Transcripts For CNBC Power Lunch 20160428

Lets bring in michael ye and another health care analyst. Michael, first you to. Given the deals that we have seen, not just today but in the past, why do you believe a biomarine or vertex may be takeout targets down the line . Two reasons. One is if you looked at biotech valuations, theyre down 35 off the top in the last 6 to 8 months on political rhetoric that we talked about. So asset prices have come down and become a lot more attractive. The second point is that theres no change to the fact that Big Companies need commercial products and they need pipeline. Thats exactly what youre seeing. And what will those companies have that make them attractive you to or to potentially bottom . Les, we can hear you. Well get to you in a second. What makes them potential buyout candidates . Both vertex and biomerine have real revenue. Theyre out there right now plus pipelines. You get both of those with that. And so both of these companies have asset value to acquirers. You know, les, when you look at it, obviously you want to probably own companies that get bought rather than companies that do the buying. Do you agree with michael or is there anything else out there that you see as a possibility . First of all, in order to do an acquisition, you have to have a willing seller. And i think that a lot of the bioteches are still anchored to the two week highs. Im not sure its going to be that much activity in that sector. I think what you saw was st. Jude and abbot today was a med tech and others have not participated in the m a sweepstakes. I think that sector in particular is due for a catchup. And id say med tech in, particular because of the fundamentals are doing so well, we own Boston Scientific and edwards which have done well this week and the hospital stocks which benefit from utilization increases. I think youre going to see more consolidation there. Towards the end of the year, i think reality may sink in with the bioteches and you might start to see more deal activity in that sector as well. But les, even though some of the Companies May be richly valued, when you look at a deal like santa fe now cross border hostile for medevation, it looks like theyre willing to pay up for companies they want. Do you think that company wouldnt be a willing seller at the right price and that they wobbling to pay that price . You know, a lot of the larger pharmas are desperate for pipeline. To michaels point, they need products. And so theyre one of them. Astrozenica. Theyll pay up. Im not sure overpaying for an asset is a great strategy. You can wind up in a lot of trouble. So, yes, it will happen. But i think it will happen in a strategic way, not in a sort of stampede way. Michael, when you look out there in your coverage universe, you gave us some names you think could be takeout candidates. We appreciate that. Is there one name out there that may not be a takeout candidate but youre watching them closely now and saying, hey, down the line, theyre going to be really, really valuable . Yeah. So we would say kite another one. Kite has phase three cancer assets in the pipeline. And theyre hanging out there, too. Its a pretty hot mid cap stock that we have a buy rating on. So thats another one. So they have a deal with amgen. Amgen talked about the fact that theyre looking at things, biogen just last week said theyre looking at a lot of assets. So the point is that Bigger Companies are saying theyre looking at these assets. I it this bid spread is coming together. Michael yee and les from esquared, good concrete ideas. We appreciate it. All right. Thank you. Meanwhile, more on the other big deals today in just a moment. First, some news in the bond market. Seven year notes up for auction. How is it going, rick . Ill tell you, you put two Central Banks behind you, three including the ecb, you push yields down. You have everybody jump in long yesterday after the fed statement. You talk about the perfect landscape. This was an a. I almost gave it an a plus. This auction, they were just dying for these seven years. Lets go through it. Final of will 88 billion in supply today. 1. 634. Looked to me like 1. 645. This was strong. Bid to cover, 2. 65. Way above the 2. 47 auction average and the best since february of 14. 65. 5 at indirects. If you take out the three that we added in january at 69. 4, this would be the best read going back to 09. If you 14. 2, up 13. They take 20 are of the auction. If you look at all the charts, whether its the sevens, twos, fives, tens, or 30s, the auction is behind us. This one went great and all yields are moving down a bit. Thank you. Lets get to the other big deal story today and that would involve cnbcs parent comcast. They are buying dreamworks animation. Dreamworks at 39. 98, up 7. Comcast, moving higher as well. Up a third of a percent. We have details live from l. A. Hi, julia. Hi, tyler. Investors are certainly bullish on this deal for dreamworks animation. Comcast shares budged slightly. The analysts say a deal helps comcast get established brands, greater presence in china and better exposure through digital. I spoke to Nbc Universal ceo about why he is paying 41 a share, a hefty premium over the 27 a share that the stock closed at on monday. He said that the deal will bolster the studios animation business, building on the success of the franchise and plus assets such as shrek and kungfu panda will help the theme park divisions. It shouldnt be valued on assets and cash alone but should take into account the synergies. Because of that poshs of integrating the acquisition into nbc used assets, burke says it makes sense to shift into a consulting role and focus on the digitsal division. A number of Media Industry insiders compared thl tis dea disneys marvel, pixar and lucas film accusations and bob egers strategy of building and buying big Family Friendly brands to exploit across multiple platforms. As for what this means for other m a, this deal bodes well for the valuations of lions gate and viacoms paramount. Brian . All right. Thank you very much. The push for electric vehicles is in full force, even in china. But plugging in can be, shall we say, baa bit of a challenge, especially for those living in highrises. Here is phil lebeau. How tough is it to own an electric vehicle in china . Check this out. This is parked outside an Apartment Building. They have to run this cord to e recharge it every night across the street, up the cord yaurtya their Apartment Building and up here and goes up to the third floor. Thats what they have to do every night in order to recharge their electric vehicle. That is dedication. Speaking of dedicated, phil lebeau left beijing but joins us now from the chinese city of shen zen. I bet that plays out all over the city. It does. And we were surprised when we first heard about. This somebody said, look, there is somebody that has a stretch of cord 100 feet to charge in their electric vehicle. But thats one of the challenges here in china. That said, were seeing growth pick up here in china when it comes to electric vehicles. Sales last year outpaced the u. S. 188,000 electric vehicles sold in this country. The goal is to have 10 of all vehicles in this country be electric. That is by the new sales by 2020. Byd is the largest maker in this country. Last year sales totaled 62,000. One reason sales are picking up, first of all, the federal government here as well as local governments give incentives that start at 8500. Those go direct to the buyer. Also, the buyers get the vehicle licenses quicker, immediately. They dont have to wait for the auction or some type of lottery in order to get the vehicle licensed. However, the challenge which we just showed you is finding a place to plug in every night. Chinese consumers generally live in large apartment complexes, not in stand alone homes where they can more easily have a charging solution. So one of the problems is where do you charge it . Are there teslas in china . Did you see many teslas . Yes, weve been driving around, we have seen teslas more in beijing than down here in schenn zen. We went to a super Charger Network station for tesla and there were a line of teslas recharging. There were people waiting to go in and charge up their tes l. A. Keep in mibld, teslas imported in here so there is a hefty tax on them. Thats limb ilimited their sale far. Great stuff about chivenlt 1 00 in the morning, there phil. We know youve been working ultra long days. We appreciate it. Really cool stuff. Thank you, buddy. Appreciate it. Were just Getting Started on power lunch. Coming up, this is big and exclusive with billionaire investor carl icahn. Lots to talk about with him. Scott is going to join us. Going to be a big free for all. No topic offlimits. Plus, more on the big nothing out of japan. Trust us, that nothing is really something. But first, were headed back to iran where Michelle Caruso cabrera continues her series of amazing reports from that country. Thank you. Last hour i showed you how they trade stocks in iran. Wait until you see how they trade gold. Coming up right after this break on power lunch. Gold futures are trading higher here in new york. But in iran, the gold trade is a completely different story. Lets get to Michelle Caruso ka br cabrera who is live on the ground in tehran for us. Michelle . Hey there, yeah, if you go to the bazaar here in tehran, youll see this, hundreds of gold traders out in the main square doing open outcry to exchange gold. Who needs an exchange . Very similar to say the button wood tree the way wall street trading got started in new york. Now that may look very old school but there are a lot of people who think the iranian economy is changing and for the better. In fact, we have run into exiles whos family left as a result of the Islamic Revolution in 1979, theyre thinking of coming back to iran because they think the economy is changing. Al this man is an economist. He was raised in france when his family went into exile in the 1980s. He made sure he was on the very first air France Flight that took off from pair tois tehran. The first one in eight years. It occurred because the sanctions had been lifted and that flight was only about two weeks ago. He said he was very, very excited. He got on that flight because