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tv   Power Lunch  CNBC  June 16, 2016 1:00pm-3:01pm EDT

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volatility is trading, trading about 20, even though we had this rally, over 21. a lot on the plate still. i wouldn't be surprised -- we were talking about going positive into green, how about a selloff. >> we'll see what happens today. look forward to that interview tomorrow. that does it for us. "power lunch" picks up the story right now. ♪ a lot of british punk this week, we're one week away are that landmark decision by the british. should they stay or should they go? i'm michelle caruso-cabrera, melissa lee is on assignment, brian and tyler are out. mike santoli is here. there's a new poll out that shows the leave campaign surging past the stay in the uk camp. 50% of brits want out. 49% want to stay. a lot of money is riding on this
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vote. se >> we are basically seeing this global flight to safety. look at the japanese yen surging to a two-year high against the u.s. dollar. brexit worries, rising pressure on the bank of japan to respond with a bigger stimulus package in july. the british pound continues to hover around a seven-year low, coming off the lows. the bank of england warning of further weakness. a pick up in risk aversion helping gold shine, up 23% year to date. and pushing bond yields lower, not just in europe but here at home. the u.s. ten-year dropping to a four-year low. the fed statement also part of this story. in terms of stocks, it's the european banks that remain under pressure. active discussion on which banks would be hit the hardest, especially when you consider relocation costs. shares of deutsche bank.
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an all-time low. hsbc among others down about 18% over the past three months. if you're looking for price reaction in the equity market, it's those european banks. >> i think we'll see more of it as we head to thursday. every time there's a new poll, every time something happens -- >> it's political and economical. the ecb and lack of a turnaround, the european economy what this bleak european landscape means, that's a big part of the story. >> whenever you have a defined moment in time, up and down decision, markets build up the pressure leading up to that. a lot of these trades are crowded, so therefore will there be a violent reversal? >> earnings could be the next catalyst, too. >> thanks. used to be oil moved stocks, now it's the dollar. look at the dollar index. volatile throughout the session here. bob pisani is at the nyse. what's moving and why?
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>> you're right. used to be oil, now largely the dollar and the ten-year yield moving things around. why is that? these brexit concerns will dramatically impact the currency markets. when they move, you have effects in the stock market. europe has been affecting us dramatically this week. look at the s&p 500, europe closes, once again the market lifts. this was a point in time when the dollar started to weaken. the euro rose over there and you could see a knockdown effect. dollar weakening tens to help out things like commodity stocks. oil came off of its low. around 11:30, oil stocks started moving up, not dramatically, but it's clearly related to moving in the currencies here.
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same with industrials. this is the s&p industrials. we're not getting a move in bank stocks because we didn't have a move in the ten-year yield. not a big move there. the only thing i would point out, guys, we're not seeing large volume. that's interesting because it would indicate that people are making big bets one way or another. i don't see that. there's not huge intraday swings. about 20 points on the s&p. a bit more than normal. the s&p will typically move about 15 points from its high to a low. a little more than normal but not dramatically so. interesting moves in the dollar. watch the currency. guys? >> thank you very much. in the midst of this tension, a british lawmaker has been shot and killed. still unclear why labour mp jo
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cox was attacked. >> jo cox has died from her injuries following a shooting in west yorkshire. police confirmed they arrested a 5 2-year-old man in connection with the shooting and have the weapon. as yet we're unsure of the motives behind the shooting. david cameron tweeting the death of jo cox is a tragedy. show was a committed and caring mp, my thoughts are with her husband, brendan, and two young children. ms. cox was a member of the labour party. she died doing her public duty at the heart of our democracy. and her husband said we all fight to unite against the hatred that killed her. she was 41 and a mother of two.
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>> do we have indication that this is related to the vote that happens a week from today? >> we don't. >> chance of her being in the wrong place at the right time? what was her position on the vote? >> she was member of parliament for labour. she had done some humanitarian things in the past. she was carrying out her regular meetings, called a parliamentary surgery. carrying out a weekly meeting which anybody is allowed to attend. this is when this event particularly happened. some people have cited the fact that sterling rallied up briefly. >> let's bring up that chart. the wires made a point of saying sterling turned positive on the announcement of her death. is there something here as a result of that that may lead to stronger support for her position? >> we go back to the police stati statement. no comment on what the motives are yet.
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the brexit votes really have not moved in the last hour or so. >> it's fed into treasuries here, fed into the stock market here. there's so much focus on that. it may be a complete and total overreaction by traders. >> it's been a market risk off day. we're having a risk on moment. >> thank you very much. we have to get to a news alert out of orlando. let's get to eamon javers. >> in washington, d.c. here here, but the president's plane, air force one, did land in orlando, florida. he will be meeting with families of the people killed in that nightclub shooting over the weekend. here's a shot of the president arriving in orlando, florida. you can see marco rubio also there accompanying him. a number of other dignitaries on air force one for this trip to florida. we're not given details about
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where the meetings will take place, if he will go to the pulse nightclub, if he will stop at the hospital to thank the doctors and the first responders. all of those locations, i was in orlando for a good period of time, all of those locations are close to each other. the president could go to the nightclub, could go to the makeshift memorial, to the hospital. we'll have to wait and see how the day unfolds. the white house has been saying they want the president to go there to pay respects and do this trip in a way that doesn't tax local law enforcement which has been pushed to the limit this week. back over to you. >> thank you very much, eamon. let's get back to the markets and bring in ron insana and steve liesman. the other big overhang on the markets is the federal reserve. 24 hours later, steve, intense criticism of the fed about lack of clarity.
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>> a lot of anger, frustration. it has to do with the idea that they're moving very widely on little pieces of data. drew matus this morning said the fed wasn't data dependent it was data point dependent. and this morning the fed was compared to a reed blowing in a wind. one day this, one day that. there's an awful lot of volatility around the fed. i would like to take a step back, take a breath, come up with a broader framework that lasts through swings in the data. right now -- i will say -- i think the market swings as wildly as the fed. i think that you look for some grownups in the room and they're not behaving as such. >> i would ask, is this not just the nature of this moment we're in, this cycle.
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gross 2%, it's been 2% for a while. a lot of people hawk or dove say another 25 basis points won't matter much. becomes almost a judgment call or semantics. >> i think the two points that you make are good ones. number one, with respect to 25 basis points not making a difference, people misunderstand the difference we find ourselves in. the world is awash in negative interest rates. so a .25 move could have a significant impact on the global economy. the environment we find ourselves -- people forget from 1971 to 1981 we fought inflation, rates went to 20%. people have lost that history. we're fighting the mirror image of that problem today. whether the fed moves or doesn't move, this is the environment in which we live.
