Transcripts For CNBC Power Lunch 20170404

Welcome to power lunch. Im melissa lee. Stocks right now are mixed actually all in the red right now. Amazon, though, hitting a new alltime high in todays session. Same for tesla, that stock trading above 300 a share for the first time ever. And take a look at gold hitting its highest level since february 27th. Tyler . Melissa, thanks very much. Im tyler mathisen. Glad you could join us on a rainy tuesday in new york. Here is what else is happening this hour. The u. S. Trade deficit falling in february as exports climbed to a twoyear high. Cleanup efforts under way from texas to the taerls after another stripping of severe storms ripped across the south. Five stormlegalitied deaths reported. And tony romo apparently hanging up his helmet and cleats for a microphone. Espn reports the cowboys quarterback will end his 14year nfl career and go into broadcasting. Michelle . Welcome to the business. Thanks, tyler. Im michelle carusocabrera. We have a lot to do today. We begin with a big headline coming out of the white house. The Washington Post reporting President Trumps team is exploring new tax proposals. Listen to this, could include a valueadded tax, very common in europe and latin america and or a carbon tax. Lets get more on this developing story, cnbcs eamon javers and numerous ceos spent the morning with the president and the Vice President. Reporter i just stepped into the white house here a few moments ago and talked to a white house official inside the building. They are not disputing the Washington Post reporting here that they are at least considering whats called a vat tax or value added tax, placed on products incrementally as they go through the Building Supply chain and also theyre considering a carbon tax. They caution they are considering these things, a wide range of options. They say its too early now to say that theyre ruling any one thing in or one thing out. Theyre also aware here at the white house that conservatives might be frustrated by the idea of a carbon tax, something they have said would kill jobs up on capitol hill among many conservatives in congress. Yet that is still under consideration here at the white house. Meanwhile they had a whole host of ceos here, about 50 ceos and top executives from a variety of Financial Companies and other industries around the economy here at the white house today. Gary cone, the White House National economic counsel director talked to the group before the president spoke. He talked about a couple of things he thinks they can achieve in the near term in terms of infrastructure including revamping the u. S. Airline system. Here is what he had to say. Air Traffic Control to me is probably the single most exciting thing we can do for a lot of reasons. Number one, everyone else has done is so we know its relatively easy to do, which is kind of insulting that were the to do air Traffic Control. Number two, it affects every state in the country. Multiple times. We have multiple air Traffic Control systems in multiple states all over the country. So this is a project that touches every part of the country. Number three, everyone in the country is affected. Whether you fly or not. Reporter and talking to that super wealthy group in the white house here it at the auditorium gary cohn said the only two groups who might oppose this are congressional appropriators who like to play with the money that goes out to the Airline Control System but also he said people who fly private aviation, the private jet industry might be against that. You all in this room use private jets. Well make sure you are not lobbying against us on this. Michelle, a lot going on. Gosh, there sure is, eamon, a ton going on. Carbon tax, a republican idea. It was the way democrats wanted to implement it, that it became very controversial, the way the money would get spent. Value added tax, great resistance among the right because they worry it would come in addition to an income tax rather than replacing it, so thats another big issue. And dont forget, eamon, big interview coming up on the closing bell later today. Chairman of the house ways and Means Committee live at 4 00 p. M. Eastern time. Everything youre hearing reporting runs contrary to what representative brady wants to do with ways and means. He wants a border adjustment tax. Now a potential battle going on between the two sides. Thanks, eamon. Lets get right now to caly tausche who was with one of the ceos or is now, in a meeting with the president. Congratulations to your tar tels. Heels. I hope you got a little bit of sleep. Just a little. The ceo of first data was in the meeting today. Frank, weve seen a lot of these meetings happen at the white house. What did you get out it have today and what sort of action plan do you feel the white house has put in place . First of all it was tremendously invigoratininvigor. Ive been watching whats going on here and i find it to be an incredible time. In the broadening of definition s if you think about infrastructure were not only talking about roads and bridges and tunnels but were talking about technology and Real Infrastructure to help power it. I find the leadership is completely dessicated to making this so much better. Of course when gary handed the president a process map it reminded me of my first days at first data and all the things in the way and the conversation about get rid of the clutter. So its an incredible dialogue, well led. But it is a dialogue at this point, and you have the manufacturing council, the infrastructure working group, the office of american invasion, you have the Strategic Policy forum. What are these groups actually getting done, and what sort of deliverables is the white house asking you for . I think today was about the partnership coming to the white house. I mean, theres been lots of ceos in here, great leaders before. I think its a very, very open to business mentality. But for the betterment of the country. I mean, its all about the betterment of the country, creating jobs. If you listen to the Workforce Development programs and i think every ceo in there took notes and thought about things we could do in our Companies Better and how we can partner with the administration better. Two of the biggest items on the agenda that businesses are focused on are tax reform and deregulation. First on tax reform, when you look at a potential border adjustment tax, a valueadded tax, now a carbon tax, when you think about running a business, what is actually advantageous for you understanding that they need to find revenue from somewhere . Well, i think that this administration has a ton of thought leaders that know the number one objective is to stimulate the economy and to create jobs and all of this is designed for that. If youre running a company youre thinking about how you, in fact, can get more done, how you can bring more to the market. And i think thats what theyre creating, keeping jobs in america, being able to develop more product, innovate. The idea of innovating and even bringing innovation to government. So i think tax reform, the way its being thought about has tremendous benefits. The devils in the details always. And, of course, there will be a lot of to and froing. I find it very stimulating. Well see which of these e ideas stick. Frank, great to talk to you. Thanks for giving us your perspective on todays meeting. Frank bisignano of first data. Jamie dimon releasing his annual letter to investors. Lets get to which will fred frost. Reporter it is understandable why so Many Americans are angry at the leaders of americas institutions. His overall tone was optimistic. He said he strongly disagrees with the view we are in slow growth and outlined boost iing labor participation, better education, lower Corporate Tax and deregulation. His comments on deregulation likely to attract attention. In particular he said america should eliminate its gold plating of international standards. By this he means the way in which u. S. Regulators topped up various stages of the basel rules and if they could use the standards of other International Banks it would free up a material amount of capital. On the point of capital he said, quote, we currently have excess capital while we prefer buying our stock at tangible book value we think it makes sense to do so at around two times tangible book value as well. This suggests they could be set for significant stepup in buybacks or dividends given the valuation somewhere between those two levels at the moment. Guys . Thank you very much, wilfred. Jamie dimon optimistic about the future. Should you be, too . Dia dia diane, mr. Dimon says we can grow a lot faster. Do you agree . I think so, too. The odds of a recession have been pushed out several years. The yield curve is telling us that and the banks are overcapitalized. You think its telling you a recession has been pushed out because everybody is wringing their hands suggesting were not going to get nearly as much growth as the stock market things . The first two years are baked in the cake. Its turned in terms of earnings reversal, turning positive. So far whatever happens in this administration really cant impact anything except two years and out. The yield curve investors are saying, hmm, well wait and see on that. The first two years look pretty good to us. Two questions closely related. One, do you agree that the u. S. Economy can grow at a faster rate than it has been and, number two, do you think that the stock market can continue to move up though maybe not at the rate it has been doing . I think the economy can that was for bob actually. Im sorry. I definitely agree with jamie dimon the market or the economy can grow a lot faster than it has. Ive never been i was a believer in this limits to growth theory. I believe that if you put in the right reforms in terms