Transcripts For CNBC Power Lunch 20160414

The world. And i have to say i personally was shocked to see that the journal would publish Something Like this, when we had sent them over a thousand pages of documentation demonstrating that the statements in their piece were false. Bill george is Harvard Business School Professor and cnbc contributor. Jeffrey sonnenfeld is associate dean with yale school of management. Great to have you with us. Collectively, including jeff who is going to join us soon, you called the science into question, you called the company a scam. You called the ceo a bad actor. A lot of ground to cover here. Lets start off with you. You equate Elizabeth Holmes with the likes of mike pierson, the outgoing ceo at valeant and Martin Shkreli, the bad boy poster child of bio vehictech. Theyre doing great harm to the pharmaceutical industry. And such a contrast to somebody like ken frazer at merck. It worries me a great deal, particularly in a Political Year when they get a lot of political pushback. Theranos has never been forth coming about its test results. They never shared with anyone. Im on the board of mayo, where it has a big blood testing business. Wont share anything about how they do things. And you just cannot change medical therapies without adequate testing and validation by Major Medical centers, more than one. Multiple centers. And if you do, youre asking for trouble. They got trouble. This is the closest thing that the government has to a Death Penalty to ban her for two years. Shes shutting the whole company down. This is very serious. And frankly i think the allegations are very serious. They should never have gone ahead without adequate testing. Can you imagine if they did testing and they didnt do testing you missed some cases of cancer, missed some hepatitis c or hiv aids. How many of those does it take to get a center like a mayo in deep trouble. To that point, bill, want to bring in les. Hindsight is 20 20. You say it was so obvious that the science just was not there. In fact, you say she basically was trying to warp laws of physics in three ways. Why was it so obviously flawed in your view . Private portfolio of companies. We look at Companies Like this all the time. And the basically it is a it is complicated. Microfluidics wouldnt allow the world to do what she did and without evidence, you know, making such a big leap for us, just looked really bad. I say we have other companies in our private portfolio like Health Engine where we deep dive diligence and so my question would be to the investors, i mean, where were they . And why werent they doing the kind of diligence we do when we look at private companies . This one should have been pretty easy to spot. According to the notes, it says we should explore the question whether or not she got as far as she did because shes a woman. So lets explore that question. Did she get as far as she did because shes a woman and Silicon Valley has very few successful women they can point to . Listen, i would like to see a lot more successful women in Silicon Valley and all over the country. People women like cheryl sandberg, very successful and i just like to see more doors open. I had the same hope for Elizabeth Holmes everyone else had. I think we didnt we didnt dig into the story. I was reading coming down here the New York Times article last fall, the style section. This is exactly the example of a golden girl, but she didnt do her homework and you cannot put peoples lives at risk unless you do testing and you have it validated by Major Medical centers and you reveal it. She said she wouldnt be transparent because she didnt want her competitors to get the data. Shes arguing for the cost transparency. You cant talk out of both sides of your mouth. All those things are true. All the things we heard. Did people look the other way or were they willing to ask fewer tougher questions because shes a female . I think we bought we drank the koolaid and we like the story and it was it was too good to be true. Frankly if something is too good to be true, it really is. She got the celebrity none of those people know anything about anything. Two of the doctors she had quit two years ago. Once a celebrity board, having people like Henry Kissinger and George Schultz, give me a break. Im not going to pretend i have any clue about the science. I have no idea. This could be the greatest thing since sliced bread, may work ten years out, i have no idea. When we look at the board, and i made this mass take yesterday, guys, you go to theranos website, it says board and consultants. I thought bill frist and other senators were on the board, theyre actually just consultants. Jeffrey sonnenfeld, what management mistakes can you see at theranos, what have they screwed up on the management side . They have gone through some dramatic changes, youre right to be confused. At one point bill frist and bill fogy of the cdc, Henry Kissinger, George Schultz, they were on the board, it was a celebrity rollup. Thats a danger sign. When you see those celebrities stapled together, theyre not people with experience in the field, time to do the diligence. It is a danger sign. Not only did the original scientists disappear in this case, because he killed himself, and left the note saying the thing doesnt work, not specifying what it was and poor widow threatened with defamation for even revealing that. But on top of that, the original board of scientists quit. These are warning signs. When they say the stuff doesnt work, why is this still out there . Why does walgreens have a partnership . Theyre trying to get out of it. This is a private company, last valuation was 9 billion. If this were a publicly traded company, we would be seeing the stock decline day after day after day. In terms of board liability, what sort of liability does that board of directors have because of the publicly traded company, th there would be lawsuit s at this point. They would have tremendous lawsuits. In terms of what who knew what when they quit the board, a good question. Their names were used as bait, to attract other investors. Did they roll up their sleeves and take a look. Did Henry Kissinger and George Schultz and sam nunn, this is not their sphere. What responsibility should they have . We saw in the cases of worldcom and enron, they were individually eventually culpable and held accountable with great finds. Is that necessarily is that necessarily a tell . Obviously Henry Kissingers political chops are unquestioned. He was on the board of another company i cant remember that had a big problem a couple of years hollinger and aig. Thank you. Conrad blacks company. Is this a lesson for investors when you look at a board and go, i know that guy is and look at her, shes whatever theyre not directly related to either a, running the company or b, the core business, the company is engaged in. Is that necessarily maybe not a red but maybe a yellow flag. That is a big danger flag. If you see the marquis names, it is probably time to pull out. This is a company puffery, pushiness, promotion, but the politics of it, look at Silicon Valley snake oil that got caught up in this, very prominent investors, steve jerveson, and Larry Ellison and people think who is it because shes a woman . No. I heard you trying to bait that before. Hold on. Wait. Im going to hold on. In the notes, it says bill geor told one of our producers he thinks we need to explore the question of whether or not i didnt bring it up. I bring it up because i am bringing it up with you. Harvard guys are cowards, ill tell you, there are times where there are times i think it is high profile. High profile. There are women. I think marisa mayor sa mayer ig a tougher time because shes a woman. If you look at investors who uniquely targeted the bank of new york and the ceo of pepsico, the ceo of kraft and dupont and add it all up, what is it . High performance. Some women have been unfair targets. This is not an example of that. You look at Martin Shkreli getting away with what he got away with and hes a guy. Look at mike pierson, hes a guy. I do think it has to do with smoke screens and people not doing their homework and Due Diligence and not gender on this to that point quickly, bill. Well, i would say that before hold on, guys. Hold on, guys. Let me ask les a question here since we have this little moment here. What Ripple Effect does this have on funding other Biotech Companies out there in Silicon Valley, does this gum up the works, make people question every single slide show that is presented to them about the wonders of whatever new process the Company Claims to have. Absolutely. It should. I think jeffs point and the snake oil sold and the valuations sold without a lot of diligence, i think a lot of this is going to come home to roost over time and i think a lot of people invested just because of famous names. It is not just health care. A lot of it in technology too. I think were going to see more of these kinds of blowups. Maybe not to the same extent of this, but i see valuation compression certainly in private health care, which we would welcome because we think private Health Care Valuations have gotten out of whack. You said a lot of things Like Snake Oil in this interview, how confident are we, what if it works . What if this is right . Too early to tell. Everything Elizabeth Holmes is saying proves to be correct and everybody else is wrong and the cdc is behind the times. What would that mean . It doesnt work. She had 250 she said she could do and they didnt work. Not yet. Spacex, five rockets before they successfully landed one. Im just playing the other side, guys. Just saying, what if brian, show me show me the data. Show what, les . I say you have to have data to support all these claims. Without data, it doesnt matter. Still waiting for enron to come around and show the numbers. I dont think you think this is enron . I dont think i dont it may not be as deliberate. But certainly the cms certainly thinks there is a lot of questions here that are enronesque. You said something i wanted to hear it. Bill, bill. I agree with les. I agree with les. We got to see the data. Medtronnic would never submit a product without data, with mu i multiple medical centers. They need to talk to les, talk to les, not to people with that looking at false business models. You have to show us the data. She said she could do we have to wrap it up. I will say this, when Elizabeth Holmes in that sound bite said i sent the journal a thousand pieces of information, that, to me, the flag goes up because nobody should need a thousand pages of data. Thats you go through this the government said the exhibits are missing. It is not there. And furthermore, the pinprick she said she could do, it doesnt work. 250 tests, didnt work. Guys, got to leave it there. Ivy league panel thank you. Bill george, well see you later. The news alert from the bond market. 