the session. >> yeah, kind of interesting. that would be the most positive thing you could say about the markets, the delinking. however, that correlation i think will come back. we got to get rid of them. >> all right, that's a conversation and big one for another day. that does it for us. thanks for watching. "power" starts now. thank you very much. welcome, everybody, to "power lunch." along with melissa lee and brian sullivan, i'm tyler mathisen. michelle caruso-cabrera has the day off. he's always entertaining and always has a lot to say, cybersecurity pioneer john mcafee will join us to talk about apple's fight with the fbi over encryption. we'll find out which side he's taking. look at this chart of the s&p 500 on a day it is higher by about three points. the stock market incredibly, incredibly, ladies and gentlemen, has gone nine months without reaching a new all time high. i don't know about some of you, i remember when it went 17, 18, 20 years or more without -- i'm

an old guy. >> sell the car, sell the house, sell the -- >> nine months without an all time high. >> sell everything. >> out of here, man. >> expectations are high these days. >> we are freaking spoiled. that's all. you start reading headlines like that. can the bull run continue? is a bear -- senior market commentator mark santelli is taking a closer look. shocking. nine months without an all time high. >> it felt like at least ten, hasn't it? >> absolutely. >> as you mentioned, obviously the market for long stretches of time has existed but low an all time high. however, i did look back and say what has happened when you first reach that nine month point after you hit an all time high as we did last may. third week of may. last year. and see what had happened from that point forward. so nine of those 13 times, only happened 13 times since 1928, did occur during a bear market. a lot of times by that nine month period or couple of times, most of the bear market damage

had in fact been done. you are only up of those 13 times six months later, only up five out of the 13. so eight times you were down after six months, there is a little more even after 12 months, up six, down seven when you look at the forward performance. and you had subpar returns from that period on. all that being said, you were down an average of 3%, six months later, just about flat, i guess, one year later. if you take away the 1930 example, it looks somewhat better. but still below average returns. and the folks at lpl financial put this together for me. there is nothing magic about the nine month mark. but i do think the point remains that bull markets at least historically speaking, tend not to take a rest for nine months and then immediately resume. you did have a couple of instances of this 1994 and also a couple of times in the '80s. i think just to contextualize it, it doesn't mean it is all down from here. two years later, you had a very

good odds of being positive. >> so, mike, you throw out a lot of numbers to us. so what is the bottom line here? it seemed to me what stood out was the six-month after the nine months with no high if you can follow from there. because that was the biggest percent -- percentage on the screen. >> the bottom line is that this tends to be coincident with bear markets, with a market that still is not finished going down. i don't know if that's going to be the case now. again, you don't tend to have bull markets that take a rest for nine months and just turn on a dime and go forward from there, going higher, and making new highs. so for what that's worth, i do think it is important, by the way, very unusual situation. six months now we have been in this corrective phase, we had really two or three separate 10% declines from an interim high. it has been obviously a messy sloppy tape. this really just underscores the fact that once you get to this

nine month mark, it is not as if you can sound an all clear. >> i'm going to call this now, guys. the jimi hendrix market. >> meaning? >> purple haze? >> well, that would work too. if a six turned into nine, i don't mind. a lot of numbers here. i'm willing to bet if we put all the stats together and you said x number percentage of times, with all respect to lpl financial, we're going to be high twoer ye high twoer two years later most the time. >> timing is your friend when it comes to the markets almost always. the question here though is was this just a correction? do we have to consider this something more and this put some context around it. again, it is an unusual period in a lot of respects. six months we started this corrective process and it doesn't feel the same as prior bull market corrects where they turned into a v and recovered the loss ground. >> stay right there, mike. want to bring in cnbc

contributor jim yurio and tim seymour of trigen. tim, do you think that bull market is resting or bear market is being born? >> i don't know why we have to obsess on bull or bear. >> we're not. >> okay, brian. ultraplimately people seem to b concerned that the market has taken a pause. that's a way to look at it. in terms of the extreme pessimism, i think a lot of that was overdone. look at last couple of days, though the things encouraging. china slaughtered last night, markets do okay. oil prices recover, despite opec pulling back. small caps outperforming. the market is starting to sort through the good and the bad. excuse me. equities are not cheap here at least certain sectors are not cheap. the entire market is not bull or bear. that debate is something that people need to be careful about. >> you called it bipolar. i think we should go for it and call it a bipolar bear. >> you know, look, i don't -- i

