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tv   Power Lunch  CNBC  May 31, 2016 1:00pm-3:01pm EDT

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>> on price alone for a trade it's under armour. stock found support in 36 which was historic support and level of resistance as well and nike's got a series of lower highs. does not look good. >> see you soon. thanks for watching, "power lunch," liesman with his mike on now. >> thanks, scott. beware. series of big warnings today from one of the world's biggest banks. welcome to "power lunch." melissa is out today. i'm michelle caruso-cabrera along with brian and tyler. stock gen society general listing a note called black swans that could possibly derail this market. we are going to focus on four of them, china, the french banks saying there's still a 30% chance of an economic hard landing there, britain in fears of it leaving the eu and then the fed hiking perhaps faster than expected and fears over the low ball slowdown.
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let's bring in bruins beleskey with bmo capital markets and dean maki and cnbc's steve liesman. >> what do you think? >> need to take a really deep breath. my comment, not to be flippant, duh. tell me something that i don't already know, issues that have confounded investmentors for the betterment of six months, number one. number two, we've been pretty clear on the views in the market that are in a rinse and repeat. can't get off the emerging markets commodity trade and can't seem to not wore egabout the fed, can't stop worrying about china. we'll be worried about the election which should be thrown in there as well and think volatility is here to say so this term black swan for all intents and purposes is
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overused, it's fearmongering and all about trying to grab the headline so i think what we already know is this. black swans typically historically happen when you most expect them. >> that's their definition. >> these are all known unknowns. >> right. >> so tell me something i don't know. >> right. >> we already know these things. >> when you read the stock gen note, the only thing at risk is the current sweet spot in the market. they don't know what happens next but the issue is that there's a new market structure coming because of all of these issues. what's your assessment of where we are right now? >> well, i think there's certainly lots of things to worry about, the including the things that were mentioned. i don't think in the near term the fed tightening extremely rapidly should be on that list. i think that might be a worry for a year or two from now if the fed goes too slowly now. i think the very clear message we've heard from chair yellen is the fed is not going to move a lot this year. >> yeah.
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and for the record, they actually think there's only one rate hike coming this year, steve, according to stockgen in december and three coming in 2017 so it's not like they are that hawkish. >> they shot their own black swan, is that what you're saying? >> clipped its wings. >> the argument is the fed could be something that derails the market. >> kind of look like turkey. kind of agree with brian. you started off the show with jimi hendrix, i want to quote jim morrison who said the future is uncertain and the end is always near. there's always going to be a set of, you know, to quote donald rumsfeld again and who fits donald rumsfeld and jim morrison in the same sentence, and i am still in the same sentence we have the known unknowns and the unknown unknowns. these are the known unknowns in the sense that the market is already adjusting to them and that's what significant about it. these things are being priced in now as we speak. there is a lot of talk about this issue of does the fed do
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one, two or three this year and there's an outside chance they do three. the betting is more in the two range, and it would be an uniside to do one. china's slow down already i think to some extent baked in. we will get data tomorrow. the chinese pmi is going to be a big factor tomorrow. also tomorrow on the issue of the global slowdown we get the oecd update to the global forecast and we'll see. at the same time, countervailing against that is the notion that us growth and i'll wrrap it up, three separate revisions upward. started off the quarter 2 and doing 2.7 with a strong consumer spending this morning so if you're worried about china, the salve to that is the u.s. consumer. >> you know, brian, i do wonder, and maybe it's because it is from a european bank which they put brexit on there which i get, but they don't put the u.s. election. bernie sanders coming up and trump is kind of a wild card. what are you most worried about?
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>> well, i -- >> i know you're optimistic, but if you had to say here are the things that bother me or i'm a little nervous about or would be more bullish if these didn't exist, they would be what? >> i'm more worried on the total reliance on the fed. we're taking the skittles away from the kid. >> i want to cut you off. total reliance on the fed, which -- is that the market doing it? is it the fed doing it? when you think about if the fed does a quarter in june or july which we're going to rap ourselves silly about over thener several weeks and you're advising investors for two, three, four, five-year time horizons on their investment, how much does that quarter matter at all and hoch does that quarter matter in what month it actually happens in? >> you and i have been on tv and talked to each other for a long time. unfortunately, majority of my clients that i speak with have not been in the business longer than ten years. all though know is whatever the fed does, cheat money, qe, qe,
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qe, we've forgotten what i call the circle of life, stocks goings up, earnings go up and the dollar goes up. >> rates go up. >> we're forgotten that rates going up is actually a good thing so the fed is going to raise rates, the market is going to go down. we freak out. we don't understand that we're taking away the skittles that's a good thing. we need to get back to fundamental investing. >> i'm not freaking. >> dean macmac -- maki, should freak out? >> i don't think so. if the fed were to delay and delay and delay, that's how you get a fed moving rapidly down their line. if the fed moves cautiously and gradually i don't think there's any reason to be worried. >> should we freak out if britain leaves the eurozone, the e ur? >> it's certainly something that may weigh on markets for a while. i have a hard time seeing how that's going to be a big factor for u.s. economic growth over the next year or two or even the
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u.s. stock market. there might be short-term disruption, but i don't think that's a major risk. >> ask michelle. doesn't it like happen in 2020 if they leave or -- >> there's a whole negotiation. it goes on for like forever. >> it's a discounting mechanism that they price in. >> will very price in the armageddon of the brexit if it happens? we've had some fed guys start to downplay it. >> i was in london last week, people deeply financialed and many are going to vote for leave. the e you are being damned, think it's a shipping sink and they want out. i hear that more han more. new polls out today for the first time shows leave ahead of remain so the pound is getting hit but we're all fine right now, right? >> jim bullard described it as a trade agreement, and he said -- >> it is. >> he said i'm not really going to have my vote for the federal reserve influenced by the essentially annulment of one party of a multi-party trade agreement. >> thank you. >> thanks, dean. good to have you, brian. good to have you, steve. >> mark your calendar because
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this thursday will be a huge day for oil. it is the big opec meeting in vienna, austria, and it will be the first meeting in 25 years with a new head oil man for saudi arabia. by the way, he is entering the oil bull ring with a few other countries desperate for a cut or production freeze because they desperately need higher oil prices. we're looking at you, advance la. oil moving higher ahead. let's talk about oil and opec from two sides. what's likely to happen at the meeting and how can you invest around it? everything all right. fifth black swan tripping. stuff going on on set here. lorne, you work with some. biggest names notice industry. what are you and your clients expecting from opec? >> well, it's very, very hard to forecast this. the thing i look at is the two main things will be driving their thinking. number one, people of the united
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states learned their lesson and number two, how much longer can we keep this up financially? the lesson learned here, they are trying to kill the shale plays. if we go back to 2014, at that time shale increases had caused the saudis to lose about 500,000 barrels a day in oil in the united states and then we started to talk about exporting the oil and the saudis said let me see. first you cut into my u.s. market and now you want to cut into my international market. i don't think so. they turn on the faucet and drive the price down. trying to send a message to people in the shale play. >> you're hitting on an incredibly important topic and why this opec meeting is so important which is really for one of the first times in a long time we've got -- we saw this in doha, right? what saudi arabia wants is not what the other countries or most of the other countries want. they are the big dog but they are going in with a new guy. how does it play out? >> yeah. >> that's absolutely the case. if you talked to people in venezuela. the other member nation.
