Transcripts For CNBC Power Lunch 20180216

Welcome to power lunch, im contessa brewer. Another strong day for stocks as all three indices look for a winding streak the dow is up about 143 points, a slight pullback from where we were a half hour ago both the s p and nasdaq are on pace in more than six years and both indices up 5 health care the best performing sector today johnson johnson, pfizer, eli lilly among the big gainers. A couple beatendown names moving higher, ge back above 15 a share despite being hit with a shareholder lawsuit and snap is now up 50 so far in february. Three hours left in what has been a huge week for stocks. Bertha coombs is at the New York Stock Exchange bertha it has been quite a big week. Its been two weeks since we had that downturn starts and after consuming a lot of rocky road ice cream, today it feels like vanilla. If you look at the major averages in terms of where they are from their highs back at the end of january, the nasdaq here within 3 of its all time high in january as weve seen a big recovery in particular from big cap tech names apple hadnt participated in the rally in january so it kind of sat out, a lot of move up in the nasdaq but its been a big contributor on the way back. Huge week for apple, up 11 with news that Warren Buffett has taken a bigger stake in the stock. Thats helping lead the tech sector overall meantime, if you look at the leaders today, earnings have been part of the story as earnings being rewarded during this recovery week historic high today for deere on the back of strong results, huntington upgrades after its earnings inucor. Whats interesting is the best performer week today in terms of sectors has been the chip sector Philadelphia Semiconductor index up better than 6 for the week but even there youve seen real differences in the recovery. Qorvo is up about 8 for the month since the start of february but take a look microchip, a couple others that are also apple components are down so were seeing folks pick their spots in terms of where theyre buying on the way back there. Thank you, bertha has anything changed since the market selloff started two weeks ago . Joining us is the chief investment strategist at Raymond James and the Portfolio Manager at fed rated investors gentlemen, good to have you here bertha had a great metaphor. For a couple weeks the markets were eating rocky road, now were back to vanilla. What do you make of this tremendous move off the bottom and where do we go to from here. I was on cnbc pretty much four or five times in the month of jab saying that our intermediate and shortterm models that had been pretty constructive for 2017 were telegraphing the first point of down side vulnerability coming in february. You had the selling climax, i was on the show on tuesday, february 6 you hada selling climax. We said at the time you should get a sharp throwback rally that fails and then you test the selling climax lows and if its textbook perfect, you make an undercut low from those selling climax lows and you buy it and that is what haas happened well run into overhead resistance at the 20 Day Moving Average which is at 27. 54. So i would be cautious on a trading basis but longer term were in a s. E. C. You alread soa bull market. What if were trying to look towards the end of 2018. Well, secular bull markets if you study history and theres not many of us that have seen the 1949 to 1966 or 1982 to 200 secular bull markets so depending on where you want to start your count from, either october of 09 or april of 2013, this market has years left on the upside. Got it, okay. Wow, very positive steve, are you as positive as jeff youre not worried about the recent spike weve seen in Interest Rates if youre in the business of looking at markets and you agree with jeff thats probably not a bad place to start but to that end, no, it doesnt bothers us we dont any you have a real problem from Interest Rates until you get until 3. 5 Interest Rates the market got a full turn cheaper just because of the pickup in earnings expectation this is year for longterm investors you want to be in buy the dips not sell the rally mode. Its brian, i love you, man, but how much confidence do you have in the Federal Reserve . As smart guy and friend of the show said, he said bull markets dont die of old age, they are schotz in the head by central bankers. Are you confident that jay powell and a relatively new and untested group of bankers is going to walk this delicate dance well in my 47 years in this business and 54 years of looking at markets with my dad, every new fed head gets tested i would not be surprised to see jerome get tested here but i think Interest Rate environment, while Interest Rates are going to go up, theyre going to go up at a glacial pace. I think you can get multiple expansions despite an increase in Interest Rates. Before the tax cuts the S P Corporation had earnings of about 141 theyre up to 155 and change and ubs had 157 on it so if you crank that through the models, that could go higher. Steve, give me a couple ideas before we let you go. We threw a log on the fire with large cap growth trying to take advantage of large Cap Tech Companies that we thought were oversold we like accor, its a play on better European Growth through reforms in france. You have a play on the move from products to experiences for millennials and theyre going asset light which protects them against the nontraditional competitors so across our international portfolios, we really like that. Got it, jeff, steve, thanks so much for joining us, much appreciated. You bet. Thank you. The weekly rig counts just came out eric chemi has a report. The latest Oil Rig Count numbers are in with drillers adding rigs to the fourth consecutive week rig counts rose to a total of 798 and theyre up by 201 from a year ago oil touched lower than just before the numbers came out. You can see on the board up about half a percent on the day. Api reporting 10. 2 Million Barrels a day, we are drilling, baby, drilling eric, thank you very much. A big move from washington causing a big move at a group of stocks nucor, u. S. Steel and alcoa jumping on the back of the new recommendations for the Commerce Department on steel tariffs. Kayla tausche broke the news in washington with the details. The Commerce Department today confirming it recommends steep tariffs and quotas on steel and aluminum coming into the United States, moves intended to restore Production Capacity in industries that have suffered the cheap imports flooding the market there are three categories of recommendations first reported by cnbc. The first is blanket tariffs affecting all imports into the u. S. The second is targeted tariffs for certain countries which would exclude canada and nato allies except turkey finally a limit on the amount of a country could exfort the u. S. Is the third option. Wilbur rot told reporters that the president will be the sole judge on what the right outcome will be, that the deadline for this announce system the middle of april but the u. S. Should expect other countries to challenge this once its announced. Back to you. Kayla, thank you. A good day for the markets but not a good day for shake shack investors. Shares down on undercooked guidance coming up, an analyst who got it right. Plus, from burgers to the black panther. Can givenys superhero movie give the box office a super boost . And what impact might it have on the bottom line . Well head to hollywood icwhh w what could be one of the biggest movie openings ever. Im going to burn it all im going to burn it all to central new york. And turning the airport into a firstclass transportation hub. All while growing urban areas into vibrant places to live and work. Across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. G the new new york. Mom anits not theirs. Car. Its mine. Mine. Mine. And it always will be, forever and forever. The new rx 350l with three rows for seven passengers. Experience amazing at your lexus dealer. Welcome back to power lunch. Another busy day of earnings, several major Food Companies starting with cocacola. Earnings and revenue both beat expectations, analysts were pleased with the organic Revenue Growth excluding businesses the company is getting out of. Craft heinz came up short and missed on revenue. It was strong in lunchables but not enough to offset weakness if planters nutts. Campbells soup results were not exactly mmm, mmm good. Its core soup business was down 7 and that stock is lower by 3. 6 . Staying with food, shake shack shares slipping he said by the seashore after reporting betterthanexpected earnings but giving a disappointed forecast here to take us inside, the man who slashed his price target on shake shack from the 36 to 33. I was going to introduce you as andy, the only analyst bearish on shake shack what did you see that made you concerned before today because you got it right. Yeah, its really the optics around 2018. This is a strong brand with great long term growth and the Investment Community has gotten that given the valuation so were concerned with the valuation clearly but also just the business as they open up outside of new york. Well see some normalization in volumes. Theres been softness in samestore sales and traffic as well as margins deteriorating as they move towards these more normalized stores versus the very high volumes, high margins theyve seen historically in new york. When shake shack launched it appeared the burger landscape was effectively, you know, a semiwarm burger on a semistale bun so they could easily eat everybodys lunch but now even the big chains are rolling out more of these customized artisanal burgers. The five napkin burger, in and out burger, fat burger, Whatta Burger is the landscape different than a couple years ago i think it is for better burgers, as youre referring to as well as the big qsr players Getting Better and just broader fast casual is much more than burgers now, its pizza better for you, mediterranean salads, bowl bowls thats making it harder for the existing brands to grow sales metric. Quinoa everywhere you look. You say theyre going to have more normalized volumes. Give us context. Whats it like when youre in new york city versus other parts of the country. Those original new york stores and they continue to add in new york but the original stores are 7 million to 8 million average revenue units doing high 20 restaurant level margins. As they move out to the rest of the country over time, shake shacks looking for roughly 3 million sales volume restaurants and margins somewhere in the 20 so you can see how the math works as the mix shifts to these mortar normalized volumes. Those are good numbers but obviously a lot lower than what theyve seen in their historical new york footprint. Can i ask you about chipotle which saw a big jump it looks like a real reversal and tough times its had. The hiring of brian nicole from yum brands