Transcripts For CNBC Power Lunch 20150209

Markets. Theyre a little under pressure this hour. A bit of a soggy start to the trading week. The dow currently off by 46 points. The nasdaq has gone positive though. Its up just very marginally. The s p is down by two points at 2,053. We also begin with a major meeting at the white house over the crisis in ukraine. Germanys leader Angela Merkel and president obama trying to show a union id front, but the two are at odds over whether to arm ukraine. Chief International Correspondent michelle live at the white house. What do you think the conclusion is likely to be based on what we heard today, michelle . We distanted idle have us stand idle and simply allow the borders of europe to be withdrawn at the government. Lower on the agenda was greece, but certainly of high interest to our audience. We know that there has been pressure behind the scenes from the white house or from treasury towards germany trying to go easier on the greeks as they go through this situation, this negotiation thats ongoing. Angela merkel at the very top of her opening remarks made a reference to other countries in europe, and listen to it and then listen to what she didnt say. Heres how she we have made significant progress in a number of areas. We have countries who are now back on the growth path. Ireland comes to mind here in particular, and also spain and talso portugal s after a strong phase of Structural Reforms they have now made significant progress. Ireland, spain portugal, port theyve all done Structural Reforms, and now theyre on the he path to growth. O grow what she didnt say there was as greece needs to do the same same thing, but clearly thats the message that she was sending as they begin these negotiations egotia later on in europe thisti week. Guys, back to you. Michelle, thank you very much v for that. Meantime, a key city in ukraine. Prorussian separatists getting ing pounded. At least two peoplee were killed in the shelling in an adjacent t area under Ukrainian Government an control killing at least seven seven people. One of thehe largest explosions tolosions hit chemical plant. Plant. That explosion caught on tape, and people said the force of the explosion blew out windows far away. The plans made all right manned where i. Ned whe the fighting continuing over there. Questions now remain about whether sanctions against russia are actually working in this conflict. Steve liesma n from the treasury asury secretary, swrak lew, about that tha in a cnbc exclusive earlier today, and, steve joins us now from new york. Ork. Steve. Hey, tyler. Thanks very much. Anks ver as you know, treasury secretary secre jack lew is the man in the T Administration charged with administering those sanctions. Sanc i got to speak with him last night and asked him that very question, tyler. R. Are the sanctions against russia working . Violence seems to be escalating in ukraine. Given the escalation, is there a sense right now that the currentrent level of sakes is not is no sufficient . Actually i thinkk the sanctions are working in the the sense that theyve done a tremendous had a tremendous d impact on the russian economy. Onomy. The russian economy is not good. Some of it is the sanctions have really weakened the core of russias economy. I think that what we havent seen is the government of russia, president putin, respond in the way that would be the reasonable way to respond which is to work to a diplomatic resolution and see the sanctions rolled back. I hope he chooses to take that course. Obviously, the diplomatic course right now is one thats designed to drive in that direction. We are prepared, as i have said many times, if we need to to take the sanctions and rachet them either up or down. On what evidence does he base his views that the sanctions are actually working . He said that oil prices are down, but my sense is that doesnt have very much to do with the sanctions. No, and i think the russian economy is definitely having some affect from the sanctions but predominantly its coming from oil. It shows the pictures and the severity of the conflict escalating in ukraine right now. Its hard to say that the sanctions are forefront in putins mind when making the decision to really not just back the rebels in the eastern ukraine, but really escalate his support for them with more sophisticated equipment. The violence in the past couple of weeks seems to have gotten worse, not better. Lets pivot now, steve, to greece. The countrys new leftist Prime Minister laying out over the weekend plans to dismantle the austerity plan. Enough ahs aint he basically says. Emergency meeting later this week. What did jawck lew say about all of that . Its obviously a key issue on his mind and something thats going to be discussed in europe. Obviously the United States doesnt want another flareup of european contagion in Global Financial markets. Heres what he said about greece. I think what has to happen right now is that everybody has to tamp down the rhetoric a little bit and there knees to be a conversation where greece and all of the parties that its engaged with look for practical pragmatic ways forward which is in everybodys best interest. I hope that happens quickly. Is he going to be going over there, and i think, tyler the major question, which is the extent to which lew himself or the United States supports some of the efforts of the new greek government to get out from under some of the severity of the austerity plan that was agreed with european the european governments. All right, steve. Thank you very much. Great interview with jack lew. Mandy, over to you. Thank you ty. Greece contributing to some of the market volatility in recent weeks, including today. This may be a good thing. Lets bring in jerry, chief Investment Officer at castle Ark Management and the chief Investment Officer of gentlemen, great to see you. Ron, it feels like 2015 has been marked by this volatility whether we like it or not. How do you embrace it . I think volatility is long overdue. I think you should embrace, it actually. We havent had much in terms of leadership change but i think that is really whats going to happen from here. Normalization in the United States, i think, is going to be a different kind of leadership over the next year developing. In that process oftentimes volatility occurs. Do you agree, jerry that volatility can be a good thing . Maybe even a sign of a more normal market, and it certainly is good for active managers. Well, it sure is, and you hit the nail on the head. The market that weve come frshg the last at least five or six years, you got paid for having some of the least volatile earnings, some of the slowest growing and some of the largest companies. All the valuation excesses in the market are packed into those big oversized companies. What were talking about is a transition to a more normal growth path awe market that has valuations now broadening, going well beyond that top 50 or 100 names and getting to the much better faster growing businesses that have kind of been left behind so far in this market. Thats what really excited about here because you say, boy, this long into an expansion the market shouldnt have much further to go. In fact, a portion of the market can actually go up 50 to 75 from here. Like what . Like what particular name could you be backing in that environment, jerry . Look closely at these 10 to 15 growers. Take a name like starbucks who has just kept up with the turning stroke. It could probably go up another 30 to 50 . Look at a company like sh schwab, and you yet the stock has lange wished in the 20s and has no reason to stay here. Much higher valuation is coming. We think its substantial, and were really just excited. Earnings are much more a point of fundamental and much more important. Not just a market thats been pumped up by liquidity. In that environment, ron, what are your picks . I think that you need to have more Economic Sensitivity. In some parts of staples i think you want more Economic Sensitivity because the economy is growing. The rate of change is going to increase going forward. You want industrials. You want technology. You Want Companies that can benefit from this faster growth. Companies, earnings, and revenues are nominal dollars. Lets focus on the nominal here, and i think were going to do just fine. Wonderful. Thank you very much, jerry for kicking off our show. You can also check out jerry and rons picks in an approving economy by going to power lunch. Cnbc. Com. You can see the stocks that are poised to do well according to those two gentlemen, and that is power lunch. Cnbc. Com. Ty, just in case for people that didnt get it the first time. Mandy Oil Continues to build on its big rally from last week, and you see there up almost 3 . West texas crude and a little more than 1 for the brent. Jackie deangeles tracking the action at nymex. Hi. Good afternoon to you tyler. Another big move to the up side. 1. 