Transcripts For CNBC Power Lunch 20160725

Im michelle carusocabrera, heres whats happening right now. Stocks are trading near their session lows with the dow currently sitting down 99 points. Were going to have full market coverage coming your way. In the meantime, evacuations are under way in california as a Massive Wildfire tears through parts of los angeles county. We are live on the scene ahead. And, take a look live at the floor of the Wells Fargo Center in philadelphia, thats where the Democratic National Convention Kicks off today. Full coverage coming up in just a few minutes. Brian. Well, as you can tell, folks, from michelle and tyler theres a lot going on today including more on this incredible heat wave smacking much of the country. But we begin with apple. And a big call on that stock that is pushing apple shares to session lows, lets get right now to cnbcs josh lipton with more. Josh. Well, brian, thats right. Those apple bulls are getting tougher to find. The reason for the worry, the health of that iphone franchise. Analysts think apple sold 40 million iphones in the june quarter, now, that would mean a drop of about 17 as that Company Struggles with tough comparisons. The question is whether that upcoming iphone 7 can revive growth. Can bgcs Collin Gillis as a skeptic he was just on cnbc talking about why he cut apple to a sell. He does think the upgrade to the iphone 7 could be a disappointment to the street and investors. On the other side of that call though pipers gene monunster thinks the iphone 7 will revive growth. Gene by his count about 65 of apples fans are still using models that are at least two years old. So that is a lot of people waiting for an upgrade. Still investors clearly concerned. Take a look at that chart. That stock now down more than 20 over the past 12 months. Apple is now trading at just about 11 times projected earnings. Thats a big discount we know to the overall market. So is the bad news all priced in we can have a better sense when apple reports tomorrow. Brian, back to you. Josh, before we let you go, apple apparently making a big hire for its hotly rumored car project. What more do we know . Well, brian, you might not know bob mansfield, but you probably know the products he worked on. He worked in cupertino for a long time, joined apple in 99, worked as a stop exec under steve jobs. During his time he led the engineering teams that helped develop a range of products including the ipad, the imac, now an advisor at the Company Since leaving the executive team about three years ago. But now he could be taking on a much bigger challenge according to recent reporting developing that icar. Back to you. Josh, thank you very much. Lets now talk more about that big sell call on shares of apple. Cowen and company does not agree putting out a bullish note on the stock today. Lets bring in the analyst managing director at collin and company. Your response to that cell call. Look, i think that the idea that the upgrade rate for the iphone 7 is going to be the lowest of sort of any model before. Its not new. The install base today is 13 bigger today than it was last year. So even if you had flat units, or, you know, down a bit year over year, the, you know, upgrade rate will be a lot lower than it was last year because the base is just that much bigger. And i also agree with the comment about the installed base. Weve done a lot of work on the installed base. Think about this, if the iphone 7 were flat year over year or even down a bit, you know, year over year versus the iphone 6s, you would have 70 million more phones that are two years older or more this time next year. So either the iphone 7 will sell better than people think, or youre in for a super cycle next year. I think probably both. You know, its interesting because youre not making the most bullish of cases. Youre sort of agreeing with the flat growth. Youre not saying the iphone 7 is going to be a massive hit, and yet, tim, your price target is 28 or 28 more than apples current price. How does it get there . Look, i think that there is so much fear. I talk to investors every single day on this stock. And theres so much fear. Everybody is so worried about iphone 7. I think once you get through iphone 7, and people can take some sigh of relief and even if its down a bit year over year, i mean, look at the number of phones theyre building year over year. It is down. It isnt down much, but it is down a bit. If you look at where the street numbers are set, the street numbers are pretty much already there. So i think all you need to do is get through this sort of launch quarter where people can take a sigh of relief and say that wasnt a total mess. And then you can begin to look forward to what people are increasingly going to agree, i think, that youll have a, you know, super cycle next year for iphone. You have this aging installed base compared against a really cool new phone. The super cycle happens because of a new phone thats going to come next year . We got to wait one more year . Is that the idea . Yeah. I think youre going to get iphone 7 because of the dynamics in the base. I think the iphone 7 will sell a little better ultimately than people think. And also look at the street numbers. To say theyre going to sell 40 million this quarter thats no big deal to guide into that and street sitting at them selling 44 Million Units for the september quarter, thats not a huge number either. So i think the numbers are really set okay right now. Untangle me here. The iphone 7 you expect to come out this fall, and then a subsequent iteration next fall . Is that what youre say sing . Thats right. Normal launch iphone 7 this year. It will look a bit different and radically different phone next year. Thats my question, what is going to be different and compelling, in other words, going to get me off the couch and into an apple store or into a Verizon Store to buy the iphone 7 . I mean, what is the difference here other than maybe some processing speed or whatever . Whats going to be the compelling attribute . Well, i would say first of all you have to think this is the first phone launch where you have this aging install base dynamic. There are a host of people, i still have an iphone s, not that im a prime example, but i do, there are a host of people now sitting there two years or more older. You have this big bubble of people who bought the iphone 6, a lot of those battery phones is now going into decline. These people are really going to be forced into an upgrade pretty soon. The iphone 7 really, i think, that one of the big issues with the iphone 6s is that it didnt look different. So a chinese buyer didnt want to buy it because it didnt look different. The iphone 7 will look a little bit different. So i think there will be no home button. Theyre using force touch. So these things, i think, are going to get at least chinese buyers and even some of the folks here into stores. And, you know, it is this installed base issue i keep talking about. Correct me if im completely off base on this, i see your price target is 125 a share which is up from what is it now 97 or thereabouts. Thats a nice move, a 25 or so move. Am i right in observing that analysts like you with price targets that those price targets on apple seem to have come down . That they used to be 200 a share or 175 and theyve compressed a little . Is that a fair observation or not, quickly, tim . Well, sure, i think it is. But i was never in that camp. I was one of the first guys to basically downgrade the stock back last year. I mean, sure, i think the targets have come down. But look, to believe apple can get to 125 12 months from now, i think youll see it. All right. Tim, thank you very much. We appreciate youre being with us. Lets go to news for the bond market right now and dominic chu is tracking the demand for the latest twoyear notes. First in a series of auctions this week, results from that 26 billion auction of the twoyear treasury notes. The yield 76 basis points, 0. 76 . The big news here though the bidtocover ratio, thats a measure of demand coming in at 2. 52. Thats well below the recent ten auction average of 2. 96 in other words 2. 52 worth of bids every bond at auction well below average. Thats the weakest by the way since december of 2008. Indirect bids people look at this just under 30 , thats a group that includes foreign Central Banks well below the recent average there as well. Same deal for direct bids. Well watch this and of course we have other auction ths week. 34 billion of fiveyears and 28 billion of seven notes up for auction later this week, guys. Got it, dom. T minus three hours until the Democratic National Convention Kicks off in philadelphia. Its already been a dramatic 24 hours for the democrats. Lets get to our own john harwood live in philly. John. Michelle, you know, Debbie Wasserman schultz has resigned as chairwoman of the Democratic Party effective at the end of the convention, but she is still scheduled to gavel the proceedings into order this afternoon at 4 00. And the question is whether this appearance this morning before the florida delegation is going to be a preview of that. Debbie Wasserman Schultz was booed by the delegation in her own state. Democrats do not want that to happen any more than republicans wanted it to happen last week. So some democrats have started openly suggesting that she defer her opportunity to do that and leave the convention. Dont know if shes going to take that advice. For his part Bernie Sanders who was defeated by Hillary Clinton for the nomination indicated that he is going to do his part to bring the party together. Right now what we have got to focus on as democrats is the feeding of perhaps the worst republican candidate i have seen in my lifetime, donald trump would be a disaster for this country. He must be defeated. Weve got to elect secretary clinton. Now, democrats have got a big lineup for the most watched 10 00 to 11 00 p. M. Hour tonight. Michelle obama, the first lady is going to speak. Shes broadly popular within the party. Then elizabeth warren, the pop e louse hero. And then Bernie Sanders will try to rally supporters behind Hillary Clinton. Well see whether he can do that. There are a lot of bernie protesters outside this hall. John, thank you so much. The other big news is Hillary Clinton announcing who her running mate would be. No surprise she chose to introduce him, tim kaine, in florida, since its one of the most pivotal swing states in this election and has voted for the winning president in the past five elections dating back to bill clintons reelection in 1996. Joining us now is a florida delegate. And hes also