Transcripts For CNBC Power Lunch 20130717

Second. Simon is at the ny sze, but we begin with the man that wall street and investors all over the world were waiting to hear from. Ben bernanke testifying before the House Committee on financial services. The tenyear reacted this morning to that. Right now it is down below the 2. 5 mark. Were at 2. 493 . Thats significant. Weve not seen that in some time. Senior economics reporter Steve Liesman joins me with some of the details on what mr. Bernanke said. Probably a dovish bent to bernanke in that hes saying fed policy is not on a preset course. Most of the economists who commented on this say they think the fed is on track to tapener september but a big issue is how much fiscal policy drags on the economy. Bernanke came back to that several times. Heres what he said in his prepared testimony. The risk remains that tight fiscal policy will restrain Economic Growth over the next few quarters by more than we currently expect or that the debate concerning other fiscal policy issues such as the status of the debt ceiling will evolve in a way that could hamper the recovery. A lot of talk about that and what would happen or could happen to the economy if the congress does not raise the debt ceiling in september or later this or later in the fall. A lot of questions about fannie mae and freddie mac. There are some bills in congress. Also questions about banking and banking reform. He was also asked about Interest Rates and higher Interest Rates and what the potential sources of those whether were and whether or not there was concern. There have been three reasons for it. The first is that the Economic News has been a little better. For example, there was a pretty strong labor Market Report that cause yields to go up as investors became more optimistic. Second partor is probably that some excessively risky or leveraged positions unwound in the last month or two as the Federal Reserve communicated about policy plans. Bernanke went on to say that the tightening associated with those higher rates is not welcome but said hes monitoring the Mortgage Market to see what the impact of higher rates is on housing. Ultimately the feds forecast is for the pickup in the economy to happen in the second half of this year. If that doesnt happen, thats when the issue of tapering in september will be on track. Simon, well be following the july data very closely. Okay. And obviously see what he says tomorrow and with the beige book this afternoon. Lets check in with the equity market action. Bob pisani is here with me. Steady as she goes essentially. And who would have thought the move in the markets would have been from bernankes written testimony but not the q a. Everyone was quiet and thinking that the republicans might come out swinging. Didnt really half. Take a look at Dow Jones Industrial average. As simon said, steady as she goes here. Not a lot of volatility. All the movement came in the bond market as they released mr. Bernankes testimony, the written testimony at 8 30 a. M. , almost a ten basis point drop in the yield and thats quite significant and thats what people felt mr. Bernanke wanted to accomplish. The delivering alpha conference coming on all day today. Jim chanos, noted short seller, put up caterpillar as a new short. Caterpillar dropped on the news. That was 45 minutes ago and leon cooperman came out with some picks of his own including some quality growth stocks. Theres caterpillar dropping and put up lee cooperments, express scripts and qualcomm and then he had growth with high income situations mentions arbor really and atlas resource partners. Those stocks moving also on his comments. Sue, back to you. In his testimony today mr. Bernanke said the fed will start tapering this year but is not on a preset course to do so. What does this do . We welcome back Richard Magadan of jpmorgan private bank. Good to see you again, richard. Great to see you. You know, talk to me about the tapering versus tightening argument thats going on on wall street. Sure. How do you view it, and how is it influencing where you put your money to work . Its funny i was going to kid you by saying the reality is Interest Rates are going up. Markets are already tightening, and believe it or not, bernanke is doing a brilliant job navigating deleveraging on one side. We saw athe lot of that in may and june which people have forgotten about and signalling to people we think rates are going high. So far low end is low, credit is still cheap. Highend rates are going up, and we expect it to be a gradual stepup over the next year, year and a half. You still like the United States. Yes. Probably better than anything else around the world. Is that a correct assumption . With the passport and paying taxes, yes. Weve been over the u. S. Market now for 18, 24 months. That was very controversial in january. I think people were looking a lot more into europe. We should talk about japan at some point, but the u. S. Is still leading the recovery and probably the most market and the one we own the most assets in. Japan. Yeah. You made a very interesting call on japan when no one else was interested in japan. Yeah. I would argue that mr. Abe has put in place quite a successful well, maybe not successful, but an aggressive and an interesting strategy going forward. Yes. Theres an election this sunday. Yes . What do you want to see happen . I think we know what happens. Hes likely to get the majority in the upper house of the diet and will have a majority in congress. The trick is what does he do with that . From the teams view we really had a view that structurally japan has been a currency trade so far. Thats got a benefit into earnings. Valuations are cheap so that will keep equity markets supported, but we want to see structural reform. What we dont want to see are consumption taxes going up, and i think the markets are going to debate that as well postelection. We heard from mr. Moynihan of bank of america this morning saying that they are strategically trying to take market share from european banks. Yes. Do you find opportunities in europe at this point . They still have a lot of structural issues. They do, and