tv Power Lunch CNBC May 12, 2016 1:00pm-3:01pm EDT
i like ge, 30, 29, $28, i'll take it. >> in the disaster that is retail, let's see j.c. penny reports earnings tomorrow. >> he's still holding on to that. >> no. you remember i sold it. so i'm looking to get back into it. the point being they exceed expectations. >> we have to go. "power lunch" begins right now. >> and welcome to "power lunch" where we're taking you inside the big meetings in washington today between presumptive republican presidential nominee and donald trump and the rest of the party. could this be a turning point for the gop in this election? welcome, everyone. i'm along with melissa lee and tyler mathisen, brian is off today. house speaker paul ryan making the headline of the day at 11:35 a.m. washington time. >> i was very encouraged with what i heard from donald trump today. i do believe that we are now planting the seeds to get
ourselves unified to bridge the gaps and differences. >> all right. what does that all mean? let's get to john harwood. john? >> michelle, it's a first step. it was a positive step for the republican party. paul ryan met with donald trump, the presumptive republican nominee. ryan, of course, has held off endorsing him. he held off again today. keeping some distance from the nominee. but he indicated that they're trying to figure out a way not only to embrace the core supporters that donald trump has he massed in this primary campaign, but also find a way to grow the republican party, grow the conservative movement. here is paul ryan again. >> it's really unparalleled, i thichlt he's gotten more votes than any republican primary nominee in the history of our country and this isn't even over yet. he hasn't even gone to california yet. so it's really a remarkable
achievement. so the question is -- this is what we think we can be a party to helping -- how do we unify it all? so this is a really big and growing movement. >> of course, the reservations he has is about growing that movement. donald trump's been very polarizing figure among latino voters, among women voters. republicans think they need to expand the constituency with both to win the election. also to hold congress. you had donald trump meeting as well with republican leadership of the senate as well as the house. he came over here to the building behind me. now he's gone to see a campaign lawyer at a firm a few blocks away. donald trump has not stepped before cameras himself. all we have is the joint statement he put out with paul ryan indicating it was a positive meeting. i think republicans will be relieved by the outcome of this.
this is the first step, not the end of the process. >> let's bring in our senior contributor larry kudlow and sarah taggian. sarah, you have been very critical of donald trump. are you relieved by what you heard this morning? >> well, i do think the party needs to be unified. i would like to see donald trump and paul ryan come together on a tax plan that's more in line with what paul ryan is likely to put out. and i really read their statements and ryan's pretty enthusiastic comments after that meeting as such -- as. that we know ryan is going to put something out before the convention or so he said. donald trump has been all over the board and willing to be malleable. i think it would be very good for the republican party to adopt a paul ryan approach here. >> larry sh your assessment? >> i agree with what john harwood reported. i mean my watch word is where there's a will there's a way.
i think there is a will. it is a process for sure. and i think they're walking through this process and they will get unity. having said that, i think they're going to be issues. i don't think there's going to be complete closure. immigration is one. trade is another. foreign policy is the third. and entitlement reform say fourth. i think that entitlement reform is going to be a very tough nut to crack. there is a lot of controversy about paul ryan's entitlement ideas. mr. trump does not agree with them. they'll get closer on trade. they'll get closer on immigrati immigration. they'll get closer on foreign policy. i just want to say that regarding tax policy and tax reform, i think paul ryan is going to really like donald trump's tax plan as it evolves. >> this seems to me, larry and also miss fagan, the idea there is the beginning of a negotiation to use donald trump's favorite word. and they're going to ultimately reach a point where they agree
on more than they disagree on. they're going to narrow differences substantially in the areas where they can't or don't agree. and the main thing that ultimately they are going to agree on is that they both want to defeat hillary clinton. sarah? >> that's right. they're going to agree that donald trump candidacy or presidency would be better than a clinton presidency. most republicans will fall in line. paul ryan is in a very tough position here. as the speaker of the house, he really has no choice but to support the party's nominee. it would be untenable for him to run around the country and try to elect all the house republicans while he said he didn't support the nominee. i think he is playing this very smartly. he can bring donald trump closer to the paul ryan vision of the republican party? it sounds like donald trump is willing to go there at least partly go there to larry's point. >> well, yeah. let's underscore partly plchlt trump has the whip hand here. it is very important to recall
in recent days some really significant polls have come out. the quinnipiac poll shows a tossup between clinton and trump in florida, pennsylvania, and ohio. three major states. a reuters poll which actually echos other polls showed that national race is essentially a tossup. so the argument that a trump candidacy will go down in flames in a landslide is now off the board. that gives mr. trump, in my view at least, a lot of leverage. and, look yushgs n, you're not change donald on entitlements or economic populism. but i think they will agree on taxes. i think that they'll get closer as sarah mentioned. >> robert frank is going to be here with a story about where
the wealthy stand. 30 year bonds up for auction. rick santelli is tracking the action. rick? >> when you think you have it all figured out and demands have been real strong for corporates and governors, 30 year bond auction was a huge disappointment. 15 million 30 years are now in new hands. 2.615. yes, it actually tailed. looks like 2.60 was trading and the high yield was 2.1615. the only good development here, indirects were spot on with ten auction average. fwoid cover, 2.19. lightest since april of 2015. 8.8 on direct. lightest since september of 2025 15. dealers take 31 1/2% of the auction. so d plus. d as in dog plus. that is the final supply of the week. and there was a little selling afterwards. you would rather have it rally if you own it.
back to you. >> let's bring in robert frank to continue our discussion on politics. you got some new data on who the wealthy are backing this time around? surprising stuff, robert. >> it was surprising this time. hillary clinton, she still has a double digit lead. trump is extending the reach up the wealth ladder. 44% of millionaires plan to vote for hillary in the fall. that compares with 31% for trump. that is according to the millionaire survey. six months ago, only 9% of millionaires supported trump. sow has more than tripled his support among millionaires over the past six months. now 15% of millionaires are still undecided. so he could get a lot of that group whether it comes to investing. 42% said hillary's election would be a good opportunity for investments. trump is right in. there 36% said trump would also be a good opportunity for investments. that really splits along party lines though. more so than wealth. look at the data among
democratic voters here. democratic millionaires are largely bullish on the economy in the market this is year. republicans say both markets and the economy will be weaker. so really split along party lines. most important issues in the election were millionaires this year are foreign policy, terrorism followed by political gridlock and then taxes. now one in five millionaires has given to a political candidate and one in five has either given to a super pac or plans. to so i know that trump has done a lot with his own money and without political fund-raiser but this is why these millionaires and these wealthy givers are more important. >> let's turn back to larry and sarah here. as people in that wealth category, larry, come to understand on a deeper level what his tax proposals might mean for them personally. >> yeah, i think that's right.
