Transcripts For CNBC Power Lunch 20150506

The markets by commenting on stocks. We have to get to sue herera with a news alert. One minute into the show and i have blown it. No you have not. Absolutely not. We want to be reviewed by the wall street journal. They filed preliminary criminal charges of a unit of Jpmorgan Chase and company for alleged complicity in tax fraud according to document that is the wall street journal reviewed. The fact that preliminary charges have been filed indicates in france that prosecutors suspect the bank of serious wrongdoing and they believe they have gathered enough evidence to launch a formal probe. Now, what are they alleging . They are alleging that jpmorgan and a banking unit went into a series of transactions entered into by 14 executives of the french Investment Firm wendell investments in 2007. They believe jpmorgan funded transactions that allowed executives to pocket 320 million euros. 360 million u. S. Dollars and defer tax payments on the shares. They said they are cooperating with the probe. Back to you. Jpmorgan paid the legal fees in the first three months of the year. We will talk more about that in the 2 00 hour. Lets get back to the top story today. Janet yellin making comments about stock valuation and saying that the stock market is high when it comes to being valued. Lets go to Steve Liesman. Are you surprised as i am that janet yellin once again is stepping in and commenting on equity valuation . I am brian. I think the way to think about it, consider it a deliberate job ownering of the market. Amping up concern with the stock market and she was speaking with imf director at a conference in washington. She was asked about the risks of low Interest Rates and expressed concern about the loan market and about the spreads of high yield bonds and then she went further. Equity market valuations are high and not so high when you compare the returns on equities to the returns on safe assets on bonds which are also very low, but potential determines there. Yellin was not done and warned that term premiums, the compensation for longterm over shortterm bonds could jump sharply. Overall yellin said she saw moderate risks to Financial Stability and her commends represented upgrade from concerns in july when she warned that stocks were overvalued. In march she said they were on the high side. The comments come as Economic Data has been weaker than expected. Adp reporting 169,000 private sector jobs created in april, below the 205 consensus. Not to do so imminently. This appeared to be an effort to use the moment when fed rate hikes are built into the market and not seen as imminent. Try to take the froth out of stock and other markets. Brian . No problem. Thank you very much. Stocks indeed turn lower after they said equity valuations are high right now. Is she right . Lets have a chat. Portfolio manager and chief investment manager at hennessey funds. Thank you very much for joining us. Leaving out whether or not the fed chair should be deliberately jaw boning the market for a moment, do you think she is right . I think she does have a point. Valuations are well above longterm averages. She also though was careful to hedge her point as compared to bonds. They are not overvalued. It depends on what you are looking at. In our view there is no magic number with respect to valuations relative to bonds. Equities are pretty cheap. Generally its not a magic number on valuations that ends up a bull market. We are watching the earnings and thats the right way to approach it. Yellin is running an absolute base relative to bonds . No. Do you disagree . Do you dare to disagree . You have to put it in perspective. Companies in the stock markets a lot more expensive than saix years ago. 18 times earnings and 16 times earnings is not overwhelming. The price of sales is about 1. 8 and our value screens stop at 1. 5. Its not overvalued or overheated. One of the things you have to keep in mind where it keeps pressing on peoples frontal lobe is essentially the market has gone through 9,000 point this is year up and down at the close. We have gone essentially nowhere. Its making people nervous the volatility market and might make janet nervous that we are getting this much volatility in the market. When they famously made comments, the ibb which is the biggest biotech out there is up a cool 30 in that time. Im not sure we need to take her comments that seriously. Im not sure because we saw a clip of talking about the u. S. Markets or if she was talking about overseas markets and generally they are more expensive. The bottom line is biotech and social media. They will have a hard time Going Forward. Lets talk about the risks that are out there. They are moderated and not elevated. In light of the global bond sell off that we have been seeing and some people are concerned about oil prices with regards to inflation. What are you seeing . They are really three concerns that you want to watch carefully this year. Oil is one. Oil prices on the rise is pretty positive as a strong correlation between oil prices. They are good for the equity markets. Higher oil prices tends to be better. And