Transcripts For CNBC Power Lunch 20160914

Im brian sullivan. It does remain an uneasy market. Investors a wee bit nervous ahead of next weeks fed meeting. Next wednesday is when we get the rate decision. The dow a little change, slightly higher today. Not bad. Oil, though, sliding again, inventories once again a concern. All the major oil stocks are lower today. Melissa . Im melissa lee. Heres whats happening at this hour. Heather brash will appear before the House Oversight committee next week to discuss the price of the epipen auto injector. It expects to complete the takeover of monsanto by the end of next year and roughly 6 Million People from florida to georgia are under a Flash Flood Watch as Tropical Storm julia moves up the east coast. Welcome to power lunch. Im michelle carusocabrera. Dangerous, risky, bubble, some of the biggest names in the financial world weighing in at yesterdays delivering alpha conference saying storm clouds on the horizon for global markets. Storm may already be here. You can look at the environment and i think it is very dangerous. I think it is a very dangerous time in the Global Economy and Global Financial markets. It has gotten extremely difficult to invest on a quarterly baseis. There is only so much you can squeeze out of a debt cycle. And were there, globally. Youre talking to 6 rate of return on stocks versus 1. 5 rate of return on the tenyear treasury and it strikes me that the i think paul singer said, the treasuries are hardly a risk free asset. Lets bring in george maris, and jack adly. Mr. Maris, ill start with you. One of the funds you run is the global alpha equity strategy. So youre committed to delivering alpha. People sounded fearful yesterday that the end of the credit cycle was approaching an end. Are you as worried as they are . You know, im not woreally. I think there is a crowded trade that is out there, it is in this low volatility safety trade and you see an incredible rush of capital to this. And what that has meant is that stocks arent being priced for growth. You know, there is growth, where it is open ended and secular. At the same time, youve got stocks that are reflecting distress asset prices. When the fundamentals are dramatically better. For my view, were finding great opportunities both in great secular growth stories around the world, as well as really interesting deep value stocks that are where the fundamentals are substantially better than the share prices reflect. Brexit, negative Interest Rates, populism, the rise of the right wing, we got all these things, george that have never happened before. Is there any historical guide . Can you look back at any textbook and say this is what i should do now . No. So i think thats what has got everyone so uneasy. All of these things put us in a place we have never been before, thats what created this anxiety. Here is what i found interesting, especially bill miller said long the s p, short the tenyear treasury, he said the tenyear was so overvalued, it reminded him of stocks in september of 1987, just before the crash. It was that so huge. Here is what i dont understand. If you think bonds are in a bubble, Interest Rates are going to rise. Isnt that going to be bad for stocks. Thats the historical play book. If we were playing off historical paradigm, thats what would happen. Thats not the case now. The reason rates are so low is because there are all these concerns about no growth in the environment, no inflation. If we get rates going up, it is a sign of growth, a sign of inflation. Thats actually very healthy for equities. If you look, jack, ill bring you in here on this conversation, you know, this notion that people are look for yield, right, thats why people went into dividend yielding stocks, look at the sectors in the s p 500, eight of the ten are yielding higher than the tenyear yield. So when yields go up, there is going to be this rush of money. George had mentioned the low volatility funds. Those are the funds in this particular trade. Arent things a little different this time in terms of what has gotten us here as people search for yield and push the valuations higher on these sectors like utilities and telecoms and staples . I think it is a consequence of, you know, we handed off to the Central Banks to say, here, fix it, we got low growth and want higher growth. And, you know, in many respects, just like putting sand in the shore and getting stymied when the tide comes back in. I think what it has done has certainly created a wedge between the Financial Markets and the and mainstream. And so as a result of that, investors are looking for yield willing to take more risks that theyre accustomed to taking. We have to keep in mind, any crisis that results from this is really a contrived crisis. This isnt a meteor coming out of outer space and hitting the earth that we cant get out in front of. This is something that has been created by the Central Banks and we have to work our way out. I dont think this is necessarily the next, you know, crisis that is going to create a huge crater. One of the arguments that i heard yesterday and i believe it was paul singer who made it and also mr. Dalio who made it and that was that what the Central Banks have done is try to create growth by keeping Interest Rates low. It hasnt worked or arguable they have created growth. But it is not arguable that they have not supported the prices of assets, bonds and stocks. And if those if they stop doing that, what does that say about the values of stocks and bonds . Perfect, i agree. Stocks and bonds are expensive. There is no question about it. The fact is that mcdonalds was able to issue a tenyear note in europe at 0. 75 a few months ago. I can assure you, no given that mcdonalds bonds in this country are trading at nearly 3 for the same maturity, why would anyone want to buy a mcdonalds bond at 0. 75 , because the European Central bank is buying it all. Investors arent buying that. And mcdonalds is taking that money back here and buying back their own shares. So there is no question about Central Banks running interference and creating high valuati valuations, but the fact is, theyre not going to necessarily turn off the spigot and run away. They recognize that, you know, there is an addiction here, and were going to have to slowly get off of this liquidity, but do it in a gradual way. Michelle had mentioned going long stocks, and short g7 bonds, but when this whatever you want to call it stops, when the merrygoround stops, wont all Asset Classes go down . There is a bank of america, Merrill Lynch fund survey released yesterday, 54 of Fund Managers say both stocks and bonds are overvalued at this point. And were just laying out, you were talking about the low volatility funds, pushing up the valuations. There is this thought there is no other alternative essentially pushing that trade higher. How is it going to end . Are we going to see a reversion where we have that break in correlation . I think you can have, you know, significant declines in fixed income markets and equity markets and have equity sectors do very well. You harken back to the year 2000, when the markets were to be kind a disaster, financials were up 50 that year. So you can have sectors that have been oversold or underappreciated do extremely well in a difficult environment. You talk about equity markets overvalued, 17 times earnings for the s p 500, historically thats very, very high. It is not high relative to fixed income at this current time. And at the same token, there is sectors within the s p 500 that are extraordinarily cheap. You can look at financials that are trading distress but arent. Or look at chinese internet plays. Alibaba trades at the same multiple as the regulated u. S. Utility, that doesnt make sense. So you can see this unwind of the safety, this low volatility trade, creating tremendous opportunities if youre active. Jay jack, yesterday, may not have seemed like some sort of a red letter day, but to me and some others, very interesting moves because it doesnt get a lot of attention, not sexy, doesnt scream at you, the tenyear yield rose by 3 , the s p fell by 1 , a very rare diversi diversion. Did yesterday establish something new . I do think that fair value for the tenyear treasury is higher in yield than where it is right now. If you look at nominal gdp, which is relatively low, thats at 2. 7 , not 1. 7 . Thats historically been a pretty good proxy for where the tenyear treasury ought to be. So, yeah, i would say we could get 100 basis point rise out of the tenyear treasury and that it will certainly create some disruption. But, you know, im not suggesting that or i dont think anyone is suggesting that fair value for the tenyear is 3. 