june or september. >> i happen to be bullish on the market right now. is the market cheap? no, but it's fairly value and from an activist standpoint a lot of companies have not kept up with the market and it puts more of a spotlight on it we are having no difficulty finding situations. >> thanks so much again. barry rosenstein off the stage and on to the set. we will be here throughout the day. power lunch begins now and stay tuned for keith meister. we broke the news on friday of his new position and he is on the stage and talking about it. # we will talk to the guys there. >> all right, scott. barry rosenstein. another interview in the next hour from the conference. what a day it has been on cnbc.

welcome to power lunch. i'm tyler matheson. mandy has the day off. the biggest names in business are on the network all day with all kinds of actionable ideas for investors like you. ackman just in the last hour. david einhorn and the list is very long. we won't go through it all right here. one of the investors making pioneer resources fall like a stone. see why and see what other stocks these folks are moving. big change at cisco. john chambers leaving as many expected this summer. we will introduce you to the new ceo and tell you what you need to know. that stock cisco is up about 27 1/2% over the past year. can the new person in charge take it to the next level. mannedy is off today, but kayla is with us and we will get downtown in a minute. we start with a slew of investing titans as i mentioned on cnbc. warren buffett with our becky

quick following berkshire hathaway's meeting in omaha, nebraska. wide ranging from the stocks he is buying to market valuations overall and becky is with us from home ha. hi becky. >> good afternoon, everybody. why don't we start with what buffett is buying or what he has been buying recently. he told us that he had been buying more shares of ibm in the first quarter. that will be public soon. there will be plenty of naysayers to plow into ibm. buffett likes to look at things over the long haul and he likes what he sees. >> ten years from now they will be earning more money than they are now. our percentage ownership will be up and i think we will make

considerable moanney. that's my best estimate. i felt that way when we started buying a few years ago. we have 165 million or something like that. 985 million shares out now and the interest has gone up by 15 or so percent without us laying out a dime. >> of course everyone wants to know what he thinks about the market overall. he is reluctant to talk about the market on a day to day basis, a month to month or even a year year basis. he called the market top or bottom. the market bottom you can think about what happened in late 2008 when he started advising people to buy american stocks because he was. don't forget what he called near the top of the dotcom bubble and started warning people that there was not all that there. right now things are americamurkier because it depends on interest

rates. >> the market against normal interest rates is on the high side of valuation. not dangerously high, but on the high side. if these interest rates were to continue, stocks would be extremely cheap now. one thing you can say is stocks are cheaper than bonds. >> of course that is the $64 trillion question. what will happen to interest rates. that is too tough to call. he has been wrong very recently about this over the last several years. rates have stayed lower far longer than he expected. back to you. >> becky, we will neat your debate when this heats up. from omaha, becky quick. we heard warren buffett defend his strategy for ibm and coca-cola. what he calls the big four. what other names should you be watching.

our chief investment strategist was at the shareholder meeting and david katz joins us as well. the chief investment officer with matrix asset advisers. good to see both of you today. i want to talk about the big four. the strategy of doubling down and ibm adding more shares in a company that was the under performer and the out come looks unclear. it is a big dividend play with the hike last week. how do you see an investment like that and should they replicate what buffett is doing? >> i think buffett explained it very well and even becky was talking about it. he is interested in five to ten years from now and i think he has gotten more comfortable with ibm in the sense that it's much more of a services play than ultra high technology play. that gives him the feeling that it is a durable franchise and certainly has a history of being a durable fortune chiz and he talked about that at the meeting

that it is dealt with all sorts of changes in terms of what it is focused on over the years and done as everyone knows a phenomenal job and they will do it again. i have no reason to doubt that side of things. >> david, as derrek shirtberkshire hathaway has gotten bigger, he needs to make an impact at the company level. he has invested in the big global conglomerate-type companies. with the economy as delicate as it is right now, i wonder if there words of caution on where to look in this environment. >> we think again buffett has that longer time with two to four to five years and longer. we think the global economy is fine. if you look at the bigger holdings wells fargo is in the sweet spot. they had a good quarter. the outlook was very good and if

they raise rates, wells fargo should do well. they might be able to buy ge assets and we like wells and american express and even though it's a global company at a great price with longer term trends. >> talk about that outlook for american express. it's had a bruising start to the year with the dropping of the costco agreement as well as judicial decisions. i wonder how long you think it will take for the tide to turn. i will throw it to david since you mentioned that company. >> we think that the tide turns with the stock over the next to nine months and we think that happens on a six to 18-month basis. we think american express has done all the right things bringing the costco deal to a head and start grow earnings next year. it's not a broken franchise and

generally when you have been able to buy it you have done quite well. we owned it for a long time last year at the $90 level. we were scaling back. we are now adding to it. . >> final word before we go? >> it's the thought of good investors have the emotional stability. the ability to as we were just talking about, taking advantage of times when the rest of the world disagrees with the long-term possibility of a franchise. if that's a good take away for everybody. go to power lunch.cnbc.com. >> one of the titans of silicon valley. he will step down in july.

cisco stock has been hovering around the $30 range for roughly a decade. what are the challenges facing the new ceo set to take over. josh lipton live from the san francisco bureau in one market plaza. >> tyler he is the man in charge of cisco's worldwide operations responsible for nearly 50 billion in annual sales. now chuck robbins will be in charge of the entire company. they announced that the board had appointed him effective july 26th. john chambers will assume the role of chairman and serve as the chairman of cisco's board. they served since 1995. under his watch the stock is up nearly 1500% in the past five years. it has dramatically under performed in the market. rob ups is a 17-year veteran of

cisco and respected reinvent the organization and is also the key architect for the commercial business segment that should grow 8% year over year. mark sue said picking robbins was a smart move. cisco is facing a range of competitive threats on a number of fronts. juniper is switching in palo alto networks. they are saying sue needed an insider who understands the culture and can steer the giant through this networking giant with a steady hand. cisco up about 30% in the last 12 months. can robbins keep the momentum going? they can can have a better sense when they report earnings results next week. back to you. >> we will be looking forward to having john chambers to get more on that succession plan. stocks are extending friday's rally and having the best

