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Transcripts For CNBC Power Lunch 20140422 : comparemela.com
Transcripts For CNBC Power Lunch 20140422 : comparemela.com
Transcripts For CNBC Power Lunch 20140422
Novartis, lily in a strings of multibillion dar deals. We call it pharma palooza. What does it mean for you . This, folks, is power lunch. This, sue, is your power lunch on drugs. Indeed it is, certainly today. We have it all covered with a fantastic team. Pershing squares big ackman and valiants ceo presenting their idea before investors and the media in new york a bit earlier. Kate kellie has the takeaway. High, kate. Were well into hour number two of this
Investor Presentation
when we heard from both. Big ackman taking the stage for the second time since ive been here just as i walked out. Hell be taking q a in just a few minutes. A quick reminder on what this deal entails. Its essentially a proposes cash and
Stock Transaction
in which every share of allergan would be received for cash as well as a large majority of a valeant shares, a lot of talk from
Michael Pearson
today whos been successful in dlirg shareholder returns about the durability of his assets, the products, the fact theres less of a patent cliff that this there is for many other similar companies. The emphasis on sales as opposed to more traditional areas like r d. Then we heard from big ackman. He made interesting points about why he stayed away from pharmaceuticals in the past, but why this deal was attractive to him. Lets take a quick listen. In pharmaceuticals before. Why is that . Because the typical pharmaceutical business, you have products constantly coming off patent, investing huge amounts of money on speculative r d. Price pressure, but then i learned about valeant. What we like is it fits our paradigm. A business with durable products and brands. The persistent cash flow we look for. Reporter so a lot of attractive points for bill ackman. Hes betting very big on this. 30 tied up in the combination of his investment in valeant, and also in all elergaallergan. And we know youll keep covering it for us all day long. Lets look at this and all the deals. Meg tirrell, thanks for being with us. Why do they have it . Two billion product botox. Half of its sales come from therapeutic uses, in migraines, testing it for things like depression and pain. It fits right squarely in with what valeant looks for in what they call durable products. Products that dont have patent cliffs. Think of the
Christmas Gifts
he would give to people with botox if he owns it. Bottom line me here. Is this deal going to get done . Thats the question. This is a big deal for valeant. A lot of people are saying potentially in for a long haul. Valeant has been traditionally a very disciplined buyer. White knight came in, testifia bid a billion more, they backed off. Theyve made it clear they dont chase for the sake of chasing. Also involve eli lilly, glaxosmithkline in sort of an asset wall with novartis. What are they doing and why . You called it pharma pa leases that, and thats such a great name. Bulking up where these companies are strongest. Grab obrought novartis vaccine business. Both of those
Companies Getting
stronger with these purchases. Eli lilly bucking the number two health xeer with the purchase of novartis unit. Why is all of this dealmaking in pharmaceuticals happen now . They all have a lot of money to spend, but they have gone through the patent cliffs, and a few years ago they were all getting better, all becoming conglomerates. Now a few years later maybe theyre figuring out maybe theyll specialize in the areas they are best in. Slimming down where they dont want to be and bulking up where they do. Meg, thank you very much. Sue, down to you. Back in 201, valeant planted a foreign flag as a way to skip paying taxes. So what are the chances that congress will clamp down on this socalled tax arbitrage . Eamon javers has been dugging for some answers. It seems like this is
Something Congress
would embrace, but is there appetite on the hill for it . Thats the big question. When you look at a company like valeant, you have to keep an eye on political risk, the risk theyll change tax policy to prevent what valeant did in 2010, when they acquired a
Canadian Company
and did a tax inversion and moving the head qua respect to canada. Theyve long are targeted by congress. Ive covered efforts to clamp down on them since 2001. But it was affected arier this year when the
Obama Administration
included an antiinversion measure within the budget proposal. Ive been talking to folks on capitol hill today, experts in this. They say theres no real clarity here on what the hill will actually do what it comes to these kind of tax inversions. Theres a way to do a reform on inversions that doesnt
Impact Companies
that have already inverted. Theres a lot of wiggle room and no real likelihood politically that anything is coming anytime soon, tyler. But eamon, valeant is an interesting situation. We have a lot of
Pharmaceutical Company
that is do have stakes in other countries. Thats different from what valeant did, correct . Thats right. When you look at the complexity, theres one move in tax law thats referred to lovingingly as the double irish. Another one is called the dutch sandwich. Theres a lot of moves that company cuss do that get a lot of criticism on capitol hill, but are legal within the tax system. Its just that they have to really go through convoluted twists and turns to make them happen. But they save money. But theres a lot of headline risk potentially. Thanks, eamon. Ty, up to you. Big picture on biotech. Some of the biggest players driving performance in that industry, the ibbetf, and we have the drilldown on this popular fund. Its very, very big in terms of the numbers of stocks that make up the etf, but the
Top Five Holdings
is about half of the exposure. So it bays to look into it. This is a stock thats up about 3. 5 year to date, but its gone through some crazy ups and downs. The top five stocks, if you look rat whats happening with this particular etf, amgen, celgene, bioguinn, id kreismt, gilead, thats the weighting, but not necessarily by market value. Gilead is only the fourth most watted stock in this particular etf. If you look at they stocks, it is massive and the big part of the etf. If you look at a few in particular that make up the top ten, well broaden the scope, a stock like
Gilead Sciences
