Transcripts For CNBC Power Lunch 20240621

Stocks selling off today after two Straight Days of gains. The dow is off the lows of the session, but we can see there it is down by 154 points. So by triple digits with this volatility translating into a good year for active managers. According to funds track, 52 of large cap managers and 73 of value managers are beating their benchmarks in the Second Quarter. Joining us now, bill nichols, head of u. S. Equity trading at cantor fitzgerald. It really hasnt been the greatest environment for active managers until now. Right, robert . Yeah absolutely mandy. I think thats putting it mildly. Right . For the last six years since the bottoming out of the s p in 2009 active management has gotten trounced. I think thats indicative of the environments. Everything across the board was cheap at that point so trying to pick a handful of stocks or 40 or 50 stocks was really a losing proposition. But today when you look at fair valuations across the board, i think now is the time over the next three to four years well really see the active management and good stock pickers really outperform the rest of the market. For the next three to four years. Bill would you agree that now is the time that active managers can really show their value . I agree. These things always go in cycles. Youve seen real divergence in different sectors. Obviously energy selling off. Health care and pharma outperforming. Well have that as a big topic next month at the health care conference. I think with that divergence stock pickers can really make hay as opposed to markets that just all move in the same direction. Robert what stock picks are you looking at now . Things we like really are companies that are focusing on a niche business really disrupting and dominating those areas. Some of the companies we like right now are in the secular play. White wave really taking advantage of the switch to natural and organic foods. We also like Companies Like restoration hardware. Thats a company right now thats completely disrupting the industry. They had a Conference Call yesterday after reporting better than expected earnings. The company is not resting on their laurels, dominating growing 15 to 20 but they realize they cant do the same thing for the next two to three years. Theyre coming out with Innovative New ideas, really taking advantage of dominating a speefk specific niche out there. Smaller mid Cap Companies we think can separate away from the pack and produce top line growth that people will be looking for in the next couple of years are the companies were investing in. So more towards the small end. What about you bill zp had. I think you have to look at different sectors. Market is saying stay away from utilities, Real Estate Energy with a bottom and a rally slightly is more interesting in the medium term. I think financials are a sector worth looking at. Theyve not been participating the last seven or eight years so that could be a space that could look to be good over the next year or two. What is your energy call based on . Not an expert in sort of the crude market but i think just being a market watcher, i think probably right around these levels, maybe trades up to 65 or 70 as a high but i think the downside is probably in and i would be surprised if it trades much below 50 in the near term. Thank you both very much. Go to powerlunch. Cnbc. Com for more. Shares of eli lilly taking a bit of a hit today, up 7 though still for the week. Investors making their bets ahead of a new longterm data release im sorry . Lets go to dom. I just got that word into my ear. We have the bakerhughes rate counts rig counts. U. S. Oil rigs down seven to 635. They were about 907 one year ago. So again, were seeing this continue decline in total rig counts down seven to 635. Also want to put it in to perspective here too. Oil production is still near these record high levels. Again we have the Oil Rig Counts for the u. S. Down seven to 635. They were 907 one year ago. Thank you. As we were mentioning eli lilly shares up strongly this week about 7 ahead of what may be some new data on an experimental alzheimers treatment. Who else but meg terrell to tell us about it. So this drug is in the late stages. There may be some data coming over the next few days ahead of an alzheimers conference in july. This drug works on whats thought to be the underlying causes of alzheimers, that buildup of black in the brain. Similarly to a drug called boi biogen. Their stock drove up in march. This drug failed in studies in 2012 but lilly identified to a Patient Population that responded better to the drug, patients with earlier forms of alzheimers. This update we may get over the next few days may give us a glimpse into how well the drug may be working. Bup but the large base testing in this population isnt expected to read out until the end of 2016. Alzheimers is such a huge problem. More than 5 million americans are affected. No drugs on the market currently work on the underlying causes of the disease. If this drug is successful analysts say it could be more than 5 billion in annual revenue. We saw the excitement of alzheimers drugs playing out yesterday, the ipos shares almost doubled yesterday on the first day of trading but that drug doesnt work on the underlying causes like this lilly drug aims to do. It works on the symptoms. Ceo of that Axovant Company on jim cramers show last night. How near or far are these medicines from being available in the marketplace . The ones from lilly and biogen is maybe end of 2016 beginning of 2017. Axovant just works on symptoms. Multibillion dollar drug even though it doesnt work on the underlying cause. They may start a phase three trial with the last stage of studies by the end of this year with the monies they just raised yesterday. I just learned that megs parents were scientists so she grew up talking about things like that around the dinner table, im sure. Mondelez upgraded to outperform from market perform at bmo capital saying the packaged food company is doing well. Williamssonoma upgraded to outperform from perform at oppenheimer. They believe the retailer is well positioned to benefit from trends in the industry. Bob evans farms is considering converting to a reit or selling and leasing back its restaurants. The company will make a final decision in a few months. Lets look at the house floor where Minority Leader Nancy Pelosi is in the well of the house, talking about trade Promotion Authority. Basically, the bill that the house will turn to very very soon and when it does we will bring the results of that vote and analysis to you. The trade Promotion Authority bill would basically allow the administration to negotiate a trade pac with some asia pacific nations, and then bring it to a vote on a straight up or down with no amendments. Thats the issue thats being debated here. Generally the people on the gop side favor this bill and more people in the president s own party are against it largely because of opposition by labor. Again, whether that vote takes place and we expect it soon we will have it for you. Mandy. In the meantime, check out the biggest losers on the s p. This hour down about 2 . Lets take a look. Youve got, for example, marathon petroleum, vertex pharmaceutical. Transpacific ocean down by 2. 4 . Nat gas prices up 11 in the past two months. We know it is a widely used winter trade but it is also a really big summer trade. Why . Well, think air conditioning. How much higher nat gas could go in the next two months. Welcome back to power lunch. Everyone of the ten sectors on the s p are moving to the downside with energy here the biggest lager. Certainly very bearish for prices. Some news coming out of saudi arabia that they could look to raise output further. The least the least bad, i guess if you could say that is discretionary, Consumer Discretionary is down by. 3 of 1 . The s p is down by. 7 , or 14 points at 2,094. Natural gas has been surging over the past week up nearly 8 . These are trends we usually see in the winter months when cold weather is on the way. Not so much in the summer so whats the story . Dan leonard, Senior Energy meteorologist of Weather Services International Joins us now. Dan, good to have you with us. I guess we shouldnt be surprised because natural gas powers a lot of air conditioners, like mine and ive had mine running pretty hard this week. Yeah exactly, tyler. You think of natural gas demand and it is mostly in the winter. Right . You are directly heating houses with the natural gas, and businesses. In the summertime it is a little bit more of an indirect effect. You are using your air conditioners, that uses more electricity. Where does the electricity come from . Power plants that are using more and more natural gas these days getting away from coal so that brings more natural gas online. In the summertime now we have more and more demand for natural gas just because of the air conditioning. What are we looking at in terms of temperatures over the next as far out as the eye can see for the summer both on the east coast and in the middle west which are heavy users. Exactly. Thats the Million Dollar question. Right . Thats sort of where things have been getting tricky. We havent had a typical el nino type summer. We have a strong el nino right now. Thats undeniable. Typically in an el nino summer you would get cooler temperatures in the summer. We really havent seen that yet and it looks like the next week to week and a half well have a lot more heat especially in the southeast. Wouldnt shock me if a couple of cities down there sit the century mark. A lot of traders are asking me when is this cold weather going to show up. Thats the Million Dollar question going forward. The prices obviously depend heavily on whats going to happen in the mediumrange and into the longerrange. If we have a hotter than normal summer and last summer was quite cool. I cant remember how many 90degree days we had in the new york market. It wasnt many if any. If it gets hot, how much more could nat gas rise . I mean right now the price of natural gas has sort of built in a cooler summer. Everybody is pretty much expecting a cooler than normal summer. We had one last year. We havent really had a hot summer since 2012. Theoretically if we get an abovenormal summer prices could skyrocket but we dont expect that. We still expect later june into july well see this el nino pattern