Transcripts For CNBC Power Lunch 20160311

The stock market is up. America is great again lets get to Brian Sullivan in the Baaken Oil Fields in north dakota. The temperature is up. One of the reasons were inside is we were here last year, i got in the rental car, negative 21 degrees. It is supposed to be 70 degrees today and 90 degree swing. We took our chance, were still inside here at the bakken. Oil is up today. The stock market is up today. The spirits here are up a little bit. Lets be clear what happened here, guys, the price of oil coming down as much as it has, this town is really struggling with the price of oil, not just with rigs, restaurants, hotels, housing, with Everything Else. Let i want to show you video, a setup to why we are here in williston, north dakota. One of the greatest American Economic stories of the past decade has taken place not in the koesz cozy confines of sili valley, but the high plains of north dakota. Over ten years, no state has benefited more from oils boom and no city in the state has benefited more than williston. Growth here Reigns Supreme as Oil Production and jobs surged. North dakota went from pumping just a few thousand barrels of oil per day ten years ago to now more than a Million Barrels every 24 hours. People literally packed up their cars with everything they had and moved here from all over the country because if you wanted a job, you got one. And a good paying one at that. The population doubled. Housing prices soared. And the only thing that rose faster than the price of oil was the optimism that the good times wouldnt end. But as prices kept rising, global producers got greedy, the world got too much oil and prices sank. Leaving a sifnking feeling for many here who rely on oil to fuel the future. We came here first during the boom. We returned at the beginning of the bust. Now, a year after that, were back again. Tell the story of how williston is dealing with the crude realities of an oil crash, where the story goes from here. So there is the setup here, guys. Slightly different tone than it was a over a year ago. Our third visit. Speaking of jobs and oil rigs and new wells, were getting the rig counts out. Theyre down again. This is the 12th straight week that the number of oil rigs, drilling rigs, which will create new wells, has fallen again. Numbers just crossing down six rigs, down to 386. Thats data, thats the lowest rig count in america, probably going back 150 years since oil really was discovered, oil city, pennsylvania, literally 386 rigs, the point of that is almost nobody, guys, is drilling for new oil. But, that said, there are some rigs still out there. There used to be more than 200 in north dakota, three years ago, there are now just 33 drilling new rigs because theyre simply not profitable. But yesterday, when we were here, we did find one, we went to one, and we want to learn a little bit more about why Oil Production is still so high. Here is our interview with a manager of a rig from liberty resources. From 2008 to 2015, you saw the big ramp up, hit a Million Barrels a day out of the bakken and we have been steadily staying there. We havent seen the big drop everybody is talking about. A lot of it is drilling inventory. You got a lot of wells drilled but not completed. A lot of drilling contracts are multiyear, multimillion dollar contracts, so just cant, you know, the price of oil crashes, you cant just shut down your drilling operation. I think what we hear a lot, people who expect the price to rise, is they say that fracked wells especially will deplete faster and because were not drilling new wells, existing wells are going to drain, supply will come down, but it seems like the current wells are lasting longer than people had thought. Why . Efficiencies. The more time you get up to bat, the better you get. It is amazing were talking about production and yet whenever prices rise, we can have those ducts come back on line. Right. At any given once prices rebound, a bunch of wells are sitting here ready to go. Thats what were seeing now is those will be coming online and still other Companies Still having to drill wells to hold their leases. They went out and bought the leases. In this environment, how long will it take to get a rig back a week . The rigs are sitting in their idle. They want to be used. The problem is, you lost the crews you just trained. Those guys are now gone. And thats the problem with the downcycle, getting you lose your talented people. And you got to retool, retrain. So talking about talented people leaving. During the boom where the rigs were in full bore, people were moving here from all over the country and no place to live. So many of the workers including tappen souter lived in what they call man camps, hotels, basically dormitory style living. Many of those are closing up due to lack of demand and the biggest and what was considered the best, called the capital lodge, shut down. Tappen used to live in that one, it is now abandoned, up for sale, we got an exclusive tour inside of it. A little dark, guys, no electricity by the way in there. But take a look at the inside of one of these man camps, now abandoned. This is the capital lodge, socalled man camp or hotel outside of ray, north dakota. You see how far down it goes, each building, seven bedrooms, seven baths, that far as well. About 1200 people worked here, ate here, lived here. Lets take a quick tour of the conditions. If youre working on a rig, the company would put you up in one of these, double doors because it is so cold in the wintertime, no power, so it is a little dark in here. Sorry about that. You see there is seven bedrooms, each one poking in there, little double bed, a bathroom, every unit has the same thing. All the same. And then at the end of the hallway, you got a Little Family communal area with the tv. This is not the main hangout spot, though. Lets take a tour of the main lodge. So thats where they lived. Here is where they hung out. Again, no power, a little dark, everybody. Just because they shut the power off, because they had a dispute over the electric bill. This is the main hangout hangar. And i think a hangar is a good term for it. Pool tables, blackjack, used to be teeming with 1200 people and not all men i call it a man camp, but there were female workers. 1200 workers, three meals a day, three hots and a cot, i guess you could say. Look at the size of this place. Now all just sitting empty because the workers are gone. So by the way, this man camp, the capital lodge, it is up for sale. Cost about 40 million bucks to build, but i have a feeling you could get it for less than that now. And i dont know if we captured it fully, but tappen southern told us one day hes living there, the next day they said, everybody out and in 24 hours were gone, towels on the floor, food, forks and knives, it literally was like something out of the walking dead where everybody just kind of fled all at once. Thats our look there. A lot more stuff later on in the Program Including discussion and a show of a new pipeline being built, which, by the way, built by a billionaire, which may hurt another billionaire by the name of Warren Buffett. Well talk about pipelines versus trains coming up as well be back live from here in williston, north dakota. Where did the all the workers go . I asked around and you had a lot of texas, a lot of louisiana, people that were basically in the oil business already that came up here because, a, there were more jobs, b, higher paying jobs. You had people from seattle. Last time i was here, i met a kid from savannah, georgia, whose car was full of stuff, drove through from savannah, 19, high school educated, came here for the promise of a job, and i think that, you know, thats one thing to remember about this place. It is a little tough times now, during the financial crisis, guys, this was the only place in america besides parts of texas that was creating jobs where if you had a high school education, you could make 150,000 a year. This was growing when Everything Else was falling and thats why at least personally you kind of root for the place. Great stuff. See you later on in the show. Brian sullivan in williston. Wti hitting the highs of the year. Is the bottom in for crude . Lets bring in john kildof, and we also have the iea come out with its report. Has the iea ever been good at calling the bottom. It was a mealey mouth prediction. The price may have bottomed, but the recent rally may not be sustainable. Whats going on here . Is u. S. Production trending downward . Yes. Are we starting to see opec producers potentially saying, you know what, maybe we should pull back some production, yes. Do we still have issues with storage, issues with inventory . Yes. They say we have seen the bottom, but theyre not willing to call the rally yet. You say that there could be a lot more downside for wti. Yes. How low . I still think the mid20s for sure. 18. 