Transcripts For CNBC Power Lunch 20160628

The european banks. See them in the green there, but after losing 20, 30 , weve only got a bounce in Deutsche Bank of less than 1 . Royal bank of scotland up by 2 . Lets get to wilford in brussels with breaking news. Wilfred. Reporter melissa, thank you very much. Im joined in brussels by nigel farage. Congratulations, extraordinary victory last week. Big event. Seismic actually not in terms of british or european policy but even global policy. This was the little people. Ordinary people. Standing up against the multinationals, the Goldman Sachs and big politics and getting a victory. Big news. A long way to go of course until the uk actually leaves the European Union. When should article 50 be invoked . Well, i have to say i rarely agree with the president of the european commission, but what he said today we should end the uncertainty and start the process, you voted to leave, so lets do it. I thought to myself, yeah, hes right actually. The idea that the succession in the conservative party should be the key determinant in this doesnt make sense. I think what needs to happen is the government gets its negotiating team set up in the next few weeks, triggers article 50 and lets start negotiating. Should you be on that negotiating team . Of course the fact that youre not a member of parliament means youre unlikely to be in the next conservative cabinet. Do you feel youll be excluded from these negotiations . Actually, the negotiating team should have lots of people in it whove never been in politics in their lives. There are people out there like former boss of the cbi, people like john longworth, lets get people in there who know how to do business. Now, you mentioned you dont often agree with mr. Juncker, you told members of the European Parliament you didnt think theyd done a proper days work in their lives. Weve got incredibly tough negotiations for the uk to carry out coming up, is it the right time to be antagonizing european leaders. Far for me to be antagonistic, theyve been abusing and screaming, twice the parliament had to halt proceedings. It was when i said lets just be grownup about this, be practical, you sell us more than we sell you, it makes no sense, no sense at all for us not to have a tariff free deal. And what i was trying to make that serious point they kept on booing. Though i did remind them most of them have never created a job in their lives. You do say rightly that theres a big trade deficit, but if you look from a sector basis on the Financial Services industry its quite the opposite. Massive surplus. Bank shares have been slammed in recent days. Do you think london is a Financial Center is now threatened . And the banks share prices falling very sharply, do you feel responsible for that . Ive felt london is threatened financially for the last ten years. Ive seen things like the afim directive lead to other hedge funds disappear from our shores. Ive seen insurance regulation coming from this place seen companies leave london, go to bermuda, singapore and elsewhere. London cannot be a global Financial Center if its kept inside the clawing regulations of a European Union. Free of it weve got the opportunity to be the singapore why are bank shares falling then . Because theyve got themselves long sterling, long equities and absolutely did their dough when they got a result in referendum they hadnt expected. Predominantly retail banks small portion of investment earnings so theyre being hit fears these banks could collapse, not because they made trades like hedge funds. Well, they did they were on the wrong side. Barclays certainly were on the wrong side of the market in quite a bit way. These banks have been badly run anyway for over a decade. They got themselves in a terrible mess in 2008. They barely recovered from it. And there is this false perception that somehow because weve left the European Union the city business is going to decline. Weve got the opportunity to go global. I was very excited last night to see the Prime Ministers of australia and new zealand say were in a race to see who can be the first country to do a trade deal with the uk. Now were free to do it. The big falls in share prices is just one of the scares that people in britain are facing at the moment please, can we just end this complete rubbish . Ftse is up 3 today. Yeah, but its 12 up from february. Can we all grow up . Stop this absolute scare mongering nonsense. So the pensions that people have seen fall in the last couple of days is irrelevant . Ftse is up 3 today, 12 up since february, stop this media hype nonsense. But relative to brexitrelated issues its fallen sharply. February we were facing global scares in terms of Central Banks collapsing, china collapsing, oil prices collapsing. Weve rallied since there for other reasons. Look, there is a declining Global Economy. And indeed in britain our growth forecasts are down. Not because of brexit, because actually the economy is not doing as well as we thought, because government borrowing is running way ahead of any expectations. And sterling ends in a declining market, a bear market in july 2014. I actually know about these things. Do you know why . Because i once had a proper job. Lets move on a little bit and talk about the fact that the polls were so wrong, which of course they were. There were many more people who were willing to vote for brexit than perhaps the pollsters had realized. Do you think there are parallels there with whats happening in the u. S. . Do you think there could be more secret trump fans out there . I do actually. Very interesting, on the morning of the vote one of the most senior figures in the british Polling Industry said, believe me, if weve got this wrong, the Polling Industry is finished. Do you know what , its finishe. No one is ever going to believe it again. Theres kind of this consensus that has made people feel slightly embarrassed, ashamed to be patriotic, to believe we should control immigration. And so when pollsters ring them, they tend to shy away a little bit. Have you spoken to mr. Trump since your victory . I havent, no. Would you meet with him now and give him advice on how you won your election . Oh, look, its a different country. Its a different country. Some u. S. Crossover, but its a different country, broadly different. Its going to be a fascinating electoral contest in america. I sense he may well win it because he may well get people voting that havent voted for years. Final question, mr. Farage, who do you back . Anybody that holds faith with 17. 5 Million People who said we want our country back, we want our borders back, somebody has got to keep faith with them. Mr. Farage, thank you very much for joining us, leader of the uk independence party. Ill send it back to you in studio. Thank you very much, wil. We appreciate that interview. There was a trump quality to the rhetoric there, wouldnt you say . I think he is fired up. He is right about the stock moves. We are well higher than we were in february. Remember one of the reasons we fell in february was because of fears in february, were going to talk about how the brexit may actually stoke some of those china fears again. Hes right now, but well see if that china dragon rears its ugly head. Hes right. But wilfred was right pushing back on ftse specifically down european banks have gotten slaughtered for this notion he says has nothing to do with brexit thats as british would say is rubbish. Also talk by farage said lets end the media hype then quoted the ftse up 3 today. You cant criticize us and then quote todays move. You cant do that. It was a farageian move. Nice. All right. Meantime protesters are in fact taking to the streets in london right now. Lets get to sarah eisen who is there live in london with the very latest. The crowds really have come out, sarah. They have come out and theyve come out in the rain, melissa. They are here to express their support to the eu for britain remaining in the eu, they are demanding a second referendum. Everything is peaceful, but there is a lot of anger here. Angry that the vote was so close 48 , a little more than that voted to stay in the eu. Little more than 51 went out. And some people are concerned here that little more than 3 decided the destiny of britain within the eu. Its very young crowd here. Remember that Younger Generation did vote to stay inside the eu. Theres a lot all righty, looks like weve lost temporarily our signal there where the protests are just getting under way. Meantime, down on wall street where we expect we do have a signal, stocks are rallying, the dow up about 145 points. Bob pisani covering it all for us as he usually does at the nyse. Hi, bob. Hello, tyler. Call it steady as she goes. Lets take a look at the markets in the middle of the day. The early gains for the most part are holding. Were just a bit off the highs but good enough for government work. Keep a close eye on the dollar and tenyear, those are what move the markets these days. Relatively quiet today. The breadth 5to1 advancing to declining. You want heavy volume as the market is up. Volatility is still dropping, it was down yesterday, still dropping today. A sign traders believe the volatility weve seen the last few days will not last for the next 30 or so. Were going into the end of the quarter. The good news is were outperforming the rest of the world, but the bad news is thats not a big thing to argue about. So take a look at q2 so far here. S p 500 down 2. 