tv Power Lunch CNBC May 6, 2016 1:00pm-3:01pm EDT
georgia. >> thank you. >> thanks for bringing her? . happy mother's day. >> thank you. >> can you go to cnbc.com for a behind-the-scenes look at stephanie and her daughter's investing lesson. thank you for joining us v a great weekend. stock market clearly in focus after that jobs report. "power lunch" is going to talk about that which starts now. >> of course, we are. we begin with a big development on that massive wildfire sweeping across western can d.a. the raging inferno has grown to more than 210,000 acres in size and the out of control blaze is now moving south. that's threatening key energy operations in the heart of canada's oil sands region. we're live on the ground in canada and in the gulf of mexico where u.s. oil operations may have to pick up the slack due to possible lower production in the north. welcome, everyone. i'm with melissa lee and tyler mathis mathisen. we'll kick off with the latest on that out of control fire.
we have a reporter 200 miles south in edmonton where evacuees are starting to arrive. >> that's right. you just mentioned the latest development. the health minister saying that they may have to ask the u.s. for some assistance. now the fire has exploded in size since sunday. it continues to grow. you also mentioned that it is just within mere miles of a couple of oil sands sites tlachlt isthat is a new development. 80,000 people have been evacuated. many of them were stranded north of ft. mcmurray. it is usually ment for employees. some of them now are coming down and we're seeing a steady stream of cars and buses come to evacuation centers like the one behind me in edmonton. we spoke to one of the evacuees, andy parker. he owns a straut in ft. mcmurray. he was lucky enough to get out before the highway is closed. we're going to show you footage
he took from the cell phone right from the patio of his restaurant before he vee vak waited. he has no idea of the status of his home or restaurant. have a listen. >> i've been told a couple times that it's gone. but i haven't seen it on the news. no one's confirmed. i know there are building that's are gone. we'll wait and see. that's not the priority. it's about everybody here that has to find a place to live. >> and as the fire has been moving south, more towns have been evacuated. as for the weather that, is going to play such a critical part in the path forward. we're looking at the weekend forecast. no rain is expected. that makes it very, very difficult for the fires and to battle the flames. that may be what is leading the canadian authorities to say they may have to ask for assistance from the u.s. we continue to monitor this very, very fluid situation. back over to you.
>> thank you. over now to brian sullivan in louisiana. brian, could there be an impact on oil production where you are? >> you know, i guess there could a little bit if they need to jack up the production and make up for the reported barrels that will come off market. really production is not the issue. actually gulf of mexico production hit a record last year. going to hit another record this year. and it's projected to hit a record next year. you say how is that possible? they're extracting everything they can from the existing wells. so production, they can probably make it up if they needed to. that is not the problem. the problem is price. and at $46 a barrel, whatever the market is not reacting that much. there is no insentive for all the ships that are dry docked behind us that are not supposed to be there, they're supposed to be in the gulf of mexico working on rigs or the marine barge that we're on at $45 a barrel, it doesn't make sense. i know it's jobs friday. all those ships should have crew
on them. none of those guys are working. the truck drivers are not working. support staff is not working. it's a very, very different kind of a situation down here especially because the cost of off shore is a little bit higher, especially than in midland, texas. we're on this barge. it is the work over barge. we'll show you more of it as the show goes on. it goes out and services and repairs and fixes some of the wells. it's owned by a family business here. there is nothing i can say that would describe the state of the industry better than one of the co-owners of this company. listen to this. >> the land rigs a little bit but not the barge rigs. i was hoping that magic number would be around $45 for the inland water rigs. it's just not. i think we might need $60, $65 to bring the barges back out. >> all right. so that was matt monkla. that was his brother. he was answering that question
where it's different. i said if $50 would make dafrns for the industry? some people say that is the magic number. we have to hit $50 and that will go back to normal. that is not the case. question go to the stock. the sound bite, that is our lingo about just how bad the industry is. all right. we don't have it. i'll tell what you he said. it's a total disaster. that's what he said. i summarized his 20 second answer in one line though, michelle. total disaster. they've got 12 barges like this. two are operating. one of them is coming off contract next month. so they'll have one of 12 barges operating. the one they have operating is operating at $12,000 a day and supposed to be 18 to $20,000 per day. so we have a couple more hours here. a couple different angles including one that, believe it or not, involves how oil's glut is hurting the fishing and shrimping market which is the second biggest industry in louisiana. >> all right, brian, thank you very much. brian sullivan reporting from
larose, louisiana. we'll be back with him throughout next two hours. all right. let's talk a little bit about the jobs report now. mixed jobs report this morning. the u.s. economy adding 160,000 in april. that is below 205,000 estimate. let's go to steve liesman. >> tyler, good afternoon. in the wake of the jobs report, three prominent wall street firms are changing their tune, barclay's, goldman sachs and bank of america and merrill lynch all change the forecast for the next rate hike from june now to september. over at barclay's, they wrote we now only expect one rate hike in 2016, that will be in september. we believe it will take longer for policymakers to accumulate sufficient evidence that economic and labor market activity is rebounding. they say it was the jobs report was the last of a string of softer indicators that prompted us to change our forecast.
as tyler said, it was a mixed report. let me show what you was mixed about it. street looking for 205,000. february and march revise bid $19,000. unemployment rate up 5%. the labor force participation rate which came up quite a bit with entrance into the workforce ticked down. average hourly wages, however, were up more than it had been recently as well as the average hours worked. so those two last data points there were pretty strong according to a lot of economists. you can wonder if this weakness could be a fallout from those deep recession and global economic weakness fears that we had in the winter. that could have caused big companies to ease back on hiring. now some kpeeconomists say get d to this. they expect wages to rise because the market is getting tight f that's the case and it does continue, the fed could reluctantly be brought in off the sidelines later this summer.
tyler? >> all right. steve, thank you very much. we have breaking news now. for that, let's go to sue. >> hi, ty. here's what we vfrment one person has been killed and three people have been shot in two separate incidents in maryland. you're looking at a live picture right there. three people were shot and are now in critical condition at the west field montgomery mall. that is where that incident took place. meantime, at the aspen hills shopping center, a woman was killed. she was shot outside of a grocery store there. law enforcement says they're looking to see if the mall shooting is related to the shooting also in maryland that occurred last night in the parking lot of a maryland high school. the suspect in that incident has been identified apparently and they are questioning him at this point. so once again, we have one person killed, three people shot, two separate incidents in maryland. one occurred at the west field montgomery mall, the other incident occurred at the aspen
hills shopping center. back to you. >> all right. sue, thank you very much. we'll follow that story as we learn more. let's get back, meantime, to the jobs report from this morning. bill rogers, a professor at rutgers and former economist at the department of labor and ron insana who is none of those things. he's a good guy. he is a cnbc contributor. he belongs at the adult table, too. i guess we should -- maybe this came in a little shy of estimates. but it feels to me like we maybe shouldn't be surprised. as steve pointed out, you might expect things to slow up a little bit, number one. number two, earlier this week we started to see some of the warning flairs, the adp report was weaker. productivity was down. jobless claims higher. what's next, ron? >> you know, also the manufacturing number while showing some expansion in the sector was only up for the second time in the last six months or so. so, yeah, there's been a
deceleration in economic growth in the u.s. i'm in the camp that the feds is one and done. december was it last year. it will be hard for them in september to pull the trigger right before the presidential election. i know they don't get involved in politics. but that's very close to the vote. and typically the fed doesn't want to be that involved. i think economy is slowing enough that the fed doesn't have to do anything here. >> bill? >> yeah, i agree. we're slowing. but there is still a lot of good things in this report. one, if you use a three year month average, you're at 192,000. it gets balk to 200,000. they're trying to stabilize at 5%. one thing we learned out of that 199 o's boom is in order for it to have broad base prosperity, if this was as steady as she go, solid gains. they're above what is above the 100,000 threshold which we need to replace new entry. and that's what in this report. you know, now i could still -- i can see why folks would agree. i would think that, you know, probably one and done this year
unless you get another bang outnumber that the average looks wrong. >> in terms of market interpretation, this really confirms what had been being in the markets and there was only going to be one rate increase. so what kind -- how do you interpret the reaction we're seeing today? it seems like maybe is bad news bad news? i mean -- >> i think for the moment it s the bond markets have some jie rags. >> and then right back to flat. >> i think there are a number of factors. it's not just the jobs report. i referred to recent decline as the trump dump. once he got his presumptive nominee status, he's talking openly yesterday on cnbc about repudiating the u.s. i think there are so many creeping uncertainties in the market whether it's global economic growth or deceleration in the u.s. there is enough to hold this market at bay. and really, you know, stweerting to see things through correlations. a couple days ago we had a one to one in every asset class, gold, oil, stocks. that's a little disconcerting.