the miami beach mayor, philip levine, good to have you here, sir. Thank you. Were you at that meeting this morning with Debbie Wasserman schultz the florida delegation . I sure was. Let me tell you something, i know it makes great tv but the fact of the matter is you had a few Bernie Sanders people disgruntled, a few donald trump people, but they were unified, ready to go to elect secretary clinton. So you werent one of the ones yelling shame on you and you rigged the election . Absolutely not. Debbie Wasserman Schultz is wildly popular in south florida. Shes done a great job. And shes unified the party. I mean look whats going on in the Republican Party how ununified that was with that ted cruz thing. Lets talk about gop chairman priebus but, sir, when she takes the stage are you not worried that the number of bernie supporters we know showing up for the full convention that shes not going to be booed even louder . Michelle, tonight youre going to see the beginning of an incredible unification. Corey booker, senator warren, michelle obama, senator sanders, its coming together. By the way, its not nick at night like you saw last week, its in black and white. This is going to be in color. Youre not going to have antonio sobado jr. And chachi. Is somebody going to get slimed if youre making ni nickelodeon references . I was waiting to see the blob last week. Who all screech . Of course. You dont think Debbie Wasserman schultz should step down now . Stick it out for the whole convention . The party will make that decision. But i want to know what you think. Unifying a party together, now is time for change and i think the partys already made that decision. But what youre going to see is moving the country forward, not going backwards that we saw with donald trump. Listen, they want to elect a fake billionaire, they got themselves a fake billionaire as their nominee. And you know on a business channel this guy aint a billionaire. Were showing al franken right now, he used to be on tv too. He never claimed to be a billionaire. Do you have a question . Well, i was going to say, listen, philip, i understand your support, time of unity, i get it, ra, ra, the pompoms, on both sides, but you have leaks that somehhow the party basical conspired we have the russian we dont know that. Oh, yes it is. How do you know . The fbi is already doing an investigation. Many experts the russians who leaked it . Im not saying the Trump Campaign was involved in that. Of course we know that putin wants donald trump as the next president because hes going to dismantle nato. If you were putin wouldnt you want donald trump . I would. Youre not saying but it sounds like youre saying trump and putin conspired to hack into the dnc. No, im saying dismantle nato. God forbid Donald Trumps the next president , europe will not be safe next summer. Is it safe now, sir . Its safe now. Europe is safe now . 37 attacks. Go on a cruise ship. The way to go. Huge number of attacks in the last 37 days. Well, if you look at the actual over the periods of 1945 weve seen a tremendous, tremendous reduction in crime, terrorism. Of course the last spike youve seen in iraq in nigeria, in syria, that is a spike we did see at the end. But the fact of the matter is the facts are the facts. Unemployment over 5 , under 10 before president obama took office. Mr. Mayor, if i could ask you this, listen, the rnc, the establishment lost, donald trump got the head of the ticket. At the dnc, the establishment won. Youve won the battle. Are you convinced Hillary Clinton is the person that can win you the war . If we were looking right now for ceo of the United States of america, we would hire secretary clinton for the job. We wouldnt hire the fraudulent fake billionaire. Thats for sure. Mr. Mayor, were going to leave it there. Thank you so much. Miami beach mayor philip levine. That was spirited. Listen, i wouldnt mind he had it. It was a lot of unity and stuff like that. Were dpoing to talk more by the way about this alleged russian hack later on in the show. It is not proved. The hack is believed to have happened, but the connection from the hack several weeks ago to it being leaked to wikileaks, theres no proof of that. But if Vladimir Putin wants to call in, im sure we could make arrangearrangements. Weve got russian speakers waiting on the line. Crude oil hitting a threemonth low briefly dipping below 43 per barrel. Crude oil at 43. 08 right now. That could be bringing down the whole stock market. All right. Dont bet on this chart staying the same Going Forward. Nerves may be down since the brexit vote, but our next guest says they are ready to make a comeback, but how you can embrace it and invest in it. Straight ahead. They may want the latest products and services, 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. Lets look at where the markets are right now. Dow industrials off about half a percent. Oil moving lower, Energy Stocks moving lower pulling the industrials with it. Nasdaq down about 0. 25 . S p 500 down again about 0. 5 . Roughly the same as the industrials. So the blue chips moving lower faster than nasdaq. Market is up about 3 , however, since the postbrexit vote losses. Despite the move head of strategy for usi shares expects volatility to continue for the rest of the year. Heidi, welcome. Good to have you with us. You think volatility is going to come back, i guess. I do. If we look at the volatility of the First Quarter, it was enormous. If we look at the brexit and the volatility around the brexit as michelle mentioned 37 attacks in europe and the u. S. Election of course coming this fall. I do think were likely to experience more volatility even janet yellen in her four speeches mentioned uncertainty 37 times. I may be one of three investors, lets just sort of hypothesize here. Somebody wants to avoid volatility, get it away from me, i want to invest to do that. Number two, i want to manage it. I want to sort of take advantage of it to the extent i can, but not let it dominate my investment thesis. And then third, to embrace it. Take advantage of it. How do i do each, heidi . Yeah, at blackrock thats the way we dimensionalize risk. We think of volatility for those who cant stomach any market equity volatility we suggest having low correlating assets to the equity market, things like our gourd portfolio or looking at treasurietreasuries. For those that know they will outlive their money if they dont have some equity market exposure, i think having exposure to low volatility or minimum volatility type strategies where they can limit some of that downside volatility makes a lot of sense. Those would be examples examples of that would be . Yeah, so thinking about usmv, which is our u. S. Minimum volatility portfolio. We have a suite of minimum volatility portfolios based on the emerging market index, u. S. Index, the historical msci developed exposure. So you would have low volatility names in that etf. These would be what kinds of stocks, broadly speaking . Actually whats really interesting about our portfolios is theres, you know, many different options in terms of low volatility or minimum volatility portfolios. But the thing i like about the ishares portfolios is theyre very true to their benchmark. So they take the parent index and they have guardrails if you will of plus or minus 5 to the individual sectors of the market. So youre not filled with a portfolio thats just loaded with low volatility stocks, which would arguably be very expensive these days with things like utilities and consumer staples. Our portfolio has the broad exposure to the ten market sectors, but with plus or minus 5 guardrail. So its looking to invest in those low beta, low standard deviation type of names and overweight those and underweight the high beta. Very quickly, if i want to ride this pony, whats the way to do that . Emerging marketing. If we think about whats been oversold the last few years, its emerging markets. I would say for long term investors to go in and buy some of these low market valuation stocks. Looks like a lovely place out there in seattle. Im coming out there in a month. It is beautiful. Thank you very much. Heidi richardson with usi shares. It is the most abundant Natural Resource on earth but hard to get to, it is vital to electric cars, and it has been called the new gasoline. What it is and why it may be the new gold rush coming up. Ppening this is my new alert system for whenever anything happens in the market. But thinkorswim already lets you create custom alerts for all the things that are important to you. I guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. Man youre beautiful [click] im coming back to you [click] welcome back now. Let get to some of the days other big headlines. Shares of santander consumer, shares down about 10 right now after postponing quarterly release over possible accounting issuing. Janney analyst writing today a possible accounting restatement also cannot be ruled out. Sprint shares going the opposite way today. They are soaring after the Company Reported better than expected First Quarter revenue. Big discounts helping sprint attract more subscribers. That stock now up nearly 60 this year. And as we noted, Oil Prices Falling again. Crude oil down about a buck to 43 and change. Nearly 100 drilling rigs have been added since may sparking new fears about oversupply. By the way, nearly every oil stock is down today. Oil struggling as we noted, but how is gold doing . Any better . You got to stick around to find out. For decades, investors have 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. When a moment turns romantic 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. Hi everybody. Im sue herera. Heres your cnbc news update for this hour. Investigators continue to comb the scene at a florida nightclub where at least two teenagers died and more than a dozen were injured. They say they are working to determine a motive, but they emphasize the incident was not an act of terrorism. At least 164 people have been killed, 125 are missing across china as a result of heavy rains over the past week. The downpours have hit vast areas of northern and Central China displacing thousands and destroying homes in at least ten provinces. The nfl says there is no credible evidence that quarterback Peyton Manning used hgh or any other banned substances. This comes after a sevenmonth investigation into claims made in an al jazeera documentary. A kentucky bridge came crashing down this morning. Crews imploded a big part of the ferry bridge built in 1932. It closed earlier this year when a new bridge crossing the Tennessee River opened. Whoa. That is the news update at this hour. Ill send it back to you, michelle. That was cool video. Yeah, it is. Final gold trades crossing, sue. Show you whats going on. Gold is about 2. 