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

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off. >> been hurt this year in health care. we've not properliest mated the impact that hillary, the candidate, is having on the industry. but i look at allergan at 236, 235, looks very cheap to us. shire looks like a fabulous franchise. selling at a very low multiple, big free cash flow generation. we're inclined to buy some of these health care names on weakness. >> it's been great having you. thank you so much for your time today. >> pleasure to be with you as always. >> leon cooperman, chairman and ceo of omega advisors. does it for us today. see you tomorrow. thanks for watching. "power" starts now. what a great interview that was. i'm melissa lee. mastering the art of market manipulation. the direct shot one big money manager just took at janet yellen. also ahead what to expect from donald trump's surprise swing south of the border. and later a look at big money bets on the final frontier. buckle up, "power lunch" starts right now.
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welcome to the big tl, i'm michelle caruso-cabrera, three hours left in the trading session. stocks are head ed lore, right now dow, s&p 500 and nasdaq they're all in the red. energy is the big loser as oil hits a fresh two-week low. brian. here's what else is happening at this hour. breaking developments out of brazil. the senate there voting to remove president rumsef from office. more on this developing story straight ahead. also, elon musk suggesting that major improvements may be coming to tesla's autopilot software. more details are expected later on today. and florida declaring a state of emergency as a hurricane watch goes into effect for parts of the gulf. this as hawaii braces for a hit from two hurricanes. the very latest on all three weather patterns coming up. as you can tell we've got another big two hours ahead for you, but let's begin with this. janus capital bill gross taking aim at janet yellen and the federal reserve itself and latest outlook gross says yellen
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and the fed have, quote, mastered the art of market manipulation. let's bring in bill, he's a portfolio manager at janus, what did you mean by master the art of market manipulation, bill? >> well, brian, they've been doing it for five or six years based on quantitative easing and now negative interest rates in terms of policy rates and euroland and japan. and so it's not a hard call to suggest that a negative interest rate has been artificially produced and therefore manipulated by central banks. i think even janet yellen would agree or stan fisher would agree. i think they both would say however that those negative interest rates and that quantitative easing have, you know, elevated asset prices. and, yes, they've hurt savers, but let's worry about that later. and let's get the stock market up to a sustainable level at the present. >> the thing i worry about, bill, and i think the thing that's starting to come a little
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bit to the fore are pension funds and insurance companies. do you believe the federal reserve understands that with rates like this and the bond market not doing much and the stock market not doing much that many pension funds could have serious problems meeting their obligation sns do you think that they acknowledge that? >> i think they do. to them i think it's a pay me now, pay me later type of thing and they prefer to pay it later. i've long argued that near zero negative interest rates erode the real economy by keeping zombie corporations alive and gradually destroying what you're talking about, important capitalistic business models such as insurance companies, banks, pension funds. and to be clear, and most importantly, small savers. you know, it's difficult or near impossible as you've suggest for these entities to meet current liabilities at 0% or near 0% yields, like i suggested vice chairman fisher yesterday or a few days ago said that that was
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a problem. but, you know, he favored the approach of low interest rates, not negative interest rates. low interest rates because it kept asset prices high and they'd take care of the liability problem later. i don't think some of those problems, you know, can wait until later. we're looking at illinois. we're looking obviously at puerto rico and many pension funds that now either have to lower their expectations in terms of total return or stop and lower, you know, payments to their constituents. >> would you buy illinois muni bond debt? do you own any, bill? would you own any chicago bonds? >> well, i wouldn't. they trade at a discount. they trade at 80, 85 cents on the dollar with decently high yields, 6%, 7%, 8% in some cases. so for the adventurist investor that wants to bring that down to the bottom line and thinks they've got an asset at a discount, you know, let them go ahead. but i would point out in the case of detroit and, you know,
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other bankruptcies, municipal bankruptcies in the country in the past few years, that, you know, bondholders basically get the short stick. and usually it's about 25 or 30 cents on the dollar or so. it's just a question of time to my way of thinking before these pension funds, you know, whether it be illinois or puerto rico, you know, have to face the music and basically default technically on their bonds and haircut, perhaps their constituents as well. >> do you believe illinois will default? >> oh, i'm not calling for that. illinois's a big state. and they've passed some laws and tried to correct their budget in the past few weeks by taking money from one hand and putting it in the other. i think ultimately illinois has to raise taxes. and that's the problem that they face. they want to be competitive as a state relative to their neighbors and relative to every other state in the country. and hard to do that, you know, if they raise taxes. but i think ultimately that's
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what may prevent them from going down the default road. but at the moment they're not raising taxes. >> pretty heady topics. why don't we leave this with some optimism and some new ideas, bill, right? shall we? it's a beautiful summer day. when you look out around the world -- >> okay. >> -- and you've left us with a lot of good ideas already this year, has there been anything that popped up on your screens or your big brain in the last few weeks anywhere around the world you see an asset that looks good? >> sure, here's a good one. we all know microsoft close to a aaa credit, and it's not going anywhere in terms of default, it's going to be around. got a lot of cash. they put out a bid for a company called linkedin. trades with the symbol lnkd. it should close within two to three months. you know, the bid is $196 a share, the stock trades at $192. $4 a share or 2% over the next
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several months some would say big deal, but i would say a 2% return for two months time six annualized is about a 12% return. if you did five or six linkedins every year you'd be doing much better than the pension funds. >> bill gross, you probably don't have a linkedin profile, i'm guessing, but you own linkedin? >> we do. we do. and we'd like to buy some more. but i'm just suggesting that the public, you know, join in the bid, so to speak. >> there you go. one word answer, last question. federal reserve raises rates in september, yes or no? >> yes. >> bill gross in the yes camp. bill, thank you, buddy. have a great day out there on the west coast. we'll see you soon. >> thank you. thank you, brian. all right a double dose of data on the housing front mortgage applications rising 2.8% last we're on higher refi activity. while pending home sales jumped the second highest level in a
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deca decade, all this fueling talk of a new housing bubble. let's bring in bill emerson, the ceo of quickenloans, great to have you with us. >> great to be here. >> on top of that data we also have home prices seeing levels now that we haven't seen since before when we had a housing bubble. is this a bubble now? should we be worried? >> i don't think it's a bubble. i think if you take a look at what's happening fundamentally with underwriting standards, with folks that are qualifying for mortgages, you've got very, very clean stuff that's happening there. i think what you have going on here is a complete lack of inventory. on that lack of inventory is causing price increases to take place. we've got, you know, data that would tell you first time home buyers are below levels where they normally would be, data that would tell you we're below the housing start numbers that we should be at given the demand that is out there today. and we're not even talking about the demand that will be coming when you get to a millennial and really getting into the faze of buying homes. so i don't think you have the fundamentals that lead to that
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bubble, but, you know, i think time will tell. >> you mentioned tighter lending standards. i'm curious, is it really difficult to get some of those really low mortgage rates that we're hearing about all the time 3%, 3.25% on a 30-year fixed rate? is that only for the people with the most pristine credit? >> no, i don't think it's only for the people with the most pristine credit, but it's certainly more difficult to qualify today than it was call it 2005, '06, '07, '08 in that timeframe. underwriting standards are tighter. the regulatory environment is way tighter than it was, which was causing some of the lenders to just not -- you know, lenders don't lend to the edge of the credit box any longer. they're trying to protect themselves from a variety of different regulatory environments. and so, you know, i do think it's more difficult than it has been, but certainly if you've got the income and the assets and you can show those, and that's the key these days, you've got to be able to show that stuff, you can certainly get yourself into a low interest rate. >> you know, rates have been low for so long, bill, are we going to see people sort of get off the fence, move because they're worried that rates are going to
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tick higher finally as we enter the last quarter of the year? >> you know, we always say that. are people going to move? you would say to yourself at 3.5 or 3.25 or wherever interest rates are at this particular point in time, could there be anybody left because refinancing has been happening for so long. but there are still people out there that can qualify. there are still people out there that need to take action. they need to take action now. rates are probably artificially low as a result of what happened with brexit. i don't know how much longer they will be around. if you're thinking about buying a home, if you're thinking about refinancing, i wouldn't wait. i think this is the absolute right time to take advantage of what's happening in the marketplace today. >> but tell me, bill, have we seen the lowest mortgage rates that we will see in our lifetimes already? is that in the past? >> i don't know. i mean, i wish i could tell you that. i think if you look at the domestic data you would say, well, there's enough of domestic data for the fed to turn on a raise rates in september. but it's a global economy now and things can happen around the world that could cause interest rates to actually go lower, believe it or not. so, you know, it's impossible to
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prognosticate. all i can tell you is when you're at these levels which we haven't seen since 2012, now is the time to take advantage of that. now is the opportunity to put yourself in a great position to have a very low mortgage payment for a very long time. >> bill, thanks a lot for your time. appreciate it. bill emerson, quicken loans. coming up next, breaking developments out of brazil coming nearly minute by minute here as the senate has voted to remove rousseff from office. what impact could this have on the markets? that's ahead. and later, donald trump making a surprise visit to mexico ahead of tonight's big immigration speech. what is this? is this a pr stunt? is it a policy shift? something else? we debate when "power lunch" returns. u tell your insurance company ey mada stake. the check they sent isn't enough to repla youtotaled new car. the guy says they didn't make the mtake. you made the mistake. i beg yourardon?
