Transcripts For CNBC Power Lunch 20240622

Another big asian selloff. China losing 8. 5 in overnight trade and the hang seng in hong kong also dropping 3 . Japan a more muted drop but i think you get the picture. Europe falling as well. Germany and france bearing the brunt of the selling and the drop continues through the usa. We are off the lows of the day but as you can see the dow is moving to the downside by 133 points right now. The nasdaq is off by 46 points. The s p down by 11. The russell 2000 is down by nearly 1 folks, or 11 points. My old colleague now joins us with more on why china dropped so far, so fast. Reporter volatility returning with a vengeance to the Mainland China stock markets. Equities plunging more than 8 . The biggest oneday drop in more than eight years on signs beijing might be backing away from supporting the markets. Concerns over Economic Health soured sentiment further. Data show chinas industrial firms dropped 3 from a year earlier reversing a. 6 rise in may. Index heavyweights including china unikom bank of communications petra china were all sharply lower down 10 . Thats where we stand from china. Lets head to the nasdaq now where berBertha Coombs is following the big china stocks there. A lot of companies here particularly big cap tech stocks, have a lot of exposure to china, mandy. We know from apple that thats where their iphone growth is actually happened. Apple down 1. 4 . Ya yahoo exposure via awill balibabaalibaba, up 2. 1 . Macao gaming stocks suffered today but it is really the chinese abrs suffering the most. Take a look at some of big these caps. Jj. Com. They want to make sure investors know they have the rigor in terms of their companies and reporting. They list here because of all the volatility in china but today they are seeing the impact of the stocks here as well. Some of the biggest tumblers today ironically are in the internet space completely in terms of Online Gaming like shanda, like some of these others. Soh tuchlt. Com today. They are all falling by the wayside. We are seeing a couple smaller names turning a little bit positive and come off of the lows. Nonetheless, that is really one of the things that is drawing things lower here today. Dont forget these exchanges have done a lot of business with these Chinese Companies to have them listing here so they have exposure as well. Okay thank you very much bertha. Well get back to you later on in the show. As weve been driving home china fears driving down stocks here in the United States. It is the first fiveday losing streak in six months. The s p 500 close to wiping out its gains for the month so far. Lets get all the trading action bob pisani joining us here from the nyse floor. I thought it was interesting not so long ago this morning there were reports saying china was going to increase state buying of stocks. Stocks here in the United States still didnt get any courage from that. I feel that they have absolutely no faith in the ability of policymakers and regulators in china now. They dont because no one knows whats going to happen tomorrow. Whats interesting, they didnt come out today and say we didnt support the market. This is all speculation about why we dropped. We droopd going into the close in china. Everybody said it must be because the government there wasnt supporting but there was no statement to that effect. Were all speculating about whats going on here. For sure theyll be supporting it in the near future though. The chinese etfs here something interesting. The heavy volume were seeing today is in the hong kong gaysbased etfs. Not so much heavy volume in the main Mainland China based etfs. Seem like people are more interested in whats going on in hong kong. Here in the United States very clear knockon effects in all the commodity names. Oil was weak copper was weak were seeing big drops in some of the big energy names like apache chevron, thats at 52week lows. Same with freeport mcmoran. Alcoa just reached positive territory but its been negative throughout the day. Industrials, many of them overseas, more than 50 of their profits. New lows in a bunch of names here caterpillar, discoverier,en Owens Illinois fluor. All these companies outside the United States. We are way oversold in a number of etfs. You can buy all of these sectors. Theyve been drooping for over a month now. Theyre more dramatically away from their 50day moving average. Normally this would be buy signals traditionally but everyone is so uncertain about whether there will be any notable bounce in china that nobodys doing much here today. The convictionvix, the fear indicator, i usually Pay Attention when it hits 20. It is not there yet but its been trending up. It is of o of its lows. We were as low as 12 just a few days ago. Still historically speaking it is not that high. 20 is where i start lifting up my head and say things are getting interesting. Not quite there yet. Well get back to you, bob. Thank you. One major u. S. Company with exposure to china is disney. Ceo bob iger on squawk box this morning talking about the volatility and uncertainty there and about his companys big china bet. Were going all out in china with shanghai disneyland. Should open in about a year. We believe in that market for a disneyland bigtime obviously. We think it is a probably the most exciting opportunity the company has had in a long time, and definitely the most exciting opportunity weve ever had outside the United States. Is bob iger ageless or what . Iger also talked about the Chinese Consumer and disneys new theme park in shanghai. We opened up a new disney store in shanghai few months ago. I was there week before last. Still doing extremely well. We havent opened the theme park yet so we dont fully know but research that weve done so far suggested the Chinese Consumer is not really in terms of its behavior indicating that there is an issue with their markets. So check out shares of disney this year. Up pa up a whopping 25 and sitting at 118 a share, very close to record highs. So is china just too risky to touch right now . Is it like catching a falling knife or could there be some good opportunities created here . David reed, peter navarreonavarro, gentlemen, great of you to join us on a day like today. Peter, i know you are perennially a china bear but nonetheless, is there anything in particular right now that gives you cause for concern when it comes to how it affects us . Im not perennially a china bear but i started back in april saying, hey, this is not a good situation. The thing that people have to understand is that the markets are basically reflecting the fact that were in a Global Economic slowdown and any hope that china was going to lead us out is gone basically. So this is a longterm kind of trend. The markets are going to be down in china, probably for the next 6 to 12 months or longer. And the basic fundamental here is china is an exportled economy, and its two biggest customers, europe around the United States, continue to struggle economically. Europe certainly is struggling economically and even though america is the strongest economy in the world right now, were still well off the 3. 5 gdp growth pace that we did year in year out, that basically lifted china up to its 10 a year growth rates for 30 years. That worlds over. And disney should know that and the rest of Corporate America should not that. Certainly investors are putting their money in china should know that. If that worlds over and not coming back any time soon, david, do you agree or is there anything peter said you want to push back on . I dont believe we should read too much in the xhinzChinese Market as it explains anything about anything. Chinese global overperformed the Global Economy for years and years and years. While their economy was going well, their stock market did nothing. Then the economy starts slowing down in percentage terms, then the stock market takes off. Which tells you it is completely divorced from fundamentals. It is completely different by policy out of beijing but very little impact on Chinese Consumer pocketbooks. Less than 10 of chinese households own equities so it can get a lot of headlines, it can cause a lot of consternation but in terms of a pocketbook issue . Its really irrelevant in china. What about the pocketbooks of americans here as they watch the fallout as u. S. Stocks fall as a result of this. There are a lot of big cap, s p companies, intel i could name lots of them. Apple. Bowl. Ge. A lopt of these American Companies have great exposure to the Chinese Market and the chinese economy, david. Dont you think this is a concern . Well they should be concerned if theyre concerned about the health of the Chinese Consumer. If this gets to the point where it is hurting the Chinese Consumer and making them pull back, yes, apple and yum and all these guys have reason to be concerned but we havent seen that yet. Weve seen the stock market be extremely strong. Weve seen the stock market be extremely weak but we have yet to see any change in consumer centerment which is what we Pay Attention to because it is so important to global business. It hasnt fall be off yet. Heres whats interesting about this. Here in america twothirds of our gdp growth are driven by consumption. Sure we watch that carefully. In china it is only onethird. All their growth is export driven. So i dont really care what the Chinese Consumer is ink thissing or doing or investing in or whatever. This is all driven by exports and big money going in and out of china. To say that the chinese stock market hang on. To say that the chinese stock market deuce not reflect underlying global fundamentals just take one step further over and look at the commodities. Look at every single commodity in this world right now thats going into the basement. Thats a china effect. Thats a knockon china effect. China doesnt operate in a vacuum. Is it possible because commodities are moving lower partly because of lower demand from china, do you think thats something that might stave off a rate hike this year in the United States . David . Well couple things. First, peter may not care about the health of the Chinese Consumer, but apple does and disney does and intel does and all those other companies do. So he may not care but those companies do. Secondly i think that what weve seen in decline in commodities is all related to the strength of the dollar. We have not seen a decline in underlying demand. Youve seen return of supply and youve seen strength of the dollar driving Commodity Prices down. Oh, please. Come on. We have to leave it there, guys. Unfortunately, weve got a lot to get through in this hour but david and peter, thank you very much for your thoughts. Over to you, ty. Thanks very much. Fiatchrysler facing record fines over the handling of recalls despite the massive recalls in the Auto Industry though. Auto sales just keep rising. Whats behind that head scratcher . As we head out now, a look at how the major auto stocks are trading at this instant. Fiatchrysler down 5 almost 6 . Power lunch returns in two minutes. