Skip to main content

tv   Power Lunch  CNBC  May 25, 2018 1:00pm-3:00pm EDT

1:00 pm
final trades >> ross stores >> m, and a, an etf trading on the back of qualcomm one to own. >> qualcomm. >> that does it for us thank you for joining us "power lunch" is next. >> right now >> okay. i'm michelle caruso-cabrera. here's what's on the menu. oil sliding. crude is plunging 4% on pace for the worst day in almost a year we will tell you what is fuelling the decline. watch what you are saying. amazon's alexa recorded a family's private conversation without them knowing, and then sent it to a random person this the owner's contact list, again without them knowing how vulnerable are you will any of this really change people's behavior? >> it's been exactly one month
1:01 pm
since the "power lunch" stock draft. who is leading who has been left in the dust? we will check in "power lunch" starts right now >> hello, good afternoon and welcome to plounch i'm sarah eisen. stocks are under pressure today as we head into the long holiday weekend. the dow and s&p 500 trying to avoid a secondid straight day of losses however both are still on track for their second week of gains this the last three. the nasdaq is holding you. investors are piling into safety yields on the the bench mark ten year treasury at their lowest level since the beginning of may. the big market story this hour is oil prices are plunging right now. crude down about 4%. the energy names getting whacked. dom chu is tracking the action >> it's probably the most noteworthy move happening in the oil market right now that oil price slide by more than 4% so far in today's igs session. it's on pace for its worst say dating back to july of 2017.
1:02 pm
the oil move is driven by the fact that major oil producers like saudi arabia and russia signalled a willingness to pump more crude onto the market that prospect is putting pressure on a number of big oil and gas names making energy by far the worst performing secretary neuro the s&p. apache, devin energy, continental resources and exxonmobil among the bill oil companies currently trading in correction levels or worse hess, conoco phillips, and halliburton among the worst performing stocks in the entire s&p 500 so far today those names are on pace for their worst day in four months finally let's look at the etfs that track the oil market. the xle down more than 5% so far this week. looking like it's going to finish in the red for the first time in two months we have breaking news. it's friday, of. and means rig counts you can look right now the rig counts are coming out from baker hughes.
1:03 pm
we are adding oil rigs for the seventh time in eight weeks. we are up 15 oil rigs to 859 that's 137 more than the same time last year sarah a lot of news come out of the oil patch today. >> more rigs is not going to do much to turn around the falling price today. dom, thank you oil prices down 4.25%. to washington. 24 hours cancelling the big summit president trump today saying his meeting with kim jong-un could still happen ayman javers is following all the twists and turns in the saga he has the latest for us. >> there is twists and turns in that saga and also in the saga of zte i spoke to sarah huckabee sanders a minute or two ago. what she told me was that the white house is not willing to confirm right now there is in fact a deal on zte as has been reported in couple of other outlets. sanders just saying when we have an announce member on that we will give it to you. we are continuing to work through the details. the white house not willing to
1:04 pm
announce anything official other outlets report odd an tentative deal being worked out between the united states and china on that deal as you say, the president raising the prospect this morning of the idea that that summit with the north koreans could still be on. here's what he said just a couple of hours ago here at white house. >> we'll see what happens. it could even be the 12th. we are talking to them now they very much want to do it we would like to do it we are going to see what happens. >> sarah huckabee sanders was asked a number of questions whether or not an advance team from the united states is still going to singapore to prepare for that meeting she declined to answer that question specifically but she said that the united states will be ready the president hopes for a meeting but doesn't want a cheap political stunt. he wants something long and lasting. whatever happens here, sarah huckabee sanders saying the united states' side will be ready for a summit if one happens in the coming weeks. >> on zte, the possibility
1:05 pm
offist compliance officers at zte -- wilbur ross hinted at that in his interview the other morning here on cnbc it's not unprecedented to have compliance officers in the business banks have to do it all the time that's in this country cross border is extraordinary. >> think of that in terms of the white-collar fraud context this the united states as a law enforcement measure, not an international measure. what would be the legal basis for an additional fine for zet which pled guilty last year and agreed to pay a billion dollar-plus fine in that process last year. is there some other process by which the united states could levy a fine against zet at this point? and how would they collect all that some of the details that sarah huckabee sanders said they are still working through on this case that's why perhaps they are not willing to announce anything here from the white house. >> ayman javers thanks for the update from the white house? >> as always. despite all the back and
1:06 pm
forth in d. kprchlt the major averages are on track for weekly gains. where do we go from here and where are the best places for your money you say it's just noise, not news, when it comes to trade what about the back and forth over north korea what was the takeaway in terms what have investors should do given the fact that it's still a very unsent, fluid situation, whether there is actually a summit >> i mean, it's difficult for investors because you are talking about a sample size of zero how often have we faced nuclear standoffs and had these kind of one-off summits? but the way we view it is that the calling off of the summit was part of the negotiating dance. i think if anything this was an attempt to cool down rhetoric and get people to the table hopefully in a better frame of mind to do business. at the end of the day, does it affect earnings? no, not yet.
1:07 pm
does it affect inflation outlook? not yet. and does it affect the fed >> no. those will the pillars of your framework. we are bullish. >> andrew, do you buy that, sometimes you could see this filter into consumer confidence and that impacts the economy and could impact fed policy. how do you view it >> i agree with steve. the reality -- i hate to say it, but if you bought the market every time the mark dropped on a north korea move, news over the last five years, it's been a great trading strategy. >> so -- got it. all right. so you put that one completely to bed andrew. >> exactly >> steve had this interesting idea, the three pillars of the market we talk about them all the time. earnings, interest rates, et cetera andrew, what do you think right now the three pillars are telling you? are you bullish or bearish >> i think 2018 overall is going to be a more muted year for equities but it's going to come with a lot more volatility
1:08 pm
and from what -- the implication from a trading standpoint is you can't chase the winners and can't sell the losers. i think it's no surprise that energy is selling off. it has been a winner the last month. flip side, consumer staples have been a loser i think that's a better area to look at than energy. overall, i think the market over the next couple of months is headed higher not lower. >> what's attractive about consumer staples other than the fact they have gotten beaten down so hard >> look, what i find fascinating is there is a pattern where leading into a yield curve flattening the defensesive do very poorly. that's exactly what is happening. once we get to that level they start to outperform. these defensive stocks like staples, i think it is a great time to build up on these stocks because they are down a lot. that's consistent with history. >> steve, what's your list of
1:09 pm
what you would buy or what you would sell >> we were on this show a month ago talking about small caps and why we thought they could do well i think the deregulation on the financial side is going to kick the m&a activity in maul and mid cap banks and give another rise to small comes we also believe in multiasset strategy. >> what does that mean >> global allocation portfolios, products that are both tactical and global you know, you had a 300 basis point spread between international and u.s. bonds in q 1. volatility is picking up the ability to have strategies in the portfolio that can navigate that are going to be increasingly important because we are getting at least towards the late part of the cycle. >> the nasdaq up a quarter of a% thank you for joining us, andrew and chris. a developing story in the
1:10 pm
auto world fiat chrysler recalling 5 million vehicles and telling people to stop using the cruise control feature immediately. stock is not reacting much phil la boo joins us from chicago with more. >> consider this last year fiat chrysler recalled a total of 3.9 million vehicles. they have eclipsed that with one recall issued today. it is a big one. 4 7 million vehicles are being recalled 15 models in all basically from model year 2014 up through 2019 model year jeep, ram, dodge, chrysler a number of the brands -- all of their brand except for fiat are affected here. cruise control, specifically what might happen under rare circumstances is that the driver might not be able to turn it off. they would have to shift the vehicle into neutral and then park it before the cruise
1:11 pm
control is disengaged. that's why they are issuing a warning. stop using cruise control because they are not sure if people might encounter this that they could follow through with putting it in neutral. then hit the brakes, then park it again, there have been no incidents, no accidents reported where this defect has come up. nonetheless, fiat chrysler is telling people don't use cruise control. fiat chrysler will be issuing its five-year profit forecast next week at the corporate headquarters in italy where the ceo will sit down and say okay this is what we expect to do over the next five years it is a crucial time for the company as they lay out their goals for the next five years. today the shares are down just a little bit as they announce this big recall. >> i said the shares weren't reacting much, but 2% is significant, isn't it? is it down because of this >> i think it's because of this. absolutely it's because of this.