is still down about 12. 5 , and still off 25 or 2 away from the 52week high, a stock thats been on sale because of the recent sell offin biotechs. Does that mean it becomes a possibility attractive buying opportunities for some investorses . Maybe, maybe not. Illumina, its down about 26 from its 52week high. Another big sale for investors if they want to get into some big names. Of course another one as well. This company here is down about 24 year to date and lost about 26 of its value since weve seen its 52week. When investors look at this name, they say we can look at the etf or some names that make up part of it. You wonder whether or not, sue, that these selloffs create buying opportunities for people or company that is want to buy up our invest. Back over to you. I think youre absolutely right. Dom. We havent even really scratched the surface of whats happening. Drug giants novartis and dplax osmith klein struck a 20 billion dial to trade their assets. Gsk gets the majority of novartis vaccine business. Big plays that could ultimately reshape the entire industry. Barbara ryan has ways to profit from some of those changes. Nice to see you again nice to see you, too. Mr. Ackman teaming up with valeant kind of changes the deal landscape. Is this an indication that the m av a may change . We have seen a trend of active investors being more broadly involved in longterm transactions and strategic investments. Certainly this, you know, is a compelling and striking example of that. I think the other is last year we saw 77 billion in m a transactions in life sciences. The average deal size was up 49 . Were clearly going to blow through those numbers against this year. So talk to me about the consolidatation thats going on in the industry. You know, it seems to me that its all about scale. Yes. And the fact that they all have patents that are going to expire. So if they have to deal with that and dont have a great pipeline, they can buy the pipeline, correct . Absolutely. I think youre absolutely right. Its about scale, about being a dominant
Global Leader
by market share. Its about maximizing efficiency. This industry is growing locally globally around the world, so these synergies are required to drive accelerated earnings growth. Were seeing that play out. We also have rumors that pfizer was going to step in and buy astrazeneca. I think there is a glaring point to be made here about our tax policy in this country. When you see the flood of money that is leaving because we are not competitive from a tax perspective, and certainly companies are looking to get while the getting is good to eamons earlier comments about the potential for these loopholes to be changed. What companies do you think still have to do deals . I think there are a bunch of companies that are likely to continue to do significant deals. Para go last year acquired elan. They are certainly armed to do much more substantial transactions. Another company were mylan. A lot of these are taking place in the special markets, where valeant competes. All of those companies you mentioned are being bought today, probably in david faber will join us later, lives at the active passive summit with
Barry Rosenstein
. Thats coming up in the next half hour of a very busy and big power lunch. Thank you, sue. Another massive day for earnings. About 70 points away from a record high at 16,554, the s p up 11 points at 1883. 43 points higher no the nasdaq. Well here about best bets from market veterans at usaa and atlantic trust, when power lunch returns after this. Plus the legal battle between aereo and the nations most powerful networks has gone to the
Supreme Court
, in a case that could change the way you watch tv. Thats next on power lunch. [ banker ] sydney needed some
Financial Guidance
so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. [ dog barks ] [ male announcer ] imagine the cars we drive. Being able to see so clearly. To respond so intelligently and so quickly, they can help protect us from a world of unseen danger. Its the stuff of science fiction. Minus the fiction. And it is mercedesbenz. Today. See your authorized dealer for exceptional offers through mercedesbenz financial services. Complicated case today that could impact the way you watch tv. At issue, a
Company Called
aereo that captures programs using antennas and then streams them to you the online subscriber. Our
Hampton Pearson
is in d. C. With the key takeaways. The
Supreme Court
justices were basically conflicted and skeptical about that area of technology which carry i dont claims is for the benefit of the consumer in terms of being ability to stream free over the air broadcasts reported for later playback, if you will. The justices skeptical in the sense of saying at one point
Justice Roberts
among others, how are we to be convinced that all of your technology is simply designed to get around the copyright laws, which was at the heart of the case, and the chal ink made by the major networks. Aereo kept come coming back that theyre enabling the consumer. On the flip side, the chief lawyer for the broadcasters arguing, wait a minute, no, this is theyre doing something other folks, including cable and satellite folks dont get to do. Thats take the content, put it out there, and not pay some sort of royalty or licensing feel, if you will. The other piece, as far as the argument from aereo was the court should be careful in this case, not just keep it focused on the
Aereo Technology
, but worry about the possible impact of any ruling on
Cloud Computing
in the future. The justices, even the lawyers for the broadcasters said just deal with the
Aereo Technology
question and leave the nothing of
Cloud Computing
for another legal day. All in all, interesting. The gloves did come out, the broadcasters saying if aereo goes out of business, nobody should shed a tear. Tyler . Hampton piercing out front of of the
Supreme Court
. Whats the likely outcome . Always great to see you. You liken this case to prior
Supreme Court
decisions involving the sony bet amax ability to record things, and also dvr technology. On the face of it, it doesnt seem like it has anything to do with those. No, on the face of it, it really does. I dont mean to be rude, but all aereo is doing is teak over the air signals, putting them in the cloud and provides a technology that allows individual consumers to draw that content down when and if they want it. It is really not as the lawyers for big media against aereo have claimed in court today. Its not really the technology at all, because there will be more and more innovations in
Technology Like
aereos and others that will continue the march towards over the
Top Television
away from cable and away from over the air direct live broadcasting, no matter what. Its really a question of public or private. Aereos position is that they are providing private content, just as the sony beta max case was decided on, public versus private. So it was the cable vision dvrs case. Barry diller i gather is a big player, and boy did he make his bone at absence and fox. He sure did. But answer me two quick questions. Number one, can i watch the content in live . If i want to watch the nfl on fox, can i watch it via aereo as its happening . If its on fox, its not exactly live. There is a few seconds delay while technology is sending that signal to the cloud, and then the individual viewer can draw it down from the cloud using the antenna that aereo provides, but most of the live sports are going to be on cable only because of the dollars involved. Eventually. Well get to that. The idea that aereo is going to destroy television as it exists today is really not very convincing, because aereos even if they win, which i think they will at the
