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tv   Power Lunch  CNBC  May 24, 2017 1:00pm-3:01pm EDT

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tax returns on mobile. this platform keeps growing and growing. all-time high in '84. anybody have a quick comment on that? >> it's semiconductor equipment. >> thanks. "power lunch." >> thanks, scott. i'm melissa lee. home prices are rising. home sales are rising overall but will there is one thing completely freaking out the housing market right now. we'll tell you what it is straight ahead. and uber under fire. the ride hailing company underpaying drivers. a shocking and bold claim but one big investment fund. raising questions who has been paid back, many have, but thousands haven't seen a dime almost a decade later despite billions of dollars just sitting there. power lunch right now. >> welcome to "power lunch."
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i'm wilfred frost. the longest winning streak for the dow and s&p since february. the dow up about 0.2% as is the nasdaq, the s&p just behind that. materials and utilities leading the gains while telecomes and financials the worst performers. intuit, mattel and nrg energy better than expected earnings. dupont is leading the dow on news there are changes to the dow/dupont post merger plan. and ge around session lows following the presentation by the ceo jeff immelt, worried about the neglect it tiative im an accounting change. here is what else is happening this hour. five house democrats are asking deutsche bank for information on president trump's alleged russian tries. maxine waters and four others on the house financial services committee want to see any information the german bank may have on dealings the trump
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administration had with it. the nba says it will play the 2019 all-star game in charlotte, north carolina. this comes after the league moved this year's game away to protest. and tensions remain high, the uk raising its it terror level to critical, the highest level. >> we begin with another retail wreck. tiffany's, lowe's and chico's moving lower. >> what do you think retail investors think when they see me? it's always bad news. >> starting to feel bad about this. >> bad news delivered brilliantly. >> it is messy today because of the trends tiffany's and lowe's break. the sales disappointed and fell in every region but europe. lower tourist and domestic shopper spending, that's the key region, and the strong dollar as a negative when it comes to
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tra translating over the foreign sales. tiffany sales up more than 20% this year but the stocks have that with today's downward move. a week after home depot knocked it out of the park, lowe's missing on the major metrics with sales positive but weaker and shy of the knockout number. the main difference is home depot has cornered the professional higher spending consumer. chico's is the biggest disappointment but it's not as surprising the company does have 1,500 stores. white house black market, comps whiffing. comps down 9%. that's the worst since january 2009. so a very difficult environment overall and that's what the ceo pointed to. >> this used to be a big
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company. now it's small. >> some are mall, some are off mall. >> anybody in apparel that's winning? i'll let you reverse your grim reaper comment at the beginning. >> i have news that's moving shares of abercrombie & fitch. american eagle working on a joint bid so we're seeing shares higher by almost 9%. this according to dow jones express and other firms remain in the abercrombie auction. so we see the spike but the shares are halted right now. halted up 8.9%. is this a surprise? >> not a huge surprise. the rumors started and the speculation had started that they may be a takeover or deal target of some kind and came out and addressed the rumors and said, we are looking into alternatives to increase shareholder value. they've been struggling for quite some time. i'm not totally sure what
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american eagle gets out of buying. >> do they have a strong balance sheet? >> american eagle is probably the best performing retailer when you look at all of them. that's been performing very well so i think of anyone they would have the best ability to do something with abercrombie & fitch without having to take on too much debt but, again, i'm not totally convinced as to why they would want to really do that. lady gaga brought onboard to endorse certain products. did we expect that to deliver quicker or is it something we expect later in the year? >> sometimes that does take time. it's always hard to know with
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these new collections and they haven't pushed her as heavily as i thought they would. they haven't rolled it out as intensely as i might have expected. tiffany's have been solid. a lot of analysts are giving them credit thinking this is a safe place to play retail if that's where you want to go. nothing is perfect in today's retail environment. >> just checking quickly on shares of express which is still in the abercrombie auction. they are higher as well. so i don't know if this is a sigh of relief they're further removed from winning the prize. >> very possibly. the consolidation is so interesting. lane bryant and have been spun out into their own company or done other deals. it's interesting to see them
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coming back together. >> everything is cyclical. >> all retailers now out of business. stymieing some investors, diane has those numbers. diana? >> reporter: demand is really strong but you can't buy a house if you can't find an affordable one. home sales dropped bigger than expected 2.3% in april because the number of listings dropped 9% according to the national association of realtors and listings are slimmest it at the lower end of the market. that's why sales under $100,000 fell 17% year over year and those under 250k dropped 6%. remember, the median price of a median home was $244,000. so half the market is really hurting and that's the half where the strongest demand is.
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the ceo said it best. >> the inventory is reaching historic lows. it's never declined faster. it's freaking us out. it's affecting our business, limiting our sales. >> reporter: and what is telling even faster the lowest since realtors began tracking it in 2011. there's more of this online, cnbc.com. i've seen them sell in three days in it this neighborhood. >> thank you very much. we want to check shares of abercrombie & fitch. they have resumed trading at this point so we are seeing them trade higher. they were halted up on the dow jones headline that american eagle would make a bid in this auction. express is not yet out of the auction so could be a player
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still but we do have shares open for trading again. >> mulvaney testifying today. democrats going after him for cuts of social programs. mulvaney, like he did yesterday, saying spending has to be justified to taxpayers. deep spending cuts raising doubts about congress adopt iin it and without a budget the likelihood grows and the chances of tax reform fade. still, none of this seems to faze richard turnhill. >> you have the fundamentals in the economy as seeing growth picking up. the investment spending over time. if you did get a material tax package now coming through a net positive surprise. >> is turnill right?
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joining us is larry kudlow. layrry, great to see you this afternoon. the reflation trade has not been on. the dollar is moving in the opposite direction. >> core inflation has come down. i don't think it's a big problem. having said that i love the budget put out by mulvaney. your tax cuts are in there. 3% economic growth so there's some on there. and what he said yesterday, this is a wonderful way to portray this. the measure of success is not how much cash or government or welfare assisted it's how many people we put back to work. that's why it's an economic
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growth bucket and they'll try to redo the bill clinton welfare reform which had been decimated in the last 10 or 15 years and they're spot on to do that. spot on. >> layrry, are there enough people out there to be put back to work, to close the gap, a big gap between economist forecast for growth and what the administration seems very competent of doing over 3% growth. >> well, look, you've heard me say that, those numbers, how many people are out there is very hard to estimate. edded $15 million, the s.n.a.p. program, they have skyrocketed. now you have a perverse incentive effect going on where because the work requirements have been decimated, all these clinton reforms i supported
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years ago people have incentives. they have incentives not to w k work. obamacare provided them with incentives. breakeven working poor have incentives not to work. if they went to work they would lose their health care. what mulvaney is saying, the whole idea is let's reform these small entitlements and reform obamacare and completely change that. and the net will be more people coming back into the workforce and at the same time you're going to have your business tax cuts which will improve capital formation and productivity and real wages and probably help wage earners the most. >> is there any criticism that we're not adding the multiplier of any money that would be necessarily cut or not added? i know the headlines scream, as we confirmed yesterday with steny hoyer, these are decreases and increases down the road.
