tv Power Lunch CNBC August 29, 2016 1:00pm-3:01pm EDT
thor ceo bob martin. >> that's a horse. remember, that's air street, which we're all going to live out of nuclear war happens. >> zombie apocalypse as well on this post-fed jackson hole we're in. that does it for us, thanks for watching. see you tomorrow. power starts now. all right. welcome to "power lunch." we got a lot coming up. first of all, talking about mylan labs company announcing a new program today to bring on a generic version of the epipen. but is it too much -- too little too late to quell the firestorm on drug pricing? a bold call on stocks, dow headed to 38,000, and trouble brewing millions from the carolinas to the gulf coast on high alert as hurricane season kick sbos into high gear.
"power lunch" starts right now. all right. hi everybody. i am brian sullivan. happy monday. here's what else is happening at this hour. apple sending out invitations to an event it will hold on september 7th, a new iphone, new ipad, new tv? we got to wait to find out. environmental groups in colorado failing to gather enough support to put two anti-fracking measures on their ballot this november. and stocks are sitting near session highs as we head deeper into the trading day. right now the dow is up triple digits. let's kick things off with bob pisani live on the floor of the new york stock exchange with more on what is moving your money on this monday. bob. >> and, brian, we got a very broad rally. let's take a look at the market internals. what's broad 3-to-1 advancing to declining stocks been there most of the day. you want to complain the volume is light, it's august, the volatility it's subdued, 11 or 12 on the vix. but it's been there for a while. i want to see some new breakouts on the new high list. only five on the s&p at a new high.
i get excited when i see 10, 15, 20%. we're not there yet. sectors, take a look, big leaders materials, energy, telecom and utility stocks. generally that's our leadership group today, the stuff that's been working throughout the year is what's been moving up. but we've got a new leader too. financial stocks were laggards all throughout the year, recently have been moving to the upside, and you can see some of the names here. not just the banks like suntrust or bankcorp, but prudential, what's it all mean? over the weekend a lot of people think the economy's getting better, risks are declining and maybe rates might be higher by the end of the year? that's the likely explanation. the funny thing about it is if you look at yields on the treasuries, down right across the yield curve today. kind of hard to reconcile the stock market thinking with the bond market right now all i can tell you a fairly broad rally. finally september we're going in and everybody complains august is lousy and september is worse, but be careful. in presidential election years,
september is often a lot better than people think. in non-election years it's true, september is the worst month, 12th out of 12, but in election year what we're in now it actually ranks 7th out of 12, back to you. >> good to point out that outlier. thanks, bob. mylan announcing it is launching generic epipens following the backlash over the company's pricing. but the controversy continues. meg tirrell has the latest details on what they announced today. >> so pretty surprising announcement coming out this morning from mylan essentially saying they're going to provide their own authorized generic to the branded epipen. the price will be $300, about half that of the list price of the branded epipen. the so-called authorized generic will be identical to the branded product and it will be what's known as ab-rated. so that means it's so identical, really the same product, that a pharmacist can swap it in automatically when a doctor prescribes epipen. now, mylan's ceo heather bresch saying in a statement today that
because of the complexity and opaqueness of today's branded pharmaceutical supply chain and the increased shifting of costs to patients as a result of high deductible health plans, we determined that bypassing the brand system in this case and offering an additional alternative was the best option. now, of course we know a lot of the criticisms of the system here was that there was no competition to mylan's branded epipen and that teva had tried and failed. now the competition is being provided by mylan itself, which of course is traditionally a generic company. now the question people are asking though is how much revenue is mylan going to get from the generic version of its own epipen, what kind of hit is this going to have. you can see mylan stock there up more than 1%. it's really been seesawing today as people are trying to figure this out. >> literally just got an e-mail from mylan just now from their pr, because there's been some question about this because they mentioned a direct ship program, which is what we've talked about are they going to go around to try to change that cost structure that we had. >> that's right. >> they're going to work on that, but they also said this is
going to be available in pharmacies, it's going to take a few weeks, just like any other epipen and that insurers should push you to that because the insurance companies want you to use the generics. but if not, you should ask for it. so mylan confirming just now to us this will be available like the normal epipen in pharmacies. >> and what's fascinating about this though, analysts are coming out questioning whether this is going to further tweak off, anger the pharmacy benefits managers here, which you know got a chunk of a rebate that mylan had put into place on the branded epipen. so further infighting potentially in the supply chain here. >> sure. what about wells fargo's analyst put out a note today raising questions about the epipen for schools program. and when you read it, he has so many questions about the confusion of who was the distributor, who owns the distributor, what is going on here? is there yet another round of questions to be asked about the school program? >> well, so david's note coming
out this morning was kind of overshadowed in all the epipen news this morning. >> sure. >> what he's doing is raising questions about when you go to the epipen for schools website you see there's a name of another company on there, bioridge pharma. and his questions are just surrounding what is this company, who owns it, how does it work. and mylan -- >> i want to go to a place that is potentially -- i don't know what's the word, but as i read it, it reminded me and was it supposed to remind me of valeant and philador. >> yes. >> which is an explosive question. >> he does not mention valeant or philador in his note. he is not saying it is similar. he is raising a lot of questions though. so one might wonder whether it is reminiscent. he does not say that. and we did reach out to mylan on this. they gave us a statement saying that their epipen for schools program is a mylan program for
which bioridge pharma provides services, completely unaffiliated entity to mylan and mylan has no ownership stake in the company. you can go to the website to see it works with other companies as well. >> i think you've pointed this out, meg, but we have to remember mylan has a partner on this, pfizer. this is not just a mylan product. so pfizer is also involved. they're the biggest company -- pharmaceutical company in the world. the question now is also as another wall street research firm put out, if because this price cut is mylan going to have to look to cut some costs internally if they make less revenue now. but that's a pure stock story on mylan. but we're cnbc. >> exactly. what are you going to see in the guidance. >> if generic comes out isn't there potential possibility they could make more on the generic based on the way they get around distribution models? >> this is a fascinatinining question. we have a lot posted on
cnbc.com. if we remember the economics of the supply chain that mylan actually gave us last week. they said they netted about $274 out of $608 list price for the branded epipen. now, if they're going to supply a generic epipen at a $300 list price, what analysts are trying to figure out now is does anything else come out of that? how much does mylan net of the generic list price of the epipen? and if it's $270 for the branded, could it be more for the generic. a lot of people are raising that question. we don't actually know the answer yet. >> i think that's why this e-mail we just got that we highlighted it's not just the direct channel. they're going to try to do that, but right now the distribution channel is going to be the same as it was. so you can still get it at your local pharmacy. >> sure. >> and your insurer should push you toward it. it's not just some direct sale. >> which in cable they talk about over the top. you can get your hbo over the top, you can get your drugs to
you over the top, skip the distribution. >> i can't imagine pharmacy benefit managers would be happy about this price guide. if the reverse from what we talked about last week, they benefit from increases, they must not benefit from price cuts. stick around, talk more about one of the great issues of our time trying to fix america's expensive and somewhat broken health care system. one manager says the entire system is broken is lawyer and author steven brill, he wrote a book called "america's bitter pill," money, politics, back room deals and a fight to fix our broken health care system. we bring him in. steven, you wrote this book before all this stuff we're talking about came out. why do you say the system is broken and has been for some time? >> well, it wasn't before all this stuff happened. it's before the press started to focus on it. in this case with epipen there was a salvadi before that. sitting here listening to you
and let's sort of step back for a second because i think this whole thing is a metaphor for how crazy and dysfunctional the system is. you have a company that has said we are selling something for $600. we used to sell it for $100. it's the exact same product. now we're simply going to take the brand name off it, but we promise you it's the exact same product and now it's going to be $300. it used to be $100, but now it's a great bargain at $300 because it's half the price of the $600. that is insane. there is no other consumer product in this country that works that way. >> why has that happened? >> only the health care system works that way. >> and why is that? >> and it happens because we are the only country that doesn't regulate health care prices in some way or another. >> do you think that would be a solution to regulate health care prices? >> well, it's not a hypothetical. every other country in the world does it and does it successfully, produces better health care results and much