43 on wti. A couple of things going on here that i want to break down. First of all we did get that report from opec raising its 2015 demand forecast. Thats certainly part of whats moving us higher here. I want to point out that theyre raising their demand forecast for their International Product because theyre anticipating that the low price of oil will have an impact on u. S. Production, bringing demand for our product down. Its not really something that were seeing because Global Conditions are changing or because we have a better situation in europe or perhaps a better situation in asia. In fact, you have weak trade data out of asia that leads some traders very concerned here. This might be a little bit more of this hectic that weave seen. A little psychological bounce. We are staying over 53. Lets talk about gas prices. A lot of people think its the rise in oil prices that has been impacting gas, and not so much so. Certainly supportive. The unless you see a big leg lower, you wont see that. Back to you. Jackie thanks very much. Dominik chew, market flash. One of the worst performing Industry Groups within the s p 500 today is the Airline Industry group. Thats on the heels of those Rising Oil Prices. Up 2. 5 for wti, and disappointing numbers from certain traffic and sales metrics from the likes of American Airlines and southwest. As a result, the bigger names in the business are taking a hit in addition to those two. Sanctions are easing, and businesses are lining up. Get aing piece of the action in cuba. Netflix, the latest one. What cuba will mean for that movie streaming giant. Plus, while Oil Prices Continue to rise, more u. S. Refineries facing major worker strikes. What it means for the refining stocks. Well tell you that and more when we come back after this short break. Welcome back to power lunch where are its all been hasbro for the last year. After opening up its climbed to a 52week high. Shares up more than 8 . They are just are not 8 today. The company is close to better than expected profits thanks to boys toys. Hasbro has boosted to 46 a share from 43 cents prior. Thank you very much. Netflix expanded cuba. Any cuban with internet and International Pay options can use the service, and dish Network Debuting online streaming program sling tv today. Microsoft bond order ballooning to 26 billion. They are expecting the deal to sign due to strong are interest from the buy side. Microsoft is just one of three corporates left with triplea rating. Intuit on a turbo tax software. The Financial Software company suspended filings. You might remember that was last week to investigate fake returns. Okay. Were back in the markets. Stocks have been under a little bit of pressure this hour. Another flareup and tensions between greece and european creditors weighing on investors as well. Lets go to bob pasani and kated rogers out of the nasdaq as well. What are traders saying at the beginning of this trading week . Were seeing something we havent seen in a while, and that is low volatility. Take a look at the dow. Were only in a 65point trading range. This year the average has been 200 to 300 point trading on daily basis. Thats unusual. I was surprised of diamond off shore cutting the special dividend. They have a huge dividend 10 . Thats gone now. Loofr people say they will pay that money and maybe make an acquisition for Companies Whose prices are way down. Take a look at american. The stock is down 10 from where it was just about three weeks ago. A lot of these airlines are starting to look a little bit more attractive. Fatherinlaw, weve got a lot of lagards today. You are Johnson Johnson health care dpz Companies Like merck, Proctor Gamble and walmart all lagging. Lets go uptown to the nasdaq. Kate rogers running down the big moves there. Thats right, tyler. Not too much happening at the nasdaq right now. Positive for the month. Off by more than half a percent. Outperforming the dow and the s p. Qualcomm up by nearly 2 . One of the top gainers on the nasdaq 100. That comes on news for reuters that the company is likely to pay 1 billion in fines to the Chinese Government over anticompetitive practices, ending a 14month government investigation. Of course, aeg also keep an eye on apple up half a percent. The wall street journal reporting it will hold its first ever swiss franc denominated bond sale. That could come as early as tomorrow morning. Also, bob and john American Airlines, the biggest loser on the nasdaq 100 today. Down by 4 . The airline reported lower traffic in january and also raised its fuel cost guidance for the First Quarter rather. Semiconductors also have Applied Materials all also in the red today. Mandy, over to you. Thank you very much. Well, gold is getting ready to close. A big selloff in the commodity last week. Prices going to go from here. Well speak with a trader live at the cme. Stick around. I make a lot of purchases for my business. And i get a lot in return with ink plus from chase. Like 60,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Rick tracking the action at the cme. Hi tyler. We are reversing some of the flattening from last week. We see 30s up four. 5s unchanged. Well get a chart of that of the tenyear twoday. That was 196. That was the intraday high. We had since the 12th of january. Lets open the chart up to see the daily we are seeing that euro versus dollar on the yeartodate chart start to give up what has been a congestion zone. Pay close attention around 112, 112. 5. Lets take a look at whats happening with gold price. They are closing right now. Its been another weak day for gold. It did manage to finish to p the up side. Slightly at 1,241. This is, of course, after friday. It suffered its biggest oneday loss. Currently we closed up by 6. 60. Joining us now from the cme is todd, senior vp. Great to have you with us today, todd. January was actually pretty good for gold. People started to say maybe its do you think that recent run is done . Were going to move back down . Especially after the big one that we have over the wreerz. I think right now we have a shortterm top and shortterm because theres a whole lot of uncertainty. You look at whats happened in europe and ukraine and greece and all over the world china. Theres a lot of uncertainty out there, and gold feeds on that. That as well as fear. Fear has subsided quite a bit in the world, the economic political whatever you want to call them risks are still on the rise. Gold, while its on a shortterm high here, probably has a little move to the down side. Maybe around 1,150. If it gets believe that, then it will be a freefall and you are going to see people jumping on the short wagon from all over. When you say freefall, below 1,000 . Its going to trade at least down to 1,000 before we see any real buyers. If you look at gold volatility as well that has kind of traded in the range and not suggesting theres really any fear out there. Were just waiting to see what happens. More with greece and ukraine than anything else right now. Are you watching overseas then. Thank you very much, todd. Lets get to dominik chew for a quick market flash. What are you watch sng. Mandy, todd was just talking about this idea with a shortterm pop today. The price of gold set up fractionally. Thats helping the mindset for the precious metal. Newnont mining. You can see theyre all very much in the green in todays trade. Check on some of the gold mining etfs. The gold the market gold miners etf, the gdx, and thats the gexj. Both you can see there p by 2 as well. Back to you. Dom thank you. Oil prices continue to move up. Morgan bren airborne has the fallout. That is the national strike. More than three decades. Its getting bigger. Well have that story when power lunch returns. Hey, girl. Is it crazy that your soccer trophy is talking to you right now . It kinda is. Its as crazy as you not rolling over your old 401k. Cue the horns. Just harness the confidence it took you to win me and call td ameritrades rollover consultants. Theyll help with the hassle by guiding you through the whole process step by step. And theyll even call your old provider. Its easy. Even she could do it. Whatever, janet. For all the confidence you need td ameritrade. You got this. Im sue herrera, and heres your cnbc news update for this hour. President obama and german chancellor Angela Merkel had their News Conference earlier today. The president said a military solution in ukraine remain unlikely. Where is the beef . Mcdonalds reported its cheaper than expected drop in january sales pinning the blame on the after effects of food Safety Scandals in china and japan. Its shares have been lower on theynews. Carl icon is at it again. The crane maker said the activist investor will have the option to nominate one person to the companys board as part of a settlement agreement. The top charity giver for 2014 none other than bill gates. He and his wife melinda paid a gift of 1. 