Transcripts For CNBC Power Lunch 20160617

Course. Power lunch begins now. In a week well know. Did the brits vote to stay or leave europe . This is power lunch with tyler and melissa. Im michelle carusocabrera. Brian is out today. This was the big trade yesterday. Right now the pound versus the dollar at this hour, 1. 43 is what its going to cost you. Pound is stronger again. That little yellow arrow indicates the strength of the dollar. European markets jumping sticks days before the vote. The footstse finished up 1 . A statement being made following the Fatal Shooting of jo cox yesterday. Brexit Campaign Officially suspended only for today. Lets bring in cnbcs wilfred frost who is on his way to london tonight. Tonight but not quite yet. The latest in terms of polls, the Financial Times poll of polls says 48 say theyll vote leave. 43 say theyll vote to stay. Im delighted to say that were joined now by kate, British Labor politician, a member of Parliament Since 1989. She is in the leave camp, one of the few labor members that is in the leave camp. Thank you very much for joining us, especially given recent events, and may i take a moment to pass on my deep condolences to you and to the labor party more widely following the sad loss of your colleague yesterday. Yes, it was a terrible, terrible tragedy, and were all incredibly sorry and just really words cant say anything about it. Indeed. And im going to step back to start from the events of the last 24 hours if i may. The story i suppose of the last few weeks has been one, in fact, of great momentum for your side of this debate, for the leave campaign. What do you put that down to . Why has momentum grun for peoow people who want to leave the eu. Of course, were not leaving europe, but we want to leave the eu, and over the past number of weeks i think i find when going around the country that people have been listening to the arguments. I dont think theyve been scared by all the terrible, ridiculous stories about being put out by the remainers if we were to take back our own country and our own borders and our own trading, and our own democracy. I think whats happened is theres been so much of a bringing together of the establishment, leadership of all the main Political Parties, the big banks, the big institutions, the international bodies, the Prime Ministers and leaders of other countries all telling us how dreadful it would be if we would leave, and i think the public have actually come around to saying, look, hang on. Weve never been asked about this European Union, how its changed over 41 years. Weve had treaty after treaty imposed on us, and this is our opportunity to say, we dont like how its changed, and i think what has happened now theres a kind of confidence amongst the British Public particularly outside london who are just beginning to say, well, hang on. Were going to show you that we think you have been wrong as the political elite who have led us into this European Union, and were going to vote leave. So do you think when the likes of jamie dimon, the jpmorgan ceo came over recently and helped to outline the case for why the uk should stay, do you think that helped your cause . Do you think that helped the leave camp gain traction . Well, i think it actually did in a way, and i think also when we had your president obama over, everyone thought, oh, this is going to make such a difference, and actually we saw the polls shift the other way after hed been because it was nice to have him here and he visited her majesty and wished her happy birthday, but really it wasnt up to president obama to tell us how to run our country, and as people said to him and to other americans and to your public, you know, you would not you have a trading relationship with mexico and with canada, but you wouldnt allow a Mexican Court to overrule your court, and you wouldnt certainly have open borders with those other countries. So no one is against a trading relationship. We want to trade, but what has happened over the 41 years is that the original Common Market has become a political structure over it which is now more important to the elected commissioners than almost the trading attitudes, and so thats why i think people are beginning to feel very strongly that its time to get out. You mentioned some aspects of the remain camp, be it financial institutions, the president , the uk Prime Minister. One aspect where there has not been a united front amongst the remain camp has been between the Prime Minister David Camerons conservative party, your party leader, jeremy corbin, and the rest of the labour party yet this morning for the first time they appeared alongside each other. Do you fear the tragic events of the last 24 hours might help to boost the unity of the remain camp and could that hurt your cause in the final few days of this crucial vote . No, and i dont think its seen i dont even want to sort of answer that sort of question because thats not what i think this is about. Ultimately people will vote next week. The British Public i have a lot of confidence in them. They have a lot of common sense, we have as a country, and they will be taking the decision on what they think is the best interests of the country, not whether in the long term as well and not whether two leaders of two Political Parties appear together in a very unified way, very rightly over what has been a dreadful tragedy, and, you know, couldnt have happened to a nicer and better member of parliament. Im sympathetic to not wanting to answer that question, maam. Thanks so much for joining us. Michelle here. But to follow up yes. On wilfreds question, when this horrific event was announced 24 hours ago, everything seemed to change. The markets, the pound rallied, bookies odds changed, the stock market rallied. All of the markets, all of the indicators we follow seem to suggest that this horrific event would give more power to the remain campaign. We are littered in history with many, many incidents, violent incidents, that moved elections, polls, legislation, civil rights legislation in the United States, for example, many believe occurred because of the assassination of jfk. So i want to go back to that question which is yesterday could have been a very pivotal event for the remain camp, and it could hurt your cause. And theres one more thing i want to tell you. The uk police according to reuters has just said that the lawmaker was the victim of a targeted attack and that they are investigating whether or not it was right wing extremism. They think its the priority line of inquiry into her killing. Well, i mean, we dont know the full facts. What we know is that this person certainly had Mental Health problems, and i think that until we get the full facts, you know, whatever his history is, the reality is if he had Mental Health problems and he wasnt being treated properly, who knows why this happened, but certainly its very, very worrying if the person was the member of parliament was actually targeted, because that means members of parliament from all parties and all sides have to be incredibly vigilant, but your initial question really, i really dont think this would change something in that kind of way that youre implying and i think well see in the polls that are coming over the weekend not a shift. Of course, the markets go up and down. And they can change with all sorts of things. Similarly, with the betting odds. The betting odds have been moving towards they have been way, way in favor of the remain Campaign Just a few days ago. So they had begun to move back towards leave. So, you know, im not in the game of working out what the markets are saying. I believe in what people say and not particularly worried about what the markets are saying. You know, we americans have some history or familiarity with rebelling against foreign control of our destiny, and so my question is, is that what this is about for you personally . Apart from the effects that membership in the eu may have on wages and job availability, is it really about democracy and the ability to control your own destiny . Well, for me and for many of us, the democratic element is the crucial thing that underpins it all. You know, we really have lost so much power from our own parliament, and as i always say, the train is only going in one direction, and if we remain in the eu, we lose even more power. And i think that is very, very important because, you know, weve been were the fifth largest economy. Were an independent we should be an independent, free nation, and, you know, only out of all the democratic nations that we recognize in the world, its only 28 that seem to feel that in order to have a trading zone you have to have this political structure, and i dont think probably the American Public understands that its not just about trading. It is actually now a directive to try to change things we do in our own country, our own parliament can be overruled. We cant deport people back into European Union countries sometimes because of various rulings from the court of justice. So it is about that to me very much, but also the European Union has changed from what many in the labour party supported. Its now from the left were seeing it as a supporter of the global corporations, the multinationals. Its a neoliberal organization, and its also trying to have a relationship the Transatlantic Trade Partnership with the United States which were very much opposed to because it would give the multinationals huge power. Theres a very coherent argument from the left as to why we would like to leave the European Union which is why theres quite a vocal group within the trade Union Movements working right across the European Union. The United Kingdom is not alone in having problems with the European Union. Were seeing more growth in the other countries who would quite like to have a referendum and thats part of the reason that theres been this really trying to push us from other countries because theyre worried what might happen to other countries. I want to zero in on that very point. If you look down the road if your leave campaign succeeds, if you look down the road and look at the ramifications and see europe as a whole being stronger, including britain, because many people say this will lead to weakening of the euro, the currency, and then also a weakening of the European Union with the periphery wanted to come out. This could potentially if your campaign succeeds, lead to the dissolution of the European Union. Do you think this is the