5 or 4 or Something Like that. George maris, jack, thank you both very much. Appreciate it. Pleasure, thanks. If you are in pittsburgh and you hail an uber today, it could arrive without a driver. The question is, would you still get in . The Company Testing out its Autonomous Vehicle program. Were going to have the details. And making the case to buy valeant stock, a bold call from one of the most legendary stock investors. That is straight ahead. What if a company that didnt make cars made plastics that make them lighter . The lubricants that improved fuel economy. Even technology to make engines more efficient. What company does all this . Exxonmobil, thats who. Were working on all these things to make cars better and use less fuel. Helping you save money and reduce emissions. And you thought we just made the gas. Energy lives here. We think with valeant, it is a different company, different management, now a slow growth Specialty Pharma Company that will generate a lot of free cash and you should be able to make that a 25 to 30 on valeant in the next over the next five years. That was legendary investor bill miller making his case for valeant pharmaceuticals. Yesterday, at delivering alpha, that call grabbed the attention of kay kelly who followed up with millers folks today who told her that number, that was per year growth, in the stock, over the next five years. Joining us now on the phone is luis chen, a buy rating on valeant. Great to have you with us. Youre a valeant bull here, but even in your most bullish scenario, do you see a scenario in which there can be 25 to 30 return each year for the next five years . I think thats probably a little bit early to look at over the next five years. But i think in the near term that kind of upside could even be conservative if valeant is able to deliver upon some of the objectives that they have laid out for the company. And i do think the street is missing a lot of the potential upside the stock has here. So lets tackle the first year then. In terms of upside to the 25 to 30 prediction made by bill miller, what are going to be the primary drivers to that. Is it primarily asset sales . So these are the things i think the street is missing and if a company is able to demonstrate that, you know this could probably drive some multiple expansion for the stock, the stock is pretty inexpensive where it is, trading at four times pe multiple, and i think it could expand to eight times, you know, a group on average trade about 12 times. So the three things i would notice, first of all, i think the street underestimates valeants ability to pay down debt. You did note that. That is a big overhang on the stock. Thats first and foremost. The company has given good visibility over the next year on how to get there. And even put numbers behind that. The second thing i think they need to do is stabilize their earnings and part of that will come from paul hair, who i have worked with through two companies that i covered and hes been able to successfully do that for those organizations as well. And then i think the third thing is they have a great branded drug pipeline they have been executing on and getting products approved and no one is giving them any credit here. And they have two big products coming up for approval through the end of the year and next year which could be blockbuster drugs to the company. Like the new management . I do like the new management team. I worked with both of them before and other companies that they have been Senior Executives for and they have done a great job to turn around or enhance the organizations. What do you need to see happen in the next six months to make you believe that 25 could be conservative . So i think what they need to do is paul hair, hes new to the organization, hes been there for seven or eight days, but a very experienced cfo that has good communication skills. I think he needs to give people confidence in what the numbers will be. I know there is some anticipation because hes looking at 16, 17, and beyond numbers and where he might come out with that. And given the fact that valeant has had a couple of downward earnings revisions, you know, i think people are worried ahead of that. I have a lot of confidence in paul that hell put out numbers that they can meet or beat. Thats first and foremost. I think the second thing here is to show some evidence of the divestiture of the noncore assets and give people confidence they can sell the assets for something worthwhile. I think skepticism is that, you know, they overpaid for these and they did it under a benefited tax structure, so if they try to sell these, maybe they wont get what they paid for. Well leave it there. Thank you very much for your time. Louise chen of guggenheim securities. Quickly, i did something on the back of valeant i promised i would never do, math. I looked at 25 a year, where would that put investors if you bought it today. If you believe bill mill, 25 gains, 34, 30 a share, by the end of 2021, five years, 25 brand of return, you would have a share price of approximately 84 based on where it is today. It was a 257 stock in july of last year. So youre still down 67 if you bought at the peak. No one will knock 25 returns. It sounds great. But you look at the Historical Context of the stock, it doesnt even really get you a third of the way back to where it was. Up next, two big reasons why tim cook is dancing today. Power lunch will be right back. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. [ala m beeping] the highly advanced audi a4. Yes, that is video, if youre on the radio, picture a lot of people dancing. Tim cook, the apple ceo is one of those folks dancing, you see him at the top, and hes dancing for a reason other than, i guess, just pure joy. He and other apple staffers are setting out to prove the new air pod Wireless Headphones will not fall out. Even while dancing. A little air pod mob. Thoughts . More like swimming to me. I think he has to dance more vigorously for me to be convinced theyre not going to fall out. Melissa known for her desire for vigorous dance when testing headphones. How about running . Hes basically hes, like, chair dancing. Doesnt count. When i run, all the stuff in my ears falls out all the time. Makes me crazy. So how are we to believe these little pods are going to stay in . Always asking the right questions. All right, well, tim cook may be dancing again today, but for a different reason. Get to dancing dominic. I like to dance when i hear cnc music factory. Thats a little blast from the past there. Yes, i can dance a little bit more. Dancing is apple shares up more than 4 today, best day in nine months for the stock. A top gainer on the dow for the second day in a row, adding 30 points to the gains by itself. So those shares are on track now for the first three day win streak with consecutive gains over 2 each day. First time since april of 2013. The gains are likely due to mobile Service Carrier sprint, stronger orders for the iphone, hits stores this friday. Stock more than doubled its average full day trading volume. Still a couple of hours to go, guys. Despite todays gains, down since march, but the stock remains a darling among wall street analysts. 84 of analysts tracked by them still have the equivalent of a buy rating. Back over to you. Dom, thank you. We should really be saying maybe thanks to apple, were seeing the stock market didnt see it fall as much yesterday because of apples gains and in todays session, apple is helping technology be the leading sector on the s p 500. The technology, by the way, yesterday, lost the least on the s p 500. So it is really thanks to apple that we sort of remember all that hand wringing in the low 90s, is this it . Is it over . Should you buy it here . Should have bought it at least in the short term. Another news alert. Brazilian prosecutors filed corruption charges against louie da silva and his wife. Back in august, the police recommended prosecutors charge them. This is a key step. Well wait it see if the judge accepts the charges. If that happens, this politician who was widely loved across latin america will face trial. An incredible change of fate. Wells fargo still in the headlines over controversy it created phony accounts for customers. Next up, were going to speak with a reporter who knows the story well because he broke it. Three years ago. This straight ahead. Were drow. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. This just in. 50 million customers data was not compromised this morning in a Security Breach that didnt happen. Wall street, not rattled. At all no. Sir, sir. What went right . Everything. We have a brief statement on this nonbreach. Were happy to report theres nothing to report. My dads company wasnt hacked today. Cool. Im sue herera. Here is your cnbc news update for this hour. President Obama Meeting with myanmars leader Aung San Suu Kyi this morning. He said the u. S. Is prepared to lift sanctions against the asian nation, one of the worlds poorest countries, as it continues to transition from military rule. At a Washington News conference, senator Bernie Sanders and other members of congress voiced their opposition to the Trans Pacific trade deal. We feel confident that we speak for a Strong Majority of the people in this country who are urging congress to say no to the tpp. Flints mayor is discouraging donald trump from visiting her city. A number of Media Outlets reporting that trump plans to visit flint today to tour the citys Water Treatment plant. But the mayor says neither trump nor his Campaign Staff have ever reached out to her since the citys water crisis began. And do you like your boss . Of course you do. But according to a new study, roughly one fifth of top corporate professionals have extremely high levels of psychopathic traits. Thats about the same rate as prisoners. The study says successful psychopaths have become increasingly common in the last decade. No comment. I dont know if ive seen you quite so speechless. Im just not going there. Just not going there. Not going there. No. But the study didnt say that 30 of employees are psychopaths. Right. That i would believe. I think that 20 number is very low. Kids want to know. Lets take a look. Thank you very much, sue. Ill have my eye on you. Check on the markets now. Trading is calmer today after two days of very high volatility. Lets look at the numbers. Dow, s p, nasdaq, all higher right now for the week. Lets see. I cant even read anymore. You see am one of the big stocks as we have been talking. Ninemonth high, leading the dow for a second day in a row, adding 30 points to the dow all by itself. Techs and utilities, best performer overall, energy, the leading laggard. Wells fargo in major damage control mode today this follows the fraudulent account scandal, another headache for the bank is 125 million in compensation for the executive in charge of the unit that is responsible for the unauthorized accounts. Heres what wells fargo ceo told jim cramer last night on mad money. Why, if you have callback provisions, if there are callback provisions, why wouldnt someone like carrie, who ran this the consumer bank, why wouldnt you want to reclaim some of her stock, even if she worked there for many, many years, because someone oversaw cant just go after the low guys. Thats