ultimately think we're in a case where clearly markets pulled back, a number of sectors look expensive. values outperforming over growth. but we're not in a place where all stocks are doing poorly. transports are doing well. miners are doing well. >> when we start talking about six months, nine months, two years, there is plenty of fun we can have. we can make money now. i think tim hit on something important, the fact that we didn't budge and china got pounded overnight is significant. the fact that we rejected those lows yesterday and finished strong significant but the most significant thing in my opinion is that this morning, james bullard came out and said all the other dovish fed rhetoric came in the time of real focused market duress. this came with the market was 120 ticks off its lows from a week and a half ago. to me it seems like the fed has grown accustomed to the fact that the market needs us. that's a good thing. if we can settle the market above 1940, 1945 in the futures, i think we're going to go and

test those highs, call it 21 even and then start having this conversation about is there a big enough fundamental reason for us to bust through the highs and start on to new worlds, but right now, i think we have a lot of room to go and make some money on the upside now anyway. >> where? >> what parts? doesn't look like -- >> you said let's forget six, nine months, two years. you went off on other stuff. >> i like those ideas. >> i got ideas too. you go, tim. >> somebody give me an idea. >> i'm invested in a couple of steel companies like new core and turnium that are rallying on the releases. food companies, they're not cheap, but if you look at, again, pinnacle foods, pf, fourth quarter numbers out where the guys are continuing to show they can operate in an environment where margins aren't that great and growth isn't that great. there is parts of this market, the transports were so beaten up that you had these things trading 10, 15, 20% cheap to the historical. this is a great place to own good companies.

john deere is up on the year. these are places if you run in the other direction or sell things at lows, it has been a sad time for you. >> i'll get to you, jim. the context -- tim, i'm glad you brought this up. mike, it seems like what is working in this market, i don't know if you have context in terms of the data you went through with lpl financial there is an aversion to the mean trade and the most beaten down sectors are the outperformers. you have that going on and bid for safety. you got a lot of consumer staples names making new highs in today's session. general mills, kellogg, the list goes on. >> without a doubt. i don't disagree with these guys at all, there is nothing that says we can't go up more. you can go up 10% for the overall market and still not hit that new high. in fact, to tim's point, last year, what was the story of the market, a flat to slightly rising index when you had stealth bear markets underneath. a lost sectors falling away. what we have today is a flat but recently down index when you did

have these stealth bull markets happening or recovery trades happening within certain sectors. to me, that all is very consistent as being a little bit of a flip side to what happened last year. >> quickly, go ahead with your picks. we have 15 seconds. >> if the fed isn't tightening, i like gold. i like -- i personally buy things in oil that have been beaten down that pay a dividend juxtaposed against the paltry dividends in treasuries. >> got it. thanks, guys. >> to aymiyman jafers now. >> the u.s. congress is going to hold hearings and the fbi versus apple issue. the hearing will be held at the house judiciary committee on march 1st according to a committee news release. the committee is saying interestingly enough the fbi director james comey will testify but apple ceo tim cook is not expected to testify at that hearing on march 1st. instead, on behalf of apple will

be mr. bruce sewell, the senior vice president and general counsel of apple inc. also testifying in that hearing on march 1st, cyrus vance jr., district attorney for new york county. a big discussion up on capitol hill. you're going to get very little in that discussion as well as the legislative implications of this battle for apple and for the fbi. now, guys, i can also tell you that we saw that nationally televised interview with tim cook of apple last night and i can give you some insight into what the reaction was to that interview inside the u.s. government. i spoke to a senior u.s. law enforcement official earlier today and that official told me that folks inside the u.s. government are frustrated by the tick co tim cook interview, especially his claim that this would affect hundreds of millions of users of the apple iphone. a official reacting to tim

cook's argument that this is lighting the software by apple would be like creating a cancer cell. the official telling me, if you're talking cancer cells, in this case, they would create the cancer cell, that is apple would, use the cancer cell and then destroy the cancer cell in their own facility where you would think they would have good security. so clearly at least some u.s. officials here frustrated by what they saw from tim cook on national television yesterday. >> is there any reason why it seems like the fbi or the government and apple are saying that they're being told to do such different things. it appears that apple is saying we're being told to do this, the fbi is saying, no, we're being told to do that, but not coming together at all. why do they seem so far apart? >> they're talking past each other, you're right. you're getting one argument from the government, you saw comey making the case this is a narrow thing, just affecting this one phone. and then tim cook saying, it will affect hundreds of millions of people. it is a potential cancer.