kick in and cooler than normal temps will develop especially across the midwest heading into july. So all things equal we think we still expect a cooler than normal summer. Interesting. Interesting. There you see it. Its going to be hot in valdosta next week. Thanks, dan. We appreciate it. Mandy . Made in america. Using good oldfashioned ingenuity and red, white and blue color workers to drive profits. The ceo of athletic giant nubalance will tell us how hes using cheap stocks over labor. At chase, we celebrate Small Businesses every day through programs like mission main street grants. Last years grant recipients are achieving amazing things. Carving a name for myself and creating local jobs. Creating more programs for these little bookworms. Bringing a taste of louisiana to the world. At chase, were proud to support our grant recipients and Small Businesses like yours. So you can take the next big step. You probably know xerox as the company thats all about printing. But did you know we also support hospitals using Electronic Health records for more than 30 million patients . Or that our Software Helps over 20 million smartphone users remotely configure email every month . Or how about processing nearly 5 billion in electronic toll payments a year . In fact, todays xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. With xerox, youre ready for real business. Welcome back. Check out shares of bojangles. This is a Fried Chicken and biscuits restaurant. Reporting its first earnings since going public last night. Kelly evans and scott wapner will have the ceo in an exclusive interview coming up on the closing bell, 3 00 p. M. Eastern. Cnbc exclusive. Hope he brings some food. While many well known athletic footwear brands have moved manufacturing overseas or never really had it here in the u. S. In the first place, new balance continues to make millions of sneakers right here in the United States. Take a listen to why they make their shoes in america despite those high labor costs. New balance is the only major Athletic Shoe company that continues to make shoes in the United States. We produce over 4 million shoes annually in our five u. S. Factories. Our competition left over 30 years ago. Major reason why we continue to make shoes in the United States is the commitments to the communities. More importantly, there pea a customer thats willing to pay a premium based off of the craftsmanship of our product. In order to continue to make shoes here in the United States weve taken our process from cutting Raw Materials to shipping finished shoes from eight days down to three hours. Rob dimartini, ceo of new balance. Good to have you join mandy and me today. What is the big advantage you get out of making your shoes in america . Quality, or what . Well we really think theres three main advantages. The first is innovation. As you said in the opening, a lot of people in our industry dont actually make their own product. We think by continuing to manufacture, we know how and can find better ways to do it over time. The second you hit on the head is quality. We think that it allows us to create a very crafted product and weve got 1,300 associates in those five factories with an average of 13 Years Experience making those shoes. Then the third reason is the consumerism today is changing so dramatically in getting to know consumers on a one to one basis. It used to be a privilege. Now it is really their expectation, and our Custom Program allows us to do that. What is the biggest challenge you face as a ceo in continuing to manufacture shoes in the United States . Is it finding Skilled Labor . Is it sourcing the materials that you need to make the product . Well, both of those are definitely a challenge. Materials in particular because the industry left our shores by and large, 30 years ago. Weve had to work very closely with a number of suppliers to make sure they keep enough materials here in the u. S. Our 990, one of our most iconic shoes has 30 different suppliers that are all u. S. Made materials and that allows us to keep making that product. There are so many competitors out there, arent there . Nike adidas. Just so many Shoe Companies doing similar things. But what makes you stand out at new balance, apart from the fact that youre made in the usa . What makes you really stand out if i wanted to buy a running shoes, why would i buy yours . I think because we have continued to make shoes i want to continue to say what i said earlier. We have more people making shoes today than any time in our 109year history. We think our product is better. You heard earlier from brendan who runs our u. S. Operations. I walked that line this Tuesday Morning and those associates theyre crafts people. Theyre not making withe widgets. Were exporting out of the u. S. More than a million shoes. But why are yours shoes better . You say theyre made by crafts people. Im sure every shoe company would say the same thing about their products. Well im sure every shoe company would say the same thing but again were 109 years old. Weve always been known for fit and comfort and the fact that we run our own factories allows us to understand innovation. Brendan said in that clip you played that years ago what took us eight days to do we now do in three hours. You simply dont get that kind of knowledge in a Contract Manufacturing industry, and to a great degree thats what were in. How much higher are your costs to manufacture than the costs that a competitor, like nike, who goes out to contract manufacturers in asia would face on a shoe . Roughly how much more . It is roughly about ten times more expensive on the labor component. To a great degree that is why the industry left years ago. How do you compete at that level of disparity of cost . How do you compete . I mean it is quality, but people swear by your shoes. Some people have flat feet wide feet and they swear by them because they just fit them better but how do you compete . We do it because weve been committed to lean manufacturing for more than 20 years. I go over to asia at least four times a year and meet with our partners who do make shoes for us over there, were teaching them. We fundamentally believe as a company that making things matters and by making things we know our business better. We think that allows our your company has been resolutely privately held throughout. Why not go public . Would you ever consider it . No were not interested in public. I think things like this are examples. That the shortterm pressures that would be put on us somebody would come in and say, hey, do you know its ten times cheaper to make it every o there . Yeah we know that. Thank you. Very good answer there. Continued good luck to you. To learn about other companies that manufacture in america, go to powerlunch. Cnbc. Com. What we have right now is an update possibly on the recent hack attack that exposed what was originally thought to be about 4 million personal records of civilian contractors and Government Employees both current and former. According to a report from the ap that number could be as much as between 9 million and 14 Million People going all the way back to the 1980s. This according to two people who have been briefed on the investigation. Now remember, a lot of this has to do with whether or not there have been allegations so far from intelligence officials, also from members of congress that its the chinese who are behind these hack attacks. But still, the initial estimate or initial disclosure from the Obama Administration was for around 4 million records. Now according to these two sources here from the ap that number could be more than double that, between 9 million to 14 million. Obviously a developing story. Well bring you more details. For right now an Interesting Development on that front. Thank you, dom. Gold prices are closing right now headed for its first weekly rise in four. Mild downside buys at i,clxxix. Silver palladium and platinum are lower but copper is moving higher. Rick santelli is our man at the cme. If you look at 10s, theyve been a big topic not only because it has a minus 2. 20 basis point repay, which means everybody wants them and there arent enough to go around twoday putses puts it in better perspective. We settled last week at about the same level were trading now 2. 38. Bundz set bunds settle at 84. Notes versus bonds, 10 versus 30s, has flattened a bit. Down three basis points on the week for the 30year. Much of this might be. Directly related to the repo market well have to see the way the market looks monday not only because of next weeks fed meeting. The final chart is the S P Rating Agency the only one to still have the uk with a aaa. Removed their outlook from stable to negative but it didnt really move the currency much as you see on this chart. Back to you. Rick thank you. Broad selloff in the market. About 4 out of 5 stocks in the s p lower. And now they have begun to vote there in the house of representatives about the trade Promotion Authority vote. A very close vote is expected here. It is right now 52 in favor, 54 nays. We will have the results of that vote in 10 or 12 minutes and well bring it to you when it is complete. Well be right back. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Here at td ameritrade, they love innovating. And apparently, they also love stickers. Whats up with these things, victor . We decided to give ourselves stickers for each feature we release. We read about 10,000 suggestions a week to create features that as traders wed want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. Who reads all those . He does. For all the confidence you need. Td ameritrade. You got this. Im courtney reagan. Heres your cnbcs news update for this hour. Jennys splendid ice cream says it has found listeria in its plant and has halted production for second time since april. Clm columbus, ohio based company says the listeria was covered during a routine monitoring process. Luckily no ice cream was contaminated. The cdc suggests doctors in the u. S. Start watching out for the mers virus after an outbreak in south korea. There were proefl two cases of mers in the u. S. Both people who traveled to the middle east and both who recovered. Jeb bush visited estonia and afterwards he commented on the situation in ukraine and the threat it poses saying it is a global not regional problem. A 15yearold high schooler from texas has qualified for the u. S. Open Golf Championship next week. Cole hammer will be the fourth youngest contestant in the tournaments 100plus year history. Hammer qualified after getting through sectional play. That is really awesome. Thats your cnbc Business Update for this hour. For now, back to you guys. What a great flame for a golfer. It is like cole trickle. Hammer. Hes 15 years old. That guy can beat 99. 