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they are not normal times. they do not require normalal behavior. can we declare the end of the rate cycle? >> i did that in december. >> we have waited seven months. i think they're in another phase now. you can't wall it the same rate hike cycle. >> in december i said one and done. the economy has decelerated through a sing the quarter point hike. they're not in the position to do anything that would approach normalization. >> i want to show you guys the probabilities of the next several minutes. it's hard for the nothing gets above 17%. >> next year. >> that would be next year. 2017. this is the change in just a week. if i showed you a chart of these changes overtime, you would see incredible volatility around this. this goes into volatility into the broader interest rate and
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broader stock market. >> these numbers could be relied upon at what distance? a month? two months? >> they're a perfect reflection of the sense right now. what will happen. >> ten minutes. >> that's all a prediction is good for. what i think now of the future. it does reflect that nobody thinks now there will be a hike. >> the flattening of the yield curve here, two, strageis brought up the flattening of the yield curve, and expectations. >> should we be talking about stimulus? >> in the absence of -- >> qe5? >> qe something. >> you don't need qe, but i think the fed will take short rates back. they will need -- >> i think we'll have a transition. >> yeah. >> what happened yesterday is the beginning of the transition with the lowering of the
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forecast for future rates. >> let's talk more about what the bond market thinks. foreign investors selling $75 billion in treasuries in april. the u.s. ten-year yield did hit a four-year low, not far above 1.5%. the two-year down to 0.689. the five-year also really plummeting. multi-year lows touched these levels in february. that 30-year yield down to 0.24%. to talk more about this market is bruce dodi from s.i.t. investment and gene tanuzio. thank you very much. talk to us about what the treasury market is positioned now. you have seen almost a buying panic in treasuries.
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is there truly relative value here compared to the rest of the world or is this a reversal in the making? >> this is the first time we've had a rally in treasuries plummet fueled by the fed is dead mentality. it's only june. each of the other times rates rebounded significantly. this time might be different. you have brexit weighing on the market. the possible divorce of britain from the european union is an emotionally charged situation. until that potentially explosive situation is defused, you could see yields staying low for a while. is there a value right now in treasury years? not in the two to five-year part of the curve. we think it's a lose-lose situation right now. you mentioned how low the five-year is, getting close to
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1%. core inflation is going between 1.5% and 2.5%. buy-in at current yields you would lose versus inflation. if rates rise to inflation write rates, you lose versus the bond falling. i don't think inflation will accelerate sharply, if it did i believe the fed would finally have the courage to do something. >> gene, where does that leave you as a fixed income investor? you have this global scarcity of safe income. it seems to be driving so many of these markets. where would you like for something that looks like attractive value here? >> look. the global scarcity is still there. we have a liquidity squeeze going on. safe u.s. assets will be in high demand. that's going to continue for the reasons that bryce talked about. steve was talking about the
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normalization cycle. i don't think we're in a cycle. you look at this dance that the market and fed are doing, i would say the market is leading the fed to lower rates in this environment, the fed has created a number of hurdles for themselves to continue to increase interest rates. we need to see an improvement in the labor market data and an acceleration of growth. it's possible you see all three and ultimately the fed will follow through with rate increases, for now they're not doing that. you look globally, and you say, okay, ten-year treasuries might be lower than they were during the temper tantrum experience three years ago, but they have a greater spread to european assets back in that time. now you're looking at an environment in which 50-year swiss government bond yields are at nearly 0%.
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even though yields are low, it's likely they will go materially higher in the near future. >> that's right. we have to redefine what low means. thank you very much gene and bryce. tragedy and triumph for disney this week. shares are fractionally lower. we'll take you to the new disney park in china next. images, videos, social updates. we call it dark data. 80% is invisible to most businesses. the ibm cloud has tools that can help see dark data and put it to work. hello, my name is watson.
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agreement with workers averting what could be a strike at its flagship store. and kroger reporting a 9.8% increase on higher sales as it expands product offerings and online ordering. kroger off its early highs but still up 1%. microsoft acquiring messaging app developer wand labs. microsoft up 1% on the day. disney world in orlando is still dealing with the tragedy of that 2-year-old toddler being killed by an alligator, half a world away shanghai disneyland opened its doors today. it's the company's biggest theme park yet. eunice yoon got a sneak peek. >> reporter: this was a big day for disney. tens of thousands of visitors came here to shanghai disneyland today and just to give you a sense of the crowds, the average wait time outside the park just
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to get in was two hours. this is on a important day for the company. the ceo told me last week that he sees this park as a booster rocket for the business here. he's hoping as more people come to the park and get more exposure to the disney brand and character ors, eventually they'll go home and want to buy more tickets to movies and more products in disney stores. there's reason to believe that this big bet by disney is going to pay off. the company believe there's are 330 million people who live within a three-hour radius of the park and can travel here by car or by train. and also who can afford to take a vacation here. if you believe, as many economists do, that the chinese economy is going to continue to grow and expand especially in the long-term, that incomes will rise, and that household spending will take up a larger
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and larger role within the economy, then disney is well placed. analysts estimate that there are going to be 15 million visitors here in the first year alone. that would mean, if it were to happen, this park would be one of disney's most visited. what are people coming here to see? they want to see the very many attractions. 80% of the attractions are unique to china. including the updated version of the pirates of the caribbean ride which is now based on the movie. also, of course, featuring jack sparrow and packed with lots of different visual technology. also they're coming here to see the largest disney castle in the world, which just matches the size of the population. >> yep. huge. let's talk more about disney. barton crocket is a senior analyst at fbr capital markets. it seems for months now we have talked about disney as a stock exclusively related to espn,
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cord cutting, et cetera. how important are the parks to disney? and shanghai disney in particular. >> the theme park segment is close to one-fifth of disney's earnings. that's a great business. investors love the theme parks, you don't have the secular issues that you have with tv. you have a good growth story generally worldwide. disney is getting a jolt from its movies which inject great new brands into their parks. now you have a china growth story which could take it up another notch. it's reasonable to believe that the shanghai park was over a number of years on a track to become very profitable to fizdiy and great success. you mentioned how the people parks under bob iger have become intertwined with the movie franchises. they're trying to build on one another. to what degree do the chinese people need to be introduced to the franchises? is that all incremental
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potential audience there or largely so? >> disney movies have done well in china. they loved "zootopia," the marvel movies. what they don't know as well are the classics like "peter pan." they had some mickey exposure. i think this park has helped make them aware of the more classic disney brands, which is good as they reboot these things into movies in the future and expand license sales in the market. i think it will be helpful for that. the real opportunity in the park is making money in the park. it's brilliantly set up. so close to the largest city in the world with a subway line going straight to the middle of shanghai. >> eunice brought that up. 300 million people live near it. a tougher subject, the alligator attack in orlando. impact on the company. it's been an awful tragedy. do you see any impact there?
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>> it's hard to talk that. as a dad myself, it's terrible. i do think that disney's made some statements which are important. we'll have to see what they're doing to make people comfortable that there's no chance this happens again. >> that's certainly the hope. absolutely. thank you very much. we'll be right back on "power lunch." this is a game of yards and inches, fairways and greens, drivers and irons. it's also a game of big data and servers. just as pga tour pros need modern analytics to improve their scores, businesses need customized data center solutions implemented by cdw, using hpe proliant gen9 servers with intel xeon processors to improve their bottom line. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally.
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hello, everyone. i'm sue herera. air force one carrying president obama along with senator marco rubio arriving in orlando, florida where they were greeted by vice president biden. they will meet with families of the victims of the nightclub shooting that killed 49 people early sunday morning. the former head of michigan's department of environmental quality refused to talk about her role in the water crisis. leann smith appearing in wayne county district court where she invoked her fifth amendment right. a drug worked so well for patients in a lung cancer trial that the study was stopped early so all patients could use it.