the so-called millionaires are going to like it. i'm glad for them. i really worry about them a lot. i think with respect to business owners, trump is going to come without a deregulation plan that will be much to their liking. but, look, let's put the limousine liberal as side for a minute and let's recall that heart and soul of the landslides for trump in the primaries come from essentially middle and lower income, middle and lower middle income workers and wage earners. the middle class which has not basically has not had a wage hike since the year 2000. that is trump's base. he's going to stay with that base. hopeful lit limousine liberals will come around. >> actually, he gets a larger share of his vote from people making $100,000 or more than he
does from people making less than $50,000. >> the irony that donald trump is the champion of the blue collar worker is, i don't think, lost on anyone. i think that the reason you see mrs. clinton ahead in this poll is because you know the devil you know is better than the devil you don't. donald trump here to now has been so unpredictable in what he is propose will and so few details around the things he did put out including the tax plain that a lot of times markets, you larry, you know about better than anyone of us, they want certainty. they look at a clinton presidency and say she'll be more liberal than i like. she spend more than i want. but least i know what she's likely to propose. donald is totally unpredictable. >> on the tax plan, larry, i can read you something from politico. they quote sam clovis saying that tax proposal would, if fact, tleed a surplus of 4.5 to
$7 trillion. a surplus, not a deficit. there's been the conservative tax foundation says it's going to add $10 trillion to the debt. >> sam clove sis a good guy. he's a friend. i don't know where in god's name he got those numbers. it just doesn't make any sense at all. the tax foundation, by the way, is a dynamic scoring. that means they say policies will effect behavior. and that will effect the economy. as i say, our committee to unleash prosperity is helping on this as we've helped every other candidate by the way. trump is the last guy standing. and it will be any shifts -- and there are tweaks, they're just tweaks, but they will add to growth, jobs, wages and investment. and they'll vastly reduce that deficit number to something around $3 trillion. to sarah's point, i get that. i think sarah is right about the uncertainty factor. but i think that arguement is
going to wear very thin. you're going to come into the period now where mr. trump is making more teleprompter speeches on trade, on the economy. just as on foreign policy. as you move to the convention, you'll get more details from trump policies as the platform committee writes its policy options up. and i think what paul ryan is trying to do here is help. the thing that i heard that i liked the most is ryan wants to help, not harm, donald trump. and as sarah said, after all, hillary clinton is the one waunt to harm if you're a republican. so i think the pieces are falling together very, very nicely along with the opinion polls. i think mr. trump is in a very good position right now, frankly. >> all right. okay. we'll see. >> i don't know. i'm not sold yet. he's getting a bump as candidates often do when they become the nominee or the presumptive nominee of their party gheshgts a bump.
there is still a lot of really bad data out there about the polls. and when we have conversations about states like arizona and georgia becoming competitive -- >> this is what i always come back to with people like you. i have a lot of the conversations with people like you, are you going to vote for hillary? >> i'm not going -- no, there is no way i'm voting for hillary. >> you don't vote. >> i certainly voting a candidate. >> sarah fagan -- >> it's very frustrating to watch donald trump and the way he's conducted himself over his lifetime lead a major party. i find that personally i nind very hard to square. >> now, look -- >> sitting one out is the thing to do. >> being a president is different than any other thing. >> i'm first guy to acknowledge that mr. trump has warts. and i myself have disagreed with several of his policies, at least up until now on trade and immigration. i think those policies are shifting. i don't know that. sarah is correct. mr. trump made a number of
unforced errors. having said that, though. i have complete confidence it that sarah fagan will be one of the top trump strategists as we move into the general election campaign. >> i don't think. so. >> sarah is one of the best in the business. the republican party cannot do without her. i'm fully confident at the convention whether we sit down in cleveland and have at least a cup of coffee or more that he'll be onboard. >> i wish you could see sarah's face when you said that. >> yeah. >> all right. thank you, lady and gentleman. >> just having fun. just having fun. >> larry, sayer yashgs robert, thank you so much. >> up next, the battle for america's biggest company. alphabet unseeding apple for the top spot by market cap today. but is bigger really better? we'll debate that. looking for balance in your digestive system?
try align probiotic. for a non-stop, sweet treat goodness, hold on to your tiara kind of day. live 24/7. with 24/7 digestive support. try align, the #1 ge recommended probiotic. hey, jesse. who are you? i'm vern, the orange money retirement rabbit from voya. orange money represents the money you put away for retirement. over time, your money could multiply. hello, all of you. get organized at voya.com.
apple's big fall continues. it dipped below $90 but right now around $90 for the first time in two years. they hit an all time in february of 2015. so let's bring in brian white from drexel hamilton. the price target, 1 wi$185 a sh much it's interesting about the developments today is that you yourself had the apple monitor survey which basically is a survey of various taiwanese suppliers to april.
f apple. you still came away bullish. but what he's saying is a lot of the same suppliers are saying that orders for their chips that go into apple phones are going to be significantly down in the second half of the year. are you concerned? >> i'm not concerned. stock is still dirt cheap, number one. number, two i don't think anyone really knows. i will let you know, our model already indicates a 10% decline in the second half of calendar '16 versus calendar '15. so we do have a decline. i think most analysts have a decline. the nikkei article had a greater decline. no one really knows until iphone p 7 is on the market. >> so when the taiwan semiwhere the seven, 6 s, et cetera, will shrink orders to 80%st levels reached in the second half of
2015, for this second half of 2016. you think it's just simply too early to predict that? >> too early to tell. generally whether you get a nons series, demand is better. we went up just against hugely impossible comps with the 6 s versus the 6. and that was very negative for iphone shipments in fiscal 16. i think a lot of people that upgraded to the bigger iphone are going to come back for the iphone 7. they did it with the of 6. that's whether they upgraded. they passed on the s. i think they'll come back with the iphone s. i don't think you need to reinvent the world with the iphone s. >> what is your stock going on with the world? >> there is a lot of pessimism. it feeds on itself. you have a sloppy tech tape. so a lot of traders are probably playing games. we're telling investors stay the course and add to your positions. the stock is very, very inexpensive.
i think the cycle troughs year over year change. >> you've been covering apple for quite some time at various firms. you have the distinction of putting on the highest price target. you put a price target of $1,001 which would imply $143 a share. the stock never reached $143 a share and some sat company in april of 2012 looked very different from the company today. are you saying essentially that today because your price stargt $185 clshgs is even higher than that, that today you still see the best days for apple ahead of it in terms of innovation and new products and average selling prices, in terms of margins? >>, so remember, apple came very close to that price target. very close. the second thing i point out is that a lot of the things that we're talking about now with apple in 2012 weren't even on the horizon. a car. i'm talking about robotics. we're talking about virtual
reality. we're talking about wearables. >> are we going to get those things for the next 12 years? the target is for the next 12 months. >> some of them will get more color on. they may not be released. i don't expect an apple car in the next 12 months. but these are things that apple has an iconic brand. their competitors are going to go by the way side. they have this ecosystem of a billion installed devices. it's impossible for most competitors to compete with this. apple is not going to be just a smart phone company much it's an internet of things play. once people get that right, they're going to give it more than a market multiple in my view. >> all right. brian, great to have you with us. thank you. brian white, drexel. valeant shares getting punished y some are blaming valeant's broken promises real is making new friends. amazing is getting this close.
real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing icult times for elderly holocaust survivors with no food and no heat they get weaker and more die everyday. i want you to see their faces. look into their eyes that are haunted still by the memories of the past. they desperately need our help now. a simple blanket, a loaf of bread and medicine are lifesaving when you have nothing. these are people who often have to go for days without food. this woman would die in a matter of days or weeks without our help.
cold, sick, weak the jewish people have suffered so much pain in their lives. please call now and say you will give a gift of $25 that will help bring these lifesaving essentials to a holocaust suvivor. are we going to hear the cries of the oppressed? or are we going to be silent to them? are we going to feed the hungry? to clothe the naked? and not avert our eyes from our fellow flesh and blood. the fellowship is faced with desperate pleas for food blankets and medicine. for only $25 you can help save a life with the gift of bread, a blanket and medicine.
to a holocaust survivor suffering alone with no one to turn to. i hope and pray you will do so before time is up and it is too late. . athe least 15 russian gold medal winners from associaty, rush yashgs were part of a state run doping program. this has been on going series of stories coming from "the new york times." once again, implicating number of russian gold medal winners, perhaps -- >> and this on the eve of the rio games where there are some questions about whether certain russian track & field, most sefkly also i assume swimming, i believe swimming, athletes are going to be allowed to participate. and then the world cup coming to russia in two years. >> which is also controversy
because of the fifa investigation. >> all right. speaking of gold, melissa? >> gold, $1271.40 is where the gold prices are settling. the trade is not telling you the story in the medals complex. we're seeing steeper declines aacross the street board. more than 1% declines. palladium, down 1.2%. copper, $2, 1.6%. rick san tell ji tracking action. what is the fallout of that baek 30-year auction, rick? >> a lot of underwater participants, that's what it is. look at intraday of 30 years. we just had $15 billion from the dutch auction. it went off at 261.50. you can see the volatility. here is something interesting, let's look at a two day of ten year, the auction was yesterday at 1.71. you're out five basis points. let's look at the day before's three year.