of better tax policies, better regulatory policies, better monetary policy, the economy could grow a lot at a lot quicker pace than it has in recent years. That said, if we get some positive reforms out of washington in terms of continued regulatory roll backs, we get some tax reform or tax cuts, i do believe we can see the economy grow faster. I think that would be good. And stocks, have they gotten ahead of themselves . Are they counting on too much good news . U. S. Stocks have been expensive for some time. I think with a rebound in corporate profits and if you do get some positive policy developments out of washington i think stocks can continue to grind their way higher. I wouldnt expect the returns that weve seen in recent years to continue. I still think we could end the year higher than we are today. Tax reform is great, sounds great, but the devils in the details. If the rumored or reported possibility of a valueadded tax is out there and that happens, is that a concern for you in terms of squelching consumer demand . I think they have to consider that carefully before they enable that and i think that just lower taxes would be better. Clearly the United States is one of the highest in the world. Id like them to focus on Corporate Taxes first and then, of course, the individuals. No one wants to be double taxed. Diane, bob, thank you. All right. Elon musk taking a dig at tesla shorts. Got us thinking, who are the other big losers in shortsville this year . We have those names coming up. First, though, airlines adding more routes to the summer schedule. Good move or could it backfire . We could see too much capacity. You always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you 24 7. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance welcome back to power lunch. Breaking news from the Federal Reserve. Richmond fed president jeff lacker resigning from the Federal Reserve. He is acknowledging that he was the source of information about an investigation that came from a story from Medley Global Advisers in september 2012. The story has been out there for five years. We have not known the source of the leak. Jeff lacker now saying he was a person who confirmed information in possession of the analysts during the call. Jeff lacker saying, quote, my conduct was inconsistent with Federal Reserve policies. Hes disclosing he says he did disclose that the analysts had the information in talks with the u. S. Attorneys office in the Southern District in 2 5 2015, but he did not disclose it in 2012 when he was interviewed by the Federal Reserves general counsel. He says, quote, i crossed the line. A 13 year veteran scheduled to retire in october. He is retiring immediately. Jeff lacker standing down and resigning after admitting he was the source of the confirmation of information in that medley global adviser story that caused such a controversy back in 2012. Confirming there was a quantitative easing. Should we tell us about how the fed works. I know theyre appointed. Should we assume lacker is stepping down because he knows he would have been removed . Hes not an employee like a ceo where you can get fired by a board. Reporter he actually is. So the Federal Reserve could have or would have reporter right. Conducted some sort of ex parte hearing and booted him out . Reporter he serves, as my understanding, brian, at the pleasure of the board of directors of the richmond Federal Reserve bank. Those are the people who appoint and vote for the next president. Its important here he did not tell accurately to the general counsel of the fed about this contact with this analyst. He doesnt even seem to be admitting that he told it in a wider investigation. This was the subject of an investigation by the u. S. Attorneys office. Which leads me to a question, steve, could he be prosecuted . Reporter look, thats outside my area of knowledge. What i wanted to talk to you about right here is this notion what it says here is, i did disclose in the interview around the broader investigation in 2015 that the analyst was in possession of confidential information, but he doesnt say that he admitted to talking to the analyst about that. Thats unclear to me whether or not he actual ly told the full truth in an investigation that involved the fbi and the Inspector General of the fed right there. So certainly in the 2012 interview with the general counsel he says he did not provide the information. There should be two stories here. To michelles point, if he broke fed rules he will not be prosecuted. He will be canned, in which case he stepped down immediately because you step down immediately when you think youre going to be booted anyway. If, however, that information was utilized in some capacity for trading by medley which is an adviser of macro policy my question is even more simple. The fbi is involved, the doj is involved, the minute youre involved michelle is asking an excellent question. The obvious which is in order to be prosecuted you have to have broken a law not a federal rule. Reporter this is a novel Insider Trading case, and thats something that had been pursued, and i dont know the status of it right now. Its been in the background for almost five years now and things crop up on it every now and then. We have not known the source of the confirmation of the information. The way president lacker describes it is the analyst already had the information and it appears from reading it that he confirmed that information that the fed was about to do a stimulus package of 45 billion of bonds. I know we have to go. Its a big, developing story. Our producer, i apologize, what does this mean for the fed in terms of interest Interest Rate policy . Lacker a Voting Member . Reporter he is not right now, i dont believe. Let me say this is not strictly directly at Interest Rate policy. I believe this is a black eye on the reputation of the fed. I was wondering if we would be short a Voting Member or will be short . Reporter no. When do we get somebody new . Reporter somebody will take his place, a Research Director or Vice President at the richmond fed would take his play on the board would be typical fashion. Theres not it would never be short a member. If a president who is a Voting Member couldnt vote theres an alternate for each member. Got it. Like a jury. I dont think weve been doing this about 20, 25 years never seen a story like that before. Jeffrey lack earp was scheduled to retire october 1st so hes moving up his retirement. Resigning immediately says a lot and not saying anything. Were back. More on this developing story. More on your markets and how airlines are adding more routes to the summer schedule so you dont have to be quite as packed in as sardines. Just a different type of slightly larger fish. See things your way. You have access to the right information at the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. To growing businesses cdw broacross the city,tration increasing productivity like never before, which is amazing, unless youre a barista. Cdw implemented Dell Poweredge servers with intel xeon processors to allow people to work from anywhere, so lucky me. So nobody wants coffee . hey, can i get a couple copies . Enhanced mobility by dell. I. T. Orchestration by cdw. Several airlines are expanding routes. Who is doing it and is it a good move . Phil lebeau . Reporter its a good move if youre in one of the smaller cities that has been targeted by united, american, as they try to fill in their route structures. Here are the airlines and the flights where the type of flights that theyre adding. Were not going to list every new route or destination but united adding 31 destinations, a lot of smaller cities, southwest expanding in 21 markets and american wanting to keep up with united with more flights out of the hub here in chicago will be adding flights. We know that there is strong demand. Were expecting a Record Number of people to be flying this spring and the Airlines Want to tap into that so they can fill in their route structure he especially as theyre bringing people into their hubs in the different cities. At the same time fares remain relatively low and with High Consumer confidence there are a lot of people who have said, yeah, this is the time to fly. This is from hopper. Com, an expectation of what we will see in terms of airfare this summer. Right now you see the average domestic ticket 237, or thats what it was in march. In june its supposed to hit the High Water Mark for the Summer Season at 269. Can the airlines add this capacity where they are adding it and still have positive passenger revenue per available seat mile . We talk about this all the time called prasm. If they can get that passenger revenue to be positive delta today out with its metrics for march said it had positive prasm for the month of march. This is the time other airlines say, look, coming into march, april and may we think we can swing into the positive ledger when it comes to that passenger revenue and thats why you see the Airline Stocks moving well. It does look good for the year. Phil, thanks so much. Lets try to answer that question that phil posed with the managing director and transportation analyst. Hi, elaine. Phil laid it out perfectly. Hi, thanks for having me. They want to add capacity because demand is higher. Will it still mean positive revenue when it comes to passengers . Some of the cities theyre serving will be competitive and fares will come down. They are adding more capacity than they thought they would six months ago. We think it will be positive in the Second Quarter but not as strong as it would have been had they not added all this he can ses capacity. When i see the last year it is already up 20 . How much is priced in and how much of this is going to improve the Stock Performance . None of the futures are priced in at this point