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then people, rightly so, all those dollars that we're not going to spend do have a multiplier on the overall economy. >> but wait a minute. all those dollars we're going to spend, what about the taxpayer? i want the taxpayer to spend it. can i read you a stat, sully? this it budget would take $3.6 trillion over the next ten years, $3.6 trillion away and will still leave, get this, over ten years, $53.5 trillion. do you think that's enough? $53.5 trillion, with a "t." so the current services baseline, planned spending, but this is going to slow it down by 7% over ten years.
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there are no cuts here. there's no cuts here in the budget. you're going to grow at 8% a year. 7% a year. the whole thing, this idea of planned spending and the current services baseline. this is one of the worst inventions ever known to mankind not to speak of taxpayers. you go out and decide to pay a $50,000 car. you tell your wife and then you decide, wait a minute, i looked around and saw this and saw that. i only bought a $25,000 car. the government would call that a $25,000 cut. huh? what? i'm still spending. i'm just spending less than i would have otherwise. this is the whole problem with the budget. we should have a zero based budget 40 years ago. >> either way there's a lot of opposition to the budget. what's your expectation in terms of its likelihood of passing in
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this form and what it does for the rest of the agenda? >> they're going to negotiate over many months here. i think a lot of this will stick. i was interested except for one guy, dop young, one of the great appropriations pork barrelers in congress, republican, by the way. anyway, most people did not say it's dead on the run. most people will negotiate, talk this through because the thrust of this budget is pro-growth and it will put people back to work and save tax money. that's a good thing. when, wi are lfred? i don't know. i guess they're going to put the tax cuts in with the budget whenever they come up with and that will be reconciled for fy-18 which begins october 1st of this year. i would like to have them sooner. i would take it if they could get it in there by october 1st of this year i would be a very happy camper and that will get the economy moving and you'll
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have a much healthier budget story for the first time in years, you might have fewer people on public assistance. more people working. more taxpayer savings. get rid of unnecessary programs. roll back regulations and grow, grow, grow. 3%, in my opinion, is minimal. minimal! i think they can do 3.5% to 4% if they get the tax cuts through asap. i know you've never heard that from me before. >> larry, i think markets would like october 1st as well. as always, a pleasure. thank you very much. >> thank you very much for having me. >> let's get to the bond market five-year notes up for auction. rick santelli at the cme. hi, rick. >> reporter: melissa lee, boy, twos and fives are different. we auctioned off $34 billion five-year notes. below the one issued market, that's a good thing. grade i gave it an "a" as in d
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apple. internals, 2.67 bid to cover, well above 4.2. in december of '16 2.72. in november of '14, 2.9. the best number since november of '14. indirects very solid. directs at 8.6 best since the spring of 2016. this was a good auction. tomorrow is the completion in supply with seven-year notes. it certainly seems as though these investors aren't thinking rates will move a whole lot lower so it's very fascinating that the shorter maturities have found so much interest. brian, it's all yours. >> rick, thank you. coming up, why one big fund manager says a part of uber's business is a ponzi scheme and its days are numbered. and the surprising new way that companies are trying to bring in truck drivers. all that and more when "power lunch" rolls on. hi i'm joan lun.
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two big stories involving uber today. first, the company owes million in back pay and, second, a fund manager on the other side of the world says the company will be broke in ten years. live with both stories, deirdre. >> reporter: uber admitting it miscalculated driver commissions and that's a mistake that could
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run the company at least $45 million according to one report or more than $200 million according to the new york taxi workers alliance which has filed a larger wage theft lawsuit against the ride sharing startup. the same problem in philadelphia back in march. and while uber says it has paid back every driver every penny owed plus interest this puts the spotlight on its business practices and its treatment of drivers. as you noted it comes as an australian fund manager douglas calls it a ponzi scheme and one of the stupidest businesses in history. he points to its high cost owner/driver model and its almost valueless user base. to be fair uber has faced comments like these in the past. it's been called a charity case in disguise and an eventual dmror fid auto leasing company yet it has continued to skyrocket. douglas co-founded a fund that
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manages $37 billion. that has got to sting and carry some weight. >> want to be clear who this guy is. he's not a crack pot. he runs a major fund management company in australia. that's surprising given the pace of losses, they're losing billions. to call it a ponzi scheme, i'm a little bit confused by. >> reporter: so the business model, the reason he says this, it relies so much on venture capital, on money -- >> venture funds are the suckers? >> reporter: exactly. that's why it's called a disguised charity case. the idea is there's so much money coming from the funds and uber is using it to subsidize its rides. one says that, you know, the customer is only paying about 40% of the ride they take and how long can that really continue. i think that's what douglas is
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referring to. i should mention, brian, on the other side of this, the people who think -- and there's a lot of smart people who think this business model works, there's a reason uber is valued at $70 billion, the idea is it will eventually become so big and have so much of the market that it will start to make money. it has achieved a critical mass there. >> as you said a lot of that valuation rests on the huge market share. just going back to the first story, the fact they haven't paid new york drivers enough, to what extent are they losing share to lyft and i suppose what comes with share is how many drivers. juneau has made a big push to steal the best drivers by giving them equity. >> reporter: that's something we track very closely he especiall remember, this is one piece of many, many crises the company has. lyft is the biggest competitor.
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very marginal market share according to the data we track. it's about convenience here. people aren't loyal to uber. it works fastest and most efficiently so if lyft cuts down the times it takes for a car to get to the customer it could perhaps take more of that market share but so far we haven't seen a huge infringement on market share. also noting that there's been reports that uber's valuation has in the private markets decreased by as much as $10 billion. >> deirdre, thank you. oil has been holding steady above $50 a barrel. will that still be the case? it's been four weeks. cnbc stock draft and some big movers, valiant up 38%. amd down nearly 20. we'll update the standings and talk to the early leader straight ahead on "power lunch." and i know a thing or two about trading.
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today marks a somber anniversary here at cnbc. on this day six years ago we lost our friend and colleague mark haines. he was a fixture for more than 20 years, the first anchor of "squawk box." he was a curmudgeonly man, a loving man, who had a sharp tongue at times but could be one of the most generous people to sit beside. he was incredibly kind to me as i anchored my first shows ever on this network. we miss mark deeply and try to
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live up to his manner in most ways. we miss mark.
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hello, everybody, i'm sue herera. two more people have been arrested in the suicide bombing attack at a concert in manchester. british police raided an apartment in the city earlier today as part of their investigation. in addition abedi, the brother of the attack er salman, was arrested in tripoli. no bond for a man charged with killing seven neighbors, five of them children. they all died in a house fire in northeastern ohio. stanley ford appearing via video link before a judge this morning was charged with seven counts of aggravated murder. greco is recalling more than 25,000 car seats because the harness webbing can break in a crash and may not keep children restrained. the recall involves eight different model numbers of the my ride 65 car seat model. and tennis star serena williams is joining a silicon
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valley boardroom for the first time. the online poll survey monkey announcing her appointment. williams wants to help tech companies diversify their workforce. that's the news update this hour. wilfred, back to you. >> a shame there's no james bond story to end it this afternoon. >> producers are happy. let's have a look at the markets right now. the dow is higher by 0.2%. the nasdaq and s&p fractionally higher, all three indices into positive territory for the month. let's have a look at some of the names hitting all-time highs, general dynamics, adobe. trip adviser, tractor supply, alexion all trading at their lowest in terms of overall performance. it's a slightly mooted rally with yutilities the ones that ae outperforming. >> the bond conversation is four minutes of my life i can never
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get back. from stocks to commodities -- >> come on. it was more like three minutes and you must have enjoyed at least a minute. >> it felt like four or five. >> so is this. >> well said, brian. oil still sitting above $50 a barrel but down half a percent ahead of the opec meeting. let's bring in the editor and publisher. it's interesting because you have all sorts of headlines from all sorts of ministers saying we're going to extend the cuts by nine months, the cuts may go deeper in light of the ipo next year. >> it's probably 100% given they'll extend it for nine months. shall they actually try to get a little bit larger cut and is difficult to accomplish.