that went off at the dutch auction at .875. you're out four basis points. republican, when you sell off a point yields up. all the yields are higher. everybody that participates in the auction may be a light seller or heather in the futures. finally, one weekst dollar ib dechl broke the streak yesterday. it is holding a 94 handle. >> thank you. dramatic 24 hours in brazil. so now it's official. brazil's president rousseff has been suspended from her position. the senate voting to impeach her. now what? what happens next for brazil and the market?
you can never get enough of it. change the way you experience tv with xfinity x1. hi, everybody. here is your cnbc news update for this hour. a federal judge ruled the obama add smgs unconstitutionally spending money to fund the president's health care law. it's a win for house republicans who brought the legal challenge. the judge issued an order stopping further reimbursements
but delayed the implementation while that case is appealed. >> john kerry telling a corruption summit in london the corruption is as great a threat to the world as terrorism. >> it is a contributor to terrorism. the extremism we see in the world comes from no small degree from the utter exasperation that people have with the sense that system is rigged. >> walmart says it's cutting the delivery time to two days from three for its pilot shipping program. it said it is also lowering the annual fee bied 1dz to $49. the pilot program was started a year ago to counter a plan offered by the rival, amazon. and kelly ripa says michael strahan is leaving the morning talk show on friday. so a search for his replacement can begin. strahan was scheduled to depart "live with kelly & michael" in september to join "good morning america" full time. >> there is a back story. there hrt. that's the cnbc news update at
this hour. michelle, back to you. >> i bet it's juicy, too. >> all right. >> brazilian president rousseff forced to hand over pow they are morning after an imimpeachment vote this morning. the new president decided who the new finance minister will be. he ran the central bank from 2003 to 2010 when time were much better. he's very familiar to the markets. in account fashgs he was a frequent guest here on cnbc whether he held that position. rousseff not going down without a fire. in a fiery speech this morning, she told the world she has been out offed in the coup and she never broke the law. standing by her side, s you seem in the picture heshgs predecessor. he is also under investigation for corruption. he handed power over to her former ally after a 20-hour debate in the brazilian senate started 9:00 a.m. yesterday. finished before dawn today. only 41 senators were needed to vote yes in the end, there were
far more than needed. 55. outside parliament, thousands of protesters, some supportive of rousseff, some support of her impeachment. her suspension was not a surprise. what stock analysts were looking for was the scale of the defeat which foreshadows the next vote after her trial to decide whether or not to push her out of office. you need 54 senators to vote yes. that is pretty close. keep in mind that her successor is also under investigation as is the vast majority of the brazilian congress. let's bring in shan an o'neal, senior fellow for latin american stunsies on foreign relations. i mentioned the data point about the vast investigation of corruption into the brazilian congress. should we look at this as a water shed moment when it comes to battling brazil. are things changing there?
>> well, she is actually being impeached for different charges, not for corruption. she's being impeached for budget airy moves that she made to cover up the deficit that she had within the federal budget. so that's not actually what this is about. it is about the larger corruption scandals that are happening in brazil. dozens and dozens of political officials of elected politicians, a business leaders and the like who have come under investigation and many who have been convicted. so it's part of that larger frustration that is happening. 50 is awfully close 25094, is it a fate acome plea that she'll be kicked out permanently or is this for real? >> there will be a trial. one thing we have seen through this whole process noshts just political polarization, but as people following the constitutional orders. so we'll see a trial. i do think that the two-thirds
ma jord needed in the senate to impeacher, it will come in the end. they'll go through the process over the next few months to impeach her. >> markets also believe that the economy could get better because she is leaving. >> yes. timer is more friendly. can he do the things that are needed in brazil to actually make it a more market driven economy? >> manufacture the things brazil needs to do out of this recession is economic reforms. they need to reform the tax structure and labor laws. they need to make it easier to do business there. they need to pass tlouchlt most of those need to pass through congress. and there he has to build political coalitions. brazil laz over two boz parties. veal to bring them together to pass laws. and that is the question. he comes in without the legitimate sieve an election. he comes in with his own name mentions in the corruption investigations. so the real question will be whether he can bring that majority behind him to actually get things done.
>> and what do you think? >> i think we may see some incremental reform. the real worry here is what happens with the on going corruption investigations that are outside of this parliamentary process. outside of the congress. so we have three plus years old investigation into petragas originally. lots of people have been named in there. the real question here is will those take down people like him as well. he's been named, so have many allies in the new coalition being formed. so that to me will really determine in many ways whether or not we get some of the reforms, the economic reforms that brazil needs today. >> yeah, sounds like a lot of headline risk coming for sure. thank you so much for joining us. >> my pleasure. >> thank you very much. switching gears back to the apple story of the day. a big fall from the tree.
let's bring in mike will kajino of permanent portfolio funds and nancy tengler from heartland financial. nancy likes apple, michael doesn't. nancy, you first. make your case. >> all right. well, they once said there are too few value managers because of the career risk. so i'm well aware of the problems with apple. i wrote about this stock in my book 2013. and the reason was because it was a classic fallen angel storey. same concerns. slowing earnings growth. it was -- they reported slowest growth in ten years. no more -- no innovation. stock crashes. we had eight months of declining price and enthusiasm about the stock. and that is often the case with fallen angels.
they go from love to disappointment, hate and neglect. we have a lot of positive things in this story, not the least of which valuation. it seem the market is much more willing to pay a 20 plus handle multiple for a slow growing consumer growth stock or consumer staple stock and less so for apple. so i think there is a lot of inconsistency that's long term investors can take advantage of. >> michael, you don't own apple for a reason. >> right. we don't. i think a lot of the points that nancy made are ligit. i think i would focus on valuation. for the better part of last 15 years or so, apple traded not as a technology stock but as a lifestyle stock. >> or a fashion stock. >> a fashion stock. as people are living their lives, they're incorporating apple products. and that's created a lot of buzz around the stock. we're in the middle of a cycle. people don't see we're up grading as quickly. and the valuation is trending down more towards like a
hardware company, for example. and if you look at valuation based on say a consumer lifestyle stock sh it's cheap. if you look at it as a hardware tech, you know, that sort of a stock, it's sort of trades in line right now where others are and would arguably have the same issues with competition and the like. >> michael, want to get your thoughts on a couple of other stocks i have to say are in the value area. and that chevron and freeport and mac. >> we tend not to overpay when we can help it. >> that can be a problem here. >> in the short term, no. two areas that are in a booten down area, while energy bumped a little bit, in the near term, we're in the low phase of a kplod commodity cycle. threes good companies, fossil fuels are not going in here. industrial commodities are not going anywhere. the world is going to need them when the growth picks up. if can you afford to wait out the cycle, they're good long term plays. >> to show you're not a square, you like fiscal cliff, too.
you got that going for you. >> i'm going to get back to nancy in the time we have left. abbott labs, make your case. >> same storey. it's completely out of favor thanks to the st. jude acquisition. yet, it just made the triple play list. so that's beat on earnings, beat on revenue and raised guidance. this is an extraordinarily well managed company that is being punished because of the two simultaneous acquisitions, aleer and st. jude. and we think it's a great time. we use relative dividend. i talked about it many times on your show, tyler. that's how we bought chevron in january. and that stock has improved dramatically. abbott is being punished about it political ris click went through during the billary administration.