two-day gain since early february. utilities and health care leading today's gain. you can see the dow is below that level. they had touched the all time closing high. let's get a little bit of a better look on the trading action from bob pisani. >> we were at 21.16-17. a nice day. 2-1 declining and a slow droop to the downside. we need to get over 21.17-18 and that would be a high. he noted the buy backs have been very, very strong and could continue here. $337 billion in buy backs. is that a lot this year? the stock market value is about 27 trillion. it's about 1.5%. that's a lot actually. he did point out that the buy back is now ending and that may

be the catalyst to get us to new highs. health care and financials materials and energy which have been the big market leaders are lagging here. look at the commodity etfs. they had big movers. metals and mining and base metals and a lot of people are saying this is a sign that the global economy may not be as sicka as people think. it's impressive to have metals be the market leaders. >> bob pisani here on the floor. tyler, over to you. >> we will go to nasdaq and bertha coombs is there. >> health care and financials is the theme for technology. infrastructure spending help the revenues with top expectations with boosting the outlook. the company took over and that was part of the reason they saw a surge when it came to health it infrastructure. in health care biotech is rebounding as well.

they moved into correctional territory for the high. they are coming off of there and led by exact sciences. they had a blowout quarter in part on testing kit sales. also isis in a sharing of licensing with buyer of ag. apple is once again dragging here today. down for the fourth and fifth days. it's above it's moving average, it continues to be a drag. back to you. >> bertha coombs at the nasdaq. it's one of the longest bull markets on record but there might be troubling signs emerging right now. check out this chart of oil. crude flirting with $60. right now it is just near that mark. we haven't hit that point. prices soaring 20% in the last month. is the energy rebound for real or is it an oil trap? that will be up next on power lunch.

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welcome back to power lunch with a check on the oil fracking stocks moving on the heels of comments made by david einhorn. he said they can contaminate oil

returns. you see the resources and all of those moving to the downside here. also shares of csx are down on the heels of hedge fund manager bill ackman making comments that he is not going to be talking about this rail company during his presentation at the conference as well. then barry rosenstein said the future continues to be bright for walgreens and turned to qualcomm shares saying they are undervalued undervalued. both of those we knew he was involved in, but reiterating for the record barry rosenstein. >> a lot of those big names ai couple of which he just mention said are making headlines and moving stocks. let's go back to scott who is live where all of those big names seem to be. the conference in new york. he has keith meister of corvex capital and he just got off the stage. >> keith literally just walked

off the stage after his presentation about the brandts which we knew it would be. what case did you make this that room? >> hopefully what we highlighted is yum brandts, a phenomenal business with three brands with a well-managed company. over the last couple of years, they have been hit by foot-related safety issues that caused them to under earn in china. they are in process of fixing the issues and the fkc and pizza hut brandts are the most recognized in china and the business will recover and have limitless growth tied to the emerging middle class. with the effects of the last few years highlight, it's different being an owner of brands globally and versus operating restaurants in china. it doesn't mean is good and one is bad, but they are both great. we hope to engage to show how by

separating china coand entering into an agreement, yum can have themselves positioned to learn from the recent past and excel for the decades to come. >> you want a spin off of the chinese business. >> yes. but the change in corporate structure allows you to change capital structure and being more fortune franchise-heavy. the reason they have a mix today and 95% plus is because they own that. they don't have a mature market. by franchising it to themselves they get the best of both worlds. they have the best team and their management team managing the business in china and managing the franchise agreement and young china becomes a more chinese business that can grow better in china for the next

decade. franchise co has a great model while still having exposure to growth from china. >> huh an interested party in the back of the room. dan with a third point who also owns the stock with a significant position. he told me that you crushed it. it appears at least you guys are on the same page. did you guys meet in a taco bell or kfc and come up with the idea? >> i would love to have but we didn't. we never spoke about yum. we had the same idea at a similar time. we had a lot of respect over the last 20 years. it is almost without equals. we haven't talked about the idea, but they see many of the same things we do. we are thrilled to have smart owners and thrilled to debate ideas. it's our view from the open and free exchange of ideas what's going to happen. the company can have a chance to

adopt the best going forward. this is a well-managed business looking to hear ideas and make the appropriate responses. >> it was notable that in the investor letter that dan sent out, he didn't mention a china spin off. did you take anything from that? >> as i said i haven't spoke tone dan. what we want to focus on we stood off at a charity conference and presented yum. we thought highlighting the ideas, focusing on our ideas and not having the sell or the buy side and showing a strong value and helping to frame the debate. if we can learn from them fantastic. you supportive of the ceo. >> we look forward to continuing those. >> the investor who has been in this stock they have been over a year the stocks up 27% over the

last year. it's up 20 something percent. >> yum is a great business. we think a great business can be better. our presentation was called think moss. think bigger. the company's logo is live moss. they have an algo rhythm of 10% growth per year. that's great. but by changing the corporate structure and letting it follow they can grow at 20%. we are big believers and when you get dealt a great hand making the most of it. let's turn a triple into a home run. >> did the earnings show you they are on the track to do that? >> we found the recent earnings release encouraging. the key to yum is fixing and growing china. the second quarter showed that they made great progress on that and they turned a corner.

we praise them for finding 400 or 500 basis points of operating. when the business does recovery which it will and get back to the unit revenues they had in 2012. the margins would be higher and at least $2 of earnings that can come with fixing china. the separation is not because china is not a great business and franchise is a great business. they are better separate. we will continue to have a relationship that is symbiotic. >> you are the second largest shareholder? >> we are one of the five largest. >> appreciate you sitting down with us today. back to you. >> stocks meaching higher today. the bull market one of the longest on record without a 10% record. six years and counting with

