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tv   Power Lunch  CNBC  May 13, 2016 1:00pm-3:01pm EDT

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agriculture is at a traffic the way that metals and mining is not. like this better than cat. sells for a cheaper multiple and buff set buying dips here. this is a good stock to own. >> all right. i'll point your taengs to the dow. it's down 76 points. what a week it's been for retail v a great weekend. see you on the other side. power starts now. >> thank you. welcome to "power lunch." happy friday, everybody. i'm melissa lee and tyler mathisen. brian sullivan has the day off. we kick off the hour with a crack in the retail wall. shares of jcpenney recovering after a big drop this morning. the stock down 30% in just two months. that as the retailer reported a drop in sales in a $68 million net loss moving on to nordstrom. it is down after posting weak numbers last night. this stock also dropping 30% in two months. lots of questions on retail including this one. will the stocks recover? bob pisani is reporting on that. we start off with diedre bosa
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using a stock tool that says, yes. >> me list yashgs after sulissa go out on a shopping spree. but if you choose wisely, there could be some money to be made. now using a quantitative tool looks at market action. we looked at past occurrences when the retail etf has fallen 7% or more within one month as it just has. that has happened 12 times since 2009. now no clear signal for the xrt itself about half the time it continues to lose ground. but we did find some good individual stocks. now as for macy's, nordstrom and jcpenney, they only post rebound gains of 67% of the time. but when they do rebound, they're good for 2% and 3%
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average returns sprerespectivel. there are special i dty and dist names. the names are more reliable bouncing back one week after the xrt loses p 7% or more within one month. so look for names like tjx and ross stores. head over to cnbc pro for more on other parts of the consumer sector that tend to bounce back. >> all right. thank you for the data dive. let's get to bob pisani. you have a theory about retail now. you call it the barnes & noble infec effect. explain. >> we're seeing revolutionary changes in the shopping patterns. so take a look at the retail sales numbers. this is all you need to know. internet sales up 10%. and department store sales down. we don't know where there is going to end. it certainly is a huge trend.
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it's a problem when you try to invest in retail stocks in the future. here's my theory about barnes & noble. they hit a new all time high in 2006. this is a ten year chart. they went essentially straight down. everybody said amazon is going to kill them. at one point book sales stopped dropping so dramatically. they started getting into other businesses. this is the numbers for most recent quarter. the comp store sales were up 1%. toys are a big part of the business now. gifts r books down a little bit. but book sales have stopped dropping dramatically. in other words, stabilization and parts of the core business and new areas of investing and research. what does this mean for broad we tail? we don't know where we are in this psych well department stores. there are winners and losers. it will be very hard to pick them right now. my point is don't just look at the past. look at how the patterns are chaging.
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withhold your fire now. just because they're cheap doesn't mean they're good buys. >> let's bring in our retail analyst of key bank capital. you're overweight one retail er getting hit, nordstrom. >> we think nordstrom doesn't suffer from a lot of the same challenges as other department stores. they've invested significantly in e-commerce. we also think that they're working pretty hard to cut expenses and improve the offering. so we still like where they sit relative to other players. >> you are not worried about something that came out of nordstrom's report and that is that the rack area of the business did well where the core full price part of the business didn't do as well. in your mind, this doesn't signify some sort of change for the consumer? that's what we're sort of seeing a favoring of the discounters right now, the tj max and off price retailers versus the department stores. >> it's interesting. you peel the onion a little more. the rack was very strong. but within the regular price business, the piece that was weakest is actually discount
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component. so the full price, full line business was actually quite strong. >> as for the rest of retail, what's your take on some of the other big box retailers like a macy's snt ones that we've seen really taking on the chin this week? >> look, we certainly think that the consumer hit a little bit of a rough patch early in march that continued into april. one stock we like is amazon. we do think that amazon is taking share within the apparel space. >> are we seeing a permanent change in the way consumers shop? i think that's what people would like to think given all the retail earning that's we've seen and given amazon's run for new all time high this is week, ed, or is this temporary? >> we think the shifts are permanent. when people opt to go to a mall, they know what they're want and they leave. they're doing browsing from homes and tablets. that plays into the hands of amazon or longer term like a nordstrom that invested in the econ. >> do we see a shrinking of the footprint of each individual store? >> i don't think there is much
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disagreement that the u.s. is overstored. so we think we're going to see sinned store closures across the space. >> ed, thanks a lot for your insight. tyler? >> all right. thank you. apple with a 1% gain. it is a neck and net gain between it and alphabet as the biggest stock. the company hoping to have a big bet on and in china. let's get to susan lee with more. >> hi there, tyler. the investment means hong kong commute in chinese. it is a dominant player in china. anyone that travels to china knows that you go on a app when they have 99% market share. only 87% market share when it comes to private cars. and they operate in over 400 cities. compare that to uber which operates in maybe 45 to 50 cities at this point. they want to expand that to just around 100 cities about it end of this year. and it's not just cars and taxis
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that they operate n they also allow you to hail buses for one. and they also have this innovative new app called hitch which allows you to book chauffeurs. for instance, if you had too much to drink on a friday night, you can book a chauffeur and they'll come and drive you and the car home. now who is behind this? who exactly is this person? the co-founder and ceo is a founder of alibaba and the president is a former goldman sachs banker and her father is the lenovo founder. now in terms of backers, alibaba is a name and so is ten cent. they're giants in china. they've been some of the early backers now in didi chuxing. not surprised that apple wants to get into this game. recently, we learned that didi chuxing may be worth $40 billion. and asked recently what they want to do with this money?
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they say they want to invest whether it comes to artificial intelligence. they think they can better the system to match up customers and cars more efficiently. also, they say whether it comes to international expansion, yes, they're always looking at international expansion. they want to focus on how they can serve the chinese consumer and chinese traveler better. they're getting into this global alliance with lyft and hola and paying $100 million to do so. right now when it comes to, you know, whether or not the profitable, they said they've been closer than ever to profitability and they say they have $3 billion in cash on the balance sheet at the end of last year. back to you. >> that's a pretty good place to be, susan lee. thank you very much. so what is really behind the billion dollar bet on china and will it move the needle for apple? a company in need of needle moving? let's bring in shawn o'hara with pacer etf contributors and peter navaro from uc irvine who also joins us on the phone.
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>> peter, 99% market share. i guess april sl not worried about antitrust concerns here, are they? >> no. apple is pretty much the apple of the chinese communist party eye. they off shored close to a million jobs to the southern part of china. this particular play here, i think it's a good short run for apple. they have long run risk. the short term move is apple is in the same situation that ibm was back in the '90s when ibm was building hardware kpu computersen that industry was getting commoditized. apple thinks the same thing. so what they're doing is trying to diversify into the sharing economy. >> go ahead. >> peter, china invest. corporation invested in didis
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there any political motivation on the part of apple doing this? they are now aligned in some ways with the chinese government. and i push back a little bit on the contention that china loves apple. there is a lot of concern that maybe the chinese government was trying to punish apple. maybe this move is in response to that. >> no, i think what happened was six months after apple came in with their i movies and itunes platform, chinese regulators shut them down. that's a move consistent with what china did to google. i mean, basically the chinese communist party does now want the pop lift infected with any western culture if they can help it. i think that is a done deal. that's not coming back. april sl not going to be able to do anything more than google did in that area. i see this as a continuation of business as usual. >> let me pick up on michelle's
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point. shawn o'hara, here is apple investing, you can say, alongside the chinese government. that's generally a good place to be until it isn't. >> yeah. so apple is one of the top holdings in two of our etfs. so let's tie the first half and the second half of this thing together. this acquisition of billion dollars, april come do this 200 more times and still have enough excess catsh to have more cash than the average market cap of the holdings of the s & p 500. it's a small investment with regard to what they do. maybes the foray into the car business that everybody keeps talk bchlgt on the other side of that, we were talking about retail, apple's brand is so strong. when they go into a shopping mall, they don't pay 15% of sales. they pay 2% because they drive so much traffic. those are just brand issues.