the fact that oil prices are putting in a near term created stability in the earnings stream. We dont worry about the oil prices. The dollar is something we want to watch closely. The dollar stopped rising in march and has been in the process ever since. We want more stability in the dollar. Clearly that has been a big disruptor for earnings. You want to watch the serve carefully. Usually an upward sloping curve is indicative of better prospects prospects, but if that gets out of control and starts to spike higher and moves very quickly, we need to worry. I dont think any of the factors are a worry right now. As a whole they are very supportive of investment, but i think these are things we want to watch Going Forward. By the way, folks, you can get more with powerlunch. Cnbc. Com to see why he is bullish on multinationals. It has something to do with the view on the dollar. Two of the potential threats and maybe the stock market we touched on it a bit. A big jump in the yield recently and oil rising to a new high for 2015. Standing by diana lets start with you. 2. 23 , the highest in two months and maybe taking the toll on one sector of the stock market. The Real Estate Investment trust, they are down nearly 9 over the past month. Brian, you stole my headline. They are now not. They were a big player in the requirement. They offer nice dividens to hunting for yield. Now the move is hitting it. All equity is down and they had been outperforming for the past several years and even in the First Quarter of this year they offered times the return of the s p s p. Why are investors companying the commercial real estate stocks . Seems like a knee jerk reaction if rates are rising. They think they can get better yield somewhere else. But wait there is more. Fundamentals are solid right now. Vakancy is low and rents rising and supply is limited. Commercial real estate values that is the actual prizes of the buildings are up 11 in the last year. Apartment and self storage and lomging and office leading the pack. Names, Boston Properties simon. it can be a buying opportunity. Interestingly, we are starting to see a wave of those going private. Portfolios getting bought and why . You are earning much more than it costs you to finance them. You are upwards of 9 return. Compare that to u. S. And european bond marks even with rising rates. We have lots more on the realty check. As we mentioned, oil hitting another high for the year even as production does not appear to be slowing down. Jacky is live at the nymex. What are people saying about this . Good afternoon. Lets talk about pricing first. We were well over 62 and coming off of the session highs. Still over 61 a barrel and a few things you need to know. The first reason we are bouncing today is the crude Oil Inventory number a drawdown of almost 4 billion barrels. Inventories are coming down as well. Regarding production, you are right. Its not that we are necessarily increasing at this point. We are off of our peak of 9. 4 Million Barrels a day, but flat lining. Traders like the term and like to see the data because it indicates that soon we will start to see declines. Thats why oil prices are going higher. The third component is the demand pick up because we are approaching the summer driving season. We have refineries not doing as much maintenance. I are turning out more product. More people are definitely going to hit the road. Having said that, add to this the geopolitical issues we are watching in libya and yemen. This is the perfect storm to send the prices higher. A lot of people say 65 by memorial day. We can reach that point sooner. Be watchful of oil as we are approaching the next two weeks or so. It probably will move higher. Back to you. Thank you very much. Lets get to dominic with the market flash. Maybe the erroneous reports of a deal . How about the reports currently right now. Western union shares are halted because there was deal speculation. They are getting halted for news and the news is Western Union issues a statement saying that although our policy is not to comment on market rumors or speculation and that continues to be the policy on a Going Forward basis in view of the high level of market activity in our stock. Western union states that current news reports indicating they are in discussions to acquire money gram are not accurate. Some of the shares getting back much of the gains. They were around today and still up big, around 13 . Again, Western Union coming out and saying the reports may be going after money gram international. They are false. You can see a lot of the air coming out of the shares although we should say we are up about 14 . Western union we should point out are still halted. We will see when they reopen and at what level they open at. Back over to you. That are story came out last night and the stock was up nearly 40 , up 13 right now. We will watch that too. Thank you very much. Meantime Glaxo Smithkline shares are higher today and its not about the earnings. Plus, a really cool power pitch. Would you buy a product that promises even when the ice melts, you will never ever have to drink a watered down