1:12 pm
>> thank you phil. a deal in the snack world. pepsico announcing moments ago it will acquire bear foods a maker of baked fruit and vegetables snacks. the deal is worth under $200 million. it fits in with their strategy of tuck-in acquisitions though the company did not make the financial terms of the deal available. we have been talking about so many of these big american food and beverage companies folding in smaller faster growing moon shot companies snacks is a hot area when it comes to food. this is not campbell's soup bying sniders for $5 million this is a smaller deal where they bring it in to get a different area of growth and innovate themselves on products like frito lay and toast ethoses. >> the smaller products are perceived to be more authentic by a certain age cohort. there is something about the smaller brands that's more
1:13 pm
appe appealing. >> they understood the consumer shift faster in many ways than the big brands the big brands are scrambling to catch up and buy up these companies. i like fruit snacks -- have you had these? >> no. >> they make beat chips and tried bananas and mango chips. a hot area of growth. when we come back, he manages more than 2-billion and is may going a bold call on bonds. he is big on tech and taking an aggressive stand as an investor in facebook. we will talk to the chief investment office of calsters next spark cash card from capital one. with it, i earn unlimited 2% cash back on everything i buy. everything. and that 2% cash back adds up to thousands of dollars each year... so i can keep growing my business in big leaps! what's in your wallet?
1:14 pm
whai tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.
1:15 pm
sure. mom,what's up son?alk? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. [ chuckles ] download the xfinity my account app and set a password you can easily remember. one more way comcast is working to fit into your life, not the other way around.
1:16 pm
when calstrs talks, wall street and corporate america listen closely that's because the nation's number two pension fund with a portfolio worth $224 billion is one of the largest blue chip investors around giving them clout to make changes in board rooms and c suites they making in tech and general electric it bought almost a million ge shares last year it is also big on bonds. chris joins us welcome to the show. >> thank you >> i want to start out with general electric how confident are you about the dividend what do you make of john flannery. >> we are a long term investor we are not in it because of what happened last year or the lange in leadership. we are in it for the long term it has a mix of different portfolio companies. it hasn't gone well. it is one of the laggards in the
1:17 pm
dow. we think the future has optimism we think it's going to improve in value over time the dividend is important but it is not critical. it's more important for the pensioners but for us as a shareholder we are interested in the total return of the stock. >> i understand that you are a long term investor, chris, but trying to forecast the long term, i mean it's important to figure out what you think about john flannery and how he is doing at least so far on his promises also, your confidence in the dividend speaks as to the ability of general electric to generate that cash that supports it so those are all long term issues n. terms of the progress that he has made so far, and the plans that he has made so far, do you like them do you think he is on track? do you think the company can generate enough money to cover the dividend. >> i think it is a good starmt he needs to continue to diversify therd bo we would like to see more outside ideas coming in to that board. there is a diverse set of product mix. i think that's one of the
1:18 pm
challenges for wall street trying to figure out what ge exactly is is it an television company, an engine company what kind of profit centers are going to generate returns? we think they have to make good decisions about the capital allocation, where they put that money in terms of dividend, in terms of reinvesting in the businesses, which businesses to continue to hold and which businesses to consider acquiring. it is going to be a long time period it is a giant ballship like our fund. when you are a huge ship in this ocean trying to navigate this world he is going to be to have challenges in front of him we are going to give him time to see how he performs. >> some of your holdings, apple, alphabet, amazon, facebook obviously you like tech a lot. no netflix of all the fangs, why? too expensive? >> we hold the index 70% of our equity portfolio is the russel 3,000 index when you are reading those off
1:19 pm
it's just the capitalization side i bet it's just a time period you are looking at versus where netflix is today it's not that we have a perspective in the fang stocks it's just that they have reached amazing values and risen up so large relative to other companies in the s&p 500 or the russel 30 00 i'm not going the forecast them. >> you have a perspective on facebook you have been vocal about some of the issues that you see there, including the voting class structure. you say it's like a dictatorship and you have been critical on how the company has handled privacy as well. what are you about this? what is your engagement like with the company >> engainment with facebook is a challenge because so much of that stock is the dual class structure and so much of it is held by mark zuckerberg. we have engaged with the company, we are writing them, talking with management of the but that's why we are also going through the media to get our word out not just to facebook but all of silicone value. we think that dual class structures are a failed
1:20 pm
structure and they should not stay with it we understand why they used it to go public but it's the now time to grow up as a company and can back to one share, one vote. if you want to use other people's capital, if you want to usury tiries capital and america's capital you need to give people a chance to have a vote on the board of directors and have some equal share in the quality of a business. they have made classic huge mistakes in the last year that you highlighted. we are concerned that silicon valley is copying that model of having a dual class structure which academics have shown doesn't work over the long term. >> you got in on the delete facebook movement yourself, right? you yourself deleted your own facebook account, according to what i understand. can you delete it from your funds? do you have the ability to do that it's in the index. you have got to own it is there any ability to change the structure. if it gets out of the dual class
1:21 pm
structure -- does the company trade at a discount because of the dual class structure >> your first question, that was a personal decision for me i'm not going to enforce that to the fun. as i joked with some people, you have to have a number of followers on facebook for that to really matter i didn't have many followers i don't think it hurt them that i have stepped out and i'm no longer a client. i think the dual class structure does cause a discount. it's hard to say it's going to slow the stock down. it has other issues they are dealing with on the privacy and cambridge analytic they are trying to turn it around our endajment with them is for the longer term. we think it is a better model. we think that if they would drop that structure -- mark zuckerberg holds a controlling interest i don't know what he is afraid of or why he wants to retain this tight network around him but they need more open ideas, a more diverse board. >> i mean, wouldn't you want to be king? come on. >> exactly, it's back to -- you
1:22 pm
know, we know in america dictatorships don't work for the long term. and corporate america needs to realize that, too. they need a board of directors that will hold them accountable and ask the tough questions to operate the company for the long term what will we do? we are a long term investor. as long as their public school teachers in the state of california we are going to own these stocks we want them to operate not just for 90 days but for the next two years, three years, 31 years people's lives rely on it. >> coming up on "power lunch," new rules in europe designed to protect privacy are causing big problems for big tech over here in the u.s. speaking of private see. amazon's alexa recorded a private conversation and certainty it to a contact. is alexa listening to you right now? come up on "power lunch.
1:23 pm
prepare for your demise, mr. billingsley! do your worst, doctor. i will. but first, a little presentation.
1:24 pm
hijacking earth's geothermal energy supply. phase 1. choosing the right drill bit. as long as evil villains reveal their plans, you can count on geico saving folks money. fifteen minutes could save you fifteen percent or more on car insurance.
1:25 pm
new rules implemented today in europe designed to protect your privacy are affecting big tech companies here. josh lip ton explains. >> it's billed as the biggest change in data privacy regulation in 20 years gdpr, general data protection regulation after years of lobbying and discussion the new law takes effect across the eu starting today. what exactly is gdpr it is a new set of rules that will give eu citizens more
1:26 pm
control over their personal data you will now be able to access their data stored by companies and find out where and for what purposes it's being used they will have the right to be forgotten meaning they can have their data erased and they can take their data and transfer to a different provider companies like facebook and alphabet store information on users. the concern for investors? that these new rules could impact user growth, engagement and ultimately affect the companies. right n.o.w. the street isn't worried about the impact of all of this on big tech's bottom line still, the same analysts say that smaller companies could face more of a challenge, they mention increasing oversight compliance and oversight expenses they are going to face big fines, up to 4% of dploebl annual revenue or 20 million tos, whichever is larger.
1:27 pm
>> josh lipton in san francisco. shares of amds amazon higher today even after the company deals with an embarrassing situation with an alexa device recorded a private conversatio d nt it ow have we accepted that our devices are just listening "power lunch" we'll be right back welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you! every stay is a special stay at holiday inn. save up to 15% when you book early at hollidayinn.com
1:28 pm
1:29 pm
at the marine mammal center, the environment is everything. save up to 15% we want to do our very best fory each and every animal, and we want to operate a sustainable facility. and pg&e has been a partner helping us to achieve that. we've helped the marine mammal center go solar, install electric vehicle charging stations, and become more energy efficient. pg&e has allowed us to be the most sustainable organization we can be. any time you help a customer, it's a really good feeling. it's especially so when it's a customer that's doing such good and important work for the environment. together, we're building a better california.