30 year bonds up for auction as the u. S. Government borrows more money. How did they do . This one was a lot like yesterdays ten year, the grade, aminus. A half a grade shy of yesterdays a. It was a good auction. Matter of fact, lets go over the internals. Reopen 30. It is 29year, tenmonth, yield 2. 596 at auction. I did a quick glance, back to the credit crisis this is about the fourth lowest yield, only been let me rephrase, only four yields lower, really, since the credit crisis. Put that in perspective. The bid to cover, the best since december of last year. Not that long. 2. 4. 65. 1 on indirect since the fall of last year. 10. 8 on directs. 24. 1 go to the dealers. This was an a minus auction. The best part, 2. 596 was well below the bid side of the one issue market, which was 2. 615. That gave it horsepower. Were done. Markets usually rally after auctions. Lets see. Back to you. Lets see. Thank you, rick. Straight ahead, jack lew talking about the u. S. Government borrowing money. Except today hes weighing in on the administrations crackdown on corporate inversions. We asked him if the u. S. Government is targeting specific mergers. Well tell you what he said. With workers striking against verizon and now mcdonalds, is capitalism under attack . Well bring you the debate. Youre watching cnbc, first in business worldwide. Ow. Are you okay . Yeah, i just got charged for my credit monitoring. Thats how i know its working. Ah. You know you can go on creditkarma. Com and check it out there. Its completely free. Really . Yeah oh, that didnt hurt at all. Yeah, completely painless. Credit karma. Give yourself some credit. 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. Welcome back. U. S. Treasury secretary jack lew appeared on cnbc today, again cracking down on corporate inversions, an area he says are of deep concern. Take a listen. Everyone who engages in business knows that it is subject to changes in law or rulings. And i think the important thing here is that everyone has been on notice for a very long time. It hasnt been a secret that this is an area of deep concern. Bipartisan concern. My only frustration is that legislation hasnt been enacted to deal with it in the best way. But we remain focused on what administrative tools do we have to stop the pipeline as much as we can until congress acts. Bill george is still with us. Were also joined now by cnbc contributor jared bernstein. I think some of the pushback on what treasury did was maybe even less about inversions themselves and more about sort of the rules of the game being changed midway through the fourth inning. Your reaction to that . I think that thats a fair critique. On the other hand, this is the third of three interventions they have done and as you just heard secretary lew say, there is nothing new to what theyre doing here. Ever since the Obama Administration came on the scene, back when i was working for them, they had been trying to reform the Corporate Tax code and trying to create very significant speed bumps in this road toward corporate inversion as a system of tax avoidance rather than tapping some of the benefits of globalization. They havent been able to do that. They dont have a willing partner in congress. I think jack lew is right. Just because they have a do Nothing Congress doesnt mean they should have a do nothing treasury department. Ive argued about health care spending, why do we spend so much time talking about spending and not enough time talking about why were so sick. Why do we consume so much health care. It seems like were talking about inversions the same way. A lot of talk about the mechanics and less about why would Companies Need them in the first place . Im not sure i agree in the following sense. We had lots of discussions including on this show about the deep problem with the Corporate Tax code, which is a huge mess. Obviously the statutory rate is too high, but the effective rate, what companies actually pay, is ten Percentage Points below that for Domestic Companies and were like 15 for multinationals. There say great deal of unfairness in the corporate code and the administration i know for a fact, they released a new white paper on this, very much wants to do business tax reform, they dont have a willing dance partner. You come on our air and saying that essentially that it is a tax code that needs to be reformed. If youre a ceo, lets say youre the ceo now of a publicly traded company, and what is your next sort of page out of your playbook, if inversions are off the table at this point . Well, it is not clear, you know, that im very concerned about u. S. Corporations being taken over by European Companies. Pfizer is now worth more to a roche or novartis or senofi than to the american shareholders because the tax code is not resolved. Jared has got it right. We need to fix the core problem. This is like having skin cancer and you put a bandaid over it. And thats not going to solve the problem. The cancer can still spread. We have got to solve the problem. I agree with him, there are a lost in lot of inequities in the tax code. I think we need to get to a better tax code and we need to solve the problem. I want to build Great American companies. I think this is taking away from that. Lets go to a territorial tax system. I want to underscore, bill that Ripple Effect that youre forecasting. You think there is going to be a wave of takeovers of American Companies by Foreign Companies because of these new inversion regulations. But thats sort of the intended consequence of the treasurys action . The inversions of the unintended consequence of having a dysfunctional Corporate Tax system. I say go to a territorial tax system, tax people where the money is earned, these companies all pay tax, lots of u. S. Tax. Every other developed country in the world has lets tax them where the money is earned instead of forcing to bring it back. Theyre not bringing it back. So why not solve the problem . You get the last word, but, bill, if you were still the ceo of medtronic, would you invert . They already have done it. They did it for the right reasons. I would only do it if there was a very strong strategic rational and it enabled me he to invest more in research and development in the United States and do more acquisition in the United States because the cash is freed up and thats exactly what medtronics is doing and the test was, when the previous inversions went through it cost medtronics i got to make two points. First point, hold on. First point, first point, you said there are theyre willing republicans. There are probably some, but there certainly arent enough to actually either implement Corporate Tax reform or to build the kind of speed bump that treasury is trying to do. Secondly, look, the Corporate Tax code in this inversion problem is one where companies are not taking advantage of globalization in the sense that bill was just talking about. Theyre moving their irs tax mailbox overseas and thats not a good rational. Bill george and jared bernstein, a good discussion, one nowhere near being over. Thank you, both. Bill gates bringing his brains, organization and his money into the fight against zika. Well tell you what the microsoft founder is doing to fight the disease in the developing world straight ahead on power lunch. 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 every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. Welcome back to power lunch. Seagate cutting its outlook because of weaker demand for enterprise disk drives. Seagate plunging more than 19 today. Gap naming executive sonya sengal as the new president of the old navy unit. Twitter service has been restored after Service Outage impacting users in japan, singapore and elsewhere. Twitter rising today 1. 5 . On deck, the risk and potential big rewards of investing in europe. We discuss when power lunch is back in two. He 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. You ppremium like clockwork. Month after month. Year after year. Then one night, you hydroplane into a ditch. Yeah. Surprise. Your Insurance Company tells you to pay up again. Why pay for insurance if you have to pay even more for using it . If you have Liberty Mutual deductible fund™, you could pay no deductible at all. Sign up to immediately lower your deductible by 100. And keep lowering it 100 annually, until its gone. Then continue to earn that 100 every year. 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French tv reported that abrini who admitted he was the man in the hat in the surveillance photos, told investigators he, quote, wouldnt hurt a fly. House Speaker Paul Ryan says he opposes any effort to give iran access to the u. S. Dollar. He cited concerns about what tehran would do with any Financial Access gamed in the wake of the iran nuclear deal. Microsoft is suing the u. S. Government over a federal law that lets authorities examine customer emails or online files without the individuals knowledge. The company says the government is abusing the law. And Amc Entertainment says it is considering allowing moviegoers to text in its movie theaters. Its ceo telling variety magazine one possibility is having a certain section where texting is allowed. Another option, specific auditoriums that are set up to be more texting friendly. Thats a cnbc news update at this hour. Back to you. Sharon epperson, thanks so much. Lets check gold prices. We have the markets Holding Steady in the green. This is something you dont see too often. A big pullback in the price of gold. This is the biggest or on track for the biggest loss since march 23rd of this year. 12. 27 an ounce. The rest of the metals complex, mixed trade here, seeing silver as well as platinum down by a percent. The big pop, though, is in platinum and thats up 3. 