9 . You see the rest of the world trailing us here. I would anticipate some modest buying going into the end of the close simply because in certain sectors weve had such beaten up names that are out there. Look at the airlines, the retailers, even the whole tech group as a whole down almost 7 . A lot of doubledigit decliners including microsoft and apple in that group. And the banks as well. Finally i would note the big banks here, tyler, i think we may see some dividend hikes and maybe some buybacks after wednesdays fed stress announcement comes out. Remember, bank of america, citi group pay almost no dividends at all. Back to you. Bob, thank you very much. U. S. Markets rallying right now as bob just so ably described. Europe also up. So could this be the perfect time to put money to work . Joining us is david marcus, cofounder and ceo of evermore global advisors. David, welcome. Good to have you with us. Thank you. You say now is one of the most opportune times to be investing in europe in a generation. The vote didnt change that. You feel the same way today as you did last week. Why is now such a good time to invest in europe . Well, look, the markets except for today the markets have come down precipitously as you were just talking about. The fact is thats when you get buying opportunities, when investors go in to fear mode, when they go into panic mode, they start to sell Good Investments with bad ones. They dont care, they just want to get out. So we look over the carnage and we start picking up. Does your call on europe extend to england, to Great Britain, or not . No. So we do not have any investments in the uk, but we havent had those in years. Weve always focused on nonuk europe. Why . Because frankly most u. S. Investors when they go to europe, they gone to london and they stay there. Its easier, its the same language, the valuations are generally higher. We want to go to the other markets, germany, italy, sweden, go to the southern find Better Bargains there. Cheaper stocks, more change. Lets be clear, how are you buying them, david . If you buy in local currency terms, its not as bad. If you buy them in dollar terms, buy them here, its worse. How are you buying them . So we buy them in the local markets, but we actually hedge all of our nonu. S. Exposure. Were a dollarbased investor. Were a mutual fund. Because as bad as the ftse looks its worse in u. S. Dollar term. Youve got to be clear wherever they are what currency are you buying them in. So were buying in the local market. So if its in euros, its euros, if its swedish, its krona. But the fact is we go out of our way to hedge away all of our currency exposure. What is it that tells you that europe is a good place to put money now besides the fact the stock prices are down . What do you think is fundamentally right about the businesses there . Look, ive been investing in europe for over 25 years. When i started, sweden was going through a financial crisis. It was the end of the world. It was that end of the world. This is a different one. And the fact is thats when you get bargains. Europes doing something that it had not done previously. Its changed the rules and regulations. Companies can restructure, streamline, layoff, close plants. They couldnt do that previously. So the eu has brought things that are positive. So i dont think the eu goes away. The fact is we want to embrace the volatility and take advantage of it. I get that, at the same time if you take a look at the dax its basically flat over two years. And its been in a down trend over the past year. So given the increased concerns over brexit and the impact it might have on eu growth period, why is now the time to say, you know what, even though this has been in a down trend for the past year, im still going to go in even if there is uncertainty. Ultimately were not buying markets, were buying companies. Were buying companies in those markets. So while the index itself might be flat, even down in some of the markets, individual companies are up. And the ones that are strong balance sheets, Good Management teams, theyre restructuring their business, growth is coming back. And so the fact is do you own volkswagen . No. Did you . No. Would you buy it now . I would not. 15 billion fine, stocks beaten up, sounds like youre a deep value guy. Is there deep value in volkswagen . Not yet. Its just not cheap got to get deeper. Exactly right. You do like vivendi, a big owner. Were going to have to leave it there. We have a little breaking news from meg tirrell with the market flash. Thats right. Were checking out a couple pharmaceutical stocks, endo spiking after saying it got a new patent issued to one of its operating companies on a product known as vasostrict. Endo soaring up more than 13 on that news. And then over to gilead today getting approval from the fda for new combo pill for hepatitis c. This expands the applicability of this treatment to all six forms of hepatitis c. This new drug is priced about 74,000 for 12 weeks. Thats just about in line with what some analysts were expecting see gilead up 4 , tyler. Back to you. Meg, thank you very much. Volkswagen, which we just mentioned a moment ago, just ordered to pay up for its admissions cheating scandal. Wait until you hear how much the automaker has to fork over. Its a lot. And is the worst even over for vw . Power lunch will explore that in two minutes. Why pause to take a pill . Or stop to find a bathroom . 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Even down here in the dark i can still see were having a great month. And celebrate accordingly. I run on quickbooks. Thats how i own it. Enis really built into theat foundation of the company. Whole foods market is engaged with pg e on many levels, to really reduce energy and reduce our environmental footprint. For a customer like whole foods, saving energy means helping our environment, and we can be a part of that. Helping Customers Save Energy is a very important part of what pg e does. We can pass those savings on to the environment, the business, and the community. Pg e really is an expert in saving energy, and that partnership is extremely exciting. Together, were building a better california. Welcome back to power lunch. Lets get back to volkswagen. Shares of volkswagen actually up slightly. Maybe the market anticipated worse. Phil lebeau still has the big money details. And, brian, i just got a list of what the payouts will be for volkswagen owners. Well go over numbers in a bit. These are hefty checks that will be cut over the next couple years for vw diesel model owners here in the United States. Heres the settlement overall that volkswagen has agreed to with a number of u. S. As well as state regulators 14. 7 billion total. Up to 10 billion of that will be in buybacks and compensation. Well explain more about that in just a bit. Another 2. 7 billion to the epa and another 2 billion to develop zero emission vehicles. Now, this is what a lot of people are going to focus on. Whats the compensation for the people driving around with these vehicles that are violating emissions standards . The buyback at september 15 value is where theyre pegging this to. And an additional 5,000 to 10,000 depending on the vehicle you could also have the option of give me 5100 or 5500, however it much be and i want the vehicle fixed and im going to keep it, payments start in october. People believe this is probably more than many people were expecting. I think people are getting as much or more money than they hoped or expected out of this deal. And i think they like the option of seeing what they want to do as opposed to being forced into one pathway. Keep in mind volkswagen is not out of the woods yet. It is still facing criminal investigations. And in fact this morning we learned that new york is serving subpoenas to vw to look at their leasing records. The idea being did people pay too much in their leases, expecting a certain value for a vehicle that clearly was defective. We have reached out to volkswagen, have not heard back from volkswagen. And finally i want to share what we think is an interesting chart here. Its volkswagen versus General Motors versus toyota. You consider these the three big scandals in the last decade, and what these stocks have done in the last year clearly volkswagen is feeling the most pain since its the most recent scandal. I mention the value of the buybacks. Guy, how much do you think youre going to get if you have a 2010 jetta sports wagon, how much can the owner expect to get with 90,000 miles. 2010 with 90,000 miles, probably retail for 35,000 eight grand. Yeah, eight to ten. Theyre expecting to get between 14,700 and 16,600. Sold. Sold to you. Lets pick a more recent one. Go with a 2015 jetta sedan, 22,800 to 26,400. Thats more than resale market. Yes. A lot more money than people were expecting. Thats a lot more. Thats high, man. Yeah. Could i sell a few cars back to volkswagen . Theyre not volkswagens, but make me an offer on my car. Thank you. Still ahead, a potential side effect of the brexit that is not really been talked about but may be the riskiest thing of all for the Global Economy and your money. Stick around. Welcome back to power lunch. Rick santelli live on the floor of the cme group. Look at a oneweek chart of tens. There hasnt been much bounce in the ounce of yield. Much selling pressure with regard to investors, thats important. Put a sixyear chart, traders are almost holding their breath waiting for a test of the alltime low close right under 1. 40. So of course well continue to pay attention. Lets look at a monthtodate chart of the euro versus the dollar. Look at the same timeframe on the pound versus the dollar. Why is this important . Well, now lets open them up to ten years. The breadth of the move on the pound is bigger. And its intensely crucial because unlike all the countries locked into the euro currency, which the brits arent, they could let their currency move down which will aid and abet the healing process. Melissa lee, back to you. Good point there. Rick santelli, thank you. Airlines staging quite a comeback today after getting slammed over the past three months or past couple of sessions for that matter. Should investors buy into this weakness . Thats straight ahead. Hi everybody. Im sue herera. And here is your cnbc news update for this hour. Ahead on collision involving two bns freight trains caused several boxcars to detrail and erupt into flames in texas injuring an unknown amount of people. Residents who live nearby were forced to evacuate. That accident occurred this morning near the town of panhandle, which is about 25 miles northeast of amarillo. Senate democrats blocking a republican proposal to provide 1. 