he believes this is an historic time for iran. You can feel it. I just came from paris, france, with the first air France Flight to tehran after eight years. And when i entered the flight, i was feeling the excitement of the people. Its not just because the nuclear deal. Its also because under the president , the president here laz made it a point that he wants to enlarge the private sector. This is an economy that still has deep, deep intervention by the government. But he wants to change that. However, he says he still has one very big concern. This corruption which is unfortunate system is a very, very significant constraint to the development of the country. And i think the government of iran, the current one, is very much aware of this issue of governments, of corruption. And theyre trying to solve. That but this is a very difficult problem. Its going to take time. It is an incredibly difficult problem, especially when there are vested interests. Thats where a lot of corruption comes from. Well have to see if iran really is changing. But there is hope. Back to you. Michelle, you have explored every facet of the economy there. I know well get a little more from you a little later on. Michelle Caruso Cabrera in take ra tehran. Why ford shares are in overdrive right now, kusht currently up 3. Full details when power lunch returns. Welcome back to power lunch. Marriott adjusted profit of 87 cents per share, three cents above estimates. Revenue at the company beat forecasts. Ford beating estimates, revenue below forecast. The automaker saw record Profit Margins globally and in north america. And mastercard reporting profit that declined year over year but less than the street expected. Customers are spending more using its cards and mastercard is ramping up spending on technology, did so less than expected. Over to you. Thank you. Last month a security lapse in the bank of bangladesh led to an 81 million theft from an account at the new york fed. Now a fed official says theres little the u. S. Central bank can do to prevent Something Like that from happening again. Alarming words. We have the story live from washington. The new york fed official told Steve Liesman and i that fed is taking this issue very seriously and that cybersecurity at the banks around the world that fed tranacts with is critical to the system. What happened in february is crooks got into the Computer System and authorized transfers of nearly a billion dollars out of the banks account. Systems blocked some of the transfers but released 81 million to accounts in the philippines and slee lafrpga. Some was sent on to casinos in the philippines and converted to chips on the gaming table theres. Authorities dont have any idea who stole all of that money. Now despite that heist, the fed official told us that the fed has no control over cybersecurity at the global banks that it does business with around the world. And that means theres potentially an enormous amount of money at risk here. Now as many as 250 Central Banks and entities around the world have accounts at the new york fed totaling 3 trillion in assets, roughly 80 billion is wired into and out of those accounts every day, the official said. Now that staggering pool of munn represents a rich and tepting target for cyber thieves. But if cyber thieves strike, it doesnt have to tell anyone about it. The official said there is no law or regulation that requires the fed to reveal the heists have occurred. Steve liesman and i asked if there are other cyber thefts like at the bank of bangladesh and the official replied that there have been none in a central bank context. But the official and a fed spokesperson declined to respond to several questions about whether accounts at private banks at the new york fed have ever been victimized. Back to you. So lots of questions arise here. Sounds like there may have been other incursions into the fed one way or another. They dont know. But why we began the piece by saying they cant guarantee the security or that wont happen again. Right. Why arent they taking steps to make sure it doesnt . I assume they must be. This is the Global Nature of this problem. They say they cant tell us any specific steps theyve taken for security reasons. They also say theyre ham strung by the Global Nature of this. The fed has that 3 trillion pot of money in new york. But the global bafnks dont hav operational control over the cybersecurity at other global Central Banks. And thats the key issue here. That seems to be what happened in the bank of bangladesh. Someone got into their systems and then withdrew the money out of the new york fed account. It is just me . I know were highlighting the story. It is 23 minutes after the hour. I think if there was somebody literally Walking Around inside of ft. Knox that it would be this gigantic story. I feel because this is happening on computers, but effectively the same thing is going on, there is a crook literally Walking Around the hallway, if you were, it kind of gets pushed down a little bit. Yeah. Youre an a block kind of guy. Look, what were so used to all the hacks happening and all the news, it all blends together. But remember what the thieves tried to do here. They tried to steal a billion dollars. Exactly who can carry a billion dollars out of ft. Knox. It would take up too much space. National news headlines, whatever is a couple Million Dollars at the time. Were talking about a billion bucks. But because this is on a computer, it seems to happen so much, i feel like its not us or you, its sort of as a country or a world weve become so sanguine so to what is true monumental crime. 80 billion is being wired back and forth on every single average day. That is a lot of money in motion right now. Its a lot of big hugearget for cyber thieves. The goal is to get a billion. This ended up getting 81 million. You say that Security Systems caught the others, i guess. Yeah. And we dont know exactly what happened there. The new york fed is not providing any details about what happened. There is a member of congress opt hill in washington who sent letters to the new york fed asking why some of the transactions were approved and others were not. It may be something as simple as a spelling error in the electronic file that requested the transfer. The other question here is why arent there human beings involved in the transactions . Why is there completely Electronic Transaction here . There is simply so much money moving in the global economy, xrupt human beings process this every day. Its that much money. Another check on gold price wlz theyre sold at the button wood tree in eiran or whenever, up 16, almost 17. 1268 even. That is your gold check. Look at silver, copper, platinum and palladium. All higher as well with copper the lagger there, up just. 25 . Others up more than 1 in the case of silver, palladium and platinum. Big scandal at price line. Well tell what you the controversy is that led to the resignation of the companys ceo. Power lunch returns. Hi, everybody. Here is your cnbc news update this hour. A u. S. Attorney reporting three people connected to the shooter farouk have been arrested on conspiracy, marriage fraud and false statement charges. One of them was farouks brother. The attack last december left 14 people dead and 22 wounded. Syrian rubbles blaming russia for the deadly air strikes over the last 24 hours, one of them hitting a pediatric hospital. Rush yashgs however, says it was not behind the strikes which killed at least 61 people in the city of olepo in the last 24 hours. The United Nations urging north korea today to stop further provocative actions after reports it test fired two intermediate range ballistic missiles. They were detected by the u. S. Last night. They pose nod threat to north america. Take a look aat. This a bird strike leaving a large dent on a jetliners nose. The dallas bound flight returned to seattle shortly after takeoff and landed safely. Luckily no injuries except to the bird, of course. Brian . Back to you. Guessing the bird did not have his happy outcome . Just a wild speculation on my part. Thank you very much. Sure. All right. The bank of japan surprisingly investors by doing nothing. They did not raise rates. They did not make any additional stimulus moves. Seema is here to tell us that this big nothing is actually something. It is. Well, heres what he did. He overpromised and underdelivered which we know is never good for markets. Expectations have been building ahead to have days meeting. Some economists forecasting a larger stimulus program, more negative rates, expansion of the pulled assets. He had been quoted over the past couple of weeks saying hes been watching the strengthening of the yen and is looking at further options. Todays meeting came and we got no action raising the question as to whether its simply run out of options are still trying to work out the negative rates. The yen strengthening to a 17 month high. Japanese stocks selling off. Dhoenlt like a strengthening currency. Theyre now off about 12. 