cocktail again. Raise a glass to power lunch. We are back after this. Rock you anthem call 1800royal caribbean or your travel agent today my name is julia grinberg. I work in Energy Efficiency for pg e here in san francisco. My job is to help my customers save money, save energy and save the environment. When it comes to renewable energy, pg e is absolutely committed to creating a clean energy future. One out of every four solar rooftops in america is in our service area. Its wonderful to work in the city where i live and help my neighbors and i feel like the work that i do reflects that every single day. Together, were building a better california. Large capital could be a potential bidder if they deal with the papers falling through. They bid more than 6 billion. Up more than 2 . Mappedy and brian . Shares of Glaxo Smithkline are higher. Its about the companys new plans. They laid out the strategy after closing the big deal they announced and a couple of months ago gaining the vaccines business and establishing this joint venture and Consumer Products. Saying its really clear that the company has been listening to investors and doubling down in vaccines and the Consumer Products business. They announced plans to hold on to the business saying that the growth has been strong. There was talk about the potential spinning that off. Also acknowledging investor concerns about erosion of the asthma drug advair that is coming under pricing pressure. We caught up with the ceo who said the company is not focused on high prices to drive growth. Take a listen. While there is pressure on price, there is an enormous volume opportunity. Lets put it into context. The next five years, there will be 300 Million Health care consumers starting to buy over overthecounter drugs for the fertile time. A different strategy for Glaxo Smithkline. Thank you very much. Live at the nasdaq in times square. How is google investing its moan . We will be talking to the man who runs Google Ventures plus this weeks power pitch. Up next power pitch. Alcohol in the rocks. As this ice melts, the drink becomes colder smoother and stronger versus any other cocktail. Will there be a melt down . The shot of patron is one ice cube equal to one shot . How long does it take the ice to freeze . Or will the panel toast to it . Stay tuned to find out. It gets talked about. So you can live the way you live, and enjoy all the rewards. Chase sapphire preferred. So you can. Im only in my 60s. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i looked at my options. Then i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans it helps pick up some of what medicare doesnt pay. 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And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i know how important that is. Time now for a boozy power pitch. It cook ticket seconds to convince him that his start up has what it takes to be the next big and cool thing. Whether you are wine spirits or a beer drinker, lets not water it down anymore. May name is Jason Sherman and im the founder and inventor of beyond zero. Every 20 to 30 years, Technology Advances and new categories are created. My company specializes in machines that introduce the new groundbreaking innovative category called in the rocks. Now the liquor is the ice. As this ice melts, the drink becomes colder smoother and stronger versus any other cocktail. Its colder because our ice is just colder. Its smoother for the same reason that you put chicago in the freezer at home. It removes the ethanol bite and allows you to taste the true flavors of the spirits and its stronger because we dont water it down. For those of you out there that are tired of getting watery drinks, we look forward to bringing you the beyond zero experience. Welcome to todays power pitch. You saw the pitch, lets meet the panel. On set with us is the wine director for benchmark restaurants. David creates and develops signature menus at a handful of new york city eat res. Board member of the new york angels. She advises and invests in over two dozen start ups. She is also believe it or not a certified mixologist. Joining us is billionaire businessman known as cofounder of Paul Mitchell pair products and cofounded patron tequila. Would you like to come out . Sure. I work in high end restaurants and they are fastpaced and high volume and my concern with this machine is that how long does it take to freeze and be served to the guests . We have several twices that will be accommodated. One of the main devices is fully automatic. We are able to make ice every two minutes. How many cubes . Four. We have sold one unit and the fully automatic one will run about 10,000. The small one will run about 5,000 for a barrel version and 3,000 for a custom skin version and a storage unit that will run 3,000. If you have a patent pending, have you been challenged especially if you put it out about two years ago . We have been issued a patent on rapid fluid freezing and several other patents that have been filed as applications. Have you been challenged . We have not been challenged. If someone were to swallow one of the cubes as if they were taking