the chinese did devaluing their currency in the stocks selling off and crude oil is a large part of the story. s&p down less than 1%. "power lunch" picks up the market story, and more, now. good afternoon, everybody. welcome to "power lunch." along with michele caruso cabrera, i'm tyler math son. brian has an exclusive? just a moment. first, though, let's talk about this selloff. oil tanking following comments from saudi's oil minister. crude right now, there you see west texas down $1.62 that's about 5% at $31.75, ice brent is sat $33.21 down about $1.50.

let's switch over the stocks. off their lows of the day. nevertheless down with a slide of about 1%. 153 points at 16467 on the dow. the s&p is at -- lets he see what is it there -- i'm going to look over there. 1927 oh, that was a good year, 1927. down 18 points or .9%. nasdaq is down about .9% as well. brian to you in houston. >> the saudi arabiian oil minister making headlines and moving markets with his comments here at the ihs week conference in houston. on stage making comments about a freeze versus a cut. and he moved markets when said this. >> not many countries are going to deliver, even if they say they will cut production. they will not deliver. so there is no sense in wasting our time seeking production cuts.

they will not happen. >> no time seeking products production cuts effectively because there is no trust among oil production nations. that's just one sound byte. he probably saiding in something to that effect no sutsz, no cuts, no cuts, five or six times during the interview. that sent oil down and sent the stolkt lower as well. right now we are pleased to have an exclusive interview with a man who is giving us his first english language interview since becoming the ceo of pemex. >> you pakd goo great time to start as ceo of pea mecke. threw you right in the shark tank. what is your view on the oil market? >> i think consensus is prices will remain relatively low for the foreseeable future, but this presents an opportunity for us. our main task in motion cois to adjust to this new reality. and the nice thing is that we

have a new legal framework. mexico embarked on a very important energy reform. the president yesterday outlined the benefits of this reform. we have new rules. we have more flexibility. i'm optimistic. >> when you say lower for longer, can you define that for us? >> no. >> where do you see prices? >> well. >> because this is everything right now. >> i know, but the best thing to do about forecasting the price of oil is not to forecast the price of oil. >> you social media sound like an old time ceo. you sound like you've learned a lot in the couple of weeks on the job. >> couple of hours. nobody really knows. >> when you budget for the company you have to have some sort of a projection. >> for this year, that's part -- we are making an announcement -- we are submitteding to the board later on this week cuts as every oil production company in the world is doing. so we adjust to the new price of oil, the price of oil with which

we made our budget was $15 and the price is below that. >> you were at 50. >> we were at 50. the budget far mexico casse done many months ago. >> can you give us an idea, $302040 range? where are you. >> at $25 for the mexican mix. >> custom is discounted to the rest of the world because without getting technical, because of the quality of the smile that's correct. >> you have literally cut your price forecast internally by half for next year. >> by $25, that's correct. >> you heard the oil minister making headlines. when he said those comments there was a murmur in the crowd, like, wow did he just say this? do you believe what he said, he said many times no cut, no cut, no cut. >> it's hard to me being here as you said just two weeks to get a pulse of what other oil

producing countries will do. what is true is what we have to do. we have to adjust our expenditure towards the new reality and take advantage of all the new flexibility that mexican energy reform has provided us. >> let me andity a different way, if opec were to make a surprise cut despite what the minister said would you be happy or unhappy? >> well f the price of oil goes up, we will be very happy of course. >> what about your output. you are a major producer. cantorel is the large nest the world behind the saudi field of gawar. are you adjusting your production. >> can toe war is declining. >> rapidly. >> more rapidly than we would like. what we are trying to do is replace the production and keep our production levels fairly constant. >> this is a good question.

if the price of oil is so low and everybody is looking to everybody else to cut production and you are one of the biggest oil producers in the world you can look in the mirror and say why aren't we cutting production when prices are so low. >> we produce $2 billion a day, the u.s. produces $12 billion, so we are a major oil producer, but we are a price staker in the world. it doesn't -- unless the entire production collapse, we wouldn't impact the price of oil. i think what's important is for us to make the prediction of which production of oil is profitable. as long as our prices are above our costs then we should make a profitability decision as everybody else i think is doing. >> and how much of the production is prftible at $30, $3525. >> at this point, we have a few oil fields that are very efficient and very protective and they are still profitable at that price. >> we're going to bring in my

colleague in inglewood. yesterday we were talking in commercial breaks there is a lot going on with this company and the country. >> hi mr. gonzalez. thanks for joining brian. back in november of 2013, the company invited me out to see some of the oil rigs off shore. and everybody was so excited about that new framework you were mentioning that finally after 75 years the country was going to allow important investment. and then, boy, that trip could have been a tell. the market fell out of bed. and when you started to go to auction with different lots, et cetera, it didn't go nearly as well as you had hoped. back then you were hoping that deep water drilling could start to happen by 2019, 2020, shale by next year. where do you think that actually happens now when it comes to your constant struggle for pemex to try to actually increase production down the road? >> i think one of the things i have learned here in the last 24

to 48 hours that i have been here is that there is a tremendous amount of interest for oil exploration in mexico, and production in mexico. you know, even though we are right now in a down cycle, these investments take a very long time to mature. so people are still very interested. and we are talking to a lot of people to try to get this through. and i go back to our story. we are very happy that this energy reform allow us to have this flexibility. and as the president said yesterday, you know, just two years ago there was one company exploring and producing oil in mexico. today we have 30 contracts to 30 companies in mexico. so we are optimistic that the energy reform is structural and it will work out in the future. >> i wanted to address that point, mr. gonzalez. it's melissa lee here at krrks nbc. pemex had a monopoly in mexico

over the last 80 years. during that time some analysts would shutting pemex is behind the curve in terms of investing in technology. an analyst said that pemex is a company that in the u.s. would be bankrupt. in a time where oil prices are going to be long lower for longer, what is your greatest challenge right now in a period when other companies have to slash cap exand it seems like you may need to increase cap exto catch up? >> well, our biggest challenge in the very near future is as i have said in the spanish language interviews, we have announced a cut of 100 billion pesos, which is a very substantial cut in expenditures. again, like all the other companies in the word are adjusting to this price. and this is the beauty. i think this issue of the capital expenditures in the future and technologies, that's

why we're here. we're trying to form partnerships and we're trying to find people so we can do these things together. again, like all the other oil companies in the world do, in which, you know, she share technology and expenditures. >> anything you want to break on cnbc now, if you have made any deals since you've been here this morning? >> no, i'm not going to say anything. >> tyler i'm trying. >> he is well practiced. he is not going to give you anything unless he is ready to. mr. gonzalez, i wonder from where you sit how you see the low oil prices filtering back to government budgets in many parts of the word where governments have large stakes or actually own oil company assets. how do you see that playing out? >> well, i mean, one of the things that we are doing is you may or may not know, but i worked at the treasury, at the finance ministry for ten years. so we have to work very closely together with the finance

ministries to make sure that these transitions are well planned out, well executed and well communicated. and that's part of the things i've been nothing these last two weeks is talking to the ministry of finance about how to adjust the company and the entire sector to its relationship to the government. >> a lot of our viewers, mr. gonzalez, may not invest in pemex. you have bonds and things like this. but they might be ininvested in mexico directly or indirectly. you and i spoke before the interview. pemex is something like 30% of mexican government revenue. it is an incredibly important part of the government. how does the price of oil's slide impact investment in mexico generally? >> well, it impacts -- you know, the impact is directly, of course, on the energy sector. and that's why we're here, to get a sense and to form partnerships, et cetera. but as i also mentioned the mexican economy is not predominantly oil.