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you want to talk about who apple is and why we're such big fans of apple, the profit margins are 23% compared to 27% for the competitors. they have a free cash flow yield. we've been doing a lot of work. we believe that is what warren buffett believes. the other is for looking at the stock are meaningful. but cash is what means the most. why serve hating on apple then? >> i think they have an issue like mcdonald's and walmart had in the early 90s. when you're a immediate orric growth company, at some point the growth becomes more difficult. and so maybe there's a slight re-evaluation of the -- or adjustment to valuations. but apple is not quite there yet. there are the leader in hand helds, leader in tablets and desk tops. they have the ability and strength and brand to command what others can't. and in this case, with china, this might just be what their little dish needs to be for the
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development of that next innovation. >> thank you very much. we appreciate your time today. >> my pleasure. >> you bet. it is friday, a little after 1:00 p.m. what could that mean, dom chu? >> 1:00 p.m., do you know where the rig counts are? it is friday. baker hughes out with the weekly rig counts. they have declined by 10 overall rigs to 318. that is the total number of u.s. oil rigs as counted by baker hughes. again, we have gas rigs up 187. miscellaneous unchanged at one much the important number being the oil numbers down 10 to 318. the same time last year, remember, it was 888 total. oil rigs were 342 rigs back then. so again, an interesting take here on what happens from perspective on the oil rig counts. back over you to. >> dom, thank you very much. we have a rapid update on the economy. let's get to steve liesman. >> tyler, chu asked do you know where the rigs are?
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where is your economy? his is going down. mine is going up. we have the rapid update tracking for the second quarter now with retail sales in this morning and business inventories. we're looking at a 2.6% second quarter gdp. that is .4 larger than the last number we had. can you see the first quarter gdp. it is near 1% for the first quarter. but rebounding from that weakness, here is where some of the major forecasters are right now. barclay's, 2.2% and morgue an stanley is 1.5%. lots of data to go. but if we missed this morning on retail, people would have quickly given up hope for that second quarter rebound. the hope remains intact. >> steve, thank you very much. so is private security the answer to long lines at the
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airport? that one coming up. and you know these products or these brands. they're part of our daily lives. and they're all made by -- >> 3m. >> what's next for the company and who does he think is better for business? hillary or donald trump? that's straight ahead.
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welcome back to "power lunch." post it notes, scotch tape, ace bandages, we go on and on. a few of the big products under the umbrella of 3m. shares are up nearly 13% this year. joining me is the chairman, president, and ceo of 3mg to you have here. >> thank you. nice to be here again. >> you have such a huge product portfolio, all over the world. what does the global economy look like right now to you? >> i think we've seen a slowdown in the economy generally speaking if we compare now to 12 months ago. but i think that some sports that look more positive and maybe some more surprisingly stronger than we thought when we went into the year. >> what is better than you thought? >> west europe look better than we thought when we run into the
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year from a geographical perspective. i think united states is going side ways. i think we have challenges in brazil. but mexico is doing very, very well. and if you look at asia, i would say asia is going side ways as we speak. i think that's more to come as we go. >> when you look at what happened with the asia revenues, asia pacific was down 5.6%. china down 3%. why? >> yes. >> well, it's very much driven by the electronic business. >> the electronics business. >> we have a big business. so if you take that aside, which, of course, you cannot do, they're looking much, much better. but i think when you look upon the result of the first quarter for us, that was a couple of very positive things. you had health care that had a growth of almost 7%. you had consumer that grew very, very well. electronics is 11% of the total portfolio. it was down.
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that was expected in a way. right, there is a nice reason for it. first of all, in market demand is inventory levels. then i think also comparison year on year. >> is china down? electronics are down? is that related to what we're seeing when apple talked about iphone sales in china? is that directly connected, do you think? >> no, it's not connected for us. i cannot talk about them. i can talk about 3m. for us, it's not directly china and the business you're talking about. i think generally speaking, it's electronic sector was down in consumer electronics. now consumer electronic is volatile. it's a near term adjustment that will come back later in the year. >> you're talking about china and/or electronics? >> both. >> we're in the election season, as you know. is there a candidate right now we presume that donald trump is the candidate for the gop and hillary clinton is the candidate
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for the democrats. is there one better for business? >> first of all, as a global company, we have to look upon the whole spectrum. one thing we have to do and is important to control the controllable. so i don't know what they will come out with in the end relative to specific around this business and after i've seen that, maybe i can give an opinion. >> one of the big issues and two-thirds of the revenues come from overseas, the repatation of money you make overseas. one of the huge departments within this election. what is the effect on you not being able to or the different taxation rates that happen around the sfwhorld. >> we take back some of the money but of course, not all. i think we tlik have to change. that but what can you do and what you need to do is to invest in money overseas. and as you said, we have a big portion of our business overseas. so that's where we invest the money which has a better return for the shareholders for us. zbh because of the current
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structure of taxation that we have, you end up investing more overseas than you would have otherwise in the united states? >> i -- no, i would not say so. i would say is more natural way for us to do it overseas. we do some big investments in the united states as well much as you well know, research and development is the heartbeat for us. and two months ago we invested and open up huge research and development senter in the united states. >> when you took over, you said you were going to increase how much was spent on r & d. you have reached that goal yet? >> yes, we have. i said at the time that we will go from 5.5 closer to 6. and we are around 6 now. and that investment is into disruptive technologies. that is working very, very well for us. >> the one knock you reed from analyst ises, you know, premium valuation, you generally hit it every time. they say, you know, right now mostly a short cycle business.
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now is not the time continue to vest in a company like 3m. there is a better entry point down the road. what you would say to them? >> i would say i believe it's time continue to vest in 3m. there is a perception that short cycle, but we're in short cycle, mid cycle and long cycle. in fact, there is a noncycle like health care. so when you look upon our portfolio, 70% of our portfolio is either in designing or regulating businesses. 70% is there. 30% is what i would say consumabl consumables. so the portfolio is fantastically laid out relative to different cycles in economy. and we can compete the whole time. i think if you look upon our stuff over time, i think short to be correct. >> thank you so much for joining us here on "power lunch." >> thank you. thank you very much. >> ceo of 3m. okay, coming up, a cheap trick as you listen to some cheap
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trick. why cheaper isn't necessarily working in this market. we'll explain. first though, investors are loving bleach, blenders and a cincinnati bengals. check on a few stocks hitting all time highs when "power lunch" returns.
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bleach, blenders and the cincinnati bengals, what are in common? they're hit you new highs in today's session. bleach, we're talking about clorox. all these by the way, they since turned to the red. they did hit new records.
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it is down by .7% right now. blenlder maker stanley black & decker trading the highest level since stanley works merged with black & decker in 2010. that stock retreated from the highs, now down by .5%. as for the bengals reference, check out shares of cincinnati financial off new highs. so if you're long in any of those stocks, you're having a great day. since today is friday the 13th, we want to know, are there any stocks you should fear? head to our website to weigh in. we'll have some of your answers later on in the show. speaking of fear, up next, a fearless call on the market. we'll see 15% upside about it end of this year. we'll press him on that call when "power lunch" returns. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be.
