Economy. Zell not so much. And investor lynn tilton is with us live this hour. She just filed a suit against the s. E. C. Shes fighting back saying fraud charges levelled against her are absolutely false. We begin now with the American Labor market. Traders and investors positioning themselves for fridays employment report but could they be setting themselves up for a bit of a shock . Steve liesman is here to explain. Explain, stevie. Yeah mandy. There has been a lot of worrisome Economic Data these past few weeks and this morning that raises questions about the friday jobs report. Let me show you what im talking about. The adp data 189,000 coming in below the prior one and below the estimate of 225. The ism Manufacturing Survey coming in again below the estimate, below the prior, and inside that ism report wills an employment component asking manufacturers how theyre doing hiring coming in at 50. Thats the lowest since may 2013. Here are the negatives as we get ready for the friday jobs report. Corporate profits have pretty of flatlined. Retail sales have been negative three months in a row. Allows where i weather, low oil prices creating firings in the oil patch, and a strong dollar along with overall weak growth running around 1. 3 for the cnbc rapid update. The positive jobless claims jobs, however, laying growth. We may have positive job growth from the prior strong growth. There has been a thawout in march and strong swrob growth trend. You can see real quickly they have underestimated job growth within the past several months. Including by 2,000 in december. Cathleen madigan, she compiles the data and so far today economists have stuck with their forecast for the government to report 248,000 of jobs in the month of march. Madigan says they are acknowledging the down side risk. Tyler. Thaw in march . What thaw did you see in march . Its above freezing. Thats the only thing. Above freezing. Barely. Its not much but its a little above freezing. Two titans of investing in america, Warren Buffett and sam zell speaking to cnbc. Both have divergent views on the state of the u. S. Economy. Listen up. Almost every company is turning in numbers that are less than expected. Revenue, particularly for multinationals is being hurt by currency devaluations around the world. Im looking for demand, and i find very little of it. Its been a remarkably steady improvement, and now its starting to come through with employment in a significant way. So who is right . The pessimist zell or the optimist buffett . Lets bring in dan chung, ceo and cio of and dana cio with atlantic trust. Great to see you. Dan, which camp are you in . Oh im definitely in warrens camp. I think things are better than expected and actually mr. Zell is a terrific investor but is he wrong about Fourth Quarter earnings. 72 of the Companies Beat earnings numbers with a 5 average beat. On the sales line 56 beat. I dont know how he can say that the vast majority are missing. There was a lot of downgrades, of course, around foreign exchange, but we looked through that. Were fundamental bottomsup investors, and im on warrens side and we are positive. A lot of estimates have been coming down, but we will wait and see for the earnings season. First of all, to you, david, which camp are you in zell or buffett . I would lean on the optimistic side as well. I think theres no question that the First Quarter was sluggish, but we think well see a better tone to activity over the rest of the year. If you look at the consumer Consumer Behavior has been cautious, but weve seen you know, Energy Prices are down, Interest Rates are down the job market and Consumer Confidence are up. I think the benefit of lower gas prices will kick in and help in the second half of the were, and Monetary Policy continues to be very supportive. The fed, you know i think will look to september to raise rates. Might even be later than that but even whenever that process starts, those rate increases are going to be gradual and Monetary Policy will continue to be accommodative. The economy isnt great, but its solid, and were in a 2. 5 to 3 zone for gdp growth. Lets translate what all that macroinformation means for the marketsed. Dan, first of all to you. Were kicking off the Second Quarter. In the First Quarter a few things worked. A few things didnt. The worst performer were utilities. Best performer were health care stocks. What about the Second Quarter . Whats going to work . Whats not going to work . Well were bullish on technology and health care. I think that youre talking about two sectors where they have a combination of growth but also in other cases strong value right within the same sector. So we like the secular trends that we see, for example, in the internet and Cloud Computing within technology and also the global strength that u. S. Companies have. Technology is a global we are a Global Leader in technology and those trends are not only placed in the u. S. But theyre placed overseas. Health care we think is really dynamic right now with both drugs and biotech pipelines looking strong but at the same Time Services transforming because of the aforredable care act. We think theres opportunities in both those sectors, and we think theyll continue to outperform. You think its going to continue to outperform. What about you, david . Where would you be placing your bets for the leading or lagging sector this is quarter . I think the banks are interesting. Theyre cheap and unloved, but theyre better capitalized and were going to be able to share more of that capital with shareholders in the quarters in years ahead. When Interest Rates do eventually rise that will improve bank profit margins. Then i would echo the thoughts on health care. You know, its been five years since the obama care legislation passed and weve seen the industry rationalize and adapt and, you know, recently thats led to a great deal of m a activity, which is likely to continue. I think theres still a number of interesting opportunities in the health care space. Okay. Both of you continuing to back that Winning Health care horse. Thank you very much to both of you for joining us, ben and david. You can go to powerlunch. Cnbc. Com to see why every investor should be putting investment dollars into international markets. Thats on the air right now. You can check it out. Ty. Talk more now about health care. First quarter in the books. Second quarter trading is underway. Take a look at the biggest winner and loser so far. Well, the biggest winner for the year so far, health care. Up 4. 48 . Utilities down about 6 . Reversing last years very strong perform wrans for utilities. Role reversal between these two widely watched sectors as we go into april traditionally. Dominik here to talk a little bit about history and performance. Sfroo well, heres the thing. So a lot of traders like looking at history to see if it can at least help them predict whats going to happen in the future. We asked our partners over at market Data Analytics firm kensho to look at just the month of april for the last ten years to see which stocks have the best chance of outperforming, at least based on the last ten observances. Broad sector etf. Xlk that tracks technology. All the big spiders. Xlb that does health care. We looked at the average performance in april for each of those broader sector etfs, and we looked over the last ten years. Heres where the results get interesting. Like tyler just said you saw health care as the best performer so far in 2015. Utilities the worst. Check this out, though. Were going to put those first of all, the financial sector, the best performing one on average over the last ten aprils up about 3. 5 . As positive 70 of the time. 7 out of the last ten. Heres where it gets interesting. Aprils best performer in terms of batting average overall is the utilities sector. The xlu. The spider etf that tracks utilities. Its up 3. 4 , and it hasnt had a losing april over the last ten years. 100 positive over the last ten years in april. The Health Care Sector meanwhile, is the worst performing of the broad sector etfs. Xlb, the ticker there, its only up and its still positive but only up 1. 4 of the time. Its positive. Well call it a coin toss. 50 of the time. As you look at whats happening overall, tyler, health care and utilities. Health care, the strongest ones going into the Second Quarter, and now they could be some of the worst performers. Its a little bit of financial faber metrics here. It is. Looking at the amount of gain and the percentage of times that theyre up. There you go. Thank you very much. The worlds biggest carmakers out with their latest sales figures and overall they saw a drop in march which had one less selling day than prior month. Go figure. February has 28 days. Oh, well. Strong demand for jeep helping chrysler sales up 1. 7 . That did fall short of estimates. Ford, a drop. However, that was less than expected. Gms drop was more than analysts had looked for. On the other hand, toyota sales surged almost 5 last month. Lets take a look at some of the shares. They are all down about 1 . A little more in the case of swren motors. Almost 2 at this hour. Manned mandy. Thank you very much, ty. A major summit underway of investors and top ceos to discuss new opportunities in cuba. Now the u. S. Is working to establish diplomatic relations with the island. Michelle carusa cabrera is at that big gathering. Hundreds of investors are here interested in talking about how to invest in cuba if its ever going to be legal. What are the potential investors, frank dell rewroe the ceo of norwegian cruise lines live next on power lunch to talk about why he is here and why he is interested. Power lunch will be right back after this. Mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Pooh shares of go daddy. The Web Hosting Company is raising 460 million after offering 23 million shares at 20 a piece. Theyre currently sitting at 28. 