Transcripts For CNBC Power Lunch 20160412

What are we watching for, julia . Right now there are 2600 developers and press in the Conference Hall next door. They are here to learn about all the new tools that facebook is going to give developers, tools that that will change the way we as consumers can interact on facebooks various platforms and also could change how facebook eventually makes money. Surely well hear how facebook is putting live video front and center and integrating oculus into facebooks other services. And well also look at how messenger will happen brand interact with other commerce. Mark zuckerbergs keynote is expected to begin any minute. Then well be hearing from a range of other facebook executives. Now the company doesnt give an exact agenda, but we certainly expect to hearr hear from messenger chief david marcus. Well also be talking to him on closing bell after he leaves the stage. Back over to you guys. Thank you julia. Lets talk facebook. The stock are at about 6 this year. Lets bring in the ceo of al beion financial. He recently added facebook to his portfolio. Jeff is a cn blrks bc contributor. He is bearish orch facebook right now. Jason, it seems the onus is on the bulls. The stock up 35 over the past 12 months. What do you need to hear in order to remain this bullish on the stock . I think what we need to see from facebook and from Mark Zuckerberg today is a clear discussion, articulate the strategy of messenger. As julia mentioned the chat box has been the focus of the last couple of weeks. There has been a lot of discussion about what the opportunity there is for facebook to be able to take messenger and monetize the ecommerce portion of it. There is a lot of opportunity there to bring in economics to the business, quality economics to the business to keep the growth race rate going. Meanwhile they are doing a number of other things, video, they are starting to monetize instagram. There is a huge opportunity in their core flag ship app. The rois for those marketing in facebook is huge. Is just seeing Mark Zuckerberg clearly articulate that strategy and be able to execute on that i think is enough to keep the stock going from here. Sorry to interrupt. We are looking at live pictures of Mark Zuckerberg taking the stage at the f 8 making his keynote address. I expect we will be getting updates on that keynote speech as we progress. Is there another 50 upside to this thing . Jason was mentioning the monetizing messenger, also vr. Also insta do you recognize there are many Revenue Streams as reasons to be in the stock . There are, melissa. I agree with a lot of the points fundamentally. But look at the rich valuation. Dont tell me jeff, dont tell me that you are ever in this stock thinking that the valuation was fair. At this point in time, i am. Im going to push back. At this point in time, i am. I think jason brought up the fact that zuckerberg is going to articulate the message. There is a difference between articulate and delivering. He articulated the fact they were going to go into mobile. He did execute. But there is a lag. Right now, facebook is the only fang thats doing well year to date. They are susceptible if we see a Broader Market pull back. Right now, facebook is too rich valuation. Even though the revenue seems clearer than at any other time in its history. But costs are going up. Last quarter, 15 uptick in the operating expenses. They have made wonderful purchases. I love the hoodie. I loved them at 37, loved them at 19. We are seeing 3 moves daily and the implied volatility going into the earnings report. Last word from jason quick. Thank you. We are speaking two different languages. Jeff is talking about trading the stock. We are talking about being owners of the business and looking at this fundamentally. There is a lot to look. If you are on a peg ratio its not expensive. Given the opportunity facebook has to grow it could grow into that valuation. One could argue, 62 in three year, trading at 49 times trailing earnings and 34 times this year, its not expensive. Depends on the view. Great points. Thank you guys. By the way, the stock is off right now. Mark zuckerberg is on the taj at the f8 conference. Will he year notes up for auction. Rick santelli, whats the deal . The demand grade straight up at 1 00 eastern on this dutch auction i gave it a c minus. 23 billion three year notes, first leg of 56 billion in total coupon supply by the treasury. 12. 9 is the yield at auction. Thats close to where it was flipflopping and trading in the one issue market. Last bid to cover for the auction was 2. 71. That far away. And that was the worst, the lowest bid cover all the way back to the summer of 09. We had 56 on indirects. Thats really good. A couple auctions ago we were over 62. That was the best read since november of 09. Directs at 11. 5. Close to ten auction average. C minus. Tomorrow well be looking at tomorrows 20 billion ten year notes. Oil is on the rise here. Crude down a bit right now. Still above 44 per share. We are seeing some of the highest prices of the year. This is all coming after a report that saudi arabia and russia have agreed to follow through with a production freeze regardless of whether or not iran participates. Lets look at both those trades. Wti up 3. 25 to 41. 67. Oil stocks, especially the hard hit beaten up ones are higher today. Speaking of will, chevrons ceo john watson was on cnbc talking about oil. Listen to what he said about a possible stabilization coming to the market. Ultimately, prices are a function of supply and demand and you can get shortterm movements that are a function of sentiment. Ultimately it comes down to supply and demands. When weve seen is a withdrawal of capital in the business. We are in a Resource Business that declines over time without capital. So new projects have been slowed down. Also a lot of short cycle spending. The shale Oil Developments in the u. S. , what we call in fill drilling in the business, that has slowed down measurably. And we are starting to see a supply response that will bring markets into better balance. Rt will, starting to see a supply response. Stabilization may be too strong of a word i think there. Lets be clear. Im not being bearish on oil but 41 a barrel is better than 31 a barrel. When oil broke below 40 on the downside it was panic city and it was too much oil in the world. Suddenly we are talking about stabilization and balance. I dont know that he was overstating much. Weve highlighted the rig count is way down. And jackie deangeles did a great job last week highlighting we are getting ever closer to the fact that production in the United States might finally fall below 9 Million Barrels per day. Thats the thing he is talking about. We have to see the supply come out and the balance the problem is that the wells are lasting longer than people thought. The fracked wells will drain faster. But the wells are lasting longer and producing more than people thought. Thats why that 9 Million Barrels has taken way longer than many sure. You know, months of predictions that was going to fall. I think the question as we sit here at year to date highs on brent and year to date highs on wti, will projects come back on line . What is the response . Is this a self defeating rally that analysts talk about . We dont know yet. We know one thing based on the reporting weve done here and talked to the ceos. The workers are gone. Thats the problem. In north dakota, the people have moved, went back to wherever they come from. One of the best selling pickup trucks in america may have a big problem. And perhaps a new safety concern for all of its owners. The truck, what happened, and the new worries, coming up. patrick 1 whats it like to be the boss of you . patrick 2 pretty great. patrick 1 how about a 10 raise . patrick 2 how about 20 . patrick 1 how about done . patrick 2 thats the kind of control i like. And thats what they give me at national car rental. I can choose any car in the aisle i want without having to ask anyone. Who better to be the boss of you. patrick 1 than me. I mean, you. Us. vo go national. Go like a pro. One of fiat chryslers biggest trucks and biggest sellers has a big problem. We have the story on the dodge ram. What we are talking about are how the ram pickup trucks did in the latest Insurance Institute for Highway Safety crash tests. Look at this video and the results from this crash test. Thats what has some people talking today. They basically did whats called the small overlap test. 40 miles per hour, very conaccident where you clip another vehicle. The overall rating for the ram 1500, marginal, and in particular, the iihs ss the truck structure for the ram is poor. We talked with a ram representative about this. He says we meet all federal Safety Standards and went on to say our vehicles are designed for real world performance and no single test reveals overall real world safety. When you look at the crashes done by the iihs. The ford series, top safety pick, the only pickup truck tested that was deemed a top safety pick. It was also the only pickup truck with a good rating. What is interesting here, over the last three years the new f series is built with aluminum panels. High strength aluminum panels. Everybody likes to suggest these trucks because they have aluminum panels are not as safe or strong. This is another crash test which once again proves that these vehicles with aluminum panels are as safe if not more safe than other pickup trucks. Brian, its an interesting crash test. They did all seven of the major full size pickup trucks and ford it was the only one to get a good rating. How big of a hit has the dodge ram been . How big of a deal is it to fiat chrysler. Its a big sale. Huge sales. In 2009 at the depths of the auto recession, annual sales for the ram 1500, 177,000. Last year they sold almost a half million. They have really amped up the sales of the ram 1500. It is a popular pickup truck. Phil lebeau and the dodge ram story with powerful video there. Phil, thank you very much. Appreciate that. You bet. Just in time for earnings season, annists making big down grades. Well tell you where the pain might be. And more importantly, how to protect your money. Power lunch, back in two. Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card on their auto insurance. Wouldnt a deal involve two parties discussing something . A little give . A little take . Because last time you checked, your rate was just, whatever they say it is. Why not give you some say in the matter . Or even better let your driving do the talking. Liberty mutual righttrack finally puts you in control of your rates. All you have to do is connect, drive and save. In fact, safe driving could save you up to 30 . With 5 off just for signing up. For righttrack. And the discount is good for the life of your policy. To get started, visit a local office or call Liberty Mutual today at take control of your rates. Visit a local office or call see Car Insurance in a whole new light. Liberty Mutual Insurance we believe in the power of active management. Management, by debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Look at this video. A road in Central California is closed. This is happening live on the camera. Wow. After large portion of the street collapsed into a massive sinkhole. Video captured the street crumbling into a sewage line on monday. The hole only big enough for a fiat 500. All right. While speaking of the bottom falling out, just ahead of earnings season many analysts are out there downgrading wellknown names across multiple sectors. Is this a sign of things to come . What does it mean for the Broader Market . Dom is here to walk through the down grades. There is a slew of them on any given dade. Lets look at the notable names. Where are you going shlg im going to the wall. Well look at the names today. L brands. First of all, analyst upgrades and down grades, they happen all the time. More of this activity on the downside front lately. Some stocks had nice runs, stalled out with bad news. Noteworthy ones today. L brands, the victorias secret parent company. Downgraded. Also, avon products, which has inched into positive territory here downgraded by piper jaffray. Neutral on valuation. Starbucks downgraded by Deutsche Bank to hold. Also citing valuation. Among other things. Dominos pizza getting a hold rating by maxim group on valuation. Of course, the Broader Markets already rallied strongly since the jamie diamond bottom and koentd sit far from these record highs. They have appeared to stall out. We are seeing a ratcheting down of expectations ahead of earnings season. You have got a stock market trying to get back towards record highs. Its middling about for the past week or two. You have also got this idea of ratcheting expectations down ahead of earnings is kind of what wall street does ahead of earnings season. Are you a basketball fan . I am. Can we do a basketball analogy. Go ahead. This is less of the 76ers, they are just terrible, no reason to go, than the golden state warriors, they have been great but there was nowhere to go because they have won everything. In other words they have done as well as they can. Im sure the warriors would disagree with you. One game left. Then playoffs, a championship. Anyway. The idea is some of these are valuations calls. Some are that the outlook may not look as good. We will get more color during this earnings season coming up because the companies themselves will say on the record what they think the outlook is going to be. As analysts take down their valuations, they have been coming down for months. Right now the s p is supposed to post 7. 7 profit declines on a year over year basis. But that includes energy. Includes energy. Energy is expected to have a 104 decline in earnings. If you stripped out the energy, which i know some people dont like doing, but some people do it anyway, just for a perspective basis, if the you stripped out the energy component, it would only be down about 2. 5 . So there you go. Lets bring in the fast money traders. Brian kelly and david seeberg. Brian, youve been a longtime bear, bear suited up for firmly months and months and months. As we go into earnings doesnt this provide almost the optimal set up to bring down expectations just before these companies report, especially a high Valuation Company like a starbucks. Yeah. If i had my choice i would rather see analysts upgrading. What i do think is probably more important, though, is the fact that earnings and corporate profits are rolling over and it doesnt look likehere is a Growth Engine to get those accelerating again. David seeberg you like stocks that have high valuations, nike, under armour. Morgan stanley questioning the womens apparel business of and armor. Why do you stick with those stocks. Seems like stocks are nailed to the wall in the s p, 2050 every single day. It is a trade for me. I think the sentiment is so negative here, it has been beaten down so much this is a trade into the quarter. I think the earnings will be fine and i think the stock is going to react in a positive way. Id wait on nike. I think nike could be more risky. I think 55 is your line in the sand being long in the stock in the quarter. As it approaches 60 i would be taking profits at 60ish ahead of the quarter. Again, it depends how the earnings come out. I look at those two names and say they are tradeable names going into earnings. Brian, we talk about it from a traders perspective, but from a valuation basis and a longer term side of things, do you think the stock market is still one that you can buy if you have got a waiting period of six months, a year or 18 months out there . No, not for me. I think what were looking at is the process of rolling into a bear market here. I think weve seen that really since june of 2015. You dont have a Growth Engine for earnings coming up. You know, depending hon on how you look at it there is multiple ways to look at the valuation. P e is the main way. Look at the stock market capitalization to gdp. We are in an overvalued situation at this point in time. Without that Growth Engine i dont know where its going to come from. I dont think if you have a six months, a year, or five year time frame, now at all time highs is the time to buy it. Final question to you. Does a downgrade of starbucks or avon to you signal we are going to a recession and the economy will slow or rather the money has already been made in those stocks . Two different scenarios. Heres the deal, brian, with starbucks in particular, they downgraded the stock, it was a consensus long, everybody that owns the stock knows it is a crowded trade. When you own, your risk is to the downside. Why not downgrade ahead of earning. Its growing at 15 per year for the next five years. A forward multiple, its at 26. 5. Lets say it gets cut to 25. That will bring you down to based on what were expected to report in earnings, roughly 50, around the 53, 54, 55 number. I look at it and say from a value perspective i look at it at that level and say id jump in and buy it long term. For a trade, 55 i think the right number to look into. Thanks, guys, bk. David seeberg, see you late. Up next, an upgrade edition of street talk. This is the first time ever. Keep your spirits up. Power lunch is back in two. Welcome back to power lunch. Im melissa lee. Stocks are just off session highs. Look at this, all ten s p sethors are in the green. Energy stocks leading the gain. Financials the second best performing sector at this hour, being helped because of energy, the concern about exposure to unfunded energy loans. And also of course we are expecting a slew of Bank Earnings later on this week, starting tomorrow morning with j. P. Morgan. Now to sue herera. Heres what is happening at this hour. Today is equal pay day. Democratic president ial candidate Hillary Clinton campaigning in new york taking part in a discussion on the gender pay gap. Some say there isnt really gender pay gap. Well, that is just wrong. The typical Woman Working full time in 2014 was paid 79 of what men were paid. Nearly 2,000 migrants and refugees were rescued off the libyan coast this week. In dramatic video released by the Italian Coast Guard workers repeatedly urging the migrants not to move to prevent their overcrowded boat from tipping over. British Prime Minister cameron and prince harry commemorating the british tourists killed in attacks in tunisia last year. Laying a wreath for the victims on behalf of the queen. A great moment at the phillys game last night. A Philadelphia Police officer who was shot three times in an ambush threw out the first pitch. Officer jesse hart net walked out the to the Pitchers Mound to a heros welcome. And look at. That his girlfriend met him on the mound. Thats when he pulled out an engagement ring. She said yes, and the crowd went wild once again. Doesnt get much better than that. Thats charming. Girls love it. So sweet. Thank you, sue. Back to you. All right. We had a big stock move higher, then a reversal. Maybe another case of a buyout that turned to be to be perhaps false. Dominic chu is on the case. Business world trying sort it out. You can see the stock reaction. Look at the intraday chart. The story developed over the last hour and a half or so. You see the spike in the middle of the day, this after headlines came out, reporting that possibly a group of investors, some in china, perhaps one party here in the u. S. , may have made a quote, unquote bid to buy integrated device technologies. That sent the shares higher by around 20 at one point. Then questions, serious questions arose as to whether or not the bid may have been legitimate or whether or not there were questionable elements to this particular transaction happening. There you can see the shares have come back down. Only up about 2. 