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tv   Power Lunch  CNBC  May 10, 2016 1:00pm-3:01pm EDT

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>> and disney could provide a boost and i do like that stock and it's part of our uit. >> steph? >> when financials do well they tend to do well and economic data is very important for them to do well. >> quick, joe. >> all that earnings smart. hopefully will drive us. >> big, big week for retail. see what disney does. "power" starts now. ♪ changes >> and there is a big change on tap for one of america's most iconic brands. good idea or just a cheap marketing gimmick? we're going to tell you what it is, and you can decide. hi, everybody. happy tuesday. michelle, melissa, tyler and me, brian, all here with you today, and if you own stocks you're probably making money today. the dow is up about 200 points. two stocks are down in that index. pretty good day for the dow, so let's go downtown, downtown dominic chu live on the floor of the nyse. >> better than downtown julie brown. in the same agenda.
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let's talk what's happening with stocks because you pointed out the dow heat map and the dow heat map is almost all green. here are the two biggest point contributors to the rally. nearly 200 points to the upside today. take a look at this. post 6, the nyse, imc, market makers for boeing shares. up about 2%. they are adding 26, 27 points to the overall rally in the dow. now we're going to turn around here and go around to the other side and this is post-5 for citadel securities where goldman sachs trades. goldman sachs up over 2% as well. that's adding north of 20 points to the overall dow rally so those two stocks are showing real signs of life, and if you take a look at the macro markets overall for the sectors in the s&p 500, we do see that financials and industrials, boeing and goldman sachs, are among the two best performing sectors so far today. also, one more thing to watch here. some of the traders have been talking a lot about oil prices. we can see oil prices moving
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higher right now. wti moving up above the $44 mark and, remember, that's going to take up energy stock prices as well and some of the big names like the valeros, conoco phillips, moving to the upside. a nice big real. 200 points on the dow to the upside. back to you, guys >> turn to two tales in retail, amazon versus, well, the rest of the retail world and let's start it off with amazon. that stock hitting new all-time highs in today's session. victor anthony covers amazon at axiom capital management. great to have you with us. >> thanks. >> this is also a call from bernstein saying $1,000 a share for amazon. do you see a path -- your price targets is now 811. do you see a path to 1,000? is that off the charts right now? >> well, i can't comment on the bernstein note. what i could say is that i think amazon is one of the world's most best in class, you know, technology and now we can clearly say it's a media company as well given the news of the announcement today so to capitalize on what i think is a
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move of media consumption to over the top for the announcement today so i think that's contributing to the upside and positive for the stock. i'm a bull on the stock and have been for several years now. >> in terms of the new video offering. a lot of people want to paint it as amazon versus youtube. is that the right way of looking at it. seems like this is an effort to increase or increase the number of reasons why people would want to be prime members and to really fortify that -- that wall of prime. >> it is. it's all about -- most of the moves amazon makes is really about fortifying prime, as you said, to increase that value proposition to the customer and get it to sticky and drive new prime customers because if you've seen all the stats, prime consumers spend a lot more, over ti two times what non-prime consumers spend. this move is all about increasing the value proposition to prime and also to capitalize what i said earlier. there is a natural gradual shift of media consumption to over the
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top and amazon is capitalizing on that. multiple terms in ternls of being able to buy, rent, as well as original content, so this is just one more tool. i think they probably do live tv soon. >> back to the retail side of amazon's business. in the past week or so we've seen pretty steep declines in the department store area. a lot of retail analysts come on and say, you know what, they haven't kept up with the online portion of their business in terms of discounting and can't compete with amazon. is it that binary, that department stores loses and retail wins? >> i don't want to make it that resolute but i do think amazon is taking traditional shift on traditional retailers and that's what you've seen out of results of traditional retailers. amazon has figured out how to own customers, and i think that's been a struggle for the retail industry for the past 100 years, so with the advent of prime, they figured out how to own customers and that's what they are benefiting from. i expect amazon to continue to
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take shares with retailers into perpetuity. >> into perpetuity, victor. thanks a lot. appreciate it. >> axiom capital management. >> meantime other big retail story today is the gap. shares are having their worst day in years after posting another big drop in sales. other retailers like macy's, jc penney and kohl's are also in the red. weren't low gas prices supposed to be a boom for all these retailers? let bring in the president of s.w. retail adviser. stacy, listen, when we talk about retail, we always talk about esoteric things, always the weather. it was a currency translation, whatever. we're going to bring up a picture of t-shirts that the gap is selling, okay. horizontal striped blue and white t-shirts. nobody looks good in that unless you're french or a sailor or a french sailor. is the problem here really all about product and the gap simply doesn't have it, and they are making mistakes? >> brian, you hit it on the head here. so we can blame all of retail's problems on amazon, or we can
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actually look at some of these brands and say what are you thinking? if you have been into a banana republic or a gap in the last six months, you would know that as you were just saying the fits are wrong. the stripes are wrong. the florals are wrong. this is a largely self-inflicted problem. yes, small traffic is down. yes, the consumers spend less on apparel. however, if you choose to not get your fashion correct and also not keep up with your supply chain and fast fashion, that is not going to help the situation. >> yeah. you know, it's easy because amazon has become kind of like the weather for a ceo. it would be very easy for a management team to say, well, there's the amazon effect or we've got this or that. does the gap, do you think they have the acknowledgement and the self-awareness to realize they have just screwed up their offerings? >> you know what? they have said in sort of the last year that they are going to get back on track. they are going to fix their supply chain, but we've seen neither of those things happen.
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the ceo on the last conference call in q4 said he was pleased with the spring product. well, i'm in stores going i don't know what he's looking at, but i'm not pleased and you're looking at those numbers which tells you the consumer is not pleased, so, again, you can blame it all on amazon or take a look inside your company and say, hey, we've got a product problem and we need change here. >> okay. so we know the gap is doing it wrong. who in your mind, stacy, one or two names quickly, is doing it right? >> you know what. i think you take a look at a pvh which is inside macy's, yes. numbers we know are going to be bad this quarter. . however, what they are doing is see now, buy now, runway to store, so i think that that will give a little bit of severance urgency back to the consumer. also, they took the big hit and the markdowns in q4 and went into q1 generally clean. that's an outlier and i would take a look at pvh if you want to take a look at the apparel
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space. >> stacy, always a pleasure. >> good to see you. >> let's switch from retail to the bond market. we've got a news alert. three-year notes up for auction. sue herera, contain your enthusiasm. >> absolutely, brian. $24 billion specifically of three-year notes went off the board. tepid demand. of course, we have a big rally in marts of the market. the dow jones industrial average up almost 200 points, so there was some competition for this offering. we got tepid demand for the $24 billion of three-year notes that came at a yield of .875. the bid-to-cover ratio was light at 2.93 to 1 whereas the average is 1.99 to 1. tepid demand. kind of a weak bid-to-cover ratio, and the yield and the coupon are both pegged at 8.875%. back to you, ty. >> sue, thanks very much. big changes on top for one of america's most iconic brands. cnbc's jane wells has the details. jane, this to mesa shocker. >> tyler, this america is for
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you. budweiser has approved approval from the alcohol, tobacco and firearms tax bureau to have a different label this summer, and the label looks like this. the king of beers wants to change its name to america e pluribus unum on the label. we're embarking on what should be the most patriotic summer that this generation has ever seen. someone joked that bud light will be renamed canada, but bud has been taking aim at the fast-growing craft beer industry like the ad it had in the super bowl. ♪ bud still dominates in sales, but it is losing share. the latest earnings report from its parent company shows that bud and bud light sales continue to fast. one-third of all beer sales though happen over the summer and certainly the move is generating some buzz. the snark is out on twitter with tweets like @sebrewer says bud wise is owned and headquartered in belgium and it's run by a
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bunch of brazilians. so not american and from @morninggloria, like american the country budweiser the beer is only sometimes tolerable and will make you fat. someone else tweeted could this make the political season any more 2016. guys, as for who might be seen on the campaign trail holding up an american, well, trump doesn't drink. back to you. >> huh, okay. >> how much risk is in this for them, do you think, jane? >> oh, i don't think -- what's the risk, that people get mad that they are using the word america in the king of beers. yes, they are owned by bell janz, but they -- 1876 anheuser-busch was founded in st. louis, missouri. could you argue it is the most america beer and all part of the in your face, we're not into the beard, flannel, you know, craft brew millennial scene. we're a real beer, really american and i don't think there is a lot of risk to it. by the way, tap, moulson coors,
