'30s. over the top is changing. everything, netflix versus traditional distributors changed the fabric. and underneath it all, some really talented people have to tell the story. and as a group, that people represents all of us. so the bottom line is, what should be representative and hasn't been of independent film producers, which are now having a new gauge is a broader view of that creative community and that should be more diverse than it is. >> tom, appreciate you being here. "power lunch" begins now. thank you very much. and welcome, everybody, to "power lunch" with melissa lee, michelle caruso-cabrera, brian sullivan, i'm tyler mathisen. >> we begin with -- >> how about that? >> how about that? we begin with breaking news from the fed, steve liesman is here with the headlines. steve? >> thank you, melissa. fed vice chair stan fisher speaking on market volatility, inflation and interest rates. he says further oil price declines and recent dollar

strength suggests lower inflation than previously thought. he says there is increased concern on the global outlook, and china and they have sparked the market volatility. the market volatility, it is difficult to judge the implications of it, but if it ends up tightening financial conditions, it could slow the global economy and affect the u.s. economy. he does point out similar periods, apparently alluding to what happened in august, had little permanent effects on the economy. he repeats the fed is watching global financial developments and global economic developments as the fed said in their statements. and he said flat out, to the question that you will ask me in this event later, what is going to happen next, i do not know what the fed will do next. stan fisher says. he says the fed will adjust its policy with the economy and financial developments. he expects further strengthening in the labor market and expects the effects of the oil price declines and the dollar strength on inflation to dissipate over time. that's what they said before. now they seem to be lengthening that amount of time it will take for it to dissipate. policy, he reminds the markets,

remains accommodative after the rate hike and only grad rate hikes are expected into the future. so going further than maybe he's gone before, in saying, you know what, we have seen these things before, and now chronicling something of an effect on the critical outlook for the federal reserve, which is how they make policy, and saying, the dollar strength and the recent oil price declines are lengthening that period that we're going to be getting back towards -- >> tap dance or backpedal or neither? >> definitely a tap dance, perhaps a little bit backwards. >> okay. >> i think i would take away from this as a market, to a guy who said to me four is in the ballpark, i think fewer than four would be in the ballpark after saying that within a given 12 month calendar year. >> do you feel definitively you can say march is off the table? >> i think march was off the table based on the last statement and based on the data, the way it has come in. i don't think june is off the table, for example. i think that's still live.

if there is data turn around, and if fisher is correct and ultimately that this market volatility doesn't have a big -- leave a big imprint on the global economy. >> the last point you made, future rate hikes will be gradual. is that him saying there will be future rate hikes? >> brian, that's -- >> or if we have them, they will be gradual? >> that's an excellent point. and i'll explain why i think it is. what fisher essentially is underscoring there is the direction of policy remains what the direction of policy was and that is to increase rates. so we are still in this mode of deciding when to increase rates and we have not done a full retreat, to answer tyler's question, we're back -- we're changing the direction of policy. policy direction remains for further hikes. we'll be monitoring the q & a with him and come back on. >> look forward to that, steve liesman, thank you. an ugly january and stocks starting february on a down note as more of the same ahead. let's bring in tobias lefkowitz.

you're 20% upside from where we stand now. what is the backdrop we need to see in order for us to get there? do we have no more fed rate hikes? what is going on to get you tow 2150? >> i think ultimately we'll see fed rate hikes, we need earnings growth and that's kind of the strain toward the damper on the last couple of quarters. particularly the impact from energy. but generally speaking earnings have been challenging and as a result, the markets has been having trouble getting forward. you prefer to have rate hikes than not have rate hikes if it is signaling something about the economy. listen to steve, and his comments from stan, you know, i think, you know, i work with stan fisher here at citi a long time ago, and i think he's a very sensible man, he'll look at the data with the rest of the fomc and if they told us all

along that they're going to be data dependent. if the data is weaker, they act accordingly. >> one huge head wind for earnings has been the strong dollar. we have seen the surprise for the bank of japan last week, potential further easing, probable further easing from the ecb, that's a de facto strengthening of the dollar even with rate hikes here in the united states. how much of a wild card is that for your forecast for 2150 if this head wind remains strong or perhaps gets stronger. >> so i think if we get significantly stronger, we have to worry. for instance, in last 18 months, the dollar -- trade weighted basis, not against the yen, the dollar has gone up 20%. that is a significant amount. our affect strategy team is talking about 3%, 4% moves from here. in a very simple way, about 30% of s&p 500 sales are from outside north america. similar amount on earnings. you got to be a little careful in how people interpret that because of companies taking

advantage of different tax structures around the world, but basically think about 30%. so if you move up 10% on the trade weighted dollar, in theory, you lose three, but don't, because there is some purchasing benefits. you lose 2% on the earnings side. >> tobias, from market to turn, sentiment has to get very, very bearish. we dropped almost 11% from the major averages. we have come way off that. have we finally turned? was investor sentiment so bad that we finally mark that moment and can move higher from here or is there another potential leg down at this point? >> so there is always a potential leg down, some news event occurs, you can always throw off the forecast. if we look at particularly citi is -- we're in deeper panic today than we were in early 2009. if you remember back then, everybody was petrified about going off the abyss in terms of new great depression. and investors are quite frightened the way they're

positioned. we would tell you when we're in panic on our model, 97% of the time, just about, a little under 97% of the time, the market is up 10 months later. that leaves us in a bullish mode. >> tobias, can the overall market go up if oil sags around 30 or 40 bucks a barrel? >> in the 30, 40 range, yes. if you're talking about 20 and people are worrying about that being a much more difficult economic environment, no. and it is more about people's interpretation of the data and, in other words, oil is down because of supply, not because of demand. we have significant supply, we have saudi pumping out pretty aggressively, iran into the marketplace. that's the disconnect today as emerging market demand hasn't been strong enough to absorb that. and probably won't be. if people interpret it as something demapd nd oriented, w have a problem area. >> if oil falls back to the 20s and hangs out there for a

significant period of time, would you have to revisit your targets? >> 20s or -- we got to be a little careful. are we talking 20 or 29? those are pretty significant differences. we actually believe earnings for the energy group or energy sector will be down 40% this year, built into our numbers already. we use the future strip of the curve on futures contracts on oil to get a sense of that, it is a pretty good indicator for earnings coming in. they were down 55, 60% last year. we're taking another pretty hefty swing at these numbers hitting it. and that's why i think if you're sitting $20, probably have to look at those numbers again. >> tobias, i'll ask you a dog's breakfast question, number one, your prediction last year for the s&p 500 was 2200, didn't work out that way. now your prediction is 2150. that suggests you've become more defensive on the economy. so i would like to get you it reflect on that and why you have reset so much lower. what went wrong in 2015.

but the key question here is how was the election going to affect the investing climate this year. iowa tonight, it is going to be a dog's breakfast of a year politically. >> i'm going to take it as you weren't calling me a dog, tyler. >> no, no, never. of course not. >> but i'll go from there and just start with the where were we wrong last year? it started with similar numbers, about $128 the way we started this year, trimmed back the numbers to $126.50 for this year honor earnings. last year, the numbers drifted down to 120. energy was a big chunk of that, two-thirds of it, the dollar was the last third. if we have to kind of make it nice and clean. now we have already built in that energy hit into the numbers so we don't think we suffer through the same pain. if you went back and looked at our numbers back in september, october, we laid out our original view for 2016, we were looking for 2200, year end 2015, and 22 on ye00 year end 2016.

there is margin pressure and the fed potentially looking at fourth rate hike and historically markets get wobbly around there. those are the factors that we were worried about. but, you know, in a bottom line aspect, you know, this is where i kind of raise my canadian flag and say thank god it is not my choice in november. >> all right, tobias. >> thank you, tobias. good to see you. >> thank you. take care. twitter surging now. down 50%. 5-0% in the past year. could a takeover be in the works? should twitter go private? decision day in iowa. we speak with the candidates, they'll join us live from des moines. you're watching cnbc, first in business worldwide.