and this is an important thing to clarify. in the early 1980s, most of our exports were oil. today that's not the case. so the mexican economy does not depend on the oil sector. >> but the mexican government relies on pemex revenue. >> that's very important. >> there is a distinction, but you are incredibly important to them. >> that's correct. that's correct. and that's why we work very lows closely together with the ministry of finance to make sure that we have our accounts well done and well analyzed. >> jose gonzalez in his first english tv interview since taking oerch pemex a couple of weeks ago in let's call it an interesting time to be a new oil ceo. we appreciate your time. >> thank you. >> thank you very much sir, and good luck. >> thank you. >> the have you had ay minister ran that sound byte from the conference earlier today where he moved the market. but that wasn't all he said. something else i thought was interesting, guys, because there

has been this theme that saudi arabia is there to drive the u.s. shale revolution out of business, right in the we've all heard that before. without being prompted, in other words, not as part of the q and a, the saudi oil minister directly addressed whether or not they are going after america. he said no. listen to this. >> let me say for the record again, we have not declared war on shale or on production from any given country or company. contrary to all the rumors that you hear and see. >> so mmt as i'm just going to call you all three, or mtm, whatever. dow what do you make of those comments? we are not coming after the u.s. shale production. >> i think he is going after any excess production, it doesn't matter where it's coming from. the fact of the matter is it needs to be out of the market for his prices to go up. u.s. shale, russian oil, doesn't make a difference.

>> he doesn't care. i think he cares about maintaining market share for his country's oil. >> absolutely. >> if the consequence is that it drives other producers out, so be it. and i think, you know, pointedly, he didn't say they declared on iranian oil either but they clearly have a problem with iran. >> i think probably they have declared war on high cost producers, of custom the u.s. happens to be one and parts of russia happen to be another for the arctic. and shale falls into that basket. >> trust me, michele, the iran issue came up a few times. there is a q and a session after the speech. but it was really sort of -- he avoided directly addressing iran just sort of saying all countries need to get together. all producers, especially to your point high cost producers need to be on the same page. he dodged it. the one thing that moved me aside from the market moving

comments was he had quite a sense of humor. he started in 1947 -- if viewers are not familiar with this oil minister. if there is one person in the world that is the most important person to the price of oil, it's, arguably the most importantman to the price of oil. he joked i've been through six cycles. he said somewhere in my drawer i've got a t-shirt that says you survived peak oil. he has sense of humor. two year notes up for auction. let's get to rick san felly. >> $26 billion of two-year notes, the first of $88 billion in supply all week. demand, straight up 1:00 eastern. b minus, yielded auction .752. the offered side of the one issue market was 75.5 basis points lower yield points. here's weakness.

2791 bid to cover. if but forget the last two bid to covers, 2.9 and the 2.8, you have to go back to august of '09 to find a lower comp. 55.8 the stellar indirect bids, best since june of '09 if you don't look at last month's 57.9. directs were weak at 10.8. all in all a b minus. tomorrow of course we'll have $34 billion in five-year notes. melissa lee and the gang back to you. >> a tale of three retailers moving higher in this market selloff. we'll break it down for you. plus the one chart that's signaling a strong buy in this market. as we head out a look at the sell off in the dow right now, down 1%. 164 points. s&p 500, nasdaq, all three down about 1%. we're back in two minutes as you watch cnbc, first in business worldwide. its sleek design... is mold-breaking. its intelligent drive systems...

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big story. let's get to david faber who has news on two giant companies. >> honeywell and united technologiesv recently held talks about a merger. there is no assurance if these talks will lead to a deal. >> these are two incredibly rel well run companies with fabulous work forces. put these two together and you have the great american industrial. >> it is not every day where we

a chart of viacom. here's why. well welcome back to "power lunch." i'm tyler mathisen. news out moments ago on viacom and sumner redstone's media giant. up about 275%. julia has the details. >> at a kurchs just moments ago the ceo newly appointed chairman

announcing that viacom is exploring selling a significant minority stake in pairmount pictures. viacom shares spiking on the news that a deal could come within six months. >> because of the complexity of the discussions we'll be having involving financial but also commercial relationships, we expect the process will take a few months. and we are targeting reaching an agreement around the ends of our third fiscal quarter. >> major viacom investor mario go belly calling this a good first step telling scott wapner they should joint venture with alley baba, by amc, a and create a distribution platform like netflix. >> it's interesting because when the news first came out i looked at how the media stocks were

trading. only viacom reacted. is there any doubt this deal will actually happen or it will be a benefit to whoever becomes the minority shareholder? >> i think viacom has been such a different situation than the other media companies. viacom has so much exposure to what's going on in the cable bundle. and exposure to the younger viewers, the cord nerves and the cord schaeffers because of mtv and comedy central and all of those cable networks. what the ceo was saying on this call right now at the jeffries conference was that he thinks that pairmount is really undervalued. last year pairmount didn't have a great year. not one movie in the top ten. ranked fifth or sixth in terms of market share for all the studios but dauman thinks it is undervalues because it has franchise films coming. i think it is likely to happen in part because investors really think it needs to. >> i was going to ask, my recollection was that paramount

didn't have a good year, a dry spell. but as you said they may have some things in the pipeline that may be good. i'm curious, why would mario be suggesting they buy a producer like amc? i thought paramount was a producer of content. >> paramount is a producer ever films. what dauman is saying the franchises they have in the works are the likes of a -- they have a mission impossible franchise, they are going to be more of those movies and transformer movies. they think they need to be a content power house. and where the content has shifted is both to digital streaming and television. if you look at amc, which is what go belly suggested that's a strong tv content producer and distributor. it might make sense for amc, which is a stan alone company, has just a couple of channels to be combined with a larger media player. just in terms of consolidation being the name of the game. >> mario also suggested alley baba. when i saw this news cross i

immediately thought of dali an wanda. either way, potential chinese investment in this sector. they have been wanting to pi up for a lot of stuff. a lot of people think they are paying too much much for what they have bought in hollywood so far. >> there is no doubt the chinese are interested in hollywood. i would be shocked if one of these strategic investors that has contacted viacom is not a major contractor for tv like alley baba. because i think there is a lot of money there that wants to get into the hollywood business. stocks sell off right now. the one chart that may be signaling a green light for a rally. you'll want to see this, when "power lunch" comes back in two minutes. i've heard that. i have analysed your biggest matches. oh really? when down a point, you serve an ace 5.8 times more than other top players. you sound like a coach.

i am not. but i can customize training programs based on biomarker data. watson, that's pretty impressive. you might say i am the serena williams of cloud-based cognitive systems. nah, i wouldn't go that far.

welcome back to "power lunch." i'm melissa lee. don which you is here with a market flashes. >> despite the broader market slide, retail stocks currently outperforming overall. the spdr, the cider is up about half a percent led by dillard's, shutter fly, sonic automotive and macys. those retail names have been a battleground. last year they were underperforming for a bit. now assuming more of a leadership role. retail stocks certainly a big focus for some traders in today's down market.