its funny the banks probably have the biggest structural issues so not being cute. It isnt hard to take market share right now. True, very true. Because they have Bigger Capital issues to deal with. We are seeing opportunity in europe. Weve been underweight europe last year and this year. The team is doing a ton of work in terms of looking at individual sectors right now because i think they are unique stories in europe. Were trying to put together the equivalent of a Recovery Fund in europe where we can be very specific in individual newspapers and then sectors but its not a market that i would still say to go out and buy as a broad market. Very quickly on china. The direct inflow of money from big multinationals into china is something you highlighted in your note to clients today. Yes. And you think that indicates a longer term commitment to the country. Whats funny is the longer term commitment hasnt changed. Whats surprised us and markets is how aggressive this administration is being in reform and i could make parallels on what the issues did for the deleveraging that weve seen in long bonds last month. Inflows into china are very consistent strategically. What no one is talking about and its even more interesting, we had 62 billion come in in fdi in china. Foreign direct investment. Yes, and thats the equivalent of about a 5 increase year on year. It was a 20 increase in june which is what got the headlines around it. What no one is looking at is the investment leaving china, and weve seen an increase in Something Like 30 of directed investment outside of china into broader asia, into europe and into the u. S. Interesting. So trn is converging and evolving. Its going to be bumpy. Its going to be aggressive, but its good for the region. Richard magadi madigan, plea spend time with you again. Delivering alpha, may be the best lineup in Financial News history. Lots of questions for you but first the highlights from delivering alpha so far today. Going forward, well measure our progress in weeks and months, not in years, and much of our remaining work will be completed in the next five months. Let me repeat. By the end of this year, the core elements of the dodd frank act will be substantially in place. I dont think anyone is too big to indiet. No one is too big to jail. I think, an ive been saying this for years, you know, theres enough moral hazard in the industry, and if you give people a blank check and you tell people that they have a get out of jail free card because of their size or because of their interconnectedness to the economy as an absolute matter, thats a very dangerous thing and we should never do it and we dont do it. Im only up about 17 so if you take out my exorbitant fee im lagging a mindless index called the s p 500. I wouldnt be surprised personally if the market got into a corrective mode or went sideways for a while. All in all i think that caterpillar, while an amazing american Success Story down through the decades is going to be facing a series of super commodity headwinds, that i dont think its supporters really appreciate. And ty joins us now with a lot more. Ty, its been fascinating, some of the rather provocative comments that we heard earlier this morning to some of the rather interesting investment ideas that basically scott wapner had on his show. And you got a few of them there and a sampling from leon cooperman. If you want to be where the newsmakers are making news, you want to be here today because that is the kind of morning that weve had. This place was buzzing like a forest full of krikdacicadas. Right now its more like crickets. Why dont you turn and show how ive cleared the room. They are all having lunch right now and listening to john paulson, Carl Quintanilla will be interviewing him in a few minutes. Let me go through the highlights, treasury secretary jack lew, third year in a row for delivering alpha and third year in a row that the treasury secretary is here taking questions from our Steve Liesman. My takeaway is what was in the clip. Anybody who thinks dodd frank will not get done and be enforced he got it wrong. He put a timetable on it just as mr. Bernanke has been putting timetable on when hes going to draw back or taper those asset purchases. He said by the end of the year, dodd frank, dont get any ideas you wont be able to avoid, it dont get an idea that much will be repealed. Its not happening. Its the law of the land. Moving on to Preet Bharara, you heard what he said, no one was too big to jail and he was very careful and had some criticism of the press, specifically with respect to all the speculation thats been going on on what the District Attorney the u. S. Attorney might or might not do with respect to receive cohen and s. A. C. Capital. He said dont let the number of a date on a calendar, specif specifically the lapsing of a stat stat fool you. There are lots of ways that he can find to go after wrongdoers, and he said if youve done something wrong in your past, your past is going to catch up with you eventually. It was a big shot across the bow, and basically a cautionary note. Moving on quickly to some of those best ideas. You heard lee copperman talk about how he thought maybe the market would move sideways, maybe a little bit of a pullback. He had ten predictions last year. All ten of them came to pass. Hes looking for lower returns in the market over the ensuing 12 months. Roughly 5 to 8 . Jim chanos who you just heard from. He said short caterpillar. Why . Because he says the global super cycle in mining and commodities is coming to an end. People may not see it yet, but it is here, and he thinks that caterpillar is overexposed there. A couple of other interesting ideas. Mark kingdon said go long japan, inc and likes toyota, Fuji Heavy Industries and mazda. Some of the top notes weve had during the day. An interesting session. Yet to come john paulson across the way, and later today, as scott was talking to you on the last program, we will hear from carl icahn. Ive given you pretty much all ive got, sue. The room is full of crickets. Im going to go where the cicadas are. Grab a little lunch because youll be really busy this afternoon and