9 of golfers in america. Wed love to talk about that but were going to talk about the broader market. Maybe treading water heading into the summer but there could be some stocks that are ready to break out like a cole hammer. Or a cole trickle, twifr one floats your boat. Our data partners took a look at some statistics. They looked for stocks that ran up a lot and were maybe due for a bit of a pullback at least short term or stocks that have fallen so fast that maybe they would have a shortterm pop. Russell 1000 mid to larger cap stocks. Theyve gone up very far, very fast or down really sharply and may be due for at least a shortterm reversealreversal. These reversals, we screened out only the ones that have reversed 90 plus of the time and had a minimum of ten observations. They had to show some record of this thing happening before. We found a number of names. Were going to add a bonus one. Two of them that could be due for at least a shorter term pop here, Thor Industries and micron technologies. Thor industries makes rvs. Those stocks have underperformed a bit as of late but could be due for a pop. Ones that could be due for a bit of a pullback, if you look at the overall picture due for a pop or drop. Thor industries and micron. They could be due for a bit of a pullback because theyve gone up pretty far, pretty quickly. The statistics here Thor Industries 29 of the last 31 times its pulled back when its popped this much. With citigroup and zions, two very positive stories but they could be due for a bit of a pullback. Not that these stats are trying to predict the future. But if history repeats itself these could be some pops or drops you see going forward. At least very short term. Thank you. Well twitter shares giving back. Of their gains after the news about the ceo shakeup. The stock is down 30 in the past two months alone. The new ceo, cofounder jack dorsey. Both men appeared on squawk on the street this morning with david faber. Listen to what they had to say on the transition. The end of last year i started talking to the board about transitioning. I wanted to make sure we were doing it when the team that was in place was strong was working well together they were forthright with each other. State of the team that is healthy, maybe healthier than ive ever seen it. As jack mentioned, the cadence of the product executions. Better than ive ever seen it. And with new Services Like fabric doing so well and per periscope, it was the right time. Weve always had an open conversation with dick and the leadership and the board about the next steps of the company and we do that just in service of making sure that were putting the company first. We did not want to interrupt the momentum. If anything we want to amplify it because were extremely excited about the products and new initiatives to come. One of the most fascinating things to me is that i found that you would learn more as a ceo and as a leader through mistakes. They may be simple mistakes. They may be organizational mistakes. They may be operating errors. And that always fascinated me. As i reflected on my time in the company. While youre currently an interim ceo, youre being considered for the job full time. If in fact youre asked to take the ceo job permanently, will you accept that . Its not even a question im considering right now. We have a great Search Committee looking for the right fit for twitter long term. And my focus right now is to make sure our product cadence and momentum of execution continues within the company and also to make sure square continues its cadence and its momentum with our strong team over there. Well youve got a 6 billion valuation on square. 1,000 employees. How can you do both . Its really a testament to the strength of both teams. Dick has spent a huge amount of time over the years building a great mantra team that i feel confident for and i have a lot of context for. Ive been doing the same at square. Im extremely proud of the team and our execution over the past six months and even our recent investments. Again, just to come back to this youre not answering the question as to whether youd accept the ceo job full time. Youre not saying no, are you . Im not focused on that. Thats not my job. My job is to make sure that we continue with our cadence and amplify and accelerate our execution. The business is extraordinary healthy. We have a longterm strategy. Were very clear about that strategy at our analyst day last november. It is a longterm strategy. Not something we said we were going to accomplish in 30 days 60 days 90 days six months. And we have very clear priorities against that strategy that were executing against internally. Most of the questions ive gotten during this interview are actually about your beard. Lot of talk about that. Does it help you as a ceo . Is it a sterner sort of approach for you . Or do you consider actually eliminating the beard at some point . Thats not a question i was expecting. But you know people shouldnt be measured by what they look like. All right. Lets bring in im just sort of watching there. Julia boorstin jon fortt. Mr. Costolo said that the business is extraordinarily healthy and that the strategy has been in place and is working. Is he right . No. I mean you can look at whats happened at twitter over the past several years and say, the business isnt quite working. Even just last quarter, they had some issues with direct response. Before that they had some problems with integration with ios 8. So no. I think part of what he was saying is the Management Team in place is the best its been after going through five or six product heads in the past five or six years. You would hope thats the case. But, the story that theyre telling, the face this theyre putting on things doesnt quite match the reality that some people inside the company and certainly some investors outside the company have seen and thats even reflected in how costolo himself talked about his tenure at the company. He certainly didnt ever imply that he was on his way out this soon when he talked about the board and i are in complete alignment. Well, i guess they are in alignment in him staying until theyre in alignment about limb going. Yeah. The ceo departure was not going to be a strategy strange. Most people do believe there needs to be. What do you hear people say is the number one thing they need to tackle at twitter in terms of changing the strategy . Is it slowing user growth or Something Else . Their number one problem is the fact that user growth has stalled. Here it is this service thats used by 300 Million People. If you compare that to the scale of a facebook the real question that twitter needs to answer and to address is whether or not it can be a really mainstream tool. The way they have to address that problem and fix that issue is by simplifying the service. Theyve tried various things. Theyve relaunched twitter. Com to make it more accessible and interesting to people who arent active users of twitter, who are not logged in. I think what we should expect over the next several months are more changes to make twitter a more accessible news service. For instance, we heard a lot of talk about the potential of breaking out twitter by topic. Make it you have twitter news twitter sports twitter entertainment. You could also break out some of those into separate apps. Thats something that one of the investors talked about. I think we could expect to see it to be made easier to save things that you see in your twitter stream if you want to read them later, like links to articles or videos. Then also search. Twitter is so valuable for search that they really havent figured out how to make it that easy to go through search results. Let me ask both of you the bottom line question for me. In three years will twitter be an independent company . Yes or no. Thats so tough to answer. I must say everything that julia said wouldnt necessarily represent a strategy shift. It could just be execution. Theyve been talking about doing that stuff for a long time. The question is can they actually do it. I think that goes to your question. If they can figure out how to make the right experiments and try all this stuff without it distracting and sinking the company at the same time. Theyve got a really good chance of coming out a winner. Julia, quick thought from you. Yes or no will they be independent . I agree with jon. I think it is all about the pace of execution. Will we see these things that. Weve been talking about, jon, for the past year or so . Will we see them in the next couple months . I think if we see the changes quickly and if they do well and theyre well received by users, if we start to see a ramp of user growth then i think it could stay independent. Otherwise i think it does make sense for a google or someone to want to buy it. The question is what google thinks about its price tag as current map cap just under 25 million. With costolo staying on the board at twitter whats the dynamic going to be like now in that boardroom . Awkward . Bill george, he knows boards and he has some answers for us next. Also as we head out, a look at the nasdaq 100 heat map. Vertex intel and chatter communication are among the biggest drags on the board. Leave early go roam sleep in sleep out star gaze dream big wander more care less beat sunrise chase sunset do it all. On us. Get your first months payment plus five years wear and tear coverage. Make the most of summer. With volvo. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. Welcome back to power lunch. Im john harwood in washington. President obama, Republican Leaders and their shared trade agenda has just suffered a major defeat on capitol hill. The house has voted down expanded trade adjustment assistance which was meant as a sweetener to get the votes to pass trade Promotion Authority which, in turn should lead the way to the Transpacific Partnership trade deal the president hoped to pass by the end of the year. What this means is that the Republican Leadership and the white house are going to go back to square one and have to figure out a new formula because the trade adjustment assistance that they were just voting on that was defeated was part of the Senate Package passing tpa. This means that this debate is going to take a while. Nancy pelosi the House Democratic leader said that the road should be lengthened. This should be slowed down. That is exactly whats going to happen again. Big defeat for president obama. House Speaker Boehner and Republican Leaders who share with the white house the goal of moving expanded trade sooner rather than later. Let me see if tims got this straight, john. This was one of the constituents of a package of bills that would have led to that tpa . Thats right. So it was not literally the tpa thing . Tpa vote has not happened yet, but for tpa to go to the white house, this trade adjustment assistance has got to be part of it since thats the form in which it passed the senate. Obviously you can go back to the senate have them pass Something Different, have the house take up that Something Different and pass it. But it means that the road is getting longer for getting this accomplished. All right, john harwood, thank you very much. Lets bring in bill george cnbc contributor, board member at exxon and Goldman Sachs and the former ceo of medtronic. Why dont we start with what we just finished talking about, bill, and that is this trade pact and your thoughts on this defeat for the administration. Well i went from a happy guy to a sad guy. This is a disaster if it holds. To see the Democratic Party underline its own president does not bode well for washington. I think they need to go back to square one and get their act together. Theyre becoming the party of the unions rather than the party of jobs. This is a great job creator. We can export more products from the United States all over the world if we have this tyler. And so im very disappointed because we know that free trade opens up markets to the u. S. U. S. Is already open so it opens up markets for us and allows all of our companies to be dominant factors in the world. So i hope theyll go back to square one and get their act together here and stop playing political games and put whats best for the country. Is anyone down there . The president has in this case. Is anyone going to put the Country First . Well said bill. Lets get back to the issue of twitter. It is kind of an awkward situation, isnt it. Youve got the ceo, dick costolo, i think only a couple of weeks ago he was up on the code conference stage and he was saying that his job is safe hes completely in sync with the board. Now hes out. But he a he staystaying on the board. Is this going to be a very awkward situation with the dynamics on the board . Were seeing the consequences of poor governance here. I had recommended six months ago that costolo step aside. Apparently he told me he was going to and he didnt do anything for six months. He dawdled and they havent even appointed a Search Committee until now. What are they doing . The worlds passing them by. Twitter is rapidly becoming the blackberry of social media. Compared to the facebook board which has fantastic people Mark Zuckerberg to his credit went out and recruited don graham and he got real heavyweights on that board. Google has alan mulally, great board. Having two founders on the board and a ceo . Boy, i wouldnt step into that situation. I think they need a clean sweep, they need to revamp the governance and bring in an outside person who understands products and is an innovation leader somebody like john donahoe at ebay. But if they continue the way they are this does not bode well for twitter as well. I see them for the same malaise theyve been in the last five years. You think an outsider is what they need. I do tyler. Because they need a whole fresh sweep to bring in a new team. I like jack dorsey. I admire jack. But hes done his thing. Hes doing square. Hes doing an excellent job at square. You cant do two companies at once, in my opinion. So somebodys got to devote full time to this and clean the decks. I think dick should resign now. July 1st at the latest and step aside and Evan Williams i think they just need to open things up. Evans going to be on the Search Committee but lets open things up to fresh blood and build that board at the same time. This is starting to smell more like hp the old hp. The hp before meg. We can chat another time also about the lack of gender diversity on that board of twitter as well. Bad news. Nearly 8 Million People owe more on their mortgages than their homes are worth. The impact that is having on housing. Plus when her wall street job left her feeling out of touch, this former Goldman Sachs employee called out a new career. In furniture. It was intoxicating to work on wall street but it wasnt meaningful to me. Escape being the coupe next. There is breaking news. The president has suffered a major defeat in the house of representatives regarding the security of securing of trade Promotion Authority that would enable him to move on a fast track a trade agreement with some Pacific Trading partners. John harwood has been following the story. For those who arent up to speed, tell us what just happened and what it means. What just happened tyler, was that the house overwhelmingly defeated one of the Component Parts of a package meant to give the president negotiating authority so that he can close this Transpacific Partnership trade deal. This was a part of the package meant to sweeten the pot for some wavering democrats because it increased the amount of adjustment government subsidies for workers who lost their jobs because of trade. This is something that unions had originally pressed and as they were trying to get democratic members to go along, this was included in the package. It was defeated because democratic members knew that if they defeated that element, it would be harder to pass tpa. Now were seeing the tpa vote. We can expect that also to go down although kevin mccarthy, the House Republican leader said he was not going to cancel the vote. Theyre going ahead with the vote, which some people thought they would not do once trade adjustment assistance went down. Well see. But in any case theyre going to have to come up with a different strategy to advance president obamas agenda on trade and the Republican Leaderships agenda. Remember, this is one of the cases which they share that agenda. What does it mean for trading partners themselves . Trading partners are watching this and wondering whether the United States is going to be able to work this out. This is not about the deal itself. The deal itself hasnt been closed. In fact getting the Fast Track Authority is considered necessary to get the deal in the first place. So they are in a waiting game as they have been waiting for this Fast Track Authority to get approved. I will note that some trade experts that i talked to early in the year said if the administration doesnt get Fast Track Authority by the end of june it is not feasible to complete this deal and get it approved by the end of the year which is the administrations goal. So this vote today is significant. A significant setback for the president. Let me just be clear on what is being voted on right now, john. It is now 211 yea, 203 nay with one minute left to go. What is being debated here . Trade Promotion Authority itself. So if this passes, what happens then . Then theyve got to work out something on trade adjustment assistance so that whatever they pass can be matched with the Senate Legislation and then go to the white house. So right now by my count, there are eight nonvoting republicans, ten nonvoting democrats. Now nine. If all nine democrats voted against, you would have a tie vote at 215215. It would just take one republican then to carry it over. Right. Well, look. In any case theyve got to regroup on the strategy and figure out a way of going forward. It looks like its now 218. Does that get this over the top . It looks like it does. Yes. But again, its not over the top until they work out the entire package. John harwood, thanks for sticking around and watching that vote and talking us through it. Thank goodness you understand the legislative sausage making there in a way i cannot. Well be right back. Financial noise financial noise financial noise more and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Lets continue our conversation now with john harwood on these dramatic developments taking place down in washington in the house of representatives where one constituent of the package of bills brought to the house regarding trade Promotion Authority has gone down to a rather overwhelming defeat and the other, the fast track Authority Bill has eked out a victory. Where does this leave us john . Well the hope of proponents of trade Promotion Authority is the fact that they just passed a majority by a majority vote the trade Promotion Authority itself will put pressure for another run at the issue of trade adjustment assistance which was just defeated. If they change the package, if they have a different provision on trade adjustment assistance, the senates going to have to pass that too, because it is all part of a package that goes to the white house for the president s signature. If they dont change the package and the senate vote stands that means theyll have to go and wrangle the votes to overcome a very lopsided vote against it just now. Not clear how theyre going to do that or when theyre going to do that but thats the choice awaiting them. They are hoping as i said that the fact that you just had a majority for tpa itself may help them do that. Quickly talk us through the timeline a little bit. You say they arent entirely sure when that will happen. Will it be soon . Im pretty sure it wont be today but it will be as soon as they can figure out how to get the votes for that package. That could be next week it could be next month. John think youll have a busy afternoon and we know what youve been following. John harwood, thank you very much. That does it for the first hour. For the first hour and for us for the week as well. Well hand it over to you, brian. Brian . Mandy and tyler, thank you very much. 2 00 now on wall street. 