30 1319 is where it stands. Metals complex mixed at this hour and generally flat. Palladium slightly higher but platinum, copper and silver are lower or flat. Brian, back to you. All right, michelle. Now back to the big deal of the day, verizon buying yahoo for 4. 8 billion. Heres what yahoo Ceo Marissa Mayer had to say earlier on squawk on the street. Today is an important step for shareholders in terms of finally taking the step of separating our alibaba stake and what yahoo japan stake from the operating business is an important step to unlock value for shareholders. We also heard from marny waldin, verizons executive vice president. Yahoo gives us scale, and thats whats most critical here. We go from being in the millions of audience to the billions. And we want to compete. And thats the place that we need to be. So very pleased with where we are today. Now, lets bring in our own Julia Boorstin with more on the deal and what it means for the ad wars. Julia. Well, brian, this deals all about ad technology. Tools for marketers to determine what types of ads to buy, what kind of message to create and to automatically distribute and target those ads with tools to measure their impact. Verizon with its aol acquisition and yahoo own complimentary tools and they both bring scale in users and data about those users. Which enables more accurate targeting of a broader audience. Now, in terms of scale, yahoos web Services Still draw about 1 billion monthly users while verizon the leading mobile carrier here in the u. S. Has 140 million wireless subscribers. Verizons hoping to combine data from smartphones with aol and yahoos ad systems to improve targeting. So what are these combined assets . With digital video arguably the most valuable and Fastest Growing part of the ad business, this deal brings together two leading video ad networks, aols adapt tv and yahoos bright roll. Focus on analytics, search and ads. Aol one is a premium selfserve ad software to help target consumers across all advertising formats. Now, though these new assets allow verizon with its acquisition of yahoo to leapfrog microsoft in terms of digital ad market share, still its going to be a distant third to google and facebook with just 5 market share according to e marketer, which is just a fraction of googles 39 and facebooks 15 . Now, its not all just ad tech. Verizon has been investing in its go 90 app to create a mobile video platform. And it has a long way to go to rival youtube and facebook. Drive traffic from yahoos users to help create more available ad inventory there as well. Brian. Julia, thank you. Now lets bring in jessicales s lesson, cnbc contributor, ad words, online video, digital marketing. I understand the attention is on yahoo, but what does this tell you about what verizon is trying to become . Well, as julia said, becoming a player in digital advertising. But today it has a lot of companies in scale, but i dont think thats enough to win, to beat google, to beat facebook and to grow market share. Its not enough to have eyeballs, yahoo had has those for years. So verizon will have to show it can keep the audience going to yahoo so it has a chance to show them ads. So there are a lot of big ifs ahead in realizing the grand vision they outlined this morning. So twopronged thing, jessica, the thing most people can easily understand which is the more eyeballs you can get there, if you can increase them, those are more people worth advertising to, so to speak. But then it sounds like when you listen to julias story about the technology and knowhow to make it easier to actually get to those people and target the individuals that you want, right . Is this about competing on various Ad Software Platforms with google . Absolutely. And with facebook and with snapchat, whos coming up. And everything else. You know, eyeballs are great, but its not enough to have a booming advertising business. A lot of places will sell you eyeballs. A lot of publishers have them as well. Its really about whats going to make that ad perform. Its about new ad formats. Its about having so, jessica, im going to interrupt you. I run a business and i go see the facebook people, google people, yahoo people, presumably the yahoo aol people, theyre each going to give me an interface where i go to and what do i do, thats how i decide which platform im going to use and spend my ad dollars on . So youre going to say if i gave you a dollar how much are you going to make me . What ads can you show to get me customers to turn my dollar into 5, 10 and beyond, right . Its all about roi for advertisers. Youre going to go to the platforms that are making you money, not just the platforms that have eyeballs. You know, i wonder, i can see how an advertiser would like the idea of having a muscular alternative to google and to facebook. But is that enough . So Tim Armstrong is believed deeply in providing a mus lar alternative for a long time and ironically helped build google the juggernaut that it is. He knows the game well. The game is changing. Its changing fast. The formats are changing. So verizons got to be looking way ahead and aspects of this deal look backwards to me. I would think because so much is moving to mobile that there was some synergy, there was some knowhow that verizon would bring to the table. Is that not the case . So traditionally the telecoms have not innovated in mobile advertising. So its not enough to have the customers. Its about your relationship to them and what youre showing them. And verizons trying. I mean, go 90, the video service, its an attempt to have a product that drives eyeballs and engagement through their mobile customer base. But its still early days, but you can be on verizon and watch youtube just fine. Thats what a lot of people do. Where does Marissa Mayer go . So shes sticking around in the short term. I personally believe she well and should start a company. I think she has a huge loyalty among Silicon Valley engineers and product managers who have enjoyed working with her. Shes polarizing but a lot of people love working for her. I think shes still got it in her but will take some time as she said she wants to see this through. Jessica, a pleasure. Thank you. Wikileaks releasing more than 19,000 hacked emails from the dnc. Already know that there have been investigation of suspected Russian Hackers into the dnc several weeks ago. Now there are reports that maybe the two are connected. Lets bring in bill browder, long involvement in russia, cant go there anymore. Bill, good to have you here. We were hoping you could help us understand a little bit about putin think. People in the dnc would have us believe that putin was somehow involved in the hack in the dnc, led to the leaks that are now appearing on wikileaks because Vladimir Putin wants donald trump to win the election. Does any of that make sense to you . I dont have any details on the specific allegations of hacking in this case, but what i can tell you is that its very plausible because this is the kind of thing that putin does. They have something in russia called active measures, this is something that the russian government through their foreign spy agencies do in order to try to influence the outcome of different political processes. And so for example the russian government has provided money to the far right french politician marie la penn. They also do hackings and various other things. In this particular case we know that donald trump has openly said that he would be perfectly happy to let the baltics hang out to dry if they were invaded by russia and not defend them through nato. If they hadnt paid their bills. Lets add that. He didnt go quite that far, yeah. Okay. Fair enough. But if one of these things where it puts into doubt whether or not what they call article 5 of nato, which means that we all sort of all for one and one for all if somebody gets invaded. And thats putins like most glorious fantasy is that the americans wouldnt step in to do something there. Thats what hes been hoping for and praying for. And the fact that youve got an american president ial candidate saying that at the same time youve got this allegations of leaks and then the leaks coming out the day can i push back against that one idea, bill. Let me ask you this. I think Vladimir Putin, Hillary Clinton is the devil, you know, and to me from his part would seem easily manipulatable. He knows exactly what her game is. Because hes seen it played for a very long time. Whereas donald trump is incredibly unpredictable. Im not sure that and the other thing i would ask is i wonder if donald trump doesnt force some of these western European Countries to actually spend more on their defense. If this is true that putin wants this, maybe it backfires on him. Well, anything that happened with donald trump, hes flipflopped on lots of different issues. But recently i read an article that said because banks stopped lending to him that hes actually getting a lot of money in the Trump Commercial organization from russians russian interests and kazakhstan interests. Who knows where in guys agendas are coming from. He flipflops around. I agree with you that for putin to place on donald trump is probably a pretty crazy thing because wlo knows where hell be. But the one thing i can say right now as we speak theyve made it very clear at all Different Levels of the russian government that they would prefer to have donald trump be the president of the United States because at least early indications of his position on nato, on the eu and other things. Its not implausible what the dnc is saying. And its not out of their own practices with what theyre doing because this is how they operate. This is how they roll. Quickly, bill, hey, its brian. Is there anybody else in the russian government besides putin . All we ever talk about is putin. Who else is there that could be manipulating this . Well, so what putin first of all, putin its a oneman show over there because if theres anyone else who becomes too powerful, putin eliminates him because he doesnt want a coup to happen. And thats how guys like putin operate. Having said that, once putin sets a directive, hes got 50 guys around him to implement that. And they dont play by the same rules that we play by. They cheat on everything. They cheat in sports. They cheat in politics. Everywhere. Thats another story we could have asked you about was the olympics as well. The swimmers, they got banned. Bill, thanks so much for calling in. We got to get out to the dnc because