>> particularly noticeable in a day when everything else is moving in a lower direction. >> absolutely. and the reason why people play close attention to these retail stocks is because 70% of our economy is made up of consumers. as long as consumers are spending money, these stocks keep going forward. some of the retail stocks are seens a barometer for retail spending. >> thank you don. >> let's get a check on the bond market on the back of the two year at the bond market. >> two year note yields not a lot of action at auction time. we are down one basis point on the day after all yields were higher after equities dropped. d's first last year's start to two years it's been a swoon. currently down 31 basis points on the year. and it isn't even the most

aggressive drop in yields on the curve. if you look at tens mine us twos. since january of 2008, you notice we are within half a base point of making another new pass at a historic run on this flattening spread. and finally a two day of the pound versus the dollar. it continues to get pounded. we are making fresh seven-year lows pound versus dollar. melissa lee back to you. >> thank you rick. the closing prices of gold settling right now. it was on track. yes, it is. to snap a three day losing streak. gold closing up by 1.1%. strength across the board this the metals complex, particularly in the copper trade -- actually it turned negative there. we do see some strength in silver, palladium as well as platinum. another big week of politics. a week away from super tuesday. that is a huge one. what should you be watching for in tonight's nevada caucus? where will the jeb bush money go

now? he spent $130 million and didn't win a state. larry cubba will weigh in. plus the one chart signaling an all clear. your money is back in two. w

lunch." i'm melissa lee. let's look at what your money is doing at this hour. right now we are off the session lows for all three major indexes. the dow is down by 171 points, good for 1% loss. the naktsz nasdaq is down 1%. the driver of today's session is oil. wti crude is down by 4.6%. we should note that energy materials are the weakest sectors on the s&p 500 at this hour. let's go to sue herera. >> here's what is happening think at this hour. president obama proposing to close the detention center in goo bay once and for all it's his last effort to make good son us unfulfilled 2008 campaign vow to close that facility and remove the remaining detainees to the u.s. 606 are on trial in istanbul

on charges of being isis members. the suspects were detained in july of 2015 after a bombing near the syrian border killed 30 people. shouting slogans and holding placards thousands of teachers and students moved through the heart of new delly to protest the recent death of a student. the protest from the city's two main universities marched to the indian parliament building. singer rihanna now has the third most number one hits of all time. she has 14 number one hits thanks to her latest hit "work" that's one more than michael jackson. she trails only mariah carey with 18, and the beetles with 20. that's the cnbc news update this hour. >> she might catch them. >> yes. she has a lot ahead of her. >> wow. i thought elvis would have had more than those. who knows. maybe they didn't count the same back then. just one week away from super tuesday. tonight is also a big night for

politics. republicans are caucusing out in nevada this evening as bernie sanders and hillary clinton battle it out in a town hall in the heat of the primary season. what can we expect from this race going forward? joining us now, our contributesor larry kudlow and sarah fagan. what's going to happen, sarah, in nevada tonight? trump is the. >> the presumptive winner. i suspect he will win nevada. marco rubio has deep ties there having lived will. >> he lived there. >> at one point in his life. and he's on the ascent. this is a lot of buzz about marco rubio. and certainly the establishment is coalescing behind him. that could give him a bump. >> the establishment knows nothing. nothing. by the way. >> it's amazing to me. >> the establishment hated reagan. i want to note this. and trump's assault on the establishment wins him big voters among independents and democrats. let me repeat that. the establishment knows nothing.

>> larry makes some good points here. but it's also important to keep in mind that, you know, to date, donald trump hasn't broken 35% of the electorate. so if these other candidates, marco rubio, ted cruz, john kasich, if the party can get behind one them there is time to stop donald trump. >> one of the things that's been interesting to me, ten days ago, people were saying rubio had had a horrible night. he was finished after new hampshire after that debate right before new hampshire. now he has ascended. and who is having a bad week. >> ted cruz. >> ted cruz is having a bad week and he is going. >> cruz is in trouble. >> why due say cruz in trouble. >> he is in trouble because nobody likes him. >> he couldn't win evangelicals in south carolina. >> trump carried the vngcals in south carolina, heavy evangelical country. and also in new hampshire. trump looses the solid extreme

conservative vote, trump wins the moderate conservatives and the independents. that's very important. >> at the nominee? >> i'm going to try this on all of you. i made a schematic. trump has to knock off cruz and rubio one way or another. they are still alive and the race is not over. march 1st is texas. >> they the one, texas. >> that's cruz. >> cruz has got to win that. >> cruz has got win that. >> he has got to win that. >> if trump beats cruz in texas, he is out. sec one, florida, if trump defeats rubio it's over. there is a midpoint in michigan, march 1st, john kasich's last stand. >> it's difficult in the republican party. >> the texas and florida primaries are rushl. >> they are, as is ohio on march 15th. but the challenge for the party right now, there are two many candidates in it. we are heading into super tuesday. it's proportional voting, almost 600 dahl gets.

if trump gets 35% and cruz and rubio each get 20%, you have a mired delegate fight. and then we move into the winner take all states as larry describes and they split them up, kasich wins ohio perhaps -- we could be heading into a convention without a nominee who is very strong if he has enough delegates to begin with. >> a good old-fashioned brokered convention the way it was in the olden days. >> the last one was in 1948. it would be fun for us. can i say one thing, the republican party party doesn't understand this. there is in this country a beleaguered middle class. >> that's true. >> which is angry and furious at everybody, at the whole so-called establishment, at washington, at politicians. they haven't had a raise in wage terms since 2000. they are -- this is what the so-called republican establishment does not understand. i'm not endorsing. but i'm just saying donald trump has hit that vein.

he has opened that vein. whether he wins i'm not going to predict right now. but he is the only guy, i think, in the gop race who really gets that. >> it's the same anger that has animated bernie sanders on the other side. >> excellent point. >> do any of -- let's say it comes down to a three horse race, trump, cruz, rubio. do all three of those beat hillary clinton? >> well, i think a lot of that depends on where the economy is in about three months. >> does she run from jail? how does that work? >> the general elections the cake is sort of baked in the spring, typically. if the economy is continuing to diller along and not do well, it's hard for the republican to keep that, regardless of -- hard for the democrats to keep that regardless of what the republicans nominate. >> it's changing the gop. the gop is becoming less

dogmatic conservative and more pragmatic understanding that the middle class fears china, immigration, and the middle class wants higher paying jobs. now, my other point is this. the winning candidate has to have a positive optimistic upbeat economic growth, i can do this message. they don't always have this. >> that's not donald trump today. >> that's not donald trump. >> that's not donald trump today. >> today is a key word there. >> the cat fighting in the gop has to stop. >> it does. >> and and they have to get down to brass tacks and project a message that yes is somewhat reaganesque, say i get it, i'm going to help you solve it, here's how. when they cat fight they are completely off message. >> we need to figure this out quickly or donald trump will in fact be the republican nominee. >> it sounds like you don't want that to happen. >> from my view of looking at his record he is not a

republican. here's somebody who last week called for government mandated health care. >> that's not true. >> he absolutely did, larry. >> that's not true. >> repeatedly through his career. >> he called for mandates to help the poor. the rest of his health care program -- >> on 60 minutes last summer -- >> he misspoke. that's not his position. >> he is every changing over time. >> yes, can i ask a different question. on the democratic side they have the super delegates that don't happen on the republican side. >> right. >> bernie sanders is making a really strong case here. i mean, is there any chance of a revolt within the democrats on the ground who say we're making our voice so clear, and yet the establishment has set this up that hillary clinton wins almost no matter what? i mean, if i were a democrat, and i'm not, i would be really furious. it doesn't feel like my vote matters at this point. >> then you vote for trump. >> it's an excellent pointed.