welcome back to "power lunch." check out shares of facebook. those shares are hitting new highs in today's sessions, up 2.5%. the social media giant now topping exxonmobil's market cap making it the fourth largest company by market cap in the s&p 500 and that is behind apple, alphabet and microsoft. facebook shares are up 10% in 2016, up more than 50% in just the past year. it is decision day in iowa. time to caucus in the hawkeye state. it starts this evening. joining us from des moines,

larry kudlow and chief washington correspondent john harwood. welcome. good to be with both of you. john, take us through the timeline, if you wouldn't mind, when do people start caucusing, when do we start getting results, when will we know who the winner is? >> tyler, the caucuses start at 7:00 central time. that's 8:00 eastern. and the process is a little bit more straightforward and more rapid on the republican side because it is more like a straight primary vote. so i would expect that by the time we get to 9:00, we're going to have a pretty good idea of the republican contest, on the democratic side, it is a little more complicated because you have candidates, supporters, separating into groups and if a candidate or supporter don't reach 15% of that particular caucus, those people have to reallocate themselves and join other campaigns, so you can have switching around, we have seen that in the past. so the democrats take a little bit longer to figure out who is

where and longer to tabulate their results. but republicans more rapidly and honestly that's the race that everybody is looking at a little bit more closely because donald trump is such a phenomenon and whether he can hold off ted cruz and marco rubio is the question of the night. >> by the way, in that sense, the trump phenomenon, you know, you can go to the caucus and register, right there, okay. that's the most fun i've ever heard of. i would like to do that. you can be a democrat and register republican, you can be a republican and register democrat. i just love that. and i want to add one thing before i forget it, i bumped into people from des moines on the streets, very exciting for me. and they reminded me, the university of iowa has a very good basketball team, somebody tells me 17-4 already this year, but there is no game tonight. so the whole college town is going to caucus. and guess who they're going to caucus for? bernie sanders. okay. so we got a little ncaa basketball, bernie sanders,

potential upset on the democratic side. >> any big predictions here, larry? any upsets? can we add -- it seems to me historically iowans are good picking who the democratic nominee is going to be, but not so good at the republican nominee. >> yeah, well, prediction game is pretty tough. we all are quoting the des moines register poll that came out. look, i think the questions here, with the trump phenomenon, as john described it, i think it is crucial to this whole story, will the economically disenfranchised people, the people who are squeezed, either going to come out in droves, right, first time caucusgoers, and come out for trump. in the polling data, if you get a lot of new people coming in, trump will get something like 35, 40% of that vote. cruz allegedly only 20%. this is according to the poll. so the question is, will the trump message to the

economically squeezed people, will it work tonight? i think that's a big factor. >> and, michelle, one of the key points that larry alluded to earlier, the des moines register poll is an accurate poll, more than most public polls and that's because they poll off of lists of registered voters kept by the party. but because of what larry said, there is no cutoff for registration. you can go to the caucus and register right then, whatever increment of people shows up at the end who weren't available to be polled before, that's going to be potentially crucial to the outcome, about 4% of the vote in 2012, how big is it going to be this year? we don't know. >> in chicago, in chicago you vote early and often, right? it is a great tradition. >> even if you're -- the issue here is you can't vote the unpolled because you don't know who they are. i think it is a really -- it may be a technical point, but could

turn out to be vexing to the pollsters and the so-called prognosticators. >> two questions. one for john, one for larry. john, tomorrow, are we likely to hear from any candidate on any side, those frightful words campaign suspended. that's question one. for larry, you talked with ben carson, what happened to him? john? >> well, let me first of all talk about candidates dropping out. typically what you would see is if candidates get skunked in the place where they're supposed to do well, they're very vulnerable to dropping out. so if you look at somebody like rick santorum, who won here four years ago, mike huckabee, who won here eight years ago, if they do as poorly as the pre-election polls indicate, there is no rational reason for them to go on to new hampshire. now, other candidates who do poorly, jeb bush, john kasich, chris christie, none of those will show well, but their real hope is for a breakthrough in new hampshire. i would suspect that if you see

dropouts, it would be on the republican side with those candidates with special appeal to the evangelicals who are 60% of the vote here in iowa, and so look for huckabee and santorum. and interestingly, those are the guys who showed up at donald trump's counterdebate performance in des moines last thursday. >> that's a really key point. sort of a de facto endorsement of two guys who had won these caucuses, and in years past. that's a very important point. the other thing is, you mentioned ben carson. that's an interesting story. take a look at the numbers in the latest poll here in des moines. carson is fourth with 10% of the vote. he's coming back up. the reason i find that interesting is he's not going to win tonight, but the evangelical vote is going to be split. that's the thing. carson, i think, is pulling from cruz, who thought he had a lock on it. the other thing is, trump being endorsed by jerry falwell jr. of liberty university, trump will also pull some of the

evangelical vote and they're developing this new genre, it is called a practical, a pragmatic evangelical. i think that has to be john harwood. pragmatic evangelical. and those people are trump voters, according to the polls, which makes this an even more interesting and maybe tighter -- >> larry, one second. >> hold on, michelle. let me make one point before you go to larry, which is to paraphrase marco rubio, there is only one savior and it is not ju john harwood. >> we're all working very hard on that. anyway what were you going to say? >> the house financial services committee put out a press release today and they subpoenaed a bunch of records from treasury and guess what, treasury, they say, was lying about their inability to prioritize which payments, remember during the whole debt ceiling crisis, oh, no, we can't pay the debt first, oh, no, we

may default on social security to the elderly because we just don't have the ability to do so, and they're saying now that, no, they found documentation that actually the new york federal reserve was ready to prioritize social security, veterans benefits and also shocking the debt as well. >> right, listen. back in 2011, we had this whole brouhaha, i made this argument repeatedly. i disagreed with the obama people, because i've been through this, okay. back in the early '80s, when i was reagan's deputy budget, we went through this. we had had some shutdowns. we had some debt scares and you can prioritize. my problem with that story, though, and we had this on the air one night, with eric cantor and i going at each other, canter is a friend of mine, i had to blitz him, cantor said you can run the government by prioritizing revenue. and i strongly disagree with that. then. and i still would today. that's no way to run a railroad. i don't mind if you shut the

government down for a couple of days, doesn't bother me. democrats, republicans, have done it all the time. but you cannot run the government just on the priority basis. so in a sense, both sides were wrong on that. >> guys before you -- >> larry was so crazy at the time. the greek government can figure out how to prioritize payments, obviously the u.s. government can as well. >> the greeks have done such a good job, michelle. really have. they have done a great -- they have done a good job and it has to be a role model for the u.s. >> before you let us go, i just want to get back to the campaign dialogue and make one point i know is going to be disappointing to larry, but it is a fact. that is the incredible sidelining of the issues of tax cuts, tax reform, from this debate. the rise of security fears, the focus on blue collar voters in the republican party has shoved that debate to the side. i just did a word search of the republican debate on fox, the

words isis were mentioned, the word isis was mentioned 39 times in that debate. the word tax reform, one single time. just ted cruz. >> and i think john is right. most disappointing to me, that debate, never mentioned the economy at all. the economy in iowa is pretty good. and, by the way, so is the economy in new hampshire. these are national debates. and the whole country is watching it. i do wonder, john, though, as a kind of hidden factor, again, coming back to the so-called trump vote, he appeals to white, middle class people who are economically squeezed, many of whom are democrats. and one of my big questions tonight is will those democrats show up at republican caucuses, reregister in order to vote for donald trump for economic reasons? that may be a hidden theme in this election. >> guys, we'll leave it there. thank you. >> john harwood. >> appreciate it. shares of twitter surging

now, up 8% at this point. private equity eyeing a buyout? will twitter go private? should it go private? so many questions. "power lunch" is back in two.