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>> all up today after rbc rated

the four clothing retailers without perform ratings in the new coverage. goldman sacks is reportedly in talks to sell the coal mines in columbia at a loss. this would end the raw materials productions. coal prices dropped more than 50% since 2011. bank of america is planning to let shareholders weigh in on whether the ceo should be the chairman as well. the board overturned a post financial crisis rule requiring they be held by separate people. bank of america up by 1.5%. that vote won't happen before wednesday's meeting, but it will happen before next year's. >> thank you very much. let's go out to the bond market. rick santelli where he usually is tracking the action at the cme. rick? >> good afternoon, tyler. if you look at an interday of tens, slightly elevated. what i find interesting about that simple chart is that 214 is

the high yield. we are taking a swing unchanged despite the rebound from close to unchanged levels from the dow and the s&p last week. all the german sovereigns out to the nine year things have changed. look at the five-year going back to january 15th because right around the 20 something is the last time it was in positive yield territory. let's look at the february start to the dollar index at the lowest level since the last week in february. that along with the best levels since the end of last year. they are helping contribute to rallying commodities like gold. tyler, back to you. >> pretty significant moves in bonds today. it starts at $350 and goes all the way up to 12,000. we are going to tear down the apple watch to the components

and reveal how much it's really worth. troubling signs in the bull market and when i think of trouble, i think of that. >> trouble with a capital t. speak of trouble, what's happening with the bull market. there is a bearish case that some are seeing and we will have that story and so much more coming up next. you can call me shallow... but, i have a wandering eye. i mean, come on. national gives me the control to choose any car in the aisle i want. i could choose you... or i could choose her if i like her more. and i do. oh, the silent treatment. real mature. so you wanna get out of here? go national. go like a pro.

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. here's your cnbc news update. officials identified one of gunmen killed at an event displaying cartoons of the prophet mohamed. he was elton simpson from texas. simple and a second man -- >> from social media and other intel to make sure we are not getting any threats. we don't know the intent other than they were willing to start shooting on police. >> they were shot and killed

after they were outside the center. a security guard was hunded in that attack. ben carson made it official to kickoff his presidential campaign at a rally in detroit. mike huckabee is expected to join the republican field tomorrow. american express will roll out a new loyalty program called plenty. they said they will allow shobers to earn rewards for paying bills or making purchases. they are not tied to a single credit card issuer. an update on the solar powered plane still trying to fly around the world. weeks of rainy weather them and they are setting out on the seventh leg of the flight to hawaii. they have no idea when that will be. you are up to date. back to you.

>> i'll take it from there. gold prices are closing andy woo are coming off of a six-week low. and that's up by about 1%. as for the rest let's take a look. everything is there except for copper. silver is good and tyler, over to you. >> there signs that we are nearing a possible long awaited pull back and many participants have been participating. we have what to watch. >> this is interesting. he publishes and has a newsletter called cross currents.

it shows market bredth. how stocks are going up compared to the number of stocks. we go back to 2010 and it's going up and town. slowly overtime the number of stocks that participate in this market on a percentage basis is going down ever so slightly over the past five years. it dipped below 50%. about half. less than half of all stocks traded are showing signs of negative price momentum. that's not a good sign. that's one of the main reasons why people are saying maybe it's time for the long awaited pull back. everyone who called for this has not seen more than that for a pull back. that's one more indicator of why traders are look for a pull back and one part of the story and the debate. >> a vivid sign of lower highs is what that is showing.

thank you very much. the story is up on cnbc pro. you can check it out on power lunch.cnbc.com. kayla? >> the apple watch sport retails for $349 but ihs technology took apart the components and shows it costs only $84 to make. the principal analyst joins us now. wayne, it's good to have you. >> good afternoon, kayla. >> we have the round number of $84 for the parts that make up that lowest price point apple watch. what conclusions do you draw from that? >> we have to be clear. these are just a snapshot of the hardware costs. other costs are going to be baked in. we don't want to use this as an indicator as to the gross margins of what apple gets in

terms of the product, but we found a unique design of the apple watch. it differs quite a bit from other smart watches especially from the android space. it shares more in common than with medical devices than consumer devices. novel designs and really interesting cost points. lots of emphasis and attention towards user interfaces and lots of cost around display and sensors and of course the enclosure. this is the lowest model. of course the stainless steel model and the gold model will be substantially higher in terms of cost. and based upon the share cost it is differentiated from other

an droit and smart watches. i wonder if you can elaborate with how the apple watch is with smart wearables in the market. >> the philosophy and design. the other smart watches on the market are really taking a smart phone design and shrinking it. it is more of a piece of fine jewelry. the emphasis on the machine and the construction and the novel use of this interface and the crown ask so forth. it shows that this is not a consumer consumer electronic driven company. they are looking for a very unique position in the market. >> what apple's margin will be. thank you for putting an important part of this puzzle together for us. tyler. >> pushing the market back to

record levels. the gapes on earnings stand outs and encouraging signs of a manufacturing come back. there is the dow up 52 points and about a quarter of a percent at 1876. the s&p at 2141 up about a 30 of a percent and the same for the nasdaq at 50 20 64. >> let's bring in art from the stock exchange. the chairman and ceo live from houston. gentlemen, welcome. let me start with you, drew. how likely is a correction over the next few months. if one happens, what would you buy? >> i think it's highwayly likely given today's levels and the way volatility is moving. when that happens over the next couple of months the valuations

are high and that's more than likely where you see the correction there. valuations abroad don't support that big of a pull back at this point. that's the way we look at it. more thing. you want to stay with the diversified strategy this year. pick between domestic and foreign stocks in changing the portfolio. >> what is mr. market saying to you? i know the ten-year bond yield is up about a full tenth of a percentage point from where it was late last week. >> the interesting thing about that is that it's not just here in the united states. bond yields are creeping up & they are still going ahead. i think your question about the correction will depend on what the fed does or doesn't do and

how the data comes in. we may get the report from the fed today talking about how banks are doing with loans. that could change the velocity and push it a lot faster than the economic data. let me ask to you drill down on the sectors within the market. you painted a picture of going after the markets. i know you favored japan. maybe a little more than china right now. what kinds of stocks in the various markets have got your attention right now? >> let's switch gores a little bit with the falling oil prices there is an opportunity and the mlps. all the infrastructure is around

crude or refined products. they have been painted with a brought brush here and they will do fine. it's a great yield student for investors. the second is a nice diversified nondirectional. # they had commodities and currencies and fixed income. we think both sides of those trades can make money especially if we end up with a choppy market over the next several months. both of those themes you should be thinking about in your diversification strategy. >> let me get a final thought from art. you suggested that the fed will move on interest rates. i assume you may be in the camp that said later this summer septemberish maybe. they are likely to be tiptoey. does that necessarily spell

trouble for stock? >> i see changes in the data that will be important. i think the intention at least in the beginning as things begin to change is maybe move up 25 basis points and sit back. the real question is how does the market react to that? does the market believe it will be slower longer or to think things happen around the globe. >> thank you very much. we appreciate it as well. go to power lunch.cnbc.com. do it right now for more on today's market movers and shakers. that's power lunch.cnbc.com. >> ever feel like your problems would be solved if you just hit the lottery? we found not so fast. robert frank is breaking down a study on the high stress of high income individuals.