1:30 pm
hello, everyone. i am sue herera. here's your cnbc news update for this hour. secretary of defense james mattis adding some color to the president's comments that negotiations with north korea are are ongoing. mattis telling reporters, quote, if our diplomats can pull it off, a meeting may still be possible. disgraced hollywood mogul harvey weinstein was arraigned this morning on rape and other charges in new york. agreeing to post $1 million cash bail and wear a gps monitoring device his lawyer, benjamin braffman briefing reporters following that arraign men. >> they were not reported to the police at the time these events occurred and i anticipate that the women who have made these allegations when subjected to cross-examination in the event we even get that far that the charn also not be believed
1:31 pm
look at this the philadelphia police department releasing this video showing a suspected road rage incident where a man attacked another with a sledgehammer. he smashed out the windows of the vehicle. police are trying to identify the attacker and also the victims. you are up to date that's the news update this miles an hour. michelle caruso-cabrera back to you. let's get a check on the markets. the dow and s&p are under pressure but are both still on track for weekly gains dow is off 92 points s&p dower beten, nasdaq up by 11 crude sliding more than 4% the dow's two energy components are the biggest drags. energy is the worst performing sector because of talk they may increase production either by opec or by russia. here's what is happening consumer sentiment falling slightly last month but americans are still upbeat about
1:32 pm
the economy and expect their incomes to rise. the national hurricane center says a system moving toward the gulf of mexico is now a subtropical storm, alberto and wall street banks had their best money making quarter in years but they are still firing traders investment banks generated almost $44 billion of revenue in the first quarter the, highest sense 2015 at the same time, banks cut 6,000 jobs you can read more about that story on cnbc.com. now it's time for my favorite story of the day. amazon today dealing with the fallout of a strange incident in which alexa recorded a family's conversation and sent it to someone else adeity roy has more on what amazon is saying about this. >> a kroez story that's right amazon saying it is an unlikely set of events that sparked that accidental recording the company saying that the
1:33 pm
portland oregon couple's alexa device mistook certain words in a backgrounds conversation as voice commands the recipient of the private recording was a business associate of the husband the couple learned what happened when he called them up and told them about it. amazon says they are trying to prevent this from happening again. it comes at a time when google home products are winning over more customers the case price up privacy concerns i talked to consumers. the ones who already own home speakers were surprised something like this could happen butsaid they will still keep number devices plugged in. >> crazy stuff thank you. really are you kidding me let's bring in ed reed and john
1:34 pm
scott melton we knew the devices were always listening. how else does the echo hear you when you say "alexa" unless it's always listening could this have happened with all of the products out this. >> they all operate on the same principle. they are always listening in case you give the wake up word in this case alexa in this case, they didn't say alexa. it just thought it heard alexa the ai promise of the future is nowhere near where we think it is already >> when you say wake up, do you mean the companies i think it's the people's fault. we knew alexa would always be listening. >> but that it would screw up so excessively that it would record
1:35 pm
a conversation without you knowing and then send it to someone randomly. >> there is an expectation that's not going to happen but you are giving up a lot of privacy. >> are you an ai expert? can you tell us what happened? >> i am a not an ai expert but i think a lot of us when we were kids read "where the south korea ends". there were kids peeking over a precipice. we are out from our societal norms help us understand events like this are a glimpse of how far out we are. >> that's a good metaphor, but now what. >> the cat is out of the bag the devices are in so many homes already. what do you do about this now? >> i don't think you fault consumers. it's absolutely the case that we know, in a sense that we are bringing these things into our homes. inthe real challenge isset going some kind of control over what we've already brought in i think the future is not wake words. i think the future is listening
1:36 pm
to key words if you look at patterns from these companies you see exactly that right? the interest is going to sort of a less object strusive more present future i think the concern is that none of us really know where that's going. what was that? >> a less obtrusive but more present future >> that's right. >> is he talking about having a conversation about regulation? is that the answer >> the technology simply needs to get better. it needs to be able to pars the differences the way we do in everyday life. that's the promise of voice enabled computing. that's what am and google and apple are fighting to win that next platform. the way went from desktop to mobile we are going to go from mobile to voice. it's nowhere near where it needs to be. >> we are talking about a failure in the technology itself we are not talking about hackers trying to hack this thing. >> it was not malicious. right. >> we are at a point now where companies are racing so hard and fast to get these products to market that we don't understand
1:37 pm
the short false, whether it's in the technology itself or on the defense against hackers. a height hat hacker hacked into an alexa, they put into the code the ability to generate a transcript at the next trigger word they told amazon about this but all of it exists. >> this highlights the fact that it is not such a privacy issue as consumers we are ongoing guinea pigs. they are constantly beta testing. this is an edge case we need to solve for that going forward but ongoing you are going to see more instances. >> john, i didn't mean to suggest necessarily it's the consumer's fault here but i wonder if it's going to make a dent in sales of this fast-growing market that's hyper competitive right now between amazon and google and apple. do you think it is a going for a psychological impact for consumers? >> my sense is inch by inch case by case we are ultimately as a
1:38 pm
society accepting these things in our lives as we bring them in we feel less and less in control. we like the convenient and the access at the same time we have this feeling my goodness how much of my life is private for example, our conversation right now. when we say alexa, there is a chance devices are waking up. >> alexa buy toilet paper, it's happening across the country what's the next wave. >> short-term it's definitely going to be bad. they are going to take a hit long term, this is the future, people are going to buy into it, into these devices and accept it as part of their every day life. >> i expect that is the case thank you ed, thank you john good to have you on. let's go to the bond market, which is closing in a few minutes here rick santelli at the cme group rick -- >> having trouble with rick's
1:39 pm
mike, i think. we don't have his mike we'll go back to him for a bond update also coming up, we are going to trade in our high heels here for a comfortable pair of sneakers women all over the country are doing this the comfort trade, and which company is cashing in on it. next on "power lunch." [fbi agent] you're a brave man, mr. stevens. your testimony will save lives. mr. stevens? this is your new name. this is your new house. and a perfectly inconspicuous suv. you must become invisible. [hero] i'll take my chances.
1:40 pm
this is no ordinary coffee. it's single-origin kenyan coffee from the nyeri highlands, 6,000 feet above sea level. but how do you really know that the beans journeyed to the port of mombasa and across the pacific? that you can trust they're 100% authentic? ibm blockchain. a smart way to track every step, ensuring this coffee did indeed come from 6,000 feet above sea level. and not a foot lower. ♪ ♪
1:41 pm
welcome back to "power lunch. rick santelli on the cme floor a lot of futures markets are closed the equities markets are open. one week chart at tens down six basis point on the day. down 14 on the week. looking at a mid april start of tens we have given up some ground, for sure, especially now that we
1:42 pm
don't own that three handle. boons, december 1 to boones. the last time we are here. they settled the year at 42. they are under that right now. down seven on the day. down 18 on the week. november 1, the euro versus the dollar we haven't been at these levels this year. if you look at the same chart, november to the dollar index it is a at the beneficiary. it's up close to two thirds of a cent on the we can and a lot of quality buying supposedly going on pushing boone yields down, why? because italian yields continue to skyrocket sarah back to you. >> shares of foot locker running full speed up more than 13% after a blowout quarter. the stock has seen rough times in the past but is now at 13% for the year can it climb higher? joining us on the phone, sam poser an analyst at susquehanna. they beatan every metric and the gross margin as bad as the street and you thought what was it in the quarter that they got right
1:43 pm
will it continue in the next quarter? >> they comped down negative 2.8. it was better than the street expected the business in north america was very strong while the business in europe continues to be challenged. however, their inventory is getting getting clean and a better product is starting to show up in the states. there is still a bit of overhang in europe. but you know we think they put out reasonable guidance. and we think the flow of a lot of that product is really going to improve as we move towards the back half of the year where we still expect to see a very good inflection in the comps >> sam, it's sarah you know we talk about nike and adidas and under arm audio they are investigating in their direct to consumer businesses, their own website and their own stores that's where a lot of this growth in the athleisure category is coming from.
1:44 pm
what does that mean for a foot locker going forward how do you build a bull case around that? >> the brands you i think inned among others are trying to grow. while they are trying to grow within their own story, you know, a lot of companies -- you know, you want somebody else to tell you, this is important. and really foot locker over the years has had very good relationships with their customers. they are continuing to improve on that and the customer wants to go where all the coolest sneakers are if you know what you want, you may go to nike or adidas or under armour's website but fur going i want the coolest sneaker who is going to tell me about that, a lot of people all over the place go to foot locker saying they have the best new stuff. the problem that happen in the past recently is they weren't changing quite as fast as the consumers and the key to the ongoing success is for that all to match up significantly better than it has been
1:45 pm
we are starting to see some of that right now. >> sam poser, susquehanna. >> you want to know where the coolest sneakers are right here workplaces are getting more casual as you can see, we are getting in on the trend as well. just for today and just for one segment we are all wargs our sneakers. according the npd group sales of women's sneakers rose 37% in the u.s. last year this while sales of high heels fell 11% during that time time beth goldstein is here the executive director of the mpd group which found the data what else did you find >> this is all part of a trend towards consumers wanting to be more comfortable you heard what sam said. a lot of what foot locker is selling is the fashion athletic product. that's become a fashion trend. women particularly want to be comfortable. >> is it because sneakers have become cooler and more fashionable and companies like gucci are making them now. >> everybody is making sneakers
1:46 pm
and women want to wear them all the time because it's comfortable and like you said, workplaces are more casual we are working remotely, in shared workplaces, places that are more relaxed and women don't need to give up that comfort there are many options right now. >> there are high price point sneakers, too, to sarah's point. louis vuitton wants to charge $1,000 it's crazy. >> that's why yields are up. >> we haven't seen a move towards overall in the industry lower price points because the trade of -- you would have thought the sale of sneakers would have traded off but it hasn't. >> are they buying multiple pairs because they want different colors for different outfits? >> they are buying multiple. their sneaker wardrobes are increasing. >> are we seeing this as a fashion trend embraced by designers. when we send models down the runway are they walking out in snookers >> absolutely.