welcome back to "power lunch." shares of cit group, the financial company, sources saying hudson executive capital and other investors are calling for the breakup of cit group. the activist hedge fund started last year by a couple of high profile jpmorgan chase executives is suggesting cit to

consider selling its rail and lending operations business shares of cit group up about .6% on the day. >> seema mody, thank you. shares of twitter soaring on speculation that mark andreissen could partner with silver lake to buy the company. what is ahead for the struggling social media giant? joining us is edmund lee at rico and james chakmuk. i want you to tell me what you think of this report, this report is sort of odd because it says they considered some sort of a deal, but the author of the report goes on to say i don't know if anything is active. how would you assess the validity of this? >> sure, a deal for twitter makes academic sense. you're buying an interest grab for -- and integrating 300 million people around the world. but you do look at the prospects of who could buy twitter, it is less promising. facebook going at it on its own. google already has a search deal

with them to get the data. and then news corp. in the mix, but the agnostic nature of the platform makes it attractive and then this report with andreissen silver lake kind of combo. it gets interesting when you think about nontraditional buyers. if it has a nontraditional route is the more likely scenario, but here you have jack dorsey holding pep rallies. this is not something that is top of mind for the company at all. i do think that if it were to happen, it has to command the substantial premium to where we're trading today. >> good point, in assessing prospects of a deal is an academic exercise, and egos involved. and jack dorsey has an ego. mark andreissen was an angel investor in twitter, he loves twitter. >> on it all the time. >> the father or one of the founding fathers of the tweet storm. you check his twitter -- the last time i checked his twitter feed, the last time he tweeted was 12 hours ago, which is unheard of for marc.

>> he's not on it every five minutes. >> so hmm. >> what is going on with him. takeover talks or takeover reports on twitter had been essentially since the beginning, really, beginning of the ipo. always under pressure that way. still -- it pales in comparison to facebook in so many ways and they set themselves up as the next facebook. and they're nowhere near that. i think they have always been companies kicking the tires, right? it is a great property still. has a lot of active users, sizable user base, great on mobile. that's something a lot of tech companies and media companies are trying to figure out. but whether someone like a google might take it over, google never had or never really successfully figured out their own social strategy, twitter doesn't give them for that. google needs to figure out their own mobile audience, twitter is flat. >> james said it maybe the best avenue if there is an acquisition would be a nontraditional buyer. but where would twitter be the best bolt on for an existing

company? >> it is unique. that's part of the problem. you don't bolt it opn. it is their own ad tech. not something that would slot in with the existing ad tech system that google would have or facebook or some other media company, so you -- >> people, james, we're talking about news corp. as a possible buyer here. news corp. had one very disastrous foray in social media called myspace, right? >> right. and i really don't think that news corp. is a buyer. i don't think media company is a buyer because it is the fact that you do have the agnostic content. it is from all sources, from all journalists, all politicians, all celebrities, it is not tied to any specific publications or companies that own a portfolio. so i don't think that's a scenario, but i do think ultimately twitter at this stage, at the very least, with jack dorsey at the top, will have to determine its own fate. it does have the content there.

now it is about getting the product right to actually get people to consume that content. i think there are opportunities for montiization to outperform over the near term, but it comes down to jack dorsey and the product team. >> let's just bottom line this. >> sure. >> is twitter going to be public or private in six months, james? >> i think it is going to be public. >> i think it is going to be public too. i think six months is a good time frame. dorsey has been ceo four months now. got to give him a year to see what he's able to do with it. >> we'll leave it there. thank you. to the bond market, rick santelli tracking it all at the cme. >> even though rates are elevated a couple of basis points, we haven't recouped a lot of the buying that pushed rates down on friday. a year to date chart of 10s minus 2s, it is flattening. here is something interesting, go down the curve, look at 30s minus 5s, it is steepening. it is steepening at a rate of plus 14. the previous 10s minus 2s

flatter by 8. euro versus yen, if you look at it since december 1st we're now at the best levels on the euro versus yen since december. the trade to watch, 133. let's look at two nine-year charts. they both look similar. the hyg in worse shape. we want to watch the etfs, good thermometer on the boiling point of some of the credit markets as it relates to energy. tyler and melissa lee, back to you. >> thank you very much, rick. alphabet the last of the so-called f.a.n.g. stocks to report its earnings. the stock higher ahead of the results. later today, should you buy ahead of these numbers? there is the stock. and look at the one year gain on that baby.

♪ light piano today i saw a giant. it had no arms, but it welcomed me. (crow cawing) it had no heart, but it was alive. (train wheels on tracks) it had no mouth, but it spoke to me. it said, "rocky mountaineer: all aboard amazing". oh remotes, you've had it tough. watching tvs get... ...sharper... ...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, come out from the cushions, you are back! the x1 voice remote is here. welcome back to "power lunch." i'm melissa lee. major averages lower, but steady this hour. we're off, in fact, the session lows, the dow is now down by just about 84 points or half a percent. the s&p 500 down by a little over 8 points. the nasdaq down by 12.5.

energy is a drag. it is also off the session lows, but wti is clocking in at a decline of 6.5%. nat gas down by a little over 7% right now. gold prices we should check on them, they're closing right about now. so taking a check on where we settle out, 1127.60 the close on gold co-mex. >> the who convening an emergency meeting to decide whether to declare zika virus outbreak an international emergency. the director general saying that they -- she has taken the committee's recommendation to declare the birth defects known as microcephaly associated with zika and other neurological conditions seen across the americas that may be associated with zika a public health emergency of international concern. they're focusing on complications they think are associated with zika, not zika in general. and what they're going to do is coordinate an international response to better understand

that association. and also standardize the surveillance for those potential complications. but this potentially galvanizes the international response to this outbreak of zika cases we're seeing across the americas, melissa. >> does this change the response? there say lot of work being done on zika vaccines. does this facilitate a speedier approval process for the zika vaccines to be used on the front lines? >> that's what you would hope. with the international gavelenization behind this, there is a focus on the urgency of trying to figure this out. already the nih is working on two vaccine candidates and trying to get that going pretty quickly. this should also bring attention from potentially pharmaceutical companies to be interested with the nih on this, hopefully all of that coming together more quickly. >> meg terrell, thank you. >> to sue herera for the cnbc headlines. >> here's what's happening this hour. world renowned chief benoit has been found dead.

his restaurant in lausanne was given three michelin stars and voted the best in the world. he was 44-year-olds old. britain's fertility regulators approved a request to edit the human gene code. the decision means scientists can alter the dna of embryos for research only. it remains illegal to alter embryos to be implanted. a team of experts is making a final attempt today to salvage a cargo ship adrift off the coast of france. all 22 members of the crew were rescued last week following the distress call. the ship is carrying 3600 tons of wood and equipment. high winds and waves have made the rescue attempts pretty much impossible. here at home, the free snacks apparently are back on board at the nation's three biggest airlines. american and united say they will restore the complementary snacks in coach. delta never took them away. well what you get depends on the flight you're on and if a meal is being served. that's the cnbc news update this hour. back to you guys.

to steve liesman with breaking news on the fed. >> sue, thank you very much. want to bring you a couple of comments from stan fisher speaking at the council on foreign relations and what he just said is that it is not clear that recent market volatility reflects real economic developments, he's monitoring for that. the second thing he said, tyler was asking this question about was he tap dancing going backwards? he said the notion of four hikes being in the ballpark, four is the number that is among the numbers discussed, but says it is not the only number. in fact, he says that the fed doesn't really even talk about the number of hikes in a year. it is a number that comes from the statement of economic -- economic projections, don't have a discussion about that. four is among the possibilities, but he says not the only possibility. >> a lot of numbers out there, aren't there? >> between zero and four, i believe there are infinite number of numbers, aren't there? >> hadn't he been one who had strongly suggested that four was -- >> yeah, the history of this, tyler, is the interview i did with stan earlier this year,

early january, where i asked him about the four rate hikes, he said four is in the ballpark and didn't talk about three, two, one or five. he said four is in the ball park. four is the median forecast. >> between three and five. >> exactly. i think we'll get into a monty python exit here. >> if we could. >> four is the loneliest number. >> four is also the median forecast of your average official on the fomc. >> let's talk, steve, to another fisher, former dallas fed president richard fisher. welcome, as always. great to see you. >> thank you. >> i assume you're familiar with what mr. fischer, stanley, has been saying. how do you interpret it in terms of what the fed may or may not do? >> i listen to stan's discussion. i always used to tease him, we're cousins, he just spells his name wrong. he adds a c.