i want you to listen in on John Paulsons statements. Hes making those comments during lunch and a little later during this hour, Carl Quintanilla interviews investor john paulson. Mr. Paulson had a very interesting year. Thats an understatement. Some of it was very good. Parts of it were not so good. Well hear from him in about 30 minutes. Simon . Okay. Lets run through some. Other hours this lunchtime. Bank of america posting a 70 jump in its quarterly profit held by higher stock trading and lower expenses, importantly cost control a key issue. The stock is slightly higher on the day, as you can see, but up 24 so far this year. Kayla tausche has more on b of as big day. Kayla, over to you. Still Corporate News happening for you and we have it all for you. Bank of america, it cut more costs and released more loan loss reserves than expect the and also posted its first postcrisis quarter that didnt see the banks bottom line erased by pesky legal costs and managed to best its peers in some cases like mortgages and jpmorgan and citigroup, the ceo this morning said the pipeline is down only slightly and wont see the impact that its peers will. Trading another boost to earnings. The best quarter for Equities Trading in more than two years. Big hires paid off in cash equities and thompson attributed weakness to the end of june volatility as the market tried to interpret the fed. He later made comments saying it could take up to three years to make up some losses in the industry suffered in the recent bond route. There were some thorns in the quarter. The bank made less off interest than it did last quarter and revenue every quarter was down. Those issues are standard across the sector and its hard for banks to keep turning profits but for bank of america always bigger legacy challenges there, and at least on that front it seems the psychology of investors has finally shifted. Thank you very much. We should mention that Credit Card Companies are down this lunchtime. The European Commission says it will propose a limit of 0. 2 and 0. 3 on the fees that the banks charge to process debit card and credit card transactions. Sue, over to you. Two big numbers from the Housing Market out today. Starts dropping 9. 9 in june and Mortgage Applications fell last week. Diana olick is here to wrap it all up for us. Shes live in washington. Hey, sue. The starts were a surprise, the Mortgage Applications not much. Applications to buy a home were up 1 week to week and down 5 in the last four weeks. Refi applications were down 4 and down nearly 27 for the month, this as Mortgage Rates were unchanged, the average rate on the 30year fixed 4. 6 and it is down from the spike a few weeks ago but higher than the lows of early mau, and ironically rates moved lower as we got bad news on the Home Building front. And to that Housing Starts down 10 , driven mostly by a 26 drop in multifamily. Single family starts were essentially flat, down under 1 for the month but up 11. 5 from a year ago. Permits considered a more dependable stat were up just under 1 for Single Family and down nearly 23 for multifamily month to month suggesting lower starts and in the coming months ahead despite high demand. Well talk much more about the builders coming up on street signs and online well talk about how Housing Confidence is still high despite these cautionary numbers. Another reason that the bond market rallied today and the yields on the tenyear dipped 2. 5 . After the break, the heat is on, and its not just on the east coast thats getting the really hot weather. The forecast next. And more than 100,000 people in washington are on the brink of losing the Water Service in the midst of the heat wave. Theres big news out of washington just moments ago. Well take you there live momentarily. Meanwhile out west fire is the problem. A new round of wildfires forcing evacuations. Its quite literally a fast moving wall of fryar thats now burning through the golden state. Well take you there after the break. [ male announcer ] its time. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. Some absolutely incredible pictures coming out of california. That is a wildfire in the mountains just west of palm springs burning seven homes, sparking widespread owe vacations. Some 650 Fire Fighters are on the scene so far. Ten air tankers, 8 helicopters are helping to fight that fire, but its hot out there, too, and execs teamly dry, and clearly that is making it a very difficult situation. Simon . You know, sue, well get the Weather Forecast in a moment but first lets go to Prince Georges County right outside washington, d. C. Where 100,000 homes were on the brink of losing water right in the middle of this heat wave until something pretty unexpected happened. Tracee wilkins from wrctv joins us live in morningside just outside of washington. Welcome to the program. What is the breaking news here . Reporter well, whats breaking is that they were able to actually shut off a valve that had been stuck for the last day. It was because of them not being able to open that valve that they thought that they were going to have to shut off water to more than 100,000 customers. They were thinking maybe up to 150,000 people without water. Let me show you where we are. Were here right across the street from Andrews Air Force base, the president s airport here in morningside. That place was impacted. All of the businesses along the roadway across from andrews impacted. Were standing here in front of this mcdonalds because its closed, although as you can see from the line folks are waiting for someone to take orders but thats not happening. The county shut down businesses that use water to try and conserve. Now, the good news is it looks like we wont have folks impacted by having to lose their water. They are saying that they want people to continue to conserve, to ensure that they wont have any issues here. We were talking about 3. 