Transcripts For CNBC Power Lunch 20160607

We want to show you then how some of the fun and games developed with the twitter hacker after this had come up. After this had been taken down, the tweet about Roger Goodell, we also saw some, again, some interesting tweets coming up from the supposed hacker that also said that, oy, dont take this tweet down. We also saw him come back and tweeting again from the nfls verified account saying okay, okay, you amateur detectives, something along that line you got me. Interestingly enough here, this is, again, one. Latest string of highprofile attacks that have gone on with twitter. We want to point out, of course, that Roger Goodell is alive and well and the nfls Public Relations department did put out a tweet saying as much as soon as these tweets were discovered. Right there you can see Brian Mccarthy, nflpr. The nfl twitter account was hacked and the nfl commish is alive and well. What we want to point out, again, is that Roger Goodell, the nfl commissioner is alive and well and that this is just the latest in a string of highprofile hakz for twitter dating back over a couple of years now. Remember, there was also that one from the Associated Press back in the day that had supposedly the white house under attack at one point. All of these things, again, speak to just how fragile social media is with regard to how it disseminates news and whether or not that news can be downed at face value right off the bat. Well be watching and see how this develops throughout the afternoon. Appears all the erroneous and extra hack tweets are gone. Twitter has a problem. Yes. They have a problem and a problem that goes well beyond the 60 decline in its stock over the past year. If youre a corporation and twitter needs companies, they dont just need individuals, if youre a corporation and you look at the benefits of certain types of social media like a twitter and look at the potential downfall, right, look what happened to usair a couple years ago . Yeah. Basically bad dirty stuff that was going out there, you might think maybe its not worth our time or effort to be on that platform. In theory its up to the user to have a very strong password and to do everything necessary so that this doesnt happen, right . Yeah. In theory, but ultimately if it happens over and over and over again, with katy perry, et cetera, et cetera, they have to come up with something else. It may not even be hacks. Could be some disgruntled employee who has the login who says im going out with a blaze of glory. The thing about twitter accounts, these are not individuals, the twitter profiles of corporations so there are many people with access to these accounts. It could be somebody who has actually logged in and did not hack. In the account and tweeting whatever they want to tweet out there because we dont know. Im going to quit today. Thats not twitters company but its the companys problem. All right. More on that later. We can talk about twitter a lot. The markets a big story, dow cross i crossi crossing above 1,800 and crude has crossed the 50 mark again David Seaburg is here and jon najarian. Great to have you guys with us. David, you say the risk and reward, they are kind of balanced here, but as an average guy out there im taking a look at the markets here and taking a look at markets around the world which are doing horribly. Yields are terrible. Are you telling me that i shouldnt be in the stock market with, you know, potential whatever it is return in said put my money in a bank account that will give me 3 . No, no, no. So what do i do . Be patient. If youre long equity just ride this out. I think that the momentum trade here is occurring. Youre seeing a tremendous amount of hedge funds that are completely underinvested in the long side. Watching this tape grind higher, and they are extremely nervous. They are getting ready for that chase point, so at the end of the day i think we can tick a little bit higher. Look at the oil stocks, trading names. Not trading on fundamentals, trading on positioning so youre seeing a lot. Fundamental guys that look at it selling the stocks. Right. But youre seeing the hedge funds come in and trade them so the bid up here is a lot of Short Covering and sort of momentum trades. Not necessarily purely fundamentals, so i look at it and say wait for little lower levels. I think well have a pullback and then you can get in at cheaper prices. Youve been noticing a lot of activity in these oil names in todays session. Meshlgs a lot of them have had activity, and a lot of the activity, quite frankly is on the put side where people are more or less saying, well, after this furious run, it 20 , 30 in the past 30 days people want to protect, but then theres a couple where theres pretty good speculation to the upside. Anadarko petroleum fits that to a t because weve seen normal activity explode from 4,500 contracts a day to 22,000 calls, just in the first two hours in apc. Thats based on rumors, mel. I dont really want to invest anybodys money based on rumors. Right. But these are a lot of big institutional trades that somebody is putting a lot of credence in those rumors and one of the few stocks that people have the big breath on for this to continue. Sure. Even after a 20 run in the last month. David, last word to you. You know, you talk about the momentum trade winning out at this point, but for the overall markets be patient. If you want it to be a momentum name at this point, what would that be . Thats a hard thing, mel. Hedge funds have lost control and the passive investors have control. You dont know where the new momentum is. Its very difficult to seek that out, so i think if you look to any sector right now it would be the Energy Sector where youre just seeing a tremendous amount of Short Covering, some underinvestment and people may be piling on to this trade so maybe theres a little more upside there. Outside of that, you know, again, just for a trade. I dont really seeing anything compelling. All right. Thanks, guys. David seaburg and skworn najarian. A news alert in the bond market, threeyear notes up for auction and Rick Santelli all over the action at the cme. Rick, whats demand like . I gave it a cminus. Charlie minus is the demand grade for the 1 00 straight up dutch auction. Lets go through it. Shall we. 24 billion threeyear notes to start a 56 billion total supply week with 10s and 30s yet to come. 2. 93 was the yield at auction. That was the bid side of the one issued market pretty much for the last 25 minutes before the auction buttoned up. Every statistic, 2. 79 bidtocover and 48. 1 indirect and 11. 1 indirect was all a little bit light to ten auction average and all seen recently within the last several auctions, so cminus. Dealers take 40. 8 and primary dealers which isnt a really on the high side, but what we really want to Pay Attention to is how low yields have gotten. That really took away any concession and when you are dealing with the short end. Its all about location considering the question marks on normalization from the fed. Melissa lee and the gang, back for you. Speaking of low yields, wait until you say what some are buying up. Shares of ralph lauren back up after falling nearly 10 earlier in the day after the company unveiled a Restructuring Plan including job cuts and store closures. Lets bring in the ceo of j. Rogers nippon worldwide and the ceo of talmage advisers. Jen, im going to start with you. Weve been talking so much about the struggling retailers. Ralph lauren isnt a retailer. Its a brand. Do they have any of the same problems when it comes to the retailers, or is this a different issue. Most of their business has been inside of retailers. Its so great to go to a meeting where everybody on the stage is dressed better than i am and where they serve the best coffee in new york and their own brand out of their own restaurant, a first class operation and thats really what ralph lauren is all about. First class brand, whether you look at teenagers or boomers like me its one of the top ten brands. So whats the problem . Whats going on. Even if they cant afford to buy it. Why do they need a turnaround, and do they have the right guy doing it and how long is it going to take . I do think they have the right person doing it and i think, you know, it looks like it will take a year when it comes to stabilization. There was a little bit of vagueness about when exactly they would see the infliction point. They hope next year they will see stabilization and they are not sure. Do need a turnaround for the rest of the details that retail is suffering. Distribution thats not brand enhancing hand not margin enhancing. The new guys from old navy about as polar opposite from ralph as i can imagine. I came on here the day they announced him and said this is the right guy at the right place and at the right time. What is he doing . Closing stores and thinning out brands . Havent had anybody that can run the train since Roger Farrell left. Hes there, running the train on time and Closing Stores and focusing on polo, ralph lauren and lawyer as the three groups to drive the business and the tertiary groups, cutting off the tails and look at them attin roi basis and hes doing a turnaround 101 as well as can you describe it on the stage. One of the issues that highend brands suffer. If you go public, you have to grow and grow and grow and your product has to become more ubiquitous. The second youre ubiquitous nobody wants you anymore. You lose your exdaluisivity. How do you manage that . Thats exactly what they are trying to do right here right now. Once you go public youre serving two masters a little bit. You want the brand integrity stay intact and you also want to promise wall street