4 year to date. There is now an active discussion around whether Central Banks are losing credibility and also whether theyre misguiding markets. Remember, china was blamed for doing this earlier this year. Now japan seems to be throwing a curve ball y does this matter . Its been a large Monetary Policy experiment for the world. Japan, 25 deflationary trap. Growth has been slowing despite the massive measures. Still w have not seen the turn around in japans economy. Thats a big concern now. Were expecting both action and summer. Well see if we get it. The big nothing something. Also a big hair cut. A lot of the Japanese Companies do trade here. Look at. That honda down 3 . Toyota down. Those are the sthookz trade here. If you export out of japan, a stronger yen is your worst nightmare. Japan is an economy that is heavily relinlt on exports, sefkly tsefk specifically the automotive industry. Thank you. Thank you, brian. So how does the boj decision impact stocks and bonds . Lets bring in a fund manager aeven a cnbc contributor. Gene, ill start with you. The market acted surprised in january when the bank of japan first went to a negative bank deposit rate. Theyre surprised again today. Is japan just not as good at job owning the market as the fed is now . I think what we have here is a situation where Central Banks, since the g20 in february and shanghai are trying to lean less heavily on the currency devaluation lever in order to stimulate economies. And so investors expectations were too high that japan was going to go into further negative Interest Rate territory today. Jack, when you look at the performance in the u. S. Markets, the futures looked incredibly grim on the back of asia still being open and europe trading down. Europe closed well off the lows. S p 500 at this point is not even down one point. Did we actually avoid chaos because the bank of japan held off this time . Believe it or not, it was good news in some regards. Remember, everybody was looking at what the bank of japan was doing over the course of the last couple months. And wonldering eriwondering if desperation. People are calling negative Interest Rates ludicrous. For them to continue to go down that path right now without letting all of that work through their economy, it would be the wrong move. The fact that they did nothing is actually, i think, looked upon favorably. What you saw happen, by the way, is that relative value trade. Everything got dragged down right off of that news. But then when people realize that maybe just maybe this is not all that bad, we saw everything start to come back. Now the flip side to that is that you could see that june rate hike back on the table now. And it could be a reason why you could see a bid back in the dollar which may not be good for stocks. Gene, im curious this vote for the bank of japan, it was not split whatsoever. It was 81. They did take down the inflation estimates for the year. They said they wanted to study the effect of negative Interest Rates. If that decision had to be made today, what do you think the effect would have been . Well, look, i think what they learned in january is that there is a pretty disruptive impact of implementing negative rates. What you have now is a situation where japanese Bond Investors are absolutely in a position where yields are negative. There is not a lot of income to be found. Now you dont even have the central bank, at least today, add ago decisional qe to push up prices. You cant even play the hot potato game of pushing Prices Higher at negative yields. So it leaves them in a very challenging situation. And frankly, the answer is to invest elsewhere, to look for places where high quality bonds still have reasonably attractive yields and that does push you into the u. S. , frankly. Gene, where would the places be . I think the Corporate Bond market is going to be very well supported. Particularly the Investment Grade space. Weve seen a lot of flows coming from asia and there are still attractive risk premiums that flows are going to push tighter. All right. Well see whether there does put any pressure on the fed in june. Gene and jack, we appreciate your time today. Thank you. All right. Lets go to the bond market and Rick Santelli who is tracking the action at the cme. Seven year auction earlier this hour. It was a solid auction. A for apple auction. Look at intraday of seven. Yields dropped at 1 00 eastern. It wasnt only sevens. Two year yields dropped. Lets go right on the curve, 30year yields dropped. Maybe the most significant issue today is an extension of that last conversation regarding the bank of japan. They didnt fail to deliver. They failed to deliver and add the policy that wasnt delivering. Its a good thing. Let the market simmer. They have many more issues to deal with. Now if we look at a one week dollar index, look at that drift. If you look at one week of the dollar, yeah, maybe that is the most significant chart of all. Were dabbling with the 107 handle. Were not far away from a close that would challenge the close on the 11th to be the lowest close since october of 14. You want to watch that dollar index. It could be next weeks wood for a big equity fire to the upside. Tyler, back to you. All right. Rick, thank you very much. Minutes from now, a power lunch exclusive with a billionaire investor carl icahn. But first, Michelle Caruso cabrera will report for us again from iran. Behind this door is one of greatest modern art collections in the entire world. It is rarely seen. But coming up after this break, youre going to get to see it. Welcome back to power lunch. Im live in tehran, iran. Even though iran and the United States have agreed to a nuclear deal recently, there is still a lot of antiamerican sent. That is very visible in artistic works around the city. Take, for example this very large poster that hangs next to a busy thorough fair in central tehran. On the right youll see president obama, on the left youll see what is called shem. He is an enemy of shia islam, that is the kind of islam practiced here in iran. The message is dont trust obama because he is like shem. There is another painting on the wall thats been here for decades. It says down with the usa and there are skulls where the stars would be in the american flag. And then we go to the u. S. Embassy which was the flash point which ended iran and u. S. Relations. That is where the u. S. Hostage crisis took place. Its now a museum and there are two statues in front of it that the iraqis put there to commemorate the hostage crisis. One is the hostages with hands in surrender above his head and the other statue is the statue of liberty with a prison cell in her stomach and a dove inside. There the hostage crisis is connected to the next story that im going to show you. As a result of the Islamic Revolution, the shaw had fled iran. He was the previous leader of the country and he had taken exile in the United States. Students took over that u. S. Embassy and took hostages because they wanted the u. S. To return the shah to iran. That didnt happen. When the shah fled along with his life, they left behind an incredible treasure. The Tehran Museum of con contemporary art sits on a busy street. The spiral inside might remind youst guggenheim in new york. It leads to the museums basement which holds a secret treasure. Behind this door, one of the greatest collections of modern art in the entire world. Rows and rows of paintings hidden away. The pieces were collected in the late 70s by the queen. Wife of the shah of iran. When the Islamic Revolution swept the kun friday in 1979, she and the shah escaped. The great works of art stayed behind. The collection has been kept in the basement since 1979. Its not clear why. Believed to be the most valuable in the collection, this painting worth 400 million. The cnbc team was allowed in but we were only permitted to take photos with our phones. And nbc bureau chief and correspondent shot a story here eight years ago. We believe it may be some of the only video that exists. The manager tells us there are between 1500 and 1600 pieces in the collection. There is no public catalog. Now the Museum Displays only one at a time, currently its this painting. However, you can buy postcards of most of the works that you cannot see. There is only one piece that is known to have left the collection and it is owned by Hedge Fund Manager steve cohen. He didnt buy it from the iranians. He bought it in 2006 from david geffin. He bought it from an art dealer who did a bart we are the iranians. That dealer managed to get crucial pieces of leafs from the book of kings, very important document in the history of iran and he did a barter with the iranian government, two planes meeting on a runway in switzerland is how they did the handoff. Pretty incredible story. It felt indecreedible to go down and see those works of art. Thats an amazing piece, michelle. Really fascinating that so much and a half is still there. That is hard to believe. It truly amazing. Everything youve been doing is spectacular. I know it was a world of trouble to get any of this stuff on camera. What was the sense down stairs when you walked down, you know these artists, what was your first reaction . Oh, my god. This is the met. Youre right. Its like a mini met in the basement. It was incredibly exciting to be able to see it. They think we think they actually may get seen by the public in the next year because there are reports that there are museums in germany negotiating with the iranian government to take some of those pieces and put them on display. If they do put it on display, it would be huge. It would be first time they were seen by the world in decades. It may signal bigger things about what may or may not be happening here politically and economically in iran. Thank you very much. Reporting from tehran. Florida governor rick scott says forget california. Come to florida. How he plans to steal business from the golden state. He stops by to tell us. Dont go anywhere. Sic plays thr the first stock index was created 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. 