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welcome back. we're following a huge developing story out of brazil. the senate there voting to remove president dilma rousseff from office. the brazilian stock market up. could we see people selling on the news? seema mody here with a look. >> michelle, one recent theme that's emerged lately is the decisive role that politics have played in driving global assets. case and point, brazil stock market there up 35% almost this year although it's dealing with its worst economic recession in 25 years. the stock market outperformance purely on the prospect of a change in leadership. the historic vote to impeach
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president dilma rousseff has lifted hopes that brazil's long political crisis is coming to an end. since rousseff stepped down as president to deal with this impeachment proceeding in may, brazilian stocks have climbed about 8%. in the meantime acting president michel temer has been using time wisely establishing an economic team seen as key to averting a serious crisis of confidence. but like other leaders of economically strapped nations who promise change, narendr narendra modi of india, action will likely fallen. if we don't see as most forecast for brazil, these gains should be short lived. in fact, morgan stanley says on average stock markets that are driven by politics typically outperform for two years after a new leader's elected. then those markets start to fade. again, examples are indonesia, russia as well when putin was elected and modi of india.
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that could happen to brazil if we don't see reforms implemented by temer. >> it's very tough considering the constitution that has so many restraints within it to do it. as a u.s. investor it's not just the stock market but the currency, there's been so much volatility some of this will be related to the federal reserve and what they do with interest rates. >> great point. a country also dealing with a high level of dollar denominated debt therefore it's an emerging market vulnerable to another rate hike by the federal reserve. >> i guess the markets will now look to who may be the next president of brazil. i don't know if rousseff's party nominates somebody or they go to another election. they went to another election, it would probably be this gentleman i'm going to massacre the name who was very close to the last election, former governor of one of the states, economist by trade, little issue in the media, some say he may be a bit of a partier -- >> he was considered more market friendly. >> correct. who's next? >> sometimes markets are
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forgiving of a leader's past as long as they're promising better days ahead. we've seen that in the past as well. >> and a lot of places. >> yes. >> not uncommon. >> forever. we have other big news out of brazil today as well. the energy ministry saying that brazil may again allow companies other than the state run petrobras to be run on oil. companies sold back to petrobras in 2010, bit of a u-turn for the company. had been open to outside investment until 2007 when then president and now current president who will no longer be president dilma rousseff took back much of the state's monopoly. basically, michelle and melissa, they wanted the oil back for themselves. i think financial problems, kind of like the government of mexico forcing petrobras to reopen. >> they got greedy. you can probably time the decision they wanted petrobras to do everything in the oil sector back to about $1.40 for oil, remember those days? and they were going to be the dominant player.
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>> it was. it was late '07 and petrobras shares topped out at $71 a share. they're now at $9. >> right. >> so that will spark action, hopefully. >> so there can be more foreign investment. they need it. they need the expertise. they don't have it. everything runs behind schedule, over budget, it's been almost an epic failure. >> and this is probably the most capital efficient way to ring up profits from, you know, the rights they don't have to invest to get the oil out. they simply lease it. >> and people realize, i mean, listen, petrobras, a, biggest company in brazil, b, has brought down a billionaire, the richest man in brazil lost his entire fortune in less than a year. >> i think it was like $40 billion in one year. >> the greatest manmade loss of wealth in global history. and petrobras oil is most of it is in really deep water, really expensive. >> when jim chenos put on that report to his credit he said, listen, you can't even fly a helicopter that far offshore,
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right? the billions and billions they were going to have to invest to get it. >> to get the oil, which is fwhort much anymore. >> and the skeptics were like, oh, my god. we had people on every day no, petrobras, buy petrobras, to his credit he was up early. >> shorts actually in ghana. >> all right, back here in the u.s. stocks are heading toward session lows on this last trading day in august. so what's in store for stocks in september? let's get to dom chu at the nyse. september is a notoriously volatile month, dom. >> it has been in the past. and the reason why is this idea overall we have markets since the financial crisis that have moved a lot one way or the other but on average haven't done much at all. here's what i'm talking about. we asked our data partners to take a look at the last ten years of the s&p, the dow, the nasdaq. on average you can see the s&p up by 0.3%. the nasdaq up 1%. the dow up by 0.7%, positive a coin toss of the time.
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so there have been just as many down months as there have been up months for the month of september over the course of the past ten years. now, since the financial crisis, yes, hung around there until now we have seen a little bit more volatility in those stocks, but on average, again, a coin toss positive or negative. as for the rest of the year, guys, take a look at this, this is interesting. between the end of august and the end of december for the past 20 years the s&p 500 is actually up about 4.5%. so positive, decently so. health care, one of the best performing sectors up about 5.5%, also a very positive sector. and energy overall one of the laggards but it's still positive 60% of the time up by about 2.5%. now, again, these are average numbers, so the individual occurrences are going to be of course perhaps more volatile one way or the other. but still, it goes to this idea that there could be a number of catalysts this month, this coming month that could shake things up a little bit. but again, it's a real coin toss
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at least it has been over the past ten years about what's going to happen. of course all eyes on that big jobs number on friday. all eyes on whether or not that means the fed's going to raise interest rates later on in september, guys, back over to you. >> all right, dominic chu, dom, thank you. still ahead, donald trump heads to mexico. what to expect from the presidential nominee's trip south of the border. but first, we're talking tax pros, farm fresh eggs and acid reflux pills. that's why we're playing this music, it is the good, the bad and the ugly in today's trade when "power lunch" returns. guys, what's ening here? hey cole this is my new alersystem for whener anything happens theart. kid's a ral. buthinkorsm alady letsou creatoalerts for l e th th arempornt to shhh alerts on anything at l? not that, you n acon that opportunitywithp right from the art. wow, gue wdot ne t anymo
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go long ♪ welcome back to "power lunch." i'm melissa lee. time now for the good, the bad and the ugly in today's trade. first to the good, bob evans farms, restaurant chain beating estimates while raising full year forecast, shares up by more than 5% here. astrazeneca, settling an s.e.c. foreign bribery case, accused of improper payments to state officials in russia and china but did not admit or deny guilt. that stock down by 1.5%. and on to the ugly, it's a very bad day for h & r block after reporting a wider than expected loss. blaming currency problems and fewer u.s. customers. i thought everybody paid taxes and filed taxes, michelle. >> well, they're supposed to. big night on cnbc prime. don't miss a new episode of
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"cleveland hustles" from executive producer lebron james. tonight, successful cleveland restaurateur jonathan sawyer must choose between two small businesses competing for his investment. the first candidate is an urban honey making company. >> hey, what's happening? >> wesley's never operated a retail space before, but dedication to the community is compelling. i need to find out how he can grow his business and revitalize gordon square. >> this was once a home here, they raised it and it was just space. this is my one hive. i got about four right now. you see they're outside of the hive, it's a warmer day and also this indicates it's like bursting at the seams, pretty much. they need some room. my business began as a way to make our community better. there was a vacant lot of land around the corner from my house. my wife let me buy it and i transformed into a bee yard. and akron honey company was
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born. last year i had a pretty strong hive here. i harvested probably three different times from it. >> and that's close to 1,000 ounces? >> yeah. >> don't miss tonight's episode of "cleveland hustles" 10:00 p.m. eastern, 9:00 p.m. pacific time. up next, donald trump making a surprise stop in mexico. this ahead of tonight's big immigration speech. meantime, get this, the clinton campaign promptly releasing a big, beautiful list, their words, of trump's tweets about mexico. you will not want to miss your daily dose of politics. it's coming up. and it's not as sweet as honey. gineering... f it's a performance macne. withhis degreefintellige. wi this grade proctio... it's f ftress. w this rdfade proctio... xury... it's an oas. wtrucing the completeo... degned elass. 's evething youn oas. need i be... and more. lease the300 for $549 month need i be...