>> what do you think of trump getting the presumptive nominee? is it impacting the markets? >> i think right now as an initial reaction. but you know, for the most part, i say this on main street, i think in those markets and right now people are trying to get into summer, finish up the school year. it will be the typical pattern, they would like that. >> from a standpoint of -- i'm onboard with that. but i think in term of really sort of people dialing in and becoming very nervous and really starting to see consumer confidence and sentiment, i think we're a little early on. that also i have faith in the members of congress whether they be democrats and republicans. they're going to -- they're going to have to negotiate with him. and bernie sanders will be in that position, too. they're going to have to negotiate. >> a lot is facing that. >> maybe that's my trait.
attention to what is happening with shares of jcpenney. they're falling 8% after "the new york post" citing a memo saying they're facing a expense challenge for april. the company cut payroll, froze overtime for employees and took other cost cutting measures. so those shares down by 8%. n. today's trade. back to you. >> all right. thank you very much. let's bring in our own bob pisani for more on this side of the story and the chief investment strategist from bmo capital markets. retail and the overyou'll market decline. bob, ubs which rates jcpenney a sell said this could signal a terrible quarter if they're abruptly cutting costs. >> they're going to report next friday. i would not be surprised if they and a whole bunch of other department stores and apparel makers miss on the numbers. we have seen reports already from other retailers, other apparel manufacturers as well that april was slow and part of march was slow. we had the retail sales for
april this week, melissa. l brands missed, gap, buckle, zumies. these are the prices for the companies. overall swreshgs se overall, we've seen a slowing in sales. most people are blaming it on the weather and amazon. it's pretty widespread. >> yeah, brian, you like the discretionary overall. you don't like the traditional retailers. some argue the ones that bob pointed out are the traditional retailers. can we also connect with what we got out of jobs report today. is that retail sector? >> if you take a look at the numbers more closely in terms of the jobs, we had an early easter as well. there might be seasonal adjustments to that. it was a crappy april in new york. it was a crappy april in most of
north america. so i think that's having a big impact. plus, i think consumer confidence and sentiment still isn't really g i think mom and pop america are still not feeling great about spending money. and then lastly from a secular basis, i mean amazon is just a structural secular category killer that is going to defeat all this overcapacity of all those names that you just mentioned. there is too much capacity in retail and amazon will continue to be the winner. >> the only good news right now, melissa, is these stocks are not expensive on a historic valuation. jcpenney is an exception. most of these are 10, 12 times forward earnings. that is not a lochlt the problem is no sales growth at all. >> let's take it to overall market reaction. brian, i want to get your take on how the markets reacted to the jobs report. i would have thought that if you told me a week ago that the fed was going to stay on the sidelines perhaps for almost the entire year that market was like that. >> right. we have now become accustomed to
just want the fed to pump money and react to central banks in liquidity. we're in the beginning stages of showing maturity. bad news is bad news and good news is good news. anybody that's flown in to laguardia the last week or so knows what i'm about to say. we're in a holding pattern. a lot of times you fly into new york you're in a holding pattern. stocks are in a holding pattern for the next six months or so especially considering the hedge funds missed the move from 1800. we're worried about what is happening in terms of commodities and international growth. clearly, additional consternation with respect to the fed. i think there is not a lot of big moves in either direction. we're going to see a pull back. but that is pretty healthy considering the kind of move that we've seen since february. >> and bob swreshgs to talk about what is going on in technology. that's been sort of banged around. today we have apple hitting a new 52-week lo it was below $92 a share.
what is your sense on the se sentiment towards the sector? >> we're pinned because we have the two twin problems. we talked about what the slow growth situation, the other one is the valuation problem. most of the stocks in the tech sector are fully valued. a lot trading at 20, 25 times forward oerearnings. april sl an exception. i think that's a big problem. that will be the issue. slow growth and high valuations on the two headwinds we're going to be facing. >> thank you. donald trump and hillary clin face-off in november seems ever more likely and main street is watching closely. so what candidate is best for business? that's still ahead. dn't order sn without checking the spice level. it really opens the passages. waiter. water. so why would you invest without checking brokercheck?
and the families that have supported them, we offer our best service in return. usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life. welcome back to "power lunch." let's take a check on gold. there is probably the one asset class on the reaction of the jobs number really stuck throughout the entire session. you see that spike higher at 8. 306789 a.m. eastern time when the jobs report was released and it's pretty much stuck. there 1293.701 where we're closing out the session. as for the rest of the metals complex, we're seeing steep gains. industrial metal is trading at the flat line right now. let's take a check on the bond market. rick santelli covering the action.
rick? >> i guess if today's data point is considered a sign for the economy, you have to follow the signs as the adage goes. boy did we do a u-turn. getting down to 170, we're actually up one basis point on the day. but on the week, we're down seven. year to date chart, it's not only that we set the high yields at the beginning of the year, what's more notable is the double bottom in the mid 1.60s, we're getting close to testing that. hey, look at the dollar index today. now if you consider that this week the dollar index is actually up and the last several days, the notion of any type of fed activity for next meeting seems to be nil this is confusing. maybe it's just making up for a big route for most of the beginning of the year. but as you look at this chart hovering close to the worst levels or -- i should say, the extreme since january of 2015, they always ask is gold a currency and economic indicator? i find it so fascinating we're talking about the same period last year we saw the gold at
these levels. easter early january 2015. it's like a currency. >> that's right. puerto rico in crisis. the u.s. territory is already default ond $510 million. another $2 billion is due on july 1st. can they make it? can puerto rico recover? we're going to ask the governor. he'll join us live next. first though, back to brian sullivan. brian? >> michelle, thank you very much. we know the oil glut story impacted oil jobs indirectly affected oil jobs, gas jobs. but coming up after the break, we're going to tell you about another industry, a big one here in louisiana which you would never think could be hurt by oil but is. that's next.
