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tv   Power Lunch  CNBC  May 23, 2016 1:00pm-3:01pm EDT

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about the real world, doc. >> number. >> what you are going to be watching in the weeks ahead. >> like i mentioned, i think we're heading into a soft patch. i would own defenses. i think health care wins over other sectors. >> great having you as always. >> thanks. >> thanks for watching. "power lunch" begins now. ♪ are you ready for the summer ♪ you are ready for the good times ♪ >> are you ready for the summer? wall street as the odds of a june rate hike come increasingly into play. the question becomes, will the fed make a plash in tsplash in pool? glad you could join us. tyler mathisen. michelle has the week off. man, she earned it. we begin this monday with the countdown to the fed just 16 full trading days to go before that june meeting. so how is the market preparing? >> let's take a look at tom chu. >> if we're getting trod taread
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take a look at the splash, there is positioning that is starting to take place in anticipation of what could be, maybe a fed interest rate increase. hedging their bets tachlt a look at this one. the two year note yield for u.s. treasuries, already over the korts of the past week, moving higher. it was near 80 basis points about a week ago. now it's up towards 90. again, look in the grand scheme of the year to date period, eliminatively on a low basis here. one place where that battle, that hedging is starting to take place. that positioning. also look at this. the dollar a big part of that story as well. gold also playing into that. again, $1275 a week ago her ounce. now we're around $1250. a 2% loss over the course of the past year. gold has been a hot trade. it's still up. up marketedly. so but some of the bets being paired back in anticipation of what could be a fed interest rate increase. then one more place we'll look, one manufacture places we'll
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look, again, regional banks. we've seen the interest rate expectations move higher. regional banks benefiting. a huge spike since wednesday. still below where they were a year to date period. we'll talk about the volatility. you heard on the halftime report this low volatility environment we've h maybe we'll see that again. remember, when i comes to the overall market and the s&p 500, since mid march, again, mid march, we only traded in about a 75 point range for the s&p 500. the vix, volatility index between 13 and 17 since that period. so we're waiting to see whether or not there is any kind of move and whether or not that's going to jigger volatility here. for now, a lot of folks saying let's hold and wait and trim positions and see what it's going to lead. to back to you. >> i think the technical definition for what we've seen, dom, is a big yawn. there we go. all right. >> thank you. so the fed may raise rates in tune or may not. but one thing is certain. unless something crazy happens
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and interest rate increase is coming at some point. the big question is what, if anything, should you be doing with your money because of that? joining us now, cbs contributor brian kelly and brian jacobson and somebody not named brian, john stolfus. john, i'll start with you. we all note fed is going to raise rates. if you watch the show, i'm not big into the fed camp here. what you are advising your clients to do with or without the fed? >> what we're advising them is to keep their goals and objectives in mind. we think that the fed raising rates is indication of an improving economy. the fact that the fed may actually begin raising rates, i don't think in june but may do it in july, more likely in september and most certainly we would think about december. >> so does the timing matter, john? if they do it in june or july, it is newsworthy. does it matter for your clients would are investing ten days
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out. >> if you're a day trader, it matters. if you're a longer term trader, you just fasten seat belts, enjoy the ride. and if we get any kind of a pullback in here, you start using that shopping list to buy stocks you may have missed. >> brian kelly, there is a certain playbook that investors immediately go to when they hear about fed raising rates. that would be one to snap up the financials. and we have certainly seen that action. dom mentioned the regional banks. for a year, they're pretty much flat. i'm curious what your thoughts r that we've been seeing of late is the spread between twos and tens has been narrowing. it's the narrowest since november of 2007. indicating there is no steepening happening here. >> right. i would be very careful buying the financials. one, they're challenge he had regulatory. they're now utilities at this point in time. the yield curve is flat. and it will likely flatten, especially if the fed raises rates. we've seen this happen before. people from around the world
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say, you know what? a 2% ten year looks pretty good. so i'm going to buy that. that buying pressure brings yields down, keeps the dollar higher and that's going to flatten the yield curve. it won't be good for financials. >> the other part of the playbook is to dump dividend yielding stocks like utilities, telecom. brian jacob son? >> yes. that's what happened last week after the minutes were released. you saw those interest rate sensitive partsst market were the ones that did the worst. so what your classic defensive sectors were actually kind of the place not to be in this type of environment. i would concur that that's the way that's probably going to play out as well going forward. i agree with john and brian and what they were saying. i would encourage people to think about not whether or not it's important that fed raises rates, it's a question of why are they raising rates? it's because they think the economy can actually take it. obviously, people have different views on. that i think the economy can take it.
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the more important thing to watch, i believe, is actually what the people's bank of china does with the occur eni response to a rate hike. so far, so good. they've allowed the currency to fluctuate a little bit here. if you by this what triggered the previous corrections on auk 11th, depression of the yuan and then the depreciation. it's a lot more flexible. the really key thing to watch is what the pboc does, not so much what does the fed do? >> all right. we're going to leave it there. brian, brian, thank you. john, thank you. >> thanks, brian. >> you're welcome, brian. >> all right. shares of monsanto are higher. germany's buyer is offering to bite company for $62 billion or $122 a share. if the deal goes through, it would create the biggest agro chemical business. david? >> we knew last week that bayer had made a request to buy
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monsanto. it wasn't made public until bayer close to make it public. $122 a share. $62 billion, all cash for monsanlt yoe shareholders. earlier today, the ceo of bayer was a guest. he explained the decision bind -- or explained why they made the decision to come public. >> our position to make this public follows at announcement of monsanto last week that they received a private offer to us. it was out in the open and, of course, we want to respond and explain to the public and shareholders what the content of the offer is and why it is so attractive to monsanlt yoe shareholders. >> they also want to explain to their own shareholders where the deal makes sense. bayer shares were down sharply since we got word that a bid was made about it company. they're talking about synergies as much as $1.5 billion to be realized by year three of the deal. they're talking about it being a product to eps.
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they'll be financing it through debt and equity. they're not that common over here. offerings in europe are common over. there and bay er is issuing he can twhat is 25%st perfect price. so let's figure around $15 billion in rights offering. all that to back that $122 a share all cash offer. but as for the offer itself, speaking of monsanto shareholders, over the last week, week and a half since the speculation and news we got from m monsanto that a bid is made mshgs were anticipating getting a price faf above $122. perhaps they've been talking to the anlist that agrees with them and this morning says they think it's a low ball $122 a share offer. now for its part, deutsche banc also decides to waive the m & a tax. they haven't put the best foot forward and maybe therefore seeing the high ground in the takeover battle of the monsanto. they believe a buyer acquisition
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is still a possibility, they call it a less than serious initial bid. what i will tell you is monsanto's board is considering that bid and likely to reject it. what is important to see how they reject it. do they go down a road that we o would call scorched earth and bring up the possibility of anti-trust regulation being a real impedestrian iment to the deal or do they say it's just not enough? that will be a key here for its part bay eastern the new ceo fwhob a position where they have to move forward and potentially win. very rare, guys, to see a ceo step out so early in the tenure with such a bold move. back to you. >> david, thank you very much. throughout the school year, thousands of high school students across the country have been competing in the national economics challenge. think of it as a quiz bowl for future economists. after months of competition, only four teams remain and they are right now in new york city with steve liesman. steve? >> yeah, tyler, here at the 2016
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national economics challenge, 10,000 students competed to be here. in the first contest, we have lechlington high school and massachusetts against west windsor high school north from new jersey. now the kids, they worked so hard to get here from all over the country. we went out and visited one school that unfortunately didn't get here. this will give you an idea of just how smart these kids are. >> i did get a perfect score on my a.p. macro economic ar.s score. >> i didn't really know anything about economics. it was a foreign concept to mechlt the more i studied it, i realized it is on decision making. >> the index to measure inflation is -- force sfors. >> consumer price index. >> we know these are the best teams in the country. >> market theory, product costs. >> we have a long time second place and we're hoping maybe this year we can finally break that record and hopefully get
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first place. >> i just like doing supply and demand a lot whether it be like normal fly and demand or aggregate. gist shifting the grass. it's fun. >> everyone seems to be expecting a june rate hike. a quarter point increase in federal funds rate is not going to by any means destroy the economy. >> all right. let's meet some of the folks here. we have kenzy martin. tell us wloshgs is your favorite economist? >> probably adam smith just because he was so original in his ideas and he wanted people to come up with their ideas. >> now was it you, jeff that, said you got the ap economics book and you read ahead in class? >> yeah. >> what was your favorite part of the book? >> percentage costs. i like to weigh between two different options and, like, learning about that through economics. it's interesting. >> let's talk to your competitors over here. jessica, what is your favorite part of economics here? talking to the mike if you don't mind. >> personally, i like macro more
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than micro and international just because i think it's easier to undstand for me personally. >> is the fed going to hike rates in june? >> they're going to stay data dependent and look at how the markets are doing to see whether to raise the rates. >> what is your best bet? >> i would agree with. that. >> that's pretty smart. speaking of smart -- speaking of smart, i want to tell you -- i want to introduce three judges. you might recognize them from my left to right. we have mark zandy from moody's, and michelle meyer, they're frequent cnbc guests. they're on all the time giving us their smarts about the market. they're here to judge the contest today. we have two divisions. we'll go to the first question. tyler, back to you and then come back and we'll give you the first question. >> we're going to dip in and watch a little bitst competition as it unfolds, steve. looks like fun. good luck to everybody there.