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ask your doctor about cialis for daily use. insurance coverage has expanded nationally and you may now be covered. contact your health plan for the latest information. . a a new report showing 30% fewer borrowers who are under water on their morgan than last year. for people below that threshold, things may be worse than ever. live in washington with more. diana? >> you are right. better for some, worse for others. let's start with the good stuff. rising home values pulled 1.6 million borrowers. they no longer owe more than the house is worth. that's according to black knight financial services. this doesn't mean they have a ton of home equity or even enough to make a move but they are in the positive and that's good.

it makes them less likely to fall behind on loans and go to foreclosure. on the other hand just over four million borrowers or 8% are browning in negative equity. negative equity is the welling cause of delinquency and foreclosure. more than 2/3 are in a serious negative equity position. now to an even bigger problem. moment values are rising more among already higher priced homes. that means lower priced homes are not seeing the gains. they fall into the lowest 20% of home valleyues are more likely to be under water. what does it say about the housing recovery? it has been easier and faster for those with higher priced homes to begin with. those with lower priced homes who likely have the least financial flexibility are still struggling. for more on the realty check.

>> more money and more problems. the richer you are, the more stressed out you are. hi robert. >> the more wealth you have the more you think you need. that created a vicious cycle of earning and spending for today's millionaires. they asked how much money they aspire to have and the answer was about twice their current wealth. they say they needed to ten. those worth 10 million need at least $25 million. that leads to greater pressure to create more wealth. 52% of millionaires said they feel stuck on a treadmill and they can't get off without giving up my family's lifestyle. we shouldn't feel too sorry for them, but wealth it turns out doesn't bring more security. 63% say they are only one stock market crash away from losing the style and while the wealth is all for their family, the

biggest regrets are family relationships and not spending enough time with their families. millennials are the most worried millionaires. 48% have trouble keeping up with the jones and more than half worry about losing their wealth. you can read the whole story on cnbc.com. >> kayla? >> thank, ty and robert. up next amazing video of a lava lake in an active hawaiian volcano overflowing for the first time in a century. we will tell you all about it. power lunch is back in two. plus revolutionary start ups and cutting edge ideas from around the world. cnbc brings you live coverage from the 2015 conference in miami. among our big guests, pit bull is coming up on closing bell. we are back in a minute. ♪ ♪

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. >> suv's and cross overs are america's favorite cars. when you are asked what matters most when you go car shopping 33% said price point, 23% said

comfort. 21% said gas mileage and 24% said the look and design. >> tyler, thanks. if you missed the stories in the past hour visit our website. powerlunch.cnbc.com. take a look at the volatility of pioneer resources. it has been down about 3% right now. cratering after comments by hedge fund manager david einhorn at the conference in new york. we will tell you what he said that sent the stock down. that's coming up. jane wells sits down with the chief commercial officer to talk about that company's big bet on milk. jane? >> when is the last time you guys had a glass of this with your power lunch? in an exclusive, we will go inside the largest milk producers's ambitious plan to move the market back. after the break. it took tennis legend serena williams,

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>> a big monday hour ahead including shares of an oil company getting slammed. that stock may be worth nearly 90% less than the current price. is twitter's perscope the next big thing or a big time target for regulators. bud may be the king of beers,

but the stock has been cast off the throne. fair to say investors will not be happy with the analyst call we have coming up. >> you can always count on a good pun and much more. we will see you in a few minutes. the largest dairy company is announcing the biggest push ever to get americans to come back to milk. will it pay off? jane wells is inside a processing facility with the city of industry california with details. >> you know this is an alta dena dairy. folks, remember this? it's called milk. milk consumption has been falling for decades and almond milk is growing exponentially. prices are falling. dean foods, the largest milk producer is pouring it on. >> starts pure stays pure

dairy pure. >> for dairy pure it's the first national brand of so-called white milk is pushing protein and being antibiotic-free. they are doing it true true moo and turned it into a chocolate milk brand. >> this machine is running about 100 jugs a minute right now. >> dairy pure is the biggest initiative in the company's history and will be the biggest in dairy this year. by the size of dairy pure into a $2.5 billion brand. here's the deal. they own over 30 well-known regional dairies and doesn't want to use the brand equity. they are code branding and that labelling is very unusual. >> if you are a national retailer this is a huge category for you. you want to run ads every week to drive traffic and profitability. now we give you one brand to

run. one upc code to run and you can now partner with other categories. think of cookies and milk and promotionings with cereal. this is a wide thing to take advantage of. >> already, imagine for example you take the national brand and pair it with the most popular cookie brand that goes with milk. that one. talks are under way. back to you. >> already, jane. thank you very much. interesting there. i still drink a ton of milk. love it. that will do it for the first hour of power lunch. great to be with you. brian, take it. >> thank you both very much. it is almost 2:00 on wall street and 1:00 in midland texas. oil down to 58.70 a barrel. you are watching the second hour of power lunch. i'm brian sullivan. melissa is going to join us from a conference in miami in a second but a lot of big

stories. with an idea to sell a stock. shares of pioneer natural resources and the tickers are down after the noted manager slammed the company at a conference. listen to what he had to say. >> we call at this time mother fractioner. ticker pxd. they earns carb and are not growing. >> he called it the mother fractioner. i know it came fast. einhorn mentioned three other stocks. whiting petroleum, concho resources and eog resources. he saved his main presentation for slamming pioneer. that is a company that your next guest covers. joining us now with his take. what do you make of the presentation? >> so i will have to be honest. i haven't seen the details.