5 billion worth of microsoft stocks to their foundation. At number two was ralph wilson. He, as you may recall, was the late owner of the buffalo bills. He bekwooeted 20 billion to his foundation in detroit. You can go to cnbc. Com for more details. Caller coming up a reminder on the closing bell. Bill miller, cio. That gets underway at 4 00 p. M. Eastern time on cnbc. Ty, back to you. Sue, thank you. Sdmrirchlgs united steelworkers announcing strikes in two more refinery plants. Morgan brennan with the latest. This is a growing issue. Sdmrooilts a growing issue. Over the past week we have two more names. One bp refinery one that is actually its a joint venture with husk yir energy and this is now the largest strike of oil workers that weve seen in the u. S. Since 1980. Altogether the strike is now affecting 11 refineries and plants. We have more than a 5,000 workers on strike right now. Thats talks between the union and Royal Dutch Shell that is leading remaining at an impact. At least for now. If this continues, as many as 30,000 steelworkers and refineries that account for twothirds of total u. S. Output could become involved in this. Heres whats affected so far. We have two shell facilities. Three Marathon Petroleum facilities, three tesoro one plant, and now, of course, we have the two bp that have joined the list over the weekend. National contract for the steelworkers recently expired. Weve seen six proposals that have been rejected by the union with the union claiming the companies failed to address serious concerns regarding health and safety of workers and their communities. It also wants bigger pay raises and smaller out of pocket Health Care Payments and more work that has previously gone to nonunion labor. As for fuel output well, all refineries accept one thats owned by tesoro. That was already undergoing maintenance. Our operating on contingency plans, production continues. This is also having little impact on the stocks as well as we see crude rally up some 10 since the start of the month. Were seeing all of these names move higher over the past week as well. Tyler. Keep your eye on it. Well watch it for you. Mandy, over to you. Thank you very much guys. Lets get back to the markets because stocks trimming their losses right now. The nasdaq turned back into the red. Were currently down by 5. 0. The nasdaq you might remember at the top of the show, we were actually sitting in the green. The dow is moving to the down side by 72 points. Here with me at hq is j. J. Kiterhan, chief strategist for td ameritrade. Chief investment strategist with bmo capital markets. Great to have you with us. Let me go back to what is happening in europe, j. J. , and i dont want to undermine the importance of whats happening over there to europe, but are there fears about europes potential impact on our markets maybe being overdone . I wouldnt say theyre necessarily overdone, but, you know, what weve seen, mandy, is i think this level of volatility that may continue up near 20 it does seem hard to believe that bonds can maintain the return this 2 because i think as people get more afraid theyre going to come in and buy bonds pushing the yield down a little bit. I think we have to be concerned because as you know well, theres no plan of the euro that does come to go away so to speak, and i think that were going to continue to see fall apart. How likely do you think that scenario is giving the moving right now . I dont think that thats necessarily as likely as i think that maybe going to parody with the u. S. Dollar. Parody with u. S. Dollar. Is in a your prediction here . I think it can happen because theres just so much pressure on it, and people are going to continue i think to come into the u. S. I still have my pairty party hat from the Australian Dollar against the u. S. Ill put it back on. What about you brian . Same question. Do you think we have too much focus on europe, or is it about the right amount . I think its too much from a longerterm and investment standpoint. Remember, the last ten or 15 years weve been International Investors and all been outside the u. S. Any kind of news both positive and negative coming out of europe is showing these types of reactive moves, and last year everyone was bold on europe and they didnt do very well. This year coming into the new year everyone wanted europe and austerity and qe and now theres a lot more volatility. At the end of the day we continue to suggest people stay in america and watch europe from afar. That doesnt mean they should sell off their european stocks. It means they should be much more concentrated and deliberate with respect to the individual equities that they do own in europe. Right. Sustain the u. S. You were telling us just last week that this bull market right here does continue. It really does. Were six years into it and nobody believes me. Earlier this hour you had a guess. In terms of volatility, provides opportunities, and i think we are entering into a prolonged period of active investing where you want to be that old school investor, where you are looking at individual stocks and companies with great cash flow and return on Investor Capital and consistent earnings. I think its a longer opportunity from a perspective. We have a number of data points, so you can say retail sales will be the most important, right . I really do. Retail sales show in terms of rate of employment. Our people will go out and spend money now. We have rich signals from durable goods and auto sales. Overall one of the things we saw last month was our clients go from higher beta stocks to lower beta stocks and in terms of the dividend players, go towards that overall, and at t, et cetera because of the, again, exposing themselves to u. S. Stocks but in a way that has less beta. What you were saying about retail sales how much will we learn about that question weve been asking all of our guests . The last month or so is will the lower gas prices go out and spending as opposed to sail. It is a lagging indicator. The other part about that i would say, mandy is we kind of need to see that. I think its a great measure of consumer confidence. We just saw the blowout jobs before. We need to see something to back that up. We will be watching. Thank you very much. Dominik chew were keeping you busy today. Another market flash. Thats right. Were watching shares of diment off shore drilling. Theyve staged a comeback from earlier today. After being down almost 9 earlier, shares of the deep water driller are now up more than 4 . That after it exceeded analyst profit estimates, and narrowly missed sales estimates. It also canceled the payment of a special Quarterly Dividend which has been paying since 2006. It can retain cash and take advantage of Market Opportunities that may come out of distressed markets here. The company will pay, though, its regular, tyler Quarterly Dividend. Back to you. Dom thank you very much. Foreign money pouring into highend new york real estate, but much of it is untraceable. Plus the divorce that just wont get settled. More on the latest involving the billionaire harold ham and who will get the bacon. He was once one of the richest men in the world but not anymore. Not by a long shot. A real riches to rags story. Joan rivers condo reaches the market today. Hi, di. Hi, ty. Joan rivers once said i have stopped work and live carefully, but thats ridiculous. 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Stop taking viagra and call your doctor right away if you experience a sudden decrease or loss in vision or hearing. Ask your doctor about viagra. Thats more than 20 higher from here. Now, for mother on this story go to cnbc. Com pro and sign up for the free trial of our pro pruk. Its an interesting story. Can you imagine 90 of all profits in an industry. Amazing isnt it . Thank you very much dom. Comedian joan rivers was awarded a post mus grammy for her spoken word allum diary of a mad divaa. It was rivers first grammy, by the way. How about that . To the late comedians condo hitting the market today. Diana has a look. Diana. Well, mandy, joe rivers favorite thing was never economize on luxury, and clearly she didnt. Both intimate and over the top as only joan rivers could be. This apartment can now be yours for the bargain price of 28 million. Colorful, well, thats putting it mildly. Four bed sxroomz four and a half bathrooms, and yes, it has had plenty of work done. Once a gilded limestone mansion, it was converted to condos in 1930s, but an exclusive nine units. Ernest hemingway once lived here. It spans three floors and 5,000 square feet with a separate lower level apartment, two kitchens, a staff quarters, five working fireplaces. The real glamour though, is in the entertainment space. How could it not be . A salon, grand ballroom, and oh the celebrity parties she did have here. It makes me want to turn to these walls and say can we talk . Who are the buyers for this apartment going to be . Well, the agents tell thaws really the russian buyer has moved out of the Manhattan Market much more in the last couple of years. Now theyre seeing more chinese, more european buyers. This is a condominium, so that makes it easier for foreign buyers to fwet into the building. Other than the coopes on the upper east side. Also, you look at some of the trophy buildings. 