a shot would that be okay . Sure. Its like a microwave, but doesnt do any actual physical damage. We had all kinds of Legal Compliance departments and look over the ice and lawyers put them in their mouth. We havent had a problem to this point. Im sure the lawyers enjoyed being on that case. If i order a shot of patron how long would i have to wait until that ice melted before i could drink my shot of patron. I have to be honest. The first thing i ever froze and im not a tequila drinker, but it was patron. I still have the bottle. It starts to melt immediately if you pour more over the top of it. You instantly can taste it. If you dont feel safe for 25 to 30 minutes when we tested earlier, there was a loud hum on the machine. Once we go into the manufacturing, you will be sound dampening and things wont be as hand made. It will definitely bring the volume of the unit down. Do you need to clean the machine each time before you change alcohol . In a regular service environment, we will design it in a way to remove certain parts to comply with food Safety Standards and put them in a sink or a dishwasher to clean everything. Last question to you. With all due respect going back to the shot of patron is one ice cube equal to one shot and will i have to wait 25 to 30 minutes for it to melt . Not at all. One shot is four cubes equal one ounce. Each is a quarter of an ounce. We designed it that way so it would begin to melt. If you want to have it for a service, you will definitely want to pour a mixer to start the process. We heard what jason had to say. We need to know if the panel is in or out. David . This is a cool invention and has great applications for the home use. I dont think for the person who has restaurants that will be quick enough to push out drinks. Because of that reason im out. Im excited about anything that enhances my alcohol experience however im concerned about the high price points and i feel like unless they can get the machine down to a few hundred dollars like a soda stream, they will struggle to reach scale and a mass market. For now im out. What about you john paul . If you get the price down a little bit for on premises places, that will be very, very helpful. I think it has a good futdure because its a gimmick and its a fool fad. Im in. I appreciate the advice and work on the things you mentioned to get the price point down and pick up with the volume. Lets go suck on some ice. Thank you very much. From david, alicia and john paul. Do you agree with the panel . You can tweet us if you are in our out. For more on power pitch, visit power lunch on cnbc. Com. A big move up 17 and also in the past month alone, we will get a live report on why bonds are moving from the pitch. If selfdriving cars make you nervous, wait until you see that. A selfdriving semi tractortrailer truck. Stick around. [container door opening] what makes it an suv is what you can get into it. [container door closing] 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. Breaking news from atlanta. News we followed pretty closely for an idea where the board may be going. He is looking through the q1 gdp reakness saying that underlying fundamentals deliver something of a bounce back in the second quarter. He doesnt say we will get back to strong growth and he does see resumption of 2. 5 to 3 growth. He blamed the weather with transitional effects of the stronger dollar and weaker oil prices. Consumer spending is the key and it remains a puzzle with better Income Growth with lower oil prices. He is locking for evidence. We go to sue herera for the news update. Heres whats happening. Lenders dashed greases hopes for a quick reforms deal in the coming days. The greek government failed to produce enough consessions for a deal at next minutes meeting of eurozone finance minsters. Raul castro gone a series of meetings. Castro and russian Prime Minister discussed strengthening trade and Economic Cooperation between the two countries. Jet blue announcing it will begin offering a daily flight between new york and havana. The move makes it the first Major Carrier to offer a flight to cuba since travel restrictions were eased. The flights will begin in july. Pope francis showed off the best basketball moves in st. Peters square with a little help from new friends. The harlem globetrotters. They met with the hope during his weekly general audience and presented him with a framed number 90 jersey with pope francis across the back making him an honorary globetrotter. Thats it for your cnbc news update. Back to you. Now to the bond market. What is catching your eyes and ears today, buddy . I think its the logistics that are so fascinating. I look at the data of late and im sorry. Dont see the data being the reason that we are looking at rates moving higher. Its in response to or anticipating different policies by central bankers. Pacifically this room and how the market is priced in qe in europe and how its not pricing it in and how its going the other way once it has been implemented. Look at the charts. If we look at the 30year bond yields, we open it up to the first days of december last year. The last time we were this