18 still. In the midst of a huge glut. The market has given opec and russia a lot of credit and due about this freeze deal and the meeting that they may have. And i think it is all going to fall apart. Even if we have problems getting in agreement on march 20th, i think they spent the last year saying were perfectly fine and saying we need a timeout. Russia saying we need a timeout and we are starting to see the return of geopolitical supply disruptions. We had the itt pipeline, iraqs main northern pipeline, 600,000 barrels, down for three weeks. Renewed problems in nigeria. Were start fog see supply outages kick in again. Doesnt it almost not matter what the other opec members say if iran says we wont join in until we get our production up to speed . This is great. Iran talked such a good game. They say well be back, well be back with a million extra barrels on the market. There is a slower ramp up than expected. Theyre finding the residual sanctions that remained in place, the sanctions on dollar transactions, making it harder for them to move their product. They ramped up 250,000. But the question is can they do so much more than that. I think that might be giving some opec members some comfort. Not doing a Million Barrels. Maybe we can take a pause in terms of production. As low as 18, but could the rally be a difficult snapback one . Difficult for people in the bear camp . Brian makes a good point in terms of the wells are out there, theyre drilled, but it is going to take some time, even when we see demand start to come down, it is going to take some time to get them actually back producing oil. There was a million barrel increase in production in the u. S. In the latest report from the iea. It is amazing what they have done with the small number of rigs that continue to operate. Part of the off set is gulf of mexico production plants that have come online, that were in the works for years, literally years, now more than offset a lot of losses were seeing inland. The glut is still with us. I dont see it clearing anytime soon and where i do differ from hilema, i dont believe a word the saudis are saying about cutting back production. I think the saudis dont want to damage themselves. It comes back to naked survival of the governments. Theyre getting downgraded. Theyre having to borrow. When your situation where you had to trade, prosperity for loyal, you dont have prosperity, loyalty may go away. What are you telling your clients . He says mid20s. We say a recovery, q4 to 50, were confident for could you also agree with that even though you say mid20s . For q4 recovery to 50 . I dont think so only because i see the additional production. The ducts that brian is talking about, there will be a race to put oil wells back into service, even if we get above 40. Thank you. Michelle, back to you. Up next, were talking the draghi delay. Check out the twoday action on the euro. Big spike that was at the end of Mario Draghis press conference. Euro remains near 112. Why did the markets hate the ecbs decision yesterday and suddenly rally on it today . Well bring you the analysis straight ahead here on power lunch. Youre an at t Small Business expert . Sure am. My staff could use your help staying in touch with customers. At t can help you stay connected. Am i seeing double . No maam. Our at t buy one get one free makes it easier for your staff to send appointment reminders to your customers. And share promotions on social media . You know it now im seeing dollar signs. You should probably get your eyes checked. Good one babe. Optometry humor. Right now get up to 650 in credits to help you switch to at t. We need to be ready for my names Scott Strenfel and r im a meteorologist at pg e. We make sure that our crews as well as our customers are prepared to how weather may impact their energy. So every single day were monitoring the weather, and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. During storm season we want our customers to be ready and stay safe. Learn how you can be prepared at pge. Com beprepared. Together, were building a better california. Welcome back to power lunch. Im michelle carusocabrera. Mario draghi throwing everything he had at europes slow growth issues in yesterdays announcement. At least at first the market was less than impressed. Here in the United States, we had had a drop, the selloff yesterday and now higher again. So what is up with this delayed rally . Lets bring in bob pisani and simon hobbs. What do you make of the stock action . I dont think it is so much a delayed recession. I think yesterday highlighted just how dependent the markets have become on the stimulus, draghi said he thought it is unlikely we need to further lower rates. What is going on with oil up a little bit, were seeing a lot of people approaching the end of the quarter and they have been dramatically underperforming. Look what changed. With fears of a recession have been dramatically reduced. We have seen oil up 50 from one month ago, and the dollar has stabilized. This caused a lot of people to say, these are the three main reasons were so freaked out a month ago. If the market is more stable, maybe we have to get dragged in a little bit more. People are underperforming and thats the Biggest Issue into the close of the quarter. Should we even be looking at the stock markets or should we be looking at the euro instead, which has been what has been useful measure of how the markets see central bank activity. I look at the euro, it is higher than when mario draghi spoke yesterday. That isnt the reaction that he wanted. Is that a failure on his part . Youre asking me . Yes. Let me explain it to you this way. Essentially what is happening is the European Central bank is moving from a position where it says it wont lower rates until negative rates further to a position where it is more directly intervening in the european economy and the credit in particular. It is going to buy Corporate Bonds and it is going to pump free cash into the Banking System to ensure the liquidity. Yesterday the market in a knee jerk reaction focused on the fact they werent going further into negative rates, why the market fell and the euro rose. Today, they understood a bit better what is going on and certainly in europe, if you look at the rally and the ensurers that hate negative rates, they have rallied strongly. They also have hold corporate debt. The ecb will buy coke or at t or apples debt presumably in europe. I dont think i just want to mention where we are on the banks as well. Theyre now going to get free cash up it a third of their Balance Sheet, to pay off their loans to do whatever they have to do and then again if they lend that cash out, theyre going to get this 40 basis points gift from the ecb on free money. Extraordinary thing. The ecb will pay banks to lend. It is extraordinary. It is a watershed. I dont think it is a failure of communication so much. He was trying to sound balanced. Were not going to keep lowering rates forever. Look at the market reaction. We came right off the highs when he said that. Thats a clear indication were still very dependent on what the Central Banks say in terms of stimulus. Thats why, for example, simon, watch carefully next week with the Federal Reserve talking, theyre going to be probably a little more hawkish. The data would support a flightily more hawkish position. It would support a slightly more hawkish position and i bet the markets have problems with that again. One more thing i learned in my seven years here. This is really important. The markets get what the ecb is saying wrong, time and time again. They get it in delay. They didnt understand i will do everything to save the euro. They didnt understand when they were going to pile in and buy sovereign debt. They didnt understand it. It took a long time and then powerful rallies. You have to separate knee jerk reactions on the day on expectations often from what actually happens in very, very often it is in delay and we could debate why that was. Good to know. Thank you, simon. Okay. All righty, intrigue in the world of finance. Russian spy pleads guilty, plus a daring hack attack on the bangladeshi central bank. Two big stories straight ahead. Power lunch returns in two minutes. Welcome back to power lunch. It is like an episode of the americans, hit series about russian spies living under cover in the United States except that this one is real. Lets get to eamon javers with the latest on the russian spy who pleaded guilty today. It is a big day for bad guys in the global Banking System, starting with that russian spy youre talking about. His name is yevgeny burakoff. He pled guilty today in a new york court. According to the u. S. Government, he was what they call a knock, a nonofficial cover spy. He didnt have diplomatic immunity and that landed him in court. The government says that he was posing as a banker and trying to obtain secrets about russian Bank Sanctions and also the Energy Market here in the United States and around the world. And according to documents filed in the case, part of the way he was captured was the fbi had an undercover agent that he thought was a coconspirator. That agent passed him documents that were in binders and those binders unbeknownst to yevgeny had microphones in them and they recorded all of the russian spies conversations, all of that went back to the fbi and the transcripts are detailed in the court records. It is a fascinating case. He faces up to five years sentencing is still tbd. Wasnt to ta i want that talk about the case in bangladesh, a hack attack or Insider Threat attack at that bank that appears to have enabled the attackers to get about 80 million out of the new york fed. Unknown crooks, whether inside the bank or hacking, stole the bangladesh Central Banks credentials for the socalled swift system that is an International Financial messaging system. They sent requests to the new york Federal Reserve to transfer millions of dollars to other accounts outside of bangladesh. About 80 million, 81 million were transferred out of the new york fed to some of those bogus accounts before being discovered. And, tyler, here is the fascinating way this scam was uncovered. The crooks were after nearly 1 billion in transfers from that account at the new york fed. It was stopped because they made a typo, misspelled the Word Foundation in one of the requests to transfer money to a Nonprofit Organization and thats how this thing was tripped up. It was stopped in its tracks before they could get the full amount they wanted. But 80 million did go out the door and authorities are now going to have to spend some time reconstructing this, figuring out how it happened and where the money went. Million spell foundation all the time. Terrible hacker then. The money is gone, right . It is vanished . The money is gone. They sent it to apparently bogus foundations and other accounts and then from there, it was hop, skip and jump into other accounts and it is gone. Theyre going to have to do some Forensic Accounting to find out how that happened. Other foundations but knew how to spell those, i guess. The big question here is can this happen again . This seems to be a significant flaw in the Global Financial system. If you can get those swift credentials out of one of the Central Banks in the world anywhere in the world, if you can hack those or bribe somebody there, can you authorize a transfer of a billion dollars . It seems like thats theoretically possible. Man i went did they catch th perpetrators or just plug the leak . Just plug the leak. Theyll be hot on their trail. Thanks. What a story. Coming up, something is fishy in mozambique. Well bring you the full story straight ahead on power lunch. Time for the your business entrepreneur of the week. 