the industry becomes quite challenge. they had the sudden reversal and like we had over the past nine months here. you will see capital directed to the areas over the low price areas. >> i will give you the headlines for the viewers as well. they said a lot. i will really widdle this down to the points that stuck out to me. that basically said pioneer loses about $12 for every barrel that it finds. $95 oil. the stock is worth about $41 and he backed out all the stuff and said the company spends too much capital on non-productive things like buildings and real estate as well.

the cash flow generation is falling and they gave a low present valuation for the equity. >> yeah so we have a higher take here at rbc. a $95 type of oil price in perpetuity. the stock is worth more than $200. no doubt that early on in the shale plays, you have to spend a lot of money up front. that includes things like infrastructure and tanks and buildings and things etc. once you get several years into development, the costs slow down dramatically and the returns can improve. you benefit a lot from technical progress overtime. the companies get better at drilling wells and drill them faster and cheaper. if you look at pioneer, they are only a couple years into the horizontal drilling. they have third to 50 years of inventory. we expect better returns going

forward. >> just a reminder to the viewer who is may not have watched every day. this hour from midland, texas, we have dhn from a drilling rig site. they have a shiny new building and seems to imply they were spending too much money. the most damning line, based on the cost to get oil out, it's like using $50 bills to counterfeit $20 bills. >> that's an aggressive comment at the end of the day. i haven't seen all of the mats specifically on that analysis but i don't believe that you are seeing losses of that magnitude. certainly if you use the cost structure of the oil price, you probably don't have returns in the oil sector. we are looking at the cost coming down 20 to 30% for capital cost. you are seeing providing and

personnel costs fall. they take time to catch up. as we work into the second half of the year you will see wells that look more profitable than they did to six months ago as they made their way into the 40s. >> whether or not authorities a witness sheet to with stand any further drop in oil or a low oil environment. it seems like a lot of these stocks have adjusted and sold off assets or in the process of doing so. >> that's a great question here. we have seen over $13 billion of equity raised in the past four months in the e and p sector. no doubt they shored up balance sheets specifically and pioneer has nearly a billion dollars in

cash and they are in the process of selling mid-stream assets and that should be announced in the near future. they have strong hedges and about 50% hedged in 20 and 16 much higher prices. and there is no issue with the balance is sheet for pioneer and one of the strongest of the sector. >> and also david is a smart guy who is more right than wrong, but it's important and maybe you can talk about this as well. to remind the viewers that you can can't put all the fracking companies on the market. i have been in north dakota and have the eagle fort. when you look at them they are big and pioneer primarily is a permian play. a lot of people slam them. how different are the companies. they did seem to lump them all

together because of how they make their living. >> you make an excellent point. all shale is not created equal. if you look throughout the industry there a lot of haves and have nots. some have low cost acreage capable of generating returns. some companies were not generating returns when they were 90 to 100. he makes valid points but not all rock is created equal. there is no doubt that the best areas of plays like the shale and the basin can make strong returns at the current prices of around $59 a barrel for the better wells. there challenge areas of the country as well. there is a wide range of economics. >> we reached out to pioneer. we called for comment because the ceo has been the guest a couple of times am we have not been able to review the

presentation in detail and we are referring to the media tomorrow afternoon and our earnings calls scheduled for wednesday morning. they will try to refute the claims. we will bring jeff to this. the one thing i will note is that david einhorn, the conferences when we came out with a call like this you see the stock tank in double-digits. the stocks fell and maybe a lesser leskt. >> this is arguably one of the best minds in the business. like a 13 f in the hedge fund world. a lot of folks here did eye open and realized but the whole shale to leo's point and the

folks at ibc, the cost of producing of a well used to be $10 million and you are seeing a lot of folks reeling and to pay them all in the manner that he did, i have hesitation. >> you have to think of the panel that pioneer was $231 and change last july. the easy money has been made to the downside. let's play that david einhorn is right game. we see the stock move to the low level. won't somebody step in and buy it? won't there be a natural floor to this as people come in and say i will scoop up the resources? >> that's possible, but i think one other point that we need to think about is the balance sheet that we discussed earlier. pioneer is extremely well-hedged at almost $90 a barrel this year. even if the stock were to tank i don't see them trying to sell

itself as a bail out here. they believe in the resource they have and they have 30 to 50 years of viable oil resources that they develop and they have the balance sheet to attack that over the next couple of years. certainly you can make the argument that might there be a bid if the stock were to tank it's possible. i'm not sure the company would be for sale. >> that's a great point. this is in stark contrast to the morgan stanley note. they are overweight on the same day that einhorn is playing the whole basket to go lower. pretty interesting and i think the morgan stanley has seen value. we are looking at oil at $58 versus $100. we will see volatileity. hearing the market fraction we haven't heard that in a long time. they will add fuel to the volatility. >> we love you and to steal our

thunder. we will tease it but now you told it. thank you very much. >> thank you. also in the top stories today, big warnings on bonds. listen to what berkshire hathaways said exclusively on cnbc earlier today. >> if i had an easy way and a non-risk way of shorting a lot of 20 or 30-year bonds, i would do it. that's not my game and it can't be done in the quantity that would make sense for us. i think that bonds are very overvalued. >> the capital's big gross is ringing the alarm in the book titled a sense of an ending. gross said the super cycle for stocks and bonds is coming to an end. he also poppedered his own mortality. don't we all? >> we do. cisco systems naming a new ceo. the stock is fractionally higher

today. let's look at the past year. up 27% since the 2009 bottom and up 114% while the nasdaq is up. we spoke with the incoming ceo charles robbins a few months ago. who is this guy? >> chuck rob ups is a sales guy. very much cut from the same cloth as john chambers. he runs a 20,000 person sales force for cisco in about 87 countries. his job is to go around the world and sell the biggest companies, the biggest governments and the biggest countries on these $10 million, $100 million contracts. often the biggest single checks that they are writing every year is to cisco. this is the guy who has been manning that sales ship. cisco is a sales driven company and what we are hearing is that this is pretty much par for the course sticking with the guy who