5 now on extremely high volume. Thats the way things have set up. We also point out that one of the addresses listed in the s. E. C. Filing may not be in a location thats indicative of an investing operation. That has some people calling it into question. Again, this is an scc filing. We reached out to the company for a comment. They have said no comment right now. Those shares currently up about 2. 5 . I want to toss it to ayman javers in washington, d. C. Who has worked with the sec with regard to this type of incident. Ayman, the question becomes twloo this has happened in the past, can it happen in the future, and what is unique about this story . On this particular question i talked to the sec. They say they have no comment on what is happening here. Remember, just last year we did see a case where there was a fake takeover bid for avon that was an sec filing. What we learned in covering that case is its easier to file documents on the secs socalled edgar document disclosure system than you might think. A lot of people can get access to that system by getting the sec id number and filing documents as they like. What the sec said was its on the filings to make sure the information they put out there is factual and truthful. The sec has no way to fact check all the documents going out in real time. Otherwise they would slow down the disclosure process. The sec said in the past its up to the filers to make sure the information is accurate. We have seen fake bids before. People tend to trade on them, thats why they do them. Have we seen prosecutions as a result . Last year a man was arrested in bulgaria who made thousands of collars of profit on that trading in the avon fake take over bid. If this is a similar case, if it is, they will check into whether they can fine the individuals behind it. You would imagine if someone is doing Something Like that today after last years case they would try to hide the source of this information. But manipulative traders know if you file something with the sec thats a takeover bid you are going to get the stock pop that dom was just talking about. Sure. You trade in advance of that. The secs job is to fine future to who was trading this. We found six times the average daily volume today so far alone. It tells you how many people were actualliate trading on that. House Speaker Paul Ryan expected to make an announcement in washington just after 3 00 this afternoon. John harwood joins us live from washington with the latest. Is the speaker saying yet again he will not accept the president ial nomination, the gop nomination, if it were offered . Exactly. He is going to have a News Conference this afternoon at the Republican National committee once again to try to squash speculation that he has been maneuvering to receive a republican nomination at a contested convention. That speculation hasnt died ever since he told me this when we sat down a few weeks ago about that possibility . I dont see that happening. Im not thinking about it. Im happy where i am. You know, this is not dont intend to do it . You are not making a certainlian statement about that, though. I havent given any thought to this. People say what about the contested convention . I said, well, there are a lot of people running for president. Well see. Who knows. Today his aides say he will make a sherman statement because the previous statements he has made about not accepting a republican nomination havent been believed. You have a spade of stories every time he has a fundraiser or a video or ad announcement. People look at that as precampaign. If we get to a convested convention in cleveland, which is something weve never seen since 1976, all bets are off and we dont know what would happen in that circumstance. But paul ryan is going to try to put that speculation to rest for now, this afternoon. For now. All right. Thank you very much john. Lets bring in larry kudlow. Ridiculous on its face. I havent even thought about it. I mean, come on, thats charming. Its charming. Give me a break. You have spoken with him recently . I have. And . I continue to get the strong impression he is not going to run. I have spoken to staff people. I get the same impression. He has basically said it a hundred times. I want to clarify one thing. When sherman said if nominated i will not run, if elected, i will not serve was in a the statement sherman made . Because i know coolidge, in his press release in 1928, which broke my heart at the time, i think he said i choose not to run. He used as view words as possible. He was a economical speaking speaker and we like that. I, by the way am a huge admirer of paul ryan. He is terrific. There are so many rules that would have to be broken. You would disenfranchise so Many Republican voters who have cost principally for trump didnt that already happen in colorado, larry . Didnt that just happened this week, or this weekend . I dont think so. Is it a convoluted process in colorado . Yes. But there were caucuses at the precinct level, then you build it up to the congressional level and state level. Mr. Trump has got work to do on that. No question. He has paul mannaford, an ace. In michigan, trump joutd jocked people in michigan with john kasichs help. Trump said yes im straying, but not much, he would consider veep kasich, scott walker, and marco rubio. Thats the first time weve heard a sort of unifying thing from mr. Trump. Thats all interesting. But ryan is not going to run. If you proceed the criticism of trump related to colorado, why didnt you get your game on in understanding how it is that delegates get chosen and how they choose them . I mean, he seemed to be completely amiss on his ground game if he really wants the nomination. By his own acknowledge, except for colorado. He got angry about that. Yeah, they have been well behind the curve. And paul mannaford, who is a veteran strong smart guy is going to take a major role in the campaign. They are going to work as i said, i believe it was over the weekend, they did very well in michigan in the jockeying and beat cruz. And actually, kasich was working with trump on those delegates. So thats kind of an interesting development. What do you make of this super pac thats, you know, getting all the wall street billionaires to go antitrump . This is an antitrump pac. Do you think they will have any effect whatsoever. Billionaires, they should strive for diverse portfolios, if you ask me. With a heavy emphasis on dividends. Here, they are throwing everything at him. You are right. Everything. So youve got the fox news poll. Youve got to nbc maris poll giving trump 54 . Roughly 30 Percentage Points kind john kasich, and cruz coming in last in new york. If those numbers are remotely right, trump is still in the game for first ballot. Still in the game. On the other side. Ten being panic, one being everything is fine, where should Hillary Clinton be right now . In new york. Senator from new york and her lead is slipping. Every day. Everything is fine is what. Ten is total panic. One is everything is fine, no worries. I have to believe they are in the five or seven percent zone. Bernie is doing a good job he has a lot of money. 45 Million Dollars average donation is 27 a piece. I wish senator sanders would call. Im here, here to help, i have ideas on how you want to get on that ticket. If there is anything i can do in the process, i would love to. He used to come on the color report. Senator clinton is a senator from new york. However, Bernie Sanders is actually from new york. There is a real debate over if either are true new yorkers. I love the pictures when she puts on her new york yaengs baseball hat. Its pristine. Just bought. She is from the suburbs of chicago, not new york. I dont blame her. Your point is well taken. Sanders is taking a real run. He is even sort of lashing back. With all the concerns, all the complaints about what the Republican Party might or might not do to trump during the process, they have done it in advance in the democratic party. Bernie sanders won wisconsin, Hillary Clinton got more delegates. It doesnt make the democrats are worse. Yes. The super delegates the republicans have a little bit of that. But the dems are much, much, you take out the super delegates from hillarys total i believe it is a 100 delegate spread. It is a cool story. From super delegates to super dallas. We want to bring in steve liesman. He sat down with the Dallas Federal Reserve bank mr. Caplan. What did he say. He hit on a couple issues that weve been talking a lot about on this show. On monetary, he san jose himself to be a patient policy maker. April is out. June is a possibility. Wants to see the data rebound. Is not in a hurry to raise rates. Thinks there will be a rebound and wants to see it first. We talk about the issue of tax inversion. Lets listen to what he said. One of the reasons you are seeing this trend of Companies Looking more at taxation when revenue, growth, and margin growth are harder to come by, people look at every possible cost aspect they can improve, and thats the reason they are now looking more at taxes. So i understand why the treasury did what it did. I dont think it is a substitute and i dont think they would say it is a substitute for more comprehensive reform which takes into account that our companies derive much more of the revenues and profits from ougs the United States. Three other things we talked about. Energy loans, he said there will be losses at the banks but doesnt see it as systemic. On building the wall, he said, look, we need a sensible way to handle immigration, which is a key for u. S. Economic growth. Finally on too big to fail, doesnt see it as the Biggest Issue because banks have been leveraging and the capital is higher. There is no central banker no matter how dovish who wants to be at zero and certainly who wants to be negative. What you hear around the world is this call for Structural Reforms in japan, in europe, and the United States to do things that will raise the underlying growth rate so that we dont have to rely only on monetary policy. And the thing weve been chronicling on this show week after week is more of that human cry from the central bankers trying to tell the fiscal side and the lawmakers to get their act together and reform the tax system, especially here in the states. Lets bring larry back into the discussion. What do you think of what caplan said . First off, i cant find any reason why the fed would be raising Interest Rates right now. If anything, the economy is slowing. I look back to the Third Quarter last year, 2 , fourth quarter, 1. 