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at an all-time high today. >> i feel like as an american -- as americans we should have a say as to whether or not we should lend our name to a beer and what sort of precedence does it set for another product to say we're going to be called america, this cheese product in the dairy aisle or this candy? >> there is american cheese. >> a kind of cheese. >> virgin america, american express. >> the german shepherd will be called iowa and the belgian will be called nebraska. i've got to imagine, jane, there is risk. that's got to be pricey. reprinting billions and billions of cans every week. >> that's a great idea, because will you be more likely to buy bud wise they are summer just for the can? >> oh, like a collector's item. >> yeah. >> maybe. >> america. >> can i drink this now? >> jane, thank you very much. >> michelle, our next guest, guys, bust american purposely in
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the name of the company, nordic american tanker, shares of the shipping giant doing quite well, up over 30% the last couple of months and the company reporting better than expected earnings yesterday. they were hit with a downgrade to underperform by jeffrey's today and perhaps why the stock has taken a hit. here for a "power lunch" exclusive is herb johansen, ceo of nordic american tanker. you put american in the name of the company on purves, is that correct? >> that's right. i have a great admiration for your country. i started my business in houston, texas and then we had the texas star and the flag as well so i'm here quite off and thank you for inviting me. >> you're welcome. let's talk about this downgrade from jeffrey's. they point out the payout ratio, the dividends you're paying out are more than your earnings and they are worried that at some point you're going to have to cut the dividend or you're going to have to raise equity and dilute shareholders. >> it is the wrong approach. people -- some people have said
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that before, even since we started in 1995 and jeffrey's is completely wrong simply because they don't understand our model, and that is the challenge we have. there are a number of upgrades, so i just disregard that jeffrey's report because that's not how the professional views that i expect. >> but intuitively i understand that if you keep paying out more than you make in profits, at some point s something's got to give, either your profitability has to go back up to make up for it or you keep borrowing? how do you keep funding everything? >> the important thing is the cash. don't talk about earnings per share because earns per share does not take account of risk at all but cash metals, look at the
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total return of what they call unlevered irr. unlevered irr. we are at the top. we are at the top when we talk about the dividends and the dividend yield and people have said to me, like this hopeless report. it's not sustainable. i'm the largest shareholder together with my -- my family. >> how much do you own? >> we are in the region of 5%, and, of course, i -- i'm in the business of making people rich. >> you've said that before. >> including myself, and i would been very stupid and my board would have been very stupid if metals are as you indicate from this hopeless report. >> what about the rates that you're getting paid to ship oil. there's talk that at some point opec maxes out and u.s. production is down and oil
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volume shipping-wise could go down. what do you predict when it comes to the daily rates that you're going to get paid? >> i normally don't predingt, and if i did know something about a future i wouldn't tell you, but i feel good about the situation. there is an oversupply of oil, and there is also a strong demand. china is doing excellently. america, we see now that they are doing excellently in the sense that they import 15% to 20% more now than a year ago, and a lot of oil is all around the world and we are dealing with the big companies like exxon and shell all over the world, and my objective in business has been to understand the world because we need to understand where we are. >> thank you so much for coming in. we really appreciate it, the ceo of nordic american tanker. good to have you on. >> thank you for inviting me. all right. many conservatives have been distancing themselves from
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donald trump. not congressman sean duffy though. he says he'll back trump if he's the nominee. he'll stop by live next. ♪ ♪ 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.
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bae systems. welcome back to "power lunch." i'm michelle caruso-cabrera along with tyler mathisen, hello. >> house speaker paul ryan will meet with the republican presumptive nominee hon thursday just days after mr. ryan said he was not quite ready to endorse him. >> can trump win the support. house republicans? with us is republican congressman sean duffy of wisconsin who says he will back
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trump if he is the nominee. you're willing to take a step further, welcome. >> thank you. >> you're willing to take a step than your fellow statesman paul ryan. why? >> first of all, look at donald trump, he has more votes at this point than any other republican candida candidate. donald trump won my district, but that doesn't mean there's not a lot of great concern in the conservative movement about donald trump's conservative principles and ideas and i think that's what paul ryan has expressioned in saying i'm not ready to endorse quite yet. over the weekend when you heard donald trump talk about taxes and talk about wages, even talking about american debt, i think that's given conservatives some pause and so when you look at where -- >> does that bother you? >> he's clarified the comments. i think it comes back to where is donald on policy, and he's spent -- he's run a great campaign but we care about the policy and conservative ideas that will grow the economy and help keep us strong. he hasn't spent the time on that, michelle. >> if you say you're willing to endorse him if he's the nominee you'll put those policy concerns aside.
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>> i have to look at hillary clinton's policies as well and who is better to grow the economy? who is better to work with, a donald trump or a hillary clinton and hands down it's going to be donald trump. a lot of conservatives are concerned about the court. i think -- >> the supreme court. >> the supreme court, yes, another liberal progressive, you know, on the court from hillary clinton, donald trump's a little bit of an unknown, but we feel more comfortable with donald than hillary. >> finish your thought. >> i think that's an important issue for us, so very to look as house republicans who is better to work with? you only have two choices? might hope that, you know, there was a different republican nominee, but there's not. it's hillary clinton or donald trump. who is the best for the party? >> it is binary, i suppose. >> do you expect that speaker ryan and mr. trump will come to some sort of rapprochement that will end up with mr. ryan presumably supporting the nominee, and what happens if it doesn't? >> i'm hopeful that that will happen. i think that this is going to be a great opportunity for speaker ryan to talk to donald trump about all of the ideas that have been working through the house,
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and the we're hopeful that donald trump will buy in these ideas, and if he do, and if there's some agreement on the bigger issues, i think you do see a cumbaya. >> i remember how mr. ryan played his run up to becoming speaker, i'm not going to do it, i don't want to do it, my family doesn't want me to do it, i'm doing it, i'm doing it. >> he doth protest too much. >> i'm wondering if that's part of it. let me ask you another question. mr. trump has repeatedly this week used the frads i'm flexible. i'm a flexible guy, flexibility is important. flexibility is not what i immediately think of when i think of the mood of the republican caucus. it was precisely why mr. boehner was thrown out. >> i disagree. i think we are flexible as long as we're on the right path, but
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going back to your point about paul ryan. i was with paul as he was saying i didn't want to do it and he truly didn't want to be the speaker. in the end there was no one really left, paul ryan or nobody and he saw the call of his country and caucus and took that step, but, yeah, i think we're in a place where if paul ryan comes on board, there's other conservatives who are very concerned about donald trump, and there's an article in "the wall street journal" expressing that concern and some will say a defeat for donald trump is a win for conservatives in november. i think that is the most foolish argument. again, i'm concerned about donald trump. some of the things he's said about women and on policy. >> but you wouldn't go as far as what they said. >> far more concerned about hillary clinton. >> can we move on to puerto rico. >> puerto rico. >> viewers of this network are very concerned about whether or not the hierarchy of bonds is going to be upended by this legislation that's moving through congress. they buy bonds and buy a lot of them, municipal bonds, et cetera, and there are certain rules and regulations that they expect to be followed and there's a legislation moving
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through congress which could theoretically undo that. is that going to happen? >> it will not undo that. the bondholders have had a seat at the table as we've been putting this bill together. we're very concerned about debt prioritization. do pensions take a priority over bondholders? >> right. >> that will not happen in this bill. we give the bondholders a voice to negotiate before we get into court which is what they wanted, to have a collective action movement to say how can we restructure the debt? >> this matters because there's a big payment coming up in july, and if puerto rico decides not to pay, they want the right to sue because if they don't they feel like the hierarchy has been upended in just a different way. >> if we allow puerto rico to take the money that doesn't go to the bondholders and they put it somewhere else. the bill prohibits that as well. you need to say let's -- we don't note finances. we haven't had an audit of the island for two years. >> they haven't filed in a long time their mess. >> we have to figure out the finances first.