growth and oftentimes we see like were seeing here, you know, a retrenchment. I think beyond Stefan Larsson they also have a very strong team beneath him. The brand people are really from the high end. The operation people from fashion and the others from ebay. Its a very strong plan and team and in addition to the 101 things that jan is talking about, doing the 201 is and doing the test and it rate and react and things we see coming out of a Technology Background so i really think they have the right team and right plan and its just a matter of time before this thing turns. Talking to someone who said they had five different mens suits line. Had a black line, gray lane. This is what youre talking about. Constitution, contruce, concentration. Do their Outlet Stores help or hurt him . They want to do less in outlet channels and do less discounting in the Department Stores and want to do more direct. You know, my philosophy i think 50 of all retail will be online in 13 and a half years and, therefore, them going direct is good. Every time they take a piece of items and go online their roi goes up. They will do more of that as well. They are doing all the right things. The question is will they get it executed and that will be at least a year until you see the sales stabilize. This is more hospital mystic than what i expected to hear and then they said they were being conservative. All righty. They have told this to the street and they are only down 1 2, . Got to leave it there. Appreciate it. Fantastic. Talking about the little polo shirts. Next, a power player in the energy world with. The companys stock is up 46 in the last three months, and we are going to talk to the ceo about where he sees crude prices going from here. All that and much, much more on power lunch. Back in two minutes. Man 1 youre new. Man 2 i am. Woman exmilitary . Man 2 four tours. Woman you worked with computers . Man 2 thats classified, maam. Man 1 but youre job was Network Security . Man 2 thats classified, sir. Woman lets cut to the chase, here. Man 1 whats youre assessment of our security . Man 2 [ gasps ] porous. Woman porous . Man 2 the Old Solutions arent working. Man 2 the world has changed. Man 1 meaning . Man 2 its not just security. Its defense. Its not just security. Its defense. Bae systems. male 1 rock crawling is a great activity. Its a lot of fun. Its exciting. Its exciting. male 1 you get to explore, you get to see things that people dont get to see or do. announcer at truecar, we believe buying a car should be as fun as driving one, so well help you find the car you want and show you what others paid for it. male 2 once truecar came into the picture, thatsthats where i go now. It was just such a quick, easy experience that i just go back to them. announcer discover for yourself how easy carbuying can be with truecar. Skwoirks welcome back to power lunch. Just soent i dont forget, im Tyler Mathisen Zimmer Holdings agreeing to buy ldr. Zimmer down 1 and ldr up over 63 . Brazils antitrust watchdog set now to rule on whether hsbc can sell its brazilian business to banco. Hsbc is relying on the 2. 5 billion sale to maintain its capital ratio and meet the dividend there. United Natural Foods beat estimates. Brian, back to you. Oil back to above 50 a barrel hitting its highest level since october and the big question is where is oil headed from here . Rbc Capital Markets surveyed 600 Energy Investors and ceos on where they see prices at the end of the year. Here are the results. 9 said were going to go back below 40. 23 said well be between 40 and 49 a barrel. 51 said well be between 50 and 60, basically where we are right now and 17 , said, wait, were bullish. Were going to be above 60 per barrel. One of the ceos surveyed, david done lap of superior energy, shares of that company up over 43 the past month and david here for a power lunch exclusive from rbcs Energy Conference in lower manhattan. David, thanks for joining us again. Where did you come in on that survey . Well, brian, im bytesed towards oil price towards the end of the year around 60 a barrel. I think in the second half were going to continue to see prices migrate up. As the market begins to realize that nonopec production is coming down, including shale production here in the u. S. , and were going to be getting closer and closer to that supply demand balance. Before we get to your business, you know, specifically heres the only issue i would take with that. Youre right about the data. However, do higher prices beget more drilling which then begets lower prices because people upproduction because people want to make money . In other words, do the the industry oftentimes doom itself . Well, theres no question this industry has a history of dooming itself. I think part of the challenge now though is that a lot of our a lot of our customers, emp customers are cash strapped. Difficult Balance Sheets to deal with, and its going to be difficult for Many Companies to be responsive as Commodity Prices get better. There are companies in the u. S. As well as a few internationally that we believe will start to spend incremental dollars as Oil Prices Set into this range of 50 a barrel or bert, but its not the entire market that will respond so, listen, this is a cyclical business and ultimately one that weve got kind of a full level of investment and thats probably a few years out. Last year we saw the gain of a couple of oil rigs. Do you see oil rigs, drilling rigs, having got tommed out . Yeah. I think probably so. I mean, we did see the Baker Hughes Rig count come up by four last week. Not really a market mover, but i think weve had conversations with some of our customers that would indicate that were likely to see a bit more activity in the second half. Year. Thats probably high utilization for the completion supply chain, including hydraulic fracturing. Thats going to be a positive for our business. More than 14,000 employees, dave. Some may be watching this now or watching it later on the web. Have things stabilized to the point where layoffs and or pay cuts are not a risk from here out . Yeah. I mean, i think that if we have reached a bottom in drilling activity in the u. S. That by and large we have probably reached a bottom from a head count reduction standpoint. You know, its been a stressful couple of years for our labor force, and i know many of our field laborers would like to get more hours than they are getting right now and i think the first step in recovery will be the laborers that we have in place today. Getting more hours before week. Our labor force really likes to get 60 hours a week and upward and we havent been able to offer them that for a couple of years and had the first thing they will see is a bigger pay czech. Maybe good news for whats been tough years for many across the industry. David, a pleasure. Thank you. On deck, shares of this company are up more than 30 since the new ceo took over. What company were talking about and why the stock is soaring. The name and ceo interview again. 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. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. I could get used to this. Now you can. When you lease the 2016 es 350 for 329 a month for 36 months. See your lexus dealer. Welcome back to power lunch. Im eamon javers in washington where a council of banking regulators has just issued new guidance to Financial Institutions about Cyber Security risk. This council is called the federal Financial Institutions examination council. Its made up. Fed and a number of other regulatory bodies here in washington that oversee the banking industry, and they are sending this note in the wake of that bank of bangladesh act out to Financial Institutions advising them to take a number of steps to protect their Cyber Security. Heres what they are saying that the banks should do in terms of risk mitigation. They are saying you need to conduct ongoing Security Risk assessments and protect against unauthorized access to equipment, implement test controls around Critical Systems regularly and manage Business Continuity risks, a whole series of advise here now for Financial Institutions from the u. S. Government regulators on how they should prevent another bangladesh from happening. Michelle, also reuters reporting that the fbi has issued a letter of warnings to banks on Cyber Security risk as well, letting them know that they need to tighten up security. A lot of aspects from the federal government to the federal Banking System that it should be very diligent. Shares of the rv maker winnebago booming and that ceo is michael happy and joins us for another power lunch exclusive and must be living up to his last name because of the some performance. Michael, your industry was absolutely devastated during the financial crisis. How is business, and are you back to precrisis levels . Well, good afternoon, brian. The industry was impacted significantly during the last financial cries and to answer your question, yes, the industry has rebounded to levels now that have exceeded the previous highs. The industry has grown search straight years here in 2016 and were about to set an alltime record high again as we move towards 2017, so the current state of the industry is very strong. Why is that . Is it easy credit . Is it the economy is better . We keep hearing about all the subprime car loans . Is there a concern in your industry about the same thing, michael . Its a combination of a number of factors. Certainly the economy has been steady enough so access to financing and low fuel prices have certainly enabled people to be interested and making things like this. The products are getting better. The amenities of your home are starting to make their way into the rv