1 00 in st. Louis. The dow down 130 points. Oil lower but still a little bit above 60 a barrel. Hi, everybody. And happy friday. Welcome. Lets talk about these markets now. Weve got twitter, a lot of stuff going on today but dianic olick will join us at the top of the show because there is important new data an number of homeowners still underwater in this housing market. Homeowners collectively gained billions of dollars worth of eshg wit just over the past year in their equity thanks to rising home prices but it was not enough for some borrowers who still owe more on their mortgages than their homes are worth. These are the socalled underwater borrowers. They are not coming up any time soon. Nearly 8 million borrower ess still under. Thats a little over 15 , a vast improvement over last year but half of those borrowers are deeply underwater. That is they owe at least 20 on their homes. With home price gains expected to moderate in the coming year these borrowers could remain underwater for many years to come and that throws a real wrench into the housing cycle because the majority of these borrowers are in lower price starter homes. If they cant move up that limits the supply of homes for First Time Buyers and we know the builders are not focusing on that segment now. There is already a near critically short supply of homes for sale which continues to push Prices Higher faster than is healthy, even though we do expect those moderations. If you want to read about some underwater homeowners who have been that way for a while, we have a great story on realtycheck. Cnbc. Com. Still tough times for many people out there. Diana, thank you. Your top corporate story today is twitter. Even if you dont use twitter or dont care about social media, it is a big story because it is one of the highest profile case studies in American Business today and the biggest question perhaps is this how can you fix a product that most of america seems to care less about . Consider this. Just 23 of adult Internet Users use twitter versus 71 who use facebook. Worse . According to multiple sources the vast majority of your twitter followers will never see the tweets that you send out. That number sometimes as high as 95 . Thats depressing. Can it be fixed . Kurt wagner these are heavy stats. Twitter is on yously lyobviously a big source in the media because we broadcast literally our message. Does the rest of america really care about twitter . Well i think that thats something that twitter has been trying to argue for quite a long time is that they can show that this is a product that can be used by people who just arent power users. Those people in the media and those who really love breaking news. It is something that theyve struggled with over the last couple quarters. I think the big issue is that a lot of people people who arent super heavily into tech they dont understand the product when they first sign on and they first try to join. Thats a huge barrier to entry that twitters been trying to solve. What about the mind share . Facebook snapchat instagram, whats app just straightup old texting. Is there enough space for all of these companies out there . Well i think that there is enough space given that there are so many people coming on to the internet for the first time on mobile devices in countries all around the world that arent the United States. We oftentimes just kind of lump all these companies together and look at them from a u. S. Or American Perspective but when you look at what whats app is able to do in europe a lot of these services are finding kind of niche little markets that they fit in. I think twitter offers a service and offers a look into live events that no one else is really doing right now. I think there is enough room for them to tweetcompete with all these others. I dont know if theyll all necessarily survive in the same markets the way that we may think about. But around the world theyre all being used a differently. Heres the thing though kurt. Last night on fast money, melissa lees show she had an analyst. The analyst said never in the history of any Public Company hes covered, in the tech and internet space, has he seen the kind of executive turnover in such a short time since an ipo, ceo, cpos, you name it have probably been replaced. Whats the word on the street in San Francisco about the sort of stability of twitter . From a management perspective . Right. Thats been something that people have been critical of twitter since the ipo. Especially dick. A lot of that falls on dick costolo, right . Hes the leader of this company while all this turnover is going on. Theyve said they feel like they have their strongest executive teams that they have right now. Thats why costolo is saying its time for me to step aside. We have all the pieces in place, lets find a ceo who wants to take this to the next level. I think the time something what questionable. Obviously twitters struggled a lot, a lot of pressure from wall street. Fact hes stepping down now versus potentially being pushed out in a few months is kind of convenient for him. But, yeah thats been a critique for a long time and they believe that theyve kind of shored that up a little bit. Now it will depend on who they bring in and if we still see this kind of issue with the new ceo, then well know that maybe this is a board issue and not just a costolo issue. Pleasure to get your views, kurt. Continuing on this angle a little bit, talk about more the leadership or perhaps lack of in twitter and bring in the economist, alexandra, im going to begin with you. Youve wrote and talked about the fact that twitter had these massive expectations. Would it be possible lets not just pick on twitter for any company to really live up to the expectations and the hype that this company had from day one . I really think that twitter made a strategic error during its ipo road show. It promised that it wanted to deliver one of the Worlds Largest audiences and so i think in the aftermath investors were looking for proof that they were delivering on that that they were going to be the next facebook, for example. Twitter has been stuck around 300 million users. They cant really push beyond that. Facebook has 1. 4 billion. So i think that its really about managing expectations and that dick made a strategic error there. Do you believe this is ultimately going to be just a Niche Company . I think it is a large Niche Company. 300 million users is nothing to scoff at. But i think that the Digital Advertising market really rewards the largest players and i think that twitter is not one of the top three or four and so theyre going to get fewer dollars as a result. I would argue i would love to get herbs thoughts on this that twitter, as alexandra pointed out, just basically has a communication problem. Right out of the gate here you have a day investors were clamoring for the ceo to step down. The ceo steps down. They cant even get their message across to hold on to that 7 pop in the after hours that they saw. The stock is now down on the session. Herb greenberg, theyre giving wall street what it wants and yet it still couldnt communicate the message properly in terms of the strategy as well as the reaffirmation for the Second Quarter for that matter. Perhaps the message theyre trying to im hearing a terrible feedback right now. Because the message theyre trying to give out is a message that is extremely, extremely hard to articulate because theyre in the middle of trying to do create twitter. Whatever twitter is going to be. Lets try it again. I think heard might be periscoping live. Herb, try to reconnect with you. Alexandra, well go back to you. Youre a journalist. You work for one of the most preeminent publications out there. You may not want to touch this next question but im going to throw it out to you anyway. They have to say they have a great team. Dick costolo saying hes stepping down on his own but leaving the company in really no more than two weeks time notice before hes out of the company on july 1st. Though he will remain, i understand, on the board. Does it pass the smell test to you . I think that the conversations have been happening behind the scenes for a while. The market i think is surprised at the suddenness of his departure but people have been talking about this for a very long time. Think that one of the viewpoints thats not represented a lot from twitter is what marketers think of twitter. I think behind the scenes they really disappointed marketers. One question is audience and how large their user base is. Another is how able they are to deliver products as quickly as they promised to roll them out. Dick is the type of person who likes to say yes, and validate choices and he has a great pr campaign. But i think marketers have been disappointed, too. So i think as long as they manage marketers peas ersmarketers expectations for their business that the transition will be smoother than just whos taking the helm on the executive team. Good point. Alexandra suich, thank you. Herb, thank you as well. Melissa, before we get to you, just want to add this too. I think the point that we made i guess you guys talked about it a bit on fast money last night. I didnt get a chance to listen to the whole program. If 95 of tweets are not being read marketers are going to have a very different perspective the next time they come in to a meeting and fry to establish revenue points with twitter and thats another big hurdle that twitter has to overcome. Thats part of the reason why theyre continuing and they use use declines at twitter. Shares of twitter turned negative on the session. Theyre down 23 in the past three months. Brians weer has a buy rating on the stock. Brian, great to have you with us. I want to go to the question of the stock price reaction in todays session. Its trading lower. Twitter finally handed wall street wall street exactly what it wanted a ceo transition. It cant even communicate that to the street and ceo reaction in the stock. Whats your take . Part of your note today is that it does have a communication problem. Seems like this is evidence of that communication problem. Yeah. I do agree there is a communication issue. I would argue though that i dont know that investors were really clamoring for costolos head. I think many were frustrated, thats safe to say. But ive seen dick in different situations where they really want management to leave. Frustration is whats happened not demand for departure. To the effect that the stock is effectively neutral, it was kind of surprising that the stock went up because what was clear to me from