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hi, everybody. here is your cnbc news update for this hour. donald trump asking kevin cramer offed in n ed inorth dakota to energy proposal. he is one of the ardent drilling
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advocates. more than 5,000 soldiers taking part in the annual military xper size by the russian boarder. nato troops from 11 countries including the u.s., germany, netherlands and the uk are among those participating in the military drill. russia's deputy sports minister categorically denying the russian olympic team had a doping program ahead of the sochi winter games in 2014. he held a news conference denying the allegations from the former head of russia's anly doping lab that he had been ordered to tamper with samples on the instructions of the country's sports ministry. new england tight end rob gronkowski will grace the cover of "madden 17." it shows gronkowski spiking the ball after a touchdown. he's the first tight end to make the cover. gronkowski said it's a dream come true. he looks pretty darn happy. that's the news update this hour. back over you to, melissa. >> thank you very much, sue. want to take a quick check of the markets. the dow jones industrial average behind me. we're pretty much legging to a new market low here instra day.
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that is 17,620. that is our level here. we're down by .of 6%. it is also worth noting the nasdaq turned negative in just the past 15 minutes or so. let's also take a check on gold. on the gold trade. final trades are crossing for the day. what is interesting about the gold trade in today's session, usually we're here and talking about the dollar. today the dollar index is actually up by .6% at last check. and we're also seeing a bid for gold remain in the session. gold is at $1272.70 an ounce. taking a check on the rest of the metals complex, positive trade on silver. copper earlier in the session hit a 2 1/2 month low. take a check on the bond market now. rick santelli is tracking the action at the cme. rick? >> what a difference a few hours makes. 8. 3067 8:30 eastern and then with the university of michigan, we saw good data points. look at the ten year. we spiked.
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the short end in the curve flat ening. we need two and three year rates are still a little pressured to the upside. but the long end is giving it up. look here today. notice, the low yield, close of the year on the 11th of february, 166. we're only a hand ffl basis points away as we sit right now, we're down four on the day. down 7 basis points on the week. you see a tens minus two chart there going back to 2007. flat ening curve does suggest that the better data at least changed the implications potentially by investors for the fed. but all the contagious of negative rates may be the reason the long end is down. the dollar index, that's one week chart. it's looking like it's going to be the three week high while treasury yields could be closing at a five-week low. tyler? back to you. >> rick, thank you very much. you may be tempted to buy cheap stocks. but cheaper isn't necessarily working in this market. our michael santoli has that story. >> if you look at the most statistically cheap stocks coming into this year, the ones
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with the really low pe ratios, they've actually acted more like value traps. i'll give you some clusters of stocks that would have qualified here. apple most prominently. people talking about for a couple years now. trades less than ten times expected earnings. just about right now. it has not worked. kept going down. old retail, the mall retailers, macy's, kohl's, gap, these were cheap on a price earnings basis even before this last leg down the big banks have not been able to get out of their own way. they also look cleep on book value. airlines, you want to talk about something that looks cheap, five times earnings, autos not getting the benefit of high car sales. all of the stocks are in a market with a 16 multiple. the market seems to be saying they're peek earns or the companies themselves face some structural issues like the physical department stores and it seems like there is really no conviction in sort of rewarding these attractively valued stocks. down -- i'll say the value index is like the russell 1,000 has
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played catchup. mostly that's been about energy stocks and some industrials rebounding. so that has not been a bad trade against the growth indices. but the question now, i guess, is will these cheap looking stocks start to look like bargains? it doesn't get more simpler than this. it's all about the cyclical economic dat yachlt the macro picture f we look like economic growth is going to accelerate, they have a lot of leverage to that cycle. second half earnings will start to look more plausible. now the analysts look like there is supposed to be a second half pickup. that will seem more reasonable if the data cooperate. >> stay. there we bring in our cnbc contributor ron insan yachlt take apart michael's findings there. >> i wouldn't presume -- >> cheap can stay cheap a long time. cheap can get cheaper. >> yep. and all the groups he talked about also are in the middle of a very large secular shift. when you look at retail, the united states is overstored and there is massive disintermediation from the internet. >> that's a big word, there man. >> disruption.
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let's go with that. when you look at banking, same thing. you know, we may be overbanked for all we know. and so in that respect, there is -- a competition coming from other places. a low interest rate environment, flat yield curve that doesn't help. yeah, cheap can stay cheap. expensive can stay competencive. people don't necessarily buy stocks based on those two factors alone. price is not the determinant. even sometimes price earns ratios aren't the departmentant. in this environment, too, the market is going through a structural shift. you have to be very, very careful about what you do. >> it's interesting, michael. one thing you pointed throughout is a reminder to all of us and especially to me is that when you look at an index's performance, you really have to dissect what is causing the index to do what it's doing. so when you showed the graph of the value stocks, i said oh, values doing okay. but it's really just the catchup of energy coming back. >> it was. of course, remember last year, growth dominated to an extreme degree. in fact, the past few years, growth stocks did.
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there are so many dollars chasing very scarce growth in the world in terms of companies with reliable double digit growth. what i find striking though about the fact that so many cosmetically cheap stocks have been band ond by this market, is that other safe seeming investments like consumer staples, the stocks with reliable dif denvidend yields, they're looking expensive. people are paying for things that are not growing at all but look more like bonds or fill some other dmeneed which is sca income. we need to be careful where we're laying our bets, especially whether we think we're being safe and we're not. >> and they're also paying up for things like a facebook and amazon on the flip side. is there concern that the leadership of the market is narrowing and, therefore, it's a more tenuous market situation? >> amazon bot got a pass it's ee life. they never had feet held to the fire when it comes to earnings growth, margins, anything like.
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that because it's such a diverse company in a lot of ways like an alphabet or google, they have hands in so many different pies. it's a different type of stock. you're looking at the cloud and logistics. you're looking at retail. and so it's a different beast. fp, too. facebook, too. are they the largest television network in the world some day? that's a tough question. they're being rewarded for having untold promise. and i think that's where, you know, still having said that, i agree with you. the market is getting very, very narrow. it looks like we have a rolling bear market in a lot of different spots. >> ron, thank you very much. michael santoli, thank you as well. >> we're going to pick up that and keep discussing the markets after this very volatile week. where do we go from here? classic bull-bear debate right now. rob lutz is from cabbot wealth management. he says 15% upside on the s&p 500 by the end of this year. craig columbus, ceo of power
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square management is bearish. you wouldn't add to positions, why not? >> we're snuck a trading range since 2014. let's call it 1850 to 2150 on the s&p 500. i don't see a really economy catalyst that can push us to new highs. i'm very content to be patient here. wait to add to any new positions. >> rob, what is wrong with that picture? you agree with any of that? i mean, your target isn't until the end of the year. >> i think it's crazy to be bear toish day. the fund. alf factors are bullish. quaund take theive easing. a lot of people have given up on. that later this year we'll see 3%, 3.5% gdp growth. interest rates also being as low as they are, likely will stay very low with the rest of the world's interest rates much lower. so then you've got a situation where the pe multiples can rise on the market. where little elevated to day from average. but i think a 20 pe in this
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environment where we have interest rates is expected today. so you take 117 earnings from 2017 and 20 multiple, you get $23.50. the last part of this trifecta here is you've got a investment sent. that is down right awful. the ipo market is asleep. that really takes off and hits new highs. >> if i understand rob correctly, i think he called you crazy. >> well, my only response to that, eni think there is a diminishing return to stimulus. we will four consecutive quarters of negative earnings growth. and looks like profit margins have peaked in every sector. i see very little sign of pricing power that can off set wage increases. there is an index rollover. it looks like withholding receipts are weak. i don't see the economic catalyst. the economy has to lift us higher, not stimulus. >> rob, i hear you chomping at
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the bit there. >> what happened here over the last 18 months, we had a very unusual phenomenon. this messed up quantitative easing. that is over now. quantitative easing is going to work and it's going to work, actually, five years from now they're going to wish they hadn't done quantitative easing. then we'll have inflation. but that's for another time for now. it leads to why you have to be bullish on gold. gold is going to be a great play a couple years from now. it may be starting now. but i think that interruption of oil was a very big factor. >> and we'll have that debate maybe years from now. thank you so much. go to our website right now. you can see rob's picks in emerging markets. not just the u.s. that he likes. by the way, the selling is accelerating right now. the dow is at session lows. the s&p 500 is hitting new lows.