4. Looks like the First Quarter will be flat. We are going in the wrong direction, dipping below two. Lets say they want to do 2 in the back half of the year. Do the elections stop them from making a hike . No. I never bought into that argument and i dont think the evidence supports that. Let me go back, on the inflation side, import prices today, low. Minus 6. 5 for the last 12 months. Feds pced deflator is 1 year on year. I dont see any evidence of inflation. Real Interest Rates five year treasury on the real rate is bind us 50 basis. Why on earth with would you even think about. There is a different way. Aside from the data. The data says no raise. But its argued that these kinds of low rates are artificially distorting asset prices and that no one knows how to value stuff because everybody is putting money steve is not there anymore. I was going very well larry and you heard me. People are putting things into things they normally wouldnt. So they want to normalize asset price values. I think bill rose is right. He is a smart guy. I just dont think the timing is correct right now. My plan all along, we need significant tax reform, particularly the business tax. I agree with mr. Caplan on that. The way to do this is smack down the Corporate Tax rates or large and Small Businesses. You do that, the economy will pop up. Well get investment. Then the fed can follow market rates higher and get back to normal. You cant lead with the fed. Do you feel like the fed is waiting for perfection that were never going to get . I dont know about that, but to larrys point, the United States, japan, europe, every single one of these countries, continents, whatever, were supposed to do all these things to make their economies grow. And because their federal reserves or their Central Banks keep money so easy there is no pressure for them to ever do anything. If italian Interest Rates were back at 7 on the ten year they would be doing more. The Central Banks make it easy for them, so then they dont do anything. On the fiscal side. Yes. I think you make an important point. This idea of Central Banks as super men is just crazy. They are not well central planners. We are seeing that now. The stuff they are doing is not working. We do treat them sometimes like they are super. Europe, which has lower Corporate Tax rates, they should cut the back tax, the income tax. They have got regulations we have never dreamed up. Incredible. Right. Japan is the worst. Taxes are high, regulationing are impossible. They have moved away from fiscal, leaned on monetary. Its all wrong. Its all wrong. Its all backwards. Thats why the World Economy is not growing. Thats all you know. Larry, a pleasure. Steve, if you are still out there, by the way, safe travels. Good job, steve. All right a quick market check, see if the dow is still up triple digits at this point. Yes, it is, higher by 153 points. Nasdaq is higher by 25. S p higher by 16. Anywhere between a half and a full percent. Crude is higher, above 42 per barrel. Back in two minutes. Introducing the 241 horsepower lexus is 200 turbo. With almost twenty percent more base horsepower. Once driven, theres no going back. Whoa. Whats going on here . Oh hey allison. Im val, the orange money retirement squirrel from voya. Val from voya . Yeah, val from voya. Quick question, what are voya retirement squirrels doing in my house . Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . No, im more like a metaphor. Okay, a spokesmetaphor. No, im. Youre a spokesmetaphor. Yeah. Ok. See how voya can help you get organized at voya. Com. Freshly made in the japanese tokyosttradition. Noodles. When you cook with incredible ingredients. You make incredible meals. Get your first two meals free at blueapron. Com cook. Sir ridley scott, legendary filmmaker. Are you a film buff, watson . No, but i am studying the visual storytelling in your movies. You know, its amazing how much information is contained in a single image. One visual can make or break a film. I am analyzing images for factory managers, sales people and healthcare professionals. Thats good watson. But not exactly movie material. Perhaps the healthcare professional could be played by matt damon. Youre learning, kid. Another gain for gold prices. They are closing for the session. 1259 even. Up by a buck an ounce. The real story in the mek metals complex is over here. Im going to be talking about silver here. Up by 1. 4 . This is in fact a five and a half month high. The reason this is so important, a lot of people see the gain of silver as confirmation of the rally we have seen year to date in gold. There is a lot of bullishness built in with this rise in silver. Copper, 2. 7 to the up side. Back to the bond market. Rick santelli is tracking all the action at the cme. If you look at the intraday of threes the auctions we just completed, 24 billion of them you can see we did spike a little bit, make our high yield pass at 1 00 eastern. More important, open the charts up to the end of march. On a closing yield basis, we havent closed a three year note above this current level since march 30th. On an intraday basis of course we traded that high as recently as april 6th. If you look at the intrathe 30 down the curve you will say it also paid attention. Yesterdays low on the dollar was 107. 63. Thats a 17month low. Today it is a reversal in favor of the dollar. One final point. The boone closed at 16 basis points 16, the highest yield close since the 24th of march. We want to watch rates, especially at this point. Thank you rick. The market rallying today when it comes to stocks, triple digit gain for the dow. Good numbers this earning season or not . Is that going to drive stocks higher . With us is you are nestos ramos, also tim an. Ernesto, what do you think of the market here. Alcoa last night. The banks later on this week . I think the earnings season is not going to be so good. We are going for negative 5 earnings year on year growth. But the market has priced that in and is looking to the next 24 months. 10 gain, s p . Earnings. Earnings. The market should track that roughly. You think a positive year. Yes, a positive year. You would be putting money to work right now, adding to this market . Absolutely. There is a lot of Short Interest out there, levels of Short Interest building up. That tells us there is a lot of skepticism about the rally. And that is usually a good contrary indicator to what the market will do. Auto zone, mcdonalds and verizon. Thats what ernesto is referencing. Tim . Negative sentiment in the marketplace. But the market is trading a lot of psychology at this point in time. The correlation of the equity markets equity market moves you seei on a day to day basis very much tied to oil prices. As ernesto said it is based on forward expectations of oil prices. There is a meeting this weekend from oil producers. They are hoping there is going to be a production freeze. So that correlative effect would be a positive for the Energy Sector and more importantly for us, for the financials. A lot of financials have some unfunded liabilities out there to the Oil Companies and they are hoping that it will abate as Energy Prices at this point in time stabilize. What kind of message do you hope to hear from the financials, besides a good one. As we get through reporting, what are you watching for . We are hoping for exposures in the Energy Sector arent as bad as we thought. And eventually we may be right in terms of the fed raising rates that effectively a steep in the yield curve and essentially improving interest margins should help the sector going forward. Thank you, guys. Ernesto and tim. You can go to power lunch. Cnbc. Com see a large cap stock in the consumer space that ernesto likes right now. We have more market coverage straight ahead. Power lunch is back in two minutes. The call just came in. Shes about to arrive. And with her, a flood of potential patients. A deluge of digital records. Xrays, mris. All on account. Of penelope. But with the help of at t, and a network that scales up and down ondemand, this hospital can be ready. Giving them the agility to be flexible reliable. Because no one knows like at t. Welcome back to power lunch. Im julia boor citizen live in San Francisco at facebooks f 8 development conference. The ceo Mark Zuckerberg just left the stage where he spoke about his long term five year and ten year visions for the company. He talked about how he wants to connect billions more people to the internet. He also talked about how near term they are giving developers more tools for Facebook Messenger as well as Live Streaming video. Take a listen. Now you can build the ability to stream video into facebook live. For example, this drone flying from the back of the room. Zkerberg also announcing a messenger platform, artificial intelligence, Natural Services to help brands communicate directly with people. Cnn will be able to send