industry in a big way. Electronics and technology is present and candidly the lifestyle, the outdoor lifestyle is attracting more and more people interested in, again, investing in the space, and we are seeing the average age of rv consumer decrease as more people explore the great places around the United States. Feelgood story. Unfortunately we have to leave it there and cut it short because we have more breaking news. Michael happen enof winnebago, sorry about that. Lets go to scott wapner with breaking news. Thanks so much. I want to call attention to shares of the pultegroup. Elliott management has taken a large position in that company and the firm has told pultegroup about its position. Did i reach out to pultegroup which told me the following, and i quote, elliott recently informed us that they have taken a position in the company. We welcome dialogue with all of our shareholders, end quote and also reached out to elliott. That firm right now is declining to comment. You guys may have been following this story. I mean, its sort of been sizzling up over the last month or so. The founder, William Pulte and his grandson, have been trying to oust the sitting ceo. He has said hell retire in may of 2017. They want to speed that process up, and now it becomes a little more interesting, i think, its fair to say. Paul syringes Elliott Management now has a stake in this company, and what role that might play in trying to speed up the process, if at all, of getting mr. Dugas out as the ceo of pulltegroup and shares are reacting on this news of whats been a board room drama the last couple of minutes. Youve had bill pulte the grandson on this battle. Any indication whether or not hes talked to paul syringe or elliott where elliott might stand in relation to the battle lines that are drawn . Interesting question and certainly a good one but, unfortunately, i dont have anything for you on that yet. It is interesting. Bill pulte, the grandson, yes, hes been on the program and has stated the companys position quite forcefully that the stock has underperformed. Their peers certainly since the financial cries, and he, along with the founder of the company, his grandfather, have been arguing quite apparently they want mr. Dugas out and i have no idea whether the grandson has even spoken to el yeast and certainly good questions to follow up on. How vulnerable could the board be, scott in the is it a staggered poured or unclear. Guys, i can add a little bit to the story, scott and melissa, you know the story well as well which is, you noh know, they have been mad about a lot of things. The point that elliott may be looking to change here is that pulte got criticized and the stock got pulverized legaltive to its peers because they feel like they mixed the waves of the kinds of homes that they built. They went in one direction and pulled in another one and dont like. Fact that this is a battle where maybe elliott is on the pulte family said its a little more ammunition in the market against sort. Dugas contingent, if you want to at all it that. Its an active position and not a passive one by elliott so that would lead you to believe that they would be on the side of the grandson and the founder. Frankly having not spoken welliot management other than getting a no comment, i cant really get you any more that what im telling. It will be real interesting to see. Brian, youre firm exactly right and with the two points of contention that pultegroup missed out and then the move to plantability, has almost um that the founder of the company has raised as to one. Reasons why they want dugas out as soon as possible and not waiting until may 2017. Scott wapner with that exclusive. Thank you. Were watching Home Builders and not just pult at the on the move here and get to dom chu with more on that. Melissa, on the move even before the pulte news came out. One of the mainateievs, the s spidr s p Home Builders, leaders include shockingly, i know, pulte, temper sealy and dr hortoned and le far as well. Of course, brian, guys, Home Builders were such a hot trade at points over the last few years, they have cooled off the last month months and this year to day to date. Back over to you. Thanks very much. If youve had a biopsy, you know how painful and scary it can be but theres a comlooking to find a newer, better way. Youll hear about the liquid biopsy and the Company Behind it coming up next. Jake reese, day to feel alive jake reese, day to feel alive thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. This clean was like pow. Everything well . It felt like i had just gone to the dentist. My teeth are glowing. They are so white. 6x cleaning , 6x whiteninga in the certain spots that i get very sensitive. I really notice a difference. And at two weeks superior sensitivity relief to sensodyne i actually really like the two steps step 1 cleans and relieves sensitivity, step 2 whitens. Its the whole package. No ones done this. 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Ive known him for 14 years and donald trump is not a race unfortunate, and so, you know, the the allegations that he is are absolutely contrary to every experience that ive had with him over the last 14 years. The head of the tsa telling a senate panel that significant progress has been made on shortening airport screening lines since earlier this spring. Peter neffinger said 90 of passengers rated less than 30 minutes and 90 waited list than 15 minutes. The cincinnati zoo has installed a higher reinforced barrier to prevent similar instances. And added a small memorial to the gorilla who was killed to protect the child. And the last known living 9 11 search dog has died in a houston suburb at the age of 16. A golden retriever was euthanized on monday and had become ill at a veterinarian clinic. Spent ten days at the World Trade Center searching rubble for human remains and she was given a heros farewell. Thats the news update this hour. Michelle, back to you. Sweet and sad. Thanks, sue. Just after 1 30. Lets show you whats going on with the markets. Talking about whether or not were potentially finally break out of this trading range that weve seen for so long. Dow industrials higher by 17 points, 17,994, below 18,000, but we were above it earlier in the session for the First Time Since april. The nasdaq higher by 10 points and the s p higher by 9 and the russ sell higher by 6 points. A gain of half a percent. To the bond market now where Rick Santelli is tracking the action in the cme in the wake of the auction we had earlier this morning. Richter. The threeyear note auction was just blah. Many thought it would go better especially after Toyota Motors found so much sponsorship for a. 001 yield. Look at intraday. Not a lot of action. The whole curve has been quiet, preand post threeyear auction. 81 basis points, low yield that everyone was looking at. Maybe not enough cushion. Dollar index, one market. Just gone flat line after the big deterioration after the jobs report due to federalismcations. Listen, one week of copper, look at that down 3 , 3. 25 today and if you look at that chart, oneday took a lot of action away to the upside and what i found significant is as real as that move is look how the crb index is still at its loftiest levels since thanks of last year. Back to you listen to this. Toyota finance just sold 10 and 20year bonds with the lowest Interest Rate ever for corporation. What will your yield be . 001 . Holy smokes. If you borrow 10 million, if my math is correct, you get 10,000 a year in interest, thats nothing. Theres been zero coupon bonds, unilever, our neighbors here issued no coupon bonds. Thats how bad things were in the eurozone, and this is the lowest offered yield. You get to a point where you think why offer anything . Do the unilever and go zero . Whats the. 001 going to get you . Zero coupon bonds, you get a discount on the purchase and theres a different way to do it. To do it this way is interesting. The bigger issue is you can borrow for almost nothing, and if youre toyota youre wondering why i cant get a negative rate. You people should be paying me money. They have no money. If anything, theres deflation. If there was inflation youd be getting a negative yield and if youre toyota financial, hey, throw it out there. Why not. Can anybody top it . I want to see. 0001 of coupon. Keep going further and further past the decimal point. They have to be competitive because the average yield on a Japanese Corporate point, 0. 