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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. Natasha stewart was famous for physical assets but when they worked with tracy lyn garner to sell illegal butt injections, the back room procedure cost a woman her life. She exploited a model for money by referring her to tracy lyn garner, a provider of the illegal silicone injections. . This case came down to two people who planned, two people who plotted eastern they were all about making a profit. Investigators believe that garner is performed the same injections on other women. So attorney general jim hood makes a public plea for victims or their families to come forward. Maybe the procedure done on other people and didnt kill them. I suspect there were more here in the jackson, mississippi area. Cautionary tale that back room cosmetic procedures can have devastating results. More deadly tales from the cosmetic surgery underground on an all new episode of american greed tonight at 10 00 p. M. Eastern and pacific on cnbc. Arguably the first and hopefully the last time the phrase back room butt injections will ever be used. Lets hope so. On cnbc. You did it brilliantly, my friend. Her upper lip was quivering. You could see it. Lets move on to more mundane topics. Not really. Thats not mundane. , no you got that right. Ceo scandal rocking the price line group. The ceo there darren houston stepping down today after an investigation revealed his relationship with another priceline employee. Actions out of bounds under the companys code of conduct. So where does priceline go from here . Were joined by dean ted snyder of the yale school of management and Anthony Deangelo from Syracuse Universitys Newhouse School of public communication. Dean, let me ask you first, is this a case where the company in a textbook fashion handled a problem and i say that because they seem to dispose of the problem before we knew there was a problem. Probably textbook, yes. Everybody is in favor of finding love. But its got to be found in the right place. A relationship between a ceo and employee is typically not the right place. It tends to be corrosive for three reasons. One is the other party is an employee. And how corrosive depends on where that employee is and i dont know the facts here. But that is typically an issue. Is it always out of bounds then for a ceo to have a close or maybe romantic relationship with anyone in the company . Or it is just bad practice . Its not it is a bad practice. I think, you know, its aggravated if there are Company Resources involved. Its aggravated if the person is a direct report. But i think the only way its going to fly is if a ceo goes to his team and goes to the board and says, listen, i found love. And discloses it because otherwise, its just going to be a lie after a lie, hiding, hiding, hiding. Actually, you know, ted, its interesting you said direct report. Our story said it. I dont want to knock our own storey. They said well this person was not a direct report. If youre the ceo, everybody is a report. Right . They may not be directly, you know, suborder nant reporting you to but you cant distinguish. Everybody works for you. Thats why its typically out of bounds. And thats the thing. If youre the ceo, even though ceos work long hours and theyre around people close by and further down in the organization, you really have to find love somewhere else. But if you end up in a relationship with somebody inside the company, the right thing to do is to then take it to the board, take it to your team. Dont hide it. Because you probably got a Company Policy in place that says its not right for other folks. Professor, i want to bring you in. Did priceline handle this the right way in from a Communications Public relations standard . And what does the company need to do now in the aftermath of this . Yes. I would second what the dean said in terms of them first of all, they had a code of conduct in place. That code of conduct was parentally violated by the ceo and they moved very quickly. Clients that ive counselled in the past, my advice is typically easy to say, hard to do which is rip the bandaid off. It looks like thafr done that. As a next step, a question that i would have if i were a shareholder of priceline, is there bench strength . Is there couldnt neutral now in the plan . And they brought this their chair, the former ceo, jeffrey boyd, to man the ship at this point. So it looks like there is continuity. And i think as a result they bought themselves some breathing room. Professor, does the fact they brought back the old guy tell you that their bench may not than strong . Not necessarily. I think that thats an immediate move and so thats understood. Its also, i think understood that this is an interim arrangement. The next step will be what is the plan Going Forward . And they will be called to task on that. Ted snyder, answer brians question, do you see that as a strength or weakness or neutral that they brought back the old guy . Good thought. Yeah. Id have to go with the professor. I think its neutral. Its an interim step. And well see how it goes. But the right it was clearly the right thing to do and then youve got to figure out the next step in terms of leadership. Syracuse and yale did very well in the ncaa tournament this is year, didnt they, brian . Well, the nakt yale mafact te it was very good. And syracuse beat virginia in an epic come back. We did. And hes a cavalier, hes weeping. Thank you very much. All right n a few minutes from now, a power lunch exclusive. Carl icahn will be here. Stick with us. What are you doing right now . Making a cake ayla reminds me of like a master chef and emiana reminds me of like a monster chef. Uh oh. I dont see cake, i just see mess. Its like awful. It feels like i am not actually cleaning it up whats that make mommy do . doorbell whats that . Swiffer wetjet. So much stuff coming up. This is amazing woah. Wow. Now i feel more like making a mess is part of growing up. Stop cleaning. Start swiffering. Welcome back to power lunch. Were watching shares of hanes brands. Theyre the second best performing stock in the s p 500. This on the heels of an announcement it purchased Pacific Brands which is the biggest maker of underwear in australia for about will 800 million u. S. So those particular bits of news helping to send the shares higher to be the second best performing stock in the s p 500 and what is interesting about this as well, hanesbrand, one of the few existing s p 500 companies right now that has outperformed facebook since facebook went public back in 2012. So as interesting look. Now lets get a check of the broader markets overall. Well head to the floor of the new york stock exchange. Bob pisani is standing by with a look at the markets. Thanks very much, dominick much the important thing about today is we started off a down side, disappointment over the bank of japans lack of stimulus. We have briefly gone positive at the s p 500. We opened down about 10 points. The low was right at the open. You can see we moved into positive territory briefly. Down negative and now also positive. Social immediate yashgs the key about today, facebook and relief on facebook really helping the overall markets. You can see up 7 . Well get linked in tonight. They issued a very disappointing earnings outlook a few months ago sparking a big decline. Well see if they come up with positive commentary after the close here. Sectors to day, a number have gone positive. Health care, Consumer Staples and in particular, notice energy has gone positive as oils moved into positive territory today. Now we have were starting to get some Energy Stocks. Conoco phillips came in a much smaller loss than expected here. They did reduce the capital spending. The stock up is 2 now. You see that big move. Almost 50 from the february bottom. So Energy Stocks have had a significant come back. Were going to be hearing in the next couple days exxonmobil and chevron as well thursday and friday. And well see exactly what they have to say, of course, everybody is making sure that that dividend is safe for both of those companies. Tyler, back to you. Thank you very much. Its coming up on 2 00 p. M. On wall street. And this hour were going to be joined by two big guests, Steve Mcmillan, chairman and ceo of homelogic and billionaire and investor carl icahn. Scott has covered carl icahn for years on cnbc. He joins us as well. Good to be here. Were going to begin plchlt eye can is going to phone in were told, or were going to call him back and bring him in to talk about his investments and more in this political season, im sure. But first, lets get to steve and brian and wholeogic. One reason he is joining us in addition to his relationship with scott sbauz of the relationship to the guy to my left who is Steve Mcmillan. He is the ceo of hologic. What do they have to do with carl icahn . A lot. He took a big stake in your company. I guess some of the board got replaced. Yes. You came onboard. Carl is leaving the board ammicbly and they call it what do they call it . An activist that a nice activist situation . There you go. A ceos dream. Hes not on the phone yet. Tell us about your experience with carl icahn. What exactly did he bring . What happened behind the scenes . Sure. As you know with hologic, there was a troubled history that overpaid for a couple acquisitions. And i think this is one of those true cases where he provided a shot. And it precipitated a change that board brought me in. Actually the board and his two people on the board actually ended up working very well together. And you think about in turn arounds, so many things you want to do is change the culture. I would tell you by having him involved, it made it that much more apparent to everybody, the board all the way through the employees that we needed to change. , no but i mean take us inside, steve. In that board room when mr. Carl icahn sits there he is a very plain spoken guy. Scott knows. A the love people think its a nightmare, not a dream. What did he do and say . Did he bust throughout doors this company sucks . He started with. That but the first time i met with him and most of the time my meetings with him are outside the board room. They were in his office, at his apartme apartment, whatever. Just good plain spoken whats going on. And not just to focus on the next quarter or. Two i it this Biggest Surprise and the board room, the very first Board Meeting they were in we were focused on quarterly issues and his representatives said, look, who cares about this quarter or next quarter . How do we create value . And i that i is truly a wear the shed moment and was unexpected relative to what everybody thinks about the short term focus of the activist. Did he push to do things you knew you needed to do . Things you didnt want to do . Or the best part i found with carl is he had a very clear point of view. I also had a different point of view that is different from him and he list ebbelistened. He wanted to break the company up and cut costs. We needed to accelerate our top line and invest in the business. What i found from the very outset where it started out kpative, he listened from the outsaid. He gave me the latitude to pursue my plan. He said, okay, you think you got a different plan. If it works, great, im behind you. By the way, im going to be watching. And the great part was by the Second Quarter i was there we started to get it turned around. And he changed his thesis. And then started to really support the direction. So i think instead of coming in with a formula, what i found best part of dealing with him was he was willing to say, yes. Hey, if you you have a better plan and it works, great. And