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opec cartel have had their hands up since november of 2014 saying let's have a meeting, let's stop this stuff. venezuela is in such bad shape you can't find toil oat paper in venezuela and the other problem is the other countries do not have a big stash of cash like the saudis. started started out with $730 bill in excess reserve, the cash over here. what has happened and one of the things that's making them think through this is that cash reserve is declined at least 100 billion, $730 billion and it's dropped by $100 billion at least, and in addition to that, they have had to cut their internal spending by like 29% over 2015 and 2016 which causes internal problems for them so they are going in there thinking, you know, how much locker can we keep this up versus have the people in the fail play and more importantly, the people that lend money to the people in the shale play learn their lesson because if they let the pies go out, we'll
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turn the faucet on again and say you ju didn't learn your lesson, did you. >> we'll be there and try to corner the saudis. appreciate that. thank you very much. now to kneel dingman. there's the macro backdrop and let's get micro and talk about making money off of this mess. any opportunities around oil and/or opec right now? >> yeah, we do think so. we think maybe near term in opec comes out and saudi comes out and says they are going to keep pumping. may get pullback and think that production is going to start to go down and we'll continue this upward trend and we think there's a lot of ones that can turn on the spigots the quickest, in the best plays and we like a few names like parsley, diamondback and whiting, continental and the bakken. these are names that unlike the majors are able to go very quickly and add some rigs. >> my concern about parsley,
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diamondback. you probably like pioneer as well which is we keep hearing the same names. i do fear that too much money is going into just three or four of the operators that we know have solid balance sheets. >> you do seem a bit crowd but, again, the thing that strikes out for these names is, one, they are in the best areas, the permian and the bakken, places where oil wanted to be and, two, if you look at the balance sheets of these companies a lot of times investors will say look at the beta trades but you have to have money to go after the new rigs to be able to frac and add more production and these companies can do that. >> we know some. names that you like there. parsley, diamond back, the last two that you mention there had? >> a couple in the bakken, continental, obviously harold hamm with his group. >> on stage with trump the other day. >> neal dingman, sun trust, robinson humpry, thanks very much. appreciate it.
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much more on "power lunch." also why apple shares are under pressure today. plus the one stock getting an upgrade thanks to corn prices. we're not playing this music by accident. katy perry's twitter account got hacked. what is the biggest problem in the world for twitter? is it katy perry when "power lunch" returns. you'll hear us roar. & in a world held back by compromise, businesses need the agility to do one thing & another.
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welcome back to "power lunch."
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i'm tyler mathisen. here are the headlines. at the moment starbucks is rolling out new cold coffee beverages that will become the foundation for a cold bar at the company's stars. starbuck shares are down 31 cents at 54.83. volkswagen surprised with an increase in first-quarter profits. the automaker pulled down 3.8 billion for the quarter. forecasts called for a 17% drop in the wake of the company's diesel emissions scandal. the stock down today, 17 cents at 30.90. alibaba telling vendors to top selling drugs on its t-mall website because of government regulation changes. >> investor peter teal hiel is n for becoming investments likes facebook and now he's known for backing the hulk hogan lawsuit against gawker.
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we've got a lot of stuff to talk about but i'm going to throw it out there. is this the hottest topic in silicon valley right now? >> a lot of people are talking about it and a lot of people are thinking about it. i actually know people on both sides of the issue so this is a tough one. at the end of the day one of the things i'm thinking about is did they violate hulk hogan's privacy, and when you think about this in the whole debate no one is even talking about that anymore. all coming down to where the money is going which i agree is interesting. >> the reason we're all so focused on the privacy issue is pete thiel thought his privacy was violated. we as journalist talk about this, we're trained in this, the minute you're as big a person as hulk hogan you've given up your right to privacy so this is an interesting case. peter thiel is a different question. is had a celebrity? what is he? does he have a right to privacy
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when it comes to his sexuality? that's the bigger question at the heart of the whole conversation. >> i mean, i think you're right. i think the -- the debate is whether he is justified to bank roll the lawsuits against gawker and, you know, that's -- this is a question for the legal scholars and definitely i've heard an earful on both sides of this debate on whether it's ethical for him. >> lots of people bank roll lawsuits for other individuals, either because they want to invest in the possible outcome. i mean, he -- he has the money. he has one would say the motive because of his history with quacker. just sort of a question of do you like the idea of him doing something that some would argue chills freedom of the press, right, dalton? >> yeah, i think that's the debate. i don't think anyone is questioning whether he can legally do that. the question is can he morally and ethically do that and the that's obviously more of a moral
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and ethical debate than a legal one at this point and i think you're exactly right. he's able to do that from a legal perspective. >> how about this katy perry situation for twitter. had so much issues. maybe she had a really poor pass word, who knows, but when she's the biggest person on twitter with the most followers and she gets hacked and all her followers wake up to nasty messages that are supposed from her and aren't from her, how big a problem for twitter? >> i think security is a huge problem for the internet companies. every single internet company like facebook and google has the ability to make -- make their user accounts not hackable, but issue is it's very difficult for users of these services to -- to use -- use the tools to not have their accounts hacked. specifically have you heard of two factor authentication. >> yeah. >> it's a pain in the neck, right? but the fact is that's how you keep accounts from getting hacks
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is tools like factor altercation and you have huge attention from companies like twitter on, you know, do we want to make it very hard for accounts to get hacked or do we want to make it easy and convenient for guys to get back? >> you're saying they can protect these things on lockdown for the most part but they don't want to because they might hurt their customers' feelings? >> or get fewer customers because they don't want to be bothered. >> if you're facebook, do you think somebody will knock them on facebook to put their cell phone code in. >> we're that laysy. >> i'm just not going to go that extra inch. >> you know, it's an option of right now the way most people do it, they make two factor authentication an option for folks and definitely suggest for the more famous people. famous people tend to get hacked the most, but -- but at the end of the day you can't force people, you know, to have good passwords and tuesday two factor authentication and so i think, you know, it's up to the company
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to decide how aggressive they want to be in forcing the stuff. most likely in a lot of the cases someone hacks someone's e-mail address first. they hack their icloud and then -- and then they hack their twitter and others. >> right. >> i don't know the details of this katy perry case. usually if a hacker is able to hack one e-mail, they can hack everything you've got. >> do you follow katy perry? >> you know, i don't. >> i don't either. >> i am now though. >> i'm going to right now. >> yeah, yeah. >> her password was teenage dream. >> dalton, i understand you think self-driving cars are going to get here way faster than everyone thinks. i want you to be right. i don't want to drive to work. want to be able to use my phone, read, et cetera. when is this going to happen? >> i think the real question is about the legality and the regulatory environment for self-driving cars. because i live out here i actually see self-driving cars on the road all the time.
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google has permission toe drive them around mountain view and also you sometimes see them around san francisco with the humans sitting in the see and they are self-driving cars and, you know, once you've pulled up behind a self-driving car and seen it in action you're able to see that this is a very real technology and the fact is -- if they had the permission to do so -- >> do you think traffic will move bert as a result of it or move safer? >> i think it will. you won't see -- drunk driving, sleeping people on the road. you won't see truck drivers driving 24 hours a day and being really tired and you won't see road rage and people merging incorrectly so personally, yes, i do think it will make the driving conditions better, but -- but essentially what's holding back the wide scale rollout of self-driving cars is getting the finishing pieces just right. for instance, for a tesla, they already have autopilot which is effectively a self-driving car but there's obviously a lot of bugs in there and trying to improve that and the technology is pretty good at this point and
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the other thing is just getting permission to launch it. depending on -- >> permission and insurance. >> insurance is going to be a huge part of it. >> dalton? >> i think you're exactly right. >> you mentioned all the companies. one-wierd answer, who is going to win? >> i don't know. have you heard the rumors that apple is working on a self-driving car? only read about it. just a rumor. >> right. >> totally serious. >> yeah, yeah. >> everyone. i think every single automaker and internet company is investing heavily in this and this is one of the reasons why it's happening soon. this is a lot at stake and a lot on the line for self-driving cars and a lot of money to be made in this entire space. >> a lot less tarmacs in the world. don't need a lot of parking lots. >> going to redesign the way cities work. >> that's true. i know, it's going to be great. can't week. >> i think people want to drive though. >> i don't think people like to drive. you like to drive. >> i like to drive but not in new jersey. >> i was going to say. you like to drive. >> i love to drive.
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>> and when everything is at a standstill on the turnpike, that's not what you're talking about. >> no, no, no. >> that's not any better in -- in a -- not really any better. >> the drango 95. >> you can make phone calls and do all kinds of things. >> i think it will create more stress, not less. >> a good productivity enhancement. >> no, no, you're going to be stressed. >> now i'm stressed. up next, a sign of the times. the world's biggest hedge fund gets a big fat check courtesy of connecticut taxpayers and final gold trades are crossing for the day. we have the metals close on deck when "power lunch" returns. 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. i stay focused 24/7 and never sleep.