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hello once again everybody. i'm sue herera. here's your cnbc news update for this hour. a small bomb exploded on a main road near the eastern lebanese city killing one person and wounding 11 others. lebanon has been hit by a wave of explosions over the past three years as syria's civil war spilled over into its borders. florida governor rick scott has declared a state of emergency in 42 counties in preparation for tropical depression nine. it is spinning in the gulf of
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mexico and forecast to move towards the west coast of the state. >> we have 6,000 members of our national guard ready to be mobilized. but just think we're going to have storm surge, we're going to have rain, we have the risk of tornado. and this is going to go across the state. it's dpoing going to start some time tomorrow and hit most of the northern part of the state. we're going to see a lot of rain especially on the east, the southeast side of this storm. food lion is warning its customers of a fake coupon that is circulating over facebook. it tells customers they can take $90 off any purchase of $95 or more to celebrate its 60th anniversary. forewarned, don't fall for it. and sotheby's will auction off john nash's 1994 nobel prize, best known to the general public as the protagonist in the 2001 academy award winning film "a beautiful mind." it is expected to fetch between
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$2.5 and $4 million. that's the news update this hour. >> i would hate to be a food lion worker today. >> yes, indeed. i want this coupon. i got the coupon. >> says right here $90 off a purchase of $90. >> exactly. can you imagine? >> i'll just take my food and go. >> and go. >> what if it's double coupon day? >> double coupon day then we're really in trouble. >> i only bought $45 worth of food i want, $45 in cash now. >> now. oh, my god, they're going to need a spa da. >> they really are. >> thanks, brian. >> thank you, sue. first megyn kelly now this food lion, facebook has a fakery issue. dow jones industrial average down 90 points, near session lows, not quite there yet. crude oil is down fairly big. crude oil is down more than 3%. melissa, we're going to watch crude oil. to the bond market rick santelli tracking all the action at the cme. rick. >> hi, melissa lee. indeed, whether it's the weakness in equities pushing a
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little buying in treasuries or the weak chicago purchasing managers, we're back in the range you see it. one-week chart there. as a matter of fact all maturities down two basis points in yield, bond only down one but we're splitting basis points here. how did we arrive in the mid 150s? i'll show you a chart starting mid-june, the high at 175, brexit 623, the all-time low, july 8th, 136. guess what the average midpoint is on that, you got it, 155. i have a feeling we're going to spend more time here. last but not least, let's take a long look at the dollar/yen starting at the end of april. and when you look at it that way, many traders are thinking the next big pivot is 106. a couple of tops and bottoms there, traders do believe the dollar strength may persist with the notion of the fed possibly tightening. i haven't run into anybody who believes it, but nonetheless they're getting long the dollar. sully, back to you. >> all right, rick santelli, thank you very much. well, this came as a
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surprise to many. donald trump heading south of the border today. he will meet with mexico's president. that's all ahead of tonight's big immigration speech. eamon javers has the latest from washington. >> hi, brian. we expect donald trump to lapd in mexico at some point this afternoon, but exactly what point remains unclear. we're not getting a whole lot of detail from the trump campaign about exactly what his schedule's going to be in mexico. we do expect him to meet with the mexican president enrique pena nieto at some point this afternoon. we expect possibly a press availability with photos being taken. whether or not they'll answer any questions is also sort of anybody's guess here. this trip coming together very much at the last minute putting a lot of stress on the u.s. state department facilities down there. and the u.s. secret service, which have to keep everybody safe during that trip to mexico city. so during the course of the day though today we've seen this twitter war break out on twitter between the former president of mexico and donald trump. let me give you a couple of those tweets. you can see sort of the tone of this thing going into starting
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with real donald trump tweet former president vicente fox who is railing against my visit to mexico today also invited me when he apologized for using the f bomb. writing in response, i invited you to come and apologize to all mexica mexicans, stop lying, show some respect. meanwhile hillary clinton getting into the action today with her own tweet saying a big beautiful list of nearly every tweet donald trump has sent about mexico over the last two years, clearly the clinton camp expects that this might play out to their advantage. hillary clinton was speaking just a short while ago to a veterans group. she said ultimately that a trip by donald trump for a couple of hours to mexico can't make up for a year of insults to mexicans, mexican-americans and mexican immigrants inside the united states. so a lot at stake here.
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a fascinating moment in diplomacy and politics. we'll have to wait and see how it all plays out because we don't have much detail right now. >> all right. we'll be watching this afternoon and tonight, eamon, thank you so much. >> you bet. immigration has been a bedrock of donald trump's campaign. what can we expect from tonight's speech? what can we expect from this afternoon? thoughts now from immigration and free trade expert dan griswold and houston immigration attorney a member of trump's national hispanic advisory council, met with donald trump right before we had this whole discussion about whether or not donald trump was actually softening his position. mr. monty, what do you make of donald trump going at the invitation of the president of mexico today. >> we're seeing a leader recognizing there's a problem and taking steps to solve it. that's what we have in donald trump, an executive who studied the issue and who's going to tackle it not just kick it down the road another four years like the democrats have done. >> you're third generation mexican-american, right? >> yes.
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>> so did you just see eamon's report where he talked about what hillary clinton said, which is a trip to mexico can't make up for more than a year's worth of insults to mexicans, mexican-americans? do you feel insulted? do mexicans and mexican-americans feel insulted that you know? >> look, i think mexicans were hurt by the broken immigration system that has a number of good people here without status. we also have criminals that are here. we need a solution. that's what's really what we need. and if you want a solution and the solution everyone agrees has to come through congress, the only one that can get that done is donald trump. i'm very encouraged about the trip to mexico. i'm very encouraged about the speech today. i think we're going to hear a speech that will promote security, that will treat people with compassion and that will protect our economic interests as well. >> treat people with compassion, does that mean not send them back? because that was his position
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early on that i know you disagreed with. >> well, yes. that was something that when we met with him he acknowledged that that was the tough part. and he was open to different suggestions. we had -- i think that we're going to hear a plan that number one secures the border, but also treats the people that are here that aren't criminals with compassion. because that's what americans want also. so i'm looking forward to the speech. i think it was bold for him to accept the invitation. again, i think that's the leader that we want in the white house to solve the problem, not just kick it down the road. >> dan griswold, you just heard mr. monty, he's been in the room with donald trump to discuss the potential deportation or not deportation of mexicans living here illegally. what do you think? >> well, i think mr. trump's dug a deep hole for himself. you know, let's hope he reverses himself somewhat on his immigration policy.
