strong dollar, concerns about growth in china. we have all the latest on oil, that move lower than particular. that's coming up in just a moment here. >> meanwhile, too much pressure on the fed. mob tair policy can't be the only tool used in this market. he'll join us shortly.


info Stream Only

Uploaded by TV Archive on