he made a good point which i haven't heard many people talk about, steve referred to it a couple of times. here is the key point. monetary policy remains accommodate ir, significantly accommodative, and he also referred to the reinvestment of maturing securities and what is called the selma portfolio, the fed's portfolio of treasuries and mortgage backed securities and i want to give you some numbers. i think rather than focusing on how many rate increases there might be, if any, for the rest of the year, this is, to me, the most important influence on the fixed income markets and through them on other markets. this year, i just wrote these down, i'll look down to make sure you get them correctly. but this year, 2016, 216 billion treasuries will mature in the portfolio, between new and 2019, 1.1 trillion. i want to put that in perspective. in 2014, only 470 million

matured. and last year only 3.5 billion. so we're going from 3.5 billion to 216 billion and then between -- this is important. it is important because as long as they reinvest those proceeds, monetary policy maintains our balance sheet, their balance sheet, can't say ours anymore, at 2.5 trillion in terms of the securities held. the other reason it is very important is the fail rate on treasuries has gone up to 2.5%. norm is 1%. when they buy or replace a rollover, they buy what is known as on the run issues. that will alleviate some of the problems you have in terms of fails in the treasury market and some complaints that have been running through the market that liquidity is restrained even in treasuries. so i think this is the most important thing to me that came out of stan's comments.

the rest of it basically was my summary and what i used to say at the meetings, forward guidance, which is we'll see. we'll see what happens between now and march. and i listen carefully to stan. stan is to me next to janet yellen the great thinker on that committee. he has the most authority of anybody. people respect him enormously throughout the world as it was said and when he was introduced today. and what he basically is saying, we can call it data driven, but we'll see. we'll see what happensdomestica. one number that came out today in terms of what private sector wages and salaries are running at year over year, 4.8%. that was for tedecember. for october, a higher number. there is a disconnect over what is happening in the private

secretary, the fed wants to see better wages, they also want to -- as the math works its way through, work up to that 2% and maybe overshoot the 2%, but this is a very important matter because wages and salaries now at an annualized rate are running at 4.8%. that's a good number. >> that's a good number. what you want to see. people are not fully employed, more significantly employed, 5%. also getting paid more in and especially in a private sector. >> richard, we leave it there. thank you very much. we appreciate as always your perspective. see you again soon. >> thank you so much. >> you bet. january was a rough many for the dow. now that february is here, what can you do to make some money? that's next. opportunities aren't always obvious.

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welcome back to "power lunch." i'm julia boorstin with news on the nfl's thursday night games. the nfl striking a deal with both cbs and nbc to share the rights for those thursday night games, both nbc and cbs broadcasting five thursday night football games, an expansion from a total of eight games over the past two years. so this new agreement mashes a departure from last year where the nfl broadcasted its thursday night games on cbs alone. now nbc has been added as a partner. this has been -- this deal has been reportedly cost as much as $225 million for both networks. though there is no official comment on that cost. back over to you. >> thank you. stocks down on the first trading day of february, but the dow is now off the lows of the session. so what can drive the market higher from these levels? joining us, art hogan, chief

market strategist at wonderlic and david spika at guidestone capital management. art, we kick it off with you. you say oil needs to hold 3250 to stay constructive with stocks. here we are, 3152. does that mean you're not optimistic about stocks? >> we need to break the correlation between oil and stocks. wti and s&p have been very correlated for the last month. certainly very correlated for the last six months. 3250 is a technical level, resistance. not holding that today. i think that something north of 30 is positive. i think positive and constructive for the 1900 level on the s&p for the time being. we need to break that fee, stop looking at oil every day. this is the busiest week we'll have for catalysts this year. so far this year, over 200 companies in the s&p 500 reporting and a boat load of economic data. first thing you check on your

monitor is the price of oil. that needs to break. something in the 30s helps that. i think the -- i think we sort of made that turn last week and i hope that continues because as soon as we break that correlation down, i think investors will start finding we created bargains in first month of the year. >> i want to ask you about the sectors you like, consumer one of them, and consumer discretionary. bank of america, merrill lynch, had an interesting note, we have seen one of the largest transfers of wealth in human history because oil, the -- money has been going from the oil producers to the global consumer. we haven't necessarily seen that in consumer discretionary. if you strip out names like netflix and media stocks, we had a lackluster performance. what gets consumer the stocks moving? >> it is purely confidence. i was encouraged to see consumer confidence rise in january, despite the market volatility. good sign. it is about confidence. savings rates have gone up. but over time, consumers, if they believe oil prices stay

where they are, they're going to be encouraged and be wanting to spend that money on discretionary items whether that is restaurants or leisure or clothes or whatever the case may be. if you look for a place where there say good chance for revenue growth, they're very hard to find right now. and if you look across the broad landscape, the u.s. consumer is the one pocket of strength you can point to, particularly given the tailwinds of the strong dollar and low gas prices and so we would believe that as long as the economy doesn't go into recession this year, which we don't think it will, that consumers will spend that tax cut they have gotten from the prices at the pump and that should provide some upward movement in the consumer discretionary side. >> we have 15 seconds, you like smith & wesson, monster rise. why do you continue to like it going through the election? >> the elections come out with the result of a government contract coming out, worth $500 million from the get go. it is an ongoing revenue stream of $200 million. we think smith & wesson gets

that contact. >> thank you. art hogan, david spika. go to powerlunch.cnbc.com to see why art is bullish on recreation products. we are back in two. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ rma. checking your credit score is for chumps.

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the power points, stocks lower, oil tanking about 6%. utilities in telecom, the best performers on this down day. walmart and verizon lead the dow. "power lunch" returns in two minutes.

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all right, google reports earnings as alphabet for the first time today. it is a f.a.n.g. stock. is it the a or the g? we say the g. the tech giant breaking up its earnings report into two, one for google's core, search, youtube and android, and another for the company's other bets. brian wheezer at pivotal research is one of three analysts with a hold rating on google. 49 analysts have a buy or a strong buy rating. brian, welcome. good to have you with us. why are you in such a minority? why the hold? >> i guess i phrase the question why is everyone else so optimistic? >> good for you. >> i would characterize the state of google and google investors as being willfully optimistic that the leopard can change its stripes or the tiger can change its spots, pick your metaphor, misconstrued as you like.

i think the issue is that google is a company that is in a hegemonic position with facebook. the two of them collectively take the equivalent of all of the growth of digital advertising. that said, google's expenditures on capital are so substantial and just will not stop anytime soon. it is difficult to come out with a price point that is much higher than where it is. >> but hegemonic sounds pretty good if you're an investor, right? >> it is priced in. that's the issue. it is already priced in. >> the capital expenditure is, what, going in places that are not going to turn out to be particularly profitable or major engines of growth? >> well, this is the problem. you can argue it is a very capital inefficient enterprise having all of these disparate businesses under one roof. i mean, general electric as an example, we could argue is probably not as capital efficient as comcast is with nbc as a separate thing. and the same way google investing in life sciences and investing in access, and energy

and et cetera. >> we're going to get results broken out this evening for the first time, greater transparency. could your view change if you actually see that, say, the ebitda margin is better than we thought for the core business versus the other bets? a lot of the spending could be spent on the other bets and so therefore could you then rerate the stock to attribute a stronger core business? >> there is no question that the numbers will look better when you separate out the other bets from core google. no question. the question is how much better. and i think what i'm seeing is that investors are willfully optimistic in thinking that the vast majority of the capex sits in the other bets. youtube is intensive. google's margins are eroding because of their investments. nothing wrong with that those are sound businesses. but it is not as if it is all roses and sunshine if you separate out the other bets from core google. >> what do you see tonight? in line, beat?

what? >> it is hard to call. investors tend to put too much weight into any one quarter's numbers. i'm expecting very similar to what we saw in the third quarter, on the core business, with, you know, solid midteens growth. some margin erosion, collectively. again, the big question is how much better does the business look when you separate out other businesses and that, i don't pretend to have a better, i guess than anyone else does. >> brian wheezer, pivotal research, by the way, we're breaking down all of google's numbers in the conference call, trading the conference call comments on fast money tonight. 5:00 p.m. eastern time on cnbc. michelle, hello. >> good to see you guys again. it is 2:00 p.m. thanks, guys. wall street stocks are holding in the red to kick off the new month. right now the dow jones industrial average is in negative territory with the s&p 500 lower by 6.5 points. nasdaq off by eight. and the dow is off of its lows down 69 points. a lot of that being driven by a big decline in the price of oil which is off by nearly 6%.