custom stories or you will be able to order flowers from 1800flowers without everlying the messenger app. Whats app, people are sending 60 billion messages per day, three times as many messages that are sent via sms. Power lunch basketball back in two minutes. Evy has a number. Icy but not every Insurance Company understands the life behind it. For those whove served and the families that have supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. Im spending too muchs for time hiringnter. Cnn will be able to send custom announcer need to hire fast . Go to ziprecruiter. Com and post your job to over 100 of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. announcer over 400,000 businesses have already used ziprecruiter. And now you can use ziprecruiter for free. Go to ziprecruiter. Com offer2 it is 2 00 p. M. On wall street. Stocks are movely nicely higher. The dow with a nice steady climb throughout the day. We are up right now about 160 points on the Dow Jones Industrial average. Caterpillar and chevron the two best performers. The s p 500, the nasdaq as well as the russel 2000 all up higher as well. We call that up across the board. Oil is hitting its high for the year. There is one sort of x factor that might derail the crude comeback. Listen to what chevrons ceo john watson said earlier today on cnbc asia. A wild card is what about opec do and what will the producing nation does . There will there be collaborations to limit increases or reducing supply . That can affect prices. So you will see speculation around that in the short run, and ultimately in those meetings. Ultimately its going to come down to supply and demand. Lets bring in rbc capitals head of Global Trading and security. Are we closer to Global Supply demand balance . We are moving in the right direction. We are not there yet . Not there yet. But we expected it to be 800 million in q 2. It was 1. 2 in q one. When we get into q four thats when well get into balance. Thats when we think we will have a 50 price. Lot of talk to that saudi arabia and russia agreed to a freeze. Arent they agreeing to a freeze. Every other day. First of all the story changes every other day. Everybody is frooed freezing at record output. Can we add more. Nobody besides iran has any more in the tank at this point so the freeze makes sense. I continue to find it hard to believe. They talk out of both sides of their mouth. I think it will come down to a meeting that ends in disarray on sunday. I think there is more in the tank, too. I think there is a chance that libyas Oil Production rebound this is year if their government comes together. And i want to know where the saudi arabia kuwait deal to restart the jaffe field plays into this. Its either a freeze happens or a freeze doesnt happen. And there is a isoff either way. John . This is the mother of all buy the rumor sell the news events if you ask me. Downside. Downside. There is one scenario where it can move higher. If you get an agreement and the statement says all options are on the table. There might be a cut later in the year. I think you have to have a expectation that a freeze is a corrective first step. You believe that . It is not my base case. You basically dont believe that. We are having countries being downgraded going into this meeting. Saudi arabia was downgraded for the First Time Since 2004. Do they care . I think they do. They are going to have to borrow this year. This is not an easy situation, even for saudi arabia. Is iran really going to go . I think iran loves to show up and talk. I think iran will be there. But the question is, you are going to have to find a creative solution. At one point he said he would go only if he had time. I dont know what else he would be doing. Trying to sale their wears. They just got back from india where they had a trade mission to increase their market share. This is part of my argument why this falls apart. The battle rages on between saudi arabia and iran. The collective pain they suffered from the pain they suffered from the low oil prices. But yet they want the same thing ultimately. Not on a religious level. But on an economic level. Not for each other. They want it at the expense of each other. Is there hatred for each other that deep, game of chicken the cars may actually hit . They hate each other but they all want to stay in power. The question becomes can you keep your people away from the palace gates . There is an old saying in greece, i dont mind if my goat dies if yours does too. Thats a very greek thing to say. Thats where im coming from, thats my analysis. I look at it more from the game of thrones. At the end of the day im sitting in my thrown and im in power. Except everybody keeps dying. Who is going to be last. Im going to be last man standing. Do you think well get real news out of doha . I dont think they want it sending in disarray. I think they will say well meet again irtsz still a sell off. Every scenario is a sell the news scenario. Whats the percentage of that happening . I think it is a 20 chance. 20 chance we will see a higher trade in oil on monday. All right. Another thing about the demand thats growing, a lot of it is from china who built out a ton of Refining Capacity. They make 150 of the diesel they need. They have become net exporters. Even that story rings refined product. Not of imported crude. Thats what im saying the argument that the demand for crude oil is growing, a lot it of it has to do with china which has over built their Refining Capacity as they had overbuilt their steel capacity. We are talking about steel later on in the show. Right now. From oil to steel. Steel up 121 year to date. Leaders in the Manufacturing Sector say Steel Companies are struggling because china isnt playing fair and the u. S. Government hasnt done much to help here at home. How bad is the impact of global steel overcapacity particularly when it comes to china. Lets bring in scott paul and claud barfield. Guys, good to have you here. Scott whats the problem . When i see u. S. Steel sharply higher, it doesnt suggest to me there is an issue in the Steel Industry, especially in the United States. I mean it is ugs steel. Sure. Stocks are day to day. Take that ticker back five years and it paints a vastly different picture for not only u. S. Steel but a lot of the other Metals Companies in the United States. What is happening is that you have a lean and efficient u. S. Industry trying to compete against the chinese government, which owns nine out of the ten largest Steel Companies in the world. And the chinese manufacturers keep making a lot of steel, demand has been declining in china. And so the world is faced with this overcapacity glut. To put it into perspective, the United States makes about 100 million tons of steel a year. A little under that. The estimated global overcapacity in steel right now is 700 million tons. So seven times the u. S. Production. And i will say also that any of the producers that are still in business in the United States today, they have survived the economic equivalent of category 5 hurricanes, with the great recession, with the Asian Financial crisis in the light naents. Late 90s. They are lean. They need relief. They are getting flood by the chinese. I have heard them say there is way too much steel in the chinese field. They know they have got a problem yet they dont want to do anything about it, you have seen what happens to u. S. Steel prices and as a result u. S. Workers are laid off. Is that a problem or not . What about the steel users, the using industries, the boeing, automobiles, automobile parts, all of the other manufacturers that use steel really are benefiting. This is a bonus to them from the chinese because they are selling it below the normal prices. So all this means is that the downstream producers are really benefiting. We should really not think of just in terms the steel producers but in term of the total economic on the United States. And that is certainly positive. Its great news obviously for steel consumers, claud, but we know that yeah, but the steel consumer industry is 16 times larger than the steel producing industry. So thats where the economic benefit is. I see the tradeoff there. What about the idea that you are facing off against a government subsidized business . When we talk about world trade, we talk about a fair playing field. And that is if you are a steel producer in the United States, it seems incredibly unfair. Well, i think i think as your introduction said, this is a worldwide problem. I think we are moving towards a worldwide attempt to downsize the industry across the board worldwide. We also have in place and are using counterveiling duty, and antidumping provisions of our laws against the chinese and against others. So i think that ultimately is not a smart idea because if you put an antidumping duty on a steel produced from china or any place else, you are raising the price of it, which means it raises the price for boeing or raises the price for general motors. Scott, what do you make of that . Okay, so steel producers get hurt. But steel consumers, which are a much bigger group of companies and individuals in this country and therefore perhaps employ more people are benefiting, thereof the tradeoff when you look at the cost benefit its okay. I wish that were the case. Unfortunately, its not. I would add that that sector of the economy doing reasonably well of. But to take clauds argument to the extreme, its a great thing getting prices when you are buying counterfeit prices off the back of a truck. There is nothing kourptd fit about this good. There is a consequence to this. And the other aspect of this, michele, is that since 2000, china has made commitments to try to move towards a marketbased economy. And it has broken every one of those. The United States has zero tariffs on steel, and its incumbent upon the Steel Industry or any other industry to file cases that takes a lengthy process. Meanwhile there are tens of thousands of workers who are getting laid off. And a steel job supports seven other jobs. I just saw reports today of a plant that closed in alabama. The Walmart Super center had to close. The Police Service had to close down. There is a Ripple Effect that you see in addition to our national security. And i cant imagine that were going to be able to depend on china if we take this to its logical conclusion of supplying the armor plate to build our naval ships patrolling the south china see. You are going places we sbnt intend for. Appreciate it. Scott, claud, thank you for joining us. Coming you, trading nation. The only stock in the s p up more than 100 this year is steel. The politics of zika intensifying in the u. S. With 1. 