here they are tied in voting. but she's -- >> she is way out ahead with super delegates. >> she has a lock on the party. >> she has a strong lock on the party. i agree. and she is heading into more favorable terrain for herself. the point that tyler made earlier is a good one. there is lot in common between bernie sanders supporters and trump supporters. they are both mad as heck at the system. >> yes. >> and in many ways, they have more in common with each other than they do with the other bases of the party. >> no. no. >> they do. listen to this. listen to these two men speak. put your tv on paws and just -- >> they both want big change. i grant you that. it goes back to this middle class revolt. look -- >> they arrive at the same conclusion differently. >> i'm not endorsing trump but this whole thing interests me because it's a big change in the gop. the last tidal be wave change was ron reagan, who i worked for. when trump says to boos you are

all the money donors running the republican party. the money donors don't like that. democrats watching to tv says hey this guy doesn't like republicans as much as i do. so i might just vote for him. trump has the potential -- people say he has a limit. i don't believe it. he has the potential to pick up democrats and independents that nobody has had in the gop. >> you and i agree on that. >> that's big. it's not an endorsement. i'm giving you the reality of the situation. look what he's doing and it's there. >> clump/clinton, we are talking about trump/clinton. >> then the former mayor of new york is going to enter -- >> by the way he closed down the war on women. he closed it down where one sentence. >> i'm not sure about that. >> it was hillary's war on bill's women. and that killed -- you haven't heard that much. but i agree hillary shouldn't be written off. hillary is hillary. she has great moments a smart woman and has the democratic base. but this is a year where again

the prognostic kators, the pollsters -- the wall street journal poll was off by ten points in south carolina. the dumbest thing i've ever seen. we don't know what's going to happen. >> there is anger out there, but the trick lg will be i think on either side but particularly on the gop side turning that anger into a positive message. >> right, right. that's my -- >> because. >> that's my point. and it has to -- >> it's not as simple as make america great again. that can be the slogan but it has to be deeper than that. >> it has to be directed at the middle class, which is beleaguered and under assault. i don't think it has yet sufficiently. and that's why this thing is still wide open. but taxing everybody and spending $20 trillion is not going to do it. >> trump has called for higher taxes. >> free college education, it's not going to work. >> we are going to be talking about this again. >> we will. >> thanks guys, lair larry and sarah. melissa. >> we have a sell off on our

hand. let's check the market. the dow is down by triple digits. a big loser in today's session the financials. across the board, jp morgan is down 4%. chevron down 3.8%, dupont down 2.75% so is goldman sachs. "power lunch" is back in two. yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird. i...just me...me andrd my four daughters.... ah, there's a lot of dancing and pageants that go on in our kitchens and living rooms and things like that. i've had to learn to accept certain things like the fact that my toe nails and finger nails are going to be painted constantly. but it's really awesome to watch them at their own things. they're great kids... all of them. whatever home means to you, we'll help you find it. zillow.

welcome back to "power lunch." i'm melissa lee. here are this hour's power points. oil plunging following comments from saudi arabia's oil minister who says production cuts will not happen. crude is down more than 4.5% right now. s&p and nasdaq down about 1%. energy and materials leading die clients there. gainers, home depot leading the dow. frontier leading the s&p, cruise lines leading the nasdaq. back in two.

today. it's dragging stocks lower. the dow is down more than 150

point. wti crude oil is off about 4%. with us to discuss what at that do in this market is the manager of the usaa precious metals and minerals fund and the senior vice president and portfolio adviser at advisors asset management. good to have you here. jean, we understand you are excited about signals you see within the dow transportation average. what are you seeing? what is it telling you? >> what we're seeing is the transports year to date are now leading the industrials. this is the first time this has occurred in some time. certainly not last year when they trailed industrials by about 17%. this wouldn't be all that meaningful alone, but it's occurring as the commodities with beginning to show really good signs bottoming and starting to rebound here in something more than just an oversold rebound. i think we are really in the throes of what could be a longer term recovery for the commodity. transport's leading starts to put into motion the old dow

theory concept. so that makes me quite positive. >> are you excited or waiting for other signals beyond that? >> well, i think there is a pretty good chance now that we have bottom with the recent lows that we struck in the low 15,000s of the douchl i think the lows now probably will be successively higher than those lows. i think a dow 16,000 will be the area we want to watch as a good support area. but there are a up can have things still missing here. one of them is the new york stock exchange volume. it hasn't gotten to the levels that we want to see that would be the bell ringer of major turn for the market. >> dan, let's say that jean is right. gene likes to think that he will be right. does that mean it's bad news for your indianapolis fund which invests in gold miners. >> every time something that's goes good it's bad for gold. one thing i'd pointout out bh the transports. we haven't seen the industrial

side of the transports starting to perform. the rails -- if you start watching the rails and see the rails perform then you might believe better about the rest of the commodity space coming around. for now it's fear on, there goes gold. >> so make the case for owning gold mining stocks or your funds that invest in gold. >> if we can get a flat price for the gold itself stable in this trading range 1150 to 1250. the gold mining companies actually have operating leverage. they have been cutting costs and right sizing mine plants. if gold stays flat my guys can make money, generate free cash flow and return that to investors. that's good. would the rest of the portfolio like it? probably not. >> metals and minerals, your fund has been down substantially for the last five years. >> yes, ma'am. >> is there anything to be done, or would it have been better to go to cash at some point and wait until this thing finally

turned around. >> it would have been better to go to cash. use the fun for u.s. insurance. if the forest isn't dry, you add more insurance. if the forest isn't dry you don't need as much insurance. have it there in case there is a chinese currency devaluation. again, there is worry. are they to do a major revaluation of their currency? if they do, you want more gold in the portfolio. if everything is hunky-dory you are not going to need as much of this. >> jean, are you concerned about dan's points about the rails. morgan stanley cited coal and energy volumes continuing to be lower for longer and downgraded the rails. >> dan brought up a good point. but it has been the rails that have been attributable to the gains we've seen in the transports here to date. while the rails have had a good run here so far, maybe this downgrade will cause some back end filling. but i think the rails are poised for a longer term recovery and i

view them as attractive on weakness. >> all right. let's see if -- see the small cap names that danite likes right now at "power lunch".cnbc.com. >> i may sneeze but let's look at all the major indexes all down about 1% right now. you're going the make it. despite today's downturn, stocks well off their lows. 1% declines, 4 to 5% decline for wti. did three ceos just call a bottom? we'll bring you the numbers. stay with "power lunch." ♪

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lunch," everybody. i'm tyler matheson. is there something happening in the sea sweep that is signaling a bottom now. ceost when they make moves people watch. sometimes it means something, sometimes it doesn't. >> you are right. and some money managers take a cue from thesy sweet moves. there have been notable insider

purchases. let's give you an idea what have it's like. you look at the s&p 500 so far on a year to date basis, we know how you can rocky it's been. during the time on the january bottoms and the february bottoms we saw ceos stepping and making moves here. first of all, steve wynn, the casino mag natd, january 22 chbd, he bought half a million shares of stock at around $55 and change. if you take that buy and extrapolate it to today's stock price. you are talking about in that particular trade a 42% gain already. >> in a month? on that particular perform. this is not to say this is all the stock he owns. he obviously has millions of shares. but he made one particular trade. and he did another one a couple weeks ago that also netted out a fairly substantial gain as well. of course the big one everyone talks about, the diamond bottom. jamie diamond doesn't real lee step into the open market to buy his shares all that often. but he did back again just this

month, february 11th, half a million shares at around $53 and change. if you factor in today's not so great moves in the stock, it's still about a 5 to 6% gain on that particular trade he made a. massive amount of stock, $26 million. >> i want to go back to wynn. i'm not familiar enough with what that stock has been doing. why did it move up 46% in the month. >> to be fair, wynn's stock as long with many of these others have been on decent turn trends over the course of the past year or longer. when you are talking about the overall moves you have to put them in context. the interesting part about wynn they have been so beaten up because of casino traffic perceived in -- >> china. >> one of the last ones, the cfo bought stock. again, anthony noto has been buying all the way down in twitter stock. this is just one trade of many.