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>> brian's got a rooting interest. there. >> west wind sore plainsboro which is where i live. go knights xlast. >> the west windsor knights. you are smarter than a 12th grader? we're going to test the economics knowledge, theirs and yours, when "power lunch" returns. . sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade. race car made history mercwhen it sold forprix a record price of just under $30 million. and now, another mercedes-benz makes history selling at just over $30,000. ♪
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welcome back to the national economics challenge live from new york city. 10,000 students competed around the country to be here.
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we're down to four teams now. we have lexington, massachusetts, against wwp from new jersey. it's a big east face-off here. and we're going to get right to the first question. what is the name for what occurs if government borrowing causes interest rates to rise and private investment spending -- >> counting out all private investment. >> okay. >> that is correct. >> just so you know, wait until you're told to answer the question. >> i've got a job i like to do here. >> i've got a job over here. >> let me do my job. otherwise, we'll do it by computer next year. >> the time keeper's job vaely cool. >> are we good? we're going to move on to the next question. the 1976 mow bell prize winner and fierce defender of economic freedom? >> you have five seconds to answer the question. >> milton friedman. >> that is correct.
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>> can we give her extra points for behavior? and take some away from them? do we have a thing like that? kidding. let's go on. third question. what is the official name of the currency of china introduce bid the >> ryan, you have five seconds? >> the chinese reminby. >> that is correct. lexington, two. >> that was a trick question, sfligt i would have hit wrong. you probably would have had it wrong at home, too. feel free to use pencil and paper for this one. >> ryan? >> you have five seconds to answer the question. >> it was an accident. >> okay. when a firm produces 20 units of output, the average total costs are $4 and the average variable costs are $3. what are the firm's total fixed costs? >> $20. >> you have five seconds to answer the question.
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>> $20. >> that is correct. >> okay. >> so what is the score now? >> i think i went 0 for 3 there. actually, i got milton friedman. the last one i couldn't have done that quickly. that is the national economics competition pitting school from west plains -- >> west windsors plainsboro north and there is a south. >> thank god you know. >> the only one i got right. >> and lexington. >> which is the only one you got? >> knowing the schools. >> we'll dip back in there and see chf the four teams comes out on top during the rest of the hour. right now, i believe it was lexington 3, west windsor 1. >> they'll come back. >> who matters more to your money, janet yellen or donald trump is it we'll talk about that next on "power lunch."
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welcome back. i'm melissa lee. we have a little movement on the dollar front. gold is down by .2%. taking a check on the rest of the metals complex, the biggest movest day within the complex, palladium. it's down 1.5%. otherwise, the rest is quiet. let's get a check on what is happening in the bond market. i'm no rick santelli, what i thought was interesting is the spike in the two year yield here. the two year yield hitting in the session, .91%.
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.19%, the highest since march 15th and the spread between twos and tens, the narrowest since november 2007. the yield curve is sort of even state steady there. today in case you did not know is world turtle day. so to celebrate, we want to know which slow and steady stocks could be good investments for you your money? take a look. this is live in studio by the way. he is going to make his way on the stage. we'll have all the stocks coming up on "power lunch." with usaa is awesome. homeowners insurance life insurance automobile insurance i spent 20 years active duty they still refer to me as "gunnery sergeant" when i call being a usaa member because of my service in the military to pass that on to my kids something that makes me happy my name is roger zapata and i'm a usaa member for life.
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hi, everybody. here is your cnbc news update for this hour. president obama and his vietnamese counterpart signing a trade deal between the two countries. that deal includes the plans to sell 135 advance jet engines and boeing's plans to sell 100 aircraft to the vietnamese. the white house says the total deal is worth some 16 billion.
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a blockade in france's main southern oil depot is preventing trucks from accessing that complex, causing fuel shortages. it's another consequence of france's disputed labor reforms which have prompt aid series of strikes and protests across the country in recent weeks. >> a federal appeals court has reversed a jury's finding that bank of america was libel for fraud for the actions before the economy collapsed in 2008. it also negated a more than $1.2 billion penalty imposed after trial. they said there wassive sufficient evidence that mail and wire fraud was committed by the bank's countrywide financial unit. and adelle is set to sign a $1 o $230 million contract with sony music. the biggest ever handed to a british musician. the 28-year-old sky fall singer was the best-selling artist in the world in 2015. and this deal will double her wealth. all right. that's the cnbc news update this hour. i'll send it back you to.
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>> thank you. let's get to julia borsten with breaking news. >> this is just the latest in the battle over who will control viacom and cbs. sumner redstone's attorney filing a petition asking a los angeles county superior court for an order confirming the validity of his removal of both the ceo of viacom as well as another viacom board member george abrams from his trust. now he basically -- sumner redstone said he didn't want them as part of his trust, on the board of his trust which will control his 80% voting stake just this morning they filed suit challenging redstone's ability to remove them and also raising questions about redstone's mental state now redstone himself filed suit -- has filed again saying he wants to defend those decisions to take them off of his trust. redstone's attorney saying it is telling them that they're
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raising the question of meantal capacity foifrt time after he is being removed when just months ago in court documents he pronounced mr. redstone engaged, attentive and opinionate the as ever. so this is a massive battle over the future of who will control both cbs and viacom and now there's a lot of debate about the state of sumner redstone's meantal capacity. back to you. >> incredible. another turn of events. as i understand it, to the lawyer that delivered this news to the other guy was a lawyer that nobody had ever heard of. that suddenly popped up. by the way, i also now represent sumner redstone and you're fired. >> well, fired not from his role at viacom. people are asking questions about that. he was fired from his role as one of -- >> national amusements. >> yes he was on the board of national amusemen st. and he was removed from that seven trustee board that will control that voting stake in cbs and viacom once redstone is deemed
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incapacitate order when he passes away. so, yeah, so there is a new lawyer introduced here. there are statements flying back and forth between sherry redstone, sumner's daughter and the lawyer and viacom. everyone trying to figure out who is going to control the will 80% voting stake. >> is les munvez of cbs involved in either of the trusts or is he on the board of national amusements? >> he's not. so he managed to really stay out of this whole thing. the reason why viacom is any' vifrn situation here is because viacom shares are down about 40% over the past 12 months. cbs's performedance is much better. it's also worth noting that they have this three decade long friendship. he was rez stone's attorney for many years. he was, of course, ceo at viacom for many years. they have this long standing relationship which both men describe as a friendship and a very close friendship for many years. so they've both, you know,
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described their relationship as very close. up until april doman was redstone's health care proxy and only removed because of this lawsuit filed by sumner redstone's ex-girlfriend who said she wanted to be back -- put back as redstone's health care proxy. so clearly very close relationship until very recently, until friday when it started to fall apart. >> truly incredible story. julia, we'll see you soon. thank you very much. now let's get back to your money and get advice and ideas from your next two guests. joining us, our investment strategist from edward jones and a cbs contributor. before we get to some specific ideas, you and i agree the fed probably already priced in june, july, whatever. i want to move on and ask this very simple question you to. is donald trump the greate esee wild card to stocks now? >> until someone is elected in november and in office in january, it is all speculation.