1 billion to fight the zika virus. Faulting the gop for packing the measure with restrictions on planned parenthood money. The 52 to 48 vote left the senate short of the 60 votes needed to advance the measure. More than 1,000 immigrants and refugees were rescued from the mediterranean sea, thats according to naval forces patrolling that area. They were found aboard several rubb rubb rubber and on a sad note buddy ryan the architect of one of the greatest nfl defenses of all times, the 1985 chicago bears, has died. He is survived by his twin sons, rex and rob ryan, who both coach in the nfl. He was 82 years old. Thats the cnbc news update this hour. Brian, im going to send it back out to you. Sue, thank you very much. Oil rebounding a bit today. In fact, the price of oil is up a little more than 2 which actually could be giving a little bit of floor to the stock market. Who knows. Either way oil at 42 to 47 area. Will the brexit have an impact on Global Oil Demand and thus price . Well, guess what, we caught up with nigerias oil minister who was in china and he said hes not really that worried. Im not too sure why it should have an effect on oil. The european isnt a huge consumer, you know, really of oil as it were. Once the dust settles, oil will climb back to where it should be. There really isnt any logical reason on a demand and supply basis why this should have a dramatic effect on oil. Well, from oil to gold, here while the norwegian threat of a norwegian strike is lifting oil prices, gold prices arent seeing that same sort of impact here. 1318 is where were closing on gold here on the session down by just about a half a percent. And keep in mind that we had a massive twoday rally here in the profit taking on gold really limited when you consider how much damage has been done to the market. Taking a check on the rest of the metals complex, copper as well as palladium, the two more industrial metals, are seeing the biggest gains right now, brian. Stocks are rebounding overall after two big days of losses. Youve got travelers, visa, home depot leading the dow higher. Dow up 122 points, not on our highs of the day. Weve come back, but were still up more than 100. Also important to note as we just did oil may be giving a bit of a bottom there because we are seeing a bunch of the energy names up as well. So pay that close mind. And of course we will continue to remind you as well about oil. Now, you cannot keep track of the big moves in the market. Youve probably got a day job. But this is our day job. Dominic chu looking at the stocks that have taken the biggest hits in the brexit aftermath. Dom. Brian, youre not wrong there. We watch a lot of these stocks on a daily basibasis. We wanted to look in the large cap s p 500 weve seen real downtrodden times in the wake of brexit. No surprise financials the worst performing sector in the s p 500. A lot of those stocks were some of the worst performers since that brexit vote on the close of business thursday last week. Financials certainly in focus. In fact, out of the 20 worst performers in the s p since that time around 14 of them are financial, insurance, that type of related stock. Thats something to watch for sure. The Financial Sector spider certainly a focus for a lot of people out there. Also industrials with sales exposure to places like europe, uk, Owens Illinois one of those companies, make a lot of glass products, that company down by 13 just since that timeframe. And then auto parts, also an interesting focus there, two large publicly traded auto Parts Manufacturers are part of this brexit slide. Check out these two guys, delphi and board one both down big about 12 to 15 , tyler. So a few interesting names here besides financials that have led the way down since brexit. Back to you. Dominic, thank you very much. Stocks as we mentioned rallying selling off the last two sessions. Is this whats known as a dead cat bounce . Or is the worst potentially over . Joining us are dan skelly, head of Equity Model Portfolio Solutions at Morgan Stanley Wealth Management and michael cagino, president of permanent portfolio funds. Gentlemen, welcome. Good to have you both here. Dan, im going to begin with a hypothesis, theres a heck of a lot more we doent know about te economic effects of brexit. Were all in a bit of a guessing game here. With that being the case, my suspicion is that within two weeks the focus is going to pivot towards the health of the u. S. Economy and the health of u. S. Corporate profits. With that in mind, do you buy that thesis . And if so, what do you expect the earnings season to show . Now, i think thats a great point. And i think theres some validity to that. I think in really just a couple weeks time to your point were going to start paying attention to corporate earnings. When you look at First Quarter earnings, we think that we actually saw the trough in this cycle recently. Really wed been in a period for three or four quarters there where we had contracting earnings. So i think, yes, theres a lot of uncertainty right now particularly as it relates to brexits impact on the uk economy. Will obviously have the most severe impact. And potentially on the broader impact towards europe. But i think in the nearterm people are going to come back to the realization that earnings from a Broader Market perspective are looking okay. And when you look at other drivers of the u. S. Domestic economy, namely housing, i think theyll be some really strong solid trends that wont be as affected by this update with brexit. Michael, do you buy the argument there that theres so much unknown about brexit, we dont know how its going to effect britain, we dont know how its going to effect europe, but what we do know or will know in two weeks plus time is how american companies, how profitable they are. Yeah, i totally buy the thesis, tyler. In fact, we dont even know whether its going to be a negative or positive for europe, britain or the u. S. Going forward. And i think the markets may trade on that news in those negotiations for a long time to come. Having said that, i do also agree that were going to be pivoting very quickly to Second Quarter earnings, outlooks for the second half of the year, how theyre impacted by policy initiatives and the election. The lack of growth or growth in the u. S. Economy, i feel like a broken record at times, but which economy is going to show up in the second half of the year . I mean, q1 awful, q2 appears to be maybe better but i cant tell how much. Were in this sort of low growth, you know, 1. 5 to 2. 5 annualized gdp. Which is good. Its not recessionary, but its not robust and dynamic. When you look at corporate earnings, yeah, i think we may be starting to bottom out. The effects of the strong dollar youve now got comparisons for over a year. So that is less weighted now to corporate earnings. But you still dont have very good Revenue Growth overall, Certain Industries thats not the case. There are good growth stories out there but net net the overall market the growth is not there. I think thats the next significant leg up for the stock market. We need the top line growth. Busy news day, let me point out, michael, you like among financials first republic, key and state street. And, dan, picks are allergan, down so far this year, and alphabet, thats the goog google folks, down 11 . Thanks, guys. Go to punch. Cnbc. Com right now to see a growth stock dan likes in the consumer sector. Thanks, tyler. Getting slammed over the past three sessions and past month for that matter, should traders be cautious or is this now the time to buy in . Jim, great to have you with us. Thanks, melissa. Even prior to the brexit selloff, jim, this is a group thats been under tremendous pressure. Take for instance American Airlines basically sitting at 52week lows. This is a stock down 36 over the past 12 months. Why would you step in here . Especially given the unknown of the exposure and the impact of the brexit. Well, its not just american. Most of the group is sitting near 52week lows. If you look at it on a valuation basis these stocks are trading at levels we havent seen in about a decade when the industry was fundamentally different, much more risky. So seems like some stocks get priced to perfection, these stocks are priced for disaster and its disaster we dont think is fundamentally sound. Certainly there will be an impact from brexit. Weve seen american at risk for 6 of revenues, united about 5 , delta about 3 . This is a very small part of their overall business. Of course if theres a global domino effect, thats certainly going to be something well have to look at at that point. But the stocks are priced for a much worse outcome. You rightly point out exposure directly to the uk is very limited, but in terms of exposure to europe as a whole. Lets say there is a global slowdown in europe. I mean, how do we factor that in to these stocks . I mean, International Total including asia and atlantic is 10 of revenues for the airline industry. Its a little bit more profitable because these are more profitable markets. Were not currently expecting it to be a domino effect. We dont think theres going to be a global slowdown that will impact the industry. But certainly a risk people need to consider but thats more than discounted into the stocks looking at these valuations were seeing right now. Youve had a lot of strong buys in your coverage universe. In terms of more insulated ones some might make the argument that domestic carriers here in the United States service more point a to point b within our borders might be the safe way to go. Where do you stand on that . Look at a company like jetblue we have a strong buy on, no International Exposure whatsoever except maybe a little in the caribbean. Theyre not going to be impacted by brexit or a slowdown in europe and doing very well right now. Theyre benefitting from the oil tailwind all the airlines are getting, theyre solidly profitable and we think the stock has been overly punished for factors that are not in actual fundamentals. Jim, thanks a lot for your thoughts. Appreciate it. Thank you, melissa. Well, the first week showdown over brexit taking place today in brussels. There were fireworks and some awkward moments too. Well have the very latest coming up. Welcome back to power lunch everybody. The first European Union summit since the uk voted to leave the organization takes place today. And there have been some heated exchanges already. Wilfred frost is live in brussels. High, wilfred. Hey, tyler, thanks very much. I just caught up with the leader of the uk independence party, nigel farage. I was asking him whether he felt responsible for the fall in asset prices, particularly share prices of banks, and he got pretty heated. Lets take a listen. Please, can we just end this complete rubbish ftse is up 3 today. Well, but it fell before that. Its 12 up from february. Can we all grow up . Stop this absolute scare mongering nonsense. So the pensions that people have seen fall in the last couple of days is irrelevant . Ftse is up 3 today, 12 up since february, stop this media hype nonsense. But relative to brexitrelated issues its fallen sharply. February we were facing global scares in terms of Central Banks collapsing, china collapsing, oil prices collapsing. Weve rallied since there for other reasons. Look, there is a declining Global Economy. And indeed in britain. And our growth forecasts are down, not because of brexit, because actually the economy is not doing as well as we thought because government borrowing is running way ahead of any expectations. And sterling ends in a declining market, a bear market in july 2014. You know, i actually know about these things. Do you know why . Because i once had a proper job. Now, of course we know that he was mistaken. Share prices have certainly fallen in relation to brexit. Couple key points, one, thinks article 50 should be invoked sooner than later and i asked him about trump and said its going to be a fascinating race in america. I sense he may well win it. I dont know if Hillary Clintons taking note of that. Guys, back to you. All right. Wilfred frost with a Fiery Exchange there. Thank