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Ive got two reasons to take care of my heart. Thats why i take meta. Meta is clinically proven to help lower cholesterol. Try meta today. And for a tasty heart healthy snack, try a meta health bar. No students ever done the full hand raise in ap calc. But your stellar notebook gives you the gumption to reach for the sky. Thats that new gear feeling. All hp ink buy one get one 50 off. Office depot officemax. Gear up for school. Gear up for great. Welcome back to power lunch. Qualcomm shares are positive in an otherwise down market. They caught an up break from an overweight rating. Mon Morgan Stanley says the market is too negative on the stock. Shares are near their session highs right now up by over 1 . Mandy, back over to you. The apple watch coming to a best buy near you. Apple striking to deal to begin selling the watch at the Electronics Retail giant beginning in early august. Box a bright spot in todays down day. Upgraded to overweight citing new partnerships. Allergan shares are storing. The Company Selling its generic drugs unit for 40 billion in cash and stock to mylan. At the same time, teva is withdrawing plans to buy mylan. Mylan down by 14 . Thanks mandy. Time for the power rundown. Auto additions. Phil lebeau that big Fiat Chrysler crime. What did they say Fiat Chrysler failed to do . And is the government getting sear jess now about recalls if theyre going after companies at this level of what . Ninefigure fines. Reporter well it is 105 million fine. Yes, the government is getting serious. This is a record fine in terms of an automaker being hit for a penalty when it comes to misimagine recalls. Mis mishandling recalls. Youre looking at 23 different recalls. We wont run down all of them but it affects about 11 million vehicles. They basically say it was a pattern of poorly handled recalls, safety issues. Thats why they put the hammer down on Fiat Chrysler. Despite all these recalls though phil cars are selling like crazy and Fiat Chryslers jeep mark is doing the best of all, basically. I said it this morning. Ill say it again. I would be surprised if you see any impact on sales especially jeep models because of these recalls. At the end of the day there is a certain amount of fatigue when it comes to recalls in the american populous. As a result, despite these recalls and weve had some of these recalls for Fiat Chrysler in the last year. Look at jeep sales. Up 20 this year. They were up 41 last year and it gets to this tyler. One of our producers in the newsroom said to me what do you think about these jeep models . I said you have some issues you like to address. She said i dont care about that. I only care about the styling. That says it all. Thats what people are focused on right to you. Recalls can cause a problem for the dealerships. I had a recall on one of my automobiles not long ago. They said we cant get to it any time soon because we dont have the Replacement Parts or were backed up. It is a headache for the dealerships. Right . It is a headache but it is not one of those that they really hate. For this reason. It churns the traffic. It brings more people into the show room. And a lot of times when somebody brings their vehicle in they may get a loaner vehicle and they might drive it and say, hey, not bad, maybe ill buy this type of vehicle or they walk around the show room and they say do i really want to go through the hassle of a vehicle thats been recalled will i have the confidence . You know what . Im just going to go ahead and buy one. So yes, it is a headache to a certain extent for dealers but it is also one that at the end of the day ive never heard a dealer say boy, i cant stand these recall repairs because it does churn the traffic. Do recalls, phil ever really affect sales . I mean i can imagine there would be cases remember the toyota thing, the lexus, and so forth, where that would have affected sales until they solved them. The impact is less and less. I talked with auto trader. Com today. Theyre doing a study and showing in each of these scandals, the effect is less and less. Remember toyota the sudden acceleration . We didnt see a snap back in sales. Nobody expects Fiat Chryslers sales to be hit. Phil lebeau reporting. China tanking stocks here in the u. S. The s p 500 close to losing its gains for july and the dow is now down 1 for the month. Down nearly 5 from its highs. The fed kicking off a twoday meeting tomorrow. The question is will china be a factor and yellens plan to begin raising rates. Well debate that. Dont go away. No students ever done the full hand raise in ap calc. But your stellar notebook gives you the gumption to reach for the sky. Thats that new gear feeling. All hp ink buy one get one 50 off. Office depot officemax. Gear up for school. Gear up for great. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. Welcome back everybody. Were looking at potentially the first fiveday losing streak for stocks in six months. The s p 500 down about threefifths of a percent, on the verge now of losing all of its gains for july. Lets look at some of the sectors behind me. Only two are higher utilities, classic defensive sector and telecom, not far behind in terms of defensiveness. Bringing up the rear today, technology and financials. The recent laggards have been energy and the materials. You see them roughly in the middle of the pack today. Off roughly by. 75 . Lets go to the bond markets. Rick santelli. The markets kind of a bored market. Everybodys somewhat moving together and the reason, of course, is china. We can debate as to how this will turn out but of course you couldnt doe bait they wouldnt be going through such exercise if they werent a bit nervous about the equity markets and maybe how that represents the economy, but should she succeed. What do they succeed in doing . Is the economy better or is the stock market higher and how does it fare across all the trading issues that the commodity market seems to be tracking . Look at a 10year. Right now whoeverering near the lowest yield close in about one day shy of three weeks. Open the chart up to june 1st and look at the pattern. This is a 10year. Throw the dax up. Same time period. Similar formation. Bund yields up there, very similar formation. The last chart doesnt quite fit as well in the first part of the chart but the middle part to the right is the dollar index. It is moving along as well. Think about it from the standpoint of germany. The chinese issues are affecting the dax, and their export economy is being adversely affected based on all this with regard to fed policy and the strength of the dollar and that will be the ongoing story the week of a fed meeting. I love your phraseology. Gold is closing right now but it is below 1,100 an ounce after falling for five straight weeks. Will it fall for another week . Well have to just wait and see. Jackie deangelis is at the nymex with the closing trades. Good afternoon. The key points are were staying under 1,100 and we are getting a little bit of a bid today, about a 10 pop after we hit a 5 1 2year low last week. It is definitely china but this is a twopart story. The first would be a flight to safety because of fears over whats happening in china. The second part to this is how the fed will react as a result of its concern over whats happening not just in china but also in the eurozone as well. Gold traders seem to think that the fed will take a neutral stance and continue much of the status quo. A dovest fed good for gold prices. In terms of the trading range we are watching here 1,070 to 1,100 is what investors are trading. Theyre not expecting that right now. Part of the note today for the bounce is probably that weaker dollar. Whats interesting is even though we have a weaker dollar copper is still getting hit. Not only down on the day, it is down 5 in the last week 10 in the last month. That comes directly back to this china story as well. Thats what metals traders are focusing in on at the moment. Thank you very much Jackie Deangelis. The china fear factor the first fiveday losing streak for stocks in six months. The dow hitting its lowest levels since february with the fed kicking off its twoday meeting tomorrow. So, will china factor into yellens plan to begin raising rates, not to mention Everything Else from falling Commodity Prices, strong dollar et cetera . It is the secondbiggest shopping event of the year. Why this backtoschool season may turn out to be a big bust for retailers. Dont go away. No students ever done the full hand raise in ap calc. But your stellar notebook gives you the gumption to reach for the sky. Thats that new gear feeling. All hp ink buy one get one 50 off. Office depot officemax. Gear up for school. Gear up for great. Need to hire fast . Go to ziprecruiter. Com and post your job to over one hundred of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. And now you can use zip recruiter for free. Go to ziprecruiter. Com. You focus on making great burgers, or building the best houses in town. Or becoming the next highlyunlikely dotcom superstar. And us, well be right there with you helping with the questions you need answered to get your brand new business started. Were legalzoom and weve already partnered with over a