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they've done a much better job of meeting their targets across the board. saudi arabia it has fallen upon their shoulders to be the greatest cutter of all and the one most consistent. a far better job holding to their quotas more than i would have imagined. goldman sacks is vociferously that would only average 110 barrels a day. we have rising production here in the united states. has the government in the past been good sellers of crude in terms of their timing? >> well, they've been very bad sellers of crude for their timing, and let's give them congratulations for actually thinking about selling crude from the spr.
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we have far more than we would ever need under any circumstance and the amount selling as goldman sachs sell is only 100,000 barrels a day beginning in 2019. that's a far time into the future. what's most important is the structure has shifted. a year ago, one year forward was selling at $4 premium to the nearby. almost parallel, in fact, you're moving to a backwardation. it allowed hedgers to sell forward, increase production. now you've taken that away. coming out of the eagle ford. there was a reason to produce before.
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that may change what we're doing in the united states. >> a great valuation gap between u.s. equities. has the easy money in terms of offsetting that trade already been made now? moody's down grade of china and they've downgraded hong kong as well. >> it's rather interesting. i took a look back at what's happened over the course of the past two years. i have an index of my own, my own international index which reached its high in late may of 2015 and stocks in asia have performed abysmally. stocks in the west performed astoundingly and the oldest rule in the book is that is working. you're probably going to continue to see the western economies and the western stock markets continue to rise relative to the eastern stock markets. that's been happening for two years.
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the shanghai and the japanese stock markets higher, it won't take a whole lot to keep our stock markets here and that in europe to the upper right. the trend in effect like ly to remain in effect. >> dennis, great to see you, thank you. >> meantime companies have been luring employees with stock grants for decades but usually the payouts go to the high rollers in technology. this is cool. stock grants are now going to truck drivers. for some reason morgan brennan is at a truck stop on the new jersey turnpike. on my way home i'll stop by. tell us more about the stock grants. it's kind of cool. >> reporter: this is an employ ee stock plan for drivers. it is believed to be the first benefit of its kind that is offered by a u.s. carrier.
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this is one of the reasons he took it public and he's doing it as a way to help lure and retain more truck drivers amid a labor shortfall by the american truck ing association. so how are actual company truck drivers responding to this benefit. >> it's taking care of the driver that causes churn. when you're just a number, you're always looking for the greener pasture. when you find something that's good, you want to stick with it. >> it's a great idea. not a lot of bosses are willing to give lower truck drivers and all of the other smaller employees just give them free money. >> reporter: so this will mark the first time either has been invested in the stock market and overall this is the latest example of how trucking companies are pulling out the
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punches, everything from higher pay to more benefits like health care and 401(k) matches to newer, more comfortable cabs that companies are investing in to get more workers into these big rigs and out onto the roads. guys? >> morgan, i love it. morgan, thank you very much for th that. interesting off the back of our discussion. i'm all for it. i think every worker should have a portion because it encourages a nice team approach, camaraderie, everyone has skin in the game. >> incentives are on the line. >> reports have surfaced on how much money has or has not been paid out to the victims of madoff. we're following the money trail for you.
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what about the trades? >> what trades? i made them up. they were fake. purchase dates were fake, options were fake, returns, they were fake. >> so when was the last trade you executed? >> 15 years ago. >> wow. that was a clip from hbo's bernie madoff movie "the wizard of lies." madoff specifically, how much money still needs to be paid out to madoff's victims? if you read the "usa today" it has not paid out any money to the victims. it's misleading. in all over $9 billion has indeed been paid out from the main fund to direct madoff investors, that's the key, because there is another $4 billion sitting around yet to be paid out to the thousands of victims who were impacted indirectly. here now to walk us through this maze of billions is the "new
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york times" author of the book "the wizard of lies." also jacob frankel, partner at dickinson wright and former enforcement officer. first off, congrats on the movie. the highest single watched hbo show in four years. >> the best premiere at night audience. congratulations to them. >> we had barry levinson on with you. you wrote the book. take the credit. it's fine. give yourself a round. >> thanks. >> let's talk about this. i think viewers like myself actually have a little bit of confusion between a direct investor, which i understand, but which is indirect? >> there were tens of thousands of investors, brian, who invested through feeder funds, intermediary funds, and that don't qualify under the bankruptcy rules to recover from that $9 billion fund that's being administered through the
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courts. >> if melissa lee runs an investment firm -- >> right. >> and you invest directly. she's been paid but she recruits me and i recruit through melissa lee. >> you give me your money. >> and i gave you my money and you gave it to her. >> we're out. >> we're out. and she might not even be solvent anymore or able to collect from the fund herself. >> the bridge is out. >> some of the bridges are out. some of those funds are bankrupt or they were located in jurisdictions where you don't have the same legal rights that you would have. it's those indirect investors that this justice fund was designed to help, well intent n intentioned but i think it's misfiring. >> so, jacob, is there any hope at all for the indirect investors and what about the billions that are sitting still in the fund? >> there is hope and it has been made clear that it's the complexity of what they're dealing with in the structure, the number of investors. when the trustee was paying those who were direct investors,
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that left everybody else to this structure the department of justice created which was dependent on criminal forfeitures. so you have this whole world of investors who are not eligible and are now applicants. what richard has basically said is give me time getting paid a lot in the process but give me time. there will be distributions. although the plan was for the first set to be in 2016, he's indicated they will be making distributions this year in 2017. >> jacob, as you said, it will take a lot of time but once all is said and done, what sort of percentage of original investment are people going to end up seeing back? >> there's really no way of knowing. it's dependent on the pool itself. when we're talking about everybody who was an investor in the feeder funds, what we're talking about is money that has come into this pool through criminal forfeitures. that means a criminal investigation and a disposition to that case and disposition
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instead of a plea because as part of the investigation you could have a nonprosecution, a deferred prosecution agreement where you have a payment into that pool. so whatever that pool is, deduct from that the cost of the administering of the funds and whatever is left is really what richard is dealing with. and then there's the question of people are saying, gosh, i'm entitled to what i saw on paper was a result of my investment. no, really what they're looking at is can they recover a portion of what they invested? >> i don't disagree. i think the indirect investors are facing a much more uncertain f future. more than 1,300 accounts through the bankruptcy fund of a million dollars or less have fully recovered their capital already. most of them several years ago. so while i'm sympathetic to the process of the doj fund is facing, it still needs to be more transparent and it needs to be more accountable. >> there's missing money, though, jacob, it seems like. going back to our analogy, not
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to put our friend and colleague melissa lee on the spot, but if she puts money in with madoff, that's not her money. that's investor money. if the firm is paid back the $5 billion, my claim should be against her. where is that money, though? i don't need to go to madoff because she has essentially my money and 99 other investors' cash. have a lot of these people vanished or have they tied the money up legally? where is that money? >> the point diana made in her comments and that is a lot of them have vanished so really -- >> vanished where, though? literally vanished? >> they have become bankrupt. they don't have the resources. remember, we're talking about two groups. one group which collected through the bankruptcy process,
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which were funds that came from the direct investors. what was left now was whatever the department of justice is able to recover through criminal investigations and criminal cases. so by definition that pool itself is smaller. and i agree entirely with diana the issue in all of these cases is transparency because what often gets lost is the actual cost of the administration of this process to actually get to any payments in the first place which goes to your last question which is what's that percentage of recovery. pickard has said on his side he may make up to $1 billion for his recoveries. we know that another group paid over $38 million. >> but a big distinction there, wall street is paying pickard's bills so wall street is paying those expenses. not one penny in his fund is going into his own pocket or firm's pocket. it's all going to investors. and as is more typical, more
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normally is the situation where fees and ex pennsylvania penses paid. >> in terms of how much we've learned from this original issue, the regulators, investors, is it possible another big ponzi scheme is going on now or are we much more aware? >> i think we are every day as vulnerable as we were the day before madoff was arrested. >> nothing has changed? >> devilishly hard to stop. almost impossible to detect. there are some reforms that would work like requiring that assets be held in an independent third party custodian account. absent that all ponzi schemer needs is trust and a bank account. >> sorry, guys. we have to go. thank you very much. melissa? coming up, why the street is bullish on burgers and betting big on steel. plus, we're ten minutes away from the federal reserve minutes.