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and i mean that really seriously. we're going to spend months wondering what person x is going to do relative to what they say they're going to do. and just to be clear, every other election for the past 12 years someone has got up and said on day one i'm going to make china a currency manipulator and do sanctions and then it doesn't happen. and donald trump might, in account fa, be, you know, the exception that proves the rule or the wild card. but until it happens, it's all just noise and talk. i would caution people from overtrading them or positioning them based on the position that words will translate into deeds. >> kate, when talk to clients and give them the concern list right now, you have the fed. maybe politics. maybe the british exit boot. maybe china's currency. what tops your worry list right now? >> i think the main thing on top of the worry list is how much china is slowing and whether that has an implection for the u.s. economy. we don't think so. i any the overall view of many americans is that the economy is
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in bad shape. partly because the election where everybody runs against the economy. that is not our view of the biggest worry. and i would agree with zachry. you have to be really careful not to pay attention to what candidates say but to try to interpret what they'll do. because in many cases, they say a lot of things that won't get enacted into laws. >> all right. let's get to actionable, investable ideas, kate. given all the backdrop that you just laid out, what are one or two of your best ideas right now? >> aid sigh two ideas are first united technologies. we have a buy rating on that stock. it is globally diversified. we like it because we think that it will be able to improve its businesses, especially internationally. it has a 2.6% dividend yield. we expect dividends to grow 9%. and with the businesses, the elevators around the world with pratt & whitney engines, you're looking at a company that is very well positioned for global
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growth and u.s. growth. a second one is lowe's. we all know because of the fact that it's home improvement. housing market is strong. as the housing market is strong, people tend to shop and do more home improvement. beat earnings expectations. we think it will continue to do that and improve profit margins. two solid performers likely to do well regardless of the economic or political environment. >> all right. zach, something you love right now is what? >> you know, look this is -- we're going to go from the specific on the stock to the general on investing. i think it is really vital if you look at strategic did a report today saying, we all know this just pointing it out this s & p has not made a new high in 12 months. we had a real bout of vo volatility in february, we had one over the summer. ininvestors need to find the really good ideas like the utx or in general really lower the investment expectations. the advantage of that is if the
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markets go off to the races, even if you are positioned for lower returns, you're still going to benefit from a market that takes off. but you're not going to be reaching for unbelievable risks. you're not going to be in valiant, for example. i don't want to pick on that. it's been all over the news. the point being when you reach for yield and risk because the returns are low, you're in a really problematic position. if the markets do better than expected, you're positioned for. that i think this is kind of the time to lower your horizons, be more modest in the expectations including yields regardless if the fed are going to go up over next year to 18 months and be very careful about what you're in. careful but judicious. >> all right g advice there as well. zach, thank you. kate, thank you. appreciate it. you can always check out more ideas on our website. you're going to find another large cap stock, remember, she liked utx and lowe's. there's a third one. you have to go to our website later on tonight to find out.
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all right. thank you so much. apple shares in today's session higher today. outperforming the broader markets and the stock is staging a turn around since hitting fresh multiyear lows. since then, it is up more than 6%. what is behind this move? on the cnbc news line, a senior equity research analyst. great to you have us with. you know what is interesting is that what took apple shares down in part were the reports coming out of the nikkei serving suppliers saying they're not getting the orders in. today we have taiwan's economic daily saying just about the opposite. where do you stand on what the supply chain is telling us? >> that's exactly what we were waiting for essentially when the whole thing was pessimistic. they were taking negative data points from the supply chain. we're looking at it now and apple is put in the iphone 7, we're seeing positive news come out of supply chain. this is the first time we've seen positive data points come out of supply chain. and that is where the apple
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struggle is reacting to. >> how much is the world changed because in that report is such strong results, specifically pointing to oil demand. >> that's the next step on the display that people are waiting for. we don't think it's coming in the iphone 7. it is essential something which down the road is going to be one of the key selling points of the new smart phones. but athis point, i think apple stock is reacting more towards data points from taiwan. >> sentiment is so much like a pendulum and at one point one is will $89 and change. it was on one side. now it seems to be at least making its way away from that side of the swing. are we at a point now where you would say the sentiment could be firmer in getting more firm as we go into that iphone 7 launch in september? >> we think so. we think going into second half of the year people are going to be looking at iphone 7 plans and that's going to include the sent. .
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at this point, sentiment on the stock is extremely negative. and as we go into iphone 7 cycle, it's going to include, remember, april sl not a growth story. it's more of a revenue story. we're not going to get to a point where we can call it a growth story any time soon until we see some other drivers kick in. >> okay. we're going to leave it. there thank you for phoning n appreciate it. >> sure. >> well new polls show donald trump edging closer to hillary clint clinton. what he is doing right and what if anything is clinton doing wrong? we have that story next on "power lunch." ♪ ♪ for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals.
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washington. hi, john. >> tyler, it is a tightening race. you can see the spring in donald trump's step as he goes about doing the tasks that he has ahead of them and tying to get up to speed on policy as well as that potential vice-presidential nominee. he met a few minutes ago with bob corker who chairs the senate foreign relations committee. he said it was a get to know you meeting and not a vice-presidential audition. >> i think it's certainly worth while to sit down and get to know the nominee in a different way. and we did that today. but, look, let me, again, i -- i said this when this all came up a couple weeks ago. i have no reason whatsoever to believe that i'm being considered for a position like that. >> now here's what is encouraging for donald trump. that nbc "wall street journal" poll that tyler mentioned, look at these numbers. just three points behind hillary clinton, 46/43. it was an 11 point gap in april. why has that happened? why is the gap closed?
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look at this second chart which is support within each party for the two nominees. hillary lyn clin drawing just will 83% from democrats. donald trump is consolidating his party, getting 86% of republicans. what is weighing down hillary clinton right now is resistance from bernie sanders supporters. but when you talk to democrats and ask them, is this hurting the party? we've got new numbers that just came out at noon in the poll by 2-1, democrats say, no, it's not so bad. it's okay for them to keep going on. now hillary clinton isn't feeling that way. her campaign would like this to wrap up. bernie sanders says he's going to go all the way to the convention. the question is how soon can hillary clinton assuming she becomes the democratic nominee get all those democrats behind her? hasn't quite happened yet. >> stick around. as we bring in sarah fagan, cnbc contributor, former senior aid under president george w. bush. i suppose, sarah, it was somewhat inevitable that this race would narrow just a bit as
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the candidate on the gop side consolidates support. >> that's right. it's not unusual for a presumptive nominee to get a bump when he becomes the actual nominee which is donald trump infectively is. he got a few votes to go. but he'll be there. the other things that helping him, though, is hillary clinton and this divided democratic prime airy. you get a quarter of bernie sanders supporters who say, no way, no how will i ever support her. that is likely to change. but right now, emotions are still high. it is weighing her down heavily. >> both of the candidates, john harwood, have what in the trade is called high negatives. they have high dislikability factor. but one of the things that you have been talking about is that it's very hard for a candidate to win the general election unless they have very strong support within their party. like 90% support. and mr. trump didn't have it but he's closing in on it. >> absolutely. and our poll in april, he was just at 72% among republicans.
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he still got some high profile holdouts. paul ryan among them. other interlekt you'lls in the party, people who are good friends of sarah who colleagues of hers from the bush administration. but donald trump's got to be encouraged by how people have come together and comes at a very good time for him. he's just come off this very contentious primary. for him to be able to get that shot in the arm in the polls, look more competitive against hillary clinton, feeds on itself and makes it easier for him to keep consolidating. >> there is a lot in the republican mainstream that those people in the establishment don't agree with mr. trump about, or at least at this point. but the one thing they do agree is that they don't want to see hillary clinton in the white house. >> that's right. that's true among elites in the party. but it is particularly true among the base. that is why you see him consolidating republican sport. there is lots of measures out there and in polls, not just the nbc poll. enthusiasm, interest in the election, and certainly turnout in the primaries.