less expense. now, if you look at what the epipen product is or what a cancer drug is, it is a patented product which means the government has given it a monopoly. and therefore the drug companies are free to charge anything they want. but in this case unlike the patent that you might get on a cell phone or something, this product is used to save your life. therefore you must buy it. you don't have a choice to say, well, it's too expensive, i'm not going to buy it. >> mr. brill, all of those points have been brought up. let me ask you about the broader issue of pricing that you so correctly highlight, which is that we pay more here in the united states. and the argument has always been on the other side that if we the united states start to regulate drug prices the way every other advanced economy does, there will be no other country left paying for r & d and drug advancement will slow dramatically. and that maybe the answer isn't
the united states regulating drug prices just like everyone else but other countries in the world that have very advanced economies actually controlling it less and paying their fair share of the research and development that happens. >> well, frankly that point is absurd for two basic reasons. the first is the drug companies make a lot of money in all of those other countries. they sell very aggressively. and their profit margins are very high. they're just not astronomical the way they are here in the united states. and the simple fact is and this is cnbc so you guys can do this, look at the percent that these drug companies spend on r & d. what they classify as r & d on a lot of which actually isn't r & d, it's a very low percentage. in no way justifies a margins of 80%, 90%. so the price is too high not because of r & d. it's too high because here they
can charge what they can. the second point is, who signed the united states up to subsidize the r & d for the rest of the world? assuming that's what we're doing, which again we're not because the r & d is not that high. but, you know, why were we signed up to do that? we are the health care system unique in the world that is struggling under the cost of health care. >> do we need to do more on other health care costs as well? >> oh, absolutely. >> of course hospital stays are more expensive in the united states as well. but it's a harder thing to pinpoint. >> well, it's not terribly hard to pinpoint. if you look at the p & l's of the so-called nonprofit margins, they have very high margins, executives make 2, 3, 5 and 10 million dollars a year. you pay $10 if you have an aspirin in a hospital. you pay $150 for the use of the
cuff that goes around your arm when they take your blood pressure. and, again, we're the only country that allows that. >> when you look at, steven, and i posted last week on my facebook page the income statements of a number of different players on this chain. a couple of insurers, a couple of pharmaceutical companies, a couple of pbms, because we're trying to highlight that the entire chain has been going up. in fact, you just mentioned hospital, so a moment ago i just brought up tenant health care, not picking on tenant but -- >> tenant isn't even a high profit margin. look at the nonprofit hospitals. >> well, i can only go with my public company systems right now on live television. i'm doing the best i can. the point is at the end of 2012 tenant's revenue has a doubling in about four years. we've seen that with insurance companies as well. >> right. >> you know, we've had this argument before, steven. last year, a year and a half ago when gilead sciences priced the once a day hep c treatment, it's
what $1,100 per pill. >> right. >> $1,000. >> a thousand. >> huge outrage then. nothing changed. is congress going to do anything? >> no, of course not. but let's come back to your point though. the one player in the health care economy whose margins are the lowest are the insurance companies. step back and think of it, there's an obvious reason. they're like us, they're paying bills, they're not writing bills. they have no control over the prices. they're on the receiving end of all the price increases from the hospitals, the device makers and the drug companies. >> they're writing bills, steven, i disagree with you 100% right there. everybody's premiums in america have gone up. >> they've gone up, but look at their margins. look at united health care's margins compared to umera or mylan's margins. they don't compare. there's nothing like it. >> mr. brill, thanks. it was provocative. thanks so much for joining us.
he's got a whole book on the subject. >> sure enough. happy to do it. >> thank you, meg. i'm sure meg will be around for tomorrow because we have this other big interview to tell you about here on "power lunch." we're going to be joined by u.s. surgeon general vivek murthy at 1:00 p.m. eastern time. >> pretty cool. a new storm, a real physical one developing south of florida. the latest straight ahead. and later, two pilots pulled from a united flight for allegedly being drunk. why does this keep happening? "power lunch" back in two minutes. this just got interesting. why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure.
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welcome back to "power lunch." i'm seema mody. corrections corp. and geo group taking a leg lower, the department evaluating whether the agency should continue to use private prisons which run some of the detention centers for migrants. the announcement comes after the justice department's decision last week to phase out contracts with private prisons which send geo group and corrections corp. stocks sharply lower. they're down about 35% or more over the past one month. just in the past couple of minutes geo group has responded to the department of homeland security's announcement saying its facilities are highly rated and provide high quality cost effective services. but we are looking at those stocks lower in today's trade, brian. all right, seema, yet another day on the private security beat here. remember, most of these guys have state contracts.
so we'll see if the market decides it overreacts. all right. following a developing situation that could be bad news for the already flood-ravaged gulf of mexico area. new storm developing just south of florida. let's get to the weather channel's carl parker with more. carl. >> yeah, we are watching a tropical depression right now on its way to becoming a tropical storm and could even become a hurricane before it likely moves into florida. here's the latest on that system. it's now moving west at 7 miles per hour. impressive satellite presentation in the last several hours here. still a little bit disorganized in that the center of circulation is on the north end of where all those thunderstorms are. but that may change here in the next couple of days as the wind shear is going to be lighter. so it is expected to become a tropical storm. it may in fact become a strong tropical storm and not very far away from a hurricane. so we can't rule out this storm becoming a hurricane. and if it were to come right down the center line here and make its way into northwest florida, most of the weather would likely be on the east side of that circulation.
and we're talking about heavy rain, gusty winds, water level rise there and a surge vulnerable area and a tornado coming up as well late wednesday and through the day on thursday. michelle, back to you. >> got it, thanks so much. we're going to talk more about this because there are hundreds of offshore refineries and oil rigs, could impact an already fragile oil market? let bring in a cnbc contributor. how many rigs in the palt of destruction? >> depending on that hook goes i guess how far west it goes that will be the heart of production, but the path he just showed, the weather person just showed i apologize for not knowing his name. >> carl. >> carl, thank you. they're not going to take a chance. you'll hear rigs being evacuated as soon as this afternoon at this point. >> we can observe it at this point, right? you talk about whether or not we have a supply glut.
so if this comes out for potentially a couple of days is it meaningful? >> not so much. particular pli since it's not going to turn into a hurricane. we're in record territory by the way. we haven't had a hurricane in over 1,000 days in the gulf. there's kind of a nervousness we're due. >> if you're just reverting to the mean that -- right. >> something should be happening soon. but there's a huge cushion. but it will juice prices because shipping interests will be diverted even for a time, the louisiana offshore oil port will be shut down. that's about 10% of our crude oil imports. so it could leave a mark. we've had such volatility in the crude oil inventory data series, big drawdowns, big rises that it could support prices through labor day here into next week. >> you got to remember a lot of ships, hundreds of ships a week big oil tankers going right through that pass. even if it does that hook and sort of went back east towards tampa. >> that hook will effect the shipping lanes into the loop. >> this talk of once again iraq and iran and all these places somehow trying to control the price of oil, i ask cynically
because i don't think you believe a single word of it. >> i haven't for quite some time. >> i know. >> and every day they say one thing a bunch of them and the next thing you know they're talking about wanting to up production. iranians just said over the weekend that they haven't gotten to their full market share yet so they're not cutting back. iraqis, they're not even putting a number on where they want to be, and they've made such tremendous progress since the end of the gulf war. record amounts out of their southern terminal. and now even looking to ship oil through iran if they need to if they can't cut a deal. >> michelle, you might be a better person to answer this question having been to iran. >> uh-huh. >> a lot of talk that maybe the iranians and the saudis are starting to come together, at least as far as oil goes, which would be bad for the oil market. do you think they'll be able to do that? >> i'm like john. i don't believe a word of it. >> they're still at each other's throats over syria and the future of the region and who's going to be the top dog. they are not going to work together on anything until this is over. >> and iran needs the money. they need to pump more. they want to get to that 4 million barrels and they're not
close yet. >> deal or no deal, you both say no deal. >> no deal. we're walking. >> thank you. all right. up next, sneakers, slot machines and, yeah, the music gives it away, snoopy, it is the good, the bad and the ugly in today's trade when "power lunch" returns. ♪ [engine revs] ♪ [cheering] ♪ the highly advanced audi a4.
first to the good. metlife one of the best performers in the s&p 500 right now. fbr upping its price target by $3 to $54 a share. it's currently at $42.40. the bad is nike, currently the worst performer in the dow down 0.75%. not by much considering it's an up day. and it's an ugly day for caesar's after federal judge ruled the casino operator must face bondholders in a multimillion dollar legal bankruptcy battle. you can see the stock is off 18%, brian, wow. >> yeah, that is ugly. this is even worse, michelle. the incredible and terrifying story in the skies. two united airlines pilots arrested this weekend shortly before takeoff on an international flight because they were reportedly drunk. plus, just 70 days to go until the election. the story lines keep changing. trump reaching out to the african-american vote disgraced new york politician anthony weiner causing new headaches for hillary clinton. those stories and more. stick around. ing the oceans.