with respect to the service that phil just talking about, all the new capacity going in. Most people are concerned its too much capacity, that pricing wont hold up. With fuel costs trending up a little bit, that should help the pricing side of the ledger, should labor costs trend up. So were kind of hopeful that the summer months will be a good an easy calm. Were hoping that will be up year over year. The trend that delta talked about, so the march quarter was up from the december quarter and then up 600 basis points from the september quarter. You look at the trend and the trend is heading in the right direction. As that continues the stock should perform better. You look at yeartodate performance and the stocks arent doing that well. Everybody else is down. For delta at least the First Quarter operating margins will be lower and they talk about a slower than expected. What are we seeing in terms of the Business Travel segment . We like to focus and travel and take trips ourselves, a business is an important part of the business for these guys. Everybody expected with easter shifting into april, it would be really good. We had a terrific end to the year. A good start to january and things trended down a little bit in february. March was okay and last week was fine. It wasnt the over the top greatness that i think delta he can pecked. Which Airlines Business is best and which has the most challenges . Quickly just as a stock. I think when you look at delta they over promised and under delivered. I think united and american probably estimated a little more accurately what their numbers would look like and southwest continues to crush it. Thank you. Appreciate it. Now let he is switch gears and help you make the best decision when choosing a credit card especially if you are a big world traveler and want the best bang for your buck. So here are some of nerd wallets favorite travel card picks that will have you raking in the rewards. Three of the best travel credit cards around. The bank of America Travel rewards card. Youll earn 1. 5 points for every 1 spent. The signup bonus 200 if you spend 1,000 in three months plus theres no annual fee. The star wood preferred guest card from american express. For every 1 spent at Starwood Hotels you wrack up five starpoints and two points at marriott properties. The chase sapphire preferred card. A 500 signup bonus for spending 4,000 in three months. The most flexible earning and redeeming rewards around. By the way, these reward cards are good for the airlines. They earn about 1. 5 to 2 cents while awarded to each card holder. Ralph lauren is closing its flagship polo store on 5th avenue in new york city. Courtney reagan is there with the details. Reporter so ralph lauren is closing the flagship location here on 5th avenue of the Polo Ralph Lauren store. This has been occupying this space. Ralph lauren says this is all part of the way forward plan announced in june 2016. As a refresher they said they would close 50 or more stores. Theyre going to be cutting jobs. The combination of these three new items will be an additional 140 million in cost savings. This is beyond the initial cost savings that were first laid out. The company says it will be reinvesting some of the savings into its growth. Ralph lauren shares are down about 5 today, down about 18 since the way forward plan was announced last june. The ceo larsen officially vacates the position on may 1st. That was a surprise to investors when that was announced in february. And the company has yet to name his successor. Now ralph lauren does still own and operate 485 stores that includes outlet and the club monaco locations. Ten flagships and still seven stores in new york city after this closes including those iconic locations on madison avenue. But at the time that this lease was signed on 5th avenue it did make a splash. It was the most expensive retail lease 400 million in total rental income over the lifetime of a 16year lease. They are ending it after just about three years. Weve reached out to the leasing agent as it pertains to plans going forward. We will let you know when they have more to share with us. You may remember that before this was ralph lauren it was vacated for several years and it was the disney store before that. Back over to you. Two questions. What are they going to do with the restaurant that is adjacent to it, number one. Number two, two other Retail Stocks making news today, kate spade and elle brands. Tell me about the restaurant first, if you know. Reporter sure, yes. We did reach out to ralph lauren to ask him that. Technically it was 1 east 55th street. It is staying open. So the polo bar rent is staying open. Theres a ralphs coffee location within. And that will be closing but the company is looking at more ralph coffee locations or other opportunities going forward. As for the other two, kate spade and elle brands. Reporter yes, yes. Kate spade, of course, there has been speculation this company is a takeover target of potentially michael kors or coach. There are headlines that crossed the wires that coach has submitted a bid. We dont know what the bid is and kate spade has requested more time to evaluate coachs bid or maybe solicit other bids as well. And shares have fallen but had run up once the news of the speculation had actually crossed those wires for several months now and then on elle brands there are some analysts that say that they just have too many locations in malls that arent seeing the kind of traffic you would want to see. L brands owns victorias secret, pink, and bath and body works. Those are the three brands. Back over to you. Courtney, thank you very much. Well, there is more chat thor that panera bread may be looking to sell. On deck, who might be a buyer if any deal happens. Hey gary, what you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade our 18 year old wase army in an accident. 98. When i call usaa it was that voice asking me, is your daughter ok . Thats where i felt relief. Were the rivera family, and we will be with usaa for life. The markets change. At t. Rowe price. Our disciplined approach remains. Global markets may be uncertain. But you can feel confident in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. Im sue herera. Here is your cnbc news update this hour. Ron johnson, the chairman of the Senate Homeland Security Committee says President Trumps border wall will cost between 5 billion and 8 billion. One Democratic Committee member says its not cost effective. Ive not met anyone, either a Border Patrol agent, a fellow member of congress who actually have said they think the most effective way to do that is to build a continuous concrete wall along the entirety of the southern border. Ive not met anyone who says that is the best use of our resources in terms of securing our border. A los angeles judge has rejected rowman polanskis bid to end his longrunning underaged sex abuse case without the fugitive director appearing in court. He denied several requests to resolve the case including sentencing that involved no more presideison time. Warren buffett helping out cherry coke with its launch in china. A likeness of the billionaire investor appears on special edition cans of the soft drink. Buffett says he drinks it on a pretty much daily basis. Thats the news update this hour. Michelle, back to you. Thank you very much, sue. We have to get back to Steve Liesman with more breaking news. Steve . Reporter michelle, thanks very much. We have learned that the resignation of jeff lacker is the result of negotiations with Law Enforcement officials. We cant say anything more about the status of that legal case regarding this leak which involved Medley Global Advisers and fed action back in 2012. We do know that his resignation, which was immediate, was negotiated with Law Enforcement officials. We have a statement from the richmond Federal Reserve which suggests maybe it was something more or different from a resignation. Once our banks board of directors learned the outcome of the government investigations, they took appropriate actions. Unclear from the statement what actions exactly were taken. We also know who was replacing jeffrey lacker. It is first Vice President at the richmond fed Mark Mullinix as well. One point which is in question here with richmond fed president jeff lacker. He is not saying in the statement he put out that he directly confirmed it. He said that the reporter mentioned the move the fed was likely to take and then he says here let me just find it i should have declined to comment and perhaps have ended the call. I realize that my failure to comment on this information could have been taken by the analyst as an acknowledgement or confirmation of the information. So there is the possibility the reporter either knew it from another source or had made up a number or heard something and perhaps lackers silence or continued conversation is what confirmed it. He did not directly say he confirmed the information in question here but says he failed to disclose it, failed to disclose it to the general counsel, and its unclear again what he told in an investigation that involved the United States attorney for the Southern District as well as the fbi and the Inspector General of the Federal Reserve. Melissa . Go ahead. One of the questions i would have if he made some sort of deal with officials in terms of his resignation that implies perhaps he has some sort of immunity or cooperating on another front, he may have heard in the course of the conversation and this is all speculation, he may have heard in the course of the conversation who the source was and didnt say no comment, didnt confirm it, didnt do the things he should have done. Reporter what it also says, melissa, he should have report this had communication and failed to do that. So that seems to be a certain direct