Transcripts For CNBC Power Lunch 20160504

Brought to the up and rising stars on wall street and the legends out there. Kate kelly is here covering all the big movers out of the events today. Kate, we have a long list of movers to cover. Thats right. Maybe ill just start with carson block from muddy waters. He presented a short on bank of the ozarks. They were down 14 in the opening minute or two of the presentation. He thinks hes worried about the unfunded loans within the real estate portfolio among many other things. So that was a really interesting case. Creton polleymer. That is a chemical company. That is a pong position presented by david rosen. And that popped about 8 or 9 on his thesis. Way also heard a remarkable presentation from larry robins of Glenview Capital. He had a really rough 2015. Reportedly has had a rough start to the year, too. Hes known for his prowess at picking Health Care Stocks. If you like the fundamentals but not the stock price, hang in there. I have no actionable ideas today is what he said. Yeah. His presentation was interesting. He made the metaphor of a boat in rocky waters. If you want a stable boat go, this way. If you want to go through the waters, you go another way. It draws on the notion that a lot of investors had a very rough 2016 which is a running theme throughout this conference. Thats right. Its very self aware to talk about this. He had a very humbling letter to investors about how he failed at his job. You know hes at a reflective point. One other thing i quickly point out, john corey from long pond, he was talking about hyatt hotels. I saw they were a little bit down even though he is saying theyre undervalued. He thinks they have a great business and hotels in general right now are very undervalued. And the slide that caught my eye is he estimates about a 65 upside on the bullish case for hyatt shares which is huge. Right. Enormous move predicted there. Back to carson block and muddy waters. Short bank of the ozarks. A big ten anlt of his short thesis is that its a rollup company. Where have we heard that before . Valeant pharmaceuticals. Yes. The notion of rollups and how difficult it is to value that business. Right. 3 billion market cap. Interestingly, the person that following john corey who is talking hyatt, hinted at the beginning of the presentation that he liked that thesis, too. Suggesting that maybe hes in the stock as well the short as well. But, yeah, the rollup idea, not looking good according to block. Hes concerned about the Earnings Growth potential. He thinks theyve done creative accounting. If you look at them, theyre really out there. So again, not different business model, similar type of critique. What are the big presentations coming up . Cnbcs exclusive broadcaster of the conference this is content well only see here on this network. Thats right. David einhorn always entertaining. I know hes long natural gas in 17 and 18. He thinks prices will come up. Also he recently talked about yelp as something he is bullish on. We may hear about. That he may surprise something out of the blue. Jeff gunlock, always great to hear. From hell be on the air as well, i believe. He will talk, im sure, about the bond market. He avoided junk last year. Also recommended looking at puerto rico paper, that is kind of if you think about the income you would have taken on the coupon versus the decline and face value, youre even there. That is a tough story there right now. Kate kelly, well let you get to it. Well see you later. Reminder, david faber will be along with larry robins in the next half hour. Fantastic. Thank you. Letds go to phil lebeau. Lets bring in a live picture from washington, d. C. , the national highway trast Safety Administration is announcing what was first reported yesterday afternoon, a recall of between 35 and 40 million vehicles with faulty takata air bags. Havent millions already been recalled . This is an additional 35 to 40 million vehicles. The problem is that air bag inflators may fail. This means that roughly 23 of all u. S. Vehicles are now impacted by this recall. Either in a previous recall of 28 million or the new recall of 35 to 40 million vehicles. Lets put this in perspective. The recalls going on for some time now, these are because we had 11 deaths related to the air bag deflators that dont work. Still no root cause, however, of why those inflators do not work. The mod thalz are impacted date back to 2001. Were not going to run through all of them. There are too many to list. 14 automakers impacted. By the way, tyler, this latest recall is being announced because there are so many of these vehicles being recalled, theyre phasing in the recall through 2019. Theyre eventually going to get the vehicles repaired but theyre prioritizing which ones based on the region, where theyre located and the models. Those will be the first ones repaired and then eventually all of them will be repaired. Back to you. Phil, how do i know whether my car has one of these . Will i get a notice . Youll get a notice eventually. The easiest thing to do, go on the national highway traffic Safety Administrations website. Put in the vin. It will tell you if the car youre driving is impacted. The ecb will stop issuing the 500 euro note in 2018. Existing notes remain in circulation. So this is only stopping the printing of new notes. There is concerns about large notes making it easy for terrorists and money launderers in a world of negative Interest Rates, cash has real value. If you keep your money in a bank, they give you back less n fact, thats why the Swiss Central Bank announced earlier this year that large denomination 1,000 frank bill is here to stay. Despite International Pressure to get rid of it. Get back less if i leave money in a bank. With negative Interest Rates, right . So its natural to take some out. Thats why there is an increase in the number of safes sold around the world and think about it if, you have it 20s versus 500 notes, it takes up a lot more space. Interesting story. There were following also another developing story out of russia. Hundreds of millions of email addresses and pass words have been discovered by a russian teenager who lives in the middle of nowhere. This is a potentially scary email hacking story of Cybersecurity Firm is saying that potentially hundreds of millions of email accounts have been compromised and that data is floating around on the dark web. Here are the details coming from a firm called hold security. Hold security says this hacker in central had 1. 17 billion stolen email credentials. It turned out that 272 million of those credentials were, in fact, unique. Now most of them were on the russian email system mail but also gmail, microsoft, and yahoo accounts affected here. I talked to alex holden of hold security who told me a very strange and unusual story about where this data came from. He said he was in contact with a person who appears to be a very young man or a russian teenager in central russia who said he had access to this data, Security Firm wanted to see the data and the teenager said if you want this data, you have to like my russian facebook page. So they did. That they put a couple votes in on website called vk. Com which is the russian equivalent of facebook. And in exchange for those votes on his social media page, this hacker turned over that data to the Cybersecurity Firm. So a very strange one here in the firm says its troubling that this data was out there in the first place. Unbelievable. Thank you. Day by day, the sib areaward stories get more interesting. Donald trump is the likely gop nominee. On the democratic side, theoretically, its still up for grabs. Hillary clinton holds a strong lead whether you consider the super delegates over bernie sanders. So if donald trump locks it in and hillary gets the democratic nomination, what does this mean for your money and Investment Strategy . Lets bring in michael farr and david seeberg. Let me start with you, michael assuming hillary becomes senator clinton becomes president. What should do you with your portfolio and what happens . What should do you with the portfolio if donald trump becomes president . Right. Michelle, this is really an election where all the old rules are up. I mean, republicans typically vote pro business and they typically vote republican. And they stay away from the democrats. This may be different this time. Hillary is kind of a more known entity and probably being more welcomed to wall street. Trump is saying that hes going to be protectionist. Hes going to perhaps a trade war with china. Were not sure about the mexican wall and other policies. Hes going to cut taxes a whole bunch. So i think you have to listen with almost a new set of ears to these two candidates. But certainly, hillary is talking about doing some Different Things like raising the minimum wage. That would be good for a lot of the consumer stocks. We saw Health Care Stocks not do very well last fall when hillary came out and suggested that drugs were too expensive. Typically as candidates begin to move to the middle, that rhetoric will quiet. Pharmaceutical stocks have done okay. I think you really have to take a look at the numbers. I wouldnt overplay a negative pharmaceutical market for an example under hillary. Okay. David seeberg, you have any recommendations based on what could happen when the general election finally does happen . Yeah. I mean, i agree with him on the health care side, on the biotech side. We have seen a lot of displacement in the names obviously destroyed based on the fact that people are are fearful about drug pricing. I think under Hillary Clinton, correct . Yeah, correct. With the tweet she started and threw out there about drug pricing and how shes going to go out after the companies. I look at it and say once if she is elected and i think the setup could occur, before the biotech tape has been absolutely pricing in the worst Case Scenario under the circumstances. So i think if there is any pull back under that scenario, its a absolute buy. I it this rhetoric has probably caused enough of the selloff. You take a stand, you buy them there. I think that in general, infrastructure is going to pick up across the board. But again, i question, you look at a lot of the banks. I think the banks and brokers under any scenario, under any scenario are probably going to struggle. I probably would stay away from them. Yeah, due to a lot of regulation that we keep hearing about. Yeah. Thanks so much. Michael and david joining us on this day when were getting closer and closer to figuring out who is going to be on the ticket. All right. Some would argue we already are. Were starting on power lunch. Coming up, our interview with larry robins. Power lunch will be right back. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. There is only one place where real and amazing live. Seaworld. Real. Amazing e. T. Phone home. [ soft music ] when you find something you love, you can never get enough of it. Change the way you experience tv with xfinity x1. Welcome back. Im joined now by larry robins, the founder and ceo of Glenview Capital management. Nice to see you. Nice to see you. Thank you for supporting this conference. Were happy to do it. Its been a tough year by many standards including for you. In your presentation, you sort of talked about staying the course and kind of describe things. I wont get into it. Ill let you do. That why stay the course . At what point do you start to question your judgement when the markets seem to be saying something very different . Sure. At analogy that we use and famous for sports analogies, the analogy we use is investing is like going tubing. The boat, you have to determine whether the boat is going the right direction as our investment growing . Are they doing well fundamentally. There are all the waves of macrofactors, worries about Hedge Fund Ownership and redemption of worries and the high yield market and whether it will function or implode. All those things that created choppy waters and securities, as you know, we tend to be a longer Term Investor that not only the average hedge fund but average investor and Holding Period is four years. So there are periods and unfortunately we sat through one between august and the middle of february where being an invest or that is muddied up. To your point, if its intact, we have to hang on and get where we want to go. So you close to do just that. I wonder though, along in the difficulties that you have, you mentioned being a long Term Investors. There is such a focus on short term. Do you find yourself questioning your judgement . Sure. Any time you see a down day or months, it causes us and others to say is there something that market see thats we may be mising . Is the view out the front windshield somehow more cloudy . That could be because of industry factors, regulatory factors, economic factors, et cetera. And no portfolio we own about 100 securities, no portfolio is going to go 100 for 100. Youre always going to find times with the new information you realize that we need to abandon ship. That we need to sell that security, admit we were wrong and move on. Thats an ordinary course of the Portfolio Management function. What is extraordinary in this period is the dichotomy between how companies are doing which in general, our companies our portfolio grew 10 . The s p 500 earnings were down, too. And our stocks went backwards. While there were exceptions and we had mistakes in the portfolio last year, by and large, the companies are doing well. Theyre doing what theyre supposed to be doing, deploying cash flows and building long time value for shareholders. Its the external factors that created the noise. So while well question ourselves each and every time we see a stock price dislocate from fundamental value, more times than not that encourages us to either hold on or add to our positions as well as to constructively engage in the companies. In particular, of course, given the pro pond rance of Health Care Related stocks, you got hit hard. Even though you may not have owned the names that were actually the reason perhaps that investors soured on the group. Yeah. But the names do you own that ive seen you own for a very long time whether its the name like anthem or even thermo or tmo, lets start with anthem. Big deal coming there. The group has got hit over the last year in part because of some of the things you discussed. Do you still believe the deal will occur and why are you still a buyer here at this price . Sure. So lets go back to the original concept of why did health care equities get dislocated . At the end of the day, it is Good Business and good Public Policy. You need to do one of two things. You need to increase quality or access to health care or you need to decrease costs or as a health care provider, theres going to be headwinds kpetive in government and regulatory headwinds. The reason why the Health Care Sector came under pressure is because a small handful of companies tried to make money for their shareholders doing neither. By increasing dramatically the price of single drugs without increasing the access to any of them without increasing the quality of care to any one. Why do we think that the anthem deal will go through . For the same reason that the express scripts deal went through many years ago. Those people that are managing the cost and delivery in the case of the pbms and the case of cigna and anthem today of managed care costs and spectrum, they will use the increased scale to deliver lower prices and Higher Quality solutions to providers because to customers because they can use the scale. You think the humana and aetna deal, do you think both will be approved . We think both will be improved. Again, we dont want to presuppose we want to let the doj do their job. The majority of states have already signed off on both deals m people who looked at it said on pure case law both deals should close. But on Public Policy, they realize there is legitimate Public Policy concerns about any consolidation and health care given some of the concerns weve seen in pharma and pharma pricing. Having said that, the Public Policy situation we have today is that the insurers are losing 6 billion over the last two years in these new Affordable Care act exchanges that the majority of the coops, small mom and pops have gone bankrupt f theyre going to be vibrant and function and be able to offer americans low cost insurance through the exchanges, they need to have a cost structure they can do that. Therefore, our independent analysis would suggest that these consolidations would actually be aligned with Public Policy rather than opposed to them. And even though there should always be great scrutiny when you see six Major Players including the not for profit blues go down to four. We think that customers are actually better off because on their bee half the managed care players with get them better deals. Larry, as always, we could go on. But were out of time. You and i can talk. Thank you. Thank you very much. Larry robins from Glenview Capital management. Still ahead, another big guest, bill gross, has a big warning about the future of america and well get his thoughts on the election as well. Plus, its a product thats been used in households and on babies for generations. Now a jury says its linked to cancer. That story is next. A good car has to maneuver quickly. Thats also true of a good car company. People have always bought cars. But we saw an opportunity in sharing cars. So we moved fast and launched car2go in 29 cities, all around the world. Doing that required dozens of data centers, designed for speed and performance. We built our business on the ibm cloud. Because thats what the ibm cloud is built for. Welcome back. The final gold prices are crossing for day. The 1300 level we crossed gets further and further away. Gold is lower today by nearly 18, decline of 1 . 