1 miles of pipe having to be fixed. Now they are saying they are looking at. 8 miles of pipe having to be fixed here, significantly less, and because of that, they are saying they dont need to see all of the water shut off, but they do want people to continue to conserve just in case. Good news because were in the middle of a serious heat wave. Tracee wilkins reporting live from Prince Georges County. Nice to see you. Thank you very much for that live report from morningside. Lets get to julia martin who is at the Weather Channel in atlanta just to take a birds eye view of how long this heat wave will last. Julie, who will be affected. Over to you. Well, tyler, the heat wave is relentless. It is widereaching, and its going to take a pretty strong cold front and some storms to knock it out of way over the next couple of days. Lets take a look now. You see this dome of hot air. We call this high pressure. Its stretching all the way from the midwest into the northeast, so were looking at 90s today in the midwest. Certainly heat advisories in places like detroit, over towards even upper wisconsin, green bay in a heat warning and also a heat advisory in the ohio valley, places like pittsburgh right on the edge of that, but here in the northeast, this is where were seeing, again, some very unprecedented temperatures in places like new york city. You can see the 90s, but what were really have to worry about are the heat indices well up into the triple digits which goes on through tomorrow and the next day. Its really going to be the weekend before the northeast gets a break. Were looking at these excessive heat warnings and advisories all up and down the east coast. Going to be one long hot miserable week here for millions of people. Tyler and sue. Julie martin there at the Weather Channel, thank you. Ahead on the program, they are not just for spying. Now you can get your dry cleaning delivered by drones. Yes, get your shirts nice and fluffy and then have them flown right to your door. Most people swim away from sharks, but this guy pulls them out of the water and fights with them. In massachusetts his Amazing Store end the sharks tough defeat next. Also ahead in the program, the power pitch. Coming up, power pitch. Startups give us their 60second pitch. Hi, my name is brian, and im founder and ceo of wow one day painting. And we give you insight into the fastpaced world of venture capital. Now youre profitable. How do you get the consumer to feel comfortable . Do these founders have what it takes more . Are you in or out on wow oneday painting . Stay tuned to find out. You make a great team. Its been that way since the day you met. But your erectile dysfunction it could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than 4 hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. A man from nantucket, massachusetts making waves all over the world with this video. He pulled that 200pounder out of the water with his bare hands. Elliot says he loves fighting with big game fish. Thats a seven foot shark. Granted its a sand shark, not a killer shark, but they do sometimes bite people. I hate to judge, but respect for the fish, elliot. Next time maybe throw him back. What do you reckon, sue . Completely agree with you. Poor shark. Extraordinary video. Okay. Gold down on the back of bernankes testimony. Prices closing in two minutes. Sharon epperson is tracking the action as ever this time of the day. Were looking at gold prices that have faltered after getting close it that 1,300 an ounce level in the wake of bernankes testimony. Looking at the dollar gaining some ground. Thats put some pressure on gold, and keep in mind gold prices seem to be consolidating as some people are saying and that seems natural that wed also be seeing profittaking as bernanke did not offer anything new for a lot of traders. Looking at silver an copper, they are at weekly lows. Copper really getting hard hit after that housing data from today and from the delivering alpha conference, simon, were hearing from the Hedge Fund Manager jim chanos that the psych will everyone counted on based on chinese construction, that may be nearing the end. Thank you, sharon. Lets go to the nasdaq and Bertha Coombs is following the action. The big movers down there in times square. Biggest mover is yahoo best in the s p today and also in the best in the nasdaq. The street a little disappointed on the guidance on the revenue and the revenue number itself for the second quarter. Stock today at a fiveyear here. Not bad way to celebrate your oneyear anniversary as ceo for marisa mayer. Vote due tomorrow, carl icahn slugging away. Well hear more from him with scott wapner later. Hell say to vote against the deal with michael dell. Intel slightly ahead of its earnings this afternoon, and mattel, the worst performer after it disappointed, simon. Even its american girl, which has been a real strong point, disappointing on sales there. Back to you. Thank you very much. Bertha coombs at the nasdaq. The yield on the tenyear at 2. 5 . Rick selly is tracking the action at the cme. Rick . Thanks, simon. Yes, if you look at an intraday of the tenyear note yield which many eyes are, its hard to differentiate what percentage of the weak numbers on Housing Starts and permits contributed to that drop in yield which is routine on weak data versusning ben beenchingy said. Many down here believe housing was a big factor. As you see on the charts since that came out its been creeping back up. Listen 5s, many fiveyear maturities is where the most longs are stuck. If you look at the spread between 10s and 5s the recent steepening is bailing them out. That it means simply is that the 5s are rallying better than the 10s. Now, if we look at the dollar index, we can see its stabilized, but it took a big hit, and the last chart, hyg, call this the risky tf, definitely stabilizing and moving higher and it tells me a lot about the Risk Appetite back in the marketplace. Sue, back to you. Okay. Ill puck it up, if i my, bob. Lets bring in bob pisani for more on the stocks. Important thing here as we all thought there would be fireworks from mr. Bernankes q a and that turned out not to be the case. Dow jones industrial average, take a look in a very, very narrow trading range and a lot of the moves came as rick noted at 8 30 when he released his written testimony. Normally not a market mover, and we saw a decline in the tenyear yield as rick pointed out. I