it was up 360% versus 260% for the market. abbott is a great long term, above market dividend yield payer. we think has plenty of opportunity. >> have to leave it there, nancy. thank you very much. michael, great to you have in the building. >> thank you. great to be here. >> all right go. to "power lunch's" website so ee another big name that nancy likes right now. bmw plans to run out an electric self-driving car in five years. watch out, tesla or not? plus -- >> coming up, a start-up with a new school approach to financial aid. >> we help thousands of students across the country save time and money paying for college over text message. >> will the founder ace the hot seat or get schooled? >> how do you know you really building trust inside the minds of a 16-year-old? >> i'm not convinced there's a business there. >> stay tuned. eligibility? proaching medicare you may think you can put off checking out your
medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in. like all standardized medicare supplement insurance plans, they could help pay some of what medicare doesn't, saving you in out-of-pocket medical costs. you've learned that taking informed steps along the way really makes a difference later. that's what it means to go long™. call now and request this free decision guide. it's full of information on medicare and the range of aarp medicare supplement plans to choose from based on your needs and budget. all plans like these let you choose any doctor or hospital that accepts medicare patients,
and there are no network restrictions. unitedhealthcare insurance company has over thirty years experience and the commitment to roll along with you, keeping you on course. so call now and discover how an aarp medicare supplement plan could go long™ for you. these are the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. remember, medicare doesn't cover everything. the rest is up to you. call now, request your free decision guide and start gathering the information you need to help you keep rolling with confidence. go long™. ♪
entrepreneurs get 60 seconds to make their picks and then entrepreneurs ask them questions to see if they can be the next big thing. >> my name is kelly peeler. i'm the founder of a company. we help thousands of students save time and money paying for college over text message. college is very expensive. students graduate from an average of $33,000 in debt. in spite of this, they leave $2.7 billion of free federal aid on the table every year. they can quekt a money mentor 24/7. we've been growing 18% week over week, have been saving students an average of three hours a week and are serving primarily a low income student base. our team of if many advisors has a vision to make money easy for every decision that the student
the make from high school into college and beyond. start textion now and start saving money. >> welcome to today's power pitch. you just saw kelly's pitch. let's meet the panel. joining us on site is a partner at vast ventures. also with us is kelly keenan trumpbour. she focuses on women owned businesses. and nat burgess is involved with corum group and has deals with google, microsoft, and intel. you saw the pitch. you're in the hot seat. >> i think did you a great job. the pitch was mission driven and addressed a large market. i give it a b plus. my issue is i haven't been a teenager in at least a couple of years. >> i can tell. how do you know that you're
building the trust of a 16-year-old? >> 16-year-old girls are a certain type of breed. i think a lot of products and services are not being emphasize ond that user base. the way we really do it is by a few different ways. we use their loanguage. we also start a conversation in a personal way and introduce a real human to them. they're talking to a real human and in a span of three minutes, we can get them to trust us and they're asking other people to sign up. >> so you really piqued my interest. for that, i'm giving you an a minus. i think you're adregs a huge problem. i think this is something that if i can find out more about what's going behind the scenes, i'd like to just know who do you see your competition as right now? this is a very innovative product. who else is out there? >> there's a lot of fanl financial literacy products k to 12 and personal finance companies maybe starting at the age of 26 and up. we're really different and we
hit on a user base that is right in the moment of transition. >> i have a 16-year-old daughter and she's often using snap chat while she's asking me for financial advice. i think you're on to something. i didn't hear the basic business m. trics that we're looking for. how big is the market? how are goug monday he ties and what is your vision for the company when it grows up? so i'm giving you a b on the pitch. the users are students. you're bringing a lot of benefit to them. but the customer who's are paying are the schools. en that is a tough market to sell to. how are you going to get them to pay? >> about 17 states require financial literacy course. so we use that as a means to get into high schools and establish a relationship with students. they're sort of a first way to make money. but what we see as the bigger opportunity is continuing a trustworthy relationship with each and every one of our
students. we know where they're going to college and how much they have in stuvent loans. >> so how exactly do you make money? >> we currently make money by selling to schools. we will be introducing referral programs for students as they go in and sign up for first accounts. >> kelly? >> i got real humans answering the questions of teenagers. you're working with big institutions. talk to me about scaleability. how does this play out over the years. >> >> the way we've done so it far is train the money mentors that we can provide a 24/7 service to students. but what we're doing is layering on elements of technology so that we can scale that pretty quickly. >> okay. so we heard what kelly will to say. now we want to know if the panel is in or out. nick, kick it off. in or out? >> i love there is a mission drifb kplp that focus onz a population that sunday j serves and hard to penetrate. i'm fearful it will be hard to
monetized and you may get schooled on opportunities. so in sum, i'm out. >> there is really intriguing to me. i think this is an untapped market. i think there's a lot of concerns that are coming down the pipeline because of student debt. so for those reasons, i'm in. >> in. okay. >> i was intrigued by the work did you at harvard on the financial crisis and i agree with you. the student loan cross-ice kois basically undermine the future of young people today. it's that serious. so i'm inspired by what you're doing. but i'm not convinced there's a business there. so i'm out. >> what's your reaction? >> we'll be helping your daughter save money so maybe we'll change your mind. >> text her. okay. thanks so much to kelly peeler of nexgen pass. and that is today's "power pitch." >> all right, you heard what the panel will to say. now time to see if you're in or out. follow the conversation on twitter.
...about my toothpaste and mouthwash. but she's a dentist so...i kind of have to listen. she said "jen, go pro with crest pro-health advanced." advance to healthier gums... ...and stronger teeth from day one. using crest toothpaste and mouthwash makes my... ...whole mouth feel awesome. and my teeth are stronger too. crest-pro health advanced... ...is superior to colgate total... ...in these 5 areas dentists check. this check up? so good. go pro with crest pro-health advanced. mom's right...again!
before the break we said you're having a great day if you're long soup, toothpaste and cigarettes. here's why. look at all these names hitting record highs to day in the session. among them, campbell soup, colgate-palmolive and cisco. all right. attention all shoppers, where did the great american consumer go? we're going to find out when "power lunch" returns. tokyo-style ramen noodles.
freshly made in the japanese tradition, each batch is small. special. unique... every bowl blurring the line between food...and art. when you cook with incredible ingredients... you make incredible meals. fresh ingredients. step-by-step-recipes. delivered to your door. get your first two meals free blueapron.com/cook.
♪ 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 altnatives, 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.
some blue chips are not doing too well this week on the flip side, manufacture the stocks hitting 52-week high this is week are names you probably never heard of. maybe they're smaller. what is with the blue chip blues? it is time to look beyond the defensive names? marianne at gradient investments likes blue chip stocks. there is way better opportunities with lesser known stocks beyond the blue clips. all right. make that case, sir y is that? >> i understand investors desire for stability and defense.
the best performing indexes are utilities and consumer staples, up 14% and 7% respectively. take a company like procter & gamble. over the last five years, the stock up is 50% yet the earnings are down 10% over time. it is more expensive than google. if all google wanted to do was pay a 3% dividend, they could do that within their free cash flow today without touching their cash forward of $80 billion. so i just think there is more opportunity and more cyclically growing companies right now. >> mary, what did you think? >> i think he's right. that's where we exited all the utility positions recently. we took profits in the kraft-hines position. we only oenld it several weeks. it's been outperforming the market. so we're looking for other places and we think that april sl a blue chip value type of name at ten times forward
earnings. maybe 10% growth. it's not for the growthy type of investor anymore. and we also see value in pfizer and robert hath international. >> so it's not that you got to pick the right stocks within the mega caps, in other words. >> absolutely. and, you know, in the case of pfizer, they have a very strong pipeline of new products coming over the interimmediate shorter term. so you'll see growth out of that. and robert hath international, now that we have unemployment down from 10% to 5%, there is more need for their services as employers look for qualified candidates especially and some specialized sectors. >> you're throwing the baby out with the bath water. not all big caps are bad. you have to pick aend choose. >> sure. >> go ahead. >> sure. absolutely.
there are two companies that i think we are really offer investors good growth right now. first stop a q & e brands. they're the largest manufacturer of lights and fixtures. led lights are growing at a 40% clip. and they're only 3% penetrated. if you look over the overall lighting market, fwz a $700 billion market f that done version from traditional lighting to led lights continues at a 2% clip a year tlashgs is almost a $3 billion opportunity for a company like acute ti. >> got it. all right. guys, lady and gentleman, i mean, thank you for the ideas. big cap ideas. small cap ideas. >> thank you michelle. we begin this hour of "power lunch" with shares of valeant taking a hit. this is a fresh 52-week low. they're failing to meet the forecast of some drugs. meg, there is a promise made just two weeks ago to congress.