taco bell was really a very good hire and it came fairly quickly given the announcement late last year that he was going to be moving out of the ceo role so that has been the pop in the stock i understand that, the stock had come under pressure last week with the market and some tougher Fourth Quarter numbers as well as their 18 guide which includes a lot of cost items and still a limited amount of visibility on the same store Sales Turnaround at chipotle. Brian niccols is a terrific executive but i dont think theres silver bullets it will take a lot of heart work to set the stage on 18, maybe look out to 19 as the recovery year but were still neutral on the stock. Andy, thanks so much for adding perspective appreciate that. Youre welcome. Up next on power lunch, is slavery making your seafood affordable a first look at a new cnbc documentary oceans of crime a deep dive into the multibillion dollar global seafood industry and this one may make you think twice about what you order off the menu ow lchwi be right back investing in new technologies, thats aeps road to the future. And the International Brotherhood of electrical workers helped make that happen. The ibews Outstanding Union professionals have the skills and training to get the job done right. Thats good for our customers and for our bottom line. Ibew members are our power professionals. They should be yours as well. Its abor it isnt. Ence in 30,000 precision parts. Its inspected by mercedesbenz factorytrained technicians. Or it isnt. Its backed by an unlimited mileage warranty, or it isnt. For those who never settle, its either mercedesbenz certified preowned, or it isnt. The mercedesbenz certified preowned sales event. Now through february 28th. Only at your authorized mercedesbenz dealer. I thwell wait. What did you meetthink about her . Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading companies see it and see it throughwith digital. I know when i hand them the its gonna be scary. Car but i also know that were gonna have usaa insurance for both my boys. Its something that theyre not even gonna have to think of. Its just gonna be in the family. Were the tenneys and were usaa members for life. Well, itsonce again. Eason yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from Td Ameritrade. Americans eat more than five billion pounds of seafood a year with almost 90 of it comes from overseas in a lot of those foreign lands, you might be shocked at how the fish you eat and in some cases it involves slavery and even murder a new cnbc documentary looks at crime in the global fishing industry reporter like many enslaved fishermen, mang was smuggled into thailand by crooked brokers who promised him a good job in a factory. Instead of rolling up to the factory, they roll into a fishing port the guy gets out and hes in a warehouse. A couple young toughs come and control him, they lock him somewhere and hes done for. Thats it. Next day, two days later hes presented to a fishing boat, a fishing captain looks him over, offers a price, buys him and hes on the boat. Buys him . Buys him. He guys the guy he buys the guy both the Thai Government and private industry say they are working hard to curb abuses like these but nobody would argue that the problem is going away lets bring in the man behind the documentary, cnbcs own ted kemp i just checked here, on the bureau of labor, their own web site, they warned about this in 2016 what has been done since then to try and intervene jtsds wu well, there are a number of nations and the industry itself have taken steps to try to reduce this problem. In some of those cases its not clear how sincere those efforts have been in some of the governments involved in other cases, its not clear how effective its been. It looks like it has improved but i dont think theres anybody who would say this is a problem thats licked. So let me ask you how do people become enslaved. How do some guy get bought on a boat its amazing. Most of these guys we were working in thailand which isnt the only bad actor, but its one of the bad actors and what will happen is they will get these Migrant Workers who come in from burma or myanmar, cambodia or vietnam and theyll be offered these are impoveri impoverished nations, by the way often landlocked nations. They havent they dont have Job Opportunities so they will show up expecting to work in a factory, expecting to maybe work in a boat for a contract type of job but theyre put on a boat and taken out to sea and once youre out to sea theres no getting away and sometimes these guys are out there for years, many years at a time. Ted, this is one part of a huge problem thats been exposed. The documentary is incredible. Thank you so much for giving us a little bit of a sneak peek here and you can catch cnbcs documentary oceans of crime tomorrow, saturday night at 8 00 p. M. Eastern and pacific right here on cnbc. Breaking news in just the last hour, 13 russian nationals have now been indicted over interference in the u. S. Election eamon javers here with more details. Were learning more as we go through this indictment of the 13 russian individuals and three russian entities the key entity is something called the Internet Research agency which the indictment suggests was involved in an effort to participate in the u. S. Elections beginning as early as 2014 and then going all the way through the 2016 u. S. President ial election. A couple key points from the indictment one in particular that might have some bearing here at the Trump White House. The indictment says some of the russian defendants posing as u. S. Persons but without revealing their Russian Association communicated with unwitting individuals associated with the Trump Campaign and with other political activists to seek to coordinate Political Activities a couple points on that. Its clear from the indictment that the u. S. That the special counsels office is suggesting that these russians had fake u. S. Identities and they contacted people who were in coordination with the Trump Campaign without revealing that they were working for the russians and that those Trump Officials who were contacted to coordinate were unwitting of this if youre the Trump White House, you might view that as good news here in the sense that it indicates that at least in this part of this indictment that theyre not suggesting anybody in the trump universe knowingly coordinated with the russians. That these people were taken advantage of by russians posing as u. S. Persons without their knowledge. Theyre saying some of the russian defendants traveled to the United States under false pretenses to gather intelligence related to these operations so this was an undercover sbels Jeb Hensarling operation that took place in the United States by human beings as well as an Online Social Media Campaign as weve been talking about in terms of russian bahts and Everything Else that we saw in the 2016 president ial election the goal here as weve seen reported in the past, the indictment was to sow discord in the u. S. Police political system i spoke to officials at the white house, no initial reaction from the Trump White House to the news in this indictment but the headline is 13 russian individuals, three russian entities indicted by Robert Muellers special Counsel Office were expecting a press conference over the department of justice by Rod Rosenstein, the Deputy Attorney general whos overseeing this russia investigation. They havent given us an official topic yet but the timing here would suggest it might have something to do with this russia indictment we might be allowed to learn a lot about what happened in 2016 with as you were talking, it strikes me, its like straight out of the americans which if people arent familiar with the show is based on a real case of russians posing as americans theyve done this before. Absolutely. The russians have a long history of sending anonymous agents into the United States to influence politics and to influence department decisions, to gather intelligence, spy craft in the cold war never really went away with a brief pause at the end of the cold war under the yeltsin era but under Vladimir Putin its come back in a big, big way. Weve seen u. S. Law enforcement and counterintelligence officials engaged in a catandmouse game for decades now with russian agents operating inside the United States and the significance here is that Robert Muellers office is saying those russian agents would engage in an effort to be involved in the 2016 u. S. President ial election but the contact that we know so far is with unwitting people affiliated with the Trump Campaign, not alleging witting cooperation by trump people. How many of those individuals might still be in the United States weve just gotten the names of these 13 individuals. I suspect theyre all in russia but i have to check that and figure out how many are still here and where their current locations are. Well get more locations from the special counsels office as the day goes along. Eamon javers, thank you very much. The headlines are impacting your money the dow lost 140 points since eamon first brought you the headlines in the previous hour the vix while still down just a bit is well off its low. Volatility up, the markets down. Up next, one on one with the ceo of one of the hardest hit stocks in the market today ryder. Plus, Carl Quintinilla getting an up close and personal look at one of the most dangerous spots on earth the dmz between north and south korea. A big undercurrent of these games have been tensions with north korea. Well take you on a rare vitis inside the dmz when power lunch continues tomorrow, its a day filled with promise and new beginnings, challenges and opportunities. At ameriprise financial, we cant predict what tomorrow will bring. But our comprehensive approach to Financial Planning can help make sure youre prepared for whats expected and even whats not. And that kind of Financial Confidence can help you sleep better at night. With the right financial advisor, life can be brilliant. Welcome back we are waiting for a briefing from Deputy Attorney general Rod Rosenstein lets go to him live. The indictment charges 13 russian nationals and three Russian Companies for committing federal crimes while seeking to interfere in the United States political system, including the 2016 president ial election the defendants allegedly conducted what they Call Information warfare against the United States with the stated goal of spreading distrust towards the candidates and the political system in general. According to the allegations in the indictment, 12 of the individual defendants worked at various times for a Company Called Internet Research agency llc, a Russian Company based in st. Petersburg the other individual defendant, yevgeny victorovich funded the conspiracy through companies known as Concord Management and consulting llc, concord catering and many affiliates