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welcome back to "power lunch." rick santelli live on the floor of the cme group. boy, there was a couple of big u-turns along the yield curve today. look at the intraday of two-year note yields, up then down. tens the same way. bunds overseas, boy, did they give itp about the same time. weak data. the markets, can't tell you where they should be priced and the fed's balance sheet and all the securities maybe mix them mispriced and credit spreads and corporates and any given moment they do reflect the reality that was lost, by the way, on this market. look at intraday on the dollar index. dollar index held and moved higher. maybe a five-day gives you a better picture of how stable it's been. it's not looking like this weekday is going to stop the fed. who is right? we'll have to see, and i can
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hi, everybody. i'm sue herera. here's your cnbc news update for this hour. more than 60 people were shot in chicago over the memorial day weekend and chicago's mayor rahm emanuel taking notice. >> it's unacceptable. memorial day is a time when we begin our summer. i've got a call for tougher gun laws, for judges who make sure that people who are repeat gun offenders do not get light sentences. >> 15 people, including four people were hurt when a north carolina school bus went down an embankment and into a house. it's not clear what caused the driver to lose control. none of the 15 injuries is considered life-threatening. crews had to use two large tow trucks to remove that bus. there's a flood emergency in texas as several communities are under mandatory evacuation orders this morning after days of torrential rains. rivers are expected to reach
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some of their highest levels in decades. the death toll from the floods is now up to eight. >> and adel wants concert goes to look at her with her own eyes instead of through the camera lens. a video posted on twitter shows the singer singling out a woman at a concert asking her to top taping the performance. she castigates the woman to enjoy the conference in real life. >> that's the news update this hour. michelle, i'll send it back for you. >> final gold trades for the day. heard rick santelli talking about the strength in the dollar. not giving a lot of direction though to the metals complex. gold is doing barely anything, higher by 90 cents, in positive territory, 1217 per ounce. platinum and palladium higher by 1% and platinum is essentially flat and silver and copper are lower. silver lower by 1.66%. two big companies with two big headaches, apple and boeing. josh lipton is looking at a report that apple may switch the
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iphone to a much longer life psych. in other words, people don't buy it as often. let's start with philly will bow because he's got a big issue on boeing. >> boeing shares under pressure because of more problems and more delays that are expected when it comes to the air tanker refueling program. remember, this is a program that boeing fought long and hard to win because they need new air refueling tankers in the air force. they won that project a couple years ago. now the air force on friday issuing a statement saying that the tanker has more delays. the new tanker that's being developed has problems refueling other aircraft in the air. it's not as though it's never going to be fixed but it's further problems with a prom that have dogged boeing over the last year and a half getting the program right. a lot of potential and considering the technical issues and the still aggressive flight, test and production schedule we should not be surprise federal there were additional delays
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ahead. what are some of the problems that we've noticed in the last couple of years since boeing won this contract? look at the charges that boeing has taken because of problems developing this new tanker. you go back all the way to 2014. there have been three charges totally almost $1.5 billion, so you might be saying to yourself why is boeing sticking with this program? because it could be incredibly lucrative. if ultimately they can get these problems corrected and they can get the production schedule up to speed, you're looking at the potential for 179 planes. refueling tankers that boeing could be building which could be worth up to $80 billion. but that's once they get all the problems fixed. for now the air force is saying we've got to make sure these planes did refuel other planes in the air and because they are having that problem that's why shares are under pressure for boeing. back to you. >> off by more than 2% at this point. >> over now to josh lipton on a report that apple may switch the iphone to a longer life cycle.
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josh? >> well, michelle, apple fans may have to wait longer for big changes to the iphone. that's according to the nikkei which reports that apple will likely now take three years before full model changes. traditionally, of course, major changes come every two years driving millions of users to buy new phones to get the latest improvements. that will mean that this fall we would typically see a major upgrade with the iphone 7 but the nikkei says the iphone 7 will boast minor changes such as improved camera quality and battery capacity. japanese paper says this change to the product cycle is happening because in part smartphone functions have little room left at this point for major enhancements. apple declining to comment on this report and shares are down less than 1% in today's trade. we know though that stock has rebounded recently, up more than 10% in the past two weeks with an assist from berkshire hathaway which carved out a stake in the tech giant, but
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btig's walter piacek, an apple bull tells me this claim of a three-year circle could have implications for investors. big upgrades are big sellers. that's not going to happen as often going forward and piacek said analysts and investors will have to rethink whether that iphone franchise can indeed return to growth. tyler, back to you. >> josh, thank you very much. the dow and s&p 500 have turned lower as we close out the last trading day for the merry month of may. can investors make money in the market over the summer. kevin norris joins us and president of univest and michael farr is president of farr, miller and washington. michael, let me start with you and i think, kevin, you have the same answer here, you think stocks overall are pretty richly priced? >> i think show, tyler. i think they are certainly fully priced. we've seen markets now year to date up 3.5%. they are up over 15% from those
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lousy february lows, so, yeah, we're trading up near market highs and if the old rule is to buy low and sell high, even though things are feeling a bit better, this is not low. pick your spots and i think there's money to be made but you have to be a little more careful with the markets at these levels. >> kevin, your view if not fully valued at least fairly valued which implies not a ton of movement higher over the short term. >> not without some kind of a catalyst to drive prices higher. i agree with michael. it's hard to find value out in this market, and -- and we're at all-time highs near the s&p, you know. i think you're more focused on growth picks than traditional value picks. sort of the value is hard to find right now, so, we're fairly valued and we're going to need a catalyst to drive the market higher. >> and still though obviously it's a market of stocks, not a stock market.
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you've got a couple of choices, kevin, in your areas. cvs and amgen, two sort of branches of health care, i suppose, you could put it. >> yeah. different branches of health care. obviously cs is the retail pharmacy market with company management which did really well and helped drive earnings and beating estimates. amgen grew revenue and earnings per share by double digit rates, has a strong pipeline of new compounds in the pipeline. >> right. >> so we like both of them and the valuations are compelling. >> michael, you like bb&t and abbott labs. quick thought on those? >> abt is the symbol on bbt. bb&t, look, banks i think if you're looking for cheap somewhere in the marketplace, even though they have gone up since i've first made that call on "nightly business report" with you, tyler, bb&t is trading at 1.1 times tangible book and a 3.1% dividend and interest rates
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goes up and the fed does things here. i think you'll see the stocks benefit. abbott labs have made a shift towards the equipment, towards the stents to defibrillators and also have a nutrition business. they sell ensure and similac and things like that. stock is 16 times next year's estimates, a 2.2% dividend. if things are fully priced, these guys are still earning money. they are growing earnings and a good dividend and great balance sheets. i think it's a good place to keep some money. mi guys, thanks so much. >> last week we with talking about the impact of a quarter point rate hike hand while newsworthy it would only take us up 25 basis points and probably wouldn't matter much. about ten seconds later i got an e-mail saying, brian, i love
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you, but you're wrong and i added the i love you part. matt mayor daley joins us now, equities strategist at miller tabak. >> i think i said with all due respect. >> it was it was a very polite you're wrong. >> and i could be wrong as well. i've been wrong before and i'll be wrong again. but thing that we have to consider on this is not just obviously a quarter of a point. what will that do to business? it will raise their cost and have an impact on the supply and demand of what's going on in the stock market. look at buybacks, most have been fueled by debt and as the rates go up the cost of -- of buying back the shares is going to move up, and you have to look at what happened since the first rate hike in december. even though first quarter buybacks were very high at a record and the new announced bye backses, from the january 1st, through the first four months of the year is down 50%. just think if we have another rate increase how is that going
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to impact how much shares you'll buy back and a lot of people do feel the buybacks have been a big -- very important in the supply and demand situation, but the other part, of course, is the amount of leverage. we have a huge amount of leverage in the market, new york stock exchange market accident 1 are 50% higher than it was in 2004 than it was when the last rate tightening cycle began and that's come off and just look at what the that leverage has done to the marketplace. since 2011 the economy hasn't improved much at all. 2% gdp growth or lower, earnings growth low single digits until recently when it's been negative. we know from 2009 to 2011 the economy improved and the stock market went up with it, but the -- none of the fundamentals have really improved and what has gone way up is the new york stock exchange debt has gone up 93% since the fall offy 2011, so as the cost of that margin gets
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higher that will have to be unwound than will, again, put a little pressure and take away some of the buying power it's had in those two areas >> you make a compelling argument but i will say this. as the market is, as michelle said earlier, a discounting mechanism, if we are expecting a rate hike about, half the market will, either june or july. to me the date doesn't matter much. why haven't we discount what had you're talking about? why is the market, vix at 14 and haven't seen a stock market decline? >> well, that's a very good point, but my argument is that we saw the same thing in december. i'm sorry, if it was even more telegraphed in december we would have a rate increase. the stock market held in there and rallied a little bit in serb parts of dibz and it wasn't until after those -- the rate increase actually kicked in and the costs actually went up that the market started to sell off. obviously the price in oil dropping played a very important