i'm sue herrera on a developing story out of maryland. we told you early better several shootings. now police believe the shootings may have been related. there has been one person killed, three shot in two separate incidents in maryland. the three people who were shot at the west field montgomery mall are in critical condition. at the aspen hills shopping center, a woman was killed. she was shot outside of the giant grocery store this morning. police identified a suspect in these shootings and one that occurred last night. the suspect's name is ualio savia torado. he is wanted in connection with the murder of his estranged wife which took place last night at the high school where his wife worked. police now believe that he is also the suspect in the two maryland shootings that occurred today. so he is basically wanted in connection with three separate
shootings over the last day and a half. we continue to follow this situation. there is going to be a news briefing by police in just a few moments. and perhaps we can clarify some more of the details that are coming in. police are saying the suspect was saying that he wanted to commit suicide by cop. we're going to get more clarification on who he may have said that to when the briefing starts in just a few moments. that's a live picture outside of one of the shopping centers. michelle, back to you. >> all right. thank you very much. keep us up to date. the governor of puerto rico declaring a debt moratorium on a $400 million debt that was due. it is the largest default yet for the territory. there is $2 billion due later this summer. the governor of puerto rico joins us now. sir, good to have you here. >> thank you. thank you for having me. >> so you're talking to an
audience that believes very much in something that is the hierarchy of bonds, some bonds are more valuable than others. some bonds have more guarantees. you pay less for them. you pay more for them, you get less return. but in theory, they should paid back first. you're on record that you want congress to pass a law that would help puerto rico up end thehierarchy of bonds. why slu congress do that for puerto rico? >> it is not an issue of politics. it's not even an issue of policy. it's a mathematical issue. we do not have the money. it is as simple as that. and just as you said in your question, creators of puerto rico are in just one group. there is plenty of groups, gos, those that are guaranteed by the same stocks, those -- [ inaudible ]
so they're fighting among each other. so it's a huge fight among them and with us. and we do not have the money. it's just mathematics. >> but the cynic was say the reason you want this passed is that so way if you don't pay the money this summer, including to some bonds that are very, very high in the ranking, you're actually going to give prerves preference to many other institutions in puerto rico which don't deserve it at this point. >> well, who said that they don't deserve it? i think that is not a right way to see it. but what i'm telling them is $2 billion, i don't have $400 million to pat last one. i don't have $2 billion to pay the next one. it's money that doesn't exist. but first, second, if i stop providing essential services in the island, then the economy will go further dip into the a
hole write found it. and i will have less to pay after. and if i do not have a process, then it will be a chaos in many courts. it will be an unorderly process. it's good for creditors. it's good for bond holders. so if our audience today believe in the supremacy of bonds, they should -- >> but right around the corner from puerto rico, sir, is illinois. >> there is an orderly process. >> if congress changes the rules for puerto rico, then they could change the rules for illinois. we have state after state that is going to come forward with issues like yours where you haven't been able to tell the unions are or you haven't been able to reduce the size of government, or you haven't been able to reduce the promises and pensions because there hasn't been political will. and it just gives you more of a
life line not to take the hard choices. >> well, let's go to the facts now. i reduced 24% in our department. 24%. there is a report, commissioned by me for -- by the former chief economist of the international monetary reform. so those are the facts. jacob letter of last monday. can you check that out. the letter said that i as a governor take the expenditures of the government back to where it was 11 years ago. those are the facts. so anyone that claimed that we haven't been able to reduce government size is just wrong. when i was in -- when i was sworn in, there were 105,000 public employees.
now we have will 89,000. so those are the facts. but again, this is mathematics. >> but you still don't have the money, governor. you still don't have the money. so that's on the other side. maybe you have reduced the spending side of this balance sheet. but the income side just isn't generating the money that you need. so what do you do about that? >> i don't -- i increase the same stock from 7 to 10.5%. the highest in the united states. so we increase revenues by $1 billion and reduce by $2 billion. we don't have the money. it's mathematic. so when you're in a situation like that, you have to restructure. >> if congress does not pass this bill, what are you going to do on july 1 snst. >> we can argue on the
conservative side or liberal side. this is mathematic. mathematic -- >> if congress doesn't pass the bill, what do you do on july 1st if they don't pass that bill? >> i -- i can not pay. you know, i don't have the printing money machine. i cannot pay money i do not have. it's just like that. and the humanitarian crisis will be worse and, listen, if congress act today, it will cost zero to u.s. taxpayers. if congress do not act, then we will need a bailout. by now, we do not need a bailout. i'm not asking. i'm not wanting one and vicinity been offered a bailout. but if congress do not act soon, then we'll need a bailout and it will be very expensive to u.s. taxpayers. again, it's mathematic. >> governor, thank you so much for joining us. puerto rico governor.
>> thank you. >> all right. let's got reaction to the governor's comments. joining us is bill fallen. he is the ceo of the national public finance guarantee which is the unit of unba which is responsible for $9 billion of puerto rico debt insurance. >> i think you hit on it. in terms of the capital markets and many markets, there are certain legal structures and priorities that are in place today that are critical. i think what is needed in puerto rico is a series of actions to help create sustainable and significant long term economic development. one of the keys to this is going to be access to the capital markets. the attach to capital markets for $07 billion. any solution is going to require them to keep going to the markets. and having that access is important. in terms of the priorities, general obligation bonds are generally thought to be gone. >> there are 805 million of those due in july? >> correct.
the commonwealth has 12 to 13 billion in total. 800 million coming due in july. those have always been thought to be supported by the full faith in credit of any issuer. so those we think are key. second, there are bonds which are the sales and used tax. there say legal structure there that this administration and previous administrations have said cannot be invaded. the other thing about this is they have reached consensual agreements and it essentially -- >> that's the electricity. >> the electric utility in puerto rico which was a deal about $9 billion, complex situation but done consensually. it is a temperatulate for other deals. they use a similar structure as others and every time they question whether or not their going to make payments either nor the gos or the structure with the electric company, it hurts the credibility in the capital markets. so protecting those and whatever
legislation u.s. congress comes up with is going to be paramount. >> all right. thank you so much for joining us. we had breaking news. it cut into the time. thanks for coming in and making the other side of the case. thank you. bill fallon. >> all right. back to sue herrera for more of the breaking news. also our news update. president obama speaking out on the economy at a white house news conference saying the global economy is not growing as fast as it could be. then he was asked about donald trump and his credentials. >> i just want to emphasize the degree to which we're in serious times and this is a really serious job. this is not entertainment. this is not a reality show. this is a contest for the presidency of the united states. north korea opening the first full congress of its ruling party since 1980 with leader kim jong un speaking to thousands of cheering delegates.
he laid out his accomplishments since taking power including recent nuclear tests. arsenio hall is singing shah nad o'connor over shoeshl media comments about him and prince n a facebook post, o'connor wrote that prince was a long term hard drug users who got his drugs from hall. hall filing aed adds million defamation lawsuit against her. and get your money out. saturday night's powerball jackpot is now up to $415 million and everybody is starts buying tickets, it's going to get even bigger. it could be higher by the time of the drawing as people and the odds of winning once again, more than 292 -- i think that just changed. it got a little harder. 292 million to one. that's the cnbc news update at this hower. more "power lunch" after a quick break. cover everything. only about 80% of your part b medical expenses.