you very much. As bad as the last couple of days had been for stocks, it is important to remember as you heard nigel farage point out that we are still well above the lows that we hit this year back in february. Now, that drop largely based on concerns over chinas economy. But could those china concerns actually come back because of brexit . Consider this. If the u. S. Dollar continues to rise against many other major world currencies, china may be forced to further devalue their currency to remain competitive. If that happens, is there a risk of a deflationary trade war that reopens some of februarys wounds . Lets bring in conrad soldana, conrad, i noticed as of last filing a number of your top holdings are china companies. Are you selling them on brexit concerns . No, im not, brian. In fact, i think the brexit phenomena has less of an impact on china when you consider that maybe a couple of percent of their exports are geared towards china. So i think thats a nonissue for me. I think that what china has is its own reform process and its trying to migrate more from the export led sectors that we know about historically but more towards the consumer and towards services. And i think thats in its own hands the reform agendas going to drive it. Still find good attractive businesses in china. And weve got to face the fact that the chinese economy as large as it is right now the second largest in the world at 10 trillion plus is going to slow down mathematically. So within that we find good opportunities in china and we continue to seek those which have high returns and more focused towards either the consumer, towards Internet Companies where the cash generation is very high. So you have no concern about any kind of a currency led trade war then, conrad . Thats a global issue. So, brian, when we talk about Global Growth being anemic, the currency debasements that were seeing is in fact across the world. So for instance last year as much as a lot of the currencies devalued or debased, china moved just a little bit. Were talking about single digits. And thats significantly less than what in fact the depreciation we had seen in major currencies in developed markets leave alone the Commodity Currencies such as australia and canada, but even the euro. So i think were exaggerating the move here, but i think it is an environment where Global Growth is going to be anemic. And i dont think there is much positive for people trying to debase their currency because the growth is subpar and is going to remain so. It is not the United States, it is not china, it is the collective eurozone. China sells a lot of stuff into europes more than 14. 5 trillion economy. If we see even a one percent a half a percent haircut, conrad, in eurozone gdp, wouldnt that have a negative impact on chinese exports to europe . It would. Thats the share price of the companies you own. Sure. So firstly, yes, that while that is correct the eurozone, if you take the entire eu itself is about 16 of chinese exports, and the uk is just two Percentage Points off that. So while it is significant, i dont mean to minimalize that, but the fact is i think the u. S. Is bigger, number one. So there is an impact to chinese exports, but net exports not as significant as were talking going back three or five years. Now, what we invest in is not really the export side. Were looking much more towards the domestic businesses in china and across emerging markets to me thats where the opportunity is to buy the domestically focused businesses that are growing faster. We showed a number of those names. Making a strong case for china, conrad, well see you soon. Thank you. Thanks, brian. If you checked my Facebook Page over the weekend you might have seen a rather unfortunate high speed spin, i hit oil, thats my story, im sticking with it. Not to be outdone jay leno was actually in a flipping car while filming his show. Hes okay. Well show you the full video straight ahead. Take a look at this video. Jay leno hop in a ride for a stunt with 80yearold driver bob riggle. It didnt go well. Im okay, yeah. Whats your name . Bob riggle. How old are you, bob . What track are you at . Urbandale. Anything hurt on you right now . My name is bob riggle and im 80 [ laughter ] the two are fine, leno shaken, probably stirred, but quickly recovered. I dont care. That is three advil right there. At least. Sort of a legendary guy for doing wheellies and thats what he does did he intend to do that . First off he should know that car is not meant to go left or right, its meant to go straight. That wasnt on purpose . Well, no, i hope not. And those fat tires he gripped it anyway, jay lenos garage airing wednesdays 10 00 p. M. Eastern time. My spin was not as dramatic. Thank goodness. Theres jay lenos garage. No helmet. Good video on Facebook Page. Thank you. Airing on cnbc tonight, a brand new episode of west Texas Investors Club at 10 00 p. M. Eastern time and pacific. Stocks are rebounding today. A number of names hitting new 52week highs, dollar general, take a look at that alltime high levels dating back to its ipo in november of 2009. Dollar tree trading at alltime highs back to its ipo in march of 95. And james smuckers, American Water works also among the names hitting highs. Consumer confidence rebounding but will brexit rebound a turnaround . Weve got that story ahead. This is judy. Judy is 65 years old. Her mortgage payment is 728 a month. Thats almost 9,000 a year now judy doesnt think that shell be able to retire until her mortgage is fully paid off. This is mike. Mike is also 65 years old. His monthly mortgage payment was 728 a month. Now mike thought he would have to work for another 12 years until his mortgage was paid off. And then mike heard that a reverse mortgage may help him. He called one reverse mortgage to get the details. Mike retired immediately after getting his one reverse mortgage loan. Maybe you too can benefit from a reverse mortgage. Call one reverse mortgage now and find out if you qualify. Theyll send you an information guide that includes all the details and the stories of mike and others. A reverse mortgage. Is a mortgage with no required monthly payments. It was created for homeowners 62 or older so they can continue to afford and own the home they love. Many one reverse mortgage clients find they can retire sooner, do more the things they love, or simply put more money in the bank. A reverse mortgage could change your retirement, and your life. I examined my finances and i said, there is no reason why i shouldnt retire today. 10, 12 years earlier than i had anticipated. In the first year, his cash flow savings totaled 8,736. After 5 years, it will be over 40,000. It really is worth a call to find out if a reverse mortgage can help you too. Call one reverse mortgage now and ask for your free guide. Street talk at the time how we roll like leno. First stock, microsoft, jefferies remains negative on the stock. They kus estimates for this year and next year well below consensus of wall street. Shares remain underperform rated as a 40 target. Microsoft is at 49. Theyre concerned about the pc cycle, so jefferies may be the most negative. I mean, this is they sell microsoft. 20 downside to the stock basically from where it is right now. We bash analysts for not having sell ratings. For an outperforming stock, thats true. Jefferies going short and strong on microsoft. All right. Second stock were watching solarcity getting upgrade to market perform from market outperforming from market perform. Analysts claiming shares being upgraded in anticipation of successful resolution to the tesla bid. Shares also added to the conviction list at avondale. Of course news here is they formed a special committee to take a look at that tesla offer specifically, more than half of the board has recused itself from voting on the deal because of ties to either elon musk and or tesla. Theyre very interconnected. Solarcity having a good day. The stock up about 6 over the past month couple of days. Yeah, couple days. Tough year for all the solar stocks. Yeah, last couple of days may have done okay. Third stock, Dicks Sporting Goods. Goldman sachs reiterating their buy, but now also adding it to its conviction buy list. Got a 53 target, so they see about 20 upside. They see dicks the best position to benefit for the closure of Sports Authority. Thats its biggest competitor. Get this, in the analysts note they note that 63 of Sports Authority stores were within ten miles of a dicks. So they were basically hurting each other. Now Sports Authority is going away and thus goldman sees sharp acceleration in Dicks Sporting Goods earnings growth. And a similar analysis out today, survey of 1,200 consumers recently bought Sporting Goods and they found that the people who used to shop at Sports Authority and this place called sports shall lay which also is going under, 53 of those consumers said they were going to go shop at dicks. Went under because all they sold were rabbit parkas. Thats not true. Are you serious . Ive never heard of it. No, made me think of swiss people and skiing. Fourth stock, penske automotive, clobbered on brexit because it is the biggest auto dealer in the u. S. But generates 35 of revenue in the uk specifically. Keybanc cutting 2017 estimates 10 because of potential slowdown in uk vehicle sales and fx impacts. Forward p e 7. 5 versus fiveyear average of 11. 6. But keybanc expects that discount to persist because of the uncertain outlook in the uk. Listen, first off penske a Company Founded by one of the greatest business and racing minds out there, hard to bet against them. We should get sarah and wilfred to go talk to people. Are you going to not buy a car or buy jeans or a cell phone because of the brexit . They might not. I mean, if you have forecasts of recession in 2017, or six months into 2016, you might not. If they just drove on the other side of the road, everything would be fine. Finally, todays under the radar name, ultragenex pharmaceuticals, ticker rare. This under the radars name has been sellers radar because the stock is down 25 this quarter and nearly 60 this year. Bank of America Merrill lynch out defending the stock, a buy and 72 target. About 50 more upside from here. The company did recently announced or yesterday, last night, i guess, that it got a broke through therapy designation from the fda for a drug right now called krn23. Until it gets a real name, which is treatment for hypophospha hypophosphatenea, one of the big causes of rickets. Some hope there. Tough sledding for biotechs in general it really is. I practiced it this morning and i still botched it. Folks, thank you very much. It is coming up in about 30 seconds on 2 00 p. M. On wall street on the east coast. Markets bouncing back at this hour. The dow as you see right there up 142 points at 17,282, but remember it did lose 870 points in the prior two sessions. Lets check the Broader Markets, the nasdaq, the s p 500 and the russell 2000 all in the green today by significant margins. The nasdaq, which has been one of the big laggards up one and almost a half percent. The s p 500 up at 1 on the button basically and the russell 2000 also hit hard in recent days perhaps somewhat counterintuitively given some of those Small Companies dont do much business in england or overseas generally up 1. 