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they've all been higher for republicans and as a result of that, donald trump is in a stronger position than most people thought he would be at this point. >> i'd like to get both of your reactions to this supposition on my part. this election is going to depend on the turnout among blacks and hispanics. and if it is strong, it will be a very favorable to mrs. clinton. if it's not strong, donald trump has an edge. >> i think that's basically right. what is troubling for trump in this nbc poll, the underlying data shows that he's only garnering 52% of the white vote right now and 20% of the latino vote. as john knows if, that were to hold, there is no way he could win the general election. and it would be an epic blowout if the numbers were that on election day. >> john? >> i gri with sayer yachlt i think another key group we need to watch is college educated white women. that's what holding down donald trump's numbers among white voters. he needs to do as well or better
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as ronald reagan did in 1948 in his landslide win to have a chance against the nonwhite support that is growing for democratic nominees. so i think whether donald trump can -- who did very well in the primaries appealing to blue collar white voters, whether he can get the college educated women, that's going to be a key as well. >> all right. it is certainly all the talk in every neighborhood around every dinner table. sarah and john, thank you very much. battle for control over viacom, boy, they're talking about that in hollywood. taking a new twist within the past half hour. we have the latest news just ahead. and what one west point cadet was doing on the way to graduation that made her a target on the internet. put down your phone, come on!
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this is the adam smith division. this is for students with -- who from the advanced classes. very exciting round in the first round. lexington, massachusetts, beat new jersey in the first round. and now we have a face-off here between belaire high school from texas and defending champs,
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moundsview from minnesota. let's get to the first question here. question one. who wrote the wealth of nations and -- >> you have five seconds to respond. >> adam smith and invisible hand. >> that sin correct. >> okay. 15 seconds for belaire. >> let me re-read the question. who wrote the wealth of nations and what country is he from? >> adam smith and united kingdom. >> that is also incorrect. >> the answer is adam smith and scotland. >> okay. 0-0. here we go. gets a little tougher from here. question two, if the marginal cost is rising as output increases, and is below the average total cost, then the average total cost must --
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>> five seconds, please. >> decreasing. >> that's correct. >> the average total cost must be falling. well done. excellent. >> there you go. brian, adam smith question got correct. >> and he cheered himself as well. >> yeah. >> you're into this. >> do you say great britain. >> i don't know how you demarcate. >> i think it was independent then. >> if you say part of england, then the scottish viewers write in and they get angry. >> but at that time, concurrent with adam smith's writings, i do not believe that there was a great britain that encompassed scotland. >> just a good break. >> good, not great. >> anyway, you have to read it. >> she got it right. >> the margin ol cost of my co-host is following along with output. >> stocks are posting slight gains. a couple names are managing to hit multiyear highs in today's trade. applied materials is trading at the highest level since march
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2015. both hitting all time highs in today's session. for market highs to what some are calling a new low, check out this video from west point's graduation ceremony over the weekend. you can see one of cat debts apparently playing with her phone while marching. of course the internet had a field day over. this critics saying she lacks discipline. come on! be in the moment, right? >> yeah. put it down. >> put it down. >> okay. >> i would oerg that in order to get into west point, you have shown an incredible amount of discipline, drive, and polish. >> finish it off that way then. >> all right. shares of mcdonald's are down 5% in the past week. they had been a slow and steady gainer before that. up more than 20% over the past year. which way is that stock headed next? and speaking of slow and steady, which turtle stocks will bring you slow and steady returns? yes, america, those are turtles live on our set. and they are moving.
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can't tell. "power lunch" will be right back. ♪ andrea sikon. medical doctor from cleveland clinic, watson, let's review the electronic medical record of the next patient.. no problem. it's a pretty huge file. done. sorry for the wait. that was quick. as part of our research, i also compared lab results with notes about prior treatments, then cross referenced it with thousands of medical journals. and i get the benefit of much more data, and a lot more time to plan the best treatments.
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i stay focused 24/7 and never sleep. you sound like a lot of medical students i know.
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i stay focused 24/7 and never sleep. you wouldn't take medicine without checking the side effects. hey honey. huh. the good news is my hypertension is gone. so why would you invest without checking brokercheck? check your broker with brokercheck. welcome back to "power lunch" y is there a giant turt
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until our studio you ask? well, because it's world turtle day, obviously. so to celebrate this sluggish reptile, we're looking at some slow and steady stock picks that could be winners for your portfolio. yes, you do see four turtles. there let's bring in the chief investment officer. gentlemen, happy turtle day you to both. what is interesting about two of your picks, each of you picked a general, general mills and general electric. and both are trading at premiums to the market. david, why don't you kick us off with general mills? why do you want to pay up for this one? >> >> basically, you want to balance your portfolio. we think the utility group is expensive. if you're looking for slow and steady, consumer product companies are the place to be. in terms of general mills, they have a good history of making money. they've been raising their dividend nicely. we're not looking for it to shoot the lights out. we think 12 and 18 months it
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could be higher. and they also are a consumer product that is vulnerable to a takeover. if that happens, you get a extra shot in the arm. >> a takeover. who would buy it, david? >> you have kraft, heinz, and there could be a greater consolidation in the industry. they don't have a voting or control stock like some of the others in the group do. so we think they're vulnerable to a takeover. but we think that management is doing a good job. they had a tough period a year or two ago. they seem to be turning the business around. the yield is pretty good. >> yeah. the yield is 3%. we should note that current pe for general mills is about 25. the s&p 500, of course, at around 18 or so. jerry, you have general electric. that is trading at a 29 current pe. also just about a 3% yield here. >> the $1.75, this is a stock a lot closer to the mid high teens or close to the market as well. but behind it is so much more that i think a turtle type of stock can more than just fire. think about. this this company now has for 20
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years been involved with financial services, not to the betterment of most shareholders. they have finally understood this. just the movement out of that space should free up 30% to 50% in appreciation just because of valuation. the industrial businesses and the ones that are going to concentrate going forward all should get high teens multiples. all are repeating businesses. they're market leaders in all of the businesses. you think of the flexibility that balance sheet now can handle other acquisitions and become more dominant and then layer on top of this this fascinating industrial internet. you have the makings of a wonderful 5 to 10 year slow growth nice yielding very predictable name in the portfolio. when you give us your list of the so-called turtle stocks, you put starbucks in. there i thought that was an interesting one. people think of starbucks as a
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growth story. it's not any more or slow eastern steadier. >> exactly. so many of the great growth stocks to sustain themselves have to fall back into things and starbucks case it was a same-store sales story for years and years. now it's this multichannel consumer nonretail driven business. and it has that capability of going over 20% growth. but in very stable grocery type and point of sale type of businesses. that's exactly what you want to have with that level of growth to take away some of the volatility. and that's another one that we think it might be a snapping turtle. >> that's funny you mention snapping turtle. we have one on set. i tried to get brian to play it with. he backed out. thank you. and, of course, thank you to our turtle friends. the big one looks like he is going to step on the little one. okay. tyler? >> they are really interesting.