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louisiana covering the oil story. we know by now, all of you know by now about the impact of the oil glut and how service jobs have been lost and we'll highlight that a little later on. but whether you come down here, you learn something else about the area which is that when all the oil workers have been laid off, they need something to do. there is very few jobs now in the oil and gas industry. so they're looking at other industries for a job. listen to what a shrimp boat captain had to say about the calls he's getting. >> looking for work? >> yes. i have. over the last year, i've gotten more phone calls from people that's been laid off looking for jobs. and i mean i have a crew of two and, you know, there is so much i can do. >> whether you're born near the water, on the water, you know the water. if you come off an oil boat, you're looking to get on a fishing boat or shrimping boat or crabbing boat. the problem is captain blanchard just doesn't have the work for these guys.
now not everybody is happy about this trend. when you have more people coming in to an industry, oftentimes can you drive wages down. you can oversupply that market, whatever it might be. here's a fisher and crabber why he's not happy about the new entrants into his market. >> it's going to slowly to get where the people will be able to make -- people that have to rely on it for 100% of the living, you won't be able to do it. you'll have part time workers. and i don't think that's a place we ought to be. >> so tyler, listen, you have the price of crab and shrimp down. maybe overharvesting. that may drive down wages as well. all this talk about shimrimping and crabbing, has a huge industry here. you have the state's biggest industry in dire straits and those people are now putting the shrimping and fishing and crabbing industry, perhaps, at
risk of its own price adjustment in a negative way. great people down here. tough times at the bayou state. >> hang around. we want to involve new the next conversation. it's going to be front and center in the presidential campaign. already is. april employment reports showing job growth. that was a little weaker. wages did increase. joining us as they do most months at this time, the president and ceo of the national urban league and former mayor of new orleans. we've also got ron christy, founder of christy strategies and former special assistant to president george w. bush. they were talking about the dynamics of the job market in louisiana. how do you see it? what do you hear from your old home state? >> in southern louisiana, there is no doubt that the off shore oil and gas industry is so important to jobs, to small business growth, to family
stability. it caused home foreclosures and business bankruptcies. what louisiana needs is a stable price of oil. ttz up and down fluctuation. it now -- the price is down. so i think it's important that for some parts of the country, a low price of oil may be a benefit. but for south louisiana which like detroit's reliance on automobiles and new york's heavy focus on financial services, this industry is essential to that coastal region. now for new orleans, new orleans began in the late will 80s working to diversify its economy. tourism became a growth industry. the movie and entertainment sector grew. you now have health care. but for the coastal perishes, it's oil and gas or it's fishing. and those are the two dominant industries.
and so it's going to have a negative effect on them which is why we need a more stable price for oil. >> and mayor, it's brian. i'm going jump in with a comment and then a question here. you know, talk to us -- it's clear that it's not just fishing and shrimping and oil. if you're out there and you don't care about the big oil companies, it is truck drivers. it is realtors. it is restaurants. it is hotels. and i like to joke, i love the state. minnesota is the land of 10,000 lakes. louisiana is the land of 10,000 bridges. i have to imagine the infrastructure costs are hard here. my question is talk to us about oil's ultimate impact many your former home state on social services, police forces and colleges. >> you know, brian, i think you're right. the entire ecosystem of southern louisiana is so heavily based on oil and gas. the truckers, the supply boat
operators. it's so permeating. so the impact of a down turn, we saw this in the late 1980s as i mentioned. and it affected people all across indeed the board. so for louisiana, for southern louisiana, i'm so glad that you all are focusing on what the impact of a low price of oil means. fishing can absorb the impact of the loss of jobs from oil and gas. what we need is a higher price but we need a more stable price of oil because it's the fluctuations, the boom and bust that we saw few generations ago which for the most part has been avoided for the last 15, 20 years as particularly devastating. >> it's up 70% or so since february when it hit the lows. brian, you'll rejoin us later in
our next hour or so from louisiana. meantime, let's continue the conversation with the gentlemen. ron, the jobs report was a little soggy, i guess i would put it. not the first time that april's reports have been that way. but there are also some other signs related to the labor market is slowing down but wages are up. how do you grade this jobs report? what do you expect through the summer? >> i give it about a d. it's very disappointing to me. as wages may have risen by 3% this year, we lost half a million people from the workforce last month alone. when you couple that with labor workforce participation rate is now 62.5%, the worst it's been in over 40 years, you have to say to yourself, you wonder why and primary after primary, caucus after caucus, the american voters are concerned about the economy more than anything else. and the inability of politicians in washington and elsewhere to deal with it. i give it a d.
it's a very, very bad reflection wrf we are. and i would also add, look at what jcpenney is doing. jcpenney, you've been reporting this hour is take dramatic emergency steps. those who are working full time, that is 20, 25 hours a week now have the hours cut down to 10 hours a week. let alone those on part time. this is a very bad jobs report. a very, very bad situation for the american works for. >> mayor, i'd like you to chime in on this. and also on the news this week -- maybe it was earlier as well, that republican presumptive nominee really sort of favors the idea of a hike in the minimum wage. does that make you a trump supporter? i know you favor a hike in the minimum wage. >> you know, look, i think there is broad consensus for an increase in the minimum wage. and it's long overdue. wage stagnation shrinking paychecks for working class americans is one of the challenges that the american
economy faces. and you see the political anxiety that's been created by that. so on one hand, you've got consistent jobs growth. >> right. >> it's been consistent for a very long period of time. on the other hand, you've had most part stagnant wages. the cost of living, the cost of housing, cost of food, cost of cars, they go up. but people's paychecks remain stagnant. so i think there is a broad consensus and congress has thwarted any meaningful movement on a minimum wage increase which is why you had this effort all over the -- >> let me jump in. >> ron christy, coming from the right side of the aisle and the presumptive nominee being donald trump and he says he leads the republican party, but like we just heard, he wants to raise the minimum wage. what do you do at this point, sflon what do you think the party does at this point? >> are you ready to endorse him? >>, no i'm not ready to endorse him. i take the position of my good friend paul ryan.
donald trump has to earn my respect. he has to earn my vote. he has flip-flopped on everything down the line, talking about planned parenthood, talking about increase the minimum wage f we take a look if seattle where they increased the minimum wage, what have we found? we found many, many, many jobs that have been lost out there due to this increase in the minimum wage. so fixing an arbitrary number and saying we should raise it to x has had a demonstratable effect on the economy in seattle. >> what if he doesn't convince you, do you vote for hillary? >> i wouldn't vote for hillary clinton. i might write my father-in-law n i'm not going to vote for donald trump given the fact that just after he became the presumptive nominee, he flip-flopped on a lot of the issues that true conservatives hold dear. he is not representing my views as a presidential candidate. >> i think you just made your foinl ve father-in-law and your wife on this mother's day weekend. have a happy mother's day. >> cheers g to see you guys. >> good to see both of you. be right back. touching a ray.
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competent tern. we have a reporter in l.a. following the proceedings. during the trial, a videotaped deposition of redstone was played and it appears he had difficult hearing, answering questions and required the help of an aide during whole process. he also said he wants his former companion who brute the suit over his competency out of his life. that would be a woman who' tacked on a number of occasions during the paroleds. she used to be redstone's primary caregiver. now court documents also say that redstone claimed he paid $150 million to her and his former girlfriend sidney holland. julia is telling us she spoke to some of redstone's attorneys and they plan to sue both herzer and sidney holland for the monday claiming elder abuse. again, so we're get something more details about. that we'll bring you more as we know more on our side. back to you. >> fascinating.