9 billion in emergency funding on the line. So far, 600 million have been diverted from ebola funds to help zika efforts. But Health Officials are saying this is far from enough funding with 40 states now seeing travelrelated zika cases. Its finding the key to combatting zika here in the United States. We have the director of Infection Control and National Emerging infectious diseases. And dr. Tim three flanagan is from the Brown University deputy of medicine. Great to have you both doctors. Dr. Badelia, the fact we are diverting funds from the ebola fund is alarming. That seems like we are behind the eight ball on two frnts frontsz now . I think the traffic stree, the money, the 600 million that was left over was meant for infrastructure, meant to create systems to diagnosis patients faster, take care of them in a better way. It just seems like the next time the cases rise up again we might be in the same spot. Its disheartening. We just showed a map of the United States, the states in the red where there are travel associated zika cases. Its practically covering the entire country at this point. Even if p e we put more funding to work. What can be done . Since we dont have vaccines, how long is the cycle to actually get the vaccine out there . Its going to be quite a long time. The biggest problem is that the mosquito, the aidese egypt eye mosquitos is present even in the United States. The cdc predicts there is high likelihood of having vaek transmitted in the United States, particularly in states like florida, and texas, and hawaii. The cdc is doing a great job trying to mobilize communities. Thats going to be the key to key crease exposure for pregnant women. Thats going to have to happen at the community level. And so this is about Community Engagement and Community Mobilization to really ramp up prevention efforts. Right, we are talking about off the shelf vaccines. But also there is an effort to genetically alter mosquitos in order to curve future generations. If the forefront is sort of at the community level, is the leadership there either from the top, from the government down . Or who is leading that effort to make sure that these communities that are in the states that have the most cases, that they will be well equipped to fight this disease . You know, i want the agree with dr. Flanagan. But the one thing i want to point out. This is such an evolving picture. Even from the beginning of this epidemic, you know, since we recognize its present in brazil and the americas, were discovering this can cause now neurological conditions. There is conversation that other species of mosquitos that are seen in broader areas of the u. S. Carry the virus but dont know if they can effectively transmit. We need more research. Certainly it needs to be a centralized effort but also needs to be diagnosing women in a timely fashion if they are infected. And then as dr. Flanagan said mobilizing communities to ensure that we keep mosquito populations low. I think it takes all those levels, surveillance, response, and research. I want to ask you each one quick question, would either of you go to the olympics in brazil, dr. Flanagan . I would, and i would follow the cdc advice. The key to protect pregnant women. This is a huge problem for peg women. If you are not pregnant you dont get terribly ill. Dr. Badeli, you outlined the fact the fact that we dont know a lot about the disease or the longer term damage that would happen. Would you . I would. I want to make a point. I think politicizing Public Health in a situation like this, i think it erodes the Publics Trust in the public good. Pat Buchanan Health is the reason we dont die of tuberculosis anymore. I think thats the bigger issue. Thank you both for your team. Just one point. Quickly dr. Flanagan. There is great advice on cdc. Gov. Vital signs. They will tell you how to limit exposure and protect yourself. Thanks for the tips. Heres whats on the menu for power lunch. We talked about stocks getting downgraded. Up next weve got five upgrades, five stocks analysts think are heading higher. We dont know who leaked the panama documents. Which hotel in america is the favorite of the rich around the world . Well have that answer. It is really surprising. Trust me. Much more power lunch straight ahead. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. They found out whos been who . Cking into our network. Guess. I dont know, some kids in a basement . You watch too many movies. Who . A Small Business in china. A business . They work nine to five. They take lunch hours. Like a job . Like a job. We tracked them. How did we do that . We have some new guys defending our network. New guys . Well, theyre not that new. Theyve been defending things for a long time. [ digital typewriting ] its not just security. Its defense. Bae systems. Time for street talk. Here we go. Stock number one, blackstone group. Positive on private equity, spresh blackstone group. Analysts said that despite modest realizations, they expect Capital Formation remained positive. They like the valuation of some of these stocks like a blackstone because estimated forward yields. The stock is undervalued. Raised from 33 to 30. 20 upside. There have been concerns about its exposure, particular commercial real estate as well as energy exposure. Thats partly why the stock has been trading lower. This is a nice upgrade. Next stock, Stanley Black and decker. Raymond james raising estimates above consensus as well as guidance. Doityourself trends with the weaker u. S. Dollar should do it, too. Market performance also. The analysts went out said that since january 28th the stock up 15 . Twice the s p 500. All these doityourself stocks. Remodelling your home, fixing your car, laying down tile, they have all had ain bid. Renovation nation. Thats a good show. It should be. It should be. Jinx. Next up, steel. Goldman sachs upgrading this global steel maker adding it to the conviction buy list, says that chinas steel market finally looks to be on the cusp of a near term inflection point. Lower capacity, lower inventory, in other words chinas steel market is slowing down. They think the valuation on mtl is fair and that recent spot price momentum should help the stock. Their target is in euros, 5. 4. 35 in u. S. Dollar terms. It was also reinstated a buy at bank of America Merrill lynch as well. It has had a heck of a run. Goldman and b of a they are you pushing that stock. We talked about the balance in oil. Same thing for steel. Next up, credit swiss is bullish of three east coast reads. Major reason for that, the weakness in tech dominated west coast markets. Vernato gets upgraded to an outperform. Slg to a neutral. Net asset values. Ofc Corporate Office property specializes in government and Cyber Intelligence portfolios. So they do offices for those sorts of things, data centers. All. That that is deleveraging, which means it could be a place to hide during increased market volatility. Corporate offices based inia in the d. C. Halo. These are not retailers. This is the federal government. Cyber and intelligence. Thats not shutting down as far as we know right now. No. I drove by the nsa headquarters the other day. Uhhuh. But they already knew it. Finally it is a true story, mohawk, mkm partners starting coverage with a buy rating. Maybe another diy stock a 244 price target. 25 upside. Analyst Megan Mcgrath thinks their diversified end market and new products should be big. International spending should drive another billion plus in sales over the next couple of years. Mohawk a carpet and tile maker. 194, 244 price target. Mkm bullish on mohawk. 6 on the year. Outperforming the market. With that, street talk, down. Later on, beating taco bell, and beating chipotle, and beating chuys and all the other spannicish and maxx mexican chains with a cart. That story on cnbc make it coming up. The odds of catching a foul ball at a baseball game are very low. So low, probably most of us have never even been close. Which and what makes this next story even more amazing than it already is. A fan in detroit caught four foul balls during last nights game, and another one according to batting practice. Guys, five foul balls in one day. He says they were all hit within a few feet of his seat. He didnt trample any children to get to them. In fact he gave the balls away to young fans. He needs to buy a lottery ticket. Speaking of sports and money. The ncaa announcing an extension of march madness basketball through 2032. Says here i will be 40 that year. Me, too. Brian, no comment. No, im well past that. Were joking obviously. A big gain for oil right now. Will we get a new closing high for the year. Actually we have. Well take you live to the my max for the closing trade. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. announcer need to hire fast . Go to ziprecruiter. Com and post your job to over 100 of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. announcer over 400,000 businesses have already used ziprecruiter. And now you can use ziprecruiter for free. Go to ziprecruiter. Com offer2 hi, everybody. Im sue herera. Here is your cnbc news update at this hour. President obama speaking at the seewell Beaumont House in washington, d. C. Designating the one time headquarters of the National Womens party a national monument, this on equal pay day. Dwal pay for equal work should be a fundamental principle of our economy. Its the idea that whether you are a high school teacher, a business executive, or a professional soccer player, or tennis player, your work should be equally valued and rewarded. Gop president ial candidate john kasich campaigning in new york, delivering a strong warning to his party about what he called the two paths facing the country. He urged voters against going down a dark path and one that encouraging fear. Authorities say a rail dispatcher in southern germany was using his cell phone to play video games shortly before two trains that he was in charge of collided head on in february, killing 11 people. He was arrested on suspicion of negligent homicide. And david guest a music producer and former president of liza minelli has died in a hotel. An autopsy will be performed to determine the cause of death. He was a friend of Michael Jackson and produced an Award Winning documentary about him. He was 62 years old. That is the news update at this hour. Thank you sue. Oil today getting close to its 2016 highs. Lets go to Jackie Deangelis at the my necks. We started the day with traders saying will we close over 40 again. Over 41 . And then will we close over 42 . We did. 42. 17. I believe that is a new 2016 high for wti. The move was based on the led lines from the Russian News Agency that the russians and the saudis agreed on some sort of an accord to freeze production. There is a meeting on sunday in doha. Well see whether this is true. One camp of people taking this with a grain of salt. Saying unless you get iran into the accord nothing is going to happen. The other group saying there is an event risk here and we could get something on sunday. The 200 Day Moving Average sets up the 42. 04 mark as a support level rather than a resistance level. A lot of people think price also go higher from here. If we get a deal 50 crude isnt out of the question at this point. Most people dont like to pay higher gasoline prices, but if you have a 402 k or a 429, hire oil prices are good for you. Does this matter for the Oil Companies . Joining us mike kelly, managing director of Seaport Global securities. Good the see you on set. Usually you are remote from houston. Does 41 or 42 matter more for the companies you cover than 32 bucks per barrel. For the elite companies, wez texas, rsp, konko, those companies could start getting back to work. But for the vast majority of u. S. Operators and operators throughout the world, 42 sill a lousy price. We talk about oh, look we are back to 42. I remember we broke through 42 on the downside and everybody panicked. You cant have it both ways. 42 cant be good and also be bad. It is a specific number . I agree. For us, its over 50 is where you start to see growth coming back to the equation here in the u. S. So we are still a ways away. We talked about this being a Balance Sheet game now. Its who can manage their costs, who can cut costs, who has the lower priced asets, whose Balance Sheets look good. The one that sticks out, pioneer natural resources. They could issue equity at will. They are in a net cash position. And they have, by the way. They have. A company yesterday, Synergy Resources went out and did 150 million equity raise. There has been 900 billion of equity raised from the e and ps recently. People are going to hate this question. If you are at 42 bucks, i have heard people suggest there is a zombie price where the industry is not growing, nobody is healing, but you are kinds of making enough to limp along but you are not cleansing out the weak performers in order the really bring sly demand in balance. This may be that price. Do you agree . I agree. In the 45 level guys will be able to hang on. But they keep pumping and then supply demand doesnt get better because they are kind of hanging on. Thats the tricky thing, too. If you are not pumping, you are going down the death spiral because you stop, you are down 30 in terms of production next year and your cash flows go with it. You look worse on a leverage metric perspective, valuation, everything. So you are highly incentivized to always keep it flowing. If you are on the radio, it is a million and a half barrels globally oversupplied. A million and a half barrels produced more than needed. When does that stop. We see it getting in balance next year. The math is easy. You would have to have demand growth, a Million Barrels plus year over other. You would have to have nonopec fall a Million Barrels year over year and not have demand change. Coming up, a surprising accusation about who may actually be behind the Panama Papers. Plus, is there a legitimate need for bank secrecy sometimes . Some say no way. Others say there may be. Well have that debate coming up next on power lunch. When the doctors dont look you in the eye, you know its not good. When i went out i had to put on a wig. I had no hair. Then when i got home, i got to take everything off and just be me. Two days before christmas i found out i was cancer free. We live carefree and where were happy, and. Thats home. Whatever home means to you, well help you find it. Zillow. Your disaster of the day stock, horizon pharma. Hznp down 25 in the market right now. The story is basic. They came out with a revenue projection that was 10 million less than what wall street expected. Down 26. 5 . Maybe well hear more on them on fast money. They are saying two thirds of their revenue will come in the second half of the year. Backloaded. Raising questions about the companys viability. Moving on to the panama apparent. It is the biggest explosion of hidden wealth in history. One of the biggest whistle blowers is weighing in, bradley berken felt was a banker for ubs. Then he became the biggest whistle blower in history. The government paid him 104 million for helping to aid the case against the ubf. He dropped a bombshell about who he thinks leaked the Panama Papers. Today bradley berkenfeld is in munich germany. We caught up with him this morning. He talked about the Panama Papers and his reaction to them. Ill give you that first. And then the bombshell second, so to speak. What he said, he knew this firm when he was operating as a swiss banker in switzerland, he said everybody in that country knew how to operate the maze of offshore jurisdictions, including in panama. Heres what he said on that. When they really wanted to have some sort of jurisdiction that was not only safe but was arms length, can whether it was lick ten stein, panama, hong kong you had a variety of these offshore jurisdictions that actually were utilized all the time by a whole myriad of swiss banks. And it worked quite effectively. And as a swiss bank whistle blower, you might think that he would be cheering on the Panama Papers disclosures. Not necessarily. In our interview today he raised significant questions about who the anonymous source is who ultimately turned over all this information to media. The fact that we see all these names surface that are the direct, quote, unquote, enemies of the United States, russia, china, pakistan, argentina and we dont see one u. S. Name . Why is that . So quite frankly, my my feeling is that this is internal an Intelligence Agency operation. The cia im sure, is behind this, in my opinion. To be clear, he doesnt have any proof of thisle gags. He is just suggesting it based on who was damaged here the most. I asked him about why the cia would have any motivation to damage david cameron. His opinion, thats simply Collateral Damage in the overall operation. A lot the chew on here. We called the cia. Im shocked. He just doesnt think that the americans are more honest . He does not. He thinks there are americans in all of these offshore jurisdictions. He thinks there are american political figures in all of these offfor jurisdictions. He is surprised not to see any big names. What should nations do, more or less to fight offshore accounts with hard to discover ownership . At the kato institute, they believe in less transparticipatesy, more privatesy. And we have the other side of the coin. Mark, im going to start with you. Why do you disagree that we need more information about these accounts. Most of them have been nonamericans. Thats a surprise. There is less reason to move your money out of america than it is russia or choip. I argue that we learned less than people argue. Did we not know russia was ruled by corrupt thieves . Again, no revelation there. The question is how do you best address it . I worry the costs and benefits. For instance if we wanted to try to cut panama even more off in the Financial System we would have to recognize today there is over 800 million remittances that go to people in panama. Those are not rich people. Those are poor people. We have seen where the Bank Secrecy Laws reduced the flow of transmittance. There is a question of whether the cia is behind it. But does putin spin this. I would say these things arent effective. They catch lots of innocent people in the process and they did little to go after the people we want to go after. Mike, to the basic idea should there be more privatesy, i raised this question on the air ever since the papers came out, when i see people in venezuela when hugo chafsz took over, he took entire businesses, taxed people at 100 while putin may be stealing money, he may be stealing monies from individuals there. People would like secrecy to protect themselves from the government. Do you think