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we'll break down the minutes for you and tell you what they tell us about a june rate hike, the potential for a june hike. that and much more ahead. i count on my dell small business advisor
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welcome back to "power lunch." trading up almost 30% after the stock reopened after on outside panel of advisers to the fda voted positively this morning in favor of an experiment's drug for breast cancer. 12-4 supporting treatment in terms of the brisk benefit profile of the drug for breast cancer. could treat about 40,000 women per year. not guaranteed to follow the panel's recommendation, however they frequently do. puma up 26% on this move. >> great news. thanks. and time for "street talk." daily dive in the key wall street calls of the day. another burger call for you, melissa? >> yes. red robin, gourmet burg eeburgem
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$5 to $8, and analyst day, happened yesterday. management unveil add plan to double eps over the next five years driven by strong ebitda. and postearnings up 25% that day. scenarios in which the stock could cost $120 just a few years out. >> is one of those that the stock gains $49? stock number two, actually three stocks. a big call by credit suisse. upgrades all outperform from neutral. they had down graded them in january. great call. they were right. mostly because iron and ore prices were down. steel dynamics to 43 and u.s. steel to 29 from 25. so potentially good guess for fast money.
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>> yeah. poster children, of course, of the replacing trade. can you say it? up 44% in a year. >> hope they ironed out the oversupply issues. >> third stock, michael korh's. cop line and gross margin pressure at the company works to improve pricing power and distribution. handbag data indicates more pressure and markdowns in the fourth in quarter with march particularly difficult. credit suisse goes as far saying it is a value trap at these levels. >> red hot one day and a couple months later, this is what happe happens. amazing fickleness of retail and consumer stocks. incredible. >> true, but you compare this to coach, and coach has seen a nice turnaround and people saying, what's going on with kors? >> great proprietary handbag data. and software, ticker data. starting coverage of a number of stocks in this space with outperform rating, but call them
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their top out perform stock the next 12 months. say the company, "not given sufficient credit for being the best of breed vendor in a market growing mour th ining more than" chief information officers surveyed said just over $61. their target there, $71 at bernstein research. bullish on data. a violent ride the past nine months. >> the past year a nice pop. >> thank you. a couple minutes to go until we get to the minutes from the latest fed meeting. what will it tell us about the likelihood of a hike at that next meeting? plus, another rough day for one auto parts retailer. down 5%, you can see. and tom cruise drop as bombshell on an australian morning show. we'll bring you that news coming up. ♪
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we are 30 seconds away from the release of the latest fed remarks. see how much they move after that. the dow is up a scant 38 points. another narrow range for markets today. benchmark ten-year yield is the question. 2.28%. eventually roll back below 2%? dollar index trading at 97 and
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33. gold, $12.53 an ounce down $2 an ounce. crude oil down. entire market in a tight range. the question everybody wants to know, on june 14th, when the federal reserve meets again, are they likely to raise rates? let's ask steve leishman. >> thanks very much. federal reserve members at its meeting earlier this month in may agreed that the balance sheet at 4.4 trillion balance sheet should be reduced this year, and the fed members at the meeting supported a plan presented by the staff. they didn't actually formally adopt but supported a plan to gradually, a gradual balance sheet reduction. details how that plan might work. the plan would tap the roll-off securities that mature every month at a certain level increasing the cap every three moss. roll-out plan not adjusted,
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autopilot unless economic conditions change. hoping this would reduce adverse market effects. they're going to discuss this plan again in june. let me explain how this might work. the fed has a $4.4 trillion balance sheet. every year hundreds of billions roll off or mature. the said to set a cap. $400 million matures every year, say, ors 20 $20 billion mature. let 10 roll off, 10 invest it. raise the capital until ostensively no longer reinvesting any proceeds over time. the balance sheet reduces to some normal level. other comments on the fed. the numbers wanted more proof during that may meeting the weakness in the first quarter was indeed temporary before hiking rates again, though they did say they expected conditions to warrant gradual rate increases ahead. on fiscal policy they said
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prospects fon enactment, uncert but views fiscal policy something posing upside risk to growth forecasts. on the economy, inflation, unemployment. a couple members worried that the employment level was too low and could spark inflation. others said there was more room for the labor market to run. a debate there about how tight this labor market can indeed go. a few are concerned over the recent low inflation readings that preceded the meeting and several saw downside risk to inflation, though they were encouraged by growth abroad. other points here, several said easing of regulatory standards, which has indeed been proposed by the trump administration could lead to increased risk of stability. in the staff report on the financial situation, part of the minutes, they said, asset valuations in market were notable and vulnerabilities appeared to v ed ted to have in. staff making pressure about
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assets out there. unclear whether that animated voting fed members at the meeting. brian? >> all right. steve leishman there. a wide-range look. again, looking for that v word. valuation, steve, pointed out by a lot of people including a cnbc article, the one that matters. said it four times in previous minutes. only one time in these minutes. dig in more. stick around. steve bringing in our fed panel. a former adviser to the dallas fed and president of money strong, and head of equities with beamo asset management. two options for your entree tonight, danielle. it's this -- steak, potentially the rolling down of the balance sheet capping, or you've got chicken, really the valuation call on whether or not they are worried about valuations. seem less. which do you want to talk about? >> they do keep raising valuations. i thought the cnbc article published was fascinating, six-time sense alan greenspan said 12 months later, markets down. so i'm curious that they keep
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throwing this word around knowing what the implications are going forward for markets. >> only mentioned valuations once with regards to any market in these minutes, and it was with regards to the commercial real estate market. in the previous minutes, federal reserve said, well some brice to earnings ratios appeared high. look like the federal reserve is doing its own stock analysis and suggesting, hey, with earnings coming up, maybe asset values aren't inflated, except in parts of commercial real estate? >> eric rosengram for the boston fed really has been at the forefront of this commercial real estate situation a long time and talking about retail all day long. there's a lot of supply coming online in the commercial real estate space and i'm happy eric's voice is finally heard on the committee. >> how big of a concern is the normalization of the balance sheet? sounds like the fed fully intends on doing it this year, steve mentioned, autopilot unless conditions warrant otherwise. is this a big risk to markets?