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this hour. a false report of gunshots that sent panic travelers fleeing from los angeles international airport last night came right after officers with weapons drawn detained a man dressed as zoro. he was possibly carrying a sword. the scare shut down three terminals and delayed about 280 flights. 28-time olympic medalist michael phelps appearing on "today" show this morning. he talked about the scandal surrounding friend and olympic swimming teammate ryan lochte. >> it's always hard to see a friend and a competitor go through a hard time like this. i know what it feels like and i've been through it before. and, you know, hopefully he can, you know, come out of this a better person. i've reached out to him a couple times. and, you know, he i think understands a lot and, you know, he will be able to grow from this. >> a four-alarm fire engulfing a church in west philadelphia this
morning. flames shooting through the roof and windows and doors of the presbyterian church. two people were inside but did make it out safely, thank goodness. no word on the cause of the fire. and pope francis meeting with facebook founder and ceo mark zuckerberg and his wife at the vatican discussing the use of communication technology to help relieve poverty in the world. that is the news update this hour. i'll send it back to you, michelle. >> thank you, sue. 70 days to go until the election, and just when you thought things couldn't get any danger -- i mean stranger, they did. disgraced new york politician anthony weiner has once again entered the clinton campaign picture. eamon javers has the latest from washington. eamon. >> hi, michelle. it appears anthony weiner has run out of second chances in his personal life, at least for now. remember that anthony weiner was the new york democratic congressman who got caught up in that sexting scandal back in 2011. well, this morning the "new york post" posted a new story
involving weiner sending digital messages to an attractive woman who was not his wife. weiner is married to huma abedin, she is a top clinton campaign official and a very close aide to hillary clinton back to her time at the state department. huma abedin released this statement this morning saying that she has decided to separate from anthony weiner. she said anthony and i remain devoted to doing what is best for our son who is the light of our life during this difficult time i ask for respect for our privacy. and, michelle, one of the tough things about this story in the "new york post" this morning is one of the pictures weiner allegedly sent did include an image of his small child in that picture. so very tough day here for huma abedin and anthony weiner. and obviously this will be distraction for the clinton campaign at least for today and the rest of this week. >> you know, eamon, we need a psychologist to explain how it is that this guy makes the same mistake, the obsession with posting photos. it's amazing over and over and over again. >> some people just can't
control themselves. yeah, look, everybody's got an achilles heal, and anthony weiner appears his achilles heal is on twitter. >> i'm not sure the heel is the part of -- >> he is a heel, some would think. thank you, eamon. >> you bet. to the bond market, nearly as exciting, rick santelli tracking the action at the cme. rick. >> how do you follow that? holy cow. all right. let's look at some one-week charts, shall we? i picked a three-year instead of two-year because the auction kind of plays havoc with my one-week chart. but you see how elevated it is even though all maturities are lower yielding than they settled on friday, they are still holding most of those jumps that we had pretty much on stan fisher. look at one-week of tens the longer out the curve, the less aggressive, but it's still up there however at 157 automatic scaling does you an injustice because right back into that august range outside of friday's settlement. let's look at some charts on the dollar. there's where the gold is. look at a one-week chart,
elevated, look at auger 1st start and you can clearly see that we've moved higher. but the real money ball is on year-to-date chart. you know, we moved recently from 94.60 to 95.60. last year closed at 98.60. after all of this do the investors trading really believe the fed is going to deliver what stan fisher said? i don't think so. dollar still down 3% on the year but we'll continue to monitor its recent strength. sully, back to you. >> rick, thank you very much. dow 38,000, that is the market call from your next guest that says the index will more than double in the next ten years. jeff hirsch joining us now. this the kind of call when you first hear it you're like, oh, that's insane, whatever. actually, if you just do normal math, the average return to the market is 7% to 9% a year, keep adding in dividends, that's about the historical average. how crazy is this call? >> it's not. imagine the reaction in 2010
when we first put this call out when the market was down about 10,000. there was a lot of other reactions out there. it was an even easier mathematical calculation back then it's about 5% compared to outgrowth rate from the end of '99. >> we just showed viewers, we can put that back up, guys, for people on the radio point it out. if we return 7% on average, you're going to double your money in about ten years, 8% return, nine years, 10% return seven years. so on that basis, as long as we don't totally just fall apart, 38,000 -- or 36,000 is not out of the question. >> the number is 38,820. it's based upon a 5% move. >> that's oddly specific. >> it's kind of nos sttalgic, b it's five times the intraday low on march 9th -- march 2009. same prediction that was made back off the '74 low in the 570
in the dow based upon coming out of war, inflation picking up which we don't have so much now yet and enabling technology that changes the world as well as political functionality, again some parts that are missing. >> i love the graphic you put up when you look at, okay, if you get the average expected returns, but there are times when the market goes flat for a very long time. >> correct. >> 1979 the death of equities was on the cover of business week, and that was because the averages had done nothing, i mean nothing. >> went sideways. >> for ten years. >> more sideways back then. we had stagflation, vietnam, opec oil embargoes. >> how do we know we don't have that now? >> i'm not saying we don't have some of that now. i think some of that's ahead. that's the caveat to this forecast that the next couple years which i stated initially when we developed this forecast is that 2017, 2018 post election, midterm year usually correction times we will expect some garden variety bear market 20% or 30%, which would be that
takeoff point, that sort of 1982 moment after the ultimate low of the secular bear and then there's that last little bear market before. >> i think there's a lot of people that still discount the stock market as a place to make money. >> i think so. >> i think there is too. >> skepticism. >> still too many. >> which i understand because the past 15 years we've had two major crashes. crises. depression. >> 50% decline in your portfolio can really, really dull your desire. >> think how long it took for the dow to reclaim its level from post '29? it was like 1953. >> but the 70-year-old millionaires of today who are not, you know, corporate giants or huge entrepreneurs, they're just the people that even as bad as the market was in the '70s. >> uh-huh. >> put some money away, the dow was at 600 or 1,000 or 2,000. and just kind of kept putting money away, dollar cost average, forgot about it and suddenly they have a $10 million
portfolio. >> i'm not a big proponent of dollar cost averaging across the board, but i think continuing to use your strategies and your techniques over the long haul like our best six month switching strategy, like the seasonal work that we do, continuing to do that stuff whether it's dividend stock investing, trading and investing the way it works for you and your portfolio. >> but to brian's point when i think back to 1979, the previous, if you had just kept throwing money at the market for ten years, it probably got frustrating, but you were buying in retrospect you were buying the market really cheap for a very, very long time. >> but you had to have -- >> for the next couple years. >> you had to have a strong stomach because i think to your point, i think the dow correct me if i'm wrong i think the dow rose rose one point literally in the '70s. >> yeah, it was brutal. >> 1970 to 1979, new year's eve to 18980 was like a one-point overall gain. >> you had to have long term beliefs. >> average inflation at that time you lost money. >> right.