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that one, the snapper there, brian, they said -- can we show the snapper? >> melissa goes, why don't you play with that one? 1,000 pounds of force. it has no teeth. hatz a beak. en that thing will grow to what did you say in sn 450 pounds? >> 400 pounds potentially. >> and it will take your face right off. >> take your face right off. the battle over viacom, taking another couple of twists today. viacom ceo was removed from the trust that will control both ceo both cbccbcs and viacom. julia is covering this hollywood soap opera for us. >> viacom ceo was sumner redstone's right hand for three decades. he was his health care proxy. but today doman sued to challenge his and fellow board member george abrams removal from redstone's trust which controlled 80% of cbs and viacom
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voegt shares. also the removal as directors of feeder and holding company national amusements. he is challenging redstone's meantal capacity saying in the suit that redstone is afflicted with a neurological disorder that can be characterized by dementia, impaired cognition, a slowness of meantal processing, a loss of memory, apathy and depression. redstone in the last hour filing a petition asking the court to confirm the validity of his actions for moving doman and abrams as trustees. redstone's attorney saying it is telling that doman is raising the question of mental capacity for the first time since he's been removed when just months ago in court documents he pronounced mr. redstone engaged, attentive and as opinionated as ever. just yesterday a statement from redstone opposed a plan that dauman has been owe pozing for months saying that dauman diverted resources from the continuing challenges facing the
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company. viacom shares are down about 40% in the past 12 months. now dauman wins the suit he filed today, he'd be reinstated as a trustee and redstone would be deemed incapacitated. dauman loses, sherry redstone can push him out as ceo of viacom. >> hard to keep track of the twists and tournz. turns. thank you. our next guest says the board room battles raises red flags but more concerning to him is the duel class stock structure which gives founders the large share of power and decision making. the stock is trading at $41 a share. good to you have with us, michael. from a shareholder perspective, what should shareholders be rooting for in term a possible turn around of a stock that is down 40% over the past year? >> in our opinion, the only path for shareholder appreciation at this spoint a change in management. current management team has been in place for ten years now. the shares have been consistent
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underperformers operationally an financially. and the share price reflects it. it's been a lagger relative to the peer group. >> so basically, you're voting for mr. redstone to win? >> i don't know that i would say. that but essentially, i'm a sports fan. i fwlbelieve in batting average. they had long enough to establish a batting average. i think the company needs a new strategic direction. >> what would that -- let's say dauman changes and a new management team comes in. what could they do? could a breakup of the company be in the cards? >> it's certainly possible. i'm not a big believer in breaking ape kplp to make it better. i believe the company lost its way creatively. it has two businesses, cable network business and film studio business. on the cable network side, there are several recognized brands that have seen a loss of audience and a loss of talent over the years. those include nickelodeon, mtv, comedy central. i think the company needs to get back to the roots and rally the
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content, creation and investment around a couple of core brands. on the film side, the film studio paramount is subscale in terms of the amount of production every year. i think there needs to be an investment process to improve the production or they should sell that business to a scaled player and use the proceeds to reinvest into the network space. >> is there a scenario under which this company could be taken over? >> certainly. >> by whom? who would the buyers be? >> i couldn't speculate. i think that the assets themselves could have value to another player, especially somebody who would like to get larger in the networks business or in the film production business. at this point though, mr. redstone from the comments that came out publicly, he is not even in favor of a sale of a state in paramount. i think as long as does he control the vote, it is unlikely that you'll see this business be slowlying. >> do you think he should control the vote, michael? >> i think it's inconsequential
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about whether he should or shouldn't. the vote is his. i don't see why you take the vote away from somebody. shareholders who have, you know, made purchases to this point knew what the structure was when they got in. and i think the shareholder structure is absolutely not shareholder friendly. but that being said, i don't think, you know, should is a bold word. >> all right. michael, thank you. michael morris at going enhim. >> we have the best viewers in the business and we listen to you. one sthaed mcdonald's shares were sliding in a big way over the last few days. in fact, you're right. that stock is down 5% last week. let's try to find out why and if there is mcdonald's opportunity here. andy barish has a hold rating on the name. jeff bernstein has an overweight rating on the stock. jeff, sit with us for a second. let's go to andy barish who is on the phone. what do you make of mcdonald's slide and what are your concerns about the company? >> sure. good afternoon. there's some chatter out there
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regarding same-store sales slowing down at mcdonald's and we in, fact, have 3.5% u.s. same-store sales estimates for the 2-q. still a solid number. but this turn around that started really in the fourth quarter of last year based on all day breakfast, we question the sustainability and restaurant stocks tend to trade on the sequential direction and same-store sales even the most stable, biggest companies like mcdonald's. so if in fact the u.s. same-store sales which are a key indicator of business health are decelerating, i think that's probably what's weighing on the stock a little bit here. >> you are advising your clients to sell shares of mcdonald's or simply just keep them but don't buy anymore? >> well, we do prefer. we have a hold rating at $115 target price. we think the shares are a little bit ahead of themselves.
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but, you know, we do think the company is doing some things that are pretty solid as well in term of its capital deployment, gna cutting. you have a kplp that pays a 3% dividend. so there are some appealing factors to mcdonald's investment storey. we just think the stock has kind of come too far, too fast on this turn around move. >> okay. >> and we're going to let you go. the target is of 6% below the current price. let's bring in jeffrey now. jeffrey, you heard some of andy's concerns. how do you respond to those? >> yeah. we still hold mcdonald's in very high regard. the turn tharn andy spoke about did begin in late '15 and the momentum around that all day breakfast was a euphoria. so not surprised to see a little easing potentially versus those fourth quarter numbers. and, in fact, the quick service category softened a little bit
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in recent weeks. if you think about it, bigger picture, mcdonald's is in the game of taking market share versus giving market share. we expect them to take market share this quarter and we have a variety of new products and initiatives going into the back half of the year that will help them sustain momentum as was discussed earlier, they otherwise pulled a lot of lefrdz levers in terms of cost customering, battle sheet leverage. returning a lot of cash to shareholders. >> the stock went from $94 to $130 and now it pulled back. let's say the stock is at a 30% value in the last, i don't know, nine months. are the initiatives, jeffrey that, you're talking about enough to add 30% to an already massive company's massive market cap? >> yes. we think for a while mcdonald's was underappreciated which is perhaps the trough that you're referring to nine months ago. and i would just remind people that the quick service category in general has seen a very strong run. so mcdonald's valuation while not the cheapest of our quick service names is clearly not one of the most expensive either.
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when the momentum they, have we think that will continue. in fact, mcdonald's is not necessarily going to be the best performer in 2016. xbekt it to continue to grow from here. >> all right. there is the bullish view on mcdonald's. jeffrey, a pleasure. thank you very much. >> thank you. >> let's get now to dominick chu. you have a market flash. >> yes, sir. i'm watching chip stocks. xenlding friday's gains outperforming the broader market overall today. take a look at the semiconductor etf, it is a mouthful. there is smh. up nearly 1% so far today after closing out the best week in three months. all members are positive in today's session with corvo, micron and skyworks leading higher. they're 2u7%. it's tracking for the fifth upday in the past seven, up 4% in the past few days. >> thank you very much. so here's what is ahead on "power lunch." obamacare sticker sho. new rates set to be unveiled. find out what you may be paying ahead. plus, voting every year to pick
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your company's ceo. it's a thing. is it crazy smart or just crazy? you're going to meet a company doing just. that. and searching for the next janet yellen or ben bernanke, they are best and brightest in the economic world. by the way, they're only in high school. you're going to meet them coming up.
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billions are spent to confuse and, dare i say it, flummox the american public. "save 16% on car insurance." "switch now..." well at compare.com, we say enough's enough. so we constantly scrutinize millions of rates... answering the question once and for all, who has the lowest. just go to compare.com and get up to 50 free quotes. choose the lowest, and hit purchase. so you can get back to whatever it is you civilians do when you're not thinking about car insurance. compare.com big increases could be coming to obamacare plans, the ones on the exchanges. let's get to bertha combs with
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some details. >> we talk a lot about united hethetth getting off the exchanges. the ones staying on are asking for big price hikes. consumers will get first chance this week to see the preliminary obamacare rate requests for 2017. and the early picture isn't pretty. insurers are looking for sharp price increases to try to stem the losses they have seen on obama care plans in the last two years. they cite higher medical costs on sicker patients and rising drug costs. another big reason is that under the law, the reinsurance program that has helped offset big losses goes away next year. regulars caution these are preliminary requests and final rates to look a whole lot different next fall. but in new york, insurers want an average bf a 17% increase in virginia, they're asking for 20%. more than that. and in oregon, the two largest insurers are asking for more than 30% increases. it's the low end bronze plans where consumers could see the biggest sticker shock.