17 . Thats why. This is like what. Thats 100 times last than that. Dont go to zero without a reason. Got to the have something. Tyler . Lets talk about the dow, moving up above 18,. First time thats happened since april 1th. Lets bring in the head Global Market strategist at wells fargo and burns mckinney, a portfolio manager. Gentlemen, welcome to both of you. Im not going to bore us or the audience what you think the fed will do and when. I want you to tell me what i should do with my money right now . Make sure youre fully invested in u. S. Largecap equities. Were going to be collected. Were going to underweight small caps a little bit. Why . Because thats where the most volatility is. Weve also previously underweighted emerging markets. Another big source of volatility. We see the market going up from here but with volatility. Wed rather be selective. Large cap and big u. S. Companies. Thats what paul says. Burns, what do you say . I would echo some of his points but even to get a little more specific within large u. S. Cap equities we continue to be very constructive on dividend paying stocks. I grew up studying economics, supply and demand and right now because of financial repression you have i have one of my deletion and talks about how they are not looking for Capital Gains but dividend yields and some of the bond proxy areas such as the utilities and telecoms have done well lately. Last three years dividend payers in the United States have lagged so reversion to the means should also work very well for dividendpaying equities. You didnt ask paul to put wells fargo in the burn list. Just a little serendipitous. My personal is between now and election day the market is going to trade in a trading range. Do you think it breaks out to new highs between now and the end of the year in. Im not sure when exactly thats going to be but were expecting the market to make gains and eventually they will surpass current highs. It will will be more selfevident to investors and as that is transpires more expansion. A little bit of breaking news. Paul says hell put nfj on his buy list. Go to powerlunch. Cnbc. Com. Another stock that burns likes right now. Powerlunch. Cnbc. Come. Two major biotech stories with an impact on your health and wallet. Thats next on power lunch. Lets turn to one of the big themes emerging at a cancer conference, liquid biopsies, a key in early cancer detection. How does this work and which companies are working on it and meg tirrell joins us from chicago . A liquid biopsy is a blood test for cans ker. A big conference at the cancer conference here in chicago and not exciting medically but could potentially be a big market as well. Its estimated the market could reach 10 billion at its peak if all of these tests reach their potential. Who is working in the space, Guardian Health was a company with the focus and publicly traded Companies Like Foundation Medicine and illumina. We sat down with the ceo of Guardant Health sat down . Cancer cells as they grow rapidly they die rapidly and shed their unique dna into the bloodstream and take a tube of blood, there will be small traces of dna in that tube of blood that are coming from the cancer cells. Now doctors tell us its still really early days here. These are not used yet to be initially diagnosing cancer instead of a traditional biopsy. We spoke with the Foundation Medicine ceo about how their tests should be used. We use them to identify the genetic changes that are in essence causing that tumor to grow and the reason that we do that is because the whole new area of personalized medicine is really predicated on finding the appropriate drugs, selecting the appropriate therapeutic for that particular patient. So a lot of work still going on in this space. Illumina found a Company Called grail to try to do that initial earlier stage detection of cancer blew a simple blood test but still a few years away. Thank you. Fascinating story. Sticking with health care, shares of vale yaent pharmaceuticals missing and slashing its guidance again. This news comes one month after joseph poppa took over at ceo. We asked the Senior Analyst at hc brian wright were the stock. You think the stock is now a buy because the worst is behind it . Lets put it this way. Were cautiously optimistic and think joe poppa was a sensible choice and the kind of person we expect valeants board to have tapped for the job. Shares are down 26 since rons appearance on power lunch. Still got a buy rate on the stock and did trim its price target. Even after todays Conference Call and todays guidance cut youre saying the market is pricing at an essentially high default risk. Why is that being perceived as excessively high after the Company Severely slashes guidance and talked about one of its core buses looked upon as perhaps one of the saving grigss, dermatology and said this business has so much problems, as if were taping dollars to the prescription bottles and handing them to out. All of these are valid points. I think from our perspective the immediate term default risk was that of not being able to file the Financial Statements on time. Obviously they filed their 10k and 10q in a timely manner and the immediate term fault risk has gone away but they have now slashed Forward Guidance to the bone and theres nowhere to go from here. If they were to reduce guidance any further they would be increasing the lack of confidence among debt holders so that they can make their interest payments. We think the company is clearly in rebuilding mode and needs to get its reputational problems behind it before it can put its buses back on a firmer footing. Because of that lower guidance basically they are at the precipice of violating a key debt covenant and that would be ebitda to cash interest expense right at the lower end of its guidance, 4. 8 billion ebitda, 4. 2 times its cash interest expense. According to the covenants they have to beat 2. 75 or better. Why do you stick to a buy rating when they are teetering on the brink . Basically no room for error when it comes to hitting the bottom end of the guidance. Absolutely correct. One of the fundamental issues here is whether valeant should be a Standalone Company or whether it should be broken up and is the value. Underlying assets greater than the value being attributed to the Business Today . Our view is that, yes, that is indeed the case. There are core assets that valeant possesses. So even under distress with the core assets, they sell some of the core assets. You think the stock will quadruple from here because thats essentially your call . I mean, at this juncture that has not yet factored in the revised guidance that they have put out earlier today. We havent put out additional commentary since that call. Obviously well have to take a look at what the revised guidance does to our numbers that existed prior to this call, but we were at the low end of the street prior to them slashing the guidance and now they have a range of 6. 6 to 7 a share. Stick with your buy ratings as the bottom line . Kwae. Thanks for your time. Again, a buy rating on shares of valeant. Coming up next, were going dumpster diving proving one mans trash is another mans treasure. Thats when power lunch returns. With usaa is awesome. Homeowners insurance Life Insurance automobile insurance i spent 20 years active duty they still refer to me as Gunnery Sergeant when i call being a usaa member because of my service in the military to pass that on to my kids something that makes me happy my name is roger zapata and im a usaa member for life. Usaa. 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If we consolidate suppliers whats the savings there . So should we go with the 467 horsepower . Or is a 423 enough . Good question. You ask a lot of good questions. I think we should move you into our new fund. Ok. Sure. But are you asking enough about how your wealth is managed . Wealth management, at charles schwab. The nfls twitter account was High Judiciary Committee earlier. A tweet september out said Roger Goodell had died. Not true. Hes alive and well. Details now from dominic chu. Dom . Thats how it all started and heres how it went down after that initial tweet went out. That hacked tweet was taken down just moments after being posted, published on twitter, and in what looks like an act of taunting from the hacker in question another tweet went out from the nfls verified twitter account saying, quote, oy, i said Roger Goodell has died. Dont delete that tweet and then another tweet went up saying, quote, okay, okay. You amateur detectives win. Good job. Now, all of this, of course, was happening in the midst of the nfl trying to figure out and trying to get out the message that in fact Roger Goodell had not passed away and nfl spokesperson Brian Mccarthy quickly responded and tweeted out from his own verified account that the nfl twitter account was hacked. Nfl commish is alive and well. Now, we did reach out to twitter. They referred us back to the nfl for any further comment on this particular issue. We have in turn reached back out to the nfl with a line of questioning regard to how this happened and what steps may be taken in the future and what not, but for right now, michelle, thats where the story is and just the latest in a high profile string of hacking. May be a good idea for you and your viewers to check the social media accounts and secure them a bit more. Back over to you guys. Such a drama. More now from a tech investor. Welcome back to power lunch. Good to have you here. Youre a big tech investor. Hi. What do you make of this situation with twitter . Weve seen so many highprofile twitter hacks. At what point do you no longer say listen, people, take control of your password and say, twitter, youve got some kind of big problem here . Well, i mean, its basically the problem that people use the same passwords across multiple sites. As we know Mark Zuckerberg does that, things dadada is a good password to use across multiple sites so thats not helpful. People should use different passwords for different websites and services and we need to get away from passwords all together and other forms of authentication such as fingerprints and so on because this doesnt work. This is an oldfashioned outdated system. We have to say, we should hack it up, back it up because we dont know hack that thing on up. We dont know if this is a being had a. It could be a current or former employee who knows the password which not really is not hacking but more like theft. It always could be. Most likely itsport of other data breaches where people use the same password across multiple sites. Its possible that this was a them. The other one is also a theft the way it moves across multiple sites so its even worse. Turns out that reports of Roger Goodells death were greatly exaggerated this time, and we will see a lot more of these news thats false if people dont, you know, change their passwords you mentioned the news about zuckerberg use dadada and his