>> so the boom's coming but i think we'll get a correction and buying opportunity, a big one over the next couple years. >> got it. thanks, mr. hirsch, good to see you. >> thank you, guys, good to see you. still ahead, the impact of terror on tourism, the destinations people are not traveling to next. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t. an ordinary experience into an extraordinary one. get great offers at the lexus golden opportunity sales event. lease the 2016 es 350 for $329 a month for 36 months
this summer has seen an incredible surge in terrorism, especially across western europe. on top of that there are increasing tensions over trade between the u.s. and europe. let's bring in political reporter and columnist tara pulmari following the story closely and joins us onset instead of from brussels. >> right, i'm here for the week for my summer break. >> good to have you onset. >> thank you. >> we saw immediately after what we call the first -- what's called the second attacks on paris, the amount of tourism in paris dropped dramatically. >> right. >> are we still seeing that especially in the wake of nice
and what happened in brussels? >> tourism is down 70%. >> 70%? >> exactly. so europe has taken a huge beating in terms of visits to tourist sites. but i don't blame people for not wanting to go. i tried to go into the notre dame cathedral on chris may day shortly after the second attack and i waited over an hour and a half. this is usually a church you can walk into but instead you're cueing up like going into an airport and opening your bag. same with the forum. you're lining up and they're searching you like you're going into an airport. who wants to go on vacation and spend their entire time in lines to see beautiful historic sites that were once accessible? >> you know, you've been critical, and others have been critical of the police in europe, especially in belgium. that they're reactionary, they're not proactive. they're not doing enough before something happens to prevent it. >> exactly. >> it's been a few months since we had anything big, thank god. have they gotten any better? are they being more proactive? >> it's really hard to tell.
i mean, counterintelligence is the key for dealing with terrorism, especially in these countries where you have terror cells that are communicating between belgium and france. >> but are they working together? are the belgians speaking to the french who are speaking to the german? >> it's always a funny thing when you're trying to get two different governments to work together. they have their own interests, they have competing interests and belgium does not spend that much money on terrorism. they spend $250 million after their first attack. new york alone spends $6 billion in counterterrorism. so you have to understand that this is a small country. they have five parliaments. they're basically in deadlock when it comes to just adjusting anything. but luckily i know that the united states has been helping with their resources, the fbi, the cia, and they've been very helpful to europe in general. >> which struck me as odd to watch the enforcement of the burkini -- against the burkini. for viewers who aren't familiar, there's a movement among muslim women when they're on the french beaches to be wearing very long
pieces of -- long bathing suits that cover up the vast majority of their body, and then some french towns have actually outlawed them because they run contrary to secularism which is something the french deeply believe in. i mean, to spend a lot of money combatting bathing suits you don't like instead of doing counterintelligence work just seems crazy. >> right. and this is just the backlash from the nice attacks. i mean, people are really bruised. they feel like this is the way to show that you attacked us, you attacked our identity. and they shouldn't be spending their time in courts battling a burkini ban. instead there should be time spent in figuring out how to create a france where everyone gets along. >> this is not -- this is not the first bizarre or foolish example of government action. you and i were talking about how -- did you hear about this? belgium spent $1 million on a tourism campaign where literally they encouraged people to what, call random pay phones around the country and speak to a
belgian who would pick up the phone who would then tell you, yeah, everything's good here, no problem. >> it's safe. and what happened a month later there was a terrorist attack. >> they call random citizens -- it's like call a pay phone in new york, if you can find one, and you answer, yeah, everything's great. come visit. >> and now they have a new campaign called proud to be brussels sprouts and they have brussels sprouts. what does that mean? you're trying to attract tourists. what tourists want to hear is this place is safe. we have penetrated all the terror cells, all of the people living in brussels that are going back to syria regularly. so that's what tourists want to hear. they don't want you to pick up the phone and say, oh, yeah, it looks safe. yeah, it looks safe on any given day. i live there. but does that mean i feel comfortable taking the metro to work? not really. >> do you think about it? >> of course i do. they don't have the same sort of security that we have in the united states. it's a very small country with open borders, borders to germany, borders to france and they're all coordinating. they don't coordinate well enough. >> trade. >> right. >> as part of this, we just
heard now angela merkel's on the defensive about and all of the eu there's supposed to be a trade deal being negotiated between the united states and europe. >> right. >> and one of the senior deputies in germany said we stopped pretending this trade deal is dead, it's going nowhere. and oh, no, no, that's not true. what are the facts here? >> it's really funny because if you talk to the french minister, he says, oh, it's the u.s.'s fault. the u.s. says, okay, europe is being too protectionist, that's why we can't strike a trade deal. truly it's a battle against globalization. people are scared this trade deal will hurt jobs in their countries. >> germany in particular, right? >> right. it would help german car dealers to trade more easily, but then there are the smaller farmers. >> we've heard something about antiglobalization here in america, haven't we? >> it's everywhere, yes. >> ringing a bell. what's the view of trump in belgium? what are they saying about trump and clinton in europe? >> well, people in belgium are not too happy with trump because he keeps calling brussels a hell
hole. okay. >> that's not a good way to get on their good side. >> no, no, exactly. >> there's definitely a feeling that in europe it tends to skew more left. and they feel even the center right parties, even the conservative parties they're probably going to work better with someone like clinton who's obviously more into diplomacy. she was a secretary of state, diplomacy is very important in europe. trump is seen as a hard hitting bull who doesn't take -- who takes no prisoners and has no care for europe. they know ttp is literally going to be in pieces, it will be dead no rhesuesuscitating it. >> thanks for being onset. >> thanks for having me. let's get to josh lipton in san francisco with a news alert. josh. [ technical difficulties ] >> we're going to -- >> all right. so josh lipton, we can see josh speaking, we cannot hear josh speaking. >> look at the bottom, tara,
don't move. >> it's good tv, not good radio. josh, get your mic fke fixed, p you back on. i think josh is going to hit tax dealings hearing about apple stuff the eu going to rule against ireland's tax dealings with apple this according to reuters. a lot of fighting about the money that -- because remember apple's got its irish entity of which a majority of its revenue somehow goes through the irish entity. and there's been a lot of fights over what the tax dealings and what the tax rates are going to be. >> josh lipton. >> yeah, sorry about that, guys. that's the magic of live television. but i think you hit the headlines here. the european commission's going to rule against ireland's tax dealings. this is according to reuters that apparently the figure here that the ec is going to recommend apple pay back taxes in excess looks like of 1 billion euros. this again according to reuters. of course ireland already reportedly has said they're
going to fight any kind of adverse decision here against their tax dealings with apple. apple has said to the press that, you know, rejecting this idea they got any specific selective or special treatment from irish officials, but apparently according to reuters this ruling against the tax dealings with apple coming tomorrow. guys, back to you. >> yeah, this has been a case we've been watching for a long time to see how it would come out. we'll watch the next step as apple fights back. thanks, josh. all right, from a news alert to a market flash. let's go down to seema mody. >> hey, brian, another stock to keep focus on, shares of chipotle up more than 1%, the company announcing it will give a free soda or ice tea to all high school or college students with a purchase of an entree during the month of september. the latest food giveaway as chipotle tries to bring back customers shaken by last year's string of food born illnesses. keep in mind shares down more than 40% over the past one year. back to you. all right. seema, thank you very much. still ahead, grounded.
two pilots pulled moments before a nine-hour united flight for allegedly being drunk. this is not the first time something like this has happened. why aren't the airlines doing more to police this problem? we're going to dig in when "power lunch" returns. here? i'm val, the orange money retirement squirrel from voya. we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com.
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welcome back to "power lunch." two pilots pulled moments before a nine-hour united flight for allegedly being drunk. phil lebeau is live in denver with the details. phil. >> michelle, this getting a lot of attention because of how dangerous it would be for a pilot, any pilot, to fly while intoxicated. here's what happened this weekend. it was united flight from glasgow to newark. it's a nine-hour flight. when they were boarding about 8:00 in the morning in glasgow, the two pilots were arrested in cockpit. they had to bring in a new united flight crew, took several hours to do that. once they did that then they got everybody boarded. the flight finally took off, but it arrived ten hours later in newark. here are the two pilots in question. these gentlemen were in court today in glasgow where they posted bail, they face ed
arraignment. united says the two pilots have been removed from service and their flying duties. we're cooperating with authorities and conduct our own investigation as well. the safety of our customers and crew is our highest priority. talk with aviation experts, really anybody, and they will tell you there is absolutely zero tolerance for allowing anybody on the flight crew, particularly a pilot to be intoxicated. >> this is one of the areas where the pilots and all flight crew members have a virtual zero tolerance for impairment for any reason. >> as you take a look at shares of united, it's still unclear who reported these pilots, whether it was another member of the crew who may have smelled alcohol on their breath, whether it was somebody who was boarding the flight. that remains unclear at this point. but again, the two pilots they have been pulled from their flying duties while united investigates what's going on. and, guys, it's one of those stories everybody says how often does it happen, it doesn't happen very often, but when it does it gets a lot of attention. >> so we don't know exactly how
it is they figured this out. is it possible -- >> correct. >> -- that they weren't? i mean, did something happen? i don't know. do we have to really wait and see what's going on here, or are we pretty sure this is true? >> well, you would assume that they would not be arrested if there was not some basis for the police who confronted them in the cockpit to say, yeah, these guys are intoxicated. remember, intoxication for a pilot is far lower than it is for what's considered intoxicated if you're driving a car. in the u.s. it's 0.08 for a blood alcohol level, for a pilot it's 0.02. so it's very, very low. and the reason is it doesn't take much to throw off your faculties as you're maneuvering a plane. and it's so incredibly dangerous to think a pilot might be intoxicated. that's why the level is so low. >> are there rules, 30 hours before a flight, 12 hours before a flight you're not allowed to drink? >> right. generally eight hours. but i can tell you having had friends who i live near in the past who were pilots on
international flights, they generally didn't drink a whole 24 hours ahead of time. now, they knew what their schedule was, they knew they were doing a flight to asia so they didn't drink 24 hours ahead of time. >> thanks, phil. live from the denver airport. still ahead in the second hour of power, health care, the next bubble to pop. and speaking of bubbles, the housing bubble, is it coming back to haunt us? wait until you see where prices are in america. that's straight ahead.