the nature of the transition and the news from yesterday was that we will get more of the same. Thats not necessarily a bad thing in the sense that they are continually iterating and trying to figure out what their product is. Is at any time a bad thing if youre a shareholder and the stock is down 23 this year . The fact of the matter is as you say, shareholders have been frustrated. Theyve been frustrated because it seems like this strategy however you want to characterize the strategy is not yielding a higher stock price. Correct . And what theyve said yesterday to be clear was the same theyre going to stick to the strategy. If you believe im not saying i believe this. Sure 37 sure. But if you believe the focus is on making twitter a ubiquitous product again, i believe thats a stretch. But clearly the board and Senior Management of the Company Believes thats a possibility. Costolo in my opinion iterated himself out of a job. Brian, you wrote something in a report that i think is fascinating. Okay . I want you to go into a little bit more. Ill read it to our viewers and ask you to sort of wax on this. What investors generally fail to understand about twitter, and perhaps what management failed to communicate, was that twitter was, and remains a venture stage enterprise. It just happens to be traded publicly. So are you saying that we shouldnt or investors shouldnt look at twitter as some sort of a social Media Company but rather kind of a backdoor into Venture Capital instead . You could look at it that way. I certainly look at the company where it is in its evolution, how mature it is as a product, as a business. It is very immature. Thats not a negative thing. It is just very large for what it is, it happens to be traded publicly and when i mention iterations, if anyones ever actually worked inside of a Venture Finance company, you can see this for yourself. You see the founder or leaders of the company are skonconstantly trying to solve for a problem. Problem is not necessarily to clear to the investors of the company if theyre public investors but you have to change up the people and product. You iterate constantly. Thats what weve seen over the last two years. If it is the sort of venture Stage Company that happens to be public, brian, why do have a buy rating on the stock and why does it trade at the multiple that it trades . Theeoretically if you invest in a company that continues to it iterate on product or people you should be able to get in at some sort of a discount . I upgraded to buy after the last earnings call. I had downgraded just afterprior to the prior earnings call. If you believe the company is a Different Communications vehicle for consumers and for marketers with be my estimates are based on getting to call it 3 in total global Digital Advertising excluding china by the year 2018, 2019. If you work backwards from what you think are reasonable margins for a company of that scale at that point in Time Discount cash flow will get you back to about 50 mr. With 50 which is where my target is. Brian, pleasure to get you on talking about twitter. Breakout the celery sticks the bleu cheese and wet naps. Up next were serving up an order of hot wings. Also weve got some jurassic stock stats for you to consider on the socalled dinosaurs of the dow. Forget calorie counts and soda bans. Wait until you hear what new york citys declaring war on next. And go out with animal liberation. Orchestras great song. Kwat maria. Back after this. When a rewards card is designed to sync with your life it gets talked about. So you can live the way you live, and enjoy all the rewards. Chase sapphire preferred. So you can. You probably know xerox as the company thats all about printing. But did you know we also support hospitals using Electronic Health records for more than 30 million patients . Or that our Software Helps over 20 million smartphone users remotely configure email every month . Or how about processing nearly 5 billion in electronic toll payments a year . In fact, todays xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. With xerox, youre ready for real business. Welcome back. Lets get more on the big shakeup at twitter and get the inside of what it is like to be a tech leader and have to change, or start again. Plan founder of planet rx ipoed, then busted. You got a long resume stephanie. But i with ant toant to talk about business in general. It may apply to twitter but also to hundreds of thousands of other companies in america. When do you know as a leader it is time to tweak around the margins and when do you know that it is time to completely take your previous business plan, rip it up and start over . Well i think you look at your underlying user growth and dynamics and you have clear data and a gut feel whether you into ed to rip it apart. I think in the case of twitter, im a heavy twitter user and it is a phenomenal product but it is not reaching the masses and theres a big opportunity to break it apart and simplify it to get to the masses. So what would you do then . So first of all, theres a cold start. When you join twitter, its very hard to get started. Ive a he curated it so it is my news graph, it is my interests graph. I collection it multiple times a day. But even then with i follow by 800 people. Takes a while to actually get through all of it and get my news. Id like it to be more curated. Id like to have chams of news broken out and id like to be able to save articles very quickly. Theres a lot of Little Things i could do. There bass a great overview of all of different dynamics but twitter has such a huge potential to be a news and entertainment and frankly a Commerce Platform if they just simplify it and broke it apart. They know where im at they know my interests. Lets say that im interested in the warriors and i warrant to go to the warriors game they could easily just tweet me tickets tonight. I could buy them right on twitter. I could go to the game. They can tell me there a twitter feed yahoo should buy twitter around integrate it with stub hub no. What youre saying it true. Listen, im in the media. We use it to broadcast literally our message. You use it as a ceo to broadcast your companys message. Procter gamble uses it to broadcast their message. But for mom and pop with 20 followers, what good is it . They dont want to be talked to. Right . They want to have a conversation. But really this is just a few people with bull horns and then they yell something, then run off. Im guilty of it. Twitters the first place where people can find out whats going on in the world. Right . It is a public good in that way. You can actually know whats going on around the world and then with perryiscope, thats their new product. If they just made it easier for people to get started and find their interest and things they wanted to follow on twitter i think a lot more people would use it. Stephanie, a pleasure to get your view. Have a great weekend, thank you for joining us on power lunch. Take care. Wing stop taking flight in its public debut. That ceo joins us ahead. As we head to break, a look at owl 500 stocks. Im going to walk you through each one slowly right now im kidding. Most stocks are down. The dow and s p are both down. We are back right after this short break. Until i started gellin. I got dr. Scholls massaging gel insoles. When theyre in my shoes my feet and legs feel less tired. Its like walking on a wave dr. Scholls massaging gel insoles, im a believer can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Push your enterprise and you can move the world. But to get from the old way to the new youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. And stay ready for everything that is still to come. [ female announcer ] who are we . We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. It just wouldnt be a good friday until it was bodyguard olympic time. This time in the ukraine, these guys showing off their hand to hand combat and emergency driving skills. Winners were judged from four different categories including Team Cohesion fighting shooting, and obstacle driving. The bodyguard olympics in ukraine. There you go. Melissa. Looks like fun. Wingstop shares soaring in its public debut, the stock price at 19 a share, trading well above that level right now, higher by about 60 . Joining us Charlie Morrison the wingstop ceo. Great to be here. Thank you. You think wings and you automatically think Buffalo Wild Wings is your nearest competitor yet you say you dont compete with them. Why not . We really dont. Our occasion is different. We operate in the fast casual segment of the restaurant industry. Our model is completely different. We have a 1,700 square foot restaurant. It is 75 carryout. Were focused on wings, fries and sides. Thats our core product and really we dont serve a lot of alcohol or anything like that. Were not married to the sports occasion so really a differentiated brand overall. 