>> averaging down. >> he is averaging -- dollar cost averaging. >> that's what he's doing. >> taking one for the team. >> right. >> anyway. >> thank you, don. >> let's chaek check the markets shall we. 1% declines here as we are about two hours away from the closing bell, you see the industrials of a 1%, the nasdaq off 1%. all huddled around the 1% decline. to say the start of 2016 has been rough for stocks issan understatement. it's hard to believe there is any good to gain from this. collin moor from columbia says we are experiencing a good correction. collin it's great to have you with us. >> thanks. >> how far along are we in this good correction. i understand from the notes that right now you are advocating less equity exposure. sounds like you think there is more downside. >> yeah, the point that we originally made was when the market was closer to 1800, 1850.

now that we're back in the 1900s, the upside to me is fairly limit. single digit returns. so therefore i would be taking some equity off the table and looking for other ways to invest. i'm pretty convinced we are into the long term low economic growth rate in custom case the market doesn't actually have a lot of upside because i don't think earning will be that robust. >> you said you like munis and some parts of high yield. i imagine energy is not the part you like. where are the values? i would imagine in an etf like hyg which tracks the high yield index you are going to get the pressure from the 11% exposure to energy even if the other parts of the index are gaining. >> i agree. it might be too early to go into energy in the high yield area. although i think it's interest in the investment grade area. if you are going to go into high yield, definitely take the money

out of equity because it has equity like characteristics. but i think it would be important to the case that you make to do it x energy. there are ways to do in a. >> collin, where do you see the energy market heading over the next six to ten months? i'm pretty close, tyler, to my goal of around 2,000. so there is still some upside in where i see the market. but it's pretty limited, as i said. if i was looking out five years, i think the average return will be something like 6%. so as you know, if you are looking at mid single digit returns, we're likely to get at least twice, maybe tlooe three times that in terms of volatility. i think volatility will be more in the 15 to 20% range of the it doesn't make equities that attractive. too many people think of it as what asset class has the highest return. but when you adjust for the volatility it will bring, i don't think equity is that attractive basically strs the high yield market. >> just because you have piqued my curiosity there.

if it is a not equities, it doesn't -- i can't imagine that it's really bonds. but what would be the asset ks class that you think is most attractive over the next five years? >> i think within fixed income high yield as we just talked about. i'm probably not brave enough to go back in with energy as i was just talking to melissa about. i think munis are still attractive because the after tax return is not that different than what i'm talking about on equities. so there are a couple of areas within fixed income that i'm still attracted to. but one of the thiks we're also looking at tyler is how to get the equity exposure but hedge out some of the beta. i think the derivative use is going to be important to lowering the volatility because i think the straight beta returns will be quite limited. >> any concerns about -- there has been all this talk about lack of liquidity in the bopped market and that holding some of these products, you could actually get very serious mispricing based on what you are buying in the market versus what

is actually in them. have you thought about that at all? do you think about that? >> yes, it's a really big issue, the regulations have changed the amount of capital that the brokers have to hold against these position is now very high and we are seeing it that the amount of capital available, the amount of inventory available at these house is much, much lower, which squeezes liquidity. for individuals trying to buy these bonds it makes it very difficult. we as an institution still feel that we have access. but it is much, much more difficult. and people need to be wary of that. i think the way it would manifest itself for the individual is don't get into a high yield bond as a trade because that's where these dealing costs will kill you. you really need to think of this as this is an attractive yield for the next several years. >> collin, thank you. collin moore with columbia thread needle investments. crude oil is falling sharply

today after the saad seaboardian oil minister said that the proposal for oil cuts won't happen. let's bring in pavel mulcanov, the senior vice president and energy analyst at raymond james. so much for. that we are back to where we started. everybody seems to be producing at full tilt at this point? >> this is their public posturing. let's remember, saudis have been talking down any kind of coordination between the oil producers. and yet last week they cut a deal with saudi, russia, venezuela and ga tar, first time by the way we've seen that type of arrangement including russia in more than 15 years. so it's watered down. it's obviously not a cut in and of itself. but they did reach an agreement

of on, you know at least capping further supply growth. so there is symbolic value in what they did last week. and i suspects that there is some willingness to go further and move towards a cut. but obviously depends on what all the players a of the the table are capable of doing and agreeable to doing. >> oil is pulling back today. after a nice run. where do you think it goes next? >> 60s by the end of the year is the short answer. >> do we test again before then? >> well, yeah, whether we've seen the absolute lows is hard to say. i mean, when oil was getting into the 25, $26 range, you saw a bunch of oil fields, actual existing oil fields shutting down in places like canada and venezuela. so, you know, those are probably, you know, pretty good level for lows. but the important thing is, today's prices do not support

supply growth anywhere in the world, including saudi arabia, by the way, itself. you know, they are running a $100 billion budget deficit per year. they are feeling the pain along with everybody. you've seen economic crisis in venezuela. economic crisis in russia. you've seen companies on average, these are western companies, cutting their capital spending 30% last year and 30% this year. that's the first time this happened two years in a row in three decades. >> you are making the point that something has got to move? >> it wouldn't be the first time oil has didoubled in price for a short period of time. take me behind that argument that you made that it's going to be at $60 by the end of the year. what takes it there? what is it that gets it there if global demand is rising only 1% or so? >> demand is rising 1%, maybe 1.5% this year. supply is going to be turning

into negative territory by the second half of this year. so we're not talking about opec here. if opec decides to cut supply, it happens sooner. >> right. >> without that, simply the normal field declines from places like the u.s., brazil, russia, colombia, all of that is going to be heading into negative territory collectively by the second half of this year. >> we still have u.s. stockpiles at 80-year highs. these are daunting levels of inventories, even with all of the different factors that you are outlining here, pavel. >> correct, invin veners to are high, but they are going to be trending lower by the middle of the year. as that happens, the market's forward looking, that's what's going to take prices up. we are not talking about $100. it's not going back to $100. but certainly something in the 50 to 60 dollar range. maybe north of $60 looks like a good bet over the next nine to

12 months. >> eke. we'll see, pavel, thank you so much. >> frequent krnz cnbc guest donald drop kin passed away at the age of 67, a long career in finance with many companies including revlon, casablanca was his latest sort of fund. a good friend. >> a frequent guest. >> he died in aspen, colorado, under circumstances that are noit not clear to me. but he did take a fall, either that -- and then he succumbed some days later. >> consummate deal, ron pearl moon's deal guy for 20 years. they had a rough falling out and the then a big lawsuit. they both regretted i believe the loss of the frind friendship. don lived an incredible life. loved so much by his family and his friends. somebody you could always depend on. >> and a joyous guest. >> so -- >> a font of knowledge.