Supreme Court
level, theres still a tiny fraction of the total audience. Netflix has nearly 40 million subscribers. If aereo wins, who loses . Do the networks lose . The stations operators . The networks are never going to lose, because they control the content and can do what they want with that content. The people who may lose are the independent local television stations and the small independent groups. Sinclair, tribune broadcasting. They exist primarily on the retrans fees they get right now. If you can watch your local news and weather on aereo, you will not buy cable, and cable will not pay these guys. Porter, thank you very much. Well rely on you to explain it for us. All right. It will be an interesting challenge. Its really the cause of all of this is the flawed copyright law that is congress has passed the last 40 years. They have to be readjusted refocused for new technology. Themes, thank you, porter. Sue, down to you. We have a big market day on our hands. A tripledigit rally. The s p is up almost 12, and the nasdaq composite on track for the sixth straight day of gains. Keep in mind the last 14 tuesdays in a row have been very positive for the market. In addition to that, the transportation average is sharply higher. And were in earnings season, how are earnings contributing to the move. Thanks, gentlemen, for joining me today. I appreciate it very much. Dave, im going to start with you. We are in earnings season. So far so good, though we should note that a lot of these companies had ratcheted down expectations of earnings before we started the season. How do you feel about the market at this juncture . Reasonably positive. We came into the year with reduced expectations, after a huge 2013. I think thats a high singledigit year, is what we expect for the s p 500. Earnings, as you said, have come in okay in the first quarter, but only because they were expected to be on the weak side. The good news is we do think earnings in the second, third and fourth quarters will pick up and be positive comparisons, mostly because we think were on the cusp of better economic activity. How are you allocating cash for your different members. I know youre cautiously optimistics, but you favor more european, more developed markets and the
United States
. Yeah, we do, sue. You know, to daves point we are cautiously optimistic on u. S. Equities as well, but were mindful of the valuations. When you just talked about it, when you ratchet down earnings and the expectations of earnings, yet the mark continues to go higher, the valuations just are going to get stretched and stretched. From a relative value perspective to us, theres more opportunity outside of the u. S. , in europe in particular, given their increasing margins and improving economy. Then the valuations are very effective on the em space as well, as long and were sticking with a more defensive side, focusing more on sectors that are not as expensive, we think theres money to be made within the u. S. Market as well. However on a relative value basis, outside the u. S. Theres more attractiveness. Dave, tell me what you make of what the bond market is telling us versus what the stock market is telling us. Is the economy
Strong Enough
to justify the levels we are seeing in stocks . Yetted bond market seems to be telling us the bond is not. Maybe thats distorted by the fed, but what do you think . I think they are somewhat distorted by the fed, but its a good point. If you look at the levels, say, on the tenyear treasury, it is forecasting mediocre
Investor Presentation<\/a> when we heard from both. Big ackman taking the stage for the second time since ive been here just as i walked out. Hell be taking q a in just a few minutes. A quick reminder on what this deal entails. Its essentially a proposes cash and
Stock Transaction<\/a> in which every share of allergan would be received for cash as well as a large majority of a valeant shares, a lot of talk from
Michael Pearson<\/a> today whos been successful in dlirg shareholder returns about the durability of his assets, the products, the fact theres less of a patent cliff that this there is for many other similar companies. The emphasis on sales as opposed to more traditional areas like r d. Then we heard from big ackman. He made interesting points about why he stayed away from pharmaceuticals in the past, but why this deal was attractive to him. Lets take a quick listen. In pharmaceuticals before. Why is that . Because the typical pharmaceutical business, you have products constantly coming off patent, investing huge amounts of money on speculative r d. Price pressure, but then i learned about valeant. What we like is it fits our paradigm. A business with durable products and brands. The persistent cash flow we look for. Reporter so a lot of attractive points for bill ackman. Hes betting very big on this. 30 tied up in the combination of his investment in valeant, and also in all elergaallergan. And we know youll keep covering it for us all day long. Lets look at this and all the deals. Meg tirrell, thanks for being with us. Why do they have it . Two billion product botox. Half of its sales come from therapeutic uses, in migraines, testing it for things like depression and pain. It fits right squarely in with what valeant looks for in what they call durable products. Products that dont have patent cliffs. Think of the
Christmas Gifts<\/a> he would give to people with botox if he owns it. Bottom line me here. Is this deal going to get done . Thats the question. This is a big deal for valeant. A lot of people are saying potentially in for a long haul. Valeant has been traditionally a very disciplined buyer. White knight came in, testifia bid a billion more, they backed off. Theyve made it clear they dont chase for the sake of chasing. Also involve eli lilly, glaxosmithkline in sort of an asset wall with novartis. What are they doing and why . You called it pharma pa leases that, and thats such a great name. Bulking up where these companies are strongest. Grab obrought novartis vaccine business. Both of those
Companies Getting<\/a> stronger with these purchases. Eli lilly bucking the number two health xeer with the purchase of novartis unit. Why is all of this dealmaking in pharmaceuticals happen now . They all have a lot of money to spend, but they have gone through the patent cliffs, and a few years ago they were all getting better, all becoming conglomerates. Now a few years later maybe theyre figuring out maybe theyll specialize in the areas they are best in. Slimming down where they dont want to be and bulking up where they do. Meg, thank you very much. Sue, down to you. Back in 201, valeant planted a foreign flag as a way to skip paying taxes. So what are the chances that congress will clamp down on this socalled tax arbitrage . Eamon javers has been dugging for some answers. It seems like this is