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everyone needs to take a pause. they need to feel comfortable that their money is not going to go somewhere else, that they will still have access to it. we'll have debt prioritization and a lot of bondholders get the problem that puerto rico is in and a lot are buying into the plan we're putting forward. >> your fellow wisconsin resident brian sullivan sitting right over there asked earlier today ask him why a nice guy from wisconsin cares so much about puerto rico. why does it is matter to you? >> because they are americans, and we have to care about the crisis that's burning in puerto rico, but also if we don't do this bill and you see, you know, 45% of poverty, you see schools that are going to close down, hospitals that are closing down. what is barack obama going to say to us, he'll ask for a bailout and you'll ask wisconsin taxpayers to send their money to puerto rico. >> are you going to set precedent with this bill that will give illinois and other troubled states a path of cover in. >> first of all, we are -- we're not sending taxpayer money to puerto rico, number one. number two, we're not
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restructuring bankruptcy law. this is territorial law. this doesn't change ilfor or california's ability to file bankruptcy because we haven't touched bankruptcy law which is important to note. this is the right thing to do and that's why more bondholders are getting on board. we've given them a great voice even if they get to the point of going to court, the court has to do what's in the best interest of the bondholders. this is right for the island and bondholders. everyone is a winner, kind of. >> thanks for coming in. >> thank you. >> congressman duffy. "power lunch" is going to be right back. don't move. [ male announcer ] eligible for medicare? that's a good thing,
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hi, everybody. i'm sue herera. here's your cnbc news update for this hour. verizon and espn have reached a settlement in their year-long legal dispute over how the sports network is distributed. espn sued verez op in april of 2015 over custom tv packages that the phone giant's fios unit had started selling to customers. golden state warriors guard steph curry is the first unanimous nba mvp earning the award for the second straight season. on monday curry returned from a sprained right knee to score 40 points in a 132-125 playoff win over portland. and the washington nationals announcing they have signed pitcher stephen strasburg to a search-year $175 million contract extension starting in 2017.
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strasburg skipping his first chance at free agency to stay with the club that drafted him number one overall in 2009. and voters in north texas have approved a school district bond issue that improves $50 million for a new 12,000-seat high school football stadium. needless to say it's one of the most expensive high school football stadiums in the country. high school obviously is big in texas. i think everything is big in texas. that's the cnbc news update this hour. back to you guys. >> yeah, football, hey, you name, it suit all big in texas. thanks a lot. let's take a check on the final gold trades crossing for the day and no surprise given the rally that we're seeing across the board in equities. not too much of a demand for gold today but it's holding fairly steady in the session. just about flat right now at 1266.20. rest of the metals complex, one metal that is bucking the trend and that would be copper. down by just half a percent. why this is notable? this is nearly a one-month low, levels we've not seen since
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april 12 and while we're at it the let's take a check on the bond market because as you can imagine with a rally we're seeing in equities, not too much action in the bond market. ten-year yield, 1.75% and that's a little bit higher than what we saw on monday. michelle? >> you highlighted in the broader market today. stocks are rallying, a triple-digit gain for the dow. can you trust this big comeback we've seen over the last couple of days? joining us john buckham chief executive officer of afam capital and kevin mann is with hennian and walls. i asked you both during the break if you like the market and you said yes. you've liked the market for 29 years. you always bullish, no? >> a long-term investor and equities have delivered excellent returns for those who don't get scared out of them so we're always focused on the long-term prospects of our stocks and it's important to see moves like yesterday, today, last week and it goes up and it goes down, but those who can stay the course and focus on the fundamentals of their companies usually do well?
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>> you like biotechs? >> well, it's interesting i would like biotech stocks but a name like gilad and amgen, both are trading at expected valuations. >> is that politics, hillary clinton's tweet, fear of price controls? >> i've been around a long time. hillary clinton's last foray with the drug sector. >> she would like everyone to forget it. >> not me because it created tremendous opportunity to buy the companies that got beaten up because of the expectation that pricing controls would occur so this is a time to be buying those things. >> what if she comes to power? >> well, we'll see what happens with congress because you need to have congress to go along with any -- >> but you think the risk-reward is favored towards buying them. >> got it. >> you like apple? >> just go back on biotech, i really like biotech as well. you look at the patent clip of big pharma, aging population and proliferation of diseases. who are they going to acquire,
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the young biotech companies with level two or level three approval. >> tell me how you wrap your head around this constant harangue about price controls and what could be increased regulation under a hillary clinton administration. >> i think that doesn't go away, and i think to a large degree that's some of the insurgency in investing this sector which is why i'm shifting away from big pharma and going towards the small nimble biotech companies. >> tell me about apple. >> apple, technology companies represent an opportunity right now, even beyond that. i think in this marketplace of changing market leadership i like reits and i also like -- >> how long have you owned apple? are you down 26%? >> yeah. i don't own apple. >> oh, i have it here -- >> maybe that's john. >> i'm an apple fan. our cost basis is $1, so we're pretty happy with apple. >> your cost basis is $1. >> to be fair we've quartered our apple and sold our slices along the way but of our original position our basis is
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$1 and the time to buy apple is when sentiment was pore and the balance show the was in excellent shape. >> are you adding to it here at 93 bucks? >> i have enough of it right now but if i didn't i'd be a buyer of apple today. >> guys, thanks so much. really appreciate it. -game to powerlunch.cnbc.come right now to see how many interest rate hikes both of these guys are expecting this year. that's i'm going to make them tell me during the break because i want to know. coming cup, if it's bad for you chances are it's great for your portfolio. we have four big names hitting new highs, plus there's incredible video capturing a tornado ripping through an oklahoma town. the full details when "power lunch" returns. 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.
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welcome back, everybody. before the break we said if it's bad for you it may be great for
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your investment. here's why. look at some. names hitting all-time highs in today's session. theburg are. you've got mcdonald's. if you like snaps you've got frito lay and like beer, moulson door's doing well and if you want to smoke with your beer cigarette giant attila doing well. here are some of the names missing out on today's action. we told you about the gap earlier. that's an absolute disaster. l brand, seagate and western digital hitting 52-week lows. >> president obama's record on jobs is sparking a bitter debate in the run up to the november election, so what do both sides say? steve liesman here with some insight. hey, steve. >> economists from both sides offering dualing data points on whether the jobs market has recovered under president obama. the democrats point to the nearly 11 million jobs added to the economy under the president, and there's been a record five and a half years of uninterrupted monthly job growth.
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>> the unemployment rate fell from 10% down to 5%. we are seeing wages grow, a little over 3% so far this year over the last 12 months so i wouldn't say that the job market has fully recovered, but it has unambiguously made big improvements. >> that's alan krueger the chair under president obama and some republicansy it should have been faster and more brought-based pointing to the record 94 million americans out of the work force. they acknowledge some are baby boom retirees but ed lassier from stanford, cea chairman under george w. bush he points to the age of prime working americans, 25 to 54 years old who are not working. >> you would expect that the demographic effect would actually drive the employment rate up for that group, not down, because when the older guys leave the market there's more demand for the middle-aged guys. simply not back. we're not recovered and we still have a ways to go >> add to that 5.8 million
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americans working part-time because they can't find full-time work, 2 million above normal and a case despite gains there's more work to be done. guys, that's the argument among say, you know, nationally recognized main street labor economists. you're going to hear more rhetoric more extreme from both campaigns as the election goes on here. >> let's ask you to stick around and hear from larry kudlow, our cnbc contributor. >> sure. >> how would you grade the job recovery or the job market today? >> i would probably give it a "b." i think both sides are right. the data is the data. the trouble with this story though from really almost the beginning is that part-time for economic reasons has been higher than it ought to be, way higher. it has come down, but it's higher than it ought to be. the participation rates, the employment population ratio higher -- much lower than it ought to be. one puzzle in this is 65 and older, their participation rate
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has gone up. >> going back to work. >> 55 and older, their participation rate has gone up and 25 to 54, that's really the backbone of the labor force their participation rate has gone down so what ought to be has not been happening in this story and if you compare peak to peak. i don't want to go there. jobs have been created. some of my colleagues on the conservative side deny that, it's undeniable, but we've lost a lot of people in the work force. somehow or other we've lost them. >> i wonder if any of this data can point us to a better discussion than the one we're having. >> you mean in a presidential year? >> silly, naive and foolish. which particular parts are weak, rather than saying the whole thing is a disaster and the other side and the other side says it's fine which it's not. which parts is where the problems are. why aren't 25 to a 54, why are they not back in the work force? what can be done? >> the television demographic.