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Fidelity where smarter investors will always be. Watching tvs get sharper, oh remotes, youve had it tough. Bigger, smugger. And you . Rubbery buttons. Enter the x1 voice remote. Now when someone says. Show me funny movies. Watch discovery. Record this. Voila. Remotes you are back. The x1 voice remote is here. X1 customers get your voice remote by visiting xfinty. Com voiceremote. Im sue herera. The white house says president obama did not mean to be critical of Prime Minister David Cameron in an article in the atlantic magazine. In the interview , the president faults cameron and other allies for shortcomings in dealing with libya after the 2011 ouster of moammar gadhafi. The British Press said president obamas criticism was extraordinary. Gop president ial frontrunner donald trump picking up the endorsement of former rival ben carson in florida. Carson speaking at trumps resort in palm beach and explains why. First of all, ive come to know donald trump over the last few years, hes actually a very intelligent man who cares deeply about america. There are two different donald trumps. There is the one you see on the stage and theres the one who is very cerebral. Spain marking the 12th anniversary of the madrid train bombings which killed 191 people. That attack consisted of ten explosions on four commuter trains that occurred at the peak of madrids rush hour. As expected, the Cleveland Browns released Johnny Manziel after two disappointing seasons. He faces an uncertain future in the nfl and potential criminal charges in texas following a Domestic Violence incident. That is the cnbc news update this hour. Back to you, ty. Welcome back. Thank you very much. Uncertain future for manziel puts it mildly. He had a lot of trouble when he came into the league as a packer fan. Gold prices are closing now. Theyll close lower, down 1 . 1259 is the quote on gold. 1259. 70 on a day when gold is off. Silver, copper, palladium and platinum, copper, economic indicator, up by. 94 . Silver is up. Platinum is down a little bit. Big rally in equities, the major averages all up more than 1 as you see there on that undecipherable graphic. But where are the opportunities now . Joining us is Scott Clemens and mark mashiny. It has been a month since february 11th when the lows were in the market. Can we sound an all clear or not . I dont think we can. I think although this year felt like we had one period of sharp market selloffs in january and a recovery in february, were within a handful of points of being even on the year, it is symptomatic of one environment. Until there is more direction for this market coming from corporate earnings, i think were in for more volatility on the upside and downside. You agree with that, mark. I do. I think scott nailed it on the ed. We ha we still have open ended questions with regard to china, some encouraging data coming in recently with regard to import prices that are still declining, doing so in a decelerating fashion. Which may be indicative of a rebound in the commodity area that is more sustainable than this knee jerk ricochet rally we had in the last couple of weeks or so. But at the same time, i think that Global Economic conditions dont necessarily warrant this vibrant of a move so quickly. So that would suggest, mark, you think some defensive names ought to be on my buy list. How can i make a little money . Absolutely. A couple of names that look very reasonable in a valuation basis to us have participated to a agree degree in this rally so far. Walmart and at t. Walmart with a 3 dividend yield. At t with a 5 dividend yield. Scott, youre sort of in the same camp in terms of liking consumer staples, more defensive sectors, i take it. Were actually finding a lot of opportunities throughout the market for the precise reason that the market rather narrowly led. If you forget about the indextot look within the market, the members are still down 20 or more from their 52 week highs. If we accept that as a back of the envelope definition, 40 of the names in s p are in bear market territory. Were finding it across a number of sectors. With that metric, worse a month or so ago, even more than 40 a month ago. On the buy list, against the side of your image, was oil and gas exploration. Is that because the prices are down so much or you think they bottomed or what . It is not necessarily call on the market itself. It reminds us of the experience of the late 1990s with technology companies. After the dotcom boom and bust, there were a handful of companies that not only survived, but thrived because of that. We think oil and energy are going through the same kind of thing and those companies that not only survive but thrive are extraordinarily well positioned. It is still messy now. It is third on my list, but it is something were paying a lot more attention to. Mark, one of the things you point to that we need to get some more clarity on is china and its growth posture, picture. And also Interest Rates here in the United States. Are we likely to get that kind of clarity on the fed at any point this year, let alone ahead of this meeting or after the meeting next week . Tyler, i think on that note there is so much that we need to learn here over the next couple of weeks with regard to the stabilization of Financial Markets and direction of the dollar. So i think thats going to influence fed policy. So were likely to get a little more clarity with regard to the fed as theyre likely to adjust their dot plot matrix here. Well get no, i think, lead in terms of where Interest Rates are likely to go because theyre not likely to raise them at this meeting which is going to leave the question as to will they be able to carry out whatever their dot plot matrix looks like over the balance of 2016, which i think is still going to be two if not three rate hikes. That, folks, Scott Clemens, mark mashiny, thank you very much. Go to powerlunch. Cnbc. Com. Lets see whats cooking in the bond market with the exception of the one year t bill. Reaction going on the 2s and the 10s where notable yield milestones are being hit today. 2. 96 , thats a twomonth high. As for the 10s, 1. 979, thats a onemonth high right now. Speaking of bonds, news today about what is thought to be one of the most scandalous examples of a government borrowing money when it shouldnt at the height of a credit bubble, the story, can you believe it, mozambique, where this week the government has told investors to what is going on . This is whats going on. There is a tuna boat bond. Mozambique went to the International Capital markets in 2013 to borrow 850 million so they could buy 350 million worth of tuna boats. There is a spread there of 550 million. What happened to it . Nobody really knows at this point. They never gave good accounting of it. They said, now, guess what, were not going to be able to pay you back on time, well give you a lower interest rate. The mere fact they were announcing a restructuring meant the yield on the bond fell to a lowly 19 . I bring this up only because this is a perfect example of what people within the emerging markets say was the things that could happen during a credit bubble. A government like mozambique could borrow that much money, and nobody was really paying attention. Who bought those bonds . Thats what i want to know. Thats the amazing question. 8 is what you got when you bought them, doesnt look good if youre not getting paid back, right . What a story. Unbelievable, ty, right . True. Wow. Two top executives fired from the Wounded Warrior project after criticism about how the group handled donations. Well have the full story ahead and discuss it robustly on power lunch. Every year, the amount of data your enterprise uses goes up. Smart devices are up. Cloud is up. Analytics is up. Seems like everything is up except your budget. Introducing comcast Business Enterprise solutions. With a different kind of network that delivers the bandwidth you need without the high cost. Because you cant build the business of tomorrow on the network of yesterday. In new york state, we believe tomorrow starts today. Because you cant build the business of tomorrow all across the state, the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. Like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. And in syracuse, where imagination is in production. Let us help grow your companys tomorrow today at business. Ny. Gov welcome back to power lunch. American express unveiling a plan to generate more revenue by getting more merchants to accept their cards and encouraging customers to spend more with amex rather than other cards. United continental announcing a deal with air new zealand. The two top executives at the Wounded Warriors charity have been fired, coming in the wake of reports of lavish spending by the high profile Nonprofit Organization. The ceo and the coo were dismissed after an independent legal review found that policies, procedures and controls have not kept pace with the organizations rapid growth. Insight from stacy palmer with the chronicle of phipp philanth and daniel borakov. Lets bring up the full screen. You see how much money this organization raised, from Charity Navigator in 2014. They brought in 342 million in 2014. But they spent only 148 million on aid programs, which is less than half of the money they brought in. I was wondering, what do they do with it . Administration, 15 million, fundraising, 84 million, they had a surplus of 94 million. Daniel, what do you make of this kind of spending . It is not like they were running a ponzi scheme and didnt spend the money on what they said. A lot of it sat there and did nothing. Is that appropriate . Charity watch gives the Wounded Warrior project a c grade. Theyre only getting 54 of the budget to program. What is even worse is if you look at the revenue being brought in, about 300 million, only 36 of that is actually going to Programs Services other than some of the solicitation and education that they say is