and subsidiaries the conspiracy was part of a larger operation called project locta. That involved multiple components including audiences within the Russian Federation and others targeting audiences in multiple companies. Internet Research Agency allegedly operated through russian shell companies. It employed hundreds of people in its online operations ranging from creators of fictitious personas to technical and administrative support personnel with an annual budget of millions of dollars. Internet Research Agency was a structured organization headed by a Management Group and arranged into departments including graphics, Search Engine optimization, Information Technology and finance departments. In 2014 the company blirned a translator project focused on the United States. In july of 2016 more than 80 employees were assigned to the translator project two of the defendants allegedly traveled to the United States in 2014 to connect intelligence for their american influence operations in order to hide the russian origins of their activities, the defendants allegedly purchased space on computer servers located here in the United States in order to set up a Virtual Private Network. The defendants allegedly used that infrastructure to establish hundreds of accounts on social Media Networks such as facebook, instagram and twitter, making it appear that those accounts were controlled by persons located in the United States. They used stolen or fictitious american identities, Fraudulent Bank accounts and false identification documents the defendants posed as politically and socially active americans, add vading for and against particular candidates. They established social media pages and groups to communicate with unwitting americans they also purchased political advertisements on social Media Networks the russians also recruited and paid real americans to engage in Political Activities, promote political campaigns, and stage political rallies. The defendants and their coconspirators contended to be grassroots activists. According to the indictment, the americans did not know they were communicating with russians. After the election, the defendants allegedly staged rallies to support the president elect while simultaneously staging rallies to protest his election. For example, the defendants organized one rally to support the president elect and another rally to oppose him, both in new york on the same day on september 13 of 2017, soon after the news media reported that the special counsels office was investigating evidence that russian operatives had used social media to interfere with the 2016, one defendant allegedly wrote we had a slight crisis here at work, the fbi busted our activity so i got preoccupied covering tracks together with my colleagues. The indictment includes eight criminal counts. Count one alleges a criminal conspiracy to defraud the United States by all of the defendants. The defendants allegedly conspired to defraud america by impairing the lawful functions of the federal Election Commission the United States department of justice and the department of state. Those administrations of the u. S. Government are supposed to involve disclosure of foreign involvement in certain domestic activities count two charges conspiracy to commit wire fraud and bank fraud by Internet Research agency and two of the individual defendants counts three through eight challenging arg charge aggravated Identity Theft by four individuals. Now, there is no allegation in this indictment that any american was a knowing participant in this illegal activity there is no allegation in the indictment that the charge conduct altered the outcome of the 2016 election i want to caution you that everyone charged with a crime is presumed innocent unless and until Proven Guilty at n court at trial prosecutors must introduce credible evidence that is sufficient to prove each defendant guilty beyond a reasonable doubt to a unanimous jury the special counsels investigation is ongoing there will be no comments from the special counsel at this time this indictment serves as a reminder that people are not always who they appear to be on the internet the indictment alleges that the russian conspirators want to promote discord in the United States and undermine Public Confidence in democracy. We must not allow them to succeed. The department of justice will continue to work cooperatively with other Law Enforcement and intelligence agencies and with the congress to deft our nation. I want to thank the prosecutors and federal agents working on this case for their Exceptional Service and i will be happy to take a few questions reporter did this indictment undermine the outcome of the election. Ive identified for you the allegations in the indictment. Theres no allegation of any effect on the outcome of the election jessica . Reporter on page four of the indictment, paragraph six it specifically talks about the Trump Campaign saying that defendants communicated with unwitting individuals associated with the Trump Campaign. My question is, later in the indictment Campaign Officials are referenced not by their name by Campaign Officials willing to work two or three. Were Campaign Officials cooperative or were they duped what was their relationship with this theres no allegation in this indictment that any american had any choj and the nature of the scheme was that the defendants took extraordinary steps to make it appear they were ordinary american political activists, even going so far as to base their activities on a Virtual Private Network here in the United States so if anybody traced it back to that first jump they would appear to be americans. Reporter have you had any assurances from the russians that they will provide these individuals for prosecution . There have been no communications with the russians about this well follow the ordinary process of seeking cooperation and extradition. Thank you very much. Deputy attorney general Rod Rosenstein laying out the evidence for the indictment against the 13 russians who have been, he says, involved in trying to sow seeds of discord here in the United States or leading up to the election what struck us the most is when he announced that these individuals had paid for two different protests, one to support the president , one against the president on the same day in the same place at the same time. Some of the counts include criminal conspiracy to defraud the United States, conspiracy to commit wire fraud and bank fraud as well as aggravated Identity Theft. Theyre calling themselves the intranet Research Agency, a russian firm based in st. Petersburg and rosenstein noting the sanguine nature with one of the russians noting the fbi saying we have some issues here at work, the fbi have just kicked in the door or something to that effect where they seem almost nonchalant. Lets get to eamon javers at the white house. That normal course of business is what it sounds like. The rosenstein describing an effort that had hundreds of people with a budgets of millions of dollars. From what brian just read, you learned the fbi was monitoring the communications of those people and was watching in realtime or after the fact what their communications were so the fbi learning information about what happened in this conspiracy a couple of important points one is that Rod Rosenstein said in the briefing right now is that the indictment alleges no american specifically knew about this or willingly participated in it and that the russians went to Great Lengths to obscure the fact that they were russians and posed as ordinary american political activists. Hes not alleging that anybody in the Trump Campaign participated knowingly thats an important point. Theres also no information that any of this activity, despite the hundreds of people, the millions of dollars and the social media campaign, no indication that the this activity impacted the ultimate results of the 2016 president ial election were also learning now from the white house, from Sarah Huckabee sanders, that the president was briefed this morning on the contents of these indictments so the white house is aware of what the special counsels office has found here and the special counsels office, i should tell you, is telling us in realtime that none of these defendants are currently in custody so we dont know where they are in the world, presumably theyre in russia, dont know that for sure but special counsels office is saying none of them are in u. S. Custody as of right now guys. Eamon, its also telling that this planning on behalf of the russians began years ago theyre talking about setting up private servers in the United States to mask their activity, hiring at least 80 people to work in a Translation Service and translator agency so to speak. There was a lot of planning that went into this years before the election happened. They say it began as early as 2014 in this indictment and one of the key thing there is is that Rod Rosenstein said this Internet Research agency, as big as it was, was just a smaller piece of a much larger conspiracy so he is saying this indictment here suggests these 13 people who are being indicted in these three russian entities participated in this scheme but he also leaving very open the possibility and the likelihood that many more people were involved in this russian scheme. This is just what the special counsel has complete enough to bring an indictment on today the possibility remains that there are more indictments to come here in this investigation as things move along but if youre the Trump White House looking at this set of facts you have to say that this is a relatively good day for the Trump White House in the sense that the special counsels office is not suggesting that anybody with the Trump Campaign knowingly or willingly took part in any of this. And the market reflecting exactly that, eamon. Its truly incredible to watch the minutebyminute move of the equity market with the headlines that you first brought us about 30 minutes ago and now the words from rosenstein himself. When you look at the market once eamon brought us the news guys the market began to sell off as he began to speak we saw the dow turn negative. Once he noted there was no indication of, a, american involvement or, b, that it directly impacted the outcome of the election, the market returned higher immediately. Lets bring in john harwood whos been following this story as well. John, one of the things eamon pointed out here is that when you point out that no american knowingly colluded with these russian actors that there has to be a collective sigh of relief within the Trump White House. Yes, but i think that needs to be a limited sigh of relief because remember what else we know from this investigation one is that donald trump jr. , Paul Manafort, jared kushner, all knowingly met with representatives of the russian government who were offering