25 . Rick is at the cme. We finished 56 billion in supply today, 30year bond. It was done a dozen billion out there, a great option like yesterdays ten. Intraday. Yields move back down, price moved higher after the supply was done. That isnt the accurate look. Lets take an accurate look, five day chart including the intraday moves. There is a bias to the upside. Look at year to date, 30 year bond yields, looks like it could be a Double Bottom, traders think well see higher rates. The longer maturity, the more uneven it is if you look at two or five year, that Double Bottom is much closer to the same yield prices. Risk barometer, i keep monitoring it, it is not a huge comp, but the hyg as you see on the chart, etf for high yield, not the spread, it is an actual etf, equity, and if you look at it, highest level since december. That isnt big time but we might be in the sweet spot of the issues that make investors nervous. We discussed italys struggling Banking Sector and the economy. Which is the same size as it was back in 2007. He pushed back against the idea there has been no growth in italy. It is not true. It is not growing. It has been growing now in 2015, after three years of deep recession, we did have a deep recession. It took away ten gdp points. Now were growing again, were growing faster this year and next year. It is not exceptional or chinese growth rates, but this is in line with the fact that the eurozone as a whole is not drawing debt fast. Lets bring in giardan giardano lombardo. Good to have you here. What do you make of european equities at this point. Some people make the case they have compelling valuations and yet it seems like there are so many risks, whether it is slow growth or brexit, how do you think about it . I think european equities are relatively cheaper this stage. Especially compared to other markets. But as you mentioned, also, lets say, external factors that could make us more including brexit, which is coming in a couple of months and including, lets say noneconomic risk factors, such as crisis which is plaguing the european environment. So we are pretty cautious for those reasons. We believe there are very good opportunities to invest in single sectors and single companies. In other words, dont go out and buy all of europe or buy a country, but youre saying there are specific companies that youve analyzed that can withstand those wins that youre talking about . Yes. In the case of europe in particular, we are always to distinguish the Macro Economic environment from the stock market environment. There are sectors. The consumer sector, the luxury goods sector, the pharma sector, where European Companies are multinational with thriving business, exported to the u. S. , to emerging markets. And after the recent correction, this Company Offers good value. Of course, on the other side of the more more risky are the sectors that are more exposed to the domestic environment because the growth in eurozone and in particular, in some areas of the eurozone is still is better, but still what i would call growth. Speak to an american investor who has to use u. S. Dollar and buy a foreign currency, the euro, to buy the stocks youre talking about, should they hedge against moves in the currency or you think were going to have less volatility compared to what we have seen . The currency, the Currency Movement between euro and dollar we believe will be mostly dictated by the divergence of the monetary policy. We believe that apart from the volatility that we have seen in the past, probably the dollar still has ways reasons to be stronger than the euro going forward. We believe that from the u. S. Based investor there is not such a risk of currency, of currency, if they want they start from a strong dollar position. Almost a tailwind. Thank you so much. Pioneer Investments Global cio, thank you for coming on. Coming up next, three big stories hitting the hedge fund at this hour. Well bring you the latest when power lunch returns. Well be right back. What if it were your job to make the world a more beautiful, colorful place . At ppg we think thats something we all need to do. We create, invent and formulate amazing paints, coatings and materials. So we can make the world run faster, stronger, fresher, smarter, cooler, lighter, greener and better for the next generation that comes along. Ppg. We protect and beautify the world. You think youre having a stressful day at work . This is video from the baltic sea where russian fighter jets buzzing the uss donald cook not once, but more than 30 times over the course of two days. The jets are reportedly not armed. The white house says it has raised concerns with russia over these incidents. Melissa . Look at shares of wells fargo under pressure. Wells fargo cfo john slews behry on today. Dont miss that. Mary thompson joins us now. Lets start with what is happening here in new york city. The 51 billion pension fund for new york city workers cutting ties with hedge funds, following an asset review. Funds board deciding a new approach to Asset Allocation will help it meet its longterm objectives. The fund has 1. 4 billion. No timeline yet for the liquidation and no details on the reinvestments. The decision coming a year after californias giant pension fund decided it too would no longer invest in hedge funds. Bloomberg reporting clients asked to redeem a billion dollars. Jones racked up annual gains of 19 and reportedly has performed poorly over the last three years. And steve cohen has a way to get around a two year ban on investing other peoples money. The s. E. C. Granting registration to a cohen owned firm in march. The firm spokesman said the Billionaire Hedge Fund manager in keeping with his agreement with the s. E. C. Not to manage outside capital wont have a supervisory role at the new firm. That could change when the ban is lifted in 2018. Not until then. As to had this vehicle, which will invest in ill liquid and nonpublic securities and keep up to 50 of its profits might start generating those profits, that is anyones guess. Cohen has yet to provide any seed money and the firm hasnt decided whether or not to seek outside capital. That last sentence is important in a way. Were seeing billions of dollars coming out of hedge funds, here he is saying we might not even want outside capital. At this point. At this point. But it also could be maybe just pu in place so you can return to managing other peoples money. His fund was basically turned into a family office. That was after his other firm pled guilty to insider to Insider Trading and then cohen was charged with failing to supervise, he settled with the s. E. C. , he didnt admit to the charges and part of that settlement, he agreed to a twoyear ban on managing other peoples money. What a comeback. Mary thompson, thank you. Bill gates, the country of qatar today, hes pledging 50 million toward a 2. 5 billion fund that his foundation is raising. Aimed at fighting poverty in islamic countries. Ideas about how can we use new tools to go after the mosquitos, thats one way to conquer these diseases, go after the vector, and reduce or eliminate the mosquito populations. Our foundation has some tools there, which will we will probably want to try. Because there wont be a vaccine, even in the best case for several years here. And so there say lot being looked at. There is not a total solution to zika that in the world. We should note that in gates speak, when he talks about, quote, going after the vector, hes talking at least in part about a genetically engineered strait of mosquitoes. It is a selflimiting strain, it was developed so the mosquito offspring would die before they were able to reproduce. Intrexon up more than 6 today. Remember, we had the ceo of intrexon on the show, back on march 18th. Searching the Panama Papers for answers to some of the greatest mysteries in the art world. What can those trove of documents tell us about lost art . That story coming up. Tee a fair price, quality service, and that a tired dog is a good dog. [ dog barking, crashing ] so when you need a dog walker or a handyman, we can help you get the job done right, guaranteed. Get started today at angies list. You dont want to live with mom and dad forever, do you . Boo laughs how do i check my credit score . Credit karma. Dont worry, its free. Credit karma. Give yourself some credit. 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. Man 1 man 2 i am. Woman exmilitary . Man 2 four tours. Woman you worked with computers . Man 2 thats classified, maam. Man 1 but youre job was Network Security . Man 2 thats classified, sir. Woman lets cut to the chase, here. Man 1 whats youre assessment of our security . Man 2 [ gasps ] porous. Woman porous . Man 2 the Old Solutions arent working. Man 2 the world has changed. Man 1 meaning . Man 2 its not just security. Its defense. Its not just security. Its defense. Bae systems. Welcome back to power lunch. We have a market flash. Were watching shares of 3d systems up double digit percentages in the best performing stock in the s p 500 midcap 400. Analysts over at b of a Merrill Lynch upgraded from buy to underperform and boosted the target price from 26 bucks to 11. The new ceo saying the new executive team has the experience to drive 3d systems turn around and growth through new strategy, higher cost cuts and portfolio opt mization. Shares tripled from january lows but still down 40 over the course of the past 12 months. Back over to you. We told you earlier this week that the Panama Papers, giant leak of documents about offshore accounts, appeared to reveal who is the true owner of this painting by modigliani called seated man with a cane. The son of a french art dealer maintained that painting was owned by his father and looted from him by the nazis during world war ii, which got us to thinking about the Monuments Men, the military unit that worked to made famous by the movie of the same name starring George Clooney. We know about the Monuments Men because of our next guest who wrote a bestselling book about them, also happens to be one of the early pioneers in or zohoril drilling and natural gas. What do you think about the apparent revelation from the Panama Papers . It is a great development. But it underscores the fact that all of the Monuments Men and women found and returned some nearly 5 million objects stolen by the nazis during world war ii. Still hundreds of thousands of works of art worth billions of dollars that are missing in this modigliani is really just the tip of the iceberg. It is one of the reasons the Monuments Foundation created this toll free line we have got, 1866 world war ii art. We get tips and they result in leads and allow us to return missing works of art to their Rightful Owners. You said you were surprised if not shocked by the reaction