>> always came to play. he was a happy warrior, i would say. we will miss mr. drop kin. >> so much. yes. >> we'll be right back. d last t. one second it's there. then, woosh, it's gone. i swear i saw it swallow seven people. seven. i just wish one of those people could have been mrs. johnson. [dog bark] trust me, we're dealing with a higher intelligence here. ♪ the all-new audi q7 is here. ♪ herthey work hard.ade, wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement.

there's no way to predict that. td ameritrade.

welcome back to "power lunch." i'm melissa lee. smuker topping, if frkss thanks in part to strong coffee sales. lowered revenue forecasts. kick's sporting goods stock up

13% so far this year. separately righter siding sources says sports authority could file for bankruptcy as early as next month. sales could then go to kidick's >> consumer reports out this afternoon with its latest top auto picks. fill lebeau is live in chicago with more. are we talking about quality or what? >> quality, reliability. these reports or this report is based largely on consumer reports' road testing dozens of models from all of these automakers. so they have a vested interest in saying here's what works and what doesn't in the eyes of consumer reports these are the top fix in 20616, audi number one, subaru number one. those are the only brands that consumer reports is recommending 100% of the models. subaru, some might be surprised, but you shouldn't be.

sales up 13.1%. rising every year over the last ten years. the collision avoidance system that subaru employs was key to the high-ranking. it was moving up from number two to number five of last year. here is consumer reports talking about why they are so high on subaru. >> when you drive a subaru, they actually drive extremely well. they ride well, they handle well. they are reliable and they do have a lot of features, including a lot of advanced safety features that really normally you only see in much higher priced cars. >> let's talk about the bottom three according to consumer reports. these are the three lowest rated brands. you have fiat, jeep, and mitsubishi. guys jeep has not been recommended, hasn't had a model recommended by consumer reports since 2013. look at a comparison of the stocks of fuji heavy, which is the parent corporation of subaru and fiat criesler over the last

year. see the split there. not a good report for jeep at all. consumer reports had very little good the say about the reliability of these jeep models. >> i'm perplexed, phil, because every time you come on and talk about fiat criesler. >> yep. >> you say that the strong part, the strong badge there is jeep. people are buying jeeps. >> they love the styling. >> are they not loving them. >> they love the styling. the styling, and the marketing on jeep, spot on. best in the industry. ask anybody in the industry. ask their competitors. they all have great admiration for what the team has done with jeep. having said, that tyler, if you talk about anybody who has done road testing of these vehicles not just with consumer reports, but jd power does it when they have their reliability ranksings. they are consistently near the bottom. it is a split that a lot of people have trouble wrapping their heads around in the auto industry. in terms of their sales it's about the marketing and the design. >> ultimately it will catch up tow them.

>> you would think. but we've been talking about this several years. and it hasn't caught you you were to them. >> where is tesla. >> consumer reports said it didn't have enough of the models. it didn't rate the tesla model x. it is a not included in this listing at all. >> got it, i remember until october the s had an issue, right, with this sort of ranking the reliability? >> that was an individual testing of the model s. what this is, this report is, we are looking at the brands based on a number of models that we have test dplichb each brand. >> got it, phil. >> phil, thank you. phil lebeau. >> you bet. coming up, a two-state edition of street talk. five analyst calls you need to know about. and we are all over today's market slide. check now. the dow is down less than 1%. nasdaq is down by more than 1%. we'll be right back.

welcome back to "power lunch." i'm brian sullivan in houston text. just because i'm at a conference, didn't mean we will put street talk aside. are you ready? i have a piece of paper here with my stocks on it.

stock number one. if you are carl icon this is not what you want to hear. citicorp says sell freeport. analysts there today mine by mine analysis. said yeah the mines may be worked $10 a share in a good market. but if you want to sell assets into this kind of a market you are going to get a huge discount on your net asset value. he does say if copper prices go up, he might be wrong. still, $4.50 is share is not what carl icon wants to hear. >> freeport mcmoran shares are up 80% in the last monday. next stock, twitter, upgrade, raymond james raising it to market perform.

the analysts expect an improved user interfais and new ad formats. also recent insider buying day they viewed as positive. sentiment is so negative that executing on platforms and ads could be big catalysts. >> analysts saying it could go down further but odds are it might go up. 80% upside or something like. that all these new things haven't reinvigorated new user growth. until that changes, maybe tough for twitter. stock three, motorola solutions, msi -- i used to talk about motor rola al-- motorola. they bumped the target on msi to 85 from 75, the stock now at 71.

so you have got 20% upside seen by bernstein. >> next up we have got a call on the rails from morgan stanley. union pacific, csx and kansas city southern from an equal wait. there is one bright spot in the sector. canyon national, which morgan stanley is upgrading because it has a more diversified business than its peers. >> interesting timing giving all the stuff going on with canada and oil. canada is suffering more than we are because they are really a commodity economy. the last stock is penske automotive group. a big name run by the legendary roger penske. upgraded to a buy. they say the valuation of the stock has been quote meaningfully reset. they say the market is concerned about peak auto sales that light truck and car sales have sort of

peaked out and there is nowhere to go but down. the analyst says i hear that but the stock should be good. bumped the target from 50 to 55. penske automotive, pag with a fast fat price target. $36 stock with a $50 target. a meaningful upside there. >> look at other names in the auto related sector. sonic automotive had record results today and that stock is surging. this group here is an area of strength in this down trend in today's session. brian. >> i'll be back to summarize today and preview when we've got tomorrow from this conference. melissa if you thought today was good tomorrow going to be that much plus one. you will have to wait to hear the promo. a lot of good stuff tomorrow. >> macy's rising again today.

up 20% so far this year. can you still make money. we'll break down the fundamentals and the technicals. oil falling after the latest comments from the saudi oil hinster saying cuts are not going to happen. oil price closing in just a couple of minutes. stay with us here on "power lunch." we needed 30 new hires for our call center.

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welcome back to "power lunch." i'm michelle caruso-cabrera. we are close to the final trades on oil at this hour. oil is lower by about 4%. let's look at the stocks in response. the dow, the s&p and the russel all in negative territory. we are off the lows for all the major averages. the s&p down 18 poinz. the nasdaq down 46 points, a decline of 1%. the russel lower by less than half a percent or four points. sue herrera is oond standing by with a cnbc news update. >> here's the update at this hour. speaking at a rally in nevada, gop presidential candidate marco rubio wasted no time in responding to president obama's announcement of plans to close down the knee tension facilities at guantanamo bay.

>> not only are we not going to close guantanamo, but when i'm president, if we capture a terrorist alive they are not getting a court hearing in manhattan. not going to be sent to nevada. they are going to guantanamo. and we're going the find out everything they know. >> top senate republican mitch mcconnell says his party will not permit a vote on any supreme court nominee submitted by president barack obama. the white house said it would be unprecedented not to hold hearings and has called senate republicans over the nomination. spanish officials say four people suspected of being isis recruiters were arrested today in a joint spanish moroccan police operation. three were arrested in spain and one in morocco. a new gol up report ranks naples florida as the number one overall munt for well-being in the u.s. it's based on interviews with more than $350,000 americans in 2014, and 2015. they beat out salinas,

california, sarasota, florida, and the worst place to live for well-being, charleston, west virginia. napels is a beautiful place. that's the cnbc update at this hour. macy's shares rising 4% after the retailer beat earnings expectations. in fact, after almost losing half its value in 2015, the stock is up more than 20% this year. are more gains ahead? let's ask the trading nation team. eddie aflen bind, stacey gilbert. >> eddie, would you buy the stock? they also sort of hinted at real estate deals that could be in the pipeline. >> yeah, i was glad to hear that. but overall, i don't like macy's right here. it's up because the news -- they were expecting dire news which wasn't quite as dire as expected. when it's up 20% this year it's really gone from plunging 50 to now plunging over 40%. macy's has a lot of problems.