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>> not a big risk. we all expected that at some point it would have to strengthen the balance sheet which has gotten so big. >> a dance between normalization as well as hiking rates. putting two forces of pressure higher -- >> yes. a concern, mild concern, because we've gotten to somewhat levels, high levels of valuation in the stock market and part of that sustained by the easy money. as that easy money goes away gradually, those valuations become more unsustainable except earnings growth is picking up substantially. we saw in the last print of plus 15%. expect that to continue in the double digits the next year. now, there's other risks that can come into the market, and we can talk about those more, but right now we see the market not necessarily on an unsustainable path. >> danielle, does the clarity we've got on the balance sheet reduction reduce the chance of more hikes? i mention it because of the financials down a little bit.
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lost about 0.2% on the dollar? >> absolutely. in june, tapering quantitative tightening, a term peter boockvar uses a lot. measured, dependent, pull back, reduce the size. a lot of caveats in these minutes, but will they double tighten? to melissa's point, i don't think so. >> steve, do you agree? no double tightening? >> interesting question. one sort of -- there's a hawkish note to this, these minutes and a dovish one. hawkish one is, they're on a process in ways they're not saying in their speeches. waiting for minutes to come out. the details on balance sheet planning and discussion have come from the minutes. i fully expected today to get something like this. we got it. they are full bore ahead on this plan to reduce the balance sheet this year. i point out this was a 2018 event for most forecasters several months ago. so i'm looking at the market reaction. it has generally been non-plus
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by discussion of reducing the balance sheet. looks like the fed is probably on the gradual path, but doing it a little earlier. i think to what danielle was saying, i agree. first of all, in these minutes, i didn't see a defeninitive mov toward the june rate hike. they wanted more evidence. data between now and that june 14th meeting and a forecast out there that cnbc running about 3.8% as are several other of the forecasters a part of that. in that 3.8% number there, and if that is on the track and we can prove that, the fed can go ahead and hike in june, but there's going to need to be evidence of that. i didn't see a -- >> bigger question mark at this point going into the release of these minutes? bmo said futures indicated 78% chance of a hike in june. in your mind, steve, a bigger question mark than 78% chance? >> a little more of a question mark. if we don't see the data. then the other thing, meaning to
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get to but kept interrupting my own self here. what danielle pointed out, the idea maybe they stop in december if they're really going ahead with the balance sheet. that's potentially on the table, too. >> i'm not so sure the markets believe in september. to steve's point, i think they're beginning to question june. look, we've seen rents start to come down in many major metropolitan areas that will feed into the inflation metrix they pointed out in the minutes. they're concerned inflation is declining. >> uh-huh.ernesto, what do viewers do? sell the stocks, sell the house, the kids? what do they do? >> i think you want to say it's stocks. bonds are way over priced. do it in a defensive way's in our bmo global -- sorry, the volatility fund the one we're talking about today, we want to remain exposed to stocks with a dit towards indefensive incase
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of risks that hit the market. >> like what? >> like politics. >> and couple specific investment examples for the audience? >> stocks? for example, we own apple, baxter. darden restaurants. we own american express. all companies that are low risk, that have relatively reasonable valuations because the passive approach is way over priced today. just say, stay exposed to stocks with a los risk and don't overpay. >> check your iphone across the bar. >> and ask danielle another question. do you get the feds gradually increasing roll off cap plan, and what do you think of it? something you think the market will stomach here? >> i do, but i think overly cautious with good reason. bank of america, merrill lynch, recently signed a paper, if there is potentially $2 trillion that will roll off, that equates to three quarter point interest hikes going back to melissa's point. where they risk double tightening? quantitative tightening?
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>> remember, this could take a very long time. depending the starting level. >> yes. >> 10 billion. going to gradually -- the other thing, theory on this thing is buying a bond in a crisis has a much bigger effect than selling a bond in more normal times. so that the down side, the -- the reducing of the balance sheet is technically not as huge as the idea of buying it when markets are ill liquid. >> that's a good deebd. disagrees but not for today. bring you back. at least we got out of this another acronym. r.o. krnkts, roloff cap. who's down with r.o.c.? all of us. >> you rock it, brian. you're rockin' it, baby. >> i love it. ross in croatia. thank you. >> thaunnk you all very much fo that jarngsd b that. >> and bob pisani, stock market reaction. >> quiet in terms of raeeaction. i think a little more idea how
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they're going to deal with the balance sheet issue. all anybody really cares about. remember, growth and inflation expect aces we already know about, will get an update in june. nobody was really very interested in that part of the whole discussion. i think the important thing, they'll take a lot of care how they deal with the caps. the reinvestments decline. remember something. their portfolio is very, very big. $4.5 trillion, and the mortgage bonds, that's about one-third of the whole market. particularly with mortgage bonds, a lot of questions about this, this morning, how fast do they deal with that? very, very slowly. certainly start dealing with their treasury bond portfolio before that. a lot of questions unanswered, but i think the important thing is, sending out soothing messages that they're not going to do anything unusual. in terms of the market now, s&p 500, ah, basically flat. up probably two points since that. a brief move to the down side about one or two points. look at the kbe, bank index, modest move here as well. i think the market got nothing
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in particularly surprising. that's exactly what it was hoping for. just some soothing words that we'll be very careful handling this. back to you. >> thank you, bob pisani. dollar and treasury yields tick lower on the back of fed minutes. in chicago telling us what this all means, rick santelli. >> kind of a slow move, but really is most aggressive with the dollar index. you see the intraday chart. up three to four. the minutes i saw down almost a third percent. come back a bit. a big drop there. not long. 132, down two basis points. 5s down the most. 183. now at 180. 226 versus 228 before the number on tens and two basis points to 30 as well from 294. the panel was interesting. hard to argue with the price of treasuries too high. maybe one of the reasons is because the inventory at the fed is so large! i mean, come on. if you own all the 57 chevys, somebody finds one worth a whole lot more and finally, if you look at july fed fund futures, i like to look at july.
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what they call a clean month. no meeting. the price moved up a whopping half a tick. of course, the higher the price goes like a t bill, discounting potential rate hikes. won't dabble in the crazy percentages, surfise suffice itt going to change the world. >> rick santelli, thank you. auto stocks under pressure recently. what's going on right now? plus, move over tesla. what pickup trucks might be ready to go electric. almost a month since the stock draft. an update. you may be surprised who's leading and lagging. all that and much more coming up on "power lunch."
