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

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you love deere. friday before the bell, cisco is wednesday after the bell. >> no position in cisco. too hard for me. >> we own cisco. 4% yield. >> i like cisco. >> own it. >> like oracle snl. >> cisco is going to be good. >> thanks for being here. "power lunch" starts now. thank you, scott. welcome to "power lunch." today is all about the big turn. stocks, biotech, retail and oil all making turn arounds to kick off this week. welcome, everybody. i'm melissa lee. tyler mathisen is off today. brian and michelle are bigging in on oil's big come back. hi, guys. >> thank you very much. yeah. crude oil, your top storey. it is jumping after ultra bear goldman sachs did a u-turn and raised the short term price outlook on oil. there is bullish commentary from bank of america and barclay's. wt sichlt now up nearly 30% this
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year. but keep in mind we are still about 20% lower than where we were one year ago. the question, of course, now is where do we go from here? let's bring in our all star oil panel now. lima croft of rbc capital markets and john. two things, number one, you called this nigeria thing back on january 27th. >> yes. >> congratulations. >> thank you. >> is the output cut that's happening in nigeria enough to sustain higher prices long term or just short term activity? >> one thing about nigeria is we had supply outages in the past and they lasted a long time. what i keep telling clients is if nigeria goes off line, it's sticky. they're intent on shutting down production and they have the capacity to do. so it's the biggest upside ris nkt oil market. >> is there any other sector where you have a group called the avengers having an impact? this is what they're calling themselves. >> it's really a men take two. there was a group that kidnapped oil workers, shut down
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facilities and parade them around on tv. they do things with great style. so, again, i don't think we should write them off. these guys are armed to the teeth. >> wow. >> okay. >> they're all about the marketing, michelle. >> yes. >> but can you say, john, that given what is happening in nigeria, given what happened in canada, yeah, we're up. but wouldn't we be expected to be higher than $47 a barrel given the two things? or is everybody putting enough oil on that it doesn't matter. >> we have strung together some significant outages from the kuwaiti oil worker strike, the fire, now this, venezuela ready toim ploe to implode. foofrt year or, so a the love the oil went unsold for points of time. there were scores of cargo sitting throughout with nowhere to go. >> but that's why we think it is important. the nigerian barrels is the homeless barrel choking the market. we cleared off nigeria. >> so goldman sachs in the note, they're specific. they say the market went from being overly saturated with oil
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now do being indeficit. they go that far. have we made that pendulum shift already in your opinion? >> i think we're pretty close, actually. between canada and nigeria, nigeria may be down 700,000 or will 800,000 barrels, if they keep getting worse, we'll be down. >> it would suggest the price gains we have now hold. am i wrong on that? >> there should be some stickiness to them. but i think what you're vulnerable to is whether or not the vents are transitory. libya keeps coming on and off potentially on the market as an example. iranians have come back to the market much quicker than most folks calculated. even here, all you have to do is pay them off and they're back in the market. that's what did it for mend and that's what could do it again. >> they ran an anti-corruption aagenda yachlt he's not going to pay them off and nor does he have the money. all the producer states, the weak ones are failing right now. may not just be nigeria. >> remember, we spoke to nigerian oil minister in doha.
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they were onboard to sign this deal. everybody was onboard except for the vowedies. i think we found out. but i know you're not an equity analyst. look at sand ridge energy today. a formerly and mid sized oil company filing for chapter 11. i don't want to throat bear case on all the bull stur that we're talking about, $47 still not that high for oil. do you see any -- we're going to need higher prices for a lot of the companies. do you see those coming? >> this is going to be the test z this run at 5$50 bring on the oil production? i think there is a lot of desperation out. there i think you're go to see the folks try to lock in $48, $50 barrel oil here. >> what is the prediction? $52.50, not much higher than where we are. >> no doubt about it. and, too, i think for the demand forecast that are out there, our projecting in that asia hangs in there.
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i just keep seeing worse and worse data out of all of the asian economies, not just china. so i question the demand growth numbers. >> india is doing well. theish sue inventory overhang. you have to work off the inventories. >> opec in three weeks. are we going to get a deal in vienna, austria? >> we didn't get a deal in doha, i see no deal -- >> everybody says that they didn't amount to anything. you called it. i called it irrelevant on the air. any big surprises you expect from the opec meeting? >> i don't see the saudis changing their mind right now. if you look at this pain that everyone is in, i think they're ready to blow up opec. >> thank you, ladies and gentlemen. okay. that's a big one. all right. some big oil etfs are on the move today. let's get to dominick chu with an example of some ways can you trade that market. >> so the stocks and rally mode today in the energy related etfs are helping to lead the market higher. funds being used to express
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energy views in these stocks include spdr. $14 billion in assets. it's the biggest energy related stock out. there another big one that people use is the vanguard etf which is close to $5 billion on assets. on the more industry specific side of things, you have the exploration etf. this two billion funneled focus oz companies that hunt for and produ produce fossil fuels. then the oil services etf, oih, it focuses on the companies that help service oil producers. they provide equipment supplies, that sort of thing for xbloration and production companies. now after a rough couple of years each as managed to rally alongside oil prices so far this year. as brian pointed out, we're below where we were a year, two years ago, melissa. back to you. >> thank you.
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>> kohl's, gap, and nordstrom are rebounding, they're coming off double digit declines scht worst over for the retailers? liz dunn, good to have you with us. >> if i am looking at the price action for a lot of the guys, macy's for one, nordstrom, gap, dillards, they're not bouncing at all wlachlt do you zmekt week from this week's slate of retail earnings? >> right. we have a lot of earnings coming this week xlug gap. i think what we're hearing from many of these retailers is they don't know what the problem s that's the biggest concern for me. you know, it's one thing if you miss earnings. but we miss earnings and we don't know what is wrong with our business. obviously some is going to digital. i think there are bigger problems. and just an overall consumer that is shunning this category that is worrysome and doesn't look like it's going to be fixed any time soon. >> what is your read on home depot? right now it's at session highs in anticipation of earnings.
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i'm wondering this is probably going to be one of the stocks where if they don't deliver, it's going to hurt the sector once again. >> fwhaz a home depot this weekend and it was quite busy. i think it's a category where consumers are spending and we're seeing this bifurcation of consumers spending in certain categories and completely walk ago way from other categories. i think home goods, you know, home products continue to be one category where the consumer is showing up. so i think earnings are going to be strong there. >> you mentioned that a lot of the retailers that have had problems don't know what the problem s if one were to take a flyer on some of the beaten down names, is there one you put money into? >> you know, i like nordstrom longer term. and like the fact that they got a little more conservative on earnings. but i still think that they've got a difficult road ahead of them. the reason i like it longer term is i think they're doing some things to bring newness and excitement into the stores. they're focused on some of these
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growing, exciting brands. one thing i've been saying about department stores is a lot of the brands are bypassing that channel. that's a very dangerous trend for macy's. nordstrom is still in the game and longer term, it's a stock that works. in the short term, i'm not excited about any of those that we heard report last week. >> liz dunn, thank you. i have breaking news coming in. let's get to d.c. >> the u.s. attorney in newark, new jersey, is announcing that a ukrainian man is pleading guilty to conspiracy involving the accessing of computer networks of press release companies that are issuing market making news and then stealing that information and using it to trade. the u.s. attorney is saying the ukrainian man, 28 of kai environmen -- kiev, ukraine, pleaded guilty. they said the news wires were market wired. and business wire.
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and all told, he stole 150,000 releases and made up to $30 million in illegal profits. they say he pleaded got day before a u.s. district judge madeline cox to a three-count information charging him with conspiracy to commit wire fraud and computer hacking and identity theft. this is the new wave in insider trading and cybersecurity is people getting access on information that lives on computer servers and trading on it. >> thank you so much. >> we're just getting started on "power lunch." a new law goes into effect today that could be a game changer for startups and the investors who want in on them. the full details ahead. later, winter is coming for wall street. we'll explain the big business version of the "game of thrones" when "power lunch" returns. the e-class has 11 intelligent driver-assist systems. it recognizes pedestrians and alerts you.