>> that's right. it started earlier than that and then another hearing in front congress. a lot of attention being paid to the older heart medicines. howard schiller was testifying in front of the oversight committee saying they were going to off the volume based discounts on these two drugs of up to 30%. and then, of course, when we saw them again testifying in front of congress, the senate aging committee pointed out that a lot of hospitals had not yet received those discounts. and then that was when bill ackman said they were going to take a look at this and it may be simpler to offer a 30% discount. some of the proumbly biggest customers using the drugs like the mayo clinic and cleveland clinic and they say we haven't gotten these discounts. so these are the questions being raised right now. we reached out to valeant. they said last week formed a new committee overseeing the prices
of the medicines. they said the senate hearing two weeks ago revealed there may be gaps in that process of giving these discounts to these hospitals. any hospital available for the discounts receives them. so the question now is when will we hear from new ceo joe papa as to what solutions these r now back to you. >> all right. thank you so much valeant stock is down 75% just this year. a senior research anl wist piper jaffray has an underweighting on valeant and joins us to day. >> thank you. >> the reaction, when i first saw this report, i thought, you know what? valeant is now going to be much more of a target for congress. what is your interpretation? >> well, the report today didn't surprise me. yes, i would agree with you. the reason that report today doesn't surprise me is that these are products that have massively high margins.
in some cases, 98, 99%. and it really wouldn't surprise me if what the company is doing here is trying to milk the products for every last dime of cash flow they possibly can before they actually have to fulfill on their quote promises. bearing in mind that they have massive debt service obligations that they have to fulfill. >> so you're interpreting this as the financial need to keep the money coming into the covers because they're that desperate. i mean, fulfilling the promise now versus a month from now or two months from now is going to make that much of a difference to this company? >> well, you have to look at it in a different sense. i mean, if you look at some of these older products, they have a u.s. neuroslash other segment, the top 25, 30 products here, all probably have massively high gross margins. you had average cumulative price
increases by our calculations of just under 300% over past two years. a ton of cash flow generation. so another month or two with high prices, it would matter? it certainly could. zbl we talked about scrutiny. scrutiny is only going to get worse not better to your original question, to your first question. so that is number one. number two, do i think that the company is certain to be able to meet its debt service obligation this year? i don't think can you conclude that that necessarily is going to happen given the pressure on their businesses and given the fact that a wide swath of the
growth was driven on the backs of these massive price increases. so here's the company that has got a bulls eye on its back. there is a ton of scrutiny. there's a ton of debt that they have to service. so it really difficult for me here to conclude that, yes, the company is going to be able to meet its obligations. it's going to be a long road to referry. ultimately, they'll get there. i think it's way too early to make that determination. >> david, thank you for phoning in from piper jaffray. >> the big retail stocks continue to struggle. kohl's tanking more than 10% onlt back of its latest earnings. what a week it's been in retail and not in a good way. nordstrom, lower ahead of its results. macy's sinking again. macy's ceo speaking with women's ware daily, i never miss it, weighing in on the retail sector's problems right now. referring to the health of consumers, he says as long as there is uncertainty about jobs and the economy, there won't be
a quick turn to more discretionary spending. he says consumers are buying things they need, continuing to save at very high levels. but they're not at the point of buying things they want. so are consumers thriving or hurting a deeper dive now with steve liesman along with cak entertainment ceo and the chief market strategist with convergex. is the problem more with consumers and their propensity to spend or with retailers and their product lines and this in store experience that they're delivering. >> it's a great question. i think it really is about the environment that retail has -- has evolved to. i mean, the consumer is out. there look at the amusement parks. they're seeing people coming in in record numbers. there's a great experience whether it's six flags or others. las vegas has a resurgence.
it's a family veniy event. just to go to a retail store, you may as well be at home, go on your computer and buy online go. to amazon. unless there something of interest. or if you walk into lord & taylor and you got your app and they can follow you around. you don't have to wait online. retail has to deliver an environment to their consumer, especially millennial wloz want great value, want ease of shopping, it's not about that they're depressed. they don't wake up and say, gee, comet is horrible. i'm not going to buy those shoes toda today. >> i think they need to serve up an experience with alcohol. i think the malls and stores have tok by social destination. >> well, that's why i mention a six flags and that kind of an environment. i speak a lot about car
auctions. barrett jackson an auction i go. to 70,000 people showed up in palm beach a couple weeks ago. you can't find 70,000 people any other week in palm beach. >> unless there is a pep rally. >> my band is doing great. >> band is doing great. people are coming out. >> people would rather have experiences. they would rather spend on experiences. >> the concert business is great. >> where is the great american consumer? here's the thing i think everybody on this panel will agree with. the means are there for the consumer to spend. we have record employment. we've will decent job growth. they fell off a little bit in april. doesn't change the fact we had 14 million jobs added. we have wages going up at a better clip than had been. not off the charts 2. .a%. you have low oil prices. you have confidence. it's not as high as it could be. it's not as low as it was. so it's there. what is correct that he said is the savings rate is higher. people are more concerned with getting their balance sheets in
order, having enough money in the bank than going out and buying the latest, as you know, latest blouse. >> nick, michelle made a really interesting point offline yesterday to me. and i'll let you make it or improve on what i'm about to say. you'll say it better than i will. the idea is that shopping has become less special. the stuff is all low price now. so sales are less meaningful than they used to be. there is less specialness in the product lines. wasn't that laely your point? >> yeah. you used to hunt for a bargain. now you don't have to hunt anymore. there are coupons. >> sales. >> yeah. >> nick? >> yeah. but i think you have to -- i think you have to realize that the product has to be differentiated. we have a product that is unique to wendy williams and hsn. they show up and they want to buy it. you have to have unique product, well priced and of good val uchlt and the shopper is there.
>> absolutely. weigh in here on health of consumer versus lack of health of retailers. wloz to blame? >> yeah, we look at it through a two part lens. you have to have consumers that have the ability to spend and the desire to spend to get this confluence together. i guess i take a more cautious point of view on the consumer. we're seeing savings rates at high levels, three year high levels and we're seeing a little bit of a slowdown in net take-home pay when you look at the federal government's treasury data on tax receipts in the month of april. only up 2% versus 4% for earlier this year. gh so there is a bit of weakness. there are lower paying jobs. and what we're seeing with the retailers fits this nicely together. there is a more cautious consumer making less money on a growth rate basis. >> i just say be a little careful going from the retailer balance sheets and profit and loss statements to the consumer in general. one thing that is happening is
there is no pricing pressure on the part of retailers, feen there is more money out there to spend on these things. they can't raise prices. and so that keeps the inflation adjusted numbers higher than the nominal numbers. what they're actually spending is lower than it is if you just -- >> you know, charles, let me come back you to. jump in here. i hate to be talking so much. i'm going to keep talking. one thing that i find, i love to shop. i tlof go out and wander around and see -- >> you do? >> i do. i like home goods. i just don't like to spend a whole day there. all retailers, it seems to me, they put so much stuff on the floors that you can't even move. >> you're right. that's the point. the retail environment, the retail experience has to be one that you want to go. to otherwise, why go there? you can be at home. can you shop online. you want to go there if there is something special. they just did a special where the designer and gucci.
it sold out almost before they put it on. there has to be unique products and a great environment. otherwise, why do you want to go there? >> yeah. >> but then -- >> why do you want to go? >> but then everything is unique. it leads to the same problem. if severing a special sale, what do you do? what does a macy's do? >> i'm not talking about special sale or prices. >> number i mean, but if everything has to be unique purchase, then what does macy's do? does macy's just give up? >> number what macy's does and what they've done in the past which made them terrific is they had exclusive relationships with great designers, great brands and they focused on. that and they advertised on that. instead of advertising on the entire macy's universe, be specific about what is unique in your environment. that makes someone get up and go to your store. >> thank you for helping us to day. we appreciate it. fun to talk about something we all like to do, shopping.