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role and most of the drop took place before, not afterwards. >> with all the high frequency traders, these things don't kick in until the actual rate hike takes place so that's why we want to get a similar thing. in the past it's a discounting mechanism and nowadays with all the a lg os and things it's changed a little bit. >> matt mayor daley wi-- matt maley with a very nice you're wrong. >> why a hedge fund is getting a $22 million check from the connecticut taxpayers? are you kidding me and donald trump detailing his charitable contributions to veterans a short time ago but do the numbers add? that's coming up. stick around. %
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welcome back to "power lunch." i'm tyler mathisen. donald trump blasting the media
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detailing all the money he's raised for veterans groups. let's get to cnbc's john harwood with the details. this was supposed to be a -- a news conference where he talked about his donations but then it became -- it went another direction, it is so often does. john? >> reporter: became more than that, tyler. one thing we know with donald trump is even when he's winning, and he's now the presumptive republican nom know, a he is extremely thin-skinned so he held a news conference today to detail what he said was $5.6 million in donations to veterans groups. that after questions were raised in the press. he had talked about $6 million in donations earlier this year, but he went off in that news conference not only on his critics in the press but also on fellow republicans, and he said everybody better get used to it. >> the press is so dishonest and so unfair. this sleazy guy right here from abc, he's a sleaze. has been very unfair and mitt
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romney looks like a fool. bill kristol is a loser. she was not nice and i was fine just a little bit of a jab, but she wasn't nice and you think i'm going to change. i'm not changing, including with her. >> now that last point is significant because fellow republicans, they don't mind him going after the press, but many republicans are concerned at his propensity to go off on other republicans as he tries to unite this party. he went off in new mexico at governor suzanna martinez who is a -- who is a prominent latina politician, the kind of person that republicans need to ingraciate and use to expand their support among both women and latinas and donald trump has some challenges and republicans are not going to be reassured by that criticism of everyone from romney to martinez to bill kristol and others. guys? >> john harwood, thanks very much. john harwood reporting from washington.
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>> michelle. >> tyler. the world's biggest hedge fund is getting a $23 million check from the good people of connecticut. the state of connecticut tries to retain one of its wealthiest taxpayers, plus the people who work at the company. the financial aid includes $5 million in grants and a $17 million loan that will be forgiven if bridgewater expands its workforce. cnbc's kate kell and robert frank are here with me. so in this era where everybody wants to tax the super rich, they are cutting a check to the super rich, how does this happen? >> they are held hostage to the high income taxpayers just like new york, connecticut, new jersey and california and the reason is the income is being concentrated among the very top and the states have all increased their income tax rates for those at the top, where top 1% in connecticut, like many states, pay 35% of the income tax and just a few hundred in connecticut pay more than 12 pass and ray dowly who paid $1.4
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billion last year pays tens of millions a year in taxes. >> this is not the biggest employer in the state of connecticut. you've got the government and yale university, espn. bridgewater has 1,500 people, but they are probably highly paid individuals who pay high income taxes, state income taxes and some of the remarks by the economics minister of the state were telling. she talked about the fact that you have people raising families there, you know, giving back to the local community in various ways when they are residents as well as workers. >> another side to the story. when you look at the connecticut budget over the last 15, 20 years it goes up every single year. by their own admission, their expenditures have outpaced their revenue by 3% every single year since 2007. this is a state that lives beyond its means. it had a gold rush, right? every hedge fund known to man, everybody goes out there, and they lived as if that revenue was going to be there forever. >> now everyone is going to cry
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corporate welfare. why are you writing a $22 million check to a guy and a company who made $1.25 billion last year and the fact is because of their spending and because of what's happened with incomes they are dependant on this 12%. they can't let him go. look, we're competing with other states and let's face t.dollars matter. >> you said, you've got the optics of this versus the reality of the fiscal situation in the state. a couple years ago bridgewater wanted to move to stamford and the project was scuttled. bridgewater may not stay in the state if we can't figure out a way to make it more beneficial to themselves. they will make renovations and stay. >> it's more about the traders and jobs. >> when it comes to a policy perspective, there's all the talk you've got to broaden a base. when you're a state highly
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reliant on the state, the rich can move and by the way, the income. rich is highly volatile. >> yeah. >> capital gains, et cetera. california has very, very bumpy revenue because they rely on capital gains. >> and the most mobile. >> and it's the same with film production and lots of other industries. >> exactly. >> that can get state subsidies if they shop around so connecticut is trying to stay competitive and i think they are saying darn the optics right now. >> we need the money. >> thanks, guys, laid and gentleman, coming up next, why investors are loving dollar deals, work uniforms and perfume? a look at today's all-time high club when "power lunch" returns. the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope.
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french riveria may be a shadowing and black cloud over the luxury housing market. "power lunch" is back in two minutes. it's more than a network and the cloud. it's reliable uptime. and multi-layered security. it's how you stay connected to each other and to your customers. with centurylink you get advanced technology solutions, including an industry leading broadband network, and cloud and hosting services - all with dedicated, responsive support. with centurylink as your trusted technology partner, you're free to focus on growing your business.
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they are. do i look smarter? yeah, a little. you're making money now, are you investing? well, i've been doing some research. let me introduce you to our broker. how much does he charge? i don't know. okay. uh, do you get your fees back if you're not happy? (dad laughs) wow, you're laughing. that's not the way the world works. well, the world's changing. are you asking enough questions about the way your wealth is managed? wealth management, at charles schwab. bump back to "power lunch," everybody. hope you had a good long
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weekend. we've got a warning. the high-end housing market, the super-duper high end market. >> these are houses i'm not worried about this. >> i'm not really worried about this problem. >> a penthouse problem. >> rpp, rich people problem. >> record number of homes priced at $100 mill twron or more and very few are actually selling. a new report from christy's international real estate says 27 homes around the world priced at $100 million or more. priced up from 19 last year and when you add in whisper listings, the ones offered privately, there could be more than 40 to 50 homes to sale at the $100 million mark. the last time we saw a boom like this was in 2007 and 2008 and remember what happened there. most of the homes failed to sell or sold at a fraction of that price. anyone can stick a $100 million price tag on their home to get attention, a lot do, and actual sales of nine-figure homes, that's pretty rare. only two broke that $1 million market in 2014 and since 2011
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only 15 homes around the world have hit that nine-figure mark. seven of the ten right now are in the u.s. including this home in florida listed for 159. expected to be listed in november and the "playboy" mansion listed for $200 million and more on the way, many speculative homes like this one in l.a.'s holmby hills listed for 150. 38,000 square feet with a club, a bar and disco. >> looks like a hyatt. >> somebody built that on spec? >> yes, wow. >> another spec coming on the market in bel air for $300 million, over 100,000 square feet listed at $500 million. the second most expensive and my favorite the bubble palace. >> aptly names. >> that's pierre cardin's pink mansion on the french riveria being offered for around $450 million and talking about
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penthouse problems, this is the penthouse at the property in monaco. in new york, just news in the past couple of weeks, an apartment in new york at central park south, a brand new building, not even finished yet but they are offering the penthouse at $250 million. >> what does this portend for other houses that are lower priced? does it suggest anything, or is this such a special market? >> i think it suggests that the luxury housing market which led the recovery and was led by the very top of the market became so delusional with a lot of these speculative investor driven homes priced at and with a lot of the costs at a near $100 million that someone is going to be disappointed. >> there are going to be tiers at the end of this, guaranteed. >> whoever built that -- >> if you build a $100 million spec home. >> yeah. >> you've got some internal
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fortitude. >> yes. >> and i tried to say that in a family friendly way. >> yes. >> exactly. >> but it's a big warning because, again, the last time we saw this, it's very similar to what we saw. we all know how it ended. >> the bubble house. >> yes. >> says it all. >> unpleasant and ugly, that house. >> yeah. >> oui. >> diana olick tweeted out a few minutes ago, the average home price, not the super bubble mansion, is higher than 2006. >> the average home price in the united states is. >> always fun. >> those prices may be higher but stocks are fading after a very solid start. the dow and s&p losing their gains and the nasdaq trying to hold on, higher by more than three points. a gain today would be its fifth straight. that's the first time that's happened since mid-march. boeing and disney are the biggest drags on the dow shaving off about 25 points between the two of them. china's shanghai and shenzhen
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indexes rallying 3% overnight. no economic news. instead, the rally appears to be tied to the very political battle over whether china's two main lapd stock indexes should be included in some. world's biggest exchanges. bob pisani joins us on the nyse floor with more on this. bob? >> hello, michelle. the worm's largest index will announce whether they will assume stocks from china's indexes there. he's no stocks from mainland chicago, and china's mainland stock markets are the second largest markets in the world after the united states so inclusion of mainland china would greatly increase the weighting of china in many mutual funds and etfs, including the eem, the biggest emerging market etf in the world. the problem is a lot of fund managers do not believe that china's mainland stock market is ready for primetime. they are pushing back on msci telling them maybe they should be putting off a decision. one problem is the endless trading halts.