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you no longer have to be rich to get stake in a start-up. it took four years to get equity in early stage private companies. so who can invest? individuals that make less than 1 l$1 lun hundred,000 can inves
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$2,000 or the lesser of 5% of their annual income or net worth. people who make more money, of course k. invest more. until now, under title two regulations of the 2012 jobs act, start-up investors will to be accredited. that means they had an annual salary of at least $200,000 oregon -- or a net worth of more than $1 million. the funding cap for equity funding is $1 million in a 12 months period. these are not like uber or lyft. they warn investors to do due diligence before deciding to back the small businesses. finally, how can you invest? portals must register with the sec and seek membership to connect investors to companies much as of monday, they registered eight portals, registered broker dealers are also another venue for funding. >> why stl a million dollar limb sflit. >> they don't want the small
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businesses to make too much capital because it is risky. people real proponents, they think that $1 million cap is too low and this is not going to do as much for small businesses as they originally hoped. they wanted to see that hit $5 million. >> all right. thank you. brian, over you to. >> let's dive in more. some argue this is a great way to democratize investing and get the little guy back in the game. the only thing good about it is it's a good way to separate mom and pop from their money. we have two ceos with different opinions. he says title three is a disaster waiting to happen. and another guest that is participating in the new rule. john, first you to, why is allowing individuals to invest relatively small sums of non a start-up a bad idea? >> no, first of all, i don't think that at all. i think that democrat tiesing access to startups is a great thing. i run a crowd funding platform. we operate under title ii.
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we allow credited investors continue to vest. i'm also excited about ervin vesting. but there are certain problems with the way that this is now being proposed. for example, most of these sites are going to put up the deals are not doing curation. they are not checking the deals. they're not diligencing them. they're going to let the wisdom of the crowd decide. the overall model is just raise the money and then move on. there is no one there to watch the shop. after you've handed money over to a little start dwr-up with a and gal and dog. who is going to provide the ports. >> so you don't mind theed in b -- mind the idea but you're annoyed by the structure. how you would structure it to make it work? >> first of all, there is a resolution in fronlts of the house subcommittee on finance called fix crowd funding act. it will raise the limit to $5 million. because why should you punish a company that's doing great and actually wants to raise more than a million dollars and can
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and the government is going to say, no, thank you. that's nuts. that makes no sense whatsoever. i allow people to build what are called spvs or special purpose vehicles where all of the investors, the little guys, can be aggregated and managed by professionals. on our site, our crowd, what we do is we select 2% of the deals that have been pitched to us. and then we offer them to the crowd. but we manage them. we sit on the board. we provide reports. we provide assistance. there is somebody who is not asleep at the wheel. you're not being left to the mercy of essentially a tiny little start-up who has 1,000 people. you know, who might invest. wloz going to be there to watch? >> it sounds like john's argument is there is a lot more trash than treasure and that people are just going to submit their money, money is going to be lost. it's not structured right. how do you counter the criticisms? >> yeah. we would disagree with that, actually. indigo was founded in 200 will 8 with the goal of democrat tiesing access to capital and giving individuals the
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opportunity to invest the way that they would like and to support business that's they want to support. the law did not support it in 2008. we believe that individuals are capable of making their own decisions if presented with the information that they need to make those decisions. we want to make it easier for individuals to do that. >> do you think, david, that individuals, whether i go on, let's say i have $5,000 i want to invest and i see a company description. do you believe under the rules as you know them the disclosure for what these companies do and by the way how they may be already doing is going to be enough to allow mom and pop to make informed smart and relatively safe investing decisions? >> i think it's enough for people to make informed decisions. they'll be able to see how those companies intend to use the funds. they'll be able to see histories of the people that are vafd in
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the companies. yes, i believe they'll have enough information to make an informed decision. >> you know, john, it's a little bit side ways. i'm sure that you're aware of the problems with lending club, prosper had some issues. i understand that's a different model. i'm going to lend you mb or you're going to lend me money. but this whole pier to pier thing does seem to be sort of operating under a cloud. does that hurt the entire premise of this idea? >> not really. we're talking about professionals. we have over 100 people working at our company that are engage fld selecting, curating, managing deals. what we've done is we opened up venture capital. we co-invest with the big guys with horowitz or sequoia or excel. we don't just get you into a deal. we hopefully get you into a good deal. we operate under title two so we're legal. we can engage in public solicitation. go to our website and you'll see a full company presentation not just 200 words, you'll see
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essentially a one hour webinar with the founder. and then we engage in hundreds of hours of diligence. we're checking this stuff out. the most companies don't have revenues so a financial statement means nothing. i'll going to invent something brand new. how does mom and pop on 200 words in a 30 second iphone video make an informed decision? we want to democrat ties. we want people to be investing and to make money from the private companies which is essential. i salute them. they're a great site as well as our crowd. but we're worried that mom and pop when they get involved in this kind of a platform and are looking at individual deals that have not been curated and not managed and where the economic model -- >> we have to go. do you think that is the case? mom and pop in the phone on the passenger seat driving through jack and the box and watching a
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presentation and decide let's invest $5,000 of our money s that how easy it is? or do people use more self activation and due diligence than that? >> absolutely not. people won't be making decisions at the drive through any more than they make decisions to buy public stocks. we expect people to make informed good decisions. they'll do it thoughtfully the way they do with other forms of investing that they do. and at least now for first time individuals will be able to make their own decisions and twhoent have to be reliant on venture capitals, venture capitalists or others to make their decisions for them. we believe flt power of the crowd. and we're excited about this opportunity for a new class of investors. >> you both agree on that in your own way, particularly. john and david, either way, fantastic discussion and debate. gentlemen, thank you very much. we appreciate that. >> all right. call it the buffet bounce. after will investors making none day after buffet's berkshire hathaway revealing a big stake in the company.
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but before you go out and the drive through at the jack and the box and buy apple stock, you'll want to hear from your next guest. he thinks apple is set for a fall. later on, more on big tech's charm offensive in china. are the real opportunities overseas or is this all just a game to win favor with china's leaders? we'll talk about that and much more when "power lunch" returns right after this.
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the first stock index was created over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks. welcome back to "power
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lunch." gold is off the session highs. higher by $1.10. flat trade at this hour. true for almost the entire metals complex. silver, copper, palladium and platinum flat trade. platinum is higher by 70 cents. copper is higher by one penny. silver higher by two cents. let's get to the bond market. rick santelli is tracking the action. >> well, i'll tell you what. after looking at etfs today, i came up with an idea. let's look at a clart of ten year note yeeields going back t 2012. how much under 1.80 action do you see on that chart? not much. then go to the muni etf. they're buying that greasively. i'm not sure exactly why. risk is a factor there. look at how high it s now let's look at investment grade etf. moving in the right direction but yet plenty of room. high yield was all the rage for a while. with all the issuance seems like risk is slide ago way.
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but look at the hyg. boy, you talk about plenty of room. doesn't seem like it's nearly envogue as much as the other two etfs. maybe the wild card of all. look at the dollar index for the same parameter. we have low yields and all the etfs on the price side of that close to highs or moving up. all make sense. but the dollar intex should be much lower. on that chart, i guess you see how much room there could be. if the dollar starts to kacht low interest rate sell factor. michelle, back to you. >> got it, rick. all right. it's been a year since the s&p 500 hit the all time high of 2134. so which stocks have underwe are formed since then and what is going to move them higher? >> one was the biggest company in the world and now maybe taken a bit of a backseat. we'll tell you about all the stocks that have underperformed since the market last peaked. average price of gas tleen day, $2.22. remember what it was a year ago? we'll tell you about that coming up. you both have a
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i'm sharon epperson. here is your update for this
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hour. a 5.6 magnitude earthquake struck north of tokyo today. officials saying there was no immediate worry of a tsunami. bullet trains conducted emergency stops near the capital but service was restored. the mayor of london described donald trump's views on islam as ignorant. after the presidential hopeful challenged him to take an iq test and said he would make an exception to his ban on muslims entering the u.s. for him. >> i'm afraid donald trump and his advisors, your views on islam are ignorant. we have shown in london that there is noggin compatible with being a mainstream muslim and western liberal values. >> the washington monument was close the once again because of elevator issues. in early april the elevator broke down twice in one week. tourist wloz were visiting the site had to walk down hundreds of stairs. police in suburban chicago have put out a well-being check for iris singer s. ni aechlt d o'connor. she reportedly left the area for
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a bicycle ride 6:00 a.m. sunday and hasn't returned. a caller expressed concern for her well-being. that's the cnbc news update at this hour. back to you, brian. >> all right. sharon, thank you very much. a lot has happened in the past year. a lot that is most everywhere except the stock market because it was one year ago this week that the s&p 500 hit an all time high of 2134. since then, stocks have been stuck. you have winners and losers. let's focus on glaf half empty and find out who the big underwe are formers since that high, who are the guilty parties? >> talk about not accentuating the positive and perhaps not even eliminating the negative. >> it's monday. i'm grouchy. >> i know sh it's money and you're grouchy. let's talk about the dow jones industrial average. we saw the august swoon. it hasn't been that we haven't seen the volatility. we just haven't gotten that much anywhere. so let's take a look overall at the dow. we know who the winners are. we've been talking about them for quite some time. it's the mcdonald's of the world, right?