1 last night million sales we talk about. This is very different than that. Again, its smaller. Its old world but it does have an incredible amount of character. More of course, online. Realty check. Cnbc. Com. Youll want to seat the pictures. A lot of character. She was a character. Thank you. Another recordsetting winter storm now hitting parts of the northeast. Boston has had more snow in the last 30 days than any other month in the citys history and more has arrived today. More on the way. Paul goodlow is live in worcester, mass with the latest. Were about an hour to the west of boston. By the way 30 days is actually down to around 16 days to 17 days. Thats how much snow theyve had. Theyve never had this much snow. Were also seeing even more notice than boston since the snow started on saturday. Ive actually dug down to the bottom here, and there you go. Im actually standing on grass right now in 28 inches deep of snow. Im 65, so it might look like theres not that much snow but trust me this is above my knee here. Heres the funny thing about the snow. We all know that criminals are not the brightest people, but this snowstorm actually helped the authorities here in worcester actually catch a criminal who i guess, robbed a sports bar last night. What the cops did is they followed him out the back door and they followed his footprints to a neighboring building and then caught him because they could see the footprints through the snow. Again, you are trying to get away with money, walking through two to three feet of settled snow and, yeah, you could easily be apprehended by the authorities. The weather definitely playing a role in apprehending that criminal. Again, thats why People Choose a life of crime. Its not a very smart thing to do. Lets talk about the snow here in worcester. Since it started snowing this season, weve had over 90 inches of snow. Thats an incredible amount of snow. Its almost twice their yearly average, and were only in what, the ninth day of february. We still have officially 40 more days left. This is almost nonstop over the last two and a half weeks. Wow, paul. Thats just amazing. Almost nine feet of snow so far. Paul goodlow, thank you. You dont know who the owner is. Its more than 200 Shell Companies here in new york for find out who are the buyers. A lot of them russian olagarchs foreign Business People that have been accused of corruption that pollution, you name it. When you crack down on the Financial System to ward off this money but real estate has become this huge loophole for the foreign corrupt wealthy to bias et cetera in the u. S. Question now is should we crack down on that . This is not a new thing. Its been going on forever. Why havent the regulators come down on this. Look, dwoent want regulation. The system works fine. Dont change it. I think as these dollar amounts grow more and more 8 billion alone a year in apartments priced 5 million or more in new york city. There are billions of dollars flowing into real estate. Thats part of the shadow economy now. You dont know who is behind it. The system was fine. Sfloor the divorce of billionaire harold ham is in harold ham said i am not responsible for my wealth. It was luck. Thats a p. R. Ploy. Whatever you made during your marriage that was that you didnt help create that is not subject to split with your wife. He was in the very strange position of arguing that more than 90 of his 18 billion in wealth was just luck. Yeah, but how do you quantify that . Whats he well, they had experts like glen hubbard. They had all these economists who said, look, heres what the company would be worth relative to its peers in the stock market, other Oil Companies. Anything above that has to be harold ham. Thats what the other side argues. His side argues look you know we have struck oil in a good place. Just got locky. We had Good Technology and good deputies underneath him that were responsible for that wealth. When love and money come into conflict. Its all about the money. Very quickly involved. He once said he would be the richest man in the world. But Brazilian Oil tikon batista now has a different distinction. He is now a negative billionaire. This gee started at 30 billion and said would be the richest man in the world. He is now in the hole for 1 billion. He has a negative he is the first negative billionaire. They seized his mobile phone. Ive never seen a guy go from that high to that low. He was in oil, right . As much a story about the hype in emerging markets and where thats gone as it is this guy. Everyone was plowing money into brazil, and especially into oil and it all vanished. It was one of the most painful thing to lose, the lambeou or the phone . They say thats the hardest thing to lose. Sfwroo yeah. Okay. Roberts, great stuff. Thank you. Okay. Well, after closing this weekend due to the labor slowdown, west coast courts are open again. The united steelworkers expabding their nationwide strike for two more oil refiners for labor demands. Were going to debate that in the second hour of power. Can it make a dentist appointment when my teeth are ready . Can it track my crews performance, and protect their heads . Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . Can it download a track while im sampling it . Can my keys find me . With the power of digital, analytics and automation now every little thing can provide even greater value. Ok, so can it tell the doctor how long you have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Zirnks in this hour of power Airlines Taking a hit today due to the Rising Oil Prices again, and disappointing traffic 12k3 sales metric from american and southwest. Shares of diamond off shore drilling taking a comeback, and the consolation of a special dividend. Gold up fractionally today. That is boosting companies that might be the precious melts ak the gold miners like new mont mining, barrick gold and yamana gold. All up nicely in todays trade. Well bye by the way, if you miss any of the big stories in the past hour, relax. Go to mauer lunch. Cnbc. Com. I mean 56 . Must be 86 . 10 say no. Gas prices are down. 5 say they are basically flat. You have basically 86, 10 and 5. Autonomous vehicles, could they be a threat to the auto sales . Phil lal bow has that story live. Tyler, for as long as you and i have been alive its pretty much been that twocar household for america. Right now a new study says that might be changing if we dont need to be driving all the time if the car drives you. Well explain the results of this study and why its got a lot of people in detroit talking when power lunch returns. So you can enjoy that second home sooner. Know the right Financial Planning can help you save for college and retirement. Know where you stand with pnc total insight. A new investing and Banking Experience with personalized guidance and online tools. Visit a branch, call or go online today. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Just last month their own phil lebeau travelled in an Autonomous Vehicle audi a7. You can see him there waving to us. Hello, phil. He says it was still sometime away from selfdriving cars. Some of the opposition may come from automakers. New studies suggest it would decrease auto sales. Phil lebeau is live in chicago. Explain this why Autonomous Vehicles will decrease auto sales. Phil. It has to do with whether we look at vehicle in the future, and were talking well into the future now. Were talking well into the next decade. Past 2030. Where vehicles are fully autonomous so they could pick you up drop you off at the Hardware Store and take your son somewhere and come back and pick you up. Thats what theyre looking into. The new constituted where i by the university of michigan released today saying we have fully Autonomous Vehicles on a widespread level. I mean, really widespread, it could potentially cause vehicles per household in the u. S. To drop by 43 . It would drop the number of vehicles in a house potentially from 2. 1 where it is right now down to 1. 2. The trip per vehicle would increase. Basically youre getting more use out of each vehicle as opposed to parking it somewhere and then waiting for you to come out and then drive it somewhere else. Autonomous drive cars, by the way, are getting so much attention people need to realize where we are. Were still a ways from that. Highway mode vehicles like the one that i drove out in california or actually drove me in california thats coming in about two years. Well see a number of automakers rolling those out. Fully selfdriven vehicles. Were not going see that until after 2020. Heres the key point. The regulators have to approve that. Tyler, if the regulators are not on board quickly, we could see this rollout of fully Autonomous Vehicles take much longer than the technology because the technology is going to be there. In fact, i think the technology will be there within a couple of years. This is coming along very fast. My bet is what slows it down is not only regulators, ful but also the insurers, the liability questions here because it wont be driver error anymore. It will be automobile error. Ron solomon joins us. I just you are a professional driver. What do you think . Would you go in an Autonomous Car . Because of the long commute or that i race on the side. You dont want to give up control of the car. I think youre right about the regulators. You go back. I think its going to be further out than 2020. Technology moves faster. Also a lot of questions. We cant afford to fill potholes in america. How am i going to build an entirely 23450u infrastructure for Driverless Cars . Thats what you need. Then of course, the Auto Industry is afraid that were going to lose cars per household. I doubt it. Autonomous cars ares like electric cars all right now, lets be clear are going to be cars for rich people for a long time. What about this question . I saw a piece on 60 minutes on the if someone wanted to mess up the system or target you, they could very easily with existing Technology Take over your car and cause it to do things you dont want it to do. For years we have heard the Auto Industry say you cannot hack a car unless you actually crack behind the dashboard of a vehicle