he got totally behind it. And i know were going to talk a lot more about that. In fact, i know we have carl icahn now with us on the phone. Carl, youre. There welcome to power lunch. Thanks for being here. Okay. Good to talk you to. You as well. As it always s well get back to the hologic story in a moment. I want to ask you if i could about what has been undoubtedly the biggest market story this week and that is the aftermath of apples earnings, the impact of the earnings on the stock, the way it sold off so dramatically, carl. You said in a filing in february that you had cut your position in apple. You havent said anything since. I along with so many others in the market have been wandering what the status of your position is, frankly if, youre even still in apple. Can you tell us today what your position in apple is, if you even still have one . Yeah. I figured youd start by asking me that. And we no longer have a position in apple. To start, i think tim cook did a great job. I have a great relation with him. I called him this morning to tell him that and he was a little sorry, obviously. But i told him i think its a great company. And, again, just you find in this world an economy, great ceos, Steve Mcmillan on this call did a great job for us. Tim did a great job. The issue with apple is we were in it for about three years. I mean we are short term oriented and we were it in and we liked it a great deal. I put thought tweet 2 1 2 years ago. If you bought the stock then, figure you made 48 or 50 return in the 2 1 2 years. We obviously made a great deal of money. But it was sort of no surprise that we got out of some outside of february. We have to put the 13 on the up side. And we will be putting in the stock. Its not like we sold it higher than the public has a chance to sell it. I mean we sold it and take a point or two right here with the market today. I think you mentioned tim cook. Not sure what he may be thinking at this very moment. I think a lot of people may be wondering how a stock like this goes from a nobrainer at one point with a price target you saw as realistic of 240 or so to being completely out of it in what i think is fair to say a relatively shorter period of time than maybe people expected. How do you get from that point . How does it go from nobrainer to now . I will tell you this. What i like to buy and have done successfully is one, buy what i call no brain we are a risk reward is greatly in your favor. Where you almost i know this is antiintuitive and its very hard to follow is, but almost hope what you buy a stock its going to go lower. If you dont have to worry about short term, which we dont, we kept our stocks. If you look at our whole portfolio over the years, 7 1 2 year average which is huge, we dont look at the short term orientation that everybody sort of says the activist does. One of the problems with the hedge fund it is forces a short term orientation. You have to worry that money will be pulled out. We dont worry about that. So we look at the big picture. In april toll day as opposed to six months to a year ago, in this one, there is no need for activism assuming you can even do it. In this one, they worry a little bit and maybe more than a little about trying attitude and what youve been seeing. They give it to china and they give them a great many jobs. They assemble in china. You hope there wont be a problem. But they do make a great deal of money from china. So its not the no brain wert kind of thing instiktively you love whether you see an investment. So youre saying, though, that youre worried about whats going none china and the impact it could have on apple. I thinkmade 2 million in the stock. We wonder if apples best days are behind it. Is that what youre thinking as well and wondering today as you get out of the stock . , no, im not, scott. I think apple has, which we said all along, great barriers to entrance. You cant go into that business unless youre like samsung which is really like a country backing it. A lot of people tried, a lot of people failed. You cannot get into that position unless in china, for instance, they will come in and make it very difficult for apple to sell there. They could theoretically, you know. Theyre basically in some instances, perhaps benevolent. I dont know if benevolent is the right word. So you can do pretty much what you want there. But what im saying is, and i believe china is a great turn around story in itself, but that is the risk that can you look ahead and you might see three, four, five months at all and china and apple, a great together and then it becomes a nobrainer again. Because i am not worried about barriers to entrance. I think theyre a great company. One of the greatest our economy has seen. Forgive me for interrupting, carl. Tyler mathisen here. So is china and your worries about the longevity of its success there and maybe government interference or is that the main reason youre you sold or are there others . When you make the kind of return, you look at it and, obviously, when the stock is this much higher that when i said it was a nobrainer, that means its a no brain are by definition, right . The company is not selling you know sh its gone up a great deal. So im a little against it. But the real thing i worry about, tyler, is the relationship. And i really dont know bmuch about that relationship. That makes it difficult for me. I think youd have to speak more to tim about his views of that. And i think he would probably im not going to speak for him. I dont think hes quite that concerned about it. But being that said, the one hand we have this huge profit so by definition, its not the nobrainer it was. But, two, if china was basically steadied, i would probably go back into it. I mean its not something that i feel is anything wrong with the basic company or its management. Mr. Carl icahn, thank you for joining us. I want to follow up on that point exactly. I know you bought i dont know the entry point originally, i know around may of 2014 you said you bought some more. That was about 7 75 per share. The stock falling on your comments. What price point would be attractive to you to reenter apple . I dont think its a price point. I think its my opinion about what is happening with china. Its not the price point. I think the stock is very cheap still on a multiple basis. In fact, one of the cheapest. In fact, i also think that eventually that they have 2. 6 trillion abroad. On a fundamental basis, you know, within 10, 15 points its cheap in my opinion that way. The other way is china, obviously, could be a shadow for it. And we have to look at that. Im not the great expert on china. I dont pretend to be. And that bothers me. I like to go into a company that i say to myself, this is great. As i said before, intuitively, you know, you dont mind buying more. Youre not worried about it. And you sort of feel that you have a pretty good grasp of the fundamentals. You could be wrong. Secular changes come. We got badly hurt, i mean not for us, we have so many we really have so many capital related to the investment world related to a lot of the other funds. But from our point of view, we certainly had a bad year because of energy, mine a bad year for us. And that that is a secular change. That you cant foresee. You look at the oil and Energy Companies and i mean nobody would have foreseen, i dont think, maybe some did but we didnt. You know, saudi arabia would be throwing all that oil out. We saw it as an opportunity to buy. So that is different than what im saying. But when you look at an investment philosophy and activist, say im going to go in and i can make changes here. This is a great company. Its a nobrainer. I know youre going to bring up other companies. Thats a nobrainer. You have to make changes in management. Thats what we do. Now if apple, its unlike the energy thing, its not a tsunami that hit it. I worry a little bit could a tsunami hit it . And thats one im sort of aware of more than i was on the look, you cant be perfect in these things. If my math is right, carl, your cost base sis somewhere around 68. As i said, you made 2 billion off of this investment trade, whatever you want to call it. I think can you back into it. I think thats probably correct within a few bucks. Do you think do you think that apple is still an Innovative Company . I think its a great company. I think tim is doing a great job. I wouldnt say that if i didnt mean it. Very few ceos i say that about. I think this company has tremendous future. I mean theyre going to have ups and downs, sure. Theyll come up with some innovation. I dont agree with the naysayers, they have problems here and. There you cant break into the iphone ecosystem and i think they have the opportunity to go into many things and i think they will. I think theyll be successful. So dont take it look, i would tell you that if i thought something is wrong. I got out for the purpose of because im worried about china and i have this huge profit. Being that said, i hope one day to get back into it. Does the fact that you have been negative on china and youre now out of this, are you worried about the u. S. Stock market today . You have been negative on the market. I wonder its a good question. The thing that im worried about here in china doesnt affect the whole market. You could worry about china in general. Im not talking about chinas economic status right now. Im talking about what are they going to do could this thing with apple escalate a little bit . And if it does, what does that mean to apples profits for the near term . Im not here talking about what you could talk about and there is another question. But it seems to have been taken care of somewhat. You know, chinas economy itself, you know . I think theyre im no expert on it. Thats not what im talking about here. Im talking about the facts that you see. That china is sort of looking at apple and saying, well, can you do this . Should we let do you that . Should we let you do this . And it may really blow over. Look, its blown over certainly in other areas and it certainly could blow over here. But youve been worried and negative and youve been outspoken about what you think about the u. S. Stock market. Worrying about the market. Thats a different question. You are still we