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they say all that of its bronze members will be transitioned to the mid tier silver plans cll mean about a 70% increase for them next year. bronze plans are the ones that pose the biggest losses for insurers because the lower rates attract sick patients that cost more but often drop coverage during the year. the ceo of nonprofit new mexico help venlg connections helped make the bronze patients cost 20% to 30% more than the patient who's actually stay with the plan all year. he worries that hiking prices like this is only going to make the obamacare risk pool old r old eastern sicker and keep more young healthy people from enrolling. tyler? >> because they just won't want to pay that extra premium, right? >> exactly. they'll basically say, look, if i'm only going to pay 800 or $1,000 for some of them, the ones who are not eligible for the subsidies, that might actually be a better arbitrage if they figure i'm sick and not sick so i don't need the
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coverage. >> which leads me to my next question for a reporter at cnbc.com. stick around though, bertha. we look at these numbers. we have seen numbers like these in prior years, maybe not quite this high. but in some episodic cases, yes, indeed this high. >> z. th >> does that mean that people are paying the prices out of pocket or the subsidies will be asked to absorb more of the premium cost in other words, taxpayers will pay more? >> look, both. in both cases. yeah, people that buy obama care plans, individual health plans outside of the exchanges, they'll pay the full freight. whatever the increase, is they'll pay that or shift to a lower plan by shopping around. for consumers who are buying on the government exchanges, you don't get subsidized, same deal. for people that do get subsidized, they'll not pay significantly more percentagewise, not double digit increases in most cases. the taxpayer will be eatingst cost because the increase of subsidy that will compensate for the higher premium. >> bertha, wasn't this -- this
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feels to me so predictable. in other words, that the sicker people are the ones who signed up so they cost more. these are for profit companies. they may not be for profit in the letter of the law. but they don't want to lose money on these things. so what are you going to do? you're going to raise costs. >> exactly. even the ones who are not for profits. some of the blue cross plans, they've been losing a lot of money. they can't afford it continue to to hemorrhage that way. >> correct. >> without government training wheels written into the first three years of the law, they can't afford to take big risks. if this market had stabilized, then those things could go away and they wouldn't pose such a danger. but essentially as you talk to people in the industry, what they're worried about is that this is just going to keep the obamacare exchanges as a niche market for people who can afford it by having subsidies and those who can't are going to look elsewhere. and overall, you're going to
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continue to see mostly sick people going to continue to be that kind of a market which is in effect a kind of high risk pool market. >> so, dan, i don't mean to spin the head here. but are we at a kind of tipping point? you have companies that are pulling out completely. >> that's right. >> you have other companies that are dropping whole categories of plans. those bronze people in -- the bronze people, but the people who are in the bronze plans in i believe virginia. they're not going to offer it. they're going to move up to a 70% higher better plan. but it's only better if you can afford to pay for it. >> because of the debt now, is that what you're asking me? >> basically. i think for the past three years, ever since this program has been instituted in the form that we're talking about now is there is every time numbers come out, people are like this is the end. this is the death spiral. this is the worst thing that ever happened. what they don't take into account is people can shop around for lower price plans, number one. number, two the double digit increases, yes, it's going to be
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higher. but not all the increases will be approved. >> at the level requested. >> yeah. >> but the other thing to take into account, and we were talking about this something could happen after the november election where congress and the president, whoever that may be, adjusts the program accordingly to compensate for some of the things we're seeing now. they can raise percentage of money people get in terms of subsidy, hillary clinton is part of the idea of a 500% cap on federal poverty level, people that get that. >> you buy -- >> i wouldn't loeld my breath for that, however. given what we've seen the last three years. >> it's poor now. it could go up. it could go up to five times. but my point is this is very complex, big thing. and the idea that it's got a couple holes here and, there nobody's disputing that, that it will sink the whole ship. i think we're a long way from knowing that is -- >> we have to leave it. there it is going to be a hot issue in the presidential campaign. bertha and dan, thank you very much. searching for the next yell
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-- yellen or bernanke, steve liesman is speaking with the best students in the field of economics. it's an exciting competition. the folks just won the economic challenge. we've been bringing you some of it. we'll speak to the winners next. imagine if the things you bought every day earned you miles to get to the places you really want to go. with the united mileageplus explorer card, you'll get a free checked bag, 2 united club passes... priority boarding... and 30,000 bonus miles. everything you need for an unforgettable vacation. the united mileageplus explorer card. imagine where it will take you.
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mi school students have been competing to see who would make the best economists. steve liesman is standsing by with the winners. >> steve? >> we had a really, really good contest here. again, the big story is the incredible smarts of these kids. and, of course, the dedication of the teachers. it's impossible for the kids, any school team that's kpetive in a sport -- competitive or any contest is because of the dedicationst teams putting in extra time. but let me get to the students. belaire winning team. congratulations. let me start with amy on the end. amy, so here's the question. you are able to come in on a question when i was only half way through and got it right. so my question to you is what am
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i thinking right now? no, that's a joke. okay. amy, that's a joke. amy, tell me, you really must love economics. tell us what you like about economics? go ahead. yeah. >> i really like how it's very, very logical and how can you use it to explain things like -- first, team is like common sense. it gives you a way to quantify things you would just call common sense. >> right. >> give yurs name? >> i'm suni. >> who is your favorite economist? >> alfred marshal. >> why? >> because he invented supply and demand which i think is one of the key foundations of economics. >> and what are your favorite business news sources? >> my favorite business news sources are cnbc and business insider. >> the first one gets you two points. we're going to go back. let me go over and talk to bill from lexington. what does it take to get a team here? >> oh, boy. so many logistics involved.
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those are the toughest things. they work every week. they trained, and they did a lot of online research to prepare themselves. >> i want to say congratulations you to. i know it takes a teacher to motivate the students to get involved in a topic. so you're interested in economics. what is your favorite part? >> i think my favorite part is just being goal driven. we all have the same goal. and in economics, it's obviously to make profits. i think part of it is just being so focused towards a common goal really just drives me forward. >> i can say definitively we don't have enough female economists. it's a male dominated field. are you motivated to go into the field now and study economics? >> it's one of many careers i'm considering right now. i mean, it's really cool to be one of the only girls. they pointed out, like you don't think about it in the gij. you just think you're one of the guys. you're accepted into the team as a member, not because of your gender. so, yeah, i'm considering it. >> that's great. quick question. it's more than just a game, isn't it? >> it's about team building.
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it's about having fun. it's about coming to new york and it's about the 10,000 other kids that are learning great skills. >> and you're motivating them throughout the country to do it. >> we are and they do a great job. every last one of them. >> thank you very much. from the national economic challenge. tyler, i'm practicing for the alex trebek job. i'm going to get a new tailor and grow hair and lose a couple pounds. i'll be ready to do the "jeopardy" job. >> thank you. a lot of fun. appreciate everybody's effort there. congratulations to the winners. the oil market getting ready to close. we're going to head live to the nymex for the final trades. plus, this insurance stock is up about 15% this year. but just got a big downgrade today. that call and more, four more, to be precise, when we visit street talk.