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>> even more extreme and probably dangerous discussion than this, there is a school of thought out there that we just don't need the jobs anymore. >> that's true. >> that we won't need them. >> the technology -- >> that there will be -- and i'm not saying i agree. >> brian would have been weeping and sobbing as the -- i'm not saying i agree. >> and the carriage-makers lost their jobs when we figured out how to mass assemble cars, okay. show me a technological breakthrough period. >> that was true for human, not human to robot. we'll be 3-d printing homes. we already are. >> look, in the '80s and '90s which was a massive job creation period. >> because we built an entirely new industry, larry, we built the internet. that's the only reason. >> brian, again, you need to talk to thomas malfas about that, and whenever we create innovations, whenever we have explosions, you are creating more, you're losing jobs but
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you're creating more jobs. it's the advance of history. >> i want to give a little sympathy to brian's point of view which is out there as an idea. it is bad economic thought because of the following reason. in general, labor demand should equal labor supply, and the idea is people lose jobs. i will agree with you. there have been once in a historic human lifetime changes in technology that have been more disruptive than usual, and we're right about getting the ball right, getting the education right and getting the skills right, but in general unless you screw up the economy in a massive way, and there's something to that, you know, you should have people -- >> there are going to be a lot fewer people in financial services as robotics and algorithms -- >> maybe, maybe. >> they may invent something. they may invent something away from financial services that creates lots of new jobs. i just want to counter your counter, okay. >> does that mean you agree with
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me? >> no. >> maybe partially. look, i'm going to argue not that demand creates the supply. i'm going to argue that supply greets demand. i was there 1804. >> it's controversial. >> the single best thought the french have ever come up with. you produce -- >> maybe the only one. >> supply creates demand. i say that because a problem with a lot of these numbers is this has been a lousy recovery for 15 years. we've grown at 1.7% per year under republican and democratic administrations and congresses. that in turn has had a major slowdown effect on business investment which has damaged productivity which in turn has damaged job creation. i think you have to put the whole package together. >> let's engage michelle caruso-cabrera here on the world. the relative standing has come
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down vast parts of the rest of the world have come up, middle class around the world enriched through trade, true trade agreements, by the way and america has to learn to understand that, and if it wants to be "x" amount in front it may have to do additional -- >> china is moving towards a market economy, not fast enough for a lot of people but 400 people from emerged in the middle class, only a billion more to go. >> you know what the number is from the world bank, from dollar day abject poverty. >> yeah. >> 800 million people. >> it's enorm house. >> have moved from the abject poverty to the middle class. >> because of the growth of market economies around the world. >> how do we go from a jobs question to a free trade question? >> because they are related, don't you think in is. >> my argument was all the economic models, honestly, like that's all historical. none of the historical models matter anymore. >> of course they do. >> why? >> because technology has
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displaced everything. >> technology created massive millions of jobs. look, we're in an economic slowdown in this country and world wilde. >> where have the jobs been? >> been in an economic slowdown for many, many years. >> brian, you understand the thing that maflias did wrong? like you, very, very, very good at his job and made a really, really bad mistake. >> i could care less about him. >> maflias made a bad mistake the whole world would go hungry when he projected population like this and he was wrong because he didn't change -- >> you guys are the ones using that name. >> you're making the same mistake, that's hour point. >> i want to add one other point. >> it's not my theory. >> but you're sure advocating the hell out of it.
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>> besides the slowdown and the slowdown of growth and the slowdown of productivity, all of which are anti-jobs, there's another factor here. government policies for the last 10, 15 years have probably created a number of incentives for people not to work. we've seen a suspension, under bush and more under obama. all the great welfare reforms. mid-1990s, which got so many people back working. >> clinton. >> have been basically abolished. >> clinton/gingrich but now the time limits have been erased and the eligibilities abandoned. >> a bunch of states have chopped down eligibility for unemployment insurance. >> north carolina. >> i don't know if you've noticed but over the past six months or so we've had north of 2 million people come back into the workplace. do you think it's related to that? >> the state i always single out here is north carolina because everybody booted them around when they did it. in that state it really did
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work. all i'm saying is if you create incentives to work after tax, more people will work. i fear we've gone in the wrong direction. >> let's button this off. >> oh, great important point. >> wait, wait. >> a lot of money overseas. >> radical corporate tax return. >> forget about economic theory and historical economists. yesterday mys pass credit card expired so i need to update it because my toll wasn't getting paid, sock, so there used to be a toll worker and now i've gots pass. called it up, all automated and updated my credit card information, never -- never talked to a human being. there's no toll workers there. where did -- where did -- where did the five guys that work there, where did they go? you know how many employees snapchat has? >> joe is working at a local deli and john retired. i don't know. >> there's my point. >> haven't been to a bank teller in forever.
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>> do they retrain to make robots? >> no, no, no, hold on. >> data is not on your side at all. >> in this environment, brian, you talk about 200,000 jobs on average are being created, so -- so your point is prima facie wrong? >> 150,000. >> it's less than that. >> we'll continue here. we'll take a quick break and be right back. >> coming up next, stylish clmpt parsness.
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bum back to "power lunch." kate, let's take a look at lending clicks tending yesterday's losses. the online lender remains in the news following yesterday's ouster of the company's ceo. dow jones reporting thatting goldman sachs and jeffrey's are basically pausing in some acquisitions of loans from lending club. keep in mind it's been widely reported the two companies were putting together securitization deal of those loans. goldman sachs declining to comment. on the story earlier today shares of lending club were down as much as 9%. actually have come back a bit but are still down 5%. back to you, brian. >> mary, thank you. to paraphrase an old adage
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when life hands you lemons make ice cream. kate rogers here to make why that makes any sense at all. >> that's right. in a past life tony lamb sold vacuum cleanser door to door but a chance encounter he led him to a big idea. take a look. over a decade ago tony lamb's doubt her a run-in with an ice cream man that changed his life. >> in the backyard and hear this music and my wife and i come around the corner and there's the sketchiest van you've ever seen in his life and my daughter was running up to the truck, he stopped and screamed. she screamed out of sheer terror and said but i want a popsicle. >> tony and his wife bought the kids ice cream but couldn't help but replay the encounter over and over in their heads. >> he said imagine if that truck would have been nice. imagine if it was an open kitchen concept and all glass and you could see in and this goes on for weeks. imagine if, imagine if. tony obsessed about that idea for two years and decided to quit his then day job as a
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marketing consultant in 2006 to launch kona ice, a shaved ice store on wheels. >> my wife has backed me in anything i wanted to do and i remember i told her i think i'm going to go build ice cream trucks and she said really? >> really. >> i knew this was an established industry, just a devastated industry, and i knew i could retrospect that. >> lamb launched the business from his basement and the first truck rolled out in 2007. even in a recession lamb managed to sell 50 trucks. in 2010 it was another 60. today they have 700 locations in 46 states. >> when you're driving this or when you see one of your franchisees pull up, can you believe it? do you have to pinch yourself sometimes? >> sometimes i catch it and it's very surreal, i guess. see it on television and see it the a baseball games. you'll see it, you know, in sporting events and you're like, wow, i guess it does get kind of surreal there. >> what does your wife now since she seemed a little skeptal
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since she came with the idea. >> she loves it because we're together as a family. >> today lamb is still committed to test driving his own product. trucks and ice clbd. >> wow, that's pretty good. >> even for a man who is living his dream the sky's the limit. >> i'm not in main or north dakota or alaska but tell me something. when i get into alaska i sold ice to eskimos and it's over. >> yes. >> i'm done. >> it's going to be a mike drop and i'm just going to walk away. >> so lamb is now continuing to grow that brand at a rapid pace. last year they did $120 million in sales. >> fantastic. >> pretty crazy. shaved ice, cheap concept. the shaved ice machine in the truck is $3,000 but turn key, the franchises, $100,000 all in and you get to go to kona camp in kentucky and learned all about the brand. >> shaved ice. >> cool. >> thank you, guys. >> who knew that kentucky was
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the capital of shaved ice. >> it is now. >> up next, our exclusive interview with one of twitter's earliest investors, that guy, chris sacca. do not go anywhere.