1:47 pm
and we are seeing celebrities wearing them as well selena wore sneakers under her dress this weekend >> nike and under armour in this country have partnered with fashion brands and with celebrities how are great at social media versus traditional athletes it is changing the sponsorship game as well. >> yes, definitely. >> if you go back to when nike first came on, when reebok first came on, are we facebook those levels when sneakers were so pervasive that kids were wearing them to the prom it was a hey day rur those days. >> yes. >> i was a little kid but it was the fashion item everybody had to have them. >> athletic has become again a fashion item we are ten years strong on this at this point. >> which company is capitalizing on this the host they are all trying to chase women but that's not the biggest market certainly by any stretch for a company like nike. >> well it's becoming much more important as that market is
1:48 pm
growing for sneakers i mean, adidas and nike make up half of women's sneaker sales right now. and there are other fashion company getting a piece of the pie as well. ugg, sperry, steve madden, dr. shoal's, echo on a comfort space. a lot of fashion brand are in the space. >> are we seeing other trends being influenced by the raise of sneakers when leggings were a big thing boots were selling well because they went with leggings and vice versa of the are we seeing it reinforce or give rise to the next trend >> i think it is a circular thing. the all started with the premium active wear movement about ten years or so ago. women were looking good at the gym and wanted to look good outside the gym. those brands started making casual wear. sneakers have gone from performance sneakers to fashion sneakers. >> serena williams wearing sneakers to the royal wedding. >> exactly >> thank you for coming in, from
1:49 pm
the mpd group. >> still ahead, one month check up on our stock draft. do you remember this with the first pick in the 2018 stock draft, the stevens stock traders select -- >> we are picking facebook. >> oh! >> that was guy adami behind them scoffing at that pick but laura murphy was clearly excited. does she still fl ateeth way today. the tech stevens traders are straight ahead here on "power lunch. edes-benz factory-trained technicians. or it isn't. it's backed by an unlimited mileage warranty, or it isn't. for those who never settle, it's either mercedes-benz certified pre-owned, or it isn't. the mercedes-benz certified pre-owned sales event. now through may 31st. only at your authorized mercedes-benz dealer.
1:50 pm
1:51 pm
1:52 pm
if you are planning to hit the skies, roads, or rails this weekend, you might want to catch your ride a little earlier this year because analysts are expecting record travelers across the board with nearly 42 million people leaving home this holiday weekend. here to break down what to expect eat the puat the pump isk covering the skies we've got seth kaplan, managing partner at airline weekly patrick, gas prices are big stories this year. looking at our highest prices at the pump in four years what do you expect across the country? >> yeah, i think what we're going to see is the national average is going to get dangerously close to that $3 a gallon mark. i've been watching it in my office $2.98 we may get to $3, but
1:53 pm
developing in the last couple days, more talk about opec raising production, russia, that's helping to lead to perhaps a downturn now in oil, $67 a barrel, and we could see the national average peak for this summer perhaps this weekend so long as there's no unexpected other major disruptions this summer >> still, it will be sticker shock to see those higher gas prices, almost $3 a gallon how does that affect airlines, seth are you seeing anything in terms of the air fares for the weekend in terms of planning as we have seen this run-up in oil prices >> yeah, air fares certainly aren't surging yet and they're really squeezing airlines more than consumers airlines would like to see fares come up at some point to a point where they cover the difference but right now, fares still a pretty good deal for consumers and yet fuel prices in historical terms anyway still low enough that it's a decent deal for airlines too. it's more toward the fall, the peak season, where airlines are
1:54 pm
thinking about they might have to cut capacity, try to squeeze up air fares some more to avoid seeing their margins >> seth, the economy's running pretty good here we going to have really packed planes this weekend? >> we are. aaa says 7% more travelers than last year. airlines have scheduled about 4% more seats than last year, so the growth in seats, not so much the growth in travelers, so airplanes even more packed than usual for a holiday weekend. not all growing at the same rate united growing more than its peers, american and delta. among the smaller airlines, spirit airlines growing 20-something percent so they're growing but so is demand, thanks partly to that great economy >> patrick, back to the driver we are seeing a drop in wti as well as brent in today's session but for the most part, what level does it take consumers to say you know what? i'm not going to take that road trip maybe i'll take the train or won't go anywhere at all >> motorists already feeling very squeezed. i think there's one theme here that's common.
1:55 pm
you're squeezed on the roads this holiday with traffic, squeezed on an airplane, squeezed at the gas pump people are feeling pain. gas buddy did a travel survey of summer travelers and found that 39% of respondents said that high gas prices are starting to impact their travel plans, so that anxiety is building that's up, by the way, from 19% a year ago and it's starting to have a little sticker shock, especially in the areas like california, the media's been covering now very expensive stations, $5, new york city, $5 in orlando, and it may not get good -- better any time soon in terms of seeing gas prices come down we could be in store for a little bit more pain >> i was just going to ask you about that oil prices are down, roughly 4% today because there's talk that russia and opec may pump more oil. if indeed we see this price decline hold, how long does it take before you see it at the pump >> well, i think it probably takes, perhaps, five days to start seeing the national average come down, but keep in
1:56 pm
mind, this is not necessarily a nail in the coffin for high gas prices we still have to watch exactly what will happen with the iran, with sanctions and our allies and how much more opec will be interested in producing. so far, this is being talked as opec going down, cutting production to compliance of course, to cover for venezuela so i think even if opec is producing more crowd oil, you're still going to see the priciest summer at the pump since 2014. >> all right, guys, thank you very much for joining us ahead of the holiday weekend patrick and seth >> thank you coming up, we are all over that slide in oil prices, the energy names getting whacked today. plus, one month since our stock draft. we will check in and the incredible downfall of harvey weinstein. what happens to the millions and his vilash homes the second hour of "power lunch" begins right after this break. but the market was up nearly twice as much. that's a tough pill to swallow. exactly. so i started trading. but with everything out there, how do you know what to buy? well, i think my friend victor has just the thing for you.
1:57 pm
check this out, td ameritrade makes it easier to find the investments that might be right for you. like our etf comparison tool it lets you see how etfs measure up to one another. analyst ratings and past performance... nice. td ameritrade also offers access to coaches and a full education curriculum to help you improve your skills. that is cool. and if you still have any questions you can always chat with us on facebook or call our experienced service team, 24/7. yep. just because you're doing it yourself doesn't mean you're on your own. that's great. you're still up. alright. you're still up. if i knew you were gonna run the table i wouldn't have invited you over. call (866) 296-7451. act now to take advantage of commission-free trades for 90 days, plus get up to an $800 cash bonus when you open and fund a new account. ♪
1:58 pm
never owned a business.e term "small business," there's nothing small about it. are your hours small? what about your reputation, is that small? when you own your own thing, it's huge. your partnerships, even bigger. with dell small business technology advisors you'll get the one-on-one partnership you need to grow your business. because the only one who decides how big your business can be, is you. the dell vostro 15 laptop, with 7th gen intel® core™ processors.