of the swiss authorities had had they saw this report, that it is very different than what would have happened a decade ago. Tell us about that. I think the swiss reacted immediately to this news and seizing the painting and making sure it is not moving around and now will begin the games of adjudication, whether the us la laws prevail. I think what it does is confirm that the most powerful judicial system in the world is the court of Public Opinion and were seeing that, i think, with the swiss having a greater sensitivity to not being on the wrong side of the cases and securing the thing so that it can be to make clear, ten years ago, that wouldnt have happened, you dont think . I think in late 1990s, early 2000s, no. There was much slower reaction or no reaction stone walling by some countries to pursue the claims of Nazi Looted Art or hidden works of art. It is a development as a result of the progress that were making in rising worldwide awareness about that and the George Clooney film shown in 100 countries around the world, thats awfully powerful media presence. I understand the most valuable piece of art still missing is a rafael that were going to show people. Why and any hopes of it being discovered . Any recent clues . There have been recent rumors. It is a painting on panel by rafael, great renaissance ma master, when we arrested the nazi general that had taken this picture, hans frank tried at nuremberg and hung, he had on his possession a painting by leonardo da vinci. Important painting by recommend brand rembrandt. It is something that we hope will surface and in the film, there was a notable mention of the rafael it try to draw public attention to it. The world has become aware recently again of just how vulnerable art is during war. The war was shocked to see the destruction of the great city of palmyra in syria by jihadist terrorists recently. I understand youre going to be testifying in front of Congress Next week about this issue, not about necessarily the destruction, but apparently theyre also selling antiquities for money, helping to fund their terrorism business with these sales . Thats right. Look, i think all of this, the rampant, the Panama Papers showing us there is rampant tax evasion, that there are hundreds if not thousands of important works of art that are out there worth billions of dollars that are hidden. And, of course, this really, really deeply concerning situation of isis institutionalizing the sale of looted antiquities to raise money for to finance terrorism is compelling us to think about works of art in a very, very different way than we have ever thought about it before. Thats going to be the message im going to convey to Congress Next week when i testify before the task force for investigating terrorism financing. Great to have you on. One last question. I know you knew aubrey mcclendon, both early pioneers and horizontal drilling. He ran a publicly traded company. You had a private company, which, you then sold, but any thoughts on his passing . Well, it is a tragic conclusion to a very brilliant career. People that are dynamic and change the world sometimes polarize people, people have different opinions, the United States is so much better off because of the explosion of development and discovery of oil and gas reserves, gas reserves in particular that aubrey and chesapeake and other companies pioneer. But aubrey was an early pioneer and it reduced our national deficit, reducing oil imports. The success has been one of the challenges that the industry is facing today because of the proliferation of production. He made an enormous contribution and hell be missed. Robert, great having you on, thank you for joining us. Thank you. Brian . City group thinks that making money on this stock may be in the bag. It is adding kate spade to its focus stock list. The analyst at citigroup believes last quarters results and Forward Guidance for kate reinstilled confidence and reengaged potential investors in the company. The citigroup analyst says kate spade exhibits healthy growth that results from disciplined distribution and promotional strategy. She also likes the valuation on kate spade. The upgrade is not helping the stock. It is down 2 today. Kind of a street talk tease there, but kate spade added to citi, im shocked it is not getting a little pumped. Interesting. This is a stock that had had a massive run this year. And if you look at since its last earnings report, even more so. Could have been today, put very recently essentially saying that our handbags, specifically kate spade and michael kors, whether or not the turn around in handbags is priced into the stocks already. Peak bag. Peak purse. Peak purse. Peak purse, even better. There we go. Thats a tease. We got street talk coming up later on in the show. Five more opportunity points for you. Coming up, one Company Wants to provide the antidote to airport gridlock. Were going to let you know about its plans to cut the Airport Security lines and one stat about airport waits that will probably blow your mind. Approaching medicare eligibility . You may think you can put off checking out your Medicare Options until youre sixtyfive, but now is a good time to get the ball rolling. Keep in mind, medicare only covers about eighty percent of part b medical costs. The rest is up to you. Thats where aarp Medicare Supplement insurance plans insured by unitedhealthcare Insurance Company come in. Like all standardized Medicare Supplement insurance plans, they could help pay some of what medicare doesnt, saving you in outofpocket medical costs. Youve learned that taking informed steps along the way really makes a difference later. Thats what it means to go long™. Call now and request this free decision guide. Its full of information on medicare and the range of aarp Medicare Supplement plans to choose from based on your needs and budget. All plans like these let you choose any doctor or hospital that accepts medicare patients, and there are no network restrictions. Unitedhealthcare Insurance Company has over thirty Years Experience and the commitment to roll along with you, keeping you on course. So call now and discover how an aarp Medicare Supplement plan could go long™ for you. These are the only Medicare Supplement insurance plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. Remember, medicare doesnt cover everything. The rest is up to you. Call now, request your free decision guide and start gathering the information you need to help you keep rolling with confidence. Go long™. Welcome to the second hour of power lunch. The dow just fractionally higher. The dow now 2 from its all time high. More on your money coming up. We begin with something else. Problems at the airports. That seems to be getting worse. Were talking primarily about security lines and get this, during one week in march, nearly 7,000 passengers on American Airlines missed their flights mostly due to delays at security checkpoints. One week, one air line, 6800 missed flights. It could get even worse this summer. But there is one company that is working on a solution to this and it is not just at airports. It is at security lines everywhere. Phil lebeau is live at coors field in colorado with more on this story. Phil . Were going to talk about the security here at coors field and other professional sports stadiums and this company that is trying to competent indict the process for getting inside. We started by talking about the long lines at airports. We spent the last couple of days here at Denver International airport. Im used to what can be a lengthy wait as you go through the checkpoints there. There is a company that has operations here in colorado and 13 other airports, known as clear, an expedited service for those looking to get through the line quicker. Its enrollment is up 200 . Membership topping a half million. We had a chance to go to the headquarters in manhattan where theyre planning to expand beyond Airport Security. But they realize one of the keys to the growth is in making the experience of going through security at an airport much quicker. Consumers there loving the experience. No cell phones, no paper, up comes your identity, and up comes your boarding pass. Seamless, fast, secure, Great Customer experience. Thats what clear is doing at airports. What about at professional sports stadiums like here in denver at coors field. The whole idea is to allow people who are season ticket holders, people coming to a lot of game, a chance to go into the park, much quicker by just putting their fingers on the clear identification screen so they know who they are. And you can avoid the long lines you see. The people like the idea of nothing having to weight in long lines. It shouure beats having to w in line and going through the gates with the crowd. The new technology i saw today i really, really liked. Im looking forward to this on promotion nights because ill be able to get in quicker. Theyre hoping to go into more. You have metal detectors at every entrance, every fan has to go through one, thats where you got the choke hold of people who are going to have to wait longer. Clear believes it is much like the airport. They can get you in there faster. Thats why theyre targeting professional sports teams as part of their growth in the future. There comes a greater likelihood people will say, lets stay home. Ill buy you some cracker jacks on the couch. Private solutions are coming but slow in coming. Your wait times are at the mercy of the tsa who have trouble finding enough staff to handle the growing crowds. We reached out to the tsa and they said, quote, we at tsa have a robust plan to address the volume including more canine use, hire dogs, encouraging precheck enrollments, lines are already long, enrollment overtime and accelerated screening and more, end quote. But with a budget of more than 7. 5 billion already, why is the tsa about to do more or is able to do more . Not knocking the tsa, they keep us safe, good men and women there, but 7. 