16. Sears also higher. Its currently up by nearly 1 on a real estate joint venture with general growth companies. Delta, american and United Continental all moving to the down side. All over by 4 to the down side after Deutsche Bank downgraded them to a hold from a buy. Ty. Mandy, thank you. The u. S. And cuba working on reestablishing diplomatic relations after 50 long years, but what does this mean for american businesses that would like to do business there . Or not american businesses . Shares of norwegian cruise lines up big in the one year. 62 as you see there on that chart. Our chief International CorrespondentMichelle Caruso cabrera live at a major summit about investing in cuba. Shes with one of the ceos. The ceo of that particular cruise company. Hi, michelle. Hi there, tyler. Yes, frank delrio, the ceo of norwegian cruise lines, and he joins us here at the cuba opportunity investment summit. Good to have you here. Are you the ceo of a cruise company. Yes. You are also cubanamerican, born in cuba. Why are you here . Are you here because you run a cruise, or are you here because youre cuban . A double yes. I think there are other cruise line executives who are not cuban who also would like cuba. Cuba presents probably the largest opportunity outside of china to grow our industry. Why . Pentup demand number one. Its about an off limits for over 50 years. Besides that cuba has got just about everything a vacationer would want and a cruiser would want. Cuba was perfectly built to house the cruise business. 200 miles from miami. Incredible history, culture, mountain ranges valleys, lakes, music, history, art. Its got everything. The rule changes that were announced by president obama in december, none of those, though help you legally put a cruise in cuba yet, right . Correct. But it gets us closer. I think the dialogue has now started after a 50year freeze. Nothing this revolutionary, if you will, historic moves as quickly as you would want but this is a very very positive first step. Now, there was a big poll done of cubanamericans . Should american cruise ships go to cuba, bring american passengers . More than half said yes, but 38 said no. What do you say to the 38 . They probably havent cruised yet. They havent cruised cuba or anywhere because i think once you cruise you are converted for life and, look we have to get past this acrimony about cuba and the cuban community. We all know whats happening happened in the last 55 years. Its time to move on. I think this initiative gives us the vehicle to start a number one, a healing process and the process to bring the relation with our both countries back to where they should be. Its an important country just 90 miles away from key west. Its time. Frank delrio, thank you so much. Thank you. Ceo of norwegian cruise lines. Guys, back to you. Thank you very much michelle. It is a power lunch exclusive you do not want to miss. Buyout Queen Lynn Tilton firing back at the s. E. C. Which is accusing her of fraud. The billionaire investor joins us to lay out her case exclusively on power lunch in less than 15 minutes from now. Plus up next power pitch. A startup putting some skin in the game. Our mission is to provide affordable luxury grooming for professional men. Will the panel be in . Can you talk a little bit more about your plans for sampling and distribution . Or out . How do you convince men that they need this in the first place . Stay tuned to find out. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. Theres nothing more romantic than a spontaneous moment. So why pause to take a pill . And why stop what youre doing to find a bathroom . 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Com the stock market might be down. Up by nearly 6 is wti crude. Its currently sitting at 50. 37. Lets get out to dominik for a market flash. Dom. So, mandy, moving the opposite direction, shares of carpenter technology. Bet on a steady decline for most of the session. The alloys maker is cutting 10 of its work force. Thats roughly about 200 jobs. The Company Wants to reduce costs amid weaker oil and gas prices despite the rise today. They also announced guidance for this current order earnings that fell short of many analyst projections. Back to you. Thanks, dom. It is time for this weeks power pitch where one entrepreneur got just 60 seconds to convince a panel of experts that her startup is the next big thing. Im the founder and ceo of helix. A new premium our mission is to provide affordable luxury grooming for professional men. Our strategy includes social platform online distribution, and innovative products. Mens grooming have i is a 35 billion industry thats grown by 23 in the last five years. The problem is most Mens Grooming brands are extensions of womens brands or lack complete Product Offering unique design and products and global appeal. Helix disrupts the industry by doing four things. One, offering innovative product with average margins of 78 . Two, a vertically integrated brand with no middle men or agencies involved. Three, an extremely lean team thats awardwinning with deep domain expertise. Weve led five exits, including one in the grooming category and, four a brand unique Product Design formula, and stories as well as a cause. Thats ball support. All of this makes a brand more compelling to the consumer. Hello. Welcome to todays power pitch. Im mandy drury. Well, you just saw the pitch, but lets meet the panel. On set Angel Investor nisa amoils focussing on technology beauty, and invests and advises more than a dozen startups. We have Charlie Odonnell who founded Brooklyn Bridge v ventures focussing on seed state investment in the new york area. Joining us from miami celebrity stylist, author and Fashion Designer carson kressley. He won an emmy for his role in bravos queer eye for the straight guy. Thank you all. Cindy, thank you. Are you in the hot seat. First question would you like to throw it out . Can you talk a little bit more about your plans for sampling and distribution . Right now were currently in talks with two major retailers, one of which is a global retailer. Thats going to be a Great Customer acquisition channel. In addition to that were going to use brand ambassadors. We will be primarily focused on direct consumer though online. How do you separate yourself with the name like helix thats pretty common from all the other e xhes sites that use that name . None of the other brands are mainstream. There is a fashion brand called helix sold only at kohls and its for adolescent boys. At this point we are soft launch, and ive only spent 25,000 on everything including legal so i havent spent anything on Customer Acquisition or seo or in terms of really blowing up with marketing campaigns. Thats an issue that can be very quickly addressed with seo. To carsons point, it takes a while to find you. I think you need to get your internet search sorted. Another question to you, nisa . Can you talk more about vertical integration and how that affects your supply chain and why its a competitive advantage for you . This is not our first rodeo. We know how to trim the fat with respect to supply chain and development. We understand the industry and we understand the consumer. With something in the order of 90 plus percent of men spending less than a half an hour getting ready, even less so if you dont have any hair how do you convince men that they need this in the first place . So many categories that were doing are daily use high volume High Frequency products like shower gel. Everybody takes a shower. Wronk i need to convince you to take a shower. Everybody uses lip balm. Fragrance. Some of the other categories might be more of a sell to the simpler man, but overall the grooming category has only grown. Maybe the website isnt represented, but i saw a lot of scented candles. I saw a lot of the hand wash. Those dont seem to me to appeal to the masculine consumer. Is the product mix going to be reflected of what you have on the website and then my second question is the margins of 78 . How do you maintain that across all those varied product categories . I understand how to reuse a mold and slightly tweak packaging to have a completely different product in terms of flavor in terms of decorative features so thats the margin question. Additionally, our overhead is much lower. We have no agencies involved. Our next stop is to go into hair care and skin care and fragrance. Okay. Great. We all heard what cindy had to say. Now we need to know if the panel is in or out. Nissa, what about you . I dont see a clear point of difference in the products and it is a very saturated market. Im concerned about traction to date, Customer Acquisition, and then reacquisition after trial so for those reasons im out right now. Probably more likely to use something i see in the store or maybe even an extension of a brand that somebody else i know is familiar with. Differentiation is key. Im not sure the name and the brand is differentiated enough. For now im out. I think you have to have a very strong brand, and what is your story and how are you different and why do guys need this product . Whats going to engage them . I dont see that yet. I dont see the branding. I dont see the social media engagement. I think its there but for now im out. Okay. Cindy, thank you very much for joining us. Whats your reaction . We are prelaunch, and what i have done up to this point has been only in the 25,000 including legal and development, which is far more than the competition. That has gotten venture funding. With that said i really appreciate your comments and thank you for the opportunity, mandy. Okay. We look forward to watching your progress. Thank you. Thank you very much. To all of our panelists as well, and that is todays power pitch. What about you . Are you in or out on helix . You can tweet us using the power pitch. For more on power pitch visit power lunch. Cnbc. Com. Ty. Thank you mandy. Sometimes it pays big