not how we work. Of course not. To the extent thats a consideration, to the extent thats a consideration, we have a poor process. Okay. Has James Quigley from deloitte, the head of the audit committee, has he looked at this . Jim, to the extent thats a consideration, there is a board process. Federal government is taking a lot of credit for going after wells fargo and getting out the fine, but it is your next guest who broke the story three years ago. Scott rickard was the l. A. Times reporter who released the story in 2013, since retired, now a consultant. Were glad we tracked you down, pleased you came on the program. This is old school reporting. First off, how did you get on to the story and how long did it really take you to uncover this . We had an unusual call back about three years ago. It was passed on to me from a Business Editor at the time who said there was a guy at a branch in the San Fernando Valley section of los angeles, who was saying that they had been rewarded for selling so many accounts, so many credit cards providing so Many Services to people, and they had all done this under a lot of pressure, and then some complaints cropped up and the next thing you knew they were firing people for doing the very same thing that they had praised them for. It was an unusual tip, and so thats what we wound up pursuing. Thats it, because ive gone back, read some of your excellent reporting, some of the followup stories, some of the people in other papers as well, which is they all seem to say the same thing, which is either, a, they didnt do a good enough job according to the company and so they got fired, or, b they couldnt take the pressure and it felt kind of slimy. What was the majority focus of the employees and former employees that you spoke with, scott . Does that mirror it . Yeah, i think so. We talked to dozens of employees all around the country in the ensuing weeks before we did the large investigative piece that was published in december of 2013. The stories were pretty similar all over. It had to do with extraordinary pressure coming down from regional managers on to the Bank Branch Managers who then pressured the front line employees. And in some cases coached them in how to improperly goose up their sales figures. Like what . Like what do they say . Well, there are one of the things they did was to tell people wrongly that they couldnt open a certain kind of account unless they took a credit card or debit card or something. And other cases, they coached them in how to use the employees information to open accounts without the customers knowing. So, you had both things, customers who sort of accepted accounts that they didnt need, maybe because they liked the banker. And then in other cases, they were opening accounts without the customers knowledge and in some cases taking money out of one of the customers accounts to open the other account. Why do you suspect that it took as long as it did for the feds to come to where they have come, and i gather that some local Law Enforcement people, both in the city and in the state, moved more quickly. Yeah, im not sure about that. One of the things i think you could learn from this was that the National Bank regulator, the office of the comptroller of the currency, was not on the ball. Or did not appear to be on the ball. From what we have seen in the news conferences that they have had, it was only after the City Attorney of los angeles read our story, set up a hot line and started talking to customers and employees that the investigation really began. And it was a year and a half later before the City Attorney, mark furor, filed his lawsuit, as far as i can tell, the occ got serious about doing their investigation only then. Are you more surprised that federal regulators didnt step in earlier or that wells fargo continued this culture that rewarded people to open up these accounts . John stumpf, the ceo, has been ceo since 2007, chairman of the board since 2010. This is the guy who was in place at the time you reported this article as well. Yes, i mean, i think it is disappointing that they couldnt at the very least, they didnt control this sales culture. We had done reporting on other Companies Financial firms that had extreme sales cultures. And the thing you learn is that there better be some really, really good controls in place if youre going to set that up because you will wind up with an employees gaming the system. And thats what happened here. I had no idea it would be on this scale as the cfpb discovered, 2 million, at least, accounts that were unwarranted, unneeded set up. Could you go back to the original thing you said, the original tip comes from somebody in an office, where they had gotten these, you know, whatever prizes they deserved for having opened all these accounts, so they were incentivized to do this and some people get fired, i assume it is somebody who is angry about getting fired that calls you. What happened there . Why would they have been fired after they had achieved what the company had wanted them to do . Well, you know you heard from a lot of these folks and it is something that we saw in investigating some subprime lenders back in 2005. I was working with mike hudson. Is the company said that, look, we police this, we know it is a problem. And when things get really bad, well fire the offending employees who violate our policies, and we will fire entire, you know, branches, if we have to. And thats what you heard here. Whether that is an acceptable way to proceed, to wait until things get completely out of hand and fire a bunch of people, or whether it would be a better idea to make sure that these things dont happen, that you have some constraints in place that prevent this from happening we got to start to wrap it up. Does it bother you hear the federal government seems to be taking a lot of credit for this. It was you that found it. Does it trouble you at all . Well, no, it has taken a while. Im glad think followed up on it. The feds investigate things very, very slowly. We have known that over the years. But my hats are off to mike furor within a couple of days after the initial investigation appeared, his folks were on the phone to me saying, thank you, and were going to look into this. It was they that filed the first lawsuit, basically laying out exactly the sorts of problems and it is the problems i discovered and that was a year and a half later. So here we are three years late, the feds got to it, good for them. I think the cfpb had other priorities, frankly. Probably right. And, you know, im gratified they imposed the largest fine in their short history. Scott, reckard, real pleasure, great investigative reporting, great to see journalists still doing this kind of shoe leather type stuff. Scott, thank you. Have a great day. Youre welcome. My pleasure to be here. Thank you. Wells fargo fraudulent account scandal will impact smaller banks. Joining us to discuss is camden fine, president and ceo of the independent Community Bankers of america. Mr. Fine, welcome. Good to have you with us. Thank you for having me. Lets start off by getting your reaction to what went on at wells fargo. Well, really, this is the dictionary definition of too big to manage and too big to regulate, isnt it . Thats what too big to manage and too big to regulate looks like. I mean, this is not an aberration. If you had a couple of dozen employees, thats an aberration. This is 5,300 employees that engaged in this activity. So top leadership starting with the ceo, and Senior Executives, set the culture and they set the expectations. So either mr. Stumpf and his Senior Executives set an inappropriate culture and expectations, or they cant get their arms around their own organization. It is as simple as that. Apart from the size and your point about being too big to regulate and too big to manage, do you believe that mr. Stumpf and others at the top of the bank ned to lose their jobs, or potentially face charges . I think that they should be held accountable. In a Community Bank, had Something Like this happened, and it does from time to time, the chief executive officer, the Senior Executives, and the board of directors are hauled into court and prosecuted and fined. You think there is a double standard . No question there say double standard. Thats been going on for several years. There is a double standard of regulatory enforcement. What Senior Executive, im talking ceo, number two person, number three person, at one of the megabanks, has been hauled into court and prosecuted personally, like a Community Bank ceo, and their boards, in the last eight or ten years. You think john stumpf should be prosecuted . I think he should be held to account. Whatever that is whatever is appropriate in the eyes of the regulatory authorities and in the eyes of local prosecutors, whatever they feel is appropriate, thats what should be done. What did you think of his responses to jim cramer, when jim cramer is asking, well, what about this person on the board, are they going to look into this and stumpfs ans wears alwawer the same, to a degree it is a consideration, the board will look at it. It is called passing the buck. If you want to be ceo, leaders lead. And you have to accept responsibility. I am held accountable by my executive committee an my board for everything that goes on in the organization that i lead. Both good and bad. If bad things happen, i am held to account. The same thing should go on in the very largest banks as it does in the very smallest banks. Do you believe that if some top executives of banks and you mentioned some that have not been faced any kind of charges, do you believe if they were to face charges, if some of them were to go to jail, that this kind of behavior, whether it is the aggressive cross selling and opening of accounts without peoples knowledge or other fouls committed by big you think it would stop . I think it would do it would go a long way to tamping down this kind of systemic behavior. This isnt just wells. You had the london whale. You had libor fixing. You had money laundering. You had robo signing. You had all of these scandals, and, sure, smaller lower level employees, sometimes, have to face the music. But what very Senior Executive has been hauled into court . None. Except in Community Banks. And thats just not right. The big banks, that does not seem to be quite as endemic to the smaller Community Banks. What is wrong with the culture there . I think it is transaction driven. It is driven by stock price. It is driven by monetary rewards. It is a culture that thrives on we have to have a better stock price tomorrow than we did today. It is a culture that thrives on outsized performance bonuses and that kind of thing, which is not the culture of Community Banking. Back to your initial point, too big to regulate, too big to manage, it is not a far leap for me to assume you think those big banks ought to be broken up, do you . I think i think the regulatory authorities need to take a look at can a ceo and executive team effectively manage and set a cultural tone that is ethical for banks employing half a million, million and a half people worldwide. And i think there are some serious questions about whether that is possible. Can you give us an example of a Community Banker that has been prosecuted for something . Oh, well, there have been 152 prosecutions of Community Bankers since about 2009 for things far less egregious than screwing 2. 