million new Business Owners to do just that. Check us out today to see how you can become one of them. Legalzoom. Legal help is here. Hello, everyone. Im sue herera here is your cnbc news update for this hour. Rofster, new york chosen aps the National Headquarters for a photonica hub. Vice President Joe Biden and new York Governor Andrew Cuomo making that announcement. It could mean thousands of jobs for that particular region. Turkey has detained more than 1,000 people including 50 to 60 foreigners in a crackdown on militant groups. Turkey also said it launched air strikes against militant positions in Northern Iraq over the weekend. French farmers blocking highways leading into france to stop foreign produce from entering the country. Roads from from spain and germany were blocked and the trucks carrying produce turned around. It is just the latest tactic by the farmers to protest low prices for produce and for meat. Pet food Company Natures variety is voluntarily recalling some of its dog food for safety reasons. According to the company, products with a 4 17 16 best by date may be contaminated with salmonella. Thats the cnbc news update this hour. Back to you guys on power lunch. Mandy . Thank you very much sue herera. Lets get another check on the market. Bob, youve noticed something very interesting. Very heavy selling volume going on. Certain sectors, some obvious but some notsoobvious. It is all suggesting riskoff. It is 31 declining to advancing stocks. Not a good day overall. Obvious suspects are getting the heaviest volume. Anything related to commodities. Watch Exchange Traded funds here. The materials sector. Le oil fund. Uso tracks oil. Global materials and xi. These are all related commodities, all very heavy volume today. Not a surprise. But there are other sectors not related to china where were seeing very heavy volume. Some of the Health Care Etfs. Iyh, a broad swath of the u. S. Health care sector is down but on very heavy volume. Bbh, the biotech etf has also very heavy volume. This means people are moving risk off of the table a little bit today. If you look at of the other highbeta etfs sectors that move a lot more than the general market does when theyre down. Were seeing that today. Social media. Cyber security stocks. Internet stocks. Solar stocks. All of these are moved generally a little bit more than the overall market and were seeing a lot of action in them. Emerging markets across the board, philippines, thailand anywhere globally on the chinese new, the em is the broadest way to own emerging markets and thats sitting at a multiyear low. Msci is going to add chinese stocks that are listed here in the United States to the indices later this year. Theyre going to list the ones that are here. For example, alibaba which is trading right behind us will go into throws indices a little bit later in the year. Not the Mainland China stocks. Alibaba just trades here in the United States. Real quick, what do you make of the comment from the Chinese Security regulators saying they are looking into suspect cases of mall shus selling of shares malicious selling of shares. That sounds fishy. This happened in the United States many, many times. People who think the markets are overvalued are suspicious. I wont say they wont find anything but i think it is a lot of if people here in the United States feel that the markets there are oversold or overbought they should have the right to be able to say that. Got it. Thanks very much bob. To Bertha Coombs we go at the nasdaq for the very latest from there. The nasdaq is still up for the month, but look at biotechs. Interestingly today when you get a big deal being announced, oftentimes that sort of spurs some buying in biotechs. Theres appetite and that conviction that youre going to see more deal making and taking out. The biotech etf, the ibb, is stit sitting right at its 50day moving average after having lost 5 this week. Some of the best gainers today are indeed biotechs. Amgen ahead of its earnings next week. Perrigo up. Now that mylan is going to continue to per sue perri go o in that biotech game. Also some big caps that are doing well today, American Airlines even as the Airline Index is off 3 is up after posting better than expected earnings. As usual, the usual suspects amazon and google are up on a day when the rest of the market is down. Bertha thank you. China and europe roiling the markets today. Uncertainty overseas causing a lot of anxiety for traders and maybe even for you. But how will it affect the fed which is meeting this week . Lets bring in senior economics reporter Steve Leisman. Steve . What say you . I think it is a big factor. I think the factors that are out there now. So they pretty much have are where they want to be on jobs and job growth. Thats one. The big factor outstanding on domestic is the inflation level. Then the third factor i would say, determining whether or not they hike rates is what happens globally overseas. I want to give you a little headsup. Folks, this is off the record so dont tell your friends about this. Its our fed survey from tomorrow. But because we are talking about this today i wanted to share. We asked our respondents what are the biggest threats to the u. S. Economy . Global economic weakness is the runaway favorite if you will. Or least favorite whatever you want to call it. 29 . You get down to 21 , tax and regulator policies. Then domestic. Then the threat of a fed rate hike being at 12 . Whats that tell you . I think of our folks who answer this survey thinking a lot like the fed thinks that when they think about what are the threats to the economy, you listen to what janet yellen has said greece sort of dodged a bullet. Not entirely clear that doesnt come out. China to me is a little overstated from a Macro Economic point of view. Right now it seems like it is an issue. Whats happening in their stock market for their domestic economy without a lot of knockon wealth effect. But for sure the fed is watching that. While they maintain this 6 , 7 gdp growth. If it goes lower, it might cause concern. Some say the fed should have raised Interest Rates before and now, oh my theyll glom on to china as yet another reason not to do what they should be doing. Some people said that. Some say yellen wants only the most perfect environment with which to raise rates. I think yellen would counter back and say, you know what . If im going to make a mistake, im going to hold rates down longer than i need to rather than sooner. Stevie your secret is safe with me. If you think seeing red recently . It is not your imagination. Stocks are now on track for a fifth straight down day. Is it time to go et in or out of the market or to do nothing at all . Joining us matt tuttle chief Investment Officer of tuttle tactical management, matt your position for a correction here. Youre getting all defensive on us. Why do you think this is it . I dont think this is it just yet. Were at some real strong support levels here. We got the 200day moving average. We got the greek lows. We may get another bounce up towards the highs but something is seriously wrong with china. Whats the world coming to when the chinese cant manipulate their market . Seriously wrong to the extent it will bring us down as well . Seriously wrong to the extent it could very well bring us down as well. When we started having trouble with Greece Greece disappeared from the world. Their impact on the economy is not that great. Have you a problem in china, thats going to reverb rateerate all over the world. Neil do you think we can end the year higher still . Absolutely. There are two pieces of the puzzle that are missing out of one way or the other the market is going to go either fear or greed. What you have is a traders market. Through the last couple days the market this year has traded over 15,000 almost 16,000 points up and down on the close and weve gone nowhere. So it is a traders market. Bup fundamentally, the companies, the story hasnt changed. The s p 500 companies are sitting on 4 trillion in cash. Theyre going to start to deploy that in expanding their business through Capital Expenditure programs. Thats going to put people to work, that in turn are going to buy products which mean more people are going to go back to work. Fundamentally the market is not overvalued at 1. 7 times on a pricetosales ratio but are the internals of the market starting to look a little more sickly than before . What i mean by that is over and over again weve been told that fewer and fewer stocks are leading stock market performance. The very sort of that the mega cap highbeta names. The leadership is getting narrower and nay rower. You can look at that and put it in as say the context that youre looking at it. But clear across the world, mandy, theres plenty of capital and theres really only two markets i would want to be in at this time thats japan or the u. S. Theres so much cash sitting fixed income that at some point in time when janet does raise Interest Rates people are going to see their capital or principle come down and theyll only have one place to go thats to put it into highquality dividend paying stocks in they want income. The dow jones is yielding more than the 10year treasury. This is not rocket science. Talking about cash youve go the a lot of it sitting on the sidelines. Were waiting to see what happens. Well put it to work were momentum players. Well look and see where the momentum is. If it is stocks well go back into stocks. If its treasury safe haven assets well go into the safe haven assets. But wherever we can make money is where well go for it. Thank you both. Go to powerlunch. Cnbc. Com to see why neal says there will be a few acquisitions this year. See which sectors hes talking about. This seasons backtosales may be the weakest in years. Second only to christmas in importance to retailers. Well tell you what they are saying and what it could mean for the Retail Sector in the second half. Plus teva announcing it will buy allergans again nishg pharmaceuticals business. What it means for investors. Well be right back. Try the superior hold. Of fixodent plus adhesives. They help your denture hold strong