dirt on Hillary Clinton so while in this indictment they do not allege that the americans who were lured in by the russians knew they were being lured in, there are other facts that we are have learned in the investigation so far and we have a pending plea deal with rick gates who is the Deputy Campaign manager under Paul Manafort, we dont know what hes telling and what Paul Manafort is telling so i think this is a short term relief for the Trump Administration but theres a lot more yet to go one other thing i would say that is not a source of relief for the Trump Administration is part of the argument has been as people have considered whether or not the president could be charged with obstruction of justice is whats the underlying crime . Is there an underlying crime you can obstruct Justice Without one but it makes it a weaker case with this indictment of these russians we see that Robert Mueller is alleging a very large underlying crime and then the question is as he continues to gather information, continues to get statements from witnesses does he provide any link, knowing link, between the Trump Campaign and that effort if he does, then thats a very serious blow to the Trump White House. But it hasnt happened yet but well have to stay tuned. Were learning more information from nbc newss Kristen Welker about how the president discovered this information today or learned about this information today from a white house official telling nbc news that the president was briefed this morning personally by Rod Rosenstein at the department of justice and christopher wray, the director of the fbi, so that happened here at the white house this morning its clear, this white house official is saying, from the way they handled it, the president is being treated as part of the process and not part of the problem so this goes to the point we were just talking about that for today this information thats coming out from the special counsels office is an indication that there was no evidence that the special counsels office has right now that its prepared to reveal publicly that anybody from the Trump Campaign participated in any of this. But to johns point, this is probably the beginning rather than the end of this process and well see a lot more about what the special counsel knows about what exactly happened in 2016 and there could be more to come. Just looking at the market reaction, eamon, i would say that rosenstein, if i heard him right, correctly said that this action by russian or these group of individuals began in 2014 that would have been a year before donald trump even entered the race for president. Right the other point here that rosenstein made thats important to bear in mind is that the russians were this was not just a protrump effort, there was an effort to sow discord in general, destabilize the United States political system in any way they can he pointed to an anecdote in which the russians organized simultaneous rallies inside the United States in the same city on the same day both for and against the president. So they were working both sides of the aisle here in that sense. But what we know from the reporting broadly is that the overall russian goal here in 2016 was to do what they could, whatever they could, to put their thumb on the scale on behalf of donald trump during that campaign. And brian, if i could just add to what eamon just said, there were rallies for and against the president elect donald trump but that was after hed been elected. Before he was elected we see in this indictment consistent attempts, as eamon said, to put the thumb on the scale for donald trump by giving derogatory information about Hillary Clinton, by helping jill stein who, by the way, was at that dinner in 2015 with Michael Flynn and Vladimir Putin, and in addition to that, negative information about ted cruz and marco rubio who were the two top opponents of donald trump in the 2016 republican primary. So, john, square that with me or eamon if you want to. At the very top rosenstein said their efforts were spread distrust toward the candidates, both of them they didnt couch it as being towards one or the other it was about both candidates if you read the indictment, michelle, you will see attempts that its more heavily weighted toward being against Hillary Clinton and prodonald trump . Yes. Would it would have been against clinton in 2014 but it couldnt have been protrump because trump was not in the race for another year. Right. What the reporting is on this is that the effort by the russians morphed over time initially it was a destabilization anticlinton effort and over time as the russians became more and more comfort that donald trump had a chance in this election as the republican primary process went on they gradually began to change their effort into one that would help the Trump Campaign so you see here the allegation that people affiliated with the russian effort met personally with people affiliate with the Trump Campaign so that isnt an allegation we see happening with the Hillary Clinton campaign, for example. Gentlemen, thank you so much. Appreciate it. Eamon and john we should tell everybody, russian lawmakers according to the wire saying the u. S. Indictment of russian nationals for alleged election meddling is another antirussian push. Lots more on the new Robert Mueller indictments that you just heard as well as the market reaction, we were negative briefly, we have bounced back, theres a lot of moving partons a very busy friday power lunch returns in just two minutes. Today, smart planning is helping the new new york rise higher than ever. As the world leader in unmanned aerial systems, were attracting the worlds best talent to central new york. And turning the airport into a firstclass transportation hub. All while growing urban areas into vibrant places to live and work. Across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. Breaking news in the last hour Deputy Attorney general Rod Rosenstein announcing indictments of 13 russians accused omeddling in the u. S. Election and also saying there is no allegation that the meddling actually altered the outcome of the election. John carlin is former assistant attorney general for the department of justice and now with the Aspen Institute good to have you here. First, tell us your initial assessment as you hear about the indictment this is a groundbreaking indictment that lays out the scope and scale of a campaign by the russian government to interfere with our elections, that ranged from making payments to buy political advertisements while falsely claiming to be u. S. Persons that included staging political rallies inside the United States while secretly posing as u. S. Ground roots or u. S. Persons and again, hiding their identities and working on russian interests to communicate with people inside the Trump Campaign and elsewhere in order to achieve their goal. And their goal, make no mistake about it, is to undermine our democratic system. The market is acting in a particular way, mr. Carlin, when the news first broke about the indictments, the markets started to fall. Rosenstein starts to talk, and says no indication that anybody in the Trump Administration knowingly talked to russians, they appear they were posing as americans, and also, there was no issue when it comes to the outcome of the election. That we shouldnt be worried about that so the market has come off the lows, perhaps because he said that do you agree that the market, the markets assessment that perhaps theres sort of an all clear here when it comes to the Trump Administration i think if you look through the allegations in the indictment, when a prosecutor does a press conference, youre confined to whats in the four corners of the particular indictment that youre talking about. So this indictment involves allegations about a russian strategy to undermine the confidence in our elections that included false advertisements, fake political rallies, the use and exploitation of social media. And i think what you saw at the press conference isnt is not an all clear instead, its a careful prosecutor sticking to the four corners of the indictment, and when asked questions that were not in this charging document, said, and he was quite specific, that they are not in this in the allegations in this indictment the investigations not over yet, and well have to just wait and see. John, its contessa here. What questions do you still have after hearing the charges outlined well, i think a focus here should be outside and i know theres great interest in exactly what happened in 2016. But this indictment lays out quite clearly there was a multimillion Dollar Campaign by russian interests involving numerous individuals to undermine our election, and we just heard two days ago from our Current Administration officials who run the intelligence department, the cia, the fbi, that russias determined to do this again in our Upcoming Elections in 2018 and 2020 so i think what we should be looking for is, what steps can we take right now to prevent them from doing this type of campaign again and from having it be successful, and the time to act is now its interesting because if you read the indictment, the money man behind this Internet Research agency that did this is a guy named evgeni pregosin, known as putins chef. Whats interesting is this guy has been a muck raker for some time, and the u. S. Levied sanctions against him back in 2016 for alleged meddling in the ukraine conflict so it looks like this guy, who is the money man behind this organization, according to the indictment, is some kind of a well known russian troublemake what do we make of that . Yeah, you know, its fascinating in that way. For your business audience out there, one thing not to miss this week as well is for the first time, the United Kingdom government and the u. S. Said officially that russian known troublemakers were behind the massive ransomware that caused over a billion dollars worth of damage to companies throughout the world, including pharmaceuticals and shipping companies. And that that attack was launched on ukraine and then went from ukraine and hit these companies all across the world so the fact that the person behind this is up to the same type of troublemaking in ukraine before he hits the u. S. , i think, is a sign that countries that share our values throughout the world have to draw a clear line in the sand and say, enough of this meddling thats causing damage to businesses throughout the world, thats seeking to undermine democracies. If you dont change your behavior, were going to act together to damage your interests throughout the world were going to raise the cost until you stop thank you, mr. Carlin, good to have you call in for this breaking news. Much appreciated john carlin. Still to come, a wild two weeks on wall street dramatic sell offs. Wiplash inducing comeback even today, all kinds of