theres apparently stuff going on right now. Eamon javers on the floor outside actually. Bernie sanders rally going on, right . Hey, can you hear me now, guys . So we are on broad street south of city hall in downtown philadelphia. Weve got a pretty sizable Bernie Sanders protest here. I want to show you a little bit of the scenes here. Weve got some socialist party folks who brought out the red flags. And you may not be able to see this, but this is a 50foot tall inflatable marijuana joint. And on the side of it it says berned, berned, by the dnc. These supporters are very unhappy with Hillary Clintons victory. They feel the primary was stolen from them. Theyre marching the street now with many other groups. You have pro legalization of marijuana groups, antipolice out here, socialist party groups, beginning some speeches as well right now. If you can get a shot of this giant marijuana joint here, you get a sense of the mood of this crowd. They are both happy and also pretty angry here today at the Democratic Party, guys. Im going to toss it back to you because it is pretty loud in this crowd. This protest by the way is bigger than anything already we saw last week in cleveland at the republican National Convention, guys. Eamon, long before this event happened with Debbie Wasserman schultz, one of the demands of the organizers was that she had to go. Are they not satisfied that shes going to be gone after this . No, you can sense a lot of antiDebbie Wasserman schultz animus in this group. They do not like Hillary Clinton. One of the signs says bernie or bust. So that gives you a feel for the mood in this crowd. They do not like Hillary Clinton. And theyre chanting we are not the 99 . A lot of antiwall street signs here. Thats one of the things thats been tough for Hillary Clinton to bridge the gap with this particular group is that these guys are not in favor of wall street economics. Obviously there are a lot of wall street folks here in support of Hillary Clinton. Thats a sore point. May not be bridgeable here for the Democratic National committee. Thank you, eamon javers. Point out they are i know philly pretty well and they are downtown. They are nowhere near where the dnc is. People familiar with philadelphia the dnc is on the outskirts on the south side of town near the airport. So that protest is probably five or ten miles away. They keep them far away. Also a massive fence apparently. Late thursday night eamon and i had a conversation after the whole rnc ended and we were like, wow, the list of protests were so long for the rnc and dnc and turned out to be nothing and wondered i wonder if the democratic one is going to have stronger protesters than anybody expected and its already looking like that on day one. Absolutely. Lets check on the bonds market on the back of that twoyear note that did not go well. The line from Peter Boockvar was, wow, that was just awful. The twoyear yield right now is 0. 74 . The 10year yield at 1. 57 and 30year yield stands at 2. 82 . Thats where we see buying just in the 30year. All right. Hillary clintons economic plan is in the spotlight this week at the dnc in philly. One of the big ideas taxing High Frequency trading. Good idea or bad idea . Were going to debate it. Im in vests and as a vested investor in vests, i invest with e trade, where investors can investigate and invest in vests. Or not in vests. Sign up at etrade. Com and get up to six hundred dollars. Welcome back to power lunch. Breaking news related to the Democratic National convention. Nbcs Kelly Odonnell reporting Debbie Wasserman schultz has released a statement saying she will remove herself from the convention to start the dnc on a high note. So theres all these controversials controversy about emails that revealed perhaps the leadership of the dnc was not even handed in treatment of both Hillary Clinton and Bernie Sanders. She said she would step down at the end of the convention but still open and close it and speak to the people there attending. But thus far now Kelly Odonnell says thats not going to happen. Wasserman schultz says shes going to remove herself from the convention in order to get the dnc started on a high note. A lot more about this coming up on power lunch. Plus, is it time to tax High Frequency trading . Debate right after this. People talk about deals on their auto insurance. 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Bob pisani breaks down the proposals being raised and takes a closer look at the experience that other countries that have had once theyve instituted a financial tax. Bob. Hello, tyler. A financial tax is typically on the trading of stocks and bonds. The democrats have floated several proposals this year. First, Hillary Clinton supports a tax on High Frequency traders that would tax them for excessive canceled orders. Thats just the beginning. Last year Bernie Sanders introduced a bill that would tax all bond and stock trades, all of them. Under his proposal taxed at a rate of 5 for every 1,000 in stock that trades. Thats quite a heavy tax. He wants to use the proceeds to make public colleges and universities tuition free. And last wednesday representative Peter Defazio also introduced a bill tax stocks, bonds and derivative transactions. Theres three big objections, first, its been tried in other countries and hasnt worked as hoped. Sweden had a Financial Transactions tax from 1984 to 1991, but it was repealed because so much trading moved offshore. Germany abolished its financial transaction tax for similar reason. Second, wont raise as much as everybody thinks. Italy raised only 20 of what they thought they would raise since stu since instituting a tax. Switch to other platforms that werent taxed and finally may reduce trading and liquidity. Many studies note this effect but recently a group of professors at the university of amherst report training could drop 50 if proposals by sanders were adopted. More on these taxes on my blog tradertalk. Cnbc. Com. Going to hear a lot about this week. Lets talk more about this. Should there be a financial transaction tax . Financial transaction tax is a bad idea. Andy green says a tax could be beneficial. Joe, why is this a bad idea . Well, i think bob laid it out appropriately. Theres different types of proposals right now. The Bernie Sanders and defazio tax is a broad base tax that will hit every trade out there, thats not the point of what theyre trying to do. Apparently, with Hillary Clinton what shes trying to do is eliminate High Frequency trading. Would that work . Weve actually been in favor of a cancellation tax. We think a usage fee, a fee rather than tax would hit those users of the system who use it the most who cause regulators to go out there and basically upgrade their systems and obviously, you know, they have to put something called consolidated all these new systems to monitor the High Frequency traders. So we think putting the burden on them more makes sense, but a broad based tax really is not something by the way there already is a tax on the financial system, its a section 31 fee. The s. E. C. Every time you sell a stock you pay a section 31 fee. So everyone is paying a tax which goes to fund the s. E. C. s budget. Andy, maybe thats part of your case which if theres already a tax, does it hurt . Well, frankly the system as it works right now tis taxes investors. Its costing investors Pension Funds that are helping firefighters save retirement. Its costing them money. Its increasing market volatility. Its causing flash crashes like we saw on august 24th and other instances. And quite frankly putting a modest tax or fee on order cancellations would do a lot to change the economics of High Frequency trading, restore stability and make our markets work better for investors. Just for people who dont understand, when you say a cancellation tax, these are traders who have put in orders and then cancel them because why . Why do they cancel . And they cancel a lot of them. They do it to get a sense of where the pricing is . If youre asking me, i mean, the cancellations are certainly related to a fair amount of the opacity going on right now in the markets. There are rebates that are available to certain investors that provide liquidity or perceive to provide liquidity to exchanges. But i understand the reasons youve put out a false trade or test a trade out, try to attract order flow your way, you see where the tradings going then you cancel before youre caught in the deal. You show the fly. Thats what you do, showing the fly and try to get the fish up. Hanging and sniffing. By the way, if you get rid of 50 of the volume, that doesnt necessarily mean you lose liquidity. Theres a big difference between volume and liquidity. I agree, andy said most of it, however, heres the problem, to progress through the system, can you actually get something done . Were seeing some political issues already. In fact, Hillary Clinton has a donor who actually owned a High Frequency trading firm last year, she held a reception at his house. Okay. Im sure that wont influence her. Im sure that wont have anything to do with policies. In addition theres exemptions. So even if we put something through heres what were afraid of exempt certain guys and dl diluted to the effect only joe average trader gets taxed. Doesnt make sense. Guys, thanks. Blaze north of los angeles is still raging out of control. The latest next on power lunch on the california wildfire. Its me, arty come see what i collected from the creative galaxy in my idea box. Would you help me make art . Each one of our journeys keeps us young hey, i have an idea well never get older. Arty go be amazing amazing announcer give your Cardboard Box another life. 