there is any reason is there any reason ever where secrecy should be allowed . Absolutely. The thing it is a pendulum. There are cost and benefits. Right now the pendulum is too far towards the too much secrecy side. 8 of Global Wealth is hidden in tax havens. How do we know that if its hidden. We can look at total assets and total liabilities. Its like we have a trade deficit with the moon. There isall all these lights but not all these assets. Turns out 8 of assets simply dont exist. We can see it from the liabilities side. Those 8 are tax havens. According to the panama paper, about 95 of these institutions were set up to evade taxes. Now some of those taxes may have been punitively high. They may have been perhaps vengeful for arbitrary. But most of them are just normal taxations and people wanting to minimize their tax bills and not pay more in taxes. I dont know, mike. What about when you see a large number from china, a capricious government that has done wealth taxes on savings accounts, those people live in a lot of fear of instability on what could go wrong there. Maybe it is a search for stability and knowing that if something goes wrong there is money somewhere else. Perhaps. But it cuts in other directions. You have developed countries which need a tax base, which have pluto kratz to not rip off the country and hide it elsewhere. To have some requirement over the economy. You see these are a source of corruption. They are used to bribe officials, used to hide and put money into companies. We saw this with hewlettpackard using tax havens to try to bribe countries abroad. As much as it is a sort of stability it is a source of instability as well. Guys, have got to go. Thank you, much appreciated. Coming up the best performing stocks in the s p 1500 this year. U. S. Steel. Its more than double. Is there still time to make money in it . Well ask the trading nags after this. Trading nation after this. Jake reese, day to feel alive jake reese, day to feel alive we believe in the power of active management. Anagement, we actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Freshly made in the japanese tokyosttradition. Noodles. When you cook with incredible ingredients. You make incredible meals. Get your first two meals free at blueapron. Com cook. The first stock index musiwas createdoughout over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Lots of aspiring restauranteurs start out with a food truck. We have the story of how one entrepreneur made it. He started out with a hot dog cart. He came to the United States without knowing a word of english as a teen. Today he is living his own version of the american dream. Take look. Some 15 years ago, owe cyrus hoil came to colorado from yucatan working his way through Restaurant Industry kitchens and eventually into construction. He was making it, until 2008 when the housing bubble burst. Im never going to forget that day. Begged for my job. I told them, look, you can pay me minimum wage if you want. I can be i can sweep. He tried to get work and looked at construction jobs and even jobs back in the kitchen but nothing panned out. I couldnt find anything. Reporter to keep up his spirits on the weekends, he would invite friends and neighbors over for Traditional Mexican food, the kind he learned growing up with his mother. If i bring a tomato that looks bad, i would go back again and pick one that looks good. Didnt like the he cooked what he enjoyed eating taking for granted how delicious those dishes were to others. But a neighbor and tech enpreprenewer blown away by his food saw something he didnt. I eat my food and love it but never thought it could be good. Encouraged him to look into a food truck that turned out to be too pricey. They settled on a cart. Got investors to pull together 30,000 and it took off thanks to savvy marketing on twitter and changing up menu daily and in 2010 they opened their First Physical location. Now they have seven around the d. C. Metro with several more on the way. And even with a chipotle right down the street from this vacation, district taco is jam packed. Sometimes he still cant believe it. Dreams do come true. You know, the more you see it and more positive you stay, you will be able to make your dream come true. Today he says the emphasis his mother put on the freshness of those ingredients which he did not appreciate as a kid helped skyrocket him to success. In each of the seven locations serving 600 people daily and the food is so good. It looks good. It was great. How many years did it take from cart to store . About three to four. Thats an amazing story. Its all about not seeing your own potential. He thought this was just food he enjoyed eating and cooking but his neighbor said this was inkretible. For more stories, visit cnbc. Com make it. Only one stock in the broader s p 1500 index has doubled this year. That stock, pregnant pause, u. S. Steel. Here now to discuss the move is your trading nation team, erin gibbs and stacey gilbert. Wee done a lot on this show about steel still oversupply and tok is more than doubled. Is it getting a little stretched here . It is. This is where we would say really where we see it as fair valued. Obviously it had that pop because of the new import duties including the 266 tariff on chinese maker steel to try to reduce the dumping that weve seen. But even if we reduce some of the imports that are coming into the u. S. , that doesnt change the fact theres no demand. And we still see a strong dollar. And until energy Companies Start building new rigs and they are the big buyers are steel, were not going to see an increased revenue. U. S. Steel isnt expected to turn profitable have positive earnings until 2018. So for us, hold off. No positive earnings for another two years. Stacey gilbert, people buy stocks generally because they are anticipating, discounting something changing and athey wat to get ahead before it does change. When you look at options or anything else, do you see things fundamentally changing . I would say the market agrees wither rinnes assessment, even the substantial rally this year, no one is really overly aggressively positioning for a notable pull back here. Theres not the fear out there that this stock is going to retrace a lot of its gains. That being said were not seeing a lot of positioning for further upside. If anything upside tends to be suggested it may be somewhat capped or limited here, one of the things the options are telling us, volatility is still here to say. Well see the stock bounce back and forth over the next couple of months and moves of plus or minus 4. 5 could be happening twice r once or twice a week. Theres no real directional sentiment. Thank you, for more go to tradingnation. Cnbc. Com. When millionaires from other countries travel to the u. S. , which hotel do they stay in the most . Think about it folks and name the city and hotel. Were talking about one specific hotel in a specific town. What do millionaires prefer in america. The answer . When power lunch returns now the latest and word from our sponsor. Its important to have a trading plan because a trading blan will not only help you define the products and markets and strategies youll use but also help you determine realistic profit and loss goals and realistic profit and loss goals are critical in helping you determine when to get in and when to get out. Audi pilotless vehicles have conquered highways, mountains, and racetracks. And now much of that same advanced technology is found in the new audi a4. With one notable difference. The allnew audi a4, with available traffic jam assist. Welcome back, we have breaking news out of north carolina, the governor has signed an executive order that seeks to restore the right to sue over discrimination. He is citing outrage and backlash against the state for doing that, governor pat mckrorry wants to restore the right to resue over discrimination but not going to challenge the bathroom rule. He says the private sector can make its own policy with regard to restrooms and locker rooms and or shower facilities. This is not a government decision. This is your decision in the private sector. He also affirms the private sector and local governments right to establish its own nondiscrimination employment policies. So it is a slight softening of that particular law but very slight. Thank you, sue herrera. Where do millionaires like to go on vacation . Only one man can answer that, robert frank. The rich are spending more than ever on travel but their favorite planes and trains and hotel suites will surprise you. The Favorite Hotel is the bellagio in vegas, the Favorite Hotel for more than the 800 millionaires pold around the world. The plaza in new york ranks second and mandarin and oriental. When it comes to airlines, singh air topped the list fauld by qantas and japan airlines. High end rollers from china everyone 1 million or more around the world. They wrote in their choice and the bellagio was number one around the world. You know those fountains are magical. They are, so im told. Congratulations to the bellagio. Were just off session highs right now. This will be an interesting session to watch into the close as we have one hour left. 150 plus oil and gas stocks on my screens, none are down. They are all up. Makes sense with where oil is today. Thanks for watching power lunch. Closing bell begins right now. Hi, welcome to closing bell, im kelly evans. And im bill griffeth. Oil above 42 a barrel on wti and energy is the Top Performing sector in the equity market as well. Were going to look what that means for the overall market coming up in a little bit. Happening live in the next few minutes, paul ryan will look to shut down rumors hes considering a run for president. Well bring you those comments live as soon as they begin. Mark zuckerberg announces