90 of your sales are wings, fries and sides. Any thought you said you sell some alcohol. Any thought into going into alcohol more . Because thats a higher margin area . Not really. Because 75 of our business is carryout, really our customers come to us to grab the wings, take them home share them at a great occasion or maybe with their families. Alcohol really isnt the big driver for our concept. It is all about the wings, fries and sides for us. We like to keep urour Business Model very simple. Youve got 523 total commitments to open franchise restaurants as of the end of 2015. Are you on track to keep that expansion rate . Of the 503 commitments we already had in the u. S. We had 84 signed leased. Last year we opened up 80 domestic restaurants in the u. S. We believe long term looking at 10 plus u in hit growth on our way to 2,500 restaurants in the u. S. Alone. Some analysts have been trimming Buffalo Wild Wings estimates balls of wing costs. How are you seeing that input cost . Certainly wings can be volatile in terms of the price of the commodity but weve really built a model that allows for our brand to deal with the volatility of the product by creating a very simple and efficient model. Were all about a very core simple product. We can absorb that into our pnl through simplified labor and low real estate costs. Charlie morrison the ceo of wingstop. Melissa, there are so many wing places out there. Wheres the rest of the bird . Well is that a philosophical question or is that a forreal question . Im just curious. Lot of wings out there. Nothing else. No legstops. All right. Thank you. The food fest continues. Check out shares of bojangles. You might recall we had the ceo on the show in may when the company went public. Now bojangles out with their first Earnings Report since that ipo and the ceo will be indeed on the closing bell tonight. Dinosaurs will be wreaking havoc at the box office this weekend. Yourjurassic world hitting theaters. Weve got some jurassic stock stats just for you. Well take you live to the nymex for crude close when power lunch returns. The pursuit of healthier. It begins from the second were born. After all, healthier doesnt happen all by itself. It needs to be earned. Every day. Using wellness to keep away illness. And believing that a single life can be made better by millions of others. Healthier takes somebody who can power modern health care. By connecting every single part of it. For as the world keeps on searching for healthier. Were here to make healthier happen. Optum. Healthier is here. Im courtney reagan. Heres your cnbc news update at this hour. The house delivering a humiliateing blow to president obama that leaves his ambitious trade agenda in doubt. The house rejected a Jobs Training Program that was part of a Senate Approved trade package pursued by the president. A prominent civil rights leader in Washington State is under fire after evidence surfaced she may have lied about her race. The ncaacp issued a statement saying race doesnt play a role in whether someone can become a leader of a local chapter. Her parents say shes white and is portraying herself as africanamerican. Fedex says it will record a 2. 2 billion nontax pregas charge related to the pensions. The company says it will have no effect on pension benefits. The last of the only allgirls quintuplets born in the u. S. Will be leaving a texas hospital within the next week. The five babies were delivered back in april. Today they showed off two of the girls who have been released parker kate and hazel grace. So cute. For now, back to you. Oil is closing for the day and for the week and trying to hold on to that 60 a barrel mark as it does. It looks like were going to close just under 60. Even though we stayed above that range for most of the day. We did see more Downside Pressure today. We had a stronger dollar at first. But the dollar then reversed. Looks like it is just selling going into the weekend and also the products were lower. We saw commodities lower across the board. But looks like 60 is this fair value mark where traders believe oil is fairly valued at this point. Absent a catalyst it is probably in that range that were going to see that 58 to 62. Oil will continue to trade there. Options expiration next week. Brian, are you teeing it up with me and dom chu tomorrow . I didnt get an invite. Take it up with dom. Dom. Hes talking to somebody about something. Probably about the fun you guys are going to have tomorrow without me. More fun without me anyway. Next time. Let us get more on that major setback for the president and his trade plan. Hampton pearson in washington with the details. Hampton. Hey, brian. So the Senate Version of fast track Train Authority remained stalled in the house until early next week when House Republicans hope to have another vote on tuesday to perhaps pass the trade adjustment assistance bill which was defeated by 126302. House Speaker John Boehner making that request for reconsideration after that vote which had to be a shock to the gop leadership as well as democrats. Now the house did pass trade Promotion Authority for the president. The vote there, 219211 with 28 democrats voting for the Fast Track Authority, if you will. But in order for the bill to go to the president , you needed both parts to pass. That did not happen today. Now the gop leadership says it will try again next week. No more votes today. The White House Briefing is under way where white house spokesperson josh earnest is basically calling on democrats and republicans to come together on all that. All right, hampton pearson, thank you very much. Do appreciate that. Trex is louder than i am. That is a clip from jurassic world. New movie, sequel to the universal smash jurassic park. It opens in theaters everywhere tonight. Go see it. Also remember that universal is owned by comcast which is the Parent Company of nbc which is the Parent Company of cnbc which is the Parent Company of me. Staying on the theme of things that have been around for a while, were going to take a look at evolution and the evolution taking place on stocks. Procter gamble. Not a dinosaur necessarily but its been around a while. Down 13 year to date. Exxonmobil is down 8 . Dew point dupont and cocacola, very longtime mem berps of the dow, down about 5 and they are all getting beaten by the newbies on the dow apple, Goldman Sachs, nike and visa. They dont have to be new companies, just new members to the Dow Jones Industrial average relatively. Apple, surging 16 this year. Goldman sachs up 10 . Nike claiming 8 . Visa is up by 6 . These are all great companies, its just whether investors prefer newer stocks. A good question perhaps for a later day. Now to trading nation. E g nagsing nation lets talk about wingstop. Craig johnson specializes in technical analysis. Zach, everybody seems to love the new fast food restaurants or excuse me Quick Service restaurants. Is this just the flavor of the week or really is food the new tech . Is food the new tech . Well food is the new tech then youre in for some high momentum stocks that eventually come back down to earth. I think in a lot of ways thats a good analogy in that these names do well theyre kind of buzzing, theyre kind of hip. We saw this with Buffalo Wild Wings, with whip poetly. Lychipotle. I think you have to be careful about the food of month club. Not because theyre bad businesses just because the way thee things trade they tend to have a lot of froth and momentum. Then investing aperture goes somewhere else. Well save the froth for the cappuccino companies. Craig johnson, technically strip the emotion, strip the bleu cheese out of it how do these stocks look for investors technically . Sure. Lets carve it up in a couple different ways. Nice. Carve it up. Carve it up and look at it from a technical perspective first. What im seeing is weve seen a little bit of relative strength to weakness in the restaurant sector but not enough to include a huge trend change there. When you talk to one of the best restaurant analysts on the street at piper jaffray, nicole shell point you to the fact that were down 32 in restaurants. You look at some ipos that you have seen this year. Youve got shake shack up 200 some since its offering. It looks like to me right now the way you want to trade these names, because there is such a fundamental shortage of restaurant stocks out there, is to continue to stay long the ones that are coming out from an ipo situation and from a trading perspective, im going to put simple tenday moving averages and 50day moving averages underneath these names and ill continue to play these things to the long side until i see some sort of trend break. Until that im going to let it ride to the long side. Quickly, zach before i let you go were talking about valuation. Craig mentioned shake shack. 475 forward pe. Is that alone a reason to be concerned . Chipotle used to have a skyhigh pe. Now it is about 30 on a forward basis because they grew into it. Is high valuation necessarily a warning sign . You put your finger on it. Unless you believe and unless the company is evidencing that it is growing into it. Will tesla grow into its multiple . A lot of people obviously think so. Will shake shack and these fast food names . You have to believe unless you are doing this as a tenday trade im not the tenday trader. Im thinking of these in longer terms. Is there a larger market than a niche that they can grow into that valuation and thats a stock by stock question as opposed for what you are talking about here. Just trade the mo. Plus one for the carve it up pun. For more trading nation head to tradinge gingnation. Cnbc. Com tradingnation. Cnbc. Com. The ceo of bojangles is coming up on i cant say it without doing the southern being a septdaccent. Im sorry. Lots of red on the s p 500 but dont worry, were always looking for opportunities for you with street talk. Five big analyst calls next. And now the latest from tradingnation. Cnbc. Com and a word from our sponsor. You probably know xerox as the company thats all about printing. But did you know we also support hospitals using Electronic Health records for more than 30 million patients . 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Buffalo wild wings. Why not . Since were talking wing stocks. Announcing after the bell it would exercise the right of first refusal to buy 41 restaurants from a franchise. The 161 million is the price tag. Acquisition could boost 2016 etfs by 25 . This is just the opposite of the Business Model wingstop has because Buffalo Wild Wings wants to own the stores. Wingstop has 97 of the stores franchise owned. Very different Business Model here. You can you the to my point which is also this. Mcdonalds is trying to shed assets to their franchisees. Buffalo wild wings wants to own more, some want to own less. I guess time will tell whos right. They are paying 4 million a unit. Thats the biggest deal Buffalo Wild Wings has ever done. Stock three, Chicago Bridge and iron. Big jpmorgan call. They got a 65 target. Goldman sachs upgraded this sock to neutral from a sell but it did get upgraded by goldman three weeks ago. It is also a Hedge Fund Favorite among hedge funders out there who increased their stakes. David einhorn in the most recent quarter increased its position in Chicago Bridge. Today its been a winner up more than 25 this year. Host hotels is one im watching, 25 price target. A good value play this after the decline of 20 from the 7 1 2year high back in january. Host recently started buying back shares and the stronger dollar is less of an impact than expected. When i saw the price target i went back to my charts and i noticed the last time it was at 25 who are above it was back at 2007. Wow. Then it was a 4 stock in 2009. If you timed it right you make a lot of money but if you timed it right, congratulations. The last stock is always our under the radar name. Today, cinpress nv. Bapsed based in holland. It does trade here. Custom printing jobs all kinds of stuff. If you want to done individually out there, thats the company that does it. Upgraded to outperform from market perform. 