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 saving 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 liberty stands with you™. Liberty mutual insurance. Two hours to go until the Democratic National convention is officially called to order. But by who . Debbie Wasserman Schultz in the last 20 minutes weve learned she is not going to open the Convention Amid all the controversy about her emails and that she favored Hillary Clinton instead of Bernie Sanders. In the meantime, its very hot outside already in terms of protesters. Having new round of Bernie Sanders protests underway, eamon javers is live in philadelphia outside where the convention is going to be. Hey, michelle. These Bernie Sanders protesters here are marching south down broad street. Theyre going from city hall in philadelphia all the way down to the Wells Fargo Center, which is a trip of a couple of miles. Weve got several hundred people out here protesting. The chant now is, hell no, dnc, we wont vote for hillary. They also said Bernie Sanders has our back, we dont need a super pac. The Debbie Wasserman schultz news may not have yet reached this crowd but they are fired up for Bernie Sanders here. You can see they have socialist party red flags. Theyve got dnc leaks, shame, veterans for bernie. Dont let the media choose our president. And many, many bernie for president signs out here. So this group very loyal to Bernie Sanders. The pressure on Bernie Sanders now will be what does he do with this Popular Support he has among Democratic Party voters . Will he be able to translate this group to Hillary Clintons side in november . It looks like thats going to be a pretty big turn going into the general election, guys. Back over to you. Eamon, these protesters are very targeted relative to what we saw in cleveland, right . In cleveland you had groups that came out regardless, they werent necessarily antitrump or protrump. We couldnt figure out what they were. They were the flag burners there to burn the flag simply because they could. But this is much more focused about whats happening inside the convention center. I would say thats right, michelle. This is much more focused and proBernie Sanders, antiHillary Clinton is the vibe you get here. There are a bunch of different groups here. You have socialist party, one group told us they were communists. Bunch of people out here for the legalization of marijuana. A lot of groups the same way we saw in cleveland last week at the rnc. And this group much bigger, much more fired up. And the police are letting them march. This is peaceful, guys. This is a very peaceful protest out here. The police have blocked off now both lanes of broad street, north and south. And weve got bike Police Setting up here on the side. But they are letting this protest, which was previously scheduled, go all the way down broad street, which is as you know the main drag here in my hometown of philadelphia. It looks like a very, eamon, a very mixed group. Gentleman behind you with a sign globalism will not win. Hes looking homeward. Weve heard that from sanders protect american jobs, which by the way is also kind of the trump platform. But if you look to the viewers left, theres a protester just off camera now got a picture of i believe clinton and trump in the same picture with sort of the x through it. Right over here. So you have folks says fight for political revolution. So youve got folks sort of aligning with trump in some way, not him the candidate but his views. Yeah. Look, now the chant is black lives matter, so youve got a lot of different causes here. One sign here with protesters with a picture like the uk flag with a picture of Hillary Clinton and it said indict the queen. So hillary not very popular in this group. Queen as in everybody talks about the dnc being the coronation of Hillary Clinton. All right, eamon, stay safe. Protesting the queen, that is really beyond the pail there, my god. Much more on the dnc this hour, but lets turn to a scary situation outside los angeles. A Massive Wildfire still raging out of control. More than a dozen homes destroyed, thousands forced to leave their homes and remains hot in the mid to high 80s. Jay jane wells live for us. Another hot day of temperatures, winds on the fire line. Show you live picture the sand fire in northern l. A. County is now burning in three different directions, 33,000 acres destroyed, 10 containment. The damage, 18 houses gone. One home damaged. A dead body found in a car, not clear if thats related to the fire. 10,000 homes evacuated. Officials say there is, quote, nothing normal about this fire. And heres how it sounds from the ground. Now, this fire is being fought by nearly 3,000 firefighters, 21 helicopters, 43 hand crews, 356 engines. It is a massive effort interrupted twice when drones flew into the air space of firefighters. Another issue here. Some evacuation orders were lifted and then reinstated when the winds shifted. And efforts to save structures have been delayed at times as fire crews find people on site. They were surprised to see citizen there is. The citizens were there trying to evacuate, trying to get animals out at the same time theyre trying to go in to protect homes. They were saddened by losing structures and part of their frustration was they felt they lost additional structures because they had to stop what they were doing to help citizens evacuate. Its averaged about 10,000 acres a day. An acre is a football field. So imagine that 10,000 football fields a day. Heres how it looks where we are 15 miles to the south at universal studios, thats a live picture from our vantage point. The entire San Fernando Valley is covered in ash. The weather may start to improve tonight. Were not even in peak fire season yet, guys. And one proof of that which the super scooper which the county rents from canada will not be ready until at least next week at the earliest. Back to you. Jane wells, thank you very much. California not the only state suffering through soaring temperatures, heat wave spreading across much of the nation that could have a big impact on the utility sector as they struggle to make sure you have the airconditioning you want and need. More about that side of the story, david burks, travis star. David, first to you, its a tough situation. People cranking the ac all over the country. Does it directly benefit the utility . Or because theyre regulated does it not make much of a fference from a financial perspective . Sure. On a shortterm basis it can impact earnings. You might get a little boost here or there, but we think its important to realize that over the longer haul weather tends to balance out. Sure, we can have an unusually hot summer, but that can be offset by an unusually mild winter and vice versa. In fact, travis, when you look at some of the names i know you like they tend to be in the southeast where it gets hot and humid pretty much all the time except about three or four months a year, duke and dominion, why are they at the top of your list . We like them right now. The whole sector is overheated, no pun intended there. But you have the hot weather, the overheated valuations, duke and dominion very high quality names right now. We like the investments theyre making. We like the regions where they operate. And the cap x numbers theyre putting up, dominions, were seeing a lot of Growth Potential there. Look at dominion at 3. 5 yield, duke at 4 yield, really good long term income type names even in a sector thats way overheated. Yeah. David, get into that a bit here because nobody doubts the utilities are just sort of cranking along. But when i look at aep, American Electric power, a name you like, and i see nearly 19 forward pricetoearnings ratio because cap growth because of the regulatory nature of their business, i wonder as travis said a bit overheated . Thats right. You can say that regarding essentially the entire industry. Consider this yeartodate the utilities are up 20 versus just a gain of 6 for the s p 500. And this is truly been a golden era for utility stocks. Consider this since june 30th, 2011, through june 30th this year, the total return on the dow jones utility average, by contrast the Dow Jones Industrial average has been 6 , serious outperformance. Travis, best performance is who . Id say dominion. We have a Gold Standard rating on it for morningstar. You get valuation depressed relative to the group, high quality name like the earnings and growth story there. Wide motes also a positive for castles under siege. Travis and david, thank you both very much. We appreciate it, guys. Thank you. Want to take you live to Wells Fargo Center in philadelphia where the Democratic National convention is set to get underway because Bernie Sanders is doing his walkthrough. This is a prepare for his speech later on tonight. Hes one of the big headliners. Vermont senator, but of course tried to be president of the United States and tried to get to the top of the democratic ticket. Have we got on shot on him . Have we seen him . I know were looking for him. He was out there. He has white hair. Thank you very much. Yes. I want to look at him see if hes looking victorious on the ouster of Debbie Wasserman schultz from the lead of the convention. This looks more like a camera through than a walk through. Yes, i havent seen him there. All right. Do we think hes in there, guys . Do you want to keep this up . We can come back to it . Theres lester holt right under the a in there you go, his back to us now. Lester, if you hear us, turn around and wave. He doesnt hear us. So the big question is in a couple of hours theyre going to gavel this thing open. Whos going to gavel open . Could be donna brazile. She was the one supposed to take over for Wasserman Schultz at the end. Long time clinton thats a good point. Are they going to have another very proclinton do this at this point . Is she the vice chair or the acting going to be the acting chair. Official title. After miss schultz steps down. But considering how Debbie Wasserman schultz has had to step down because of these leaks of their emails that reveal she favored Hillary Clinton or that the committee worked towards helping Hillary Clinton rather than Bernie Sanders. I think democrats and hillary ought not to use email. Just stay away from email. They got a problem with it. Send snaps. Send snaps. Go on instagram. Do something. That stays. Heres what else is on the menu this hour of power lunch . Stock hitting highs even with a bit of a decline. Has the market become too expensive to buy . Goldman sachs calling it the new gasoline, automakers calling it the key to the electric car revolution. Well have the race to fuel the future. And call it the pokemon ripple effect. The augmented reality game, get this, really did help retail sales. Courtney reagan will bring us that story. Power lunch back in two minutes. In a world held back by compromise, businesses need the agility to do one thing another. Only at t has the network, people, and partners to help companies be. Local global. Open secure. Because no one knows like at t. Keeping the power lines clear,my job to protect public safety, while also protecting the environment. The Natural World is a beautiful thing, the work that we do helps us protect it. Public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. We want to keep the power on for our customers. We want to keep our community safe. This is our community, this is where we live. We need to make sure that we have a beautiful place for our children to live. Together, were building a better california. Welcome back to power lunch. Check out shares of buffalo wild wings. Theyre on the move to the upside coming off their session highs so far this after a hedge fund run by nick ma guire diz closed a stake in the restaurant chain. They believe shares are undervalued. Theyve already had some discussions with management. They could anticipate further ones and could include a review for options including shareholder value through various strategic services. Dom, thank you very much. Stocks under pressure as we head into a fed meeting later this week. Despite all the uncertainty that is out there, the dow and s p 500 sit near record highs. So have stocks become too expensive . Or do they still have value . Mike santoli takes a deeper dive now from the nyse. Hey, tyler. You know there are many ways to slice and dice the market to tell whatever story you want about valuations. Some saying its kind of bubbly, others its a bargain. Stocks are relative to things like bonds. Lets look at numbers we actually crossed above on the s p 500 25 times on the most traditional measure of valuation which is gap official earnings in the past year. On a forward basis more like 17. 