and you have somebody in the vehicle and theyre actually working the code inside the car. You cant hack it from the outside. But we followed up with the researchers from the department of defense that did this, but thats their job is to hack into things to show how easy it could be to hack boo it. They showed that they could control a vehicle from outside of the car. Look, the automakers are not doing enough and they need to prove that cars are safe. Lets face it Wireless Connectivity is coming to cars at such a quick, fast pace right now. Boy is that demonstration going to have a lot of people looking at each other saying, mad money are we sure its not happening. There can always be a first, right. Phil lebeau thank you very much for joining us. Thats it for the first hour of the new twohour power lunch. Great to be with you. Great. Welcome. You and i can i just point out, you can hack a car with a rock and two ignition wires. Dont do it. Thank you very much. Enjoy the show. Thank you very much. Well it is 2 00 p. M. On wall street. Therefore, it is 11 00 a. M. In los angeles. You are watching the second hour of power lunch. Im brian sullivan. Melissa lee at the nasdaq. Shell be joining us momentarily. Your top story this hour, Oil Rebounding after opec said it expects demand for its oil to be much higher than initially expected. Right now oil is trading up. As you can see, well get more on from jackie in a moment. We traded as low as 44. 45 a barrel back on january 28th. Joining us now right from the new york mercantile exchange. Whats the mood or the trade on the Trading Floor . Good afternoon to you, brian. Were seeing buying pressure. Were up about 1. 75. 53. 45 is where it stands. Now, in terms of the mood on the floor here, people are buying into this trade. A lot of people saying this could be a head fake, and beware. Citi is one of them. There are notes coming out that oil could bottom at 20, and theyre reminding folks that there is an over supply issue out there. Its going to take some time to work through that supply. Its also going to take some time for those cap x cuts and recount supplies to really be implement and have an affect on the supply. Thats coming into the marketplace. We are looking at a market here that is a little bit confused, but at least for the moment the momentum is to the up side here. I also want to talk about gas prices because i know you love that. The lundberg survey saying the average is 2. 20. Rising oil prices is contributing to that, and seasonal fact oz brian. We do have refinery maintenance. We do have refinery strength adding to that as well, and well be switching to the more expensive summer blebd. These are some of the things to consider. That 2 appears to be in the rear view mirror for now. Back to you. And were going to talk more about those strikes in a few minutes from the labor angle. Thank you very much. See you at 2 30 with the close. Speaking of oil, this news. Reuters reporting that oil and gas drillers Sandridge Energy will cut the number of drilling rigs it has in oklahoma and arkansas by 75 . That is one of the biggest cuts that we have seen on a percentage size basis anyway. Theyve done well over the past month. Up 67 . The nice transition into this. If you are thinking of buying oil related stocks because you think that oil will firm up or maybe the selling is overdone, you might be late to the party. At least for some names. Look at this. We ran a stock screen are. Sorting Oil Companies by their move off the 52week or multiyear lows. Some have bounced well off their lows. All of which were to hit on december 15th. Debit energy and apache. Others not so much. Theyre at least off the 52week lows. Thoughts on this. I know you guys at fast money have talked about oil. January 28, 2015. Perhaps the stock anticipates oils bottom before it actually happened. If you actually take a look which is the etf that tracks the oil stocks that primarily is integrated oil. That bottomed on 114 or it looks like it had bottom at 114. The osx, which measures oil services, that bottomed on the 29th. Its really sort of mechanicsed in terms of the equities reaction to what the commodity is actually doing. Melissa thats the exquits will always bottom before the commodity. We got about 50 of the analysts out there, and oil you could get burned along with the moderatety holers if Oil Takes Another turn down. Especially jack jay mentioned the citi note to say that oil could go down to the 20 range or 30 range from here after it bounced so much and has the biggest twoweek gain in 17 years, thats quite a statement. Brian, at this point lets talk about which oil names you should consider own and which you should avoid. Joining us on the phone is fidel, the Senior Energy analyst with oppenheimer. Fidel, what is going on here 234 terms of the stocks . Can you say that the stocks primarily has hit a bottom. We can see that oil prices i think the 44 was the actual bottom. The outside still in oil prices is still much higher than down side rescue. You see the prices that can have with this year closer to 6 on. Then they were closer to 40. We have seen the integrateds like an exxonmobil outperformed here, but on the flip side if you wanted a bigger beta play to a bounce in oil, you might want to go to some of the shale producers. Where would you go . Absolutely. A lot of companies will do better if we see weaker out of oil prices but there are Smaller Companies that E P Companies have done significantly better. You see companies that are being punished severely over the last six months or so. Apache for example. Down 35 from its 52week high. Up 25 from its low. It is now 8 up this year much higher than exxon or chevron or any of these companies. In general most of the independent Refining Companies did the best. On average they gained 9 . The reason being is the wider spread between brent and wti. Its a key factor for this group. Right. We didnt hear that also from the integrated that the refining was very strong. We do appreciate it. Even though oil is nearly 10 off its 52week low from 352 weeks ago, kate, you have been working hard as always. Many out there, many smart, Successful Oil speculators are betting that oil will move lower. Retail investors, i should say, are stampeding to buy oil and speculateors overall, if you look at the cot numbers are generally long. Many commodity hedge funds are betting it will move lower in the coming months rather than higher. Theyre not thinking about them being blocked in yet. At 3. 7 billion, january marked fiveyear high for oil etf as an asset class as smaller investors bet that 45 oil would surely snap back. That influx has pushed kroid crude higher as discussed. As have cuts in capital spending. Drillers and big reductions. Sandridge being the most recent example. Some analysts and Hedge Fund Traders are seeing much the opposite. Weve mentioned citigroup predicting oil could go as low as 20 range in a brand new report. Even andy hall, the respected ceo of astonbeck capital thats ochbl regarded in this community as an oil bull saying its a coin toss. Whether theres enough storage to capture excess oil supply in the near term. Most people do think well have oversupply this year. A that it could be a choppy next two to three months before prices potentially rebound. Others take an even darker view saying the recent rally provides an opportunity for corporate players to put in new hedges trerly boosting the market perhaps, but also paving the way for a lower bottom in the Fourth Quarter or even extending the pain into 2016. Those people wont even see a bottom. But you are by the way, getting paid for storage. You have an economic people are betting it will be 65. Thats still not terribly high even relative to the third early Fourth Quarter of last year. All right. Thank you very much. Thank you. We talked about it a couple of weeks ago. The baltic dry index. It tracks shipping rates for ships carrying commodities. Corn fertilizer, whatever. It is at an alltile low today. You have a few reasons. Number one, too many ships on the sea. I talked to an oil broker last week. An ocean broker. He said there are too many ships. I heard demand is specifically weak. You cant get freight rate from your freight. Also 345ib lower oil prices, right . You are seeing what freight rate comes down when what they call bunker which is the term for fuel, when that comes down the overall rate to help bring the bdi down. Really the trifecta ofthe shippers and the baltic dry on an alltime low. All right. Lets get to dom. He has a market flash. Thats right. General dynamics saying it is spiking on news. The company has announced it will authorize a repurchase of authorization of up to ten million shares of the companys stock on the open market. Again, ten million shares. Starting to reopen at this hour following a shutdown over the weekend. At the center of it all a labor dispute over costs. Well have more on that story a little later on in the show, but, first lets get to Courtney Reagan with the Economic Impact of the shutdown. The weekend temporary shutdown has the industry righted up about the prolonged and likely continuing impact of congestion. As the dockworkers continues through a so far ninemonth gridlock Consultant Firm Curt Spellman estimates congestion could cost retailers as much as 7 billion this year. 