more like natural teeth. And you can eat even tough food. Fixodent. Strong more like natural teeth. Fixodent and forget it. A new study out predicts a 20 spending decline over last year. You say though that its probably not going to be as bad as these numbers would suggest. There are a couple things going on here. Obviously there are still some macro issues so i wont completely push things to the side. But one factor being parents are picking up afterschool items more throughout the year. Not making the purchases during the typical backtoschool season. The other thing is some items typically considered backtoschool items, pcs, tablets, those sorts of things are more considered household items. Parents are more expecting more than they think. You pointed off to me off camera a moment ago that last year there was a forecast that back to school sales would be down and what happened . They were actually up according to Customer Growth partners which they take out you a toes they think out things like home improvement. They actually rose 4 while deloitte was similarly forecasting a 20 decline last year. I think ill redo my bathroom and call it a backtoschool thing . Exactly. Are there particular categories that from what your Research Indicates look stronger or weaker . The one that is supposed to be particularly weak is electronics. One of the big reasons is because nrf is saying last year a lot of people restocked on a lot of these items but you dont necessarily need a new tablet a new computer each year. Maybe reining back spending a bit there. Also prices are deflating in consumer electronics. Mandy, down to you. Jan nippon a former retail executive, do you agree that the consumer might be saying one thing now and will do another thing later . Yeah the consumer lies to us a lot. The consumer is saying down 20 . They said the same thing last year. They were up 4 . Mine projection this year is up 3 to 4 which wouldnt be quite as strong as last year but it would not surprise me to see additional strength. Shes right when she says we are not going to see strength in tech. Theres now iphone 6. Theres no new computer. Theres no ipad. Theres no reason to buy. No one single thing every teenager needs to have. Also fashion watches are not as popular, hand bags are not as popular, accessories are not as popular. I think thats just cyclical but it will affect back to school. Apparel is seeing 3 inflation. If they buy same number of dresses, they only save 3 . Were not going to see down 6 . Which retailers are going to catch those sales . Were going to see back to school sales out of macys because apparel is going to be important and theyre doing a really good job in young people. The problem with the teens though is that you get sales coming out of forever 21 and h m, zara i dont know how they make any money. It is so cheap. All of the people who compete with them struggle. But i dont think well see a consumer thats not interested. Weve got more people working, low energy costs, rising wages at the bottom ends. Thats going to run all the way through back to school right on through the holiday. You were listening on the previous guest who says he is expected to see acquisitions in certain sectors go to the website to find out which but you think will could be some in retail . I think there should be some Strategic Moves in retailers. Which ones . Retailers need to be bigger. They need to compete with amazon. They need to be better online. I said on your air last week that i thought macys and t. J. X ought to merge. People laughed about that but you want to big 60 billion retailer like that so thats just an example but theres going to have to be more depth in these retailers because theyve got to keep fighting this battle and keep investing in online which is a low return business if theyre going to stay in the business. They need to be bigger. Theyve also got more government regulation and higher wangs than theyve fought before. The bigger you are, the better you can handle that. Apart from macys and t. J. Jx . Id like to see something in the stein martmart, burlington stores, those guys need to be bigger around better. They have no profit margin. The bigger they can make mass work better profit theyll have. Ty, over to you. Shanghai composite down over 8 in a single session. Is there opportunity in this downturn or should the smart investors stay away . We will debate that ahead. Plus li im michelle. The chief people officer here at quirky. Coming up on power lunch, youre going to get a special behindthescenes look at the office of quirky. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . No students ever done the full hand raise in ap calc. But your stellar notebook gives you the gumption to reach for the sky. Thats that new gear feeling. All hp ink buy one get one 50 off. Office depot officemax. Gear up for school. Gear up for great. Your invention idea helps to create it and then puts it in stores, like Bed Bath Beyond and home depot. We got our cameras into quirkys new york headquarters. Hey there, im the chief people officer here at quirky. Come on. We have a full 35,000 square feet of space to make invention accessible. Hi guys our town square. We have Staff Meetings here. Three times a year we shut the company down. Everyone can mark where theyre going to be spending their next blackout period. We have 52 days 6 hours, 32 minutes and 6 seconds until the next blackout. This is called mom. Grammy. We have mistress. We have time warner. In this Conference Room repurposed a school walker. The name on the locker was Luella Rivera is now holding up on Conference Room. This is the heart and soul of quirky. The kitchen. Animal crackers it is my personal favorite. It is after 5 00. Weve teen a refurbished wood from a Bowling Alley and made these continuous tables. We have sales. We have the finance team. Graphics. Creatives. Operations. Everyone sits here together. You can run but you cant hide. Every our ceo works here without walls. We love to name our equipment here. This print eastwood. Are you an intern . Yeah. I saw you on a few people anticipate email. Okay folks. Some time the downside of a cool startup like that one is that it comes with a volatile business. When we filmed this piece earlier this year, the company had 500 employees or so. But after massive layoffs, well just this month, it tells cnbc it now has approximately 100. The chief people officer has been very busy. As the Company Struggles to raise additional funding for more of the behindthescene tour of our new Series Office envy, head over to power lunch pnt krchlt. Lunch. Cnbc. Com. A top securities regulate says china will continue stock market rescue measures and that china will increase states buying of stocks. U. S. Consumer bankruptcy set to fall to an eightyear low according to ratings firm fitch. And a new study out says parents plan on spending just 434 on back to school this year making it a 20 decline in spending but our last guest thinks it will be a 3 to 4 gain. Vice President Joe Biden and new york Governor Cuomo announcing a major infrastructure upgrade to Laguardia Airport this afternoon with billions of dollars going into upgrading airports and roads. Is there a smart play investing in infrastructure . Well bring you the very latest on power lunch. Back in two. Im one of the real live attorneys you can talk to through legalzoom. Dont let unanswered legal questions hold you up, because were here were here and weve got your back. Legalzoom. Legal help is here. [ male announcer ] eligible for medicare . 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Well a very busy monday rolls right on into the next hour as we dig into history to see if what happens in china really matters to your money here. Plus a bull bull bear debate on american stocks and why one guest seize a new record high coming. A new list reveals what American City has the highest Credit Card Debt per household. Is it your town . Trust us the name quite surprising. Mandy will be sticking around for the next hour. Were on track for a fifth day of losses. Ben willis kenny polcari, im just going to parrot what brian just said and does what happens in china really matter to our money here in the United States. Im going first. Listen. Whats happened in the chinese stock market is very different than what people is saying is they say the Chinese Market is down 8 oh my god. Really . It is not that panicking because the Chinese Market is not a developed market doesnt operate like a developed market. You cant get in and out. Thats one issue. Whether or not you believe the chinese economy is slowing down that is where zblr it is definitely slowing down. Numbers that they give us are probably looking better than the situation really is. But they never give you the right numbers. You got a bump last week when the chinese made the official statement that their gdp grew at 7 . Most other Major Economic forecasters will tell you that number was probably sub 5 . Where it 25 to 30 differential from the equivalent number. Thats basically what were seeing in the chinese stock market its been up 150 . 20 correction is nothing. If you want to know the impact of china on your money, look at your position in cat tractor. Stock has gotten annihilated because of china. Las vegas sands, mgm, wynn those stocks have a direct relationship to chinese. Dominic chu had a great piece. Sales in the chipmakers going into products that will be resold worldwide. But if you want to look at china in your american stocks looks at industrials like ge cat tractor, then yum brands. If there are so Many Companies apart from the Smaller Company domestic names that have exposure to china asia how do you chinaproof your portfolio . The russell 2000. But not every investor out there has a portfolio with individual names. Most of them are either involved through etfs mutual funds so the manager has got a much broader array of portfolio names in that portfolio. But if youre looking at an s p or looking at a more specific etf and wondering why youre underperforming the market, underperforming the Chinese Market which is up 100 it is because in those holdings because of the dividends you have the major industrials like general electric, like cat tractor. If youre into a Blue Chip Fund because thats where you are youre going to get that exposure anyway. Thats why your money is impacted negatively is because of china. Yes, but you have to balance it out. We could just go back and forth all day i know youre up for it. Tyler, thats it for the first hour. Im sticking around here on the floor but thank you very much ty. I hope to see you back here tomorrow. Very interesting point on chip companies. So much of their sales go to asia. Mandy, see you tomorrow. Brian, take it away. Thank you very much. Mandy is sticking around today. It is now 2 00 on wall street everybody. 