but as you mentioned the silver lining is their real estate portfolio, which is very, very impressive. i'd like to see that spun off or them do some deal with that. i think that could help them a lot. >> isn't that going to be another catalyst for another high or do you think that 20% was macy shareholders pricing that into the stock? >> it could be the catalyst, but there are a lot more challenges ahead for macy's. they won't see sales increase at best for another year. >> stacey, what is the options market telling you? >> melissa, you alluded to this stock actually being a headline stock this year likely with the shareholder activism and the monetization of the real estate business. i would say options are consistent with that where they are setting up for movement it's expected to be a little bit less than what we've seen over the past couple of months, but definitely more than what we've seen over the past year with moves of 2% happening at least twice a week and 4% once a monday. from a directional standpoint, i

think this is where eddie has a great argument where you have both your bulls and your bears. we are seeing people positioning for further upside and people positioning for a pullback. the stock is currently trading a of the the 12-month average price target of the street. i think that's where some of the directal confusion comes into play. one point to highlight. on a pull back where we see investors getting more constructive or more comfortable buying this stock is at the lows seen in december, $35 level. interestingly we haven't seen the same sort of level on the upside, where investors are saying i'm comfortable selling. finds more trading nation at trading nation.nbc.com. >> bill gates walking back his comments about the fbi i-phone hack request. but our next guest pulling no such punches. one said don't do it. it opens a pandora's box. the other says this is a p.r.

move by tim cook to stick to it his competitors. that debate coming up next on "power lunch." and now the latest from trading nation.nbc.com and a word from our sponsor. >> historically the period between may and september blp people talk about "deals"

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welcome back to "power lunch." i'm tyler matheson. fit about it sliding today on weak earnings guidance and a bunch of analyst down grades. this was a $50 stock last august. receipt now it is at $13.28 western digital's take over of san disk could be in trouble. a chinese company pulled a $378 billion investment in western digital making it harder to buy san disk. >> at this fda saying the complication for a muscular dystrophy drug was too weak to merit a review. it's down 57 58%. you are going to look at

live picture where a pair of window washers are stuck outside on a courtyard marriott hotel there more than 60 stories up. it is not clear how they got stuck or if they are in good shape or not. we'll continue to watch this. this happens periodically. not just in new york city but in other countries. i guess we're picking up a live feed from one of our affiliates. we'll keep an eye on our window washers and wish them a safe return. tim cook gave an interview to the financial times, and bill gates said, quote, this is a specific case where the government is asking for access to information. they are not asking for some general thing. they are asking for a particular case. so the debate on this just does not stop. joining us to discuss is eli do you remembered ao. he thinks tim cook made the right decision and was a smart business move boot. nathan hekt is here in studio with us. he's kroeflt of the encrypteded

messaging app destructs and says cook is naive and accuses him of misleading the american people. welcome to power lnch. really,is misleading the people? this is all marketing. >> more than marketing i think it is a shrewd business decision. tim cook took the opportunity to highlight the difference between apple and facebook and google on other side where he is saying fable and google, all of your data, everything is for them to use for revenue. you are not safe with us. apple, you are safe with us. that's the underlying tone of the message tim cook is sending. >> that could all be true but he could also believe that it's not right to give the fbi what it is asking for. >> he could believe that. and he probably does believe that. but imagine for a second that the fbi went to tim cook and said mr. cook there is a possibility that on that device there is proof of a pending mass shooting at apple. >> yep, we've had this

conversation many times, over and over again. >> what does he do then. >> we found it. eli, what does he do? >> i don't think this is a p.r. move at all. apple has asked to seal the order. so that request was denied. they wanted this entire affair to be totally secret. >> they wanted to seal the federal government's order for them to do what the federal government -- >> correct. >> you are saying they didn't want this out in the the public like it is. >> they didn't want this out in the the public's eye because this is a set of facts that makes the public fairly sympathetic to the fbi. so the fbi is trying to pursue a long run streaming of increasing their ability to make these kinds of requests. and so this was a set of facts. nobody has sympathy for the san bernardino terrorists. >> the fbi -- eli, the fbi has said they don't want to use this case to set a precedent. are they being naive? because if they prevail, it's going to set a precedent. >> i don't think anybody believes that. this is entirely about the

global precedent. this is where it really could harm apple. if you think about -- apple is a global company. if this tool is deployed for the use of the fbi, it won't be long before it's deapplied for the use of the nsa as well. and it won't be long before governments in other countries start something -- nathan, you asked to do a what if with us. let me do a what if with you. >> sure. >> the chinese government says this person is breaking a law here in china. you did this for the fbi in the united states for the san bernardino killers. you should do the same thing for us. except maybe this is a democracy dissident. maybe this is somebody who is fighting for freedom. >> right. >> what does apple do then? >> apple has to respect the court order and warrant in this case. the fbi has the responsibility -- >> but should they hands it over to the chinese. >> if the court demands they hand it over the chinese. >> in china. >> if the court in the united

states demands we hand it over the chinese. >> it operates in china. it has to follow the laws in the countries in which it operates. >> they are not bown only to u.s. law. >> to an extent they have to obey the law of dhoinz. >> or choose not do business there. >> what about thea what if in china. >> china is a complicated story. i don't think what tim cook is addressing here in the united states is the same way he would choose to address it in china. the fact that he chooses to do business in chinese exposes him to a whole other set of problems. >> the reason he wants this encryption like this is so he never has to be in that position. yahoo back in 2002 and 2004 handed over incriminating information to the chinese government and these individuals spent ten years in jail. >> right. so you are assuming that to begin with what the fbi is asking apple to do is to open a

back door. i don't humbly believe apple needs to open a back door in order to give access to this specific device. there are many ways they can give access to this device with the back door still being shut. >> let's say for this one case it does this. that means in every other case in every single country in which apple operates it has to do the same thing. whether it be russia or china or other governments that don't necessarily abide by the life, liberty and pursuit of happiness that rules here in the united states. >> right, so in the laws of those countries mr. cook has to deal with the laus relative to those countries. in this country as a privacy and security advocate, which i am, in specific instances, it still makes sense and is necessary when the government can't produce discovery, due process, a warrant, to save lives in this country. >> eli, jump back in. and then i want to ask you a question. >> let's be clear about what the

court is asking apple to do. they are asking apple to create a new tool that doesn't currently exist to defeat the security systems on their own phones. this is something that no other government has yet asked apple to do. so the u.s. is setting a press department here that i think is going to be very chilling once it spreads. and once the fbi is able to ask for this, there is nothing that's going to stop the chinese or the russians or any government from asking for it. >> in your heart of hearts, eli, and in apple's heart of hearts -- let me ask it that way. do you believe that apple truly believes they will prevail in this? or do they kind of already know what the final score this ball game is, and that ultimately either in this case or in some other case down the road they are going to have to comply with a kbed fed roll court order and that they have to to protect their brand, to protect their customers' privacy, and to protect their business self interest, have to fight this fight aggressively and run out every ground ball until the last

out. >> i do think they have to fight it aggressively. and i think under u.s. law they have a pretty good argument, and they will prevail. i think there is ka leah, which already preemts the you will ritz act which is what the fbi is trying to lean on. and ka leah says that telecommunications equipment manufacturers don't have to help law enforcement defeat encryption. so i think that that is is a very strong legal argument. and then of course there are the more constitutional arguments. does the fbi have the right to compel speech. is there a first amendment right. do you have second amendment right to encryption. and then there is the 13th amendment. we don't have involuntary servitude in this country. can the court force apple to set its engineers to work making a product that it doesn't want to

make? >> nathan technology changes so fast. is it possible that five, ten years from now we think back at this discussion and think want that a quaint fight because we've gone to different places when it comes to protecting data? >> if you look at the dominant players in silicon valley, consumer interfacing technologies they are essentially built on our data. the tense and tense of billions of dollars in revenue done by companies like facebook and google won't exist without access to our data. the conferring here, as much as it is about what rights the government does or doesn't have to private information should be and is in my opinion just as much and just as important, in general where is our data? why is it that facebook and google have access to all of our information but they are so quick to come out and say the government shouldn't have access to your information. >> because the consumer says it's okay. by using facebook, i say it's okay. by using google i say it is a okay. by putting on location services