Something Congress<\/a> would embrace, but is there appetite on the hill for it . Thats the big question. When you look at a company like valeant, you have to keep an eye on political risk, the risk theyll change tax policy to prevent what valeant did in 2010, when they acquired a
Canadian Company<\/a> and did a tax inversion and moving the head qua respect to canada. Theyve long are targeted by congress. Ive covered efforts to clamp down on them since 2001. But it was affected arier this year when the
Obama Administration<\/a> included an antiinversion measure within the budget proposal. Ive been talking to folks on capitol hill today, experts in this. They say theres no real clarity here on what the hill will actually do what it comes to these kind of tax inversions. Theres a way to do a reform on inversions that doesnt
Impact Companies<\/a> that have already inverted. Theres a lot of wiggle room and no real likelihood politically that anything is coming anytime soon, tyler. But eamon, valeant is an interesting situation. We have a lot of
Pharmaceutical Company<\/a> that is do have stakes in other countries. Thats different from what valeant did, correct . Thats right. When you look at the complexity, theres one move in tax law thats referred to lovingingly as the double irish. Another one is called the dutch sandwich. Theres a lot of moves that company cuss do that get a lot of criticism on capitol hill, but are legal within the tax system. Its just that they have to really go through convoluted twists and turns to make them happen. But they save money. But theres a lot of headline risk potentially. Thanks, eamon. Ty, up to you. Big picture on biotech. Some of the biggest players driving performance in that industry, the ibbetf, and we have the drilldown on this popular fund. Its very, very big in terms of the numbers of stocks that make up the etf, but the
Top Five Holdings<\/a> is about half of the exposure. So it bays to look into it. This is a stock thats up about 3. 5 year to date, but its gone through some crazy ups and downs. The top five stocks, if you look rat whats happening with this particular etf, amgen, celgene, bioguinn, id kreismt, gilead, thats the weighting, but not necessarily by market value. Gilead is only the fourth most watted stock in this particular etf. If you look at they stocks, it is massive and the big part of the etf. If you look at a few in particular that make up the top ten, well broaden the scope, a stock like
Gilead Sciences<\/a> is still down about 12. 5 , and still off 25 or 2 away from the 52week high, a stock thats been on sale because of the recent sell offin biotechs. Does that mean it becomes a possibility attractive buying opportunities for some investorses . Maybe, maybe not. Illumina, its down about 26 from its 52week high. Another big sale for investors if they want to get into some big names. Of course another one as well. This company here is down about 24 year to date and lost about 26 of its value since weve seen its 52week. When investors look at this name, they say we can look at the etf or some names that make up part of it. You wonder whether or not, sue, that these selloffs create buying opportunities for people or company that is want to buy up our invest. Back over to you. I think youre absolutely right. Dom. We havent even really scratched the surface of whats happening. Drug giants novartis and dplax osmith klein struck a 20 billion dial to trade their assets. Gsk gets the majority of novartis vaccine business. Big plays that could ultimately reshape the entire industry. Barbara ryan has ways to profit from some of those changes. Nice to see you again nice to see you, too. Mr. Ackman teaming up with valeant kind of changes the deal landscape. Is this an indication that the m av a may change . We have seen a trend of active investors being more broadly involved in longterm transactions and strategic investments. Certainly this, you know, is a compelling and striking example of that. I think the other is last year we saw 77 billion in m a transactions in life sciences. The average deal size was up 49 . Were clearly going to blow through those numbers against this year. So talk to me about the consolidatation thats going on in the industry. You know, it seems to me that its all about scale. Yes. And the fact that they all have patents that are going to expire. So if they have to deal with that and dont have a great pipeline, they can buy the pipeline, correct . Absolutely. I think youre absolutely right. Its about scale, about being a dominant
Global Leader<\/a> by market share. Its about maximizing efficiency. This industry is growing locally globally around the world, so these synergies are required to drive accelerated earnings growth. Were seeing that play out. We also have rumors that pfizer was going to step in and buy astrazeneca. I think there is a glaring point to be made here about our tax policy in this country. When you see the flood of money that is leaving because we are not competitive from a tax perspective, and certainly companies are looking to get while the getting is good to eamons earlier comments about the potential for these loopholes to be changed. What companies do you think still have to do deals . I think there are a bunch of companies that are likely to continue to do significant deals. Para go last year acquired elan. They are certainly armed to do much more substantial transactions. Another company were mylan. A lot of these are taking place in the special markets, where valeant competes. All of those companies you mentioned are being bought today, probably in david faber will join us later, lives at the active passive summit with
Barry Rosenstein<\/a>. Thats coming up in the next half hour of a very busy and big power lunch. Thank you, sue. Another massive day for earnings. About 70 points away from a record high at 16,554, the s p up 11 points at 1883. 43 points higher no the nasdaq. Well here about best bets from market veterans at usaa and atlantic trust, when power lunch returns after this. Plus the legal battle between aereo and the nations most powerful networks has gone to the
Supreme Court<\/a>, in a case that could change the way you watch tv. Thats next on power lunch. [ banker ] sydney needed some
Financial Guidance<\/a> so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. [ dog barks ] [ male announcer ] imagine the cars we drive. Being able to see so clearly. To respond so intelligently and so quickly, they can help protect us from a world of unseen danger. Its the stuff of science fiction. Minus the fiction. And it is mercedesbenz. Today. See your authorized dealer for exceptional offers through mercedesbenz financial services. Complicated case today that could impact the way you watch tv. At issue, a