violation. And then later on he says that in the interview he did not disclose this to the general counsel that he had that communication when im assuming he was directly asked that he had that communication with the a analyst at Medley Global Advisers. Steve, you and i both used to work in florida and used to cover crime, by definition. Reporter the most insane crime, yes. My memory of those times is when you talk about this is part of a negotiation with Law Enforcement, to melissas point, im going to step down and as a result a, b, or c may not happen. You may not get prosecuted or your sentence will be lesser than what it would have been otherwise. Reporter i would say thats a reasonable extension of that notion that he did negotiate this departure or his departure was part of a negotiation. We have to be very careful here, though, right. Reporter we always are. Lacker isnt the one who leaked the information to Medley Global Advisers. The Medley Global Advisers analyst reporter if i can stop you there, brian. It may be that no information was leaked. If you heard maybe the fed is going to come out and you reason that the fed would come out with some stimulus and you said what about 45 billion . And the other guy didnt say anything . Is that confirmation and the guy kept going and you can have that understanding that the silence or the failure to redirect in that regard or to correct in that regard is seen as confirmation. Thats the impression im getting from this. This is a carefully worded statement to the point of being kind of confusing. From mr. Lacker. Reporter exactly. The one youre talking about here. There could have been a leak or not a leak. It could have been a smart analyst taking a surmise. What mr. Lacker apparently didnt do was tell the people at the fed the next day or that afternoon that he may have tacitly acknowledged reporter it looks like it was later on counsel talked to him. Whats even worse here or potentially worse here is what happened in 2015 when, again, he doesnt come straight out and say what happened in that discussion there with the it says part of the investigation. Part of the investigation opened by the fbi and the District Attorney for the Southern District. How this analyst received extremely specific information. Thats what we can surmise from the reporting so far. This medley person had some really detailed information that lacker should have said, i dont know where you have that, i shouldnt confirm anything. By maybe nodding or being millenninumb he implied. Reporter to come to the conclusion that was come to did not take a whole lot of insider information, the eidea that the fed was going to do something at that meeting. The journalist speculated on that a week before. My recollection is i did, too. They were a bit more specific and talked with a bit more certainty about it, which is what raised everybody got everybodys attention to the matter. Notion of additional stimulus are from the fed at that meeting, my recollection, was not a huge leap of faith. Got it. Thanks, steve. All right. From the fed we go to the bond market and rick san it telly tracking the action at the cme. Rick . Reporter well, tyler, yesterday the auto sales definitely put a bid to the market. Rates are up a handful. Were Still Holding the bottom of the reins. This is up month to date. Yields are moving lower at a time were tapering with quantitative easing. Mario draghi. Maybe here is the answer. Look at a threeyear chart between bunds in some of the southern paper on tenure like italy. The widest its been. That is where the Pressure Point is. And finally february 13, the start of the dollar index, it seems to be coming back right against republic cystance as it sits. Melissa, back to you. Rick santelli, thank you. Takeover talks continue to swirl around panera bread, were playing the match game. Two names that might be a good fit for the sandwich maker. Welcome back to power lunch. Im Julia Boorstin with a developing story. Pharma giants the latest companies to boycott fox news the Oreilly Factor in the wake that five women were paid 13 million to settle allegations of Sexual Harassment and misconduct made against anchor bill oreilly. Gsk and sanofi putting a hold on their ad spots are joining bmw, mercedes, hyundai and Constant Contact stopping advertising in the hit fox news show. The Financial Impact on fox is still unclear. Mercedes is reassigning its ads elsewhere within fox news while bmw is deciding whether to reallocate those dollars or to pull them from fox. Brian, over to you. Julia, thank you very much. Could panera bread really be in play to sell itself . And if so, who might be a buyer . Joining us is the senior restaurant analyst. So, bob, just a quick back story, yesterday a report came out that suggested panera may be seeking strategic alternatives. Parlance for maybe selling itself. Panera played the were not going to comment or deny rumors or whatever it is game. Do you believe panera bread may be up for sale . Brian, it wouldnt surprise me. You have the industry bellwether who literally is firing on all its cylinders at this point and when i look at the companys business, not only one of the best fundamentals in the industry theres a number of pieces to paneras story that i think for a strategic buyer makes a lot of sense. Especially the technology, the Digital Platform Company has, the loyalty program, all of those are really key pieces that i could see a motivated buyer would really like to have within their own portfolio. Who would be that motivated buyer potentially, bob . Well, you know, i think drn. Were mott going to hold you to it but who do you think could be out there . I think the most logical for whom it makes the most sense is a Company Based in luxembourg that operates a number of other brands, einstein bagels, petes, krispy kreme, green mountain. For a lot of reasons an acquisition of panera bread not only brings them a digital platform that ultimately they could use across their portfolio but also provides them with an opportunity for vertical integration of the Coffee Business with what panera sells and, oh, by the way, panera has a very great prospect for its cpd, a consumer package business, that they could also benefit from. So theres a lot of reasons why they ultimately would be the better fit versus anybody else. So if you are a shareholder of panera bread, bob, what would you do at this point . Would you take the gains and leave the stock . If jab holdings were the buyer at what price, what sorts of premiums have premiums have they paid in the past . Again, it all depends. Beauty is in the eye of the beholder. If you have a motivated buyer and it came down to an auction, the price could drift well over 300 a share. Could it be just on a fundamental basis, you know, i could see a price target for panera bread if the company continued to operate its business in the low 320, 330 range for the next 12 months, we got 270 price target which obviously the stock has blown through but when i see the operating fundamentals and momentum in the business, i could see how the stock potentially gets into that roughly 320, 325 range within 12 months. That would not be a stretch. All right, bob. Thank you. Thanks for phoning in. Next on power lunch, elon musk tweeted about Stormy Weather in shortville. What other short positions might be in trouble right now . The answer coming up. Nhl announces players will not play in south korea. Nhl owners pushing for this. I spoke with the nhl commissioner about this very issue during the 2014 winter games in sochi. After each olympics, we sit down and evaluate whether or not it makes sense too go. Theres good to being at the olympics and not so good. Not so good has to do with obviously disrupting our season, which has a disproportionate impact on some clubs. We have some with ten players and some with two and 550 players on vacation so teams come back in different shape and depending on where we are in the world has an impact on how powerful our presence is back in north america. He sounded like he was leaning toward this decision back then. Toward a no. Right. So just this morning one says hell play regardless for the russian team so that sets up a battle. There may be players that will get this exclusion in their contract or say im going. Stop me. Depends on which team youre going to play for. The russians historically are medal contenders. If youre a smaller country with less of a chance, you may not go. I love it. Back to college kids. Miracle on ice. We may get crushed but at least well be honorable. They really want it. Yes. Elon musk taking aim at tesla shares as his stock touched an alltime high. It got us thinking what other stocks in shortville are seeing Stormy Weather. So, melissa, lets take you to shortville because that elon musk tweet inspired the thought process behind this story. We wanted to look in shortville at stocks that had 10 plus Short Interest as a percent of shares outstanding and have positive yeartodate performance. Only a handful of stocks came up. These are six that are no noteworthy. Amd is up 20 yeartodate. Fundamental buying a possibility there but short squeeze. Chipotle is up. Seagate up 19 . V verisign is up 15 . Best buy up 14 yeartodate. Tesla not the only one. I should point out tesla not in this screen because its not in the s p 500. Back over to you. Still ahead, trump talks with ceos almost a weekly occurrence in the west wing these days. Are the conversations productive . That debate coming up. The cnbc Trend Tracker live data board is brought to you by the cme group. Approaching medicare eligibility . You may think you can put off checking out your Medicare Options until youre sixtyfive, but now is a good time to get the ball rolling. Keep in mind, medicare only covers about eighty percent of part b medical costs. The rest is up