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hi, everybody. baltimore officer edward niro was found not guilty of assault and other charges in the death of black detainee freddy gray. the judge handed down the ruling
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in a bench trial. five other officers in that case are scheduled to stand trial. government and business leaders heating in istanbul for the first world humanitarian summit. the united nations estimates more than 130 million people are in need of humanitarian assistance and that less than 20% of the $20 billion needed to fund that is covered. pakistan's prime minister says that drone attacks on its territory were a violation of the sovereignty. he was commenting to reporters in london regarding the killing of the top taliban commander who was killed over the weekend by a u.s. drone strike. and after 120 hours of soccer, a new world record was broke non chile. the most players in a soccer match, 2357 to be exact. the gale began on wednesday of last week and it ended on sunday. the guinness book of records confirming the feat. that's the news update this hour. i'll send it back you to guys. >> might have set the record for
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most random record. >> well, you know, football is big. >> most turtles involved in a financial news program, we got that today, baby. book it. >> actually three and a tortoise. >> correct. i think one was a tarpin'. first symptom, schlumberger. goldman sachs adding them to the buy list. they see 30% upside ahead. they say that schlumberger is best positioned in the new oil order for four reasons, one, exposure to areas like u.s. shale and, two being technological balance, balance sheet flexibility and when oil prices rise, shum sler shea tends to outperform. >> when oil prices start to rise. that's the key. >> and should be an if. >> exactly. second stock here, aflac downgrading to a hold from a buy. the analyst had outlined three catalysts in late january. they all played out. they were the labor department's standards, final rule that was
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released in a strength in the japanese yen which investors had now incorporated into the outlooks and back in january shares were inexpensive to where they traded historically but are not inexpensive enough to stwik a buy rating. >> you have no know if you want to invest it in. you know the duck. they're based in georgia. a ton of the business, more than half, comes from japan. japanese company. third stock, big lots. deutsche banc says this hot stop run is done. they downgraded to a hold. the analyst believes in the long term prospect of the sector, the shopper is healthy. but labor force headwinds, they mention the new overtime payrolls and rising gas prices sprent a more difficult near term setup on big. also worried about the volume wags of target. still a couple bucks where it is. if you own it, maybe trim it. >> year to date, we've seen the value players, walmart, this, tj max do well. fourth stock here, square.
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they're upgrading square. the credit concerns are overblo overblown. the analyst saying in short this is not a lending club. anlives quotes. addressing concerns about the square capital business which lends money to the small businesses who are using square payment system. they say they spoke with management last week and it is a manageable risk relate toist upside. >> i'll say this stock down 36% this month. 30% this month decline. >> theablist downgraded it on may 6 with a $9 target. a lot of bad calls out there. this one is looking like a good call by webb bush. finally, under the radar name is, i know a company you are talking about on "fast money," intergrated device technology. idti. they start coverage with a buy. $26 target. that is about 18% upside. analyst says the xmp carved out a great niche in the electrical systems and circuits sector.
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one area is wireless base stations, for example. they call idti a call option on wireless charging. so, yeah, very positive. idti. >> very rough run for the last year to date, i should say. down 15%. >> february was not a good month for the company. >> for a lot of companies, actually. >> there you go. >> that is idti is your under the radar name of the day. with that, "street talk" over. four to go this week. the oil market is closing now for the week. jackie d is at the nymex. where are prices going to close? >> it looks like we're in negative territory. trading just around $48 a barrel. but pairing some of the losses we saw earlier in the day. july is the front month when they come to wti. stronger dollar part of the problem across the commodities complex today. we made that run at 50 last week. we couldn't breakthrough. traders are saying they're optimistic we test the levels a couple times before we get
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there. there still is a lot of support for oil prices despite the movement that we have seen in the dollar. the support levels and the factors to watch here, low expectations for that opec meeting coming up. also, that u.s. production continues to come down slowly. and strong gasoline demand. back to you. >> all right. jackie d, thank you. from black gold to just about gold, the metal falling to its lowest level since late-april. let's talk about gold with the trading nation team. your team day is boris schlosberg and ari wald. a lot of talk about a fed funds rate hike. if and when we get it, what would that mean for gold? >> so the knee jerk reaction in gold has been to sell gold because everybody thinks the fed is going to raise rates in june. that may very well be. i think it's a very short term trade. if you look at gold in a very long term basis, there is literally very little correlation between interest rates and gold. it's like 25 points. basically, gold rose when interest rates rose in the 70
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ease. gold rose when they declined in the 90s. the key factor that drives gold is the threat to equities. so if you sort of think through that fed rate hike may actually trigger a selloff in equities, that will probably be very positive for gold. and as long as gold holds the 1200 level, i still think it's a pretty good long. >> do you? pretty good long at 1200 if we hold that? >> yes. >> all right. now we're talking your language rishgt? technicals and key levels. how does gold look you to technically? >> that's right. for us, i think the correlation is not between gold and stocks. i agree with boris. but actually between geenltd u.s. dollar. i think this weakness that we've seen is due to this streng njt u.s. dollar. and in the near term, i think it could continue. i think boris will have a shot at his 1200 level. now longer term, we do like some signs of trend improvement. it was a very notable strength. we broke a multiyear long term in trend. we think it's basing, of course, a characteristic of a base is range bound trading.
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i think the important levels to watch here are 1200 on the down side. 1300 on the upside. we think gold trades within this range. i think near term you want to be patient here. i think you do get an opportunity at the lower end of that range. wait for it to stabilize down there before becoming aggressive buyers. >> okay. wald and boris with their views on gold. thank you both very much. for more "trading nation," go to our website. all right. on deck, a company that, get this, allows employees to pick its ceo every year s this forward thinking or just terrible idea? plus, sink hole alert. yeah. a giant sink hole, more on that incredible video from china coming up next.
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♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
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look at those cars go down in a sink hole. it hopped up in china, swallowing the cars right up. a security camera caught it all. look. isn't that amazing? the tree goes n the cars go in. that was about 16 feet wide, 10 feet deep. nobody, happily, hurt. and the cranes that you see at work there dug those cars out. they presumably did sustain some damage. brian? >> thank you, sigh letter. all right, imagine being able to vote your company's ceo out of his or her job every year. well, employees at san francisco based holf usa accident zroent to imagine it, they do it every year. some call this a great workplace democracy. others suggest it's the worst idea since the chicago white sox wore short pants.
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all right, thank you for joining us. it sounds a little weird. how does it work? >> hi. pleasure to be here. absolutely. so basically, it comes from the fundamental idea that we have that employees run companies. and four years ago at hoff we were thinking if our product is to help other companies and enterprises to upgrade the pretty operating system for the people and if one mufundamental believe is we give people a voice, how should we go into the next era and chairman at that point he decided he was not the right one for the global fit and for the global expansion. he said why don't we let our employees lekt the new ceo and give them options either to vote for a person that he suggests or that somebody else nominates or go for the outside and find somebody to the outside. so that is the fundamental start where we started. >> here's the biggest problem, kelly. being a leader often means
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making very difficult decisions. it might even cost some people their jobs. you need everyone's backing to keep your job. so how do you make the hard decisions while also i guess there's no other way to say it, campaigning during the year? >> well, absolutely. that's -- and that's the challenges that you face. but the good thing is that if you think about it today, everybody elects you or votes for you every day to either follow you or not follow you in their head. and ultimately, also a lot of chatter organizations happen in many enterprises where a lot of ideas are worked on but they never come to the surface and really flourish and create more power for the organization to thrive. basically what happens is we bring night the open. what happens every day and every organization which gives me a lot of power to know that the people are behind me. and on the other side, it allows me also to make difficult decisions when knowing that when i present my strategy and plan for the following year, that they are behind me and that they
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follow me and it's a very -- the crowd genius that we have in the organization is really smart. it's much smarter than we think it is. >> okay. i know you don't like the idea. worst idea since unsliced bread. he made compelling arguments, how do you respond? >> it may work for him. but imagine if we did that at the national level. we would be voting our presidents out every year. >> every day. >> this isn't the way the workplace works. it's a dictatorship. you need a strong leader who has a vision, who can articulate it, who can communicate it very well. and then everyone has to follow behind him or her. now he, it can't than you have to decide whether they lekt us or not. you have to be able to fire people. you have to be able to shift strategies. you have to be able to shut down divisions. you have to make the tough decisions. if you have to worry about your popularity, you're not going to do the right thing for the company. you're going to try to get re-elected last year as our leaders do. and the whole thing falls apart. >> that's what i wanted to ask
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about, kelly. have will you to come to a vote where you're deciding whether or not to fire people or shut down offices to downsize wlochlt is going to vote, yeah, take my job? >> well, the way that works, one day -- when you have to fire people or cut the lower 10%, we actually vote od on that decisi. we made it public to the company and said this is the situation we are. we created full transparency about a certain situation. we said we want to get rid of the low performers and open up more resources. so the people also have a voice in that. which it ultimately and really makes everybody stronger. because if you look at the generational demands that you have today, dictatorship in my opinion doesn't work anymore. the millennial generations entering the workforce, they want to have a voice and have fulfillment every day. they want to have something bigger. and giving them democracy is one part of that purpose. i'm not saying that works for every company. i'm not saying everybody should adapt it. but for us, it's important that
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we're courageous enough and we created a culture by design that allows us to show our customer that's that there are more greasive ways to handle the demands to have day's workplace. and that's one way of showing that. and as we tailor operation systems, it could be that. it could be something else. we have multiple facets with companies like vice and we do different things. go ahead. >> i was surprised. did you use the d word, dictatorship. i assume you're speaking of a beneficial type dictator. but how strong does that leader need to be that's at the top? steve jobs gets all the popular attention. most people didn't like him but the company that he built that sort of gave it okay, whether is it not okay? if you start going through the biggest companies, the most successful ones, you'll find they have a common thread over here. they have very strong visionary
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leaders who believe in what they're doing and they tell people what to build. they don't vote on it. if you have a vision and you believe they can change the world, you're going to get people to rally behind you because they believe in you. i'm not going to work from myself to be bottom 10%. you never know about the reviews and judge it. you still have to have someone deciding how someone else performs. it's not a democracy in the workplace. >> although did it work for pirates a couple hundred years ago. kelly, when the next vote comes up, let us know how it goes, all right? we're rooting for you, man. >> i will do so. i will do so. absolutely. >> the broadway blockbuster show hamilton, the target of counterfeiters. it's not only the high profile show though that is falling prey to big tickets. it's rock con sers and a lot of other stuff. how it is happening?