6 times earnings. Come back high single digit rate over the next four quarters. Whats interesting in this scenario right here in this particular phase is that those yield sectors, those dividend plays which are basically utilities, telecom, theyre 20 times earnings. Theyre at a huge premium the overall mashlgt. If you take those out and energy out, the rest of the market is a much more reasonable 16. So interestingly while low Interest Rates dont really justify a higher multiple over the long term, it certainly enables it and it certainly explains right now why certain segments of the market seem to be stretched in terms of valuation, tyler. Thank you very much, mike santoli from the nyse. So with markets near a record high, highs, are stocks overvalued or undervalued right now or just right . Joining us quincy crosby, Market Strategist at prudential and michael, president and Portfolio Manager at permanent portfolio funds. Michael, what are you on this question . And does it matter whether stocks are overpriced or underpriced in the shortterm . Because the alternatives are so few and far between. Well, valuation always matters, tyler. So i think its something you always Pay Attention to. But i think mikes analysis is correct. There is value in the stock market depending on where you look. I think there always is. Certainly the more defensive names, the yield alternative names, the utilities, those sorts of lower growth but higher yielding types of stocks have been involved and the valuations reflect that. I think for us were finding value or looking for value in areas that are beaten down that havent kept up with the market that are more volatile levered to earnings and operating growth in the long term, probably more volatile higher beta stocks. I think longer term thats where the value is Going Forward. Well come back to some of your picks we just showed on the screen in just a minute. I want to bring in quincey if i might, where are you on the question of whether the market is valued appropriately or not . I ask the first question to michael a little facetiously, but i think you know where im coming from. Yeah. Prices can be high. They can stay high. And maybe particularly in a world where the alternatives are so spare. Well, absolutely. And, you know, when you attribute to the move in utilities and telecom that investors were being defensive and worried, i think that is not even in the playbook anymore. It is they need yield, they need yield now and theyre going to go wherever they can get it. Its interesting, by the way, that you saw utilities, telecom do well, but you also saw emerging market bonds, emerging markets do well. If youre that worried about markets, you arent going to go in that direction either. Youre searching for yield. So one of the things weve liked and weve been watching it for a while now are the small and mid caps. They were beaten up something awful. And as long as you believe that the economy will grow, albeit slowly, but as long as we have solid growth, they should start getting continue to get a bid, theyve pulled back a bit, but were going to see m a activity in the small and mid cap space. If youre worried about the yield not even moving higher, we believe financials within a small mid cap will probably be under the microscope for m a activity similarly with tech and health care. And thats an area too where you dont have to worry about the dollar that much. To think, you know, this is whats so ironic about this is to think that small and mid cap would be a safe haven, but safe haven is anywhere where you can get some value that you couldnt yesterday. All righty. Let me turn back to michael and tell me how your three picks, facebook, First Republic and newfield fit into that thesis of yours you might be going for some high beta names, names that havent participated heretofore. Obviously big tech not a big performer, we think the Growth Prospects are tremendous. With respect to First Republic, its a Regional Bank sfits in the smaller medium space maybe quincy was talking about. Maybe a little early with where respect to fed is with Interest Rates, but we think the clients of First Republic, the businesses theyre in we think its a great long term holding, small mid size producer in the u. S. , again, energy while its come back a long way so far this year, still has a long, long way to go. We think the worlds going to need fossil fuels for a long time. Its a strong balance sheet. Its in the right area as domestic production. So we think, again, its not necessarily cheap, but for long term Growth Prospects we think its a long term winner. Michael, as always. Great to see you. And quincy, thank you as well. Go to powerlunch. Cnbc. Com right now to see how quincy and michael are playing the fed this week. So clinton or trump, who the wealthy want . Its not as clear cut as you might think. Power is back in two. speaking japanese oh watson, your japanese is very good. Thank you. speaking japanese exactly. I can understand nuance, context and idiom in seven languages to help companies all over the world with everything from retail solutions, to banking, to cyber security. speaking japanese announcer dont let salmonella get funky with your chicken. On average, one in 6 americans will get a foodborne illness this year. So, learn the right temperature to cook each type of meat. Keep your family safe at foodsafety. Gov. Freshly made in the tokyojapanese tradition, each batch is small. Special. Unique. Every bowl blurring the line between food. And art. When you cook with incredible ingredients. You make incredible meals. Fresh ingredients. Stepbysteprecipes. Delivered to your door, for less than 9 a meal. Get 30 off your first delivery blueapron. Com cook. As you seen and heard over the past year today some of the protests in philadelphia many of the Democratic Party saying they represent the 99 . But in the clinton versus trump battle, many of the 1 will be in philadelphia. And not just hanging out. Robert frank more with that story. Yeah, the reason this matters is because the 1 are going to represent a lot of the investors in the stock market. So millionaire investors say this election is the most important in recent history. And many have their finger on the sell button depending on the results. Three quarters of millionaire investors say the election is, quote, a game changer and nervous about the outcome. Thats according to a ubs survey of investors worth a Million Dollars or more in investable assets. Millionaire anxiety could lead to large stock sales, 47 of nv investors plan to reduce market exposure as a result of this election and 9 have already sold. But their investment plans and their fears depend largely on their politics. Millionaires are sharply divided along party lines with roughly a third, a third, a third democrat, republican and independent, 61 said if their preferred candidate wins, it will be good for the market, and twothirds said if the opposing candidate wins, its bad for the economy. Now, millionaires say the country is on the wrong track, but they are also sharply divided on the solutions. Republicans say the millionaires answer is tax cuts, a balanced budget and strict immigration enforcement. Democrats say its higher taxes on the rich, higher minimum wage and clean energy. So what we hear about is that the market will either sell or go up on this election. There is no market, but there are republicans will sell if hillarys elected and democrats will sell if trumps elected. So we could get a very mixed Market Reaction because politics will decide are these the same people that vowed to move to canada but yet remain here in the states . Im going to sell and then, oh, maybe i wont. Theres a lot of people say stuff, right . Right. Well, we just dont know. We just dont know. But i do think its going to be a little bit more of a mixed picture as opposed to, well, trump will equal a market selloff or hillary will be a market selloff because theyre going to be a mixed population of investors. People say my guy wins, my person wins, i think its good. My person loses, im out of here. Yeah. Theres some talk on wall street that both would be, you know, reflationary. Both want to spend. He said on our air, i like janet yellen, she likes low Interest Rates. Hes in real estate, of course he likes low Interest Rates. Yeah. You could see both have very similar policies. Both have supported infrastructure, thats why you get some pretty smart folks who say invest in things like bonds that support infrastructure because both candidates have said thats something we can agree on. I think everybody can agree, potholes are bad. Potholes are bad. Bridges that are decrepe id no matter and our potholes arent much better. Have you been to the philly airport . Not to the philly airport. Yeah. Philly may be the one airport that makes newark look luxurious. Thats saying something. Thanks, robert. Thank you, robert. It is an under the radar name that caught the eye of analysts. The stock has already soared more than 50 so far this year. So why are some still bullish on this name . Well give you that and this name. Plus, oil sinking to threemonth lows, the price is getting ready to close. Well have final trades coming up. Hi everybody. Im sue herera. Heres your cnbc news update at this hour. The epa announcing that jet engine exhaust is adding to Climate Change and endangering human health. And it needs to be regulated. It said it will use its authority under the Clean Air Act to impose limits on Aircraft Emissions nchs an ingredient found in grapefruit has shown early promise in repelling the mosquitos that transmit zika and other viruses. The National Institutes of allergy and Infectious Disease says its going to sponsor some studies of that particular ingredient. More children have been treated for marijuana poisoning in colorado since the state legalized the drug for recreational use. Childrens hospitals report double the number of marijuanarelated visits after 2014 and regional Poison Centers had five times more pediatric cases. And what are the odds . The winner of the annual earnest hemmingway look alike contest is named hemingway. No relation. He won the contest in key west on his seventh try. He says he shares several traits with the famous author. I like to fish. I like to drink a little bit. I like women. And i just like having a good, fun time. There you have it. Thats the news update this hour. Ill send it back to you, ty. I think the guy to his right looked more like hemingway than he did. What are the odds . That gives you a little edge. Does he have a boat named palar . That i dont know. Sue, thank you very much. Sure. Oil markets closing for the day. Jackie deangelis covers it all for us at the nymex. Good afternoon, tyler. We hit a threemonth low in oil prices today. 