think the important thing here is we did see some Market Movers throughout the day. Take a look, for example, caterpillar, jim chanos at the delivering alpha conference. Hes been short hewlett. That hasnt worked for him and we did see caterpillar move to the downside. A lot of talk about the weak numbers this morning in the starts numbers. Much of the decline was in multifamily, and thats why youre seeing the Home Builders up today, not on the downside. They are not discounting it, but they are saying most of it is in the multifamily area. A couple reasons why im not particularly concerned about the runup in Interest Rates. Single family permits were at highest since may of 2008 today. Sentiment numbers were at a sevenyear high and overnight really, the Largest Real Estate Company preannounced strong earnings. Take a look and you can see the stock is up. Remember, that stock went public at im trying to remember. I believe it was 24 towards the end of last year, and you could see essentially, simon, the stock has doubled since then. 3. 5 to 4 on a 30year. A little bit of concern, but i dont think thats going to derail the housing recovery. If it goes to 6. 5, now im worried. And you are the son of a builder. I am, and we saw Interest Rates Mortgage Rates at 17 . I remember. 17 . Thats a long time ago. Bob, thank you. Have a good afternoon. Sue . I remember it, too. Its time for our series the power pitch where innovators get 60 seconds to make their pitch and then our panel of experts decides whether they have what it takes to become the next big thing, and one of our judges today is making a big announcement. Hes running for mayor of new york city. Heres the power pitch. Im mandy drury, and on todays power pitch we have a company that guarantees it can paint your house in a day. Brian scutamore is founder and ceo of wow oneday painting. He turns 700 and a pick yupup truck into a 100 million a year business called 1800got junk. But can he repeat his past success . Lets take a look at his power pitch. Hi. My name is Brian Scudamore and im the founder and ceo of wow oneday painting. 51 of americans surveyed say that the biggest obstacle in the way of painting their homes is that it takes too long. Its too disruptive. Could it be done in a day . Yes, it can. Three years ago i met an entrepreneur with a system for painting homes in a day. I was a consumer, and he came in with his team and painted my home, floor to ceiling, moldings and trim, speed plus quality equals wow. I partnered up with the entrepreneur and we have great suck serbs faster growth than my first brand 1800junk. With our partiers from san jose to washington, d. C. , and the goal is 200 Franchise Partners over the next ten years. Well get there by finding people who are passionate sales and marketing individuals who want to build something together rather than building it alone. The future looks brimpingt im excited. Real painters do it in a day. Oneoneday. Com. Brian is on the right side of the screen. For now he can hear us and cant react. We have real estate entrepreneur don peebles chairman and ceo of the Peebles Corporation with a portfolio of luxury hotels, commercial Properties Across the United States and serial entrepreneur jack kitery. Jack is Founding Member of the clinton global initiative. Great to have you with us. Don, what did you think about this pitch . I think its got great application, by the way, both on the private sector side and for residents and also for commercial application. I have a home in the hamptons and i was looking at it yesterday and saying it needs to be painted on the exterior, but good grief, do i want them to scaffold my home two weeks in the middle of the summer when i want to enjoy it so a good application . What about you, jack . Consumers in todays economy they love instant, instant gratification so i think it has that going for t. At the same time these are peoples homes. People care a lot about their homes, and so the quality and Quality Assurance really has to be there. Personally, as someone who has been in this situation i would love guys to come in and paint my house for one day, and im sure theres a lot of demand out there, but whether or not its a good job is obviously a question we have to pose to brian. Lets talk to the man himself. Brian, youll be in the hot seat. Nice to meet you. Mice to meet you. Thanks for having me here. Were going to ask you a few questions. First question, what would you like to ask brian . How do you get the consumer to feel comfortable you can deliver on time and give them a high quality product that they are going to be expecting based on it being their home . Our biggest challenge right now is a marking challenge, not an operational challenge. Its educating the consume their speed and quality together make wow. Weve got the systems in place. We paint homes all day long in a day, and the quality is is better than youd often expect. Tell me about your training program. A lot of these folks that youre going to bring in, a lot of the workers, they are not used to painting a house in one day. We have to have immaculate perfect Training Programs and weve learned that through 1800gotjunk. This is a stepbystep process that people go through with wow oneday university. Would i like to ask you money and cents questions. How much would you bring in each month and are you profitable . We are profitable, a little over two years into the business. We have 21 Franchise Partners. Were just a marginal profit this year. Its our first profitable year. We will do 10 million in revenue systemwide at the end of this year, 75 million in revenue by the end of 2016. Okay. Now folks, you heard what brian had to say. Weve got to ask whether or not are you in or out on wow oneday painting . Jack . I think people will want this kind of service f. Brian can deliver in terms of quality, Quality Assurance and training of the people i think is so important, i think its going to real succeed. Im in . What about you, don . In or out . I see two ideas here. One for Residential Homes and also with a growing number of homes being rented for business purposes and larger corporations doing that to get these