a program that we at Charity Watch dont believe is a program. The problem is here is the rapid accumulation of money, 1 10 million in the recent year, 85 million in the year, they got 235 million in a fund balance, why arent they spending more of that to help our veterans. One thing i want to emphasize here is theyre not the worst of them. This is the tip of the iceberg. There is a lot of Charity Watch charities, we have a lot we have four million veterans that need some kind of service and care. We want to help them, dont want to waste the charitable dollars. You see the numbers that veterans organizations bring in, it is a testament to how much Americans Care about veterans. What do you make of what we see here. I look at the numbers, i think this is an organization that has more money than it knows what to do with, hence why they throw in fancy parties. Thats one of the things that the public got very upset when they heard about this idea that people with throwing lavish parties instead of helping veterans. Even if it was a tiny percentage of what they raised, it is just hurts us all to think were parting with our hard earned dollars and were not getting a return on it given how vast the need is. One thing we often see is that charities that serve veterans, dying children, all of those groups, we get emotional about giving to them and that does meanwhile there is some wonderful groups serving the people, there are a lot of scams and you have to watch out. When we evaluate charities, there are various ways to count what are Program Expenses and what arent. Some would be more, if you count certain things, looks more favorable to the charity than if you dont count them. In this case, if you took the most charitable way, let me say it that way, of evaluating this charity, would they appear much more effective and efficient at using their money or would it not have made much difference . Youre right. There are a lot of different ways that charities are allowed to talk about what they spend. And one thing that the board said in its press release last night when it announced the firings is by their accounting, 80 of the donations were going into charitable services. Now, as daniel said, youre allowed to count a lot of different things. Like what . You get to count education that youre doing as part of your fundraising. Advertising . Not advertising. You can sort of stretch that idea. Theyre cutting 70 excuse me, theyre cutting 70 million in donated advertising and 41 million in joint costs. Thats mailings that youre receiving where there is education donated advertising can be counted as a program outlay. Right. But Charity Watch, we encourage people to follow the dollars. Youre giving the dollars, you want to know what happens with the dollars. The fact they get free psas doesnt mean theyre spending your dollars as a donor well. When you said this was the tip of the iceberg, that scared me. In any industry, even charity, there are bad apples, im sure. How widespread is this . Should people be concerned . Can you give us an idea of how Many Charities dont pass muster with you . Charity watch has 36 categories of charities and nonprofits. Most of the Veterans Charities receives ds and f grades and it is not, as stacy mentioned, there are scams out there and we got to be careful about those, but the Major National Veterans Charities and i could give you the names if you want, many of them are really poorly performing and they dont get a third of their money to actually benefiting our brave veterans. Want to name names . Oh, yeah. Am vets, the paralyzed veterans of america, some of our most famous and get this, theyre congressionally chartered and doesnt mean anything. It all looks like they have Congress Approval when congress isnt vetting them. The executive director made 473,000 in 2014. I think to the average american that sounds like a lot. Where do you come down on this . What is an appropriate level of pay . So, when you look at other charities, Wounded Warrior is the 65th biggest nonprofit in the country. So that means it ranks up there with some of our biggest colleges, harvard, stanford, in terms of private fundraising they do, red cross, united way. People who run those organizations typically make 400,000 to 900,000 a year and that may strike a lot of us as wrong, but it is what the market allows and it is what it takes to run a complex organization. So it is not off the mark, but it definitely has been a touch point and you have the high salaries along with the lavish spending on it. Employee benefits. Were they overwhelmed by the amount of money they had coming in. I dont think that was the problem so much. They were growing very fast and nonprofits grow extraordinarily fast often have trouble figuring out how to get it out the door. What to do with it, yes. They didnt seem to know what to do with it. They have 285 million in reserve. They set aside 110 million in the recent reporting period. I dont think when they ask the public for its hard earned money, they said, yeah, we want this money, we want to sock it away for, you know, for later that they really they just wanted to seem to raise as much money as they possibly could get away with raising. And then figure out later what to do with it. All right. La lady and gentlemen, thank you so much. Stacy palmer, and daniel borakov. Thank you for joining us. Stocks are in rally mode this friday. Here are some names you might own. There they are. Alphabet. Google, microsoft, jpmorgan chase, all participating today. Power lunch will be right back. Man 1 [ gasps ] man 1 he just got fired. Man 2 why . Man 1 network breach. Man 2 since when do they fire ceos for computer problems . Man 1 they got in through a vendor. Man 1 do you know how many vendors have access to our systems . Man 2 no. Man 1 hundreds, if you dont count the freelancers. Man 2 should i be worried . Man 1 you are the ceo. Its not just security. Its defense. Bae systems. Welcome back to power lunch. Energy stocks at the wall up by 2 . Three worst performing sectors, consumer staples, utilities and telecom. These are the sectors that hit new 52week highs intraday. Look at the financials, continuing to participate in the upside here. Higher by 2 . Lets get to dom chu with more. The financials, key on them. You look at the sector overall, important that one of the key sectors like financials, the second biggest weighting is up by 2 like you said. The xlf, one of the etfs, tracks the overall financial sector, seeing those gains as well commensurate with the overall market. What is interesting, this idea that if you look at the components, since those diamond lows, the february 11th lows on the market, it hasnt been traditional banks leading the way higher in the financials, a lot of insurance companies, also names like naveant. If you look at the best performing real bank, it was zion bancorp, some reenk nagion banks as well. Back over to to you. Emerge is a good word. Lets get back out to williston, north dakota and Brian Sullivan. Right now thats how most of the oil gets out of the bakken. After the break, well talk about a 500 million plan to change all that and why Warren Buffett may not be too happy about it. Stick around. Our cosmetics line was a hit. The orders were rushing in. I could feel our deadlines racing towards us. We didnt need a loan. We needed shortterm funding fast. Building 18 homes in 4 ½ months . That was a leap. But i knew i could rely on American Express to help me buy those building materials. Amex helped me buy the inventory i needed. Our amex helped us fill the orders. Just like that. Another step on the journey. Will you be ready when growth presents itself . Realize your buying power at open. Com theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. We believe in the power of active management. Management, by debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Welcome back to power lunch. Im Brian Sullivan in williston, north dakota. This is not the keystone pipeline, one you may not have heard about, but it is called the dap, Dakota Access pipeline, it was approved yesterday by 30. The reason why that matters is one of the big problems with oil in the bakken is the higher cost relative to texas. The ground is hard, labor is more expensive. Getting the oil out of here is expensive. Truck, train, pipeline your only option. The Dakota Access pipeline will be built and completed and it will help take out a couple hundred thousand new barrels of oil a day, lowering the price here. And yesterday we went out to where they were building a tank gathering space station and spoke with a developer on the land involved in the deal. Right now in a rough way about half the oil coming out of the bakken is done by pipeline, the other half by truck and rail. This design to make more go by pipeline. How much, when this is completed, will this bring out of the bakken. 475,000 barrels a day to 550 at full capacity. So it can handle about half of the bakken oil being produced today. The anticipation is well be building a lot more, more production here in the next five to ten years that should this will help handle all that. Will that eliminate the need for truck and rail . It will diminish it greatly. When this is done, how much per barrel will it save in cost to get oil out of the pipeline or bakken versus truck and rail . Well, you know, right now, for example, it costs 15 to ship Oil Per Barrel from here to albany. That price should be cut about half. The concept is that if you are a producer that is struggling right at that break even point, if you use a pipeline instead of truck and rail, it might help your balance shed. It will. What is the timeline on this . Is this going to be a keystone, hung up, finished, where are we . We are 12 months from this being done. It is good to see people at work too. Lets be frank. Driving through here, you see a lot of fields, yards with trucks that arent moving, rigs that arent drilling, wells that arent pumping. There is still work in williston. Absolutely. On the production side. We shifted from having 15,000 workers in the doing the drilling and what we call those temporary workforce and now it shifted over to the production side. There are still in excess of 5,000 available jobs here in williston on the production side that havent been filled yet. Youre an east coast guy. Youre a new york state guy. You came here, five years ago. Yes. You saw the huge runup. What do you think now . I think there is great opportunity here. I believe in the bakken, i believe in williston, i believe in the things that the state have done here and im here permanently to make a go of this. Im not afraid. So the subsidiary story about this pipeline is something we talked about which is right now half the oil coming out of here done by rail, most of that is bnsf, owned by Warren Buffett. That pipeline that gets built, that will steal a couple hundred barrels a day from the rails. This is a billionaire rail guy, Warren Buffett, versus a billionaire pipeline guy, kelsey warren, to get the oil here out of the bakken. This could be a battle royal. You got to wonder if this will promote consolidation in the industry beyond the talk that is gripping the industry now in terms of the rails. Yeah. It is about half the cost of the pipe, about eight bucks to get it out 15 by truck and rail, thats how most of it is getting done now. Well see you later on. Oil, we should mention, is a big driving force behind the big gains were seeing across the board on wall street. The dow is up more than 200 points, gain of 1. 