can answer that, though. When it pertains to the market, you are still worried about the u. S. Stock market . I still am very cautious, yes. Im extremely cautious about the market. That is not so much related to china as related to the experiment that were doing and im not the only one that believes this. You cant have a better reserve to low interest negative Interest Rate without creating tremendous bubbles and creating the wealth gap. And its doing a lot of things that are unforeseen, has unforeseen possibilities. It doesnt keep me from investing and we have a lot of long positions, but then we have a huge short position on. And the short position obviously is not working that well. But im not changed my opinion that i do not believe that all these commodities stocks are not a bit too low. I think they overdid the commodity stocks. I think there you have a definite opportunity still perhaps. But i do believe in general that there will be a day of reckonning unless we get fiscal stimulus as well as its brian again. Can i go back to the commodity story . Do you still own chesapeake energy, cvr energy or free port mack moran . I still do. I havent sold. Obviously, could i have bought them cheaper . Sure. But i think at this point that i havent sold any of them. I think that it doesnt mean i wouldnt sell them if they went up or changed my mind. But i think there that they just were way overdone on the down side. And did you add at all, as the price fell, did you add to your positions . Im not going to go into, you know, a daily trading or weekly trading. Im talking about apple because its coming out anyway in a few, you know, in a week. But as far as all these companies, i personally at this point think that, again, theres a little bit of china in fr freeport. I do think that there is need for copper for the grid there. And so i think that these commodities, you know, you got a huge short position in all these companies. You know, a lot of traders love to go with the trend. An old friend of mine used to say it was very wise. The trend is your friend until the end. So you know, when the commodities got killed, they kill and kill and kill and kept shorting and shorting and shorting much thats one things that going to keep pushing them off. Let me go back to your question. You say youd like to see more youd like to see some fiscal stimulus as one of the things that would help or turn your view of the u. S. Market in a more direction. Whats the combination there . I think you certainly could do more spending. And Republican Party, i used to be more sympathetic with. Im right in the middle now as you know im for donald trump. But i would say is congress is in this massive gridlock, obsessed with this deficit to i point that i think its almost pathological. That you just worry about a deficit when you dont have inflation and youre the reserve currency of the world. And, i mean, some of the politicians you talk to have no i mean a lot of them are great guys. But they have really no concept of what it means. You know, a country is not a company. You know, they keep saying we owe all this money to china. But were really not going to pay it back ever in the normal way. So trying to decide i want my money back. How do you want it back . You want dollar bills or treasuries . What do you want . So i dont understand this obsession that they have. Now being that said, im not saying you got to go crazy to borrow money and have money floating around and have inflation. And, yeah, the fed is there. And everything is equilibrium. Everything has a middle ground. And were so obsessed with that deficit that, you know, i never thought i would agree completely with guys like krugman. But in this sense, hes sort of right. You absolutely need to have fiscal stimulus in this economy. This economy, i dont think, companies are not doing well at all. I hope the comments dont get back to mr. Donald trump , carl. Is paul krugman on any of the dinner party lists . I dont know. I will tell you this, i think donald certainly, you know, i read it all the time and the establishment doesnt like the Republican Party the rightwing establishment. I think he should do for this economy what should be done. Im not speaking for him at all. But i think you have to do fiscal stimulus. Can you do a lot of other things in this economy. You have to make companies more accountable. Make the ceos more accountable. What is interesting is i said it before, you know, you go in and this is really a good criticism of what is going on. You lowered Interest Rates. But yet, youre janet yellen and she is trying to do her job and the fed is holding this whole thing up. You know what . Were doing this. Were doing this. And then you look at them and say productivity for workers is not going up. And true you know why . Because a lot of these guys, youd be surprised im saying this being an activist, but i as an activist am not for buybacks except that a company like apple that has so much cash around. You have companies today take advantage of low Interest Rates by going and borrowing money and buying their stock back. You know, coincidentally, if you noticed, those buybacks are coming at the time that the ceos options are invested. I made this criticism. Its not true of every ceo by far. And there are ceos that do it that are good ceos. But im saying we have a problem. And lower money does not stimulate productivity because the money is not going to the capex when they borrow cheaply. Its going into buybacks. So you see equities wid willing. And this is the problem. If you want me to go on, i can go on and on for hours. No were happy to you have stay as long as you want. We just looked at a picture its not what you were wanting to hear anyway. You got me going on it. Lets bring in Steve Mcmillan into the conversation here. I mean, youre very complimentary towards him. He towards you and what you brought into the board room. So, carl, why dont you you talk a little bit about steve and his business and what you brought to the table then as you now exit . Well, i think hes an example of what an activist looks for. Meaning, dwoent like to micro manage if we can help it. We went into this company knowing we thought it was very cheap. We thought they had great products. And it wasnt run properly, obviously. So what you look for, its very hard to find, by the way, a really good ceo that can just take it over and do it and, i love it where i have very little to say. Steve has been complimentary in saying i was helpful. I thank him for it. I think i was by saying, once you talked to him, i said, steve, you go and do it and im watching it. Let me see you do it f you do it, i love you. Youre not going to hear from me. Steve . Thats exactly how its been. We had the discussions early on. We had different thoughts as to how to create value. I had one plan. Carl had another. Carl totally listened to mine. He endorsed it but held our feet to the fire and created that great sense of you are general sichlt urgency. Im hearing you say that activist investors like carl can be very positive. It all depends on how you approach it. It is. I think its situational. As the executive. Yeah. I think it works well. We were talking to a bunch of sales leaders the other day. They were asking me about the whole relationship with carl. I said there are two ways. Some people go in and just absolutely are not listening to the other side. And just fight the activists. You know, i happen to realize, you know, carl is breaking up companies and doing stuff when i was in college. This is a man i could probably learn a little bit from. By the same token, i know about Running Companies and health care. Heres the thing, ill ask carl this, steve. Were running out of time. Carl, youre a very smart guy, very successful guy. But youre not a medical device guy. How do you know when you go into a company like hologic what to do and ask about because this is not your specialty, medical devices. You dont. I think people maybe activist, many activists with an exception, i think see their role wrongly. The role is you go into a company, there are too many in our country, many are great ceos, but you go and you look and say what is wrong with this company . And its obvious the ceo is whats wrong with it. I mean, i think you can count the ones we turned around by getting a new ceo in. Or the ceo gets religion. In other words, the problem that i dont know about a medical device company. I know a little bit but not much, but you know there are great products. I can go into, you dont want to go into details. Ge was run, we should have done it this way instead of that way. You needed somebody to come in and cut the cost and also, though, fix the company up. And, yeah, i had certain ideas going in why dont we do this, do that. But, hey, i talked to steve. My job is if you bring in a ceo, i believe this completely, if you bring in the right ceo, he runs with the ball, not me. And if he says we ought to do it this way, he has much more knowledge of that company than i ever will. And if he wants to do it his way, as long as you bring home the bacon and make this company productive, im with you 100 . And he did it. And we have other examples like steve. Its great if you can find a guy like that. And he did a great job. He never heard from me. You seemed to have or developed a very constructive relationship with tim cook. Im not sure it began in the most friendly ways. I think it never began with any animosity. I had dinner with him. I said you ought to be doing more of a buyback. I dont think he disagreed. I mean, yeah, you have that 200 million sitting over there. What does he do . Borrow a little money and do it. And he did it. I think it was profitable for him. But that is the only time i talked to tim about how to run the company. You know, if you dont really this is what i tell guys on boards that im on, these guys on the board, too many of them, not all of them, come in with great ideas. Now, you know what . If youre a Nobel Prize Winner and youre a Biotech Company and youre on it, sure you should have something to sachlt but most guys on the boards, there are companies and you say, look, why it is being run right . What are all the crazy costs . And you want a ceo that knows the areas that hes getting into. The