to invest against the grain . Three acontrarian stock trades that are likely to make you look smart in this volatile market . The turnaround Queen Lynn Tilton, target of the s. E. C. Accusing her of fraud today. The investor fires back with her own lawsuit. Tilton will join us to lay out her case exclusively on power lunch next. A 401 k is the most sound way to go. Lets talk asset allocation. Sure. You seem knowledgeable professional. Im actually a dj. [ dance music plays ] woman [laughs] no way that really is you . If theyre not a cfp pro you just dont know. Cfp work with the highest standard. Anyone have occasional constipation diarrhea, gas, bloating . Yes one Phillips Colon Health probiotic cap each day helps defend against these occasional digestive issues. With 3 types of good bacteria. Live the regular life. Phillips white house Spokesman Says iran talks continue to be productive and progress continues to be made. The u. S. Hasnt yet received specific tangible comments from iran and commitments from them and will walk away from the table if necessary. Arkansas governor Asa Hutchison called for changes to a religious bill getting backlash from businesses and gay Rights Groups saying it wasnt intended to sanction discrimination based on sexual orientation. I asked changes be made in the legislation and ive asked that the leaders of the General Assembly to recall the bill so that it can be amended. Meantime a giant sandstorm swallowed a city in northwestern china. Reports say sweeping sands and pebbles bloted out the sky in just a half hour. The sandstorm formed a giant wall reaching hundreds of feet high. Nascar has live where ied heavy penalties against ryan newmans race team for manipulating tires during the march 22nd race in fontana, california. Newman, seen racing last week was one of four drivers to have his tires confiscated. Crew chief luke lambert was fined 125,000 and has been suspended for the next six races. Newman and car owner richard chilledess were each docked 70 points. Thats your cnbc news update at this hour. Ty, over to you. Sue, thank you very much. Lets take a look now at gold prices which are closing right now as we mine the metals and can you see that gold is up about 24 almost 25 dollars an oun at 1,207. That is a gain of a couple of percent, i guess. Silver higher by 2. 6 at 1,704. Copper up as well by 2,747. Platinum up as well. New trading month. New quarter. Getting off to a volatile start. The dow down 191 points earlier, but we are well off those lows as you see right there. Down just 91. Bob pasani following all the volatility at the new york stock exchange. Hi, bob. Hello, tyler. Weve been in a deep hole ever since late last night. We never have been positive on the day. Take a look at s p futures. Overnight 8 00 thats when japan opened last night. Suddenly the dow excuse me the s p down 25 points. You see that dip there in the evening. Very rarely happens. Looks like there was some domestic redemptions in japan. They started new quarter, new fiscal year in some situations. Thats the likely culprit. Weve been negative all day and all night. At least Energy Stocks are in positive territory. Crude has been ripping this morning on the inventory numbers. Weve got about 1,030. You can see up godaddy, and a lot of debate about this pro and con. People stunned how strong it was. 20 was the price, but you can see 26 right now and some people saying listen tyler, its the number one player in domain registrars, and theyre selling other kinds of Services Like web hosting, and theyre paying down their debt as well. Back to you. Okay. Ill pick it up from there. Thank you very much. Well two days after being accused of defrauding investors by the s. E. C. Financier lynn tilton and her firm petriak partners are suing the s. E. C. Tilton claims the s. E. C. s administrative proceedings violates the constitution. Nobody has ever won a case like this, though, against the s. E. C. Lynn tilton, ceo, here on power lunch for an exclusive interview. Lynn, thank you so much for joining us, and we will get to todays news and the suit concerning the s. E. C. In just a moments time. Its a dangerous population. Theyre withholding values, and we have you know valued those carrying values as were disclosed to investors. This is not market valuations. They are defined by the indentures as holding values or carrying values and we were consistent over the course of over a decade in the exact same manner as we are today. But you directed the devaluations not be done in accordance with the official Valuation Methodology as set out in the documents for the funds . Thats incorrect. What i said is we have valued the carrying and holding values exactly as are set out in the funds, which is either at par, a Rating Agency recovery rate or at purchase price. What i have said is that the s. E. C. Has mischaracterized the word valuation and its not a market valuation like a market to market valuation as one would appear to read from the complaint. Is there another way maybe i could frame this . Is there perhaps some best practices that you could have implemented to try and have prevented this from all happening . No. I mean, im all about disclosures. Everything was disclosed to the investors. What the s. E. C. Is saying is that the minute my deeply Distressed Companies acquired at a foreclosure and bankruptcy missed an Interest Payment that i should have defaulted those and not held them as performing. Yet, what we have disclosed to investors consistently for more than a decade is the stated rate of interest exactly how much they pay and that they were held as performing. My most sfes indicated investors quarter after quarter to understand the cash flows in a cash flow collateralized loan obligation. Okay. Lets go to the news of today and that is that you are filing suit against the s. E. C. Alleging their administrative proceedings violates the constitution. There is no precedent as far as im aware of winning against the s. E. C. In a case like this. So why are you confident that this is going to be a success for you . Well im hopeful it will be a success, but our arguments are different than any of the others that have been made. First, you know we know that the Administrative Law judges have not been chosen as was mandated by the supreme court. They are supposed to be chosen by the commissioners of the s. E. C. And they have not. So that violates the constitution. Also after five and a half years of investigation, you know unleashed subpoena power and onesided testimony not to give me a chance to have the means and the time to defend myself seems unfair and inequitable. I can certainly understand where you are coming from but, nonetheless, did your attorneys warn you that there has been no precedent for winning in a case like this . Youre aware of the risks, but you still want to go ahead with it . Look, one of the things you learn about being a warrior and fighting for truth is that you keep marching forward in the darkness every day until you see the light. Ive had many david and goliath battles. This is not my first one and i have never had an adjudication against me because i fight for truth and i follow two theories. One is i follow the law, and i follow the rules with integrity. Therefore, i can be bold and strong and fight for what i believe in. And that you certainly do lynn but think about the worst case scenario. The s. E. C. Has not ruled out this could be referred to the Justice Department for criminal charges. Does that concern snu. I certainly have not seen any reason that that would be done. I mean this is a contract interpretation case and a case based on Financial Statement technicalities, all of which arguments were never pressed over the course of a decade by investors. I have a lot more questions, but robert frank, you have been covering this story for five years now, so you know a lot about it. Would you like to come into the conversation as well . My main question is the s. E. C. s job is to protect investors, and i wonder who are the investors here . Are they truly sort of victims as we would know them and who do you think the s. E. C. Is taking this action on behalf of . Well first, you know i think it hasnt been said that i am the equity holder of all the funds. I also now own twothirds of zohar one, the first fund the debt of zohar one, which is the one that mat users in november of 2015. Im sure there were angry investors here who complained to the s. E. C. Who are these investors . You know that i cant give you confidential information. I will tell you that they are the most sophisticated investors you know. Large banks, large hedge funds, investment banks. I do not believe that this came from investors. This started almost six years ago, and they have looked at every part of my business. They have all my emails for the last four years and some back to a decade. Theyve investigated every part of mine and patriarchs businesses, and in the end they brought a case based on disclosures that were given to them on day one. Was it a whistle blower that had some hot tip that you were engaged in a much bigger sort of fraud or theft scheme . What do you think started this . I am baffled. I mean, look, true. Im baffled that it took six years to come up with a case that on its face is about disclosures that i released almost 100 pages of you know trustee reports every month that showed the actual things that they are saying are not clear, so the truth is i am baffled. Why do you think theyre targeting you . Do you think its some kind of witch hunt . Look i hope that someday the truth comes out on why ive been targeted. All i can tell you is i feel very strongly in our case. I think that they are wrong and mistaken, and i dont know exactly why i was targeted. So you can categorically say that none of your investors raised a red flag to the s. E. C. . I can categorically say none of the investors raised these issues to me over