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modern bank robbery. that's what's happened. the system that allows international banks quick access to other international banks has apparently been hit by thieves. again. this is supposed to be the most sophisticated and secure banking system in the world. why it is vulnerable? what is going on? more details on "power lunch." ♪ [crowd cheering] i could get used to this.
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someone broke into what is supposed to be the world's most ses sophisticated and secure international banking system. it is called swift. it stands for the society of worldwide interbank financial telecommunications. you got that? in essence, it allows banks in different countries to i don't national business seamlessly. tony fratto is a former treasury department official. he has seen them up close, actually they have a headquarters in belgium, also with us is amen javers who started working on this after the first heist three months ago
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involving the central bank of bank la desh wlachlt is new today? >> here's what we know. swift put out a statement tolt customers saying it is now spotted a second instance of malware being used to penetrate a bank's systems here that effect the swift transactions. this effects a pdf reader used by the customers to check their swift statements. now think of swift as a bank e-mail system that allows banks to send messages back and forth authorizing the transfer of sometimes millions of dollars if not billions of dollars in cash. they put this statement out last night. it looks like there is a wider campaign here of hackers against global banks including a private unnamed bank and also has we saw earlier, the new york fed. there is also a separate report out there that we should take a little bit carefully right now. they may have been affiliated with the team that conducted the
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sony hack. we know the u.s. government said that north koreans were behind the sony hack. we're going to have to xblor this in more detail and get more information about who exactly was behind the bank of bangladesh hack, where that money went and what this was all about. we're hoping to get some more details today, not sure if that's going to happen. we'll be monitoring that to find out what we can learn about who actually executed the bank of bangladesh hack and now this new second attack. >> that's very interesting. tony, want to talk more about this with you. you've been to swift headquarters when you worked at treasury. just so people understand how important this is, swift is the biggest connection that when it come to any country's bank, i was just in iran, every time a bank got reconnected to the swift system, there was an article in the newspaper about it about how important it was. what does this mean that what we're seeing happening here today. >> >> it's krit ukly important. it's not quidly understand just how important swift is to the
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global financial system. it is the mess enking system around the world. 200 companies, literally billions of messages that are transmitted using the swift system. and as far as we can tell, this started in the -- the system started in the 7 o's. it's grown. and it was, you know, contributed a great deal to the secure and efficient communications again banks. lowering costs and making therapy cheaper. but this is a different world we live in right now as we see. where the money is where the risk is. and they have to be one step ahead of the cyber criminals. >> i do understand correctly. it's not necessarily that they hacked into swift, it's that they somehow managed to get data that helps them imitate a
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legitimate bank going around. >> there is a huge amount of liability. the liability for the $81 stolen out of the new york fed, who owe that's back? and also the liability for the next one, the precedent here whose fault this is. the new york fed said we rely on swift authentication for the tran transactions. it's authentic as far as we're concerned. we'll send the money out. what swift is saying here is that attack actually happened at the banks. the banks were the point of weakness to look at the swift statements. so that would appear to push the liability off to whatever made that software or to the banks. >> tony, if this were done on a large enough scale, you could destroy a bank, couldn't you? i mean that's the -- >> sure. >> are we freaking out about there? >> no. look, i think it's worthy of freaking out. we don't usually hear about will $81 million bank heists, right?
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>> from the new york fed. >> those are big numbers any wau you cut it. and it would be significant hold for lots of banks. >> if that were done by a guy with a truck and drills, we would be all over it. >> all right. we would have a movie deal, right? >> working on that. >> while we you have, you have another story that you need to update us on related to twitter, right? >> that's right. it's twitter and u.s. intelligence. back earlier this week "the wall street journal" broke a story saying that twitter was resisting cooperating with u.s. intelligence. they would not allow a private company called data miner to send the entire twitter data feed to u.s. intelligence for analysis to find out what is happening where in the world. now that story broke earlier this week. i've been doing reporting on it. i can add a couple more details that tell you exactly how far back this goes.
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this dates back to september or last fall at some point even though it's just breaking into public view this week. i can also tell you that the entity within the u.s. intelligence community that was trying to purchase this twitter data was an entity of the cia, part of a particular director at c.i.a.'s open source enterprise unit. they look at public available information and try to devine intelligence tidbits from that information. that's who was trying to buy this twitter data and stimied here. >> got it g update. thank you. still ahead, a japanese man just went on a $98 million shopping spree in new york city. what he bought and why it's a big sign of the times. & in a world held back by compromise, businesses need the agility to do one thing & another. only at&t has the network, people, and partners
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we're taking a check on the markets and we're at session lows across the board. dow jones industrial average down by .9%. we're looking at 154 point loss at this point in the session. the nasdaq is down by .4%. the s&p 500 down by .75%. all sectors are now in the red. of note, the financials and within the financials, take a look at the regional banks.
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we're seeing at session lows, down 2% in what is troubling market watchers here, the day two weakness in the transports. we're at session lows on the transport. the all-new audi a4, with available virtual cockpit. ♪ there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.
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today is friday the 13th. in honor of the unluckiest day of the year, we have trades that terrify and stocks that scare. weighing in, managing director from tjm institutional services and managing director at cowen and company and dohm chu. we kick it off with jim. your big fear right now is copper. just as we're sitting at 2 1/2 month lows, jim. >> no doubt about it. this is an interesting question. i thought apple and tesla were scary, too. what keeps me up at night is copper. you look at the chart on every level. you start with the five year. it looks like death. it is scarier than a circus clown. it shows that broke through significant support yesterday. even the shorter term than that, the engulfing day, higher high, lower low close on the beat, the thing that really scares met most is this is supposed to be a commentary on the global
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recovery or a imaginary global recovery. we can talk about it all we want. the copper market is saying there is no global recovery. i'm not basing the whole opinion on. that it is certainly significant. fit closes below yesterday's low, i think it's a sell. >> yeah that, is a scary chart. what is your big fear? it's biotech. i thought you liked biotech. >> so why is it scary? >> so here is the scary part. the scary part is buying into -- even the highest quality asset when you have such incredibly poor sentiment in the space. you've seen me pitch certain names on the show that are high quality assets. cell genes of the world, amgens of the world. you look at, you know, analer again, it's an mazing company. we just added it to the recommend list today. you look at the names and say sent. is so negative, incredibly negative. very hard to step in and really get overly long here. so i do think there is a lot of money to be made. unfortunately, you have a lot of assets painted with the same
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brush. the high quality ones are painted with the same brush as the low quality ones zlchlt w. t >> you face the fear and buy high quality? is that what you're saying? >> buy the high quality. the real fear is being short the name given all the negative. when they move, they're going to rip. >> dom, these are not stocks that scare you specifically. >> no. >> so we -- >> we asked the viewers. >> we want to find a sent. here. sent. can also work when things are at their highs and showing a lot of momentum. do you want to buy at the highs or even short at the highs? traders said they voted that trying to short amazon and trying to short facebook at these near record high levels would be their scariest trade. now what is interesting here is if you look on cour website, thy talk about anything around apple
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whether buying or selling now because they think a rebound is going to happen. it scares both ways. >> so april ple is terrifying n matter what do you. >> the amazon and facebook trade, such momentum behind them, whether or not they would be scary trades to get into right now. >> okay. thank you, dom. and also our thanks to jim and david seaburg. if you'd like to weigh in on the trade, head over to our website and fill in the poll. michelle? >> all right. markets losses are picking up steam. the dow jones industrial average at this hour is lower by 143 points. the loss of 28%. the s&p 500 at 2015. the nasdaq is lower by 17 points, .3%. bob pisani join us from the floor of the stock xlafrpg. why the selloff? >> well, what happened you is take out lows earlier in the day. there is no big news stories out. take a look at the s&p 500. a lot of technical selling. selling to get selling.