2 at this hour. Look at the s p 500. Thats just off the session highs now. Higher by 27 1 2 or 1. 4 . The russell is the biggest gainer here, it is higher by 1. 5 . Keep in mind over the past month, it is the best performing, up by 13 over the past one month period. We mentioned oil being a big factor here. Look at how wti is trading higher by 2 . Higher by 80 cents now. The iea sees signs of a bottom in oil price and thats helping to keep this price up here. If the bottom is in, we mentioned the oil bottom, which stocks could likely benefit . Dom chu has been crunching the numbers. We look at the numbers alongside our data partners to see what happens when oil makes a huge move like it has. It is about 48 now since the lows that we have seen so far during those recent lows we have seen in the market. So we asked those crunchers to look at the numbers and heres what they came up with. If you look at the overall trade, crude oil, when it rises, by 45 or more, in a one trading month period, all right, it tends to, again, fall off a little bit. There have been a handful of times since 1990 when that happened. In the month trading month that happens after we have seen a gain like that, crude oil itself, wti crude drops off by 1. 3 . Energy stocks and the s p 500 down by 2. 5 . Major oil refiners, like exxonmobil, the integrated companies, thats a stock that lost 3. 5 on average in the month following a huge runup in oil prices. Interestingly, though, enough, one stock in particular stands out. Valero, one of the refiners, probably one of the only ones that has gained every single time oil has gained that much, 45 or more in one trading month. So one outlier on the Positive Side and, again, it traded positive every single one of those instances. Interesting trades here when oil rises by this kind of degree in this short of time. A lot of information on that chart. I want to ask one followup question. In the month after oil has had that kind of 45 or better one month runoff, runup, only one third of the time does Oil Trade Higher in that subsequent month . Yes. This is data going back to 1990. We should clarify that. Since 1990, during those instances where we have seen a 45 or more percent gain in crude over the course of one trading month, not a calendar month, trading month, thats the kind of average return youve seen. It trades negatively twothirds of the time and it is typically down, like you said, by that amount. Thank you very much. That leads us perfectly to our next guest. Lets drill down further and discuss whether there might be a little breathing spell. What does it mean for production in the u. S. . How do you invest in the opec outlook among other things . Mike kelly is at Seaport Global securities and joins me now. You heard what dom said, i assume. After this rapid runup, the odds are over the next month, a short period of time, chances are oil will not move higher still. What do you think . I guess all you have to do is own valero. Simple. We look at the next month, we think the next 30 days is a very crucial period and well get either in our eyes, a ramp back to 50 potentially, or we could see a retracement down to the 20s. And the critical factor in our eyes is this mysterious meeting that is potentially going to happen between march 20th and early april, between opec, russia and maybe some other nonopec producers where could have a coordinated freeze. Just spent the week marketing accounts in the east coast and i think the consensus thought there is you do have a coordinated effort, we push potentially much higher, going to 50, that doesnt happen. The focus is going to return to bloated inventories, across the world. And that fear gets you more into the lets go to specific ideas in both of those scenarios and ill ask you which one you think is likelier. If the bullish case for oil kicks in, and we go from this 38 a barrel up toward 50, who wins . The bullish case, all these high beta trades, the high beta names, should say, theyre your first pop. It is the names with, you know, Balance Sheet looks stressed currently. And names with decent assets, not the best assets, that have been outper foforming in the la year. Names like guys at brian seeing up in the bakken now. Whiting. Wpx. Those are the names that really rip, sanchez oil and gas another one we throw in there too. Lets pick up a little speed here. In the bearish case, who wins . Got to stick with the guys that make money in the 30s, premium players, which are diamondback, parsley energy, pioneer, rsp and emerging play, stack play in central oklahoma, little company, gas star is there is going to work. We think new field and continental as well. Very quickly, which scenario would you be banking on . Yeah, i think in the near term here i actually think you do get a coordinated freeze. You have language in there that also says, you know what, this doesnt work with prices, we could cut and i think thats going to be supported here in the near term. Mike, thank you very much. Mike kelly at Seaport Global securities. Moodys just put out a note saying they think venezuela will likely default in the fourth quarter. Unless there say big rise in the price of oil. Venezuela suffering because of the big decline in the price of oil. Once again, moodys saying now they think the country is likely to default later on this year when they have debt payments coming due. To Brian Sullivan in north dakota where they know about the impact from the decline in the price of oil. Im not going to tell people to buy stocks or sell stocks, but one thing that mike just talked about is even if the price of oil rebounds, those rigs have been laid down. It is going to take some time to bring them out. Everybody we talked to here, guys, hears the problem. If oil rebounds, the workers who would work on those rigs are gone. They left. There is some people here that could do it and maybe people will come back. Ill advise people out there buying the names, maybe trading, maybe investing, be careful. Even if oil comes back, the workers to run those rigs, to pull oil out of the ground are largely gone. That aside, the part of the story we dont talk about enough is the derivative impact in the price of oil decline. We talk about the oil workers, ill rigz, people involved in the industry. Here is the thing, with every oil rig youre talking about 50 to 100 different jobs that are being lost as well. It is not just those working on the rigs themselves. Thats a story well tell you now. Introduce you to a young guy, started a company with his cousin, one crane to put up the oil rigs, went up to nine, things slow downed for him. Here is his story. Last time we were here, it was, i dont care what you charge, get the rigs to the job, get the well up and completed. What are customers doing now . It is definitely a different mind set now. They have to cut savings. They have to have savings, cut costs as much as possible with the lower oil prices. So as ourself as well have to figure out how to do it cheaper. How are you doing it . We had to downside. You had to cut some cranes. We did. We went from nine to four. We definitely keep these four running more often now. But the other five were leased cranes and as the work slowed down, we had to give them back and downsize a little bit. What are you hearing from customers about future activity . Future activity, theyre just trying to push through it. Right now is more of kind of stagnant. It is kind of wait until oil prices go up a little bit. Everybody is just kind of trying to survive. You went from 207 rigs three years ago to 35 now. Yep. Is there any indication that number is going to go back up or fall further . I believe it is going to fall further. I think 2016 is going to be tough. How many employees did have at your peak . We had 25. We have 10 now. We had as many people as we absolutely needed. That was a key to survival too and now ive done come full circle and now back out on the field running cranes now to try to save on payroll. Youve gotten back in the truck. Absolutely, yeah. How Many Companies including your own do you think can exist here at 38 or 40 oil . I think if people just restructure their business, forever everything was so expensive here, people were capitalizing on the boom. And now we have to come down to realistic prices. And being a millionaire overnight isnt going to happen, but can you sustain and make a good living here still . Absolutely. Andy and his wife and his young kids are sitting over there. Here is the thing that the area embodies. Hard work. You dont move here, because it is an easy life. And i want to tell a quick anecdote about andy before we going to. There is another crane off camera you cant see, a big yell crow crane. These are massive, right . During the boom, they needed new cranes. He flew to South Carolina and drove the crane back here to north dakota, but the cranes maximum speed is only 45 miles an hour and he