account got hacked and he was criticized for using such a simple password. To be honest, if anything, it shows he doesnt take himself very seriously so i kind of like that. Its certainly not very smart. Maybe he should change that, but it does show that hes got a sense of humor. What does it say about twitter, cyriac . If you go to a bar and talk to people after a couple of cocktails that work for twitter or know people that work for twitter or whatever, are they scared . What are they saying . Twitter has had a rough go, and it doesnt appear to be turning around. Well, as they say, when it runs, it pours, and currently the world does not look very good for twitter. They have had the fourth product person in the last two years at twitter and not just that. A lot of other executives this went out. Jack dorsey came back in to take over as ceo and people are waiting for the updates to the core product to make it more usable and more user friendly and we have yet to see a massive change there so theres a lot more that has to happen hat twitter in order to put it back on track. Some people are now talking about it being bought in the next year or so. That that is the only exit. I hope that how much do you think and i ask that question. Brian was bringing it up earlier. If yahoo in theory is going for 3 billion, those are the reports, what does that make twitter worth . Exactly a very good question and the same is true for all the unicorns that are not even public. All these companies that seem to be higher value until they actually have to be bought by someone and then the world looks very, very different. At yahoo were seeing that most of the value actually is in the alibaba stake and in the yahoo japan stake and not actually in the core business because were talking about 3 billion valuations here and the company is worth a lot more in total and twitler have the same issue then so if were seeing that the Public Markets are much more difficult than the private markets have been in the last few years. Listen, i dont know, cyriac, if yahoo goes for 3 billion and sells for 3 billion is that going to send a shock wave through Silicon Valley, or is it expected . I think its expected. This was a company that was offered for 33 billion a few years ago to microsoft. Yup. 3 billion . Yeah. The world has been changing. Everybody has been watching whats going on with yahoo. I dont think its a surprise, a big surprise for Silicon Valley to be honest. I think the much big and more scary story for Silicon Valley is what happens with the unicorns because those are private companies with a lot less revenue than yahoo and they are looking at valuations that are so high that its actually turns out it could be a curse for some of these companies to evaluate so highly. With investors they will lose money or with employees that wont see a lot of money when they exit. All watching to see that as it unfolds. Great to have you on again joining us from san francisco. Cloudy san francisco. Lets talk about stocks right now and they are higher. The dow breaking bad above 18,000 for a few moments. Hasnt been at that level in almost six weeks. Seems like an eternity, doesnt . S p 5001 away from its alltime closing high. Why . Well, one reason is Energy Stocks as oil tops 50 a barrel. By far the strongest sector in the s p 500. That would be energy. Health care, however, is in the red. Joining us now for more on the markets is jeremy siegel, professor of finance at the university of pennsylvania wharton school. Professor, great to have back with us. Last time you were on power lunch you said the dow could hit 19,000, 20,000 by years end and that would imply a 5 boston to 10 return. What takes us higher at this point . I think it has to be earnings. Weve had a little stability the last few weeks. Earnings projections are finally not going down the way they have for the last nine months, but we really do have to i think realize better earnings to really push this market forward. You know, im happy that janet yellen, basically said were not going to increase in june but that didnt make that employment report we had better. That really shook me. Im not turning bearish but certainly not only the job creation but the Unemployment Rate going down to 4 opinion 7, that real meant the participation rate, which is so important to get those people that want to work, because we dont want to tighten this labor force to cause the fed to to tighten too quickly, so i you know, that was a bad report and, you know, im certainly going to be watching the next one, but i think to push that 19, 20, which i think is still really possible, we really need the earnings to start moving up the second half. Year. You dont sound like a guy who is pounding a table on up to a 10 return on the dow by year end. Taking a look at the earnings saying the, part of the equation has to improve, pe earnings, the denominator has to get bigger here, are we going to see that because that impligs that the market right now is overvalued or fully valued. Well, first of all, we have about 18, 18. 5 times this years projected earnings. In a low Interest Rate environment which janet yellen is telling us, hey, this may even last longer, thats certainly not an unreasonable estimate at all. We still have the dividend yield on the s p 500 being well above the tenyear bond and well above anything that anyone is going to get on cds or fixed income, and, remember, ive been on this show before, and i think that were still in the very early innings of investors thinking about stocks as income produesing and dividendsproducing and i think that story is as live as every. I just want to make sure that we dont stall out at any point in these earnings increases because then well be stuck in the same trading range that weve been in for the last six or nine months. What im hearing you say thats not a slam dunk that were going to get that earnings increase. What i hear you say is part of your thesis is theres a dearth of alternatives to equities, rao igt . Yeah. Theres just nothing else there. When youve got toyota floating a bond at. 001 of a percent. If thats going to be the case for the next three to five years. I dont think the tenyear treasury is going to top 3 , maybe even 2. 5 . I dont think cds are going above 1. 5 to 2 , even towards the end of this cycle, and and, hey in, that environment, it 2 , 2. 5 on s p with growth and inflation protection looks mighty good to me but i think that thats going to be a big motivation for people to shift into equities, thinking of them as income producing and not just as vehicles for Capital Gains the way its been most of the past three or four decades. Professor siegel, mir shell here. When you show the twoyear charts it looks like maybe they will finally break out of this range. Tyler has brought up a point thats interesting. Do we trade flat in the election . Does the election slow down anything here . Wow. I mean, its i dont think so. I mean, you can always talking about that uncertainty out there thats supposed to keep it in a trading range. Theres still a lot of bearishness out there. A lot of people are saying, my god. How is it so high . Thats actually good because i think theres a lot of people still underweight. Even a lot of of the hedge funds and others, we know they havent even been able to match the rather tepid increases that weve seen in the averages. Some people think well have a shortterm meltup in the market as people try to catch up, but i think to sustain that increase we really have to see those earnings which have been really challenged, to say the least, the last 12 months, particularly in the Energy Sector move up. The fact that we put in a bottom of oil at 26 in february, the fact that if it stays at 50, commodities are there. I mean, i think thats positive for the markets. Professor, our thanks to you. Thanks for having me. News alert on lending club. Lets get to that . Shares are under a trading halt thats lasted for ten or so minutes because the company has filed a new regulatory filing saying that they had adjourned their annual Shareholders Meeting which was taking place today. The reason they have done so is because the company says that given the developments over the last few weeks, referring to the controversy around some of their lending portfolios and the sale to investors and what not, the company is not yet in a position to provide its stockholders a complete report on the state of the company. They have accordingly said that they will reconvene their annual meeting at 11 00 a. M. Pacific time on june 28th with the same Virtual Meeting access as well, so thats the latest news and probably the reason why the stock was halted. Its still halted right now and well see if anything else comes up. You may recall earlier, just about 20 minutes or so ago, headlines came out from a separate regulatory filing saying that lending club was looking to raise Interest Rates to borrowers other and they were saying raising Interest Rates will boost attractiveness of loans to investors hand they say they will also tighten credit criteria to remove higher debt parts of their portfolio and want to reduce loan volumes by tight nick criteria. Some. Headlines come out and well lit know when lending club starts portraying again after the trading halt. Think about what they are saying and struggling with the raising Interest Rates. We know the bond market has moved so what they are saying is were struggling and our solution is going to be raise prices effectively. Well, they are doing that as well, and they are saying as a result of that, they expect to put out fewer loans, 5 fewer loans because of this particular heightened or tightened lending criteria. Yes, the company has fallen