future in which britain will be stronger . Well, i think we are looking at a referendum that is not about the status quo or leave. Its because we have no idea what is going to happen to the eurozone within the European Union and, therefore, there is huge uncertainty about staying in, and i think what is certain about leaving is that we then as the United Kingdom can control our own destiny and decide our own future in terms of our trading relationships. We will still be trading with the rest of the world. Were trading more now with the rest of the world than we are with the European Union. Our trading relationship has gone down. Its a dysfunctional organization only people dont really want to admit that, and, therefore, leaving it will give us, i think, as a country not in the eurozone the ability to go from strength to strength, but i hope that it would actually also lead to a fundamental change within the European Union itself and it is going to have to completely change the way it works, then i think that may well have to happen. We could be a catalyst for that change that is necessary if its going to survive at all. Sitting here in the u. S. As i do as a brit here in the u. S. , a lot of people often compare the rise of the Brexit Movement with the rise of donald trump, but given the case youve been outlining, the working class case why . Because there are antiimmigration feelings, antiestablishment feelings, theres a mop of blond hair on two of their significant leaders. Im not saying theyre the right assertions but theyre made. My point wag going to be do you think there are more similarities with the case youre plakimaking to leave the with, in fact, the rise of Bernie Sanders . Well, i think there is an antiestablishment in all of that which were seeing not just in your politics in the United States but right across the eu, but i would want to stress that, you know, people talk about it being antiimmigration. What we want to see is control of immigration so that we decide as a country. No one is saying there shouldnt be immigration, but i find it very sad that our former commonwealth countries, now, i have great difficulty getting their citizens to come into this country even to work whereas countries in the European Union automatically can come in. So its about controlling immigration and then looking at the kind of skills that we want in our country, as any other democratic country does. This is what the American Public needs to understand that. Its nothing new about controlling your own border and who you take into your country. We have given that up to the European Union, and thats part of the reason the democratic deficit that we want to get back. Ms. Hoey, thank you for being with us. I will be on the ground in the uk next week and would love to have you join us again. Good. Well see you. Lovely. Thank you. She would be a terrific guest to have on again. Very wellspoken. Thank you. Weekly rig counts out moments ago. Lets get to dom chu. Back to our side of the atlantic with the weekly rig counts on friday. We have total u. S. Rigs up ten to 424. Now, lets break it down by the particular commodity class. Rigs for oil up 9 to 337. Gas rigs up 1 to 86 and misly miscellaneous rigs unchanged at 1 for right now. The u. S. Rig count for oil is down 294 rigs from the same time last year. Also a nod out to canada. Canadian rigs up 4 to 69. Those are the numbers. The big one a lot of people focus on, plus 9, again, oil rigs to 337 total. Back over to you guys. We did see a slight pull back in terms of the gains of wti. The battle for viacom has cost five members of the board potentially their seats. If the move holds up in court, well bring you the latest in this escalating legal war. Plus, one International Airline offering a startling new deal, Unlimited International Business Class flights. Is it worth the price tag . Well tell you straight ahead on power lunch. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive man 1 man 2 i am. Woman exmilitary . Man 2 four tours. Woman you worked with computers . Man 2 thats classified, maam. Man 1 but youre job was Network Security . Man 2 thats classified, sir. Woman lets cut to the chase, here. Man 1 whats youre assessment of our security . Man 2 [ gasps ] porous. Woman porous . Man 2 the Old Solutions arent working. Man 2 the world has changed. Man 1 meaning . Man 2 its not just security. Its defense. Its not just security. Its defense. Bae systems. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Two years ago right here on power lunch, a battle royale. The founder and ceo of iex went at it with an executive in the High Frequency trading industry with author Michael Lewis weighing in as well. Do you think the markets are rigged . I think its really hard to put he said it in a book. You said it in a book. Thats when i knew the markets were rigged. Its disgusting youre trying to parse your words now. Do you believe it or not . Because you said it. Its a yes or no question. Do you believe it. I believe the markets are rigged. There you go. And i also think youre a part of the rigging so if you want to do this, lets do this. I really do. He said that and he also said shame on you. How do you react to that . So ill say it again. So i think hes outrageous. I think hes part of the problem. The s. E. C. Is expected to rule today whether to grant iexs request to operate as a National Stock exchange. Lets bring in bob pisani who was part of that discussion a couple years ago. Hi, bob. Give me some history here. What has iex been doing . How have they been operating absent this kind of designation from the s. E. C. . Theyre a little less than 2 of the overall trading. Theyre an alternative trading system and theyre seeking to become an exchange. Theres been some question about how much a Stock Exchange would be allowed to slow down trading. Iex will institute a 350 microsecond speed bump. Their argument has been very simple. The exchange is separated by wide distances and sometimes traders can take advantage of the distances between the exchanges and their databases by essentially taking vac of the time advantage of the time delays. They have a speed bump. A number of the exchanges have been pushing back saying wait a minute, the rules, the s. E. C. Rules, specifically say you cant institute any speed bump. Thats been the controversy here and the s. E. C. , the question is who has been right on that . The s. E. C. Is going to make a ruling on that today, tyler. Who would want to do business with them . I mean, i dont understand the order flow and all of that as well as maybe i should and certainly as well as you do, but if im being slowed down, why would i want to do business with them . Well, the argument is its not going it affect the overall trafficking. It will simply make the Playing Field more level. The s. E. C. Has been trying to grapple with this for a while. They issued a reinterpretation of the rules a few months ago where they said anything below 1 millisecond would be consistent with our rules and, of course, this is a whole other can of worms. Nasdaq has implied they might sue them over this. The basic question is, is it okay for them to institute some kind of speed bump . I think a lot of people would say if the s. E. C. Feels its in the public interest, then the answer is yes, but its controversial and even if they vote in favor of it, its possible there could still be some legal challenges. Its a very, very interesting issue but the bottom line here is weve got one, two, three exchanges now and a good possibility were going to have four before too long. Thank you very much. If you like your equities liquid, youre going to want to stick around. The business of water ahead. Power lunch returns in two minutes. Welcome back to power lunch. Name of the game today respite after a big rally in the safety trades and that goes for gold. The final gold trades have crossed. 1,293. 60 an ounce, down by 0. 4 . For the week gold gained 1. 25 . Taking a look at the rest of the metals complex, a mixed bag here but we do have palladium, platinum, and silver down by more than 1 . As for the bond market, well, we had eight Straight Days of gains and a rest today. Lets check in with Rick Santelli from the cm e. Rick . Hi, melissa lee. Well, lets look at the biggest gains for the week, what maturity are there . Did i hear somebody say fiveyear . Youre right. Fiveyear, you see the oneweek chart, down six basis points. Those the maturity that found the fewest buyers which yields closed down the smallest amount, that was the long end of the market, 30year bond down two basis points you see on the chart. Dollar index did have some uturns this week. Oneweek chart reveals basically a quarter cent below unchanged. Not that big a deal. And, of course, that wonderful interview wilfred had, this is going to be a big deal no matter how the vote goes. The pound versus dollar this week, pound is doing a little bit better. A little bit better at 14315. Closed at 1. 