1274 per ounce n fact. The entire metals complex is negative today by more than 1 . More than 2 when it comes to palladium. Silver, copper, palladium and platinum in negative territory. With incredible video out of canada where a Massive Wildfire is burning out of control north of edmonton. It is burning in the heart of Canadas Oil Sands region. The entire population, more than 80,000 people, have been told to leave the area. Whats oil doing . This is not caused by oil. This is a brush fire. But thats what Oil Production is. Brent and crude are down with about an hour before the market closes. Well bring that close to you later in the show. Tyler . Dow component Johnson Johnson has been ordered to pay 55 million after losing a second lawsuit over its popular baby talcom powder. The suit claims an ingredient in the powder causes ovarian cancer. Listen to what the plaintiffs attorney told nbc nightly news. I think thats extremely uncaring, showing no concern whatsoever for the safety and welfare of the people that theyre selling to. Johnson johnson defends the safety of its baby powder and says it will appeal its case. Today j j shares not really reacting strongly to this news that came out a day or so ago. Since the company lost the first lawsuit over its powder back in february, shares are up nearly 8 . We have a heck of a lot coming your way from the sohn Investment Conference in new york city including our exclusive interview with billionaire investor howard marks. But first, billionaire dominick chu found what could be the perfect trade. Im hardly a billionaire, not even close. Coming up, the one chart that goes up 100 of the time in the month of may at least in recent history, want to know more . Stick around. Power lunch will be right back after this break. Day to feel alive jake reese, day to feel alive jake reese, day to feel alive heres your cnbc news update for this hour. President obama greeted by michigan Governor Rick Snyder aupon arriving in flint. The two are scheduled to meet with federal officials to discuss the citys water crisis. Afterwards, the president will meet with flint residents. Nbc news reporting that Ohio Governor john kasich will suspend his president ial campaign. Paving the way for donald trump to snare the republican nomination. Kasich cancelling a media appearance in virginia and will make a statement in columbus at 5 00 p. M. Eastern time today. Air strikes targeted a syrian rebel held area east of damascus after an agreement aimed at halting the fighting there xpaexpired at midnight. This according to the syrian humanitarian. And a Minnesota Public Radio station is inviting stations around the country to play princes song nothing compares to you. This afternoon at 5 07 central time. The song contains the lyric seven days and 13 hours and 507 marks the length of time since his death. Thats the cnbc news update at this hour. Back to you. All right, thank you very much. Narrows down, is now the time to switch up your portfolio strategy . Lets hear from lamarvillery, com comanager of the villery fund. Welcome to both of you. Lets start with the political question. Lamar, is there a hillary portfolio here . Or stocks that you should lean toward if you believe the odds favor her or lean away from . We dont think so. You know, i think its too early to start trying to get cute with your portfolio and base it on who you think may be the next president. I think the time for now as we do in general, its a stock pickers market. Stick with just trying to pick the very best stocks. But if you get into a post election moment with one or the other, there must be some sector thats you would favor or shy away from. Im always going to shy away from the defensive utility type sectors. The bulk of our companies are in the u. S. So theres a little bit installation. Bob, same question you to. Are there stocks that you think would benefit from a clinton or a Trump Administration and conversely that would maybe be penalized or pinched under either of those scenarios . I think in a clinton administration, i think you have to be careful, obviously, of the pharmaceutical companies and Biotech Companies given her position on pricing for those companies. And energy, i think sh id be careful of, too. Because of the way that regulatory issues have been used to control the industry and her stance on the environment. So id be careful of those two sectors. I think from her the infrastructure emphasis she has would benefit the construction firms and material firms. On a Positive Side sh id look towards those if she is elected on trump side defense, obviously, that is the obvious sector to think b and i think with him, the chances of tax reform are that much greater. And that could benefit the entire market. Lets pretend, lamar that, there is no election which is really a great idea. Quite frankly. I can sit for six more months. But what kind of stocks are you favoring today given your Market Outlook and your stock pickers eye . Sure. The kind of things were looking for are smaller growing companies, you know, over the last couple years we have really seen the large dividend paying stocks, heavy dividend payers. So we think this is do you think thats turning . We think its turning. Weve seen it start to turn this year. We expect it to continue to turn. You know, people are not going to be satisfied with, you know, 3 gdp type growth out of some of the companies when there are stocks trading at a discount to those companies that are growing much faster an have great balance sheets. Are there any sectors that youre finding the best values in or yes. I think were seeing in tech right now. Were seeing great values. A loit of people, you know, you see what is going on in the private side in technology with these unicorns, the billion dollar private companies. They think that sector is overheated. On the public side, there are great values to be had. Lets sweep politics aside. What you are leaning toward right now . How are you positioning your portfolio . And what youre moving out. Were uncertain about what is going to happen with the dollar because of the fed policy. For that reason, were avoiding Smaller Companies and a company like masco, for example, its got the Brand Recognition of delta faucet and the cabinets they make. And they went through a really, really rough time from 06 to 11. They restructured. They have a long tail wind behind them with housing formation. Thats one i would look at. And then a Technology Oriented company, accenture, who consults to large corporations as they improve technology and move to the cloud, their sales have been growing double digits and its a trend that seems to be accelerating. All right, bob. Thank you very much. We appreciate you being with us. And lamar villary, thank you as well. Bob is with Spectrum Management group go. To our website right now to see more stock picks. Thats powerlunch. Cnbc. Com. We know that may is often a bad month for the market. It is also bad for commodities. There is one asset class you can invest in that has gone up 100 of the time in may ever since the financial crisis. Dominick chu has that answer. All right. There is at least that one place, like you said, positive returns during the month of may. That is if recent history is any guide. We asked our data partners to crunch those numbers. The good old green back has been a winner in the month of may. Now since 2010, the u. S. Dollar index has been positive in each of the last six mays through last year. On average, the gain has been north of 3 each time for the dollar index as you see there and thats on the heels of a stronger dollar. You might expect some of that weakness to perpetrate in the commodity complex. They typically, like you mention, have an inverse relationship with the dollar, turns out that that same time frame both gold and crude Oil Prices Turn in negative returns twothirds of the time, oil with an average loss each may of around nearly 7 and gold with a decline of over 2 . Now, of course, the caveat is were only focused on the six most recent mays. Were seeing early signs the streaks could be broken. Well see if the recent trends hold true for both the dollar and the commodities. Back over you to. Kind of like when you read the mutual fund reports. Past performance is not indicative of any future perf m performan performance. Thank you. To the bond market now. Rick santelli tracking the action. Rick . You know, michelle, its been real compact ranges. Were a couple basis points lower but still within striking distance of a 180. Maybe more significant the low yield is made on the weak adp number. If you open this chart up, ill give you a surprise. Munis, if you live in illinois especially, but the muni index is close to challenging the best level since january 1st of 2013. Lets look at the dollar index again, shall we . Dom was talking about it. Look at the one week. This could be the second close, maybe, that we closed without comping back to a further date back in january of 2015. As you see on the next chart, thats very close to where were trading right now. We have bounced just a little bit. And the last chart, here is a commodity that represents nonfinancials but there is a the love things packaged in commodities. This happens to be soy beans. Lots of volatility. Still hovering at the best levels since august of last year. Michelle . Got it, rick. Thank you. Coming up, a double dose of whales. So were speaking with some of the socalled whales on wall street live at the sohn Investment Conference in new york. Plus, must see video of a massive real life whale giving a giant surprise in alaska. The full details when power lunch returns. Imagine walk ago long the dock and then, watch, surprise. A giant hump back pops up a few feet away. Thats what happened to a group of fishermen getting ready tore a fishing charter in alaska. What a thrill that was. You get that one on a hook, see if they can bring that in. Lets get back to melissa lee at the sohn Investment Conference in new york. Tyler, thank you. Joining us here in new york city, founder and managing partner of social capital. Great to you have with us. Youre literally just off the stage. You spent a lot of time talking about amazon which youre long. You actually say there is ten times the upside in amazon. Walk us through those. Some people would say its aflekted in the pe and the stock increase for the past 20 years. I think the thing is when you think about amazon, you have to think about the long term secular trends in its favor. The first is that people want to