on perhaps some tough times with regard to the overall picture of the company, but this is an interesting move by the company saying that they want to at least tighten some of the lending portfolios, a move set to shore up what some investors feel need node shoring up a little bit. Well keep an eye on lending club. Reconvening on the 28th. Lets hope they learn something about their own business in three weeks. Dom, thank you. To oil now. Nigeria starting a much delayed program to clean up areas heavily polluted by oil spills and vandalism in the niger river delta. That is where almost all of nigerias oil is produced. Terrorism, the blowing up, the cutting up, whatever, of pipelines has heavily impacted nigerias oil production. The southern swamps. Delta have been hit by a series of militant attacks on the oil and gas pipelines. Those attacks have pushed up the countrys crude oil output to a 20year low. Ouch. All right. So, whats happening in nigeria has actually helped push the price of oil back up to 50 a barrel and above that and some. Stocks the last weeks and months have been rallying. Here now for another power lunch exclusive david dempshire, the ceo of four labs. 2k5i6d, first off on prices, how much do you think whats going on in, you know, the canadian fires and. Nigerian terrorism and vandalism that were seeing is the reason oil prices have gone up because if they are those are shortterm things most likely . Yes, brian, first of all, thanks for having us back on power lunch. Enjoy seeing you again. When you look at the worldwide net decline curve rate of about 3. 3 thats going to add up to about 2. 75 Million Barrels of net decline in production thisyear. That, coupled with an increased demand of about 1. 2 million should balance the crude oil market by year end. Now, these supply disruptions in nigeria, up in canada, are having a significant effect, as you said, in the short term, but even longer term the laws of physics and thermodynamics and the decline curve always wins and never sleeps. Well said. Lets get to your business specifically, david, because you rely on the big guys, the biggest of the big, spending more money, especially with core labs. Just about once a week for the past six months weve seen xyz giant Capital Corporation cuts its spending budget. Do you believe the spending cuts by bp shell, all of them, are over . I think pretty much they are. As a matter of fact, if you look at bp later this year they are going to or early next year they are going to sanction the mad dog 2 project in the deepwater bid in the gulf of mexico. They were originally approved for oil above 100 and if brent gets to 60 a barrel. They feel returns at 60 a barrel will be better than what the original returns were going tonight. Moreover, were seeing maybe totale later this year, again sanctioning a deepwater project so i think their cap x budget cuts are over, and were going to see them start to spend money and develop the reserves around the world. Ive argued that for Many Companies, maybe not yours, maybe not bp, but for Many Companies 50 a barrel is not much better than 40 a barrel. A. I. Wrong . Well, youve about Natural Resources set at wti. At 50 they might put on as many as step rigs in the basis. That would be a dramatic is they wish to have them move in some ways. Brian demshur. Thank you. Lending club trading has resumed. Its down about 4 right now. It opened up down around 5. 5 at its lows after the trading halt. Shares were down some 2 some percent before the trading halted. Shares are out and they have said they will post pope or at least adjourn their annual stockholders meeting and will convene and when they know more about the state of their business. Guys, back over to you. Im going to jump in here, dom, or low it to tyler or melissa or michelle. Has anybody heard of a company stopping a Shareholder Meeting in the middle of the day . Im going through my brain and my brain is a little foggy. No, i dont think so. Sounds like they convened it in some way simply to announce that they would convene at some other point. Maybe procedurally they have to do that. Thats pretty gig. It sound like they are forced to change their business mold and charge higher rates in terms of what they are going to give out to loans but if you are going to get investors to buy the loans youve got to offer a better premium. If youre offering or charging higher rates uruguay wondering whether that will have them look at alternatives. I think the whole business mold el. Company is in question. The lending club has adjourned and will reconvene in three weeks, i guess. Okay. Raising the bar. If youre thinking about going to law school, dont. Listen up, something just happened in the legal world thats not happened in step years. What its signaling and the ramifications ahead. Plus, housing, red flags, a lot less documentation and more ability to lie on mortgages. Hmm. Have we heard this one before . Really is it different . Your money and your vote. Hillary clinton making history. The road ahead in this election. A lot more to do. Stick around. Im here at the Td Ameritrade trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. Igoing to clean betteran electthan a manual. Was he said sure. But dont get just any one. Get one inspired by dentists, with a round brush head. 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I regret those comments that he made. I dont think claiming a person cant do their job because of a race is sort of like the textbook definition of a racist comment. I think that should be absolutely disavowed and its absolutely unacceptable. What point do gop members of congress start to fear donald trump might hurt their chances in the fall . Think thats already happening now. More now from larry kudlow. Layer, what do you think . Look, everybody has a right to an impartial and fair trial, okay . A lot of republicans are kind of jumping the gun here. Ethnicity is not a reason, okay, and this should not be a conclusive reason regarding a fair trial, and i think mr. Trump missmoke misspoke on that. Judge curiel has a background that it would not be a fair trial. As a member of la razza lawyer, helps la aza Council Members and hes against trump and all trumps Border Security programs and the law firm gave 675,000 to bill and Hillary Clinton. Asking the judge to be recused would be a good approach and ask for a change of venue. He hasnt asked for a change of venue or done the things that you describe. He went after the judge very pointedly and very personally and you know very well, larry, that the minute you start to introduce someone being qualified or not qualified for a job based on their race, ethnicity or religious background youre beginning to go down a very serious slope, a slope on which this country was not built. I agree with that. I dont think hes going down that slope. The last but he liberals, republican establishment people. Hes kept saying it. Very quick to use this racist charge. I dont think hes racist. I know him. Im not an intimate, but i dont think hes racist. What hes asking for here is a fair trial and do i think he misspoke on the mexican thing. On other areas i think hes on very firm ground, tyler. I must say on that point. As i said this, judge does not have an impartial history regarding these subjects, and i think trumps got a point, but i also would not have used thats me. Im not running for president. Right. Just me. Youre in charge of all the data. Youre with 538 and look at all the polling and everything else. What insight can you give us and donald trump and what it might do to the gop . The question is does the gop want to survive in a multiracial america because weve got 30 years until america becomes a country with no racial majority. White people nonhispanic whites will still be the largest plurality, but in about 30 years there will be no racial majority, and so when you look at the overall figures for how the electorate is changing, latino americans and Asian Americans have a growth rate as a percentage of the electorate from 16 to 17 over 2012 whereas africanamericans and white americans are roughly flat. So if you talk about the momentum that you have demographically when it comes to courting voters, and also thats 0 years from now. What about right now . Well, right now you you have certain states, you know, a lot of the states that are swing states dont have a particularly large latino population but arizona is a state that has not been a swing state. Its still leaning red but where you have because of Sheriff Joe Arpaio and the controversial elections hes had as well as the comments of donald trump, the latino electorate in arizona is more mobilized than its ever been there. Hes a push by the Obama Administration to naturalize 800,000 legal residents who are not citizens before the election and then theres also a move by many latino groups to mobilize 3 million potential voters who are citizens who havent voted before in a president ial election so the math around these comments about latinos basically is boxing in the future. Look. Can i just break in, larry. Just gotten a news word from mitch mcconnell, the majority leader of the senate, saying that it is, quote, time for trump to stop attacking minority groups. Is there any evidence that his extemporaneous comments, misspoken or not is hurting republican candidates down ticket . Any evidence in the polls that that is why those races are as close as they may be. Well, you know, one of the things is that some of the closest races are not in places where you have the largest latino population, so youve got bingo. In the senate youve got new hampshire. Youve got ohio where theres a significant but not overwhelming latino population and wisconsin, so, you know, right now the youd be hard pressed to say. Thats exactly right. Thank you for being objective. I appreciate that. Look, im an old jack kemp republican, so i want the gop to always broaden its base and reach out to the minority groups, okay. I always have and i always will, but i think they have to do so not in a andering sense, but they have to talk about Economic Policy and growth and opportunity and why traditional gop policies, such as deregulating, helping small business, reducing tax burdens and the like will work if they go out there to the communities, so in that sense i think republicans have a problem, but i also think that the trouble with trump on this is not racial, its all about being off message. The message that trump should be the economy. Grow the economy, raising the threat of recession right now. You came in with some facts. Lets grow the economy. Thats where donald trump should you came in with some facts. Yes. You said that Hillary Clinton had been paid 600,000. 