4260. Well continue to monitor but the volatility probably starts to ramp up the closer we get to thursday and friday next week. Melissa lee back to you. Thank you very much, rick. Stay or go . Britains decision on the European Union will affect the market. How do you brexitproof your portfolio . Well tell you straight ahead on power lunch. Its final for the your business entrepreneurs of the week. Omar and camille knew nothing about the Restaurant Business when they opened their Daytona Beach based kale cafe. They knew a little more when they opened their second store. They want to keep growing but they need help so were giving them a your business makeover. For more watch your business sunday mornings at 7 30 on msnbc. Will your business be ready when growth presents itself . Our new cocktail bitters were doing well, but after one tradeshow, we took off. All i could think about was our deadlines racing towards us. A loan would take too long. We needed money, now. My amex card helped me buy the ingredients to fill the orders. Opportunities dont wait around, so you have to be ready for them. Find out how American Express cards and services can help prepare you for growth at open. Com. Hi, everybody. Im sue herera and here is your news update this hour. The iaaf says individual russian track and field athletes not tainted by doping with apply to compete as neutral athletes. This follows the agency upholding the doping ban against the Russian Track Team prohibiting it from competing in the upcoming rio games. Russia is considering an appeal. In denmark secretary of state john kerry responding to dozens of state Department Employees who endorsed an internal document that advocates u. S. Military action asense the assad regime in syria. That position is at odds with u. S. Policy. I agree with the process. Its a great process. Gives people a chance to express their views and we will deal process it now. The second black box of the egypt airplane that crashed last month was pulled out of the mediterranean sea. This a day after the first black box was retrieved. All 66 people on board were killed. Its still not known what brought that plane down. And it was a bad day for motorists on a busy new jersey highway no matter how you slice it. A truck carrying deli meat collided with, you guessed it, a truck carrying bread. The accident spread the contents all along the highway causing a massive traffic jam. No one has hurt but were wondering if there were any heroes on the scene. Oh hold the mayo, right . Hold the mayo, ty. Welcome back, by the way. Michelle said all we needed was a mayo truck to come in there and wed have a sandwich. Absolutely. It was a mess, nonetheless. Yes, traffic sandwiched. Yes, thank you. Welcome back. Thank you very much, sue. Good to be back. Stocks extended loss on concerns about the brexit vote next week. Lets bring in katy nixon, chief Investment Officer of Northern Trust wealth manager, nancy tengleer of heartland financial. How big a risk is brexit . Its a lot bigger arriving than many investors thought a few weeks ago. The polls are not tilting the way many had hoped and certainly youre seeing that in the risks off market. The risk of a brexit, the real risk, the economic risk, is very, very high. As you, nancy, look at the hierarchy of risks in the markets whether its Interest Rates, economic slowdown, profits, brexit, whatever, which one is the paramount one in your view . Where does brexit call in that hierarchy . Well, its a shortterm risk to be sure. A few months back we were wringing our hands over the price of oil and slow down in china. Now its brexit. This is what the market likes to do. Our time horizon is three to five years. So im looking at earnings and corporate profits, top line growth, and the economic slowdown. Where are we precisely . And where is the consumer . Where are jobs . And what is this fickle, feckless fed going to bring us next . Fickle, feckless fed, i love that. That is good. That is good. But the production of this fed is not so good. Yeah. Im much more concerned about earnings, and i understand the shortterm implications of brexit, but im not focused on that in the medium to long term. React to that. Is this your view . I was speaking earlier for the team with the other show i work on here, and we were talking about ultimately whats going to matter most to u. S. Stock prices is u. S. Corporate earnings, not the brexit vote. Absolutely. The brexit is clearly our number one nearterm risks, but i would say its more a symptom of a broader populist uprising that were seeing all over the world right now, and what implications may that have for policy decisions and Economic Growth Going Forward . So i do think thats something that should be on investors radars although i completely agree ultimately fundamentals will prevail and i think the news we got out of the fomc this week is a boyfriend because it takes off the table what was another risk in my mind, which was a fed flub, and we dont think that the fed is going to raise rates anytime soon. We think the fed is coming much more down to where the market has been all along with regard to the pace and trajectory of rate increases you ladies with your fed f bombs. Im telling you, this is really something here. So, nancy, you say youre looking out three to five years. What do you like three to five years . Well, so, tyler, i hate recommending a stock after a great earnings report, but we have owned oracle, we have been buying oracle. I really like where the company is right now. Larry ellison always understood the cloud. He was ridiculed for a speech he gave but he has understood and been pursuing the cloud with impunity. So i love that the cloud revenues popped. The other side of the story is that while its only 10 of revenues, i think thats the good news, and i also believe that he has marc benioff in hi sighhis sights much like he used to bill gates. It was a stop watch back then, how long would it take him to trash talk bill gates. Now its marc benioff. I love that story. And goggle, especially because of the downgrade. The price target was maintained. Its a short term potential, maybe shortfall in earnings. I love that stock. Ruth brought financial discipline and we think at this multiple its much more attractive than an electric yult. Oracle, a man with his head in the clouds. Kade kat katie, you are moderately overweight risk assets but conservative the less risky risk assets. Meaning u. S. Equities and u. S. High yield bonds which across the risky asset spectrum are the ones with the most clarity around expected return and the lowest volatility right now. So we do like u. S. Assets. We think a fed on hold makes that even a stronger case. All right. Katie thanks very much. Nancy, thank you as well. Nancy with heartland and katie with Northern Trust asset. Go to powerlunch. Cnbc. Com to see another stock that nancy says has an attractive dividend right now. That is powerlunch. Cnbc. Com. Melissa . Well, if you have never heard of the stock xylem, you are missing out. There are a handle of names hitting new 52week highs in todays session. Take a check on xylem, this is a Water Company on the alltime high list on a number of days. A water frinfrastructure company. Lets find out more about this company. Joining me patrick decker, the ceo of xylem. Your company has a pulse on what the economy is doing. 33 of your revenues from public utilities, the more stable side. 44 from the industrial side. What are you seeing in those parts of the businesses . Sure. So again thanks for having me. What were really seeing right now, especially in the Water Utility space in the u. S. Is very rapid growth. Youve seen a lot of pent up investment over the last decade or more. Investments in Water Infrastructure have been off 20 in the last two decades. On the industrial side, our exposure to industrials is less to the heavy industry. Its really more general light industrial. We continue to see low single digit growth there, so it really does speak to some renewed health in that part of the sector. Our exposure to oil and gas and mining is less than 8 of total revenue. So thats not really an impact right now. Thats correct. Or is it Getting Better . Is that part of the business Getting Better . Weve seen mining continue to be off 10 yearoveryear. We expect that to continue for the next year until we lap some of that exposure. Oil and gas has really flat lined for us. Were heavily exposed there to fracking in north america, and so that really has been kind of moth balled for us and so were lapping that exposure in the second quarter. I see. In terms of weve been talking a lot about brexit and youre an international company. What is your projection should there be an exit from the European Union by britain . What do you foresee in terms of Economic Growth in europe . How does that impact your business . So our business in europe is pretty well protected other than any impact on the euro. So our business in europe is largely local and national. Very little Cross Border Movement there in terms of economic impact. Specifically the uk. Were actually entering into the sixth amp cycle in the uk. Its a very structured fiveyear program thats very predictable, and that is a very much a domestic focus, and so we expect that to continue. Thats been going on for 30 years now and its weathered all kinds of political cycles. Sure. Weve been closely watching dollar pound or pound dollar in terms of the reading on the brexit vote at any moment in time but important to you is the euro and that could also be a casualty here if there is a brexit. How does that impact you if there is a dollar spike because that is an important part of your earnings . Sure. We weathered that last year. We saw a significant headwind in our eps expansion last year from eu euro. That has moderated this year. Search a strengcertainly is strengthening dollar is not good for us. It has little or no economic impact. Its something we keep a close eye on. We weathered the cycle before. Again, we are a global business. About 30 of our revenues and earnings come from europe but were heavily exposed in the emerging markets and north america as well. Is that a risk to Current Quarter earnings if theres a spike to the dollar . No, its not. Patrick, thank you for your time. Patrick decker. Who should you trust with your money . Humans or robots . Why some investors are making the switch. The rise of the robo adviser. That story is ahead on power lunch. Welcome back to power lunch. Im melissa lee. Apple shares under pressure right now down 1. 