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welcome back to "power lunch." i'm melissa lee. stocks rallying at this hour. the dow is up by 1.1%. 17,901, good for almost a 200-point gain. the nasdaq is up by more than 1%, 4800 even and take a look at the s&p 500. notable because we're just about at session highs on the s&p, 2080 is the level, up by 1.1%. taking a look at the s&p 500 sectors all ten, as you know, in the green, materials and energy leading the way while health care and utilities are picking up the back end but still in the green here. tech, of course, on deck today. silicon valley's top power players gathering in san francisco. josh lipton is live at the sun trust internet and digital media conference with chris sacca, one of twitter's earliest investors. josh? >> thank you, melissa, and, chris, thanks for joining us. >> right on. good to be here >> you said recently, chris, that there is a time of reckoning coming for tech startups in silicon valley. there's some unicorns that they said they don't deserve to be unicorns. what are the kinds of tech
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startups you think could be most at risk in. >> we're in an era where money has been essentially free. we have an entire generation of spvs and momentum funds that have just found incredible hunger from their lps to collect logos, just throw money without any diligence or board seats, without information rights into the late state companies. so we have a generation of some companies available to creep along without anybody giving anybody businesses a lot of scrutiny real and as things slow down investors become more cautious and want to peek behind the covers and see what's there. some of the companies won't be able to raise again and that's when i say there's a time of reckoning. >> does it look more like a cooling or are you looking for a full out crash? >> we see some of the companies with incredible burn rates but they don't be able to sustain anymore. we'll see layoffs and perks pulled back and i think ultimately we'll see consolidation that some of the companies just can't support the valuations afforded.
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>> you talk about the unicorns, are there unicorns that you think are at a serious competitive disadvantage here. >> certainly companies that i think can't compete or keep raising money. lyft is one that comes to mind. still a company that doesn't make money on a marginal basis per ride at all. throwing literally thousands of dollars as drivers for incentives to come on to the system and i think they have a scale disadvantage and a business with true network effects. computational advantage and don't have the kind of offering that uber does so i don't think they survive this in the current form. there's a strategic interest, automotive interest to make sure they are competitive to uber. lyft is an example that has had access to cheap money and i don't think that will keep happening. >> uber fan, uber investor. do you think -- is it possible ride hailing market, chris, is such a big market and such a big opportunity, that there could be a few players in it or not. >> could be a few players in it but they have to make money and lyft still can't. it's a business predicated
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specifically on scale and on economies of scale. when you go to look for a ride, you want the quickest pickup time and the highest quality ride so if you have the most drivers, you end up having the highest quality drivers particularly with a great rating system there and the most drivers and intelligence to move them around you'll have the quickest pickup times and that's where it's impossible to contend with uber at this point. >> brian sullivan back in new jersey. >> chris, you got any? >> all right, cool. >> i got you. i want to talk about twitter, if i can, from a leadership perspective. just had a hot jobs debate i want to debate actually leadership. do you believe jack dorsey should be the ceo of both square and twitter? and i'm not picking on jack, but do you believe one person can lead two major public companies? >> i do believe one person can lead two major companies. when i and most of the other major shareholders in twitter threw our weight behind jack
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though it was part of a package deal where we had talked to them and he' greed he would elevate adam baines' presence in the company and give him more oversight over things like product, et cetera and bring evan williams back into the fold, not necessarily in a formal role but consult him for more product vision, et cetera. with those contributions to the management we felt that jack would be great. he would be a great cohesive force with both the -- the founder's vision and charisma and impetus and graffiti to help run that. can we haven't seen both of those moves made and i think the company has struggled as a result. it's really hard for one person to cover two very challenging companies in an era of struggles around growth, et cetera, and i sincerely hope he strengthens his benches in both companies. >> so you're acknowledging, chris, it's melissa back at headquarters. you're acknowledging that jack dorsey right now is not 100% ceo, that you've got some percentage of what a ceo is because you've mentioned that these are two challenging
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companies. they are two challenged companies. this is not the kind of -- this is not the kind of situation where you want to split one guy between two very challenged companies. >> look, he's a uniquely talented person. not an accident that he's still got two phenomenally successful companies, talk about where twitter stock price was last year compared to this year and it's still worth billions of dollars and he went on to build another company, only one jack dorsey on the planet, an incredible person and his employees deeply believe in him. i think cheh do both jobs with strong people around him. i have some exposure to the square stock and would like to see him strengthen the bench there and could do better with his management team there. adding more resources. i don't think there's a weak link there. >> when is that going to happen, chris? >> look, got to ask jack. put him in this chair, but the same thing at twitter. i don't think there's any weak link on management team there,
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but i think they could use more help hand more people who have a lot to bring to the table to come in and help take some of that responsibility and load off of jack's shoulders to make that company successful. >> hey, chris, i hear you're joining "shark tank," really excited about that. michelle here and mark cuban for another year. mark cuban was on today earlier, speaking of "shark tank" on cnbc, and he talked about the timing for companies going public. i want you to listen to it and see if you agree with him. >> what's happening is companies are going public too late and so, you know, ten years ago, 20 years ago, you went public in your sixth year of existence during your hyper goat phase and going public in the public growth phase you're getting people excited but. you're getting markets and the general public excited but. now when you go public in your tenth, 11th year, your hyper growth is gone. >> and specifically he waited for uber wait to go long. what do you think of what he said? >> well, first, let me say all that shouting in the background
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of mark's clips sounds a lot like when he and i are on "shark tank" together. fun to be on the show and mix it up, and, yeah, you just kind of broke some news. i'm re-signing to be back on "shark tank," won't let me say how many episodes but a bunch more than this season. that's the technical term that i'm allowed. love that show, really fun and proud to be on it. that said, when it comes to companies waiting too long to go public, i agree with mark. he and i have an ongoing e-mail thread with other guys about this problem. i think frankly there's such a fear in silicon valley about what happens back on wall street, and i believe it's unfounded. i think if we're able to bridge the two communities, you know, people in silicon valley don't meet a bob peck, an incredible analyst like bob peck on suntrust until they are about ready to go public. they immediate the investment bankers prepping them to sell, sell, sell, but they are not learning the language of wall street and frankly it's not as mysterious as it's made out to be. this isn't arbitrary.
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earnings calls aren't really just a wave of a wand. i think if those relationships were built earlier on the life span of these private companies where the actual analyst came down and sat down and trained these founders in the language of wall street, we'd have a much smoother transition with a lot less fear. >> you know, if clothes make the man, chris, i'm clearly wearing the wrong shirt. between yours and mark cuban's. i'm doing something wrong here and given your success and his. you know, earl on in the conversation you answered josh's question, and you used a couple of phrases that i hadn't really even thought of in a long time. one was the massive burn rate of a lot of these small companies. the other was the idea that quite a few of them are either not or not making enough money at all. that reminded me of 1999, year 2000. is that what you see over the horizon, or what percentage of the kind of crash that we saw in '99 and 2000 are you foreseeing?