maybe you like it, i don't know. >> always enjoy it. >> thank you. markets are now positive. is that right? look at that. 87 at session highs. "power lunch" is back in. two real is touching a ray. amazing is moving like one. real is making new friends. amazing is getting this close. real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing
e.t. phone home. [ soft music ] when you find something you love, 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.
the reach for yield is still alive and well. telcom and utilities in the green. materials, consumer staples and energy. take a look at what is at the tail end here, health care and technolo technology, of course, apple being a huge weight. april sl just at $90 a share. breaking news now to steve liesman. >> we have more comments from esther george, the kansas city fed president who has dissented in last two meetings. she is saying the current rate level is too low for today's economy. she points out that we're at full employment. the inflation is close to the 2% target. low rates. she says can create risks. and she expects moderate growth in the economy to continue. re-entry into the workforce, those would have dropped out and are now coming back in, is that the fastest pace in more than 15
years. says the economy also is close to full employment. now we have another comment today from another voter on the fomc, eric rosengram. let me show you the esther george comment. i support a gradual adjustment of short term interest rates. i view the current level as too low for today's economic conditions. now watch what the former dove, i'm not sure what the comment is. the incoming data is consistent with labor martz and getting closer to target, fed should be ready to -- the markets forecast for the fed is too low relative to where he thinks the fed is going to be. look at our hawk-dove index here. yellen all the way on the left from the last time we measured this. rosengram was to the left of her. he moved in a little bit. look at those two comments you just heard and esther george all the way here the most hawkish member as judged by the cnbc fed survey respondents. both these sides, both the voters are now moving and
saying, hey swreshgs to get on it with. so the question becomes whether or not if the data does turn around, second quarter, if you have strong job growth in the month of may as reported in june, is the market a little bit behind itself or behind where the fed is going to be for a possible june or other summer rate hike? misch sne michelle? >> watching to see if we have any market reaction. we have to get to amen javers. he has a news alert. >> reuters popped a new exclusive report saying tham inauguration and customs enforcement is planning a month long series of raids here aimed at deporting central american families who have entered the united states illegally in recent years since 2014. they have now told field offices to launch what they're calling a 30-day surge of arrests focused on mothers and children who have been told to leave the united states. reuters focusing on the wave of families that we saw coming up from central america starting in
about 2014 but also included unaccompanied minors according to this report, the arrest was focus on some of those unaccompanied minors who have since become over 18 years of age. reuters saying that from october 2015 through march 2016, the u.s. border patrol apprehended more than 32,000 family units to find mothers and children travel together for crossing illegally into the united states. this would be a continuation and a step up of that. obviously, this comes in the middle of a very fraught political campaign in which donald trump running for president has made immigration a central issue of his canned da sichlt and president obama has faced criticism from immigration rights groups who called him the deporter in chief even though as he struggles to maintain the democratic party's sort of affinity for immigrants in this country. >> yeah, i think you're right. i think that will be driving the political discussion over the next day or so. thank you so much.
all right. let's get a check of the markets. the dow jones industrial average higher by 43 points. the s&p 500 also moving into positive territory. the nasdaq still in negative territory. we've seen all the major averages come off the bottom. even though we heard fresh hawkish talk from some membersst fed, steve liesman is telling us about, reit ragss of positions are not necessarily making a big move here. once again, two of the major averages moving into positive territory. >> and they are feeling the pressure for a second day in a row. big name department stores like nordstrom, dillard and analysts are not optimistic. our cnbc contributor was on "squawk box" earlier this morning and here's what he had to say about the fate of the shopping malls. >> they're going to go out of business. it's just a question of how fast and at what rate that happens? we're seeing malls go out of business. >> he is the head of global real estate securities at prudential. he joins us here on set. mark, great to you have us with.
january goes a step further and says there are 1100 malls out there. the top 250 malls are seeing traffic of about 2%. the average is a decline of 6% in traffic. which implies there is a broad swath of malls out there that he says are in real trouble. would you agree with that premise? >> no. i probably would not agree with the full premise. but there are malls which are in trouble. there are shopping centers and offices. and this has been going on for hundreds of years. good properties, well located, well managed, they'll do well. in the retail sector, quality malls are doing extremely well. they're seeing lots of shoppers and lots of sales. >> a-quality meaning general growth? >> general growth, simon, federal reality is on the strip shopping center side. they're constant liquer ating the underlying tenants. >> these are all investments in your funneled currently. when we hear on the conference call that they're going to shrink foot pretties, what malls should we be concerned about? not only could macy's be moving
out and therefore that store could be vacant, but it could possibly trig smer co-tenancy agreements where other stores in that maltha signed a lease saying the anchor tenant is going to be x, y and z and that could be a macy's. >> sure. what you're going to see people moving out of the bnc quality malls. that is happening. those properties are being repurposed to some other retail office, residential format. they're doing well. but if you tlook a general growth, for instance, macy's is less than .5% of the revenues of the reit. it's not a big revenue generator. and moreover, percentage rates are at very, very small piece of the reit income streams. >> so you're a long only fund. i asked before you, if you had drudgered and able, to you would find short opportunities in this sector. >> sure. when you look at the sectors, many of the name are trading well below their net asset values. simon, general growth trading between 10% and 30%. discounts. but there is always companies
which trade at premiums to that asset value. as we discussed, 90% of the world's real estate is private. 10% is public. so when we look at the valuations, it's easy to figure out who is trading above the disposition value. >> all right. mark, great to speak with you. oil is jumping to day topping $47 a barrel. where it is headed next? we have two oil watchers with very different opinions that will debate it next. e, and that in a new house, you probably don't share the same tastes as the previous owner. ♪ [ dolphin chatters ] so when you need a little house painting or a complete remodel, we'll help you get the job done right, guaranteed. get started today at angie's list, because your home is where our heart is. ♪ [crowd cheering] i could get used to this.
now you can. when you lease the 2016 es 350 for $329 a month for 36 months. see your lexus dealer. we rise above our differences. the right amount of garlic reigns supreme, and what separates us is mostly whether we're chopping or frying. food is a language we all speak. when we cook together, we find harmony in the kitchen. we make more than a meal. enjoy fresh ingredients and healthy recipes, delivered to your door each week. subscribe today, at hellofresh.com i'm in vests and as a vested investor in vests, i invest with e*trade, where investors can investigate and invest in vests... or not in vests. sign up at etrade.com and get up to six hundred dollars.
change the way you experience tv with xfinity x1. truchl and paul ryan pledging to work together despite their differences after a meeting this morning. ryan telling reporters they are planting the seeds for unification. >> way had a really good start to the process in and how unify. >> a once poeerful new york politician con vicked of using his position to pressure companies to provide hundreds of thousands of dollars for his son was sentenced to five years in prison. dean scellos was fined $500,000. his son adam will be sentenced
later today. baltimore police officer edward niro arriving in court facing charges in the death of freddy grey. he previously waived his trigt a jury trial, chewsing instead to face barry williams in a bench trial. and "the new york times" reporting dozens of russian athletes who competed at the 2014 sochi winter olympics including at least 15 medal winners, were part of a state-run doping program. it says those involved included some of russia's biggest stars of those games. you're up to date. that is the news update at this hour. back to you. >> all right. thank you very much, sue. let's show what you is going on with oil. closing for the day right now. trading there after spiking to a high of $47 a barrel. pulling back. now still higher by 46 cents. a gain of 1% on the nose. $46.70. once again we're talking about the possibility of $50 a barrel, melissa. >> yeah. one of our guests thinks that's in the cards. crude oil hit a six month high earlier in the day.