got them there. >> a short time for you, buddy, but we love you very much. mcdonald's also announcing a turn around strategy to spur growth. a big under performer down 4%. let's go to courtney reagan on more on mickey d's big plans. >> for will take a lot to turn around the largest restaurant chain. the ceo is detailing the initial strategy. in a video, press release and investors and media, he acknowledges mcdonald's's shortcomings and lays out the big picture for changes to come. they will sell 3500 restaurants to franchisees, taking the ownership to 90% from 81% which he said will generate more stable and predictable revenue and cash flow streams. the chain will cut layers and bureaucracy, finding $300 million by the end of 2017. they will reorganize the business units into four

segments based on growth opportunities than geography. further mcdonald's returns $8 billion to $9 billion to shareholder this is year. at least stated missions with improving food quality and bringing customer voice back into the business and being bolder with the innovation. starting today from 88 restaurants in manhattan, queens and brooklyn. they are partnering and can deliver the entire menu except ice cream. they charge a 9% service fee. if you want it they can get it to you in new york city. >> thank you very much. meantime, here is your power menu for the rest of the show. the teen retailer that you have to buy right now and the retailer that same analyst said you have to dump. also ahead, how this weekend's fight of the century may have created a headache for twitter and america. you have a new favorite kind of

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>> abercrombie and fitch has a lot ahead of itself. just in december we will see how that turns out. it's a wait and see approach for the most part. we are watching solar city getting a downgrade to a neutral. they are lowering the target to $65 a share. the an lives will remain a leader and number one currently. but the company is switching

metrics so soon it will introduce levered retained value that will introduce both market risk and regulatory risk. that will impact margins overtime. >> levered with another acronym. >> levered retained value. >> color me confused. the new tesla battery for a home storage for energy. the other company, you will talk about it after this next stock. let's get to the next stock. it's a big one. widing petroleum. morgan stanley coming from after overweight to equal weight. about 25% upside but obviously this was one of the names that david einhorn threw up when he was slamming the frackers. >> it's interesting to see the war between morgan stanley and david einhorn. we were talking about the

balance sheet of the analysts. they announced a plan to sell a billion dollars in assets. the easy money has been made and we will see if david einhorn is still right. tesla and credit suisse pounding the table. the analysts said they derisk the gigafactory as well as tesla's valuation and that sets up for a strong run. $290 price target on the stock. >> you are on a bend today, melissa. >> now for the under the radar claim of the day. gpc, under the radar and not very small. that's the market cap auto parts company. upgrading to a buy and they get better. the target is about 17% upside. >> by the way, they are not just in auto parts. they have a canadian industrial business and just got into the

janitorial supply business. that does it for street talk. they get to throne. the party is over. for more from america's conference here in miami and the interview with the ceo of redfin. he is shaking up the real estate business. power lunch is back after the break.

>> welcome back to power lunch. i am live at the technology conference. joining me is the ceo of red fin. you are on a panel of disruptions and you are bringing in a model to the real estate business which has been a broker. i would hire or pay a broker. >> yep, yep. if we pair a broker with technology, we give consumers the best of both worlds. you shouldn't have to choose between a website that understands what you are looking for and an agent who understands what you are looking for on the house. that saves thousands of dollars and results in a happier customer. >> it's different in terms of how the brokers get paid.

they are salaried and don't make a commission. >> they are pate on customer satisfaction. part is a salary and part is a bonus. there is lots of ways to get an easy sale and the customer is not happy. we tried to a line the percentage so we don't feel the pressure and you feel like someone is really on your side. we will walk away and pounce on a good one. that's the goal. >> let's talk about the real estate market in general. where are we? >> the market is hot. we have been worried about how hot it's been. sales are up and prices are up 6% and some are up 10 to 15%. what you want is more durable growth. not the up and down. we don't see consumers willing to pay that price when rates go up. we think there is going to be a step back as the money supply

tightens and we would like to see less volatileity. >> we know that rates are going to rise this year. what are you modelling at this point to keep the market activity at least where it is now if not increasing still? >> the last time we saw a rate spike is 2013 and the demand went up. we track every offer and everything that our agents do. we can immediately feel the changes. when rates go up and when the market has a bit of a spike, that's when you really see that pull back. we see saying while rates are low, otherwise it's too high. >> who is the hottest mark you are seeing right now? >> probably denver or san francisco. there not enough homes for sale in denver.

>> you don't often hear denver. what is driving that? >> all these folk who is can't afford the high prices in california are coming to denver and austin and all these places in the center of the country. we are flatfooted with inventory. it's bidding war after bidding war. we have a big lineup at the conference. next hour, the ceo of spirit airlines will be here on set. that stock is takinging a big hit. ben, you know him well. live at 3:00 eastern time. >> that is not the only big name that you have coming up from miami. you are speaking with a gent who is named armando christian perez. we will be speaking to armando or pit bull at 4:15. you know his other nickname?

mr. 3:05 a miami area code or mr. worldwide. he is a monsimate business man. he has a vodka and a fragrance line. he is a brand. >> he might be there. you got me going. nobody wants to see me dance. >> take it away. >> thank you we will have a great time. crude oil is kicking in. we will get to jackie live with the nymex when power lunch returns. can it make a dentist appointment when my teeth are ready? ♪ ♪ can it tell the doctor how long you have to wear this thing? ♪ ♪ can it tell the flight attendant

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here's the cnbc news update at this hour. the boston bomber showed emotion in the courtroom in the penalty phase of his trial. he cried as his aunt took the stand sobbing and she was asked to leave to compose herself.

she was seen wiping tears from his eyes. he had 30 federal changes that carry the possibility of the death penalty. we are learning more about the death of david goldberg husband of facebook executive. he was exercising at a in a mexican resort when he collapse and died. he was 47 years old. hopeful news from a rebel in nepal. a man believed to be 101 years old survived the quake. his relatives believed he died from his injuries. he was revived and brought to a clinic for treatment. president obama said his goodbye to david letterman. mr. obama will make his eighth and final appearance on the late show with david letterman. mr. letterman is retiring on may 20th back to you. >> thank you very much. >> oil flirting with $60 a barrel and getting turned down for the date apparently, at least for now. what is the closing number?