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keytruda was found to work better than chemotherapy. and prince william will appear on the july cover of "attitude" magazine speaking out against homophobia. he has been quoted as saying no one should be bullied for their sexuality or for any other reason. i'll send it back to you guys. >> appreciate it. >> the dow turns positive returning from a triple digit loss following those brexit concerns. steve, let me start with you. if i had nothing but the chart of the s&p 500 to look at the last week or so, i would say we're having a pull back from a new high after a four-month rally. but here we are talking about these scary global headlines. negative yields around the word and the fed surprising people in
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an unpleasant way. has anything changed for equities in your mind? are stocks whistling past the graveyard with all these risks? >> we've been cautious all year here. nothing has really changed. there's all these different hurdles for equities to get over starting with brexit, the fed and the uncertain outcomes of the u.s. election. on top of that, earnings have flattened out. we don't have a lot of earnings growth. it's been an environment where it's tough to see near-term upside and then you have the potential for a cruise missile, you know, taking out the bow of the boat here on any one of these concerns. it makes it a tough market to push to new highs until we get past some of these things and earnings start to come back, which hopefully by '17 will. in the meantime we have to get through a few hurdles. if you believe the forecasts, lamar, the second half of this year we could return to earnings growth. what do you think functionally
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is the effect on u.s. corporate earnings? it seems as if the s&p 500 hasn't had much upside but also only fleeting corrections in the last 18 months. >> sure. we don't see a whole lot of opportunities within the s&p 500 large cap stocks. we're looking noor for a low to mid single digit growth for the rest of this year. that's why we're more focused on the smaller caps. >> you have mentioned a few smaller caps. tell me about pool corporation. >> pool corporation, their logo or their motto is we'll sell you everything but the water. you know, historically they've been able to grow comfortably at about 15% a year based on equipment upgrades and so forth what we've been seeing over the
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past couple of years is massive growth in the great swimming pool markets like texas and florida. frisco, texas right now they're bulldozing a cornfield and putting up a 3,000-home community. they're putting up -- opening four new schools this fall alone. so, the growth in some of these key, very hot -- 98 degrees there. very hot in louisiana. in florida, very hot. if you're going to do anything outside with your kids it will be in a swimming pool. that has the potential to accelerate the growth. >> so domestic, consumer and housing play all in one. >> exactly. they'll benefit from any pool that goes in. >> steve, if you don't see any catalyst for a broad upside, a lot of those defensive sectors have been seemingly overdone. people crowding into utilities. do you think that's the kind of place to emphasize?
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>> mike, first i think lamar's idea of a small cap niche company is not a bad idea, but the asymmetric downside trade, you struggle. we like the stable income stocks here. even though they've had great runs, on p/e basis they're expin sie expensive. revenue is solid. not that cyclical in terms of what is going on with the global economy. and grinding rates lower. german yields negative as well. the dividend yields on these dividend stocks are still attractive. >> the overall dividend yield on the s&p 500 has been exceeding the ten-year treasury yield for months. steve, there was one other interesting thought with diageo, based in the uk, maybe got
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punished because of that? >> i try to give viewers some names that are both dividend stories but also ones that may be an opportunity with this pullback with brexit. if you get brexit, diageo may get hit harder. we already got a 10% correction there. that's a big global spirits company. when times are tough, people drink. they have a lot of their revenue base in the u.s., india, not emerging that much in europe, but a company like that w a nice 4% yield on it looks okay. >> makes sense. steve and lamar, appreciate it. go to powerlunch.com, cnbc.com to see another stock that lamar is bullish on. that's powerlunch.cnbc.com. to the bond market, rick santelli is tracking the market
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at the cme. we saw a lot of markets change when the pound came off its lows. we saw gold move, stocks move. you see a similar move in treasuries? >> yes. i'll tell you what, i'm glad you asked that question. there's nothing i like more than market forensics. in my opinion the deal was quite simple -- the close is in europe. let's look at an intraday of the dax which closed down but not nearly as much as it was three hours before the close and the ftse. if you put them together you can see, as we go into the close, traders do what they normally do. we've shaken things up. everything is mean reverted to some extent. you could see it in the euro versus the dollar. on a five-day chart it jumps out at you. look at the pound versus the dollar. intraday ten. consider this we had yields a lot lower, equities a lot lower and things were shaken up.
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right now we're virtually unchanged on everything except the long end. look at a two-day of 30s, still several basis points below their shaken up price yesterday. remember, trading is not easy. anyone who has ever done it knows as the close approaches perspiration forms. mike and the bang, back to you. >> javers has a news alertment. >> software executive and three friends have been charged with insider trading. they received thousands of dollars in kickbacks. miller allegedly tipped his brother, edward miller and barrett beil as they rushed to open online brokerage accounts and do risky short-term trades.
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at the time the millers ultimately were strapped for cash, they were the co-owners of a car wash that had mounting debts, one e-mail they referred to the trade as our possible savior and said this is what we all need to weather any storm and put us on top, bro. just make sure you squirrel stock away. i hope we're dancing in the streets in the next four to five weeks. the s.e.c. saying the software executive and three friends have been charged with insider trading >> busy week for insider trading allegations with the s.e.c. and the u.s. attorney's office in new york. >> over a car wash that was running out of money. >> be careful. >> and they put it in e-mails. >> there you go. so they were asking for it. not too careful. >> yeah. they're saying another detail, they say a brokerage firm wouldn't accept cash from some of the players in this story. they said an electronic transfer would take days to occur, so the millers obtained a cashiers
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check and drove a half hour to the nearest branch office to deposit the money to trade. in retrospect, none of that good decisionmaking. >> red flags all over that one. chaos in venezuela. people desperate, looting to get basic goods. the latest next. "power lunch" is back in two minutes.
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job cuts are on the way. according to an internal document, the firm will lay off 3% of the work force, this continues as pimco continues to post outflows. >> still the impact from bill gross. increasing pressure on the leaders of venezuela.
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this comes as crisis and chaos engulf venezuela. venezuelans are rioting for food, looting supermarket. look at this surveillance video showing people storming and looting a bakery in caracas. just yesterday at least 400 people were arrested after ransacking dozens of supermarkets. earlier this week u.s. secretary of state john kerry, while at a meeting of the o.a.s., organization of american states, joined a growing chorus of leaders saying the president of venezuela must allow a recall vote on his presidency. i spoke to one of the country's opposition leaders pushing for that recall vote. he's in washington, d.c. today meeting with the state department. >> from the outside we see what's happening in venezuela. we think, wow, this is going to end with some kind of military
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coup. is that possible? >> a military coup will be a disaster in venezuela. we don't want to get to that point. that's why we are pushing so fast, you know, for a possible resolution using this mechanism. >> do you worry it's a possibili possibility? >> yes, we are a totally collapsed country right now. it's not working. if woe don't find a solution weekly, any option could be possible. >> mismanagement of the economy is one major problem there. another major factor, price of oil. the impact from the oil market has been tough. both venezuela and nigeria facing an oil crisis. the rbc global head of commodities joins us now. which is the worse basket case, venezuela or nigeria? >> in terms of oil, it's nigeria. the armed militants and the oil region show no signs of backing
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down. the military is incapable of ending this. venezuela is a humanitarian catastrophe. that's the one where you are thinking about what type of emergency assistance is the west going to have to come up with to stave off disaster there. >> talked about getting food in there as well. what is startling is they have all this debt, debt payments, they seem committed to paying them, and the rational is to keep oil flowing but oil production is declining. >> we look at may numbers, down 120,000 barrels in venezuela, the largest month-on-month drop in 2003. that will be increasing pressure from the population saying do we have to continue to make these debt service payments. $4 billion is owed in the back half of this year from one company. you think if china does not give them another lifeline, i don't know how they pay these debts, i don't know how they pay government workers. >> turning back to nigeria what is the market able to handicap?