>> you read my mind, or the script. we will begin again, michelle, with oil. mr. oil. mr. boone pickens making a bold call this morning. listen to what boone had to say. >> once you hit bottom, which is, i think, at 2615 on wti, you're going to double within 12 months from historical, you know, information. so here you are at, you know, 30 and i think you'll be 52 by the end of the year. >> all right. there you go. 52 on wti by the end of the year. a little less bullish than boone has been in the past. oil, though, michelle said, down again, down 6% now. looks like more of that talk about a potential opec cut is just that. all talk. let's bring in roberto, head of energy trading with breen capital. looked like we would get a little bid in oil the last couple of sessions.

now down 6% again today. what is going on, what are you hearing on your desk about oil and the oil stocks? >> i think it is a normal amount of profit taking. we got into that 35 to 38 range in wti, moved quickly on short covering last week from the mid to high 20s. moved fast, real quickly. and i think, you know, normal pullback like this is justified. we had a lot of short covering last week was commentary about whether the russians were cooperating with other opec nations and the saudis. this is a normal round of -- >> just as quickly, you said profit taking, i think you're about ready to say it again, which leads me to ask the question, what profits are you talking about? who has profits? >> well, you know, there is a lot of short-term trades going on. i think the problem is we're going to have a lot of head winds as we get into the spring season when we come off -- there is supply in the gas and oil industry. i think that's going to be very problematic. in the meantime, what we're going to be doing is trading these ranges, trading below 30,

mid to high 20s into 35, 36. >> are you suggesting we could retest that $26 level we saw? >> unfortunately i absolutely think we will. we have about three tcf of natural gas. as you see nat gas down 5% today. the five day forecast 20 degrees plus in the northeast. five days out. and getting into shoulder season, we have a lot of refiners, they shut down for maintenance, and we have a massive amount of global supply in natural gas and a lot of the supplies that you've been hearing about iran putting on supertankers, a lot of this is natural gas and ngls that compounds the problem even more so. >> so you sound super bearish. how long do we stay low? does boone pickens have any chance of being right? >> i will say this about -- very well respected in oil and gas business. he did go on the tape last december when opec made the first stand to kind of stand pat and not cut production. he said this is a normal kind of

oversupply glut. we'll see gas above 100 within 12 months. here we are today. the point is, it is such a convoluted scenario. i don't think anyone can pick a bottom per se. what i do think is when it gets to 25 area, 25 happens to coincide with last summer's 1.26, it also coincides where we stopped inflation, adjusted, at the end of '01, '02. we'll get to that 25, 26 area, come shoulder season, and i think that is the point you get bull kniish into adding at that level. and we'll see a climb back to 30, 35 wti the. when we get to 50, a lot of the companies that are still around have call options to begin drilling again within three to four months. >> i love a good retracement, when that happens -- >> it rolls off the tongue so nicely. >> it does, exactly. >> what you said is bad for oil.

you talked about all these rigs -- a couple of things we haven't talked about enough. number one, a lot of tax laws and stuff, this is boring and wonky, about people having to start drilling again. put a rig in the ground, certain states where you have to start using it, otherwise you got to give it up. might start drilling more and then hedges. a lot of oil companies are well hedged last year, hedges are starting to roll off. they had the right to sell oil at 70 bucks a barrel. that's gone. and nobody is ever going to write that hedge again at these levels. how bad is this going to be for the energy stocks? >> it is going to be bad. what we have been seeing or haven't been seeing dependent upon your stance, if you see a lot of emp companies start to cap the capital markets, we saw pxd and f.a.n.g., the best and have the lowest break evens, we saw some tier three companies top the markets as well. all that means is you're getting surviving longer and lower for longer as the companies that probably should be washed out, they stick around for a while

longer and keep drilling. >> i saw that, a couple of companies were able to issue equity. that -- i understand it was maybe at a discount. but the fact that they could issue equity, is itself a positive, no? >> it is a positive, but it continues to exasperate the oversupply demand situation. instead of it righting itself, saying in spring to june, when, you know, you get the emp washout, and we're still at 9.2 million barrels a day in production, we need to get 5.8, 5.6, the longer companies can stay around and survive, the longer production stays north of 9 million barrels. >> you don't get the writing in the laws of supply and demand as we look for. thanks, roberto. good to have you on. >> thank you. keeping with oil, the crude collapse is putting the brakes on another part of the high end market that first glance you wouldn't think would be impacted by a fall in the price of oil. muscle cars. gas guzzlers, cars that you think would benefit from a decline in gasoline prices.

robert frank is here to explain. >> especially these older cars which really burned a lot of gas. the car auction in scottsdale, arizona, wrapping up over the weekend. they're the biggest auctions in the country and seen as a gauge of the collectible car market. this year, flashing red. the auction of 2,500 cars ended yesterday. it fell 14 short from last year and the first decline in five years. the average sale price falling 13% to just over $100,000. they're telling me there is an oversupply of certain cars now, and on demand side, affluent buyers are anxious about the stock market and global growth, but oil, big thing, oil may have been the biggest drag. many of the new buyers in scottsdale over the past five years have been from the oil and gas sector. this year, many buyers just didn't show up. 20% of the cars offered failed to sell. prices for 1960s and '70s porsche 911s fell 20%.

ford gts, the crowning achievement of american automobile industry, this fell 8%. there were some bright spots. the top seller, mercedes, selling for $9.9 million. and 1950 ferrari sold for $6.5. when we have a ferrari retrenchment, we should start to worry. >> so many italians. let's underline this. this is about a lot of oil and gas workers getting laid off, who -- living very, very well during the huge boom, and now they don't have the money to actually put into these cars, bottom line. >> brian has been reporting on this for past year. these are guys that had a lot of cash and they were going to scottsdale and buying the $50,000 mustang, or the $60,000 corvette and they weren't there this year. so, again, to your point, this is a market we think would benefit, but it is not. >> important to underline that. whenever we start to see big pullbacks and whatever sector of the market, wherever it happens to be going on, there are ripple effects that nobody intended.

well, you know, the -- how much is really involved in this particular -- how much direct impact is there going to be, people play it down favorite and you see it seep into areas which you didn't expect. >> on friday, people telling me, we don't expect an impact. and here we are on monday, we saw an impact. >> somebody you sent me a link to it, an interview i had done in january, on msnbc, it is very easy to tell the story that low gas is good for america, the end. low gas is good for america. nobody is saying it is not. but michelle's point, all the second and third derivative impacts this is a fourth derivative impact. >> to be fair, i doubt anybody but the auction owners are crying because the classic car market -- >> a lot of people are selling these cars, a lot of families selling these cars to pay taxes and inheritance and whatever. there are a lot of sellers that are saying -- >> to which i quote the wilson sisters. oh, barracuda. okay. they'll go crazy on us if we

keep this up by the way. >> thanks, guys. we are just getting started here on "power lunch." up next, we have more than half a trillion dollars worth of investment advice coming your way. robert tip will tell us where he's finding opportunity. plus, has a bernie madoff just emerged in china? this story may be interesting to you too. the incredible details of an alleged $7.5 billion ponzi scheme, still being uncovered. why investors are loving spam, corona. ♪ it was always just a hobby. something you did for fun. until the day it became something much more. and that is why you invest.