11 00 a. M. In phoenix. I am Brian Sullivan welcome, everybody. Stocks dropping following that big selloff in china but could Something Else really be causing the selloff . Well go back downtown to mandy who is going to give us the full run on where we stand at 2 00 eastern. Stocks are lower for the fifth consecutive trading day here right now. Numbers, the dow is off by. 7 . The s p is down by. 5 . The nasdaq percentage wise is the bigger laggard, down by 1 or 46 points. Bob pisani will be joining us any second. Hes awol at this stage. Hes prepping for us. Brian, back over to you. Theres so much going on hes that busy. I wants o to call our viewers viewers attention. Puerto ricos government saying that they do not have the money to make the august 1st debt payment for the Public Finance corporation. There have been delays and nonpayments for the pfc in puerto rico. Well get more on this breaking news headline in just a moment. The china syndrome blamed for our losses in the market today. If you havent heard by now, the shanghai composite fell more than 8 overnight. That was its singleworst day since 2007. But what is the relationship between china and our stock market . Dom chu has data and he is here with that. Obviously it is such a complex story but lets put some of the numbers behind the story between china and the United States. First, lets look at some data from S P Dow Jones indices. Youve heard these companies that are levered to whats happening in asia. Western digital, 55 ever its revenues come from the asia region. Of course china the worlds secondbiggest economy is the biggest economy in asla. Micron also 55 . Intel 57 . Qualcomm 84 . All tech companies, many of which provide equipment to original equipment manufacturers. The people who make computers there. These companies provide goods that go into chinese products that are then resold to other parts of the world. Yes, there is a little bit of a soft factor between whether or not china is that important to some of these companies. Still they are levered to whats happening in china and asia. So our data partners took a look at the link or correlation between what happens between these Chinese Markets and then what happens with our s p 500. We found a time. 10 drop in a month. Its happened 21 times for the fxi. This is the ishares china etf that tracks the Largest Companies in china that are traded, by the way in hong kong another lechlvel of complexity. Its happened 21 times. On average the s p 500 drops by 5 during those spans where we see these big drops in the chinese etf. Its only been positive four times. Talking about whether it translates into our stocks maybe not a direct relationship but still over history weve seen in this past decade those losses kind of ripple over into some of our markets. Not to steal any of the thunder away but we do have to remind our viewers that actually the China Shanghai composite is still up 15 year to date. Were going to get breaking news. More on that puerto rico situation. Sue herera jumping into place. What do you got . Brian, basically the governors chief of staff is making these comments to reuters at this point and basically he says that puerto ricos governments cash flow is very limited, which we already know but he goes on to say that the government does not currently have the cash flow to make a payment which is due august 1st. Theyre going to try and do everything they can. At one point there was the consideration that perhaps puerto rico would float more bonds but theyre taking that off the table right now saying that the efforts to raise about 3 billion no longer is being contemplated because theres no market for it. In addition to that theyre considering the option of raising 400 million to 500 million by using a tax, specifically a tax on petrol as a repayment source for cash. Well see whether or not that actually goes through because, as you know brian, all too well, the consumers have very little tolerance for more taxes at this point. Back to you. Yeah. 500 million, if they can get the tax through to raise on 70 billionplus in outstanding debt. It is just a drop in the bucket. But i think the main part of this is that they may not make this payment which is due august 1st and theyre putting it out there now to try to get some sort of resolution put in place well before that deadline. Weve been talking about greece, about china, may not focusing enough on puerto rico. Sue, thanks. Lets continue to bring you advice on how to handle your money right now with all thats going on. Gene poroni and mike the farr. Gene, you think there is a new high for the dow some time later this year in the fall early winter, whatever. Obviously you are not that concerned about china or greece or puerto rico. Why not . Well im concerned about those things but theyre not things that just sprung up over the weekend. Theyve been in in the market for many months. If you look at the modus operandi of this market all last year we had 3 correction 7 corrections. Of course the ebola driven decline. Each time the market went on to make record highs. This time weve had two distinct record highs in the dow and other major indices. I think this really falls under correction. The one difference is though since the ebola driven decline last october, there have been winds of change in the market. Clearly the market is gravitated from Large Cap Value to mid and small cap growth. I think thats going to continue and thats krischaracteristic of a market thats moving into the advanced stages of an advance. I do think there are more record highs in this market short term. Some of the opportunities are often when there are the biggest worries. Michael, to you. China, greece puerto rico. Any of those, one of those, none of those on your radar . All of those. All of those and i think my radar is cluttered with a lot more many more blips that i think are real reasons for concern. I think investors have been having a hard time really even trying to decide which of the various crises to focus on. But they shouldnt miss the point that the market has been making new alltime highs for a lot of years. In 2009 we were down at 6,700. Were now up at 18,000. Weve pulled back off of that a little bit. But 2 to 2. 5 gdp growth over the last five years, sustained and buoyed by all sorts of Monetary Policy stimulus, kwaun quantitative easing, fiscal stimulus. So what happens when that stimulus goes away . The fed is getting ready to back off. I think this is a time when you have to be cautious. Im cautious but i still drive. Do we still invest . Do we sell everything . No we dont. I stay fully invested all the time. I stay with this market but i get away from the mortgage expensive things. In todays wall street journal they talked about what had really been driving the market. They were a lot of really highpe stocks that had not fred and ethyl appropriate kind of holdings. So, yes, you own but you take risk off the table. You make sure that youve got solid Balance Sheets in your portfolio. Companies that are earning money selling stuff that you understand and growing. Gene youre obviously a little more optimistic expecting new highs. Where do you think those new highs are going to come from . I assume youd be buying those stocks in sectors. What are they . Well fear has been an e dominant emotion in this market for years. Wheres the euphoria . There is none. We dont see the earmarks of a major market top. I would look at the stocks that have somewhat higher pes. Im not saying after the nom cam pes but this market sees investors accepting more risk for more rewards. Theyre looking for where the earnings leverage is. I would still look at biotech stocks. Even after fridays biogen meltdown. Well biogen is a Larger Company biotech. I do like some of the larger cap biotechs but the medium cap biotechs i think are very interesting here as well. Biogen is recovering. I think it will continue to recover actually. I look at the Aerospace Defense area. Again it is not just big cap players there but mid cap players as well. Ecommerce. Semiconductors. Consumer discretionary and food. Interesting market but i can talk about consumer staples, at the same time im talking about cyclicals like semiconductors and biotechs. Gene and michael, good discussion, gentlemen. Be careful i think that this stuff is very risky that genes talking about. I think while it might go up in the short term this is not a time for the average investor to be taking on more risk. Okay. You guys just made a market. Thats making a market personified, buyer and perhaps a seller if not a holder. Guys, thank you very much. Much more ahead on power lunch. An increasingly busy monday including more on that embarrassing mistake by the Federal Reserve. But what does the accidental release of confidential fed projections really tell us . Details ahead. Also why right now may be the best time to europroof your portfolio and thoupt theroughout the show today well reveal the five American Cities with the highest household Credit Card Debt. Number five houston, texas. Credit cards. Com saying it would take 13 months and 363 in interest for the Median Income Houston Family to pay off houstons average credit card balance. Well count you down to number one when power lunch returns. Ve me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. The drought is affecting all of us. At pg e weve definitely put a focus on helping our agricultural customers through the drought. When they do an Energy Efficiency project and save that money they feel it right in their pocket book. Its exciting to help a customer with an Energy Efficiency project because not only are they saving energy but they are saving water. We have a lot of projects at pg e that can help them with that and thats extremely important while were in a drought. Its a win for the customer and its a win for california. Together, were building a better california. Welcome back everybody. Lets get you caught up on some of the stock headlines this hour. Restaurant sales because surgerier king sales rose 15 in the latest quarter. Shares up on a down day by nearly 3 . Delta air lines planning to take a 3. 