the software could be dangerous. it could be bad for security. and it is about the future and public safety. that's not an argument that washes well inside washington here inside the beltway where i'm standing. officials here are frustrated by that. they feel very strongly that the court order itself, if you look at the text of what they're asking for, specifically says this would be software created by apple, inside an apple facility that apple would be allowed to delete after it's done using it and they're confident that apple would be able to handle that from a security perspective. apple seems to be suggesting otherwise. >> it is a bizarre metaphor. >> that's tim cook's language from the interview yesterday. tim cook said this would be like creating cancer. we don't want to do it, it is bad for the country. >> one quick question. i apologize if you don't know the answer. but did congress invite mr. cook and he declined, or did they

just sort of send an invitation to apple to have someone come? >> we are efforting that in tv language, tyler. we know they sense a request to apple. we know that the energy and commerce committee and additional committee on capitol hill sent an invitation. it is easier for the fbi to send somebody up to capitol hill as we saw today, jim comey dealing with the congressional oversight committees that have oversight over the fbi. if they call him, it is pretty much pro forma he goes to the hill. for apple, more of a complicated decision of who they're going to send and when they're going to send them. >> thank you very much. let's transition now back to equities and small caps. any are getting crushed this year. the russell 2000 down 10% in 2016, after 20% or so from the all time highs. have small caps bottomed though? we'll ask one five star money manager and the four stocks he likes now. you're watching cnbc, first in business worldwide.

the russell 2000 small caps trading way down, about 10% so far this year. nearly 20% from their peak in june. at different times down more than 20% in a full fledged bear market. is now the time to dip in and buy? brian smalllook of the four star rated hood river, small cap

growth fund and joins us now. welcome. you argue in part that a lot of the -- of the carnage in small caps has been focused in one sector, biotechs and if you take those out, it doesn't look half so bad. explain it. >> biotech has been under significant pressure as you mentioned. down around 40% year to date. the earnings based companies have been doing much better. biotech had a bubble type scenario set up going into the end of last year, where you had a bunch of ipos, secondary offerings and people weren't paying much attention to evaluation. a much longer risk off mode year to date and biotech is the best place to go. you look outside of that, we have been able to find a lot of companies where business hasn't changed. we think they'll make or beat the numbers and values are good right now. >> we went through what happens after declines of certain magnitude. you have a rather crisp statistic that indicates when

the russell 2000 dips as much as it has over the next few months or the next year, your returns historically have been pretty good. >> exactly right. so if you look since 1980, there have been eight small cap bear markets of this magnitude. and seven of the eight, 12 months out, up on average 13% and that counts 2008, the one time where you didn't make money at 12 months out. we didn't think this was a 2008 type scenario. we think we can be constructive from this point on. >> this is a stat heavy show. in this type of situation if you purchased stocks seven of eight times, you made money how long out? >> 12 months out. 12 month time horizon on this point. on average, 13%. that includes 2008. the one time you didn't. we don't think this is a 2008 scenario type at all scenario at all. there are some tail risk

scenarios, maybe tied to china or something like that. as far as the u.s. economy is concerned, we feel like things are relatively strong. and bottoms up, talking a lot of companies where businesses haven't changed in last three months and don't think it is going to change in the next six to nine months. >> i know you're not a forecaster in terms of the overall markets. i want to ask you about the most recent bottom. since then, it outperformed the markets. that was february 11th. since then, up 7%. do you think the worst -- do you think we're setting the stage for tind small cap outperformance? do you need that to make your stock picks work? >> i think the odds are that that was probably the low, barring some tail scenario that -- in china or something along those lines. two weeks ago, things were changing at cheap evaluations. trading at evaluations where they were at 2008 type valuation scenarios and businesses was way better than it was in 2008.

>> let's get to your stock picks here. i'm going to say the name and maybe my colleagues will do the same. give me one phrase about them, why you like them, euro net. >> sold off because people were worried about -- didn't have as good of a quarter in q 4 as expected. we think they'll have 10% earnings growth. >> dmadian solar. >> canadian solar, they just preannounced upside a week ago. we think they'll take up guidance in q 1. a call option on the power business, which isn't baked into the valuation at this point. >> and full earnings on march 10th. proof point, tough sector, stocks in the cybersecurity sector have not performed well. do you see that happening at all? is that important to your thesis? >> take-out is not important to the thesis. the main part is they have -- it is trading at 27 times cash flow. they're going to do 30% revenue growth, 31 next year. i think they can beat that

number. a lot of things would the up where intel is moving their customers to proof point. they have good billings. and then they have one product called tap, which is growing at 100% and that's 15% of revenue. i think they'll do well throughout this year and i expected a good quarter in q 1. >> and a big upgrade, microsemi. >> i like it, this pnc acquisition they did, about a dollar creative per share in 2017. the street is four dollars in earnings. stock is up 33 bucks. i think it is a buy. >> brian, thank you very much. brian is with the hood river small cap growth fund. thanks a lot. >> thanks. outside of stocks, oil down

yet again. on deck, more on all the market moving comments we brought you from that big oil conference in houston this week and the one big question everybody seems to be asking, will the saudis stick to their guns and not cut production? if you missed it yesterday, the surprising and shocking comments from bill oil ceo on just how many big oil companies may go bankrupt. those comments straight ahead.