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remember china's stock market dropped 20%. that's a big problem. if you're an index fund or a mutual fund and you get redemptions. now overnight the shanghai and shenzhen stock changes said they would dramatically limit the amount of time the stock can behold and maximum. that's a ridiculously long time and at least a step in the right direction. an announcement expected by june 14 and a msci has included u.s. listed chinese stocks and their indices. the first half was on december 1st and the second phase is tomorrow and a lot of action at the close. this msnbc we can expect very heavy volume and some. big china stocks listed here so watch for action at the close in alibaba, baidu, jd.com and others with already big volume. big deal, michelle. bottom line, china would be much heavyweighting in the global indices if this goes through. >> stay with us, bob, because we want to discuss is china's stock market ready for the primetime
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and being included in that index? joining us is the president of obeweiss asset manager. good to have you here. you heard what bob is talking about. should a country with stocks halted for a maximum of three months, do you think that's a short amount of time be included in a major index where so much liquidity is needed? >> ms cy is in a big dilemma. they make benchmarks that are supposed to be investable and it real isn't exactly investable and on the other side they have a challenge to be relevant. if you create an emerging market benchmark and exclude what otherwise would be a good 20% of the benchmark you have a problem so, you know, look, i think what you're probably likely to see is a gradually phased in overtime. hard to ignore the indices as part of a benchmark but it's unlikely they will go full hog in. you'll say a phase-in of 1% to 5%, see how it works and give china time to relax some.
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restrictions causing issues right now and over a period of several years i think you'll see inclusion. msci benchmark. china, a really good thing for investors in china. >> jim, tell me, would you be god headlong into this market when you know they can halt a stock for um to three months? >> they can, so you have to think about what are you getting for that so, yes, i would, if i didn't need liquidity because of where valuations are right now. i would be the buy china just because it's going to be included in a benchmark and would buy it because of growth rates, despite all the troubles, growth rates are among the fastest in the world sore select sectors of the chinese economy. it's really hard to ignore the growth numbers and more importantly it's hard to ignore the valuations relative to where they have been. seen much more attractive reasonable valuations right now. >> bob? >> wouldn't you say this overall is a good thing and already we're seeing the threat of msci leading them out and prompting china's stock market regular
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lators to say, okay, here's what we're doing. in other words, it's prodding the chinese authorities to be more responsive to the world needs and further the process of opening up and bringing in modern markets. obviously not far enough but don't you think it's prodding them clearly to do something? >> i sure do. i mean, it takes time sometimes for people to get on the same page. besides the trading halt, a couple other issues they have to work on and what is what's called the investment system that restrict foreign ownership and if they can allow foreign entities to buy without the system that would be a really great way. >> what jim is talking about like a rationing system. not everybody can buy in the mainland. have you to ask for permission and wait for a very, very long time, and it speaks to the same issue of lack of liquidity and also a big uncertainty. you don't know if you're a brokerage firm, you would like an allegation to that market and you sit and you wait and you wait and you have no idea when it's going to come as one.
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issues. >> that's right, that's right. >> and then the other one is repatriation of profits once they are there. make money, comes out of the country and doesn't do a lot of good. look, there are challenges, but i think you'll see step-wise movement and as you see a small slice going to the indices, like you said, it really prods the regulators to go all the way in to make sure that they can get the index. remember, this is going to be 20% of the benchmark and china at roughly 45% of the emerging market benchmark when we're all done. >> and this will make them even more reluctant to engage in more radical mishures like any kind of currency controls. >> i don't know that you can say that. that's the thing. i'm not sure. when stuff happens hand they get very nervous. they have mailed up the rules as they went along, bob, so i think that's one of the bigger issues. >> completely agree. >> the only thing we can have is the bringing them into the world community has a cost and the costs are instead of regulation we all agree on, including not
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having capital controls, this is the leverage the global community have with them and they are exerting it knew in a very direct way. >> sorry, jim. got to go. thanks for having you on. got to go. >> tyler. despite mounting expectations for a rite hike the markets remain on track to end the month higher. the dow by the slimmest of margins. between while, volatility down this money so where is the fear and what could derail equities? got $4 trillion of advice from our two guests, a senior macro strategist at state street with 2.5 trillions under as esmanagement and the senior equities market manager with 1.6 trillion in assets. welcome to both of you. let me begin with you, scott. a couple of guests were on earlier today who see the market as either quite fairly or maybe even a little too fully priced. do you see it that way, or is there still more room to
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levita levitate? >> tyler, i don't see it as fully priced. there's a decent gain in the s&p. from here i think stocks have been basically trying to find fair value since the march '09 lows. we're a lot closer to it than we were a year or two ago, but at least in our opinion based on the work that we're doing, valuations are absolutely not stretched and we're looking for the market to finish higher than when it was right now. >> lee, we're almost -- we're five months into this year. do you expect the market will end the year higher than it is today. >> i think it's a very close call, i'll be honest. there's a number of challenges. the fed is one and the market is starting to price a move more likely june rather than july but how is it so hard for the markets to price the move and they are looking at the same
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data. in they are -- i think if that's the case that doesn't go well for stocks going forward. >> lows. day for equities, the dow slipping, down now 140 points as all but two of the dow components are lower right now. scott, where do you see pockets of opportunity, and why don't you respond to what lee sees? >> tyler, i think for the last six weeks we've been consolidating the big gains from the mid-february lows, so, you know, down at 2010 in the s&p is huge tim call support, in my opinion, and then, of course, the record high 2134 intraday. that's -- that's there, so we've been banging around in that range. i think we're seeing a lot of negotiation. you know, one day stocks are higher, attributed to higher oil prices and the next -- the next day oil prices are higher and stocks are down, at beauted to higher oil prize, so it's a lot of noise in here. i think what's happening is people are starting to become
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comfortable that, hey, the world is not coming to an end, chinese growth is not going to fall apart and u.s. growth is slow but -- but -- but pretty dependable, and i think really what the market is telling the fed right now by the levels that we are at is, hey, you can get away with one here. i think there's going to be one hike this year. we've felt the highest probability was in december and, remember, june and july both have press conferences. they are only going to hike rates when there's a press conference. they are probably, if they are trying to prep us, it's for july, but i think the market is saying, hey, if you want to pull the trigger here you can get away with it. >> i knew there was a press conference in june. i didn't know there was one scheduled in july. i have to check that. >> there's two meet national a row. this is the only time all year. two meet national a row with a press conference. >> i'll take your word for it then. >> okay. >> lee, if i want to protect what gains i may have made already this year but still
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leave room for the possibility of maybe eco-ing out a little bit more, what should i do right now? >> that's a very good question. i think a cross-asset class, very difficult for me to find something that's very attractive right now. we've seen a bounce in treasury yields. my own veeld is i think treasury yields will continue to grind lower and the bounce we've seen will be relatively short lived. i'm reasonably pessimistic on the outlook of growth for the rest of the year and i think we keep chugging along and i'm not as relaxed on china as perhaps your other guests. data for april has started to turn down again in china. q1, yes, we saw the economy stabilize and bounce back a bit because of a huge increase in lending again. i'm not convinced we're out of the woods there either so i think there's enough concerns going forward that makes me look towards treasuries. i think we'll see ten-year yields grind lower over the rest of the year. i still don't think we've seen the lows for yields this year so
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i'll be looking at it again. if you've got gains so far this year, i'd be looking to take a fairly safe approach for the next few months and see how things pan out. yes, it seems like the fed want to go, not convinced they need to, but looks like they want to. i think it's only one this year, but i think there's still a lot of trials and tribulations coming this year yet. >> all right. folks, thanks you very much. lee, scott, appreciate it very much. a guy named lee scott used to run wall street. >> thanks, ty. >> jackie deangelis with breaking news. good afternoon. oil prices after being up to 50.10 turning negative because of some of the comments the uae i'm minister made in advance of the opec meeting on thursday saying that the market has been correcting upward and headlines out there indicating that he said he was happy with the state of the current oil market. that's been the big question as we head into the opec meeting now. even if there was progress made in doha do we in fact need to see opec and other countries
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trading around $50 a barrel. seems to be plenty of support here. this will be a very interesting meeting as the members get together and start to trickle in and make comments about what they are individually as countries seeing in the oil market right now but, again, a close over 50 today would have been key. we didn't get there. it does show you that the market has potential to move downward on this meeting if these producers don't take some action. of course, remember the saudi arabians were making a lot more money when oil was at $100 bucks. at 50 they were doing better than when oil was near 26 this year. tyler? >> brian, did you want to jump in with a thought? >> i think it's interesting. i'm waiting to see if there's a move on stocks. ing our producer justin solomon who is awesome is there now. >> in vienna? >> the oil ministers are beginning to arrive and we're starting to get trickles of comments. i want people to understand how it works. the meet is thursday. >> but the pre-meetings where the sausage is made.