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a few deals to tell you about. co-mi abbott labs buying aleer for 5.8 billion. abbott will pay 57 bucks a share for aleer, 51% premium to friday's close. if you own aleer, congratulations. a couple of stocks hitting new all time highs. new highs in today's session. they include hormel, reynolds american and constellation brands, spam, palmol and corona. puerto rico trying to give its creditors a huge haircut today as it tries to resolve the debt crisis. and washington is weighing in with the white house saying that

president obama and republican congressional leaders may address puerto rico's situation during budget talks planned for tomorrow. trying to figure out if and when they can declare bankruptcy. house majority leader kevin mccarthy says house republicans plan to have a puerto rico bill on the house floor by the end of march. the bonds had high yielders for a reason. talk about other parts of the bond market which may be of interest. joining us is robert tipp, one of the world's largest fixed income portfolios with half a trillion in assets. >> good to be here. >> we heard liesman, steve liesman reporting on what stan fisher was saying today. right now, the u.s. federal reserve looks to be the most aggressive in the world compared to all of the other central banks out there. you think that's changing, and what does that mean for what you're doing with fixed income. >> sure. what is going on in the world from the big picture, strate strategically, what is going on

in puerto rico is representative of bigger phenomenons. there is too much debt. not enough growth. not enough inflation, an oversupply of goods, an aging demographic, and in the wake of all of the globalization we had, there is a lot of surplus of labor, a lot of unemployment on the global basis. the fed, given the unemployment rate in the u.s. is relatively low is making their way toward raising rates. but what they're finding is that the global economic picture, the financial market backdrop, can't take it. so we're getting ongoing stress and when they look at the other central bankers of the world, they get a completely different story. so the bank of japan, easing policy last week, taking rates into negative territory, the ecb planning in march to go further into negative territory, and there is only so far that you can go in opposite directions. >> sounds like you think they're changing their viewpoint. does that mean that perhaps the markets have gotten overly bearish when it comes to, say, high yield, if you exclude oil and natural gas bonds? >> right.

so the fed last week, they took out their confidence statement they had about inflation, and they took out their balance of risk assessment instead pointed out financial conditions and global economics. so when you come around to fixed income, and build up, into high yield and the other sectors what you see is the treasury market at 2% roughly for the ten year is extremely high in the global context. then when you go to the spread sectors from the high yield, when you look at higher quality structured product, the spreads available on those are another couple percent or going all the way up into a handful of -- >> how much higher? how much more? >> the investment grade corporate index is almost 2%. so, you know, 2% on ten year treasury, 2% on corporate bond or high quality clo doesn't sound like much. the japanese government bond last night rallied five basis

points. the bund is down -- >> 1/20 loss is better. is that the way we need to look at bond investing now. it may not be sexy. it may not give you much, but it is better than losing a lot. >> right. when people look in the rear view mirror and say yields used to be high, maybe too low, that's the wrong way to do it for the last 35 years. still the wrong way. investors need to have a strategic approach and recognize we're late in the cycle, equities getting riskier, bonds are probably going to earn their yields. and with less volatility. >> i want more than 2%. tell me about high yields. >> she wants it all. >> high yield was down last year. how often is high yield down two years in a row? has that gotten so sold off that there is opportunities there where i can get a nice extra juicy push. >> i think your earlier comment, you don't need to go to the riskier sectors. high quality an high yield will

outperform. >> isn't that an oxymoron, though? >> the higher end of, right? >> high yield for a reason. >> it is high yield for a reason. >> they may not pay you back. >> that's right. but there is a whole range of industries in there. you look historically at the returns on high quality, high yield, it is an efficient sector. for us, you know, i think fixed income investors are getting paid here to stay the course. and diversified, go with fixed income managers that can take advantage of these opportunities in the spread sectors including high yield are going to make out over the long-term. >> we'll see. robert, thank s for coming in. coming up next, the five big analyst calls of the day that we want you to hear including one monster upgrade. street talk is up next. stocks kicking off the month in the red. will february be the groundhog day for your money? we're going to dig in with -- look at this. we talk about the wilson sisters. rocket to heart if you go to break.

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twitter was popping for much of the session. still higher by 5.5%. however, half of its gains have been wiped out. the stock pop earlier on reports that maybe venture capital marc andreissen and/or silver lake partners may be interested in doing some kind of a deal. well, fortune out with a report saying silver lake is not interested. we'll talk more about this. we have herb greenberg coming on with more about twitter. but twitter losing half of its gains. the sellers moved in. time for street talk, our check on the key analyst calls we think you need to know about. vertex pharmaceuticals, they say shares in lotthe low 90s on fut label expansions and competitive uncertainties. basically, the analysts factored in a bunch of negative stuff for the company and came away with a positive take. target 120, up 30% upside. but says on a discounted free

cash flow valuation, the stock could go as high as 144. >> sounds like a hugely bullish price target raise. at the same time, look at the stock and where it was early january, just as it preannounced on its sales of cystic fibrosis drug saying it won't come in as expected, the stock was at 123 the day before. so basically the analyst is saying it should go up to levels that it had seen one month ago. >> second stock here, go pro, pipe gerting bearish ahead of the earnings report. down by 1.50, underweight rating on the stock and cutting full year estimates below consensus to account for what she's calling a rebalancing of spending expectations. they have a bunch of product launches later this year. rebalancing may be increased spending. just a few weeks ago, go pro issued a big q4 warning and the supplier is also down sharply today. >> if you're on the radio, don't have the stock price in front of

you, the price target is 7.50 a share. so basically the analyst is calling for a 50% haircut in go pro. >> big move. >> wow. >> third stock, the other way, monster beverage, wells fargo upgrading to a outperform from a market perform. they were cautious on the stock last year. not a great call, monster went up, but monster was using coke's distribution system and concerns about losing market share during the transition. however, a new survey shows some of the distribution problems that were facing the company are starting it fade. convenience stores up 10%. 159 to 161 a share. that implies a minimum of 15% upside on the stock. >> i'm glad you mentioned convenience stores, convenience stores are at gas stations. and low gas prices have given a few extra bucks for consumers to spend in the convenience stores open times at the gas station. >> tesla, one of the biggest

polls on the street getting less bullish. morgan stanley cutting to 3.33, down from 4.50 because of concerns about execution into the model x launch and low gas prices which could hurt demand. elon musk made interesting comments to cnn about that last month. expecting a mass market model 3 to be behind schedule, late 2018, selling average price of $60,000, much higher than the original price tag of 35k. >> i have a job for our viewers, a task, a request for all of our -- i want to know, is there anybody out there, anywhere in the world, who decided to not purchase a tesla because gas is cheap? i don't think the tesla buyer is gas price sensitive. i think it helps, it will save you more money. i think if you want a tesla -- >> you'll get a tesla -- >> you can afford a tesla. >> this is, you know, i would

like to know, if it is a positive comment, twitter me, if it is a negative comment, twitter melissa. >> give her the grade and me the praise. >> pg -- pgti is the ticker. small cap florida based window and door maker doubtry and company upgrading to a buy. they downgraded the stock in october, but say some of the concerns are mitigated, stock lost 30%. good call. analyst says production rates are back to normal, after a software installation screwup messed up the business a bit. the price target on pgti, 13 bucks, about 30% upside. >> when i read doormaker, i thought international ticker symbol dor and look at the performance of the stocks, pgti has been an outperformer compared to the lossest pier. up 24% over the 12 months versus

masonite 13% decline over the same period. >> i hate to admit i'm wrong, so my screw up with the teaker may be correct if they make doors made of teak, i was technically correct, they would be a teaker. >> that's so bad. let's move on. >> wasn't so good. final oil trade, starting to cross for the day, we'll get to jackie deangelis, set you up for the close. >> back to monday and back to reality. crude oil prices dropping 5%. intraday low of 31, up 29. we'll talk about what is driving this market, what you need to think about this week and why the technicals are so important when "power lunch" comes back. i've been called a control freak...