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>> i think market participants keep thinking there's a silver bullet. i look at the mend government amenable to cutting deals and they couldn't get it done. the flowing was amnesty deal. >> the government paid them off. >> paid them off. this is a hostage crisis situation now. you have armed mill tantitants by powerful politicians. >> so all this oil is coming off but others are producing more. >> iran has been producing more. it's come back bigger, faster, stronger but it's capping out now. if nigeria staves off 800,000 to 1 million barrels we'll draw
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from our inventories iies in q3. >> thank you very much. not a happy camper. those four words could set off alarm bells if you work at goldman sachs and you write it in an e-mail what other words are employees using that could get e-mails flagged? "power lunch" has an exclusive. we're back in two minutes. people talk about "deals" on their auto insurance. wouldn't a deal involve two parties discussing something? a little give? a little take? because last time you checked, your rate was just, whatever they say it is. why not give you some say in the matter? or -even better- let your driving do the talking. liberty mutual righttrack finally puts you in control of your rates. all you have to do is connect, drive and save.
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welcome back to "power lunch." coca-cola announcing a merger of european bottler xpektzed to hurry pretax earnings. coca-cola is up 1.5% for the week. shares of rite aid falling. revenue rows to $8.2 billion year over year but came in below analyst forecasts. rite aid off the lows. and visa planning to accelerate the certification process. it is let merchants begin the chip card and reduce fraud. visa is down .3%. >> no all time highs to tell you about on the s&p 500. foot locker and american airlines, on the flip side, newmont mining hitting a new multiyear high and investors
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flock to gold. newmont trading at the highest levels since 2013. >> all right. almost 2:00. you have to go down to the close. >> i do. >> so you have to leave. >> yes, thank you very much. >> it's a pleasure. >> replacing me where? >> right here. >> mr. frost is joining us. we have the brechl yxit vote co up. first though, over to melissa lee. she has the morgan stanny multicultural conference. >> the next guest has his pulsz on the global economy and equities. he is a siceo of an investment bank here in new york city. that and much more on "power lunch" ahead.
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welcome back to "power lunch." i'm melissa lee live at the morgan stanley multicultural conference here in new york city. we're joined by our guest chris williams who is the chairman and ceo of williams capital group.
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chris, great to you have with us. >> great to be here. >> there is a lot going on here in the markets. let's talk about the backdrop. it's a very interesting one. the ten-year yield is at new year levels. we saw a big market town turn. we have gold soaring. equities are within 3% of all time highs. what does this picture tell you? >> it doesn't make a lot of sense when you look at various sectors of the market. the reality is that i think a lot of what we're seeing is reflected in the comments made by chair yellen yesterday when she discussed the overarching theme that global uncertainty is really changed and altered the conviction that the fed has with respect to the growth of the u.s. economy. and what we're seeing globally actually has implications on various sectors of the global economy. so i think what we're -- what we saw and communicated and a lot of of frustration as a result of
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what we communicated was that we will not see the level of fed movement and heights and interest rates that was expected because they just don't seem to be the underlying growth to warrant that. >> what you are seeing in terms of activity for m & a? we were talking off camera. you mentioned the low rates make it possible to finance wlachlt is causing loet rates is uncertainty about the economy. >> right. >> which would, i think, put a capitol hill on activity. so net-net what is the result? >> so what you're seeing is a good strategic opportunity from the merger perspective. it will get done. you see large transactions have gotten done over last year plus. those have been financed very economically in this low interest rate environment. so that's a positive. it doesn't change the strategic benefits. it has to make sense. certainly financing it is very attractive in this environment. now with respect to the low interest rates and the high stock market and how they all
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tie together, i believe that the stock market is not really reflecting the growth prospect and profit prospect for corporations. what is reflecting is simply the fact that interest rates are so low and they're just not a lot of other alternatives to go to to get any type of returns. >> a lot of economists are discounting the impact of brexit on the u.s. economy. in term of what you do and investment banking activity, what impacts do you foresee if there is a brexit? >> the short term impact is a continued flight to quality in terms of u.s. dollars and u.s. dollar dedominated securities. obviously, a flight to u.s. dollars and strengthening of the u.s. dollar is not good from this perspective of our exports and growing our economy. the low interest rates would mean that from my business would mean the companies will be able to continue to fund themselves at extremely low rates. but i do think that there could
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be some type of positive offshoot. one from the perspective of m & a. if asset valuations drop dramatically, in other words, corporate values drop dramatically in the uk -- >> this could certainly spur merger activity. again, there is so much uncertainty with respect to whether or not there will be a vote or what that vote will be and what the outcome will be. but i think they'll generally be short term. >> the context leading up to brexit is we're watching deutsche banc continue to hit new lows. this is a record low for deutsche banc. lower than the levels of stock has been at during the global financial crisis. credit suisse, ubs, all sort of the same boat. what is that telling us in your view as you see here u.s. banks aren't doing extremely well. but they're certainly not trading at financial crisis lows. >> i can't say what it tells us. i can say that it's not comfort ing when you see large segments
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hit new lows. i think that a lot of the italian and spanish banks, particularly two countries that are weaker within the eu, that reflects their overall economy within their country. but we've seen just slow growth throughout all of europe. and the fact that in germany, it could be more of a reflection of certain activity related to specifically the bank as opposed to the country in general. but when you're part of a global economy, poor performance, weakness and any type of disruption in one sector of the global economy can often have far reaching impacts. >> absolutely. >> all right. chris, thanks so much for your time. we really appreciate it. chris williams joining us from the morgan stanley multicultural conference in new york city. >> checking the markets.
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come off the lows here. the dow jones industrial average is lower by 12 points. nasdaq is lower by 23. the s&p 500 lower by nearly seven points. the yield on the ten year note, also off of the lows. but look at that. still below 1.6%. >> we talk so much about brexit in particular. >> great to be here. >> excellent. >> right. ahead of that june 23rd referendum, there is a likely hfd the brexit helped drive the pound to record high levels of volatility. i'm joined now by our cnbc contributor, founder of najarian capital. >> when we spoke earlier and looking at following through on the promise to basically offer up a vote, a referendum that we're facing next thursday that, caused the pound to slide rather
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dramatically. we did break to $139 in late february. since then, we've seen a dramatic rally, a series of rallies back up to 147. the most recent news about brexit polling and perhaps even some of the incidents here in our country have caused the pound to fall dramatically again. but not all the way down to the february lows. so that's one of the things i point out. instead of saying let's bet on what the betting exchanges are saying at any of the dot-com sites they have in great britain, look at the trillion dollar market. i think that is a much better tell, if you will, for where things stand. and we're not even at the lows that we were at when the brexit voting was actually showing 70% to remain and 30% to exit. so i think people have kind of gotten ahead of themselves.