1:59 pm
i'm sara eisen, here is what is on the menu a hot rally or a sideways malaise as we head into the summer season, what can we expect from this market? we'll look back at the trends. the epic downfall of harvey weinstein, the money behind the drama, the millions of dollars, the lavish homes, what happens to all of it now and it has been one month since the stock draft here on
2:00 pm
"power lunch." two teams have taken a commanding lead. the upsets, the winners so far, and the team in the lead is here happy friday the second hour of "power lunch" starts right now ♪ get your motor run, head out on the highway ♪ ♪ looking for adventure and whatever comes our way ♪ >> and welcome to "power lunch." i'm melissa lee. mixed day here on wall street with the nasdaq the only index in the green today, the dow near session lows the dow 24,700, down by 0.4% the nasdaq the only major index in the green crude is down more than 4%, hitting the lowest level in more than two weeks, brent also lower, down by about 3% and that move pushing oil stocks into the red. 67% of the oil and gas etf, the x op is now in correction territory or worse new field, apache, and
2:01 pm
chesapeake among the laggards and airlines flying high on the become of lower oil prices, american and southwest leading the charge monsanto shares higher also on reports that buyer is expected to win u.s. anti-trust approval for its merger with monsanto i'm michelle caruso-cabrera. here's what else is happening at this hour. best buy will close its mall of america store in august. the retailer has been there since 2009 and says the move is because it already has other stores in the area consumer sentiment falling slightly in april after hitting a high in march. dip largely attributed to americans' concerns about rising inflation. durable goods orders falling last month but the dropoff stemmed almost entirely from a decline in contracts for boeing planes most businesses increased investments. the market stuck squarely in the middle of a four-month range. will this summer be a staycation for wall street? that sounds like a mike
2:02 pm
santoli-ism. he joins us from the new york stock exchange >> i'm good with the headline gimmick, sara, yeah. i think the market looks like it's gotten relatively comfortable in this range and by the way, you say smack in the middle the s&p 500 is 5% above its closing low for february, 5% below the closing peak in january. and there you go just about up less than 2% on a year to date basis the seasonal tendencies start to become head winds in the summer, of course, nothing magic about these pattern bus but they do sm the tilt the odds, especially in midterm election years, it tends to be june, especially, has some rough patches, so i'm not calling for any kind of major decline or a return to the lows but it seems as if a nervous, choppy tape is most likely right here because of the same push-pull we've had between the good corporate fundamental factors and those other cautionary ones, whether it be the fear of rising yields, which of course have moderated right now or the geopolitical trade noise and the restof it and i
2:03 pm
would say options market bets are now laid in such a way and it's not always the case, but laid in such a way that august, the most probable outcome for august expiration for index options is s&p 2700 which is right here doesn't mean they're right but it seems like there's some gravitational pull right around these levels, guys >> mike,thanks the dow and s&p 500 trying to avoid a second straight day of losses so where do we go from here let's bring in eddie perken, michael jones, and fast money trader jim seymour, chief investment officer of seymour asset management gentlemen, good to have you here on this friday eddie, i'll start with you you're saying that investors should consider rotating out of what has been a consensus over weight in general which is information technology as well as financials. why? >> i think those areas are over-owned right now everyone knows the economy is in pretty good shape but i think the more defensive sectors,
2:04 pm
particularly those that are sensitive to the yield on the ten-year treasury are a good place to be so utilities, telecom services, these stocks have lagged on a two-year view and also lagged year to date and there's pretty good value there and we've seen what's happened in the last three days with the ten-year moving back below 3%, smof these more dividend-oriented stocks are doing well the upside that comes if rates go lower, the defensiveness that comes with these investments >> was there a trigger for this, eddie? did something happen to make you think, you know what, i want to be in these sectors which may actually be stung by higher interest rates >> just the observation that there is such a uniform consensus around the direction of interest rates, and it's certainly an easy story to tell. the economy's in good shape, inflation is starting to show up in the economy, unemployment is very low why should rates stay around 3%? it's very easy to tell that story, but when everyone in the market believes something, things have a tendency to go the other way so we're not calling for lower rates but we think the
2:05 pm
direction of travel from here could easily be down as well as up we've had the ten-year move more than double off the bottom so we think we're probably in a trading range on the ten-year and you're okay to own dividend stocks >> speaking of being a contrarian here, you would go into emerging markets, which could also be stung by rising rates. >> this gets back to what's going on in italy and to some extent, dollar fundamentals are not necessarily bearing out what is going on between the european and u.s. economies, i think there's more alignment than there is but i think that emerging markets, which have underperformed massively since the dollar went on this move, e.m. down to about 7% since that time, not surprised to see it. >> you think the dollar should go stronger to reflect the gap between what's happening in europe and what's happening in the u.s. >> i would put it differently. i think the u.s. dollar fundamentals without italy blowing out on their bond yields with this colation government claiming they want some type of redemption on their debt, i
2:06 pm
think the dollar and euro should be trading closer to longer term parity i think what's going on in italy will force the dollar possibly to trade higher than it should in this environment because i think the central bank differentials while it seems like the ecb is very much on hold, i don't think the economies are that far apart >> michael jones, what would you do here? >> well, i actually think that the best story and the one that's not being told right now is japan i just came back from japan and it's very clear that the whole move to put women back in the workforce has had a profound impact on discretionary spending in the japanese households there's real dynamism and activity happening you're also seeing a big move from part-time work to full-time. that unleashes an awful lot of discretionary spending because japanese contract workers save they don't spend when they get full-time, you unleash a lot of spending the fundamentals of the japanese economy look great the companies are putting the -- that dynamism into their bottom line >> how do i make that active
2:07 pm
what do i do do i -- is there japanese etf? you have particular things that you like >> absolutely. >> would you do anything with the bonds, which pay me nothing and there's so many of them. >> no, i think the bond story is just another reason to like japanese equities. we can argue whether the massive deficits we've got to finance are going to have to push u.s. interest rates higher or lower, what you know is that japanese interest rates are going to stay low. and that's another really positive backdrop for the japanese equity market that we don't have here in the u.s >> all right, but bottom line, if somebody at home wants to do what you are suggesting, the best way to get into japan is what >> so, we're not allowed from compliance purposes to talk about specific securities but we like to invest through etfs, diversifi diversified way. we think that there is risk to the yen potentially and that means having a flexible currency hedging strategy is also a critical component of success through investing in japan >> okay. got it >> all right eddie, michael, thank you. tim is going to stay with us for
2:08 pm
the time being >> we were just talking about italy. let's take a closer look at what is going on there and with the european markets dominic is here with details >> as you guys have been talking about, those emerging markets and some of the developed ones a are huge focus because we are seeing idiosyncratic issues that may go into other markets as well and spread a bit. contagion is maybe not the way to put it just yet but we've seen the story play out in the past where peripheral european economies have been at least the basis for some of that fear to come back in the marketplace so right now, we know that the yield on italian ten-year debt versus yields on german ten-year debt are spiking, spiking higher, 200 basis points that gap right now so we can see a huge move higher, indicating risk aversion is coming back in the marketplace. as we look at what's happening with these peripheral european economies, you guys and tim just talked about it, italy may be arguably the epicenter right now f for what's happening. it's now 9% below its recent
2:09 pm
high so almost in that 10% pullback phase take a look at greece which was definitely one of the ep steices for what happened with the european debt crisis the component is below its high, the ibex now 12% below the prime minister has issues there with regard to the legitimacies of his government, perhaps and then one more place to look that's not as bad for right now is portugal, the psi 20 there down by 3% but as we look at these peripheral european economies, the question will be wrornt these issues in italy and spain start to flow out into other parts of the economy right there. it's a big debate there among emerging market and developed market investors >> we wait to see if there's contagion. let's bring in tim seymour, still here you know, looking at that two-year yield or the ten-year yield, it looks like such a sharp rise >> it is >> and then -- >> three and a half years. >> still lower than the u.s. ten-year so how seriously do you take the
2:10 pm
potential for contagion risk from italy >> the fact that european politics have now reentered the risk spectrum and the measurement for global markets, i think, is significant. we've referenced greece. we've referenced the times in which we've had essentially these -- the fundamental and the structural issues with europe, i think, on the political front are the reasons why we worry that this could -- this could snowball i worry a lot about the ecb. the fed had gotten at least back on track in terms of a plan to begin tightening policy and normalizing policy ecb is very far behind the curve and yet suddenly you've got deflationary forces, we've seen peak macro in the europe for this year. >> they didn't do any of the reforms they were supposed to do all of europe, and you see what happens. the economy is already starting to weaken and they haven't been able to take their foot off the gas. >> people don't talk about the orders of this which is that growth in italy is significantly better than it was three or four
2:11 pm
years ago. spanish unemployment is the best story in europe. so, the fiscal surpluses or the deficits have the ability to at least bear stronger macro, it's not the basket case it was three or four years ago but again you just talked about, this movement in rates has wiped out three and a half years of the ecb leaning on rates artificially and that's a concern. >> i think sentiment is only souring. it's not getting any better despite -- >> would we be in a situation where it's really felt just in the financial sector if you look at eufn, the etf that tracks european financials, it's really taken a hit and that's mainly because italian yields are at such a point that it could cause real damage to bank balance sheets in italy but we don't know what the risk is to the other financials. >> we know there's significant risk on germany here, effectively, and if you look at what deutsche bank is going through, they have also idiosyncratic issues of their own. my view is that the political risk spectrum in europe is getting worse, sara.