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what can we do to stop it? that's next.
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with 16 tony nominations and a year long waiting list, hamilton the musical is the hardest and most expensive ticket on broadway.
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no up is, perhaps, scalpers are making a lot of money off the back of the show, by some accounts, a quarter of a million dollars in illegal profits every single week. new york assemblyman calls the ticketing industry "unscrupulous and nothing short of eventual ch -- vulchers." what you would like to see happen? it's a matter separate from the counterfeiting of tickets. you would like to find some way to defeat the people working on behalf of brokers or resellers that get in there and buy up large blocks of tickets for e street band, u2, hamilton, a knicks game if they were any, good right? >> of course. you know, there is so much talk this year about there being a rigged system. well here's a primary example of a rigged system.
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the average person does not have a chance. i've been to some concerts. but there are many others that i got closed out of. i had the same experience as a lot of other people. you know, i sit at the computer at 10:00. severing all punched n all >> why can't the owners or the promoters of the event be the solution here? is it a problem with their i.t. structure that allows these other more high powered computers sometimes using people who type things in from abroad, is that the problem? why does government need to do something here that the actual producers don't seem able to do? >> i think they could do it if they chose to. i don't think government should be doing everything, but what i do think is that we should do what we can to level the playing field so that everybody has
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equal shot at getting a ticket. no one is entitled to a ticket, but each of us should have the same opportunity to get one, but by a second after the tickets go on sale they're all gone already. i mean, last year alone i know i tried to get tickets for springstein, for u 2, i couldn't, a lot of other people couldn't. that is the experience people have over and over again. it's really frustrating, and it wasn't always like that. it was not always like that. >> sure. >> this is a phenomenon that has exploded in recent years. >> there's an example of 2014 within a minute of the first minutes of sale one bot bought more than 1,000 tickets to u2. that's how big of a block of tickets they are buying. what would you propose to do? are there going to be limits on the number of tickets you can buy at one time? do the tickets have to be associated with the identity of a specific person? almost like an airline person?
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>> if i were a technological whiz i could describe what needs to be done. there needs to be a way to make any one entity from buying too many tickets. >> what's too many? >> four or six. it's nice to go to a concert with a group of people. certainly six or eight -- >> you don't think the bots can buy blocks of tickets one after another after another? >> i think it would certainly slow them down but you know what, i believe that if everybody involved in this process really wanted to do something about it, they could do it. and the industry as a whole is getting a very bad reputation. i mean, here you have -- in other words, it's hamilton, which is an amazing play, from what i've heard since i haven't seen it yet -- >> i was going to ask you if you had seen it. >> i was going to ask you if you had seen it? >> no. >> you know, it's tough to get a ticket, jeff. >> i think bot or no bot.
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>> they're going for like 2 grand a pop. there's jefferson, man. that is great stuff. we've got to being. got to leave it there. >> when you're at a concert or venue that has 50,000 people, you shouldn't have so much trouble getting a ticket. >> we appreciate your time and attention. new york state assembly. shares of foot locker dropping 9%. we'll speak with one analyst who says this could be a good point to get in. find out how high she thinks the stock can go from here. that's next on "power lunch."
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to help you keep rolling with confidence. go long™. ♪ the stock is it down 9% from last week. one analyst sees this as a great entry point. let's bring in kate mcshane. she reiterated her buy rating on the company. kate, great to have you with us. in the retail sector department stores have fallen out of favor. isn't foot locker like a department store of the world? why do the nikes or under armours need to go through foot locker when they can sell to the consumer? >> we think foot locker still has quite a reason for being in the world of retail. they're global. 20% of the business is out of the u.s. they have 3300 points of distribution. we feel they give great real estate to the nikes and under
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armours of the world that they can't do themselves as vendors. when you say -- >> sorry. >> that's okay. >> you say that nike is going to come out with a new line that's going to bring consumers back in? >> well, you know, there's a lot going on right now with athletic. basketball's where the problem was for foot locker during the quarter. that is a big segment for nike. they have been tweaking their basketball product, specifically the marquee basketball product. we're entering into an olympic year. there are always new platforms being introduced around the olympics. that should infuse a lot of new excitement into the sporting good retailers. >> thank you so much, kate mcshane of citi. >> are iphone prices too high around the world? apple ceo tim cook was asked that on nd tv television in india. >> i recognize the prices are high. what we want to do things that
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lower that over time to the degree that we can, and so we're looking at a number of different things. what we wouldn't do is lower our quality bar. >> so the iphone costs about $600 here in the united states but is more expensive nearly everywhere else when you factor in currency fluctuations, local taxes and everything else. john fortt joining us now. john, listen, the iphone is about $700 equivalent in india. the average income is 1400. you're talking about a device that is half the average annual income of a worker in india, but what can apple do about that? >> what it could do is come out with the iphone se, that starts at 400 bucks. >> 30% of the annual income. >> you're talking about -- which model is he talking about when he says too high? >> i think they're both too high. >> okay. >> that's why apple is trying to figure out how to bring in cheaper phones. they want to bring in pre-owned phones to put it delicately,
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used phones, and india's spent a lot of time trying to build up a local manufacturing base. the local manufacturers say, no, we don't want that. you would just flood the market with all of these cheap phones, destroy this market that we've tried to create. apple, meanwhile, trying to start software development there, trying to show that it's a friend of local innovation. it's different from china in that china it's more of a -- historically a market where there's knockoffs. in india a lot of companies have come in and created cheap indian version of things. that's what tim cook is saying. we're not going to create the india edition of iphone that's cheaper and not up to par. that puts them in a bit of a strategic bind. >> are the android smart phones? >> you can get a phone in india for 35 bucks. >> is it a smartphone? a dumb smartphone? >> yeah. >> low iq smartphone. >> it's not a phone that you would be happy to have. >> when i go and shop i see that the android, the samsung, the high end samsungs are basically
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the same as the other. >> the question is can tim cook figure out how to either bend indian regulators to his will or get cheaper phones in some other way. >> john fortt, we appreciate it. we thank you. thank you for watching "power lunch." >> closing bell starts right now. welcome to the closing bell, everybody. i'm not paula abdul, although we may be hearing from her, in fact, in just a little while. i'm kelly evans of the new york stock exchange. >> i'm bill griffeth. that would be paula abdul's "cold hearted snake" that you're listening to. the pop star will join us live on set. very exciting. in fact, kelly and i plan to audition for the new season of "so you think you can dance." we do a mean tango. >> it feels like that. >> yes, it does. >> apple is getting a bump. apple getting a bump up

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