37 billion in 2016 thanks to the increased cost of transport and sales due to stocks. A shutdown but, of course, it seems much worse and wider reaching with more than half of the nations imports. The National Retail federation manufacturers estimate a tenday shutdown could cost the economy more than 2 billion per day. Michael, john idle, said the additional transportation cost hasnt been a Material Impact on financials yet, but warning that it could take a hit as cost rise going forward. It ships in east coast which has extended transit time by three to ten days. Supply chain strategist frank says retailers may be a nearterm winner. They have built in the cost of air freight into that so sthe dont feel the hit. Back to you. Thank you very much. Joining us now on the cnbc newsline, susan anderson, Vice President of fbr capital market. Susan, when you look at the rye tail companies that you are there any in particular that maybe hit worse than others because of what is happening in the ports . Yes. Most of our retailers put in some contingency plan, either shipping for other west coast ports, moving everything to the east coast or putting in extra air freight. I believe there are a couple of coverage that is dont have anything in place because they did expect the west port issue to improve after holiday. One of them being ann taylor as of the end of the third quarter. Theyre one of the fewer that didnt really put any contingency plans in place. It could be catastrophic for retailers, including them. I think they could also be how far out are we literally fa some of the stores you go into a mall, you go into the store, and theyre not they dont have some of the key items that people want to buy. How about inventory do they have now that supply chains have gotten so much leaner . The port strike, does it matter more than it used to . Exactly. Yes. I think its not as bad as holiday where, you know if you dont have those goods there for the holiday selling season particularly before christmas, you can guarantee youre going to have to mark them down after christmas. I mean, the spring, though, delay of two to three weeks. It could sell through the Spring Season like march and april. It does mean that they could lose sales as other competitors say they have contingency plans and we havent heard from most of the retailers and earnings season so far. Is this just the excuse for them to miss their quarters . I think its going to be a case by case basis. If you put in place some plans and maybure not as impacted i think you could probably work your way around. For some others i think its going to be an exclusive, and i dont think a lot of this is priced into the numbers out there right now. I think we should see some lower numbers as we go into 2015. All right. Susan, thanks for your time. Susan anderson fpr capital markets. Snoo heres the menu for the rest of this hour of power. We have five analyst calls that you need to know about just for you, america. Coming up right after this. Welcome back to power lunch. Taking a hit down by 6 fueling a 52week low earlier in todays trade. Analysts over one of the securities downgraded stocks to a sell rating from a prior hold. They also slashed their price target to 17 from 30. Citing i lack of Pricing Power and a stronger dollar for the domestic sales and foreign tourists. Bank of america also downgraded the stocks from underperforming of abercrombie have dropped 30 over the course of the last 12 months. Back over to you. All right. Thanks. Countcounter point. We pick the topics, and you decide who is right and who is wrong. Which do you agree with . Let us know at twitter at melissa lee krst nbc and sully r nbc. Analysts are issuing a rare criticism of the oracle of omaha over the quality of the financial did hes closures of brookshire hathaway. They said buffett rejected the criticism saying that brookshire communicates all the relative factors for a longterm investment of shares. Wron about you, but these analysts sound like theyre complaining. You know what, are you getting all the information along with the rest of the street. Live with it. If you cant model it in then you have to live with it. Stocks up 32 . Both a shares and the b shares. Things have been just fine. I think if things turn south for brookshire hathaway, then you might want to agitate. Right now keep your mouth shut. Warren buffett keeps making everybody money. We fwrae odd that. Who is right . Who is wrong . Were both wright right, brian. Are you ready for this . Samsung. New smart tv getting buzz in all the wrong ways because many of the smart tvs come with voice recognition. That allows to you make commands to your tv. However, sounds cool. Samsung is warning customers that every word is being captured and recorded. In other words, they might be able to listen to what you, melissa, are saying on your couch in your family room. Doesnt creep me out. Are you saying anything that samsung will want to hear . Think of all the data theyre going to collect. Do you honestly think they care about what you are saying in your living room . I am deciding how to answer that depend on the time of day and whether there was an adult beverage involved. Amazon has kind of the same thing with their voice recognition. Lets just be clear. You have microphones now inside of your home, and i think that everyone talks about the internet of things. I think this could do some damage to the multibillion dollar market were expecting. Well see. Industry standards, securities safeguards and practices in all of their smart tvs. What it means is you dont want your conversation to be captured, turn it off. I read there was an Industry Standard makeup. Last up on the agenda did you see the new Sports Illustrated swimsuit Edition Cover . No. Lies. Take a look at this. Derek jeters girlfriend hand kwa davis, but some are questioning whether the cover is too lewd and, in case you dont understand why it might be perceived as too lewd, shes basically pulling down her bikini bottoms. What do you think of that . What . Brian were on tv. I think Sports Illustrated has been dipping into this swimsuit market, so to speak for a long time. Pardon the pun. Theyre going to have to push the limits in this day and age. Melissa, you got to push the limit. I think its just fine. Thank you. Quick programming note, by the way, s. I. Swimsuit model hannah davis will be live on squawk on the street 10 45 a. M. Eastern time tomorrow. Remember this Super Bowl Ad . Tell me what you love about your son. I love why free hugs and phone calls to mom just meet not cut it if you are mcdonalds investor. Up next, what mcds really needs to do to turn things around. Power lunch returning after this. What makes it an suv is what you can get into it. What makes it an nx is what you can get out of it. Introducing the firstever lexus nx turbo and hybrid. Once you go beyond utility theres no going back. Hey, girl. Is it crazy that your soccer trophy is talking to you right now . It kinda is. Its as crazy as you not rolling over your old 401k. Cue the horns. Just harness the confidence it took you to win me and call td ameritrades rollover consultants. Theyll help with the hassle by guiding you through the whole process step by step. And theyll even call your old provider. Its easy. Even she could do it. Whatever, janet. For all the confidence you need td ameritrade. You got this. Your moms got your back. Your friends have your back. Your dogs definitely got your back. But whos got your back when you need legal help . We do. Were legalzoom, and over the last 10 years, weve helped millions of people protect their families and run their businesses. We have the right people onhand to answer your questions backed by a trusted network of attorneys. So visit us today for legal help you can count on. Legalzoom. Legal help is here. Welcome back to power lunch. They test that price target. Organic growth is on track, but the ratings change reports the absence of upward catalyst says in near term. Those shares lower swk today. Downgrading that to a hold from a buy. Losing power. Thank you very much. The final trade well have your sale price coming up in power lunch. Im sue herrera. More from bernie madoff. The trustee liquidateing his firm says he is distributing another 56 million to his victims bringing the total payout to more than 7. 2 billion. Try, try again. Space x on tuesday will launch its rocket with a u. S. Satellite intended to watch for threatening solar storms. Poor weather conditions canceled the launch today. Deloitte and tushe has sheas the first woman to become a ceo of a major u. S. Accounting firm. Do you have an extra 28 million to spare . Thats how much the lav irk and beautiful penthouse that was cost the four bedroom four and a half bath condo spans the top three floors of a building on east 62nd street in new york city. You can see more of it by going to cnbc. Com. Coming up on fast money at 5 00 p. M. Eastern time former nfl quarterback brett favre is involved in a new social media project. Thats your cnbc news update for this hour. Back to you, melissa. The final oil trades are costing. Just under 53 as we head into the close here. We could hold on to that real strong momentum that we Hilary Clintons and we did talk about the report saying we could see oil bottom at 20. That is actually kind of saw a little in the table today. At the same time i think the reality is setting in to traders that the story about supply right now may not be as they are understand it and that there could be more on the table to work through than people are really sort of you know, wrapping their arms around. The Closing Price today just around 53. Back to you. Thank you. Time for street talk where every day we have five Analyst Recommendations working to find opportunity for you. We kick it off for you in harris, a couple of upgrades on the back of a deal by for 4. 