had to get permitted in every state. You know how long it took him to drive the crane . This is 16 days. 16 days to drive the crane back here to meet the work and thats what you hear all over williston, the work ethic is the hard work, raising families, this is not an easy place. And so we talk about oil, you know, it is about jobs and about people like andy busting his butt to make a Better Living for his family. Classic american story. Thanks so much. The funeral for nancy reagan under way at the Reagan National library in simi valley. This is a live picture now from simi valley, california, where the service is just beginning. Lets bring in jane wells. Right now probably the most poignant part of the service is happening. Brian mull rooney is reading a love letter that Ronald Reagan wrote his wife. The guests, over a thousand of them, gathered in a tent here. This is usually surbl a beautiful spot, but it is starting to rain. And it will get worse as the next hour goes on. There are many, many celebrities here. We have seen a lot of security. First Lady Michelle obama is in the front row sitting next to governor jerry brown. Also here, Hillary Clinton, as well as laura bush and former president george w. Bush and rosalind carter. You see the president there, former george w. Bush and governor pete wilson. Many celebrities, gary sinise next to mr. Chee. We have seen anjelica houston, now after the former Prime Minister speaks, were going to hear today from Nancy Reagans children, patty and ron and tom brokaw and james bakker. Diane sawyer will read the gospel message from john 14, where christ tells the disciples, i go to prepare a place for you. Nancy reagan, guys, organized every detail of this ceremony down to the very end, even the flowers, peonies, her favorites. But one thing has been added. Her husband loved bagpipes. There was a bagpiper during his funeral and there will be one here today as well playing amazing grace. And the former Prime Minister now reading from a december letter Ronald Reagan wrote his wife. Gold and precious stones, perfume amazing love story between the two of them, guys. Jane, thank you very much. We look in there on the funeral for a great lady, first lady nancy reagan. Well be right back. There is, of course, my first lady, she brings so much grace and charm to whatever she does that even stuffy formal functions sparkle. Sales event is on. With extraordinary offers on the exhilarating is. The thrilling gs. And the powerful rc coupe. This is the pursuit of perfection. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive stocks rally for the fourth straight week of gains. What is the best trade ahead of the weekend . Joining us is now is tim seymour and jim yurio. The s p 500 is pretty much at its 200 Day Moving Average and you both come away from that with very different conclusions. Jim, you say that were poised for a move higher. How high . I think were going to go up to the old highs we made in december. With the luxury of a day and a half of analysis, looking at what happened out of europe yesterday, they added liquidity, they threw more money at the system, but at the same time, jaw boned the euro higher. It is a delayed reaction in the market even though the currency market is not telling us there is a delayed reaction because euro reversed . I think the reaction is that the euro has stayed high today so that to me means that people think the water is okay to jump in. Thats what i like the most about risk assets, provided the euro doesnt reverse on itself and go plummeting again. I dont think it will. I think we go to the december high like 50 handles from here where were going. Tim, from your perspective, not as rosy. I dont think things are unbelievably strong here. Risk assets had a major run over the last two weeks i think going into the fed and the boj, youre taking profits and risk assets. Not shorting them here. I think if you look at all the measures of what would be places to say things are a little overdone, i think the dollar is oversold going into the fed meeting. Youre in a place where yields are moving higher in the u. S. , risk is to a more hawkish fed. More fed than less fed is what we have now. No matter where we are in the next couple of months, more fed equals more volatility. It has been spiking every time. Traders should be playing this. Tim, hold on a second, just to be clear, we had a banner saying take profits on risk asset run, so which areas within risk assets, em, small caps, they had massive runs over the past month. You got a place where emerging markets, if you think about the oversold conditions going into this year, i think em is a place where, yes, things can get better. If i think the dollar will rally 2 next week, emerging markets will take a small hit. You do believe the dollar will run 2 . I think the dollar will move 2 next week. It is oversold. The dollar peaked but trading this range, a lot of things had a good run. I think it is time to take a couple of chips off the table. Jim, what do you buy here . I personally i have apple and im thinking about adding more to it. I think it has been beaten downive in adown ive enough. And ive also im thinking about increasing to dividend paying energy names, i have exxon, i have xle, thats what im looking at the most. Stuff beaten down in the past could be doing well now. Crucial to that oil call, in terms of buying equities is a belief if we close above 3855, that the next stop is higher to 43. I believe that. I believe we if we close strong today, looks like were going to over the next few minutes, the next stop is 43. There is shorts in oil, people start to sweat. If you cover your shorts on oil, could push it higher and those stocks are highly correlated with that. Jim and tim, well see you tonight. The union agrees with the republican frontrunner on one key issue, and that would be trade. Listen to what the president Richard Trumka told us yesterday on power lunch. A Blind Squirrel finds an acorn once in a while. He found the acorn of trade, but on the rest of his policies hes very, very antiworker and antiunion. So who has got the right idea . Trump and labor unions or is free trade a good thing for america . Well debate that next. Tomorrow starts today. New yore all across the state, the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. Like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. And in syracuse, where imagination is in production. Let us help grow your companys tomorrow today at business. Ny. Gov welcome back to power lunch. We want to call your attention to what is happening now with shares of pepco. This is a midatlantic washington, d. C. Utility company, down by 6 , near the lows so far today. This after a release coming from the washington, d. C. Peoples Councils Office which said that it is now rejecting the latest concessions given by pepco and exelon in order to get the deal done to create what could be one of the Largest Electric utilities in the entire country here. In it, they say they basically address the idea that there are not enough rate protections for customers in the d. C. Area as a result of this potential merger and, again, they have now rejected this latest proposal, those shares are down by 5. 5 on heavier than average trading. So another hurdle in that particular development on this bit of news. Shares of both trading lower on the news. Quite a drama in that sector. Thanks, dom. New today, americas biggest labor powerhouse, the aflcio announcing an antitrump ad Campaign Next week. Lets discuss with fay lee, thanks for coming back. And derrick scissors at American Enterprise institute specializing in china. Miss lee, let me start with you, why is the aflcio launching an antitrump ad Campaign Next week . We want to communicate with our members and make sure they have the facts they need to make a good decision in the president ial election. We want to make sure they know what trumps full record is as it affects working people. On right to work, raising wages, on how he treats his own workers and how he outsource his own operations. We want to make sure our members through social media and other means have all the facts at their disposal. Are any of those ads ready yet . Anything you can tell us about them that will have specifics in them . No, not yet. But this will be for next week. It will be ongoing. This is going to be an ongoing part of what were going to the way we engage in the election is not so much by telling people what to do, we give them the facts to make up their own minds. You mentioned several things youll highlight in those ads, workers rights, the one thing you didnt mention there was trade. Do you agree does the aflcio agree with him on trade more than you disagree . Well, we certainly agree that there are problems with u. S. Trade policy that failed American Workers. I think where we disagree with him is on exactly how we need to go forward. We would agree that the tpp, the Transpacific Partnership will not be good for American Workers or american businesses. But beyond that, i think we have a more nuanced view. We want to live in the Global Economy, but do it with rules that are better for working people. Derrick, do you think the tpp is bad for the American Worker, was nafta bad for the American Worker . I dont agree nafta was bad for the American Worker. Manufacturing wages, manufacturing employment, Labor Force Participation all rose for years after nafta. Thats just a myth built up. The tpp, we dont know. It is not done yet. The fundamental thing here is basically that donald trump and the aflcio agree that imports are bad and theyre wrong. Imports benefit every single american, thats why americans choose to buy them, they pay money to get the things think want. Thats the basis of free Market Economics and why both trump and the aflcio are considered protectionists. The way i look at this is, okay, if you want to bring back those jobs, those jobs are just much more expensive here in the United States. So how much more should the American Consumer pay for things in order to have those jobs here in america, however you manage to get them back here. First of all, let me correct one thing. Were not against imports. We understand we live in a Global