5 billion budget is going up every year. Hundreds of people in line and cant find staff. What the heck is going back at the tsa . Some of it for management problems obviously, planning on training and having staff, when the big days are expected. There is variation and their response by geography. Number two, couple of years, the administration raised the taxes on every ticket for security and ordered that money i apologize for interrupting. We have to go to palm beach, florida, Trumps Campaign manager Corey Lewandowski making a statement. As state attorney i made the decision that this office will not be filing charges against Corey Lewandowski for battery. We have notified the parties involved in this matter and will make miss ellis memorandum available to all of you. This matter was never charged by are we all good . All right. It is important to note that despite several media reports, this matter was never charged by this office. It was charged by the Jupiter Police department, which found probable cause that mr. Lo lewandowski committed a simple battery against miss fields. The Jupiter Police department sent our office a case file, and we conducted an independent review to determine whether we would pursue the charges. Jupiter police chief and the town Police Department do an outstanding job and acted well within their authority to investigate and make an independent charging decision. We agree that probable cause exists for the Jupiter Police department to have charged mr. Loon dow ski in this case. As prosecutors, our standard for filing criminal charges is higher than mere probable cause. The burden proving each case beyond a reasonable doubt. In doing so, a prosecutor must have a good faith basis that the evidence presented will sustain a conviction. While the nefdz this case is legally sufficient for the police to have charged mr. Lewandowski, it is not Strong Enough to meet the legal burden of a reasonable likelihood of a conviction. It is unethical for us to file cases when we believe there is not a good faith basis to proceed. Here are some of the facts as stated in miss ellis close outmou out memorandum. Report of Michelle Fields covering a Campaign Event in the ballroom in jupiter. President ial candidate donald trump had just completed a press conference. Afterwards, he left the podium and was moving towards the ballroom exit. He had a number of secret Service Agents attempting to maintain space between him and the public. The full video reporting shows secret Service Agents clearing the pathway ahead of mr. Trump. Specifically it appears that miss fields was directed to the back of the room along with other members of the media. After initially complying with the directive, miss fields returned to the pathway area and walked directly alongside mr. Trump, attempting to ask questions of him. It appears based on the freeze frames from the video recording, an independent photograph taken by a Washington Post photographer that miss fields brushed or touched mr. Trumps arm. He then appears to react to miss fields by pulling his arm back, and away from her. At which time mr. Lewandowski reached forward and grabbed miss fields arm, pulling her away from mr. Trump. Both mr. Trump and mr. Lewandowski then continue toward the exit at the back of the room. After reviewing the video recording there is no reasonable doubt that mr. Lewandowski pulled miss fields back as she was attempting to interview mr. Trump. According to an confident submitted by a former fbi agent, when tasked with the protection of a political candidate, secret Service Agents create a protective bubble. This protective bubble is created to prevent unauthorized individuals from getting too close to the person, regardless of whether or not theyre members of the press. More importantly, under the circumstances it is not uncommon for a candidates inner circle Staff Members known to the agents to assist in clearing a safe pathway. It should be noted, however, that one agent was positioned directly behind miss fields and appeared to show no concern over her actions. Mr. Lewandowski could have called this agents attention to her movements before taking action himself if he considered her a threat. And in addition, soon after the incident, mr. Lewandowski publicly denied ever touching miss fields in any way. Although these factors might undermine mr. Lewandowskis potential defense, they do not outweigh the reasonable hypothesis of innocence based on the real time facts and circumstances recorded on the video. As stated earlier, Law Enforcement arrests are based on probable cause. State prosecution, however, relies upon a good faith basis that sufficient evidence exists to prove a case beyond a reasonable doubt. This includes consideration of any apparent defenses. Though the facts support the allegation that mr. Lewandowski did grab miss fields arm against her will, mr. Lewandowski has a reasonable hypothesis of innocence. There is insufficient evidence to rebut these defenses. Therefore, although probable cause exists. The state will no file this case. Now, available for any questions you may have for me or miss ellis. Could you talk about whether or not hi, glen, good. Could you talk about whether or not the political atmosphere [ inaudible ] as far as our review of the case it was just like any other case. I do acknowledge that there is International Attention to this case, which doesnt exist in just about any other simple battery case. Thats why you have a press conference like this. As far as the actual work that was done, the review, the analysis, it is the same as every case. There have been reports you attempted to facilitate a deal mr. Lewandowski publicly apologizes. Is that true . The apology in a case like this would be encouraged it is a good thing to have. We appreciate when people take responsibility for their actions. I can tell you that our decision, miss ellis memorandum and our decision in this case had nothing to do with the existence or nonexistence of an apology. Did you speak to mr. Lo lewandows lewandowski . Did you interview him before you came to this conclusion . Since miss ellis was in charge of the investigation, ill turn that question over to her. No. No, we did not speak with mr. Lewandowski. We spoke with his attorney. With his attorney. Yes. Personal meeting with him or over the phone . Yes, we spoke with him in person as well as over the phone. Did he try persuade you not to charge . Yeah. He came in with what he believed to be the facts of the case. We took that into consideration. Im sorry, one more. Do the Jupiter Police department before they charged him initially, because that happened within two days. Did they contact your office at all . No. They later got in touch with you . The Jupiter Police department sent over the filing packet after the charges says it was filed. When miss ellis did our own investigation for the office, among other things, she interviewed the lead detective in the case from the Jupiter Police department. In fact, that lead detective was here in this office for more than an hour and a half. [ inaudible ] is there any other evidence you looked at, any other videotapes you havent seen . No, we looked at there was a photograph of a bruise on her arm that we reviewed. And in terms of anything else we reviewed, Everything Else is taken from the actual Video Surveillance video recording. Still photographs from these freeze frame shots. Does that include anything for the secret service absolutely, yes, sir. That is on the surveillance report. You cant necessarily hear because there is mr. Trump is leaving making his way to the exit. You cant hear what is actually being said. You hear noise in the ballroom. As their making their way out, what is captured on the video is her along with other journalist, media, being directed to the back of the ballroom. Did she support this decision or we both spoke with miss fields today and ill let you speak to her about her thoughts, but clear to us she was disappointed by the decision. How so . [ inaudible ] she wanted a prosecution to go forward. There was no deal where were going to drop charges in exchange for an apology. As i said earlier, in a case like this, we do encourage an apology. We think it is a good idea. I think that had an apology been given at the beginning, we could have avoided the whole criminal justice process for this matter. I know that they were working on one and showed me a draft of an apology. I dont know the attorneys for the defendant. Can you tell us i would be paraphrasing it, but short apology and it is up to them to reach out to miss fields and send it to her. When do they show you that . Recently. Earlier this week. Did you speak to miss fields . I spoke with mrs. Fields on three occasions. The initial photos that we received were a couple of days old. When i met with the detectives in my office, afterwards, i asked him to reach out to see if he could obtain a photograph that would have been taken closer in time. And she had taken a photograph on her iphone that same evening and there was really nothing there. So it was an investigation that i wanted him to do just to make it more author yes and complete investigation. But the photographs that we have from her, from actually the Jupiter Police department do show bruising, but, you know, it wasnt anything that was anything remotely close to what we got from her, the actual night that it happened. Her phone did not show her phone did not show any bruising, no. It wasnt until the photographs that the detective would have picked up a couple of days later. Thats just the quality of the photo issue, not that there was no injury. Thats that could be what happens when someones bruised. You know. Bruise comes out exactly. Can you talk about that protective bubble that we see in the memo here and what she said she did, the bubble. We have a video, the full video, and i think you may have it, but we have it and i think arei in ing to be showing you that afterwards. Well show the full video and you can see. The press was directed toward the back, there is a bubble. She makes her way beyond the press area and gets right next to mr. Trump and actually makes slight contact with mr. Trump. You see he sort of recoils and thats when mr. Lewandowski comes in and grabs her arm. Would you say in your opinion [ inaudible ] well, it is our belief that what we saw in the video that any contact was incidental and thats not contemplated under the simple battery statute which requires an intentional and unwanted touching. How ghon is it for your Police Agency to file a misdemeanor like this . It happens. It is not that uncommon. We review misdemeaners that come in, charges filed by Police Agencies because we ethically we have to make a decision whether we have a good faith basis to prosecute. Or whether there is reasonable doubt. If we know in advance that reasonable doubt exists and we are in the going to be able to get a conviction or beyond a judgment of acquittal by the judge, we cant file those charges. 