5 million americans on wrongful Product Sales and so forth. There was an entire board of directors and Senior Officers at a little tiny bank in macon, georgia, about five years ago, that were hauled into court, prosecuted, thrown out of their banks, barred from banking, because the regulators claimed they used poor judgment in making some loans. All right, thank you very much. Thats an actual example. You made your case vigorously and well. Camden fine with the independent Community Bankers of america. Thank you so much for having me. Youre very welcome. Thank you for coming. Could this become new yorks eiffel tower. Well talk to the monday who says yes. Hes the owner of the miami dolphins. We got a lot to talk about with steven ross. Time for the power pitch. Im eric. Im gabe. Were from gfly bikes. Why dont we have more people on bikes . Gfly bike is a smart, electric, Maintenance Free bicycle. Lights, locking, electric assistance and more. The g takes away any excuse people have not to bike and it falls in one motion and one second. Our team is key. We have engineers, designers and sales and Business Team with the passion and the experience needed to bring the bike and the brand to market. We sold close to 3 quarters of a Million Dollars in less than nine months. We have an agreement with amazon to sell in europe and the u. S. We accessed over 200 million customers. We have partnerships with post purchase servicing and plan to sell online. We operate in a market with annual sales of up to 10 billioned, 32 Million Units every year. Our competitors are more expensive, have less features, lack mobile integration and have ordinary designs. We created the bike to go to the next level. Welcome to the power pitch. Im melissa lee. You saw eric and gabes pitch. Lets meet the panel. Joining us on set is alicia, michael roberts, and david woo. We heard the pitch. Now, eric and gabe are in the hot seat. On the pricing front, if youre planning on selling this at upwards of 2,000 per bike, how feasible is that for mass market adoption . We operate in the market of 10 billion and 32 Million Units. The fact that the competition sells anywhere from 1500 all the way to 7,000. We want to be in the lower to medium spectrum of that market. Michael. My first question is with the electric bike technology, things are changing so fast, new batteries, new motors coming along all the time. What is your plan to stay ahead of the changes . Our company is an innovation company. We bring together new technologies as they advance to bring them to the client. David . You have a sense of around how much it is going to cost to acquire a customer here . The way that we ambition selling to customers directly is through Online Marketing strategy as well as the distributors. Each of them has a different cost, but we expect not more than hundred dollars per customer. And just add to that, were partnering with electric bike stores to service the bike, but we also have brick and Mortar Stores that kind of focus on iot products and amazing new technology. In many cities there are bike sharing programs. Do you think your total Addressable Market shrinks because you have that convenience . What the bike sharing programs have done around the world is given the opportunity of people to try the bike, feel comfortable with the bike, and then go ahead and purchase their own. The electric bike segment has been slow to take hold here in the United States. Despite great bikes out here. You mentioned 750,000 in sales you had. How much of that is here in the United States . All of the 750,000 that we sold, 45 in the u. S. , 30 in europe, 15 in asia and the other 15 between the middle east and south america. Okay. We heard what eric and gabe had to say. Now we want to know if the panel is in or out. Alicia . I think this is a really innovative product, with lots of bells and whiss and really smart guys behind it and they got some great initial sales too. However, if theyre focused on the u. S. For a good portion of their sales, im still concerned that there say little more education that has to take place around electric bikes, and i also want to see that the consumers here will really stomach a price point of 2,000 plus dollars. Unfortunately for now, im out. Michael. It is a gorgeous bicycle. On the design and engineering front, youre doing everything right. It is incredibly impressive if i lived in brooklyn, i would make my preorder right now. Im just not convinced there is that many people like me out there. It is a case where you seem a little too far ahead of the curve. 2012, i would be in. But it is 2016, so right now im out. All right, so david, two out so far. How about you . Im struggling here. I really want to go in because i see the big Market Opportunity and i see a really differentiated product and design here. At the same time, the team is on balance to me, seems like very, very much product and design guidance, but not a lot of crispness around the narrative of how you go and get that end consumer and engage them. So enfortunaunfortunately im a eric and gabe, your reaction. I appreciate the feedback. This has been an amazing opportunity. Thank you, guys. Eric and gabe, and to our panelists, alirbia, michael and david, thats todays power women. Now time to find out if youre in or out. Follow the conversation on twitter using powerpitch. For more, visit cnbc power lunch. The worlds wealthiest are closing their wallets. From cartier watches to scarves, well look at spending recession of the 1 and why thousands of swiss watches are actually being destroyed in asia. Thats coming right up. Using 60,000 points from my chase ink card i bought all the framework. Wire. And plants needed to give my shop. A face. No one will forget. See what the power of points can do for your business. Learn more at chase. Com ink see what the power of points can do for your business. So i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices. The markets hot. Sync your platform on any device with thinkorswim. Only at td ameritrade. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Welcome back. America, get out your handkerchiefs. This story will choke you up. The rich may have a problem, they arent spending as much. Robert frank has the story. Shareholders get hurt here too. There is a handkerchief problem here. Now the luxury slump is reaching two industry leaders, richmonte and hermes. They gave a very dour outlook saying the negative environment is unlikely to reverse in the shortterm. The chairman saying the company will continue to reduce staff and close stores and that there say, quote, excess of every manufactured good in the world, especially in the luxury space. Richmontes problems boil down to watches. The crackdown of corruption in china hurt sales. Swiss watch sales down 11 on the year and hong kong, thats the biggest market for swiss watches, down 42 . Cartier and others have been buying back thousands of watches in hong kong and destroying them or moving them to other markets. The spending recession at the top is also hitting jewelry, clothing, handbags, other categories. Hermes, always considered the top leader in luxury, strong profits driven by leather goods. It said it is abandoning its 8 sales target for the year. The ceo saying, quote, there is a lot of uncertainty, that is the understatement of the year. Do we know if this extends beyond the chinese and the crackdown on the corruption or a global phenomenon . It is global. As you know, michelle, it is the russians, the middle east, the latin americans, all of the emerging market wealthy and Wealth Creation slowed. Why would you destroy the watches you buy back . The whole Business Model is based on the premise of high prices. They never, only rarely will discount 3 to 5 . It is worth it to them to take them for parts, melt them down, and sell them at a big discount. Scarcity of the value. Thank you, guys. Okay, uber launching a Driverless Pilot Program in pittsburgh today. Would you get in if the car arrived without a human in it . I would, yes, yes, i cant wait, i cant wait. Still ahead. More on apples bounce, a closer look at what is behind the surge that is straight ahead. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Its the final countdown the countdown is on. One week to go until the feds latest decision on Interest Rates, it has been a wild few trading days as investors place their bets on whether the fed will hike or stay pat. Should the fed hike. Well get to that in a moment. First, apple shares hitting a ninemonth high, leading the dow, second day in a row, the stock has been up more than 2 for three days in a row now. That hasnt happened in more than three years. Has apple become a safety trade during this volatility . Joining us on the cnbc news line is ben shacter. Ben, the stock is approaching a price target now, perhaps and moved more quickly an you anticipated. Are you sticking by it . We are. I think what is happening is people are comfortable with the iphone estimates that are heading into the new release. People are focused on groemg. People have been wondering when apple was going to joint party because it is in the tech sector which has been in favor over the past couple of months and does pay a pretty decent dividend yield, at least better than tenyear treasury yield. Do you think that sort of trade in the market, that sentiment is finally helping apple sharess . I think in general youre having more and more folks from different areas looking at apple. Guys looking at the dividend, the growth, some people excited about what the growth can be in the Software Side of the business, which we think is still under appreciated by investors and can be a meaningful driver going forward. Youre telling me now Growth Investors are taking a look at apple . Because for a long time, it only has been squarely in the value camp. Yeah, again, i think people looking at the Software Side of the business that is now starting to gain attention from folks because people like me and the company are highlighting that you have an App Store Business that is now 40 billion business that is growing 40 year over year. The Fastest Growing and highest margin part of their business. Your price target is 115, ben. Do you inch that higher or do you say, you know what, thats it . 4, 3 and change to the upside from here. I think well have to wait and see what happens with the launch, what happens with sentiment going forward, as well as the areas that were focused on around the Software Side. And then, you know, unfortunately, it is a game we all play on wall street, looking ahead to the iphone 8 and trying to figure out how meaningful of an upgrade can that be . Certainly the estimation is that that can be a much more meaningful upgrade and drive real growth in the iphone and if that does come to pass, i think youll see price target movesing higher. This sprint, what do you attribute it to particularly . I think particularly people happy with iphone 7, momentum. Not too long ago, people were afraid the iphone had its best days and going to be a decliner in perpetuity going forward. Now people seem to be pretty comfortable you can be flat to maybe even a little bit of growth this year, and then again heading into the tenyear anniversary next year, that should be a nice more meaningful upgrade cycle for them. Ben, well leave it there, thank you very much for your time, appreciate it. Apple shares are up by 8. 5 this week. By the way, we showed you some video last hour of apple ceo tim cook dancing or something. We want to clarify that video was from last year. Sharp eyed viewers said that was from last year dancing on earth day. Who doesnt dance on earth day. But tim cook did tell Good Morning America today that, quote, ive been on treadmills, walking, doing all the things you normally, even joked with Robin Roberts that he has danced with them, so didnt mean to imply that was the air pod or air bud video. When you have video of tim cook and people dancing wildly, youll show it on tv it a visual medium. Unless youre on the radio, then look at the road. Thank you. To the fed, were a week away from the feds next meeting on Interest Rates. The fed was a huge topic at delivering alpha yesterday. Not will they or wont they when it comes to Interest Rates, but is the fed a problem . Is it doing more harm than good . Steve liesman joins us with more about how the fed really came under fire yesterday. It did plenty of criticism yesterday for the Federal Reserve, delivering alpha conference. Showing some of the nations top investors not in great agreement with the nations top central bankers. Ever declining rates have not created a sustainable accelerating uptick in growth. The fed is putting too much emphasis on business cycle. And not enough on the longterm debt cycle. We need to fix our tax system, close the loopholes and lower the statutory tax rate. Negative Interest Rates pose a huge head wind for institutions that have to meet longterm liability commitments. The idea you should raise rates to replenish the arsenal and slow the economy, thats a weird argument to make. Not true the major governments are completely out of ammunition. So when jamie dimon says to raise Interest Rates, you think thats wrong . Thats right. I think thats right. There are others who disagree with the low rate policy and some are at the fed. This shows dissents. Mostly governors dissented to ease and president s dissents to tighten. It has been since 2005 that a fed governor dissented. Since 1990, most have come from president s to titan and the majority have come in opposition to the low rates that follow the financial crisis. That blue line shooting up our president ial dissents. Thats a sign, that a lot of the fed Bank President s agree with our delivering alpha investors. And not especially to the period of prolonged Interest Rates. Bill miller went as far as to say the reason he was calling the bottom in treasuries is he thinks that the fed in particular and worldwide there is now finally questioning of the framework about low Interest Rates and negative Interest Rates in japan, that maybe they think it is not working. This all began this period of extended volatility, extreme volatility, began with mario draghi. Not saying that he would go further. And this is something that ive been on for a very long time, this idea of how do you weaken the banks who are your major conduit of monetary policy. And negative Interest Rates do that. And that answer has never sufficiently been provided by the proponents of negative rates to my mind. Or extremely low rates cause that kind of issue, right . I think in in zero or a slightly positive environment, the banks have a way of making money. When they have to eventually pass along these negative rates to clients you get to a big problem. Steve, stick around. We bring in diane swonk, founder and ceo of ds economics. I assume ds stands for diane swonk. How ironic is that . Really, really you get up early. What do you think of what steve just said and what we heard at delivering alpha yesterday, the concern with the posture of the fed and Central Banks globally . I think one of the things that we saw, the themes that came out and i think steve also alluded to this is something that came up in Ben Bernankes blog today. I would say implicit inclusion is that, hey, negative rates, raising the inflation target, all the stretching that were seeing Central Banks do wouldnt be as necessary if we had fiscal reforms, structural reforms, tax reforms, fiscal policy, that accompanied and helped low rates earlier on in the cycle. And were sort of late to the game on that. Austerity took, you know, a higher priority than it should have, earlier in the cycle. Now were to the stage where youre now hearing people talking about loosening up on fiscal policy when we have a lot of debt in the world and it does make me worried about, you know, can we really get fiscal reforms and fiscal policy we need to get better Economic Growth and get the fed sidelined. Im not sure that can happen. Steve . I dont think it can either. Who knows how this election comes out. But what we do see and i asked jack lew about this yesterday, an attempt to pass the onus of growth, baton of the onus of growth over to the fiscal side, and theyre pretty much like we aint taking it. The problem with and everybody on this panel, with all of this stuff the fed has done, is that the fear of taking off the bandage or stopping the medication has is seen to be worse than the actual medication itself. And nobody can step forward and say with any assurance the unwind is going to be okay. Were going to take this bandage off and underneath this is going to be a healed scar. Nobody knows what it is going to be like for the Federal Reserve to stop to start raising Interest Rates. Nobody knows what it is going to be like for the Federal Reserve to start reducing its balance sheet. There is no precedent here. Guys like singer and guys like dalio, they sit there and they worry about the future. Thats why singer says you are wrong to see the tenyear as a risk free asset. It aint. And youre right and here, diane, is why it this kind of line of thinking does frustrate me because guys like dalio, and singer, theyre paid a load, ill say, of money, to figure these things out. Thats basically their only job is to figure out what is going to happen in a few years, and make investments that will pay off from what is going to happen. Saying it is a worry, we dont know, whatever. Theyre either obfuscating what they do believe or know or dont know in which case why invest, so the idea is a lot of times we dont understand what is going to happen. You still got to do what may be right and let things figure it out. One of the issues that is critical, this is one that steve is alluding to as well, that is the fed is behind a rock and a hard place. Lael brainard has been some say hey, we made it through the period, the dollar is not depreciating. And she argues, thats because we moved to the sidelines. Thats because other Central Banks actually doubled down and eased further as we saw the brexit situation unfold, as we saw the china situation unfold and so there say real issue on cause and effect and a vicious cycle of if you pull out, do you have the tail wagging the dog . The Interest Rate is telling the fed what to do. On the other side of it, we cant afford to have a very disorderly unwinding of Financial Markets either. I think a lot of the discussion too comes from what have been the costs of having these low Interest Rate policies in terms of the way capital has been