will we go back down? john leforth is from wells forg y -- wells fargo. he thinks that oil is headed to $50. we also have an energy adviser to former president george w. bush. john, you say 50s in the cards. but $60 may not happen. why is that? the crux of the iea report is that demand is actually up for 2016 while there is production that has come down. production from venezuela and nigeria and libya. >> yeah. hi, melissa. yeah. it's one of the periods where the supply-demand growth is beginning to balance which is nice to see. in fact, that balance is at a point we haven't seen for a couple years. and that's why you got the 26 to $46 bounce. but $60 is going to be the hard spot. last spring, that's where the rig count jumped. that's what we expect production to come online. and that's very typical, too. once you get into the bear markets with something like oil,
you'll get the bounce, the 26 to 46 type bounce like we did in the '80s. price will go side ways for a few years. you have to find the top end of the range. it will probably be 60. that's where the rig count increased. >> bob, we spoke you to last at the beginning of april. you said back then the daily prices could be in the 20s. you're less bearish now. but you say the market is vulnerable to a pullback to the 30s. what would take us back down to those levels? >> well, very difficult to time or predict a catalyst. last year we didn't correct until early july. it was the chinese stock market melting down that did it. this year could be a mack crow thunder clap. could be an opec meeting or signs of saudi arabia increasing production later this summer. or could just be something that triggers market awareness of the large glut that we have and yet the long -- the large long positions in the futures market. so it's more a question of are we overextended? are we vulnerable to a pullback? i think that's really the
question. and again, we will to wait until early july. it was the chinese stock market last year. very difficult to time. i think the market is ahead of itself. what changed importantly is the disruptions wheechlt from nigeria, from venezuela and iraq and canada and even italy is out on 75,000 barrels a day on a corruption scandal. that makes the bear case harder to sustain and means any pullback will be less. >> when you take a look at oil and you say the forecast is in the cards and does it happen. we trade somewhere between 50 and 60, are you worried that producers will come back online and that is going to be the self-fulfilling cap on oil prices? >> absolutely. what happened when commodities went into the bear market, the cost to produce came do you remember. that makes a the love sense. energy goes into producing energy. so with prices as low as they are and the rig count came back
on around 60 last spring, the margin ol cost to produce is less than 60 now. maybe it's 57. maybe it's 58. the longer the bear market goes on and oil prices stay relatively low, the marginal cost is lower and that increases the odds that marginal producers will come back. >> okay. we have to leave it there. good discussion bob and john. >> moving on bhchlt. w plans to rollout a electric self-driving car in five years s that a threat to tesla in the electric car market? phil lebeau has answers. phil? >> it depends on whether or not bmw is successful. we're talking about 2021, a long ways off in the auto business. here's what bmw announced at the annual meeting in germany. it is called the imex. they're not showing what it is. a couple months ago they gave thus vision of the future of what a vehicle might look like. that is what we're showing you here. it will go on sale in 2021. it will be the flab ship sedan for bmw and will be the next
generation of electronic mobility. they haven't lit the world on fire when it comes to electric cars. the i-3 that has been for sale for several years, sales have been lackluster. totals of just over 11,000. as for the i-8, this is a super car. you're not buying this unless you have a lot of money to spend. the pricetag is over $150,000. so the sales are limited at just over $2200. all of this brings up the question, who is a threat to tesla in the luxury sedan market? and we bring this up because tesla is a luxury sedan. the price point it comes in at. california is a great place to look at. last year, look at the market share. mercedes e class is number one. tesla is close behind bmw 5 series and then the lexus gs and mercedes s class. for tes lashgs the real question becomes how do they continue to grow sales as other luxury name plates get into the market? their total sales in the u.s. topped 25,000. most of those on both coasts.
but particularly in california. it expects a 60% increase in sales worldwide this year. most of that coming in the united states. they are ramping up the sales in china as well. tesla will be seeing more competition over the next couple of years. but it's got a real head start, especially for people who want a luxury electric sedan. bmw may get there eventually. but as of right now, tesla has a big head start. >> and the share stats are staggering considering that tesla's operating at a fraction of a footprint in terms of dealerships. >> oh, absolutely. absolutely. but luke at things like insentives and where the audience is. that smoest important market. california smoest lucrative luxury market in the country. and really one of the most lucrative in the world. so if they can do well there that, bodes well for them expanding worldwide. >> all right. phil, thank you so much. let's bring in the auto analyst with ubs. he has a sell rating on the stock. greet have you with us. >> thanks for having me on.
>> term of underweight or tell rating on tesla, is a big crux of that competition is going to come on and line and would the bmw fall into that category? >> absolutely. one of our parts is the increase in luxury competition. so it's a pretty long way away. i think this year they're expected to refresh the i-3. i think there are expectations the range may be up 50% n 2018, you'll see a sloe slew of competition. mercedes is going to launch the first of four electric cars. audi will have a quaut row concept. the luxury values are coming. that is going to be a threat as tesla continues to try to build its position. >> what is the primary driver at this point of your sell rating? it is self-inflicted execution issues which is the primary crux of the bear case. >> i think one key part is valuation. but as i look into the near term, i think the production targets are very aggressive.
you're talking about 50,000 last year out of the tenfold increase. that is a very aggressive target even for any established automaker. so i think that's, you know, very tough to be achieved. that will put the stock at risk. if you look at the next year and a half, you're depending on the model s for most of your volume. and there's a question of can they actually continue to grow given they already have actually pretty good share in that high end luxury sedan segment. >> that would imply that competitors also can't grow. or it is implying they're going to gain share while tesla does not? >> the products that launched in 2012, so it's been on the market for a while. so the demand, it's hard to sustain any product is hard to sustain demand over a long period of time. usually it starts to peter off. and it's going to be a challenge and i guess my main point is that that's going to be the crux of their volume driving their earnings until that model 3 launches. >> how dependent, collin, do you think your guess is that
electric car sales depend on high oil prices? in other words, does low oil prices really hurt them or is the buyer really trying to have a different kind of experience? >> i think there's sort two of different partsst question. one, from a tesla perspective, you know, luxury, i think, is really more dependent upon, it's a premium feature. i think gas prices are a key factor and mass market customer is really going to be focused on the economics and, you know, one key concerns we have is, you know, when the model three launches, will it be profitable given the high battery costs we may be facing at that time? >> collin, thank you. we have to leave it there. >> which presidential candidate will be best for business? two independent business owners weigh in. one sports trump and the other sports clinton. we have that debate next.
>> last week we talked taxes, health care and wages. so here are three more big issues that matter to them this election tike will. they oppose the partnership which seeks to liberalize trade among 11 countries in the pacific region and the u.s. it still does await a congressional vote. clinton came out against a lame duck vote on that issue if she were to win the election. on the export-import bank which makes loans to companies doing business overseas and working with large companies like ge and boeing, trump and sanders are on open sid sides of the aisle. they're both against the bank while secretary clinton does support it. now on immigration and highly skilled foreign workers, a big one for tech startups in particular. trump, he wants to increase wages for h-1-b vees yaz and hire smernz americans first. clinton and sanders support a path way to citizenship for immigrants and sanders opposed increasing the number of h-1-b
vees yaz veez yaz visas in this country. trump has been quiet on this one. clinton and sanders here, they've been critical. hillary clinton says she is in favor of better worker pro infections and bernie sanders, he said that he has serious problems with uber as it is an unregulated service. back to you. >> that's good rundown, kate. thank you so much. let's bring in david mcnear, he is own are of maxine advertising who supports donald trump. and ravine ghandi is founder of gmm nonstick coatings. he supports hillary clinton. mr. mcnear, let me start with you. why do you support donald trump? i understand he reached out you to after you were on "60 minutes." i did read that correctly? >> yes, absolutely. so six years ago we were on "6 o minutes" featuring our town, newton, iowa. we went through some challenges. we lost one of our -- we lost our largest employer, the may tag company.