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when you take out the lows early in the day, that creates more selling. and you can see we're sitting near the lows of the day. it is broad here. take a look at the sectors. banks have been having problems recently as the interest rates have not been going their way. that is the weakness. but energy materials and industrials and here is the global growth stories. notice health care is not down as much. one thing we talk about is the ten year yield. over in the bond market. the lowest levels in a month for the ten year. the dollar index is spiking up. you can see that dollar index is moving up the last week and a half so. people are talking about that. i would note the transports here, recently we had a lot of problems with the airlines and the transports. a lot of them are down 2% 203%.
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>> let's turn to the batted retailers in the news every day this week on cnbc. j.c. penny is down almost 4% posting a narrower than expected loss. revenue missing the mark. the company cutting the profit outlook. nordstrom is tanking on the back of its earnings as well. a big miss slashing the outlook. it is lower by 13%. >> yoing us is the senior research analyst with piper jaffray. let's start with jcpenney. you have an overrate rating. you say today could be a buying opportunity. >> sent sment obviously very weak. we think it's election related. there are a lot of people not happy on either side with the presumptive nominees. and the consumers are voting. >> you think is related to uncertainty about the election? what about the election? they're disliked so much, why?
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>> precisely. we're just seeing high unfavorability ratings. we haven't even gotten into the mudslinging. the could be assume consumer is strakted. they're watching your channel and other channels out there and watch veg closely what is going on with the election. they're distracted at best. >> how do you explain all the money going into online, for example? we're looking at people shift from saying i don't want to go the store, i'm just going to order it online. you don't think that's part of the stories? >> it's always been part of the story. we had untethered commerce. mall traffic is in a steady decline ever since then. but the rate of which we're seeing this decline over the last couple weeks, the disappointments that we're seeing out of the retailers, it is too fast to be just online alone. we think there is another story here.
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>> and you think it's because of the election? >> we think it's election related. >> are we past the point where we don't have to worry about this company just going pust, j.c. opinipenney? >> yeah, they're stronger than they were last year. they're paying down $4 million to $5 million in debt. that is a really good sign. more importantly, what we heard on the call today is they're rolling out new product categories. they tested it. they're rolling them out and actually adding new kicustomers. not a lot of retailers can say. that so that is the key as to how they can be resilient if not actually win in the back half of this year. >> how do you feel about nordstrom? >> you know, we're neutral on nordstrom. we think nordstrom is a phenomenal company. it's just not been a great stock. they have things they need to figure out. they've been spending a lot on technology and human capital. they already announced some head count reductions. we think they're considering a variety of rationalization of
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expenses. they need to get the overall sales levels under their feet before we can move forward. it's a great company. we think that longer term they're doing the right thing. but right here, right now, it's not time to be buying nordstrom stock. >> even though it's down 15% in a year, 13% today? that's not an attractive entry point? at what price to i get in? it doesn't have to do with an absolute stock price swrechlt to get confidence in the earnings. the anniversary sales event was a huge event. more sales volume during three weeks in july than they normally see in december. huge event. we would look on the other side of the anniversary sale to gain confident near term. >> i'm putting that on the calendar. the july anniversary sale for nordstroms. thank you. >> you know about it? >>ly no idea about the anniversary sale. >> come on! >> thank you so much.
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>> they've got a good men's sale in late june and then the anniversary vent. it is on my calendar. a number of big names on "power lunch" and cnbc this week, weighing in on the problems with retail. >> people are spending. what are they spending it on? >> they're spending it on an experience. they spend it on something with a sense of entertainment. >> the economy is not the reason they're struggling. the weather is not the reason really. the u.s. dollar or the tourists is not spending. that's really not the point. >> the retail has to pick up his game. he has to really make -- and the mall owner has to create activities in the mall like a hotel to pull people into the property. and do stuff that you can't do online. >> that's that was a points we were talking about yesterday, making the mall a point of
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entertainme in. t. sales up a year ago. bar and restaurants are doing well. books, music and auto parts posting some gains there. but department stores, down. reporting a drop. so is the problem with the department stores or changing trends in retail? probably not a binary answer here. evan clark of women'swear wear daily. evan, where does the problem lie? they create experiences and not just stuff to buy but reasons to bichlt and amazon is coming hard. the web is serious competition. department stores are getting some of that online business. but amazon is growing dramatically. >> you know, i would never have believed -- not so much with amazon, but i never would have believed that something like
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buying shoes online would become as popular as it is. people do it. i like to try on shoes. herb, you made a point in talking to one of our producer earlier today that one of the problems you find with going to the stores is that they are so jammed up with stuff. can you barely -- i mean if liesman is here, can you barely move because there is so much, you know what i'm thinking. >> you go into the stores and you can hardly get through them. they're a total mess. part of this is we're also seeing and perhaps generational for someone like me, and by the way, nordstrom is building a new store about five miles away from here in la jolla. it's a bigger store. so there is a commitment to them. one thing they have, at least whether i go there, and whether i go see the men's department, dimitri is great. he's a real salesman that has been there for 20 years. why would you go to a physical
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store if the person doesn't know the stock, if they don't really know how to sell you. i actually like to be good sold. a good sales person can save me time, money, keep me from myself and that's a thing they really know you and know. and that whole thing, you and i from our general race, we used to really appreciate. that it's harder to find today. when you get someone like i did mee tree, you go back. >> i have a similar guy that knows what i, have he knows what i bought. >> so few and far between. so few and far between. >> that is the value separation. more americans, we're talking about nordstroms and la hoy yashgs okay? >> right. >> most americans don't shop at nordstroms in la jolla or nordstroms at river side square in new jersey. they are scraping by. >> but i -- can i say one other thing? >> sure. >> i can go to blooming deals here, too, which i love to do which is a macy's owned brand. i can go to the friends and family sale.