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>> look, i don't think it's 1999, and i was out here in silicon valley during that time. had you companies then that had incredible burn rates with almost zero revenue, right. >> right. >> these companies were just kind of smoking the money at that point, and so what you have now are companies that have real business models, but the contributory margins aren't there and it's expensive to run a company in san francisco. there's no more expensive place in the country to live right now. the perks that you have to pay to keith with the other companies are just out of control. the real estate prices are huge. this is a city that hasn't let anyone build housing or office space in years so what it costs to run one of these things is really off the chart right now, and i think that's what's happening. that said, i don't think you're going to see absolutely binary outcomes where a lot of companies that have built good products with big audiences and real revenues just go away. people talk about twitter and how twitter has been beat up and
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bruised. still doing 3 billion a year in revenue and it's not going away. an indispensable source. sfook doesn't have that stuff and snapchat clearly doesn't have that stuff. twitter needs to be better putting it forward. it is a viable business. will they have to cut back more, cut back on stock-based compensation, probably but it's a real business and that's what distinguishes these things from 1999. >> the chris, sorry, got to follow up on the dorsey thing. are you saying that jack doergs's job is at risk? >> look, i don't think jack dorsey's job is at risk because we haven't cbs any turnover on the board. i think that's one thing shareholders have been frustrated by. a board there a little out of touch with investors and haven't seen much turnover there. i welcome the recent addition of the board from pepsi but still no major investors on the border than evan williams, one of the founders and former ceos of the company. i think they need more of the voices in the room and need to
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really reach out and build relationships with the investor community. right now if you talk to most major investors they have no actual relationship with jack and the rest of the team there, no insight into what's coming and i think that's been a real challenge for the company is one of the reasons why the stock has been hammered is there just isn't the institutional buy-in to the story because nobody's actually bridged that gap. >> last question here, chris. primary here in california coming up in a few weeks. how much support do you hear donald trump having among the kind of tech elites you hang out with? >> i asked and said i didn't know a single person that supported donald trump and yesterday it came out that peter teal is a trump -- it a trump delegate. that dude is brilliant and he has always fascinated me by his contrarian nature. look, i think donald trump is off the reservation in terms of policy and in terms of his vision for the country. just yesterday one of his advisers was quoted as saying, look, he doesn't have any policy
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right now. he'll continue with the populist stuff and make up the policy once elected, and that scares the h hell out of everybody here, so i think hillary clinton has shown maybe she's not the most revolutionary leader and maybe she doesn't bring a sea change to -- to what we do here, but she has reached out, built relationships and has as pro innovation platform and somebody that i think all of us here can trust in the governance of the country. >> sounds like you're throwing your support in for clinton. >> i am as this point. i think she's incredibly electable and shown she knows how to get deals done and reached across the aisle and gotten legislation passed and understands international relations at a time when it couldn't be more important to our country and i'm pep hind her. as a technologist i want stability in this country and i want somebody who is interested enough in silicon valley and what we're doing here to kind of clear the way and let us get some stuff done. i don't want a crazy populist or somebody playing on the fears of the nation or somebody shutting
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down the immigration we depend on to build the best engineers and capital markets freaking out. i don't want defaulting on debt and driving interest rates crazy. i want this country to continue on the path of success we've been on. >> hillary clinton, you have chris sacca's support. guys, back to you at headquarters. >> thanks, josh. that was great. thanks, chris. solar city and tesla both sliding today, and -- and recently. what is going on with elon's empire? and we'll bring you the late on two disasters, tornadoes in oklahoma and wildfires in canada. you're watching cnbc. we are first in business worldwide. you wouldn't take medicine without checking the side effects. hey honey. huh.
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i'm late for an important function. saving humanity from high insurance rates. amazing pictures, lock at this, of a attorney doe in oklahoma destroyed homes and knocked down power lines. you can see some of the sparks and the debris there. at least two deaths reported as tornadoes swept across that. look at that thing. my goodness gracious. speaking of amazing pictures of nature, the wildfire in alberta remains out of control. it's the country's, canada's most destructive wildfire ever. the scope of it visible from space. nasa's aqua satellite showing clouds over canada endwyned in the clouds and billowing up from the wildfires causing it to twist within the circular motion of the clouds and wind. there's your meteorological
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lesson for the day and then there's this image of fort mcmurray, the oil town ravageled by those fires. today, canadian officials, there's fort mcmurray, got a first look at the destruction of fort mcmurray on the ground. more now live from 200 miles south of the fire line in edmonton. deirdre. >> hey, that's right, guys, got their first look and we have more images to show you 10% to 15% of that oil sands city was just ravaged by the foyer and destroyed 2,400 structures and were burned down as well and residents, the displaced residents, nearly 100,000 evacuees. they don't know when they will be able to go back and the government says it needs at least a few weeks to even make up a timeline to let them know when they can go back so the images are pretty amazing of scorched cars, houses, businesses, many evacuees don't even know if their own homes are standing and many watching the
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footage to see if they can get glimpses of their own property and also the story of oil here and that's a big one because oil is the lifeblood of alberta's economy here. we know that it's been hit hard by low oil prices and now this wildfire has brought about a million barrels of oil per day offline so right now we're outside of a legislative buil g building in edmonton, the capital of calgary and we've been seeing oil executives go into the building to met with alberta's premier. they are discussing plans to revamp and ramp up production, and we've stopped a few of them and spoke to them on the way in. what they are telling us is they just have no idea when they can actually get employees back there and start up production, telling us that the president of conoco phillips says even after they get commission to go back because it's a process to ramp up process after you shut it down like they did and other companies in the oil sands sites. back over to you. >> thanks very much.