perfect example where that wasnt working and we had to change it was at janire and, you know, he had a there was an interview with him two nights ago with jim cramer. Thats where i wanted to ask you about it. To respond to some of the things that mr. Suki said about you. Were going to listen, actually. Were going to listen, carl. Hang on just a second. Well listen to mr. Suk wichi w cramer. There was an opinion that you founded the company. It was your vision. Who with differ in opinion with you enough that they would tell you differently. Carl icahn. Just like thathe . Joins the board. He says this guy is not doing his job even though he created the company. No, this guy is not doing what i want him to do. Which is slow down . No, pay dividends and use the cash to return it to the shareholders. He doesnt want to distribute cash to the shareholders. We disagree. So on an ammicable basis, you have a different view. Youre better off going off and doing something else. He wanted to give cash back. You wanted him to give cash back, he said no. How do you respond to what he said . No. Let me like all things, completely out of context. To begin with, i love jim cramer. Great respect for him. But i wish he would call me. If he was doing an interview, i say this to jim in all respect, he should have called me to answer the stuff he was doing. I think it would have been more interesting interview being that im not criticizing jim because i think hes a great guy and done a lot of good stuff. Now lets go with giving the cash back. So, yes, i wanted a cash back. You know when . In 1919. In other words, youre buying a company here, this is what he is not saying and what jim didnt hit him with. Youre buying a company, its a great company. Almost nobrainer. This is one of the ones that i call nobrainer because, you know, i disagree a little with jim chenos who i respect because if the contracts, i mean sbent a great deal of time. We do. This we do our research intensely. Those contracts are pretty damn good. Very good. So when cheniere and when it sold to shareholders and what the shareholders believe is not what suki is delivering. The shareholders believe you have the companies, you have the trains, were going to make lng and sell it over to europe where they need the lng and it could compete with oil and this is what we bargained for. We get into this company. Its down. Chenos is saying you should short it. He had a good point. The company had tremendous cost. He looked at it as cap ex. Suki looking to go into all these i hate to say it but hair brain ideas, you know . He was going to buy oil. If you look at sukis record, he was going to buy Oil Companies. He bought Oil Companies a10 or 15 years ago, what does he know about buying Oil Companies to the point that you would just ask me what do i do about medical . Ill tell what you he knew. He knew how to go almost bankrupt much thats what happened to him. So now you go in there and hes buying these Oil Companies. Well, whatever hair brain idea, i call it hair brain, maybe thats unfair. Im sure he is brilliant. I never met him. I only talked to him maybe once or twice on the phone. He invited me on the board. I said okay. But ill tell you this, what you have there is a company make nothing revenue at this point which is true what chenos said. Thats true. Youre buying a company that is almost like a toll bridge. Literally like a toll bridge. A great paying toll bridge that you couldnt buy anywhere else and you know in 1919 youre going to get a 5 dividend here. You need somebody there is a ceo is somebody that really is going to be watching over how you build it. Now suki is there saying, hey, look, were going to go and borrow. First of all, suki was taking 80 million a year. That sun heard of. Okay. He built the company. He took it public. If he wanted to take 80 million out go, do it but dont go public. He is taking 80 million out. And any stock he could sell, he sold. I do own stock. So here he is doing this, going in to one idea after another, loaning a friend of his 80, 90 million to go into some company. I dont know the details. I looked at this and said, this is insane. This is the problem with this company. This is keeping it from being a great, great company. I think this is a nobrainer. Whether you get a company that you get a 5 youre selling at 38. You get a 50 dividend and a huge kicker. The kicker is if oil goes up, you getting that dividend only using about 85 of your capacity. So you can have 15 less breadth that you got free. And if oil goes up, lng will go up. You have a free option on. That couldnt be better except you had suki. And suki is there saying in fairness to him, he said, yes. I did say, yes, i want you to stop this nonsense. I want people to understand they have a toll bridge that youre going to be paying 5 dividends. So, yes, that would give the money back in dividends but that would be in 1919. You have to do a present value calculation. There is a lot of other good stuff. There i think hes right. I was very instrumental in getting him out. No question about it. And the board listened. And im proud of the board. I applaud them for listening. And they got him out. And that is so i say, yeah, i take full responsibility for it. But i dont but its wrong in saying i want to gift money back. There is no money to give back at this point anyway. Therefore, i would say why the hell if theres no money there is suki, even if he is a genius at buying Oil Companies, go in and buy Oil Companies that make the loans to people when there really is no money there . So the whole thing is absurd wlae was sayi what he was saying to jim. And in the interview, i would argue with jim saying making it sound like poor suki came in. Hes taking 80 million a year. Hes taking the money out and sells the stock. Its analogous for somebody who, you know, we can do a deal with someone who says im great at gambling or rolling dice and something and ill take the profit if there is a profit. If theres a loss, its your loss. Thats what he was doing. All right. Carl, thank you very much for all your time today. We appreciate it. Its always interesting to you have on. And, scott, thank you for thanks for letting me in the sand box. Great. Steve mcmillan, thank you for joining us. We appreciate it. Again, the news there that carl icahn is out of apple. Yeah. Big news. Thank you. All right. It is now time for trading nation. Take a look at facebook soaring today after reporting the earnings. Partner at flight vc and gina sanchez. Youve been a long time owner and holder of facebook. You have sold any on this strength . You are buying more or just holding . I have holding it before it was even a public company. I think its a company like facebook comes along once in a generation. And you hold itd and run it with as long as it goes. And does that mean youre buying more or just keeping what you got . Its an out side proportion given how much its run. But again, i think its a tremendous company. I think its still by a lot of people underappreciated in terms of the impact its going to have. Theyre still growing users, growing engagement, driving innovation at a pace i think the worlds never seen before. All right. Gina sanchez, no doubt facebook is killing it. Operating marge sin like 55 . Ive argue foded for years facebook is becoming the internet. Its just where you go. Its bigger than johnson john sob s johnson. Is there anything that worries. You can you always look to me for worry. Im a professional worrier. Look, facebook is an interesting story. Obviously, facebook has benefitted from a structural shift in how companies spend their ad dollars. And so while most, you know, companies at this point are suffering in sales, they still find social media and facebook in particular an important ad spend. Now whether or not that continues to be the case is the big question. And thats what, you know, worries me in the long run. You know, you can always argue that there could be competitors. But facebook is incredibly resill yenlt. Facebook also has an incredible data base now that no other social media platform has. Meaning, their ability to sort of target ads and sort of they dont even really know what the value of that data is yet. So you can say that there is a lot of option value there as well. But i think the bigger shift that im concerned about is we continue to go into a slowing environment for sales, for earnings, the reality of earnings is starting to bite. And im not saying this is going to be the case forever. But it certainly going to be the case for a few more years. And thats going to be the challenge is to be able to sort of compete for a dwindling ad spend. Through go. They know a lot us about. Maybe big brotheresque. Ill on there like everybody else, i guess. Gina, thank you very much. Do appreciate it. For more trading nation, head to our website. Were back in two minutes. Were at the session low for the dow at this hour. Just a little more than an hour before the closing bell. Apple is taking about a 11 points off the dow. Of course, moving lower on that conversation with carl icahn that just finished. The nasdaq is also close to session lows for the day. Shares of st. Jude medical are soaring on news its being acquired by abbott labs. We spotted some unusual activity in the Options Market before the news broke. What did you find . When you look at this stock, it trades by appointment. Traded only about 3,000 options in the entire month of march. But then you look at monday this week, just out of the blue, somebody steps in and buys almost 2100 of the may 60 calls. Now they paid 1. 54 for each call. You can see them there on our heat seeker. Those calls went to 20. So, in other words, if you multiply that, the 2100 that traded, basically control 210,000 shares of stock, they went from 1 1. 