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you know, hunting down and expelling 11 million people, 11 million undocumented immigrants from the united states would be a humanitarian and economic disaster. it would tear families apart. it would disrupt important sectors of the u.s. economy. it would cost taxpayers billions and billions of dollars. the right approach is some kind of earned legalization. the vast majority of undocumented immigrants in the united states are not criminals. they're decent hard working people. they live in families that often include american citizens and american citizen children, half of them have been here for five years or more, a third of them have been here for a decade or more. >> i think a lot of people don't disagree with that, but what do you do about -- and mr. monty's brought this up before on our network, the issue of security at the border. a lot of drugs that cross the border. drug lords, you know, when we cleaned up colombia with the help of the united states, all of that drug trade moved to mexico right on our border. and people who live on the
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border are very frustrated by that. >> yes. well, first, if we legalize the vast majority of those here who are illegally, they can come out of the shadows, they can cooperate with law enforcement, we can turn our law enforcement resources on the true criminals and terrorists. the same at the border. the long term solution to this and i have not heard mr. trump talk about this, the long term solution is expanded legal immigration into the united states, allow low skilled workers to come in on temporary visas to work for two or three years and then go back home. and we can train our law enforcement efforts on terrorists and criminals, not on gardeners and grocery store workers. >> mr. monty, if he does soften his position tonight in this speech, there are supporters of donald trump, you're one of them, but spoupporters who have worried that may actually alienate some of his previous dogged supporters people who said they were going to vote for him specifically because he would be tough on immigration
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and tough on illegal immigrants in the united states. do you worry it's actually a political loser for him to soften? >> i don't because what we have right now is de facto amnesty. so his steps would identify who the people are that need to go back. it would identify the criminals and prioritize getting them back. you know, after 9/11 we know that most of the immigrants could be good and maybe are good, but there could be terrorists among the 11 million. we need to identify them. so it's a -- it's not a simple issue just identifying the good guys from the bad guys. but donald trump can do that. i think all americans want security. and he's the only one that has the credibility on the security issue to get something through congress. >> you've said before that you do -- you want him to build a wall. do you expect him to reiterate that tonight? and if he doesn't, are you going to be disappointed? >> no -- well, the wall needs to be built. we need more security. we need better vetting of
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immigrants. i think that the wall is not the controversial part of the whole process. the tough part is what to do with the people that are already here that aren't criminals. and i think we're going to hear some ideas from donald trump on how he plans to do that. again, the wall is not a big deal. we want security also. the bad immigrants give the good immigrants a bad name. so we want them gone, too. we're going to hear how he's going to do that. >> mr. griswold, what do you think of a wall? >> the wall's a bad idea. and it is controversial. it will be big. it will be ugly. it will be expensive. and it will be ineffective. something like a third to 40% of those people here illegally came in legally and overstayed their visas. the wall isn't going to keep them out. we've got hundreds of thousands of people crossing our border every day perfectly legally. the wall isn't going to do anything about that. >> there's this thing too -- sorry to jump in here, having grown up in southern california, they have these things called
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tunnels. and apparently people are able to burrow under walls frequently in that part of the world to deliver drugs. you get my point, we're talking about a wall as a solution, you got to go around it if you're desperate enough, correct? it's ridiculous. >> what do you think, mr. monty? >> how about 4,000 miles of land? >> well, we need a wall or its e equivale equivalent. we need to prevent the free flow of people -- >> how deep do you make it? you get my point about the drug tunnels. how deep do you make it? because if you can't go over, you go under. if you can't go under or over, you go around. >> and it's all unnecessary. >> we need to solve the problem. i know america can solve this problem. other countries have done it. i trust donald trump more than i do hillary clinton on this issue. >> all right. gentlemen, thanks so much for joining us. >> thank you very much. >> we're going to watch tonight. it's going to be very interesting. dan griswold, jacob monty, pleasure to have you both.
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coming up next, a celebrity broker showdown. real estate reality stars faceoff in the latest edition of cnbc's million dollar home series. that's straight ahead. hygieni said e most random thing
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and is better at strengtninge oh mas myho mtheel amaz adnce to heahi gums and stroer tthrom day one. my che-up was grt. crt. hea, beaufusmiles for life nbc's popular million dollar home series is back and this time celebrity brokers face off to look for the better bang for your buck. in round three we're in los angeles where broker matt altman shows us mediterranean up by coastal chic shown by broker james harris. >> this magnificent mediterranean estate in hollywood hills is just off the sunset strip. this three-story home spans more than 4,600 square feet, six bedrooms, 5 1/2 bath along with gourmet chef kitchen. fire room with onyx fireplace,
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wood beam ceiling and french doors that open to the balcony. the biggest selling point about this property has to be the spectacular panoramic view from all the way downtown to the ocean. and of course don't forget to enjoy the infinity pool below. live and work near it all for only $3,995,000. >> this coastal estate in venice is situated on the banks of the grand canal. inside a 4,200 square foot home with dramatic water views from the living room to the master suite. three bedrooms and four baths plus two great rooms with high ceilings. a chef's kitchen, wood burning fireplaces and hardwood floors. the master suite comes with a huge walk-in closet and spa tub at the center of a grand bath. the rooftop deck has ocean views and a hot tub. there's also an attached three-car garage. the best thing about this beautiful home is that you're just steps away from the pacific ocean and right next to this gorgeous canal. the price tag to live the dream in venice, $3,900,000.
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>> with us now is ryan sirant, star of bravo's million dollar listing new york. so what's going on in this market? seems kind of hot. >> it is kind of hot. this is our third round today. this morning we battled it out between two amazing homes in san francisco and then i went down to "squawk on the street" and we had a big battle between two places in miami. and now we're in los angeles where i also have an office in beverly hills. and this one's hard. i have to be honest. this one's hard. i mean, i saw you all nodding. >> what would be the better investment. >> right. >> which one is going to be the more bang for the buck. >> uh-huh. >> now, you would go to and you'd say, well, the hollywood hills, that's safe, it's a brand name right off sunset, an infinity pool, amazing views and six bedrooms. >> how much land is on that mediterranean mod? >> that's about a quarter of an acre. >> so the whole house is almost -- >> basically. but people go to the hills, they go for views, they go for the
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brand name, close to sunset. >> nobody wants to mow a lawn. >> exactly. >> what lawn? there's a drought. >> now, in venice you are side by side, but you are just steps from the beach. so this is really comparing apples and oranges. they're both homes, they're both say roughly $4 million. venice is a three-bedroom, so you're paying more per bedroom and hills house is a six bedroom, so you're paying less per bedroom but you're going to pay an overall lower price per square foot. so what do you guys like more? >> i go venice just because i'm a beach guy. i grew up out there. it's spectacular, venice. >> i love views. >> you want the views. >> yeah. >> views, views, but venice also has views. from that roof deck with a hot tub you're sitting in there and looking out at the ocean, the canal. >> venice -- let's be fair, venice can be a little bit sketchy in some parts if you've got kids, you know what i mean? it's a party town. >> and that's where the weight lifting section is, right? >> and it's a good thing you bring that up.
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>> my producer says how close to muscle beach, it is muscle beach. that's where it's at. >> but we're comparing which one for $4 million is the most bang for your buck. i'm looking at future appreciation. hollywood hills is always going to be safe, year over year that area has increased sales price about 2.5%. safe, easy, nothing too spectacular. venice though is over 6%. and once that train gets built and finished connecting downtown to the beach, the area's going to explode even more than it already has. and i think we have to also keep that in mind. >> so that's a better investment in your view. >> in my view, my winner the one with the most bang for the buck is the venice house. >> congratulations james harris. >> james, you were right on it. you like the beach. it has views too, so you're going to be okay. i'll sell you both. we have $4 million do $2 million on each, borrow 50%, interest rates cheap, lock them both up so we don't have to choose. >> melissa, this is the second time i've played today, i've
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been wrong twice. >> you can't be wrong. it's what you like. >> both of these are good choices. >> real estate is personal, it's emotional, right? >> but it shouldn't be. >> well, it depends on what your purpose is. >> by the way, there are a couple of people that are familiar names on this show as big investors who would be your neighbors should you buy that venice house along with matt grainy who created the simpsons. he lives right there. >> great area. >> selling point. interest rates low, you mentioned that. are they too low for too long? are people sort of getting lulled into thinking i'll do that later because the rates will stay low? >> i mean, i'm a fan as a broker of any market that's volatile. because you have somebody on one side who's willing to do a deal. any time the market is kind of stagnant or people are waiting and they're waiting for the election or they know that interest rates -- >> is that the position you're in right now? >> right now we're basically in a state of limbo. people are waiting. they're watching. and they're being very, very cautious. but things are selling because people need to move. and people have the cash these days. and we'll see what happens after
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november. >> all right. >> cool. >> ryan, good to see you. >> thank you. >> i'll be back one more time on "closing bell." >> yes, exactly. and that will be the next round of competition. you can visit facebook.com/cnbc to watch all of the homes competing today. still ahead, investing in space. there's one company venture capitalists are over the moon for. what makes the space start-up so special? that's next. experien mor♪ confidence
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welcome back venture capitalists. they invested more than $2 billion in space-related start-ups last year, another $200 million so far this year. one of the most popular so far in san francisco is based plant. josh lipton got a personal tour of the company and joins us now with more on planet, josh. >> brian, when you talk to vcs investing in space start-ups, they'll tell you satellite builders are some of the ones that excite them the most. that's where planet comes in. they build small eight-pound satellites to orbit earth and capture images of the entire globe. the satellites, or doves as
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they're called, are flown by companies like spacex to the international space station. from there astronauts gather the satellites and send them into orbit. right now some 60 doves circle the earth. >> each satellite comes down taking a strip of imagery, and the next one takes a strip just next to it because the earth is rotating, so it ends up being a scanner for the earth. the whole earth gets covered in 24 hours by one ring. >> the company has signed contracts with more than 100 customers such as ag giant bayer crop science which uses the imagery to gauge the health and yield of crops. vcs say though it's the founders that won them over all former nasa scientists. >> it's really combination of skill sets required to be successful here, one, you need to be able to get a satellite into space. that's not just on the engineering side but also understanding the complexity and mystery. and then oyou also have to creae
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a business on top of that. that requires software, data, analytics capabilities. >> there are challenges though, marshall notes his satellite images do not boast the same resolution as legacy satellite builders like airbus, but he says they cover far more of the earth's surface and more frequently than those established players. so is an ipo in the future? marshall certainly thinks it could be imaging the whole planet, he says, every day has a lot of exciting business applications, certainly vcs are convinced. they've already dedicated more than $180 million to this start-up. guys, back to you. >> so, josh, i'm curious, the 60 doves that are now circling the planet, are they shared by companies? do they gather up information and images and then they're able to sort of amortize that? >> right. so you have 60 doves right now melissa gathering images of the entire planet on a nearly weekly basis. give you a sense of where the company wants to head in the
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future, by the end of the year they want to have 150 doves so then you'd be gathering on a daily period. and then to your point the business model is you're going to sell that imagery and not just the data but also analysis to have the data to a wide range of companies. you can imagine the different applications that shipping routes, construction sites, climate change and rescue missions. >> all right. so reselling basically the same images, not bad. josh, thank you. josh lipton. still ahead, he's predicted five market crashes. he has three more dates we need to worry about. the analyst interview you do not want to miss. but first, more on trump's surprise meeting with mexico's president. what are they going to talk about? we'll talk about that next.