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the key pieces of elon musk's empire tesla and solar city both under pressure today. shares of solar city down 25% on the back of its earnings report last night. the stock is now down 66% this year alone. tesla sliding about 17 boston in the past month. are we beginning to see cracks in elon's empire? we've got the cio of cupe's capital management and gordon johnson of axiom capital, the only analyst on the three with a sell rating on the stock. gordon, i'll start with you because the decline in solar city today is absolutely staggering. they have got a core of their problem, gordon, is their costs are rising very, very quickly and they are not able to bring the costs per watt down. is this surmountable in your view? >> i don't think so. their cost is an issue, but i think the real problem is this is a company with massive growth from 2013 to 2015, and then in 2015 the growth started to slow, so what the company said is
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we're going to generate cash flow, and what we learned last night is their definition of cash flow isn't the accounting 101 definition, ie, operating cash flow less cap "x." their definition of cash flow is operating cash flow less cap "x" plus financing. you have a business where you burn a ton of money and issue debt and that means you're generating cash and that's the concern that investors have. >> i'm glad that you brought that up because it seems like management has a real problem with communicating the story to the street and to investors as well. on the conference call and the letter to investors, for instance, you know, management is very positive on what the outlook is and then at the same time lowered insulation guidance by up to 20%. at the same time, they have very complicated financials to understand, and even to get the cost per watt figure you've got to go through seven pages of financials in order to actually churn that number out. at this period in time with oil prices down, i know there should be no real correlation to oil prices and with oil prices down prerk uruguay the solar sector, is this a story that wall street
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doesn't want to touch because it's simply too hard to understand that they are not getting the right information from the management team. >> i don't think it's hard to understand. the problem is we have a recent example of a company where financial definitions were changed every quarter. it was very hard to model and essentially what that meant was it was so hard that, you know, it really wasn't a real company. the issue with solar city is they are defining things differently than you typically define things in economics, and one of the major problems is they redefine how you calculate their costs. they have redefined how you should look at the revenue, items changing every quarter, and us a stated it's a very hard story to follow so i think that is a concern and the constant changes are causing people to become more concerned. >> elon musk is the chairman of solar city, drew, as you know, and also the ceo of tesla. are you concerned about his method of communication to the street, too, in that he's set these goals, for instanceance, on the last earnings call, very high goals and he he
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acknowledges they are set very high and the probability of hitting the goals are very low hand that could set up a lot of volatility going forward when the goals are not hit? >> i suppose, but as the history begs to differ. i don't think he's hit one of the goals or one of the major goals. however, what has happened is he's moved the ball forward substantially in his shortcoming of these goals, so it's definitely an m.o. of his, both i think to incent the internal team as well as increasingly to incent the extra sploir network, so i don't hold these goals against him had. i think that the actual expectations for the stock, the sell side expectations and buy side expectations are well short of these goals, and so there's a very distinct possibility that the actuals will be below those goals but above many of the expectations to support. >> in terms of the stock right now, are there enough cat lifts
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at this point? we won't get anything until probably the next earnings report? >> the common view is that there's not a lot of cat lifts. we'll keep ramping the "x" and make progress in the giga factory. i expect we'll get a financing in here maybe sooner rather than later. all those things i think will tend to be positive for the stock. >> okay. we're going to leave it there. thanks so much for your time, drew cup pz and gordon johnson. another gloomy analyst report out on a. the stock down 14% in the month so is all the bad news priced in? all call and others on "street talk" coming up next on "power lunch." the fact is: some believe they won't need a traditional bank down the road, so at cognizant, we're helping banking and financial services companies think digital, be untraditional, and reimagine what the bank of the future can be. our clients can now leverage customer intelligence to predict their financial needs
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we haven't forgotten about "street talk," our daily dive into the analyst calls of the day. stock number one, ultgenics, a nevada-based biogenics, jeffrey's reiterating a buy and a $109 target. stocks at 61.60, analysts like the progress on certain drugs and say other clinical programs remain on track including a partner program including a really bad type of muscular dystrophy. i wrote it this morning and realized i'll never be able to say it. it's bad and you're on progrempingts the $109 target is
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65% above the current stock price for rare. >> raymond james cut from an outperform to a strong buy. price target getting cut from 25 to 28. results of q1 inline. the stock has been considered a potential takeout target and the analyst says an outright buyer for the company is quote, up quote scarce and rebelieves in the free business and cash flow and there's a continued flatter trajectory meaning it won't grow as fast. >> a buyer is on tap because this is a $76 stock three years ago. now at 2329. next up, sprouts farmers market. goldman sachs says you've got to sell this stock. they cut the rating from sell to neutral. the target is thrown% below price. estimates and valuations are overly optimistic and sales growth came in at the low end of expectation and appear to be
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decelebrating while traditional grocers are accelerating. whole foods doesn't see any upside on that. >> apple, drexel hamilton were its latest read on the apple monitor. they note that all have reported april sales and the performance for all of them weaker than historical manchlgs, sounds pretty bad but the gloom and doom sentiment around the stock has reached extreme levels and the stock is an exceptional value. it hit a new low. >> we're playing a lot more games on apple tv and wonder if we're underestimating the video game opportunity for apple tv. it's like a wii now. finally the rubicon project is your under the radar name of the day. not at a 70s band. a los angeles-based company working to automate the selling of advertising. citi group adding the project to their small and mid-cap focus list and comes after a 20% selloff due to what the analyst calls one blemish in an otherwise strong first quarter adding it's a compelling focus
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for a strong competitive position and liked the international and it was covered with an average of 2296, more than the current price of 14.50 and the ticker is rubi. >> that does it for "street talk." >> with the rubicon project. all right. it's approaching now 2:30 on the east coast. let's get now to sue herera with your cnbc update. >> hi, brian, hi, melissa. a car bomb striking a bus carrying turkish police officers in southeastern turkey killing at least three people and wounding are 45 more. it was carried out by the outlawed kurdistan workers party as the bus was passing by. soon after it became apparent that rodrigo would be the next president of the philippines he reportedly drove to a cemetery to visit his parent's tomb where he was caught on video sobbing. his critics have dubbed him a butcher for advocating the murder of drug traffickers and other criminals. a u.s. official signalled
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washington's willingness to work with him. new york firefighters performing a dirg rescue when two window washers got stuck on a slanted platform in lower manhattan. the platform was dangling 17 stories above the ground. the rescuers had to rappel down the side of the building to get to the stranded window washers. and this story is just downright depressing. the cost of aging continues to rise. the median annual bill for a private room in a nursing room edging close to $100,000, that's annually. that's according to the insurance company genworth financial which sells policies covering long-term care. that's the news update, guys. back to you. >> thank you, sue, got it. the oil market is closing for the day. let's goat jackie deangelis at the nymex. jackie. >> reporter: hi, michelle, didn't break $50 a barrel, 44.67 was the session high set in the last two minutes of the close here and we're closing just
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slightly after that, up 1.25. the supply disruptions in canada and nigeria and refinery outages here in the united states contributing to the support. the fact that the dollar was higher and the crude was bucking the trend showing you the sentiment now is strong to the upside. >> more about oil prices, the canada fires jackie was referring to disrupting production. should we be concerned about inven successfully brian bush joins us now. good to have you here. there have been reports that a million barrels have come off the markets because of the wildfire in canada. do you think those numbers are right? >> i think that's a little overblown. that million barrels is really related to the name plate capacity of the upgraders. >> you mean the official capacity. >> that's correct. >> and those upgraders have never been running at name plate capacity. >> there's almost 350,000, 360,000 barrels of capacity off line for one of the largest spring maintenance we've seen in
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canada in a long time, so the real impact of the fires from what was being produced, what was actually actively going is probably closer to 280,000 barrels a day and i'm not worried about that. there the highest inventories we've seen and more than enough inventory shooting around for supply. won't have a shortage of crude. the fires are terrible, a terrible event and it's impacting crude supply out of canada but shouldn't be having this type of effect. >> makes accepts that the u.s. has to import more. if u.s. production is going down and we still consume roughly 8 million a day, we'll import more. >> what has fallen off has been replaced by foreign imports. we've seen nigerian imports and west african imports into the east coast go up considerably. the economics make sense.
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it's much more cheaper to buy a brent-based barrel in west africa and bring it to the east coast than it is trying to put gulf coast barrels around and bring them around to the east coast and that barrel that we've taken away from west africa has been replaced by iranian barrels going into east india. >> i was just going to ask about that. recall what do we know about iranian production? when i was there, 1.7 million barrels a day. what do you think it is now, exports, i mean? >> their export by marine are 1.8 million barrels for the month of march and put that together with pipeline exports of a million barrel, probably at least at 2.8 in production right now which is only a million away from their pre-sanctions level. they really haven't gotten into a fight with the saudis for market share and have taken it to the u.s. as we've been -- >> brian bush, good to have you. >> thank you.
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welcome back to "power lunch." i'm michelle caruso-cabrera. the process to impeach brazil's
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president back on. the decision was reversed yesterday but now apparently he's changed his mind. the vote will proceed tomorrow with the vote in the senate and shares of twitter are higher but still trading at all-time lows. we'll talk to the former c.o.o. of twitter about his future and much more. stay with us here on "power lunch." [woodworker] i live in the fine details.