i say it's okay. >> true. >> because i want the service and the enhanced experience. it's trade off. >> number one, does the consumer really know what they are saying okay to and the fact they are giving access essentially forever for that data to be out there, not only used now, but used forever. number two is you can use that same argument for the government as well. the government is not saying we should have blatant open access whenever we feel like it. they went through the court system and they said, based on precedent, based on law, we believe that we have the right to be able to access this at this point. and you know, there are repercussions and there will be ramifications for this very strong stan of silicon valley saying no if heaven forbid we do end up in a situation where they don't get access or the next go around. and that's what needs to be considered here down the road. >> another robust discussion on this. keeps going. eli and nathan thank you for joining us. >> sure. >> good to have you on. >> thanks for having us. >> let's get to dom chu for a

market flash. >> what's interesting snooshs o'. >> he came out of nowhere. >> i looked over to the desk where you usually sit snochlt we are watching what is happening. shutter fly gained 7%. the digital photo website says it has received takeover interest in a private equity firm. they didn't name the party but reuter's is announcing it was thomas h. lee and partners. shutter fly did say it is not negotiating a deal and is focused on its 2016 results while trying to find a new ceo. shutter fly has a $1.5 billion market cap. it's down about 1% this year. it haas hasn't gone anywhere. guys maybe that's the reason why you have this private equity interest, this idea that you could have a company out there that has a business plan that's it's not executing as well as it

is should be, and that's when the private equity guys step in there. >> did you say how much it's worth? >> $1.5 billion. in terms of market value. >> think about the competition compared to when they first started. think about how easy it is to stick a picture in your iphone and print it through apple. >> you had a discussion about where we'll be technologywise five or ten years from now. we didn't think about it ten or 15 years ago ago the idea you could ache digital photos and warehouse them and then if i wanted them physically. >> i can buy a book and two days later i have it of my trip to wherever. >> who really uses the physical stuff? will they use it five to ten years from now. >> it's about a company positioning itself for where it's going to be down the line. private equity has a hand because they think there is a better way to operate a business like that to get more value out of it. >> i love shutter fly and then

apple put that software right in the phone. >> absolutely. >> there is no uploading of the photo. it's right there. >> these days you can get printers -- hp makes a printer, you can put a photo sheet in there and just print. it's an evolving trend. >> thanks for paying us a personal visit. >> i love being with you guys. >> thanks for jumping in. a gap in homeownership along racial lines. in part two of our series we look at one company trying the bridge that divide. as we head to break. took at some of the most widely held stocks, how they are trading in this session. google down 1.3%. apple down bm mm 2%. microsoft down 2.6% and jp morgan the biggest loser of the bunch. "power lunch" is back in. two morgan the biggest loser of

two two

welcome back to ""power lunch""ever one with this consumer alert. i'm sue herera. it involves jpmorgan. it involves daniel pinto and he says at this point that q1 has been a very tough quarter for them. in addition, he says that q1

revenues in investment banking fees are down 25% year over year. the market has been tough for them as well. he says that the q1 market revenue was down 20% so far versus a year earlier, however, he does say that fixed income is profitable and will resume growth at some point, and he stresses that he wants to continue to grow international businesses, but, guys, the stock has been down for much of the day. it hasn't really taken another leg down on these comments, but mr. pinto saying that it has been a very tough quarter for them so far this year. back to you, michelle. >> yeah, i'm not surprised considering all of the volatility we've seen. sue, thank you so much. we continue our series on bridging the economic divide. today we're looking at the gap in homeownership. cnbc's diana olick joins us. >> just less than 64% of homeownership. for blacks, much lower, 42%,

this as rents rise in small and large cities alike but one cleveland community is buildings its work force through an innovative program that turns employees into homeowners. >> it was a dream to own your own home. >> reporter: a dream and a prayer that eluded them for half a century until now. >> i worked for about a year and i was looking for a job. >> reporter: tim found one at a unique cleveland cooperative founded in 2009, evergreen is a worker owned and operated business that runs a commercial laundry and a greenhouse. the business also helps the employee owners become homeowners. >> that came along a few years after we started. part of our challenge then and today to some extent is as we are hiring from these cleveland neighborhoods, oftentimes, you know, one of the barriers to

employment is just stable housing. >> reporter: so with some help from the county on taxes and the local housing authority, which had homes available through an existing program, evergreen offered employees a five-year plan to homeownership. >> after some financial training and some qualification, our eligible employees are able to purchase a home that they then pay for via payroll deduction. >> reporter: from charlotte's paycheck at evergreen's greenhouse and tim's at the laundry. >> it's growing the neighborhood. you know, that's your neighborhood where you came from. >> reporter: together they're paying for and living in this house right in the neighborhood where they work. >> one thing i like about it, it come out of your check before you even see it so that build your credit up, too. >> reporter: affordable housing has reached a crisis level. more than 11 million americans spend more than half their incomes on rent. >> it is kind of astounding given the importance of housing.

you go back to the housing act of 1948 and a decent home, a suitable living environment for all-americans was the national goal. we have not achieved that, yet we're not talking about it. >> reporter: cleveland is ranked the most affordable urban housing market in america. homes are very cheap and there are thousands of abandoned properties left over from the foreclosure crisis. that's why this program works so well here. the question is would it work so well in a pricier city. >> if you were to attempt to do this somewhere else you would either, a, need more funding up front to catalyze it like we did or more time. more time. maybe you pay for it in eight years instead of five. >> mcmicken would like to see it work in other cities and he's had plenty of other interest but for now -- >> that's my son and daughter there. >> reporter: at least it's working for the colemans who have loved their community and now finally have a real stake in it, a home all their own.

>> evergreen says detroit, new orleans, baltimore have expressed interest to bring it to their cities. to hear more about how it's changed the coleman's lives, go to cnbc.com/bridgingthedivide. tomorrow we'll look at an organization to help thousands of low income inner city youth join the ranks of america. that's tomorrow. but today "power lunch" will be right back. have read all of you. did you learn anything? i learned that humans are complicated. we're emotional. absent-minded. and we make some really bad decisions. my trade-off analytics can help companies make better decisions, but i am still learning what makes people tick. what makes you tick watson? natural language processing, reasoning algorithms, statistical parsing. now you are just showing off.

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hottest traded stocks out there, shanire energy. the ceo will also join us tomorrow. spectra, pioneer, shanire all on "power lunch" tomorrow from houston. if that's not enough, i've got nothing left for you. >> it's great stuff at a time in the oil markets, brian. we're looking forward to it. >> it will be a good day. >> especially because david imar talked on his investor presentation about shorting pioneer. that will be an interesting thing to ask the ceo.

>> tonight -- >> you'll ask scott about that. i'm sure he'll have something to talk about. >> i'll see you on "fast money" at 5:00. >> the closing bell is coming up at right now. thanks for watching "power lunch." hi, everybody. welcome to "the closing bell" i'm kelly evans at the new york stock exchange. >> i'm bill. the laws of physics have not been repealed. >> because oil is moving lower. >> once again, yes. the dow, s&p, nasdaq all down more than 1%. just off the lows. energy has been "the biggest loser" as oil prices close down more than 4%. this is the april contract now. under pressure as jpmorgan ceo jamie dimon said oil decline is hurting banks. we'll bring you more of jamie dimon's comments coming up in