Economy, well import and export. We want a balanced trade policy so we have reciprocal trade relationships and we import, we also export and do so on a fair basis and the rules of the system are fair to work people. If american businesses are bringing jobs around the world and theyre taking advantage of workers who dont have basic human rights, child labor, forced labor, workers who cant form a union if they want one, thats unfair both to American Workers and to american businesses. It is not so much a question of whether it is going to cost a lot more to bring those jobs back when you impose all those things, that raises the cost, right . Do you say that there is that things will not cost more either way, however you achieve bringing jobs back here or improving the conditions overseas . We could have child labor here, we could have slave labor here, we could put workers in jail for trying to organize the union, we could trash our own environment, have no consumer safety. We decided as a democracy we do want Safe Products on our shelves, want a Clean Environment and want to treat workers like human beings. We have to figure out how to engage in the Global Economy in a way that lifts standards in other countries to make sure that other countries are playing by the rules so we are not disadvantaged. I dont think we need to give up all the things we fought for here in the United States, decent jobs, decent wages. It is going to cost more, right . It will cost more. The point is that a lot of very high wage, high regulation economies like germany and sweden are successful in the Global Economy pause they have engaged in a different way, high road competition. If were trying to win the race to get the lowest wages, we will end up losing in every dimension. We will end up with the lowest wages, with bad jobs, with a trashed environment. We dont want that. So, derrick, address the on the point she makes, but also, i mean, apart from questions of how labor practices are in china, and environmental practices are in china, the fact is we run a big trade deficit with china. There are questions about currency manipulation, questions about government subsidies to industries in china. How do we deal with china on this issue . From your perspective . There are two elements here. The first is, thea may not believe that imports cost jobs, but the aflcio says it over and over again. So does donald trump and bernie sanders. They say, and it costs millions of american jobs. Thats not true. Not supported by the facts. What we hear from trump and the aflcio and others is imports are bad for the country and thats wrong. As far as dealing with china currency manipulation is not a big issue. The big issue is that china is not a good trade partner. They steal our intellectual property, block our exports. Thats much more important than giving us cheap imports that benefit the poor and everyone who wants to buy clothes or a cell phone. We got our focus on the wrong topic. Because the aflcio doesnt like import imports, because donald trump doesnt like imports. How much do you let more imports into china . One thing to do i think would be much more effective than attacks on americans, which is being proposed by some people to solve chinese problems is to say if youre a Chinese Company benefitting from stealing american technology, not just the companies that steal it, but you benefit from it, you cant do business here. If youre going to target chinese companies, target the ones stealing from us, not the ones making cheap goods from us. That also sends a signal to better respect intellectual property. There are other things to do. Thats an example of something that isnt going to hurt americans when we try to get china to be a better trade partner. Fay, last word. Derek what about the problem that some of the companies that are violating rules in china are american companys . Not just chinese companies. It is not about imports. It is about the trade deficit. It is when we import so much more than we export even the National Accounts show that undermines our gdp, the economic growth, it made our recovery very slow and it made wages stagnant and so those are the problems that were addressing. It is the imbalance of trade that is a problem, not the fact that it imports by themselves. When our government doesnt take steps to consistently enforce our trade laws so that china cant get away with manipulating the currency, subsidizing the exports and violating that was the last word. I they will well be talking about this a lot throughout the president ial campaign. The oil market closing for the day. To jackie deangelis. Good afternoon to you. About a 2 pop in oil prices on the day. We finished at 38. 50. These are the highs set for 2016. It happened today. The iea report saying we possibly bottomed here and production numbers from the nonopec producer and the u. S. Should start to come down. Also, the rig count numbers, we lost six oil rigs, that is supported as well. Ill add there is some downward bias out there. Things that traders are concerned about, theyre worried about a surge in the dollar as a potential hit to commodities and producers may ramp up production now that prices are higher and more lucrative. They can slam them back down themselves. Last year, if you look at the one year chart, you see we did go up in term of price in anticipation of the summer driving season. But in late june, we came back down. Looking at trends and patterns, that is a potential again. Shortterm, your traders were saying look for 43. Im hearing 42. Not out of the question. Back to you. Jackie deangelis, thank you. Now to sue herera with your news update. Heres whats happening at this hour. We start with america paying the final respects to nancy reagan at the reagan president ial library. First Lady Michelle obama, former president bush and his wife laura, rosalind carter, jerry brown and Hillary Clinton among those in attendance. Mrs. Reagan will be buried next to her husband on the library grounds. Russian president Vladimir Putin says Russian Military equipment has proven its worth in his countrys air operations in syria. He was speaking at a meeting of russian top military officials in moscow. He also said russias arms program would not be afeked af budget cuts. Members of the army and Police Patrolling along the borders razor wire fences to prevent migrant and refugees from crossing it. And the Louisiana National guard has been quite busy rescuing stranded flood victims by air. Crews from the National Guard blackhawk rescued two people who climbed to the top of a tree to try and escape the rising waters. Heavy rains smashed rainfall reports bringing as much as two feet of rain to parts of that state. Tennessee is getting hit now too. Thats the cnbc news update this hour. Back to you all. Skillet tak it takes to pilo of those and drop down. Very dangerous. Very brave. Sue, thanks. Back out to Brian Sullivan live in the bakken. Thank you very much. A lot of talk about the direct jobs, we introduced you to a crane operator earlier in the program. After the break, were going to interview the guy that owns this place, youll hear how much the oil slowdown has hurt his business and you can take this story, by the way, anywhere across america, being hit by the commodity crush. Were also going to get some really good advice, very successful guy, advice from him to any Small Business owner out there, what do you do when your industry faces this kind of a slowdown. He will give you practical advice when power lunch live in the bakken of north dakota returns after this. This car . Came courtesy of james and patricia thompson. This tv . Margaret and tom lee. The championship game ball . That was sebastian diaz. Good guy. And all i had to do was ask for their money and pretend i was investing it. Their life savings is now my lifestyle. Female announcer dont let someone else live the life youre saving for. Find out if youre dealing with a registered investment professional at investor. Gov. Its a great first step toward protecting your money. Before you invest, investor. Gov. Welcome back. What do you do if you run a business and your industry or the industry that you rely on takes the kind of downslide that the price of oil has taken. The guy that owns this restaurant pretty successful entrepreneur helps start the conia grill runs some big places, moved here to help build a mini restaurant empire here in williston, but his restaurants have slowed dramatically as well. So we sat down to learn some lessons. How severe is the downturn for you and for the town . Our business is down 50 . And it varies week to week, but every week it keeps getting worse. So we dont know where the bottom is. Were not there yet. You think it is overbuilt in every way . I think the town doesnt need another restaurant. Since we opened this restaurant, i saw you three years ago, 32 restaurants have opened up. It has gotten a lot more competitive. There are too many restaurants for the number of people we have. You could say that good gas stations, apartment buildings, houses, almost everything in town is overbuilt. What if oil stays this level . If it stays, it will be difficult. And i think anyone that has leverage will probably be filing bankruptcy. Who are your customers now . Our customers, a lot of the locals are coming out. During the boom, a lot of them didnt want to deal with the traffic. They didnt want to wait two hours to get into the restaurant. A lot of locals are coming out more. And our customers are more the white collar oil people, but people are hesitant. Theyre more reserved. Not spending like they used to. Used to have people come in here, great mood, champagne, bottles of wine, the bar tab could be quite large. Not anymore . We havent had a large bar tab in a while. A lot of our viewer and listeners, Small Business people what advice do you have to them in managing through maybe not this severe of a downturn, but managing through a downturn . Whatever it might be. Our biggest difficulty was simply this, you know, up here, you know everybody. If you work with someone, day in and day out and you know them, youre friends. It is tough to let go of a friend. It is tough to say were going to cut your salary or