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and looking at a live shot of capitol hill. treasury secretary steve mnuchin testifying before the house ways and means committee taking a question at the moment. he is of course, speaking about president trump's budget proposals. we're monitoring it and will bring you headlines as as when they cross. meantime automobiles in the spotlight. news, not good. advanced auto parts down after earnings and sales miss, and trading at lows and not seen in nearly 2.5 years. auto zone, meantime, down 10% this week. stock trading at new lows not seen in more than two years. ford stock up. following a ceo shake-up, ousted
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monday. i expect some knew. >> and a new role in the home of the atlanta falcons, steve cannon, former ceo of mercedes bence and of the amb group. great to see you again. >> great to be here. >> stadium opens august 26th. in the works for years. i have to ask about security in light of the terror attack in manchester. stadiums long considered soft targets. this underscores what kind of targets they are. have you thought about security for this new stadium? >> it's an unfortunate reality of the world, shining stadiums happen to be a target. we're taking the threat seriously. our head of security reports to me directly. it's elevating its stature inside organizations. wee hired the third party safe ta do all the super bowls. work closely with atlanta police department plus a third party,
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bottom line, create an ecosystem that needs to be pretty darn close to a zero defect. >> steve, security stops check farther away? clearly in the manchester bomb, happened as people were leaving. he didn't have to go through security checks to get into the vicinity? >> for the big events like the super bowl, there are mandated distances that the security perimeter gets pushinged out. reality of being a downtown stadium, there are access points. you cannot secure every single access point. all you can do is make it a top priority. so for us, it's about connecting that ecosystem of homeland security together with atlanta police department, together with our safe security provider, and essentially make it zero defect. >> you've got a sports team playing there nearby. atlanta united. >> right. >> 50,000 people. have you notice add drop off in attendance following any -- not manchester. only a couple of days, but any
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major -- we've had others. any major event? or do people just buck up and go? >> i think they buck up and they go. unfortunately -- >> that's good news. people aren't staying home. they're not afraid. >> these events are happening all too frequently unfortunately. i think people are becoming more used to them. and, look, it might -- what you described, brian, might happen if it gets closer to home for us. what happened in manchester, tragic as it was, i don't think it will impact us this weekend -- >> you have the olympics. >> what's going on in the auto seconder? these stocks terrible performers look at gm and a ford. former ceo of mercedes-benz usa, watching prices drop off a cliff in secondary market, impacting the price of new cars as well. what is going on in the industry? >> a cyclical industry. coming off the deep recession,
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uninterrupted growth. got fortune being on the up side of the curve. the market peaks it become a share game. all producers out there that have plans that are greater than what the market will ultimately bear, if they don't cut back production and try to push those vehicles into the marketplace, then bad things happen. discounting incentives go up. impact on used car prices. so this is something, a show we've seen in a lot of auto industries play self out many times before. >> in the short term, overheated? very lake cycle? >> at the peak, and now the question is, how long will it peak remain? >> yeah. >> and how quickly do all the manufacturers adapt to the 17 million reality of the market? >> still pretty good. >> very good. >> i mean, that's -- we in the media like to harp on the negative. hate to say that pt it's true. but falling from a pretty good, darn level. you hear people say, not knocking anybody that said this. when autonomous cars destroy the car market in five years.
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be real. they're cool, work now, but their mass rollout is how many decades away? >> years and years away. gives us something to talk about but no impact on the number of cars we'll sell this year. >> part of the knock on ford, they are working on this, but billboard saying we just don't talk about it as much. so the market doesn't reward their share price with the notion that ford is out there investing in autonomous technology? >> those investments aren't paying back for years and years to come. hard to reward a company with its stock price for investments we're not sure will have -- >> to be specific, melissa and i making smart, but different points. my point, i think autonomous cars will increase demands for cars. six cars on the road. drive us all around all the time. it we're driving around 24/7, the cars will break down all the time. population is growing. biggest generation, millennials
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in history. are you optimistic? >> very optimistic. i don't believe millennials will give up car ownership. once they come to the life stage that is necessary, they will adapt their behavior as such. overall, it could have ubers of the world, might impact the second or third car in the fleet. impact on the total market size, but ultimately we've got years and years and years ahead of us before those impacts will be seen. >> quick, on volkswagen. not the share price, overall auto sales numbers. are you surprised about resilience they've seen in the last couple quarters? car sales in light of the diesel scandal? >> i expected personally to see a bigger hit based on kind of that, betrayal of trust that that incident represented, and it goes to show you that once people get loyal to brands they shake things off. in the same way we shake off a manchester and go to the next event. we go on with our lives.
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we're very busy. they did something wrong, got punished for it and come back a lot more quickly than i personally expected. >> steve, thank you so much for coming by. stadium opens august 26th. good luck with that. steve cannon. and we should note looking at the s&p 500. in fact trading above its record closing high of 2402.32. biggest winners now, in25toette intraday. >> reporter: hi-- record high, next level to watch here. >> lost 0 .2% on the back of the fed minutes. equity markets slip add tiny moment obviously rebounded. still to come, good, bad and downright ugly. plus grab your rayband aviators. in a couple minutes, we're back. . . with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks.
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welcome back. "power lunch." time for the good, the bad and the ugly. hiv vaccine showing positive results in a clinical study. stock up by 25%. small cap stock. market prior $500 million. on to the bad.
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universal health services down about 2.5%. reports the management company is currently under fbi investigation for potential mistreatment of patients. universal health previously denying reports of mistreatment. it is an ugly day here for shares of t. rowe price. down after a downgrade from ubs over concerns of fiduciary role scheduled to go into effect next month. oil pushing lower ahead of tomorrow's opec meeting. leaders may shock and amaze you. breaking down the latest numbers, next. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. see options data like never before. with thinkorswim
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hi, everybody. i'm sue herera. your cnbc news update. president trump meeting with belgium prime minister in brussels before he and the first lady were greeted by the belgium king and queen. it comes ahead of tomorrow's nato summit meeting. armed british police and soldiers took up positions at landmarks across the united kingdom after britain raised its national threat level to critical. its highest level. counterterror experts believe another attack could be imminent after authorities said the manchester suicide bomber did not act alone.