directed to different things. We talk about that all the time. But let me make another point. One of the things that were supposed to happen, we say the fiscal side, the fiscal side isnt just about spending money. It is supposed to be about changing your hold on one second, diane, changing your economy so actually it will work better. The third arrow in japan, never happened, right . Never eased up on immigration to improve the employment picture there. And not going to. By the way, this morning, the greek labor minister says they cannot implement labor reforms with the imfs demands. Nothing has changed since 2010 because Central Banks gave these governments a pass. Central banks did their jobs. I think the elected officials punted. Just like not because they didnt have to. No, but they thats not true. Back to the metaphor of the person who burned their house down. Fire department arrives and says, you screwed up, were going to let it burn. We dont know the house isnt burning down right now. You dont know thats whats happening in europe as they continually contract. You dont see business expansion. We do. If you look at michelle, look he says we do. We know that two things happened. We know that europe implemented what is largely thought to be errant and premature austerity. And it did not work out well. Without reforms. We also know michelle, wait, you had your little time on the soap box, im going to get my little time here. And number two, it was very, very late in implementing zero rates or quantitative easing. You look at the performance of the United States versus europe and meanwhile, japan has been on again, off again for many years and decades, and its performance lagged the u. S. The u. S. Came forward strongly. Because it acted early and strongly, its results show it. Were still lagging because we have not done more. At the end of the day, the Federal Reserve is doing what it mandated to do. There is a law here as well. Thats something we sort of lose sight of, the fed is operating within the law, the law may be wrong, there may be reforms. I have concerns about opening that can of worms and where it goes on the feds independence. But that said, right now, theyre operating within the construct they have. By not they have not been trying to sit there and able fiscal policy. If you look at every speech back to bernanke, the 2002 speech, where bernanke outlined what would happen if we got to this point, fiscal policy was critical as a partner. And it has not been there consistently. This is a whole other discussion, you brought up, at the end here. I know. Im michelle. Well do it another day. Im sorry. It is an important discussion to be had, right . I would love for another day, another segment. I would love to know where fed fund rates would be if we hadnt had the financial if we hadnt had the crisis and red e reduced them to zero, given the same gdp growth, job growth, inflation, where would we be . 3 . Where were they before . 4 . Now at. 25 . In 2003. You get my point. You cant erase the past. I think in the framework of the way things are now, where would we be . Thats for another show. Thank you. Thanks. Thanks, steve. Want to take a check on the markets. Were going back toward session lows. S p 500, pretty much at session lows, 2123, your level, down by. 1 . What is notable is the intraday turn wti as well. Were at session lows for wti crude ahead of the close there. Down by 2. 7 . 43. 68. So there you have the Market Action right now. 9 of the 10 sectors in the s p 500 are now negative. Lets go now to the bond market. Rick santelli is tracking the action at the cme. I imagine you might have just heard our discussion on said Federal Reserve and perhaps agreed or disagreed with some of the comments made by various members of the panel. I wish you could check my pulse right now, honestly. My heart is racing. I have paper towels here. Lets see, ill wipe off the pen, so no fingerprints there. I think ill wipe off the iphone. It is amazing. All the fed enablers want to wipe all the fingerprints off. They did an experiment, they assumed everything wrong with the economy was cyclical. They could fix it. But the grand experiment was wrong. It was structural. We needed fiscal, we needed congress, okay. So before they did the experiment, and before they whitewash it, maybe what they should have done is point at congress when they testify, point at congress and say, listen, we have structural problems that can only be fixed by reform and it is bad. Thats not what they said. They said they could get us to mars and back and we wouldnt have any of these movies like trying to live like a martian. But here we are. Here we are on the red planet and if 25 basis points didnt mean anything, if this wasnt that big a deal, why are they so petrified to do it . It is unbelievable to me the revisionist fed history. And to that end, the markets see it too. Look at one week of twos, look at one week of tens, twos really are volatile. Big volatility for a short instrument, but not really going anywhere of late. Look at the one week of tens. It looks like a ladder. Going higher. Lets look at the yield curve. Look at tens minus twos since june. Forget what the steepening curve means. What i see its meaning is theyre losing confidence in those that manipulated, held and put in storage all the long maturities and it is coming back right now. Thats why everybody is wiping off the fingerprints. Back to you. Got it, rick. We knew you would have a lot to say. Csi Federal Reserve. Coming up, well be joined by the man who wants to build new yorks answer to the ifive tower. What it will look like. Not that. Thats the eiffel tower. It tim cook dancing on it. Ross owns the nfls miami dolphins. What does he think about the players protesting during the playing of the National Anthem on 9 11 . Power lunch will be right back. This is the new comfort food. And it starts with foster farms simply raised chicken. California grown with no antibiotics ever. Lets get comfortable with our food again. Our next guest, unveiling plans today for a new monument. Joining us is steven ross, owner of the miami dolphins. Good to have you here. Great to be here, thank you. Why do you want Something Like the eiffel tower or the equivalent thereof in new york city. Were developing in manhattan, over the railyards, probably one of the most abandoned . Spaces probably in new york, you know. And here we are, were developing the largest project ever in the United States. So we had to make a statement. To do something that is going to be the new great work live, work, play environment, creating the great next neighborhood in new york, which to most places would be brandnew city. And the scope of it is so big. It required something if our viewers arent driving a box right now, they can see it on the screen. It looks like an upside down beehive. Thats a good way to describe it. 150 feet high. And it is 150 feet in diameter at the top. So it is very large in scope. It is open. It has an elevator in it. And people it is a bunch of stairways with landings that you can walk around the entire vessel. And it is over a mile in distance if you walked around it to the top. Youre taking suggestions for names, because the vessel is a temporary name for it. Well let the public, how they experience and wait and name it themselves. I think much like in chicago, millennium park, how they named well open it in the fall of 18. Fall of 18. Go ahead. At that point, the retail and the plaza will be entorely done and several of the buildings will be open. We have one of the buildings already open now at the space. We have 10. 5 million square feet under construction. Are you nervous about the timing of this project and what it is going to come online . There is so much supply coming in to new york city, particularly on 57th street, farther north. Barry sternwick thought new york was softening, so much supply copping online. Are you worried about that. Youre always concerned. I think what were developing is so unique and there is a great demand for it and best quality product that will be offered to the marketplace. We have already leased 7 million square feet of office space. The building that is open now, it is 100 leased. We have the second building of 2 million 7, thats 100 occupied, spoken for. We have another building that is over 1. 3 million that is over 50 . And we have another building that is 2. 7 million where were in active negotiations for another who is going in . Who are the tenants and what is the Subway Service like over there . To start with, what made the place people wanting to be there, is new york had their first extension of a subway line in 60 years. So right ajassant to the site is the extension of the subway line. So it has probably some of the best transportation in the entire city of new york. So that really created a reason for people wanting to go there and corporations willing to go there. Who is going in . We started out with coach, really the first tenant, and then we have loreal for the u. S. Headquarters, sap, and division, boston consulting and division of google. Thats in one building, all finished and all moving in or have moved in. The next building is 2. 7 million, time warner, we have wells fargo for 500,000 for their new york headquarters, kkr taking 350,000 feet and were taking related, the developer, were taking 250,000 feet. So we have in that building 2. 