the course of a decade. They did not press these arguments that the s. E. C. Now makes over more than a decade. We have at times had questions about things which weve answered and have never been challenged. Not by the trustee. Not by investors. Not by the insurer. You own Something Like 74 companies, right . This comes at a very sensitive time for you. You were in the middle of restructuring the investments in zohar one, one of these funds. What happens if that doesnt go well and what happens if thats not restructured . Will these companies be forced to be sold in a fire sale or some forced sale . First of all, i had been working for more than three years on a restructure of zohar one, and over a were and a half on a repurchase of all the notes and although funds, so this has definitely come at a bad time. That said as i said this week i bought twothirds of the notes in zohar one. That will really help in terms of getting a restructuring done and im hopeful that will get done very shortly. But in terms of what happens if the restructuring doesnt get done even with this you know Large Purchase of 300 million of notes that was your own money . That was my own money. The s. E. C. Says you have taken out more than 200 million that you were not justified to take out of the funds. What they dont say is i put more than 350 million either into the funds or into the Portfolio Companies and that i have tens of millions of dollars of fees that ive deferred so that the companies have the cash flow to be able to so theyre only looking at one side of the balance sheet. So the answer to your question, if by chance even after this Large Purchase im unable to restructure extended mature, there is no fire sale of the companies. What happens is in may i put up the loans, not the companies, but the loans in zohar one, and if in my good faith business judgment those loans are bid at fair value, then i will sell them. If not, then we just march on. You are so professed selfmade bill yn air. A typical rags to rimpz story, and we commend you for it. Does this have the potential to end up affecting your own personal wealth . Well i mean you know a lot of my wealth lies in my companies and in my funds and frankly, you know this is not a good thing for us but i plan on building value. I plan on taking care of my employees, and we will get through this. My wealth you know no one needs to worry about me being able to live the lifestyle ive grown accustomed to. Just one last quick question with regards to your characterization of the s. E. C. Because the s. E. C. Has said that they think they do understand complex financial instruments. Do you think they have maybe misunderstood your business . I think theyve completely misunderstood my business. They are comparing my governing documents to a clo that would be for passive investing and performing loans. My clos are unique. One of a kind. They are for distressed loans and equity. They are an active turnaround strategy. Not passive. My interests are aligned with the funds in owning the equity. Debt gets before equity. Therefore, my intentions are only to maximize the value of our underlying operating companies. Well thank you very much for coming and speaking with us. Thank you, robert, as well for jumping in. Ty. Thank you, folks. Lets out to the bond market and check in with Rick Santelli who is tracking action at the cme. Rick. Oh hi tyler. Whether its kind of soft equities or was it the soft data this morning but were down a half dozen basis points. Open it up to early march. This 186 level is very important in terms of support for closing yield. Lets look at the 20year chart of high yield from barclays. Yes, everybody is worried about the spreads widening. They have. Based on history its been a whole lot worse. Not that many years ago. Yeartodate a fiveyear boon yes, they went negative the second day in january, and theyre trading minus ten basis points. Rick, thank you. Sometimes it pays off big to invest against the grain. We have three contrarian stock trades that were going to hopefully make you look really smart in this market. Thats when we return after this. You can call me shallow. But, i have a wandering eye. I mean, come on. National gives me the control to choose any car in the aisle i want. I could choose you. Or i could choose her if i like her more. And i do. Oh, the silent treatment. Real mature. So you wanna get out of here . Go national. Go like a pro. under loud music this is the place. Eir beard salve is made from sustainable tea tree oil and kale. You, my friend, recognize when a trend has reached critical mass. Yes, when others focus on one thing you see whats coming next. You see opportunity. Thats what a type e does. And so it begins. With e trades investing insights center, you can spot trends before they become trendy. E trade. Opportunity is everywhere. Maybe you are the sort of investor that likes to buck prevailing Market Trends and go against the common wisdom, and if so youre going to want to hear what our next guest has to say. Were talking to dan kozlowski. Your fund just won the 2015 limpur award for best multicap core fund, which is for a threeyear period. You took over the fund about three years ago. Obviously, you have done a very nice job there. Congratulations. Multicap core fund means what . You can go into small companies, big companies, medium companies, or what . We certainly have flexibility, but thank you, tyler, for having me on the show. Youre welcome. Certainly want to credit them for much of the success. Weve been positioning this segment as a way to learn about contrarian investing. Where do you go hunting for stocks that go against the grain . Where do you start your research . Exactly. So we have a twolayer strategy to start with. We first come to the office each day and try to avoid the graftational pull for the wall street herd consensus. By avoiding that then we do three things. We look for Management Changes. We look for spinoffs and industry consolidation. Three things. You come to work. Management changes, pinoffs industry consolidations. Give me an example of a good pick in the Management Change category. Sure. Well, an example is air products. Actually air products and analysts day ned yesterday in new york. About in july of do they make bubble wrap . No they dont. No they dont. Industrial gas. Its fairly consolidated market with four players, and in july of 2014 rookwood was sourced by bill accumin in terms of the board and trying to find a better Management Team and he has come in and debur ok tiesed the business and restructured it, and realigned incentives. That Business National market share and Global Market share dont matter that much . What really matters is local market share, and say if you put in a completely different hart to make it more efficient for them to gain . Management change turnaround situation. Spinoff. Number two. What is a candidate in that area that you think is well positioned . A good example is they spun off last year and its a scale business. 25 billion market cap. Theres 3. 5 return on assets. One of the highest in the financial industry. Funding costs are coming down for them as lower cost to debt rolls off, and i not well known. So part of the magic of spinoffs is they are orphan when they come out. Different tickers, different names. Theyre positioned in places that its time for the consensus to find one. We have a classic janus bottomsup research in that period. In the first year after the spinoff and we often find great value. Your third category is industry consolidation. Lots of industries are consolidating. What i suspect you immediate to find are the consolidations that are not in the industries that everybody else is looking at. Whether its biotech, Pharma Health care and the like your choice here is a company that is fairly prozaic. We like the packaging space because we have a lot of the benefits of the stability of the staples area for better valuations and specifically we like aluminum beverage can. Crown holdings. Crown corp. And Ball Corporation is the other player. Theres a third player. The industry continues to consolidate and that consolidation sort of begets we think higher returns. Has crown moved past a legal problem that they had historically decades ago when they acquired a company that i believe had some asbestos liability . Thats long gone, and now they really are in food cans and beverage cans. Cocacola cans budweiser cans food product in europe. The stock has been hit a bit on currency, and theyre stepping up into the market weakness and buying assets in europe, but ultimately we think that the negative pricing power, issues of the last couple of years will resolve themselves and return to a move higher. Congratulation on the award. Mandy, over to you. Invasions that are shaping our future. We look at the road ahead for the automakers and the race to connect your car. The companies that are in the driving seat coming up next. Ly return im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. Doug. Youve been staring at that for awhile, huh . Listen, Td Ameritrade has former floor traders to help walk you through that complex trade. So youll be confident enough to do what you want. Ill pull up their number. Blammo. Lets get those guys on the horn. Oooo looks like it is time to upgrade your phone, douglass. For all the confidence you need. Td ameritrade. You got this. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. Time for a special series called game changers. Were spotlighting invasions and technologies that are transforming the way we all live. This hour the road ahead for the auto industry. The carmakers releasing their latest sales figures today spshgs those stocks are really revved nup the First Quarter. Chrysler up more than 30 this year from autonomous driving to infotainment, the race is to connect the car. It shifts the basis of competitive advantage and differentiation from the mechanical parts of a car really to the electronic parts of the car. It will make driving a lot safer. You know, estimates if you combine advanced driver systems with vehicles to be able could eliminate up to 80 of the accidents. The two players who are the pure plays are mobile eye. Leader in mono camera safety systems. And leader in infotainment as well as in car audio and many personal audio products. Our top pick is mobile eye. Its poised for not only good Revenue Growth but we should see the share price recover as well. Next hour new and Innovative Technologies that are boosting productivity of ceos and their employees at work. Ty. All right, mandy. The major averages down on this first trading day of the month. You can see its a fairly even split there on the s p 500. Were going to check on the winers and losers this hour next. Gies. My technology can help you choose the right portfolio. Monitor it. And automatically rebalance it. All without charging advisory fees, account service fees or commissions. That may be hard to compute. But im a computer. So trust me. It computes. Say hello at intelligent. Schwab. Com welcome back to power lunch. Im kayla live at the nasdaq. We have a big hour on tap for your money. Coming up the buckle up trade. If you are in this one sector, you are going to want to hold on tight because it could be a wild ride in q2. We will tell you what sector that is up ahead. Plus legendary bond fund manager bill gross is out with a new Investment Outlook. He will tell us how he is playing the Second Quarter. And a real life drama is playing out in a hollywood right now with mega star power. The biggest shakeup in hollywood in decades. Thats all at the top of the hour, but, first, back to tyler and mandy. This hour weve been watching basically two things. The first is oil. Up 5 on the day. Thats a fairly significant move there. It is a significant move, and lets take a look at the dow. It is currently down by 61 points. When you consider we were down by about 200 at the lows of the day, its what we call quite the comeback. Mind you, im going to be exiting over here ty. Take it away. Thanks very much folks. 2 00 p. M. On wall street. Lunchtime in denver. Thats mountain time, folks. Then you are watching the second hour of power lunch. Tyler mathison here. Brian sullivan and melissa lee there somewhere. They got the day off. Stocks kicking off the quarter in the red, but the good news is as mandy just described, the dow is off its low. Right now down about 64 points at 17,7eleven. The nasdaq is at 4,872, and the s p 500 down onethird of a percent at 2,060 and change. Lets get more on todays market action. First with bob pasani at the new york stock exchange. Dom is also with us from cnbc headquarters and kayla, who you just saw a moment ago, will be with us for the whole hour from nasdaq. Bob, you first. Look at the s p futures. We were down 25 points just after the japanese open that was around 8 00. Weve been trying to go positive. The good news is theres more advancing than the declining stocks at the nyse. Thats a positive sign. We may make it into positive territory. They are the worst performers of the were. Airlines werent hot. The hot oil is ripping. The inventories are up. I think we got Short Covering in the oil pits. If you take a look there at the Energy Stocks up 2 or 3 . The stock of the day, boy, a lot of debate about go daddy. People are stunned at the prices. The price of 20 above the price talk. Now at 26 and change. Open to 26. 15. A lot of debate on this one. Back to you. Thank you very much to dominik now with some of the big stock movers we are seeing on this mostly down day. Hi dom. If you take a look at some of the stocks here, they are indicative of the overall market. Were at a crossroads, if you will for many of the these momentum type stocks. Take a look at some of the biotech names. Bioge northeast, i want to say its biogen if you look at some of the simple technicals, the 50day moving average, this is the shorter term trend line for the overall market. You can see its been steadily higher over the course of the past several months but now all of a sudden were getting close to a point where some traders. All of a sudden now were starting to see this area here whether or not you can find support there, but thats a battleground if you will for apple, and then another one here to watch as well. Home depot shares its the spring Home Improvement season. A lot of these stocks have seen a nice up trend into the Spring Season but, again, right now what are you seeing here is an whered that were floating right around this 50day or shorterterm batting average for the overall market and for these stocks in particular. I just want to highlight one more that bob pointed out. The dow jones transportation average Airlines Week to date. This is the 200 day or longer term moving average. We are at a battleground here as well. The ibb, its off more than 1 and, of course meg terrell is with me here. Meg, q1 was a huge quarter for biotechs. We saw ibb up 15 . The story in recent days has been biotech weakness leading to overall nasdaq weakness. Does that continue . Well, people were freaked out just last week, but if you look at q1 as you mention, the nasdaq biotech index, up 13 . Ibb up a little more than that and that was led by optimism about m a and optimism about whats going on in the pipelines. The three biggest gainers, actually, in the nasdaq biotech index were Foundation Medicines, pharma cyclics and horizon pharmix. Its touching Foundation Medicine growth. Cyclics has set the stage for new value wags of cancer drugs when it was sold to abvi. People talking about half a cancer drug. Thats a lot of money. Then finally just earlier this week Horizon Pharma making an acquisition itself. A lot of m a activity. The question is this is always a volatile sector. People are looking over their shoulders about whether the end of the biotech bubble is coming. They say that m a and also these very, very positive pipelines we keep seeing on big drugs is going to continue to drive it. Actually, bringing in now our guest is ceo bob mullwright. You guys did just have a positive phase three readout, and were talking now about your first drug applying to the fda this year. Maybe you can tell us before we get to that what to you think about biotech valuations right now . You guys have more than doubled in the last year. Yeah. Its been a very good year for us. If i think back to the genomics level its based on the last year. There are no drugs from genomics. People hope it would turn into new medicines. The current enthusiasm is around clinical data. Its very different than past biotech rises where were seeing actually results in the clinic and hepatitis and cancer and things that are actually you know, improving patients lives. Thats why its fundamentally different than past biotech. I think its based on a much more real results orientation than the past sort of ideabased bubbles. Your lead asset, m m398, youre applying for approval this year in pancreatic cancer . Tell us about the timing for that application and also the potential youre going into second line. Thats after patients have already tried and it stopped working for them. The potential to move into earlier lines. Sure. The specific application were in is whats called its a therapy thats used actually in first line and second line. Our drug is hopeful i going to find a label for patients who followed that, which could be first, second, or third line. Its a broader application. Our timeline is essentially we hope to finish that application in the next few weeks, early in the Second Quarter. Then hopefully gain review from the fda in this year and be commercial in the next 12 months. Its very exciting time for us. Its your First Successful phase three drug m m398, which we were just talking about. Part of the concern in the overall market though is that were seeing so Many Companies going to market trading publicly that dont even have drugs in phase three. Im wondering when you look at the competitive landscape, if you think that a lot of these companies are going public too early or if you think that theres real promise for growth in the pipelines. You know i do think that theres real promise but, you know obviously the sector of biotech is very broad, and sometimes it gets them together but its an accumulation of older technologies newer technologies, you know companies who have advancing something thats a modification on something old or something brand new, and they all have different risk portfolios. When it comes to merrimack, you know, the biggest sector is the company is based on one product or often Just One Technology thats unproven. What weve tried to do is build a company thats fully twersfied. We have eight clinical assets all moving along. Were diversified robust and not based on any single technology, those are the kind of companies in the future that are really going to sort of want to move along regardless of markets because its that single shot binary outcome thats so scary to investors that you know can mean everything or nothing. Off about 2 in todays trade as the retailer holds an investor day. Lets bring in Courtney Reagan with more. Hi court. Walmarts u. S. Ceo just wrapping up his First Investor day at the new york stock exchange. It was a 90minute presentation with questions and answers focussing on making shopping fast easy and friendly. They say this will be the year for improving stores which will include better merchandise flow, replenishment, and assortment. As well as improved store flow and layout. He is focused on the store improvement and that its priced low. Walmart has been urging intrirz intrirz. E xhes remains a key growth strategy. If he were running a full ecommerce player, he would be xid about 4,500 distribution points. Located within more than 09 plus percent of where americans live and the supply chain that can move goods