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we know they've done really well, home depot and visa. they've done fairly well since the last time we hit the record high levels in the dow jones industrial average. but take a look at these ones here. the ones that we haven't focused as much on, we know that apple one is of the worst performers in the overall market since that point here. and at one point we're talking about them jug wgling with alphabet. also goldman sachs and american express on the financial payment systems side of things, they're down 20% themselves. so these three dow stocks have been the ones that have been drags on the overall index as we've been trying to push back towards those record levels. but just to put all of this in per inspective, remember, a year ago versus today, we just wanted to put a little context to what happened now versus then. now today, oil prices for west texas intermediate, $47 and change. $10 cheaper than they were a year ago at this time. gasoline prices, $2.22 a gallon. today, back then closer to
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$2.75. gold, 1277 versus 1207. haven't seen a lot of movement. gold is strong so far this year. the dollar-yen. today, 108.wi$108.88. back then, 121. a huge move in dollar versus yen. and then the ten year treasury yield, 1.75% today. back then, we were pushing 2.25%. so a lot changed, yes. we haven't gone that much on the stock market. take a look at those numbers and you've seen parts of the market on the macro side of things that have gone a lot since then. back to you. >> all right. good run down, dom. thank you so much. dom just showed us what looks like a double bottom in the dow. what about the s&p 500? if you look at a one year chart, it looks very similar wlachlt it is going to take to get back to record highs when it comes to the major averages? let's bring in quincey crosby and ernie sacilia is from brynn-march trust. quincey, what's it going to take to breakthrough that? we keep hitting that ceiling
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over last year. we finally going to be able to do it? what would make averages move higher here? >> well, i think first of all, look, we're at a rich valuation. you don't have the growth numbers that you need to be absolutely certain that we're not going back into a slump. i think that is one of the most important things for the market right now because you still have federal reserve numbers out there despite janet yellen's comments in new york just a couple weeks ago saying that we're going to get two rate hikes this year that the market needs to adjust. so right now, you know, you also obviously, you need buyers. we haven't seen one of the biggest buyers coming into the market. they're saving cash. and that's corporate america with their buybacks. you're seeing money pulled out by retail investors. and probably selling by hedge funds who have been told we're not that interested in you anymore. so the market really now is in a tight trading range. we that. i think we need to be absolutely
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certain that data begins to show absolutely that the consumer is okay, that the underpinning for the market is just broad ening out. i think that would very much help the market. >> so a bit of a wait and see game right now, she shthinks. what's your opinion? >> basically, there are absent any external influences on the market, really two possibilities or criteria that will drive prices higher. one, of course, is a pe expansion or reflags, if you will, and the multiple. we don't see that as being probable right now. we think it's -- investors are reluctant to push valuations beyond where we are. we think the market is fairly valued at this point based on current and prospective earnings. the second issue, particularly at this late stage in the cycle, is earnings growth. and the only way to see earnings growth is to get productivity growth. we think it will be difficult to see productivity growth. we think wages to some extent could push that. but over the last -- since
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really since 2008 and 2009 when there's been substantial liquidity coming to the market, corporate america as has used that cash to buy back stock, make acquisitions or for that matter borrow. so in any i vent, we think it has to be productivity driven to drive earnings beyond current levels. we think it's still low. >> dom went through the data points, interest rates in the ten year are lower by pretty significant amount compared to a year ago n theory, that should gb for stock prices. we haven't actually budged all that much. maybe because the lower yields mean you're actually more concerned about the economy. ernie, explain something to me. you do like -- when we showed everybody what you like, you like a lot of the medical tech companies in particular. why those right now, especially whether they seem to be in the cross hairs of the election cycle? >> yefrment we like the health care area or sector in general. asian population, et cetera. however, the reason we like the
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medical technology portion, if you will, of health care is we do think no matter who gets elected, we do think that there will be continued focus on large pharmaceutical pricing or drug pricing. we have elected to shape our portfolio a little bit more towards some of the medical technology names. those names that are useful, if you will, in developing diagnostic treatments, et cetera, where the reimbursements have been good. stocks like striker where the reimbursements have been strong. the stocks have done well, however, michelle. we would like to see a little pullback before adding to our position. >> got it. avoiding the whole controversy about drug pricing in particular. quincey, i see that you like health care. is that a sector you think can perform regardless of your wait and see attitude towards the overall market? >> no. we want best for every sector as the focus of the portfolio. strong being strong dividends, good cash flow. but i want to tell you, if that
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ten year yield were to go down more, regardless of the reason, maybe growth, maybe money coming into the u.s., you're going to see utilities. you're going to see tel communications, reits, they're going to get a bid. and so our portfolio is very much a barbell strategy. again, the core is the strongest names in every sector that will give you the dividends and give you the cash flow so can you wait it out during this difficult period. >> clarify. you're in the utilities and stocks now on the possibility or chase them -- explain that. >> well, in the barbell strategy, part of your barbell for us for the ten year yield going down and treasuries doing well, that's a smaller part of the portfolio. the core are the best boring, best a breed companies in every sector. >> got it. lady and gentleman, thank you so much. quincey crosby and ernie sacillia with brynn-mar trust. go to our website right now.
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you can see what ernie is avoiding right now. so april sl down almost 30% in a year. next up, an analyst who is still a bear on the stock despite that move. see how low he thinks it will go. plus, the big names trading in and out of apple whether "power lunch" comes right back.