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is reporting for us. they're relocating people. sort of 8,000 of them airlifted out of the area yesterday. more will be taken out today. let's check in with our reporter in alberta. the fire exploded inside so much so that canadian officials may have to ask the united states for assistance if the fire continues to grow. and with no rain in sight until next week, that is proving to be more and more likely. we continue to monitor the situation. remember, this is the heart of canada's oil sands and flames are now out of control. reports now put the total outpit lock in this area at one million barrels a day. the total output from this area normally is two million barrels a day. that is half. that say big hit to what is
usually being produced out of this area. and most of that does go to the united states. as you were mentioning, evacuees continue to come south into evacuation centers in edmonton like the one behind me. andy parker is one of those evacuees. he explains the scene. >> we were discussing whether or not we should leave and the fire came over the hill and all of a sudden, we saw beacon hill, the entire neighborhood went up in flames. wa it was so fast. that point everyone said to your cars. >> and like so many other evacuees, they have no idea whether their property is damaged or lost. officials don't have much of a better idea as the situation is still incredibly fluid and still very dangerous. >> thank you. reversal of the market at this hour. take a look at the dow, s&p 500 and nasdaq. right now they are in positive territory. the dow and s&p 500 at the highs
of the session. bob pisani has more on this. >> and me list yashmelissa, we forward by transportation stocks moving us to new high and also technology stocks. oil at $45, knocking on the door tlachlt is a big help as well. speaking of technology stocks, it's been a very, very difficult couple of weeks. we've had problems with slow growth and with the earnings guidance. there is the nasdaq 100. a lot are momentum names. we're off about 6%. it's a one month chart. we're off 6% in three weeks. that's because we haven't gotten great earnings guidance from a lot of the companies. so look at this this week, the big names in the nasdaq 100. seagate is down 13%. they reported on friday. they guided lower. it's been down all week. tesla was disappointing. price line was disappointing. they warned on profit growth. biogen is down will 8%, 9% in the last couple weeks. they've been down since the earnings report. sky works, there is an apple supplier. the guidance was also below
expectations. bottom line here, earnings and guidance not quite what people were looking for. >> take a look at apple here. it is down by more than 1%. it i had a new 52-week low, $91.99. that is the lowest level since june 2014. the recent decline taking down a number of big cap tech names. should you buy into this group? our tech bull is with matrix advisors, our bear is shoun o'hara. one of your etfs moved to all cash or cash equivalents just yesterday y. why was that? >> thank you for following me. we follow a 200 day moving average strategy. before we get into that, the nasdaq on february 1st of 2009 was 13,077. it's 4700 today in seven years,
four time as high. so all bull markets eventually come to an end. we're not trying to predict whether we're going have an end to the bull market. we use a rules based methodology that uses the 200 moving day average to determine how much exposure to the index we have like the nasdaq 100. our rule space, methodology tells us today that we need to be in 100% treasury bills. we think the down side risk here versus the up side is why we're doing that. >> and to go deeper, jordan on the technical side of things, i know you're a fundamental guy, take a look at the chart over the past two years. it's lower highs and lower lows as well when you just take a look at the nasdaq overall. the nasdaq down in correction territory. and it's expensive. you'll take a look at the qs. it's trading at a current pe of more than 20 versus the s&p 500. why do you like -- why do you stand by technology at this point? >> we're not -- we don't have a position specifically on whether technology as a whole is good or bad. we're bottom up investors. we look at individual companies.
to the extent that technology stocks in general have come down, that makes them more attractive on a valuation basis for us. the fact that the nasdaq may be in a 10% correction only tells us that the price is now 10% below what they once were. and from our point of view, if you have money to invest, the stocks are 10% cheaper. why not, if you can find franchises that have good value and can support their valuation and have a game plan to grow value for the shareholders over time. >> why did you initiate a small position in april snl. >> the stock is down tra dra matticly. and the valuation simply is too cheap to ignore. >> you could have said that a week ago. you could have said that two weeks ago. you could have said that two months ago. >> so we've been nibbling below $95. it's only a partial position at this point. if the stock were $55 $85, we w
be more attracted to the stock. it is ten times reported earnings for next year. and substraktitracting off the . this is company that franchise is not going to go away. the balance sheet makes it compelling and gives it enough ammunition to reinvest and to share awards with shareholders. we don't know what the next big thing is going to be. >> right. it doesn't really matter much at this valuation. >> sure. shawn, you know, it sounds like you got a lot of rules that you're buying and selling. so i'm curious if you take a look across your etfs, if not technology now, this enwhere? what are the strongest signals you're getting out there? >> well, just to start with, most people this late in the cycle forget how bad things can get. when you go into a correction or bare market, it can be severe. so having a position in your portfolio today with down side protection makes sense. that being said, we also launched a global high dividend product which we think outside
the u.s. there is big value if you want to buy high quality companies that pay dividends. we use a set of rules on that one as can you imagine since we're passive. we use free cash flow as the main identifier of companies that can pay dividends. the stocks at these levels pay a 4.4% dividend. perhaps significant down side as well. >> so high stocks with high dividend yields. >> then buy an etf like ours. you don't have to take individual stock risk. >> thank you for your time. melissa, thank you. so picking up on that conversation, is it time to get defensive? when we wrote that lead, markets were down. now maybe we should say is it time to get offensive because the market is up? we'll xblor explore it either w. welcome to our guests. damon, let me start with you. where are you on the defense versus offense speck truck? you are buying?
are you holding tight? what? >> yeah. first of all, thanks for having me on the show. >> sure. we are high quality equally weighted managers. we do not, you know, seat market right now as particularly a bad market. you know, the jobs report today, yes, a little bit -- the numbers were a little bit disappointing. but on the whole, we think the economy is at full employment right now. we got a little bit of wage growth. we're not at all in a period of time where we feel we have to get defensive. we're adding underweights. we still think there is value in oil, emerging markets still look fairly attractive to us as well.
>> all right. we'll come back to a couple picks in just a minute. rich, let me get your thoughts on whether the market feels a little too pricey for you. or whether you're still finding as the prior guest inciting apple stocks that he likes because the prices are down. >> right. when we look at valuation, we look at it in a number of ways. at best, the market is fairly valued and arguably a little overvalued. we certainly wouldn't be buying based solely on valuation metrics. but the underlying funneled. ales is driving our investment strategies now. we're at an inflection point. the economy this recovery, the bull market running on fumes. we have at best 2% economic growth to look forward to this year. and the estimates continue to come down. the consume seshgtor slowing. the corporate sector is falling out of bed. so we just don't see a compelling reason to be throwing money at stocks at this point. now if you've been positioned defensively already as we've
been in some of the defensive late cycle sectors, you've done fairly well this year. that's about the safest place to be. but buying on the dips, that's a bull market strategy. it's not going to work this year. >> all right. you like two defensive sectors. d amon, your picks included, auto parts, google and makesin. thank you very much. go to "power lunch".cnb drchlt.com right now to see why rich says you can't blindly buy the dips. >> bill dudley, the president of the new york fed has given an interview to the "new york times" today in the wake of the employment data. many agreed were softer and what made news about it is he adds even though it is a touch softer, it remains "a reasonable expectation that fed would increase rates twice this year." that's interesting. steve liesman reported a number
of wall street houses said there will only be one rate hike later this year and later in the year. they were pushing it back. so once again, he remained a reasonable expectation the fed would increase the interest rate twice this year. we'll watch for market reaction. back to brian sullivan in louisiana. brian? >> yeah, michelle. one of the reasons that job report wasn't that great was that mining jobs fell again. mining, of course, just government speak for oil, gas, and coal. so coming up after the break weeshgs going to show you what i call -- this is a terrible name, the oil jobs supply chain. how it starts at the top and does this and some of the surprising industries that are being impacted that make this oil story much more than just a south louisiana or north dakota story. that's coming up right after this. 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.