close to 3 . If we look at the 10year, we look no further than christmas. And remember the current high yield for the year made on march 6th and unemployment friday was 224. We are challengeing it as we speak. Keep that for bund yield. One of the fundamentals. It moved up to 60 basis points. What a coincidence its about where ouryear is. And spanish bonds may be the culprit. We havent seen the yields up at these levels since the 28th of november and maybe last but not least, the dollar index at the lowest levels since february as the euro continues to skyrocket putting a bit of a camper on those going into the qe lead up were doing so much better. I like the way goldman put it. They appear to be throwing a dollar tantrum and a buying opportunity for the dollar. After a very opening that saw the dow rise as many as 90 points, the dow is down to the downside. Bob pisani on the stocks exchange. The 2010 flash crash. I wrote about that trader talk. Take a look at the futures. Janet yellin made comments and they moved to the downside. They had a little trouble and the move right down there. That was an issue. The dollar weakened on the poor adp report and that has been a respect for the federals and the energy names. Those are the two sectors and we are in the red on all the major sector. We are getting very heavy volume again today. I mentioned this yesterday. Etfs that short the bond market. Ultra 20 pressuretreasury which is shorting the treasuries. Heavy volume and Interest Rate sensitive groups. Telecom and reit on the downside. Oil is new high territory. The oil and uso also has big volume and tracks a near term future in oil. Finally the big miss our friends have an unusual miss. The stock market not surprising on days that that happened is down. This only happened six times. A big miss like this and the s p traded down 83 of the time. The deline of 0. 6 . Thats exactly what the s p 500 is down. 0. 6 . Very accurately predicting how the market is predicting today. Thank you very much. Google ventures quietly becoming one of the most active capital firms thanks in part to big bets on uber and 23 and me. This firm prefers to fly focusing attention and money on start ups that they hope will literally safety world. In a power lunch exclusive, we are pleased to be joined by the president of Google Ventures. Before we begin our conversation, i want to send condolences to the goggle family for the loss of dan fred inburg as a result of the earthquake. Thank you for saying that. It is well deserved. On that note lets get back to the interview. Is there one or two when deciding to invest a sum of capital . The smaller investors out there, give them advice on one of the two or three key metrics. Let me tell you the two things i thought about the most. What are their vision and values and how big of a company they want to build and how they want to change the world. The second piece is exactly that. How is this going to affect the world . Is it going to help people and make the world a better place . If the answer to those two things is yes, you probably have something interesting. You can basically invest how you please and creek me if im wrong, but you like to focus on machine learning. We learned about the risks of that. Would you want to live to 500 . A lot of people who want to live like almost forever . That does a disservice to the reality of what they are trying to do. To do what scientists and researchers and researchers have done. Try to find ways to prevent, detect and cure disease. We can hopefully live longer healthier, more vigorous lives. Lets go into failure. You are successful. Not everything hits. We have seen things that are secret. Go. What percentage of failure is acceptable. Dont say 0 . You learn more from your mistakes than your hits. What level of failure is acceptable to you . If you are not okay failing and you dont accept that as part of the business you dont do anything significant. You are limited on the downside and unlimited upside. It can be rewarding. No one bats a thousand. What did you learn from the experience from the companys secret which was recently shut down. Did it give you a reminder of what not to invest in . You have a team of people who worked hard and started by capturing a lot of peoples imagination that didnt work out. One of the things that happened that i am not in favor of is selling shares in the company. If they are selling, why are we buying . Something we talked about and not so much what we learned because it didnt work out. Things dont work out despite best efforts and a lot of credit for recognizing cant working and shutting down before the money was gone. Whats next for you . Take us into your crystal ball. Uber and the internet of things. We get that. What excites you . The future of Life Sciences. If you think about smart phones and computers between 1970 and today has been interesting and amazing. If you look at the Life Sciences and what the next 15 years old, you havent seen anything yet. We aint seen nothing yet. Thank you so much. President of Google Ventures. Thank you. Which companies have earned the right to be called cnbc disruptors