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>> in vienna, that's very appropriate. >> i said it without thinking. >> you opened the door for me. so the ministers come in. they stay in different hotels, and it's always kind of a trick who is at what hotel, right? where are you saudis and iranians staying and iraqis staying because you are trying to find them. >> sawedries in motel 6. >> in a saudi-owned hotel. >> stay with the team, you know. >> why not. >> they do stay with the team and there's a new saudi oil minister for the first time in 25 years who is seen really as just a proxy for the king and i want the market to understand what may happen in the next day or two is we may get burst headlines coming out of nowhere and you're thinking where the heck is this coming from, because somebody, maybe us, cornered an oil minister somewhere and got a comment. >> in vienna. >> but the big meeting is thursday. >> okay, folks. thank you. >> is that helpful at all. >> jackie, thank you. the markets are taking a dip as you can see. there are the industrials, down
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a little bit on the -- on the month now. they have turned negative. s&p and nasdaq looking to safely hold on into the green for i think it will be the third month in a row for the s&p. dow, s&p and nasdaq, lows of the day right now. we'll be back. you both have a perfect driving record. >>perfect. no tickets. no accidents... >>that is until one of you clips a food truck, ruining your perfect record. >>yup... now, you would think your insurance company would cut you some slack, right? >>no. your insurance rates go through the roof. your perfect record doesn't get you anything. >>anything. perfect! for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. and if you do have an accident, our claim centers are available to assist you 24/7. for a free quote, call liberty mutual at
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switch to liberty mutual and you could save up to $509 call today at see car insurance in a whole new light. liberty mutual insurance. man 1: i came as fast as i man 2: this isn't public yet. man 1: what isn't? man 2: we've been attacked. man 1: the network? man 2: shhhh. man 1: when did this happen? man 2: over the last six months.
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man 1: how did we miss it? man 2: we caught it, just not in time. man 1: who? how? man 2: not sure, probably off-shore, foreign, pros. man 1: what did they get? man 2: what didn't they get. man 1: i need to call mike... man 2: don't use your phone. it's not just security, it's defense. bae systems. welcome back to "power lunch." stocks are moving lower today.
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they are off their lows and it's still down 145 points for the dow jones industrial average. the nasdaq is lower by a little more than six and the s&p is lower by 10. when you look at what's hurting the dow, we told you earlier, boeing and walt disney weak all day for a couple of issues, mcdonald's and home depot, energy complex, decline in oil and a lot of consumer companies lower as well and the only thing in positive territories, caterpillar and verizon. when you look at monthly performance, semiconductor stocks are some of the strongest groups this month, up about 8%. there you can see they are lower today. nvidia is leading the way in that index. that stock is up a whopping 30% in may on track for its best month since january of 2011. that month it gave 55%. check out the xme, the spidr. that's in positive territory and telecom, some of the telecom stocks were in positive territory and conley 150u78er the staples lower at this hour by .75%. one thing almost always
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happens when the federal reserve raises interest rates. banks and financial stocks go up. they not only like higher rates. often they need higher rates and here's the problem. many bank stocks have already had big moves up in the past month, jpmorgan, bank of america and citi bank have gained 15% in the past 90 days. let's bring in paul miller, managing director at the equity market strategist and the reason i bring up these stats is a lot of people think the federal reserve is going to raise rates. i should buy some of the big bank stocks. is it too late? >> i don't think it's too late. i think it has more running to it and what we're concerned about in the long term is a lot of the roes are coming down because the yield curve is not steepening, and that's what they need and 25 basis points is not what they need. they need 100 to 150 basis points with the steepening of the euro curve. we're not seeing that. people are getting excited and
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you might see this rally here a little bit and just like, you know, when the banks rallied in december, they all traded off in january and february. >> do you expect the recent gains that we've seen and by the way, there's some gains a lot bigger than the ones i've mentioned along the smaller and regional banks are overcooked to the upside and are likely to reverse? >> one the things you're missing, really sold off in january and february and you're still trading where they were back in november and december so they are still below that level and they have come back, the first quarter this year, especially february, was pretty bad for the institutions, yet they have come back. people will get excited about the fed raising rates. they like it and want to hear the commentary. are they going to do it again before the election? do it one time after the election. that's what they want to hear and however they just want to think that the fed will get rates up at some point but it will take 12 to 24 months to really make a material impact on the banks so we think this is going to be somewhat short lived and you probably trade off after the fact. >> eric, you have buy ratings on the big names that you mentioned
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and you obviously feel that the 18%, 19% gains of dealings in 80 days is not all that there is. we think the largers banks will benefit the most from fed increases and we point to q1 results in which we saw citi group, jpmorgan chase and bank of america make a lot of extra money from short-term interest rates so that really helps them a lot and i would also say that a lot of the banks did not fully participate in the large upswing that we had since mid-february. there's plenty of good names out there that seemed to have missed the rally and investors should take a good look at why those names have not yes participated. maybe we're overlooking something. >> such as? >> well, i think something like people's united, that's a very net interest margin sensitive bank, which it has not really rallied and then there's plenty of other regional banks, key corp, mnt which has not gone up as sharply as some of the other
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banks. >> eric and paul, a good discussion. guys, just two weeks away from the fed. thanks, we'll see you soon, i'm sure. >> thank you. >> well, if this keeps up, we may soon have a new richest person in the world, this being the incredible recent run in the stock of amazon.com, another all-time high today. the fourth time this year that it's done that, but is there room in amazon for your money. we'll find out and debate it coming up.