2:12 pm
but i think that the macro in europe is arguably until the last couple months, some of the best macro in the world. so you can make an argument that these economys are in a much better position to withstand a difficult period >> thank you, tim. here's what's coming up on "power lunch." what a difference a day makes after calling off the summit with north korea, the president says we're talking again we'll have the details and the implications next. plus the force is stronger with this one. "solo" already breaking records after just one day how higher expectations and will it deliver ren ow lchupand more coming he o"perun."
2:13 pm
2:14 pm
2:15 pm
the u.s. may have pulled out of the summit with kim jong-un, but it may not be the end of talks with north korea here's what president trump said at the white house this morning. >> we'll see what happens. it could even be the 12th. we're talking to them now. they very much want to do it we'd like to do it we're going to see what happens. >> what's the president's strategy here? joining us is hugh hewitt, host of "the hugh hewitt show" on msnbc. what do you think is going on here >> i think it's a question of wid two things north korea doesn't really have much in the way of skill sets for conducting summitry. they actually don't do it except with the people's republic of china so there's a lot of blanks they're trying to fill in, even though they're quite good spies, i don't think they're very good diplomats. they weren't returning phone calls or meeting at the right
2:16 pm
time with the people in the white house and so the president called it off. there's also, i would direct people to this book by conrad black about trump. all through his business career, he would often walk away from the table, especially in debt renegotiations, in 1990, 1991, 1992, the approximapresident wot walk out of meetings and call people's bluffs so this in again, out again, walk in, walk out, that's old for donald trump and diplomacy is new for north korea. >> yeah, certainly the guest we had on yesterday, two experts on north korea, said they think kim jong-un was actually completely taken by surprise, that historically he's used to being chased so this was a very different methodology that he's facing >> i think your experts are right. in fact, i wouldn't be surprised, sad to say, if a few people have already been put up against a wall and shot in north korea for misplaying the hand, by going to the top level of rhetoric against the vice
2:17 pm
president and triggering the meltdown of the summit now, maybe they're putting humpty dumpty back together again in pyongyang but i just would not be surprised if kim jong-un is completely mystified by the niceties of diplomacy, because he's living in an echo chamber where people are afraid to say no, to say yes, to say anything they just don't want to be noticed and killed >> hugh, i'm curious as to your take on our relationship with china. president trump always likes to say president xi is a very good friend of mine, we have a great relationship and then slaps $100 billion of threats on the tariffs on the country where does the president's relationship with xi stand >> well, you know, i go back to the muscle memory that he picked up in his years as a businessman, his relationship, for example, with carl, back and forth, hot and cold, very good friends, very angry business partners to me, it seems like it's a business relationship that he wants to always, as most large
2:18 pm
developers want, to maintain the opportunity to get back in but if you're going to compete, you're going to compete hard, and then look to the next deal and i think it's important for people to put the lens on of land developer and promoter and television performer and all these other skill sets that donald trump brings to the presidency that were just not used to. he's just broken every mold that ever existed for a president in modern times >> so, then, talk about -- talk to us then about zte in that context. how do you see the way he's played zte based on all you've said >> i don't premium to be an expert on how he is res recollecti -- resurrecting this company but it looks like give some, take some, give some, take some, and maybe you'll cut our tariffs on incomi incoming automobiles for united states into china and maybe you'll help this company on this side and i would expect it to continue through mr. lighthizer. i do not think it's a good sign that the trade representative is
2:19 pm
shouting at the economic adviser and having arguments on tarmacs. peter novarro continues to alarm me i've known him for a long time affable, friendly. i think he's way in over his head and the president is better served by listening to your old colleague larry kudlow and by listening to mr. lighthizer but i would look for more back and forth, tennis patch, ping-pong, if you will, to use the cliche through the whole relationship with the trump presidency. >> so all in all, hugh, where do you assess the u.s.'s position given this it's interesting that you said, you know, north korea doesn't have any skills in summitry but you can also say that, you know, them saying, oh, you know, we're not going to stand for a libya-like model of denuclearization, that, you know, that was sort of a very trumpian move as well, so all in all, do we gain the upper hand >> i think we're a lot better off than we were six months ago. for one thing, there are three americans home who were in hostageland. secondly, we've learned a lot about kim jong-un just by observing how he has dealt with
2:20 pm
this, how he is continuing to dole wi deal with this our intelligence agencies captained by gina haspel are watching closely to glean what they can so i think we're much better off. i would direct everyone to the conversation i had this morning with lindsey graham. there is a stark possibility on the table and senator graham is very blunt about this. donald trump has told him he is going to resolve the north korean nuclear problem by the end of this term, whether he does it by negotiations or by conflict and lindsey graham was not mincing words. it's actually kind of chilling to consider the prospect that you've got 1 million casualties likely if it does come to blows, but again, senator graham, talked to him yesterday, i think he's golfing with him this weekend. this is very serious gut check time for kim jong-un, because this president is not messing around, like the last three. >> finally, hugh, i just wanted to ask you about tariffs, because on wall street, the investors we talk to, everyone's trying to figure out what's real
2:21 pm
and what's just a negotiating tactic from this president so, take the auto ones this week that were threatened on auto imports into this country. does the president score political points in the all-important rust belt states for just having that threat out there or does he need to follow through with that into the midterm elections to get those votes? >> you know, i don't think it's a good threat. threatening bmw and european automobile makers, i don't think that works for him, politically. and i am from ohio i am from a gm town, warren, ohio, which was packer and general motors and lordstown is still running, i think, two ships. i don't know that tariffs rings any bells anymore. that train left a long time ago. what matters is the fact that we've got 3.9% unemployment, we've got millions of jobs that are open >> why does he do it >> why does he do it because he's been talking about it for 30 years, muscle memory what happens is what matters is whether or not he gets a poll approval uptick and so he's making a lot of noise and his numbers are going up and so i
2:22 pm
assume he's going to keep making noise but i don't think it works in the rust belt >> trade is his true north, as they say thank you, hugh. coming up, one indy car driver is bringing the world of cryptocurrency to the racetrack. his story is next. and the downfall of harvey weinstein, a look at his hollywood influence and his lavish lifestyle
2:23 pm
2:24 pm
2:25 pm
indy car driver j.r. hild brand is all in on cryptocurrency eric joins us now with the story. >> that's right. crypto is going mainstream they're getting some more traction they're actually going to be sponsoring his car at the indy 500. they're going to be the sponsor. they are a block chain network for location-based tracking so think about if you have online shopping deliveries every step of the way, you want to know where those things are, self-driving vehicles, smart cities, all those things are going to need trustless location data j.r. finished second in the indy 507 yea 500, seven years ago, he gets some xyo crypto token as part of his payment. the team, though, they need to buy engines. they need real cash to make
2:26 pm
those engines go fast, so they're not getting any crypto they're getting straight cash and j.r. is the perfect guy to bring this to the mainstream he got admitted to m.i.t. but didn't go. he hasn't gone to college but he's big into science, technology, math, class programs, for youth. he refers to himself as the bitcoin expert within indy car he was once a go daddy endorser and still has pre-ipo stock so that was a learning lesson on both the upside and downside >> this is not just a publicity stunt. >> no he recollects kn, he knewt i was like, do you work there? he was like, no i've done some digging. >> isn't he worried about the regulatory environment i mean, this is an ico and if they clamp down, that could affect the value, a part of his payment. >> i think he thinks of it as a diversified investment he's seen go daddy go up and down and kept that in his portfolio so part of this is, i get paid, i have this as a sponsorship, i'll see what happens to it.
2:27 pm
>> right >> it's a real interesting story. he'll be there on sunday, has a chance to win. >> drivers like living on the edge >> that's true if he's going 250 miles an hour, what is a token? what's he worried about that for. >> thanks, eric. straight ahead, we're going to update you on who's hot, who's not, and what's watching, o 28 il market very nervously inur01cnbc stock draft stay with "power lunch." need a change of scenery? the kayak explore tool shows you the places you can fly on your budget. so you can be confident you're getting the most bang for your buck. alo-ha. kayak. search one and done.
2:28 pm
2:29 pm
oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around.