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it's gotten squarer. over the years. brighter. bigger. it's gotten thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. welcome back to "power lunch." i'm jackie deangelis. oil prices looking to close any second now. $2 lower on the session, closing over $31 a barrel. the euphoria over an opec production cut we were talking about last week, that has seemed to weigh out a little bit over the market. china pmi, that number taking more precedent today and sending us lower. the new short-term range,

traders are saying it is between 30 and $34 mark. all about the technicals now. there are players in there now that are making little moves here on a day to day basis and trying to eek out a profit. earlier on "power lunch," a guest was saying he thought we could see the low 20s again and test the levels we saw not long ago and other sources say that's possible as well. sue herera, over to you with the business news update. >> thank you so much. here what's happening right now, everybody. just hours to go before the caucusing starts in iowa. voters will gather in public meetings across the state beginning at 8:00 p.m. eastern time. first come the speeches and support of the candidates, so it is unclear when the actual voting will begin. both front-runners democrat hillary clinton and republican donald trump spoke with optimism this morning. the world health organization has declared the zika virus a global emergency. it is only the fourth time that they have done that putting the zika virus in the same company as h1n1 flu, ebola and polio.

it often causes brain damage in children. the cdc has closed its investigation into e. coli incidents at chipotle and says the outbreaks appear to be over. more than 53 people were affected by two separate outbreaks. no new cases have been reported since december 21st of 2015. and those bells will be ringing for the rio olympics. workers at a swiss metal show are making the bells by hand. they will be used to signal the last lap for track and cycling events. the same type of bell has been used in the games since 1896. and the rio games begin august 5th, right here on nbc. and that's it for the cnbc news update this hour. back to you, brian. >> sue, thank you. it is time now for our daily segment trading nation, because traders trade better together. today we're trading the s&p 500 kicking off the month in the red. more pain to come? aaron gibbs and ari wald.

ari, you're short-term bullish, long-term bearish, why? >> what the charts say to us is we're at a low, but we think it is too soon to call it the low. and let's talk first in terms of levels, think in the near term we are setting up for this relief to the upside, we think 1965 to 2000 is a likely upside trading range. and the reason we think this, if you look at the participation numbers, currently only about 20% of the new york stock exchange above their 200 day moving average of deeply oversold condition, tend to be followed by above average for a performance and opportunity to buy large cap growth, strong relative trends, but to mark a resumption of the secular advance, we think this region has to get up to 70%. that's marked prior resumptions, long-term strength in 95, 2003, 2009, 2012. without that, looking to sell the relative weaker names on the balance, small caps, commodities, exposed stocks.

>> okay. that's the technical view. aaron, what point do stocks look attractive and do you agree with the thesis? >> so, for us, i find it a little hard because to get down to the 1740, you would have to have a major compression of valuations from where we are now. and i just don't see the particularly the economic numbers for the u.s. consumer to really make them capitulate that much. last week we had some really great numbers when it came to housing sales, mortgage applications, u.s. consumer confidence, all better than expectedment and for menand fon a nice steady hold at 15.5 times forwardearnings. we need to see a deterioration in confidence to break that. >> a polite disagreement with ari. appreciate it. for more trading nation, head to our website, tradingnation.cnbc.com. twitter today, in the news.

up nearly 8% at one point. now higher by a little more than 5%. rumors that marc andreissen and silver lake partners considering some sort of deal with the social media company. the stock is off today's high after some new reports. we'll bring you all the details straight ahead. you're watching cnbc, first in business worldwide. and now the latest from tradingnation.cnbc.com and a word from our sponsor. >> some investors like dividend paying stocks because of the income they provide. but if you're investing for the long-term, you may want to consider a dividend reinvestment or drip plan which automatically reinvests those dividends into shares of the stock and at no commission. the advantages in the long run will be clear because you'll end up with a larger position and lower overall cost.

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twitter off the highs of the day, popped at the open on a report that private equity firm silver lake partners and maybe marc andreissen would do some kind of deal with it, but never got specific about that. but apparently now fortune found out that silver lake has no interest in acquiring the company. was up 9% today on rumors of that possible deal. herb greenberg is joining us now. one report says maybe there is

some kind of a deal. fortune says no buyout. but no buyout, herb, doesn't necessarily have to mean no deal, just means no buyout. >> well, what fortune said is that silver lake didn't seem to be interested in any part of the company. we don't know if somebody else is interested. look, it is all interesting reporting and, look, the story came from the information jessica lessen, there was something there, she's very good. i think that it tells you that people feel there is something worth something here to look at. and i have to tell you something, i look at, you know, you know what i think about this. you know what i think about twitter. i've been on here for years saying i think twitter should be part of something else. i think it -- i think that's the only way to get where they need to go. and, by the way, i have an opinion about who i think should acquire the company. >> who? >> if you want to know. >> of course we want to know. >> facebook. i actually -- i used to say google. >> why do they need twitter at this point? facebook had a blowout quarter.

they do not need twitter, do they? >> that's -- you know, you can argue that. but when you look at social media, it is not all one. i actually think when i use both, i use them for different things. and different ways. and i actually think if you had the news feed, i think the one thing twitter is missing all along is being perceived as something you never have to tweet on once. but to them, that doesn't add value because you're not getting interaction. but, you know, you sit there and watch the debate and you're looking at your twitter, you get good color as it goes by. there is value in that for someone, especially if there were advertising affixed to it in a certain way. i see on facebook there is also a great twitter feed alongside that is separate, if you want that. i think there could be value because they're very different. in this case of where -- whether there is smoke, fire, andreissen, amarc andreissen, a great tweeter, he created the tweet storm, whether he has interest, who knows.

but somebody could -- we see what people think would happen if that were the case. remember -- >> no issues with the doj, right? if you look at -- i think in my head, facebook and twitter, the big, you know, goliaths when it comes to the social media platform. as opposed to google or google plus never amounted to anything. but the way the doj would look at a google and a facebook would be about advertising revenue and twitter isn't there. >> i don't think that would be -- perfect, michelle. that's the point. i think it would be ridiculous if somebody got in the way of a transaction of something involving twitter. i think it makes no -- >> i'll push back a little bit. nicely, politely, my daughter is 12. she doesn't know what twitter is. she knows what snapchat is, knows what what's app is, knows what instagram is. >> dominant social media platforms now. those are up and coming. >> they might be dominant at some point. >> doj could look at them and say there is plenty of competition. >> i don't know what snapchat's financials are, i can see maybe

somebody coming out of left field like a what's app or sn snapchat and picking up twitter. >> what's app is part of facebook. they'll monetize that. >> we all think twitter will be bought merely because they have a lot of people. >> it is still up 6.2%, herb. that seems to me for all of the investors who bought into twitter and believed every rumor that has come out and every rumor has been shot down, it is amazing to me the stock holds on to these gains. >> that's also the market, the market we live in, where rumors can move things until they don't. i think one thing twitter has you never should forget, i don't think it is an easily forgettable thing, i think it has a great brand. that brand and what they created is, yes, it could go away and, yes, it is theirs to use, i don't think it will. i think it has found a place, a niche. >> i think of two broken toys out in that part of the world,

yahoo! and twitter. who gets something done to them or for them first? >> well, yahoo! would be various parts, okay. because things like yahoo! -- parts of it we all use that are not going to go away. someone will find value it. i would think right now we're about to find out whether twitter will be first, tyler, because of the personnel issues going on inside the company. of so much there. then you got guys like chris saka, i don't know if he's been on air and what he's saying, but i think he would say that everyone is nuts to talk about this thing being acquired, i guess, based on his comments on twitter. >> can i ask us all, since we got 50 people here, can i ask us all a question? >> sure. >> if you weren't a broadcaster, melissa, michelle, tyler, would you be on twitter? >> no. >> neither would i. >> this is part of our job, so we have to use it. herb, what about you? would you be on -- >> i don't --