>> just around $59 a barrel. that's right. we flirted with 60 but got slammed down again and traders are saying it's not surprising because we had such a run up. a lot of people are taking profits and they want more hard evidence so data will be important in the coming weeks. this is necessarily a bottom. that $60 really a big resistance level there. a dollar rebound that put pressure on crude. i want to talk about gas prices. the national average is $2.62 according to aaa over the 250 mark and probably going higher from here. back to you. >> with the big hedge fund managers speak the markings listen. we have evidence of that out from the investment conference. when dominic speaks you listen. he has those right now. >> what i have to say, you don't want to listen to the smartest folks in the room have to say. the best performing fund manager, larry robbins taking

the stage unveiling his top picks among them. that makes the arthritis drug huh mira activists. the senior living that operates senior living centers. the pipeline is under appreciated and shares are pulling back after popping on the comments. he said it's an easy bet to bet on the aging population. also today, corvex is a top five shareholder in the brands called on them to spin off the china business and break it up. that could be worth about $70 alone. shares of csx are falling on the heels of comments. the presentation that you will not be talking about during his particular remarks. so again, csx moving on that bit as well. there had been anticipation of talking about that rail sector. back over to you. >> now it is time for the daily

segment, trading nation. you are subject to cisco systems. naming a new ceo that will replace the legendary. chuck robbins who is like john who is am can be from the sales side. >> thanks for having me. this is pretty well telegraphed. he would leave within two to four years. 20 internal candidates and they thought another guy rob lloyd from the sales side would be named. chuck is a solid candidate and his resume looks similar and not a big difference between him and rob lloyd. it's the kind of business as usual from cisco. >> a lot of people may not know this, but you worked for a cisco competitor. you know the industry from the inside out. is this the right bet to go with somebody from the sales side as

opposed to say the marketing or the emergencying side. >> i think it's a good ideaed to go with the sales idea. investors have been telling me they thought that john chambers leaving would be a positive catalyst. not because they could run the company better than john but chuck will be aligned with john chambers's strategy. it is a sales focused strategy and what investors want to see is more cash to shareholders. another billion in dividends. most sit back and go to three to four bill kron from to two in cash return per quarter. people are looking for new blood to limp element a higher strategy. we will have to see whether they listen to what his investors want and raise the capital return. >> coming off a 2011 low, you made money if you timed it but if you owned it for five years

and didn't you haven't made much money. your take on sesko and the move. does it change the investing game for the company? >> it's interesting. the nasdaq out to all time highs. cisco is well off the highs and as you mentioned, it has been relative lager. from a strategy perspective, i don't think they are that much different. top line revenue growth is not that hard to come by. they have done a pretty good job and the valuations are a tracked to the overall market. we like it and they have the perform rate on it. chambers will be there as the chairman means he will be part of the ongoing day to day operations. really it's more about keeping the eps going maybe with the buy backs. and getting the top line going eventually as the business cap-x spending will pick up at some point. >> andrew and mike thank you very much. appreciate it.

more more head to trading in addition@cnbc.comment speak of john chambers, they will be there 9 time 9:30 eastern time. always excitable. twitter's periscope under a lot of heat for live streaming the big fight this weekend. the problem though is the users of periscope who are sharing the screams not the company directly. who is held accountable and how might it be stopped? julia boorstin is there now. periscope is a huge opportunity for twitter, but look at airio. look at companies that stream stuff even if it's just the users. regulate ares are not going to like this much. can twitter stop it? >> twitter could stop it. they put a geofence around a certain location. they could have geofenced the

casino so it wouldn't work within that area. i don't see them doing that and so many people are sharing to instagram and facebook and twitter from the phones. they don't want to lose out on the prefight and post fight and pregame and post-game that people will be doing. even though this is a copyright issue, they are taking downstreams as they see them. i don't see them eliminating the app from them all together. >> i can't see someone saying someone is streaming the super bowl, kill it. you do that 1,000 times overall. if it's widely used and the property protects heat will come down on twitter. i'm not saying that as an editorial. look at the area. it was shut down because you are illegally stealing someone's service. >> look there is no dwhea this is the wild west when it come to the new technology and how different companies are going to deal with it. we saw hbo and show time before the big fight on saturday to

shut down piracy sites promoting the fact that they would live stream the event. the question is will we see legal action here. very various technologies and tools that they can use to minimize. they said himself in a sweet that they're interested in protecting copyright issues because they understand this could be a battle for them. they will have to feel it out and figure out the tools they can use. they will have to pull down live streams. they are going to face too big of a battle with the companies that are paying hundreds of millions of dollars for the rights to the content when it comes to sports. >> that's right. you go to websites or blogs or whatever. they have video that they promise and this has been removed due to requests. they go back and scrape it from the web, but you think how could you? companies care but how could you do that if something is

live? >> that's the big issue. a lot of this does get taken down from you tube or other places on the internet. when you are monitoring it live they can identify it's happening and twitter has to go in and make sure it's violating copyright issues and pull it down within a matter of seconds. >> think about it practically. your twitter or periscope, you have 752 illegal streams of the super bowl going on right now and here are all 752 users's names. nobody can do that. >> we have to remember that we dealt with the kind of thing before. you tube was locked in a multibillion lawsuit ask they resolved it because you tube established a technology called id to allow media companies to identify their content and to pull it down build by having that technology to make sure

they they can identify when that was being pirated on you tube. in the early days i wouldn't be surprised if we did see twitter put up a geofence to avoid a lawsuit on this. >> this is the first debate of about a thousand we will have on this topic. >> law school is dead. long live law school. as early as 2011 just 68% of law school graduates were working in a job that required a law degree. i'm one of them. is the system broken? we will be joined by a guest who said yes and in true lawyer fashion, we will have a guest who said no. stay with us.