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well, stocks made a big u-turn lower in the past half hour. bob pisani watching it all from the floor of the nyse. what was the banana peel, bob? >> take a look at the s&p 500. a real problem around 2100. every time we started in positive territory, you see it down late in the day and most of this is due to the lower oil we've seen. take a look at oil intraday. positive earlier in the day. we turned negative a little while ago and can you see here that moved into negative territory. the xle, the big energy sector, etf moved down in conjunction with that and right now that's most of the problem that we've got. tyler, back to you. >> you know, bob, it's an
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interesting way to go out for a month that had been looking pretty good. certainly for the s&p and nasdaq. the dow a little bit -- a little bit iffy. >> yeah, but it looks like maybe people are dressing up their polls of and taking profits and money off the table, i don't know. >> what you've had here is a bit of an inversion, so at the start of the month the big gainers had been energy stocks and industrial stocks and material tsx and they are actually the ones that lagged a little witt in the month of may. the big gainer has been technology stocks, believe it or not, so we had double digit news and big names like nvidia on the month so that was the group that was lagging, so i think we'll get a little more reversion and to me that's very healthy. when i see laggards doing better pulling back a little that's a healthy rotation. >> what's the biggest driver right now, all the talk about the fed or did we play that out last week, priced to see the market move higher despite the greater expectation that something is happening in the
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summer. >> yellen's obvious comment that we're really looking to do it and the adds of the june or jewel rite hike are higher than they have been in a riley and the markets are reflecting the expectation that number one the economy ask improving and number two, i think there's some expectation that we'll not see some dramatic spike perhaps in treasury yields, that demand worldwide for treasury bonds is so strong that any natural hike that the fed may have will be offset by the increased demand for the treasury bonds and maybe health in the bond market as well as moderate healthy economic stats. >> what makes it interesting if they start raising on the short end and the long end doesn't move you get to the point. >> right. >> had people ask in the past, is the fed going to push the yield curve and i hate to get so wonky like this into inversion which is usually a sign that maybe there's a recession coming? >> yeah. >> when money is cheaper in the future than it is right now, that's usually a bad sign. >> highly unlikely, and i'll tell you why.
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people i talked to, any spike up you see in, for example, 30-year yields, i think it's going to be met with a lot of buying. there are people out there in the world desperately looking for any kind of yield they can fine. certainly a safe place to find. it look what the inversions of the negative rates that we're seeing in japan and parts of europe right now. i think people are trying to flee that, and i think the united states talking bin creasing rates. that only makes our bond market more attractive. >> you know, box and i know we talk about higher oil prices tend to be good for the overall market and have to be careful and more of a point than a question which is oil is up 7% in the month of may but the oih which is a big oil services etf is the worst performing sector etf this month so it's down 7%. >> right. >> so we shouldn't assume, correct, just if oil goes up everything is going to rise with it? >> that's because there are late plays, the oih outperformed oil earlier in the year so when oil was sitting mid-30s, everybody was buying all of those sectors, the osx and the oih were all --
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the xop, were all being bought very aggressively and they outperformed. those people go in and buy that stuff real early. now, i don't know if we're too early or late on those plays but they are definitely playing a little bit of catchup now. >> bob, thank you very much. >> you may feel better on a beach in hawaii but we feel better with you at the new york stock exchange. >> we need him. >> you know who else we need is jackie deangelis because the oil market is getting ready to close for the day and she's at the nymex. jack? >> waiting for the final settling price here but it looks like it will be close to $49 a barrel so a big reversal for oil prices intraday. we were over 50 and came down and gave back all the gains and turned negative, and that was on the comments from the uae oil minister we talked about before, talking about the state of the oil market. i believe that we have those comments for you. >> as you know we need and we review so nobody is going to toll you what we're expecting from the meeting before we meet,
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that's number one. number two, we are optimistic more than anything. >> optimistic. >> and we have seen that the market is being correcting upward. >> the uae oil minister optimistic about the correction that they have seen in the market. as you mentioned, brian, earlier, as these ministers start to arrive, they will be making comments. the nigerian oil minister also arrived and did not give the media any comments about what he's seeing in the marketplace and this meeting on thursday certainly is going to have an impact. can you see here if there's no action taken from opec, the market still feelings that there's too much production out there and these prices could certainly go lower. on deck this week, other cat lifts as well. on thursday the department of energy inventory report. delayed because of the memorial day holiday and jobs friday that. couple pact the dollar and that could take oil prices lower as well. to the upside, we've seen a boost in demand. that's been keeping the price supported around 50 so u.s. production has been falling off as well and people have been
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worried about the outages, but it appears that things might be getting back on track, at least in canada. some of that production is coming online so a lot of factors when it comes to the oil price. >> jackie, thank you very much. let's now go to sue herera for a cnbc news update. sue? >> hi, ty, here's what's happening. presumptive republican nominee donald trump says he'll continue to attack fellow republicans who do not endorse his campaign. he made the comment at the end of his news conference this morning in new york city. >> if somebody is going to say a little bit negative or a lot negative about me and if they happen to be republican, i may choose to hit them back, not always, not always, but i may choose to hit them back. >> the white house says it strongly condemns nk's failed missile test calling on the country to refrain from actions that raise tensions in the region. the u.s. military addressed that launch that took place on monday. israel's new defense minister avigdor lieberman
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attending a welcoming ceremony. he's a west bank settler and one of israel's most polarizing politicians. amber heard, johnny depp's estranged wife have given lonks police to support her account of alleged domestic violence involving the actor. that's according to her lawyers. heard obtained a temporary restraining order order against depp on friday and filed for divorce on may 23rd. we'll keep you posted on too one. that's the cnbc news update this hour. >> interesting story there. >> ty, back for you. >> flying cell phones and more. sue, thank you. >> you're welcome. >> amazon stock hitting had new all-time highs, up 1% on the day as the rest of the market goes lower. how much higher can did go in the long term? we'll tell you what the charts say next.
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great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. heart. time now for street talk, our daily check on the analyst calls that we think you need to know about. stock number one, marathon oil, mro, piper jaffray up grading it. more bushel on the opec/u.s. oil
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outlook for the next year to 18 months. yeah, many oil companies already discount considering, in other words, have already gone up. the recovery in oil prices and many are based on $65 a barrel in some cases and marathon still looks good because of its equities offers recently and their target on mro bumped to $16, about 20% upside and the same call the analyst reiterates his pick, suncorp. >> tough year for mro, bought it back in february, made a ton of money. had the intestinal fortitude. >> had the intestinal fortitude. >> mike ron technology, baird upgrades to outperform. back in 1999 we used to watch for d-ram prices every month. they also have a positive outlook for the rest of the year. analysts have raised the price target from $18 to 12 and that would imply a 50% upside.
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>> rig counts have begun the new d-ram of 15 years ago. >> cliff's natural resources, jpmorgan chase upgrading it with a target of $7. listen, the stock has significantly higher near term earnings because of rising steel prices. the guidance that they provided is for $450 a ton for world steel and a right now world steel is at 610 and they think forward contracts will be renewed favorably and the stock at 420. one of the calls that i put in. i've got to be careful because the stock, look at this. it's insane. be careful on cliffs. >> very volatile. another commodity mover, ubs has upgraded the company famous for its green paint, deere & company, go from buy to neutral because ubs says corn prices are going up which means more money for farmers which means they can buy more john deere products. higher corn prices increase the sentiment on the target. the stock has gone from 94 to 82
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where it is right now, implying a 15% upside. they had to move because it was there already. >> tough august last year. >> yeah. >> stock trying to get back up. your fifth name, smaller under the cap radar name is bmc stock holdings, the sticker stock, stck, second largest building materials distributor in atlanta and rbc capital markets, bob wettenh ha ll, started with an outperform rating and $22 target. he said this company is, quote, building a better mousetrap because they have a proprietary distribution model and likes their solid growth prospects. the $22 target is $13% to 14% upside and the stock is at $19.16, stck is your ticker there. with that we wrap up street talk for a tuesday. let's move on now to trading nation. amazon shares hitting an all-time high. fourth time this year that we have said those words. can the hot stock just keep on climbing? let us ask our trading nation
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team, ari wald and eddie elfenbeim. eddie, a lot of people negative on amazon and a lot of people horrifically wrong. what's your take? >> it's an amazing stock, really has shot up since the february low, but i think for investors and traders right now this is a great opportunity to use other people's greed and the momentum to take some profits, and if you don't own it to stay away from amazon. it's a remarkable company. for q1 they beat estimates by 85%. >> yeah. >> the company. a great stat. amazon has gained 1% on average every 11 days for nearly 20 straight years. and i -- and i love the company. >> tyler, michelle and i have been covering amazon since the ipo. if you try to adapt any fundamental analysis to the company, the pe ratio is this or the metrics are that or price to sales are that, come up with an
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argument about why the stocks should tank. it never does. does fundamental analysis matter at all for amazon? >> this is what i would say. it's a different game. whatever it is, whatever the market is doing, they are following different rules. i don't get it. they made $125 per share last year and that gives them a pe based on that of 577. >> wow. >> like what you said, it's a different game. i can't make -- i can't rationalize that. >> yeah. >> that's why i stay away. >> let's take all that out and just look at the charts. ari wald, is the chart saying amazon is overcooked or more to go? >> the charts have more to go, brian, and here's what it boils down to. there's an anomaly in markets and it's that stocks that have outperformed tend to be the stocks that continue to outperform. this anomaly, brian, is called momentum, amazon's got it, and i think what's telling about me for the charts is here's a stock at a new -- breaking out to new highs while the rest of the market still dealing with resistance from may of last year.