buy things more conveniently. And so that has an immediate tail wind which we think will be worth at least a trillion dollars in ten years. And that is just a death march. Even if you put on it a multiple and assumptions for walmart. The real turning of the crank starts with aws. The way we think about aws is its a tax on the internet. Its a very low tax that everyone will pay in some shape or form that jeff has bril yently created out november where because its cheaper, faster and better to run in the cloud on amazon aws than any other form. Is it a tochl ax on the inte only as long as they have market share dominance . Thats a fantastic question. The way to answer that is look at what theyve done in the last ten years. Theyve reduced prices more than 50 times. So thats about one, almost every two months. At the same time, they introduced more than 700 features last year alone which was 40 more than the year before. So you have these amazing curve thats are diverging. Features going up and up and up faster than can you count. Costs going down, down, down, faster than you can pay. When you want jeff to do in terms of the company . A lot of people are saying they should spin out amazon web businesses. You would like to see it Stay Together or break apart . I think thats a very lazy way of actually solving for amazon. The more intellectual way is keep the president the way it is and realize these two multitrillion dollar virgining serial monopolies are working together. Why not just own the stock and be happy that this guy is compounding money for us better than any investor in modern day history. It is going to get harder and harder . I hate use the law of large numbers. But a company gets larger and larger, its hard to compound money at a 43 rate when the market cap is 316 trillion. I that i is true. When you have functional constraints on tan. But retail in amazons case, its unconstrained. And for aws, i think its functionally tan constrained as well. Meaning, innovation just going to kpaund in the future. Market gets bigger and bigger. As long as people continue to innovate, a percentage of the technical infrastructure that it takes to deliver that to us as customers and consumers will go to aws. How long are they long on the bond . Weve been long for about three years. And its not expensive in your view . In our experience it is just the beginning of the beginning. Beginning of the beginning. Okay. You said theyre expensive but cheap in hindsight companies out there. Amazon being one of them. Tesla is another one of them. Tesla reports earnings to night after the bell. A lot of the bears are trying to go after tesla right now ahead of the Earnings Report after the bell. And there is a report this week saying that one guy out there, one guy ordered 20 model 3s. That throws into question all of the reservation thats they had thinking oh, maybe there are lots of duplicates that will be cancelled. He also post a blog post that addressed that directly. We saw that blog post. We thought maybe this is true. Maybe this is not true. It behooves us to get data to validate what people think. We went to our friends at second measure and were able to show with credit card data that the overwhelming majority of people were reserving one car with one credit card. All that noise is exactly that, noise to try to create a bunch of fear or doubt. In our perspective going into earnings which we think is unnecessary. We think duty bound to review. Why is tesla so point at this cheap . You have to ask questions. The first is what is Climate Change worth economically to the world . And how much are we willing to spend as a society to have technology and entrepreneurs lead the way and developing ourselves and save us from what weve done around it. When you think about it in those terms, the battery technology, the autonomy, at built to actually take thousands and hundreds of thousands and millions of cars off the road, this is another tan unconstrained market opportunity. Twitter and square, you have choice words for jack dorsey. You talked about he may or may not have the bandwidth to run two companies. You say essentially that twitter, theres a cultural breakdown at twitter. What needs to be done in your view . You have seen plenty of companies walk in the door. I have facebook and to now, a billion and six users. Running any one company on Internet Time is exceptionally hard. So many competitors, everything is fast moving. And so not knowing him and not judging his cape act, my commentary is more that its barely possible to run one. The last time i checked, only one of the last five years worth of tech ipos are over 100 . And so if thats true, running two must be basically next to impossible. Right. So i just think its important to be hohn best that and then pick one. Last question. Golden state warriors, congratulations on what is turning out to be amazing. Amazing performances. You own part of it. It is also private equity backed z that make the difference that Business People have a hand in this team . Just to be clear, its not private equity backed, its owned by a group of folks. It thez speaks to when he focus on culture and focus on a great front office and great ownership and great players who do, you know, the overwhelming majority of the work, you have great outcomes. Pleasure to speak with you. Thank you for your time. He is from social capital. Michelle, by the way, hell be on squawk box tomorrow morning. Coming up, our interview with howard marks of oak tree capital. Looking forward to that, me list yachlt. Next, why its a golden day to be in the golden arches. Plus, americas ticking time bomb. Were talking about pension ands why a quarter of a million of them, if not all of them could be at risk. Power lunch will be right back. 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. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. There is only one place where real and amazing live. Seaworld. Real. Amazing herthey work hard. Ade, 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. A quarter million of americans waiting to see if pensions will be cut. By saturday, ken fineberg must decide whether to cut payouts to prevent the Central States pension fund from going broke. Sorry. Just keep going. Famous one going way back for reasons they might not be so proud of. Does bring up a bigger question. Do we need to change how the Pension System works . Ivan arasio is at the Competitive Enterprise Institute and Karen Friedman is executive director at the pension rights center. Welcome. Ivan, let me begin by asking you, is there something flawed with the way we have set up our Pension System . Prem not paying in enough and employers setting aside enough to pat benefits that they promised retirees . Yes. Specifically the pension and insurance system. Specifically the benefit guarantee corporation, the federally set up agency that gives private pensions. That assures private pensions and its got some basic features that really need to be reformed. Chief among them, the fact that its preset by Congress Rather than and does not reflect the risks faced. Karen, im surprised that pensions exist at all. I thought in the world of retirement those are called defined benefits. And most of the world has gone to defined contributions. Are we just going to assume that benefit pensions are going by the way side and we have to deal with the remaining ones now in some way that are underfunded . First of all, let me just say this, there are still millions and millions of people that are covered by Old Fashioned Pension Plans. Those are done great for people. Its actually created a middle class for people. What were talking about with the trshry decision is because of a really bad law passed in 2014, the Central States Teamster Pension Fund and some other very underfunded Pension Plans will be allowed to cut their retirees pensions. We have to keep pension promises. But in terms of does the system work, for most multiemployer plans, there are still ten Million People covered by these plans. And theyre still doing well for people. What we need are challenge right now is to keep the pension promises to the workers and retirees in the system. So how do you get enough money, karen, to pay those benefits if the plans are so sort of terminally and long term underfunded . Where does the money come from . Let me put it into perspective again, there is about 1500 of these multiemployer plans and the majority of them are doing very well. Theres about 100 to 200 of these plans that are rrarent doing as well. And the pension fund is the worst funded. But the truth of the matter is that the workers and retirees have done everything right. They gave up wages to put money into the pension fund. They gave up the vacation pay. These are guy whos are solidly middle class. But how do you solve the 100 to 200 . Theres a gap, right . Yes. And there are ways of doing it. What we basically feel and i agree with ivan on this, we need to get more money into the Pension Insurance program the way it was structured is completely flawed. But this is not the workers or retirees fault. What we need to do is keep the promises to the workers and retirees in the system and that could be done by several ways, getting money into the Insurance Program so they can assist the plans, having employer pay more. It is the employer, is it do you raise taxes . What do do you . Were talking about this as potentially shared responsibility. The government puts in some money. There