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welcome back to "power lunch." i'm michelle caruso-cabrera. here's what's on the menu for the second hour. mr. trump goes to mexico. at the last minute. and to the surprise of nearly everyone. and an analyst coming up who's accurately predicted five market crashes. he has three more dates we need to worry about. and whiskey wars. the ceo of mcallen gives us a taste of their latest creation. the second hour of "power lunch" begins right now. and i'm brian sullivan. let's get a check on your money
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with two hours left until the closing bell on this the final day, the final trading day as well, amazing how that works out, of august. the dow is down about 88 points right now. we are lower. in fact, the overall fate of the month for the dow is at stake. so it was a little drawn out there today. as of now these declines have erased august gains. and we are now officially down for the month of august for the dow, which could by the way wipe out a six-month winning streak for that index. nasdaq remains higher by just under 1% this month. melissa. i'm melissa lee. headlines this hour national hurricane center upgrading tropical storm in the gulf of mexico. the first commercial flight between the u.s. and cuba in 50 years landing on santa clara today. and four athletes, three from russia, had the medals from the 2008 beijing olympics taken away. samples were retested and came back positive for banned drugs, michelle. melissa, donald trump's scheduled to speak to mexican president enrique pena nieto later today and then plans to make a speech regarding his
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immigration policy. because the economy is a central aspect of trump's campaign, we decided to take a closer look at the economic relationship that currently exists between the u.s. and mexico. take a look at our wall here. according to facts that the u.s. gdp stands at $17.95 trillion, mexico much smaller $1.14 trillion, mexico's labor force slightly better than the u.s. the country's current unemployment rate at 4%. the u.s. stands at 4.9%. keep in mind the differences between the two countries' population according to census bureau u.s. population 323 million, mexico about 123 million. moving on to the big issue of trade, which has been such a hot topic in this election. total trade between the u.s. and mexico valued at $583 billion in 2015. america's trade deficit with mexico is about $49 billion. in other words, we import more from mexico than we export to them. finally, trump talks a lot about u.s. companies moving to mexico. here's a list of some u.s.
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companies with a manufacturing presence in mexico. the list includes names like ge, gm, hp, caterpillar, coca-cola and more. what are we to expect from this surprise meeting between republican presidential candidate donald trump and the president of mexico? let's bring in president and ceo of the america society, the council of americas, nonprofit that promotes business relationships with latin america. >> sorry, michelle, i was just calculating the percentage of the $49 billion of the $17 trillion u.s. economy. >> okay. that's steve liesman. >> 0.82%. >> our chief economics correspondent. susan, going to start with you. what do you make of this move by the president of mexico to invite donald trump? >> i think it's a very risky but very beneficial move by president pena. frankly, i think that president pena has a lot to gain from this. it is unthinkable that a leader
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from mexico, a leader from the united states does not have a dialogue. totally unthinkable. this is an opportunity for president pena nieto to rise above and show his leadership. and so i think, you know, he enters this with 24% popularity. >> incredibly low in mexico. >> incredibly low in mexico. and frankly, yes, mexicans are mad about this. but he can come out of this if he has some way to impress upon candidate trump, you know, some new facts, some new figures about the economic relationship. >> back it up a little bit, susan, i'm not as bright as everybody else at this desk. i'll ask the dumb question which is why in the hell would he invite donald trump down there in the first place? what does he have to gain from a guy that's largely insulted his country and his people? >> because frankly the united states and mexico are incredibly economically integrated. we are important to each other. we share a border, but more importantly we share an economic
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relationship with mexico really rivalled by no other country. they're our third largest trading partner. >> i wondered if pena nieto was surprised. is this like the guest you didn't want to come to the wedding? like, wait, he said yes? >> i think it's possible. but on the other hand he looks like a leader by inviting, you know, the two candidates from the united states in the presidential election to come to mexico. >> is this unprecedented? >> no. no. candidate mccain actually had a meeting when he was a candidate for president with the mexican -- >> but candidate mccain is a senator with a state with a long border to that nation. he had other interests as well. he was physically attached to that country. even if he lost the election, it benefitted him. trump is a new york guy. >> trump is a new york guy, but
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frankly, you know, there are four states in the united states that mexico is the primary trading partner. there are 22 other states where mexico is the second most important trading partner. there are 13% of our population in the united states is mexican, of mexican origin. that is documented in this country. they create 18% of the small businesses, the largest employers in this country. donald trump has got to find an avenue to have a constructive dialogue with mexico. and frankly, mexico needs to find an avenue to have a constructive dialogue with donald trump. >> trade has come under such fire in this election, steve, i know in the past you've looked a lot at the effects of nafta because it's been controversial for a long time. >> i'm going to boil it down to one fact. $9,000 more for your ram 1500. that's all you got to know. >> $9,000. >> more. if you slap a 35% tariff on a
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mexican pickup truck. and i think the people who are for free trade ought to talk in that language. because donald trump is talking in a very populous language, and we ought to talk not only about $9,000 for a pickup, we ought to talk also about a wave of illegal immigration as we send the mexican economy into recession. so if you want to solve the illegal immigration problem, one of the things you could do is you could build a wall and build it high, high and higher. or, you can try to help what we're trying to do -- >> that's exactly right. >> let me make a third point here, which is if you want to run the world, which by the way, wake up america, slap you in the face, we are doing -- america runs the world. we are the biggest economy in the world no matter what you're told. it would make sense to try to have at least a success story at your doorstep. it's awfully hard to run the world and create, you know, democracies and capitalism in the middle east if you can't do it in mexico, by the love of god. >> preach. >> i just want to add some
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really important statistics to support what you said. >> better than $9,000 on your ram 1500? that's a good stat. >> that's a great stat. but another great stat is that every dollar of import which the united states imports from mexico has 40 cents of u.s. component in it. really important. >> let me ask you -- real quickly, michelle, very quickly, which is the u.s. auto industry is wired for a north american production chain. it may ten years from now be better to put these tariffs on and build a wall, but right now it would be an immediate crash for the american auto -- >> everybody believes in trade, right, at cnbc. when we have people on talking about the issues at the border, they're worried about security, they're worried about the drug runners, which we know is a problem. and mexico has struggled with this. what do you say to people, look, you can talk all you want about frad but the problem is we have security issues. >> the fact of the matter is the united states and mexico
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collaborate on making the border saf safer. and in fact, mexico helped the united states when we had to repay trait a number of unaccompanied minors back to central america. so i think that it is the collaboration that will make the united states and mexican border safer. >> i have to make one more point, one of the reasons american manufacturers and global manufacturers are making autos in mexico is because mexico has 13 free trade agreements with 45 countries. >> absolutely. >> that allow you to make a car in mexico and export it duty free to other countries. the problem with american manufacturing may be we don't have enough free trade agreements. >> the point is if you're a u.s. company that manufactures in mexico, you can sell to brazil without tariffs -- >> not brazil necessarily. >> but, michelle, if i could to add to his auto point, super important, an auto when it is manufactured crosses the border eight times in its manufacturing cycle. >> wow. >> on average. >> we'll see what he says
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tonight this immigration speech. susan segal thank you for joining us. steve liesman going to stick around and talk about the fed and jobs numbers that were out. >> of course jobs number out on friday, is that key to whether the fed will hit the trigger and raise rates in september? we'll talk about that next on "power lunch."