volatility driven by geopollia c geopolitics. Plus, as investors get swept up in the blockchain and bitcoin bonan bonanza, we investigate one company that may be trying to jump on the bandwagon and are they truly embracing cryptocurrency the second hour of power lunch is back in two minutes were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. Its abor it isnt. Ence in 30,000 precision parts. Its inspected by mercedesbenz factorytrained technicians. Or it isnt. Its backed by an unlimited mileage warranty, or it isnt. For those who never settle, its either mercedesbenz certified preowned, or it isnt. The mercedesbenz certified preowned sales event. Now through february 28th. Only at your authorized mercedesbenz dealer. Heres whats on the menu. The markets stocks have followed the correction recovery script well show you how this comeback compares to prior corrections and whether history shows were in the clear of course, this new indictment coming down also moving the market well give you the latest on that betting on the banks. The financials have had a great week as rates continue to rise, but can the rally last if so, where should you place your bets . And block chain bonanza. A cnbc special investigation asks whether a company who says its betting on the Technology Actually is or at least to the extent investors think really is doing that an investigation you cant miss. Im Brian Sullivan second half of power lunch begins right now welcome to power lunch. Im michelle carusocabrera. Stocks turning lower in the last hour after special counsel Robert Mueller indicted 13 russian nationals with interfering in the 2016 president ial election. However, stocks rebounding when Deputy Attorney general Rod Rosenstein said the interference didnt actually change the results of the election. Industrials higher by a third of a percent. The s p higher nasdaq flat, higher by four points for more on the indictment, we bring in eamon javers. Thank you the news is moving very quickly here the special ounsels office ha just released additional information. This time, a guilty plea from a man named Richard Panedo they are saying he is pleading guilty here to Identity Theft, to being involved in an identity online scam. Its not clear from the initial documents that i have just read in the past few seconds exactly how Richard Panedo would be connected to this larger russian indictment that we have just seen from the special counsels office in the last hour, but both of those indictment News Releases coming from the special counsels office in quick successi succession its possible he had something to do with the larger russian effort, but its unclear what i have read, very, very busy this morning. The main headline we have for you is 13 russian individuals, three Russian Companies under indictment now from the special counsels office here in the United States for attempting to interfere in the u. S. Political system and in the 2016 president ial election. We just heard from Rod Rosenstein, the Deputy Attorney general who is overseeing this russia investigation at the department of justice, who said this was an effort by a group called the Internet Research agency that involved hundreds of people with a budget of millions of dollars in russia and an elaborate social media scam including human russian agents in the United States pretending to be american political activists. Rosenstein said that that began as early as 2014, included the 2016 president ial election but theres one important piece that rosenstein had to that announcement heres what he had to say. There is no allegation in this indictment that any american was a knowing participant in this illegal activity there is no allegation in the indictment that the charge conduct altered the outcome of the 2016 election. So were learning from Sarah Huckabee sanders, the White House Press secretary, that the president of the United States was briefed on these allegations by Rod Rosenstein and christopher wray, the director of the fbi, here at the white house earlier today. No official reaction yet from the white house, but a white house official telling nbc news that the president apparently is being treated here more as a part of the process than as a part of the problem, indicates some confidence at the white house that todays news is not disastrous news for them in the sense that rosenstein here is saying as far as todays indictment goes, no indication that any of the Trump Campaign officials who were contacted as part of this conspiracy had any idea that they were dealing with russian agents, michelle all right, eamon, thanks so much if you figure out the connection between panedo, his agreement, and what happened, let us know thanks so much the big recovery we have seen this week, lets talk more about that mike santoli is at the New York Stock Exchange with more mike yeah, michelle. As impressive as this rally has been, and it really has essentially been all you might ask for, if youre a bull in terms of the speed of the rebound and the consistency of it, the fact we have been up every day since last friday. I think we still have some tests ahead of this market here are a few of them one is the level of the indexes themselves right now, the s p 500 has regained lets say 60 or two thirds or so of the losses that we had in that correction. And it gets the index right up into a zone where it might be a logical place to falter. In past corrections, you often see the market rebound around this amount before some sellers come out and think perhaps we have to settle back a little bit. It also is some key Technical Levels and also not too far from last weeks wednesday high, which was a failed rally a lot of eyes are on this level of 2740, 1250 of the s p 500 more fundamentally, i think we have to come to terms with whether investors will tolerate higher valuations the way we saw in january january represented the highest valuations for stocks relative to earnings and also taking bond yields into account. So a common way to decide if stocks are attractive. That was the highest of this Economic Cycle, the bull market cycle. Not the highest of all time, but it showed you the market was not prepared to go higher still on valuations thats something we might have ahead of us if in fact the market keeps going higher, and the volatility levels. Everybody has been watching the volatility index, the vix. Its at 19 its popped a little on this news but if we see this lower, not out of the woods, but these are some of the things ahead that youre going to be able to use the markets behavior to see whether in fact theres something durable here about the rally. Mike, thank you lets drill down deeper on recent market comeback and bring in the chief investment strategist for Northwestern Mutual wealth management, casey matthews, a cio and economist with umb bank, and also cnbc contributor ron ensauna. We were watching this afternoon as the markets pulled back when we first heard about this indictment against a bunch of russian actors and then start to regain some ground as soon as rosenstein came out and said that americans were not involved, at least in this indictment, they were not involved in knowingly colluding with these russian actors and that there was no allegation that chthis changed the outcomeo the election what do you make of the markets moves here i think this is one of those instances where investors oefr react to political developments. So i have done this for 24 years, and each side of the aisle has had my ear at one point saying can you believe soandso got elected . Im not suggesting the president doesnt set the overall agenda, doesnt set the overall tone of what happens in the country, but theyre a plus or minus to the gdp, not a negative. I would encourage people not to be overemotional casey, we heard from a former attorney general saying there are still Big Questions remaining about whether russia could do this again in the feature. We saw right after the Florida School shooting that russian bots were taking to twitter and flooding it with progun statements and support theres clearly an attempt to influence sort of common thinking among americans is that a concern when youre talking about how the markets might react . Yeah, i think it is i think it will continue to be a concern moving forward but i would agree with brents comments that a lot of these political issues are not material nor sustainable to the fundamentals of the market so its critical that investors get good information, accurate information, from both sides of the argument so i agree, its going to be an issue going forward. But right now, this issue with washington, i think its not material, nor is it sustainable. Ron, it does highlight the headline risk thats out there, when the markets moves a couple hundred points out of news out of washington, it could be vulnerable this might not be as serious a set of indictments as what might come we dont know if the larger cases in front of the special counsellor right now involve any of the people we know who are much, much closer to donald trump than the individuals indicted today theres still Political Risk i would agree that it tends to be historically a short run, have a short run impact on the markets, but still, this is something the likes of which we havent dealt with for quite some time. There will probably be some ups and downs as a consequence of the headlines as they continue to come out. Lets talk about some of the other big news this week brent, i know youre talking a lot about inflation. Is this an indicator that the expansion, at least the end of the expansion, might be on the horizon. Absolutely. I think for the last few years, people have wondered how the expansion would end and people thought the cycle was unique we have consistently said its not unique the only thing is its taking longer to get to every place you have gotten in the past, because people have behaved in a more restrained manner. You have, one, the u. S. Economy had a slack, two, inflation rises, and three, importantly, the fedrushes to raise rates t moderate the boom because they believe if they do so, the bust wont be so big. I think the sign posts of inflation are an indicator that we are inching towards the end of the cycle, but certainly at 1. 