2:30 pm
hello, everyone. i'm sue herera here's your cnbc news update at this hour. police says an improvised explosive device is the cause of an explosion in an indian restaurant in a toronto suburb a manhunt is under way for two male suspects. ireland has one of the strictest abortion laws in the world but that might be about to change voters are casting their ballots today in an historic referendum which could end the country's near total ban on abortion fiat chrysler recalling 4.8 million vehicles due to a potential defect it covers 14 jeep, ram, chrysler, and dodge models, built between the years 2014 and 2018 and today's the day that stacey cunningham will formally
2:31 pm
become the new york stock exchange's 67th president. it is the first time in the exchange's 226-year history that a woman will have the role she started at the exchange as an intern. and that is the news update. we wish her the very best of luck melissa, back to you >> thank you very much, sue herera let's get a check on the markets right now. stocks are trading in a narrow range but off session lows trying to avoid second straight day of losses right now. dow is down by 0.33% utilities and consumer staples, your sector leaders right now. but the big story here, energy that sector lower by 3%. speaking of energy, the oil market is closing for the day. let's get to dom at the cnbc commodity desk >> we are closing these prices around the lows of the day for both west texas intermediateuate, those u.s.-based prices around $67.88. as for the world benchmark brent crude price you're currently around $76.50.
2:32 pm
the big theme, obviously, is oil supply, what are the big oil producers like russia and saudi arabia, what are they going to do in the coming weeks and months about possibly putting more oil on the market that's really going in the opposite direction of some of their agreed-upon production cuts up until now to try to counteract the effect of reduced iranian oil in the market due to renewed sanctions also reduced output from venezuela, it's just one thing to keep an eye on. now, wti prices did fall and they managed the hold right around the 50-day moving average, that average price, $67.50 west texas intermediate, the lowest today, just to give you an idea of where the range is, we are near the lows so, during our stock draft, the stevens tech traders gtsot a lot of grief for being conservative and passing on bitcoin. >> bitcoin, to me, is the one that stands out.
2:33 pm
i thought go number one although when i saw the stevens guys and gals were number one, i knew they wouldn't go that route because they had professors in their ear saying, this is how stocks work and blah, blah, blah but bitcoin is fascinating >> oh, yeah, those kids were so dumb, right? because look, in the months since then, bitcoin is down nearly 20% the worst performing of the 24 choices they had in the draft. so they are looking pretty smart right now. let's bring in the stevens tech traders. danielle, lauren, peyton, and madison along with tim seymour, who is neck and neck with mr. wonderful to refresh our memory here we go stevens, you picked facebook, disney, sage, and tim, you picked amgen, drop box, and chesapeake good to have you here. you got to laugh, right? >> these guys are kicking themselves >> everybody laughed at you for not picking bitcoin. >> blamed your professors. >> yes exactly. >> you feeling pretty proud of that, at least, that good call >> we definitely think bitcoin has been in bubble territory and
2:34 pm
at the end of the day, it's an unregulated currency that most people who are trading just don't understand so, it's not surprising to us that it's been down since the draft. >> you did pick facebook and disney i remember i think guy and cramer were calling you for going too traditional, too old school and obvious what's worked? >> well, i mean, it's definitely had some positive returns, both of them currently are about like 5% each. since we selected them and i think that it's just the timing of the markets overall that we've seen the benefit of >> any regrets there any of them you think, wow, we called that one wrong or we thought we would get better performance after say earnings or something like that >> monday morning quarterback, maybe. could have done better >> i know we liked amd early on but at the same time, we were just getting grilled on facebook, who is up huge that day, and like remember, we don't get the price until the day closes so we didn't want to do that again with amd who was up over 10% on the same day. >> these guys are great. they were very contrarian on
2:35 pm
some level and i think that's how you have to think about a lot of these by the way, it's a long season so, i mean -- >> you're in second place, dude. >> talk about the guy who was the pace car last year that did me no good >> how did you -- chesapeake up 39.5%. what's that? >> my approach in a -- call this a contest, a draft, a portfolio, you want obviously, the stocks that have the most delta, the biggest opportunity. last year, i chose valiant, the number one overall performing stock. the reason i chose it was because it was a balance sheet reparation story chesapeake is the same thing they have asset divestitures we know what's going on in the energy space, high beta, but it's really a story of a company that i think is seeing religion in terms of how they manage their balance sheet and begin to assess where their assets are. >> it is down 9% today >> it was up 50% before that this stock is not going to be a low volatility stock >> you are neck and neck with mr. wonderful. >> i know. i know would have been nice
2:36 pm
i woke up this morning in first place and i'm now in second place. >> you're not going to talk trash? he would be talking trash right now. that was a softball tim >> it's easy to look at the names that he chose were safe picks but if you think about boeing, that was the 2017 story. you know, that's ultimately, to me, where a lot of these names fall i don't want to be investing in companies that i think have already priced in a lot of good news i think the three stocks i chose have a lot of opportunity. >> madison, of the three that you have, which one do you think is going to be your winner >> i think we're thinking sage as of right now. it has potential >> it's up the most. >> yeah. it's definitely the most volatile stock so we think it could either be a huge winner or be down when we're ending but i think right now, we're looking at it being the top winner and the other uones are more conservative but we see them increasing over the next nine months >> what would you have picked at four >> if we had a fourth pick, we were talking that we might have went with energy stock, like amd a lot. >> chip would have been better than energy at this point.
2:37 pm
>> yeah. so, we're kind of happy. >> you guys, just one day, energy is down 4 % energy is totally -- you're talking trash. i mean, it's a long season, folks. >> it is great stuff, guys. thanks for coming in we really appreciate it. >> thank you so much >> thanks for having us. the highly anticipated "solo: a star wars story" is set to be release third-degrd this d it's already smashing records, thursday evening previews bringing in $14 million, a memorial day record. joining us to discuss is paul, a senior analyst paul, great to have you with us. >> great to be here. >> is it too early to project what the take-home will be for the entire weekend >> well, i think for the four days, friday through monday, probably $130 million to $140 million that would be the first $100 million opener for the memorial weekend since 2014 and "x-men" so definitely memorial weekend needs to get
2:38 pm
its groove back. it used to be the start of the summer was memorial weekend and we moved it up into early may. it's now an 18-week season instead of a 15-week season. but this is a very important weekend. this is where the month of may passes the baton to june and keeps that momentum going. it's very important. last memorial day weekend, a year ago, only earned $181 million for the whole weekend for four days. that was the 18th ranked memorial weekend that was not a good place to be. if you go back to, you know, years ago, there arememorial weekends that generated over $300 million for the four days, so a lot riding on this but "solo" is a great movie to kick off this next part of the summer >> when you're trying to make those projections, paul, do you look at what the weather's going to be like across the country? >> well, that's an important part because if people literally can't get into a movie theater, then that's going to hurt the
2:39 pm
box office but generally, it's spread out so far >> i was thinking if it's nice out, then people don't go to the movies and it's crappy out, then people go to the movies because i know in new york, saturday and sunday might be a little challenged >> well, that's the thing. i mean, it's -- a lot of that is weather-dependent but remember, you're only in the movie theater for a couple of hours, it's not like you're going there all day long so over memorial weekend, i think people find time for the barbecues and the parties and the celebrations and all that, and then if they want to see a movie like "solo," which is brand-new in the theaters, or de "deadpool" 2 which is going into its second weekend or "avengers: infinity war," this is a great movie to catch up on films that have come out earlier in the season and in our com score data, we know that the summer season is vitally important and memorial weekend is a big barometer of how the overall summer will perform. last year, that was the lowest-grossing summer since 2006 and what happened, we had a terrible memorial weekend.
2:40 pm
this year's going to be a lot better if this memorial weekend is any indicator, we're going to have a really strong summer and there's a lot of big movies on the way >> paul, speaking of which, you were talking about "solo." when "the last jedi" came out, disney was demanding more from the box office when they went to the theaters they have to split the box office and they were asking for 65% back then. are they going to command the same with "solo" is it that good? >> well, i mean, this is a many of that people are talking about blockbuster fatigue or "star wars" fatigue. i think it's more because it's only been five months since the last movie, and so -- and then we have "star wars" episode ix, december 20 of 2019 so that will give a lot of space between these two movie buzz as far as the terms that the studio's asking, that depends on the individual movie and the terms that are set up between the studio and the theaters. >> paul, great to speak with you. thanks for your time >> great to be here. thank you. straight ahead, the story everyone's watching from tribeca
2:41 pm
to hollywood, harvey weinstein's downfall we'll bring you all the latest gus he one-time media mol' stunning fall. "power lunch" is back in two minutes. never owned a business. there's nothing small about it. are your hours small? what about your reputation, is that small? when you own your own thing, it's huge. your partnerships, even bigger. with dell small business technology advisors you'll get the one-on-one partnership you need to grow your business. because the only one who decides how big your business can be, is you. the dell vostro 15 laptop, with 7th gen intel® core™ processors. ♪ how do you know you made the right call... ...you just do. the light beer you've been waiting for has arrived.
2:42 pm
lower carbs. lower calories. higher expectations. corona premier.