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oil companies have been forced to cut jobs in louisiana. that's where brian sullivan is reporting to day. >> thank you very much. we all know the story, right? cnbc breaks the news and whatever. exxon is going to cut a couple billion off the capital spending. whatever. i want to show the jobs flow or the vertical supply chain, whatever you want to call it. why oil matters. i know people love low gas prices but not expensive gas is
good, cheap gas is bad. because if it's too low that, means the price of soil too low. and here's your flow. it starts at the top. you have a bp, shell, exxon, chevron, whatever. they cut their spending. that means they don't need a new well. the drillers, trance oceans, halliburtons, baker hughes that put the thing in the ground or sea, they're not needed or their pay is cut. then you've got the equipment companies, the service providers that are ancillary to the industry. they're going to bring out the cruise ships. they're going to bring out the equipment, steel tube makers. then you've got the truck drivers, the tug boats, anybody that is doing the work to support the oil and gas industry. then totally unrelated, restaurants, retail, hotels and something else which is schools. some of the schools here are struggling with funding especially on the collegiate level. i'll show you something unusual. we're in this inner coastal water way. there are shipyards all the way up and down here. we went up the waterway and there is a bunch of tug boats.
those should all be out. the shipyard behind us, well, actually, let me show you this. you can see there is a white -- you see the white cabin guys behind me. that is tied up next to the barge that we're on. and there's about five or ten more of those at the endst pilin pilings. they're never. there the reason they're there, guys, the shipyard is full. there is no more -- the parking lot literally for the ships is full. somebody described it as a ghost town. there is a lot of ships there. all those ships mean no jobs because they're in the shipyard and they're not out on the rig. so that is the oil jobs flow and why cheap gas sounds good but there's a real impact to cheap gas and oil that is being felt in these places. >> all right. brian, thank you very much. which presidential conditionand best for independent smaller businesses? we'll talk with two business owners, one a hillary supporter and one who favors trump. they'll debate when "power lunch" returns.
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and learn more about the kinds of plans that will be here for you now - and down the road. i have a lifetime of experience. so i know how important that is. at ally bank, no branches equals great rates. it's a fact. kind of like bill splitting equals nitpicking. but i only had a salad. it was a buffalo chicken salad. salad. . a donald trump-hillary clinton face-off in november seems almost certain. president obama commented on the potential race today. >> what i'm concerned about is the degree to which reporting
and information starts emphasizing the spectacle and the circus because that's not something we can afford. and the american people, they've got good judgement. they have good instincts as long as they get good information. >> and let's turn now to what business owners are focused on as the election cycle progresses. kate rogers has that story. >> it's definitely all about taxes and regulation wages and health care reform. so let's take a look at where the candidates stand on those big three issues. on taxes and regulation, we start with donald trump. he vows that no business of any size will pay more than 15% of the business income in taxes. he vows to repeal the estate tax which taxes property transferred post debt, something that will hurt small businesses. he also instates four tax bracketses instead of seven. clinton and sanders, they focus on having the wealthy pair their
fair share. clinton is aiming to cut red tape with a more simplified tax code and sanders adds four new personal income tax brackets on today's seven. both of the candidates are in favor of the estate tax. on the minimum wage, the two democratic candidates, they both favor higher wages. sanders, $15 an hour at the federal level. clinton for $12 an hour at the federal level. also higher at state and loefl levels. now donald trump, he actually says he's open to doing something with the minimum wage. not too many details there. on to health care reform though, another top issue for small companies. trump says he'll repeal and replace obama with a national marketplace on day one. clin is in favor of strengthening obama care and also slowing the rising cost of health care. senator sanders, he wants to implement a single payer system which will encourage people to start their own businesses as they won't have to worry about having health care coverage through their employees. >> thank you very much. >> thank you. >> great rundown. yes. >> so which candidate does independent business want?
kate laid out what they might do. brian smith, co-founder of brooklyn's apple hill creamery thinks hillary clinton is better fitted for the presidency. and our other guest, says trump understands how businesses run. i hope i pronounce your name correctly, hani. please forgive me if i didn't. what has mr. trump said that persuades that you he would not only be better for business generally but maybe for yours in particular? >> certainly. you did a wonderful job pronouncing my name. thank you for that. directly speaking about the va in particular, i deal with va contracts and i deal with a lot of veterans in my industry. we provide services to them. and i would love to take on more veteran clients but how can i when the va's turn around, they're payment term with me is 30 days to 60 days. i don't receive payment from
them until 6 months to one year. so donald trump states that he's going to add reforms to the veterans administration. he's going to streamline processes and we certainly do need these processes as a businessman that comes in that understands how business should be run, cut the red tape. we need more proficiencies. >> sure. and when a government agencies goes into a reerz like that, working capital accounts, it can be really difficult. how you about, brian? what would hillary clinton do for your small business? >> well, very an ice cream company in brooklyn. that very moment our cfo is, you know, on the phones and working the internet trying to secure us bank loans because we're trying to build out a factory in brooklyn that will add jobs and help the economy and we need a bank loan to help us get there. and so one of her proposals is to try to help deregulate some of the issues
incentives to the banks to have that money flow more easily. she is also talking about profit sharing incentives which philosophically i'm a fan of. obviously, there's a bottom line issue that historically the republican party is, you know, better in that sense of lower taxes and lower regulations. but i think there's a bigger picture at play. >> brian? >> yes. >> i want to ask a couple of quick questions. how many employees do you have? and do you provide health insurance for them? >> we do. >> okay. >> we're at 60 to 70 employees now. it moves around with the year because we, of course, sell ice cream. but with just started under obamacare supplying health care and offering health care plans this january 1. >> what is your typical wage and what would you -- how would your costs increase if at all if there was suddenly a much higher minimum wage?
>> well, absolutely. we start our average scooper at $10 an hour. i fully support moving a minimum wage up. i think it's the right thing to do. >> to 15? >> well, i mean, we can support $15. we may have to pass on some of that to the customer, of course, since that's a -- is that a 50% hike from what we pay now. but i think that i support the idea of it because i think ultimately the staff and our scoopers and the customer service, all of it increases and ultimately if new york specifically supports something like that, customers will know that they need to support it, too, by paying a higher price for that scoop of ice cream. >> hold on. we have breaking news to tell you about. representative ryan asked donald trump to meet with congressional republicans as part of this on going process of trying to hold the republican party together. what would you want them to talk about? what do you think needs to be
done in order to bring the republican party together? it's so divided now. if you want donald trump to win, there has to be a bridging there. >> i mean with hillary clinton, i believe we're going to get the same old same old. let's look at the overtime salary threshold on the table right now. it's at $23,000 and they want to bump it up to $54,000. you can't salaries need to increase with inflation. and to bump something like that would be detrimental to small businesses. the lower salaries are meant to be stepping stones for our staff members. how can a managerial position be developed and n. a 40-hour week if that would be the case. so what ultimately winds up happening is company owners such as myself start decreasing benefits and start decreasing rates. so i definitely think trump brings a perspective into -- as business owner, he brings a
different perspective. this is ultimately what we need currently in this environment. >> both of you, thank you very much. hani and brian, we appreciate your time. maybe we'll have you back as the race runs on. >> good luck with your small businesses. >> good luck. i'm going to try that ice cream. >> thank you very much. we're doing a hillary clinton and a donald trump flavor actually as we move towards the election. >> cool. we'll have to come try it. >> that would be fun. >> absolutely. >> all right. latest on the wildfires in can d.a. the impact on oil production, oil prices. you're watching "power lunch."