fast. That, of course, is the infrastructure that walmart is looking at in the u. S. No yumted financials were given. Though, investors remain focused on the retailers u. S. Samestore sales which have accrued for two straight quarters, but after a period of declines, or at least just very stagnant growth. Kayla, back to you. Yeah courtney. Investors waited a long time for that to go positive. We appreciate the latest on walmarts investor day. Courtney reagan. All right, president obama issuing an executive order targeting hackers. Eamon javers has been working that for us from our newsroom. The president signed the executive order this morning, and Senior Administration officials are calling it a new teal that they can have in their toolbox in the fight against cyber crime around the world. Particularly in the hard to reach jurors dicks for u. S. Law enforcement. Had he say this new security bill declares a National Emergency in terms of cyber crimes and under this executive order treasury is now going to be able to go after and sanction individuals and entities. That means people and companies that will be able to go after their Financial Assets and all kinds of real estate and other things that they might hold here in the United States. Also its set out to protect Critical Infrastructure and the Financial Stability of the United States, among other things. I asked Senior Administration officials today about this, and when they say that theyre going after people in farreaching areas of the world like Eastern Europe, north korea, do those cyber hackers actually have assets inside the United States that the u. S. Government would be able to seize moving forward . They said surprisingly a lot of their Financial Transactions will move through the u. S. Theyre confident, they say, theyll be able to get some of that activity. Guys, back to you. All right. Thank you very much. Lets set the menu, shall we, for the rest of the hour. Still ahead, the buckle up trade. If are you in this one sector brace yourself. It could be a wild ride ahead. Well tell you what it is in the next hour. Plus, the bond fund manager bill gross says his investment style is just like this high profile hedge fund managers. He will tell us who it is in our exclusive interview, and a list celebrities like chris pratt and will ferrell at the center of a real life hollywood drama and the money involved is insane. Well tell you all about it when power lunch returns. Welcome back to power lunch. Take a look at whats happening with oil right now. Crude oil rocketing higher in todays session. Right now up about 5 . Invebtory here in the u. S. And crude oil built slower than expected in the last week. Its been a wild start to the year, though for oil despite todays gains. Crude is still down big on the year, tyler. Kayla, thank you. If you think the First Quarter was a wild ride for energy, brace yourself because things could get a whole lot crazier. Were going to hit on this story on two fronts. Kate kelly is here with what we are calling the buckle up trade. Lets start with steve liesman. You are looking at the Global Impact of the crude collapse, steve. You first. Tyler, what were talking about here is a transference of producers to net consumers, and to try to see what that growth impact is. What we have is the world in multicolor. Were going to do around the world in 80 seconds here. What you need to know about this map, folks, is that the deeper the purple the bigger the loss. The deeper the green, the bigger the gain or benefit to gdp. Lets take a look here. Some of the obvious places here. Kazakhstan is a deep purple. In a minus 10 of gdp impact. This is from a 50 decline in oil. With russia up there as well. Then come down into asia here. China, big beneficiary. India as well. All through Eastern Africa and then you come up through the middle here to nigeria and niger and theres the middle east. Much of the country, brazil as well, a beneficiary despite the fact that they do have some considerable Oil Production there. Then the north here venezuela and columbia big losers. The United States comes out as a modest beneficiary. 0 to 2 despite our huge Oil Production over the past several years, and what we are seeing right now is a situation where we seem to be registering all the negatives from the decline and none of the positives, and economists say thats something thats going to take time. Tyler, heres the map that you got here. Can you see Eastern Europe is a beneficiary. Then all of europe a beneficiary except when you go up of course, to norway. Tyler. Steve, thank you very much. Lets turn now to kate kelly who says if you are planning to play energy in the Second Quarter, you better buckle up. Kate. Thats right, tyler. Oil both domestically and overseas are looking at volatile reputation with big surges on production in the u. S. May finally being slowing a little bit helping supply and demand and better balance. Even those that are bullish on this market are bracing for a choppy Second Quarter as a combination of robust continued production and diminishing storage, especially in pushing oklahoma and are likely to come to a head. The latest Energy InformationAdministration Report shows that storage in cushing, which is a centerpiece when we talk about on store storage in the u. S. Is at 80 capacity and only about 12 Million Barrels are left before those tanks are completely full. Meanwhile, despite the number of rigs laid off around the u. S. Amid dirt cheap prices for oil, especially in the domestic market, and also overseas. Production so far this year has increase and may only this month be starting to top out. As a result of that even those that are overall bullish, both folks like the oil trader andy hall who closed out his bearish bets on crude earlier this year say that we could be set for real volatility in the Second Quarter. Whereas, 40 oil was the buzz word just a few months ago. Now Hedge Fund Traders like pierre, the londonbased trader who called last years down its turn successfully are calling for 25 oil. They are looking to the coming months, tyler, and kayla, to see if the lows come through. Kate thank you very much. Lets get to sue herrera straight away for breaking news. Sue. It is out of california, ty where the governor of california, governor brown, has just ordered unprecedented mandatory water restrictions for the state of california to deal with this historic drought. It is a 25 reduction in water usage statewide. Now, this comes, of course after multiple years of very dry weather and Drought Conditions and it is also a record low in terms of the snow pack which normally would feed from the mountains down into the rivers and the lakes of california, but they really didnt get much snow. As a matter of fact, the governor said today we are standing on dry grass where there should be five feet of snow. This historic drought demands unprecedented action. Its a 25 reduction in overall water usage statewide. Ty back to you. It is really serious out there. It is very. We appreciate it. Thank you very much. Ahead, the rise of the new mortgage king. Big banks pulling out of the home loan market. Wait until you hear who is stepping in, and its like a scene ripped straight out of hbos entourage. A real life drama playing out in hollywood right now, and our julia borstein is all over it. Its a midnight raid at a powerhouse. Ill break down the shakeup at two of the talent agencies thats coming up after the break. 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. Iron ore prices in a near freefall. Check out this chart. Now down 5. 1 4 . Hitting the lowest level in a decade on concerns of a global glut. Heats whats driving prices lower as the bigger producers woke up supply and chinese demand slows. Some of the big players, like rio tinto, bhp, all lower on the day. Ty. Thanks. Real life hollywood drama playing out right now with stars as big as will ferrell at the center. Lets go to julia borstein for the latest. Tyler the shakeup at leading Talent Agency caa as the number three player looks to build a comedy powerhouse. Just in the past day uta has recruited ten agents from caa. They represent hundreds of those working in comedy across actors directors, writers, and touring. Now sources tell me caa will pursue legal action because some of the agents are under contract. Nauert eta or caa will comment. Already jumping ship is will ferrell. This on the heels of a 34 million Opening Weekend for get hard. As well as guardians of the galaxy star chris pratt and ed helms. The question is what other big name talent will follow. Whats the appeal of uta over much larger rival caa . Well, less than six months ago prior took a majority stake in caa sparking talk of an ipo down line and raising concerns that shareholder interests could be put ahead of clients best interests. Now, uta is owned entirely by its partners and has more of them offering more potential opportunity for agents to advance to that level. Caa also has been boosting its sports business while uta remains focused just on entertainment. Now, this is the Biggest Agency defection in a long time and perhaps the largest from caa in its 40year history. Tyler. Oh thats a good juicy one, julia. Thank you very much. Well be watching it im sure. Keep a close eye on oil as the final trades cross for the day. Jackie deangeles live at the nymex setting us up for the crude close. Jackie. Hi there, tyler. Lots of action in the oil pits. 5 spike over 50 a barrel. Are the fundamentals starting to show us that supply here in the United States is declining. Were going to talk about that and talk about the Iranian Nuclear deal as well. All that on power lufshlg. Stay with us. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Hello. Im sue herrera, and heres your cnbc news update at this hour. Escalating her battle with the s. E. C. New york financier lynn tilton sued the agency to stop it from pursuing a case charging her with defrauding her investors. She explained why earlier on power lunch. Five and a half years of investigation. You know unleashed subpoena power and onesided testimony not to give me a chance to have the means and the time to defend myself seems unfair. Police say a sleeping couple and their unborn child were all killed on impact after a Sport Utility vehicle slammed into their home in florida. The driver of the vehicle was taken to a hospital with injuries not considered lifethreatening. No names have been released yet. Amazon is letting some of its customers reorder staple products with the click of a different button. Its called the dash button. A tiny oblong device thats linked to the amazon app and connects to the users wifi network. Once enabled consumers can reorder products with a touch of that button. First Lady Michelle obama is, again, challenging children to come up with healthy lunch recipes. The healthy lunchtime challenge invites 8 to 12yearolds to submit original recipes for health where i and affordable lunches. The winners will visit the white house and attend a state dinner just for kids. Heats the cnbc news update this hour. Back to you, ty. I guess Peanut Butter and nutella sandwiches probably wouldnt be on the list. Hoo maybe the Peanut Butter. Not so sure about the nutella. All right, sue. A big gain today for oil. Lets get down to jackie deangeles for the close. Hi jackie. Good afternoon, tyler. Looks like were going to close just around 50 a barrel. As you said, a big spike in crude oil prices after the eia reported that we did see a 4. 8 million barrel build in inventories. However, the eia also said that we saw 36,000 barrel decline in production. Of course weve seen record production here over the last recent period. The most weve seen in 30 years. Every day seems to be different in the oil pits. Honda unveiled an ultra sporty civic concept at the new York Auto Show. It has been one of the best selling cars in its segment. Consumers have been awaiting a fresh new model. Joining us now in a first on cnbc interview is honda executive john mendel. Good to see you, john. Good to see you. So can this car jumpstart sales for the civic . Well we think its dynamic new approach. Its our tenth generation of civic which were really excited to bring here today. Certainly going add a lot to the civic lineup, but also to the honda lineup in america and the rest of the world. Why did you feel that you needed this civic to become a sportier car . One of the reasons for its popularity was how simple how reliable, and affordable it had been, so why did you go in this direction . Well, civic has always been about being sporty and fun and dynamic. It has probably one of the broadest appeals in terms of demographics in the industry of any car. Theres certainly a demand by younger buyers who are typically very strong civic supporters for a little bit more sporty more dynamic vehicle. Thats what were delivering with this tenth generation vehicle. Its wider. How much will it cost . This new model. We havent announced pricing. It will launch this fall and the closer we get, but it will maintain the core values of civic, right . Safe clean, fun, and great value for money. Thats one of the hallmarks of this car. We dont look to abandon any of the great things that civic has grown up to represent. This vehicle has been on sale in a number one seller for 43 years. We have no intention of abandoning that position. John you mentioned all of these tenants of the civic. Thats several of the reasons its been so popular with millenials. As millenials age, how much do you feel like you have to keep up with that buyer base . Well its funny. Of the last ten years a honda has been the number one vehicle with millenials for the last ten years. Civic, seven years in a row, up until the time that accord actually passed it in two years ago, so we have kept up and weve grown with those millenials through time. You know we while this show is about civic, this year 2015 were calling the year honda, and were calling it that because launched a brand new crv at the end of 2014. The new hrv small utility crossover vehicle and just a couple of more weeks. A brand new pilot this summer. The new civic this fall. And yet another new accord later this year as well. Its weve got something for everybody, and our plan is to grow lifetime owner loyalty with customers who cannot imagine a World Without a honda in their lives. Although john much of 2015 would in all likelihood also involve trying to fix all of those honda cars that need their takata air bags either replaced or repaired. Its been a very slow process. You just expanded the recall earlier last month. Im wondering what you can give us as an update on where you are in ficking or replacing those air bags and whether you feel comfortable with the number of cars youve recalled at this point . Well our number one focus as an industry as it should be because it is an industry problem, not just a honda problem, is the customers and taking care of them. It is particularly difficult getting customers back into the dealerships. Weve gone on a very Aggressive Campaign not only with mail phone contact, but as you know weve begun running ads in local newspapers where the affected vehicles are to make sure that we try to find every customer out there that needs an airbag fixed. It is a slow process. Its not aided by the fact that many of these vehicles because of the dur ability are in third and fourth and fifth generation hands. Were doing everything we can to reach out. Youre right. It has been a very laborious process, but you know as we bring additional capacity on we hope that we can bring customers in and speed that process along. The latest from the new York Auto Show today. Well its an exciting show. We hope everybody locally gets out here. John mendel. The new civic. John mendel thank you so much, honda motor company. I take my sons most years to it. Lets go to Housing Mortgage apps rising for the second straight week. Diana here to break it all down. Two weeks of gains. Thats news. Weekly Mortgage Apps up 4. 6 . Refis up 4 because we havent seen Much Movement in rates. The better news is in loan am kegs to buy a house up 6 and now 8 higher than a year ago. Thats home buyers. One note though government loan volume like fha and va which tend to be the first time home buyers were up. All good things. Who are these nonbank lenders . Not all of these Mortgage Apps are going to the big banks. No they are not. The big banks have been pulling back. Especially in home purchase loans, and that has opened the door for nonbank lenders to pick up the slack. Take a look. Their share of these loans more than doubled in the past four years from 14 to market and now nearly 38 . Thats according to inside mortgage finance. Names like quicken, loan depot, penny mac. Theyre being more aggressive in terms of rates and underwriting, and grabbing business from wells fargo and jp morgan chase. Some have an angle Like Movement mortgage in charlotte founded in 2007 just before housing collapse. They claim they can close your loan in just a week versus the average 45 days. No todays ultra competitive market, timing is huge. Our building as it hits in the shadow of a bank of america headquarters building, and weve been able to gain number one purchase market share in that city inside of five years by offering Great Service to the homeowner. Nonbank lenders are hoping to see private capital return to the market but for now most are selling fannie and freddie and underwriting guidelines. Back to you. Diana, thanks very much. Lets go over right now to mandy. Hi. Coming in for a second inning. Trouble in transports. The dow transports are underperforming today, and badly lagging the market so far this year. Does that point to more down side for those stocks . Lets bring in the trading nation jonathan chief market technician with mkm partners David Seaburg head of equity sales trading and the underperformance worry you for the overall market. Its interesting. As you mention through the First Quarter, the transport is actually the worst of the 24 industry groups. Going back to 1909 thats never happened. We dont really know what the absolute underperformance means, but what we do look at is what we call dow theory. Thats how transports are trading in relation to the industrial average, and early in bull markets you want to see both confirm each other. What happened this year . The industrials maid a new high in early march. The transports didnt. We have that dow theory nonconfirmation, but it really doesnt become troubling or a sell signal until both indexes close below their prior collection lows. Transports are flirting with that level today but the industrials are still well above that level. Right now theres no sell signal. One other thing to look at within the transports, its really a tale of two subsectors. Its the railroad that is are actually dragging the transportation sector down. The airlines are actually holding up relatively well. We think if you want to sell the group, start with the railroads as here the laggards right now. Its a dichotomy there. In general, do you believe in the dow transport theory . I mean first of all, i fwrae with the airline comment. I think they should be actually bought here and ill fwet into that in a minute. No, absolutely not. I mean look is there nor nearterm weakness here . Probably. Theres probably more down side risk. Were not seeing signals of a material deceleration in the economy by any stretch of the imagination. Bomb line we said this yesterday in the airline names. Its simple. What you have is you have the buy side. Street numbers immediate to still come down. Its setting up to really be a big buy signal and a great buying opportunity. 