we have to let you go. Oil went down. We had to do it anyway. If you ask anyone, maybe we could have done it earlier, but thats tough. It is a human relations and you dont want to cut people. Thats our biggest mistake is we didnt cut faster and quicker. We have done that. And right now it is really month to month. We make some money and business is going down, we review it and cut some more. I dont know where it is going to go, but well survive. I think marcus makes a point, there are people behind every statistic, all the drilling rig counts we get, there is people that are working on those rigs that have lost their jobs and i think that, you know, this is our third visit here, we made relationships, we made some friends, i think that without getting too sort of editorial about the story, i will say this, this is the kind of town you want to root for and ill tell you why. This is not south beach. This place is hard to get to. It is near the canadian and montana border. Winters are long. Theyre cold. It is a tough place to live in many ways. Wonderful, but tough place to live and the only reason that people come to williston is to work. Lets not forget, when the financial crisis hit, the oil business is really one of the only businesses, maybe besides attorneys, that was growing. And you had people moving here, for jobs, theyre here to work. And nobody wants to see the price of oil go to 150, that will slow the economy down. I think if we look at this town and the people we met here, and the jobs and the families that are behind every statistic, you know, you kind of root for this town. It is a hard working place and i think williston is down, it is not out. These guys behind us would probably tell you there are still jobs here and still working, but wouldnt mind seeing the price of oil do a little bit of this. Brian, thank you very much. Brian sullivan, well he is y w back here next week. Power lunch will be back after this. Our cosmetics line was a hit. The orders were rushing in. I could feel our deadlines racing towards us. We didnt need a loan. We needed shortterm funding fast. Building 18 homes in 4 ½ months . That was a leap. But i knew i could rely on American Express to help me buy those building materials. Amex helped me buy the inventory i needed. Our amex helped us fill the orders. Just like that. Another step on the journey. Will you be ready when growth presents itself . Realize your buying power at open. Com theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Million dollar home series is back and today we tackle the ultimate dilemma, to rent or to buy, two properties in one market face off and well determine which one gives you the better bang for your buck. In round three, were in new york city, where you can buy this manhattan mod or rent village digs. Lets see the homes. Located in manhattans hells kitchen, a condo offering Natural Light across 640 square feet. Oak floors line an open concept living, dining and kitchen area, plus views of some of new yorks landmarks. The bedroom comes with two closets and a full bath enjoys heated floors. The complex offers shared rooftop access with a gym and lounge area. Easy city living priced at 1,055,000. Built in 1870, this Greenwich Village townhouse is home to a apartment on the third floor. Hard wood floors line 700 square feet, Natural Light fills the common area and kitchen, which is equipped with marble countertops. The one bed, one full bath unit has a working wood burning fireplace steps away from the iconic Washington Square park and new york university. 5,850 a month. All right. With us now, ryan serhoff, what is going on in the new york market overall . A lot. And i have to put out a full disclaimer, both of those properties are my listings. It is important i put those out there. These are your babies . My babies. I was watching them, like, which one i do love the most . Which one should go back to school. I dont know. Rent versus buy. The question i get every single day. On the way over here, were doing a deal now, downtown, someone sent me the same question. Werent watching, but that shows how many people are asking that same question. As i look at the rental there, it was 5800 a month or thereabouts. The cost to carry the ownership one 5500. 5500. So the out of pocket exactly. Is roughly the same. The after tax cost on the ownership one is lower. Correct. If i finance it. Sure. But you cant just look at that. A lot of people look at those two numbers and say it will cost less per month to own this beautiful apartment at 432, west 52, or am guy i going to go ren something in the village, cool, townhouse, great location, what i do do . Look at timing. And what is great about new york city is new york has the shortest time frame for where it becomes cheaper to actually own than it does to rent. Rents are so high. So here it takes just about two years to get to a point where you are now after all of your up front cost and Closing Costs and monthly costs paying less per month net net to own a place in general or specific to this example. In general and specific to this example. Which one . Or should we guess . I want you to guess. I know which one. Thats why im here. For sale. You go for the one for sale. For rent, youre paying the same amount, not nearly as many amenities in the building. True, true. I dont like the location. I dont like the location either. You would go with the rent. I would never live that far west. For investment, putting that money out there investment, i go for the buy. What would you go for . For me, i always look at greater appreciation, so time frame, if youre buying something, you want to be there at least a couple of years if youre going to live there and see where your money is going to go. Otherwise you should probably just rent. If youre somewhere six months a year, doesnt matter. Midtown west is getting an influx of money, influx of new development, you have so many new restaurants, residential amenities coming and the whole new hudson yards developmenties hudson yards coming. I think for the same amount of monthly youre the buyer. Manhattan mod. Thank you so much. Youre going to be on closing bell. Yes, i will . Another round of this. Thanks very much. Well be right back. Rnlgs a widely watched technical level, lets discuss that with the trading nation. Craig johnson, guys larry, youre no longer acg analytics, excuse me. Whats so important about the moving day average and where do you see us going next . Melissa, the pain trade is up, from our perspective, when we broke above the 1950 level, the trade flippeded from down to up. A quick relief rally right up to the but now its judgment day. We think its something more because weve seen our measures of the market internals turn positive and last several times weve seen these major buy signals with our work, the market has been meaningfully higher and this two a day will get pushed on a few times but ultimately will yield and there will be another leg higher. You see more upside. Larry, you see back the train up on bonds. Why . Well, a month ago on this program on the network, we were very bullish on the financials. Very bullish on the oil names, buying fear and this is a market where in a bear market, lets face reality, you want to buy fear and sell complacency, thats been the play book that worked since september. Fact. I think now that were happy days are here again and everybody is piling back in the market, you want to sell equities here and buy bonds because as we head into the fed meeting next week, bonds are probably going to perform very well over the next two weeks. Thank you. Craig and larry for more trading nation go to trading nation. Cnbc. Com. Well be right back. When a moment turns romantic why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card. At ally bank, no branches equals great rates. Its a fact. Kind of like bill splitting equals nitpicking. But i only had a salad. It was a buffalo chicken salad. Salad. Youre an at t Small Business expert . Sure am. My staff could use your help staying in touch with customers. At t can help you stay connected. Am i seeing double . No maam. Our at t buy one get one free makes it easier for your staff to send appointment reminders to your customers. And share promotions on social media . You know it now im seeing dollar signs. You should probably get your eyes checked. Good one babe. Optometry humor. Right now get up to 650 in credits to help you switch to at t. The companys janetgenetica modified mosquitos have no effect on the environment. That would reduce the population, limiting the spread of zika and dengue and other viruses. Robert frank is here with the results that do not look impressive. Seinfeld is facing a tough crowd in florida when he put his 18 porsches. Saying he never bought cars for investments but for pure joy. Take a listen. On the road and driving and all of the different components of the car mesh well together, thats when i feel like i go to another level of joy of just driving. Thats what i love about these cars. Porsche nirvana, yeah. That nirvana quickly fading as top cars missed low estimates. Some of the cars topped their highs but this top lot was 1973 cam am. That failed to sell. Seinfeld bought it for 4. 4 in 2012. This spider fetched 5. 3, that topped the 5 million estimate bupt the 1959 spider, my favorite one, drove it with kevin hart with cars getting coffee. The top bid was 2. 6, but one of the Success Stories with the vw camper he use the for his familys Lemonade Stand in the hamptons until they were shut down by the police. It sold for 99 love those wv bugs, they are great. And the low cost stuff did well. Thank you very much. Thank you all for watching power lunch today and this week and always. Closing bell starts right now and youll see melissa at 5 00. Hi, everybody, im kelly evans. Do us a favor and turn the volume up, shes going to need to whisper for next couple of hours here. Im just channelling my best angie harmon. Its working. Welcome back. Thank you. Were closing out the week with a rally in equities. The broad market will debate whether oil has officially finally hit bottom and look ahead to the next fed meeting. The dow is up 1 , thats off the highs of the day. We were up more th