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welcome back to "power lunch." the countdown is onto friday's big jobs report. and today we got the adp report
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showing 177,000 increase in august payrolls. meantime two fed presidents speaking in beijing today with very different views on the economy. eric rosengren saying federal reserve will likely reach inflation target, but chicago fed president charlie evans says he's increasingly convinced u.s. economic growth has slowed. i spoke with mohamed el-erian about the likelihood of a september rate hike. >> the odds are 60% y because while domestic conditions are flashing green, international conditions are flashing yellow. so it is international picture that is holding back the fed. >> el-erian also saying chances of a september rate increase will go up to 80% if friday's jobs report shows three things, job creation at about 180,000, which is consensus, wage growth and no significant move in labor participation. let's bring in cnbc contributor joe, chief economist at deutsche
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bank and our very own steve liesman is still here. joe, do you think it's at 60% right now? and does it go to 80%? >> no, i would say the market's probably right it's about 35% for september. if you get a strong report on friday, those probabilities will rise maybe to 60%. but i think mohamed's a little high right now. >> what's going to be the excuse not to pull the trigger if friday's jobs report comes in at 180 or higher? >> that the markets aren't yet ready for it in the sense that you've gotten a recovery in the economy perhaps in the second -- in the third quarter, the numbers are okay. and the fed just wants to be certain with the election coming you don't want any negative spillover should they raise rates. remember, if they raise rates in september, they probably have to tell us what they want to do in december with the dots, so it would be more just being very, very cautious. that's what i think, melissa, they'll do. >> joe, i'm going to keep my remarks brief so we can get to the tomato story at the end of this segment. >> what a tease.
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>> but i'll say that's lame. i know that's not your argument -- >> no, i know, steve, it's definitely lame, i agree. >> the market isn't prepared is pretty lame. >> yes. >> i think it's right what's interesting about what you said is, a, the market is priced about half of where el-erian puts it now and more than that if it's a strong jobs report. but the market is priced everyone half of what it should be on a percentage basis given your own forecast if they hit the number, 180, i think the fed goes and i think part of the reason it goes is because they're out of excuses for not raising. and by raising they're fulfilling what they said they were going to do which is if the economy is in the clear they're going to hike. >> let me add to what steve said. it is absurd, steve, i agree. this fed has been so beholden to markets. and maybe they finally get the courage to move. but if you look at the fed funds futures markets over the years, they have never surprised the market and hiked -- by hiking, when it wasn't fully there. so really the tale -- >> we already have hiked, forget
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in december. >> joe, does that mean that if the market prices at 50 post jobs report that the fed's excuse will be gone at that point and so it can hike? >> effectively, yeah. but you know there will be enough data, something will happen between now and meeting to push the market above or below. i'm of the view as i have for a while now that the economy's not very strong. i believe evans is correct. maybe growth could bounce back a little bit this quarter. i actually think friday the risk is a weaker number, i'm at 160, if it's wrong i think i'm lower. >> we're talking fed funds futures. >> exactly. you are correct. >> but if you take a look at the equities markets, what they have been telling us for the past month or so is that there is going to be a rate hike sooner than we think. i mean, you take a look at financials they're up 3% over the past month. bonds are down 1% over the past month. gold is down. cyclicals are up. we've got technology gaining.
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i mean, the things that signal growth -- >> don't argue with her. she got stats. >> joe is right for a while when things were better than expected. he was right for a while when things were worse than expected. now, joe, i'm afraid you might be on the wrong side of the trade here. and i'll just say i'm looking at our cnbc rapid update, 2.7% tracking for the third quarter it's looking like it's going to be a decent rebound that we might average out at what has become the golden lustrous number of 2%. >> even -- steve, even a blind squirrel can catch the proverbial nut. >> and i understand, joe, your point about the economy maybe not being strong, but have you ever broken a bone, joe? >> i have. >> okay. so you know -- you break your bone -- >> stick with me here. >> where is this going? is this going to stop with the tomato story? >> this is genius, or stupid, find out. you break a bone, wear a cast, eventually bone heals, cast comes off, maybe you have to go
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into a sling. you have to admit maybe we are not -- we've got cast fed conditions, but the economy is not broken. why are we still at crisis conditions? why are we so afraid of 25 basis point hike to -- >> that's a good question. i'm happy you raised that. >> 50 basis points. >> steve knows these guys pretty well so he could be better to position to answer maybe than i. i would argue fed should have raised rates a long time ago, the economy may have been better. the problem, brian, raising rates isn't with the one or two hikes, it's where the market is saying the terminal rate is. and i don't think they're going to change the terminal rate very much. but as of the moment the fed is telling the terminal rate is 3. if you look at the euro/dollar strip curve which is what you have to look at because fed funds futures isn't out really more than a year it's telling you terminal rate is 1. so the minute the fed raises rates, the markets then go back to the dots and think about where the fed is going. that's why the rate hike matters.
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it's what arguably the market thinks -- >> the answer to brian's analogy is that the fed does not have an x-ray machine with which to tell if the bone is still broken or not. >> so we're being healed by -- >> ee erred on the side of keep it -- >> i'm going to be more critical of the fed. this is more like the fed doing medicine in the 17th century. >> yes. thank you, joe. >> got to get to another story. >> thank you. now you say like it's a bad thing. >> this better be good, michelle. >> 20,000 people in spain today throwing tomatoes at each other. it is an annual tradition. looks like fun. it is a giant mess. however, and here's why we're talking about this. >> this is like the september fed meeting. >> this a terrible waste of tomatoes, 160 tons of beautiful ripe tomatoes not being savored and enjoyed with a tomato
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enthusiast, all spelled out one word, i cannot condone this. follow me, one tomato, two tomato. >> is that a plug for your instagram? >> yes, that's exactly it. didn't want to talk more about the fed, did you? >> that was better than the fed. >> shameless. >> maybe that's what happens in the back room with the fed. >> i've argued -- >> the fed is so divided that's what september meeting's going to be like. >> the lesser attended cactus throwing festival is more interesting video. >> look at that. >> far less attended. >> they're like half naked pause they don't want to get, you know -- all right. i'm going to go one of these years. >> all right. on a serious topic, tomorrow night on cnbc we have a new documentary "ground zero rising." it's about the rebuilding of the world trade center. coming up we're going to show you how they're making the newer tower bigger, better and safer.
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fifteen years after the 9/11 attacks the new world trade center's open for business. its centerpiece tower is the tallest building in the western hemisphere with a price tag to match as cnbc's jim cramer
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reports in a new documentary, one world trade center was designed to be the biggest but also the safest. >> the unique safety features inside 1 world trade, are a key reason it costs $3.9 billion, $2 billion more than any other skyscraper in the world. it was designed precisely to survive a 9/11 type attack, which makes it both a shield and a bullseye. >> the world trade center remains a target, remains a target for the al qaeda groups, for isis. >> reporter: don spent 25 years with the fbi and helped lead new york city's antiterrorism task force after 9/11. he's now an nbc news analyst. do you think there have been any credible threats even during the time of the building this? >> lots. >> reporter: lots? >> lots. i would say lots. >> well, you can learn all about the new world trade center in the new cnbc documentary "ground
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zero rising: freedom vs. fear" it airs tonight 10:00 p.m. pacific. big drop in oil prices today down more than 3.5%. coming up we'll go live to the nymex and an explanation what's behind today's big move. stay tuned. [cheing] [engvs] ♪ the hily advanced au a4. ♪ wh icomes to medicare, everyone talks out whwh happens whurn y-five lly, it's what you do before that co. e rest is.