might somebody tax credits to employers. They could put into some money. And even the retirees we talked to are willing to put into the voluntary self contributions as they call it. We are the richest country in the world. We should not be breaking promises to workers and retirees when an individual loses his pension, thats going to have an impact not just on that person but on their kids and their grandkids and the economy. Certainly. I receive a pension from a former owner of cnbc general electric. It is a very nice part of my retirement plan. Ivan, let me turn back to you. You just heard karen prescribe what she thinks needs to happen to fund the Insurance Program. What do you think needs to happen there and where does the money come from . The money should be paid by largely by the people doing the insuring which are the Companies Running the pensions because the way this the employers that, is . The employers . Yes. And can ask employees to chime in if theyre willing to do that. That would work. But, yeah, right now, karen, i would add to what karen said. Right now basically works as a huge subsidy for, you know, for companies that can run the Pension Plans and not pay the full cost of insuring it. Ivan, are we going to see more and more Pension Plans like the Central States one which is in such an extreme situation because the returns on the pension portfolios are so low . In other words, they have the reserves havent grown enough to keep up with the promised benefits . We might. But the way the only way to prevent that is change the incentive structure. And basically ensure pensions in a way that premiums are reflect the risk that plans are actually facing. The only way to do that is for congress to get out of the business of setting insurance premiums. All right. Karen, so sorry, we have to go. Thanks, ivan. Thank you, karen. Well be right back. And that what goes down doesnt always come back up. [ toilet flushes ] so when you need a plumber, we can help you get the job done right, guaranteed. Get started today at angies list. Welcome back, everybody, to power lunch. A quick check on the markets. Where dou they stand right now . Triple digit losses. The Dow Jones Industrial average are off 124 points and change. Nasdaq at 4722, off 41. And the s p 500 down 15, abo about. 7 a at 2047. Another big hower of power lunch coming your way. More big name guests including bill gross in just a few moments. First, lets get back to melissa lee and kate kelly from the sohn Investment Conference. Thank you, tyler. On a day where brent oil is down by 1 and the stocks and s p 500 are among the worst performing sectors, there are a number of people coming out today really touting the long positions in oil. Equities as well as the commodity. Kate kelly joins us. It is interesting. This is a thing that burns so many people last year and, yet, here they are make Something Big proclamations about whether or not weve seen the bottom. So hard to make a good call on commodities. Such a volatile space. You know, really the widow maker. At least that is natural gas. A couple bullish thesis on oil, one of them was essentially the bottoms are in in terms of oil. Supplies are coming down in the u. S. And many countries around the world. Not necessarily opec, thats okay. Demand sont rise. That was the nutshell version. The other was from nick tiller, former sac energy trader. He said he likes Royal Dutch Shell for a number of reasons. He likes the p7 dividend and h thinks green house emissions will welcome more prominent and he lukz where theyre positioned in terms of oil. So a couple thesis there. The market not cooperating. Crayton performance that specialty Chemical Corporation touted by david rosen, another sac alum, interesting. Theyre up 12 , 13 . It really strengthened since the time of the presentation. Since at the open. And then ozarks, that short presented by carson from muddy water, they were down 14 . Now theyre down about 4 . So still feeling pressure from the market on the down side. Not nearly where it was before. Thats interesting. You have immediate reactions in the stocks intraday. You want to see whether or not they hold into the close at least if not into the next session. So its really going to be a test over the next few hours. Absolutely. Were hearing great feedback on the presentation by presenters. He is long on amazon and has been for three years. Were not seeing a lot of movement. There its a highly liquid nament. And a 300 trillion market cap. Its interesting. In terms of what he had to say and the points he made about amazon web services, people seem to feel it was a great showing today. Im sure a lot more ideas coming in the afternoon. Thank you so much. Tyler, coming up next, well have our exclusive interview with hoe ard marks of oak tree capital. The bond tightened bill gross painting a grim picture in the latest investment outlook. Very important to think of. He said be content with low single digit returns. Thats not where he starts. He warns most pointedly about the job market drying up. Bill gross Portfolio Manager of the janice unconstrained bond fund with us to explain. Bill, people say a lot of things about you but you never fail to say interesting things in your outlook. Lets start with this. You said were talking in the campaign about a lot of things, building walls, putting caps on drug prices. But the one thing that isnt being talked about, you think has the greatest power to change society and the way we live is well, i think, tyler, its the robotics and technology. And were seeing that over the past five or ten years. Its changing the way we live. People are being replaced by computers and robotic technology, medicine, transportation, education, a few examples that have been to the forces of technology and the question i posed in my outlook is what to do about it. How to pay for it for these displaced workers that will likely need retraining or in my view most likely income support which is being labelled ubi or universal basic income. You just get a check, right . I think thats true, michelle. Its basically Social Security for working age people that dont have jobs. And to a certain extent, that is being supported by conservative elements in the United States by silly con valley and so on. You know, basically realize that displaced workers, you know, reduce consumption and to keep consumption up at a certain level, you know, perhaps there should be a way to benefit displaced workers. What would you say to folks who think youre a little too negative. When there is you automation, people are freed up to do other jobs. If we have women switching the telephone calls every Single Person in america would have to do that. There are so many telephone calls, right . I mean the theory is that, yes, theyll need to be retrained and there will be people put out of work. But ultimately, new businesses are created because that those employees are now available. Thats true, especially in the other countries. Displaced workers find jobs but at a lower wage and lower price. That lowers the standard of lifl for 99 as opposed to the one. What were talking about is unbalanced income. As a result of technology, not that we dont like our apple cell phones and we dont like, you know, advances in terms of games and so on, but its true that trees companies, these Technology Companies do not really produce a lot of high quality jobs relative to what we saw back in the terms of telephone switching can Auto Companies and ford and General Motors and the factory that was the job generator of the 1920s. To pay a universal income, say its 40,000 per person per year, whatever the number is, not something that you thought a ton about. But lets say its that. Where does that money come from . How does that get generated . And you think it comes from doing equally take theive easing. You have to pay for these benefits. And were talking perhaps 1 to 2 trillion. Central banks have been doing that through quaun take theive easing. What the government does is issue debt, Central Bank Buys it and basically they refund all of the interest back to the treasury. I dont necessarily endorse it. Were well along the path. And i think that, you know, helicopter money has taken on a connotation of, you know, bernanke or Milton Freeman dropping cash from helicopters. Thats not what happens. Basically, were talking about fiscal policy such as the one that i talked about in the past few minutes. Infrastructure, were talking about health care, were talking about paying for things not with private debt but with debt that is basically held within the central bank. And is that costless . No. The results in higher inflation. And ultimately, it savors in terms of negative Interest Rates, its the saver being taxed. Somebody has to be taxed. Thats the way i see it going. Incredibly depressing. Why i would bother to work . Why work . Ill get paid. Somebody else will get taxed or there will be massive inflation. Its a dire, dire outlook. I have a sense that a lot of people will work. Those looking for 50,000 or 100,000 would get into the job stream. Its not a very healthy scenario. It basically suggests that as jobs are displaced that these people have to be taken care of in some form or fashion. Up until now, we have taken care of them in term of tax credits and in terms of food stamps. Now Going Forward for the next five or ten years, this is an agenda for either trump or for Hillary Clinton. But over the next five or ten years, i think ubi will be something that is addressed. Since you raced trump and hillary, are you looking at how can you adjust your portfolio in the event that clinton becomes president or trump becomes president or is that a fools game right now . Well, its a fools game right now. We have to check out the polls as donald trump would say. It is significantly different than what Hillary Clinton advocated three or four months ago. That in addition to immigration are the two key economic areas that investors should focus on Going Forward. Free trade or less free trade. Right. All right. Bill, thank you very much. Good to talk to you as always. Bill gross. Heres whats on the remainder of power. The trumpclinton president ial race looking a lot more likely. Well talk to former vicepresident ial candidate and connecticut senator joe lieberman. Plus, is Hillary Clinton actually a fiscal conservative . Were going to get both sides of that discussion and why wont anyone buy Michael Jordans house . Well explain. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive e. T. Phone home. [ soft music ] when you find something you love, you can never get enough of it. Change the way you experience tv with xfinity x1. They found out whos been who . Cking into our network. Guess. I dont know, some kids in a basement . You watch too many movies. Who . A Small Business in china. A business . They work nine to five. They take lunch hours. Like a job . Like a job. We tracked them. How did we do that . We have some new guys defending our network. New guys . Well, theyre not that new. Theyve been defending things for a long time. [ digital typewriting ] its not just security. Its defense. Bae systems. Trumps political path clearing as cruz bowed out last night and case toik night. Sure looks like clinton son the way to clinch the nomination for the democrats. Joe lieberman who served on the u. S. Senate for 24 years and was the 2000 democratic vicepresident ial nominee. Also trying to warn u. S. Businesses of participating and doing business in iran. First though, senator, good to have you here. Lets talk politics. How did we end up in a situation where it likes like the gop nominee and the democratic nominee are going to be individuals that both have extremely high negatives . Have you ever seen anything like this . How did we get here . I think it is literally unprecedented and its an expression of the times. Remember, primaries generally speaking only allow people in their own party to come out to vote. Also people who feel most intensely to come out to vote. So it is an opportunity for those people to say what theyre feeling about the country and clearly theyre not happy. Theyre not happy with the status quo in washington. Theres a lot of economic anxiety and it seems to me that particularly in the vote for donald trump but also bernie sanders. You see an appeal for change and nonetheless, it looks like sanders is going to fall short. Secretary clinton will be the nominee and shapes up to be a very really a brutal battle on coming in which because of the negatives. There will be a lot of attack ads. How badly is senator sanders hurting mrs. Clinton . And should he drop out of the race soon so that he does doesnt damage her even more . And second question, is the process on the democratic side with all of the super delegates which is where shes run up her big lead, is it fair . Well, ill start with the second part first. I dont think the super delegates are fair. Theres a history of why they ended up being part of it is simple as governors and senators, members of congress wanted to be guaranteed theyd be a delegate to the convention. But the why do i say its unfair . It doesnt reflect the vote in the primaries. Right. So it ought to end. On the second part about bernie sanders, its up to him when he with draws. I certainly i dont think anybody has a right to ask senator sanders to withdraw after he won in indiana. I fully expect him to stay in through california and through the end of the primary season, go to the convention and really try to affect the platform. He is hurting secretary clinton . Really it remains to be seen. What i mean is when we get to the convention in the fall as to how they act. Can you argue that hes actually helping secretary clinton by energizing a group of voters around issues to come out. Really pulled her to the left. Are you embarrassed at all that a socialist has gotten as far as hes gotten on the democratic side . Well, im really surprised. Look, i got into politics a long time ago, influences a lot of people in my generation whereby john f. Kennedy. Im a kennedy democrat. There are not too many people that would do that today. John f. Kennedy if running to day wouldnt be able to secure the democratic nomination. Im also a bill clinton democrat. We were all about center out, maybe Center Left Politics within the Democratic Party. Today, Democratic Party is certainly trending to the left. And while people want change in america, i dont want i dont think they want it to go too far left. And thats the risk for secretary clinton and the Democratic Party as we head toward november. If we can move on to iran, senator, youve been traveling and meeting with Business People. What are you telling them . Im honored to be the chair of united against nuclear iran which we call uani. Its a Bipartisan Group formed eight years ago. And the whole focus is on the business community. Some sanctions have been listed. Our message is to companies, its still very Risky Business to do business in iran. Its not open season. There are still sanctions against iran because of the support of terrorism, because of the denial of human rights. And there are still risks in iran of kidnap and hostage taking which have occurred. There are also reputational risks for any business that goes in because of the antiwomens right, antigay rights, antipolitical which companies have you visited . Were going out to a lot of them. Theyre actively considering moving back into iran to do business. General electric is one. Bombbadier and chrysler. Were saying do you really want to do business in this country and therefore help a government that is supporting terrorism, killing people and repressing the human rights of their own people. Have those companies been receptive to your message, number one . And number two, how do you respond to the counter argument that maybe it is precisely by engaging and doing business in that country that you effect change in it . Well, if i my response to that counter argument is that look at the conduct of the iranian government right up to the Supreme Leader ayatollah khomeini. Since the Nuclear Agreement was signed last year and implemented in january, just a few days ago the Supreme Leader said United States remains number one enemy of iran. They launched missiles as we know in violation of United Nations resolutions. So theres no indication that post iran Nuclear Agreement this radical expansionist terroristic administration has changed. If i thought doing business here would change it, i would say go right ahead. What i think the iranians have to take the first step. They have to show they really have changed. And ge and fiat and boeing and those companies, what do they say to you when you went to see them . I think theyre listening. I think this is a question of not only putting values like freedom, life ahead of every possible business gain can you get but really what were saying is its Risky Business to do business in iran now because you could be slapped with other sanctions that still are part of the law. You could hurt your reputation and your workers and executives could be kidnapped and held hostage. Its not a good or safe place to be to be doing business. And most significant reaction to our campaign so far has been by european banks who have not followed their companys russianing for gold russia rushing for gold in iran because they dont want to run afall of the u. S. Sanctions laws which could deprive them of access to the u. S. Banking system which they obviously prefer to the relatively small iranian economy. The iranians complained bitterbly that very fact. Then they better change. Thank you. Great to talk you to. Senator joe leberman. Byebye. All right, 17yearold kid starts a business charging people to ride around in a tesla. That story next on power lunch. Welcome back, were in new york city and joined by howard oaks. And youre about to go on stage to introduce jeff gunlock. Oak tree has 20 stake in double line and has had it since the beginning. Right. Im curious, do you share the same view of the world as jeff often does . No, jeff is a macrodriven and holds strong forecasts and were micro investors and were trying to learn more about others and industries and securities. Macro doesnt inform your views at all . No. Lets talk about where youre finding the micro opportunities right now. Youve said recently that in term of the opportunities of the debt market there, the best youve seen in about five years. So where are the opportunities . Well, the opportunities got better. I said that in january. Right. The opportunities got better in january and february. Weve had a snap back since then that nobody saw coming. And so i would not say that the opportunities today are very special. Theyre not . No. Okay. Lets sort of trace back. You said that in january. At the same time, well, your timing for raising capital is really impeccable, howard. Last year you raised 23 billion. The last time you raised a