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a member of the country that actually had to live through some of the change that's have gone through with all of the immigration and so forth. that's where the focus is. and then, of course, the tragedy today with ms. cox, that has people focused on whether or not that will dramatically impact the upcoming vote just seven days in. >> and your take from the sterling market is what? it is suggesting that we will or won't have a vote? >> well, right now it's like i say, not even near the lows that we put in in february when they suggested that the betting was far different. in other words, 180 degrees different really. because the 70/30 remain vote back in february versus now, perhaps a five or 6% spread for the brexit side. >> that's very intuitive. if you thought they were going to laeven you thought the pound was going to get hit, the pound would be getting hit right now. i would think the pound would be
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much, much lower than where it is right now. if you believe in the currency market, what do you think happened here today, john intraday? anything? this turn around, we see the pound going positive against the u.s. dollar seems to have rippled through all of the other markets today. it is what is driving the markets ahead of that vote. >> in particular, just as you say, when our market was able to turn things around today, we had that triple digit loss going on. we had new highs for volatility. and various volatility metrics in this country. i think those measures along with the currencies, that's where the hundreds of billions of dollars are. that's where the trillions of dollars are as far as currency. looking abetting sites to try to figure out where the brexit actually stands, i don't think is very accurate. >> we're going to do it anyway, john. that's what they do in britain. they're always talking about the bookies. >> sure. you should be taking the other side is what i'm saying. >> okay.
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>> based on the currencies, they're not voting to exit next week. >> it will be a close vote. >> that exactly in fact what the betting markets are saying. both the betting markets and the sterling markets are moving in tandem together. they still suggest a remain is the most likely outcome. so in fact, they all show the same momentum towards both the betting and sterling market suggests remain most likely. we're going to have to leave it there. thank you very much. >> thank you. >> now, so what is at stake in this british exit vote? how do we get to this point in the first place? >> the gold to foster economic cooperation. it grew in size and scope over the years and formally became known as the european union in 1993 when ch introduced the idea of european citizenship. today there are 28 members.
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in 2002, the euro was first introduced. britain, however, did not adopt the single currency and maintains the own currency and its own monetary policy. now a growing number of uk citizens want to left ue altogether due to concerns over immigration, loss of sovereignty and effects of eu bureaucracy on businesses. a vote on whether to leave or stay will take place on june 23rd. david cameron is the most prominent member of the stay camp. >> i think britain will be better off by remaining in the union. >> and the london mayor leads the exit count. >> once in a generation chance to take back control from an institution that is out of control, spending quantities of the british taxpayers money. >> great explainer. also included a sound bite from labor. they're on the same side as
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david cameron. it's a unique thing to have both of the parties. >> they are predominant. the conservative party is roughly equally split between stay and remain. of course, the prime minister himself is very much a stay member. the labor party is two-thirds stay, one-third leave. if you break it down in terms of voters. the party itself should be much more united behind stay. but it is controversial to care my. it hasn't been quite as passionate as people had hoped him to be. calling into question whether in fact he is really selling it enough for his own supporters. that is a key swing. do enough labor voters turn out to back stay or not? >> isn't there skepticism about both david cameron and jeremy corbin if they really believe that stay is better? i read reports where there are doubts, actually. >> in the part, jeremy has been backing exit. he is now leader of the party and changed that position. but he's not selling that change of position very convincing.
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david cameron has left the base on but there is a question whether he really believes he secured enough in that renegotiation and whether he is therefore able to sell it convincingly enough. >> all right. a week from today. >> a week from today. >> volatility on the rise at the highest level since february. trading as high 2277. the vix gained 45%. the biggest weekly gain since early january. our next guest expecting volatility to exist until the brexit vote. how do you play it? let's bring in our krtor of tjm institutional services. i pear people say buy or sell the vix. it's a lot more expensive. can you still buy volatility? it's not cheap enough anymore. >> no i'd rather be a seller of volatility at these levels even though i think it's going to persist for another week or so. the market's job is to price in worst case scenarios. it does it all the time.
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we can debate whether or not the brexit is a big deal. it doesn't matter. some people out there have the potential to panic or hedge huge positions for what they might consider a black swan event, it will keep volatility bumped up. but when the sun comes up on friday morning next week, we'll realize that even if they vote yes, there is a ton of trade agreement that's need to be renegotiated. both sides still have the same motivation. and the fact that they're not a member of the common currency is equivalent of being a social member than a full golf member in a country club. it's not as enormous of a deal. and it's probably -- the volatility will probably come out rather quickly at the end of next week. >> that's an important point. i agree with it. of course, nothing actually legally happens on the 24th of june if the uk votes. we look at all the different bond markets that react sod sharply to this risk. is there any particular that shouldn't be reacting quite so sharply? the u.s., of course, benefiting.
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germany, uk, japan as well. >> all of them shouldn't be going negative. to me that, is just amazing. and it's absurd that we have negative rates. and it makes the u.s. rate at 160 look fat and tractive in comparison to globally. but i think the u.s. stock market, i know that's not exactly what the question, is but the u.s. stock market is dragged down is the one thing that shouldn't be dragged down. that should actually probably transfer over to the risk off list as far as if there is nothing else to buy, if there really is a problem in europe and spain and italy are calling up saying, yeah, we want to get out too. there is a lit of about five things. the yen, u.s. treasuries, gold, and on that list is the u.s. stock market. because, you know, it's not really going to affect our country that much. every central bank in the world is going to throw money at the problem. it has to end up some. where. >> all right. thank you, jim. >> all right.
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let's get to bertha combs. >> hi, michelle. anthem today getting a red flag in california. insurance commissioner is there, david jones. coming out against the anthem merger saying it would reduce competition in california. it would mean that anthem would have better than 50% market share and more than half of california's county. he is recommending to the justice department to block this merger. it doesn't have any baring in terms of officially being able to block it himself in california. nonthe less, call sexual a very big state. may have very big weight with federal regulators. >> makes sense. thank you so much. >> here's what's coming up on "power lunch," brexit and the fed's inaction. should you stay away from the stocks or is now precisely the time to get in? and we know our company's may be looking at our work e-mails but they may be surprised by the words they're searching for. 132 years ago today, first
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roller coaster opened in america. so we thought it was guy time to ask if you should invest in theme park stocks. all that and much more coming up on "power lunch." e*trade is all about seizing opportunity. and i'd like to... cut. thank you, we'll call you. evening, film noir, smoke, atmosphere... bob... you're a young farmhand and e*trade is your cow. milk it. e*trade is all about seizing opportunity.