7 million square feet. In the next building, the third building we have very exciting. It is. The diversity. A wasteland over there for decades. My wifes former company is one of your tenants. The only pushback theyre getting is that you basically have to live in new jersey now to work in hudson yards because youre coming from connecticut, youre not at grand central, for those of you who dont live in this new york area, getting to the west side is not as easy. I beg to differ. If you come in from new jersey or westchester or connecticut, you go to grand central, you get on the 7 line and it goes right there in two stops. So it is within five minutes of grand central. Threeminute walk from penn station from new jersey. Can you do something about penn station, buy it, youre rich enough, and change it. Four of your dolphins player knelt during the National Anthem. A picture. Your thoughts on that . Well, i mean, you know, our team and probably the whole organization, obviously, doesnt stand for that. We dont encourage that. At the same time, you know, we do understand the people have a right to speak out how they think. I think what it does from our standpoint and i kind of i wouldnt say i encourage them, but i understand it and totally accept it, is that starts a conversation that needs to be had. And it is i dont think for one second, because ive spoken to all of the players, theyre as patriotic and believe in this country as much as anybody that there is. But they were making a statement and starting a conversation that no one wants to talk about. And from that, i respect it, i encourage it. Do you expect the demonstrations will continue throughout the season or taper off as that conversation may get kindled . This is a conversation i think that, you know, shouldnt get kindled. It is the fact of the matter is we have to address it. I set up a nonprofit that deals with racism and dealing with all the leagues and sports. Sports has never been used to create change. If there is any one place where there is, you know, equality, it deals with sports. I think that a lot of people are speaking up and i think they realize that they can create change and they want to see change and i think that is a very important conversation that needs to take place. So therefore ive encouraged them to do what they feel they should be doing because i know that none of it is in disrespect of this country, the military, or anybody else. Let me make sure im understanding what youre saying there. You encouraged them to do what they feel their conscience dictates they do, but you would prefer they not . The organization, we all encourage everybody to stand up and really, you know, show your respect for the country. Traditionally most people expect theyre doing. But these people i think have the same feeling. Theyre kneeling. Some with their hand over their heart. It is their way of showing that something needs to be changed, and there should be a conversation that should take place. You certainly shouldnt discourage that. Okay. Great to have you here. We appreciate it. Good luck with hudson yards. Thank you very much. Appreciate it. Back to the stock market. Shares of sarepta soaringing today, up 23 because one person is leaving his job. Well tell you who it is and why that person leaving is sending the stock up. Plus, the day has finally come, you can get picked up and driven around by a selfdriving car. Uber bringing these to pittsburgh. More on this story coming up. Still paying for your home when you should be enjoying your retirement . If youve paid off at least 50 of your mortgage and youre 62 or older, a reverse mortgage might be the answer. A governmentbacked reverse mortgage stops your mortgage payments and gives you steady taxfree income. Let the home youve taken care of, take care of you. Turn your equity into a comfortable retirement, all while continuing to live in, and own, your home. Find out how much you could receive for retirement. Lendingtree when banks compete, you win. Welcome back. Time for the good, the bad and the ugly for the trade. First to the good. Sarepta therapeutics. A drug has left the fda. Earlier this year, an fda panel voted against approving the drug, so it seemed like the drug may have a better chance of approval. Ford shares are down. The Company Expects overall Financial Performance to decline next year as it rolls out a new growth plan. And it is an ugly day for first solar. That stock one of the worst performers in the s p 500 and touching new lows not seen since april of 2013. Oil plunging in the past hour. Price closing, lets show you now, off by more than 3 . Jackie deangelis at the nymex. It is interesting that earlier this morning when the inventory report came out from the doe, we saw a spike in oil prices turning positive. Once people dug into the report and digested it a little bit more, they saw more than just a half a million barrel drawdown. They saw u. S. Production was rising and imports were up as well. With that told, last weeks number was a one off experience because of the weather. Add to that, the gasoline actually added this week, and distylets were up as well and this was bearish. 43. 5 is where we close. Back to you. To sue herera now. Cnbc headlines this hour. The acc president voted to relocate the leagues championships until North Carolina repeals that law. Chelsea clinton out on the campaign trail stump be for her mother in North Carolina. She held two events, one in rally and one at a Field Campaign office in carborough, right near chapel hill. We have one candidate who has real policies and plans to protect the progress that president obama has made and build on it, and one person who has a real record of being able to deliver progress. Speaking from moscow where he is in exile, National Security agency leaker Edward Snowden says it would chill speech if he serves a long prison term in the u. S. His supporters have launched a Public Campaign to persuade president obama to pardon him. And s. E. C. Chair Mary Jo White threw out first pitch before the Washington Nationals new york mets game last night. She fared pretty well. Boom. Maybe a bit high. But it was over the plate nonetheless. Good for her. Thats the news update this hour. Power lunch back in two. Whats happening here . 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. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. A lot of bad news out there. Upbeat census data showing us middle class income spiking more than 5 . The biggest jump last yearer. With that in mind, lets get the pulse of the economy from two western cities that we dont normally hear from. Ken faulkner, the mayor of san diego, the eighth largest city with a population of 1. 4 million and Unemployment Rate of 4. 7 million. It also produced notable tv stars such as me. Also the u. S. Navy qualcomm, Kaiser Permanente is there. Greg stanton is mayor of phoenix, sixth largest u. S. City and the state capital of arizona, population of 1. 5 million and Unemployment Rate of 4. 5 million, like six people live there 50 years ago, now one of the biggest cities in the entire United States. Lets get the pulse of the economy if we can. Mayor stanton, thank you for joining us onset. Youre based in phoenix but youre here why . Doing Economic Development activity in new york city. A lot of people are looking at opportunities in phoenix. Trying to steal companies from new york . Were where the action is at, san diego and phoenix in terms of tech jobs. Were ranked in terms of tech job growth number one in the United States of the United States of america. Our cost of doing business in the city of phoenix compared to the bay area, 40 less. You get top talent, graduating from our local universities, Arizona State university, the largest and most Innovative University in the country. Top talent at a lower cost, and city of phoenix, great place lets be honest. You would not mind, nothing wrong with this, you would not mind if your Companies Move your headquarters or significant chunk of their employees to your city, would you . Happens all the time. Are there Big Companies that we would know that are actively involved in discussions with you to move right now. I cant say that on national television. Right here. But the reality is this, we want the National Economy to do well, when the National Economy does well, cities like phoenix do very, very well. Were not rooting for bad things to happen in new york. We want the new york economy to do great. As those Companies Grow and expand, they often look to a city like phoenix to place a lot of employees and thats great Economic Development for our city. How much you benefiting, if at all, i should say, from very high real estate prices in Silicon Valley . We think we have a competitive advantage when it comes to real estate, affordability and the cost of housing. I think one of the things that we share in common, san diego and phoenix, is our focus on innovation. Our focus on growing and startups. It is not so much stealing businesses, but growing our own businesses and from that, what were doing in cybersecurity, biotechnology and that, you know, from my standpoint, that unique synergy we have here and collaboration, working well together in the region, that gives us a leg up and that helps us create Great Companies here and they grow to medium size and larger companies. Youre both border states that in border states and san diego right at the border with mexico. Mayor, should there be a wall between the United States and mexico . What were working on here is building bridges. Our economy and our economy in san diego and tijuana are linked. Thats a positive development for us. Ill give you one example. If you take what were doing in the area of medical device manufacturing, put what we do in san diego and tijuana, were the largest region for medical device manufacturing on the planet. Thats good news. And sometimes the products cross the border several times before theyre completed. So as we look to build additional infrastructure here in san diego to help with our airport, which were doing on cross border express, another border entryway, the more that we can get goods and services, and people, moving back and forth, i think i think that was a no, am i correct in. Well, ill tell you what, our border does a great job here. We have Strong Border enforcement. My job is to increase our ability to compete in the marketplace. One more time. Is that you oppose the idea of a building a wall between the United States and mexico . We have a wall a border fence here in san diego. Im all about building bridges. All right. Mayor . A wall