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get 25% off. get a bunch of rebates back to mechlt use the rebates for the next friends and family sale. what a deal! that's -- they'll keep me from going away. by the way, i can buy it on line because it's like get 50g% off. >> i think back to my question which is really becoming the high end consumer has certain issues about where they shop and what they're looking for. >> right. >> i think that vast -- a lot of america is struggling just to make ends meet. and that is pinching -- >> i think that's part of it, tyler. when i look at the broader macro trends, more people working. i actually have wages going up a little better than they have in 2 1/2% a year. even though you have oil prices up. they're still relatively low. stocks, they don't affect everybody in equal amounts they have a broad infect. home values are up. if you're surprised about this trend what is happening with online, i want to show you a couple graphics. take a look at online versus
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merchandise stores. it is sort of silly. this trend should not surprise anybody. first thing you'll see is that the online, the white number is going up like that. one is up in double digits. the other is struggling to stay flat. you have one group of companies doing everything they possibly can to stay in place. and not lose market share. the other is raking it in over double digits. and these trends -- and the thing we want to be very careful about is not to extrapolate from kohl's to the broader consumer. you know, even walmart can come in with lousy earnings and the retail numbers can be okay. we have economists saying today that we think that after the april numbers, consumers in the second quarter could be growing their consumption at a 3.5% to 4.a% annual rate. >> that is huge. >> it's double. >> that's huge. >> it is double what it was in the last quarter. >> evan, let me come back you to
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and then get the same response from herb if i might. a prior guest said she thought the lek was having some kind of chilling infect on consumer spending. do you buy that? >> i think there something to that. i don't know if that's the primary driving factor here. most of it is a discretionary purchase. to make a discretionary purchase, you have to feel good and feel you'll have your job this time next year and you need a certain momentum in your economic life. >> can i just challenge you on that? how do people go out and buy 17.3 million cars at an annual rate in the month of april if they're so concerned about the future here? >> i think that certainly that is something that is -- karss and discretionary purchases, i'm not an expert on the car side, but if it's deals from the dealers or whatever, but i think also a car and clothing, i guess they do share some things. but really reflect you and
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you're asking apparel and fashion to kind of state to the world how you're feeling and kind of who you are and i think there is a kind of malaise there. people have money and they're willing to spend it f you look for reasons why they're not, i it this reaction is a solid one. >> you don't cover cars at women's wear dealy? >> only the really fancy wunsz. >> a quick thought. we have to get to dom. tie it off for us. >> yeah. when i saw -- see the amazon trucks flying around here in san diego, i have to tell you something, same day delivery, there you have it. can you talk elections all you want. that has been something big and new here certainly in the past two or three months. >> got i it looks so nice behind you, herb. i can't even tell you. thank you very much. evan, steve, herb, thank you. >> you bet. >> we're going to go to dom chu for a flash. >> what we have here now are shares of beverage and snack giant pepsico which are down
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1.75% on accelerated volume. there is on the heels of a recollect to regulatory funneled. trian run by knelt on pelts reported that avs march 31st they dissolved their stake in pepsi he could. so they sold off the entire stake in pepsico. that filing and the headlines associated with it is what is driving the stock lower at this point here. so again, remember, it was maybe a couple years, maybe just last year when pepsico and else in on pelts reached a truce, an agreement here by adding william johnson, the former hj heinz ceo to the board. he was a close adviser to trian and else in on pelts. he still remains on the board as close as we can tell. but the shares are moving to the down side right now. we're in the process of reaching out to pepsico for a comment. we'll get back to with you developments. >> the greek debt drama never
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goes away, it seems. big debt payment looming this summer am we'll talk to the greek prime minister's right-hand man. [ soft music ]
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e.t. phone home. when you find something you love, you can never get enough of it. change the way you experience tv with xfinity x1. they found out who's been who? cking into our network. guess. i don't know, some kids in a basement? you watch too many movies. who? a small business in china. a business? they work nine to five. they take lunch hours. like a job? like a job. we tracked them. how did we do that? we have some new guys defending our network. new guys?
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well, they're not that new. they've been defending things for a long time. [ digital typewriting ] it's not just security. it's defense. bae systems. greece's summer long bailout battle threatened creditors and caused the country to leave the eu, massive market val tilt. this summer, greece is facing another round of billions of dollars, euros worth of debt payments. it is going to be another summer of trouble?
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joining us now to discuss is the greek minister state. minister papas, great to you have here. do you see any trouble making a payment? >> well, no. we're very close to concluding the agreement with our partners. this is our message that we keep getting from both sides of the atlantic. i think that we're at the stage where there is a need for very few steps of convergence between basically the imf and now european partners on the debt issue. i say that because you're giving me the opportunity to explain that we have achieved much more than what everybody was expecting. in july last year, when the agreement was reached, the estimation was that greece would have a recession of minus 2.3. however, gdp has only fallen
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by .2%. we pushed to parliament reforms that reduce red tape, create stability and make up a stable environment good for investment and business. >> we do manage to do. that now, it is the time, i think, that all sides take a few nor steps and do not -- we should not allow any disagreements on how we handle the deliberate debt issue of the country. this is our position. because in our position, there is no reason for delays. and we're confident that in the euro-zone schedule, 394th of may, we should find a solution. >> how do you square, minister papas?
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a lot of things being demanded of greece are things that actually don't square with your party that you guys don't actually believe in. can we actually believe you to execute on this stuff? >> well, that would be the case. i mean any agreement is a compromise. so any agreement has good elements that the other parties are going to negotiation procedures want to take place. and there are elements that we want to take place. so we think now that there is a balanced program up to 2810. -- up to 2018. we have achieved much more than everybody was expecting in the fiscal front. let me tell you, we have a surplus of 7.p 7%. the agreement in july was predicting minus .25 and this sends a message of a very effective tax administration and tax policy. and i think that this together with the fact that we have ruled it very, very core ageous
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pension and tax -- income tax reform, gives the signal to the world that greece is stable aga again. there is political leadership that is determined and socially just and willing to pay the country to the next chapter. and i think this is the days that we're actually seeing the first few lines of the next good chapter for greece and the greek people. >> because of that, i hate to look backwards. looking back on last summer, are you willing to admit, was it a mistake as the finance minister? a guy who we now know was ready to push greece out of the euro? >> well, it has never been a position of the greek government that the country should be driven out of the euro. had this been the case, they would have grabbed the opportunity when the greek people wanted no. on the contrary, that time, they
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were declaring he wants a no vote and negotiate a better deal. and so he did. because we did manage to negotiate $20 billion lower. euros lower. primary surpluses. this has given us the fiscal space and the ability to work hard to put the country back on track. >> thank you so much for joining us good tow sue again. >> i hope and i don't see you this summer. "power lunch" is back in two minutes. elderly holocaust survivors
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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.
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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.
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a japanese billionaire went on a shopping spree in new york. what did he do? >> he is the man who saved art week. he is a 40-year-old japanese billionaire scooped up seven major works at the art at the cyst yuz auction this week. his total bill topping $98 million. that included the most expensive work sold this week, the untitled painting that went for $57.3 million at christie's setting a new record for the artist. he is coming to japan. he announced on instagram. he said this piece gave him shivers all over his body. it will go to a private museum he's created outside of tokyo.
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now in a statement, he said, rather than monetary envestment value, i feel i have a personal responsibility to take care of this masterpiece and preserve it for the next generation. now some other things he picked up, a $13.9 million christopher woofl from swolf from sotheby's the $6.9 million lobster. now all those purchases accounted for about a quarter of the entire sale at christie's tuesday night. now he is a founder of the online retailer zozo town. he is the net worth of $2.7 billion. he is a former punk rock drum wloer started out selling cds and band t-shirts from his kitchen table. now by the way, that painting was purchased in 2004 for $4.5 million. so pretty good appreciation for that piece over that time. guys, back to you. >> all right. robert, thank you very much.
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big drop in emerging markets over the past month. what impact could it have on u.s. stocks? let's look at pepsi. shardz down 2%. else in on pelts's eliminating the stake in the soda giant and that is taking the wind out of that one. power is back in two.