Company Called<\/a> aereo that captures programs using antennas and then streams them to you the online subscriber. Our
Hampton Pearson<\/a> is in d. C. With the key takeaways. The
Supreme Court<\/a> justices were basically conflicted and skeptical about that area of technology which carry i dont claims is for the benefit of the consumer in terms of being ability to stream free over the air broadcasts reported for later playback, if you will. The justices skeptical in the sense of saying at one point
Justice Roberts<\/a> among others, how are we to be convinced that all of your technology is simply designed to get around the copyright laws, which was at the heart of the case, and the chal ink made by the major networks. Aereo kept come coming back that theyre enabling the consumer. On the flip side, the chief lawyer for the broadcasters arguing, wait a minute, no, this is theyre doing something other folks, including cable and satellite folks dont get to do. Thats take the content, put it out there, and not pay some sort of royalty or licensing feel, if you will. The other piece, as far as the argument from aereo was the court should be careful in this case, not just keep it focused on the
Aereo Technology<\/a>, but worry about the possible impact of any ruling on
Cloud Computing<\/a> in the future. The justices, even the lawyers for the broadcasters said just deal with the
Aereo Technology<\/a> question and leave the nothing of
Cloud Computing<\/a> for another legal day. All in all, interesting. The gloves did come out, the broadcasters saying if aereo goes out of business, nobody should shed a tear. Tyler . Hampton piercing out front of of the
Supreme Court<\/a>. Whats the likely outcome . Always great to see you. You liken this case to prior
Supreme Court<\/a> decisions involving the sony bet amax ability to record things, and also dvr technology. On the face of it, it doesnt seem like it has anything to do with those. No, on the face of it, it really does. I dont mean to be rude, but all aereo is doing is teak over the air signals, putting them in the cloud and provides a technology that allows individual consumers to draw that content down when and if they want it. It is really not as the lawyers for big media against aereo have claimed in court today. Its not really the technology at all, because there will be more and more innovations in
Technology Like<\/a> aereos and others that will continue the march towards over the
Top Television<\/a> away from cable and away from over the air direct live broadcasting, no matter what. Its really a question of public or private. Aereos position is that they are providing private content, just as the sony beta max case was decided on, public versus private. So it was the cable vision dvrs case. Barry diller i gather is a big player, and boy did he make his bone at absence and fox. He sure did. But answer me two quick questions. Number one, can i watch the content in live . If i want to watch the nfl on fox, can i watch it via aereo as its happening . If its on fox, its not exactly live. There is a few seconds delay while technology is sending that signal to the cloud, and then the individual viewer can draw it down from the cloud using the antenna that aereo provides, but most of the live sports are going to be on cable only because of the dollars involved. Eventually. Well get to that. The idea that aereo is going to destroy television as it exists today is really not very convincing, because aereos even if they win, which i think they will at the
Supreme Court<\/a> level, theres still a tiny fraction of the total audience. Netflix has nearly 40 million subscribers. If aereo wins, who loses . Do the networks lose . The stations operators . The networks are never going to lose, because they control the content and can do what they want with that content. The people who may lose are the independent local television stations and the small independent groups. Sinclair, tribune broadcasting. They exist primarily on the retrans fees they get right now. If you can watch your local news and weather on aereo, you will not buy cable, and cable will not pay these guys. Porter, thank you very much. Well rely on you to explain it for us. All right. It will be an interesting challenge. Its really the cause of all of this is the flawed copyright law that is congress has passed the last 40 years. They have to be readjusted refocused for new technology. Themes, thank you, porter. Sue, down to you. We have a big market day on our hands. A tripledigit rally. The s p is up almost 12, and the nasdaq composite on track for the sixth straight day of gains. Keep in mind the last 14 tuesdays in a row have been very positive for the market. In addition to that, the transportation average is sharply higher. And were in earnings season, how are earnings contributing to the move. Thanks, gentlemen, for joining me today. I appreciate it very much. Dave, im going to start with you. We are in earnings season. So far so good, though we should note that a lot of these companies had ratcheted down expectations of earnings before we started the season. How do you feel about the market at this juncture . Reasonably positive. We came into the year with reduced expectations, after a huge 2013. I think thats a high singledigit year, is what we expect for the s p 500. Earnings, as you said, have come in okay in the first quarter, but only because they were expected to be on the weak side. The good news is we do think earnings in the second, third and fourth quarters will pick up and be positive comparisons, mostly because we think were on the cusp of better economic activity. How are you allocating cash for your different members. I know youre cautiously optimistics, but you favor more european, more developed markets and the
United States<\/a>. Yeah, we do, sue. You know, to daves point we are cautiously optimistic on u. S. Equities as well, but were mindful of the valuations. When you just talked about it, when you ratchet down earnings and the expectations of earnings, yet the mark continues to go higher, the valuations just are going to get stretched and stretched. From a relative value perspective to us, theres more opportunity outside of the u. S. , in europe in particular, given their increasing margins and improving economy. Then the valuations are very effective on the em space as well, as long and were sticking with a more defensive side, focusing more on sectors that are not as expensive, we think theres money to be made within the u. S. Market as well. However on a relative value basis, outside the u. S. Theres more attractiveness. Dave, tell me what you make of what the bond market is telling us versus what the stock market is telling us. Is the economy