42. 97 was the session low but looks like were going to close just over 43 a barrel. Now, a relatively stronger dollar is part of the problem here pressuring crude and also getting that number on friday about rig counts, four straight weeks rig counts went up. The fear here is that we have got a supply glut on our hands and producers are going to be pumping more oil. Meantime seasonally this is what starts to happen people see demand drop off this time of year and crude prices do go down. But buyer be ware here because we may see some come in and buy the dip, thats the technical trade pattern weve seen. Back to you. Thank you, jackie. In the past hour dnc chairperson Debbie Wasserman schultz will not be at the gavel in philadelphia this week. Also making the rounds Hedge Fund Managers and top democratic donors of Avenue Capital and boston providents orin cramkra kramer. No. Partly because they dont love Donald Trumps message on trade, they dont love his message on immigration and theyre afraid of alienating their own workers with some of the trump rhetoric. Not the case in philadelphia. Tons of wall street people, goldman, jp, little bit of hedge funds, a problem for Hillary Clinton when you have Bernie Sanders people coming after her for being too close to wall street. So many ways to go with this. Not so great for her all these bankers show up, number one. Have you seen eamon javers live shots from the protests . The protests are way more intense. And a lot of them are fueled by the occupy wall street crowd. Right. This is a big problem for her. Youve seen it today with the resignation of Debbie Wasserman schultz which resulted from all of these dnc emails about Bernie Sanders and not giving him a fair shot in the primaries. There are a lot of angry progressive democrats who still are not completely on board with Hillary Clinton, still want Bernie Sanders. They didnt love the tim kaine pick for v. P. , so having a bunch of wall street people there, helpful on the money front. Come on, weve talked about this because trump said and he im surprised he hasnt tweeted this already, i told you. Right. The system was fixed. I told you that sanders was being marginalized and it was a fixed thing. Right. He has tweeted some about that. He has tweeted about the dnc leaks. But we also know all of us here know partisanship aside, whatever, people back winners. And if you think somebodys going to win, you see the odds in races go down, whatever, i wonder how much of this is people just love hillary, or if you believe shes going to win and your industry is under the regulatory gun, it helps to get close. Theres absolutely part of that. The assumption on wall street is that she will win and maybe win comfortably. Polls today dont bear that out given trump has gotten a bounce from his convention. Good question exactly. Lets bring in larry kudlow, cnbc senior contributor and forer advisor to the Trump Campaign. Brian was suggesting, larry, maybe they want to be there to promise regular capture. Trump has said the whole system is rigged. The democrats are rigged. Wall streets rigged. The banks are rigged. I dont know, theres a lot of rigging going on. But there is some truth to it. And i think it does resonate. Remember, you know, i mean, look, wall street guys, i mean, trumps got his mnuchin, a lot of people, i dont count any of that. I dont know what that means. Right now the polls are showing good bounce for mr. Trump. But basically the race is even. Its even nationally. Its even in the swing states. And its probably going to remain so. This is a grinding kind of race. My own personal view is its going to be down to the wire. Down to the wire. What do you make of Wasserman Schultz having to step down here . Look, i think its a good idea. If youre asking about the dnc chairwoman, i think its a good idea she took herself out because i think that was going to be a big annoyance at a big distraction. Look,ic i think, you know, weve talked before, trump is appealing to the middle class. Trump is saying i am your voice. Trump wants an american revitalization. Hes very clear about that. And he has a progrowth message in my opinion on taxes and regulations. Now, i still want to know what Hillary Clintons message is going to be. What is her justification for running for president . Im not going to make snarky remarks. Im just waiting to hear because i dont think most folks see a unified message from Hillary Clinton. And they see a Democratic Party which is not the party of her husband that was a cent ris. What st your message, mrs. Clinton . Thats why they hold a convention, larry, so they can deliver that message. I think thats whats going to happen here in cleveland. And i wonder if larry thinks a 10 trillion tax cut weighted to the wealthy is the thing thats going to get the economy moving and really going to help the middle class. Well, ben, my friend, i think thats a cheap shot. Its not going to be a 10 trillion tax cut. By the way, it is not aimed at rich people. Actually, the biggest chunk of trumps Corporate Tax cut, his tax plan, is the Corporate Tax cut for large and small businesses. Emphasize small businesses. Thats a middle income tax cut is what that is. It will make america competitive. And trillions of dollars will come to this country and be invested to create jobs and wages. I havent heard a peep about mrs. Clintons Corporate Tax reform. Which is the most uncompetitive in the world. Ive heard her raising taxes on Capital Gains, on rich people, on corporations, on Financial Transactions. Where is her progrowth plan . Where is her relief for middle class wage earners . Ive heard trumps. I have not heard mrs. Clintons. Last word. Larry makes a good point she hasnt talked about Corporate Taxes and part of that is because the left dont want you to hear about that. I want to thank larry for coming to that panel. We appreciate it. I think what you will hear is some talk about middle class tax relief and her platform, i think she has it there and will talk about it in the convention speech. But shes not just going to cut taxes on the top. Shes not going to cut Capital Gains taxes or any of the other things larry would like to see her do. Well see if thats a message that resonates. Shes going to raise them. Raise it on the top and raise Capital Gains and propose this Financial Transactions tax because hes right that the party is moving more progressive, more left. And that may not sell well with a lot of voters. It may not last either. It may not last. She could move back to the center. And shell have an opportunity to do that. Right now shes got to deal with sanders, Debbie Wasserman schultz, a lot of other things on the mind of the clinton campaign. Former advisor to donald trump, also a cnbc contributor, thanks, larry. Thanks, ben. Thank you. Thank you. Goldman sachs calls it the new gasoline. Automakers call it the key to the electric car revolution. However, there is a catch. Phil lebeau is live in Clayton Valley, nevada, with more. Phil. Michelle, the reason were out here in 95 degree heat is because of whats deep below me, lithium. Its great for the future of electric vehicles, but getting it out of the ground and getting it into those electric vehicle batteries that takes a while. Well explain the new race for lithium and how important it is for the electric Vehicle Companies when power lunch returns. More places. Le covers your bun so you can take your business just about anywhere. Plus, our extended range lte reaches twice as far and its 4x better in buldings. Get more done in more places. Switch your business to tmobile work today. 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. 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Shares of tesla and solarcity, both controlled by the Billionaire Elon Musk close to striking a merger deal. One of the earths most abundant Natural Resources could be key to teslas growth and the electric car revolution, but theres a catch. Cnbcs phil lebeau is live in Clayton Valley, nevada, where phil was complaining its 95. Its 95 here, phil. And humid. Yeah, but, tyler, its getting up to 107 here. If you want to stand out here in the desert like i did yesterday in 110 degree weather, i will gladly switch places with you. At least you have airconditioning you can go into. We dont have it here. Why are we here . Because Clayton Valley there you go. Clayton valley sits on top of one of the largest lithium deposits in the world. And its where some companies are already mining for lithium. And back here, this Company Pure Energy minerals is looking to potentially open up a lithium manufacturing plant with a new process. This is one of the startups that is looking in this area at mining the lithium here much faster at a lower cost. The way its currently done they extract the lithium, they pump it out of the water tables below the desert, it sits in these giant extraction pools for up to 18 months. Whats left in the end is the lithium. Thats the lithium that is then send overseas for processing. All of this is being driven because electric cars, thats the big growth. Theres more than 500,000 electric cars that were sold last year. That number will continue growing in the future. Automakers they want those electric vehicle batteries which contain lithium, thats the Energy Source within those batteries, they want them to last longer and to have more power. That means greater demand for lithium. The growth