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there were big hedge funneled moves in and out of apple last hour. berkshire hathaway took a big huge new stake in apple. a source tells cnbc it is now completely out of apple. others have dissolved stakes in apple. as apple stock continues to climb today, there's another name on wall street that sees down side ahead. they have been bearish ever since. let's bring in eric ross, chief
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investment strategist. are you, my friend, ready for the onslaught of fan boy anger because you dare to be bearish on apple with your $82 price target? why no negative? >> it's a great company. you know, it's going to eventually grow out of it. now we're at a point where we have a product cycle issue. we have the channel that is very confused. we have issues in china. it's going to probably go down. you have technical issues pushing it down as well. >> yeah. and it's not just going down. i mean you got -- the $82 target, what is that, i don't know, 15%, 17% below where the stock is right now. >> it's struggling to day, of course. >> you get the buffet bounce. that is not changing your thesis. >> not at all. buffet bought it last quarter. it has nothing to do with what is going on this quarter. when did he buy it in the quarterer? he might actually be down. >> it's like 92-106 is the range. again, he's a long term holder. that's not what we're talking
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about here. we think the stock will go down more near and medium term. and longer term, you know, the technology there is good. the brand there is good. >> we have gone through the fundamental stuff, the china stuff, iphone stuff. you got a chart which is spectacular for television and terrible for radio. so for listeners on the radio, imagine this chart with a the love stuff going on. >> go to the website. >> let's bring it up. what in this are you seeing that would suggest such down side for april sfll. >> we do a statistical analysis wrf pricing has gone. >> it looks like a bag of fruit stripe gum. you have a the love colors. there. >> the blue is where the stock has been and then goeg forward that yellow is the price target projection and the red is the down side risk with confidence intervals. the green is the upside intervals. >> so there is a possibility or a probability that you could be wrong. >> there is. >> it could move higher. >> absolutely. >> what is the percentage if you can of confidence that the
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negative, the down side target is more viable than a move higher? >> right now, the down side target is right at the 50% mark. so right now the up side risk is rising even though the target is going down. so we have a near term potential that is going to bounce off of the levels because people are excited. actually, we're seeing that. but just as we saw earlier whether we had the same sort of type of chart was $110, we think that pull is going to be pulling down towards $82. frankly, our systems actually telling us it's going to go lower than that. >> lower than 8 2 z$82. it may be stretched too far at that point and you might start loading n you may see fundamentals as we get into the summer. >> so there is the chart rational wlachlt is the one biggest funneled. al -- there's a lot of different things people with point to and they v what is the one biggest fundamental worry you have over april snl. >> my biggest worry actually is china. it's not the iphone 7 dislocation in the channel. it's china. we think china is all of a
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sudden turned off i books and i movie. they lost their court case recently on the iphone leather goods manufacturer. we know that they've been asking apple for their code, their source code. it's been a bad couple of weeks. >> listen, you know, michelle and melissa and i were chatting before the show began. and apple invested a billion dollars into a car sharing company in china. one wonders perhaps if this was just a move to make nice with the chinese authorities. >> last time this happened in 2014, apple brought all of the chinese customer on shore to china telecom. so now it's sitting right there in a repository. >> all right. eric ross, get ready for the onslaught, man. you talk about apple negatively, they want to murder you. thanks again. still ahead, we were negative earlier. we returned around. we're going to give you a check on a few stocks hitting all time or new highs. the glass half full view whether "power lunch" returns.
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venezuelan government is going to seize and run idle
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factories nortd to try to deal with massive shortages hitting the country. 9 factories are idle due to price controls. the price controls make production of any kind of production in fact a losing business, of course, he's also extended economic emergency powers for another 60 days giving him the power of the rule by decree. they triggered another round of protest this is weekend and there's going to be another one on thursday m supporting the opposition and asking for his removal. and then just in the last hour, new headlines crossing and very important viewers of the network quoting the top economic official saying the state controlled oil company is going to honor all debt commitments this year. they also acknowledged the need for debt restructure. next big payment, two billion is due next october. venezuela's yield, 24%. south america's largest economy, brazil, the new president moving to implement changes.
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he reduced the number of cabinet members, getting rid of a number of ministers including the ministers of culture, women, racial equality. he also restructured the country's anti-corruption agency replacing with a new task force under a new leader. skeptics wonder if this is an attempt to end an investigation. he promised in an interview over the weekend he with not interfere with that investigation which is believed to have been sfared two-thirds of the parliament. it's that big, yes. >> it's one of few places to get yields. and they have said over and over and over again we will pay. we will pay. we will pay. whenever you buy debt, you have to decide, do they have the willing no, sir pay? do they have the ability to pay? they always had the willingness in ven ez wail yachlt the question is do they have the ability with oil price sflz. >> i hope none of my friend are
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watching. they have fwrendz that owed me money for 20 years. i'm going to pay you back but maybe they can't. i wonder how much that is this. we want to. but can we? that is a very different issue. and by the way, in what currency also would they be using? >> the they're dollar denominated. so they have to. >> at least there is a measure of protection. >> but whether you watch all the shortages on the ground, people are starving. there is no medicine, et cetera. why do they keep paying the bonds instead? because if the oil company doesn't function, then they have less money. >> so it's the really -- >> we talk about this a few months ago. the thing about brazil, brazil is interesting because they might provide in the short term, who knows, it could claps and wipe everybody out, a really interesting investment thesis which is like roth child said last century or two centuries ago. you have to buy when there is flood in the streets. he meant that. brazil, severing going wrong.
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commodities collapse. there was no reason to invest in brazil. >> but that's had a trade, is that over? >> the brazil etf is up 40% in 90 days. you have to loovenlgt it is always darkest just before -- >> right. i wonder if the imimpeachment has happened. is that trade over for a while? >> sounds like a segment for another day. >> it z. >> biotech investors having a good day. the biotech etf, look at. this tracking the best day in a week helped by that $4.5 billion pfizer deal. there are a handful of names hitting 52-week highs. nvidia continuing to hit new all time highs. lchl brands trading at the lowest self since october of 2014. it's the stadium that pramss to revolutionize the guest experience. the mercedes benz stadium in atlanta may be costing $1 billion to build but fans are going to save big time. we'll tell you how.
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we're going to tell you this, going to a sporting event these days can be quite expensive for a family not only do you have the game tickets but then you have parking. then you throw-in the $15 bad
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nachos and the $12 beers, pretty much, you have $100 plus per person to go to a game. but the new mercedes benz stadium in atlanta opening next year and it costed 1dz.abilli $ build, they're lowering the prices for food and drink. are they insane? have they been drinking? let's go mr. blank, one of the founders of home depot, a generally rich guy and owner of the falcons. okay. so i want to be clear, make sure we have this right. you're going to cut the price of beer and food? >> food in general. fan friendly prices is what we're calling it. essentially, we're going to reinvent the business model which we think is slightly broken. and when you build a brand new stadium and you have the opportunity to start from scratch and say what are we going to do with fans? one of the biggest impact on the fan experience is the concession experience. and it's expensive. it's generally poor quality. and it's delivered in a poor
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way. we're going to try to reimagine. that. >> okay. you used to run mercedes benz north america. mr. blank is a big time capitalist. i'm sure prices are high because somebody is making money. is this going to hurt you? >> the first part of the problem is that you sell the concession rights. that concession needs to make money. so we're not doing that. we're saying the concession, we're bringing them in as a service provider. we're going to pay them to proit service, but they're not going to start off in the hole millions of dollars. they try to make up on the price of the food and -- >> is that why it's so expensive? the only way they do that is through $10 hotdogs? >> that is a contributing factor. we take that off the equation and swha can we do to delight customer as and a $2 hot dog and being able to feed a familiar live four under $30. >> i had a four day weekend of grouchy and i'm cynic will.
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the initial reaction was okay, fine, they're going to cut price of food and drink. they must be getting it back on the tickets. >> no. because we have to price our tickets by the marketplace. it's a competitive marketplace. >> you're the only football team in atlanta. >> we've got phillips arena. so we have basketball. we've got baseball and essentially you've got -- >> have you seen the braves? this isn't a bait and switch let's delight them on one hand and reach into the pockets on the other. sweet sales are going well. so tickets are fine. so you're not jamming one in and sticking it to them on the other end. you're not going to comment on mercedes benz, the company in north america you used to run. a lot of people think that car sales peaked out. the market has done this. what do you i >> it's at a peak. >> it is at a peak? >> yes. it's at a peak. 17.5 million is a healthy peak. how are the automakers going to
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respond? they're driving up the center. it's a propped up peak. increasing fleet sales. it's all about market share. so how long will it stay at this peak and how much is it going to cost the manufacturers to hold on to it? >> the philadelphia 76ers of all teams, by the way, apparently are put ag logo or a sponsorship logo in the upper right hand. we're showing that sixers will have a patch with the name of a sponsor on it. we see it in other sports, socker in particular. how long will it be before it will be the home depot falcons or we will see real companies names on uniforms in nfl or other major sports? >> your guess is as good as mine. that is an nfl league issue. they're going to look at it. the 76ers is the first test case and it's a limited sort of trial run. i think this is probably going to go well. mls we have atlanta united in atlanta. there will be a jersey deal for that.