10 of the time, half the time, how often is it that you say that you get a charge like that and you decline . Often. You know, we have a Domestic Violence unit where we review Domestic Violence all the time. Instead of them actually arresting the person, they will present us with a filing packet in which case we have to review the case. And a lot of those cases are not filed as in this case. By the way, when she says a lot, it is far from a majority, it is a clear minority of cases. Did you talk to anyone in the secret service directly about this incident . No, sir. There was an affidavit from an fbi agent, but no. Your conversations with in person or on the phone . On the phone. Im curious in some parts of the country states attorney is did you have any outside political influence on the decision here and how are you registered yourself . None and my political affiliation and political leanings are very public, but they dont come inside this office. This is an apolitical office. Were all elected with a political a party affiliation. But once you get to this office and work as state attorney, your state attorney for everyone and are to run the office in a nonpartisan manner. I have three chief assistants here today, brian fernandez, registered republican, al johnson registered democrat and adrian ellis, no party affiliation. It is public. Im a registered democrat. [ inaudible ] he spoke to a few of us, the chief assistant and me. He said that he gave his version of the facts, and his opinion of the case and then urged us to do the right thing. What was his version . He was she touched him. And pretty much thats it. She touched him. And he did not think that miss lewandowski should be prosecuted for it. Felt threatened or scared or concerned. They said she she touched him. And all that is captured on the Video Surveillance. She it was quite evident. The Jupiter Police department had the videotape. We got it from jupiter. When is the call from mr. Trump . Couple of weeks ago. Did he make any threats at all that he was thinking of filing charges . I dont remember any such threat. I can tell you that. The conversation we had with mr. Trump had no bearing upon our final decision in this case. Just like i said earlier about the existence or nonexistence of an apology letter, had no bearing on our decision in this case. What did have the sole bearing on our decision, the facts of the case and the law. Were there any notes taken during that conversation . I dont believe there are any notes taken, but if there were, anything subject to sunshine law would be available to all of you. Was it a Conference Call and you spoke to several people at once . Correct. Conference call. Did you as a long time person in politics, can you describe your relationship with mr. Trump, how well you know him and what type of yeah, i got a kick out of the whole political angle because at first they were saying that somehow i was doing this on behalf of hillary clinton. And then found out i was law schoolhouse mates, dorm mates it ted cruz. We shared a bathroom first year of law school, i assure you that had no impact upon my decision. I knew marco rubio in the florida legislature. And i have met mr. Trump on a few occasions. Ive been to marealago. Last time i was there was 800 others there. I have a relationship with several of the other people running for president has no bearing upon our decision in this case. Our decision was made solely on the facts, solely on the evidence and solely on the law. What law school was that where you shared a bathroom, i guess Harvard Law School and hastings hall. And i had a reporter call me to question me a couple of weeks ago that somehow that was the reason why i did this and he asked me when is the last time i spoke to ted cruz and i believe it was my third year of law school, which would have been about 20 years ago. Yeah. The memo, it talks about how sometimes participate in assisting secret service. Is that written down anywhere. Was that codified anywhere . Just accepted practice. I believe that came from the sworn statement from the fbi agent who we quote in the memorandum. On the politics side, you made it clear that politics was not a factor in your decision, but did people try to influence you politically . Absolutely not. Your first name . Adrian. Adrian . Yes, sir. Your title . Im one of the chief assistant state attorneys. Is there interest in the video . [ inaudible ] all right, so we have been listening to the palm beach florida county prosecutor saying they will not be pressing charges against Corey Lewandowski. Donald Trumps Campaign manager over the incident with Michelle Fields. Back to the subject at hand. If youre just joining us after that rather lengthy press conference, were talking about airline delays, tsa problems, lines, et cetera. Got Gordon Bethune and seth kaplan. Thank you for being patient through that. Here is the problem. We all complained about the lines. But we also want to be safe. We dont want to compromise safety. The tsa, ill deaf the tsa, are they stuck in an impossible to win decision. Not at all. Around the world, one thing that is different is that other security regimes, a lot handled by contractors, some not, have Customer Service standards and you can go to the busiest airports in the world, london, heathrow, you get through in ten minutes. Thats because it is in the contract that the contractor has to process whatever, 90 of people in ten minutes or less and they get fined or fired. They do a good job. But we could use some of that here. No question they kept us very safe. But it is just a huge drain on productivity in the country. Tell everybody you got to be at the airport two hours before a flight. We want to we want to travel, we dont want to wait in long lines, want to be safe and have a cheap ticket. Who ultimately, if we look at technological solutions, who ultimately would pay for that, the passengers at the end of the day . Sure, they just enacted not that long ago another tax increase on every ticket for security, that money went to the general fund and not the tsa. Theyre getting the money from the passengers, but theyre not deliveng the product as was just mentioned. I think it is an allocation of resources, administrative overhead. You could like some Police Departments put more people on the street. Just depends upon how you allocate the resources. Gofrde egordon answer a quese got. There are more tsa workers than there are people on the plane, then you go to a huge airport and you cant find somebody. Why does that happen . You talk about miss allocation of resources, what the heck is going on . It is mismanagement. You dont put the people where the passengers are. The security agents. They dont order part time jobs. Theyre eight hour shifts. One or two people in the when you go to chicago, there is people there all the time, day and night. I did say there was an allocation of resource problem. Thats a management problem. They could do more to make sure the agents are where the people traveling are at the time they want to travel. We had major headlines this week that could suggest capitalism is at a crossroads. Thousands of verizon workers striking yesterday. Today, mcdonalds workers, a number of other minimum wage workers rallying in an effort to raise the minimum wage and earlier u. S. Treasury secretary jack lew telling cnbc that legislation should be passed to shut down tax inversions once and for all. Lets bring in mimi sol tisic. Before we get to your ideas, im curious, we do have a socialist making a very credible run for the presidency in this country. Bernie sander. Hes a socialist. Are you jealous of him . Hes running on the Democratic Party ticket. Are you proud of him . Well, i certainly wouldnt say im jealous of him. The Democratic Party is a capitalist party. There is a lot of problems inherent to running as a socalled socialist on a capitalist party ticket. What Bernie Sanders tends to advocate is reforms within the capitalist economy, more of a social democracy, things that we might see in scandinavia. What were talking about is worker control over the means of production. Sander also has a record of support for war. And we dont see imperialism as part of any sort of responsible socialist program. Can i frame a question to you this way, which is, you know, there has been a battle of ideas, right . Back to the bolshevik revolution, you ask what is the best way to divide a nations resources to do the most the best for the most people, is it a government control, or is it the markets. What would you answer . Not looking to the market for our answers. What we see is being the solution is community control. The way that we operate and the way we approach this, we dont look to a president ial campaign to provide the solutions. We look to the people. The people are going to lead this. And if were going to see a socialist revolution in the United States, it is not going to happen through a president ial campaign or a candidate. It is going to happen because the people led that revolution. How do you feel about capitalism . A lot of people think it is immoral. Is it . Capitalism is the most moral form of government in economic formats of distribution of income. It is based on the consumer. The consumer determines who has wealth in capitalism by spending on products and goods. Socialist is based on a Government Official determining who has resources and taking it from the Rightful Owner and distributing to others who didnt earn it. Thats the basis of not only socialism, but communists. A capital asks how can i benefit and create values . A socialist asks the question, how can i confiscate money that has been created by others and distribute it to myself and my power base underneath me . It is really going back 3,000 if not 30,000 years to centralize power and control. And it is the most destructive form of government and economic structure imagined by mankind. Carl marx did more damage to this world than any other individual that ever existed. The cool part now is that aside from that definition of socialism is wrong, and i think why were seeing such support for socialism now is that the kind of message he is sending, people can fact check in real time. And find out what is the truth. That message that hes putting forth has been so thoroughly debunked and so out of touch that i think this is why youre seeing such support for socialism right now is people dont have to buy that crop