25 . Bob pisani is following the action from the nyse. Bob. Hello, tyler. Lets take a look at some of the sectors. Lets call it steady as she goes. Were holding on to the gains of the day. You can see here banks are leading the markets along with restaurants, airlines and semiconductors. A lot of beaten up sectors rallying today, including airlines. Keep an eye on buyback announcements. Were entering earnings season and with prices of Many Companies down significantly i anticipate to hear additional buyback announcements. Watch banks in particular, after stress tests are announced wednesday, big banks like citi group and bank of america, they likely announce dividend hikes as well as buybacks. Also bear in mind remember that jamie dimon turn the markets around february 11th when he announced he was personally buying back 25 million in j. P. Morgan stock. There was that giant jamie dimon bottom there. Might hear more of those in the next few weeks. By the way theres a long held belief companies cannot buy back their stock during their earnings season. Thats not true. They are allowed to buy back stock during their earnings season provided its part of a regular preannounced buyback program. Just one of the many facts you learn here at cnbc, brian. All right. Bob, we try to be just fact based all day long. A handful of hedge funds ended up big winners on that brexit decision. Among them names you know, george soros and Stan Druckenmiller are some. Scored on volatility plays by buying credit default swaps. So where else are some of these Big Hedge Fund managers finding gains or shorts . And what strategies are they avoiding . Lets ask paul graham with 20 billion under management, lets be clear, paul, our viewers, most of them are not hedge funds. Theyre not going to go out and put some weird swap, short, whatever it is, inverse thing position on some german banks debt. Long short is the obvious answer to that question. We take fundamental, olympic know, views on stock specifics. We try to ignore the macro although clearly in this backdrop its quite difficult. But what we do and what most hedge funds actually do is pretty straightforward. You know, they dont use complex derivative instruments or strategies. Its just good old stock picking. I think clearly over the next three years good Old Fashioned stock picking in a market that will see huge, you know, stock dispersi dispersion, weak correlations between sectors and markets oscillating around, i think those are the types of managers that your viewers should be considering. So do you think these things you know, soros all e allegedly putting huge position, do you think those are just oneoffs, sounds like, paul. They just put a bet on this one event and thats it and now we just need to go back to either buying stocks or selling them short . Yeah, i mean, thats real if you dont mind the term sex, rock and roll and violence, its very opportunistic around a specific dislocation in the market. We tend to look at things longer term. You get great returns if things go right in those types of trades, but clearly you get massive volatility and potential downside in negative returns. So im not sure that for the most and certainly for retail investors, you know, those types of strategies are appropriate. Paul, im just curious what youre hearing out there in the Hedge Fund Universe in terms of whether or not this event has made or broken hedge funds, will this be the seminole event in 2016 we look back upon and say thats why x, y and z hedge funds went under, or thats why they made a great year . Well, i think, you know, hedge funds have had a pretty, you know, hard run of late, the last couple of years have not been vintage years. A vast amount of money has gone into index trackers and etfs because markets have been trending upwards. And so hedge funds, you know, have come under a lot of criticism for the fees that they charge and the lackluster performance. What i would say is as ive just alluded to is the next three years should be more positive for hedge fund strategies. You know, the markets should be more conducive to running a Hedge Fund Strategy because there should be clear winners and clear losers as a result of this market dislocation. Its just whether investors can stay along for the ride because, you know, clearly youve seen the news recently theres a lot of criticism around the hedge fund industry. And jumpi ining ship right now d be the worst possible time. Were going to leave it there. Thank you very much, paul graham. Last weeks brexit vote wreaked havoc on the markets the past few days and our next guest believes tech could be the next to see effects from the brexit referendum. Scott, good to have you with us. Thanks, melissa. You did analysis in terms of direct exposure to the uk and some Interesting Companies on that list in terms of 10 revenue exposure. Yeah, so obviously there was a lot of interest and remains a considerable amount of interest in this kind of exposure specific to the uk. So what we decided to do is look at all 67 companies within the Technology Sector of the s p 500. And as you referenced, we came up with four companies that have 10 or more revenue exposure to the uk directly. So those companies are Cognizant Technology solutions and hewlettpackard enterprises, both at about 10 . Then we have paypal at 13 . And ebay is the leader, if you will, at 16 . Right. Why should we ignore this . I mean, there are calls now for the uk to go into recession in 2017. There are calls that the eu growth overall will be depressed. I mean, these companies surely have more exposure than just 10 or more to the uk when you take a look at european, Continental Europe exposure. Is that a wild card right now in your models . Absolutely its a wild card. And this is just the beginning, we think. So when you look at a company like ebay, theyre already experiencing growth related challenges, especially when you consider that they just less than a year ago spun off paypal. So theyre really trying in terms of revenue increases, now you have brexit, other european exposure, we think thats got to be a risk that investors should know about as they make their investment decisions. You know, a lot of Multinational Companies have sophisticated currency hedging desks, you point that out in terms of what google has or alphabet, i should say. Old habits die hard. Could that actually be a drag . Could we actually see companies say, you know what, we got it wrong, because everybody else out there got that wrong also. Yeah, i mean, its possible, right. I mean, think about what were considering in the context of lets say thursday before the market close when folks were really excited about the brexit vote. And obviously we all came in in the u. S. On friday and it was bedlam, right . So theres no question that folks could have gotten it wrong, but i think alphabet has shown time and time again since they implemented this very extensive and sophisticated hedging strategy that they actually do a pretty good job of this. I would rather as an investor be aligned with a company like that than one that doesnt pay as much attention to currency related risk and actions accordingly. Wrou point out google, uk is an important part of the business but at the same time its been less reliant on the uk specifically. What do you do with the other companies . Do you avoid them at this point just because there is that uncertainty . I mean, you cant even put it in the model, why should i buy those stocks . Yeah, so the four companies highlighted earlier, we have hold opinions on three of them. And we actually have a buy on hewlettpackard enterprise largely because of valuation and upcoming transaction where theyre selling their big Services Business to computer sciences. We see that as a positive kas list for the company in the stock Going Forward. I agree with what youre saying and thats the reason we put this piece out is just to give people some information and context about the types of choices they should be making given the brexit vote for leave and what could happen next. All right. Scott, appreciate the analysis. Thank you. Scott kessler at s p global. The uk vote to leave is just the first step in the path to exit the eu. So will it actually happen . Our next guest isnt so sure. Plus, protests in london today. Sarah eisen is live, well go to her next. This just got interesting. Why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. 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Im sarah eisen live in the heart of london, trafalgar square, where crowds now by the thousands have taken over. Theyre here to demonstrate peacefully their support for the eu to protest the brexit vote. They want britains future to remain in the eu. Theyre angry. Theyre chanting eu, we love you. Weve been out and about all afternoon talking with some of the folks here. Heres what they said about why its so important to be here today. People voted on the basis of misinformation and misunderstanding. So, i think, you know, for it to be left at that in a parliamentary democracy is completely unacceptable. Britain is not Nigel Farages country. We are not a racist country. We are not an intolerant country. Were not an intolerant society. We are colorful, diverse, hugely accepting and welcoming country. And nigel farage and ukip have placed in fact this referendum have put a mark on this country. And we have to wash that off. We should say that we are in london. And london was a stronghold for the remain voters. It was one of the few places in this country that actually voted overwhelmingly to stay in the eu. We should note also its a very young crowd. That demographic also voted to stay in the eu. But it gives you a sense of just how divided this country has become. Theres a lot of chants against Boris Johnson, the former london mayor who is now one of the frontrunners to take over as Prime Minister. People here going against him because of course he was the lead campaigner for the brexit vote. It also gives you a sense of how difficult the job is going to be for whoever, guys, takes over as Prime Minister in september from what they have to deal with. There are very much cries here to have a second vote, a doover. That its not a done deal. That britains future still