properties back on the market by quickly repainting them is very effective and so im in. I think its a great idea. Okay. Well, i real like the fact that they are already profitable so money is not a stage at this stage and like the fact that brian has lots of experience doing this kind of thing before with his very successful 1800gotjunk, and as you have both said, it seems like theres a lot of demand out there, i would personally hire your guys that went through your oneday university. Brian, whats your reaction . Im honored that three very bright people give their vote and say they are in. I think weve got an awesome business. Im passionate about it and i see that this business will continue to grow. And that is the power pitch. Okay, folks, you heard when the panelists had to say. We want to hear from you. Are you in or out on wow oneday painting . Cast your vote today on powerpitch. Cnbc. Com and join in on the twitter conversation with the powerpitch. And just to recap our power pitch judge, jack hitary, will announce today that hes entering the race for mayor of new york city as an independent and going up some pretty formidable adversary in that race and we wish him luck. Plans to cap mastercard and visa transaction fees. Is europe waging war on corporate america, and they are not just for spying anymore . How about getting your dry cleaning by a drone . Its all coming up in the power rundown next. And still ahead live from delivering alpha in new york city, Carl Quintanillas big interview with investor john paulson. Thats still ahead as well. Back in two. If youre serious about taking your trading to a higher level, tdd 18003452550 then schwab is the place to trade. Tdd 18003452550 call 18882849410 or visit schwab. Com trading to tdd 18003452550 learn how you can earn up to 300 commissionfree online trades tdd 18003452550 for six months with qualifying net deposits. Tdd 18003452550 see how easy and intuitive it is to use tdd 18003452550 our most powerful platform, streetsmart edge. Tdd 18003452550 we put it in the cloud so you can use it on the web. Tdd 18003452550 and trade with our most advanced tools tdd 18003452550 on whatever computer youre on. Tdd 18003452550 also, get a dedicated team of schwab trading specialists tdd 18003452550 who will help you customize your platform tdd 18003452550 even from the comfort of your home. Tdd 18003452550 and talk about ideas and strategies, one on one. Tdd 18003452550 get all this with no trade minimums. Tdd 18003452550 and only 8. 95 a trade. Tdd 18003452550 call 18882849410 or visit schwab. Com trading tdd 18003452550 to open an account. Tdd 18003452550 and learn how you can earn up to 300 commissionfree tdd 18003452550 online trades for six months with qualifying net deposits. Tdd 18003452550 our trading specialists are waiting to help you get started. Tdd 18003452550 so call now. Tdd 18003452550 the donald is moving lower being downgraded from neutral to buy saying investors are too optimistic about u. S. Sales trends this summer. Tesla rebounding from its selloff on tuesday. Maintaining a buy rating and maintaining its price target from 200 based on potential from its Third Generation vehicle and sales of devices to treat abnormal heart rhythms improve. It says from earlier this year, and saying with health care. Two of the biggest hospitals in new york have agreed to merge in complying with obama care. The Largest Nonprofit Health System will be in the United States at continuum health. Mt. Sinais ceo ken davis says the merger makes up for federal and state inability to pay for health care. Experts predict the deal expands patient treatment and stream lines insurance payment. Critics say it could, however, lead to much higher prices, sue, in the future. Over to you. Time will tell on that. Simon, its time for the power rundown. Lets get right to t. Europes war on american companies. In the past it was google and microsoft on antitrust. They are going after visa and mastercard right now. Bob pisani, ill start with you. What do you think . Well, you know, if you read the testimony of people who have gotten into trouble with credit cards, you have a little bit of sympathy, and you can understand governments trying to regulate this but id have to come down against this, the whole nanny state concept of telling people how much debt they can get into and how much they can hand. Im against the idea. Im against it. Youre against it. What about you, simon . It sounds antiamerican. The europe yarns are focused much more on the consumer and too much market share. They choose to act and thats what you see time and time again. Im not sure if the average american wouldnt want it. Affecting American Express more than visa and mastercard. Having a much tougher session. This may be the future of retail, guys. Im not sure, but over in finland customers can pay for their purchases using face recognition. You just nod or blink and then you pay. The software does the rest so you dont have to carry your credit cards and dont even need cash. I dont know. Kind of creeps me out a little bit. What do you think, simon . I think face recognition is one of the major technologies moving forward. From being able to see people on Surveillance Video and crossreference it to their Facebook Page it will be huge but im not sure it would be time for payment. I could put a bob mask on and he would have to foot the bill. Thats a scary thought. This may shock you, sue, i dont have a big problem with this and ill tell you why. Its a better solution than what we have now to confirm peoples identity. By the way, one of the reasons iwatch and wearable watches will become such a big thing is the biometrics component of it. It gives a way of identifying who i am by biometrics, and that also could be used as a way to identify who you are. Why cant you use your fingerprint. You can use that, too. Another alternative. Right. I think that would probably be the first step. I dont know if i could ever embrace facial recognition but well see. Finally, philadelphia entrepreneur came up with a rather novel idea, thats putting it lightly, for his dry cleaning business. Uses a drone to fly clothing over to customers