5 on the core pc, we arent there yet. I think most importantly, this fed has indicated they will let the economy run hot, so based upon all that, i still believe we have a couple years left in the cycle before the economic recession that leads to the market downturn people have been talking about for years. Kc, what kind of signs do you look for that a bear market could be looming most bear markets are associated with a recession. So when you look at certain data such as chinks in the economic armor that would lead to a recession, youre not seeing it at this time Economic Data around the globe remains very, very strong. Evidenced by global pmi at a fiveyear high we saw Consumer Confidence come out this morning surprised with a very strong number the other thing i look at is, i think the bond market gives us clues to an upcoming recession and perhaps the end of a cycle or a bear market that would be the shape of theyearold curve right now, we have a positive slope in the yield curve the difference between twos and tens typically, you see the yield curve become flat or inverted prior to a recession or a bear market and we have just seen the opposite, even with this correction we had about a 58basis point spread back on groundhog day and today, we have about a 70basis point spread. So a lot of the economic triggers and flags out there are not waving red at this time. So i dont thinkyoure going t see the end of the Economic Cycle soon and i think the bull market can continue at least through 2018, and then well have to reassess the data at that time. When we talk about the fed, ron, letting the economy run hot, how hot is too hot . I dont know how hot at this juncture the fid is going to let the economy run, given that under other circumstances, they would have looked at this as fiscal stimulus and tightened slowly now that we have the tax reform bill and the budget, the fed may have to accelerate the pace of Interest Rate increases. Its the pace of change, the rate of change we see in rate inkrooess that could, again, create a deleverage moment in the market how fast is too fast . We dont know that because we have not come off zero before. Next three, march, june if they go three in a row, that would shock the markets you think theyre smart enough to know not to do that . I dont know if its a question of smart enough if they believe theres too much slack in the labor market and they dont want to wait until they see the whites of inflations eyes, then i think they could move more quickly, and if inflation does accelerate, you run the risk as rates go up of seeing some pocket thats overlevered in the market come undone that lideads to a more broad disruption in the market, but again, youre looking out six, nine, 12 months, not tomorrow. Thank you for coming in brent, kc, appreciate it to the bond market. Rick santelli following the action at the cme in chicago rick well, is it going to be lucky number seven right now, looking at intra day of tens. Two things to glean from that. First of all, it didnt get much of the volatility equities did on all of the headlines with mr. Rosenstein, but it is moving higher in yield. Thats important for the following reason every single week this year, tenyear note yields have closed higher this looks like it could be seven. All it needs to do is close above 2. 85, and its at 2. 87 it might be a trade mario draghi watches. Right now, at the widest since april of 2017 at 215 basis points tens minus twos, year to date charch you know that it steepened ten basis points this week it closed at 77 last friday. 67 now the reason i bring it up, a lot of the things that were associated with the volatility in equities have reversed. I think thats something to Pay Attention to 24hour chart of the dollar index, notice the low. The low is key because we traded down to 88. 25. Havent seen that level since december of 2014, but the market has bounced a bit, down on the week, up on the day, and finally you can see that all in the index chart im showing you that shows the last time we were down at these levels. Michelle, back to you. Yeah, looking at that right now. Thank you, rick. Heres what else is coming up on power lunch. Its been five months since Hurricane Maria hit puerto rico. A head, a look at the islands progress on its road to recovery is americas apartment market headed for a csiris . All that and much more coming up on power lunch. Your investments roaring back this week few groups have done as well as the banks. Is there still money to be made in the group that makes the most of its money from money . Fred cannon with us now on that. Fred, i know its not as simple as Interest Rates are up, so net interest margins rise so the banks make more money so buy the stocks or is it well, at this point in the cycle, it somewhat is like that because really what we have now is we have, were early enough in the cycle where deposit rates arent moving up very quickly. Asset yields move up with the fed. As a result, spreads increase. Right now, for example, we only have one fed increase this year. If we move to two, earning estimates are going to move up for the banks. Okay, so if i know that, and im not a market pro, shouldnt everyone else already know that, and that already would be reflected in the price of these stocks why would there be more to come when its just that simple buy low, sell high great point the issue is, though, if you look at bank valuations, were at the longterm averages relative to the s p, so if thats true, if were in a Good Environment for earning expansion, why shouldnt we trade a bit above the longterm averages i think the valuations still seem to indicate to us that theres upside relative to higher earning estimates jpmorgan, you upgraded it this week. What valuation call are you making there look, we believe at this point in time its the high quality name, we think everything is going in the right direction right now. It will get helped by higher rates. This increase in volatility means trading is finally going to pick up and youve got Capital Market activity across the board with global growth. So things are going its way. High quality name, valuation is reasonable i see in your note that you say shares of jpmorgan are currently trading at 11 times our 2019 eps, and thats a good risk reward that you think is favorable. What im confused about is most of the time i see people talking about book value and where its trading relative to book why do you use forward eps we think the bank stocks and financials have moved off the book value issue and are starting to move to eps. Book value is very important in financials when you have credit issues at this point in time, credit is very good. Looks like it will continue to be good if we get a little inflation, so really were starting to look very much at earnings multiples for the financials 11 times next year, where else do you think you can get that valuation that is worth compared to the risk getting in . We think besides jpmorgan, we like bank of america you get the same kind of risk rewards if people want to buy the banks generally, if you look at our etf on the big banks we think that offers a broad based diversified approach to the big banks. Talk in your book the companys book it is the best known, of course. All right, you got anything else you good fred, thanks so much thanks for having me on the big story of this hour. 13 russians indicted for interfering in the u. S. President ial election. The indictment does not allege that their efforts actually changed the outcome of the election with us on the phone is ron hausken, former fbi assistant director, ron, good to talk to you. Lets go back a little bit if there are 13 individuals, 13 russians indicted and several agencies, whats the next step in the bigger, broader investigation . You know, thats actually, i think, the beauty part of bob mueller and his team he is doing things behind closed doors, very discreetly, and were only finding out about it after the fact or much after the fact frankly, i think its how the sensitive investigations ought to be run. Muellers clearly given word to his team, probably had them all sign nondisclosures, that silence is going to be golden. And if you leak anything to anyone, youre going to be out of this team so thats the hard part here and he has bob mueller is certainly aware of whats going on but i will say, you know, i have said to others, mueller has thick windows. You know, there could be hollering in the streets, his name being taken in vain, and hes not paying attention to that hes got hes head down, pushing his group forward, and we dont know we dont know what mike flynn might be proffering after a guilty plea. We dont know what is going on over there only in bits and pieces, after the fact, and i think what were hearing is apart from whats made public, is coming out not from muellers team but probably from defense counsel from somebody who has been in touch with them. We watched the markets moving with this news, pulling back somewhat when the indictment was first announced, and then regaining some footing when r e rosenstein said no, there were not going to be americans in this indictment because there was no indication they knew they were dealing with russians they had been mpersonating americans and no, there was no indication this here changed the outcome of the election. We heard from a former Deputy Attorney general raising the question about what russians will continue to try to do how big a concern is that for you . You know, i think it ought to be a fairly substantial concern from all of us, because this is not if this indictment is any reflection, this is not putins russia doing this from the distance of 10,000 miles from russia, from moscow. These folks came here. A group of these folks came here theyre hiring other trolls to maybe unwitting, to do some of their bidding. And theyre doing it in a pretty smart way. Not so smart that it cant be, parts of it cant be uncovered because here we have a part thats been uncovered, but i think that we have an adversary in Vladimir Putin who is clearly our adversary and is going to do what he wants to do. Regardless of our bluster, regardless of the bombast, regardless of whats being said over here, putin is doing what putin wants to do. And he will just deny that he had any role in it hes done that around the globe, so i think theres a real concern here where do we go from here where do we go downrange do we think this is going to stop him these folks are, im sure, comfortable back in russia hes not going to extradite them to us. This is a name and shame piece of the mueller work. The big question is, how much collective will is there to get to the bottom of it and prevent it from happening again . Thank you for weighing in. My pleasure straight ahead, a cnbc special investigation goes behind the closed doors of a Company Whose stock surged after adding the word blockchain to its name how much work are they truly doing in the balk blockchain business experience amazing at your lexus dealer. Experience amazing big thinking in the finger lakes is pushing the new new york forward. Were the number one dairy and apple producers in the eastern United States supported by innovative packaging that extends the shelf life of foods and infrastructure upgrades that help us share our produce with the world. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov mom anits not theirs. Car. Its mine. Mine. Mine. And it always will be, forever and forever. The new rx 350l with three rows for seven passengers. Experience amazing at your lexus dealer. Another wild day for your money. Stocks started the day strong, sold off on the indictments of 13 russians accused of interfering in the u. S. President ial election. Rebounded when the Deputy Attorney general said their efforts did not influence the outcome of the election. Now, were selling off again markets gone back to flat, then gone negative, now, right around the flat line. Well keep you updated coming up also, a special cnbc investigation a look at who is behind ryant blockchain the companys stock soaring a few months after it changed its name whats behind the move, and why the ceo pulled out of a promised oncamera interview with cnbc. Thats after the break transparency. Expertise. These are the Building Blocks enduring relationships are built on. As Investment Management professionals, lets measure up. Cfa institute. You know whats not awesome . Gigspeed internet. When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Im sue herera heres your cnbc news update for this hour. The Justice Department holding a News Conference announcing 13 russian nationals and three russian entities were charged with interfering with the 2016 president ial election. The defendants are accused of posing as americans and creating false online persons and social media pages. The fbi reporting a person close to the Florida Shooting suspect called the agencys tip line but that information was never relaid the caller provided information on Nikolas Cruzs gun ownership, desire to kill people, erratic behavior, and disturbing social media posts. It also included concerns that he could conduct a School Shooting meanwhile, dozens of High School Students in florida are protesting gun violence. That protest taking place outside south broward high school, where slain coach Chris Hickson had previously worked. And four vietnamese nationals are under arrest for allegedly selling a crypto account and password theyre accused of opening an aaccount last july in japan and selling it to a group of Illegal Transfer agencies. Thats the news update ill send it back to you thank you very much, sue. So its been one of the highest flyers in the crypto world. Riot blockchain. Its stock soars 2 1 2 months after changing its name from bioptix. We wanted to fiengd out more about the company and whos behind it. What we found is one investor in particular who got in and out at the right time Riot Blockchain, formerly known as bioptix they were selling medical equipment. Now theyre a Blockchain Company. Do the normal shuffle and there goes the stock it soared more than 600 this year im not sure this is actually a Blockchain Company so you need to be careful. Riot blockchain in the news after it changed its name last october from bioptix, a medical equipment company. The stock shot up from 8 to more than 40 over the next two and a half months. It sounds somewhat like the kind of newly minted Blockchain Company the s. E. C. Might be interested in, as the Agency Chairman testified at a recent congressional hearing. Are you concerned that Companies May be utilizing blockchain as a scheme to pump up their stock prices . Nobody should think its okay to change your name to something that involves blockchain when you have no real underlying blockchain Business Plan and try to sell securities based on the hype around blockchain we wanted to find out who was behind Riot Blockchain, but for weeks, no one would talk to us, so we decided to see if we could get answers here, at the swanky boca raton resort and club in florida. Thats where riots annual Shareholders Meeting was set to take place it would be an upscale setting for this upstart company with red ink as far as their most recent Quarterly Report shows. But as we quickly learned, that annual meeting wasnt going to take place twice Riot Blockchain announced they were going to hold their annual Shareholders Meeting here at the boca raton resort and club twice at the very last minute, in fact, the night before, they announced they were postponing the meeting, and in fact, the hotel tells us there was never a meeting room ever booked under the name Riot Blockchain so we drove to this nearby office building, trying to find barry honig, according to s. E. C. Filings, he may be the man behind the curtain he was an early investor in riot, back when it was a medical Testing Company and then eventually bioptix he led an activist move to replace the board and he eventually won the new board changed the name from bioptix to Riot Blockchain. Hello hi. Michelle carusocabrera. As the elevator door opened, in front of us, not barry honig but this man, john orourke, the ceo of Riot Blockchain the same john orourke who made news in december for selling about 869,000 worth of riot stock just two months after the Company Changed its name orourke quickly closed the door five minutes later, he emerged and agreed to talk to us, but only off camera. He said he was here for a meeting with honig when we arrived and we had just missed him. Orourke insists he does not work out of barry honigs office even though we found him there during that hourlong off camera meeting, he told us his riot stock sale was merely to pay taxes on his restricted stock. And as to the sharp rise in shares of riot, he said that was unexpected and ridiculous. He also said he isnt worried about the s. E. C. Because we overdisclose when asked about ryans Business Model, he said its a combination of Strategic Investments in cryptorelated companies and soon they would be mining bitcoin, and as far as the noshow annual meetings, he said there wasnt a quorum of Share Holders needed for a vote, and additional corporate actions were in the works that would require a Shareholders Meeting he repeatedly promised to talk to us on camera, as long as it was a week and a half later, after some key announcements and he would even come to new york to make it convenient. We took him at his word. His emails to us say the comrt view was confirmed and i believe you will be impressed. In the meantime, we went looking for barry honig, because according to s. E. C. Filings, he once owned more than half a million shares or more than 11 of riots common stock, which he bought before it was riot. And thats not all after winning his fight to change the board of directors, s. E. C. Filings show he accumulated another 700,000 new warrants, which he could convert to stock at 3. 56 a share, and more than 700,000 prom sory notes that he could convert to stock at 2. 50 a share after the Company Changed its name to Riot Blockchain seven months later, the stock soars to a high of 46. 20 since honig wasnt at his office, we went to his home. Thats when he finally called us back and said he would think about talking to us, but only if we left. Finally, he did agree to go on camera the following week, while he was in new york. Only to back out two hours later. But he did agree to talk to us by phone just two days ago he downplayed his influence with riot and john orourke john orourke, he makes his own decisions. In 2000, you were fined for 25,000 and suspended ten days by finroof for stock manipulation and youre no longer a licensed broker do you still manipulate stocks im a successful investor im a comfortable person i dont need to work today i have a beautiful family thats collegeeducated and im very comfortable. I am very comfortable the truth will come out. He acknowledged hes done this before. Five years ago, he and john orourke were involved in another company that changed its Business Model to blockchain that stock also skyrocketed. Today, its trading around 2 a share. Oh, and its changed its Business Model again, to Cloud Computing for cars when we asked richard burns, a securities attorney, to review riots s. E. C. Filings. When you look at Riot Blockchain, do you see red flags . Yes, i see a company that has had a change of control of the board. I see a company that has had a change in business i see a company that has had several dilutive issuances immediately following the change of the board and change of the business, and i see a stock that has gone zoom, and what i understand a significant amount of insider selling, and so yes, these are red flags. As a securities lawyer, what would you tell potential investors about riot well, in my position, normally im not telling investors whether to buy or sell securities in fact, thats not my job but if the question is, are there things that an investor should be wary of, i would say absolutely there are things that when i look at these filings, they are outside the norm just this week, a new filing from barry honig, which shows he sold a massive amount of shares. His common stock down to little more than 173,000. So as riot was issuing press release after press release, promising great plans for the company, honig was selling, making millions of dollars along the way. As far as john orourke, his promise of a confirmed oncamera interview did not happen remember his email to us saying i believe you will be impressed . Well, he never gave us the chance to be impressed because he never showed up canceling the night before, saying he needed to jump to the midwest to try to close an acquisition. The day of the interview, all we got was his voice mail hi, mr. Orourke, its michelle carusocabrera. And this an empty chair. Just this morning, john orourke told cnbc he would do a live interview here on power lunch only to back out ten minutes later when he found out i would be the one asking the questions. In a previously emailed statement via his attorney, orourke told us that increased regulation and transparency is ultimately good for the sector unfortunately, as with many new hot sectors, it has attracted some bad actors trying to capitalize on the hype he went on to say, riot is all for increased transparency and properly imposed regulation. Minutes ago, Riot Blockchain released yet another press release defending the company, including its activity in the cryptocurrency space they said theyre in fact a Blockchain Company theres much more to the story and you can read the full version on cnbc. Com. Thats, first off, incredible reporting by you and the team. That stock down 32 right now. Its amazing to me that it looks like from honig and orourke, this is not their first time to the rodeo. There was another company that they together were involved in that had changed its name and Business Practices a couple times, now involved with Cloud Computing. Right, so they have been in business together on a couple of companies, on several companies. In fact, john orourke used to have his office in barry honigs office thats according to barry honig himself. They have known each other for a long time and have been involved in other transactions. But orourke denied to you his office was in honigs office, at least at that time . Yes, as did barry honig at one point, they were together yes, he had space in his office you played in that piece the