is a really dumb thing. In phoenix, were lucky to have close proximity to mexico. In the past, some people have tried to portray our proximity to mexico as a negative thing. On occasion our state Legislature Passed very divisive laws that made national, international news. Bad divisive politics leads to bad business. We lost a lot of business when arizona passed a divisive law. Phoenix opened up a trade and Investment Office in both mexico city and our sister state of sanora. Trade with mexico has been a great thing for phoenix and arizona. And border walls are quickly, since i spend a great portion of my youth in ensneete encinitas, california, can you keep them . Were working hard to keep the chargers in san diego, right where they belong. Dont build a bridge to l. A. For the chargers van. Thank you. Well said. Thank you very much. Appreciate it. Well take a quick break. Yeah. Before we do that, lets look at the retail index. Down about 5 in one month. Got a big call, major u. S. Retailer. Luxury retailers taking a beating now. How to trade it. Look at you. Youre at the top of your game. At work or at play, youre unstoppable. Nothing can throw you off track. Oh hey, shes cute. Nice going man. Things are going great for you. Youve earned a night out. Good drinks, good friends. Yeah, we can go ahead and call this a good night. Wait, is that your car . Uh oh. Not smart. Yeah, i saw that coming. Say goodbye to her. Ouch that will hurt your bank account. Youre looking at around ten grand in fines, legal fees, and increased insurance rates. I hope you like eating frozen dinners. Alone. Lets try this again. Smart move. Because buzzed driving is drunk driving. Time for street talk. We kick it off with gilead. Price target being slashed by credit suisse. Says the stock is down 22 this year, mostly on questions on how sustainable the franchise is. Credit suisse thinking street consensus, revenues too high given competition from advi and merck. That should provide some upside to the stock here. Free port mcmoran, opportunity on the short side. Morgan stanley cutting to an underweight to equal quiet, target to 7 from 9. Stocks 982 a share. Downside. Morgan stanley says the risk reward is skewed to the downside. And that the stock is pricing in 2. 75 copper. Well above their house view of about 234. Also concern about the sale of a stake in a huge indonesian mine and free port may get less than planned. They just sold some gulf. Mexico assets to apc the other day and a carl icahn holding. So down 3 . Macys getting an upgrade to buy. The price target 34 bucks a share. The analyst doesnt believe the changes to Department Stores are going away, but macys gets it. Last week, macys talking about partnering with starbuck, putting bars in some stores. To tylers delight. Good free cash flow, good solid dividend yield. As jan rogers said, frequent guest on cnbc contributor, the real estate has a lot of value. Your final stock is under the radar kind of. Vonage. Youve seen the commercial for internet phones. Outperform rating, 8 target, the company is in the midst of a transformation, using consumer generated cash flow to fund strong pushes into the enterprise size, the corporation side of the storey. They like the sum of the parts valuation for vonage. 8 target, 35 upside. Average target 8 bucks. So on a 6. 12 stock, thats significant upside for a company that havent talked a whole lot about lately. With that, street talk is wrapped. Time for trading nation. Because traders do trade Better Together and today lets trade higher in retail. Shares of coach are lower. Now down 10 of the month. This follows other well known brands whose stocks suffered lately. Lets find out how and why. Your take on Luxury Retail, the sector finished or just a buying opportunity for the longterm . Great to see you. One thing i would say in terms of what were seeing trading, seems like most investors are in a wait and see mode for a lot of the Luxury Retail names. Two names to throw under the radar, they caught our eye, both with the bullish bias, first would be lulu, shorter dated calls. The cost of these calls relative to what they have been historically on the lower side, which makes them an interesting play. Investors looking for a quick bounce here. In tiffanys, the other name, same in terms of the cost of the options. Bullish flow for couple of days here, two names to watch. Boris, your view on Luxury Retail . I think Luxury Retail is really going through a massive transformation. The whole game turned to what i call pokemon shopping where everybody is looking for discount shopping. Only thing that seems to be working is the discount mall, the outlet numbers. I think for that reason alone, the sector is going to have to rethink the longterm goals. Millennials just culturely and technologically are not nearly as predisposed to luxury shopping as my generation is. Thats why the whole thing say much bigger danger than people think at this point. Bigger danger there. Watching a luxury space. Stacy and boris, thank you. For more, go to trading nation. Cnbc. Com. The day we have been promised for years, Science Fiction movies, maybe even night rider is here. You can hire a selfdriving car from uber. Power lunch minus me will be right back. Determining good exit, look to buy pullbacks to support levels like up trend lines, pryor lows, retracement levels or moving average of appropriate length for your time frame. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Selfdriving cars are here. You can hire an uber in pittsburgh that will drive you to your destination. Phil . Lets be clear here, tyler. This is not a vehicle that will not have somebody sitting in the front seat. If we show you this video here, these are vehicles that are selfdriven in terms of the technology, but there will be an uber driver skpan engineand an the front seat for people who hire these vehicles. By the way, these rides will be free in pittsburgh, and the president of uber says this is just the beginning of where the industry is headed when it comes to selfdriving cars. People get distracted. Uber has done a lot of work for helping people not drive drunk, but this is the next level of safety of really allowing machine precision and machine execution to be able to bring more safety to the driving. The selfdriving ubers will be operating in pittsburgh. Thats where ubers selfoperating Power Program is based. Youre talking about fords that will be modified. Eventually more will be added to the fleet in time. 27 cameras and 7 lasers are on these vehicles. The question is, will people in pittsburgh want to be driving around in a selfdriven uber . I would personally be more comfortable in a selfdriven car. I trust them over human drivers. I was asked if i would take one and i said no. I dont know if i would take it over someone behind the wheel, but i think it will be something good for the city. Overall people were split in terms of whether or not they would be excited to be in one of these vehicles. Guys, we had a chance to try it out, even to pilot one of these selfdriven vehicles. It will be interesting to see what the reaction is from the public who are ordering these uber rides and actually getting one of these vehicles. Whats amazing, phil, just a couple years ago if you asked anybody who was in the lead with selfdriving technology. You might have said apple, you might have said google. Google is tightening their selfdriving program, but tesla and uber really taking the lead. And ahead of it was anthony elvada, who you just heard from. He was at google. He is really considered one of the gurus, if you will, when it comes to selfdriving cars. Hes in charge of this program now, so that gives a lot of people optimism that uber will make the right moves and take the right steps to aggressively move into this space. All right, phil. Thank you very much. Phil labeau is reporting. Apologizing but did he go far enough . Our check, please is next. Remember here at ally, nothing stops us from doing right by our customers. Whos with me . Im in. Im in. Im in. Im in. One, two, wait, wait. Wait wheres tina . Doing the hand thing . Yep we are all in for our cuomers. Ally. Do it right. To the extent that was a consideration, what does that even mean . Is it a consideration or isnt it . It sounds like cya. Yes, passing the buck. Some lawyer came up with that phrase. Right. Keep in mind the hearings are next week, the 20th. Hes going to have to go to the hill and answer some questions. I think the accide extent of consideration is not going to fly on the hill. Just a guess. If we get mad, we cant make a political statement. Were watching shares of apple as well. It is right now sitting pretty much at the highest levels weve seen since december. It is the leading component on the Dow Jones Industrial average right now helping technology be one of the leading sectors on the s p but underhired by 3. 8 . Three conserve ative gains. Low expectations for that iphone 7. They mock your ipads but its going up. Have the people seen past that . I guess they think the 7 is going to help blunt that and theyll pick up some sales there. I dont know. But certainly the stock is responding beautifully the past couple days. I got a sign to talk about the psycho bosses, which means 20 of bosses in the country have psychopath i c psychopathic tendencies. I must be blessed because ive never had that issue. Theres none here. A one in five chance. One of my first bosses used to come out of her office and scream at people and flick her hand like this. There will be people who know. Thanks for watching power lunch. Closing bell starts right now. Hi, everybody, welcome to the closing bell. We have a little bit of a breather in the markets. Stocks not getting too much of a bounce after yesterdays oil selloff. Apple leading the dell from the second straight day. Samsung from that battery explosion. Could tmobile and sprint be the real winners . Thats still coming up. Thats the story sort of emerging right now, isnt it . Money manager mark