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hello everybody. i'm sue herera. here's your cnbc news update at this hour. by a vote of 61-20 brazil's senate has voted to permanently remove president dilma rousseff from office for breaking fiscal laws. the decision is the culmination of a yearlong fight that helped paralyze latin america's most powerful economy. she will be replaced by the country's vice president. british prime minister theresa may shared a cabinet meeting to discuss specific plans for the uk to leave the european union. french prosecutors confirm that 815 pounds of cocaine was discovered inside a coca-cola factory. the drugs were found in a container transporting fruit concentrate from costa rica. and pope francis announcing major changes to the vatican
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bureaucracy which will see him taking direct charge of migration issues. when he was elected back in 2013 he pledged to cleanse the church's bureaucracy which has been racked by scandal and charges of corruption. that's the news update this hour. melissa, i'll send it back to you. >> thank you very much, sue herera. big move lower for oil prices today. let's get to bertha coombs at the nymex. bertha. >> yeah, melissa, you would think with tropical storm or actually now a tropical storm that we'd see a more positive impact in terms of going long on oil. but it's not really having an impact on production per se. today, the big issue was the inventory number. we had a much bigger build than expected on crude 2.3 million barrels as refiners did quite a bit less refining last week. and we also saw a bigger build when it came to distillates then analysts were looking for so overall a big plunge when it comes to the oil patch. that said we're ending the month on a down note, we are breaking two months of a downward pressure on oil prices up over
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11% for the month for wti, mnymx crude, perhaps opec coming to an agreement next month to try to freeze production, really having fueled that rise over the last month. nat gas is the outlier today, not again on the tropical storm, only about 11% of production is shut in. more on the fact that we're expecting more hot weather for next week. back to you guys. all right, bertha, thank you very much. one technician has correctly predicted four different market crashes, literally to the exact date. wow. now he says we're in for a few more bumps along the road to 2018. chief market strategist at signal pro joining us now with three new forecasts that might spell trouble for the market. sandy, we appreciate you joining us. let's talk about it because we've been in an unprecedented -- literally "the wall street journal" said today august has been the fourth
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narrowest range market since 1928. i mean, that's how narrow it's been. when are we going to break out? and in which direction? >> well, it's interesting that at the moment the dow as you said has been trading in a narrow range, especially the last two trading sessions. what i'm looking at at this particular point in time is that there are very specific cycles in play. and the larger cycle that we actually had, the one that's compared to where we are right now was actually in 1928. and this is actually an 84-year cycle. so what that basically means is that from right now up until the end of 2018 we could be in murky waters. and the likelihood is that we could see further downside moves even though on the short-term basis we're in a bull market. now, if we take a look at the long term charts, we know that in 1987, in the year 2000, also 2007 and currently where we are right now there are some very
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specific relationships. and market technicians often look at trend lines and they use different degrees of analyzing where the markets could go. my concern is though right now, and i did point this out last year that right now in 2016 we could be approaching a critical high. now, at the moment my worry is that if we start dipping below key levels that could signal that we're in for a rocky ride at least for the next three months. >> what does it mean by critical high? sounds like that's the peak and we're going down. >> there's never a way to predict the markets. i always like to say i like to forecast because that way it puts you in flexible terms. so what i'm really looking for, the august month has ended up on a high, but on a short-term basis market technicians are looking at things like moving averages. these are technical indicators which they use to give them an idea of where we are right now. and as of yesterday the market
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closed below its 20-period moving average. and all that signals is that at least for the short-term we could be looking at further downside. >> how much? >> but there are very specific -- my view is that the minimum it's going to be 400, but on average i'm looking around 800 points. and that takes us down to 18,000 or 17,600 from where we are right now. >> that's not too bad. so you're not calling for any kind of a crash? >> no, it's -- you know, things sometimes get out of hand. i've never said that i'm the guy that calls the market crashes. i would rather say i call the market turns. in fact, since 2014 pretty much seven in a row we've actually seen markets turn on very specific dates. so my recent one has been august 30th, which is actually yesterday. so what was i looking for? today it's actually given me a signal i was looking for a break or a breakout of yesterday's low. and that's actually happened today. so this signals to me that at
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least for the next two and a half weeks more than likely i'm going to see a move towards a downside. now, that doesn't mean to say the market has to crash. it could just be a standard correction or a pullback. you know, since 2014 typical moves have been anything from 260 points up to nearly 2,000 points. so i'm not saying we're going to crash from here. i'm just concerned that we will probably see a pullback here. >> all right. well, maybe market participants be happy to see any kind of move of size. sandy, i know it's late there, thank you for coming on live from london for us. we appreciate it. >> pleasure. shares of geno therapeutics and kite farm falling today. ask juno ceo about what it means for the specific type of cancer treatments those companies are working on. that's next here on "power lunch." le trg sk i can t trarang platform wherever go. you knowhat thkorswi seamlely scs rollour devices. thmark hot nc youplatfo on deceitthinkorswi
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welcome back. we're following a developing story in the gulf of mexico. national hurricane center upgrading hermine to a tropical storm as it nears florida. maria larosa is live in tampa. maria. >> reporter: good afternoon. yes, now tropical storm hermine, but the effects here in tampa pretty much the same. the heavy rain continues.
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and you can see behind me this is hills borough bay and behind that about six miles tampa. high water coming in this is of course with high tide, but we have flash flood concerns and we had them this morning with high water already on the roadways. now you're talking about hours of heavy rain and it's going to be a very difficult evening rush. so going ahead hills borough county schools have been closed tomorrow and the governor and mayor of tampa asking everyone to exercise caution. while wind may not be the component, they are very concerned about the flooding. and they say if the roadways are covered in water, find a different route. turn around, don't drown. that's their main concern into the next 24 hours. also worth mentioning they are spending a lot of time talking about the zika virus. they are concerned that once this system leaves, hermine on its way off into the atlantic, that that high water will be left and they're asking residents across florida to make sure they're taking the proper precautions in that regard to keep the potential mosquito
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issue at bay here. and they're asking everyone to make sure no standing water is left in anyone's yards. but as far as the immediates, we're looking at a few more hours of heavy rain and maybe a little bit more rise as high tide continues to come here in hills borough bay. back to you guys. >> maria, stay safe. thanks so much. shares of juno and kite lower in today's session. we're going to be joined by the ceo of juno in a moment. first, meg tirrell joins us. >> these guys working in a new area of immunotherapy. novartis laying off about 120 people, this shaking confidence in the whole space. you can see there juno down about 4%, kite down about 2.5% as well. now, what cart-t does is a brand new, takes a patient's own white blood cells out of their body, beeves them up to better identify cancer and then gives
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them back. this has been showing very positive results in the clinic for patients who've tried everything else and they've stopped working. but it is still very new. novartis, juno and kite are companies competing in the market. we reached out to novartis and they say they remain committed to the development of car-t therapies and remain well positioned to successfully launch ctl019 in relapsed -- that's the indication they're going for. they say they're still on track this doesn't effect their plan to file for approval early 2017, guys. >> to be fair they laid off 120 people, but they're still keeping and reintegrating 280 people into other functions. >> that's right. so they're really calling this an organizational shift, but you can see it's clearly spooked the market. some people interpreting this as them saying maybe this opportunity wasn't as big as we thought. >> okay. let's chat more about this and bring in hans bishop, ceo. hans, thank you so much for joining us, given the stock
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reaction to the novartis news. >> my pleasure. >> there are some questions about car-t treatments in general when you guys had a setback for your treatment for acute likucute acute, that's thrown doubt on the whole space, we saw stocks react accordingly. tell us why we shouldn't be concerned about car-t and car-t's future. >> well, i think the promise for these to be curative is very real. and if you look at the totality of data, for example that we've generated in acute limb foe blastic lieu kaem y iic leukemi just mentioned, what patients want to understand and their doctors want to understand is what's the relative likelihood of a great outcome, hopefully a cure. and what's the relative risk of something bad happening, a side effect? and when we look at our collective data, we believe we're already at a place where the benefit to risk of these
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therapies may already be better than currently approved therapies. and on top of that it's our firm view that we can still make these therapies better including reducing the toxicity. so i think the promise for them to offer something very new and improved for patients is in our view still very real. >> hans, how do you interpret this move by novartis in terms of laying off potentially 120 people though they may be able to seek new positions back within the organization. some folks are interpreting this to mean that juno and kite are really going to be the leaders here. do you interpret this as meaning a big player may have down shifted at least in terms of its focus? >> i think it's difficult to know, meg. i read the reports like you have. and they clearly seem -- continue to remain very committed to ctr019 and getting it approved, but to your point they've announced some layoffs. i would say when you look at the history of really enormous breakthrough innovation in medicine, you can learn actually
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something very informative from antibodies. it was biotechnology companies that gave birth to the antibody space and invented the biotech industry. it was great companies like amgen. and i believe that the winners in this space are going to replicate that model. ie, biotech companies that are staffed with great people that have got a singular focus on figuring out a new technology and are well capitalized. you know, we've raised over $1.6 billion over the last three years. and i think the winning strategy often for big companies to participate in very new fast moving areas is actually very akin to the relationship where roche picked what they thought would be the winner in the antibody space, they helped genentec get well capitalized and history shows us that was the most successful biotech company of all time. we believe that the partnership we have with cellgene mirrors many of those aspects. >> that was a partnership you
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announced last year. it's a ten-year relationship in finding treatments for cancers swell auto immune disorders. do you see novartis throwing in the towel, so to speak, as a sign that perhaps there are more of these long-term agreements with a larger biotech and pharma companies for companies like yours? >> difficult for me to know. i mean, i don't read what they've said as them throwing in the towel by any measure. as i said they've continued to commit to the first approval probably of car-t. so i think we have to wait and see what the future holds visa vis overall strategy, but doesn't look to me like they're giving up. >> hans, we're just about out of time but i have to ask you given the environment now in drug pricing, you are pretty commercial, but does that effect your ability to do business? all the scrutiny of how much the price cancer drugs too how much they cost? >> well, you know, i think there is no doubt that the most value for money therapy is one that can be curative and avoid lots of downstream costs.