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so it's pretty commonplace on a global basis. it's just a question of whether will the nfl be comfortable with something like. that. >> i'm sure it's coming. very exciting stuff. steve cannon, good luck with the falcons. >> thank you. >> thank you, steve. let's get breaking news on uber with kate rogers. >> that's right. we believe a plaintiff in a class action suit against uber is speaking out against the settlement terms of the deal. last month uber proposed to pay $100 million in a class action suit raised by several plaintiffs saying this they should be considered employees and not independent contractors as they are today. douglas o'connor is the lead named plaintiff speaking out in a declaration just filed saying that he is speaking out on behalf of himself and the hundreds of thousands of other uber drivers in the state of california and throughout the country who are at first given hope and a voice by the lawsuit bearing my name but now feel utterly betrayed and sold out by an undressed settlement results that only benefits uber.
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this has the potential to derail this settlement. they have seen to get off easy, only paying $100 million in the proposed settlement. >> that's the key point. only money but the actual structure of the company doesn't change. that is pretty significant. that's why he's angry? >> yeah, absolutely. there are articles out there saying uber in this proposed settle. had to pay $100 million to the people who sued them wanting to become employees and not independent contractors. they were estimates over $700 million that they could have potentially had to pay if they had to restructure the company and consider these people employees and not independent contractors. so this is definitely a wrinkle here and something we'll continue to follow. >> thank you, kate. >> thank you. >> stocks are high they are hour by 1%. pretty good move. the s&p 500 and the nasdaq more than erasing last week's entire loss. it has been a year since the s&p 500 hit the all time high of 2134. markets made little progress since then. we have gone nowhere.
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however, there have been wild swings in between. do you remember those gut wrenching moment that's you see there? we will market corrections. the worst start to a year ever and earnings recession, the fed's first-rate hike in a decade. all right. so we're back to where we started wlachlt it is going to take for the s&p 500 to reach new highs? brian belski joins us from bmo capital markets. brian, you were on the set a couple time at those gut wrenching moments when things look sod bad. you said the market is going to come back and it did. congratulations. >> thank you. >> what you have done for me lately? i think ti end of the day fundamentals reign supreme. you mentioned issues that we have fundamentally. we're very comfortable with our 2100 target for year end at bimo. we think the summer could be bumpy. i think people try to be too cute in terms of calling corrections. at the end of the day though, we think 2015 and 2016 are these
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transition years we like to call them, part of a broader bull market that we continue to believe is in place and we've been on record by saying we think u.s. stocks are in 15 to 20-year secular bull market. prices don't go up -- >> you haven't moved from that? >> number remember, things don't go up forever. brian likes to say when there is blood in the streets of negativity, that's when you bichlt everybody is more comfortable with the rally again. i think there are thing onz a short term basis to not be so comfortable about. longer term, we believe the u.s. stocks will lead. >> we'll delve into that. what do you make of the market here when we look at bumping up against this top now that we hit a couple times? >> i think the top should be ignored. it doesn't matter if we're 3% at the top or at the top. you have to look at where valuations to day relative to the opportunity and risk and i would say relative to fixed income, equity is still really cheap. if you look at it on a multiple basis, we're -- we might be -- looks like we're in the seventh or eighth inning of a game where
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the multiples are high. you need start to see earnings growth. we have a backdrop where you could see that. >> i should mention that sessions, where would do you that? where do you think the valuations got misplaced and missed opportunity right now? >> well, i think you want to see where there is controversy and uncertainty. i think you have it right now in pharma and biotech f anything, take advantage of the pricing scare that's going on out there. and look for the babies that were thrown out with the bath water. i think you have opportunities there. within energy, definitely look at some of mid cap names are trading at a huge discount relative to the big integrated oil companies. so there's definitely opportunities within sectors in the market. >> okay. brian, you also like financials. i get that as a value play. they haven't actually moved very much relative to the rest of the market. but consumer staples, you also like which have moved a lot. why would i chase those? >> we think it's most hated sector in wall street because a lot of the smart guys and the fast money completely missed it
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right from the lows. you think about consumer staples is this. part of our core tent. with respect to strategies that we think we're heading back into an active investing funneled. al environment like we saw in the mid 9 0e's. what worked really well is consumer staples. the bottom line is always consumer staples. but they're the most steady and consistent earn oern the s&p 500. they have global reach and domestic reach and they throw out dividends and have good earnings. we think people have missed that entire trade. therefore, that's why you're seeing all this negativity on the street with respect to staples. >> you made the case on the bioteches and health care. make the indication for financials. when you look at the ten-year yield, i can't get excited about this yield curve. >> well, i think that's what kept people on the sidelines. especially on the insurance side. you look at these companies, if you have a ten year at 3 1/2, the companies rocket up. and that is the driver. so you have to -- do you believe the new normal is forever? are we in continued slow low
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economic growth? and if that's the case, you know, financials will probably lag. but when that normalizes, you'll see financials correct and they'll correct pretty quickly. >> i'm looking at that intraday chart. s&p 500 making a steady climb here. same with the dow. maybe it's you guys. >> it s. >> ryan and tom, thanks so much. tom is with ubs. ryan joining us as well. he's with bimo capital markets. >> okay. melissa? >> new filing shows berkshire hathaway's top two portfolio managers took a new stake in apple and boosted shares of ibm and lowered the walmart stake and dissolved the at&t stake completely. two guests made the invest. s, a signal of a changing of the guard at berkshire hathaway. welcome, guys to "power lunch." i'm going to start off with you. you know, berkshire hathaway famously does not invest in tech
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stocks. it's a last tech investment was ibm. increased the stake once again. some may say this investment, if they were a hedge fund, some would say it's a strategy drift wlachlt is your take on this new investment? >> i think this is an xameexampf how there say transition going on at berkshire hathaway. for years they've been run by buffet. they're getting into the mid to late 80s. and we've known for some time now that there's going to be a transition taking place. so i think what's going on, especially with the apple investment today is that wes willer and combs are taking over the investmen tlt decision make making process. ibm was the first company that berkshire hathaway invested n you have to take a look at what tech companies they're not investing in. they bought ibm and apple but they did not buy amazon and tesla. that tells me they're still very value driven. >> value driven but simply put,
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robert, the investment in ibm hasn't worked s there a concern on your part that berkshire hathaway that two new managers are going after the value stocks that may not help the portfolio at the end of the day? >> no, i'm not concerned at all. it is not uncommon for the successor backup of warren buffett used to be lou simpson at geico who manage $2 billion to invest in different stocks than his boss. ted and todd are doing the same. they bought dish tv which got bought out by at&t which has since been sold from the portfolio. and apple is a value play trading at a similar pe as ibm. and it is not uncommon for the successors to invest in a different portfolio, a concentrated portfolio than their boss. >> now you actually, robert, you bought ibm along with warren buffett. are you going to buy apple along with berkshire hathaway? >> no, i looked at it.
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but i -- >> why not? why not? it has the berkshire hathaway stamp of approval. why not? >> i've looked at it. and i will consider it. but i don't -- i haven't done enough research on it. ted and todd spend about -- or ted spends 500 hours before he makes an investment. and i've spent less than an hour looking at apple. >> do you think that apple will be a good investment? investors are looking at this and obviously seeing the jump in the stock even though so many hedge fund managers have dissolved their stakes in apple in the very same quarter. they're taking warren buffett's side of things. that didn't pan out though on the ibm investment. what is your take on what this means for investors in apple? >> first of all, it hasn't panned out yet for ibm. don't forget that berkshire -- nothing changed in terms of the time horizon. so i'm not surprised to see a pop in the price of apple today simply because of the buffet or
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berkshire effect. but i think they're buying apple for a very long term play. now i don't have apple in any of the portfolios i managed but i have a lot of ibm in my portfolios. again, it's a long term investment. >> thank you for joinging us. we appreciate it. stocks are hitting session highs that hour. let's look at the dow 30 stocks right now. we were just talking about apple. it is in fact the biggest gainer on the dow jones industrial average. still it is practically at session highs right now if not at session highs. home depot ahead of earnings is also making some nice gains today on tail end of things, american express, travelers as well as disney. those are the biggest drags on the dow. much more on this market rally when "power lunch" comes back. what are you doing right now?
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making a cake! ayla reminds me of like a master chef and emiana reminds me of like a monster chef. uh oh. i don't see cake, i just see mess. it's like awful. it feels like i am not actually cleaning it up what's that make mommy do? (doorbell) what's that? swiffer wetjet. so much stuff coming up. this is amazing woah. wow. now i feel more like making a mess is part of growing up. stop cleaning. start swiffering.