anymore. We have a lot of capitalists who watch this network. I bet youre not surprised. They would point to the soviet union failing and saying, see, thats proof it doesnt work. We talk about socialism, were not talking about stalins soviet union. Were talking about a lot of things we havent seen yet. Now, we might see they didnt get it right is what youre saying . It was completely it was different from what were talking about. We might see universal health care, and universal education, things that we see as fundamental rights, we see those in a socialist economy. But what we also see is Grassroots Community control, worker control over the means of production. A lot of this is new. And things that, like i said, we havent seen before, so to point to history saying this didnt work here, this didnt work here, one, the definitions are wrong, and, two, we as people are capable of progress. As capitalism, it is failing as designed, were capable of moving forward and working together on solutions. Thank you so much. We have run out of time because of the long press conference. Appreciate it. Mimi sol tisic and mark madsen. Were taking a look at president obama welcoming participants in the annual Wounded Warrior ride at the white house. The ride was established to raise awareness of Service Members who suffer physical and psychological effects of combat. Reminder of the sacrifices that our men and women in uniform have made to keep our nation free. It is a reminder that for those that were called to serve, their mission doesnt end on the battlefield. When you carry with you for rest of your lives. Prosecutors deciding not to press charges against donald Trumps Campaign manager. Corey lewandowski, over a videotaped altercation with a female reporter. The reason, the evidence against him was not Strong Enough. Student protesters clashing with police in paris today. It occurred during a tense demonstration against the french governments planned reform of the labor market. Police using pepper spray against those throwing rocks and bottles at them. And Prince William and wife kate given a red carpet welcome as their plane landed in the himalayan kingdom of bhutan. Theyvited by the nations king and queen. Thats our cnbc news update for this hour. Back to you. News just out of significance to underwater home owners. Diana olick is on that story from washington. Eight years after the mortgage crisis hit, fannie mae and freddie mac are now offering principle reduction Loan Modifications to seriously underwater borrowers who are three months behind on their loans. Their conservator said while this could be seen as too little too late or even too much, the plan is consistent with fha statutory obligation to maximize assistance for home owners. The new program would help an estimated 33,000 borrowers, a little perspective here, 34,000 completed foreclosures in february of this year. Since 2008, 6. 2 million homes have been lost to foreclosure. Lets get straight to dom chu. What were watching now are shares of baker hughes. The shares are moving up towards their best levels today, coming off a little bit now. Headlines from dow jones, citing sources saying carlisle is in serious talks to buy perhaps a package of assets from both halliburton and baker hughes. The businesses, the report goes on to say, could be worth more than 7 billion. Remember, these guys both baker hughes and halliburton, trying to buy baker hughes, running into antitrust resistance from the government, perhaps this could go toward alleviating some of the concerns. Still, you can see baker hughes and halliburton shares in the green today. Baker hughes, noticeable upside move in just the past few minutes or so. Trying to shed assets and redo the deal and go to the doj and say, see, were not as big and scary as we used to be. Upside for baker hughes either way. They have until april 30th to walk away from the deal. If there is a breakup fee most pe firms that dove into the world of oil and gas have come out with their butts on fire. Corporate bonds and Treasury Bonds are badly beating the stock market this year. Will that bond overstock trend continue. Here to talk about it, your trading nation team, editor of the crossing wall street blog. Bonds have trumped stocks this year. Do you think they will continue to do so . If it was a fight, this he would stop it. The bears, we were lectured and lectured last year and the year before. Got to stay out of bonds. The entire street, most economists said stay away from bonds. Bonds will continue to beat stocks for the rest of the year, especially the next two quarters. You have 7. 4 trillion of zero yielding bonds in the world. Thats government bonds. And under 1 , 1 , 9. 3 trillion, and the u. S. Treasuries 170 handle. It is a buy, im going to stick with my 140 target which i had said last year, one spot on the tenyear. 140, on the record. What say you . Stocks or bonds . What side are you on . Im on the stocks side. Bonds got off to a tremendous start this year. But really since early february, it has been all about stocks. And it really comes down to the math. If you get 1. 7, 1. 8 on the ten year and look at the dividend yield of the s p 500, about 30 basis points more than that. On top of that, the dividends grow, fixed income means exactly that. It is fixed. Look at it now. The math strongly favors stocks. There we go go ahead. Last word, larry, quick. I dont get it. You get 9 trillion in bonds in the world below 1 . Thats the math. Youre getting 1 . Id rather get a stock that gets 2 , 3 . The point is, keep your capital. Youll have a return of capital, but a return of capital, larry and eddie, two sides, stay apart, guys. Stay apart. For more trading nation, head to our website, tradingnation. Cnbc. Com. Companies in all industries are trying to figure out how to market their products to the younger generation. What do the Millennials Want from retailers . Courtney reagan is live with some college students. Good afternoon. I have three students here from the university of arizona, all in the retailing and Consumer Sciences program. They are millennials and also probably going to be our future retail leaders. Some pretty interesting thoughts about what retailers are doing. Nicole, i want to start with you. Where do you shop . What brands . And are you shopping in store or online . My favorite retailers are online currently. Im a college student. I dont have time to go to the mall and pick out an outfit. Online is my go to. My stores are asos, h m, top shop. Youre online for now. Yes. In the future you suggested maybe that wont always be the case for you. Im more in the professional field, i hope to be more in the stores and have that interaction between sales associates. Time and energy. My focus is on academics. And, nick, youre going to be working for the home depot. You work at abercrombie. Youre in stores all the time. Do you prefer to shop in store or online and how do you feel about technology in the stores . I definitely prefer shopping, especially for colonialing in the stores. You get that experience. You get to touch and try on and feel the clothing. Get the face to face interaction. Online, you know, it is you have to wait for it. I think it comes into play of patience. Have to wait for items to be shipped to you. And it is just a different experience. It is not as enjoyable. In store. What about you . Retailers are spending billions of dollars trying to infuse technology, like virtual reality. Is that what you want . The idea of that scares me. I dont want a robot checking me out at a register. I enjoy the Customer Experience and relating with the employees there and the relationship that retail was built on. I hope to see that doesnt fade in the future. I think technology is implemental to research and development. Very interesting. So we have to wrap item because as you all know we have been dealing with breaking news, but a final question ill ask each of you. Who are you voting for president . Nicole . Oh, gosh. I am still researching and i will let you know when i find out. Nick . Honestly, couldnt say right now. Oh, wow. Bernie. Bernie . All right, one for bernie, two undecided. Michelle, back to you. Really, really smart students here. If you like who theyre voting for. Good stuff. Coming up, banking on the banks. Power lunch will be right back. Volatility spikes are notoriously difficult to forecast. But what we do know is that when they occur, they tend to be relatively short lived. So rather than trying to forecast when the next spike is going to occur, instead, consider taking a position that will benefit when volatility comes back down. Stocks a big story. Some say Regional Banks are taking the spotlight. Could the small banks deliver big returns . Here to discuss are Robert Sarver and tom misho. Great to have you both. Im going to start off with you. Everybody nose trading and Investment Banking results are going to be terrible. But the real wild card is the exposure. Energy costs were way beyond Management Guidance and talking about the number and percentage of energy loans in their book that could be at risk of defaulting this year. Are you confident we have a grip on what the exposure is for the banks. The banks have been pre very prudent and conservative in their actions and the provisions are occurring before the losses show up. I think the big message in what the big banks have done is that they have plenty of earnings power to deal with the problem. We at kbw believe the Energy Problems that emerge for the biggest banks are just going to be issues in terms of earnings, but not really impact the balance sheet. Now in the case of some of the smaller Regional Banks, that may be different if a bank has too much located locally in the market. For the biggest banks, this is a sign of strength in terms of how they deal with the energy credits. Is there a preference on your firm, small versus mid or small or large . Were at a Pivotal Point with Bank Earnings. To date we had some of the biggest banks report earnings. What we learned in the jpmorgan example is the market was too cautious on large Bank Earnings. But really next week youre going to start to see some really terrific regional Banking Companies start to report earnings. These are companies that are some of them are companies that can grow earnings at 10 plus percent and we even had a few report this week. Look at First Republic this week, not big in the energy sector, they dont have big Investment Banking revenues, they have