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Was this in the era of dick grope . Art haiman and jeff mullens. Stars that went on to the nba. I was trying out for the bench warming team. I was cut the first day. I became humble after that and left the ball playing to others. Well, i think you have to start, tyler, by recognizing that almost all asset prices are artificially elevated. That means that Interest Rates are artificially low, and in some countries such as germany and others in the euro zone, theyre negative. All the way up to six years. It doesnt necessarily speak to pe ratios on the stock side but ultimately theres a connection between low Interest Rates and artificially low Interest Rates and, therefore, the potential for stock prices to, you know, be reaching a peak. If not a plateau for a number of years. I think an investor has to sort of play it differently because, you know we can all recognize that buying a german fiveyear note at minus ten basis points isnt going to do much for your portfolio. Its no way to make money. Interest rates so far this year and recently bill as recently measured by the tenyear treasury have sort of moved between about 2. 1 maybe a little higher on a day or two, and 1. 7 1. 8 whatever it is today. Is that where you expect them mostly to hover for most of this year, and does that mean that to make money you have to look in bonds that you have to look somewhere else to find your opportunities . Yeah, i think it does. Now were at 1. 86 on the tenyear hovering around 2. I think the key for the longterm Interest Rate for the tenyear, tyler, is the fed funds rate, which the economy is neither too hot or too cold. Its the fed funds rate that janet yellin has been talking about and now bernanke is blogging about it. Larry summers is going back and forth with better than aink where i. Theyre all debating what is the neutral fed funds rate. I think its closer to 2 . The fed thinks its closer to 3 3. 75 . Where is it closer to 2 . Many my mind high debt as well as other structural head winds form a basis for a 2 number that the fed believes otherwise, and if the 3. 75 fed funds rate that they believe is coming then we have a bare bond market coming. Boy, youre telling me. I think were okay. I think im more in your camp just intuitively because right now were at basically the zero bound, right . That would take if it doesnt take a long time, the shock to the system would be severe. My suspicion is that the system has gotten so acusped to lower Interest Rates that its going to be hard to go above much above where you say. If 2 is there, then i think were okay but its still meaning that of course you are just earning 2 from the tenyear treasury. Lets jump back to the april Investment Outlook in which you sort of liken your fund to the Investment Strategy followed by bridgewaters ray daleio. In what ways and why does he seem like the apt analogy sf. You know i think one of the key tenants, tyler, is that if yields are so low, then why not borrow at them and invest you know accordingly at higher rates. Its what corporations do when they buy back their stock. They borrow at 2 or 3 , and then they buy back in their stock at earnings rates of 6 or 7 . The end verse of a pe ratio. If you do it mildly and if you are cognizant of those darn tales in which the lehman of 2008 or the exuberance of the 1999 and the dot. Coms can wreak havoc, then a mild amount of leverage can allow the funds like the unconstrained fund at januaryus that im running to return 4 to 5 with mild leverage. Final question. Who wins the Basketball Championship this weekend, and who wins the masters week after that . Well i think its kentucky unfortunately. I would like to see wisconsin beat them so duke would have a crack, but ill go with kentucky as a betting man, i guess. In terms of the masters, oh, there are so many new ones. I would like to see bubba win it for the third time. Im going to vote on dustin johnson. Good to see you. Well when we come back on power lunch, technology thats changing the way we do things. You may never again have to worry about forgetting your wallet as long as you have your phone and your face. I dont imagine you would leave home without that but we will explain up next. Plus, were still watching these markets. Take a look at the s p 500 heat map as we head to break. Losses are intensifying just slightly. Still down about half of 1 on the s p. Im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. Theres nothing more romantic than a spontaneous moment. So why pause to take a pill . 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For a free 30tablet trial go to cialis. Com to another Way Technology is changing the wait we do things. Soon you may no longer need paper money or even a credit card just your phone and your face. Josh lipton is live in San Francisco with that very crazy story. Josh . Well, kayla, this is the big promise of biometrics or technology that could allow consumers to use their own unique physical characteristics. So facial features eye retinas when completing transactions. Remember, the mobile Payments Market will triple to 142 billion by 2019 to cane an analyst the forest ter. When you make payments with your phone youre relying on your passwords and user name. There are questions about the security of that. Thats why you see Tech Companies moving into bio biometrics. Alibabas jack ma took it up a notch touting a new service that he called smile to pay, and that would basically allow users to scan their faces with their smartphones. Of course, no surprise some analysts are skeptical. Its taken some time just to get them comfortable with the idea of having their fingerprint scanned, so im not certain that consumers are going to want to have their eyeballs scanned by their phones just yet. Much of this Biometric Technology is still very much in its infancy but some analysts think this is the future of payments where passwords and pins become a thing of the past. Tyler, back to you. Josh thank you very much. Coming up on power lunch, a castle that is also a miniature beef producer. This sounds like a story for jane wells. Jane . Tyler, Hearst Castle is surrounded by the largest Grass Fed Beef operation. But whole foods is coming in to eat some of the cost on the beef side. Well have that story after the break. Bring us your aching. And sleep deprived. Bring us those who want to feel well rested and ready to enjoy the morning ahead. Aleve pm. The first to combine a sleep aid. Plus the 12 hour pain relieving strength of aleve. For pain relief that can last until the am. So you. You. And you, can be a morning person again. Aleve pm, for a better am. Welcome back. Big news out of california just an hour or so ago. Governor jerry brown announced new water restriction that is would force cities and towns to cut total uses by a quarter. This is a story our jane wells has been all over and will continue to follow but right now she is at a castle that also includes the largest Grass Fed Beef operation. Its the Hearst Castle in san simeon, california. Hi jane. Hey, ty. Theres not a lot of water here either. The magnificent Hearst Castle is a state park. Its undergoing some renovation now but just as mag nif sendnificent is the land around it. 82,000 acres. Its privately owned, the largest producer of Grass Fed Beef in the country. Its Main Customer is whole foods but with the drought steve hearst has been spending 80,000 a month to bring in grass, reduced his herd by half. Here is what happened when the president of whole foods heard. He said show me the numbers, well split it with you, and they invited a price increase because they understood that everything they do and what we do has to be sustainable. So they what a partner to have to just say, look, if its costing you more well pay more. Now, one reason hearst keeps this as a working ranch is because he sold Development Rights for 95 million in public and private money to the california range land trust. Thats a nonprofit. Its a legal agreement never to develop the property. It allows us to pull some money out of the ranch when, you know, its not right now its not a great time to be a rancher. Its financially difficult to do that, and i think a lot of people are struggling with that. All it takes is nonprofit money which there isnt a lot of but, guys this is what you get. You know jane theres a lot of water behind you but it doesnt do very much good there for the ranchers out in california. How much of that property if any, is subject to irrigation or are they really just so dependent on Mother Nature which has not been cooperating for so long . Here is what is so fascinating, tyler. Yeah, there are some d cell operations trying to get up and running here but its very expensive. Not only is the castle amazeingamazing, the engineering story 100 years ago is amazing. The way they have natural springs on top of a mountain and they have a pipe system which brings it down here to two reservoirs. That said you cant use the toilets down here. They have special chemical toilets. If you were going to build something, forget getting water rights. Everything is very very restricted. As i said the neptune pool is empty right now. It has a leak and theyre fixing it, but even if it wasnt, theyd have a hard time filling it with water and getting away with it at the moment. Jane from one of the most beautiful places on earth, san simeon out in california. Thanks for watching everybody. Get your power lunch to go at powerlunch. Cnbc. Com. Com. Kayla . And closing bell starts right about now. Yes, it does. Welcome to closing bell. Im bill griffeth. And im sara eisen in for kelly evans. After wrapping up a volatile month of march, we are kicking off april on a down beat note. Look at the action in todays market. We were down as much as 200 points on the dow earlier. Of course it was in this hour yesterday that the bottom dropped out for stocks so you have to stay tuned to see what happens next. Oil has been very strong today. Yes. As we watch the story out of iran as the negotiations continue. Yields on the