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igoing to clean betteran electthan a manual. was he said sure...but don't get just any one. get one inspired by dentists, with a round brush head. go pro with oral-b. oral-b's rounded brush head cups your teeth to break up plaque and rotates to sweep it away. and oral-b delivers a clinically proven superior clean versus sonicare diamondclean. my mouth feels super clean! oral-b. know you're getting a superior clean. i'm never going back to a manual brush. financials are become on the market now. the group is also down on the week. is this a risky time to bite stocks. >> matt maley is the management
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director. he is bearish on the financials. i'll start with you. the environment, of course, q-1 earnings for the banks were, in fact, actually pretty good, better than expected. and since then, a lot of those seem like they're concerned and things like that improved. so why is it like that today? >> i think a lot has to do with the flattening of the yield curve. a lot of people set up, remember back in december, we thought we were going to have the big rate hike and this is going to be positive for the stocks. they got the rate hike. then everybody had to peace them out. the same thing happened this time. the fed became more hawkish. people started to load up on the group again. but as -- rates started moving up and the long term rates didn't move up. the yelled curve flattened out. even if get a rate hike that
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seeks more likely. because they're not going to be able to ride the yield curve as they have in the past. >> the yield curve slook pretty dreary for bank stocks. how can you be bullish in that environment? >> let's look and see what happens from february 11th to last week. the financials had horrible sent. . when things were a little bit better and looked like the fed would raise rates, they rallied about 20%. they gave some of that back now. but the reason that we're upbeat now is you never know if a turn is going to happen until after the fact. you saw earlier this year, the stocks move well in front of that. if you turn the volume down right now the banks are selling at the most attractive valuation relative to the s&p 500 that they have in a decade. the balance sheets are in great shape. they have great capital ratios. a lot of them are paying better than 3% yield. at some point in the next year, the fed is going to raise rates. the banks will be a big beneficiary. in the meantime, you're getting them in the cheapest area of the
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market. we think they have 20 to 30% upside. there are not many areas of the market question say that. >> the effect of brexit on the yield curve aside, should we be worried about the u.s. banks with brexit on the cards? the exposure to the uk isn't that high, is it? >> i don't think the brexit has as big an impact on the yield curve. long before the vote started gaining momentum, the yield curve is flat ening. and so my biggest concern is that it will continue to flatten or that pressure to flat enwill continue over the summer because of what the ecb is doing. they're buying all these bonds both sovereign debt and corporate debt now. that keeps those interest rates low which, you know, even at only 1.5% or 1.6% makes a big fat yield. it makes it very compelling. people will continue to bite long end of the market in the treasury market.
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as for europe, one of the biggest concerns you is talk a lot about deutsche banc and it's all time lows. well below the lows of the crisis in 2008. we also have the italian banking stocks and they fell well below this year. they're not performing tlaen the aggregate amount of that is more than the entilian banking system. deutsche bank has such a huge derivative. and it's a big yellow warning flag for me and what is going on at deutsche banc. >> very quickly, you said 20%, 30% upside. do you buy today or wait until after the vote? >> we buy half this year and then half after the vote. we think if they lead the european union, they will have down side f there is a staveout, we think the stocks will get a
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pop. we do some now and some later. >> thank you for joining us. >> thank you. >> stocks are at session highs. the dow is down as much as 159 points earlier in the session as we look at markets right now. we're up 62. so up .3%. quite an impressive turn around since about the first hour of trade. still to come, the words and phrases you should not type in an e-mail at work. that's what private g-mail accounts are kept for, michelle. we'll tell you what goldman sachs and maybe your employer are looking ought for.
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is control. this is the pursuit of perfection. welcome back to "power lunch." california's insurance regulator has come out against the anthem merger with cigna and now we're getting a response from anthem to that decision. the company issuing a decision saying we don't believe the california department of insurances opinion is based on the true merits of this transaction. and goes on to say that they're confidence that the department of justice and other state regulators will see the merits of this deal.
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california's action doesn't actually stop the deal in its tracks. but california being a very big state holds the big weight with federal regulators quite likely as they consider this deal. and there are many, guys, on the street who think that this is going to be the tougher of the two major insurance deals to pass regulatory muster. back to you. >> all right. thank you for the update. we go from the health care sector to the health sector. news alert relating to zika. we have the details. >> that's right. the centers for disease control and prevention putting out numbers on the number of births there have been of women who have had the zika virus. six babies have had zika virus birth defects in the united states, three of those were born with birth defects, three were miscarriages or aborted. the cdc is monitoring this because zika is linked to the birth defects. they're monitoring more than 200 pregnant women in the united states.
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importantly, these were cases of travelers back to the united states. we do not have the zika virus circulating in the continental u.s. although public health officials expect that could happen as warmer months approach. michelle, back to you. >> do we know where the cases are? does it matter since they were traveling back from somewhere else? >> i don't have the data with me now. i can check. it does matter because they were traveling back and they didn't catch it here in the u.s. >> they were in the south, for example. it may be a different story suggesting it was pervasive in a certain area. >> that's right. >> okay. thank you. >> thanks. >> so not a happy camper. those four words could set off alarm bells if you work at goldman sachs. >> yeah, hi. goldman sachs employees are told that the firm is monitoring their e-mails for certain phrases. but they're not necessarily given the list of those phrases that the compliance department is watching for to protect against any fraud or
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embezzlement or bad activity. cnbc obtained a list generated fwlak 2008 inside goldman sachs for the plan to monitor employee's e-mail. we can bring some of it to you now. most of it is on cnbc. take a look at the phrases. something as basic as answer your phone. that will get your e-mail flagged inside goldman sachs. or disturbed/troubles me. that may indicate a problem. the compliance department at goldman sachs. they want to know about it. also, don't worry, i'll take care of it. similar problem there. take a look at a couple more here, embezzle the account. obvious why they may want to watch that. i lost enormous amounts of money or mad or angry or frustrated as f that, is one that will get the e-mail flagged. there are 13 varieties of the f word on this list which we have up on cnbc.com. it gives you a sense of just what goldman sachs is looking
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for there. this is a widespread practice within the financial industry, regulators want banks to monitor the employees' embarra-mails. they're told they're monitored but not told what they're looking for. >> not a happy camper that, is a sweet and endearing phrase, isn't it? >> it s but it indicates some disgruntlement. something in a a banker is upset about. anything that registers any emotion is something they're going after here, particularly with all the f bombs and f bombs on this list. anything where there is a real point of convention or conflict that, seems to be something they want to watch for. >> why would they look for f bombs? bankers and traders don't swear. >> it's interesting. interestingly, michelle, i'm told that this list is generated back in 2008. i'm told they now updated the e-mail security procedures add goldman sachs. can you not send an obscenity on e-mail in goldman sachs without it popping up a dialogue box
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that says are you sure you want to send this e-mail. it contains an obscenity. some of us at cnbc would see that dialogue box a lot. >> worth checking cnbc.com. very amusing phrases on there. thank you very much for. that. >> all right. so what is an employee's trigt privacy in the workplace? is there any? does your boss have a right to spy on your e-mails? what about your google searches? sechlt messages? social media accounts? are they allowed to snoop on that, too? we have an attorney yoing us. welcome. >> good to see you. >> i'm not surprised by anything that he reported there. i mean it's great to have the actual list, for sure. certainly raises an interesting question. i assume that -- i avoid typing my boss is a jerk for very specific reasons. should anybody believe they have any privacy with their e-mails at their office? >> probably not. this is an interesting example that shows the competing balance between corporate overright and employee privacy. the general rule is that employers have broad latitude and discretion to monitor