7 following some conflicting reports on iphone sales out of china. Lets get to cnbcs josh lipton with all the details. Josh . Well, melissa, theres been a lot of confusion about this story today, so lets start with the facts. A patent tribunal says it violated a local companys patents for phones youre seeing here. This tribunal says apple should not be allowed to sell these iphones in beijing but apple immediately appealed that ruling and now that injunction is stayed. The case has to make its way through the Chinese Court system, but as of right now there has been no disruption to apples business, so all its products still for sale in beijing today. Apple stock though trading lower on that news. Not everybody is worried just yet. I just got off the phone with rbc. They dont think apple will be ultimately barred from selling these iphones. His point is if the Chinese Government really slapped apple with such an injunction, then it would also be hurting apple supply chain, much of which we know is based in china, so the point, hard to see the Chinese Government ultimately doing that. Still, certainly these headlines come as we know theres uncertainty about that flagship iphone franchise, its health and future in china especially. The Companies Revenue in the last Quarterly Report did fall more than 10 . Let me ask you this, it would hurt the supply chain. Is the theory then because they would sell fewer or no iphones, that would mean less business for apple, that would mean less jobs and less income for the supply Chain Companies that make those phones . Is that what youre describing . Well, so the points were find of twofold. One is he was sort of speculating it was hard for him to see why the Chinese Government would take an action that might result in hurting its own companies. Two, hes arguing if you really do see this kind of injunction, it looks like it would ultimately only hit sales if it did happen in beijing. He doesnt think ultimately if that happened it would have some type of material negative Financial Impact on apples gross sales there. But well see. This is a case that now has to work its way through the court system there. And you got to wonder if theres going to be a pull forward of demand because maybe people are afraid they wont be able to get that phone sold in beijing so they go out and buy them. Josh, im wondering if this has any impact, if youre geditting read that this dispute could have an impact on the iphone 7, whether thats not different enough that it would also spark some sort of dispute. Thats a great question. Certainly when i sort of looked at those images we all just saw, what would be the knock on effects. Not just for the 7 but if you really barred the 6 and 6 plus based on those images, wouldnt you also have to bar the 6s and 6s plus . And is the Chinese Government really willing to make that kind of move . Of course, you know, listen, the backdrop is you have investors that josh, with he have to cut you off. With he have to get to jane wells. Sure. We have to go to jane wells for a news alert. Jane . Folks, eight years after the housing collapse, it appear that is the final attempt by the government to go after angela mozilo of countrywide has gone away. There are reports that a federal civil prosecution investigation of mozilo has been dropped now by the Justice Department. Mozilo has all along said he was not guilty of any wrongdoing. Of course, in 2010 he did pay a large fine to the s. E. C. As part of a settlement there, 22. 5 million. However, countrywides insurers covered that money. Again, reports that the Justice Department has dropped an attempt to go after Angelo Mozilo civilly. Long ago it stopped any sort of criminal prosecution, and at this point it looks like there will be no more government attempts to go after the guy who had one of the largest Mortgage Companies at the time. Back to you. Yeah. Caused the famous phrase, friends of angel loo. Josh, let me go back to you. Implicit in what the analyst said is the belief that china does not have a Justice Department or a court system that is independent from the government, that it does what the government wants, and when i see this injunction or this decision, it suggests to me that apple after all of these efforts, the charm offensive, still could very much be in the crosshairs of the Chinese Government. I mean, were their efforts for naught . Well, i think its not just apple. If you talk to financial analysts who cover Tech Companies and specifically Tech Companies that do a lot of business in china, theyll tell you that this is simply a risk of committing capital in those companies that you can wake up with headlines like these. So its not just apple. Interestingly, its usually not the consumer Tech Companies we wake up to headlines with this. Its often the enterprise side that you wake up to. Often it seems like the Chinese Government wants to try to encourage business for the homegrown teams. Thats a risk analysts say when youre committing capital and verying in compani investing in companies that do business there. We were just talking about tim cook being in china. Right. All the twitter posts. A big show of how theyre friendly with china, and then this comes and its like a slap in the face. Yeah. I would think. Thats what i was thinking. Yeah. All right. Still ahead by Companies Like facebook and alphabet need to Pay Attention to the bitter board room battle at viacom. And then the one airline offering unlimited Business Class flights for a onetime fee. Just how much . Stick around to find out. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. This just got interesting. Why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card stop taking cialis and get medical help right away. 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. Go pro with oralb. Oralbs rounded brush head cups your teeth to break up plaque and rotates to sweep it away. And oralb delivers a clinically proven superior clean versus sonicare diamondclean. My mouth feels super clean oralb. Know youre getting a superior clean. Im never going back to a manual brush. 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. Shares of viacom shooting higher yesterday on news that Sumner Redstone was removing five of its Board Members. Those Board Members fighting back now, but shares are down today following weak Third Quarter Earnings Guidance from the company this morning. Back to the issue at hand. The war for viacom. Lets bring in ed and jeff. Gentlemen, this story not only is juicy on its face or many faces, frankly, but it also has implications for other companies with similar stock structures to viacom, to companies that are led by longstanding patriarchs or matriarchs, so jeff, you wrote an article for fortune saying here is how viacom could have avoided this game of thrones. How could they have avoided it . Obviously we dont have go ahead, jeff. Im sorry, your mike wasnt open. Sometimes i do better in a pantomime anyway. They really did have opportunities going aback from jonathan to tom freston who melissa lee had a tremendous interview with him, congratulations to melissa on that, but those people had an argument and perhaps Sumner Redstone should have kept them. The one argument that shows that redstone has his wits about him is he has the good sense at least now to get rid of dohmen. This is a category i have called the heros farewell, a monarch. They leave there is one person indispensable. Sumner redstone said to larry king in 2009 that the people who are afraid of dying are the people who are going to die. Im not going to die. Rupert murdoch has a very similar view on his own longevity and it does create problems. In hamilton there was written, death does not discriminate against the sinners or the saints so i dont know if mr. Redstone has that right. Lets pivot a little bit. How does that play out in your sort of i think at this point whether sumner or his daughter exercising his influence, philippe is out. Hes done. Hes over. And i think the irony here is all the confusion, all the lawsuits going back and forth stems from the fact that, you know, all the power rests with sumner himself, and the fact that the board is basically saying i dont believe you are who you are. I dont believe these letters are actually coming from you. We think theyre coming from sheri so why dont you tell us facetoface and then well some of the very same people who are criticizing whether he is acting of his own free will were those who defended his capacity not that long ago, right, when there was a lawsuit. Four or five months ago. Its clear theyre just defending their own self interest and not the shareholders interest. Even in some profiles in vanity fair and other obligations over the past few months, theyve been defending redstones competence when it was in their interest. Now they flip. But to use shareholder values this way, surely the perfect metaphor is this outgoing board is the board that champions teenage mutant ninja turtles. The new folks coming in are fantastic. They tower over this old board. The worst thing you could say about these five people coming on board is i have been proposing their names to companies to bring on pa wha if they disagree with Sumner Redstone . Are they going to be able to stand up to them. I think every one of these people can take an independent position i doubt thats what he wants. Nicky, nicole, is pretty tough and independent minded but right now she would do the right thing. I think Sheri Redstone and others would realize that basically there are assets they couldbetter val oue out of. Ron nelson goes back not only as one of the coleaders of dreamworks, he goes back to a succession crisis like this that only one of us on this call, tyler, in the gulf and western situation, he was in the top team after the old original jeff, i have one last question for ed and this is the possible outcomes here. Ubs had a really interesting note. Everybody is saying something has to be done about the Balance Sheet ultimately whoever the ceo is. They have a lot of debt. You either sell part or all of paramount. You remerge viacom and cnbc cbs, or cbs buying viacom. Thats the most interesting one. Given cbs leadership, les moonves, everybody thinks hes the guy to turn both companies around, if you have to pick one guy, thats the guy to pick. Les is more. Les is more. Interesting that paramount was at the center. And the guy who took over was martin davis. Youre right, i did remember. I was what were you trying to say there, sonnenfeld . Ed, jeff, thank you very much. Stick around, folks. We have a big money trifecta coming your way. Your best bets in bonds, stocks, and commodity looking at brexit. Power lunch is back in two. 