we went through extreme difficulties and lost some other businesses. and i spent a good portion of the time on 60 minutes and it featured our company. and then as well, what shocked me was that not one politician aside from my buddy who is the mayor at the time and also on the show, not one politician from the city sh county, state, or u.s. politician reached out to me but yet, literally sh vet next day mr. trump personally reached out to me. he offered to -- >> this was six years ago, right? >> had six years ago. absolutely. he wasn't running for office. he reached out and opened the door to the chicago hotels. we started doing business within a couple months and then i personally met him for the first time last year, early last year. he remembered me off the "60 minutes piece." >> do you think he will be helpful for sfwhiz. >> absolutely. if you want to continue with the last six, seven years that we went through, continue to
restrict businesses, put i mean clamps on us what we can do, for one example, the health care issue. my wife and i literally have will the same health care for 20 years. and we heard it over and over and over when obama care came in, if we like our health care, we can keep it f we like our doctor, we can keep it. we lost our health care. simply because of the fact of they're not covering us in iowa anymore. and we have very few options other than pick up some kind of obamacare health care. i don't really want to do that. >> all right. i want to get in mr. gandy here for a few minutes as well. >> absolutely. >> so you heard what he said. he doesn't want more obama policies. he thinks hillary clinton is going to continue those. what would you say? >> i would say that mr. trump in my view has disqualified himself from being the president for two key issues. number one, on trade. mr. trump is talking about a trade policy which would potentially cause the prices of everything at walmart to go up by 60% to 100% overnight. imagine what that would do to
the consumer. we may have a recession in this country that made 200 will 8 look like kid stuff. the second thing is mr. trump in a surreal fashion is talking about hunting down, rooting out, and deporting 12 million people. and estimates are that could cost $600 billion to just do that. notwithstanding $600 billion he would lose from the gdp that they produce. so that is over a trillion dollars right there. and between those two things, to me, economically he's completely disqualified. can you talk about taxes. you can talk about other issues or the demagoguery that he is doing. but when you actually look at the policies that he's escri prescribing, they sound good but they're rooted in economic nonsense. zblim inauguration one and trade policy are the two issues you're opposed to mr. trump. >> that's correct. >> let me ask you if i think something implicitly mr. mcneer is driving at and that is regulation of business. do you feel overregulated? >> yes. i think it's going to be very hard to find a small business
owner that loves regulation. i certainly don't. and i want to be clear. i'm a political independent. i don't support every single aspect of secretary clinton's policies. but as i said earlier, or i implied earlier, this is a choice. us as citizens have to decide which of these two people are going to be better for the country and for the economy. and though i might want regulations to go down, i'm certainly willing to vote for secretary clinton for the two reasons that i mentioned earlier. notwithstanding the fact the economics. who do we want to be as a country? mr. trump is talking about banning a billion people because of their religion. i find it absurd. >> i wish we had more time. thank you so much, david mcneer and ravine gandhi. good story and the "6 o minutes" appearance. apple shares falling below $90 today. the lowest level since june of 2014. the stock down 20% in the past month. how low will apple go in the short term? we're going to trade it next. ot?
umm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. ...of fixodent plus adhesives. they help your denture hold strong more like natural teeth. and you can eat even tough food. fixodent. strong more like natural teeth. fixodent and forget it.
trust. how does the charge look? >> not good. the key take away being the bear trend is intact. let's look at the charts. one proxy is to look at a securities 200 day moving average. we can see apple's 200 day is lower. april we saw a deflection from the level of reczyz tense marking continuation of weakness. now we have a fresh breakdown below the february lows at $92. here are the levels. $92 level breakdown is now recitizr recitizen tans. you can see little support until the low $80 range. that marks about a 40% decline. we have seen that before. we saw it in 2012-2013, a 45% decline. the point being here, what did we learn in 2013, wait for the stock to stabilize.
we haven't seen it yet. stay away from it for now. >> ernie, would you concur? >> yes. this is where the technical analysis matches. they often do. that's a good thing. first of all, i would say we have been reducing apple on behalf of our client accounts for the past 12 months. the first thing to establish about apple, number one, it's a phone company. in 2015, iphone sales represented two-thirds of sales or 155 billion, roughly. secondly, the company fared well in 2015, but a lot of that was a result of the fore factor of a size change with the iphone 6 plus. they grabbed market share from android users looking for a bigger screen. we think apple, number three, they have to focus on recuring revenues as opposed to the market focused on a new
innovation, which will be difficult each time. we see the stock as being attractively valued. we would concur with the technical analysis and we would stay on the sidelines as we have been a net seller the past 12 months. >> thanks for your analysis. tradingnation.cnbc.com. next, food fight. presidential candidates hillary clinton and donald trump open to raising the minimum wage. how would that impact restaurant stocks like mcdonald's. we'll find out after the break. now, the latest from tradingnation.cnbc.com and a word from our sponsor. a common mistake is searching for stocks with the highest dividend yield. this can be dangerous because it could mean the stock prices come down sharply or may mean the dividend is at risk of being cut. before you reach for yield, be sure the stock is fundamentally sound.
get your own 24 / 7 dedicated business account team. and with double the lte coverage in the last year you can get more done in more places. right now get 2 lines with 10 gigs each for just a $100 bucks. and for a limited time get a hot spot free, yeah free. switch your business to t-mobile@work today.
welcome back to power line. check on the markets t. dow and the s&p 500 is in the green. the nasdaq is down by .1. amazon making a nice big gain, up 1% hitting a fresh, 52-week high. nike up 2%. microsoft as well as boeing up more than 1% a piece. tyler? >> both presidential candidates, hillary clinton and donald trump say they are open to raising the
minimum wage. miss clinton more emphatic about it. how will this impact restaurants, especially fast food and casual dining. peter is in with us. welcome. good to have you with us. how would a higher minimum wage affect the various segments of the restaurant biz? >> thanks for having me on. it will affect them all. it will impact the casual dining stocks more so because they are predominantly company owned. the franchise miz models and qsr. across the board, everybody is going to feel pain from the rising minimum wage. in terms of margin pressure, you will see more at casual dining. >> explain why the quick serves are less exposed here. because, wouldn't the independent franchise owners of
those quick serve restaurants, they would have to pay the higher minimum wage, too, which might impact their revenue and thus the flow of capital cash back to the parent. >> correct. yes, they will all be impacted. quick service with the highly franchised business model, if you have a 100% franchise business model, you don't have a labor line on your income statement. it's not a direct impact to the quick service, it's more indirect. if you see the quick service guys raise their price dramatically, that could hurt the traffic, which, in turn, will hurt your stock price. again, everybody restaurant is going to feel pain from minimum wage. >> peter, it seems like in new york we are seeing a change in the business model because of the rising minimum wage. a lot of restaurants are saying we are getting rid of tips, everybody is going to be the same. it is becoming problematic, the price hikes we have to pay when it comes to labor.
is that a possibility we are seeing a full-on change of the business model? >> the restaurants have to fight back. there's two ways to fight back. one is to raise price. keep in mind, everybody is going to raise price. some will take it today, some tomorrow. everybody is going to raise price. the other option is implement technology, which is what we are seeing. you are going to start seeing kiosk ordering like at the airports. that will eliminate the labor hours. >> peter, thanks very much. >> tyler, the s&p 500 energy sector holding on to gains despite crude oil off a six-month high. hall burton up 1%, 2% here. airlines stocks are down 2% to 3%. back to you. >> thanks very much. folks we thank you for joining us today for these two hours of
""power lunch"." the nasdaq is down a little bit. the dow has been waffling back and forth. >> shake shack, the minimum wage, conversation is going to continue. see you at 5:00. "closing bell" starts right now. hi, everybody. welcome to the "closing bell." i'm kelly evans. >> i'm bill griffith. stocks are off the lows. dow about 170 points. shares of apple have been dragging the dough lower. it's hitting a two-year low. we go live to the nasdaq to see what's behind that move today. donald trump and house speaker, paul ryan are committed to unifying the gop after today's meeting. judd greg is on the fence. he'll join us live