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>> this is a volatile and heavy stock. a new report said one out of five law school graduates in america from the class of 2010 work in a job that does not require a law license. many grads are saddled with super sized student loans as well. it's not good but doesn't mean the system is broken. both used to practice law. they are writing articles for the website above the law.com. the last classes and they ran into 68% of people. is this necessarily a bad thing? we treat it like it's terrible. is it? >> it's not necessarily a bad thing in that law schools are reforming.

the job prospects for people who are graduating are better from the class of 2010. >> all right, they seem to think the system is fine. everything is okay. >> it's terrible. the big difference. # they are improving for law students. the amount of people is going down. we are not creating more jobs, but decreasing the supply of would be lawyers. >> is that a bad thing? >> it's probably okay but not a good reason to rush back. >> many people will tell you and i'm sure they have they like too many stores? we are overlawyered in america. >> we are overlawyered at the top, but not the bottom end. there a lot of under served people who need legal help. if you are coming out of law school with $150,000 of debt, it's hard to serve an under served community. >> you need to go to the top to pay back the loans and have

money if are a can of beans on the side. some said there too many law schools. i will ask it a different way. 100 years ago they needed to go to law school because they didn't exist. you placed too much on the paper part of this? >> that's interesting. i think that law school could be more practical. you could have fewer years of classroom instruction followed by apprenticeship like being a medical resident? >> why not -- why does it have to be three years full time and four years at night. give people a chance to earn a better living while -- i went to law school at night. i didn't sleep for about four years. that's the point. too many law schools. >> it's also the tuition is too high. the tuition is the only thing that is recession-proof. it's gone up. if you want to have more lawyers who are serving the people you have to bring the price down.

i am not talking about a 10% haircut, but slashing prices. they have the class coming out of the recession and that's that is not a good control group. . >> the latest statistic and the two organization that follow us. i will show a significant up stick in employment. things are looking better. i'm not saying rush to law school, but for people who have done their homework it's not a terrible time. >> it's like saying it's a terrible time to be a boxer because there is not a lot of competition. that doesn't mean boxing is a smart use of your brain and time. >> the debate will continue. it's a good debate. kids, do not rush out and go to law school tomorrow. think about it first. thank you very much. on deck a big shift in the cars that americans love most.

we will reveal the most popular kind of car in america and this strange weather occurrence. part dust storm and part tornado. (music) boys? stop less. go more. the passat tdi clean diesel with up to 814 hwy miles per tank. just one reason volkswagen is the #1 selling diesel car brand in america.

all right. check this out. a dustdevil caught on camera in palm springs, california. not a dirt devil. that's a vacuum. a dustdevil, a funnel cloud of dust. you can see it damaged some tents, some cars too. hard to get these on video. they're very shy. tend to only come out at night. but there you go, a dustdevil, maybe it wanted some organic zucchini. the most popular cars are the small suvs. that's good news for the automakers. phil lebeau is joining us now. these are small, they want big. >> bigger profit. >> bigger profits. what used to be number one in the u.s. which was compact cars well they have fallen to number two. let's talk about why small suvs and utility vehicles have back so popular. in the first quarter it was the number one vehicle or type of vehicle in the united states. 15.6% of the market.

in 2015 sales of these vehicles up 11.6% compared with the overall market which i think is up 5, 5.5%. so doubling in sales. at the same time, this is what might surprise people a little bit. if you were no the market for one of these and you go to the show room they'll make a deal for you. incentives up 18% this year. the average transaction price over $25,000. because of the higher transaction price that the automakers can say, okay, we'll put extra cash on the hood. there's a flood of these out there. that's why they're offering such great deals. here's the new favorites in america. the small suv, number one. right ahead of the compact car. then the mid size sedan. about 15% of all sales. then the full size pickup which is picking up speed as sales increase. you know, you have the new "f" series out there. look at shares of general motors. the ceo was asked about a possibility of a merger.

we're hearing more talk about this, brian. should there be consolidation in the industry, she says we have no plans to consolidate or merge with another automaker, but i'm telling you what sergio her shoney is making the case and people are looking at this and saying he's right. there's a lot of ways they could save if a lot of automakers start about getting together. so far he's the only one who wants to start dancing. >> phil lebeau, thank you. we have a web alert for you. the ceo of united therapeutics, a founder of sirius satellite is speaking, and you can live stream that right now. a buzz kill of a downgrade on a name that you know. the cnbc real-time exchange snapshot is sponsored by interactive brokers.

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well talk about a buzz kill. shares of anheuser-busch down after your next guest downgraded that stock. carolyn levy made that call and good to see you again. how much of your call has to do with fundamental weakness in anheuser-busch's beer business versus the weakness in a brazilian economy which is technically where the company is headquartered now?

>> right. well they have three reasons for the downgrade. one the stock is trading at the high end of the historical relative valuation both to the s&p and to other big cap what i call global moguls. great, strong consumer franchises. so that's the first thing. in the context we looked at brazil and said things are at no getting better or even stabilizing from what coke pepsi and others have said. it's deteriorating in terms of consumer demand. then finally, beer demand in the u.s. is shifting as we all know towards crafts and the mexican imports. so budweiser, bud light having a hard time. >> yeah i want to say the stock down 2.3% down 5% over the past week. you know in your note you talk about the brazilian economy, you talk a lot about currencies. what i don't hear necessarily, you know what, people are going from budweiser to other stuff. is that really also what's happening? it sounds like you started to get into that carolyn. >> well, in brazil bud has a 65 70 share.

so quite frankly, they are going to do very well relative to other beer companies in brazil over time. what is happening is the high end is growing a bit faster and you're seeing companies like heineken benefit. heineken is a small company doing very well. i think in general though if you have got a very weak consumer and a very difficult economy and no hope on the who are risen -- horizon, very high margin that's risky. >> if you own this stock or are thinking of buying this stock at some point are you effectively then betting on not beer but a turn around in the brazilian economy? >> in the case of brazil, yes. because, you know, beer is a fairly stable business but the ups and downs will come with when consumers are spending more or less. but in the u.s., we have a problem with beer. it's not really just an economy issue at all. it's that the big beers, for example, bud light, 45% of ab's

volume in north america has been in decline and with a bit of a marketing gaffe going into the summer, i don't think it will get much better. >> all right. we'll leave it there. thank you very much. appreciate it. as always, appreciate you watching "power lunch." "closing bell" starts right now. welcome to "closing bell." i'm sara eisen. >> and stocks are on the move higher today. still in positive territorying pushing the s&p 500 to the closing high. anything can happen as you know in the last hour of trading so stick around. >> anything with us. we're watching the shares of mcdonald's today. announcing that big turned around plan focusing on better food and a major franchise, but that's not impressing the investors right now.