Strong Enough<\/a> to justify the levels we are seeing in stocks . Yetted bond market seems to be telling us the bond is not. Maybe thats distorted by the fed, but what do you think . I think they are somewhat distorted by the fed, but its a good point. If you look at the levels, say, on the tenyear treasury, it is forecasting mediocre
Economic Growth<\/a> well into the future. We think that in fact thats probably going to be wrong and that the economy is getting ready to be more like 3 real gdp growth this year after, of course, a weak period due to weather. So were focusing now on things like payroll jobs. If el with finally get to that elullsive 200,000 a month pace, which we think is in the cards, hourly earnings, i think this is an indicator that jan et yellen has elevated in terms of its importance. In that trends towards 3, 3. 5 , thats a good sign about consumer health. Finally we have begun to see some good news on the big long growth. Thats a good sign for capital spending, and a good sort of general barometer of risktaking in the economy. So those things look better, making us cautiously optimistic. Waseef, do you want to weigh in on the bond market stock market debate . Yeah, i think theres a big debate going on. Every time qe has ended the last two times weve had qe, the bond market has said the economy is still too weak, and we need more of qe. I think thats what the bond market is indicating right now with tapering and the imminent end. The stock market is saying well be okay, and that debate is unfolding. We are taking a cautionary tone on overall stocks in the u. S. Thank you both. Appreciate it very much. A quick programming note. Warren buffett, first on cnbc tomorrow 12 00 p. M. Eastern on street signs right after the lunch he has with the anonymous winning bidder of the annual glide foundation, the
Million Dollars<\/a> goes to providing services to the poor and the homeless in
San Francisco<\/a> and the lunch itself as well as another 20,000 is being donated. So tune in tomorrow. It sounds like quite a lunchtime. Sue, thank you very much. Up next, the el nino index. Jane wells on a varies of commodities that might be impacted by in abnormal weather pattern. Reporter they call it an umbrella. Im supposed to maybe learn how to use it again. Were going to talk about the ilnino economy next, and go in the wayback machine to give you some hollywood reaction when power lunch returns. Unch ret. I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry, but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. But with so much health care noise, i didnt always watch out for myself. With unitedhealthcare, i get personalized information and rewards for addressing my health risks. But shes still gonna give me a heart attack. Thats health in numbers. Unitedhealthcare. Oy. Forecasters are on el nino watch. The phenomenon could bring muchneeded drought relief to california. Jane wells has a look at what this could mean for commodities. Jane . Reporter hey, tyler, right now the usda is saying nearly the entire state of california is in a severe to exceptional drought, but its not putting the chances of an ilanyone i dont later this summer or fall to between 50 as much as 70 . If its a big one, it could eradicate the drought in just one season. Some of the historically strong el ninos, 198283, 198788, the hallmark were flooding rains, heavy mountain snowfall across much of california. Reporter this is the el nino of 1982 which pummelled the west coast with rain and snow, causing billions. We found some great file tape. Even stars in malibu were impacted. That was scary, i have to say that i did get scared. I panicked. By the way, your boat went by here the other day. I was going to bring it down here and leave it in front of your place itches the late great larry hagman. What happens if we get an el nino. Should be good for corn, soy beans, berries and nuts, but drought in australia across could create wheat shortages and flooding in south america could impact metal prices if mines get flooded. Famous will you in 1978, i believe it was peru and ecuador had seven years of rainfall in four months period. So mines were flooded and production was cut off. Reporter if soy bean and corn prices come down, maybe the price of there will come down. This is a ribeye, natural, to antibiotics. How much do you think it costs per pound . 7 per pound . 16 a pound. Oh, my god, really . At retail. Its not that much back here. Reporter this cow is made of gold. Its ridiculous. Yes, it is. That is ridiculous. O. My god, janie, thank you very much. You need to move back to the east coast where things are cheaper. Reporter no thanks, jane. Following the big movers, hi, sheila. Were on track for six
Straight Days<\/a> of gains here. Its really a 1, 2, 3 punch. Good earnings report, positive
Corporate News<\/a> and of course merger mania. Lets start off with the earnings, because comcast, the
Parent Company<\/a> of cnbc had an up as of earnings and sales did beat expectations. Netflix also one of the big winners. Moving on to the
Corporate News<\/a>, tesla giving a big boost today after its launch in china, and also wynne and several other gaming stocks off macaw data came in better than expensed. A bad boy tech index up forman 3. 5 today, sue. Thank you very much. Appreciate it. Interest rates, we did have a twoyear note acts. Holding a 23. 72 , basically the in two weeks, the
Treasury Department<\/a> sold in terms of where they came in, weve had the average yield coming in at 0. 447 , the bid to cover ratio was 3. 35 . This was only average demand. There has been
Strong Demand<\/a> for the twoyear after the past year or so, given the quaint at a timive easing. It was not quite the same type of demands, but the first auction of the week. Well see how the rest of it goes, ty. David faber and his exclusive live interviews with barry rosinstein. Well have that and more on power lunch, coming up. , com. [ grunting ] im taking off, but, uh, dont worry. Im gonna leave the tv on for you. And if anything happens, dont forget about the new xfinity my account app. You can troubleshoot technical issues here. If you make an appointment, you can check out the status here. You can pay the bill, too. But dont worry about that right now. Okay. How do i look . Thanks. [ male announcer ] troubleshoot, manage appointments, and bill pay from your phone. Introducing the xfinity my account app. Welcome back to power lunch. Im
Mary Thompson<\/a> on the floor of the new york stock exchange. Were seeing a different session today. Today volumes render to normal thanks to the mergers and acquisitions news we received, and better than expected results. The result today, s p 500 is on track for its sixth straight gain. A bit of a stutter step for the s p at the open of todays session, but the gains started to accelerate thanks to existing home