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you may be aware, meg, you know, perhaps the most difficult country in the world to get the government to pay for a drug is the uk. and their pricing authority recently did a survey of car-t cells and they asked the question, if car-t cells can cure 50% of leukemia patients, what are the costs avoided? and depending on the different assumptions they used, it ranged from $500,000 to $700,000 of costs avoided. so i think that shows you the potential value for money that our types of technology can create for patients and payers. assuming they're successful and assuming that they're approved. >> hans, we got to leave it there. thanks so much for joining, hans bishop ceo of juno therapeutics and our own meg tirrell. highly profitable and well run, does that sound like a company you would want to invest in? we'll let you know what company the analysts said about that. plus, gold falling to lowest level since the brexit. should you jump in or not try to catch a falling gold bar? trading nation and street talk
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are next.
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time now nor street talk,
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analyst recommendationins on th stocks you need to know. raymond james cuts from outperform to buy, goes to 165. palo alto posted strong quarterly earnings last night but 2017 guidance was below the street on eps margins as well as product growth. the magnitude of the guide lower increases concern according to raymond james but slowdown in security spend is deeper than expected and deeper at palo alto. >> one of those stocks that if you invest in a hot space like cyber security doesn't always pay off. just because we talk about it every day, stocks got a high valuation still. second stock pnc bank, new analyst, new rating, kbw upgrades to outperform from market perform boost target from 96 to 93. pnc highly profitable well run bank with levers to grow earnings. they like the valuation and deserves a higher multiple because of pnc's diversified revenue stream. i understand target is only about 8% more upside on the stock but does pay a 2.5% yield and you probably shouldn't be
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too greedy, america. >> quick, levers or levers? >> i think i mispronounced it. >> i don't know. one tomattomato, two tomato, no from argus with a price lag and competition and the tax credit to 2019 is an urgency for getting projects done sooner. >> go back to '06, ending the day at 26 so if you bought first solar after the first day and you've owned it for ten years, you basically made no money, adjusted for inflation. you traded it, you have probably done -- no, $37 stock. i bet you, today's dollars, maybe not quite, made a dollar or two, but you get the point. get this, this actually is faxing, yes, digital faxing.
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yes, they also do cloud computing. but the analyst willpower and notes there's a lot of short sellers circling around j calm. but he likes the free cash flow and digital media growth and $83 target on jay com and a company that still gets a large portion of revenue from faxing. and with that, street talk is down. it is time now for trading nation. and let's look at gold. today, hitting lowest levels since the brexit vote. here to discuss, max wolf and chad morganlander. max, we saw a bid into gold, ahead of brexit. held on for a bit. has gold seen its peak for the year? yes or no? >> i don't think so for the year. >> no? >> i don't think so for the year. >> why not? >> there are three reasons you buy gold. either you live in your mom's basement with a tin foil hat. or you worry about inflation.
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and that's probably an big one. or you worry about stability. i think number three is the reason gold gets another bid before 2016 hits the history books. >> what are you doing there, bobby? stop playing video games. i'm buying gold, mom. chad morganlander, you're a stock guy. i know you like little bit of gold in your portfolio, do you still maintain that view? >> i agree with your other guest. in the negative interest rate environment we're in, gold is a good hedge as well as equity risk. we expect gold over the next five to six years to have an annual return of roughly between 4% and 6% and for a balanced pour folio -- >> no return, clad, unless you sell it. >> it had a return this year of roughly 22%. >> if you sell it, gold or gold stocks. gold itself is a rock. >> gld -- >> okay. >> from year performance, etf
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had a performance of about 22%. so yes, it has gone up. we will believe it will continue to go higher. for the short run we believe the gold will rally again after federal reserve comes in and repositions for the next interest rate hike which we're expecting at the end of the year. >> okay a couple of gold lovers there. max wolf and chad morganlander, thank you. go to tradingnation.cnbc.com. what do you need the end of a two-hour power lunch? a night cap. even if it is still the middle of the day. so a ceo will join us to talk about his company's whiskey. there we go, a little garth. we will put it to the test when power lunch returns. >> now the latest from tradingnation.cnbc.com and a word from our sponsor.
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to help you go long™ what's going on here? i'm val, the orange money retirement squirrel from voya. we're putting away acorns. you know, how the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organizeat voya.com. you may have heard of macallan, and maybe enjoyed their single malt. we are going to give you whiskey notes here today. let's bring in paul ross, ceo of the parent company of macallan
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and other premium spirits. thank you for joining us. >> thank you, very much. >> what's the difference between the two? >> well, macallan is different in that most of our cask comes from spain. we have been producing one form for a long time and what we have done this year is introduce a new variety which introduces american oak as well as european oak the first time and called double cast. >> what is the price difference between the two? >> both like the same about $60 and most independent liquor stores. >> let's taste. >> let's do that. >> what are we looking at here? >> we have a double cask here on the shea oak. so as i said, all 100% oak. all produced in spain. and using wood from american forest and european forests. >> should i invite my cohosts
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on. >> also whis he can enthusiast like i am. >> what are we doing first? >> we can all partake in this. >> first thing is macallan is a hundred percent natural color and all coming from within america, gives it a lighter color and makes it more porous. so you can notice darker color from european oak. >> darker is double cask -- >> it is more porous and takes more of the flavor of the wood. then the vanilla is more lightener color. >> i'm a wine guy so i think i know how to taste wine. how do you taste whiskey? what's the most proper way? jam the nose in? same thing? teach us. >> first thing, i will take this one, is it is 43% alcohol. as opposed to maybe 14, 15%. >> be careful, kids. >> you don't want to stick your nose in there or swirl it like you are doing now.
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>> i'm doing everything wrong. >> so really part the lips, little business of the nose open. have a taste. what you have from the nose here is a combination of the word you get cloves and light spice. >> less than two minutes so i'm tasting. >> why is the glass so small? >> are you seeing more demand for whiskey? is this still a popular -- >> absolutely. >> we are seeing massive explosion in whiskey generally amongst 2 a to 35-year-olds. we are well positioned in scot whiskey as well as american whiskey. we have 8,000 bottles available for north america. >> 2 grand a bottle roughly? >> if you can find it, yes. but roughly we are going back in the time machine to make more. >> i've got a bottle on my desk, if you want to ever --
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>> you're offering to have a cocktail with me, melissa? now i can retire. >> thank you so much. >> cheers. >> thank you for watching power lunch. "closing bell" having more fun than you. >> definitely. >> hi and welcome to the "closing bell," everybody. i'm kelly evans at the new york stock exchange. >> and i'm in for bill griffeth. what's new for me today? >> oh kudos to them, don't expect any of that down here. you have to wait until the market closes next hour. >> lots of markets on "closing bell." august with a little bit of weakness today due to the drop in oil while it's been a very calm month, september could bring more volatility if history is any guide. we will tell what you to expect coming up. >> donald trump meeting president of mexico this afternoon ahead of tonight's big im

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