>> at some point, twitter burnout happens where people say i'm not a broadcaster, not a sports star, not a celebrity, i don't have nice gluts or abs to show off, so i'm going to check it out once and a while and passively look at it but what is the value there. if twitter becomes a new s feed if you use the apple news app, i use that to scroll through news now when i'm home more than twitter. >> that's a good -- >> maybe apple should buy twitter. >> it is great when there is stuff happening on the ground. >> a shooting, an attack. >> a breaking news event, like when they captured bin laden and you go back and they killed bin laden and you go back to the original tweets that were telling and informative at the time. that's the place to be. >> they own that, but can i tell you something, given the work i do with the research firm, there are days i'm so busy, i don't look at it, i don't look at anything, i'm doing my work, and do i miss it? not really. but then the minute i look at

it, i get hooked again. >> it sucks you back in. >> it is fun. it is fun. twitter is fun. >> it is a great -- that's not what we're arguing. people are, like, you hate twitter. i don't. it is a great way to look at a lot of information quickly. it made my life easier. it doesn't mean it is worth $20 billion to most people. that's my only point. it is how much value it has. >> guys, if it weren't for -- >> your phone is ringing. >> if it weren't for twitter, if it weren't for -- if it weren't for twitter, if it weren't for twitter, we wouldn't know guys like ivan the k, one of the greats to follow. if that weren't the case, you know, i look at that and look at the people i found who are just great resources of information -- >> no one is saying -- not saying it is not. awesome people on there. i'm talking about a value of $20 billion or whatever, what did somebody say last year, supposed to tweet for the rest of our lives. >> maybe it will be some chinese

company, maybe some chinese company comes around at some point, buys twitter, folds it in, who knows. >> by the way, this is -- >> this is the perfect twitter, i just got a tweet from somebody, holy bleep sullivan, i liked you for four years until today. no taste for four years. >> great talking to you, great to see you, thanks. >> great seeing you guys. >> i miss herb. remember that time he didn't wear any pants? nasdaq positive for the day. >> trying to forget. >> its own bernie madoff. details of a potential -- nearly $8 billion ponzi scheme in a formerly reputable major chinese institution, a story you got to hear to believe coming up. your path to retirement... may not always be clear. but at t. rowe price, we can help guide your retirement savings. for over 75 years, investors have relied on our disciplined approach to find long term value. so wherever your retirement journey takes you, we can help you reach your goals. call a t. rowe price retirement specialist

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very big money managers facing off against a goliath. chinese central bank in betting that china's currency the yuan will fall. the question isn't if or when china will let its currency fall, but by how much. seema mody has updated forecasts from analysts. >> that's right. going short, the yuan has become a popular trade among hedge funds. according to david tepper, kyle bass, are making bets against the chinese currency. those who follow the yuan

closely say the bank of japan's surprise move last week strengthens the bearish case. robbo bank forecasting a 15% drop bit end of 2016. the idea idea is that if the ch economy continues to show signs of weakness as it did today with a disappointing read on manufacturing, policy makers will have no chance but to allow it tody appreciate as it helps lower costs of dollar denominated debt and makes goods made in china more attractive to other countries, therefore helping exports. a number of china watchers say the government is trying to stabilize the exchange rate and investors should expect a gradual depreciation rather than a one-off drop in august. >> like they did on two occasions that sent the market. we don't know how big or how much of that decline because that negative carry can get expensive if they don't get it

right. >> we don't know the time line or how big the bets are but this has become a much more popular trade. will the pboc use currency as a way to boost growth and will it work? >> it's daring too if they suddenly the chinese central bank decided they wanted to crush the spek laters, they could do it. they have the weapons and power. they could do capital controls and raise and hose a lot of people in a lot of ways. >> going short it is making a bet against the chinese government and they won't embark on further weakening or stren thning. chinese using a trial and error approach for currency as well. >> we'll see if they -- >> that's what makes it interesting. >> seema, good to have you on. >> local authorities in china are alleging a popular online finance company examed investors out of $7.6 billion and it is

nothing about a enormous ponzi scheme. $7.5 billion. >> a lot of money in china where people are poor on average and doing pier to pier lending. it's tough to get a return in certain places and nervous about real estate. and you were lending to fake companies, i mean, that's -- one thing we should note, whenever there's a bubble, you get a lot more froud. it always happens, housing market here in the united states and this i think is a perfect example. >> it's the big story, new york times was the first to write about it, not getting a lot of attention although now maybe it will. ken griffith, looking to flip his beach front property in miami beach and if you like big numbers and real estate porn, this next segment is custom built for you. the hottest young company around but if we want to keep the soda pop flowing we need fresh ideas! >>got it. we slow, we die.

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♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ welcome back. billionaire hedge funder ken griffin set three records last year and now set another one. the most expensive pent house flip in miami. griffin purchased the top two units in south beach last year for $60 million and planned to combine them to create the ultimate bachelor pad but now he's selling them instead. they are listed for a combined 7 3 million. that would be a $13 million gain on the flip.

he's not commenting on why he's selling but people close to the deal tell me he had too many projects going on with the new $200 million apartment in manhattan and in palm beach, $120 million worth of land he's building out and happy with his main digs a two story mansion in the sky. too much real estate. >> wow, let's see if he'll be able to sell it. the founder of dibianci real estate, doing high end deals in florida. will he be able to flip this that quickly with that much of a price gain at this point in this market? >> it's going to be tough. i mean, generally speaking, in the luxury side, you're looking at 3 to 4% annually. we'll see it slow down. ken has a different plan even at 4%, i don't see where those numbers make sense. he overpaid for that property by 10 million. he paid over 10 million asking.

now he's at 7 3 and plit is into two. it's the actual penthouse which is 55 and lower pent house at 18 which doesn't have the pool and panoramic views. >> as a broker you're being very kind. let's put the numbers out there. in south beach, prices are down 19% in the fourth quarter. inventory now two years and normal inventory is 6 to 9 months. tons of stuff coming on market in miami and prices are coming down. >> and brazilians can't buy as much because currency has weakened. >> at the same time, there's a lot of uncertainty globally but with uncertainty a lot of people also want to move their money and the u.s. is still a safe bet. i don't know -- when you're looking at 73 million, that's a whole different type of buyer -- >> you're suggesting there's a big flight capital play if you can sell it.

>> i hope he does, it's going -- >> it would be great for everyone. >> it's going to be phenomenal. >> what do sales like that do a market? do they move the entire market or one off neat thing to talk about? >> in my opinion it's more of a one off. >> all of the sellers looked at that 60 that i know and say, well, if that's worth 60, my place must be worth 45. it's really an outliar fictitious price. >> when he first bought it, he said this is better to have a miami ocean front property than gold and i'm going to have this place for my family and friends and so now i'm wondering what is he thinking? >> maybe you do and i know ken a little bit. buy 50 smaller condos and wildly overpay for one big condo and lift everything up and sell the 50. don't do that at home kids, i'm not recommending that strategy. i'm saying if you had that much

money you could do something like that. >> how many of like this in miami. there's probably 10 maybe. >> you know that miami has always been the tip of the bubble. when it starts to crash, that's the leading indicator of the broader housing market. we saw in the fourth quarter some decline in sales and weakness in sales. >> i remember being there and thinking, looks like beijing here. >> looks like the crane. >> whether it's miami or north, the last time i was on the show i talked about how the miami condo king related group is moving north to ft. lauderdale. i have the largest pent house in ft. lauderdale, under 500 a square foot. >> you do? at your place? >> her listing. >> that's my little plug. >> not where you live, good grief, i'm in the wrong business. >> when she makes all of her sales. >> i knew you were doing well but good for you.

>> wow. good discussion, guys, we'll see how mr. griffin does with his sale. >> peter griffin has a house for sale -- thank you all for watching "power lunch." "closing bell" starts right now. >> don't call it a comeback yet but welcome to the "closing bell." i'm kelley evans. >> this is something we haven't seen often, oil deep in the red but broader market is fighting back. the s&p 500 looks about to turn even for the day. >> amazing, we were down how much at the low. >> down about 20 points, s&p down 167 and kind of ground its way higher through the day. >> and oil prices still negative. >> and energy names like chesapeake and apache and hess