Sales Numbers<\/a> which were a bit weaker but not as weak as expected. Home depot as well as some of the
Building Materials<\/a> and the builders themselves. The sectors leading the broader markets hire, discretionary, financials as well as industrials. Take a look at the industrials. Of course, transports hit an intraday high earlier today led by airlines, delta one of them, of course, benefiting from the decline we are seeing. Also seeing strength in the builder. Masco, robert havel oddly in the industrial group, but keep a watch on it, reporting tomorrow. The dow is up 115 points. Sue, back to you. Thank you very much, mary. Given that, what mary so expertly laid out for us, how should you position yourself really in the markets . Abigail doolittle is back with us, counter. Nbc contributor and founder of peak theories. And kenny policy carri. The transports is one of my favorite indicators. Mayy mentioned they are at very lofty levels again. It doesnt make sense. Kenny and i were talking about this before we came on, talking about how we had the market steadily going higher, but it also feels like a calm before the storm. We also have the bond rallying this year, so long as the tenyear remains under 280, i think were going to see all this sideways volatility resolve to the down side, probably led by the emerging markets, maybe in particular russia. I think investors can play this by shortsells eem, a brought emerging etf, and even rsx, as a point of disclosure, i do recommend a report, a short on eem. The charges look barrish. I think the u. S. Follows. The dispart between the bond market and stock market is something i watch closely, yet we keep pushing the s p up towards that resistance level and now right at the highs. So its going to resolve one way or the other. Again, listen, dont forget, the nasdaq is nowhere near, not even back to its 50day high yet. Thats true. It could really represent resistance, right . I keep saying this, and it goes higher, i suspect well hit resistance. What has changed right . Earnings are weak, but better than expected, but theyve been managed. Lower expectations, absolutely. But no followthrough. You would think with this exciting you would expect more volume, and i dont feel it. I dont feel it in my gut. The bond market, as you were saying, you watch avidly. Something is amiss. Theyre taking money away, the bonds should be falling off the rally. And in ten days or eight days, well get another fed announcement where jan the yellen is supposedly going to stay im taking another 10 billion off the table. Make russia and syria are the wild cards. Thank you so much. Appreciate it. Ty up to you. Thank you, activist investors continuing to grab headlines. David faber at the fifth annual active passive investing conference, and hell be speaker with
Barry Rosenstein<\/a> after power lunch returns, after this. This. [ man 1 ] were now in the approach phase, everything looking good. Velocity 1,200 feet per second. [ man 2 ] youre looking great to us, eagle. 2,000 feet. Still looking very good. 1,400 feet. [ male announcer ] a funny thing happens when you shoot for the moon. Ahh, thats affirmative. [ male announcer ] you get there. Youre a go for landing, over. [ male announcer ] the all new cadillac cts, the 2014 motor trend car of the year. [ banker ] sydney needed some
Financial Guidance<\/a> so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. The active passive investor summit is under way. Top activists have gathered to discussing their best investment ideas. Dachd faber is there, joined by
Jana Partners<\/a> david rosenstein. Thats right we are here at active passive. Barry rosenstein is my guest, and a lot of battles behind you, but interesting you havent been battling very much. Since then seven in a row where youve taken a position and more or less its gone the way you wanted it to. Is it that youre such a tough guy and nobody wants to fight with you . That must be it. Actually, weve had a good run. I would like to say its gotten easy or weve gotten better, but the reality is companies are fighting smarter. I wrote an oped piece a couple months ago on this topic. Today the battles are not the companies versus the activist. The companies have realized theyre just alienating the base if they fight. Instead theyre doing the right thing, trying to figure out the right solution and do whats best for the company. Its no longer
Company Loses<\/a> activist wins, everybody wins. Except if the board and manage, for example, ebay, where there was a recent fight, if they disagree with the strategy being proposed, dont they have a right to do that and make their case . Yes, the ones we have been involved in, we dont get involved unless we have concrete ideas that make sense on a long term and shortterm basis. And we know we have shareholder support, and theyre the right solutions for the companies, and thats why, you know, we really havent had fights. You say long term. Of course, you know, activism has only gotten more and more pronounced, if you will over the last few years, ive been doing it for a while, you have a lot of companies, asset sizes of many of the competitors, so to speak, are growing, and so has the criticism. You say long term and i say, cmon, what is long term to you . 20 minutes . Of the seven companies we own, all of them save safeway, because that got taken out, but were still shareholders in every one of them. Look, we dont propose shortterm fixes. Were not proposing that companies lever up and strip out the cash and buy back stock. You know, if you look at our track record, everything we appropriate is much more fundamental and has more of a longlasting impact. You can see from the stock price performances, too. And obviously you had a good year as a result of that. Im curious, a lot of talk today about bill ackman, but a watershed moment, now valeant is an
Interesting Company<\/a> in and of itself, so it might make sense in a way that it doesnt for others. But is it something, could you conceivably see having similar conversations about these kinds of bids in the future . Weve had conversations similar to this, you know, not exactly structured like bill did. I think i think from the companys standpoint, from valeants standpoint, they get bills expertise, which is considerable, and they get a 10 shareholder whos in their corner, and but at the end of the day theyre still going to have to pay a fair price, a price that the board approves. So, you know, i think theres a marginal benefit to the partnership, but i dont think its dispositive. So its not necessarily something you can see pursuing actively . Would we do it in the right situation . Absolutely. In a short time scott asfeld is going to present an idea. Wall grin, its been in the news, and jana has been part of the coverage, some shareholders urging the company to reconsider reincorporating given the deal, and lower the tax rate. Is that something you said to see . Walgreens we own a billion in wall groans, our largest position. Its a company that, you know, its an iconic brand, but its a company thats underperformed on an operating basis and shareholder run base on almost one year, five years, ten years. Its underperformed its peers and the potential. Theres a lot of opportunities. They just did a they have a pending acquisition of