analyst warnings about the name change and what does this company do was there anything you found that was clearly illegal so barry honig denies he has done anything illegal. When we spoke with that securities attorney, i think if he were advising barry honig, he would have told him, you should have filed your s. E. C. Filings much more quickly. When youre a significant owner in a company, you have to file whats called a 13d which is you tell the s. E. C. And the investing public how much you own, when did you buy it, at what price he only filed two over a period of 13 months and the one he filed just this week said he sold a large position in late november. That was two months ago. Attorneys i spoke with said you need to file within 24 hours, 48 hours, and harvey pitt today, who used to run the e. C. Said ten days maximum again, im not an attorney. I do have a law degree, a very dangerous distinction, but this was an interesting point right at the beginning of your piece you noted that the annual meeting had been postponed twice. And they had put out that this was the annual meeting, at the boca resort and club then they postponed it but you talked to management at the boca resort and club and they denied that any meeting space had ever been reserved so there may be some legality there on putting out a Public Document stating that theres a meeting at that time and place with a publicly Trading Company when in reality, according to the resort, it was never scheduled. We were exhaustive at the resort we checked under executives names, the two former company names. John orourkes name, et cetera, and they told us they have no record of any affiliated party booking rooms for those specific meetings such a great that empty hallway is such a great advice for investors, not just if youre in a small fastgrowing company with a lot of hype, go to the annual meetings, right . And if theres no one there, call michelle. If you can bear it, read through the filings. Right because they can reveal a lot about whats going on. All right, michelle thank you coming up, in a different florida story, landon dowdy is in miami with what she call s super bowl of boat shows this show is real, it is happening, there are boats there. It is real. Welcome to Miami Technology is the name of the game here. Well show you all the sexy tech d the future of boating coming up next on power lunch. Doing it yourself or tagging a friend thing. More revolutions in the making thing. That play like a girl thing. That fourlegged friends thing. At t gives you more for your thing. More entertainment, internet, and unlimited plans. More for your thing. Yeah, thats our thing. Im not really a, i thought wall street guy. Ns. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade weve been preparing for this day. Over the years, paul and i have met regularly with our ameriprise advisor. We plan for everything from retirement to college savings. Giving us the ability to add on for an important member of our family. Welcome home mom. With the right financial advisor, life can be brilliant. Its time for the ultimate sleep number event on the only bed that adjusts on both sides to your ideal comfort your sleep number setting. And snoring . Does your bed do that . Right now during the ultimate sleep number event, save 50 on the ultimate limited edition bed with adjustable comfort on both sides. Plus 24month financing. Ends monday. Visit sleepnumber. Com for a store near you. In vehicle, info tainment, connected technology and autonomous feature tech isnt just revolutionizing the auto industry. Its changing the future of boating as well. Landon dowdy is in florida with more you had me with miami and boats. Yes, and its a pretty great day to be in miami at the boat show and there are more than 1400 boats here you throw in the accessories, you have about 3 billion worth of merchandise the boat industry has been doing pretty well. Seen steady growth for six years, on pace for its seventh year boat sales have slowed younger buyers arent shopping the same way previous generations have and sales grew 4 last year. Thats down from about 5. 5 the year before. Now, Innovation Technology is the key to attracting the younger buyers we have seen solar panel docks that charge electric boats as well as autonomous and smart boat features. I even got to drive a boston whaler with technology that lets you map out the route and basically just steers itself now, overall, its new technology that really drives new boat sales thats what the ceo tells me, and check out this malibu wake setter its part of the ski wake segment, one of the Fastest Growing segments the rider can surf behind, and he just controls the wake with a tap of a wrist and i dont know if you can see it, but he was doing some pretty crazy tricks there we were just talking about that contessa has never seen wake surfing. Thats a real thing. What . You need a lot of weight in the back of the boat to generate that kind of wake. You need about you need about seven to nine feet we were in pretty shallow water. As soon as we got going, he got up there and literally, the tan of a wrist, and he controls how steep that is, how much he wants to jump. Its the technology is crazy. Good stuff, landon. That landon is pretty smart, right . Pitches a story in miami in february absolutely thanks, landon new data out suggests that americas apartment market is a mess, and one major developer says theres a crisis headed our way. Diana olick joins us from a luxury building in washington with that story. Hey, diandiana. Hey, and so if you want or can afford a swanky luxury apartment like this one, fantastic. Because there are lot and lots of them, and landlords are giving away concessions. But that is not the case in the rest of the rental market, where more affordable apartments are desperately needed and rents are still rising, driving inflation. Multifamily construction is now at a 40year high. Completions last year jumped 46 from 2016. More than doubling the longterm average. That according to real page. The trouble is, 80 of that is luxury why . Because of the high cost of land, labor, and materials Construction Costs up 1 per month for the last 36 months developer toby faces ever more difficult financing on every new project. The group has a portfolio of about 70,000 units, mostly luxury his tenants spend a relatively low share of their high incomes on rent. That being said, it is a tale of two cities. And the middle income and lower income market, people are are spending proportionally more on their rent so much so that i believe theres an acute crisis headed our way. Now, there are some low Income Housing tax breaks for builders but he says there are too Many Developers competing for far too few credits. Its really becoming a crisis. Lots more on cnbc. Com. Thanks for highlighting the issue for us, diana. The chip stocks are on track for best week of 2015. Is is there more sizzle left in secoucrsmindto well debate it straight ahead well debate it straight ahead here on power lunch. Wake up slap on some cologne im 85 and i wanna go home just got a job as a lifeguard in savannah im 85 and i wanna go home dropping sick beats, they call me dj nana 85 and i wanna go dont get mad. Get e trade, kiddo. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Time for trading nation today. Lets trade semiconductors the dwrup in the greeb for the Third Straight session kim forrest. Kim, you are a value investor. You dont get on board this momentum train i doubt youre buying Riot Blockchain today are there any semiconductors you would own or do own . We have two we do own and enjoy owning one is Texas Instruments they are more of an analog to digital sort of chipmaker. The analog world is the 3d sorld of world its really useful to have instrumentation that can get that information into digital form thats primarily what their focus is of course, intel we like intel, have been a believer for a long time for many reasons love intel okay. Intel and Texas Instruments. So, there are some on your value menu mike, what do you think . Do you own any semiconductors . Are you buying more . Like kim, do you like intel, perhaps . No. Like kim we love intel weve loved it for a long time its an easy stock to own. Necessity just came off a great quarter, earnings per share beat, price targets are moving north of 50. They just raised their dividend. The Business Model is changing to a more datacentric Business Model, the alterra acquisition, memory, data center chips. No longer are they at the whims of the pc cycle in that slow decline theyre seeing own intel. Its going to work out fine. Where we see some real value is in the semicap equipment space there. Those stocks, the fundamentals are very good. The two 800pound gorillas are talking positively about capital egypt spending the stocks were extended corrections took care of that. They just raised their dividend. We own that. Good fundamentals. In our small cap portfolios we own ultraclean and we just got icore, two subsystem makers. We love them both. Very cheap. Good names there on trading nation we appreciate it for more trading nation, go to our website tradingnation. Cnbc. Com check please is next. Now the latest from tradingnation. Cnbc. Com and a word from our sponsor. 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Check please. We wanted to show you how Riot Blockchain are trading. Now down 35 , declining by more than 6. Well have norel chunk coming up on closing bell. Dont move were also getting news, i wanted to give you an update on wynn resorts which has made its separation from steve wynn he resigned over those Sexual Misconduct he will assist the company in unresolved issues moving forward and he agrees not to sell more than onethird of his shares in any quarter. That is, if hes allowed to do so remember, theres this outstanding Shareholder Agreement that has to be resolved with his exwife and former partner. The pachenko king of japan. 5 million problem, i think he wrote. How far the markets swing, seems now, guys, unless something dramatic happens in the next hour, and it could, the s p and nasdaq on pace for their best week in really 6 1 2 to 7 years. The dow, the best week in about two years. Pretty incredible rebound for equities contessa, thanks for being with us. Thanks. Thanks for watching closing bell power lunch begins closing bell begins right now. Closing bell begins now. Welcome. Im kelly evans in the New York Stock Exchange. Been hosting too many shows im bill griffeth. Major story out of washington, youve been hearing about, moving the markets to some degree its about russias involvement in the 2016 election lets get to eamon javers for the latest on these indictments. Reporter we got a set of indictments today. Two separate filings from the special counsels office one detailing 13 russians indicted for their role in alleged meddling in the 2016 u. S. President ial election and the