huge amount of money was in january of 2008. By may of that year, you had 11 billion. So in terms of the try powder you have right now, what you are waiting for . Well, we think that the prerequisites for supply have been put in place. In other words, we think bad decisions have been made. When the bad decisions are put to the test and fail and present opportunities for us, we never know. You know, we never know when things will happen. Were lucky if we know whats going to happen. We just want to have the money now. In terms of bad decisions, are there certain sectors where you think the most bad decisions are being made right now or certain areasst market . Well, i think that the worst decisions were made in the oil and gas sector and other metals and mining. People lent a tremendous amount of money to companies in those sectors whose products are whose revenues are enormously dependent on the price of the products. And normally Commodity Companies cant borrow that much. But in this particular period, they could. So a lot of mistakes were made. Some of them have already presented. The default rate on high yield bonds is up. And most of the increase comes in those sectors. So if you think well see an increase in defaults . And when will you see the opportunity presenting itself . Do we need to see a bottom in oil . Do we need to see oil continue to go down or stay low . What are the trigger points that youre looking for . Well, we started to see the defaults. We had i would say, we almost had as many defaults in the First Quarter as in any of the previous six years. And there are more to come. Will there be a trigger effect if there are more defaults in oil . Do you see then distress being transferred to the Financial Sector, for instance . Is that how you think about it . I think there will be some distress in the Financial Sector depending whon lent what to those companies. We dont invest much in the Financial Sector. Its hard to predict and mack crow depends on it. Sure. But i think that the most important contagion will be psychological. When there starts to be a lot of defaults in one sector, people get worried with regard to the other sectors, sometimes not having anything to do with fundamentals. Its just that complacency is replaced by panic. Certainly opportunity that may not nbt oil sector by triggered by it . Absolutely. Last question, howard. Real estate, interest ralgtes remain low . What do you see . I think that the low Interest Rates are one of the factors that has been raising the value of real estate. We try to buy real estate which is not just the bond substitute and consequently not just dependent on low Interest Rates. But maybe on the ability to add value. And you see those opportunities today and todays market . Yes. Theyre pretty good today. Theyre pretty good today. And in the particularly in the sense of better than most other areas. All right. Relative base snis. Right. Okay. Howard, pleasure speaking you to. Thank you for your time. Howard marks of oaktree. Back to you. Thank you very much. Now to Sharon Epperson with the said lines this hour. Sharon . Heres whats watching at this hour. The national highway Safety Administration says takata agreed to recall another 35 to 40 millionaire bag inflators that, is double what is the largest automotive recall in u. S. History. At least 11 deaths have been reported worldwide. Sentra energy says they expect costs from a massive gas leak near los angeles to bloom to 665 million, more than double the original estimate. The leak which was capped in february had temporarily uprooted will 8,000 households. The fbi says the man who is believed to have contaminated food at several Michigan Grocery stores has been arrested. He admitted to sprifrpg willing a combination of hand sanitizer, rat poison and water on unpackaged food. Health Officials Say they dont expect any Adverse Health effects. The nations oldest world war ii veteran has died. Frank livingston pass add way on tuesday at a va hospital in shreveport, louisiana. He lived through both world wars. He was 110 years old. Thats the cnbc news update at this hour. Back to you, michelle. Thank you so much. The oil market closing for the day. Lets get to jackie deangelos at the nymex. Good afternoon. We returned positive at the end of the session here after being negative for most of the day. Closing undered 4 e 44 billion. There was a build in gasoline when we were looking for a draw. We saw that u. S. Production did fall for the ninth week in a row. That will be supportive of prices. Todays mixed action probably based on the inventory number and a little bit the Dollar Strength that we saw as well. Again, very range bound here between 40 and 45. Massive wildfire burning in canada today. The entire population of ft. Mcmurray ordered to evacuate their homes. Thats about 88,000 people. In one neighborhood, 80 of the homes were destroyed. Almost no one is left in the city except firefighters, high winds are making the fire worse and harder to fight. Firefighters from across canada are being brought in to help this massive blaze. Instead of flying from los angeles to las vegas, many people have taken advantage of a new business that will drive them there in a tesla. For just 85. The business got so popular it is expanding and phil lebeau joins us now from chicago. Hi, phil. Hi, tyler. For some people the price is right when it comes to tesloop. It is an independent l. A. Based ride Service Company start bid a father and son last year and the success that theyve had offering people rides in tesla model ss or a model x between l. A. And vegas or l. A. And palm springs for 40 to 85 one way convinced them there is a bis here that they can expand. Its such a huge time saving and stress savings. I think the one thing we can do this whole country is make things more stress free and not having to sit at the airport, go through the parking or being dropped off, having to pick up, not having the same baggage issue. I pulled up to the tesloop, put the bags in and got in and went. One of the keys to tesloops success and keeping the costs down is the fact that it recharges its vehicles for free. They own these tesla vehicles. They lease them and like all owners of tesla vehicles, they can recharge at tesla super charging stations and it does not cost them anything. Thats one reason why they want to expand into other areas where theyre offering perhaps rides between 1 and 5 hours. The free electricity is not important. But the idea that theres lots of super chargers that can charge really quickly in 20 minutes get you, like, hundred plus miles of range. Thats critical to us. So we need the super chargers. So far he has put about 300,000 into tesloop. He is talking with Venture Capital firms about getting another infusion of capital and perhaps, tyler if, there is enough demand out there and they can expand enough, theyre talking about possibly some day going public. Thats a long way off. Still, its interesting to see the demand that we saw out in l. A. For people interested in this ride service. Phil, thank you very much. Phil lebeau from chicago. Tesla earnings after the bell, the two top executives leaving ahead of that report. Shares right now, phil, what is behind the departures . Well, the model x problem thats we saw as they were ramping up production earlier this year. So what you got are two executives who are leaving the company. One of them is going to stay on until they transition into a new head of production. The two executives, they are crucial for tesla because youre talking about production not only of the model x but also model s as well as model 3 in the future. When you look at the earnings later today, model x production will no doubt be questioned because of the resignations. The giga factory status and also whats going on with model 3 reservations. They were pushing close to 400,000 last time we got an update a couple weeks ago. Well see what they have to say about that when they report earnings after the bell. 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Stocks continuing to struggle to day. Utilities todays best performing sector. Energy and industrials at the bottom as you see there. Big interview today on the closing bell. Home depot cofounder at 3 00 p. M. Eastern. Power lunch returns in two minutes. They say you want to vote for a fiscal conservative in the next election. A woman writing that according to a new report from the Nonpartisan Committee for responsible federal budget, the most fiscally conservative president ial contender right now left standing, Hillary Clinton. Katherine joins us now, also joining us is sarah fagan, forler senior aide to george w. Bush. I listen to the democratic debates and all they talk about is how much money they want to spend. She does plan to expand the footprint of the federal government. But she actually pays for it. Ch is unheard of on this president ial stage right now. So she would raise taxes on the rich. She would get rid of the interest loophole, she would, you know, expand via state tax, a bunch of things like that, various pay fors. So on net, the net fiscal impact of her plan would be a zero impact. On the budget . On the budget. So shesreducing the debt. Would she spend the most of those of the candidates . No. Who would spend more than she . Sanders . So it depend how you define spending. If youre just talking about money going out, less revenue being collected, it is sanders. But actually, the candidate who would have the