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this is evidence of the relative strength in the stock so here are the levels that i'm watching. the breakout at 680, now a level of support, and the targets i'm seeing on the upside north of $800. forget about timing the stock. we think it continues to work longer term because of that momentum >>the only thing higher than the pe ratio is the price. $800 target and eddie, your point is noted as well. thank you very much. for more trading nation head to our website tradingnation.cnbc.com. >> now the latest from trading nation. overbought and oversold indicators such at momentum oscillators are generally used differently depending on whether the stock is range bound or trendy. to buy a range bound market such as the rsi falls into oversold territory and moves back above it and look to sell a range-bound market when the as lator rises into overbought territory and then drops below it. i was working in the yard, my chest started hurting
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and i thought, well, you need to go to the doctor. i was told that is was cancer, and i called cancer treatment centers of america. dr. nader explained that they can pinpoint the treatment. once we identified that there was this genetic abnormality in her tumor, we were able to place her on very specific therapy. our individualized care model gives each lung patient specific treatment options with innovative procedures that are changing the way we fight lung cancer. we have excellent technology that will allows us to perform very specialized procedures for patients
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who have lung disease. to learn more about these targeted therapies and advanced procedures for lung cancer, as well as the experienced physicians who deliver them, go to cancercenter.com when he showed me the cat scans, i was so amazed. with this treatment, she had a dramatic response. call or go to cancercenter.com. cancer treatment centers of america. care that never quits. appointments available now. shares of allergen down after carl icahn said he had, quote, a large position in allergan. joining us is an asset portfolio
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manager. you own allergan so you're pretty happy about mr. icahn's position i would imagine. >> happy he came to his senses and the finally bought the stock. we like allergan. i'm not sure this is necessarily an activist play. the way we look at it, we look at the company at this point as a company that's becoming something and we're very interested in what it becomes in terms of pipeline and capital allocations so this for us it's looking longer term and would i like to think he's also thinking along those lines. >> how long have you owned it for? >> we've owned it for a while. we've sized our position depending on the trading. we -- we initially got involved in the stock after the break-up with pfizer. we're not arbitrage people so we go on fundamentals and so once the deal broke we were much more interested in the stock. >> what makes you get out of the stock eventually?
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what's the exit point, if any? >> for us it's if something material changes that we don't like but so far so good. things have gone pretty well, and it's -- it's generally been only a few months since the deal broke, so it looks like we'll hold this one for a little while. >> as a biotech investors, i want the comment, they have found a stoin of superbugs that's supposed to be good for superbugs. why is it that the biotech world can't come up with something that fights this? >> i will tell you we can. we also invest in private companies that investing in an antibiotic company is a risky and long-term proposition for something that may not -- it's not a chronic drug, so really i think here is the case where maybe the cancer moon shot that was just announced is a bit misguided and they probably should have done an antibiotic
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moon shot where the government incentivizes via lump sum payments or extended patent life development of antibiotics because i don't see -- and this is -- this is global, too, so you can count on the world bank and ifc do the same. i don't see private industry picking up the slack. i think this is more of a government public health issue. >> got it. >> thanks so much. hillary clinton making an abrupt movement the presidential candidate cancelling a big campaign event in new jersey to head back to california. does she really have something to worry about for the primary in the golden state? is bernie sanders making the clinton campaign nervous in california? "power lunch" is back in two minutes.
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great time for a shiny floor wax, no?
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not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. it was quite a weekend for bernie sanders, first at a rally in oakland. look at your screen. animal protesterprotesters. watch this guy. takes him out at the knees with a nightstick. then senator sanders scored a ticket to last night's game seven of the western conference finals. big night for the warriors fans. they got to see the candidate.
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there he is. the warriors won the game too. tyler? >> that is campaigning right there. also heading to california unexpectedly, hillary clinton, cancel rallies in new jersey to start a five-day tour of the golden state. one poll shows sanders closing within single digits of miss clinton. what does miss clinton night to do to stay ahead? mark aldon, mark, good to have you with us. how much of a risk sit that hillary clinton would lose in california? how do you handicap it? >> tyler, i think that this is the storm before the calm. california is always stormy. eight years ago then senator clinton beat then senator obama by eight points and then with
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drew and endorsed. i think the same thing can happen this time 5ur7bd. it's important for clinton to win for the perception of the race. she's already won. she's the nominee. but she's lost a lot of states, mark, and she geel into that convention if she happens to lose the big it state of all, california to mr. sanders, as certainly a wounded creature. this is apart from the idea that she brings a lot of baggage, some would say steamer trunks into the convention. >> the other nom nay has hknee his own steamer trunks.
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>> we do have that. she needs to honor the man and respect the agenda when it comes to senator sanders. senator sanders has had a phenomenal run here and secretary clinton very publicly and personally needs to celebrate that achievement. i think that she also needs to respect his agenda. the party platform, the party rules have to include and incorporate the issues that have been important to him. >> all right. mark alderman in philadelphia, thanks very much. appreciate it. cadillac's challenge. what the company is doing to make a t brand cool with a new generation of buyers. we'll talk about that next. welcome to opportunity's knocking, where self-proclaimed financial superstars pitch you investment opportunities. i've got a fantastic deal for you- gold! with the right pool of investors, there's a lot of money to be made.
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a quick check on the markets. the dmakz is lower by 7 and the s&p 500 lower by a little more than 9. we're well off the highs of the session. >> while tsa lines at o'hare -- look at that. look at the cab there. a taxi cab barrels into o'hare's airport area there, passengers domging the car at the last second. nobody thankfully hurt. the driver expected to be cited. we would certainly expect that some sort of citation and not in a good way would be given to that driver. brian? >> have you noticed nothing
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seems to be about product anymore? today it's all about the experience of something and cadillac is getting on board the whole hipness thing by opening up to a new expeditious. phil lebeau, won't say it again. he's in new york and joins us now. phil. >> brian, we're in the soho district of manhattan where they're making the final preparations for the grand opening of the cadillac house. this is not a dealership. we've had a chance today to look at them whether it's at the coffee bar or other places. this is about image. it's not whether or not they're an immediate hit and saying, hey, come in here and look at cadillac but change overtime the perception of cadillac. >> i think it's a matter of instant gratification. it's thought over very
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comprehensive and many strategic. a high aspiration of the luxury brand. >> part of that is not chasing market shafrmt instead it's profit per vehicle which is up under johan deniesen. you can see it well below mercedes, lexus, and bmw. mercedes is doing a similar thing in beijing. it's a me store. again, it's not a dealership. it's about giving people a different flavor, whether it's a coffee bar or restaurant. yes, there are vehicles in the store but it's not about selling vehicles. this opens tomorrow. by the way, this is one of several they plan to open. next year one will open in shanghai. back to you. >> got it, phil, yes.
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the experience when driving the car. >> it will be self-driving soon. >> right. i can't wait. >> a self-driving experience. >> have a good trip. >> have a good trip. >> i'll bring you back a lippens honor. >> where the sausage is made. "closing bell" starts right now. welcome to the "closing bell," everybody. i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth. it's the last trading day in may. how fast time flies. boeing is the biggest drag. see it there in the bottom right-hand corner. we'll tell you what's behind that 2.4% coming up. >> meanwhile somchai niece companies get ready toec

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