675,000. By a a latino lawyers group. No, its no, a group who is representing im sorry. Lets be very fair on this. The la raza lawyers of whom the judge is a member is very different from la raza lawyers but the council represents them in a number of cases. Judge curiel appointed a law firm which has in recent years given 672,000. If these are the facts, why does mr. Trump choose not to cite those kinds of facts and to go to the to the matter of the judges ethnicity. Well, i and youve been in the room with him. I think does he listen . Hes got youve got mitch mcconnell, the two highest elected republican officials in this country calling him out on this. Does he listen, and if he listens does he hear . I think he will listen. I think he does listen. Does he care . Im not let me jump in. Im not a trump expert. I know him. I have been in the room for him and i cant speak for him on any of these matters. However, you make a good point. I would rather he judge the judge regarding these other matters which are far more important than ethnicity but i stick to my response to my friend michelle. The gop must stay on an Economic Growth message and mr. Trump has a good one but he should be using it and thats the best way to the minority groups. The thing you is asked about down ballot races but when it comes to swing states, thats where you see the power of the latino vote. Florida, you have all of these cubanamerican republicans like the mayor of mime who are saying hands off, i cant touch this guy. You know, all of the, i know, southern Florida Republicans are running against donald trump, so floridas a classic swing state. Youve also got nevada, colorado, those are all states with very high trump is running even in florida. Trump is running even. The real clear average. Cubanmen traditionally Republican Voters wont touch donald trump. I dont think thats true. Can we can i ask a totally different question. Trump is running even with hillary in florida. Thats what the polls show. Can i ask a different question for you, layer and then can you respond off the trump topic. Yes. If Bernie Sanders wins california, despite Hillary Clinton being called the presumptive nominee, what happens . All hell breaks loose. Do you agree with florida. Maybe not that exact description. All hell breaks lose. The Bernie Sanders people will be emboldened. Well see fights on the floor of the convention, fights for rule changes, fights for delegate changes and platform changes. Dont tease me, hillary. You can quote me hon in a. According to the pollsters for 538 the polls plus analysis is clinton has a 90 chance of winning california, even thought the polls themselves seem close, once you dive down and look at the underlying mix and you can look at them by region of california, 90 calling somebody a winner does tend to skew votes beforehand. We know shes the winner. Im not going to vote for a loser. I have a lot of respect for miss silva though shes made a lot of mistakes in this campaign so far. Shes not going there. I dont know who is going to win. Right now the race looks like a tossup. Thats what the latest polls show. I would just say in answer to brians insightful, brilliant question. Youve never heard that. First time ever. For politics. Look at him. Getting red already f. Sanders wins tonight, if he does, im just telling you all hell is going to break lose. Theyll be like a team going into the playoffs on a 20game losing streak. Thats a good metaphor. Picture in the the New York Post with her trying to claw over the finish line. Yeah. Like the olympics, youre supposed to run straight ahead and put your arms ahead to the tape. Shes barely getting there. And with super delegates there has enough. There may be a fight on the floor. They can change their mind. Thats very contentious and what im saying is i dont think shes crawling across the finish line the question is whether she crosses tonight with an overall delegate count or just with the super delegates. My point is a little different point. Youre right on the rules, but there may be a big rules fight on the floor regarding super delegates. This is possible. Its in the democratic rules. And a california win emboldens them to try if thats the case. Im telling you. Its a hell of a thing and well all be very anxious tonight. On both the moral level and a practical level the gop has to figure out its messaging to latino americans who actually are more likely to vote for republicans than either Asian Americans or africanamericans. I have it. Breaking news, growth, opportunity, breaking news. Gop, growth, opportunity. Jack kemp. Kudlow, ryan, steve moore, art laugherer, and sully. Brilliant. Kind words. Well be right back. Back in two minutes. man oh, looks like we missed most of the show. woman and theres no way to restart it. jon bon jovi with directv there is. 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Since it was announced yesterday, already had half a dozen firms around the country announce they are raising pay rates as well, so it looks like whats going so well for these lawyers . Welling right now the large law firms have been doing well. They have had about six consecutive years of increased revenue and profit. Representing their clients and collecting on their bills and and they have had had a decent amount of growth in this recovery. This is the first time in how many years that these sort of benchmark law firms have been raising their firstyear salaries . Almost a decade. Last big pay raise like this was back in january of 2007 so its been a while. Does this make the law an even more appealing career choice . Well, peace the difficult question. I think whether the law is the right career for a driven person depends on where they are going to law school and firms like cravath are very selective in their high school. They are going to harvard and yales and michigan and. Exact successfully other law firms arent jumping along. Is this the beginning of a trend . Is this a multiyear thing, or will we see another long breathing period between now and the next time they go up by so or 20 grand . Well, i think whats going to happen is this pay raise will spread across the country and that could take several months as it goes to d. C. , los angeles, san francisco, et cetera, and then, yes, well have a couple more years of a breathing period. David, thank you very much. Thanks for having me. Interesting news in the law feel. Appreciate that. Power lunch returns in two minutes. It is time now for trading nation because traders do trade Better Together and todays quest, what sector, if any, will drive stocks to record highs . Erin gibbs and max wolfe with manhattan venture partners. Erin, we know you like health care. Why is that the sector to drive us to new highs . All right. One, its one. Largest one of the three larger sectors of the broader index, so obviously it has a lot more heft and weight to push the index up, but another big part of it is has some higher growth rates and were looking at 8 growth for this year and 6. 5 over the next 12 months, but the really big thing is that its actually trading well below its threeyear average valuations as well as below market valuations so even if we get another 5 of evaluation expansion, let alone some of the most attractive eps growth, we could really see some growth and pushing the market higher. Much better than weve seen with the financials that are trading at more richer valuations and obviously having the fed hanging over them so they are my favorite and thats where i think we might get the push. Max, you have another favorite which is financials, something we talk about all the time with the federal reserve. Is the financials just a fed story . No, but significantly a fed story and the other big story here is whether or not were going to get the full package of financial regulations has gone back on the chopping block, having been off that block for many years, so were starting to see a weird situation that kind of formed up here which is that the rulemaking took so long that it wont actually be complete until the next president comes in, and were seeing lots of voices in the house and senate, including some of the president ial candidates talk about repealing or big pieces of approximately huge segments of regs. Likely to see a situation where rates are more accommodative, and been unloved a long time and valuations may come back and they may get regulatory relief and given that we think the markets are overbought we think theres a sweet spot in the number of levels, though health care is appealing and its probably a safer bet between the two. All right. Max and erin, health care and financials, two good arguments. Thank you both very much. Remember, for more trading nation, go to the trading nation website which is tradingnation, did i mention tradingnation,. Scenes. Com. All right. Up next, are the banks going back to their old sad ways . A possible red flag in housing when we come back. And now the latest from tradingnation. Cnbc. Com and a word from our sponsor. Trading with the trend is key for many traders so trend following indicators are important. The markets are trending down, many traders watch moving averages which will generally have a downward slope. As long is a the stock or index stays below the moving average, most trend traders believe the weakness in the market is being confirmed. When a moment turns romantic why pause to take a pill . Or stop to find a bathroom . 