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here's your cnbc news update at this hour. the cdc confirming the first case of zika virus in a child in puerto rico. the fetus had severe problems and was diagnosed through a sonogram. >> justin trudeau meeting with firefighter as he gets a first-hand look at the devastation left behind by a wildfire that tore through parts of the alberta community. the blaze destroyed approximately 2400 structures. >> and spanish officials have ordered the evacuation of 9,000 residents close to a raging tire dump fire near ma zrid. the fire spread spectacular cloud of thick black smoke across the area. the mayor said the fire appeared to have been started eed intentionally. a committee held a hearing an traumatic head injuries in youth
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sports. equipment is only a small part of the solution to solving the concussion problem and more work needs to be done on prevention. that is the update for this hour. back to you, melissa. >> thank you very much, courtney reagan. let's get to dom chu. >> so we have is a statement from trian, the firm run by else in on pelts. in the statement, he says that it believes pepsico addressed many operational issues identified by trian, management increased advertising and investment and delivered consistent earnings growth on a constant currency basis. they go on to say late oern they wish pepsico's management every success. they feel as though it has gotten its role down. it got the goals taken care of here much pepsi he could has done their part. now that they're liquidating the investment in this, we'll see if there is any other response from the pepsi he could side of
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things. they says it's the policy not to comment on individual shareholders. we'll see if there is anything that comes in response to. this i will note though, melissa, you can see on the chart there what happened on the heels of the headlines. it is the same thing that happened for the overall consumer staples sector. again, big names like coke coal yashgs procter & gamble moving to the down side. in fact, overall today, consumer staples, the worst performing sector on this down move. back to you. >> so they don't want to comment on specific shareholders. i imagine they're taking a victory lap behind closed door, right? >> you can imagine that for right now, when an activist investor come calling and then later on says they got all the stuff done and getting out of a position, can you pretty much maybe make an assumption, perhaps, that those guys have taken a victory lap. again, you're also talking about a company that possibly made a lot of money. we don't know the exact cost basis. they did get in at lower levels. and pepsi co had a nice run over the course of the last few years. so maybe they are taking that capital and then saying that they're done and we'll see what they go from here.
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>> this is great time. we've seen headline after headline about all these hedge funds having very difficult years. it's been very difficult year or so for investors in general, particularly for the hedge fund community. you have a winner here. you may as well lock in the game. especially a winner, by the way, that a couple bucks off the 52 week highs. >> correct. as part of this whole thing they had last year with trian, one of at the r the close advisors, bill johnson, the former ceo of h.j. heinz, a huge consumer products company in and of itself, he is still on the board. and they still, you know, have him there. assuming he's a fairly contributing member to the board there overall. so as we talk about what is happening this is perhaps, i guess, a victory lap for everybody involved. >> refresh my memory as we bring kate kelly on set. where is tian with respect to dupont? are they completely out of that i
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guess you would have to say they had some effect on the fortunes and future of due ponlt. >> kate may know much more than that than i don't individual position side. she is monitoring these things. remember, we're in that season right now where in the next couple of days all of these funds are going to be at least disclosing their long positions as of a snapshot in time at the end of march of this year. remember, not all activist has a lot of success. you talk about the bill acmes of the world and other places in the market for investors has not been as up to par as some would like n this case here, we don't know what the performance is overall for the record. we do know they have taken some profits in this position sfwlchlt ka. >> kate kelly joined us on set. your thought of this selling out of the position? >> it's certainly symbolic. now it appears they're making a statement about operational issues as well. i looked at the stock since they
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got in. it was first report they had got in march of 2013. now, of course, what they were looking for for some time, they issued a white paper on this and had what was a very, you know, tension filled relationship for a while, of course with, pepsi management. it was the splitup of the company. they wanted the snacks unit to separate from beverages. i'm sure you've been talking about that. as it turned out, pepsi management said we're doing well as an integrated business. this isn't necessary. so you would think that trian was saying we did well in this position, now we're going to walk away. but they're not. >> they're saying the operational issues have been resolved which nothing they wanted has happened and what has actually happened is a market shift favoring these consumer staples stocks paying high dividend yields. >> absolutely. >> that's what happened. even if the activism didn't bear fruit in any expected way. they did say at one point we think the stock price has our
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inactivism baked into it. so that may be partially responsible for the rise. >> and they made money. >> right. exactly. they got in at very roughly speaking, i don't know exactly when they bought, but in the high 6 o's. now it's about $104, not bad. >> and to melissa's point. so many funds are doing so poorly, somebody who is incredibly angry sent me the foremanance of persian square and since inception, net of all fees, they're at zero. >> right. >> it's been -- so not just to make fun of them, but the whole swath of them when the market is up, they're not. there. >> there were too many crowded trades and hedge fund hotel ideas, valeant pharmaceuticals down over will 80% in the last year or so being a great example. that was a big pershing square holding, still is. too many crowded ideas. we had the hedge fund panels. you hear others talking about the lack of talent. now they're blaming their staffs. we've seen major allocator wlz it's the new york city pension
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fund or somebody's major insurance funds bailing out of hedge funds. we've been talking about that all week. >> the low cost provider, absolutely, conservative business -- company investments you can understand. >> yeah. i mean, they're underperforming in good times as well as performing worst perhaps in bad time n 200 will 8, a lot of funds were down by double digits. so maybe less bad than the bench marks. still not great. >> thanks for coming on for the breaking news. kate kelly. >> i'll get to the oil trade. the close for the day. taking a look at where wti and brent stand. higher today. that is key here when it comes to a lot of commodities trade. we see oil down by just about 1% right now. $46.20 is the last trade per barrel. one of the best trades this year has been in gold. some of the miners have done even better than the metal. the junior gold miners etf trading under gdxj doubled in 2016. kit continue to rally?
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let's bring in the trading nation team. the key thing to know about the minors and particularly the junior minors is that it's all about getting some extra juice on the gold trade and direction of gold. miners do better than the trade in gold. the gains we've seen in gold. junior minors is even better. do you think is more room to run? >> there is more room to run if they follow medal. there is no doubt they're rich at this point. 43 times earnings and peak momentum. zint mean they're done. because if gold traded and continues to go forward, the reason why i am bullish on gold is so many people are skeptical. the best type of a bull market is where everybody is doubtful kit go much further. now we're coming against that 1300 level which is really key. if we can bust through that, i think gold goes to $13.50. that big move could have a nice push on miners. they'll respond very well to positive move in gold. >> erin, where do you stand on miners? >> i'm a little less positive
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than boris. when you look at this etf in particular, what really makes up this etf is over half of it is micro cap canadian companies. and when you look at what has been driving the performance, it's really been this massive consolidation and these companies have been beaten up. they lost about 90% up until the end of last year. it's been the winners doing well. and they also had a lot of tail wendz helping them with the canadian dollar. but that consolidation phase is pretty much over. the winners have won. there really isn't a tail of it anymore. when you look at valuations, they're incredibly overvalued. they're trading at like 43 times forward earnings. >> so stay away? >> i would say stay away. i think it's done. the run happened. it's over. >> all right. boris and aaron, thank you. find more market insites on our website. >> when a woman says it's over, it's time to listen, folks. >> move on. >> if you flown recently, you probably waited in a long security line. up next, what needs to be done
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take a look at the losses. we led into the final hour. we're at session lows right now. the dow is looking at more than a 200 point loss on the session so far. down 206. 208 to be exact. 1.2%. s&p 500 down 1%. as for the nasdaq that, is faring best of the three, down by .6%. bob pisani joins us from the floor of the nyse. what's going on? >> take a look at the s&p 500 on an intraday basis. i see two things. no big macro events happening. but there is a modest buyer strike going on. the volume is normal. as you get buyers not interested in putting in bids, market
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drops. there is a market on closed sell orders we've seen. i think that is putting a little pressure on it as well. in terms of sector, the big trends playing out here, banks are weak. we had a problem with them for a while. interest rates a problem. then the big dollar plays. the energy, materials and industrials. also on the weak side. you see more defensive names like health care not down as much. here's the broad trends. ten year yields at the lowest levels in a month right now. and that's been a trend for a while now. and that's been putting pressure on the markets. particular lit banks. then the dollar index, melissa is talking about this earlier, spiking up. this morning on retail sales and ppi. that's a high of about two weeks in the dollar index. guys, balck to you. >> a big problem with tsa airport screens. the homeland security director responding to day saying the tsa will immediately increase overtime hours. you swhee shapg on the screen here? >> what is going on? >> there was a problem in the airports o out west where the screeners weren't working. so they couldn't screen the
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luggage. >> so it's just sitting out there. >> it sat in the parking lot. people left, their luggage stained behind. they sent it to other airports to be screened and then forwarded it to where people were. luckily it wasn't raining in phoenix. 22 u.s. airports -- that's just the screeners. then there is the security getting through the lines. 22 have already signed up to use private security. airports in seattle and atlanta are hoping to do the same. gordon lethune is the former ceo of an airline. we're going to collectively complain about this problem. i mean, it's a no-brainer. it has to be fixed. what do they do, gordon? >> i think they reallocate the resources. you are remember how to get the policeman from behind the desk and out on the streets. we've got a lot of people that aren't on the front line that probably need to be re-evaluated and thrown at this. the answer is not throw more money at it. but use your resources wisely. airlines can't go on vacation during peak travel periods.