54 to 20 that, i 300,000 investm hechlt nt. Someone is going to look into this one. This is a very well timed bet just two days ahead of this announcement. Yeah that, volume would make it seen like there is no algarythm behind the scenes. Okay. Florida governor rick scott hitting the trail in a campaign against the 15 minimum wage in california. Governor scotts Economic Development organization launching a new radio ad that will air in los angeles and san francisco. The minimum wage hike hurts the same people it was supposed to help. Its time to leave california. You got that right. This place is beautiful, but you just cant afford to live here. Ready to leave california . Go to florida instead. And were joined now by Florida Governor rick scott. Governor, welcome. Thats an aggressive play. I know you guys are always out lobbying to bring business to your state. But thats a pretty aggressive ad. What is the minimum wage in florida . Its 8. 05. The campaign is basically moved to florida. If you want a job, if you want to build a global business, florida is the place where you want to build your business because we understand what Business People need. And youve had a lot of success doing it. Its been either you or texas sort of in a friendly competition over the past few years. Were actually leading texas in job creation now. I called governor perry once a month and let him know were beating him now. He remundz me he is no longer the governor. But we added eed 1. 6 million jo. Our wage growth rate is better than 40 . The Labor Force Growth rate is 50 faster. So were doing really well. But i want to keep it up. I want every florida family to have a great job. And you believe dsh, i would assume, that raising the minimum wage by large increments if at all means lower employment overall. The study that says californias raise will theyll lose 700,000 jobs. And it hurts the people they say theyre going to help. I want to make sure everybody has a job. I grew up in i lived in Public Housing growing up. I grew up in a family that struggled for work. I want to make sure every business has the opportunity to succeed because theyre the ones that create jobs. Should there be its something we talked about from time to time here on cnbc should there be a minimum wage at all . Well, heres what we know. We know that as we raise it, Congressional Budget Office raised it and it would be 500,000 jobs lost around the country. Now we know in california, if they raise it to 15 that, 1700,000 jobs. So what i want to do is focus on what do we do to compete globally . We have to have lower taxes. We have to have less regulation. We have to give businesses the opportunity to compete globally. If we do, were going to get more jobs. Thats what i want in my state. Philosophically, im asking a broad question there. Should an employee be able to work for whatever wage they think is fair for the job thats being offered to them and should an employer be able to pay whatever they think would attract the kind of worker they need . Well, we already have the minimum wage. I dont think the minimum wage is going to go away. My focus is puts us in a position that were in the best position. I dont think the minimum wage is going to go away. I know what california is doing with their taxes, with their minimum wage and regulation, theyre the worst state to do business in. They are going to continue to lose jobs. Florida is going to continue to win jobs. I see that youre in one of my favorite cities in the whole country, naples, florida. Lets talk politics, governor. Youre one of only three sitting governors to have endorsed donald trump. Why do you think he has so few endorsements so far at your level . You know, whats interesting is you go back to 2010. I got the fewest endorsements but most number of votes. So i became the governor. Donald trump is in the same position. He has the fewest endorsements but he has the votes. Hell become the next president. Endorsements dont change races. What changes races is who can get to the voters donald trump believes in job creation. He believes in securing our border. Look, there is between donald trump and hillary clinton. We know her position. Shes not going to secure borders. Shes not going to build our military. Shes not going to destroy isis and she doesnt care about job creation. What do you think of the alliance oorearlier this week o governor kasich and mr. Cruz with respect to dividing up their campaigning concentration in an effort to deny mr. Trump a first ballot win and second, your reaction to mr. Cruzs choice of Carly Fiorina as his potential running mate . The alliance sure didnt seem to help anybody on tuesday other than donald trump. If you look at his big wins on tuesday. I met miss fear evCarly Fiorina time. Donald trump will be close or at 1237. Weve got to stop trying to stop trump. All that is doing is helping hillary. Weve got to focus on winning november. We cant have we cant have four more years of Barack Obamas economic policy, health care policy, all the things that have damaged this country. Lets talk a little bit about Business People in politics. You ran a very successful business. You founded it and made it a large business. And now we have Carly Fiorina, former business person. We have mr. Trump, a business person. What is the transition like . What do you have to learn that you didnt know as a business person that you have to know as a governor, an executive of a Political Organization . Heres whats similar about it. You have to surround yourself with the best people you can find. Youve got to be very focused on what youre going to accomplish. I focused my entire entire time how do we make our state the best place for jobs. Youve got you know, you do have more media. Youll have a congress if youre president , in my case i have a legislature which is different than in business. But if you focus on what you want to get accomplished, if youre clear with everybody you work with, if you hold people accountable, surround yourself with good people, you can have the same success in politics that you can in business. Mr. Carl icahn was just on our air a few minutes ago. Somebody mr. Trump who has endorsed mr. Trump and who mr. Trump has mentioned as the kind of guy hes like to have as his treasury secretary. Mr. Acaan favors stimulus, spending, and politicians particularly are way too concerned about the size of the u. S. Debt. Would you be comfortable with a large stimulus as part of a way to get the economy moving forward, and are you as unconcerned about debt as mr. Icahn is . I can tell what you i have done in our state. Weve cut taxes 55 times. In the last two years over 1 billion in tax cuts. I have cut 4200 regulations. I have traveled outside the country and around the country to get jobs. Weve added 1. 61 million jobs. The four years before we got le elected, we lost jobs in florida, weve paid down debt, and weve almost doubled our transportation funding. We have the highest Education Funding in the history of the state. So the path of making it a better place for business means we get more revenues we can spend. Governor scott, thank you, as always, for being with us. We appreciate it. Nice seeing you. Thank you for your time. Move to florida. Save me a place in napele. Power lunch is back in two minutes. Billions are spent to confuse and, dare i say it, flummox the american public. Save 16 on Car Insurance. Switch now. Well at compare. Com, we say enoughs enough. So we constantly scrutinize millions of rates. Answering the question once and for all, who has the lowest. Just go to compare. Com and get up to 50 free quotes. Choose the lowest, and hit purchase. So you can get back to whatever it is you civilians do when youre not thinking about Car Insurance. Compare. Com hp stocks. Stocks have been improving, but after hearing carl icon ecan exited apple, that took the market lower. Apple, cisco systems, and home depot all leading the dow lower. Up next, one of the big Airlines Getting a big upgrade. Street talk is on deck. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. 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Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive time for street talk. Our daily dive into the key calls of the day. Who is this . Melissa is off and its bring your kid to work today. And this is my sixth grade daughter, shea. First stock dont jump on my lines. This isnt home. Facebook, you know the story. Earnings crushing the stock story. Deutsche bank bumping their target to 160. Thats another 30 upside. Gold mman sachsis bullish. Operating margins were a stunning 55. 3 . By the way, good call by argus researchs joe bonner who upgrades facebook back in october when it was 96 bucks a share. That is a 25 gain since then. The second call today is an American Airlines morgan stan lie upgrade to stock overweight. The price target was cut to 46, but that is still 25 upside. The analyst says american can benefit the most of any airlines if things continue to improve. Raymond james also upgraded on march 24th with a 52 target. Nice work. Yeah, Raymond James upgraded the stock. He likes the legacy carriers saying if things continue to do well, american has the most Revenue Growth opportunities. Nice work. All right. Our third and final stock, service corporation. This is your under the radar name of the day. Sci, its a houston. Based funeral and Cemetery Service provider. Credit suisse upgrading the stock. The credit goes from 32 to 25. They see about 23 upside on service corp international, sci. So i dont know, tyler, what do you think . Well done, shea. Well done. And you stepped on his lines just the way i step on his lines practically every day. Thank you very much. Youre lovely. It was fun to see you do it. All right. Kayla has se news on paypal. Just watching shares, tyler, after earnings beat on the top and bottom line. Beat on almost every metric except margins. The company said theyre onboarding so many large merchants they pay less so they make less profit but they get a lot in revenue. Investors like what they saw. Stock up 1. 5 . As we wrap it up here, the hours big news, carl icahn exiting apple. Kayla, shea, and brian, closing bell starts right now. Hi, everybody. Welcome to the closing bell. Im kelly evans at the new york stock exchange. I dont want any jokes about me bringing my kids to work today. Im bill griffeth. Facebook shares popping today after the social network bucked the trend and beat earnings expectations last night. Now the attention turns to amazon. You know theres always another one after that, and that will be after the bell tonight. Well wonder whether that ecommerce giant can deliver. Well tell you what to expect. In the meantime, coming up in a little bit, kelly