5 stake in China Eastern Airlines for 450 million. Delta shares just slightly lower on the session. Best buy says it will begin selling the apple watch in its Stores Starting next month. Best buy shares are currently down by 1. 3 . Down more than 17 so far this year brian. The fed causing quite a stir. Literally. Somebody accidentally posting internal and confidential Staff Economic Projections on friday and to make it worse, some of those projections then had to be updated again, Steve Leisman joining us now with the telling details. We say it with a smile. This was a big oops by the fed. Well yes. Like to point out in the name of transparency, they released these numbers and the union is still standing. Why wouldnt they just release them all the time . It is another window into the thinking of the fed. The fomc staff, the fed staff, has a model thats well used and well followed. A little bit more information. You dont need the meeting. Then you dont need the press conference. No, this is what the fed staff thinks is going to happen. I want to show you what weve learned about the fed staff is theyre a bunch of dovish deb bib downers. They are more pessimistic about growth or jobs than the most pessimistic fomc governor. The top line of the gdp chart, is fomc. The blue line. The orange line is the fed staff. What you see theyre kind of close, over 16 and 17. We use the long run for the fomc numbers. They differ on a very key point here which is potential growth. In the long run the fed staff sees potential growth below 2 down near 1. 8 whereas the fomc sees it above 2 . I want to show you the allimportant funds rate forecast for the fed staff versus the fomc. You can see the fed staff is below down towards 3 3. 2 in the long run there. For each year that we have information for, the fed staff looks for a lower funds rate than the average of the fomc. With all due respect to the hard working men and women of the fed, they havent been spoton. Can i correct you . We know what the fomc officials have forecast. We dont necessarily know that the fed staff has been been quite as wrong as you think. Youre not correcting youre differentialing between the fed staff and fed leaders. Theres been some research by roemer and roemer who you know the roemer Husband Wife Team that shows the fed staff has the best forecast out there on the street. Thats something to consider. Did you just inadvertently also admit the fed staff may be better economists than the fed governors . I would admit that in a hurry. We should replace the fed governors with the head staff. If what roemer and roemer reported true and remains true your average fed governor would do better to simply adopt the forecast of the staff rather than do that is unbelievable its out there. The fed governors have not been spoton. Thats a correct and accurate statement. Maybe thats why theyre negative, because theyre the staff. Work in giant nebulous rooms they get no credit. On the other side would it be such a bad thing to release it . If it is the better forecast out there, wouldnt the market benefits from seeing the fed staff . Im using this as an opportunity to call for more transparency by the fed which has been more transparent. But here is another opportunity, get it out there. Then if the governors are wrong and the staff is right, then people like me and you and everybody else on the interweb is going to clamor for positions to be gone you get up here every day, put your reputation on the line. You sit in the fomc seat you take responsibility for your forecast. That comes with the territory. My thought, two im waiting for it. You know now this is going to be politicized. If youre running for president , youll say even Federal Reserve thinks the economy is slow. The reason why they dont want to release these fed staff forecasts is because they dont want the fed staff to be politicized and this is what they feel the pressure of this. I think it is a give and take cost benefit. I think you could make an argument that the world would benefit from seeing the fed staff forecast. Steve leisman, a fiery fed discussion. Youre right on it obviously. Thats what makes it a good discussion. Im sort of in the weeds, you draw it out 18 minutes in the first show of the week and im right on . I should quit now. More on the big deal between Teva Pharmaceuticals and allergan. And we continue to countdown the list of the mesh cities with the highest average household Credit Card Debt. Number four the miami ft. Lauderdale area. Creditcards. Com says it would take 14 minutes and 375 in interest for the Median Income miami resident to pay off their average credit card balance. Stick around the infamous top three cities yet to be revealed. You are looking at two airplane fuel gauges. Can you spot the difference . No . You cant see that . Alright, lets take a look. The one on the right just used 1 less fuel than the one on the left. Now, to an airline a 1 difference could save enough fuel to power hundreds of flights around the world. Hey, look at that. Pyramids. So you see, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. No students ever done the full hand raise in ap calc. But your stellar notebook gives you the gumption to reach for the sky. Thats that new gear feeling. All hp ink buy one get one 50 off. Office depot officemax. Gear up for school. Gear up for great. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Big earnings week rolls on with big pharma tomorrow. Merck and pfizer reporting their results. Shares of pfizer up 10 year to date. Merck, however, pretty much flat. Lets see what our data provider kensho has to say about these stocks. Merck and pfizer, heres what you need to know about these two Big Pharma Companies as we approach their big Earnings Reports. Take a look first at the expectations. With pfizer on average analysts are looking for 52 cents a share in earnings on sales of 11. 4 billion. That according to thompson reuters. Merck, look for 81 cents in earnings on 9. 8 billion worth of sales. Those are the headline numbers. Kensho took a look at some of the numbers around these particular Earnings Reports and they found something interesting. First, dont expect a lot of volatility. For instance, over the last five years with pfizer earnings theyve beaten average analyst estimates often. 20 of the last 22 times. Heres the thing the stock doesnt really do anything on average after that report comes out. Its positive about a coin toss 45 of the time. A little less than half the time. Pfizer, no fireworks. Look at merck as well. In this particular Earnings Report theyve come out also beating earnings estimates 21 the last 22 times over the last five years. On average theyre down. 2 . On average the day after earnings. Theyre positive even loss 4 even less 20 of the time. Theyre both plowsricing in a plus or minus 2 . Not a lot of volatility expected here but like you said here take a look at some of these stocks. Pfizer up 10 year to date merck up. 33 . There a he a divergence in the performance here. Well see if there is any commentary out of either of these companies to change that overall direction. Keeping pharma in focus, reagainre regenerons ceo was on squawk box this morning talking about who would be a good candidate for this drug. People who have clinical cardiovascular disease if youve had heart attack or stroke peripheral. Sometimes they cant get there with a max mally tolerated statin. Were excited there is another alternative out there. Today teva farmpharmaceutical announces plans to buy teva. This puts teva among the worlds biggest pharmamakers. This will give allergan a 10 stake in teva. The question is whats allergan going to do with all this money. The ceo addressed that this morning. This is the right deal for us at the right time. When you look at our branded business aesthetics eye care gi, Womens Health urology, infectious disease, these are higher margin higher growth businesses for us. Now we can really double down build those therapeutic categories out and also look for future transformational deals like we did the allergan deal. Brent saunders has been called the chuck norris of pharma m a. In the last couple years, 100 billion. He sold boush and laum. Lomb to valeant, then sold forest to actavis. The chuck norris of pharma m a. Thank you. The oil market about to close for the day. It is another down day for crude oil. Lets get to Jackie Deangelis of the nymex. Thats right. In action whats interesting about the pricing action today we are only 4 off from the year to date low. Thats what traders are watching right now. Momentum is to the downside. Ill break it down for you and tell you what to watch for this week when it comes to the crude oil trade. Power lunch is coming back. Why pause a spontaneous moment to take a pill . Or stop to find a bathroom . Cialis for daily use, is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. No students ever done the full hand raise in ap calc. But your stellar notebook gives you the gumption to reach for the sky. Thats that new gear feeling. All hp ink buy one get one 50 off. Office depot officemax. Gear up for school. Gear up for great. Hello, everyone. Im sue herera and here is your cnbc news update this hour. Hillary clinton campaigning in iowa calling Climate Change one of the most urgent threats of our time. And she blasted gop president ial candidate Mike Huckabee for saying the Iran Nuclear Deal would lead israelis into the oven. Comments like these are offensive and they have no place in our political dialogue. I am im disappointed and im really offended personally. Secretary of state john kerry announcing the release of the 2015 Human Trafficking report. Speaking to a group at the state department, he says that the purpose of this report is to speak for victims who cannot speak for themselves. Rescue crews are expanding their search for 14 yearolds perry cohen and austin stenofoulis since going on a fishing trip last friday. The coast guard found their 19foot capsized boat off Cape Canaveral yesterday. North korea marking the anniversary of the end of the korean work with a huge fireworks display in pyongyang. The country recognizes that occasion as victory day. The armistice between north and south was signed on july 27th, 1953. And that is your cnbc news update for this hour. Back to you, brian. Sue herera, thank you very much. Let us find out how oil is going to close, back to Jackie Deangelis at the nymex. We have the settling price 47. 