with twitter, lending club and etsy. We reveal the disruptor 50. Are you ready for selfdriving trucks . Barrelling down the highway with no one behind the wheel. One auto maker is pushing to achieve that goal. Phil le bow has the story for us. If you are driving on i85 north of atlanta, you see a lot of trucks. Is it possible the truck driver wont be driving the truck . That story is coming up on power lunch. Im sue herera with the news alert for you. The nfl is out with the longawaited report on deflate gate. They concluded that it is likely the patriots personnel did purposely deflate footballs in the afc championship game and broke rules in doing so. In addition, the report said it is more probable than not the Quarterback Tom Brady was at least generally aware of the inappropriate activities involving the deflated footballs. Separately they found no deliberate attempts to introduce a nonapproved ball into the game used for kickingrelated plays. The owner said he is disappointed in the findings and said the team will accept the reports conclusions and discipline imposed by the league. They have not decided on what action it might take. We will keep you posted if they do come out with a statement. Back to you. Wow. That is a big story. All of boston is going nah and the rest of america is going yeah. Just as automakers have been racing to develop selfdriving cars the companies are also pushing forward to do the same. Phil below behind the wheel or standing along size of a highway in atlanta for us. . I 85 north sees a lot of trucks and in the feature its possible that the trucks could be at least semi autonomous driven. This comes to us from las vegas where the frayed liner, one of the largest manufacturers unveiled in autonomous drive, semi tractortrailer. Freight liner has been licensed in the state of nevada make the the first state to license a selfdriving semi. It is on highways meaning the drivers wont have to do as much on the long hauls. The truck driver is still in charge and does the monitoring of the truck and the traffic just as much as a pilot would do that. The systems take over and do the everyday steering for the many long hours. Daimler has a lot invested in this and for good reason. It leads market share wise. Those are the large authorities that we see on the long haul routes across the country with 36 of the market. When you are talking about semi sales, so have sales of the trucks. They are expected to be sold making this the second best year ever for semi sales and why . Because long haul demand is growing and there is another story here. Its the fact that the federal government is looking into the increasing number of trafficrelated fatalities when it comes to truck crashes. Not all are caused by trucks crashing, but because of a car crashing into a truck. They are increasing and approximately 4,000 fatalities last year related to truckrelated deaths. If you can have trucks out there, that can increase safety and cut down on the numbers. Back to you. Thats shocking and thank you very much. We are staying in the theme of planes trains automobiles and drones. They are regulating the use of federal drones. They have massive growth potential. Gabe gutierrez has the details. Gabe . We are right here at the drone convention at the observation area. Over there they have been flying a few seconds ago. Now it is at rest. That is a drone that would inspect roads and bridges. The agency is teaming up with several companies to explore regulations and change in regulations for drones. They are studying them. Most interesting to many of the companies here is perhaps sometime down the line easying restrictions online of sight drone operations. Some of these Companies Say that could open up a path for drone deliveries. Packaged deliveries. Amazon and google is interested in that. Another Company Started in australia and testing it out in new zealand. A lot of buzz here. If you are looking for a return on your rin vestment ten years ago the art market was cool. Today it is red hot and you have to hear the auction results. That is straight ahead on power lunch. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens every third tuesday. We have Pattern Recognition Technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. For all the confidence you need. Td ameritrade. You got this. The network that monitors her health. The secure Cloud Services that store her genetic data the servers and software on a mission to find the perfect match. And the mom who gets to hear her daughters heart beat once again. Were helping organizations transform the way they work so they can transform the lives of the people they serve. With xfinity from comcast you can manage your account anytime, anywhere on any device. Just sign into my account to pay bills manage Service Appointments and find answers to your questions. You can even check your connection status on your phone. Now its easier than ever to manage your account. Get started at xfinity. Com myaccount. A quick updates on the markets much we are sitting at the lows. A gain of 91 points. Very early in trade and overall among the lagers are utilities. Sitting around a twomonth high. Here are this hours power points woochl learned that french prosecutors have launched a formal probe against the u. S. Banking unit. Prosecutors suspect that jpmorgan helped french executives avoid taxes in 2007. We learned that Dennis Lockhart is looking past the week and things that underline are Strong Enough to bounce back in q2. They should be followed by a resumption of a pace of growth between 2. 