to you. Thats where aarp Medicare Supplement Insurance Plans insured by Unitedhealthcare Insurance Company come in. Like all standardized Medicare Supplement Insurance Plans, they could help pay some of what medicare doesnt, saving you in outofpocket medical costs. Youve learned that taking informed steps along the way really makes a difference later. Thats what it means to go long™. Call now and request this free decision guide. Its full of information on medicare and the range of aarp Medicare Supplement plans to choose from based on your needs and budget. All plans like these let you choose any doctor or hospital that accepts medicare patients, and there are no network restrictions. Unitedhealthcare Insurance Company has over thirty Years Experience and the commitment to roll along with you, keeping you on course. So call now and discover how an aarp Medicare Supplement plan could go long™ for you. These are the only Medicare Supplement Insurance Plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. Remember, medicare doesnt cover everything. The rest is up to you. Call now, request your free decision guide and start gathering the information you need to help you keep rolling with confidence. Go long™. Welcome to the second hour of power lunch. Im michelle carusocabrera. Two hours until the closing bell. Heres what were watching at this hour. Cutting red tape and growing jobs. President trump meeting the nations top ceos about his economic plans but are those ceos still buying what the white house is selling . Wall street warming on snap with a slew of buy ratings. However, one of the top media and tech analysts says snaps growth may be done. She joins us. And amazon reviciniinventing thg it disrupted. Brick and Mortar Retail for actual store fronts. One retail stock immune to amazon and one stock that is riding amazons wave. Meantime, lets get a check on the markets. Major average wiping out earlier losses and carving out gains. Check out movers were tracking. Staples soaring 10 on talks hes of buyout talks. Southwestern energy, vertex pharma also. And take a look at tesla marching higher once again. Talk about pain in shortville. Stock trading above 300 bucks for the first time ever. Meantime, President Trump hosting ceos at the white house today and sounding very probusiness saying he will cut regulation more and spend a trillion dollars on infrastructure. Our own eamon javers was there and joins us now from the white house with some of the highlights. Reporter what a session. Dozens of ceos and top executives at the white house to meet with the president , his daughter ivanka trump, the Vice President and a whole host of Administration Officials here. They did a couple breakout sessions, roundtable discussions on a number of issues. At one point the president said were going to do things that are very good for the banks and he talked about his dodd frank rollback plans. Heres what he said. You look at the folks from government that are running all over the banks. Theyre running the banks. The people that are really, you know, the head people, theyre petrified of regulators. They cant move. The regulators are running banks. Well do a major haircut on dodd frank. Reporter no real specifics on what major haircut of dodd frank is that the president expects to roll out here. We also got the answer to another question which is just what is elon musk been doing over here at the white house. We know hes come over here several times for these ceo sessions. He was not here today. He might as well have been here in spirit. The National Economic counsel director talking about elon musk on a discussion with infrastructure saying he may have a solution for highspeed rail. We cant build highspeed rail in the east coast corridor because its too curvy. Elon musk says i can solve the problem. I can tunnel the whole way. Hes been tunneling out in the desert and california to prove it can get done. He can beat highspeed rail. Reporter a shoutout there for elon musks hyper loop. Apologies here. They are cleaning the driveway behind me if you can hear that noise. Ultimately i talked to a number of ceos after the fact. I talked to stephen on the stairwell after the white house. He said this is what you want the president to be doing. You want him to talk about cutting regulations and probusiness tone out of the white house. He was very enthusiastic. There were other ceos i can tell you in the room today who were looking at this skeptically saying there were a lot of Different Industries here represented. The conversation was scatter shot and general all over the map. Those ceos are going to watch this for any specific followups to see if this is a useful kind of a way to deploy their time and engage with this white house. Thank you very much. Mr. Trump tightens the talk. Are these white house ceo meetings effective or have they lost mojo because of frequency . Joining us now is susie and steve. A person you know pretty well went to one of these meetings. I havent seen him quite so are they working meetings or listening sessions . Whats the result . He was happy when patriots won the super bowl also. It was that he was very, very encouraged. Speaking of my husband, jack, hes been to meetings with president s for every Administration Since reagan. Most of them are complete bs. You flap your lips and administration nods. He felt that Trump Administration was listening closely and is probusiness and wanted to hear whats going on. Im encouraged to hear that the haircut on dodd frank because one of the things we hear all the time talking to banks need to be regulated obviously they do. When you have regulators sitting in bank hr departments, whats up with that . So i think hes listening and what youre hearing right now is him beginning to respond. The meetings are effective. Meetings are work. Its not like they are nothing. Steve, how meaningful is it as a former ceo and as a business person to be sitting down in the oval office or cabinet room or wherever they have these meetings and feel that you are among sympathetic listeners . People who know what you need and know what you want in other words other Business People . Well, its great being with other Business People but more importantly with an administration who ran and won the election in no small part because of a promise to grow the economy and create more american jobs. I will tell you, there were 50 people today. I hope these meetings happen every week. I hope a different 50 ceos every week. They prepare before you go in. Ive been going to these meetings for many years. You prepare. You talk about what youre going to prepare and deliver to the administration. You listen. E exchange. Its quick. As long as we get feedback on how we can grow and simplify regulations and what tax moves need to be made, this is great. Some impact for sure. We also want to ask you about minimum wage. I dont know if you saw this oped by andy who tried to be the labor secretary. Hiking it to 15 will kill the very jobs of the people they are trying to help. What do you think . Do you agree . I think robots are coming no matter what. Im not sure this is what will speed it up. I think that minimum wage in some cities you have to have it or youre going to pay another way because people will not be able to support themselves. I do think that automation is a really big thats sort of like a threat with automation coming in to replace low level education. The answer is education and not minimum wage. Steve, how about you . First thing is i dont think there should be a federal minimum wage. It should be left up to the states and cities. They know their areas best. These are microeconomies. Second thing as former retail ceo, when wages get high enough, you do automate. No more checkers. They are selfcheckouts. You look in restaurants today. They have ipads for ordering. This automation is happening. Maybe it would have happened anyway. When you raise wages, it pays off the cost of automation and it helps a few people who get to keep those jobs at a higher rate but it does in fact very people youre trying to help. We also want to get your take on this story. Many Silicon Valley companies are shaking in their boots. A Government Agency is making what it calls random and unannounced visits at companies suspected of visa fraud. Some people are calling these raids. Weve been hearing the word raid come up in unconfirmed reports. The Trump Administration says its cracking down on h1b abusers by making these unannounced visits to companies. The u. S. Immigration office said targeted visits will allow uscis to focus resources where fraud and abuse of the h1b program may be more likely to occur and will be random and unannounced. Unconfirmed reports of raids in Silicon Valley have emerged including a ceo saying that i hear from friends that uscis showed up and pulled people from meetings. Critics say it lowers wages in the tech sector and takes away jobs from americans. Those include trump adviser steve bannon. Take a listen to this breitbart interview from 2015 where he commented about h1b. My point is that country is more than an economy. Were a civic society. Another critic of the h1about program is attorney general Jeff Sessions saying the program was hurting stem graduates. Iing firms are voicin their concerns. One tells us tcs has significantly reduced its use of high skilled h1b visas over the last three years. Melissa, back to you. Thank you so much. Steve, what are your thoughts on this . Well, the Trump Administration is cracking down on illegal immigration. Theres no news in that. These companies have been warned for a year. The h1b program is a big one. Theres a skill set gap on what Companies Need and what comes out of postsecondary engine aa in engineering and technical fields. We need to provide those h1b visas to provide companies the skills they need to run their companies. We need these brains. Its a complicated problem. Its going to have a somewhat complicated solution to it. The question is are we educating people and starting educating people in stem areas early enough. The idea of people being pulled out of meetings doesnt feel american to me. If thats actually happening, thats something that needs to be talked about. This sounds like it was secondhand information. Similar to the issue of minimum wage. Goes back to the issue of education. Thank you very much. We appreciate your time. Lets get to comments from bank of americas ceo. A day for bankers. So speaking just moments ago, Brian Moynihan outlined his take. Businesses are optimistic. It charged after the election on the theory that issues were important to them, regulation, administration i believe would deal with regulation and deal with some of those issues. It really rose unprecedented things. Reality of the process to get this done meets their needs, theres been a debate about whether its enthusiastic. Demand is solid and things are fine. Seemed relaxed about q1 earnings but not excited over loan growth. 