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federal safety regulators are telling airlines to remove a certain type of seat from their planes claiming it could cause neck injuries during survivable crash landings. the order covers more than 10,000 seats mostly used on small regional jets. they have five years to remove those particular seats. looking for the perfect father's day gift? babe ruth's original contract with the yankees and 1927 championship ring all available at auction bidding on the ring has reached $259,000. bidding on the contract reached $161,000. they're both expected to go much higher. dad's priceless! go ahead! make a bid. >> absolutely. >> dad's priceless. >> it's a yearly event. maybe it's -- 50th birthday party. >> exactly. you got it, will. >> sue, thank you very much for that. check in on the markets at this hour. you can see a little higher than when the show started. we dipped fractionally off the
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fed minutes and gained a little off the back end in part probably because the dollar softened 2/10. nasdaq up shy a quarter percent. s&p trading above record closing high. utilities, health leading the gains. original stocks at this hour. jewelry retailers tiffany and cigna, worst performers in the s&p. abercrombie and fitch gaining on reports that seebreast and american eagle working on a joint deal. up 5%. and iss recommended company shareholders vote for activist nominees, up 7.5%. mcdonald's leading the dow hitting an all-time high up 1.4%. the oil market closing for the day. let's go to cnbc commodities desk for an update. >> hi there. crude bouncing around again
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today. one day out from that crucial opec meeting. typically the commentary and job owning does happen like this. a meeting that has great magnitude for the market. earlier in the session we were higher because of that. the market is looking for an extension to be locked in tomorrow. maybe even longer than six months and wants to see a deeper cut, if possible, as well. later in the session we turn south. that was after a larger than expected drawdown in inventories. typically supportive. the turn south came because of something in that report. total u.s. crude stop standing at over $2 billion. this figure well above the five-year average, that could be problematic. look what we know, the opec cuts are making a dent here, rebalance is happening. the progress is slow. and tomorrow we have the potential to be derailed. back to you. >> all right, jackie d. thank you very much. nearly a month since the 2017 cnbc stock draft kicked off. check in on leaders and laggards so far. reminder of the teams. mr. wonderful, kevin o'leary,
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flash crash gordon. tim seymour alpha. and people's and the rutgers student fund. remember, the winner the team whose stock or stocks have the best return between april 27th and the super bowl next year. a long way to go, but who's on top now? leading the plaque is tim seymouralpha. a big boost, big gains in valiant pharmaceuticals, timed that dog well. other pick, mattel, by the way, happens to be one of the best performers in the s&p 500 today. no doubt, fast money 5:00 p.m. eastern, unwatchable tonight. don't get too comfortable, because hot on your heels, beardstown ladies, flash crash gordon and kevin o'leary, mr. wonderful himself. the others -- ah, a tougher time. obviously trailing. remember, it's early. a lot of market-moving news coming up in the next few months. melissa? >> it ain't over until it's over. hear from a stock contender with us. tim seymour, seymour alpha, team
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owner, "fast money" owner. congratulations on your standing. >> we play one game at at time, mel. early in the season. you said. happy where we are putting our heads down and putting our pants legs on one leg at a time. >> many, many months ahead. what concerns you the most in terms of the valiant story first? >> for valiant a lot of issues in terms of their core business and in fact we just got a little reprieve in the, facts in stay against the lawsuit on, with teva, ultimately, generic competition encroaching on their core business is a big deal. revenues are down. the key, generate enough free cash flow to pay down debt the way they have over the last year, $3.6 billion better that terms of balance sheet and keep core businesses. not divest core businesseswhat it needs to get on to the next level. >> i specifically had this conversation with you prior to the stock draft. valiant, a swing from the fence
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sort of play. you must be a little worried the gains, we've seen them. >> nice to lock them in here. >> exactly. >> tactically. but, you know, the way i look at this, this is a company, again, my whole approach to the draft was, rather be buying companies that were over sold with catalysts versus overbought with catalysts and in looking at valiant i think it's a company where the sum of the parts, it's a massively levered company. if pushing out debt profile, major drivers for the equity. with mattel, a turnaround story with terrible first quarter numbers but people forget that the first quarter is typically a weak quarter for them. they have, i think, enormous content portfolio at the time when content is trading peoprem. >> what's for mattel? >> down 15% first quarter. a terrible, terrible story, but you have content releases into the fourth quarter. you have a case where there's an
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inventory overhang largely worked through. a management team that set out a two dwrooer plan for a turnaround and people rewarded this company in the early days of that. i think you're at a place, trading roughly, should be, 15% to 20% to its long term multiple 15. puts the stock at 30. great performance. still it's january. more opportunity for outperformance for something way over sold than there is actually to play something at fair value. >> tim, i hope for your sake, total returns not just price returns. a massive yield on this. it's a little bit of a warning sign. isn't it? >> it's a big dividend because the stock's also appreciab appreciably. the margin on the core business and seeing revenue growth at a time when other players in think space are doing very, very well. i don't think the dividend is at risk. not the reason to own the stock but we're in a yield environment. this is something i say is still
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going to be have a which makes this stock interesting to people. they maintain this dividend. i don't see that changing. >> you don't get the -- >> i get it imprift is live. a reason to buy the stock. >> give it 110%. gone through every sports cliche already. i caught what you did there at the top, seymour. didn't go bias. would you sell valiant? you can't, would you if you could? >> i think there's been a lot of names priced in to understanding this company's possibly able to force off certainly bankruptcy, actually free cash flow generation not bad. lock in 35% gains going into january? i would, but i can't. guess what? i think the stock's going higher. in fact, the street's coming around to this. few of the bold bracket onboard with a buy on this stock. maybe good reasons for that. i think people saw the first quarter numbers, saw what they did with debt maturity profile and a lot more flexibility in the balance sheet and people will come around. going higher, i think, brian.
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>> better hope so. hang on to that number one place. >> i'm crushing people now. let's be clear. >> no respect or a chance. back against the wall. >> thank you. >> tim, thank you. see you later. tim seymour. >> take it to the next level. move over tesla. are pickups truck ready to go ere electric? we'll do our own electric slide right after this. i'm only in my 60's. i've got a nice long life ahead. big plans. so when i found out
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electric cars is one thing. electric pickup trucks? phil lebeau has details. >> people may be skeptical. americans are notoriously extremely loyal to the pickups including construction firms, utilities. have a certain type of truck and like driving that truck around. get used to potentially seeing a change with the workhouse w-15. electric pickup truck. no fully. extended range electric truck means can go 80 miles fully electric and a gas assist motor kicks in extending the ride to over 300 miles. first delivery scheduled for 2018. we had a chance last week to drive the prototype you see here. a prototype.
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really couldn't put it through the paces. more than 5,000 of these pickups already ordered. they are targeting utilities companies, industrial fleets. construction firms. the kind of people who really beat up their pickup trucks and they believe that the fact this is an electric truck will make a difference to those corporate buyers. >> we think we'll save an average fleet over the ten years they might own their pickup truck $35,000 tos 40ds,0 $40,00. fairly conservative. calculating gas stays where it is ten years. >> expecting to see these next year according to the people at workhorse. the reason we're showing you gm, ford and fiat chrysler, the guy whose dominate the pickup market, on the fleet side as well. the people construction firms, ordering these types of trucks and they hold on to those trucks, guys, a long time and beat them up and also put a lot of miles on those trucks. that's where workhorse believes it can cut into that business.
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i'll be curious how much they can do in terms of stealing sales. a lot of loyalty when it comes to pickup trucks, and what independent company? did i miss that at the time? >> yes. independent company. remember when navastar had a bunch of problems, doing conversion about a decade ago. 12 years ago? some plants at that time decided, look, not using them anymore. workhorse is being built at an old navastar plant in eastern indiana. >> how far could tesla be away from an electric pickup truck? >> elon musk said that is down the road. it's coming up. they haven't said a definitive date when we might see an all-electric pickup truck from tesla. elon musk has plans for that eventually. >> one goal in this life. one other goal. which is to see phil lebeau with a mullet driving an electric el camino. that's hot. >> you see that or me with a mullet i'll give you $1 million.