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Find a remote hotel. Bring the family. I do not think that is a good idea. Welcome back to power lunch. Remember last woke we told you when the return of the 3 down mortgage. Wait until you hear this offer from diana olick in washington. Diana . Reporter melissa, remember stated income loans. Could tell the bank where you worked and what you made. They called them low doc or no doc loans after the housing boom and after the housing crash they called them liar loans. One Community Bank in queens, new york, quantity c, and what you need to get it . You need a really big down payment, 40 p. You need a minimum 700 fico credit score and have to occupy the home but all you need on the document side is verification of employment, two months of Bank Statements and enough cash in a check considering account at quantic to cover all the costs of the loan for six months. For those of you who know todays tight mortgage rules you know this does not xlooet comply with new federal regulations called the, quote, ability to repay so how does it work . Quantic is part of a Treasury Program from 1949 to help revitalize lowincome areas that. Said, quantic can make these loans to anyone anywhere. So far they are only doing it in new york and miami. Now i spoke with the bank ceo this morning. He said, quote, i see them as extraordinarily lowrisk loans. They are missionoriented. The worst case scenario, he said, is that the borrower goes delinquent and have you to foreclose. Okay. Well, there is, of course, nothing to keep these borrowers from lying on these loans as has happened in the past, we know. Shock. Diana, is this a profitdrive institution or a Nonprofit Institution . Not a nonprofit. Its a Community Bank which by virtue of it being that type of bank its supposed to be giving back to the community doing what it does within the neighborhoods to help revitalize those economies, and thats why its part of that Treasury Program, but it is not a nonprofit. Got it. All right. Thanks, diana. Lets bring in bruins marks, and this is a nonprofit that provides loans to lowincome individuals who are considered to be sub prime borrowers. Good to have you here, bruce. Great to be on again. Thanks for having me. What do you think of the low doc loans . You have to put down 40 for the down payment. A big whopper of a down payment. Well, it is. This is going back to the predatory lending, but its even worse because its taking whats supposed to be for low and moderate income people and its preying on using that to just make these mortgages that are very problematic, but most importantly its not going to help low to moderate income people. Its just these its the bottom dwellers who are there going after going to the depths of predatory lending again. Why does it not help . Why does it not help these people, bruce . I mean, if they can make the payments, and if they have got that 40 down, very high fico score, why cant these people decide on their own that this mortgage is for them . Why is it that they are being preyed upon . Because if you look back, look what look at what created the mortgage crisis. It was people with high credit scores, but they were able to put down anything on their mortgage statements and on mortgage payments and actually what happened is you had the lenders saying if you want to get this markets put down this income, put down how much you have in assets, but really what built this country is full doc underwriting. Is it different this time because this is as 40 down that were talking about. Back in the crisis we were talking about almost nothing down or no money down in some cases . We but weve been doing the no money down mortgages for over 30 years, but its always full doc underwriting so when you do full doc underwright youre verifying your income and your ability to pay. Thats the key piece. If they were so sure this is the right thing to do why are they using to did you read the story that diana wrote . Yes, i did. A lot of nontraditional buyers who dont have necessarily traditional incomes, a lot of immigrants who but but but the point is to pool resources so to document would be incredibly difficult. They may have the money but dont have the ability to file the paperwork so why shouldnt they be able to get the loan . Because the paperwork that you have to require to do the ability to repay is not difficult. Its not difficult. So they shouldnt have to use the mechanism but they wont qualify for a traditional loan. But they do. Common sense says if youre going to be in the lending business, anybody in the which is meant for low moderate income people but every form of lending, common sense says you have to document the ability to repay. It is not difficult. Its very simple to do that. Youve just got to verify the income, the deposits. Thats what built the country. Remember, after world war ii, what built the white suburbs . It was a v. A. Mortgage. It was a no down payment mortgage, but full doc underwriting. What caused the mortgage crisis was not the lack of payment. It was the lack of documentation. Got it. Anybody listening to this say use want to verify it. Its common sense the and to repay. Bruce, thank you so much. Theyre going to find a way to scam me again. Thank you very much. Good to have yu on. Thank you. Power lunch is on in two minutes. Using 60,000 points from my chase ink card i bought all the fruit. Veggies. And herbs needed to create a popup pickyourown juice bar in the middle of the city, so now everyone knows. We have some of the freshest juice in town. See what the power of points can do for your business. Learn more at chase. Com ink see what the power of points can do for your business. I could get used to this. Now you can. When you lease the 2016 es 350 for 329 a month for 36 months. See your lexus dealer. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. 2016 disrupt ter list is ready to go. Its the rank list of the most innovative and disruptive private companies. Our chief disrupt ter Julia Boorstin is at the headquarters. Number 6 on the list, julia. Tyler, thats right. Here at bloom, the company is building fuel cells. Theyre designed to revolutionalize how energy is produced and distributes. Its fuel cells that convert natural gas into electricity far more traditionally than traditional power technology. Bloom has performed these for big customers including apping, at t, walmart, and home depot. Earlier we spoke with the c ceo krs is sridhar about his companys mission. Its critical to a sustainable planet. Just like computing telecom went to centralized to distributed. Thats access, affordability, choice, sustainability all coming together. This is one of the most important things we aztec knoll gists can do for this look. The company signed deals with others. Sridhar says the next leg of growth will come from a big push into emerging markets. Developing companies and leapfrog just like they never had landline and went straight to a mobile. They can go straight from l electricity to the most advanced form. Bloom Energy Raised over 150 billion. Sridhar says hes not in any rush. Look. Ipo and going public in a Company Whose mission is to change the world is one step in the process. We will take that step when its appropriate for us and not whenover people think its right for us to do it. At the end of the day, we want to be a large Sustainable Company that will have an impact on the world. You can find more interviews with disrupt ter 50 ceos as well as the full list at the website. Julia, thank you very much. We have a big line of disrupters tomorrow beginning with the cofounder and ceo of the yore gachbl Design Company ginko bioworks. The call just came in. Shes about to arrive. And with her, a flood of potential patients. A deluge of digital records. Xrays, mris. All on account. Of penelope. But with the help of at t, and a network that scales up and down ondemand, this hospital can be ready. Giving them the agility to be flexible reliable. Because no one knows like at t. Were holding onto gains. Dow jones industrial average gave up that 18,000 mark, but hanging in there up by 61 points, s p 500, this is a yeartodate high. Were less than a percent away from alltime highs and for wti crude, this is 2016 highs setting above 20 a barrel. No surprise Energy Stocks a big gainer on the s p 500 along with transports, semiconductors, homebuilders. Cfi. It matters if youre out west. Are you going . Its 2 00 p. M. West. Closing bell starts right now. Welcome to the closing bell, everybody. Im kelly evans with the new york stock exchange. And im bill griffeth. Welcome back. Thank you very much. Stocks moving to alltime highs. Were going to tell you where you can find growth. Yes, were flitting with 18,000. Well see if it can happen by the end of the day. Getting hit hard on the back of bad news from biojen and valiant. Well bring you the details on whats behind these moves in just a moment. Meanwhile nearly 70 million cars in the u. S. Alone have