39. Less than 4 off of that year to date low which was 43. 46. We reached it on march 17th. That is the number that traders are eyeing. They think that we are headed there. Things to watch this week tuesday and wednesday the fed, what the fed thinks about kleinchina, what that could potentially do to the dollar. Tuesday and wednesday we get some key supply data out an figures on inventory. Friday the recount numbers will be out again. Last week we saw an increase 21 rigs. Nobody was expecting that. The major question on the street at this point is when are prices going to get low enough where u. S. Producers have to do something meaningful to cut production. We will see what happens and how quickly prices slide from here. Mandy, back to you. Thank you very much for that Jackie Deangelis. The markets now, well days have been better. Theres some volatility at the moment, up about 15 . As bob pisani was saying a moment ago, still at 15 he is not going to worry until it gets to about 20 . Nonetheless it is up today. The dow is currently down by 128 points. Certainly not the lows of the day but not looking great at tripledigit lolsssses. The s p is also moving lower along with the russell. The number on the nyse has been going up every day. Lets look at the s p 500. Were not at the lows for the day but were just off of the lows. Lets not quibble about a few points. Volume on the moderate side and the new lows on expand something a little bit worrisome. First commodity Stocks Energy stocks like apache, new lows. Dozens of them in the energy group. Chevron. Materials there, freeport mcmoran, alcoa, Owens Illinois. Also now seeing expansion into the industrial space. We know of course the exposure to Global Growth but a lot of big Global Industries like rockwell, textron, caterpillar, dover, there are seven eight, nine or ten more of them that i could add at 52week lows. Many of the emerging stocks that trade here at the New York Stock Exchange are at or near 52week lows. The eem is the emerging market etf, a good proxy for how emerging stocks are doing. Thats also at a 52week low. One thing you want to keep an eye on health care not far from the highs that we saw. And today were seeing some heavy volume in some of the Health Care Etfs like iyh and the bbh which biotech etf. Finally i want to note the greek etf, greek stocks have been closed for three weeks now but the greek etf has hit a new low. This is a multiyear low today but puzzles me a little bit because in theory we are inching towards a new deal on greece yet the market does not seem to think that it is very satisfied with that deal. This is a in you 52week low. Many much these stocks trade right here including National Bank of greece. Whats going to happen when the athens stock market opens again . Maybe this week . They talked last week maybe opening the end of the last week. Now theyre talking maybe opening the middle of this week. We just dont know. Bob, is there a sense well get more in a bit. But is there a sense that oil is also a big problem . I kind of hammer the oil story all the time. Im looking here at 12 companies focused in the region in north dakota, the best performing stock over three months is down 24 . Thats the best. Many are down 30 and 40 in just three months. Energy is a massive weight in the s p 500. Yeah. Earnings are down 35 in the Second Quarter and will be down 35 again. I think part of the problem were having problems with the earnings in the s p is we were anticipating earnings would slowly start improving as oil started moving up in the third quarter. That hasnt happened and it doesnt look like it is going to happen through the third and maybe into the fourth quarter. The problem with the commodity decline is these sectors just continue to lag month after month and quarter after quarter. Thanks bob. Happening right now Vice President ipbiden and new york Governor Cuomo expected to reveal details of a major project at new yorks Laguardia Airport. Last year the president took a pot shot at laguardia, if i took you and blindfolded you and took you to laguardia, you must think i must be in some third world country. Seth kaplan is with airline weekly. I agree completely with the Vice President. Now i know theyve renovated parts of the terminals, but overall laguardia needs help. It does. Youre right, i flew through that new delta terminal or renovated delta terminal just a couple weeks ago and it is as nice as anything hell see anywhere. You order your food and drinks on touch screen. The Central Terminal which though we dont know details yet, yeah it needs an upgrade. But you got to do it in a costeffective way. Passengers sure all things being equal wed like a nice modern facility but we arent paying to pay infinite amounts of money. People choose on flights and schedule not based on glamorous airport terminals. Im a big infrastructure guy and i agree with the buildout but id also like to see the new york area improve stew warts, an Old Air Force base about 60 miles north. There are some commercial flights out of there. If you were going to pick a spot to build a major airport, laguardia probably the single spot you can pick. The roads are terrible. Why not also focus on building a major fourth or even fifth airport around this area . But if anything, laguardia really proves that what people value most is convenience, brox imty. It is kind of a victim of its own success. It is right there, right across the bridge from manhattan. Thats why people like it despite all its faults. You go around the world, what biden called third world countries, developing world and see all these gleaming terminals. There are a lot of lovely airport terminals in rural china, basically White Elephants that nobodys using. And somebody paid for those. Again, you have to do it. To be clear, im glad theyre doing this. But you have to do it in a way that makes sense where it is commensurate with the additional value thats going to provide. And there are few airports in the world that people value more than laguardia. Laaguardia is more domestic but you dont get a Second Chance to make a first impression. A lot of people coming excited to see america from all over the world, and the first thing they see is newark airport. Just turn around and go back home. If you see newark airport, it is time to think, this is america . In dubai if i dropped a piece of peaizza on the floor, id pick it up and eat it. Maybe that says more about me than dubai airport. We got to leave it there. Here to tell us how to ride the boom in airport upgrades, josh dietz. He has a very simple rule of thumb own the owners. Josh, welcome to power lunch. Explain that. Own the owners. So as we were just talking about, very few airports have been privatized here in the United States. If you go outside the United States many Infrastructure Projects such as airports and roads are privately owned. So wed like to own the owners of infrastructure. They have consistent demand and lasting demand for the services steady predictable cash flows. They announced a winner back in may of the Laguardia Airport, its a skanska. We want to own those type of companies that own the owners of infrastructure. You also like adp, not the Payroll Company in america. This is the corporate parent of the Charles De Gaulle airport in paris. How risky are these names . We invest in it the. Alpine Global Infrastructure fund and they are fairly liquid companies, theyre Large Companies that you can trade easily on the local exchange. We do own them through the local exchanges. Another company which our viewers might be familiar with is called ferrovial because they privatize roads. They own roads, some of which i believe are in the United States. Is that an annuity type stock . Are you going to get Capital Gains on it . Is it really like im build a road, pay the toll and ill give that to our investors. It wont be a fast growth story, just more of give me the cash flow . That is correct. These are steady predictable cash flow streams over time and growing. Ferrovial owns a road in toronto and have been able to raise their toll 17 since 1999 on that road. The actual tolls are growing much faster than inflation and therefore, their dividend has been increasing quite a bit. These are still equities and they do fluctuate but we like to see the nice consistent earnings. I can look back into the 20082009 time frame and see that the companies had steady or grown earnings, those are the type of companies that i want to own in this fund. Josh duitz, pleasure to have you on. Time for our daily segment, trading nation because traders trade better together. Today lets look at the overall market visaavis the s p 500, briefly this morning breaking through that key 200day moving average. This has proved to be a buying opportunity in the past. Will that be the case this time . Weve got todd gordon on the charts david seeaberg. History repeats itself until it doesnt. What do you think . Look. He dont think youre getting hurt here in buying the tape. I dont see a lot of up side. I think were in a fairly valued market right now until we start to see some real changes. One of them being top line growth. That really needs to offset the