2:43 pm
now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks. did you see this this
2:44 pm
morning? an epic moment that is reverberating through the halls of power of new york and hollywood. harvey weinstein in handcuffs, arraigned on charges of rape and sexual abuse the one-time media mogul's rise and fall like something out of shakespeare, a man who held so much power, he made and destroyed careers on a whim and he's now humbled with an ankle bracelet and a $10 million bond, a man who traveled the globe, and now he can not leave new york and connecticut contessa brewer is in new york where weinstein was arraigned just a few hours ago jul julia boorstin is in los angeles. contessa, you're up first. >> reporter: so, official, we have heard from the attorney for harvey weinstein that he will plead not guilty he's facing two counts of felony rape and a count of criminal sex act. the former head of film studios
2:45 pm
miramax and the weinstein company was handcuffed and marched into court to face for the first time criminal charges. they're based on accusations from two different women involving encounters in 2004 and 2013 >> we intend to move very quickly to dismiss these charges. we believe that they are constitutionally flawed. we believe that they are not factually supported by the evidence, and we believe that at the end of the process, mr. weinstein will be exonerated. >> reporter: weinstein posted a million dollars bail, surrendered his passport and weight of the eviden waived extradition we'll learn next week whether he will testify before the grand jury sara, michelle, we're learning that he should be back in court by the end of july >> contessa brewer, thank you very much outside the courthouse now to julia boorstin from los angeles with more. >> reporter: well, sara, a lot of talk here in hollywood about just how dramatic the fall has been for the producer who once
2:46 pm
dominated the independent film world and the oscars it has reverberated throughout hollywood. miramax and the weinstein company produced and distributed films that were nominated for 341 oscars and won 81 oscars weinstein himself was nominated twice and won for best picture the weinstein company grossed $2.4 billion in the u.s. across 133 movies over about a dozen years. but his power faded as studio franchise films eclipsed the independent studios and a number of weinstein films fell flat now, following more than 80 women accusing weinstein of misconduct, dozens of hi high-powered hollywood men have been accused of a range of inappropriate behavior women in hollywood are using this moment to try to drive lasting change >> stay there, julia want to go to robert frank how extensive were harvey weinstein's personal holdings and how much of that wealth will he be able to access to help with his defense big question here, robert.
2:47 pm
>> yeah, and he really did live large as one of hollywood's biggest moguls now harvey weinstein is racing to raise cash. just two years ago, he bragged that the weinstein company, has his main asset, was worth between $700 million to $800 million after he was fired in october, the company filed for chapter 11 bankruptcy it was sold out of bankruptcy for just $310 million. almost all of that will go to unsecured creditors. he had a $15 to $20 million divorce settlement he told his first wife at the time he was suspended child support because he didn't have the funds. now, just over the past six months, he has quickly sold off all three of his homes he had a mansion in the hamptons that was bought for $12 million in 2014. just sold us for $10 million so he took a loss on that one. he had a water front estate in west port, connecticut, sold that in march for $16 million and he had a townhouse in new york's west village, just sold us for $26 million in total, all those sales raised
2:48 pm
over $50 million, but that does not count the more than $15 million in mortgages that he had and the legal troubles, the settlements, all the lawyer fees, this could be tens of millions of dollars, so it's hard to see that he has anywhere near the wealth that he had just two years ago. >> weren't you just startled to see him in handcuffs the minute he walked out of the courthouse, like, wow, shakespeareian, operatic, all these things you think of with this guy who was just so powerful and now like this >> he was a king maker in hollywood. >> that's my question about the weinstein company. now it's going to be sold. what remains of the company and what is that company without him? >> reporter: well, that was sort of the big question when people were trying to figure out what those assets were. so he did have a television business as well as a film business and for the television business, you know, it was mostly reality tv shows, but the film business really is sort of the residual money that's going to come in
2:49 pm
from films that are being sold on video on demand, say, or sort of the home video revenue, but then also it's films that are in development. so, i mean, he has really been out of this business since october when he was kicked out of the weinstein company, and those assets did sell for, first, the company filed for chapter 11 in march and then earlier this month, the assets sold for about $300 million which is a lot less than weinstein himself said it was worth. >> but even in terms of those revenue streams, julia, have we seen a blowback? have we seen consumers not opting to watch weinstein productions? >> with the name. >> reporter: well, i don't know how much consumers are responding to it, but i do know that there are a number of different projects that were in the works that ceased production or they sort of ceased development, you know, and this is going back to october, because anyone who is partnering with them all of a sudden became very, very cautious. so that company has gone through a total overhaul and a lot of internal changes there since that -- the first revelations of this in october.
2:50 pm
but you know, the real question here, though, is what the independent film business is worth. i think one of the reasons why -- one of the are reasons why women finally felt comfortable coming forward with these accusations, some of which go back decades, is because harvey weinstein wasn't as powerful as he used to be. i think if he maintained his role as that king maker, maybe the stories would not come out, but women felt comfortable coming out and telling stories because the whole independent film industry decreased in value because whole business changed >> definitely. >> thank you oil markets tumble down, touching the lowest level in more than two weeks. are there opportunities in oil or is the slide a ipryslpe slope? we'll debate let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks,
2:51 pm
$0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online. one second. barely enough time for this man to take a bite of turkey. but for cyber criminals it's plenty of time to launch thousands of attacks.
2:52 pm
luckily security analysts and watson are on his side. spotting threats faster and protecting his data with the most securely encrypted main frame in the world. it's a smart way to eat lunch in peace. sweet, oblivious peace.
2:53 pm
a down slide for names retail gap missed estimates and sales fell short the company said they were dealing with excess inventory and bad weather. trying to turn around the gap brand not so successfully.
2:54 pm
hibbett sports sinking they expected a gain of more than 1%. tough out there for the apparel sports retailers except for foot locker with a good day, but ross stores in the red. they met estimates, but weaker than expected forecast for the current quarter. stock off 7% oil is sinking today, 4% for cruise, weighing easing output limitations. worst performing sector in the s&p today. craig johnson and gina sanchez is here, thank you for joining us craig, how do the charts look for oil, time for a pullback >> at this point in time, the charts look like a pullback in the context of a bigger uptrend, back to the 50-day moving average, testing that, and looks like a normal pullback if the level does not hold,
2:55 pm
there's support going back to the 15 highs at $62. the longer term is in tact this looks like just some normal profit taking along the way here, and i looked at a lot of the stocks and set ups, they are interesting bottoms, washed out stocks from our perspective. >> seeing the march higher >> overweight, we do >> fundamentally speaking, news russian and saudi could step in with extra supply. how do you look at the new supply picture given what we have seen from the president, president trump, and how everyone else is responding. >> there's several factors pushing oil up geopolitical factors, iran sanctions, renewed sanctions, venezuelan sanctions, as well as tight opec the only piece of information that changed is the opec and
2:56 pm
russia pumping more in the market and easing tight supply restrictions now, i say in the short term, that actually could be fairly meaningful i agree with craig that the long term outlook for oil is still robust and positive and we should see an uptrend for oil, but that does not mean that the downdraft of can't be pretty significant if, in fact, russia and saudi ease up on their oil supply cuts. >> all right, guys, thank you. oil prices down more than 4% for more insights, go to tradingnation.cnbc.com follow us on twitte twitter @tradingnation check please is up next. and now the latest from tradingnation.cnbc.com and a word from our sponsor. >> traders short stocks when they thinkthey are going lower the number of shares sold short is called short interest short interest is often used to gauge market sentiment a rising short interest means
2:57 pm
investors are becoming bearish on a company however, when short interest reaches extreme levels, it can be a contrary indicator cae beus traders are forced to buy back their short stock, and that drives stock much higher
2:58 pm
anyone can get you ready, holiday inn express gets you the readiest. because ready gives a pep talk. showtime! but the readiest gives a pep rally. i cleared my inbox! holiday inn express, be the readiest.
2:59 pm
check please listening devices. >> amazon, we thought about this for the home, but i don't like
3:00 pm
it >> i will never. this confirms what i already knew, i'll never have it in my house, like bugging your own home >> yet, a lot of people are buying them. they knew the risk it's interesting that today's privacy day when the new laws are in effect in europe, this is not covered, amazon alexa, because it's not collecting data to sell to advertisers >> thank you for watching, have a great weekend. >> closing bell starts now. the energy trade running out of fuel as oil slips and stocks in the sector do so as well. >> i'm phil lebeau stop using cruise control immediately, a warning to millions of drivers, who is impacted, and what's being done about it >> in lower manhattan, i'm contessa brewer, weinstein pays a million dollars in bail, the rise and fall of this hollywood titan.

111 Views

info Stream Only

Uploaded by TV Archive on