hey everybody. welcome back. i'm brian sullivan. you are now halfway through a "power lunch." but here's what's still ahead, is america's health care the next big bubble to pop? we're going to find out and ask what it might mean for you. plus, new data you have to see on housing. is there a reason to worry about some red hot markets? and america's space race, the company shaking up the industry as the second hour of "power lunch" blasts off right now. nc i'm michelle caruso-cabrera. let's get a check on the markets with two hours to go until the closing bell, stocks nicely in the green. they're not rocketing higher, but they are positive. the dow and s&p up about 0.5%, dupont and travelers leading the
way there, alcoa and csx leading s&p 500. not a single major average higher by more than two-third percent move. expected to hand apple a tax bill worth over a billion euros. meanwhile, apple holding a big event in september on september 7th, the new iphone 7 expected to be unveiled. iceland raising the alarm after its largest volcano was hit by the biggest tremors in about 40 years. brian. two big health care stories we're following at this hour. the latest in the fight against zika and the continuing saga of mylan and the epipen. meg tirrell joining us now with updates on both. first to zika, meg. >> zika, the news today is the fda has given an emergency use authorization to roche for its diagnostic test for the zika virus. this of course comes just after friday when the fda recommended that the entire blood supply of donated blood in the u.s. be tested for zika.
so roche has the approval now under emergency use which as the name implies is for emergency situations to contingent approval, both for testing people with zika and for testing the blood supply. other makers also have approval for testing the blood supply in cooperation with the government in doing so. and quest diagnostics up 1.8% now also has approval on emergency basis for testing people. also hands on deck here for zika. moving over to our other story of course is the epipen, the generic version that's being launched by maker mylan. this of course would split the list price in $200 to $300 for a two pak. this would be identical to the branded product and available in the same dosage strengths. mylan plans to launch this over the coming weeks. they'll now be the maker of the branded epipen and the identical authorized generic epipen, guys. >> that's not unusual, right? when a company is about to lose a patent they come out with a generic some time of their very own product, don't they? >> that's right. it's not unusual when they're
about to face generic competition, however in this case we know generic competition was not imminent. mylan responding some saying more of a political move than financial one. >> could be in the wake of all the controversy. >> yeah. >> thanks. >> thanks. all right, america's health care system, is it broken? and if so, how to fix it. our next guest says it starts with transparency. joining us now is former fda deputy commissioner dr. scott g g gotlieb with the american institute. good to have you here, doctor. >> thanks. >> what's your assessment with epipen? >> well, with respect to epipen the problem is there's a whole series of middlemen in the drug supply chain that are paid on the gross revenue figure. so how much drugs are sold against the list price. and so there's an incentive to get the list price up as high as possible to allow money to flow to all those middlemen. the actual price that we pay for drugs is much lower because a lot of money gets rebated to those intermediaries. but those rebates don't flow
evenly through the system so many consumers don't get the benefit of those rebates. those rebates eventually flow back to insurance companies, a good portion of them and transfer into lower premiums. people underinsured or uninsured don't necessarily get the benefit of those rebates. >> this is incredibly important, doctor, what you're talking about. i'm going to give you a metaphor and tell me if you think this is applicable because it's an extremely complex situation. and i think we don't deal in the health care world, but we do deal in real estate. so would this be equivalent to you sell me your house, we agree -- i ask you to lower your price, you say no, but when i buy it you're going to kick me back money. the realtor then gets paid on a commission on the sale price, you and i sort of surreptitiously exchange money, but people in the system they don't make less because they get paid on a percentage basis. is that kind of what's going on here? because you just said, and it's fascinating, they have an incentive to raise the list price. >> right. it's not a bad analogy. the drug companies do like the
system to some degree because they use the rebates to buy access on the form lairformular. the drugmakers provide a discount to any one entity in the channel, so if they provided a big discount to a pbm or health insurance company, and this is a 1990 court ruling, they had to provide same discount to pharmacies and everyone in the channel. so therefore moved away from providing discounts and went to this rebate system based on some measure of drugs, had to go to this convoluted system or otherwise be forced to offer discounts to everyone in the channel. money today is worth more than money tomorrow. so if you're an insurance company or pbm, rather have a discount or rebate, that's probably the case but for the fact the drug company would have to provide to everyone and rebates would be much lower. >> scott, it's meg tirrell. from how you look at the economics of what you understand of the situation anyway and what's been made public of the situation, could epipen actually make more money from the generic
than it is from the branded epipen? >> potentially in the long run. i mean, i think this was a clever move on the part of mylan but it's a move that will provide a lot of assistance to some consumers particularly those paying the full list price those underinsured or had to go to a convoluted coupon process. people can go get a very transparent list price the same as what they would have paid if they'd used the coupon. the way this will benefit mylan in the long run is allow them to lock in more market share and could take pressure off the fda to approve another generic drug. where it will hurt is there are some insurance companies who weren't negotiating good discounts and rebates who weren't paying that full list price and they're going to lose that business. those pbms and insurance companies will shift to the generic drug. i think in the long run it's going to help them. it's also going to hurt them that they're probably not going to be able to take any more price increases, but i think that was up anyway and i think they knew that. this is a smart move in my view and one that's going to help consumers. >> you know, far be it for the
media to make a mountain out of a mole hill, dr. gottlieb, but how many people do you think as a percentage were actually paying the full list price or were really getting socked? when you look at all the buyers of epipen, are we solving a problem for a very small percentage of individuals? who i feel for. i don't want to undercut what they're going through to have to lay out all this cash. but if you're on medicaid you didn't pay this, if you had any kind of insurance from a corporation you probably weren't paying that full list price either. >> yeah, it's a growing number of people. it's a small number, to your point, but it's a growing number because more people are finding themselves underinsured for drugs as a result of some of the regulations imposed by the affordable care act. people finding themselves in narrow formularies and now it's back to school season, people are going out to buy these pens to put in their kid's knapsack and find they're getting socked
with the whole bill. so it's not a huge portion of people. and it's hard to put a number on it. nobody's been able to do that. but it is a growing number of people. >> here's the thing, what was supposed to happen under obamacare was the high deductible plans were supposed to be no frills plans and hence they would be cheaper. how is it that no frills plans have gotten expensive? i mean, these are supposed to be car accidents and cancer, right? i mean, if you had something very severe that would happen to you, you might end up with a $10,000 bill, which sounds like a lot but it's way better than the million dollar bill that you get if you're not insured at all, right? and yet somehow the premiums on these affordable plans got very expensive. >> well, there are no no-frills plans inso far as the affordable care plan. you have hollow plan good benefit on paper but no access.
plans need to cover in full all the cost of surgical sterilization, you're going to end up with expensive insurance plans, that's exactly what we've ended up with. so it might not pay for your cancer therapy, but it will pay for the bells and whistles politically favored here in washington. >> too many mandates, in other words too many must-covers, you have to cover this and that. >> the list never ends because it's part of a political process now. >> got it. good to have you, doctor. >> thanks a lot. >> meg, you too, thanks for joining us with zika and the latest on mylan. big interview tomorrow on "power lunch" we're going to speak with u.s. surgeon general vivek murthy about all the issues in the health care industry. let's move to another major market mufr, that is herbalife making a nice comeback after falling on friday after investment activist, in response, icahn didn't sell, icahn bought 2.3 million shares in herbalife.