benefit. We really need to see the momentum there. We arent seeing it. 65 of the New York Stock Exchange stocks right now are trading below their 200day moving average. The leadership in this market has been very selective, very small. I look at some of the names like Google Facebook amazon the numbers have come out, these stocks have ripped but there are a lot of stocks that really arent performing well. The commodity headwinds will continue to be there and the industrials i think are the next to take it on the chin. Theres not a lot of up side. The next catalyst in my opinion is going to be when we have fed liftoff which may not be until the end of the year. I think were in this sort of malaise right now. That was basically the cover story not to go off this way, cover story of barrons saying the market has been less volatile than any time in years. Todd, we dipped briefly below the 200day moving average. How significant is it to you looking at the charts . I dont value it very much. To daves point we kind of went sideways for most of 2015. Whats happened is the moving average which has been up trending has now met price. We have them a little bit of reversion to the mean. To your point, weve tested probably about six times since that low in the chart thats showing on the screen right now. It is more an indication of the trend. I think whats more important is that trend channel that was accompanying that. Until we break through that is when we would say we have a real trend change at hand. I think were okay. Were just resetting in 2015 before we make our next leg higher. Good to see you both thank you very much. Todd referenced online. Go to trading nationtradingnation. Cnbc. Com. Up next, why china might not be the only culprit for five down days here in the u. S. Thats just ahead. We are getting closer to naming the American City with the highest average amount of household Credit Card Debt. Coming in at number three hotlanta. Creditcards. Com says that it would take the average atlantan 14 months and 376 in interest. The Median Income atlanta resident to pay off the average credit card balance. Stick with us. Well reveal the top two cities with the highest average household Credit Card Debt when power lunch returns. Hi my name is tom. Im raph. My name is anne. Im one of the real live attorneys you can talk to through legalzoom. Dont let unanswered legal questions hold you up, because were here were here and weve got your back. Legalzoom. Legal help is here. [music] defiance is in our bones. New citracal pearls. Delicious berries and cream. Soft, chewable, calcium plus vitamin d. Only from citracal. No students ever done the full hand raise in ap calc. But your stellar notebook gives you the gumption to reach for the sky. Thats that new gear feeling. All hp ink buy one get one 50 off. Office depot officemax. Gear up for school. Gear up for great. Hello, everyone. Im sue herera with a cnbc news alert. Bostons bid to host the olympics in 2024 is apparently over. Various sources, including the associated press, boston globe, reporting that the u. S. Olympic committee is going to be servering its ties to boston because of basically the reluctance of the mayor of boston, mayor walsh, to sign the host contract agreement. That contract agreement has to be signed before the host city can be awarded. Now the governor had talked to the u. S. Olympic committee and asked for a little bit more time because they have a consulting report thats coming out next month but the usoc wanted a decision sooner than that. So apparently, because the governor around the mayor wanted to wait for a little bit more time brian, the usoc is going to sever its ties to boston in terms of this particular bid. The default city or the next city inline reportedly is los angeles for the 2024 olympics. We will see. Should have a statement coming soon. Back to you. Okay. Boston not really abandoning the bid. Looks like theyre getting booted from the bid because of an administrative screwup. I dont think it is an administrative screwup. They are requesting a consulting report to find out exactly how much money it would cost to host the olympics. The mayor walsh earlier this morning said he would not sign any document that puts 1 of taxpayer money on the line for one penny of overruns on the olympics. The issue is the overruns. They want to know what the potential outlay would be. Good news is olympics are cheap and they never cost overrun. Sue herera, thank you very much. Too early in the week for sarcasm. All Great Stories need a protagonist and an antagonist. Seems like lately china is the stock market bad guy. Even with chinas 8 drop last night, is it right to cast all the blame east . Jim paulson from Wells Capital amongment joining us now. China taking all the headlines but we still have greece puerto rico, a fed Interest Rate hike and oil sinking. What are you blaming for this boast best growth rates of this recovery cycle. We have Profit Margins maximized. No more room on the up side. We have a great need to reset rates in this country, something closer to the economy growing 2. 5 nearing full employment. That creates a market of vulnerability. Any news item which is negative upsets this market. Are stocks priced to perfection . I dont know if they are priced to perfection. They are priced rich for the environment that now surrounds this market. We cannot grow earnings very fast getting where we are at in this recovery cycle. Weve got calm sentiment after three years of straight upness. If you upset investors too much theres got to be a lot of portfolio changes made. Ill give you a for example. Lets say next friday we get a hotjobs number finally. And we could. Weve got record low unemployment claims. Say we get strong job creation and hot wage number. Boy, does that create a quandary. The fed should tighten. It now will have to tighten because the u. S. Is going hot when Everything Else is not. That creates a hardness for the stock market with higher rates and slower growth. That could create a turbulence or correction. All right. Weve got to go. A lot of breaking news. Cautious, jim paulson. We appreciate it. Thank you. No students ever done the full hand raise in ap calc. But your stellar notebook gives you the gumption to reach for the sky. Thats that new gear feeling. All hp ink buy one get one 50 off. Office depot officemax. Gear up for school. Gear up for great. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Hi my name is tom. Im raph. My name is anne. Im one of the real live attorneys you can talk to through legalzoom. Dont let unanswered legal questions hold you up, because were here were here and weve got your back. Legalzoom. Legal help is here. Tough day for the bulls. Dow, nasdaq and s p all lower. Chevron down 33 in a year. Exxon down 22 in a year. Thank you very much. Coming up we reveal the American City with the highest average household Credit Card Debt. Before number one, the runnerup is dallas ft. Worth. Number one is . S coming up after the break, silly. Coming up after the break, silly. Coming up after the break, silly. [ radio chatter ] [ male announcer ] andrew. Rita. Sandy. Meet chris jackie joe. Minor damage or major disaster, when you need us most, were there. State farm. Were a force of nature, too. A new season brings a new look. A chance to try something different. This summer, challenge your preconceptions and experience a cadillac for yourself. The 2015 cadillac srx. Lease this from around 339 per month, or purchase with 0 apr financing. This is a great place to work. Not because they have yoga meetings and a juice bar. Because theyre getting comcast business internet. Comcast business offers convenient installation appointments that work around your schedule. And it takes done. About an hour. Get reliable internet thats up to five times faster than dsl from the phone company. Call 8005016000 to switch today. Perks are nice. But the best thing you can give your business is comcast business. Comcast business. Built for business. No students ever done the full hand raise in ap calc. But your stellar notebook gives you the gumption to reach for the sky. Thats that new gear feeling. All hp ink buy one get one 50 off. Office depot officemax. Gear up for school. Gear up for great. Time to reveal the city with the highest household Credit Card Debt. The city with that unfortunate distinction is san antonio, texas. Their card balance is nearly 5,000 a household or an average overall lower income it would take the typical san antonio resident 16 months to wipe out that debt paying 344 a month. Matt schultz of creditcards. Com joining us now. Three of five are in texas. A little surprising. They say everything is bigger in texas. When it comes to Credit Card Debt burden thats the case. What it all comes down to is the big cities in texas, folks dont necessarily earn as much and take home as much as they do in big cities in the northeast or out west. Is it because oil prices dropped that the debts are higher or do you think its because texas has done so well families are more confident and when you are confident, you spend . I thick its more toward the confidence side. People are feeling a little better. All the fed data shows people are spending more. People are tending to pay off their balances more at the end of every month. The reality is not everybody can. The one conclusion is that the, quote, free spending north easterners and westerners are off the hook. Its the southeast. Exactly. Washington, d. C. , San Francisco and boston had the lowest debt burden so they are doing something right. Great list. Thank you. Take care. Mandy, thank you for pulling double duty today. Always a pleasure. Is it . Yes. Categorically, yes. Always a pleasure. Have a great day. Closing bell starts right now. Welcome to closing bell. Im kelly evans at the New York Stock Exchange. Im scott wapner in for bill griffeth. Chinas selling overnight has been pressuring u. S. Stocks all day long. Well discuss whether the china fallout is just the beginning for u. S. Investors. Fiat chrysler paying more than 100 million of its handling of recalls. Transportation secretary anthony fox will join us live