largest impact on the federal budget, that is, you know, expanding the debt and deficit. And the deficit, right. It would be donald trump. Because . Because he reduces tax rates by so much and doesnt even attempt to pay for them. The cost of his tax cuts plus additional spending because does he plan on shoring up the military and more spending on veterans and things like that which costs money, its Something Like 15 trillion over the i didnt know we had that much clarity on what donald trump planned to do. Sarah, are you what do you think about this . I guess on its face, katherines assertion is right based on what we know of the two major candidates left standing. You know, she appears potentially to be more fiscally conservative than donald trump. Although we dont know a lot about what donald trump plans to do. But to somehow call her fiscal i mean to use Hillary Clinton and fiscal conservative in the same sentence is just plain wrong. I mean there is nothing fiscally conservative about what she proposes. Its a low bar. It is a very low bar. And you do ive seen all the accounting Congressional Budget Office gimmicks over the years. And the reality is what she proposes which is higher taxes, higher minimum wage, increased federal outlays, really means that were going to see anemic slow, no growth in this country which is just going to keep us in the same rut weve been in. We need somebody who will be bold, who will tackle entitlement reform. Shes shown no courage in that regard. Is anybody like that running right now, sarah . At the moment, there is no one running. Donald trump will not tackle Social Security reform. Hes been he pointed that out many times. So it does appear that the United States is headed for four more years of at least the last eight. Were going to continue it one way or the other based on what we know today. The deficit is down in the past eight years rather markedly. Kasich, curiously, hasnt really hes the one who keeps talking about how he balanced budgets. He was part of the fiscal he sees himself the only grownup on the stage. But not that it matters because hes going to announce hes going to drop out next couple hours but hisself image is very much at odds with reality. And that of all of the various candidates whose plans have attempted to be scored, his ais the only one unscorable because it was too light on details. He wouldnt really give any detail about what his tax plans would look like. He sort of had revenue targets. But they didnt add up with the math. It assumed he would have like 4 or 5 growth that economies think is not something we can sustain. So his plans, even though he describes them as being so fiscally conservative, theyre we dont know enough to know. There is no way to know. But does he have a track record. Does he have a track record. That is very strong in ohio. It doesnt matter, hes not going to be in the race for but another hour or. Two. What is a fiscal conservative to do, sara . I think there is enormous self reflection going on in the Republican Party right now. This is now the leader of our party. I think theres going to be a lot of republicans who become independents, at least a lot of elite republicans, so to speak. And well see if they come back to the party or if somebody runs as a protest candidate as an independent. They can only help someone else win, an independent candidate could win at this point. I think there will be some people who look at as a means of protest. Ladies, good discussion. Thank you. Katherine and sara, very provocative. Appreciate it. Mick don alds shares hitting an all time high today. Kit keep going even higher . Trading nation tackles that next. You wont see these folks at the post office. They have businesses to run. They have passions to pursue. How do they avoid trips to the post office . Stamps. Com mail letters, ship packages, all the services of the post office right on your computer. Get a 4 week trial, plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. It takbut stealing itard work tonly took a few days. Female announcer protect your money. Find out if youre dealing with a registered investment professional at investor. Gov. Before you invest, investor. Gov. Shares hitting a record high today. Will mcdonalds keep making investors happy . Lets ask our trading nation team. Who would expect that mcdonalds is the number one performing dow stock over the last year . It was in september, the company tweeted the news of the all Day Breakfast and since then its up nearly 40 . Another. Kaub investorers choosing the options because of the embedded protection in there. Thinking maybe 23 times earnings is too expensive but thinking the stock may have further but wanting the protection. In terms of the risk priced in, it is at the bottom third of what weve seen over the last two years. I. E. Investors are not pricing in significant risk. This is very different than Consumer Discretionary as a whole which definitely has more bearish tone and the restaurants specifically have more risk pricing than weve seen in a while. Stacy, thanks very much. Eddie thank you as well. More insight at trading nation. Cnbc. Com. Take a look at this. Its big. Belongs to Michael Jordan but o notebook wants to buy it. Tell you why, next. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive time for the super rich edition. Michael jordans mansion still on the market. Isnt it selling. It is expensive. Really big. 60,000 square foot, about a half hour outside of chicago. We went on a tour. Everything reflects jordans taste. A round infinity pool desliend to look like a ball swish into a net. He wants to build something that was a little outside of the city just as a get away. A get away with lots of privacy. So the legendary baller and his tight circle of friends could relax in their element outside of the spot. These giant doors came from the playboy mansion. Jordan also built a wine cellular and enormous gentlemens lounge to indulge his passion for cigars and playing cards. A swank three bedroom guest house. And of course worked them out on the ultimate regulation sized home court. To answer the question the reason it hasnt sold is its really expensive. 14. 8 million. But that is half off the original asking price of 29. Who needs a Basketball Court . There is a lot of infrastructure there that is very particular. And if you are afraid of over head. That is the challenge. But some Michael Jordan fan whos also a multi millionaire. This is the ultimate memorabilia. Expensive cars that look like junk on purpose . What . And they are called derelicts. And thises after first more me. Clunkers on the outside. Hot rods on the inside. And they cost half a million bucks. Jonathan ward is the wizard behind icon. The company that transforms old clunkers into the modern marvels. He lovingly calls them derelicts. In reality they are anything but. Take this rooint repeatedly over hauled road master. He kept the exterior as is, and glossy paint to camouflage that natural aging process. And under the hood is the different story. Jonathan has remastered this 70yearold ride into a contemporary hotted ro. We decided to use the modern corvette engine. Serious horsepower. If you want your own there are more than thirty collectors already waiting in line. And this is the ultimate stealth wealth. Right . For our age where people want to enjoy the great engine and luxury and dont want to flash it. So driving in an old beater but it looks liis super car underne. I love that he just let it oxidize and let it go. Reminds me of cuba. Finally a 50 million mansion filled with luxury logos. Where and why . Logos have always been important in luxury but now they are creeping into the luxury real estate. We went to a 48 48. 5 million mansion in bell air. They need to keep this 14,000 square foot posh mansion ready to show at the moments notice. You have to spend just about 20,000 a month just to carry the property. Everything has to be in place. Fresh flowers. Candle. Every throw has to be in place. And the pillows in this are luxury brand fendy. The plug, the light fixtures. The head boards. And even the crocodile wall paper. It was designed for a super rich buyer who wants to hang with l. A. s elite. A lot of these logo mansions were sort of geared towards the asian market because they love logos. But the buyers recently for these are actually americans and europeans and we dont know where the asian market is headed. It was geared to them but the asians arent buying these. Other people are. Do the o Logo Companies want to be in houses like that . Oh yeah. And in fact they have helped design special one offs. Whether it is that crocodile wall paper or wall paper or the lights. They love these things and they are really expensive. A great margin. I bet. What do you call it. Nouveau rich . As long as its rich. A great name. What do we got tonight . Secret lives. 10 00 p. M. Eastern and pacific. Awesome. Thank you everybody for watching power lunch on this down market day. Closing bell starts right now. Welcome to the closing bell everybody. Pressure for u. S. Stocks again today. Now, if the s p were to sell off any further into close, it could end negative for the year. So well watch that very carefully here and tell you whats behind this move lower again today, kelly. Well here weve been hearing some interesting long and short positions. To include those from noted hedge fund managers. Up and comers as well. And well have more on those coming up. Also speaking live with ken