he now owns a 28% stake in the company. let's bring in herb greenberg, former occupier of this desk. he now no longer wears a tie. herb, what do you think about this continued carl icahn, bill ackman, he said/he said feud? >> i think it's absolutely at this point absurd. it has zero to do with the stock unless carl icahn has some plan that he hasn't really, you know, laid out to everybody. because in the end what really matters to anybody here if you're an investor in the stock, if you're short the stock, if you're thinking about going either way with the stock is what happens going forward. i think jim cramer did a really great job today if you watched him and some of his segments he was talking about nobody's talking about earnings going forward. and from this point say over the next 12 months it's a speculative situation. and if you believe the ftc really is cracking down on how they did business, then you believe that the model is
broken. if you believe what the company says that this is the best thing since sliced bread, then it's not. now, one other thing i throw in there is that the one thing i've always been wondering about this whole thing is do they have some plan to go out and make acquisitions somehow of non-multi-level marketing companies, but if they do that that would impact their margins. and of course their cash flow. >> so to your point about what the ftc said, i mean, bill ackman, when he responded to this question about whether or not, you know, carl icahn was selling, he said, well, i think it's because he realizes this business model isn't functional. i guess what i find astounding, herb, is bill ackman is short. and if you go back to that very first fight where carl icahn came on "halftime report," he didn't have a big view of the company. what he had was a view of a guy who had a huge short position, and you don't talk about -- he said you don't talk about your shorts. when jim chenos is on your show, he doesn't talk about his shorts
because when you're short, you get squeezed. so he did a totally tactical move. and we're still in the same position. ackman is still short. why making the same mistake? >> right. well, first of all shorts do talk about their shorts just as longs talk about their longs. what they don't typically do is come out and sort of say it the waybill may have said it. and put it the way he may have put it. but what i think this whole thing has done and i've said it all along when i was employed by cnbc full time i was on the desk and we were talking about this and it was always, guys, this shooting back and forth still is distracting and diverting attention from what's really going on. >> and here's the irony -- herb, here's the irony here, we all talk about icahn and ackman. let's talk about handily. because that may be an investor, matthew handly, probably somebody nobody's ever heard of, he may have more impact on herbalife than anybody else.
this a short seller arguing that herbalife may have misled investors and the s.e.c. about the impact from their recent deal with the ftc. what do we know about this? >> well, i don't know him. don't know who he is. didn't know who he was until i saw his comments. and i think that he makes an interesting point. but, you know, because you have this situation. companies come out, they create a message. they tell investors what they want the takeaway to be, gullible investors say, well, okay, that's the takeaway. and then you go to the filings and the filings are often where it really is. now, in this case what he's saying is that the company laid out a cautionary tone in the risk factor section, which the company would probably say that's just boilerplate, we have to do that. now, what i've seen over the years of course is it's boilerplate until it isn't. so if it's a risk factor, it really is there and it's there for a reason because lawyers say there's an issue that may occur here. and the company i don't really
believe knows what's going to happen a year from now. so, you know, you've got to decide which way you want to go, listen to them or do your own research. >> let's talk about itt educational services, the department of education is coming down hard on them denying any new enrollment in the school. stock down nearly 80% in just the last week. one of your favorite sectors of the market, herb, for-profit education. >> this one in particular. because this is one that i certainly was on back in 2004, then the company, you have to understand, there was an fbi raid of the company's campuses in 2004 and suddenly, and you thought this was a big deal because there were a lot of issues back then, and suddenly, poof, fbi investigation disappears. you say what's up with that? you didn't hear anything over the years. and this company of all of the companies was the one you'd say how has it hung in there so long. now basically if you go to their website there's a sign, we're not accepting any new students. company's basically going by way of something else that won't be
around any longer. i think it's getting its just due. i have to tell you guys something, i was asked -- interviewing the ceo on cnbc a number of years ago. and at the end of the interview there was one of those deals where if you look out we were off air but the cameras were still rolling in indianapolis where the ceo was and the guy who was the cameraman said, hey, how'd that go, and he said, well, he didn't get what he wanted but i got to do what i wanted to do. at that moment when i saw that, i said, man, there's something more there. we knew there was something more there. but that told me all i needed to know. he's out of a job -- well, he's got other issues and obviously the company's going by way of out of business. or something like that. >> herb, yep, nope, any industry that must have government subsidies to survive and wouldn't survive without them, i'm very questionable about, right? >> i know of another company that's required -- there are a few companies out there that are government subsidies, with the
big t, the big t. the big tesla is one of them. >> we have that discussion all the time too. thanks, herb. >> all the time. >> herb greenberg. >> you're welcome. carl icahn will be back at this year's delivering alpha on september 13th in new york city. look at all those high powered guests we're going to have. for more details head to deliveringalpha.com. weill tiger woods ever tee t up again? we're going to speak to one of his closest friends on the pga tour. and up 13% this year, investors have been desperate for any kind of dividend yield, but coming up we're going to speak with someone who says that trend is about to reverse. is there a dividend bubble as well? we've got the power. we'll be right back.
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best part... you still own your home. take control of your retirement today! welcome back to "power lunch" everybody. as investors continue to search for yield, dividend paying stocks have become a very popular trade. in fact, utilities sector one of the best performing sectors of the s&p 500 this year, up more than 13%. however, some market watchers are now becoming concerned that these popular trades could soon become unpopular trades. let's bring in chief market strategist co-ed of multiasset solutions with ab formerly known as alliance bernstein who had a note out last week that caught our eye. it's one thing to say utilities are consumer staples to be overowned by investors as a percent of their portfolio.
it is another thing that the bottom is going to drop out. what do you think is going to happen to these groups? >> well, i think the over value and particular pli investors are searching for yield but more importantly searching for stable yield. as a result you're seeing a number of these sectors ones you've mentioned are trading at fairly extreme valuations. i think what's important to recognize is the decline in these stocks or relative under performance of these stocks doesn't necessarily require higher rates. look at last year many of these stocks have underperformed by about 12% and rates were flat from the beginning of the year to the end of the year. >> if you look at valuations of say a consumer staples stock, general mills 25 times earnings on a trailing basis, or duke energy, not picking on those two names but i'm just using them as examples. those are very stretched, do you think that they're going to come down in a meaningful way? not those companies but those groups? >> i think the groups will come down. the issue's always the timing. you know that the expected returns over the next couple
years are likely to be significantly lower than they've been in the past. you know that the investors' willingness to pay up simply for the companies that raised their payouts is somewhat irrational. what is difficult to know is precisely the point at which the trend will break. i do think any talk of fiscal policy, any signs of significant stronger wage growth and i do think those groups will start to underperform. >> that would suggest perhaps the fed is going to raise interest rates. but what if the long end of the curve, and we know they're very involved in the long end of the curve, don't mean to misstate that or misunderstand it, but what do you watch for as what's going to be the flag to suggest these stocks could get hit because of rising interest rates? if you own a lot of these utilities, should you be watching the ten-year yield like a hawk? >> i think you should be watching wages, because that's going to be the precursor of a lot of other things. if wage growth continues to increase, if we continue to see
low labor participation, so unemployment continues to decline, that's going to be the sign to watch. even more importantly a point you brought up which is critical, look at the entire portfolio. because many investors have portfolios that are very sensitive to interest rates even outside of the dividend paying stocks. and so the real risk is that your entire portfolio could be under pressure if the rates were start to rise. >> we're going to leave it there. interesting research. thank you for coming on the program. see you soon. >> thanks. guess what, ten years after the peak home prices are back. so are we at risk for another housing bubble? plus, dominic chu got the lousy assignment to spend a beautiful summer day on the golf course. something he just hates, right, dom? >> i just hate it. and we're here in bedford, new york, at the barryburg invitational raising a lot of money for charity.