. hi, everybody. i'm sue herrera, here is your cnbc news update. maryland police say three maryland shootings in the last 24 hours may be related. they identified a person of interest suspected of killing his estranged wife last night and shooting four people outside two d.c. area shopping areas this morning killing two. south carolina senator lindsey graham, one of donald trump's most outspoken critics said he could not support donald trump for the presidency. and he said he will absolutely not vote for hillary clinton as well. a minnesota food supplier
issued a nationwide recall of sunflower seeds because they could be contaminated with list tear yachlt they're included in 100 snack products and salad toppers. and for the second year in a row, noah and emma topped the list of best baby names. noah was followed by liam, mason, jacob and william. emma followed by olivia, sophia, ava and isabella. one major change, perhaps not surprisingly, the name isis which dropped off the list of the top 1,000 names after being in the middle of the pack for some 15 years or so. understandable, perhaps. that's the cnbc news update this hour. back to you. >> noah. i don't know. are we a nation obsessed with arcs? >> the oil market is closing for the day. let's get to jackie at the ni mech nymex. >> we did see another update for oil prices.
down slightly on the week closing under $45 a barrel. the wildfires in canada sent prices at a session high of $45.34. most traders are saying we're going to continue to trade this range. this will probably subside next week. the commodities base remember, higher all across the board because the dollar took a little bit of a breather from the gains today and the anticipation is that a dovish fed will keep that dollar low. back to you. all right. to the late oevent that out of control blaze. consuming canada's energy heartla heartland. the wildfire growing and the spread threaten twoz oil sands sites. south of ft. mcmurray in alberta. the fire forcing 90,000 residents to flee and triggering precautionary cuts or shutdowns at a dozen major facilities. >> let's talk about the oil output from canada and what means for the united states. rbc capital's head of commodity strategy joins us on set. brian is with us from louisiana. how does canada factor into what
going on with oil prices? >> the question will be the duration of this outage. most market participants expect it to be a couple weeks. if it were to extend beyond that and if we got material damage to actual facilities, then i think the price impact is much more material. >> how much are they producing? >> right now we have about 900,000 to a million barrels down. we think about what the supply overhang, is if you want to think about like how you bring a market into balance faster, if you had a significant outage like that, that would clear out that overhang. >> and then in term of the other things going on, what's going on in libya, for instance, is that a much bigger factor? where does that come in? >> the thing with the canadian fires is the size of it. it's not expected to be that language. but libya's on going problems could take barrels down. also there is a chevron facility in nigeria, they could be stickier and really add up in terms of outages. >> so as we head into the summer driving season, what you are expecting? >> we think again we're still cautiously optimistic.
these are the kind of things that could propel us faster. sent. is really been the driver of the markets right now. the physical markets take slower to catch up. >> brian, is there any optimism out there where you are? >> you know, that's a good question. i'd like to sort of end on an optimistic note. there are reasons to be optimistic. she can probably address this better. i'll give you a few things. so this rig that we're standing on. we'll give you a tour of that, the rig we're standing on is the workover rig. they put it on an oil rig or well to try to fix it, refurbish it, flow better. they're not on the job. so what is happening is you're not seeing a capital investment in the wells. if they're slowing down in their production, the owner of the well is just allowing it to slow down. so eventually, right, the bullish case for oil is without new investment what we got drains. if demand goes up or even if it doesn't that, decrease in supply because rigs like this aren't
going out every day to make the wells continue to flow. they literally this is the worst, i guess the best term, they get mucked up. the lack of new investment might drive down supply enough to bring prices up. but whether does that happen? >> u.s. production is coming down. and we are starting to see outages in other places. and without the new investment going into the energy sector,he be setting up for higher prices. >> we continuing to climb? zblur seeing u.s. production trend down. on the bear cases, the iran numbers consistently look high eastern higher. so people are concerned that that will be what pulls prices down. and there was optimism about libya coming back w libya off the table that, is more bullish for prices. >> and quickly, short term you said higher prices. how high can we go? >> we think without a catalyst, you know, we'll probably the 46 we saw last year will be the
short term high. we think 50 by q-4. >> you got a close-up look at what's it's like on a barge down there. >> yeah. i never seen anything like this. it's a really an interesting environment. obviously it's a tough story down here. the people are working hard if they have the job. they're trying to find jobs. but i thought still it might be fun, if you want to call it that, to explore this rig which, like i said, is the workover rig. it goes out on the wells. it's a very unique vessel. it is not a shichlt it gets push bid a tug boat. let's take a tour of the rig that we're on now. if you need to repair an off shore oil well, you're going to hire one of these babies. it is the workover barge. a unique piece of machinery. let's get a tour down here in louisiana. some of the off shore oil wells can go down 20,000 feet.
that's where that giant hook comes in to pull it out three to four miles down. that big green engine is a mud pump. guess what? it pumps mud. all these big engines and they are loud when running are just bringing up the mud, cleaning it out so they can go down and repair the well. all the hefry machinery, the crews actually live on this barge. in fact, as a rule 18 to 40 guys anywhere from a couple days to a couple of months. here's one of the bedrooms. it's not being used because the barge is not being used. so this is where they sleep literally for weeks or months at a time. but they need a place to hang out, right? eat and play cards and whatever. so let's go into the common area. you have the galley. you have the kitchen. this is where they'll sit and eat and watch television. believe it or not, they have good taste in tv. >> and these are some of the guys. i want to show you reggie, wayne, and jimmy. they treated us like familiar lit last day and a half that we've been here. i know it's a tough environment.
we're fulg for you. thanks to everybody. jimmy, we're going to go back. jimmy made ven i son chili with a deer he shot and skinned and the chili was delicious. did you want tell me what was in it until after it is over. they're fighting and doing the good work every day. i'll send it back to engelwood and we'll see you back in the east coast where apparently it hasn't stopped raining since i left a week ago. >> great stuff, brian. safe travels. thank you. goldman sachs slashing more jobs. is this a sign of even more cuts to come on wall street? we discuss that next on "power lunch."