been basically executing on a great plan. And they have been a double digit earnings per share grower and banking company. We see the Fastest Growing companies today in that midcap Regional Bank size. What happens to the megacap bank size, tom . Bank of america, the cfo was saying on the Conference Call in quarters like this, revenue would be challenged and talking about the yield curve. Most people believe there is going to be two Interest Rate hikes, but conviction in that seem to be dwindling now. I think the factors that are driving the largest Bank Earnings are very different than the factors that are driving some of these growth Regional Banks. And i think the macro issues, they matter for the whole industry, clearly. Some macro issues are more important for these global civvies than for the banks that have unique strategies. The biggest issues with the big banks are going to revolve around the appropriate return on capital. I think the management teams and boards have to figure that out over time. But it is a very different story than the Regional Banks. Tom, great to speak with you. Thank you. Lets focus in on one of the Regional Banks. Robert sarver, great to have you here. You agree with everything you heard there and what do you make of what we heard so far from the large banks . I do. I think there is differences with the Smaller Banks. The larger banks have less to find capital and liquidity rules. In addition regulatory costs are higher. The Smaller Banks tend to have better net interest margins and you see better top line Revenue Growth from them. Do you think the government should break up the big banks . I dont think thats the in best interest. I think the big banks need to be monitored, and the rules need to be in a situation so that we cant run into what we had before where all of a sudden the banks become too big to fail. And i think government has done that. I think through legislation and through regulatory actions the bigger banks have adequate capital ratios, they have robust Enterprise Risk Management in place and the regulators have been prudent watching and making sure that what happened before doesnt happen again. Politicians love to champion the Regional Banks, the Smaller Banks and beat up on the big banks. But if they were broken up, you have much more competition in your space, right . I dont know if it would change the competition that much, i think if the bigger banks were broken up, they would separate more of the investment activities from the regular commercial and consumer baf er activities. Where do you find the greatest profitability now. Were a business bank. We operate out of about 40 banking offices in arizona, california, nevada. And then we have a handful of National Business lines, so what we try to do is try to avoid the commodity type loan products and do business in niches with companies that need bankers that understand their business model, understand their industry, and then deliver a high level of service and by doing that, we have shown we have been able to get high risk adjusted returns in most of our piers. Youre the owner of the phoenix suns basketball team. I would be remiss if i didnt ask about what did you think about kobe bryants last game, steph curry, what were you watching last night . I watched first half of my game and took a plane over here. Both are great. Kobes last game was incredible. Throwback. The privilege of watching him play three playoff series against the phoenix suns and following him. And with the warriors this year, they have been spectacular. Nba basketball is at a high. The talent level and style of play is made the game extremely great to watch. And then along comes steph curry. Yes. Steph curry is incredible. Hes almost like a video game. Like, you know, hes too good to be true. Guys, great to have you. Thank you. Thank you. Is the once hot Miami Real Estate market starting to melt down . That story next on power lunch. 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. P . P . O . Gv i am a First Responder tor and iemergencies 24 hours a day, everyday of the year. My children and my family are on my mind when im working all the time. My neighbors are here, my friends and family live here, so its important for me to respond as quickly as possible and get the power back on. Its an amazing feeling turning those lights back on. Be informed about outages in your area. Sign up for outage alerts at pge. Com outagealerts. Together, were building a better california. It may be storm season for Miami Real Estate. Robert grafrank is here to brea down the money and mansions. Robert . Thanks a lot. A lot of people have been wondering whether miami, which is always a boom and bust town is now switched to a bust cycle. What are the pressures that are sending prices down, inventory soaring two years of supply in places like miami beach that were looking at now . Its really the stock market volatility as well as the strong dollar that have had amajor impact on whats going on in miami. Very wealthy buyers who face so much uncertainty and that uncertainty is not only related to geopolitical events to not knowing whats going to happen politically also within the United States they get very uncertain and very worried. The luxury end is so discretionary, when things are great, we say we have money to spend. They can turn it off like a light switch when they dont feel like spending. We have the pent houses sitting there. Miami, tough quarter for them, moving up the coast though, what about boca, ft. Lauderdale, palm beach. Theres actually a huge difference in terms of the story when you look at the ultraluxury Market Segments and palm beach, boca raton and delray beach, the really budding town. People are excited about this town. Is that because its cheaper, different kind of buyer, less traveled . Whats driving it . So, when you look at broward and palm beach counties, youll realize that majority of buyers come from the United States of america or they come from europe. Most of miami buyers tend to come from south america. And russia and china, all of the places having trouble whereas the european are a steady buyer group than palm beach. What was the average price this quarter . According to jonathan miller, samuel, this past quarter in palm beach, the average home sold for 60. 5 million. 60 million was the average sale price. Lets go to your market, boca, boca was the best performing market in all of southern florida by a long shot this quarter. Whos buying . Mostly americans and certainly europeans. Whats going on in europe in terms of security and safety, a lot of europeans, particularly belgians and dutch are coming to boca raton and feel good. They feel comfortable belgians are the new russia and boek ka is the new miami . You can look at it that way. We have a listing of yours, a penthouse listing at 1000 ocean. Black stone built this five years ago, really modern, unique product in boca. Tell us about this listing on the market. What could you get for miami for the same price . Thats the key question. In fact the values that youre getting in palm beach county, boca raton in particular, 1400 square foot and getting a significant penthouse, its 4400 square feet, two terraces directly on the ocean. How much is this property . This one is a mere 6 million. 6 million. So what do you get comparably for miami youre getting what, about half of that amount of space . I will just say Something Like this in miami would cost 12 million in bar harbor 14. In miami for 6 million, you can get maybe one bedroom and two bedroom if youre lucky. And michelle, i know you know the florida market well but its interesting when you have one group fall off in one place, florida always seems to be drawing from somewhere, doesnt it . Its warm and sunny and taxes are low. Exactly. Thanks. Thanks so much. Mill enials cant put their phone down even for two hours to watch a movie. We have that story next. Here at td ameritrade, they work hard. Wow, that was random. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry 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. Td ameritrade. This just got interesting. Why pause to take a pill . 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. 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So we can make the world run faster, stronger, fresher, smarter, cooler, lighter, greener and better for the next generation that comes along. Ppg. We protect and beautify the world. Cell phones at the movies are annoying but they may also be profitable. Theater chain owner amc wants to not only figure out how to let people use their phones during the movie but might actually encourage it. The amc ceo says asking a millennial to put his or her phone down for two hours is like asking them to cut off their arm. A special section for the millennial is one possibility they are looking at. Thumbs up or thumbs down . How about if they are sitting at the back . Screens are so bright it would be very distracting. Its one reason to not go to the movies and wait until it comes out for streaming or on demand. I love going to the movies. I text at the movies and put a jackets over my head. The jacket is extra . I guess thats one way to describe it. The jacket texter is well known entity of movies. It is, i thought i was unique. Thats also the person that thinks we cant see the cell phone site underneath the jacket. We had a segment about how millennials are forcing Corporate America to reexamine how they employee them and what sort of benefit and work hours, et cetera, et cetera, here they are once again dictating to an industry, you know what . Get with it, get with the prefrpss, otherwise you are at risk for losing us. This is a generation that loves to stream gen z now also. Theres a new gen . Millennials are aging out. Genz is all the rage now. Good story. Thank you for watching power lunch whatever generation you might be. Closing bell will start in just about four seconds . Yep. Hi, everybody, welcome to the closing bell. Im kelly evans down here locally at the new york stock exchange. You have plenty of company over there. I know im Bill Griffeth here and ill be on nightly Business Report tonight on pbs, hope you can join us then, kind of a lackluster day overall. The dow up just 16 and s p still watching that 2085 level on the s p to see if they can get above that. But so far no dice. Transports have been strong. You can see among the ten sectors in the s p, the financials are the strongest. In the transports it was