executives, pro golfers all getting together to play golf and raise money. dominic chu is live at the gary player international. dom. >> all right, so, michelle, as we talk about the whole golf and giving aspect, we've been here all day talking about the charitable aspect of golf. we're now joined by major championship himself hall of famer mark o'meara, thank you so much for joining us on "power lunch." >> thanks, dom. >> let's talk about the charitable side of things first. there's a lot of things that go on with the invitational, but you do a lot of charity work on your own. what are some of the causes you value most? >> i think everything. you know, look at our society and as fortunate as all of us professionals are to be able to play a game, but yet give back. my former caddie was an ms patient, so there are a lot of different areas when people go down pro golfers can relate and get around that and help any way they can. gary player, being the legend that he is and raising the amount of awareness and the
capital that he can raise for all these different charities, it's really impressive. >> now, it's no comment on your age, but you've been around the tour for a while. you've done a lot of great work on the golf course and off. you have a sense of your player comrades around you. we're curious though, it's a contentious election year right now. >> very much so. >> if you talk about the idea, who are most professional golfers, who are people on tour right now leaning towards in terms of who you think they're going to vote for in the election and why? >> well, i think a lot of us since we started kind of nothing and we're kind of all independent contractors and if we perform well, we do well, if we don't, we lose. i'd say 90% -- 85% to 90% of the guys i know would probably vote conservative and vote for donald trump since he's the republican nominee. >> now, as you talk about that that seems like it's a vast majority of people you talk to. is there any reason why? it doesn't strike me as a number that can i justify saying that 90% of people out there that you know are going to vote for trump. there's got to be a case to be
made for the other side of the story as well. >> no, there are. i think we all understand we're all americans, we care about our country. and, you know, the thing is it seems like when you're in the golf or sporting world you're not that much in the political world. you know, you can view it from a different angle. and to me i just care about our country. as we were talking about earlier, i just want what's right for our country and for our country to keep getting better. and i just feel that, you know, whether people have positive or negative feelings about donald trump, you know, he's different. he's outside the box. i kind of like that. >> all right. now, you're very close with tiger woods. >> yes, sir. >> you've been a mentor for him for a number of years. >> yes, sir. >> is he ever going to play golf again? and if he does at the same level he did before? >> well, i think he'll play again, because i think he is born to be a golfer. whether he can get back to the level he attained for such a long period of time, dominic, i'm not sure. we played about two months ago together and he looked good.
he looked fit. he's extremely strong. but it's just all about whether tiger really wants to come back and play, whether he still has that burning desire. i think that's going to be the difference. >> we'll have to wait and see about the tiger woods thing as well. >> pretty much. >> mark o'meara, thank you so much for joining us here. with that, brian, back to you guys in studio. >> dom, thank you very much. excellent interview. we've got another news alert right now on mylan. let's get back to meg trirl. >> the house oversight committee sending a letter to mylan ceo heather bresch asking for more information what went into the price increases on the allergy drug epipen. they're asking for a briefing no later than september 6th. this is the same deadline chuck grassley in the senate asked for in terms of getting more information, also asking answers to a series of questions by no later than september 12th. this signed by chairman chaffetz. and elijah cummings. same committee sent a letter to the fda also asking about
generic competition to the epipen. the letter doesn't mention mylan's own generic version, guys. back to you. the politicians pile on. i'm shocked, meg. thanks. now to sue herera with your cnbc headlines this hour. sue. >> hi, michelle. and here's what's happening at this hour. secretary of state john kerry arriving in new delhi ahead of a u.s.-india strategic and commercial dialogue. he will co-chair the event with his indian counterpart tomorrow. he is expected to also meet with indian prime minister modi on wednesday. lib yan forces claiming to make progress in their fight. with the help of u.s. air strikes fighters have said they've secured a main residential area in that city. a car took quite a plunge after a water main break near baltimore. the driver was okay after escaping that huge sinkhole you're looking at caused by that break. at least 135 homes and an apartment complex had their water service disrupted. and a memorial mass was held
today for two 68-year-old nuns who were killed in their mississippi home. family and friends gathering at a church in jackson to remember and honor the lives of sister margaret held and sister paula merrill. police arrested 46-year-old rodney earl sanders and charged him with those killings. that is the cnbc news update at this hour. brian, back to you. all right. sue herera, thank you very much. let's get back to business now. the oil market closing for the day. bertha coombs is at the nymex for us today. bert bertha. >> brian, even though we have a storm brewing in the gulf, the bigger headwind for the energy complex today was the strong dollar. the dollar has now given up gains this afternoon. it's let off. still we are seeing oil down for the first time in three sessions. we are seeing a lot of folks continuing to express doubt that we'll see any movement from the opec players when they meet next month. nat gas on the other hand is also losing today, but it has
been up five straight days, brian, because of all of the warm weather. but running into a headwind again with that strong dollar. back to you. >> all right. bertha, thank you very much. well, it is now been unbelievably ten years since the peak of the housing market. and in some markets prices are more expensive now than they were then. a lot of people are asking is this another housing bubble? are we making the same mistakes again? we'll debate it when "power lunch" returns.
the housing bubble peaked in 2006, a full ten years ago. then of course those dramatic sometimes catastrophic declines beg began. but guess what, new data shows home prices are very close to those 2006 levels again, they've even passed them in some markets. diana olick joins us more on housing and pricing. diana. >> well, michelle, it's hard to believe not only are we ten years from the peak, but just four years from when home prices hit bottom after an epic crash. and somehow we're almost back to where we were. june marks 50 consecutive months of annual national home price appreciation, with prices up 33% from that bottom in 2012.
a new report from black night financial services puts the home price on average in june at $265,000 and that is within just 1.1% of a new record high. now, the difference today from a decade ago is that these prices are not being driven by faulty mortgage products that people can't afford. they're being driven by a severe lack of supply of homes for sale as well as near record low mortgage rates. of the nation's 40 largest cities 14 have already seen home prices cross to new highs. they include austin, boston, charlotte, dallas, denver, pittsburgh, portland, oregon, san francisco and seattle. only st. louis saw home prices drop annually. but apparently there is a limit, san jose, which has some of the highest prices in the nation did fall off its peak and gains in san francisco are shrinking. so that's something, right, michelle? >> yeah, it is. but diana, there are still some people who are under water out there, right? this is unevenly spread across
the country as you mentioned. >> absolutely. in fact, millions of borrowers still owe more on their mortgages than their homes are worth because they're in markets that have not recovered as much as some other markets have. notice the markets i listed are heavy tech markets with strong employment. and that's why they're seeing prices go up. >> or -- >> in other places they have not gone up as much. >> or, diana, that's one side. let's be honest the other side is people are still taking out cash out refis. we see it in the home remodeling data. are they once again making the mistake, i'm going to borrow another $100,000 on my house to put on a pool or whatever it is, not thinking that home prices could go down again? >> they are starting to take money out of their homes again. we've reported on that, but not in near the amounts they used to, and the underwriting on those home equity lines where people take out cash is much stricter. much stricter. >> got it, diana, thank you. let's talk more about this, do
rising home prices point to a housing boom, a bubble? chief economist at redfin. >> hi, how are you? >> now that a lot of markets -- some markets have reclaimed the 2006 price bubble, does that mean we're in a housing bubble? >> no, we're not. just because prices are high and it's easy to see to make that mistake because prices have risen so rapidly in a very short period of time still doesn't mean we're in a bubble. we just have really high prices and shrinking number of transactions. in fact, i think the market is contracting instead of expanding into a bubble. >> wow. interesting. why -- give me evidence about why you think it's not a bubble? >> well, there's a couple of really key reasons. usually a bubble is marked by speculative buying and building. we're not seeing speculative building by any means. in fact, new construction is short of historical norms. we need more inventory, not less. you're also not seeing speculative buying. the investor share of existing home buyers is really, really
low. we're not seeing investors take up a third of the market. they're more like 10% of the market. and it's even really hard for buyers, homeowners to want to sell and trade up and become buyers. they're not biting on home prices. a lot of them are staying put choosing to renovate and stay in their existing homes instead of speculate on a market. >> we often highlight silicon valley as a glaring example, but maybe that's exactly wrong of us because you wonder there's so many rich people out there and so little supply that maybe that's the least bubblish market in america despite the fact that the prices seem almost obscene to most americans. is there something to that? >> brian, this is absolutely true. san francisco never has been and probably never will be a bellwether for the national market. it is an island unto itself. and yet you see the influence of tech buyers in a lot of major cities. you see it in seattle, portland,
denver, austin an influx of rich buyers who can't afford san francisco anymore going to other parts of the country and really being a factor in those markets. but this is a problem of super star cities not nationally. >> are you worried? i'm in my car a lot, i listen to a lot of radio, michelle, you start to hear a lot of ads like, hey, no money down loans, cash out refi, get your mortgage in three minutes and you'll get a king's crown and a happy meal. are you starting to worry that the mortgage side of the industry's getting dumb again? >> no, actually not. >> no? >> we're making different mistakes this time around. >> very comforting. we're not making that mistake. we're making other mistakes. >> the market is actually too tight. it's still really hard to get a mortgage. after a little bit of loosening in 2015, we haven't seen banks really loosen markets much, loosen underwriting standards. in fact, in commercial new building a of multifamily they're actually tightening.