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employee internal e-mails accounts as well as publicly available social media. that is a broad latitude. there are limited exceptions to that. it's not completely unbounded. and the two small exceptions are the employee is pointing to potential illegal activity, there can be reprisal. there also, if the employee is complaining about the terms and conditions of work internally, that's known as protected speech about the terms and conditions of one's job which is kind of a var yant of freedom of speech. fwhaut is a limited exception as well. >> what about that little trick of using your g-mail account or your private account even while you're at work and clearly doing work under the terms of your contract. does that protect you? >> well, if you are piping company information into your private phone, then it's not f there is any indication that that goes through, then, of course, the employer has the right to go ahead and look at that because there is a pro pry takery interest for getting access to that information. so there really should be a law
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that people basically have between their work account and private account. the other thing that is a big development is the federal government is nailing the cases on social media. social media policies from a lot of companies are sometimes deemed as overly broad and the obama administration through the national labor relations board is really slamming companies for trying to hit some of the freedom of speech corner. it's a balancing act. this is really a hot area of employment law. >> what if i have my personal phone which i may frament take amusing selfies on but i also have my work e-mail on that phone. does that then mean that work can claim the other images, information, whatever, off my phone and it be theirs as well. >> to the extent it is derived from or obtained from the company, absolutely. because the company has the pro pry takery interest and direct business gt tr in regulating and moring toing. that people have to be careful in terms of not blending the lines. it's surprising to day with such an important topic that
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employees don't even realize the supreme court concluded that they generally don't have a reasonable expectation of privacy in the e-mail. just think it would surprise a lot of employees in corporate america. similarly, companies don't realize the obama administration slooking at social media policies. this is a very dynamic area that is really cutting across corporate america every day. >> seth, thanks so much for joining us. i think i have to go back to writing letters. >> you bet. >> too nervous. all right. 2:30 on the east coast. let's get to sue. >> here is the news update this hour. defense secretary ash carter meeting with saudi arabia's defense minister at the pentagon. the two formed a long term security partnership between the two countries. the prince will also meet with president obama at the white house tomorrow. british lawmaker jill cox was shot and killed in a daylight attack in the town she
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represented. a 52-year-old man was arrested and believed to be the lone attacker. cox who was married with two young children was elected to the house of commons in the may 2015 general election. strong winds continue to fant flames of an out of control wildfire burning in southern california. that blaze charred more than 1100 acres of land in sanlta barbara county and forced the closing of a 30 mile stretch of the 101 freeway. home owners in the area have been evacuated. and in what has turned out to be a bit of mashgting stumble, virgin america sent out a mass e-mail tuesday promoting summer travel deals. the ad included a cartoon image of two tourists on a boat watching an alligator approach them with its mouth open. at some point the company changed the alligator image to a man floating in a pool. this follows that tragic descent at disney world this week in which an alligator killed a 2-year-old boy. that marketing plan was released in advance of that. that's the cnbc news update this
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hour. back to you. >> you can see why they retracted it. >> absolutely. oil market closing for the day. let's get to jackie at the mymex. >> rough day for oil prices. 3% decline. wti finishing at $46.31. taking out very important technical levels. it gained momentum to the down side. yesterday traders thought that inventory number would actually give us a little bit support. but when you saw the dollar move higher today, that was the reason that crude oil went down. also, there is a lot of fear out there in the marketplace about the brexit vote that is coming up. that could impact the markets and create chaos. and there are concerns about global growth base ond. that that's why crude is moving lower. traders are saying to expect volatility in the coming days until we have more clarity son that situation, especially if we see the dollar continue to rise. back to you. >> thank you very much for that. now to the gold market. gold off the highs after breaking above 1300.
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we're dissecting the trade. >> the outperformance in gold really captivating at tension of traders after hitting 13167 t. s there is a heated debate about whether gold goes higher from here. the short term catalyst is the brexit with increased odds of britain leaving the eu and the negative consequences that could follow. longer term factors include central bank action whether it is the federal reserve kugt back expectations of a rate hike or the bank of japan introducing negative rates. yields continue to drop. the value of government bonds with negative yields in, fact, hitting a record high $8.3 trillion market according to j.p. morgan. japan account foing for 54%. and gold does not have a yield, it is seen as a risk haven and one of the factors helping gold this year. now the wild card in all this is sent. risk aversion.
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it is helping gold gain traction. experts say better than expected economic data in the u.s. would then result potentially in the fed raising the likely hchd a rate hike and therefore gold potentially would lose steam. i think after the debate around central bank action versus political uncertainty and which one carries more weight. and that, of course, could potentially tell you where gold goes from here. >> in general, the risk of sentiment is helping gold. thank you very much. buckle up. we're about to add serious excitement to your portfolio. we're talking roller coaster stocks when "power lunch" returns. er, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.
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what is the currency market telling us about the brexit? joining us is craig johnson, a technical analyst with piper jaffray. stacy gilbert is from strategy. what are the charts telling us about the brexit vote? >> there is the chart of the pound versus the dollar. as you can see from the chart, the pound versus the dollar is in a decline for the better part of a year. if you drill into the selloff
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over last 30 days, you'll see the pound has weakened about 5% over last 30 days. now compare that pound to also some of the other safe haven currencies such as the swiss franc. you're seeing the brexit vote and the price into a degree. but when i talk to the smart money out there, they also say this is position flat ening ahead of any vote coming up or a little hedging that is taking place. but nonetheless, you're seeing currency markets reacting, pricing it in. i want to remind everyone, it is going to take a year or more before you actually see real impact due to any sort of brexit vote. >> craig, on the day of the vote if we get a lead outcome, how many down side against the dollar? >> well, that's a difficult question to answer. you will be taking out some pretty important support levels on the sterling versus the dollar and on some of the other currencies. i would expect, again, further, deeper selloff. but if you look forward over the
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intermediate to longer term, you might actually see that a bottom may be getting made at that point. to craig's point, it seems to be focused around the pound. the stock price is telling us what markets think the price is right this second at any given moment. the beauty of options is this is a forward contract. it is a snap chat in time of what the market is expecting in the future. we can get a move and probability. so looking at the options on british pound or the euro, there is movement being priced in there. you ask where is the market positioning in terms of if there is a leave, what happens? i would say in terms of the pound, we're seeing a move of 8% to 10% on the down side. that is a huge move in terms of the currency. if it's a stay vote, 5% to 6% on the upside just base ond where the options are being priced. ott euro significantly less. it's probably around the 2% move. so the pound has the most risk
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in it. you're looking at historically large moves that could happen depending on the outcome of the vote. >> stacy, pep underplaying the effects of this might have on the euro then? >> i don't think so. if you think about really which country is going to be most impacted and where the most ris, is i would argue that i think the pound has that most risk. and i think the moves that were being priced in are certainly reflecting it. you know, i don't have a great handle on where the euro can go. i can tell what you the market is expecting and it's around a 2% move. it's the pound where they really see that risk. >> thank you for joining us. find out more market insight at tradingnation.cnbc.c tradingnation.cnbc.com. >> whether she talks about a will 8% move, had some hedge funds won't move that. you put on a big trade like that, it can do you in. doesn't it drive some trading out of the market? >> we've seen all sorts of forecasts about where kit go. it is very hard to pinpoint an exact number. the point being that the range from february to now, 138 to 146
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and we're at 142, kind of in the middle. that suggests there is down side if you go exit vote. the dow is down 169 points, at the lows of the day. it was down that much. and right now, of course, it is up up .25%. we'll talk about the market's big turn around when we come 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
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steve, other than making i'm here atme move stuff,rade trader offices. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade.