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. Its time for the your business entrepreneurs of the week. Omar and Camille Brown knew nothing about the Restaurant Business when they opened their Daytona Beach based kale cafe. They knew a little more when they opened their second store. They want to keep growing but they need help so were giving them a your business makeover. For more watch your business sunday mornings at 7 30. When . Our new cocktail bitters were doing well, but after one tradeshow, we took off. All i could think about was our deadlines racing towards us. A loan would take too long. We needed money, now. My amex card helped me buy the ingredients to fill the orders. Opportunities dont wait around, so you have to be ready for them. Find out how American Express cards and services can help prepare you for growth at open. Com. Welcome back to power lunch. Im michelle carusocabrera. Were coming up on 2 00 p. M. On wall street. Stocks are in the red at this hour. The major indexes down six of the last seven sessions. The s p 500 having its worst week in over four months. The dow is off by 58 points. The s p lower by 7. The nasdaq is lower by 37. Energy the leading sector right now. Technology and health care, however are lagging. All right. We are less than a week away from the brexit vote. Imf chief Christine Lagarde spoke to cnbc this morning about the referendum and the fear its causing among world economists. What i did today in vienna was to actually explain not the dark side, not the fear side, which brings all the economists of the world pretty much together to say that there are Downside Risks in a choice to withdraw, but i wanted to identify the benefits. Is she right . Are all world economists saying leaving is bad . Joining us gregory dacho and david malpass. Gentlemen, good to have you here. You know, its brexit vote so i will be a little cheeky today, david. David, are all the economists of the world saying that leaving the eu would be a bad thing for the uk . Hi, michelle. No, i dont think so. I think Christine Lagarde is part of the establishment so most of the establishment economists want to stay in the status quo. What do you think . I think they should leave the eu and the reason is the eu is just too big. Its too expensive. It doesnt work. They havent even made progress on their mission, which was fiscal responsibility, banking reforms, defending the external borders. Theyre just not doing the job, so this is the uks chance to get out. Chance to get out. I see in the notes you say its a sinking ship and they may not have another chance. Thats right. You know, the last referendum they had was in 1975. That was 40 years ago. So these opportunities come along once in a generation where people actually get to vote on what they want. So the establishment is going to say no, no, dont change anything, its working for us, were getting rich, but i think for people its just not working. Mr. Dacha, what do you think . Should they stay or should they go . I think whats important from an economists perspective is the fact that overall it would probably be negative for the uk economy and probably likewise for the european economy. If you take a broader perspective, it might not have that much of an impact on u. S. Economy per se, but overall i think it would be a negative, especially in the short run. Why would it be a negative . What would it do . I think it would hamper trade, and thats an important component of the bilateral exchanges between the European Union and the uk. I think it would also hamper investment. You cannot forget that Financial Services are a huge part of the uk economy, in particular in london, and being out of the European Union and perhaps being out of the Single Market would probably hamper trade linkages and financial linkages and hurt both economies quite importantly. Greg, im curious because theres so many economists who sort of say the impact is going to be kind of limited. You take a look, for instance, at the european financials. You mentioned them briefly and how theyre trading. We saw Deutsche Bank many of them are trading below financial crisis lows. Does that tell us something, that we may not be addressing that the potential impact the way we should be . I think its very much a question of what happens, and theres a tremendous amount of uncertainty in global markets, and i think thats what were seeing right now. Were seeing that global uncertainty, whether its uncertainty as to global growth, whether its uncertainty as to policy decision or political events like the brexit or the Upcoming Elections in the u. S. , and banks in particular are worried. Businesses are also worried. And increased uncertainty would certainly not be good to increased economic activity. You know what . Theres been so many notes put out by various banks. Jpmorgan has a note out, david, i wanted you to address talking about the issue of grade. Christine lagarde also brought this up. He points out if we can bring up that graphic, that there are many noneu members out there, noneu countries, that actually have plenty of trade with the eu and doesnt necessarily think its going to be an issue. Talk about trade specifically because in essence what the uk is in right now is a trade agreement. They dont use the euro, david. Thats right. Theyre also in the wto, so lots of countries are looking for ways to trade. Its a very globalized world. So i think the uk could exit the eu and still be an ally and a friend of europe and trade extensively with europe. They run a trade deficit so theyre in a good bargaining position to have good trade relations with europe, and they may add better trade relations with the u. S. If theyre separated from the eu. The problem is the eu is just too big and its sinking. Coming back to the neg at ththi this negative, to the bank stocks, bank stocks have been getting crushed. I think its ball game negative Interest Rates are a negative for banks. The Central Banks are buying all these bonds and driving down the yield. So whats a bank to do . David, you know, we reached out to a couple economists after Christine Lagarde, we reached out to several. It was easy to find ones who disagreed, who said actually it wouldnt necessarily be a negative, but most of them wouldnt come on because they work for major firms and they were worried they would get in trouble saying that on television. Why do you think that is, david . I dont work for a major firm and so i can say a view. I think that the establishment or the status quo is just very strong. If youre already set up to do business, you dont want anything to change, and thats plaguing thats actually a global phenomenon. Thats one of the political phenomenons in the u. S. Of how do you break how do you get an upheaval, a break out of the status quo . Thats a little bit whats going on with this brexit vote. Gregory, how do you react to what david just said there . And im thinking specifically of the Financial Services businesses in the city of london, that they want to keep things pretty much the way they are because theyre accustomed to it, theyre making nice money from it, and they would be vulnerable to losing market share, i guess is the best way to put it. I think that overall were in a relatively weak environment in terms of the Banking Sector. As was mentioned, the fact we have negative Interest Rates is, indeed, hurting profitability, and increased uncertainty would not be good from a banking perspective. But that being said, even if you take an unbiased approach like im suggesting, it is overall the fact that you have an increase in incertainty would overall be quite negative for the Banking Sector in the short run. That does not mean that over the longer run you can have Structural Reforms that increase or improve the european project. I think thats also important to keep in mind is to distinguish the very short run effect of having banks having access or easy access to the European Market from the longer run structural issues as to whether there can be a further improvement in the european structure. When i was watching Christine Lagarde it reminded me of mitt romneys speech criticizing donald trump and i remember watching that speech and thinking, mitt romney is exactly the kind of guy that donald Trump Supporters dont like and the more mitt romney talks, the more it helps trump. When i listen to Christine Lagarde, i thought she is the establishment defined. The more she and people like her talk, the more likely it is to actually make people in the uk angry because theyre trying to influence this. Do you worry about that, greg . And do you agree or disagree, david . David, let me start with you. I agree with the point that if you show that clip of her in england, its going to cause people to want to more vote to leave the eu. Its not that shes bad. Its that shes part of the establishment, the status quo, and the people that have already gotten rich from the system keep fighting the change, and so if youre sitting in england, you want to vote for change, so youre going to vote to leave the eu. Greg . Yeah, i think in general i think there might be also a misperception as to the underlying reasons for the vote. And the political element to that vote is quite important because were asking sometimes individuals to vote on topics they might not fully understand, and as were seeing globally, were seeing this antiestablishment movement around the world. Its not just in the uk. Its around europe, around the u. S. So let me ask the two economists, if britain stays or goes, how is that countrys growth going to look over the next five years . Does it grow faster over the next five years if it stays in or faster if it leaves . Very quickly. Greg, you go first. I think it grows slower. I think the impact would be quite significant especially in the short run because you do have to trade, you have lower investment, you have heightened uncertainty in the private sector, and thats very important in an environment where youre already greg . I think they grow faster. Same in the u. S. If you have an upheaval, if you have a better system, its going to grow faster. We cant do much worse than what were doing right now. All right. Thank you, gentlemen. Good discussion. Appreciate it. Gregory daco, david malpass. Britains vote to leave or stay in the eu having an impact on the Financial Markets and your money. So coming up, well look at it from all angles, stocks, bonds, commodities, currencies. Stay with us here on power lunch. Welcome back to power lunch. Im melissa lee. Three areas impacted by the brexit vote. Were talking about stocks, bonds, and commodities. Joining us is david seaburg, todd colvin, and jeffrey. David, ill start it off with you. Most people say a spike in the dollar, thats bad news for earnings and thats bad news for stocks. How do you break that down . I mean, look, if they decide to leave and you have a dollar significantly weakened just based on the fact they left, it doesnt necessarily mean good news for stocks, mel. You look at the reverse. If they decide to stay im sorry. Im sorry, you meant the pound going the reverse. The going down. And dollar spiking. Dollar spiking. No, if that occurs, its not necessarily good news for stocks, and weve talked about it on fast for a long time. Were looking at a market right now that is teetering on id say a brink of a massive pullback either way. I mean, i think if they vote to stay, theres no move there, the market is going to take off. Its going to ignite. Its going to be a riskon sort of event thats going to be short lived. If they vote to leave, you will see a lot of massive let me throw this possibility out. What if there is a vote to stay but its a very, very close vote which could imply that there could be rumblings in the future. So