homes. I mean certainly it would be kind of fun, but i dont know whether longer term he has to be right behind, it whats the point . I guess you dont have to carry the clothes, simon . I love it. You could deliver anything, the mail, take the children to school. I guess it would be if there are too many of them. Its gone viral, a great gimmick. More seriously the faa has got to make regulations on actually how drones can be used in businesses and to the extent that they interfere with any kind of aviation traffic, certainly thats an issue, but i think its a great story. I have a house in philadelphia and right down the street from us. All sorts of attention. Can have your dry cleaning delivered to you, bob. Your clothes are so expensive, bob, youd never trust them to a drone. Id throw them away and dont even use them again. Thats me. Simon, take us to the markets. Lets talk about the marks, up six points on the dow. We bring in ben willis from the nyse and brian battle is in chicago. Brian, are you surprise that had we managed to get through the fed testimony today unscathed as a market . No, i think the markets took great solace in what ben bernanke said. Released the text early which is unusual and the text was very dovish. They talk about the markets, hold rates low and will adjust how much quantitative easing they do buying bonds, and in all three counts ben bernanke said hey, hey, wait a minute, not doing any quantitative easing any time soon and well hold rates low for an extended period. That will support stock and bond markets and were seeing that today. Ben, would you agree given that we think they will start tapering in september . I think the job technique of the central bank has worked effectively. Hes managed to do without moving the needle at all using jawboning to let the market expect what will happen. Nothing has changed and by the end of the year hes going to taper. What i found interesting where the market did not react ben, ive got to interrupt you. Ive got to interrupt you. Lets go down to delivering alpha. Carl quintanilla is sitting down right now with john paulson and begin the discussion. You talk about how few interviews you do and more than that how few Television Interviews you do. Have you done a Television Interview before . No, carl, this would be my first one. Oh. And your last maybe, we dont know yet. I must admit you put together a great lineup starting with treasury secretary lew and then with Preet Bharara and then you had Great Investors from harvard, jpmorgan and great managers so thank you for including me in this conference today. Well talk about a number of things, what you like right now. Im interested in some of the history what forbes has called the greatest trade ever, but just to get it out up front, for someone who made so much money when others were losing so much money, theres been a lot of scrutiny of your recent performance. How happy are you with it, and how would you characterize it in. Were pretty satisfied. Youre right, carl. Theres been a lot of deserved attention on our high returns in 2007, but weve been running our fund since 1994. We had a very good track record up until 06. 2007 we had very high returns due to the subprime mortgage short, but that was sort of over in 07. Those securities had declined to almost zero by the end of the day. It happened that we were very profitable in 2008, when most hedge funds lost money. The market was down 35 . All our funds were profitable. Very little or no contribution from subprime, and then we were very profitable in 2009 and in our best year, at least in terms of absolute returns was 2010. We stumbled in 2011, and we got overly ambitious as to the direction of the market, but 2012 again, most of our funds were profitable n. 2013, you know, were having a very strong year. We get a lot of attention for the gold fund which is down because gold prices are down, but the gold fund is only 2 of our assets. The rest of our funds are all very profitable. Returns so tar this year range between 5 and 32 , so we think were, you know, back into, you know, our longterm, you know, achieving returns now, commensurate with the longterm track record. Does it bother you that whenever theres a headline about gold your name seems to be in the sub head line. Why are you so identified with this yellow metal . We did you know, we became very concerned when the fed started qe 1 about potential loss in value. Since then theres been qe2 and qe3 so the fed has printed a lot of money that didnt exist before. I think in total its close to 300 more money than existed prior to the failure of lehman. So i and other people were looking for a currency alternative to the dollar to protect wealth in the event we get inflation. Historically gold has been a very good currency alternative, excellent currency alternative in times of inflation. Whats happened currently is although the fed has printed a lot of money, to date theres very little inflation. So people that bought gold in anticipation of inflation, some of them have lost patience and that has caused the price to fall in the current environment. However, would i say that its the rationale for owning gold is not gone away. I think the consequences of printing money over time will be inflation. Its just difficult to predict when, and we were at risk for having very high rates of inflation because of the amount of money thats been printed. Now, i know many people arent concerned about it because the latest headline Inflation Numbers are below 2 , but i think over time that will change, so i think the rationale for owning gold is valid. I would say in the trend were in a pause period, but overtime, as we see the economy grow, credit expand and inflation or the indicators of inflation to start to rise, i think demand for gold will start to increase again. As a portfolio manager, has this trade forced you to rethink how you stop yourself out even though you believe your fundamental analysis is correct . Well, with gold we did two things. We started a gold share class, and we created that, you know, its completely voluntary. For our funds we gave investors opportunity to invest in dollar shares, euro