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man 1: i came as fast as i man 2: this isn't public yet. man 1: what isn't? man 2: we've been attacked. man 1: the network? man 2: shhhh. man 1: when did this happen? man 2: over the last six months. man 1: how did we miss it? man 2: we caught it, just not in time. man 1: who? how? man 2: not sure, probably off-shore, foreign, pros. man 1: what did they get? man 2: what didn't they get. man 1: i need to call mike... man 2: don't use your phone. it's not just security, it's defense. bae systems.
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more than eight tons of cocaine, $240 worth, that is street value, they were seized in clom yeefrt weekend. the country says it is the biggest seizure of drugs in history. look at your screen. holy smokes. the drugs are in an underground hole on a banana plantation. authorities say they were bound for central america and eventually the united states. three people were arrested in the operation. i mean if it's only three people, that's an incredible
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production ti productivity level, don't you think? >> it goes to what we talked about, the jobless future. >> doing more with less. >> whether does season two of narco on netflix come out? >> the best slow on television. >> meantime, stocks are hitting session highs right now. a good start to the week. the dow up is, let's call it 200 points. 199. you get the point. it's monday as well. that is higher and also the nasdaq is on the move. stocks on the of move today. if you own stocks of anacor pharmaceuticals before today. pat yourself on the back. pfizer is buying them for $5.2 billion. does the music mean we need to hurry up? they're soaring, up 55% of the day. truck and train maker tarex selling a division to a finnish company for $2.2 billion. this deal canceled what was an existing merger agreement between the two. the stock is up 10%.
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and the biotech rec of the day, adu are ro. they failed to meet the end goals in a trial. that stock costing investors about 18%. melissa? >> travelers facing increasingly long security lines at airports, passengers missing flights and having to turn up three hours early for domestic flights. this is a video from chicago o'hare. look at those crowds. a new report card is out from the flyers. phil lebeau is in chicago with the details. >> this report card is for the month of march. remember, a little bit of a lag effect when the d. to reports the numbers and it showed what you would expect in a month where there weren't a lot of storms to cause major delays. overall on time rate of 81.a%. here are the top three. we always see these guys at the top of the list, hawaiian, dealt yashgs alaska. the bottom three, the three worst airlines in terms of on time performance, remember, compare this with the industry average of 81.a%, spirit, virgin america, and jetblue. quickly, we want to show you shares of delta.
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they're moving higher today at one point up more than 3%. they're still up 3%. the company announced they're going to be trimming its capacity growth later this year. we always talk about passenger revenue per available seat mile. well, they're bringing down the available seat miles at least the growth that's expected there later this year. that should help pricing. that's why the stock is getting a boost. back to you. >> you know, phil, listen. i'll ask you to editorialize as a passenger out of o'hare. we all travel a lot out of newark and laguardia. listen, i'm sorry to say this. this is a national disgrace. i mean, i don't know how else to say it. i know it's a little strong. >> brian, you have two problems here. >> why is it so bad? >> brian, think about this. you have at all of your older airports limited entry points. and because you have limited entry points and you're having more flights added, you've got more people going through these limits areas.
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i know everybody says well the tsa should move people through quicker. something has to give. either you move people through the line quicker or you add more entry points. it's not an easy solution because you have all of these airport that's are land locked like o'hare and laguardia. >> i can't tell you how often i go throughout airport and nothing is fully staffed. i mean, there are many, many things they can do. >> you're right that adding more staffing would help. i've been at airports fully staffed, fully staffed and there are long lines. there is what you have with an infrastructure that needs to be updated. that's the only way to put it out there. now that doesn't mean that the tsa doesn't need to improve performance. nobody is giving them a pass here. but part of the issue here is that you have these limited entry points. they're pretty small. i mean, you have tried to get into the c con course at laguardia? try walking in there. that's a tiny area there. that's the way the airport was built back in the day. there has to be a solution that
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becomes into effect at some point in terms of infrastructure. >> why are there only two major airports serving the chicago market? i know this is a huge long term question. we tried to get a fourth airport in new york. >> we tried a third one. we tried a third one. >> there you go, melissa. why should we invest in infrastructure? let's just drive on dirt roads and go to camels. >> you have government that's have a complete monopoly on airport infrastructure. we deregulated the airlines but barely touched the surface when it comes to deregulationst airports. also, aulg of the money that gets tacked on to our tickets, those taxes, they go to congress. they don't go to the airport. and then congress divvies it up based on politics, not on the amount of people traveling to the afrirport. there is plenty of money. it is poorly spent. >> well -- >> you're right. no argument here. you're 100% right. >> and the taxation and how those taxes are used is ridiculous. >> agreed. i'll say this -- force.
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>> melissa has something she wants to say. >> it's on dealt yachlt thlta. they picked up when they said they're going it decrease capacity and is this the first shot in terms of airlines finally 5:00 nolging they hafin ly acknowledging this? >> yes. you'll see others fall in line. you'll have a few at the bottom that will say no way, i'm in the race for market share. i'm going to go for pricing. so even though this will help in terms of pricing and you'll see probably some of the other legacies match what delta is doing over time, you'll still have the low cost carriers who are going to say you're going to abandon that route or not guest enough seats weeshgs going to step in. that's the problem. >> right. all right, phil, thank you. >> by the way, we got a special edition of "power lunch" we're going to take a look at infrastructure issues here in the united states. >> did we make that up just now? did you just decide that now? >> just now. >> no.
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no. >> excellent. >> great. i'm going to take some xanax so i can just stay calm for that segment i get all worked up. >> you drive a lochlt you fly a lot. >> i love how you threw out prasms. that was hot. >> i thought it was like spasms or something. >> all the airline acronyms. dom chu? >> all i can say, guys, we know it's all about the money. you make great decisions. energy stocks are leading the way higher. oil prices moving higher. the sector up is over 1.5% today. you have the williams companies and also marathon oil, apache all up by 4% or more. energy one to watch here. keep it right here. "power lunch" is back in two minutes. ing] [engine revving] [phone buzzing] ♪ some things are simply impossible to ignore.
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amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing apple shares are rallying around the rest of the overall mark. they're up by 4%. tracking for the best day since march 1st. the stock having the most positive impact on the dow jones industrial average average. also the nasdaq 100 as well. apple, remember, still down more than 25% since the july 20th 52-week high. still up by 10% so far in a year to date earnings basis.
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just keeping an eye on apple shares, one of the big movers in the market. >> thank you. time now for "street talk," our dive into the key wall street calls every single day. let's go. stock number one. southeastern base bank bb & t. sun trust, another southeastern bank, upgrading them to a buy. they got a new $40 target. it follows a management visit with the company. bb & t is realizing efficiencies from deals they made over the past few years with intense focus on expense control. that new $40 target is up from $36 and is 20% upside. the stock a dog, me list yashgs down 12% this year. >> every time a fed rate hike gets less and less likely, the stocks go down. the next stock we're looking at, sales force. a lot of analysts are previewing sales force quarter. they're expecting them to beat on the first quarter and guide second quarter in line. notes of resellers are seeing early interest in the vertical
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spef specific offerings. they were probably buying ahead of a price increase. that doesn't go into effect until the current quarter a nice pop here. >> everybody is wondering when they're going to get bought. you wonder if there is anybody big enough to buy them anymore. all right. the third idea today, paloalto networks. buy this stock ahead of thursday's earnings. their field work suggests another record quarter. big sales are strong especially in high end intranet appliances. the stock's poor sent thment year, it is down 25%. the analyst says this stock is his best idea. reit rates a buy and $210 target which, my friend, is a 60% upside. >> it is a favorite in the cybersecurity sector. >> been a favorite all the way down. >> it has had tough time. our next stock here, bank of america. cutting bank of america to a market perform from outperform. saying the bank has plucked much of the low anging fruit to get
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returns. they expect changes in the overhang of the crisis which are preventing it from achieving profitability. wait for better opportunity to buy shares which are up 26% since february. eventually higher rates will help. we're talking about rates before. but bank of america needs to have a plan beyond waiting for rates to rise. >> basically been a $13 stock for a few years an down 75% from the high ten years ago. all right. your fifth stock, always this sort of. >> narrator: radar name of the day. it's a pretty well known name. jones langlasalle. they've been whacked this year. kbw thinks this stock is a good value. they start coverage of jones with an outforeman and $131 target. they say that jones lang and two others benefit from the on going institutionalization of commercial real estate. that $131 target is about 20% upside. >> there you go.