Alliance Boots<\/a>, the rest of it and thats transformative its run by stephano, one of the great value creators, will end up owning 17 , the personal stake will be over 10 billion, so this is a serious player. And his you know, his margins of the
Alliance Boots<\/a> are almost double walgreens. I think the company has an opportunity to basically work with stefano and his management team, implement a lot of the same play book. Improve stores, cut costs, and they also have an opportunity to articulate a capital structure strategy and
Capital Allocation<\/a> strategy. They could add a turn of leverage and buy back 15, 20 of their stock. So theres a lot of levers to pull. And then of course, theres the potential for tax conversion. You know, no different than
Iconic Companies<\/a> like an hauser busch. Applied materials most recently. More than half a dozen pharmaceuticals. We could go on and on with the
American Company<\/a> that is have pursued this. Barry, weve got to leave it there. I know youll be joining us in the not too distance future, but thank you for your time. A pleasure. Of course, on this topic of tax inversions we could keep talking all day long. Send it back to you guys. Clearly affecting lots of businesses in lots of different industries. David, thank you. Later today, dave will sit down with carl icahn. You can catch it on cnbc. Com. Thats at 6 00 p. M. Eastern time. Sue . Look forward to that very much, ty. Coming up, americans cant get no satisfaction with one essential industry. The latest index showing this sector is right at the bottom of the barrel, right along with the i. R. S. And activist investor big ackman, you know the story, big interest in botox. Whats behind his move to buy allergan. Thats up in the power rundown. Were back in two minutes. N two. Just take a closer look. It works how you want to work. With a
Fidelity Investment<\/a> professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. Predibut, manufacturings a prettin the
United States<\/a> do. Means advanced technology. We learned that
Technology Allows<\/a> us to be craft oriented. No ones losing their job. Theres no beer robot that has suddenly chased them out. The technology is actually creating new jobs. Siemens designed and built the right tools and resources to get the job done. slurp hear that . Thats the sound of your electronics sucking power from your outlets. So unplug youll save energy and money. slurp the more you know. Power rundown time. Dom is here, seema as well. Activist, aereo and airlines. Bill ackman teaming up with valeant, making a run at botox. What is the end game . Access to botox. Thats hi end game. Why not . Jokes aside stocking stuffers. He clearly sees value in
Allergans Botox<\/a> line as well as the eye care vertical. Of course, valeant perhaps sees value in having ackman as a teammate, because ackman has experience in hostile takeover. Its a
Growth Business<\/a> and act viss do tend to do well. And lets go to aereo. The
Supreme Court<\/a> to decide whether or not aereo is any different from other capable or satellite phones or if they are entitled to draw freely from programs transmitted, whichever way the court rules will dictate in some ways the future of television. What do you think here . I get both sides of the act. I get the fact that i still know people who have rabbit ears and collect the broadcast networks. At the same time i know why you want to pay for it. Those fees are key for content providers. Its a close call. Basically theyre downloading the signal to an antenna. And sending it and using it for. That feels like rye transmission to me. It will be interesting to see what happens. You think any of those
Supreme Court<\/a> justice know what aereo is . They think its a cookie, believe me. Airlines, according to the latest satisfaction index, airlines received the lowest ratings. They barely rank above the you dont dislike the i. R. S. , do you . Who would ever say that . Not publicly. I got my refund in five days. I did. Thats quicker than getting a seat. On maybe one of the other carriers. I wont name any of the airlines. Paepgs, they were okay with luggage fees. They were okay with the checkin process. It was the actual flying experience that they had an issue with, beverages inflies services. Its a commoditized business. Ill bet the airline that stands out just has one notch above. Get any on and off the plane fast, the rest doesnt matter. I carry on. Traveling has ceased being fun. Weve got to go. Thanks, guys. A big market day. When we come back, the top stock winners, but first whats coming up with street signs with brian sullivan. Ikenic investor, with what he says with unfortunate businessing accounting abuses and who may be guilty of it. It owns a home one of the worst
Financial Decisions<\/a> you can make . A hot debate, im sure. Were going to do it coming up on street signs. Power lunch returns after this short commercial break. At delta were investing billions of dollars, improving everything from booking to baggage claim. Were raising the bar on flying and tomorrow well raise it yet again. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Carstheyre why we innovate. Theyre who we protect. Theyre why we make life less complicated. Its about people. We are volvo of sweden. Those little
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Ready Anytime<\/a> the moment is right. Cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. \\s. \\s. We know theres been a lot of m abd a activity, but also a lot of activity in u. S. Equities, its up 106 points, the s p only about six points away, and its up just about 12. 3 points on the trading session. The nasdaq also some big advances. Not surprising, the bid for allergan haz moved the stock up 15 . Harleydavidson, that move, that stock up higher as well. Learned a new phrase, tax inversion up there with polar vortex. That will do it. Street signs begins right now about brian sullivan. Is owning a home one of the dumbest
Financial Moves<\/a> you can make . Hi, everybody. Welcome to street signs. How is that for an open. Realtors save your nastygrams until its over. But who might be the next biotech to get bought . Iconic investor bobs on steen is here with what hes calling one of the biggest accounting","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia601305.us.archive.org\/32\/items\/CNBC_20140422_170000_Power_Lunch\/CNBC_20140422_170000_Power_Lunch.thumbs\/CNBC_20140422_170000_Power_Lunch_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240619T12:35:10+00:00"}