theres really no finality. So thats even just as bad a case scenario. You have a scenario where theres more uncertainty in the marketplace. Why is the market goitraded they it has . Uncertainty. They hate uncertainty. They would like to have certainty, let the market react, flush it out, and traders and investors can come in and make their bets. But, look, i think you have to keep in mind, if they vote to exit, right . Whats going to happen to the dollar . The dollar is going to move big time but its going to be short lived. Short lived because the fed is going to be paralyzed, absolutely paralyzed, and you will probably see it come back in retreat a little bit based on that fact alone, but ill tell you what, it concerns me a great deal. And i think another really good point to make, we talk about these yield chasing stocks last word. Yeah, yield chasing stocks are going to come off big time if you see a risk on trade if they decide to trade. They will underperform the overall market because thats where the money has been crowded into, defensive. Thank you. David seaburg. Lets switch over to bonds and bring in todd colvin. Do you agree with davids general assessment that if they vote to stay that was big ben, by the way. If they vote to stay, its risk on. If they vote to leave, its risk off. And i would say that would tell me that if they vote to stay, then were going to see treasuries fall, correct . Well, i doubt well see treasuries fall that much. I believe the riskon trade comes if we see them leave but ultimately if they stay, you have to ask yourself why. Were they able to forge new deals, get better deals they have now like mr. Trump speaks about Getting Better deals out there. The uk has been paying a lot of this contributing a lot to the eu but not getting benefits. I think treasury yields would remain low because of the fact we saw this week the u. S. Economy is not as strong as people think. Yes, its been a riskoff trade helped by the brexit to keep yields low, but the multimately we see yields going down. The british pound has added gains now at 1. 43. Take a look at the intraday chart. This is a leg higher on the pound versus the dollar. If you take a look at the intraday its very distinct. Generally speaking, every time weve seen the pound rise, it more and more leads to the idea that the remain vote remain. Bremain. What happened to treasuries if they vote to leave . Well, if they vote to leave, i think you continue to see this riskoff trade accelerate a little bit. Obviously today yields are a little bit higher. We heard from mr. Bullard, he talked about rewording some of the feds communication and thats been whats driving the bond market this week. Obviously since fomc. If the uk leaves, it kind of opens pandoras box a little bit and we will see risk strategies kind of take it on the chin. We will see bonds continue to rally, see equities sell off. And gold is out there, its been rallying very strong and thats been a great indicator for the riskoff trade. Thanks, todd. Todd colvin. Since you raised the question of golds lets move to commodities with jeffrey grossman, a brg brokerage individual. Good to have you with us. I assume you would think if britain decides to stay, that is not good news for gold. If they decide to leave because gold is a fear trade right now i would say that it would be good for gold. Absolutely. Gold is an uncertainty type of a trade here. Again even yesterday we were at the highs of the most recent move, and the minute the rumor mill came out there was a poll that said it was 60 to stay, the market has come off 30 off the highs. Again, as you said its going to lock step with what we spoke about the normal parameters. Can i remind everybody that even after the referendum theres a twoyear negotiation period thats going to take place. Theres going to be many gyrations along the way. We have a long way to go. Longer term, after next thursdays vote and the results that will come in on friday, where do you see gold moving apart from whatever happens on brexit . Ill put it this way, i think we have a little sideways action. Well work been a range. I would say 1260 to 1340 is a fair figure for gold near term without any gamechanger coming into play. Jeffrey, thanks very much. Appreciate it. Jeffrey grossman. Financial firms are increasingly using robo advisers to answer client questions. Do you trust a robo with your money . Thats next on power lunch. 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 on their auto insurance. Wouldnt a deal involve two parties discussing something . A little give . A little take . Because last time you checked, your rate was just, whatever they say it is. Why not give you some say in the matter . Or even better let your driving do the talking. Liberty mutual righttrack finally puts you in control of your rates. All you have to do is connect, drive and save. In fact, safe driving could save you up to 30 . With 5 off just for signing up. For righttrack. And the discount is good for the life of your policy. To get started, visit a local office or call Liberty Mutual today at take control of your rates. Visit a local office or call see Car Insurance in a whole new light. Liberty Mutual Insurance they are called robo advisers, Digital Wealth managers. They take the place of human Financial Advisers at least in part. And big firms like charles schwab, vanguard, blackrock increasingly using these algorithms, cyborgs, if you will, to answer client questions or automatically update portfolios. Our next guest is giggling here as i said that. Hes bo lu who runs the robo advisory for blackrocks 4. 5 trillion empire. Why did that seem funny . Because i called them cyborgs . A little bit, yeah. Are they not . Well, i think robo advisers is just a term for bringing digital experiences to Wealth Management. Computers have always been a part of the Wealth Management experience. You just havent seen it because your adviser is using it to run simulations and robo advice just allows advisers to share that sophistication and share that work with their clients. My expectation was that my Financial Adviser is using a computer yes. Inputting all of my dauta, m age, my risk tolerance, my current holdingholdings, lookin them and seeing if theyre appropriate for me and then changing them based in part on what the computer says, right . Yes. How is this different than that . This is that, all of that, but also giving you a mobile experience on your phone when you can check in at any time, and its also giving you an ability on your ipad to look at it and to converse with your adviser at your convenience. But thats just of above the water line. Think about whats happening on a daily basis. Your adviser can use computers to look up particular opportunities for your portfolio and then have the computer take action when those opportunities arise even if youre out having a meeting. Your future adviser is the name of your product company. If i sign up for it, what does it cost me . And then what happens as i turn my money over to you guys with my existing positions . How does the money then get redeployed and what does it cost . Great question. So to be clear, our strategy at future adviser, part of blackrock, is a b to b strategy where we work with banks and broker dealers, Financial Firms you already have a relationship with, to empower them or their advisory teams to use the technology as part of a relationship with you. So we dont set the prices. You know, we work with our partners and they use the technology as part of an overall broader offering. If i go and sign up for ththis, what is the cost . Depends on the partner. If its fidelity or this guy or somebody else, it may be its a Fee Structure that they set. The Fee Structure and the offering structure are all partner dependent. If i decide i want to do this and out comes my plan and its got me in these etfs and these index funds which is basically the products involved here . Mostly, yes. Lowcost products by and large. And i dont like the selections. Uhhuh. Im the client. Uhhuh. What do i do . You talk to your adviser or bank and say exactly that i dont like my selection. They will work with you to see why dont you like it . Did the machine did you have a good dialogue with the machine or with me . Did we understand your situation . Was there Something Else about your situation we failed to take into account . Whats the difference here between this kind of approach and a target date fund where im basically selfidentifying by age or when my goal is. Im retiring or i have College Expenses coming in eight years where the portfolio is then assembled to take that into account. How is this materially different from that . Its a great question. Theres actually two ways in which its different. The first is that its more personalized as opposed to saying, well, you and everybody in your plus or minus fiveyear age range is going to get exactly that portfolio. We can do things to account for maybe what your spouse has or what your other hold ths miging be. The second is it can be done at a personal level, applied to your particular situation in saying that we can do tax laws harvesting which you couldnt do unless you did it on a person by person basis. Tlt ov so its that its personalized and that it is applicable directly to your situation and we can make changes for you and not the guy next to you that looks like you and has your same age. Bo, thank you very much. Appreciate it. Thank you. Its a coming thing. I can guarantee you that. Bo lu with future adviser through blackrock. A growing wave for president obama and secretary of state john kerry over their handling of syria. Well talk to two men who know the situation and the deputy crown prince of saudi arabia here in the u. S. What does he want . Whats he doing . Plus oil rallying a bit today. Well get the closing trades live from the nymex when power lunch returns. Every year, the amount of data your enterprise uses goes up. Smart devices are up. Cloud is up. Analytics is up. Seems like everything is up except your budget. Introducing comcast Business Enterprise solutions. With a different kind of network that delivers the bandwidth you need without the high cost. Because you cant build the business of tomorrow on the network of yesterday. As long as you love me, its alright bend me shape me, any way you want me. Shape the best sleep of your life. Sleep number beds with Sleepiq Technology adjust any way you want it. The bed that moves you. Only at a sleep number store. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Hello, everyone. Here is your cnbc news update at this hour. The iaaf upheld its ban on russias track and field team for the upcoming rio summer olympics. Agency president Sebastian Coe with the reason why. Although Good Progress has been made, the iaaf council was unanimous that she had not met the reinstatement conditions and that russian athletes could not credibly return to International Competition without undermining the confidence of their competitors and the public. Cases of the zika virus are rising rapidly in puerto rico. The cdc is following zika infections by analyzing the blood donor supply there. It found 1. 1 of blood donations are infected by zika, and they expect that could go as high as 2 . France paying homage to two Police Officers knifed to death this week by an isis sympathizer. French president hollande spoke during the ceremony saying measures would be taken to ensure anonymity for police when they are out of uniform. And thousands of people gathering in charleston to mark the First Anniversary of the slaying of parishioners at a black church. It was held at the college of charlestons td arena. Ty, i will send it back to you. Thank you very much. The oil market closing now for the day and lets check in with Jackie Deangelis at niymex. We saw strength in oil all day and hitting new session highs into the close but finishing at 47. 98, just under that 48 mark. Still about a 4 move on the day. Interesting that yesterdays close under 47 indicating that we could see some more momentum because we took those Technical Levels out to the downside, but its not surprising on a day heading into the weekend that you see a little buying the dip mentality come into the trade. Remember, the dollar has been a big part of this trade and the dollar did come off a bit today, so thats supportive of crude prices, and you need to continue to watch the moves alongside the dollar, especially as we head into the critical brexit vote. Today rig counts were out. They went up again here in the United States, but that didnt really seem to impact oil. Back to you. Thank you so much, Jackie Deangelis. So speaking of oil, saudi Arabias Deputy Crown Prince Mohammed bin salman visiting the u. S. This week. Hes meeting with president obama today to discuss the conflicts in the middle east as well as saudi arabias efforts to diversify its economy beyond oil. Lets chat more about this and a couple other issues in the middle east. Jim smith served as u. S. Ambassador to saudi arabia from 2009 to 2013. Steven sech was charge deaffairs to syria during the bush administration. Good to have you here. Well get to saudi arabia in just a moment but i want to start with syria because dozens of state Department Employees according to the New York Times have gotten a copy of a memo have protested to secretary kerry and complained about president obamas policy in syria saying that the u. S. Should be using military air strikes in syria to force assad to a diplomatic solution. Ambassador smith, i want to start with you. Not only are you a former srve, youre a former member of the air force and you flew combat missions during Operation Desert Storm so you would not more about the effectiveness of this type of measure. What do you think of this move by these members of the state department. Should we be doing that in syria . Well, from a tactical viewpoint, eric strikair strike certainly do damage to assads forces. The problem with any strategy is you have to ask what next. If were going to undertake a bold and aggressive military campaign against the assad regime, then you have to ask yourself, what does it look like when we finish that . Unfortunately, i dont think this memo recognizes that there is a big push back against the last 25 years of what i would call liberal intervention, and i dont think theres strong Domestic Support or support in this administration for a much more muscular approach. Not to mention it would put u. S. Interests and u. S. War planes presumably up in the sky against what had been russian war planes. Well who were fighting on the side of assad, right . You certainly have the challenges. The real problem here is it has nothing to do with assad. We should be focused on how to stop the killing. And at a strategic level, that means the United States spending its time with russia, with china, with the p5 on a coherent strategy to stop the killing, and it really doesnt matter what it looks like afterwards. You can deal with that if the killing can stop. I dont think us coming in conflict with russia on behalf of a notion of attacking assad helps us in that process. Ambassador, what do you think . I think what weve seen in the state department is basically five years of enormous frustration bubbling over on the part of the Foreign Service corps in the department. I think it is interesting, it is a very useful exercise. I dont think its going to impact as jim said the United States government policy. The white house and the president have set a course pretty firmly to stay away from this are they right about military air strikes and i ask that knowing the American Public has almost no appetite for this situation at the moment due in large part because of what happened under george bush. I dont know if theyre right or not and i dont think theyve thought this through. I dont think theyve got ton the point that says what will happen if there is a confrontation with the russian air force. What will happen if it goes south. This is more of a kre decorps. Lets move on to saudi arabia. What do you think is happening behind closed doors and what should the message by from president obama to the deputy crown prince . The deputy crown prince wears two hats. Hes part of the restructuring of the economy and hes the defense minister. Theyll be talking about syria and how they can lash out in the same direction and bring all of our assets to bear as well as in libya and the war in yemen and try to bring some level of stability back to the region which it sorely needs at the moment. On the economic side, the deputy crown prince is looking for us to say to him this is a watershed moment a very important exercise you have undertaken in saudi arabia. We want it to be successful. We think diversification of your economy in this now low price oil atmosphere is essential so were going to do what we can and get the Investment Community to help you at the same time. Ambassador smith, what does the crown prince want and how would you characterize our relations with saudi arabia right now . I would submit to you that our interests are the same. The priority of those interests have changed, and thats why theres debate between our two governments. For example, in yemen the kausas have been focused on the huthi. The u. S. s focus has been al qaeda and our government wants saudi arabia to move back toward that threat. So its an issue of priority of interest as opposed to different interests. I do think the deputy crown prince is here mostly on an economic campaign. Theyve released saudi vision 2030 which is a campaign to move to a private sector economy. I cannot overstate the complexity or challenge of doing that. As steve says correctly, theyre going to need support by other private sector economies and certainly the United States government in the execution of that plan. The challenges are going to be enormous. To the two ambassadors, thank you so much. Good to be with you. Its been a bad year for big tech. The nasdaq 100 down almost 5 while the s p 500 has risen more than 1 . Hear to discuss is erin gibbs and todd gordon. Erin, do you think this is going to be a reversion . Do you think that finally tech will catch up in some way . I think eventually, but right now i think were looking at this global deflationary environment for at least another quarter if not two, and were seeing investors really prefer the more defensive stocks. Weve also seen the s p 500 get a little boost from the improved oil prices versus the nasdaq. So i think as long as the u. S. Market is sort of the best house on a bad block and we keep looking for more defensive stocks, particularly with the brexit coming up, i think that were going to continue to see this trend of the s p 500 outpacing, but longer term when were talking a year, absolutely not. Valuations are really getting rich on the s p 500. Growth is exceptional on the nasdaq. Were looking at almost 40 Earnings Growth over the next year and its really starting to look attractive from a valuation standpoint. What are the charts telling you, todd . The deflationary scare is pushing bonds up and yields down and youre seeing sector that is pay heavy dividends far outperform. The s p is about flat, 1 on the year. As you mentioned, technology is underperforms but its not just tech. Its health care. Its consumer discretionary. All the higher beta names youd like to see leading in a good bull market are not there. Provided the fed continues to remain dovish, rates on sold, the staples and utilities and dividend payers will continue to outperform. A weaker dollar will help precipitate that. While Central Bank Policy is what it is, i guess well continue this way. No nearterm relief for tech say both of you. Thank you. We are les than a week away from the brexit vote, but that may not be the end of it. What should you be doing with your stock portfolio to be ready for whatever happens . We have that next on power lunch. Todd spaletto, president of the north face, we are working on the prototype to match customers to gear. Watson, lets give it a try. Say its midjune and im backpacking in yosemite. Of our 353 jackets, i can recommend nine. Watson, what if it rains . There is just a 3 chance of rain, so i recommend the breathable stretch fleece fuse form dolomiti jacket. A Perfect Choice watson. No wonder our Customer Loyalty numbers keep climbing. I believe we can do even better. I like the way you think. I believe we can do even better. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive mamost of the show. We missed woman and theres no way to restart it. jon bon jovi with directv there is. You see, weve got the power to turn back time so lets restart the show that started at nine and while were at it, lets give you back your do and give her back the guy she liked before you hey, thats the power to turn back time. vo get the ultimate allincluded bundle. Call 1800directv. Where selfproclaimed ofinancial superstars , pitch you investment opportunities. Ive got a fantastic deal for you gold with the right pool of investors, theres a lot of money to be made. But first, investors must ask the right questions and use the smartcheck challenge to make the right decisions. Youre not even registered; im done with you i can. I can. Savvy investors check their financial pros background by visiting smartcheck. Gov the countdown is on to the big brexit vote less than one week to go. While everyone is concerned about what to make of the potential eu break up or at least one defection from it, we wonder whats in store for u. S. Markets. Where can investors safely continue to put their money . Lets bring in robert luna of shore vest Wealth Management and mark usco of morgan creek capital management. Robert, let me start with you. If i want a brexitproof my american portfolio, how do i do it . I think, tyler, you have to look at companies with minimal to no exposure to the eu right now, and i think theres a lot of great names out there. If you look at a day like today, you look at the russell 2,000, that tends to be outperforming because of that nonreliance on international revenue. Names like amerco which is uhaul. Its one of the can. S companies that people will continue to move in trucks. The stock was up 30 last year. Its been consolidating. We think this is a great entry point for longterm investors. And nordstrom and travels are on your list. Mark, how about you . Do you think that the brexit is a likelihood or not and either way, how do i invest . Yeah, you know, we think its much ado about nothing. We think its a whole lot of tempest in a tea cup. We dont think they will exit. We think theyll remain. However, if they were to vote to exit, i think you really want to be very defensive in the u. S. , hold things like gold, gold miners and treasuries. I think things could get very ugly, but as i said i dont think its going to happen, and i think even playing a little bit of offense coming into the vote next week could be interesting. How do you do that . Well, you know, one way is its a nonu. S. Play but you could actually buy these european banks that are just flat on their back. I think they could rally a lot. Everybody is short these things and there could be a nice short squeeze. You could do the same with u. S. Financials. I think with a remain vote, that will give the fed the green light to at least talk about raising rates again. Mark, doesnt that imply if youre saying there could be a short squeeze in these european banks, doesnt that imply that people were shorting them because a brexit was going to be an issue for them . Because they have been in decline for this entire year. First it was worries about ex pope sure exposure. They still stayed flat on their back. What is the catalyst . Well, long term im with you. I dont see much catalyst. We think the banks are not out of the woods. We think the copper prices in particular are not actually turning up. Theyre actually heading back down and thats what glencore and the other things are exposed to. I think from the shortterm perspective if you really think that theyre going to vote to remain, youre going to get a riskon pop, and whats probably going to happen too is theyre going to revise last months unemployment number up i mean not unemployment, jobs number up pretty heavily because of the verizon strike and theyll talk about raising rates again. It will be good for financials. The two banks you mentioned, Deutsche Bank and credit suisse. Robert, back to you, do you think brexit is just a speed bump or something more . Well, i agree with the other guest. I dont think its something thats going to happen. I think its a lot more about politics than it is economic prosperity. Even the bulls on brexit that are talking about britain leaving the eurozone are essentially saying 2030 is about the time theyd start to see the benefits. Thats quite a long ways away. You know, i dont know. I dont see anything exciting about jumping in the banks right now, but i think there are good Companies Like you mentioned, nordstrom, thats a stock thats got pummeled due to some peril issues. The stock is yielding 4 . Ten times forward earnings. Travelers is a Great Company with less than 5 exposure to europe right now. 2. 5 yield. I think theres Good Companies at good valuations that dont have the headwinds that financials or european stocks have right now that investors can look at can i interrupt you . Theres a new opinion poll, jpmorgan analysis, their researchers, they see a leave for the leave camp of 3 to 5 in the Eu Referendum vote. Does that sway you at all . Were going to show the pound here in a second. I think its going to go back and forth. You know, its hard to tell. I think it would be a huge mistake. I think you could see some shortterm volatility, but our investors are longer term. Were going to take that into consideration, and, again, these are names that i dont see any impact really brexit or not. The financials are something that really could get hurt though if that does occur. And theres the pound moving a little lower, right . Yeah. I wonder who knew about this when. This is only hitting the wires now and we saw a spike earlier. We didnt know what it was. Im suspicious. Thats all. Well leave it there. Robert luna and mark yusko. Business class buffet. A Company Offering unlimited flights to europe for a fee, of course. People talk to the ceo next. Ne. 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 im in charge of it all. Business expenses, so ive been snapping photos of my receipts and keeping track of them in quickbooks. Now im on top of my expenses, and my bees. Best 68,000 employees ever. Thats how we own it. Experience the thrill of the lexus is f sport. Because the ultimate expression of power, is control. This is the pursuit of perfection. 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. All Business Class airline is trying to lure the Business Class traveler with unlimited flights to london or paris. Will it work . Phil lebeau joins us with the ceo of that company. Phil . Lets bring in the ceo of the Company Based out of paris. Why offer this promotion . 35,000 is a lot of money. How many people do you think will be out there who will say, yeah, i think its worth it over the course of the year . Well, actually, we are very confident that were giving the requests and needs of the passengers. Weve been there two years on the paris to new york access. Its an answer to request we already had from some of the passengers. So youve had requests already, so you think youll sell these ten unlimited passes and bring in, what, another 350,000 in revenue . Well, actually, we already have a lot of very frequent travelers. A lot of very loyal customers. Among those, a few of them were traveling at least two times a month or something. They did request some kind of plan. So we thought that was a very good way to reward a limited number of people, ten, as you said, no more, ten people, will be granted the possibility to get that 35,000 unlimited ride Business Class honors. And frantz, if you cancel, you have to do it at least three hours in advance . You just have to let us know a few hours in advance, certainly. P it is a good way for us to second your birthday. Last question, frantz. Up 35 from london to new york. Are there too many Business Class seats from new york to london right now . Well, usually the demand decide, the passenger decide. In the end, what we are seeing is that we started up two years ago. Of course, the first months we had like 30 . These days we are between 75 and 90 . So we know there is a demand for typical product. We are up from a year ago, a tremendous success. I think if the other airlines are offering more capacities, usually that does demonstrate the fact there is a demand. I think in the next future, we are going to see some kind of increase. You have the coach class, for example. Frantz, i hate to wrap you up. But were at the end of this segment here. Thank you for joining us from paris. Michelle, tyler, well see how many people take him up on this offer. 35,000 for unlimited Business Class travel for a year. Youre already on the site, michelle. Frequent flyer here. Just a single flight, Business Class to london is very competitive for a Business Class ticket. All right. Nasdaq, s p lower right now. But almost at session highs. We have been in a tight range. The three major averages down 1 still for the week. Caterpill caterpillar, walt disney, dupont. Energy materials, utilities, industrials, the leading sectors at this hour. Power lunch is back in two. Will your business be ready when growth presents itself . American express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. Find out how American Express cards and services can help prepare you for growth at open. Com. Check out the pound versus the dollar. Its been strong all day against the dollar. Opinion poll analysis researchers see a lead for the brexit leave camp of 35 when it comes to the Eu Referendum vote next week. With the big vote on whether the uk will stay or leave the European Union, just six days away. We spoke with kate, and she made her case why the uk should leave the eu. No one is against a trading relationship. We want to trade. But what has happened over the 41 years is that the original Common Market has become a political structure over it, which is now more important to the unelected commissioners. Almost a trading attitude. Thats why i think people are beginning to feel very strongly that its time to get out. Very articulate. She was very interesting. I was particularly interested that at the heart of her argument was this sort of ceding of sovereignty. Very antidemocratic. Thats what it was. It had less to do with nativism, or fear of immigration per se, and more to do with what theyre giving up. Jpmorgan, an analyst there put out a couple of graphics saying, wait a minute, when it comes to trade, and we can show it to you, there were three noneu countries that traded a ton with the eu. Norway, iceland and switzerland. Exactly. All right, folks. Weve got eight seconds to go. Fathers, have a Great Fathers day. Thank you for joining us on power lunch. Closing bell is right now. Welcome to closing bell. Im sarah. In for kelly evans at the new york Stock Exchange. Tgif. Im bill give frith. Grith fifth. Only one more rate hike through 2018. This is from what had been the staunchest hawk on the fed. Were going to talk about what it means for the markets coming up here. Countrywide, one of the faces of the financial crisis, front