75 billion. Adjusted a buy from neutral. Drexel hamilton was also up to buy from a hold. It was also a 90 target. They say, listen this is a multiple of nine times expected earnings, and they believe with the combined company they could have Free Cash Flow of maybe more than 8 a share. Cornerstone on demand. Another one were watching rsh the target ahead of earnings. Theyre actually seeing an uptick in in the Fourth Quarter. The guidance too conservative on the name. Its 33. They see about 30 up side to the stock. The stock, melissa, needs help. Its down 55 from last year. Ouch. And this is a strong one. Century aluminum, somewhere p morgan says to sell. It all has to do with Commodity Prices coming down zoosh you wonder if it will fall on the tin ears of investors. Its cut from an underweight. Cut to 17. 50 from 20. That is 25 below the current price. That would be Columbia Property trust. Morgan stanley upping from an overweight to equal weight. About 15 up side. The stock pays a 4 dividend yield. Keep in mind though, only three analysts cover this name. Well mcdonalds down about 1 today after releasing a mixed january sales report. The headline here is that global sales fell nearly 2 making it the latest quarter of declining sales at the golden arches. What does mcdonalds need to do to turn things around . Tim, cnbcs restaurant startup joins us now. Tim, i dont know when the last time you were in a mcdonalds was, but what do you think they have to do . Well, its been a little while since i have been in mcdomeds, but you look at mcdonalds, and i feel like all the time mcdoblds has come in and redone the way their dining rooms look or theyve tried to make it more modern and they seem to be deflecting the issue here that i think would really benefit them, which is taking their buying power their ability, their brand power to really get behind what people are wanting to do right now with food which is, you know nongml foods, sustainable ingredients a little more organic into their product. People are coming to mcdonalds to eat the food. Theyre not coming there to sit in a chair. I think sometimes they have missed the boat of where american diners are especially, which is they just want to know where the food comes from and why. I think if mcdonnells does that and advertises that, you know, theyre pulling on peoples heart strings, which is great, sf when i was a kid, a ate at mcdonalds too, but now we want to we need to get behind the food sxb able to represent the food and show that you are able to do that. They need to change their atmosphere as opposed to a place that we feel like needs to be wiped down with a jibt hose and be clean. Make it more just a more restaurant atmosphere. Why doesnt mcdonalds get a culture that says hey, you can create a career here at mcdonalds. We stand behind our food. We stand behind our product and how great they are for you and your family. At the same time were going to offer you opportunities to really move forward in the food world. As opposed to being a job for 16yearolds. Those are a lot of great ideas. You see a lot of startup ideas. If it this concept came across your desk today would you fund it . Thats a complicated question. Would i be able to have four million the concept of the hamburger with the two pickles on it on the bun and the chicken mcnuggets . You know that particular concept i dont think is a bad thing. Its just the way that the food is processed. I think that is the most important thing for me. S looking at todays modern world and the way people dine, they want to know what the food is. Yeah, a burger with two pickles and some griddle size diced onions, theres nothing wrong with that, but the product itself immediate to be defended better. You see that and whats happening when they have somebody reporting to have expired meat. That right there that Problem Solved could have solved the whole quarter drop in sales. Thats just what i see. I think what you need to do is get caught in a vicious cycle that says, oh well we have to be able to serve the 99 cent burger. Do you really . Thats really the marquee question. Or can you have a value menu that is 4 instead of 99 cents . The people that are beating them up right now, arent serving 99 cent burgers. Its a real pleasure. Thank you so much. Take a look at some of the peer companies. You look at chipolte swrak in the box, wendys. They are all moving to the down side. The overall market may have something to do with that, as does rising gasoline prices. Also, just keep in mind that for a lot of these fast food stocks theyve had a huge run on this idea, brian, that of course, with lower fuel prices leads to lower leads to higher spending on fast food. Could one thing derail the recovery or maybe help it . Were going to debate what that is coming up. Plus, carl icon, other activist investors make themselves a lot of money. Can you do the same by following their moves . Stay with us. [ male announcer ] at northrop grumman, we know in the cyber world, threats are always evolving. At first we were protecting networks. Then, we were protecting the transfer of data. And today its evolved to infrastructure. Finance. And military missions. Were constantly innovating to advance the front line in the cyber battle, wherever it takes us. Thats the value of performance. Northrop grumman. I make a lot of purchases for my business. And i get a lot in return with ink plus from chase. Like 60,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Sfwlimplgts welcome back to power lunch. Now, separately united steelworkers expanded their First Nationwide strike to two more bp refineries. That brings the total refineries on strike to 11. Could labor unrest hurt the u. S. Economy or help it by raising wages . Lets join in now with dan mitchell, senior fellow at the cato institute, and author. Phillip, im going to begin with you. Why do you believe the steelworkers and the port workers are using right now as their team to reassert the labor power . Well, he think theres a couple of separate issues going on. Theres some specific issues going on there. This is a sore smallish union. Its separate now from the aflcio. It feels a little embattled, and it feels like its protecting some of the last in america and its time to stand up for its workers where. All right, dan. What do you make of the strikes . In theory whether or not Labor Management wins any particular strike should be irrelevant to the economy. If labor wins well, less money for shareholders. More money for workers. If management wins, the other way around. It doesnt hurt or help the economy unless unless, a union, particularly in an industry with high fixed costs, manages to impose work rules and pay and compensation schedules that undermine international competitiveness. Thats i think what happened to a good degree with our Steel Industry with our Auto Industry. I have no swrokz to unions winning the battles, but they need to keep in mind that if you bankrupt an industry or make it uncompetitive in the long run ewe really tugt cutting your own risks. Can you actually view this maybe as a positive sign for the u. S. Economy because maybe if you dont like the unions and you see what theyre doing as distasteful, whatever, they obviously feel like they have Bargaining Power which would imply they feel the companies theyre working for or with are making enough money that now is the time to strike. The economy is back especially manufacturing. You need to have a little more the last thing i want to say is income inequality which after all our labor biggest issues are in the public forefront and most folks agree with labor. We have inequality there. Were looking at the strikes, looking for higher wages. Maybe theyll get them. Lets take that, though, and expand it out just a little bit. Is there anything that really the government can do from the income and labor inequality problem right now . I view it as more of a consumer issue where a lot of what we decide to spend our money on is how you are going to pay these people more because if i go for cheap every time they cant sell goods and services at a high cost. Well thats part of my concern about unions pricing Certain Industries out of the marketplace. Heres my problem. If the unions really put income inequality after a top issue instead of growth, i think theyre hurting their members. Theyre failing their fish responsibility. If all were concerned about is reslicing a shrinking pie, sort of like a southern european stagnant economy, thats not good for workers in the long run. We should be focussing on how we can get back to 3 to 4 growth. Thats where you get tight labor markets and tight labor markets is how you my point is how much is this resting on us the american consumer. If we always go for the cheapest products, it may not be