so where we need loosening in the market, new construction, we're seeing banks actually tighten. that's a mistake especially when you look at where the demand is. >> got it. thanks for joining us. >> thank you. >> she's with redfin. the space race is changing in a major way. jet pack jane wells has that story live from new mexico. >> look at her. i knew it. that's so jane. >> i'm training to be an astronaut, guys. you know, bezos, branson and musk get all the headlines, but up next boeing and lockheed refuse to be grounded when we come back. the heirloom tomato.
delivered to your door, for less than $9 a meal. get $30 off your first delivery blueapron.com/cook. the space race used to be between the u.s. and the soviet union, but now it is nasa and the private companies. and it is forcing everybody to change their ways. jane wells, is that a space port in new mexico? are you able -- i mean, how dizzy are you right now, jane? >> i am -- this was better than going to six flags, brian, i tell you. here i am this is spaceport america zip code 876543210, and clients here include virgin
galactic and spacex, companies funded by rich pioneers with deep pockets. and those disrupters are impacting the traditional players. >> here it is. the new orbital vehicle -- >> reporter: billionaires mean business. and traditional aerospace companies have learned to adapt or die. lockheed martin, boeing, orbital atk and aerojet rocketine still heavily invested in space and the traditional business model while the new model has nasa contracting out for things like cargo to the space station, the old model is still needed for nasa's big ticket items where there's no commercial market yet, like the $10 billion rocket boeing is building to take nasa where no human has gone before. and those humans will travel in a $6 billion orion spacecraft build by lockheed martin, which is going through unmanned testing. >> and liftoff at dawn. the dawn of orion and a new era
of american space exploration. >> reporter: new competition has changed nearly every aspect of the industry. for example, aerojet rocketdine with no buyer. the boeing lockheed owned united alliance is developing a powerful rocket in an effort to hold onto military launches that spacex threatens to poach. and boeing is also taking on spacex in the private space taxi arena with a cst100, which could shuttle astronauts to the space station on an american spacecraft for the first time since the shuttle program ended. >> with a company like boeing we have a huge design history, we know how these things are done, we've been doing space for 50 years. so we have that. but the newer companies bring in new ways of doing business. they are possibly more agile than boeing. they have different suppliers. it's a mix. i think it's all working together they may learn from us. we may learn from them and get a better overall solution. >> all right. meantime we continue to pay the russians tens of millions of dollars to send our astronauts
to the space station. nasa has contracted with both boeing and spacex to come up with crew carriers. don't know when those are going to fly yet, but by the way, boeing's crew carrier will be tested here at spaceport america. like my facelift? >> yeah, being a girl, jane, i noticed earlier your hair looked great despite whatever that is that you're doing in there. what are you doing in there? what is that thing? what does it test for? >> this is sort of a simulator, a little bit of what the gemini astronauts went through when they went through the right stuff kind of training and it's all part of the spaceport's effort to educate people. virgin galactic has a 20-year lease they're three years into and yet they have yet to launch and spacex has yet to launch. so they're trying to come up with ways to raise money like weddings and car commercials and letting people like me in. >> i think this report was out of this world, jane. >> oh, thank you. >> doesn't her hair look great?
it looks great. >> everything about jane's great. >> she'll go anywhere, do anything for a story. jane wells. >> stop. >> let's get right to seema mody for a market flash. it's the private prison stocks once again in focus, this after the department of homeland security said it's evaluating whether the agency should continue to contract with private prisons, which do run some of the detention centers for migrants, geo group has responded to the department of homeland security saying its facilities are highly rated and provide high quality cost effective services, but it does add further concern after the u.s. justice department decision to phase out its contracts with private prisons which send geo group and corrections corp. stock slightly lower. even in today's session down between 4% and 7%, brian. all right. seema, thank you very much. we'll watch those stocks. coming up, one analyst dares to slap a sell rating on netflix. more on that, plus three other
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time now for "street talk" a dive into the key calls of wall street on the day. the first is netflix, a big one. they initiated coverage with a sell rating. the firm notes that rising competition, diminishing price power, rising content costs putting on pressure to reach profit estimates. the price target $80. it is 17% below -- $17 below the current right now. >> you need to have a lot of content. i argue that "blood line" is best show on tv. cowen, the analyst says after a deep dive analyst, it appears to be a better opportunity in the space than it was before. notes, yeah, there's some concern about a deal with lam
research. supposed the happen. may not happen with agitation of competitors and believes that the deal spread moved and he says, quote regardless of the deal outcome, kla is too interesting to ignore. boosted the target. about 16% upside. >> third stock is t-mobile. wells fargo to outperform based on the possible ramp-up of growth in 2017. analysts it's the hockey stick part of the cash flow. going up. the firm notes that it's attractive and up almost 20% this year and says, however, spread is -- in the sector. >> t-mobile good. smaller caps are under the radar call of the day is cantel medical. benchmark llc analyst with a buy
rating and $83 target. 12% upside and said it's leveraging the leading position in infection prevention equipment and an opportunity to pull through more branded disposable and consumable businesses and should be able to hit the 15% growth target without a problem. stock's had a big year, up 15%. in the past 12 months. but benchmark llc sees more opportunity in cmn. it is time now for other daily segment, "trading nation" because traders trade better together. let's look at the recent rise in the u.s. dollar. if that dollar continues to rise, what stocks may be impacted the post? dennis, let's assume, let's not argue the dollar going up and for the segment that the dollar does continue to -- may not but let's assume it will. what stocks may be hurt or helped? >> well, i mean, conventional wisdom in strong dollar markets
to concentrate on small cap stocks like the iwm index and throw conventional wisdom out the window. i don't think conventional wisdom -- we are not in convention times, be it the election or interest rate policy. you need to dig deeper on why the dollar is going an up because the u.s. economy is heating up an they're raising rates and knock-on effect makes rates go higher. look atwal mart, hershey's, big companies not necessarily small companies and predominant amount of the revenues coming from the united states so stocks that will behave well in an overheated u.s. economy will do well and it might be people you wouldn't expect. energy prices, if the u.s. is consuming more energy, they do better. so don't take it from the fact of normal think is stuff made in the united states is going to be too expensive to be sold overseas because the dollar is stronger. take it from the point that the u.s. economy is strong. >> craig, chart it for us, buddy. >> yeah. let's look at the u.s. dollar
index. you have been in a range of 92 and $100. since latter part of -- early part, excuse me, of 2015. from my perspective you are starting to see a move off the lower bands on the chart and looking at a sector basis and from our vantage point, price is fact and look at total return. plot them out. what i see happening today is a consumer staple sector is starting to roll over. seeing the strength in the dollar. we're seeing utilities rolling over as we see strength in the dollar. but what i find interesting is that we're finding strength in the financial sector. perhaps we are going to see a rate hike in september or december. i certainly made a bet that rates will go up into the december time frame or before then and financials look good and benefit from that and a lot of large cap banks are turning higher. >> guys, thank you very much. we appreciate it. for more go to
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big interrue tomorrow here on "power lunch." we'll be voifed by vivek murthy to talk about the health care industry brought about because of mylan. >> shedding the light. thank you for watching. >> "closing bell" starts right now. welcome to the "closing bell," everybody. i'm kelly evans at the new york stock exchange. >> i'm wilfred frost to be here. your holiness. we'll explain that later. financials which have been struggling this year leading the way. we'll have more on what's behind that move coming up. >> a report saying apple will be hit with a tax bill over in europe. details on that story and what apple is doing to fight it, coming up. help wanted at the big banks. why it's more difficult to fill those jobs and how changes in