in lithium has been spectacular. The demand applications across the Electronics Sector now with electric vehicles, grid storage, energy storage, batteries, all these are growing applications. And we see no end to that. Because of that growth, take a look at what weve seen with the spot price for lithium over the last year. Up 17 . This is a mineral that is in demand right now. This is one of the largest deposits in the world. Theres also a large deposit in south america. But again, its the old process of bringing it up by pumping the water into these extraction ponds and waiting 18 months to pull the lithium out of what was pumped out of the ground. They want to speed that up with pure energy. This is part of the race to create more lithium, produce more lithium, do it faster and cheaper. Phil, this is going to be an unpopular thing to say but im going to say it because you know im a fan of electric cars as well. But what youre showing is very important because if you drive a car, somebody on a panel i was on in l. A. Said if you drive a tesla, youre supporting the coal industry by 30 . If you have a car with a battery, prius, tesla, whatever it is, theres a ton of carbon being burned in operations like that before you drive off the lot. You may get higher gas mileage or have no gas mileage, but its not exactly like youre leaving no footprint on the planet. I understand what youre saying. Im not arguing with you, brian. Thats been well documented. Plus, when you charge up an electric vehicle, where is the electricity to charge up that vehicle coming from . Its coming from the grid. Coming from power plants, which most of them are being fueled either by coal or by natural gas. So, no, its not completely clean. And thats not the argument for the people who support electric vehicles. But when it comes to the companies that are trying to pump more lithium out, they realize that the demand for electric vehicles is only going to increase worldwide from here. Will it eventually replace gasoline powered vehicles . Thats too hard to say. But theres no doubt that the growth will continue. And thats why there are Companies Like pure energy that are saying lets get it out of the ground quicker and faster and cheaper. I know you know and i wasnt saying it to phil. I was mostly saying because you see people that have like their customized license plate on their tesla says 0 mpg, maybe you are but theres a lot of burning. That goes into the manufacturing. If youre plugging it in, arent you burning coal . Thats what you said. Or natural gas. Its like a prius. Somebody said the prius was the most environmentally unfriendly car because by the time the nickel is mined for the batteries in siberia, by the time you got it to the dealer, youve burned hundreds of thousands of gallons everything comes from somewhere unless we go back to horses. Thank you, phil. Phil has a donkey. Its in nevada. Tech underperforming the Broader Market this year, but this red hot tech name up 35 just this year. Wall street expecting it to go higher. Who is it and why . Street talk getting the long end of the stick coming up. All right. Time now for street talk. Our daily dive into the key wall street calls of the day. Stock number one, mondelez. Susquehanna had a 30 upside. They say the company is unlikely to remain as is over the next year. Which means a deal is probably come with either mondelez buying hershey or mondelez being bought. Analysts say in both cases, he sees north upside of 20 . And turmoil on the board may make it easier for mondelez to get a deal done. By the way, kraft heinz could come and scoop up. Either way, hes bullish on the stop, because somethings going to happen. Had to do something. He was already at 45. 61 at this point. The second stop, holte group. Analysts say the catalyst for the upgrade includes new management, faster growth, usually helpful, significant share buybacks. Analysts say theres a huge cash flow potential for the company due to released land supply as well. Deutsche bank has raised the price target from 27 to 20. Its currently at 21. 99. That would be 35 upside. Not sure ive seen an upside based on old management and slower growth. Theres been a number of other companies that wall street has already upgraded. Theyre undergoing a fight between the ceo who may be going out. Stock number three, hewlettpackard enterprise. Hpe. Citigroup upping it to a buy from a neutral. Its a cash flow story. The analyst says cash flow generation is underappreciated by many investors. Thinks the company may be able to double their dividend payouts after they finalized the spinoff of the services business, because theyre going to get 1. 5 billion in hash that would be a different payment, 1. 5 billion in cash from computer sciences. Analyst jim suma says thats about a 3 million incremental value to the core. Boost the target from 25 to 20. But again, like the other one got to do something. Youve got to do something. 25 is the new upside. Pablo escobar not making a bid for hpe. No frowning allowed in this next stop. Allergen makering of botox, an outperform rating. Credit suisse put in a target of 320 a share. Right now its 247. Its about a 32 upside. Not helping today. The stock is down a buck. Analysts say investment positives include open science model building. Thats the platform that they use for product development. They also have a growing base of business led by botox, icare, that thing that makes your eyelashes grow longer, compelling valuation, and best in class management. And as always, your fifth stock, kind of the smaller, under the radar call of the day. And today it is belldin, st. Louisbased wiring and connection company, more than a 100yearold company. Guggenheim starting coverage of belldin with a buy. They say that belldin is a leading provider of connectivity solutions. Over the past eleven years, theyve gone from being a highmargin networking company. The current valuation doesnt give belden enough valuation. About 17 upstik. That stock is already red hot this year. Up 50 . St. Louis, belden. Cool. With that, we wrap up street talk for a monday. Time now for trading nation. Lets talk oil and Energy Stocks with the trading nation team. Aaron gibbs and craig johnson. Aaron, listen, we talked about the risk to Higher Oil Prices being Higher Oil Prices, because nearly a hundred drilling rigs have come online since the beginning of may. What do you see for oil Going Forward . We could be in this trading range for a while, in the mid to upper 40s. Right now, at least for the Energy Sectors, thats where the earnings expectations are pricing the oil. Theyre really expecting it to stay above the mid40s. And overall, i would say the sector is very much a whole. Were seeing really high valuations, the Energy Sector is trading at about 53 times forward earnings. So it really seems like investors are looking not just at whats going to happen over the next 12 months, but theyre expecting oil to stay in these 40 to 50 ranges for the next 18 months, if theyre going to be reasonably priced. Or could be high because there may not be earnings to speak of Going Forward. Part of the process at 43 bucks. Craig johnson stripping out all the emotion. What are the charts telling you about energy and Energy Stocks . Well, the energy chart itself, that i brought for this afternoon is pretty clear. First, look at the drown trend reversal thats already started to happen in the energy patch, but, brian, the last time ive seen the chart set up like this, you can see, theres kind of an inverted head and shoulders pattern starting here. You can see the left shoulder, the clear head and the right shoulder unfolding right now. I think youve got 2 to 3 downside over the intermediate term here, back to about 40. But the last time i saw a setup like this, was the bottom of the market in 2008, 2009 on the s p 500. Wow. That was a ninemonth setup, and standing that measured objective up led to a very nice return in the market. And i think, here, for oil, looking at this price objective, standing it up, you could be between 70 and 75 in oil in about 12 months, based upon the topline break of that line here. So really positive chart. May go down a little bit in the shortterm, but a longterm bullish call on the price of oil. I know the Energy Companies would be happy to see that. Erin and craig, thank you. For more trading nation, you can go to tradingnation. Cnbc. Com power lunch. Back in two. Announcer now the latest from tradingnation. Cnbc. Com and a word from our sponsor. Just as its dangerous to try to catch a knife falling to the floor, its risky to buy a stock selling off. But dont buy just because its quote unquote on sale. 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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 to learn more. Liberty stands with you™. Liberty mutual insurance. Welcome back to power. Pokemongo panel for retailers. Courtney reagan here with new data. Its not just a phenomenon. Its for real. When the craze first began, many voices spoke up about it, how it could be a great trafficdriving opportunity for retailers that so badly need a reason to get shoppers to come to their stores. But getting shoppers to come, chase pokemon or otherwise, doesnt guarantee purchases. However, new survey data shows that the registers are ringing thanks to pikachu chasers pap survey by info shout, which is a Research Firm gathering data from receipts, show 75 of pokemongo shoppers made a purchase at the retailers that they visited to catch pokemon. 86 made a purchase at restaurants while in pursuit of the chase. And whats more than, 56 have actually been actively seeking out poke stops, poke gyms, or capturing in locations that they wouldnt typically have gone otherwise. All right. So looks like theyre buying. Looks like its paying off. Whether its a fad or not, its working right now. And apparently people are randomly running into restaurants in search of a pokemon. Yes. And then they realize they get hungry and buy something on the way out. Life is crazy. Thanks for watching power lunch. Well see you from philly tomorrow. Hi, everybody. Welcome to the closing bell. Im kelly evans at the new york stock exchange. And im bill griffeth, not looking for a pokemon stop right now. But energy is very much the big mover for wall street today. That sector dragging down the Broader Market, as all oil falls below the 43 a barrel level for a time. Today was the first time in nearly three months weve seen that, and well see whether stocks can stage a comeback in this last hour of trade. The dow down 105 points right now. Chevron, exxon weighing on that index, what you just mentioned. And this just