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there are all kinds of things can you do to meet the demand. >> what are you hearing in terms of how big a problem this is? are flights leaving with empty seats because people are stuck in the line. i mean that happened, actually, i was flying to miami. i got to the airport two hours for a domestic flight. prechecked in, nothing, no checked luggage. i almost didn't make the flight. i was the last person on the plane. i had to run to the gate. >> yeah. and you're not the only one. and it's a crime to be -- look, in some cases, look, if you're flying from miami to new york, you're going to grin and bear it and fly. fwh but in a lot of markets, if you tell me to show up two or three hours before a flight, i'll drive-in stead. what we're doing in that case is telling people to get off the safest way to get around and go the most dangerous way can you possibly go somewhere which is to drive in a private car. and, you know, that along with a million other problems with this is a real shame. >> viewers of the show will know
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i no fan of government. i'm a big fan of privatization in any form or fashion. do we have any evidence at the airports where they have private security instead of public security, gordon? is it better? >> kansas city does a really good job. i'm thinking the answer here is there are a lot of small airports like rockport maine that have full time agents for the four flights of ten people each. what we need to do is reallocate the resources. take some planning to know that when christmas is coming, you're going to need everybody on the job. so don't give vacations on those days and get the administrators back in uniform, back on the front line. i think that would help a lot. >> do you think it will get -- i mean a lot of people are heading into summer vacation time. memorial day weekend is around the corner. what should people do? is it going get any better in that short amount of time, do you think? >> well -- >> seth, sorry. >> no. some of the airlines are kind of taking matters into their own hands. they're not -- we started talking about the airline collectively.
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they have taken different approaches. american has been complaining very loudly about this. delta's ceo a week or so back said, you know what? complaining doesn't do anything. he said delta is really out there sort of offering its personnel to help with nonscreening functions. and, in fact, he talked about that today, about bringing in the airlines to say, look, obviously airline personnel can't do the screening. they can't hire and recruit and train the people. they can help move the bins back to the other part of the line. airlines we'll see jumping n airport personnel. in the end, this is bad for everybody. not just for the the airline industry but for this country what does it to productivity. you just take that many hours of people's days. >> that's true. just takes so long. last word from gordon. any thoughts? >> well, you know, it needs management. frankly, i think it's lacking there. i think the $2 they charged last year went to the general fund and not security. they need the funding that they are charging you for. and people aren't getting what they're paying for.
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but you all in all, i think the airlines are paying twice and paying on the security fees and then they're also, because they're losing seats and revenue because they have to refund that ticket. >> yeah. ridiculous. all right. gordon, thank you so much. >> we have a development of herbalife. the stock is taking a sudden down turn. details after the break. he orany retirement squirrel from voya. we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at ...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.
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let's take a look at where stocks are right now. they are selling off. the dow industrials have trade lower here in the past hour. let me see where i can see it. 187 points. 17532. nasdaq down about 24, 25. s&p off about 1% at -- and that would be 18.82. rough ride lately for emerging markets. the etf that tracks them, eem on track for a fourth week of losses, down 7% in a month. china shanghai composite down 8% over that same time san. so, will the selloff continue and bring down potentially u.s. stocks, too? seema mody with insight. >> first the april manufacturing number, exports last week, and
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now today's sharp drop in loan growth highlighting the banking is reining in on bank lending which should be a good sign. markets are perceiving this as a short-term negative, as this could lead to slowing growth. it also suggests chinese leaders may be starting to scale back on monetary support, which some investors have been betting on. there's also another sign of defaults, which were unheard of five years ago are now accelerating in china, specifically in the manufacturing and industrial sectors. again, perhaps a healthy sign for an economy that's in transition. it also points to a new stance on how the government is managing this economic turn around you got the stronger dollar has soured the mood of emerging market investors. we're looking although the shanghai come positive et turning in four weeks of consecutive losses and for investors to stay relatively positive on emerging markets, china needs to improve. they do make up 20% of the emerging market index. >> thank you very much.
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welcome back to "power lunch." we're keeping an eye on shares of herbalife. the shares are lower alongside the rest of the market here. our own scott wapner found out and tweeted out the national consumer league sent a letter to the ftc, federal trade commission, urging what is called, quote/unquote,
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meaningful reforms in any potential settlement with herbalife. our own scott wapner bringing this to our attention as well. it is putting a little pressure alongside the rest of the overall market on shares of herbalife as well, but right now that's what's putting herbalife shares in focus for some traders. this national consumer league letter to the ftc, asking for meaningful reforms and our own scott wapner calling it to our attention via twitter. >> there was words last week they were close to a settlement last week. >> yeah, they sort of gave a range of possible outcomes. do we know anything about this national consumer league? >> yeah, who are they? also, i assume they want it touvened. >> the national consumer league is a consumer advocacy group. like an organization that acts on behalf of the better interest of consumers. they sent one a couple years ago in the original kind of part of this whole herbalife, i guess, case going forward and whatnot alongside the ftc and what they
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were doing in terms of their investigation of them. alongside bill ackman. an interesting move here, like you said, guys, there's been some chatter, some movement around a possible settlement here. in this case, this consumer advocacy group, according to scott wapner, is asking for what it calls meaningful reforms in any kind of of a settlement there. so, just one more layer to add to this overall story. >> we don't know what those reforms would be at this point. >> right. >> thank you, dom. acacia software debut. is the ipo market heating up again? bob, next week we're expecting u.s. foods? >> right. a week and a half from now. we've been waiting for the ipo market to open up a little bit. some signs it's happening. u.s. foods announced terms today, we've been waiting for a long time for that ipo to be auns noed. 44 million shares, 41 to 42.
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most ipo -- this has potential of $5 billion market capitalization. cisco is number one. they're set to begin trading on may 26th. remember, we've been looking for some big names to start coming out. they've been holding back. obviously, there's been some valuation concerns. you mentioned acacia today. they priced at $23 and opened at $29. that's a very good sign. also, we had the one yesterday. that was site one landscape. they price in the middle of the range and also traded notably up on their first day. two good ipos, two trading nicely. again up here. remember, they priced yesterday at $21. now trading at $27. i think this has given a lot of people in the ipo business some confidence they're finally coming out. good news today. back to you. >> thank you so much, bob pisani. we're still looking at market declines here pretty much across the board. we're off the session lows. s&p 500 is now down by 0.8 of
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1%. all ten sectors are in red. they're turning green so we're watching a change. >> a tumultuous week for retailers, in particular. >> thanks for watching "power lunch." have a great weekend. >> "closing bell" starts right now. hi, everybody. welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. stocks ticking a leg lower in the last couple hours of trading. it's not the skegsary weighing on the markets. financials and staples are getting hard hit. we'll see if the market can come back in this final hour, which is an options expiration date, by the way. >> that's true. meanwhile, watching apple make a $1 billion investment in the china's company like uber. meanwhile, donald trump takes a swipe


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