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welcome back to "power lunch." time now for the power pitch. entrepreneurs have 60 seconds to convince a panel of experts their business has what it takes to be the next big thing. >> i'm darnell jones. >> and i'm daniel jones and we're the founder of the power hand. power hand is an athletic company that designs and manufactures velopment products for several sports including basketball, baseball, boxing and more. >> this started where i would dribble a babble with gardening gloves. it was extremely difficult. >> we raised our initial funding via friends and family. next is convertible note rounds. that included investors who are
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current and former professional athletes. >> power hands has five patent pending products at average price of $24. and in 20 months we sold over 17,000 junts and 55 countries with an average return rate of less than 1%. >> next step, we're expanding into retail. then we're expanding our portfolio. we're adding technology to provide our athletes with real time performance messages. power hands will be a game changer. are you in? >> welcome to the power pitch. i'm melissa lee. you saw the pitch. now let's meet the panel. joining us is a board member of the new york angels. she advices and invested over 40 startups. also us with, nichlt r liberboim. and david wu, he is a general partner at maveron, a firm focusing on consume are companies with $1 billion under management. he has more than 30 startups in his personal portfolio. you're in the hot seat. we'll kick it off with a
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question. >> i would have liked to hear about the sales and marketing background. it is so key to launching a consumer brand as well as market size. but i will still give you a b plus. >> so on the market sizing front, how you are estimating the total market size in dollars forage lettic training gloves? >> today, 36 million youths participate in sports. and they spend on average 40 hours a week practicing. so what we looked at is across right now our market is really basketball. we just launched into baseball with heavy hitters behind us such as david ortiz and we really feel that basketball and baseball is going to be the largest markets. and our focus is training, training, training. >> what was missing for me is more about your background as financeders and high level financials. i think it is strong. i gave you an a. many venture capitalists shy away from funding married couples because of the couple's relationship can get in the way of making the right business decisions. how do you get comfortable that
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can you run the business well together and not get into the con fwlikts? >> when i came up with the invention, the first person twoint is danielle because of her experience in sales and marketing. she had 15 years with one of the largest medical devices in her career. it is important to have that balance. i can come up with the creative ideas and she can come up with the execution plan and we work off each other. >> i really liked when you described the product how it works and the passion and the energy you guys had. i'm going to give you an a minus. i had the chance to go on amazon and, you know, congratulations. you have stellar reviews. is this something you have to really intergrate into your daily ritual and regular training routine or can you see results kind of quicker even if you only use them sometimes? >> we have kids that are 5 years old that are using our products. and not only are they using the glove from the basketball perspective that strips your dexterity and adds weight, but they're using reps. so from a combination of both from a 5-year-old all the way
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from a professional it really depends on your skill level. >> you both have gloves. may i? >> absolutely. >> all right. let me -- these are heavy. surprisingly heavy. you're talking about a pitch about technology. i'm wonldering, you are right now i know you're focused on getting this off the ground and expanding with within your core markets. you parallel investing in the technology in the gloves? >> yes, adding technology to get this to get real time metrics is the next stage. >> there is already technology that measures hand speed but we can easily implement them into the products. i think initially it is going with what is the path of least resistance and building on that to make it more specific to our initial product with the way the weighted gloves and the other products down the pike. >> we heard what the founders had to say. now we want to know if the panel is in or out. what do you say? >> i have to say after meeting the entrepreneurs and seeing them work together as a team, i thinker that truly fantastic.
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the company made great strides also in terms of global sales, filing patents and bringing on big sports celebrities names. so i am going in. >> i generally don't invest in startups until i see retail performance. i see these will be very strong. so i'm in. >> wow. >> david? clean sweep, yes or no? >> i have questions about is this a really, really nice angel funneleded size business or can this get the venture scale? as a result, i had to think about it a lot. but i'm going to go out. >> danielle, what is your reaction? >> no. thank you for your feedback. and david, i think by a couple months we'll give it 2017, we'll circle back you to and you'll be in. >> good response. our thanks to darnell and danielle of power hands and our panelists. and that is today's "power pitch." >> all right. so you heard what the panel had to say. now it's time to find out if you are in or out on power hands. follow the conversation on twitter using the #powerpitch.
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for more, head to "power lunch's" website. buckle up all you thrill seekers. up next, we're about to add some fun to your portfolio. we're talking roller coaster stocks when "power lunch" returns. >> my name is lisa amatti, and i get paid for this. >> what it takes to be a paleontologist. watch nout w on cnbc.com. yet mae still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks.
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welcome back to "power lunch." the dow is down 170 points. the dow currently up 63 points or a third of one percent. risk has been off most of this week, but we're finishing today, it seems, with a bit of positivity. and in terms of how much is priced in to u.s. markets in the last week, they're only down a couple percent compared to the german dax. as for today's session, the winners on the s&p.
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on this day in history america's first roller coaster opened, the year 1884, coney island, in new york. joining us now, tyler is a vice president. guys, good to have you here.
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tyler, let's start with you. what drives these stocks. is it simply they duo down during a recession, up when the economy is good or more focused when they have really cool new rides? >> i think the biggest driver is the new attractions they have in the park. whether they add a new roller coaster, new event, new show, the whole idea for both of these companies is every year you have something new. every time a consumer goes to the park, there's a new experience. they're spending money on technology. >> can i interrupt you? does that mean you're not actually building these physical structures? you can sit somewhere and the ride is in your eyes rather than physically on your seat? >> yeah. so the way it works for six
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flags. they give riders the option when they're on the roller coaster. from a financial perspective, you look how much it costs. adding virtual reality is less than a million. you're still getting the returns of a big attraction but the cost is actually substantially left. >> should we be buying the stocks? >> we're continuing to see groukts in this. however, we to have a number of areas that i think we should certainly take a little more caution with, namely there has been a lot of excitement. for me, i think we're left with the scenario where generally the consensus and upside looks much more limited and also when you
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look at the valuations for these stocks, they're both at near peak levels. so we look for other ideas within our leisure coverage at stephens. >> tyler, is it hart for these guys to compete with the universals and disneys of the world where they have brand value and characters and the themes. the likes of six flags really pushing on the thrills as opposed to the branding. >> it's a good question. i would say no. obviously disney and universal have been spending huge money. however, six flags and cedar fair are putting more in. typical customer is coming from 50 miles and in. you look at a disney or universal. they're atacting commerce from all over the world. a little different. >> guys, thanks for joining us.
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six flags and sri door fair. tyler batory and joe edelstein. you're a roller-coaster fan. >> it makes me want to go. >> seeing it makes me sick to my stomach thinking about it. >> thanks for watching, everyone. >> "closing bell" starts right now. >> welcome to "closing bell." i'm sara eisen in for kelly evans along with bill griffeth. >> he gets to go home and you get to stay with me for the next couple of hours. >> lucky me. >> i'm looking forward to it. bill griffeth. stocks turneds around after the global action. we'll tell you what's behind this reversareversal. >> we're going to focus on financials, the worst performing

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