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>> a million bitcoin. thank you! a lot of money. that's a lot of money. >> all right, all right, all right. thank you very much. the ten-year yield falling -- a rock? ten-year yield falling on fed minutes. could it drop below 2% this year? ask the team. you look at charts all day long and probably sometimes in your sleep. you look at that long-term or shorter term chart of the ten-year bond yield, do you see it falling back below 2%. the answer to that is, no. neversy never in this business, but which i look at this two-year chart up here. you've seen clearly, you've had a reversal. started to move higher with rates. now pulling back. you're coming back and this, to me, looks like a typical retest of a down trend reversal. go back look at a longer term chart, brian. coming up to the long-term down term reversal off the 81 highs. not happening on the first push,
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from our perspective, still think it will happen this year and looking for rates to move higher not lower from our perspective. >> higher, not lower. and boris disagrees the entire premise of the segment. what say you? >> i agree with craig. not seeing 2% yield. yields are fairly valued to disappoint. the big effort problem with bonds now, you see a 2% yield it means in a recession. that's the scenario which 2% becomes reality. at this point it's not possible. the fact international yields starting to creep up giving competition. unlikely we'll push the yield down 2% unless we literally see a recession in the horizon. >> boris and craig, thank you very much. a lot of homeowners watching as well. appreciate it. nor "trading nation" go to our website. still to come, tom cruise feeling the need for speed again. "top gun 2 "sea in the works. is that good news or a sign that hollywood is out of ideas?
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one set of people definitely not out of ideas is the broadway team, never been better. that story coming up. back in a couple minutes. >> announcer: and now, the latest from tradin tradingnation.cnbc.com. >> once you have a target list of stocks, employing technical analysis or study of stock price and trends can help you select your entry and exit prices.
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many of you have been waiting 30 years for it, some of you know doubt could care less. but there finally will be a sequel to the 1986 blockbuster "top gun." speaking on australian tv show this morning tom cruise saying while it is true, it is definitely happening and filming should begin in the next year. no word yet who will star in the film. one would assume it is tom cruise. they said, he is fitter, smarter an better looking than you are. of course he is. he's also richer. i'm saying the movie was 30
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years ago and you wonder how other members of the crash could pull up pulling 7 gs inverted. >> as long as cruise is in, they don't need anyone else. >> it could be top cruise. >> he could be the instructor or something like that for the generation of top guns. >> get them up quick. he was 23 in that original. >> wow. >> star at the time, first big break. crazy to think that given it is still one of the biggest. >> first movie was the rebecca demornay where he took over the house, or the outsiders. >> i love that film. >> he was one of the bleachers. >> it was his breakout film. >> it came out before i was born i realized, though i love that film. >> moving on, as he feels really bald. speaking of movies, this weekend at the box office -- after a tip at the beginning of the summer hollywood hoping for a turn around. julia boorstin is in l.a. with a look at what to expect. >> reporter: a lot is riding on
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the memorial weekend box office and not just for disney which is opening the fifth big budget pirates of the caribbean film, but for the whole industry. it is a key time to hook movie goers with trailers for the summer which is responsible for 40% of the studio's annual revenue. since the beginning of may, the u.s. box office is down nearly 10% according to com score. this on warner brother's big budget bomb "king ar sure" and disappointing performance of foxes "alien: covenant." there's concern about sequel fatigue, not to mention the slew of high quality entertainment alternatives on tv and streaming. it is not all negative. the box office is up 2 1/2% from last year so far with highly anticipated films like wonder woman and done kirk, industry analysts say this year could be a box office record. back to you. >> julia, thank you for that. let's bring in com score's paul for more. do you agree with that
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sentiment, although the summer season -- all-important summer season started softly, year-to-date things are not looking too poor? >> that's right. the year-to-date overall is up 2 1/2%, but the first three weeks of the summer movie season according to our com score data is down almost 10%. look, we're in the first quarter of the football game. so this is just the early part of the summer. so we're only three weeks n we're heading into memorial weekend. that's a really important weekend, as julia said. but there's a lot yet to come. "wonder woman" which i'm seen and i think is going to be an absolute monster worldwide, and there's a lot of other big movies on the way. so while some people are predicting gloom and doom already, it is way too early. there's a lot of movies left on the slate. i think will do really well including a host of original films, not sequels, that i think could do very well. >> we just mentioned "top gun 2," of course is it coming too late?
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sequels sort of have their moment and there have been too many. >> it is interesting you are talking about that, i literally walked out of a screening of universal's "the mum my" where universal is bringing back old monster movie hits and updating them. for tom cruise, this guy is still on top of the world. he is definitely beige, major star. i would be first in line for a "top gun" movie. but to bring maverick and goose back and all of that, it really will have to be good. i know crews does not get involved with anything unless it is at the top. >> goose died! >> maybe they'll bring him back again. >> is val kilmer -- let's just cut, val kilmer, ice man, will he do it? >> loorks think it was one of the coolest movies ever. >> he made everybody want to be a fighter pilot where "african
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voices"ators c voices"ators --r avee ators. >> we have seen a lot of movies come back with three-quels, sequels, reboot, retread. i get that. if the movie is good, i don't care if it has a number next to the title. the mummy is definitely an old story and i love this movie, it is really great. you have to look at the movies as they come. it is not about categorization or whether it is a sequel or not, it is whether the movie is good or not. that's the most important thing. >> hold on, mel. what did you say in the book? >> confirms there may be a remake of space balls 2. >> is that real? >> no. >> thank you very much for that, paul. >> i appreciate it. >> now, while the movie industry is hoping for a big summer, broad way just completed its best year ever thanks in part to popularity of "hamilton," of course. broadway set a record with ticket sales of nearly $1.5 billion over the previous 52 weeks. according to the broadway league which tracks this kind of thing,
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attendance was slightly lower but prices higher. i mean broadway -- "hamilton" made a massive difference, disproportion yalt in fact. >> tremendous production. "check please" is next. excuse me, are you aware of what's happening right now? we're facing 20 billion security events every day. ddos campaigns, ransomware, malware attacks... actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that? we can do that.
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check please. >> my check please is s&p watch once again. we told you earlier 2402 is the record for the closing high. we're watching that. we are about a point off the level at this moment and four
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points away from a record high on the s&p 500. this could be a record-setting day. >> mine is a lot less severe, which is this. apparently i gave away the ending to "top gun" to some people that haven't seen it yet, that goose dies midway through the movie. i want to say a few things. "gone with the wind," they burn the house down. >> whoa, whoa, whoa. >> there's a guy, there's no wizard, just a dude behind the curtain from kansas. >> she misses the hot air balloon. >> so mean. >> ruining dreams left and right here. >> my check please slightly an interesting one which is because we were able to talk a little bit about soccer today and i didn't get criticized for it. i was going to say manchester united kicked off 15 minutes ago, and all eyes on that following the devastation in manchester. best of luck to them, their fans and the people back home in manchester. >> yeah, certainly.
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market doing pretty well in the session. five straight days of gains. >> apparently "closing bell" will owe wilford frost lunch because we're going to give it to them early. >> thank you for joining us today. glad to have you with us. thanks for watching. >> "closing bell" starts now. ♪ >> good afternoon, everybody. welcome to "closing bell." i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. we are watching capitol hill today. we are expecting to get congressional budget office score of the house gop health care bill. we will tell you what to expect and why it could affect the market. all coming up in the next couple of hours. >> probably most anticipated after hours event, earnings and everything today. if you think google knows too much about what you are doing online already, you may be surprised to learn they know what you're doing off line, too. we have details on a new google

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