shares and yen shares or gold shares, so its completely up to the investment. We dont force it upon them, and if they are concerned about inflation, they can invest in the gold shares. I will say since we started the gold share class it has been very successful. Our average cost putting on the hedge was about 950. The amount of gold in the share class has come down over the last two years, so those that took it up from the beginning are doing very well, but gold admittedly is volatile. It always has been volatile, so i think if you its very difficult to predict Price Movement in the short term, but if youre looking for a hedge against potential inflation in the future and have a longer term view, i continue to believe its an important part of anyones portfolio. Lets talk housing. As someone who saw the cracks in u. S. Real estate and mortgages, whats your view now . We took a longterm view. Even in 06 and 07 when we looked at the Housing Market. We looked at Housing Trends over a 30year and 50year period and what we noticed is that housing is a cyclical area. Theres periods of time when it goes up and periods of time when it goes down. Similar to the bible, seven years of feast, seven years of famine. We thought we were at a peak in 2006, and thats why we went short the Housing Market, and now we believe the Housing Market has bottomed so we wanted to go long real estate opportunities. The Housing Market is starting to recover. I think the latest data, its up 12 in a year over year basis, and i think were just at the beginning of the recovery. I would expect this recovery to continue for at least the next four, possibly seven years, so its not too late to get involved. I still feel buying a home is the best investment any individual could make. Affordability is still at an alltime high. It still costs less to own a home after tax than it does to rent and then you get lock in the rates with a fixed Rate Mortgage and then you get the benefits of appreciation, so if anyone bought a home last year, lets say for 100, you put down 20, today that home is worth 112, so you made 12 on a 20 investment, 60 return, so obviously whether you invest in my fund or any other managers that are speaking today, you wont make returns that are that good. Plus, you get to benefit by living in the home. You do each better if you put 10 down, you would be up 120 , so im not sure if housing prices will increase 10 every year, but its likely over the next five years they will increase by at least 5 to 7 so theres still a lot of upside. Not too late to get involved, and id certainly encourage anyone thats a renter to consider becoming a homeowner. And over a long period of time thats probably the best single investment anyone can make. Youre getting exposure to this in a number of different ways. Yes. Lets talks about lots of land. One of the things we notice in a real estate is also cyclical, so in the, you know, after lehman failed, the all real estate markets went down, but in looking at past recessionary cycles we realized that land prices are land is the segment thats hurt the most because in the downturn generally the home falls below the home price of new homes fall below the cost of replacement. As builders go bankrupt and banks sell homes for less than their cost so theres very little building activity, and if you were to buy a lot and build a home you couldnt recover the cost of the home so land basically has no value. So we noticed this pattern happened in the crisis we had in 1990, so we wanted to be prepared to take advantage of this opportunity this year so we set up a special Real Estate Fund to exclusively buy entitled lots across the country. In the last cycle, the average land, the average price for land fell about 78 , 80 from its peak value in 2006, so we set up a fund to buy lots primarily in stress situations, either from banks or as part of foreclosure situations or from builders that needed to raise cash in the growth areas of the country because you want growth eventually will absorb and will create the need for new housing and then, therefore, the need for land, so we focused our fund on arizona, california, nevada, colorado and florida. And between those states i think were probably the largest purchaser of entitled lots, mostly developed in the recession. Until we bought close to 30,000 lots, and now that the Housing Markets are starting to improve, the valuation of this real estate is starting to increase. We also approached the housing recovery by securities as well. Became a very large investor in different tranches but of the same Mortgage Securities we were short. We supported the bbb tranches, but after lehman fell and this market collapsed, a lot of the aaa tranches fell to prices around 30 , 40 , so we became a large buyer of the aaa tranches, and today its the largest segment of our credit funds, and those securities have performed very well. And then weve also bought a stake in realagy. Thats the largest residential broker in the country. They were purchased in a leveraged buyout by apollo, but their timing was off in 2007, and then we went into recession. About two years ago we capitalized well leave the john paulson interview momentarily because we have breaking news with Brian Sullivan and mandy. Over to you guys. Thanks very much. Stocks are up. Gold is down, and we are downtown in the beige book delivering alpha wednesday. Looking at the wrong camera. Live with news, info and top level tips from our amazing delivering alpha conference all day long. Right now breaking news on the beige book with Steve Liesman. Thanks very much. Brian, a beige book that in my opinion is a bit at odds with the weaker Economic Data. You just dont see it. The beige book a bit stronger than the Economic Data weve h. Overall the beige book saying the economy increased at a mod toast moderate pace. Manufactured which has been weak in some of the other data is said to be expanding in most districts according to the beige book, Consumer Spending and auto sales all increasing. We had that weak Consumer Spending number. Seven districts report modest retail gains, new york saying its it was soft. Retailers in four districts