it could record the 11th losing session out of the last 12. that will be first time we've seen that happen since 2009. let's discussion this with the "trading nation" team. aaron gibbs, gina sanchez and we start off with erin, what do you think of technology as we have ach will hitting a new 52-week low? >> one thing that is really weighing on it is q-1 earnings. they've had a medium surprise of 3%. basically flat. basically we're not beating analyst estimates for this and we're also seeing estimates revise down. the thing, is right now the
nasdaq actually looks attractive. we're looking at really good growth over the next 12 months, about 90%. and it's trading at about 18 times earnings. it's starting to look cheap. any time the nasdaq goes below 18%, it's been a really good buy for the past three years. so, you know, these selloffs could actually be great buying opportunities. i'd let the sentiment keep rolling out. but if it goes a little farther, it's time to buy. >> erin, was that an 18 forward p or 18 current pe? >> forward. >> so in termed of 18 forward pe, is that cheap on the nasdaq for what we're seeing right now in the market? >> it depends on how you look at it. erin made a good point which is that it's over the last three years. and if you look at it over a longer period, you know, the concern that we have is that where we're calibrated in terms of what we're expecting out of growth continues to disappoint. every year we started out expecting more out of earnings, more out of the economy and
ending up on a sour note tend of each year. and we're probably headed in that direction. i think that's what the market is reacting to and the nadz dak is reacting to shift in sentiment that's been continuing to shift. where we're looking at probably ending the year at sub2% growth for gdp for the u.s., well that has an impact on your expectation for growth generally. so is 18 time forward cheap? you know, i think you'll have to calibrate that to what you're expecting going forward. >> what do you think -- do you think it's cheap, gina? >> i don't think it's cheap yet. i don't think it's cheap yet. >> all right. going leave it. there thanks a lot erin and gina. for more "trading nation," head to our website. michelle? ladies only "trading nation." i like it. goldman sachs announcing additional job cuts, 100 jobs from the sales and trading division will be impacted this year. citigroup, credit switt, bank of america, merrill lynch announcing cuts too as bank profits decline. >> so what does it mean for the
future of the industry? let's bring in two wall street recruiters, mike carp is ceo of options group and john ritco is atlantic group partner. let me begin by asking the layoffs that we've seen so far in the finance and banking business, part of them surely are cyclical, just sort of the way the business changed and profitability and so on and so forth. but there's got to be another piece here and that is how automation and tech is changing the way these companies do business. is that really the trend that bankers and the financial services business need to keep their eyes on? >> well, i mean, technology is always going to play a factor in the economy and hiring. but i think what you're seeing is more of, like you said, cyclical what is going on. it's a short term, you know, it's a short term pullback in the market. and that's what some of the layoffs have been. technology while that's a factor, maybe some of the trading aspects of things that go on. there is another side where
there is a lot of hiring. firms like ours, we have more positions open for a long, long time across various platforms. basically i.t., accounting, redo our front office positions, administrative and other aspects. i mean i would say it's a little cross wind. there's a lot going on. >> mike, why do you think there are layoffs? is it just cyclical? is it technology like tyler said or it is also regulatory with dodd-frank and the rule meaning you can't property off trading anymore? >> my opinion is that the world has changed and the bankers finally realized that the markets will never be the same as they were precrisis or even post crisis. and i disagree with john a bit. i think the statement that wall street hires and fires this time is not true. i think people realize that volumes won't be the same and the regulation and the new concerns coming out with the new capital requirements, i think
the fixed income is going to look very different and equity was going to look very different. the world has become more electronic. i think electronic trading is more, you know, more on the forefront on the sell side and buy side world. we even see on the buy side and asset management side of the business, they're rolling into family offices. i think there is a lot of different things going on and the market is going to look very different. >> so john, mike seems to feel that it is maybe more structural than cyclical. how do you respond? >> respectively, i disagree. i think it has to do more cyclical. i think as the economy improves, we're going to add jobs. yeah, the landscape might certainly change and while hiring maybe has gone from banks to publicly traded partnerships, technology might be a piece of. that but it is not the whole of what is going on. you are looking at a small correction which, you know, wall street which is when it is performanced based, as a rule a down turn in jobs. when the market improves, we're
going to increase. so, i mean, like i said, my firm and other firms like ours swreshgs more jobs out there than we need. >> and to that point, mike, what i heard you say is wall street big bank jobs are going down but those jobs are going to other places and financial jobs are still out there. they've just been pushed to other parts of the financial system that are less regulated at this point. >> exactly. that's what exactly i'm saying. i'm saying that the sell side, the bank jobs are going to look very different. and a lot of the migration is happening to tech, a lot of the migration is happening to technology. even ott banking side, i think there will be jobs but it won't be precrisis. it won't be like 2011. i haven't heard firms say we're increasing head counts. i think the sell side is going to look different. there are the growth management
area and predicted analytics are coming up. they need people to come in and look at global risk. yeah, the jobs will be there. it will be compression on compensation. there will be compression on how many people get hired. there is always jobs for athletes. there are eight players. so any player can find a job with great handlers like us. i don't it this markets will look the way they looked precrisis. >> compression on compensation. that means salaries go down. >> that would be the other way of putting it. mike, thank you very much. john, we appreciate your time today. have a great weekend. thank you very much for having me. >> you bet. >> sue herrera with a breaking news alert. >> indeed, this comes out of london. the bbc reporting that it looks like kahn is set to become the new mayor of london which would be a big boost to the labor party because, of course, they slumped in the scottish elections. mr. khan's expected victory would end a decade of
conservative rule of the city hall. he has better than 44% of what's called the first preference votes. so when second preference votes would come in, that would push him over the 50% mark. so the bbc is reporting that sadiq khan looks to become the new mayor of london. he would be the first muslim mayor of london. michelle, back to you. >> water shed moment. all right. thank you, sue. jcpenney stock is tanking wlachlt is taking it down? that's coming up. "power lunch" is back in two minutes.
dish, the biggest gainers up between 5% and 8%. well, jcpenney has been a hot stock this year but down 8% today and 25% in the past two months. we're all other that story and today ice drop on "power lunch." ♪ ♪ for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20.
credit card use. let's bring in matt from jpmorgan. glad to have you with us. you recently lowered your price. in terms of the report does that make you more concerned? you were already concerned. does it make you more concerned about the quarter? >> the only thing it adds for us is the cutting of sg & a toward the end of the quarter seems like they were saving performance. our bigger concern is what we receive in the field over the last 60 days. the envenntry is building, sales have sold. i think sales across a large amount of stores has slowed and the reaction to jcpenney was toward the end of the quarter. but our biggest issue is the forward looking and the inventory. how are they going to clear through that inventory. >> i love going through your notes, the photos, the evidence, the racks and racks of signs
with 50% to 70% off. can we simply blame the weather or is the deeper problem at jcpenney? >> i think there's a bigger issue than weather across the board. jcpenney is one of many i think you're going to see next week. reality is retail slowed and took a major stepdown in the month of august. all the questions are why did it slow. we had a stepdown in august. the weather was horrific in november and december but then it was substantially better in february and i think we went to a new high and all we're really doing is normalizing back. >> matt, we're going to take barack. we want to go to sue herera with the news. >> this concerns the developing story out of washington, d.c., maryland specifically in montgomery county. the suspect that was being sought in a total of three shootings between last night and this morning has been taken into
custody. he's suspected of murdering his estranged wife last night and going to two separate areas in montgomery county, two shopping areas and killing two other people and wounding two more. so they were looking for him as a person of interest. they do believe that these shootings are related. there is his mugshot. his car was reportedly seen at all three of those locations between last night and today. they have been asking for the public's help and indeed they got it and he is in custody. >> is he a police officer? because that says police k-9. >> yes, it does. he actually works for the government for buildings. he does building security for federal buildings in washington, d.c. so he is considered a law enforcement officer. that's why you see it. that's actually his work photo. >> that's frightening. i want go back to matt.
sorry to interrupt. we're just on the precipice of a week of a lot of retail earnings. should we expect bad news across the board? >> yeah. the reality is from a topline perspective, we have a plus two same store sales. it's probably going to be the best aggregate that we actually get from the department store spachls i think you're going to get a down mid single digit print from macy's and get a flat or even negative territory. >> underline that, matt, when i see the report that's got all these photos of jcpenney's, could you take the photos at other places with lots of inventory build? >> the difference is that jcpenney's in the first or second inning of a turnaround and it's far more important at this point to be stabilizing the shift, so the question is this has appeared to taken place across retail and apparel. >> who's going to surprise
positively? >> your off pricers. they'll be the week after. >> okay. >> you're going to get a gap in the didn't store. my guess is you guys are going to be talking about retail and apparel. >> got to leave it there. matt boss, thanks. >> have a great weekend. all you mothers out there, happy mother's day. thanks for watching "power lunch." >> "closing bell" starts right now. ♪ everybody's working for the weekend ♪ how do they know. >> boy, are we ever. can i just say happy mother's day to my mom at this moment? she's the best. >> mine is probably not back from lunch just yet. she watch 20s minutes later. >> on dvr? >> no. live, all the way. >> doing it live. welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth. fad devices, fad stocks. square, gopro, fitbit, they're all being hit hard. we'll look and see whether the best days are whienld them with th