2 growth economy. Loan to demand will match that. Loan usage is at high levels on historical basis but it isnt going to grow unless the economy grows faster. As for reforms, he said there was uniform belief the Corporate Tax rate needs to come down and deregulation he felt that Smaller Companies deserved the benefit. We believe that the regulatory relief for small Financial Institutions has to be real and fast. They just dont have the scale to be able to afford the 3,000 people we have in compliance. More coming up on closing bell. Heres whats coming up on the rest of power lunch, apple had a great run this year. What might even push that stock higher . Plus, well speak to an analyst who has a viewpoint on snapchat that may not be what the bulls want to hear. Amazon on a tear as well. Well talk about their incredible run as well. That and more when power lunch returns. Welcome back. Lets get a market flash. So shares of estee lauder are up. The fimp sarm says theyre beneg from new Distribution Channels and growth in smaller brands. Goldman raised price target to 103 bucks a share from 85. Shares still down 11 over the past 12 months though up 11 yeartodate. Back over to you. Is growth all about over at snapchat and when can a downgrade be considered bullish . Two big questions. Lets get answers. Laura martin is managing director. Laura, those are good questions. Lets get some answers. First off, snapchat. You think you have an underperformer. You believe that the peeps that may use it may already close to sort of maxed out. I do. There are three things that limit total dreaddressable mark for snapchat. Age of users 13 to 34. You are way too old. Youre not using it. Not just old. Way too old. Thanks for coming on, laura. Fired. Never invited back. They need a highend advice and they also need free band width. Turns out in top ten markets, total age range is 13 to 34. 650 million people. Thats 80 lower than or smaller than facebook and they are already at 50 penetration in the u. S. Where they do half their revenue. What if they change . Your analysis is based on what they are today. Could they become something where us old folks would also like to be on the inner web . Maybe but facebook has adopted all of snapchat, stolen, borrowed, all of snapchat functionality. Copied it all. Same name. Same tech. I think facebook, which already skews older, is adopting all of that Young Persons does facebook have a patent problem . They dont. Its software. They use snapchat as r d lab and copying software. No lawsuits. There will be advances in iphone 8 namely better 3d sensing so when you take a selfie it has a better quality image. Youre not sort of distorted. Its going to be a much better image. Snap made it clear its a camera company. When there are these sorts of leaps and bounds advances in iphone technology, wont that help snap and maybe increase the total Addressable Market in ways were not thinking about right now . I would say yes. How about in the u. S. Where they do most of their business . Its helpful to snap but people try it on Facebook First and think its a facebook application and dont bother to migrate to snap. Do you give a darn in your analysis about the fact that you have absolutely zero rights as a shareholder . How much does that play into it . Clearly all analysis here irregardless of ownership structure, does that lay on top of it . I would say its emotionally insulting that they gave public shareholders zero votes and the founders have super voting shares nine months after theyre dead or if theyre fired. Thats an insult to public shareholders. They dont seem to care. They still buy the stock. Lets move onto apple. The other question was a riddle basically. When can a downgrade be also bullish because normally its bad. You ungradowngraded apple but bh on the stock. Connect those dots. Apple is our top pick for 2017. We had a strong buy. Stock was up 40. We have 165 target price. 20 upside. We love this stock. We think that too many hardware analysts think that you sort of zero base your apple demand every year and all Research Shows that average turn rate is falling for an apple device. People stay in the ecosystem longer. We are talking about lots of advances for the 10year iphone and we think its an ecosystem with services locking people in for longer and longer tenures. Lots of problems with galaxy note helping apple elongate its consumer life span as well. Apple tried to argue that they are a Software Company because that would get them a bigger multiple. So far the rest of the street, to your point, looks at them as hardware and doesnt give them a big multiple. This company has higher Profit Margins and it has higher returns on capital than facebook and priceline so why is it being valued like a Hardware Company as if it has no margins. Apple services, itunes part of the business, number two business, iphone number one, is bigger than facebooks entire business. Its got massive margins. No one seems to care. Were hammering away at that. There are 50 analysts. We think 40 are wrong. We think were right and apple is our top pick for 2017. Laura, a real pleasure. Next time i pull out my rotary phone, ill give you a call. The old guy. Whats that you say, tyler . Thank you very much. We all took a look at how much the most expensive diamond would sell for in auction. Well tell you who came out sparkling and who actually bought this stunner next. At . Hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at Td Ameritrade. Parts a and b and want more coverage, guess what . You could apply for a Medicare Supplement Insurance Plan whenever you want. No enrollment window. No waiting to apply. That means now may be a great time to shop for an aarp Medicare Supplement Insurance Plan, insured by Unitedhealthcare Insurance Company. Medicare doesnt cover everything. And like all standardized Medicare Supplement Insurance Plans, these help cover some of what medicare doesnt pay. So dont wait. Call now to request your free decision guide. It could help you find the aarp Medicare Supplement plan that works for you. These types of plans have no networks, so you get to choose any doctor who accepts medicare patients. Rates are competitive, and theyre the only plans of their kind endorsed by aarp. Remember these plans let you apply all year round. So call today. Because nows the perfect time to learn more. Go long. 24 hours ago we told you about this 59. 6 carat pink star diamond. Today it sold at auction in hong kong and now officially the most expensive diamond ever sold. Yesterday we did a price is right on power lunch and made guesses of how much it would go for. 53 million on the low end. Tyler guessing a whopping 110 million. He likes pink. Actual selling price, 71. 2 million meaning robert frank nailed it almost exactly. He guess 71 million even. Rigged. And thats why he is our wealth editor of course. Winn ene ener bidder is a hong based jeweller. Thats why car salesmen love to see me when i walk into the room. Can i get the price above 50,000. Youre a hard bargain, melissa. Anyone find it suspicious . 200,000 off robert frank . Robert frank big news. Rigged. Hacked. Coming up, well talk to the founder of this years Coolest College startup and energy is the worst performing sector so far this year and coming up one analysts gives three names hes bullish on for the rest of 2017. Well be right back. Im val. The orange money retirement squirrel from voya. I represent the money you save for the future. Whos he . Hes the green money you can spend now. Whats up . Gonna pay some bills, maybe buy a new tennis racket. Hes got a killer backhand. When its time to get organized for retirement, its time to get voya. What if we could bring you by having better values . At blue apron, we work directly with more than a hundred family farms. So instead of spending on costly middlemen and supermarkets, we can invest in the things that matter most making farmland healthier. Cutting down on food waste. And bringing you higher quality, fresher ingredients for less than you pay at the store. Because food is better when you start from scratch. Get 30 off at blueapron. Com cook on a perfect car, then smash it into a tree. Your Insurance Company raises your rates. Maybe you shouldve done more research on them. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you 24 7. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Hello, everybody. Heres your cnbc news update at this hour. Rex tillerson meeting with jordans king abdullah. The king is scheduled to meet with President Trump tomorrow. Tillerson ignored reporters questions regarding the syrian chemical attack on sicivilians today. The cdc says one in ten women who contracted zika virus had a baby with the disease. Tornadoes causing lots of damage. Homes were destroyed. Trees uprooted and power lines were down causing power outages. Widespread ones. One person was killed in south carolina. And Dallas Cowboys quarterback tony romo will retire. The sports Business Journal reporting that he will take a job in the cbs broadcasting booth replacing phil simms as the networks number one color commentator. The cowboys are expected to release romo today. Thats the news update this hour. Back to you. Thank you very much. Lets go now to Steve Liesman for more details about this resignation. Thanks very much. Just got off the phone with jeffrey lackers attorney. Jeffrey lacker as weve reported in the last hour abruptly resigned today for his involvement in the 2012 confidential information case thats been out there and investigated. The attorney telling me that no charges will be brought against jeff lacqu lacker and failure t disclose is a narrow piece of information that lacker failed to disclose the analyst he was talking to had confidential information. He disclosed that he had the discussion with the analyst. This leaves the question about this case as to whether or not the analysts got the information from another source or whether or not the reporter was merely just fishing and made up a number or some information and jeff lacker saying he failed to hang up the phone or failed to say no comment or deny it and he believes inadvertently the source of the information or confirmation. I have been reaching out to people in the last 30 minutes or so. The analyst worked for Medley Global Advisers from australia. I have the report she put out october 3rd, the day before minutes released. Lacker spoke to her october 2nd. To your point she could have guessed 45 billion number but there are specific things. Also the threshold what the number would be for the fed to stop that. That was a story there. So the failure here of lacker to disclose is to disclose to officials that regina had confidential information which is sort of a strange area but hes required to disclose that as well. He talked to her the day before her report came out. That he disclosed that he did talk to her. Three years later in 2015 he disclosed that. From what i can tell, from the statement which as weve said is a little convoluted, it doesnt appear as if he denied talking to her in that 2012 general counsel discussion. I dont think he denied that. Theres still the question where did you get the information in the first place . Exactly. Thats really an interesting question as to whether or not what we dont know, well try to reach out to the u. S. Attorneys office whether or not the investigation overall continues. It appears to have ended as far as jeff lacker is concerned but whether there was another source of information but whether he got confirmation and got it through jeff lacker or whatever transpired during that call. I presume that lackers attorney didnt disclose if there were no charges in exchange for information on the source the reporter had. We didnt get into that. My guess is that lacker would not know that, but i dont know for sure. Were just talking about fed rules. Theres no law broken. Just fed rules. Unclear whether there was a law broken or what the source of that requirement to disclose that the analyst had confidential information is from. Can we throw a hand grenade into the entire story because janet yellen met with this regina earlier this year and admitted that back in june of 2012, three months, she had also met with regina to talk about global issues. Thats out there and known. As far as i know, no confidential information was passed in that regard. I think it was colonel muster in the library with the candlestick. Steve liesman, you may have a long night, my friend. This fed story has intrigue. Always a long night, as you know. Thank you. Were 90 minutes from the closing bell on wall street. Major markets are modestly higher. There you see them. Industrials up about 36 points. S p basically flat. Nasdaq basically flat as well. In the green. Big moves in Energy Stocks. Southwestern energy, range resources, chesapeake, eqt biggest gainers. Oil closing for the day higher near a onemonth high. Yeartodate down 5 . Today up 1. 5 . Back above 51 a barrel. Which is one of the reasons that Energy Stocks are moving higher today. However, the sector was the worst performer in q1. So what do you do in the Second Quarter and what are top stock picks for your portfolio . Lets bring in john. Good to have you here. Thank you for having me. Will these catch up in the Second Quarter . We believe it is. Why . We believe oil prices will go up. Supply and demand is tighter than consensus believes. Demand growth is strong. With regard to supply, we think increasing supply to meet that growth will be harder than people think it will be. One dynamic that happened during the downturn is what we call higrating. If an operator planned to drill 100, only had cash to drill 30, you drill 30 best first. The productivity of additional wells wont be as good as best stuff they dlirilled during the down cycle. Its going to be difficult to do as activity picks up. Top picks if you believe that oil is coming back, parsley energy. Its an oil company. Pe. Was down 8. 5 . Why do you think this is the best pick now . The last name. The founder of the firm, its named after his grandfather. They are one of the most they have a 10year history. The history is longer than that. One of the other companies very favor is pioneer natural. Pxd. The chairman is parsley energys its brians dad. Theyve been working in the base for 50 years. Companies that are late to the basin are paying up to 30,000 to 35,000 per acre for leasing rights. Pioneer does not have that issue because its been there with Predecessor Companies for 50 years. They have done very well for investors. We think that will continue. You also like weatherford. Whats your highest convicted sector . Is it energy . We stay sector neutral overall. Within that we are positivity weatherford because of oil prices. Weatherford was up 30 in the First Quarter yeartodate. Way outperforming oil. Youre going to get more out of that stock . Thats after a dismal 2016. During the downturn they fired about half of their workforce and closed onethird of their facilities around the world. What that does is create a lot of earnings power with the up cycle kicking in. That was the original earnings thes thesis. Earlier they hired a new ceo. Widely respected in the industry. Investors love him. Not part of our thought process. Technician must love that chart. Higher highs over and over again. Its looking much better. Theres even gravy on top of that within the past couple weeks. Weatherford is combining part of its business with Industry Leaders for fracking so activity increasing and there will be a much more competitive entity while the number of wells being drilled increases this year. So some three ideas if you want to play energy for this quarter. Thank you. All right. Coming up, this is cool. The winner of this years Coolest College startup. Well tell you who won. Plus, janet yellen and fed raised rates at the last meeting and are expected to keep raising them this year so why are bond yields going down all of a sudden and what does it tell us . Were going to find out next. Welcome back to power lunch. Four weeks and thousands of votes later, we have a winner for the Coolest College startup contest. Its 101. Education tech company that could be a big game changer for the classroom. Joining us is cofounder of 101. Great to have you with us. Thanks so much. Your basic goal was to further education, improve education particularly for stem classes. Thats your background. What were you noticing . What was the inspiration for this startup . Absolutely. So right now im finishing up my ph. D. In Chemical Engineering and ive been teaching forums of math and science including subjects like chemistry for nearly a decade. I started off as private tutor and continued being a University Teaching assistant so i witnessed firsthand the problems that so many Students Experience across the country with math and science subjects as well as problem that exists in the classroom today. And what exactly is it that students arent paying attention . Way back when, i loved chemistry. I took an accelerate class in college. And then i dropped. I stopped. The classes just werent as interesting. I didnt even have the problem of having a smartphone at my fingertips at that time. The problem that exists in the classroom today is really that the lecture in the classroom in math and science sources hasnt fundamentally changed in centuries. Quite honestly since the middle ages because unfortunately for so many students who take these math or science courses in college, the Course Experience still involves sitting in a classroom or lecture hall and listening to a professor talk at a podium for an hour straight. What does this product do . So our first product is focused on chemistry allowing professors to engage students in the classroom by pushing out problem solving activities over the cloud to students can receive them on their devices. L on . The middle of lecture. Students can draw chemical structures to do it on their phone or tablet and send it back to the professor and professor can see what their class is drawing in realtime. Make sure theyre not playing solitai solitaire. You keep the student engaged on their phone so theyre not doing Something Else on their phone . Genius. Where were you 30 years ago . We hear that a lot. Students today are so engaged in interactivity in daily lives from social media. Does the school pay for this . Student pay for this . Are you monetizing this . Students pay for this. Its a textbook. Professor adopts it and students pay for it as part of their course fees. How much does it cost . 