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welcome back to "power lunch." let's get back out to josh lipton out in san francisco. joined by a partner in startup incubators like drop box and airbnb. >> you've seen drop boxes cutting perks and prosper laying off almost 30% of its staff. is that what you expect to see going forward, more of this sort of general belt tightening? >> i think companies are maturing and they are getting -- some of them are getting closer to being public companies and the i think they are paying much more attention to the bottom line and so some belt tightening
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and right sizing the business in these companies can i think is probably to be expected, and i don't think it's happening at a greater frequency that it happens in public market companies. those don't all get reported but because a lot of companies have invested in creating like amazing employment brands and attracting great people to their companies some cost structures can get bloated so i think it's a health he sign. i don't look at it -- where i've read about it as drop boxes, it's a great sign. trying to get their business -- their bottom line and numbers sort of tightened up, and i don't really see this as a big cause for concern. >> the advice you and the rest of the crew, the advice that you give to young founders, young tech companies, has that changed at all over the past let's say six or 12 months? >> not really. i mean, you know, the first and foremost when companies are young and programmed, the core advice we try to give them is try to build a product that people really want to use and
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start to get people to start using it organically and get a small group of people to love it and then they broadcast that to you and attracts the users. that's what you tell the companies when they are early and young and for companies able to find great product market fit and able to find customers who are growing, they build their company, how they hire and set their structure and organization and how they set goals and raise money and how they create the success that they have found. cycles come and go and how you build a great company and great product that kind of endures so it's not really cyclically dependant. >> brian kelly back in new jersey. we asked the same question of chris sacca and we'll ask it of you. should jack dorsey decide between square trade and twitter, not picking on jack, but can anyone successfully run two public companies? >> well, i think the answer to that question empirically is
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yes, you know. i was an executive at pixar for a long time and steve jobs was our ceo at the same time that he was the ceo of apple, so it takes a very special -- >> it's funny, because i mentioned that to our team, tyler, melissa, michelle and all smart and they came up with steve jobs. >> i'm going to challenge that because it's not quite the same. for pixar and for apple you're dealing with product cycles, multi-year companies like them, a very different attention span. >> that may be true. apple is had a very complicated company to run being but having said that i think it's air to find an icann do both.
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i don't think it's an ideal session, and the last time were you on cnbc was last fall and you keep seeing the twitter shocks get shelled. what keeps bringing investors back here? >> i think what investors want to see is the company gain momentum pertaining to user growth and user engagement. i think that is sort of the -- probably the most concerning thing. i think revenue quarter to quarter, which was the issue in this earnings cycle i think is frankly less important than confidence that the platform has continued to grow in scale and the consumers are as engaged on twitter today as they were yesterday, and so i think it really comes down to the question of usage and engagement. >> switching gears, you have a unique perfespective on the funding environment out here for private companies. what's been the follow-on market
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for why y combinators? are you seeing enthusiastic investing in the companies or has there been some cooling? >> i think in the early stage seed and series "a" side of things i think that's been as hot as ever so combinator graduates some of the most promising companies in the ecosystem and there's tons of investor interest at our demo days and companies are getting funded at the same frequency as before so we haven't seen a slowdown at the early stages at all. >> always thanks you. >> my pleasure. >> thanks as well to ali. shares of apple down 14% over the past month. is now the time to get in? the trading nation team has that covered from all sides. that's next hon "power lunch."
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i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade. because you can't beat zero heartburn! i take prilosec otc each morning for my frequent heartburn ahhh the sweet taste of victory! prilosec otc. one pill each morning. 24 hours. zero heartburn.
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in trading nation, let us talk about apple because those intel now has the unfortunate designation of being of the worst performing dow stock this year, apple is still down 11%, and it's been a dig disappointment. any real sign of a turn let's find out. the president of strategic partners and dennis is president of harvest volatility manager. mark, are you a buyer of apple?
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>> we are. apple stock is still a good buy. we think there's a lot of great value in a. we're talking about an earnings disappointment and the first revenue decline in 13 years, but the year-over-year comps are pretty tough. we're talking about apple of today with a steal iphone 6 versus apple a year ago with a brand new hot iphone 6. when apple 7 comes out later in the year i expect apple to do better. one of the main things i'm hearing right now is apple is no longer revolutionary, they have become evolutionary. in being evolutionary, it isn't really a bad thing. you know, we lock at toothpaste and band-aids. there's nothing revolutionary about toothpaste and band-aids, but when you look at procter & gamble over the last ten years procter & gamble is up almost 50%. johnson & johnson over the last ten years is up almost 100%, so even evolutionary companies, if that's the case with apple which i don't think is necessarily the situation here. they can still make money.
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>> bottom line, you're a buyer. you're an options pro. another way to make money on apple besides just buying the equity. >> yeah, there is, and there's a real conundrum around apple right now. i think there's a lot of electric days in apple. you saw carl icahn got out of his position. and then there's a lot of really smart people like mark who are looking at it as a value investment. you can sell options that will give you an additional 2.5% yield. you can have the 80 strike call and 85% strike put. even as the two forces battle it out, you can can get additional yield out of the to and hold it and get paid to hold it while i think the stock eventually goes higher. >> there you go. "a," buy the stock. thank you both.
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for more "trading nation" head to our website. the spring auction for art season is kick off. in fact, so much up for sale it could bring in as much as a billion dollars. we're going to give you an exclusive look of some of the works you might want to, you know, pick up during your lunch hour. we're back after this.
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welcome back to "power lunch." i'm melissa lee. we have got a huge interview coming up tomorrow on cnbc. that man there, jamie dimon, will be on "squawk box" at 8:40 eastern time. be sure to catch that interview right here on cnbc. >> speaking of, the annual robin hood benefit that raises money to fight poverty. usher and zac brown performed. in the crowd, lloyd blankfein, john sykes, larry robness, there you see, bill ackman, paul tutor
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jones. it raised $16 million for charity. that has to be the most profitable fund-raiser in new york city every summer. >> by the way, how great is zac brown live? >> i haven't seen them there, were you? i've seen them in concert. >> who was the guy with the hair. >> jones. >> brans. >> my uva classmate. >> what happened to you, mathisen? >> wow. >> yeah. he's been extraordinary generous. >> excellent. >> hope to see you, paul, at the reu. reunion. our 40th, my friend. our 40th. all right. 1,500 works of rare art going to
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the dwavl this week. including two master peels. a "power lunch" exclusive. standing next to one of those monets. nice to have you with us, brooke. we appreciate you being with us. >> thank you so much. thanks for having me. >> put this season's auction in context as against last season. we are hearing that maybe the prices may not go as high as they did? i'm thinking of one of the piece use have on sale. mow dill janne. last year it went for $180 million. this one this year is expected to fetch a lot less. what's happening in the art market? well,ite's all relative to the quality of the market every season is different. it was extraordinary to be able to offer such an outstanding mow
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dig lee any reclining nude portrait last season. we wish we could do it again but it wouldn't be rare and worth and worth $180 million. what we're ufring this season is an outstanding female portrait, this time a cloektded figure which will appeal to in some respected of a wider audience. not everyone wants to hang a naked woman in their home this is a beautiful sensitive and very alluring portrait. i think it will do very well. >> so what i'm hearing you say is that the difference between this year's prices and markets has more to do to use a word that may not be used in the art world our sales are context
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rally driven. when you have something to offer lie the mow did lee any from last season, it creates an opportunity that can encourageover proactive sales so that's had an impact on the other market not having a marquis piece of that level of the $100 million-plus level, which brought out o'additional consignments in the last two seasons, has made it a more selective selling season. nonetheless, there are great works on offer and i think this will be very strong results. >> that's a picasso? >> the om de sis. >> the seated man. >> yes. >> that's a relatively recent work. >> it's 1962. its was a sem sags, that
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exhibition. critics were dismayed at what a spectacle it was. changes have taste. his late work are incredibly popular and it's being offered at $8 million to $12 million. >> let's talk about the monet that's behind you. i think of a brand. his brand stands for water lilies, right? when you see monet, he has atmospheric ethereal light and dark works, but, man, he's known for water lilies. do buyers want brands as it were? >> buyers do want brands, particularly new buyers and global buyers. the water lily is not just an emblem, though, of monet. it's an emblem of his entire practice.
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he spent the last 30 years of his life devote method this subject matter because it was a way for him to continually explore how light and surface change due to the weather. you look at it and it's clearly impressionist. >> brooke, thank you very much. brooke lampley. >> "closing bell" starts right now. hi, everybody. welcome to the "closing bell." i'm kelly with the new york stock exchange. >> and i'll bill griffeth. stocks have rallied on wall street as the dow flirts with its best day in two months. the s&p and nasdaq are going for their third straight gain, as a matter of fact. big jump in the price of oil over fears of supply,


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