remains inside of europe. Back to you. All right, sarah, thank you very much. Yesterday on power lunch we asked the Atlantic Council president ceo fred kemp about the possibility given the complexity involved in the breakup an exit by britain may not happen after all. Listen to this. I think youre absolutely right to raise the issue of whether its going to happen and when is it going to happen, because nothing starts in the eu until you trigger article 50. And article 50 isnt triggered until the Prime Minister signs a note to the eu saying, look, were ready to start our exit. That may not happen until october, and we dont know with which prime pminister. So youre going to have a long time of uncertainty which is whats shaking up the markets, the uncertainty. Were joined again today by fred kempe. Yesterday you seemed a little hesitant or uncertain that the brexit was a sure thing. Has your thinking e involved a little bit . Will they find a way to stay, maybe . It has evolved. If i had to wager and that would be buying the ftse index right now, i would say that brexit will not happen. And i base that on three arguments. First of all, it isnt triggered. The Prime Minister, david cameron, could have triggered it on the day of referendum. And it could well be if he didnt do it on the day of the referendum, nobody ever will. Most of the Political Leadership doesnt want it. Even Boris Johnson on the day he wrote his editorial in the Daily Telegraph saying he was on the leave side, had written an alternative editorial. So hes a little bit mixed. The second reason is the eu has a history of rolling over referendum. You had the danes in 1992, they voted against. You had the irish twice in 2001 and 2008 on the roman lisbon treaties. They reran their elections, they rolled over the referendum, the eu made some compromises and then things went through. Then you see the mood of british people. 4 Million People have signed onto a petition against the outcome of the referendum. And you have scotland and Northern Ireland potentially putting constitutional vetoes in the way. I dont know whether they can legally do that, but theyre going to do everything they can to slow down the rush to the exit gates. And then the british have to say, well, do we really want to give up our threecenturyold United Kingdom . And then finally you have german chancellor Angela Merkel, she does not want britain out of the eu. She sees her legacy as being saving europe. And so i think shell try to make some sort of deal with britain that will allow a second referendum. But what gravitates against this is of course youve had a vote, and its a very clear vote. And you also have a lot of people in europe that would like to throw the anglo saxons out. We have a lot of drama, but im betting at the moment brexit will not happen. Let me bring in larry kudlow to react to that. Its very difficult to go against the will of the people. And this vote as close as everybody thought it was going to be, wasnt all that close. Wasnt that close. Look, with respect to mr. Kempe and his organization, at best these are fanciful scenarios. At worst its just downright misleading. The elites have done this now throughout the entire brexit campaign. Britain is a democracy. The eu i might add is not a democracy. Thats what this is all about. I call it magna carta 2. 0. I think its about freedom. I think ultimately its about economic growth. And i think its a terrific thing. Its going to take awhile to sort through. Regarding these issues about the timing and so forth, look, i would like to see the toris move faster on this. I really would. Theyre saying Party Conference in september elect a new leader. I think thaw ought to get that done sooner. I wish they would. I think as soon as that trigger that the portugal treaty will be triggered. As soon as they get a new leader in place. It appears thats whats going to happen. Mr. Cameron doesnt want to move unless so i think they could move faster on that. I hope they do. And i think the United States should be moving faster to develop trade relations, new trade relations with the uk. This thing is really about trade. Maybe well talk about that in a few moments. Regarding the Angela Merkel point very clear. Thats what i want to come back to. Ms. Merkel is part of the problem in the first case. Okay. It was her agreements to bail out these other countries. It was her agreements on free and open immigration that caused the problem in the first place. She has been a weak leader. And she is not liked even in her home country of germany. She isnt going to pull off any miracles here. The best thing she can do is get the eu ministers, the unelected, unaccountable socialist eu bureaucrats to negotiate a treaty on trade which will benefit both sides. Okay. To negotiate a treaty with Great Britain. With Great Britain and get the roles done for the eu. If you want to contemplate let them go work a trade deal. The only thing make the worst Case Scenario come true is what i call mutual assured destruction. Like the nuclear strategy, if you want to have a instruction, no trade, protectionist barriers between britain and the eu, then i would regard all hells going to break loose. That is not likely. Mr. Kempe, your turn. Let me respond to that. First of all, the eu is still britain is still in the eu. Nothing has changed constitutionally. Nothing has changed legally. And it wont change until this is triggered. And the eu cant compel british leaders to trigger it. And i dont see a leader around whos going to do that in the near future, probably not before october. So theres a lot of time to go. And the question of chancellor merkel there is a deal to be had. And the deal to be had is over immigration. What the british wanted in their negotiations with the eu, which they didnt get, is an immigration deal where if they reached a certain threshold of immigration they could shut it off with the eu. Now, there are a lot of other countries now in the eu that would like that. And so by making that kind of a deal with the brits, you might be able to headoff some problems with other countries. So i think theres a deal to be had here. I agree with larry completely. This would be politically messy, britains a very strong democracy, this referendum rolling back is not going to be easy. I think you see a lot of buyers remorse in britain right now, certainly see a strong 40 to 60 that wont change their mind. But theres buyers remorse in the swing vote that could change over time. Fred, this is a democracy. They just voted. You know, thats the way it works. And britain, by the way, this whole movement is about much more than immigration. Though i acknowledge immigration is part of this. But its much more about immigration. The people in the cabinet, i mean, responsible torres who oppose david cameron. Theyve said all along the eu, bureaucracy and socalled leadership is unlengted and unaccountable to anybody is driving that whole continent to the left. They are encroaching on britains fundamental liberties, their regulatory stayed in europe, the judicial stayed in europe. Next youre going to see raising taxes and socalled harmonization. This was never part of the original eu free trade idea. Theyve so far britain has revolted it is the greatest democracy in the world, and we the british cousins took it from them. Thats why i use the magna carta. It is not so fanciful to cite the magna carta and its 800year dissent. Is there an argument to be made, fred and then larry, that this shot across the bow of the eu might ultimately result in an eu that is more responsive to the democratic yes, yes, yes. Things youre talking about, fred . One would hope thats going to be the case. Let me say one thing on the economic front. What the brits are learning is theres more of an economic downside than an upside from leaving the eu, and the leave campaigners, the leave leaders, know that theyre going to inherit a britain, a Great Britain thats probably going to head into a recession, have to renegotiate dozens of trade deals. And i think they dont very much want to take that on. So i really wonder whether the levers themselves want to take on the leaveers. With respect i think thats just entirely incorrect. Let me pakmake a couple points. Britain will have a much better opportunity to discuss bilateral free trade deals with the United States, which eu has stopped, with canada, which the eu has stopped, with australia which the eu has stopped. Thats point number one. Point number two, the eu is no longer a free trade zone. They are blocking any and all expansions to trade. And britain, which is the Financial Center of europe, one of the great Financial Centers of the world, will forever remain so. Eu needs britain, its finances and its markets more than britain needs the eu. And thats why this has to be resolved. Britain has a chance to reform taxes and regulations and spending in a progrowth way. And hopefully the United States under a new administration will help them. Then we can stop calling it britain and call it england if scotland decides to hold another referendum and passes. Northern ireland does the same. England gets most of its oil from scotland. We can call it anything the Voters Decide to call it. Im okay with it. It will be england, it will be big england, it will be britain, it will be Great Britain. They have been around for a long time. I dont disagree with larrys criticisms of the European Union. The question is a voter and a country is where is your greater Downside Risk. And i would still argue the Downside Risk of out is so much greater economically than in. And the markets are showing us that. Liberate. Liberate. Markets are calming people are saying maybe this we have to leave it there. We didnt even get to trumps speech on trade, which is eminent. Well maybe cover that in a later moment. Fred, thank you very much for coming back two days in a row. Larry, always great to see you. Thank you. Lets check the markets right now. You see there the dow up 133 points at 17271. Much more market coverage and more coming up on power lunch. Hello prashant bhuyan. Cofounder of the Fintech Services startup. Hello watson. Your analysis of social media and conversations on various trading floors, helps us uncover insights. Insights that help investors predict market closes, well before markets close. You know, your analysis has helped us improve our predictive accuracy by over 500 . 550. 2, to be precise, but we can always do better. I like your attitude watson. Premium like clockwork. Month after month. Year after year. Then one night, you hydroplane into a ditch. Yeah. Surprise. Your Insurance Company tells you to pay up again. Why pay for insurance if you have to pay even more for using it . If you have Liberty Mutual deductible fund™, you could pay no deductible at all. Sign up to immediately lower your deductible by 100. And keep lowering it 100 annually, until its gone. Then continue to earn that 100 every year. Theres no limit to how much you can earn and this savings applies to every vehicle on your policy. Call to learn more. Switch to Liberty Mutual and you could save up to 509. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. Welcome back to power lunch. Im seema mody with a news alert on airbnb. Reportedly said to be funding valuing company at 30 billion according to New York Times citing sources the home rental site reportedly last valued at 25. 5 billion in late 2015. This new valuation of 30 billion would make airbnb the second highest value startup in the United States behind uber, which is valued at around 66 billion, tyler. See ma, thank you very much. Seema mody. Donald trump is speaking right now in pennsylvania. Trade is the topic. Lets listen in. Economic independence once again. That means [ applause ] that means voting for donald trump. Ill do it. No doubt about it. Not even a little doubt. It also means reversing two of the worst legacies of the clinton years. America has lost nearly onethird of its manufacturing jobs since 1997. Even as the country has increased its population, think of this by 50 Million People. At the center of this catastrophe are two trade deals pushed by bill and Hillary Clinton. First, the north American Free trade agreement, or the disaster called nafta. Second, chinas entry into the World Trade Organization. Nafta was the worst trade deal in the history its like the history of this country. And chinas entrance into the World Trade Organization has enabled the greatest job theft in the history of our country. It was bill clinton who signed nafta. People dont remember. In 1993. And Hillary Clinton, who supported it. And the havoc that it wreaked after he left office was unbelievable. It was also bill clinton who lobbied for chinas disastrous entry into the World Trade Organization, and Hillary Clinton who backed that terrible, terrible agreement. Then, as secretary of state, Hillary Clinton stood by idly while china cheated on its currency, added another trillion dollars to our trade deficits and stole hundreds of billions of dollars donald trump speaking in pennsylvania about trade and assailing what he calls two of the most disastrous trade arrangements in history, nafta in 1993, chinas entry into the World Trade Organization. Elsewhere in draft released to the press he assails Hillary Clinton for her support of the transpacific partnership, a pending trade deal, which she initially called the, quote, Gold Standard of trade deals, until she decided she would switch and be against it aligning with, oh, by the way, mr. Trump and bernie sanders. Larry kudlow is with us now. Ive read much of this speech. Rhetorically it is very strong, rather detailed for mr. Trump. Yeah. Its not his usual extemporaneous jazz. Its more composed music. That is correct, i think. I believe this was a tell prompter speech. Looks like it. I think he does quite well when he really focuses and has discipline. A very serious speech. Outlines seven steps to improve our program. What hes saying is this, trade is good. Trade deals can be good. But the other parties cant cheat. Have broken the rules. And weve got to stop them from cheating. This is not a new thought by the way. Ronald reagan had to punish japanese, clinton, w, obama too, and also labels china a currency manipula manipulator. I think its a fair point, but basically saying along with lower regulations and lower taxes, im going to have tougher trade policies that benefit the American Worker as best we can. And were going to enforce the rules. And i think hes right about it. Im a free trader, but youve got to play by the rules. He says he would go in and if he cant his first tack would be to on nafta, renegotiate with the parties to that deal most notably canada and mexico, as i recall. I dont remember my history terribly well but those are the main ones. If they dont want to go along with the renegotiation, he would move under one of the positions and ab ra gait it. Its tricky business ab ri gags. There are laws on the books in the u. S. And the Congress Just passed a new law called Congress Enforcement act. Basically says yies has the power if there are trade violations and not remedied after discussions, we are permitted to impose temporary targeted tariffs. We are. And its been used before in the past. As i said reagan used them. I dont like tariffs, tariffs are taxes, but i feel there has to be some way to sanction these deals. Yeah. And im particularly critical of china. Intellectual property rights, they counterfeit our goods, cyber hacking into our awful story. Chinas an awful story. Something needs to be done there. Regarding nafta, im not as clear about what actions would have to be taken. But to me free trade is fair trade. The public is really if youre not going to play fair, you need to have a big stick. Somehow. Youve just got to do this. We have the authority. Look, all these years think about this. How many times did china come to the United States amidst great fanfare with state dinners and new leaders and were going to talk about currencies and trade and all the rest of it, and nothing changes . Why would it . China is us decades ago. I dont mean that insultingly, they still have some pretty horrific work conditions in certain parts of that country, they are a country that is on the way up, but theyve got a long way to go. In our early manufacturing history, when we were coming up, we didnt exactly play by the rules either. No. We didnt. We stole jobs from england. We played look, early president s in the the Republican Party was the protectionist party. Now, mind you there was no income tax, so trade tariffs were the major source of revenue. Little different than it is today. Regarding china, sully, i think china had a nice run in terms of market reforms. I really do. I think the last couple years theyve gone backwards both politically and economically. And i think thats important for the future and i think trump is right to step in and deal with this. Were going to go to john, my point is we cant expect them to be on a same level because theyre in a very different part in their evolution as a nation than we are. Its not their evolution, its the rules. You sit down and you make a treaty and you abide by the treaty. And as i said before, american president s, both republicans and democrats, have had these chinese here, state dinners and nothing changes. Somebody has a stick and somebody has a knife at a duel, theres going to be different rules. No, you cant have different rules. You make a deal, the deal should stick. Otherwise you dont make the deal. Look, trump himself has said this is why i like reagan gorbachev, trump wants a tougher negotiating stance. I dont blame him. I think i dont know how you negotiate with a country whose goals are very different. Lets go to john harwood in washington, d. C. With more on wrapping up because we did i guess get an Early Advance copy of trumps speech. John. Brian, this was a bernie sanders, u. S. Labor union speech. Its remarkable that donald trump is trying to go way left of Hillary Clinton on trade. It is true, as larry just indicated, everybody is in favor of free trade that is fair trade. But at some point youve got to decide if youre going to make deals or not make deals. Ronald reagan initiated nafta, george h. W. Bush moved it along, bill clinton got it passed with republican support in congress. The same thing with chinas succession to the wto. Donald trump came out today and said powerful corporations, wall street elites, had rigged the system to their own benefit. This is a speech that john edwards, bernie sanders, elizabeth warren, any number of left democrats could give. And this is the way that donald trump is trying to prosecute his economic argument as he goes to rust belt states like pennsylvania to try to win them. It is very unconventional. It cannot help his fund raising at a time when hes now trying to raise the small amount of money that hes got in his bank account and raise that from traditional republican donors. Now, maybe he can get a blue collar voters who backed him in the primaries to kick in money for his campaign. But thats not going to be easy. Its very interesting strategy that trump it is interesting because he really couches so much of this from what ive read as a question of the elites favoring the status quo, theyll never change it versus the little guy who im championing. I think hes got a point. I mean, i really think hes got a point. The rhetoric is really resonant. I dont think its about fund raising. I disagree with john on that. Not saying its about fund raising. Im saying it may be detrimental to his fund raising. It might, john, i dont know. Let that play out as it goes. Theres a lot of people, a lot of Business People who have come to trump meetings who are very much in favor of a tougher trade stance because their own industries have been badly hurt. So well let that play out. Again, i think the fundamental point here, the Republican Party has been drifting in trumps direction for many years. All hes basically saying along with tax reform and regulatory reform, we need to have trade reform and get people to play by the rules. And hes saying i am going to change this attitude. And i will take actions to enforce if need be. Hard to argue with that. Hard to argue with that. Larry, thanks very much. John harwood, thank you as well. Lets take a check on the markets because right now were just about a point off of the session highs. This is very important to watch especially as we are seeing this bounce after two days of really horrendous selling here in the United States and around the world. Were going to see how these markets close, but again, a point off of the session highs in the s p 500, 2025 is our level right now. It is worth noting too financials are surging higher to its session highs close to into the close and oil as well pretty much at session highs right now. Consumer confidence is rebounding, but will the uks exit from the European Union derail the turnaround . Weve got that story and much more ahead on power lunch. Pro, but they demand the best shopping experiences. Theyre your customers. And by blending physical with digital, cognizant is helping 8 of the 10 largest u. S. Retailers meet their demands with more responsive retail models. Ones that transcend channels and locations, anticipate expectations. Creating new ways to engage at every imaginable touchpoint. Its a new day in retail, and together, were building the store of the future. Digital works for retail. Lets talk about how digital works for your business. Ive got a nice long life ahead. 