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with that, we wrap up another day of "street talk." goldman sachs out with positive comments on oil today. we're going to get that and more on the supply outage in nigeria that is helping send oil to a six month high. but where, melissa, will oil close? >> good question. >> we'll find out the answer. choose your own oil adventure in three minutes.
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i'm sharon epperson. here is your cnbc news update at this hour. john kerry says the u.s. will back libya in the global fight against isis and other terror groups. said this at a news conference after meeting other world leaders in vienna. >> we're not talking about troops and boots and that kind of intervention. we continue right now to assess the activity that is taking place and we're working with our partners to determine the best way forward to help libya to be able to deal with that threat. >> low cost airline ryan air will cut the amount it invests in britain if the country votes to leave the european union in the next month's referendum. the irish airline flies 40
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million of the 100 million plus passengers to and from the uk. the ceo making that announcement. democratic presidential candidate bernie sanders is rallying supporters in puerto rico. in the first of three campaign stops, he held a town hall in san juan for about 250 people. he stressed that the island's $7 o billion in debt must be restructured by the federal reserve. >> minnesota senator carl anthony towns was unanimously named the nba rookie of the year. it's only the fifth time that's happened in league history. towns was drafted first overall in last summer's nba draft. that's the cnbc news update at this hour. back to you. melissa? >> thank you, sharon. all right, sharon, thank you. the oil market closing for the day. we are at the nymex with the closing trade. >> i don't have the fibl print yet. it looks like it will be $47.70 something. a dollar and a half bounce in
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crude oil prices. six month highs. the goldman sachs note having something to do with that. they see a rebalance in the second half of the year. we could be around $50. remember, goldman sachs also said earlier this year that $20 a barrel was a possible scenario. we got down to the $26 level. so not necessarily so wrong of a call there. still, there are skeptics on the street that think it may toob soon to call for that rebalance at this point. supply disruptions and nigeria, they could work themselves out and come back online and change the game. so something you have to watch when it comes to oil prices. but getting close to $50. back to you. >> good starting point for discussion there. thank you. the goldman sachs and nigerian issue she is talking about, what is it going to do to oil stocks? exxon is up 12% since february 11th when oil hit that 13-year loechlt chevron is up 23% since then. joining us is mike kelly, managing director and senior analyst at seaport global securities. i want to ask you about goldman sachs and whether or not you actually take position and thinking about what happens not
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just to the stocks but oil itself. goldman sachs says that the market was saturated and now actually it's moved into deficit far more quickly than they thought. and, therefore, they think the chance of going back to 20, not likely. and the next move is 50? do you agree? >> i do. i think that they're spot on on this call. and really what you saw last week, the iea comes out and says first half of the year here, we're oversaturated. it's 1.3 million a day oversupply. second store yishgs you get to .2 million barrels a day of oversupply. you have a supply disruption like you do in nigeria. that clears all that out in one fell swoop. so right through pretty much at equilibriu equilibrium. >> it's a testament how fast they can swivenlgt here's tng. we're already at $48. and some of the stocks have rallied so much. i feel like almost they were
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telling you that this was coming. should i be getting in here or have i missed it? >> well, yeah. i think you can't get greedy at this point. we've put out a strategy piece at the beginning of the year and we said we think you get back to this 50, $55 level. at that point it gets tricky. because at $55, u.s. producers come back with a vefrpg ens. we start growing here. we think upward of a barrels in the u.s. so at that point it gets a lot harder. you're right, stocks rallied. they're up 60%. that's over the last three months. so i still think the wind is at your back here in the short term. you get to that 55, pushing $60 level, you have to take chips off the table. >> all right. we're showing people that you like within e & p, continental resources, energen and cimarex energy. thank you for joining us. >> all right. dominick chu with a market flash. >> all right. what we got is semiconductor
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stocks flying high. look at one etf, the ticker smh also moving higher along with the rally. the smh is now up near best levels today. up by 2%. among the names leading that etf higher are holdings like nvidia and sky works and broadcom up by 2% or more on the day so far. and now to more news here, we have kate kelly with a news alert. kate? >> thank you so much. more 13 rolling in. that is tiger global, they're known among other things for technology investments. a couple interesting things. we continue to see the lack of favor for apple shares n this case, the position was decreased to 5.66 million shares from 10.6 million. that was during the first quarter, of course. also, amazon, a decrease to 1.04 million shares for tiger global from 3.19 million previously.
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now less going on on the new and increasing position side for tiger global than on the dissolve or decrease side. one notable new position close to a million new shares of zillow, a stock that is rallying today. interesting moves for chase coleman who had a tough first quarter. don't know what motivated him. although if performance was bad, perhaps he's trying to get out of certain positions and raise some more cash. >> thank you very much, kate. it is time now for "trading nation." let's talk about telecom. berkshire hathaway, warren buffett's company, shedding the stakes in at&t in the first quarter. should you think in investing in these stocks or do like warren did and sell it if you own it? rich ross, stacy gilbert join us. stacy, i'll begin with you. your view at us is we hannah? >> looking at where investors are positioning, we've not seen
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anything that would suggest they soured on these. we're not really seeing a love fest that we had once seen for at least a good part of this year. it does set up for an interesting situation for investors who are long these stocks, particularly at&t and verizon. to consider overriding meaning selling an upside call, higher strike than where the stock is currently trading collecting that premium to again enhance the yield. that is the theme this year. it's a side ways market. investors reaching for yield. utilities, telecom, these are the stocks that people are interested n in terms of this lack of a love fest as i highlighted, too, flow in at&t and verizon, particularly in the options, has become more balanced. it used to be very bullish f we look to the etfs, huge inflow this is year. 72% increase. top components have verizon and at&t. it has not shifted to outflows. it slowed. so i think the love fest is dying here. i think overriding is a great opportunity. >> all right.
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the love fest is dying. rich ross, when you look at at&t or others in this space, when you look at the charts, do you agree the love fest is dying? should we sell the stock or maybe buy more? >> you know, i actually like both plaintiff buffet's moves today. buying apple, selling telephone and i'm sure he was pining for my approval on both counts. as it pertains to telephone, tale of two charts. first in the short term, let's bring up that chart, brian. what you can see is a fairly constructive stock chart. a bullish base breakout from a it 2.5 year basis support. can you see the double top that formed around the 40 level. now it's not a deal breaker in the short term. when you zoom out, here's where it really gets interesting, brian. look at this weekly chart. you have the exhaustive weekly reversals at the tale iend of a surge. if we go to may 2013 that, is the tantrum, that's the last peak in the stock. you can see there yields on the ten year soared from 170 to 3%. and telephone got crushed.
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where are those yields today, brian? right around that same 1.70 level. so that symmetry keeps me on the sidelines. it makes me a better seller at the tail end of a strong surge in telephone. woib a seller of telephone and buyer of apple even though it's not on this segment. >> all right. double agreeing with warren buffett. he is trying to say if rich ross agrees i made the right call, thank you very much. do appreciate. that neither likes those at&ts. for more "trading nation," head to our website if you so choose. walmart upgrading the delivery options to take amazon on head first. amazon, by the way, moving in on the grocery stores and walmart and apple seems to be taking on uber. everybody is fighting everyone. let's call it a corporate "game of thrones." we'll tell you how it plays out next on "power lunch."
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who do you work for? your boss? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird.