5 and 3 . Finally we learned that the nfl concluded it is likely the patriots personnel did purposely deflate footballs in the afc championship game. It is more probable than not that Quarterback Tom Brady was at least generally aware of the inappropriate activities involving the deflated footballs. Brian . Over to you. Since we have been informed that our microphones were open that entire time steve, your reaction . Wow. I didnt know they concluded that. It just came out. A 96page report. Thats a lot of public statements made. You have the paquiao and the brady stuff. We still have some heroes. When it comes to childrens future millionaires have two very different views. Mr. Robert frank and Steve Liesman are on that story. What are the different views . Millionaires are planning to leave huge fortunes to their kids. We will tell you how much and why they are pessimistic despite all that moan. I believe that children are the future and let them lead the way. The American Dream is still alive with the middle class. We will tell you all about this when we come back. Blap hello. I am technology that is changing investing forever. I am a fully automated Investment Advisory service. I can help you choose the right portfolio. Monitor it. And even rebalance it. Ive been called innovative. Revolutionary. And just plain smart. Id blush at the compliment if i could. But i cant. So. I wont. Say hello at intelligent. Schwab. Com robert frank and Steve Liesman are talking about how the wealthy are feeling about their kids in the future. They plan to leave the vast majority of their kid and leave less than 10 to charity. The majority of millionaires plan to leave at least 1 million to each of their kids with 40 leaving a Million Dollars or more and in nine planning to leave at least 100 million. A huge amount of money about to cascade from one generation to the next. 59 said there is no such thing as too much when it comes to their kids. Most are not putting restrictions on their money. They want to leave their kids as much money as possible. Charities are not going to get as much. 2 3 plan to leave 10 or less to charity. 24 are not giving anything to charity. Millionaires dont feel optimistic despite all that money. 35 say their kids would be financially worse off than they are. Only 32 said their kids would do better. Richer millionaires were the most pessimistic about their kidss future. Thats how the millionaires feel. We will discuss that. There a few controversial comments and we asked the same question in our cnbc all american surveys. The americans nationwide of all the groups. We took the 32 and thats what the millionaires say. Will your kids be better off than you are . If you have more than 100,000. Average americans 49 . These americans average americans are much more optimistic about their kids living better than they will than the millionaires are. We did find interesting differences in our group which is first of all by age. The younger you are, the more oft mystic. You lose that optimism. My guess is robert in the millionaire survey picking up the more pessimism about your kids. Interesting by party, not quite sure to what to do with this. Democrat, 57 believe their kids will live better and gop 41 and independents are right in the little. Whether you are an average american or billionaire, you are doing your kids a disservice if you leave them a lot of money. It may not make them try as hard as you did to make money. Thats a reason why we couldnt see the millionaires as being pessimistic. There is only way to go down. With all this money, they are not as prepared to strive. We want to see that number and how it moves overtime. The idea that about half the americans are optimistic the kids will live better thats a healthy number and what you want to have that people have a sense of hope and optimism. Have we seen it higher or lower . We have never done it before. We conspire to ask the same question of millionaires and average americans and get interesting differences. The optimistic note is privileged is not passed down to other rich kids. Maybe we truly live where the middle class rises and the wealthy go down overtime. That are is the American Dream. Thank you very much. Fascinating. Good stuff. Over to you. Thank you very much. It is now 2 00 eastern on wall street and 11 00 at herb greenbergs house and you are watching the second hour of power lunch. Melissa is off. Mandy could hang around and the dow being slowed down a bit. Down 131 points. Fed chairman janet yellin creating a stir and saying that a washington event where the equity is quite high. Wow. We will get more on that in a moment, but we begin with another mega deal in biotech. They are buying biotech for