100 target price, just under 20 up side. But i wonder is this a late call . The stock has more than doubled in the past 12 months. Wow, it could be. The stock has had an amazing run. Thats the what . Oneyear stock . Back it up five years ago it was a 30something stock. Than ends orange you glad were not talking about a Dutch Company . That is the worse. I got all clogged up. Thank you very much. Street talk is over with. That mass customization is one thing. A mass data breach is Something Else entirely. Coming up a hacking expert on just how much personal information may not be in some bad guys hands after that massive Government Data breach. Plus boeing showing off what the dreamliner can do. Trust me this is some cool video that will surprise you. Stand by. Before i had the shooting, burning, pinsandneedles of diabetic nerve pain, these feet. Served my country. Carried the weight of a family. And walked a daughter down the aisle. But i couldnt bear my diabetic nerve pain any longer. So i talked to my doctor and he prescribed lyrica. Nerve damage from diabetes causes diabetic nerve pain. Lyrica is fdaapproved to treat this pain. Lyrica may cause serious allergic reactions or suicidal thoughts or actions. Tell your doctor right away if you have these, new, or worsening depression or unusual changes in mood or behavior. Or swelling, trouble breathing rash, hives, blisters, muscle pain with fever, tired feeling, or blurry vision. Common side effects are dizziness, sleepiness, weight gain and swelling of hands, legs and feet. Dont drink alcohol while taking lyrica. Dont drive or use machinery until you know how lyrica affects you. Those who have had a drug or alcohol problem may be more likely to misuse lyrica. Now i have less diabetic nerve pain. And my biggest reason to walk. Calls me grandpa. Ask your doctor about lyrica. Take a look at this. A boeing 787 dreamliner doing a near vertical takeoff. And other aerial acrobatics as well. This is a neeksneak peek of the boeing demonstration next week at the paris air show. If you were sitting at laguardia on some 42yearold plane, would you like it . On a 40yearold plane . No. On a 787, sure. There you go, the American Federation of Government Employees is alleging the recent data breach of government servers may be far worse than anyone thought. All federal employees had their data including Social Security numbers exposed during that hack. Let us bring in david kennedy, founder and ceo of trusts sec. You think the hackers may have been inside the federal government system undetected for as long as a year. How is that possible . What we see in the federal government, their detection capability their ability to stop hackers are still immature and not as much as we see in the private sector. If you look at it the only reason they discovered this they were testing a new tool for detecting intrusions in their infrastructure. Thats the only reason they detected it in the first place they had no detection in place before. Even though they have a 450 million system in place called einstein. Why do companies putting all our data online . Every single thing about us online that somebody could do harm with yet probably knowingly are aware their systems are not up to snuff . Thats the problem we had. Go back to a rolodex. That would be great, but i would be out of a job. We had the big web in 2000 where we want information readily available realtime. We didnt have enough time to put security into it. All these numbers were unencrypted. What we are seeing with these large breaches anthem and premiere didnt have encryption as well. There are multiple problems in place that we are not doing the basic Foundation Principles of security, let alone good security practices. That sounds stupid to have Social Security numbers unencrypted, correct . It is. Is your take this lack of security is pervasive throughout the u. S. Government or just for the employees . Im hoping the pentagons level of security is a lot tighter than this. Unfortunately, its across the entire federal government. Its not just federal, its state and local. The problem is security moves at a quick rate. You have to change things and change behavior. That its different perspective of the government. Its more slow political in a sense. Getting things done in a quick way is difficult. You are seeing breaches occur in different federal government institutions. Unfortunately, its a more broader problem than opm. Faa said their security was subpar and doesnt have security Detection Capabilities either. Its all over the place. A great discussion scary, but informative. Thank you very much. Yes, brian. The next battleground in new york citys push for nutrition is sodium. Is this a smart idea or taking a good idea one step too far . Sara eisen joining us. Did new york citys Health Commissioner go too far . With her fight against salt catch on coast to coast . I am never getting married. Never. Psssssh. Guaranteed. You picked a beautiful ring. Thank you. Were never having kids. Mmmmmm. Breathe. I love it here. We are never moving to the suburbs. We are never getting one of those minivan . We are never having another kid. Im pregnant. I am never letting go. For all the nevers in life state farm is there. At chase, we celebrate Small Businesses every day through programs like mission main street grants. Last years grant recipients are achieving amazing things. Carving a name for myself and creating local jobs. Creating more programs for these little bookworms. Bringing a taste of louisiana to the world. At chase, were proud to support our grant recipients and Small Businesses like yours. So you can take the next big step. When you do business everywhere, the challenges of keeping everyone working together can quickly become the only thing you think about. Thats where at t can help. With the tools and the network you need to make working as one easier than ever. Virtually anywhere. Leaving you free to focus on what matters most. If the new York City Council follows the recommendation of the Health Commissioner restaurants will be forced to warn customers about the high salt content in food. Sara eisen joins us with the woman behind the plan. Why do this . Why not let consumers make their own decisions without the regulations and warnings . Consumers will be able to make their own decisions. We want them to know about single items that have a really high salt content. Thats because the sodium in our diet is important to our health. Ive gotten comparisons to mayor bloombergs failed push to limit supersize sodas, the nanny campaign. Why is this different than that . This is giving the patron of fast food chains and chain restaurants information that they need to make healthy choices. We are not telling the restaurants or chains to change their food we just want them to give patrons some information to make a good choice. The worry is what comes next . First the mandatory labels then what . Well this is what we want to do because we have never done anything on sodium before. As far as i know this is new york citys first effort at sodium and the first in the country. So this will be information that will be really helpful to people. One of the other criticisms it could cost restaurants a lot of money and could use a lot of labor for something that might not make us all that healthy putting salt shaker labels on menus . Our hope is they can put that little icon on at the same time they have to change their menu boards anyway. How big of a problem is sodium in this country . You are a doctor. You raised the red flag obviously. I was going through some of the salt content on everyday foods. Broccoli cheddar soup from pan panera in a bread bowl 2,400 will grams of salt. In new york the average intake is 40 higher than the recommended daily limit. Our diets have a lot of salt in it. People cant tell how much salt is in it by looking at the food. I didnt imagine that bowl of soup had that much sodium in it. All right. Thats the problem. Thanks for talking us to about this. Commissioner at the new York Department of health. A vote in september, possibly those labels if it pass necessary december in new york. Will be an interesting debate. Thank you. Time for point counterpoint. Let us know what you think about the salt warnings on twitter melissa lee at cnbc and sully. Every restaurant in america should have a giant neon flashing sign that says everything in this restaurant will probably not be really good for you because we want it to taste good we want you to have a good time and come back. The only way to control what you really eat is to eat at home. Restaurants are for fun. I understand what they are trying to do. The reality is most restaurant food is going to be butter and salt because theyre delicious. The thing is brian, if they fried butter and salt. If they put the labels on and let you know you can decide. Im all for information. Hold on brian. Let me finish my point. As long as there isnt any curtailment of Consumer Choice or any insertion of control into my life telling me what to eat, im aokay with it. Okay. Do you know there is a recent study by Oklahoma State where they poll people by the phone and talked about how dna is linked to disease and they said they would favor a warning label if food contains dna. Dna. They were trying to prove a point and they did. Interesting. Tonight we are going to talk about the markets. You are seeing a pullback today. Big move in shares of eli lilly. Weve got the trade along with our biotech reporter meg terrell. Thank you. Have a great weekend. The dow getting weaker as we head into the last hour of trading. Down 164. Nasdaq down. Will the weekend with a whimper . Well find out with closing bell which starts right now. Hi everybody, happy friday. Welcome to closing bell. Im coaly evans at the new york stock exchange. Scott wapner in for bill griffith. Stocks struggling into the last hour of this trading week. New data shows emerging market funds having the biggest outflows since 2008. Well discuss how to position your portfolio before next weeks key fed meeting. Eli lilly shares pulling back today after excitement over its Alzheimer Drug set the stock into rally mode. Lilly shares down about