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the harmony of the seas can carry 6,296 passengers and more than 2300 crew members. the ship is owned by royal caribbean cruises and is due to arrive in southampton on tuesday. this is the world's biggest plane. 275 feet long and it just transported a power generator from the czech republic to a western australian mine yesterday. wow. >> there is a david foster joke in all of this. competition among tech giants is nothing new. the tech landscape is starting to resemble the starks versus the lanisters. is winter coming for amazon as a precious fresh direct and food
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delivery? capital invest in china setting the stage for a possible fight with uber and other major companies challenging other corporate giants. who is going to win this corporate "game of thrones"? let's bring in a senior analyst at moody's and a cbsor to recode and john fort. so we see amazon talking about fresh food delivery at the same time that walmart is talking about two day deliverly. finally. it seems like it's taken them a long time r all business models merging into one here? >> ien into was inevitable for walmart, right? we saw earlier this year that walmart said they were closing hundreds of the stores globally, 150 stores in the u.s. at the time they said it was too focus more on super centers. there was retooling and restrategizing going on there in terms of e-commerce. online sales are growing, amazon accounts for half of those online sales right now in the u.s. so, you know, walmart has to remain competitive. i wouldn't be surprised if you start to see other retailers say
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we have to get on this two day delivery train as well. >> charles, who is going to win? >> that's a tough call. i think it's important to note that we're still over 90% of retail sales done in a brick-and-mortar location. we're talking about a fast growing but still a small sector or subsegment of retail. we feel they need to be representative online but they don't need to invest online and build online presence at the expense of the brick-and-mortar locations. so it's tough to sachlt i don't think anyone will beat amazon online out of the brick-and-mortar guys. but then amazon really isn't competing with the brick & moored ar guys. you have this dichotomy going on that i think we need to be conscious of. >> do you think they're all going to trip over each other and as consumers, we should love sflit. >> there are so many different areas where this is happening. there are two key factors than vestors and tech walk keep in minder. number one is credit cards on file from loyal customers. amazon's got it through prime.
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apple got it through the app store. google has it through google play. go on down the line. uber now, everybody getting in uber. once you have that credit card on file and people are using it constantly, you get the opportunity to sell them other stuff. then you get the different players trying to optimize their means of delivery for apple, it's both the app store and premium retail locations. walmart still has the stores in mainstream areas. they have to figure out how to leverage that. is that something the others don't have? you expect to see them battle on the point of strength trying to get a bigger share of wallet from that community of credit card users. >> am i the only one remember pea pod? i remember delivery of groceries is expensive. it is difficult. some are succeeding. most have failed. i also just wonder if we're getting to peak delivery. the ups guy in my neighborhood is the hardest working dude in the county. >> that's a really good point. my ups guy is the same way.
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i ask him when i'm home, how many package dz you deliver? he is delivering more and more packages. on the food side, it's tough to scale fresh food delivery. you know sh, it's being done heavily in the uk. i think it works in some urban markets. >> they like things warm. >> yeah. >> and also in, you know, when you have a high end demographic population in that market. but it's a tough market. and food is hard. you know, if you're not there and you don't have a doorman, there is a lot of things that can go wrong. >> but it's not impossible. right now we're seeing things done in a sustainable way that they just kobt do in the first dot-com boom. remember that was going to deliver stuff. it's working now. amazon is actually doing it because they built up the infrastructure to do it. now that's what they're trying to do with food. and it could work if they move it. >> lauren, walmart's move into going into faster delivery, i mean one thing is that amazon has a less price conscious
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customer and they'll take the speed of delivery rather than the cheaper product. is that a head wind that walmart faces as they try to move into that space? or because they're so big, can they achieve both? >> well, i think they both have exceptional brand recognition and i think it was john that made a great point earlier about once they have consumers, once they have that grasp on consumers, they have the payment information, people are more likely to go with the brand that they trust. at the end of the day, it's going to come down to product. what is interesting about amazon getting into private labelling and, you know, its own consumer goods lines is it's padding the margins and trusting that people are going to say well, i'm going with the amazon brand because i trust amazon. if the product isn't very good, then we're talking about a whole different problem for amazon. >> right. they have to manage. that lady and gentleman, thank you so much. charldz, lauren, and john. >> thank you very much. >> all right. so we just talked about amazon's move into fresh food. what does that mean though for thcerye grotores of the world? find out.
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welcome back to "power lunc lunch". the dow up by 205 points. the nasdaq up by about 70.
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and the s&p up by 25 as well. apple shares contributing to that, of course. and then there's shares of home depot down by 2%. another big contributor to the dow gain, this after monthly data from the national association of homebuilders showing homebuilders are feeling pretty positive about the housing market but their level of confidence hasn't moved in about four months. it also comes ahead of its quarterly earnings lease that happens tomorrow morning before the morning bell. the stocks into it, 20% over the course of the last 12 months. back to you. >> thank you, dom chu. as amazon extends its delivery, how do traditional grocery stores compete. let's bring in andy wolf. a great to have you with us. >> thank you.
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>> is amazon the next fierce competitor they should be scared of? >> first of all, don't forget costco, but, yeah. they'rereacting to it. it's really starting to increase. 20% say they're active users in the last few years, so it's hitting a ground swell. they've got to respond to that and the better ones are. kroger and walmart in particular have set up click and collect. you set up the model on your iphone or whatever you use. instead of having it come to your house, you pick it up at the store which turns out to be really convenient. a lot of consultancy work i cisses it's a little more convenient than having it come to your house because you actually control when you get the groceries. it's like a drive-through at the pharmacy. you go to the back of the store, they put it in your trunk and
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you go on your way. on your way home from work, it's really convenient. order it on your way home and pick it up on your way home. >> let's take the example of kroger since you named them best in class. what percentage of revenue is online today versus say a year or two ago? is that piece of the pie growing for them? >> it's fairly minimalist to be blunt. they just got into this. they were a laggard on the omnichannel and they did acquisition of a business called vitacost. it's online vitamins like it sounds. but what we're talking about are fresh groceries and how hard that is it to do. how expensive it is. i would agree with them. it makes sense in urban environments like new york city and that's where you tear going to see a threat to your local
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grocers. some stores in cincinnati where they've launched it where it's already 10%, 15% of sales, maybe $5 million a year. it can be pretty big money once it's spread out over the entire chain and i think it will be in the years to come. >> andy, thank as lot for your thoughts. tim cook makes a billion-dollar investment in a chinese company and then goes to visit the country. mark zuckerberg was there a couple of months ago. what's behind it? will it work? look at those pictures. that's next on "power lunch."
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get an insurance quote and see why 92% of our members plan to stay for life. let's wrap this show with some awesome necessary. an amazing softball game. army. jumping right over the catcher's head landing with her left hand on the home plate to score a run. >> amazing. awesome. >> like a three-foot vertical. i don't know who won that game but it's a cool game. army did win the game. not only an awesome play but may have won the game for army. love it. friday we learned about apple's $1 billion investment. this morning tim cook is there in china tweeting out photos of him along with a woman. there she is. she's ahead of the euner competitor in china, the dominant player in china.
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they have 80% market share. clearly a professional photography were him. part of the charm offensive. if you're going to grow in your apple, you've got to grow in china. there is no choice. and they've faced some headwinds there lately. >> speaking of headwinds. there's mark zuckerberg. remember this one when he was jogging through all the smog? >> smiling. >> china was one of the reasons that carl icahn got out of apple because of china's attitude toward apple. this is part of the charmed offensive. not only did he tweet these, he also tweeted these on his wabo account. he's looking to do that. >> wabo is the twitter of china. >> hard to make money in china. they should just be careful. >> for sure. absolutely. taking a look at markets,
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the s&p's off a high. the dow is higher by more than 200 points. the s&p up by 1.5%. apple and its suppliers all charging ahead here in today's session. >> thanks so much for watching "power lunch." >> yeah. we'll see you at 5:00 p.m. for "fast money." but "closing bell" starts right now. hi, everybody. welcome to the "closing bell." i'm kelly erns with the new york stock exchange. >> and i'm bill griffeth. as you can see, stocks are in rally mode after being lowered for three weeks straight overall. oil prices are fueling this rally after goldman sacks put out that mildly bullish, not wildly but bullish. that in and of itself is interesting, talking about the rise in prices. we're going to talk to leading trader to see where he cease prices for oil heading next.


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