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And which aarp Medicare Supplement plan might be best for you. Theres a wide range to choose from. We love to travel and theres so much more to see. So we found a plan that can travel with us. Anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only Medicare Supplement Insurance Plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Remember, all Medicare Supplement Insurance Plans help cover what medicare doesnt pay. And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i know how important that is. Consumer confidence rebounding this month after falling in may. Will the brexit vote be a Consumer Confidence killer Going Forward . President and ceo of kimco realty operates 550 Shopping Centers in north america. Len schlesinger, currently a professor at Harvard Business school, welcome to both of you. Len, let me start with you. Is the vote of britain to leave the European Union something its going to show up in any measurable way in american Consumer Confidence over the next six months . Well, theres no question the data that came out last week relative to Consumer Confidence was invalidated by the vote. But what the vote really means at this point is a source of enormous uncertainty. Clearly it was a surprise. Clearly it represented some terrible political judgments. But under conditions of uncertainty we find the American Population and the consumer particularly either stepping down to a complete mode of paralysis and uncertainty generating no action whatsoever, or in fact prefacing doom and gloom and just completely acting as if the world is coming off the rafters. And neither of those things are true at this point. Yeah. What we do know relative to the American Consumer is the vast majority of benefits and issues they face will largely be in outgrowth of currency fluctuations which will allow discounters in the United States to continue to flourish and will raise serious questions about the continuing pressures that exist on luxury goods. We know that the American Consumer who elects to go to europe and most specifically to the uk this summer is going to be treated to a whole portfolio of bargains. We know that its quite likely that the pricrime rate will not up and Consumer Credit will be reasonably stable. Beyond that i think everything is a guess and we need more time for the stuff to unfold. I want to come back to you on a couple of companys that are european based and in the fashion area you are so familiar with from your history at elle. But, connor, your reaction to what he just said and do you see any ruboff or knockon effects here in your tenants, in your clients, costco, tjx, many other of the big retailers. No, its true. Our sweet spot of retail is really on the discounters, the off price. If you look at whats working in retail today, its still the off price concepts, the grocery stores, the Home Improvement categories. The consumer is resilient. The supply and demand is very much in balance in the u. S. 38year low on new supply, so virtually no new development in our sector. Thats a bright spot for us. Does the stronger dollar, vis a vis it does especially if theyre sourcing from overseas and tjx and others will probably catch that upswing. But, again, you know, the strong dollar will probably impact the tourism trade. And our retailers really focus on everyday goods and services. So i think our defensive portfolio lends itself to holding up through currency swings. How much of a nick to revenue or profits, len, with specific companies in mind would a slowdown mean a slowdown in europe and Great Britain mean to some u. S. Companies like a tjx that has some stores over there, like a costco that does some business over there . I think tjx is very much in a sweet spot. Their presence in the United States and uk is more than do let me go to two european companies. One is zara, the other is h m, we could throw in a third, which would be ikea. Are those Companies Going to see their fortunes impacted here . So theres no question in my mind that companies that are based in europe, that are operating largely in european currencies have some risk attached to them. It is driven largely by their presence in the uk for each of them, h m has the most significant presence in the uk of those three. But theres no doubt that all three of those firms will be impacted, h m probably the most. All right. So, connor, hows the business overall . The consumers doing all right . You do see some stores with vacancies. We had a guest on yesterday who said the good malls are doing great. There is a bifurcation right now going on between the highest quality real estate and call it the mid market real estate. And theres significant demand for top quality retail space. We see that as continued to go with when you look at the new concepts, the demand sources that are out there, youve got lowes with a new concept orchard supply, whole foods with their new 365 concept, tjx with a new concept, so the demand is very strong for top quality real estate. And theres virtually no new development. That means limited supply is getting bit up and we can push rents. Connor, thanks very much. Good to have you back. Appreciate it. And len schlesinger, vice chairman and former coo of elle brands. What are the risks lurking in the markets . Thats next on power lunch. Used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Little over one hour left to trade. Look at session highs on the s p 500 and the nasdaq. Worth noting that financials are also hitting fresh session highs. In todays session. Thats certainly helping propel us higher here. The nasdaq up 1. 9 . S p up. Quickly individual stock story of the day is comscore. That stock is down 20 . Not a misprint. They had not filed the filing, their quarterly filings, in february. And then they had a deadline for may. This was their new selfimposed deadline for filing the quarterlies. They missed, that, as well. Theyve blown three separate times. Sounds like me in sophomore year. Calculus 101 or 201. I was never in calculus. This is what happens when you dont file your papers. Update on accounting, too. You want the know a, file it. Worst filing to miss. Whats in it . Showing up late for the wrong test. I studied biology. This is geology, man. All right. It is time now for trading nation because traders do trade better together. After the big british vote to leave the eu, are there other major risks underestimated by the market . Good question. Chad morganlander, ari wald. Chad, it is a great question. Were brexit focused but this is the time when other things happen when youre so looking over here maybe something over here happens. What do you think might be out there were not talking about . Well, the general thematic is Global Growth. Global growth we believe will continue to decelerate to roughly about 2 over the next 12 to 18 months. That increases the political risk, ie, the brexit issue. As well as global trade. It has a major impact on global trade which bleeds in to global earnings, especially here for the s p 500 companies. So we would be concerned about that. Especially when valuations at forward looking pe multiples of 17 times. We believe were a bit stretched. So focus your attention on credit growth, in particular within the emerging markets. If you start to see a rapid deterioration there, thats a bearish sign for the overall Global Economy and markets. I thought we could get through without brexit but we did not. Ari, the charts are cold blooded and cold hearted. They dont care whats going on because all known information is supposed to be built in. Were seeing more acceleration and the daily s p today. Is the market chart anticipating some, i dont know, gray swan. We cant anticipate something unanticipated. I guess to continue on chads theme, what is going to cause the global deceleration and our answer and where we see the risk is we think its still in europe. You know, along with the deflationary signals as the charts speak for themselves as you mentioned, brian. Looking at the europe stock 600 index, the big picture view here, once again, seeing the equity market topping out at the same level as 2000 and 2007. Still in secular decline. Now breaking a sevenyear uptrend, as well. Listen. The weak get weaker when markets turn lower. This is the main drag on markets right now. And with this broken trend we think this is an area of the markets to continue to sell. Okay. Sell the european stock market. Ari wald, there you go. Chad morganlander, thank you very much. We do two additional segments every day on the interweb. Trading nations is your destination. Power lunch is back in two. And now, the latest from trading nation. Cnbc. Com and a word from our sponsor. When it comes to medicare, everyone talks about what happens when you turn sixtyfive. But, really, its what you do before that counts. See, medicare doesnt cover everything. Only about eighty percent of part b medical costs. The rest is on you. Consider an aarp Medicare Supplement Insurance Plan insured by unitedhealthcare Insurance Company. Like all standardized Medicare Supplement Insurance Plans, it could really save you in outofpocket medical costs. So, call now and request this free decision guide. Discover how an aarp Medicare Supplement plan could go long™ for you. Do you want to choose your doctors . Avoid networks . What about referrals . All plans like these let you visit any doctor or hospital that accepts medicare patients, with no networks and virtually no referrals needed. So, call now, request your free guide, and explore the range of aarp Medicare Supplement plans. Sixtyfive may get all the attention, but now is a good time to start thinking about how you want things to be. Go long™. Welcome back. The markets attempting to lift into the close here. The s p 500 just one point off of session highs. What seems to be litting us higher is move in financials and close to session highs right now. Gain of more than 2 at this hour and take a look at the biggest financial gainers. Today were getting the ccar results. Some saying the cap will increase across the industry by 19 . Seeing citi, comerica and citizens. Dont give it all away now because more of us. Can never have too much. We have one other thing in common because virginians. We both hate beets. I love them. No worse food than a beet. Thank you for watching. Closing bell starts now. Good afternoon, everybody. Welcome to the closing bell. Im becky quick at the new york stock exchange. Welcome aboard. Thank you, bill. Yes. Dont adjust your sets. She is here when the sun is up today. Been way too long. Im bill griffeth. Following that dismal two days for the market, following the brexit vote, is this rally for real or what they call a dead cat bounce that investors