5 per student. You piloted at eight schools including carnegie, columbia and university of cincinnati. Any sort of funding or approaches about funding . This sounds like a business. Were currently raising our seed round now. We have our first paying customers from all eight of our colleges and universities across the country. 40 of students who use our products said it became more interesting in chemistry which is incredible and demonstrated 200 improvement for students who used the grade versus students who didnt in the same school. Were looking forward to expa expanding this across math and science subjects across the boards. The elevator pitch. You got it down. Excellent. Thank you. Best of luck. Thank you very much. All right. Lets ask a big money question that may have some of you confused and confused me. Why are tenyear bond yields falling as the fed told us they are likely to keep raising rates . Lets ask the trading nation team. Craig, ill start with you. Answer the question. Why are yields falling when the stock market is doing okay and economy is okay and fed said well keep raising rates . The rates have been stuck in a range of 230 to 260. Theres a couple reasons for this. Number one, weve got a resetting of expectations that are happening right now. We didnt see the Health Care Bill get put through. Fed has raised rates. Put up short end of the curve. We havent seen those Inflation Expectations accelerate due to challenges in washington. Second, from an international perspective, you have some populism issues happening around the globe. Whether its in the uk, whether its in germany or in france and they come out and buy the safest debt in the world. Those two things are weighing but step back and look at longterm chart. It takes a couple times to push at that rusty door before we break that reversal in rates and i think thats whats happening now. Were consolidating. Well push through it. I think by the end of the year well see tenyear bond yields in 3 to 3. 25 range. Wow. A lot of Real Estate Agents and brokers dont want to hear that. Erin, do you agree with craigs analy analyst . We see it less so around the fed. You see more attachment closer to the fed. Its about this unwinding of the trump trade. Disappointment. We also had disappointing capital goods order yesterday. So that also was putting pressure on the u. S. Economy expectations for today and therefore the 10year as well. Overall we still have global pressures. Remember that the u. S. Treasuries are still some of the most attractive in the world. Theres more instability in other developed areas and thats another thing thats keeping those prices up and yields down. All right. Thank you both very much. Looking at the bond market appreciate that. For more trading nation go to our website. Shares of amazon alltime high today. What else is new . If you think you missed out on amazon, well get two other ideas for you. One that benefits from amazon and rides its coattails and one that could be amazon proof. Thats what our guest says next on power. And now the latest from trading nation and a word from our sponsor. Anything worth pursuing hard work and a plan. At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. [vo] quickbooks introduces and her mobile wedding business. She travels far and wide to officiate i dos. And quickbooks automatically tracks those miles. She categorizes with a swipe and is ready for tax time. Find more than 4000 in tax savings. Visit quickbooksdotcom. Shares of amazon hitting another new alltime high, and they continue the push to become a store. We are live with the story. Reporter behind me, the First Physical bookstore opened in seattle less than two years ago, and opening the 11th location this year in new york city. Its a quiet and quick ramp up for a company that built the business online, but thats not to say amazon is now doing retail the traditional way. Inside the stores, books are browsed with the smart phone out using visual Sensor Technology and the app shows you more Information Online in realtime. Throughout the store, theres ways amazon encourages customers to join the online ecosystem with prime membership incentives or alexa, a virtual system that invites shoppers to play games. Now, amenson is testing the Grocery Shopping experience here in seattle. Again physical stores with advanced technology citing this may help more than the 600 billion grocery market. For now, brick and mortar is a tiny part of the business, but it may represent the vision to revolutionize the Retail Business again. That may be part of the reason analysts are so bullish on the company and its stock that hit record high after record highs this year. Back to you. Thank you very much. The new highs may be good to shareholders, but those who do not own the stock, is there a way to benefit from its big run . Lets bring in the chairman and founder of navalier and associates. Good to see you. How are you doing. Good to be here. I know you like amazon. You own it. There are other ways to play. I thought that what i really wanted to be was the box maker for amazon. That would be a smart thing to do . Thats correct. We like packaging, corporate america, ckg, a nice dividend deal, smooth, steady earnings growth. Conservative stock. How much of their of amazon boxes do they make for other packaging material . Do you know . That is unknown, but they are benefitting immensely from online sales. So they are just in there riding the coat tails of amazon. Another one that you like is one that doesnt do business with amazon, and you think has a mote around it. Which is it and why . Thats ulta beauty. Average customers in the early 20s, obviously sell makeup, and its one of the things thats hard to buy online. Its been a great stock. I mean, its one of the best performing stocks of the past 1 pennsylvan 5 years or so. Correct. Correct. What also helped it is the domestic retailer, when the dollar was strong, everybody wanted to be more domestic, and just like the lowes or home depot, Something Like that, domestic presence helps and you have the s p 500, so now it gets benefits from all that indexing activity. That pushes it up in and of itself, so ulta and pkg packaging comp. A quick thought on amazon. Why do you think theyre investing as they are in brick and mortar locations, books, groceries, whatever, do you think thats ever going to be a corner stone of their business or just the way to sell omni channel. Well, i dont think so. I think if they get in the grocery business fulltime, yeah, obviously, physical stores, but i watched them in auto parts. You know, oreilly auto parts, going after that too. They decide they want to go after Certain Industries out there, and god help you after that. Great to see you. Thank you. Appreciate it. Check please is next. Dont move. Usaa gives me the peace of mind and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. Now that fedex has helped us we could focus on bigger issues, like our passive aggressive environment. Were not passive aggressive. Hey, hey, hey, there are no bad suggestions here. No matter how lame they are. Well said, ann. Ive always admired how you just say whats in your head, without thinking. Very brave. Good point ted. Youre living proof that looks arent everything. Thank you. Welcome. So, fedex helped simplify our ecommerce business and this is not a passive aggressive environment. I just wanted to say, you guys are doing a great job. Whats that supposed to mean . Fedex. Helping Small Business simplify ecommerce. Welcome back, this is the latest on advertisers boycott of the bill oreilly show on fox news in the wake of Sexual Harassment allegations. There are 11 companies that pulled ads from the show. Those companies now include terow price, all state insurance, and bmw, hyundai, and others that pulled the ads in the past day. Back over to you guys. Were all wondering as we sit here, brian was wondering, for a minute, temporary, do we know . Clarifying . Do we know at this point . They are calling it a hold. They are holding off on putting ads in the show. Many said the ads may show up in the show tonight because it takes awhile for the changes to take hold, but they called it a hold on the ads evaluating the situation perhaps as they way to see what fox chooses to do in the wake of the allegations. The show generated 400 million in ad revenue in the most recent years. Yes. I believe the most recent quarter were the highest ratings ever. This is a very popular show. Whats interesting is the advertisers say they are reallocated elsewhere on fox, others are still deciding. Unclear how much this hits fox in terms of ads. What is it up front . Well, interesting. We are going into the upfront ads selling period, and this is when as much as three quarters of all ad dollars committed for the upcoming year, and advertisers have to start making decisions in the next month or so, and well see how fox chooses to handle this. A lot of money could be at stake. The gorilla in the room is does he go away. Doesnt say. Tremendous earnings power for the network, gone through a lot. This i think story, a little bit wonky, hard to understand now, gets bigger. The conversation before the day this report came out with specific details, who knows if it goes back, but the fed leak is a big story. Credibility of the Federal Reserve here. All right. The story continues to watch, and meantime, thank you for watching power lunch, closing bell starts right now. Hi issue everybody. Welcome to the closing bell, im kelly evans. Im bill griffeth. I know what youre thinking. More purple . All by accident. We need a mirror. Just happened. Not planned. When jamie dimon speaks, wall street listens. He discussed his letter in a town hall event, what he said about the state of the economy coming. 11 things wrong with america, he lists them out