made in the United States. Instead of looking at the government or labor, we say dont we owe it to spend a little bit more, right to keep your neighbor employed or give him or her a raise. Its not them. I dont think thats the case. I think that you can have a lower cost product simply because you are more productive, and theres really a lot of positive stories to tell about productivity and manufacturing and the u. S. Economy and if we do things to say reduce our incredibly own russ Corporate Tax rate and our depreciation schedule so we get more investment, what does investment translate into . Productivity . What does productivity translate to . Wages. Its not a question of having cheap workers in america. If you can point me to low product and sales prices and high wages, i love to see it. They dont make anything in singapore. Dan, well continue this discussion another day. Guys, thank you very much. If to power lunch. Cnbc. Com. Well three as sounds like a pretty good report card, doesnt it, but in this case the as are amazon apple and alabab arks and there is a reason that we have lumped them together. The closing Bell Kelly Evans with us live. These are huge issues for one guy named bill wilson, and our discussion will be coming up next. I have the flu with a runny nose. [coughs] better take something. Theraflu severe cold wont treat your runny nose. Really . Alkaseltzer severe cold and flu relieves your worst flu symptoms plus runny nose. [breath of relief] oh, what a relief it is. Mommy hey its been four and a half months. Their global unconstrained bond fund. Big money followed his move as investors, including 700 million from himself have piled millions into the new fund, but new data out today shows those in flows may be slowing down. Morning star says that janice global unconstrained bond fund, thats the name, attracted 58. 6 Million Dollars last month. Down sharply from the 176 million the funds took in last december. The 770 million last november. In the meantime, bill miller, the big interview of the afternoon coming up on cnbcs closing Bell Kelly Evans is live at the New York Stock Exchange and were also joined again by ameritrade j. J. Kinihan. We teased kelly the reported card that i never got. The three as. This is alababa, apple and amazon. Is he just working alphabetically through all the holdings, and did he pick these out for a reason . I think theres a reason behind this. I dont know how much to give away, by the way. I think we got to wait until we hear from bill himself. I can tell you, though on a couple of these one is limited up side. One might have more and one has a ton. Ill let people try to guess what those will be. Well, kelly, you got to ask about alabab because thats been an underperformer. Theyre investing in a phone to kaut create the ecosystem along the liens of an amazon, and look how well that worked out with the amazon fire phone. Right. Mount st. Helens yashg as you know bill has been a contrarian on the amazon name. Amazon has not been doing the right thing. It hasnt done enough to increase profits. Obviously it took a hit last quarter. I believe theyll tell us more about this and they took that as an opportunity to unload more and think about the companys past generation will makenect 1200 you know, he does not think that Energy Companies necessarily are that attractive right now, that the new normal, if you want to call it that, will be low oil prices and not continued low bond yields. And the one thing i would say, kelly is that the dollar becomes so much more attractive with what is going on in greece right now, et cetera. I think you may see more of a clamoring for dollar as we have more uncertainty elsewhere. I hope if he brings up low oil, please remind him of the work we did 25 years, monthly averages. The 2014 dollar adjusted price of a barrel of crude 48 over the last 25 years. So actually were a couple bucks above the historic. We have this bias because oil it be at 100 bucks a few times. Oil is cheap. Actually its a couple bucks more expensive. Brian, are you throwing in the towel . I thought you were bullish on oil. I have been dragging by butt through the frigid of north dakota. It was over 70 im sorry, the Fourth Quarter. I am pointing out the 25 year average price is 48. Oil is not cheap if you look at the last 25 years. Investors make decisions based on the past year. Thats the bottom line. Or the past second. Thats the bottom line. If theyre a computer its the last millisecond. As people focus on areas of opportunity right now, theres a cup cover of the economist this is an interesting topic with guys on a longer term view like bill miller. Curious if these are guys are who are looking out for shareholder interest. Were in a different era than the 1980s and there has been too hoarding of capital. Lots to talk about, kelly. Thank you. Thank you, j. J. You can watch bill miller with kelly evans in the 4 00 hour of clel. Lets get to kate kelly with an alert on citadel. How are they doing kate . Just out from ken griffin the founder of citadel talking about their performance in january. Interestingly, theyre up nearly 3 in their Multistrategy Fund in january which was a month when the s p was down 3 and the average hedge fund per hfr up half a percentage. They say that given their very good per forpformance in 2014, they will have a lot of flexibility doing some hiring with a focus on equities which was a star performer last year. Theyll be hiring analysts associates, portfolio managers. A couple word from griffin about the current tone of the markets. He said we approach 2015 with vigilance while Market Conditions remain uncertain. A half decade of unprecedented Government Intervention and monetary stimulus continues to impact the Global Financial market. So always interesting to hear from him brian given how much money they manage and looks like so far theyre off to a good start. And its a rare piece of news that does not involve a divorce. That has been dominating the headlines in chicago and elsewhere. Kind of a market perspective from ken. Kate kelly, thank you very much. Thank you. House of cards meet bay of pigs. Its only been a few weeks since the president opened cuba and netflix set to make its move. Is it symbolic or a bigger deal than ron burgundy . Jeer back after this. Once you go beyond utility theres no going back. [ male announcer ] at northrop grumman, weve always been at the forefront of advanced electronics. Providing technology to get more detail. Detect hidden threats. See the whole picture. Process critical information and put it in the hands of our defenders. Reaching constantly evolving threats before they reach us. Thats the value of performance. Northrop grumman. Welcome back to power lunch. Im john harwood in washington. Weve been expecting for some time that the Obama White House will seek a new authorization for military force for the fight against the Islamic State in syria as well as iraq. Reuters is now reporting that authorization will come by wednesday. I have not confirmed that independently with congressional aides, but this is not surprising and most importantly, guys, it does not mean a decision has been made to put boots on the ground. There is still a determination by the administration not to do that. Big news. John, thank you very much. Im sure well get more as the day goes on. Meantime, netflix starting to offer his service in cuba, but it isnt going to be easy. Brian netflix is launching in cuba today starting at 8 a month. It aims to offer a range of content as Internet Access improves and credit and debit cards become more widely available. C. Everett hastings saying hes hoping to bring a cuban content. But the current market for netflix in cuba is tiny. Just 0. 05 of cuban households were broadband subscribers in 2013. And 8 is a lot considering that the average cuban earns just 20 or less a month. Many cubans access content through underground services paying 1 per tv series. Netflix saying in a statement think of this as a sign of our confidence in the reforms in cuba and that loosened restrictions on the u. S. Businesses will lead to rapid investments in the country. It says it can deliver its service on slow networks thanks to Adaptive Streaming and it faces skepticism about its latin american launch and it was there the lack of credit cards rather than infrastructure that slowed that launch down. Brian and melissa. Thank you so much julia. Tonight on fast money at 5 00, well talk about qualcomm. Are we witnessing the bottom in qualcomm with the 1 billion fine in china and also brett favre social media entrepreneur . What are you going to ask mr. Favre . How do you pronounce his last name. He has the side burns now. Hattiesburg mississippis own, brett favre. Thank you for watching new power lunch. Head to power lunch. Cnbc. Com. Welcome to the closing bell. U. S. Stocks lower because of things far outside of the u. S. Chinas economy a concern and the situation in greece is causing some investors to seek a safe haven today. After the huge gain in the dow of last week, this is probably somewhat expected. Given the turn of events in greece, its surprising the markets have held up reasonably well. The place to watch and a lot of people are looking to italy and some of the others to try to figure out whether we go back to the crisis trades or not. Not