all right, welcome back. what are your hot stocks today? domino's, she said read the prompter. domino's shares are up 11.5%, after beating earnings. domino same store sales came in up 10%. not only did that far outpace the consensus of 6%, but was the best performer of 25 major restaurant chains including starbucks. 10% same store sales growth. i don't know how. but we're go to find out tonight. because patrick doyle, the ceo of domino's pizza will join jim on mad money. who has same store sales growth. >> he's not the man who paid manning -- >> don't confuse the two. that's a whole -- that's a war right there. >> stocks have been hot. >> no prompter. >> let's go to the brond market -- the bond market.

seven year auction we're supposed to get but it never happened. rick santelli, what is going on? >> easy to give it a grade then. i for incomplete. it is rescheduled tomorrow for 11:30 eastern. so i wouldn't look for any big wisdom or any truce in the fact that it was postponed. my guess is it was technical issues. but let's just look at markets to make sure we're not missing anything. let's look at a one and two-day of seven year and acknowledge 5s, 7s, 10s, everything seems to be risk on again. so what is going on? look at a year to date of 7s. looks pretty much like all other maturities. except for the following. let's look at year to date of boons, which, by the way, are trading 13 basis points, they're down 3 basis points. this is the relative value trade right before your eyes because it is what matches up best that

is pressuring our rates down. even the dollar index as you look at the month to date is somewhat fending off the notion of how big a drop the pound has had, that's because the dollar index is pretty euro centric. tyler and the gang, back to you. >> thank you very much. well, anyone who was anyone really in oil was in houston earlier this week including cnbc and we brought you some interviews, some of the heavy hitters in the oil business. if you happened to miss our coverage, shame on you. but don't worry. here are some of the interesting comments about the state of the oil market right now. >> i think consensus is prices will remain relatively low for the foreseeable future. this presents an opportunity for us. our main task in mexico is to adjust to this new reality. >> this is unquestionably i think one of the most devastating periods in the industry. this will be the first time since 19 -- mid1980s you had two successive declines in commodity prices and activity.

>> i do see probably over half of the independents probably going into some type of chapter 11 or bankrupt if this thing lasts another one to two years. >> wow, let's bring in halima croft with rbc capital markets. a lot of comments, the mood was pretty grim compared to last year. don't worry, we're going to recover quickly. i know you're not an equity analyst, so i'm not going to ask you to comment on stocks, but what scott sheffield of pioneer said, if we stay 12 to 24 months these levels, half the industry is going bankrupt. what is the chance we stay at the levels one year from two years from now? >> one of the big concerns is why saudi arabia put the deep freeze on the rally is that the saudis are tare fide errified i. pulls back production -- i think there was an effort to say, to the saudis, look, we're not jumping back in, so full free to pull barrels. right now we're so oversupplied that if somebody doesn't sit down the barrels, it is hard to

seat recovery. >> you believe in some of the comments to us were maybe not disingenuous, right? i think scott is a straight shooter, but was incorporated a little bit of brinksmanship. >> i think there was a certain element, when you had, you know, hess talking about saudi being the swing prue producer, to sayt worry, it will work, i think sf saudis. >> how much of that was jaw boning and can they actually sustain that? >> here's the thing. the saudis may get their wish if they keep talk ing this way publicly. half of opec is going to be circling the drain in this type of price environment. saudi arabia will have to access the international bond market in this type of price environment. they will run larger deficits. they will have to cut spending. they have a couple of years, but

social contract is at risk in this price environment. venezuela is facing a catastrophe. a relative pain spectrum. >> mr. sheffield, not to be confused with mr. sheffield on the nanny said the other day if you get to a $15 a barrel, the number he said. >> said it was possible. >> said it was possible. get to $15 a barrel, you would see remarkable amounts of wells being shut in. is that where we need to get? to take production out to a point where it is very much more difficult to bring it back online quickly. >> i think that is what -- if you want to talk about the faster recovery, lower, sharply lower is the path to higher in my view. i think you need to have some sense this is really rolling over. the big head fake last year was people thought u.s. production was going to come down and then it didn't. people don't want to be fooled in this type of environment. it did come down, but not at the speed at which was expected.

>> we'll leave it there. we appreciate your valuable insight. now to john harwood. >> we have the latest chess move in the back and forth between the white house and senate republicans on filling that supreme court vacancy left by the sudden death of justice antonin scalia. the senate republicans, of course, said they're not going to consider any nomination. the president trying to make them look unreasonable, the white house yesterday let it be known that brian sandoval, the republican governor of nevada, was under consideration. he is a pro choice moderate republican. that was made to -- whether or not he was going to be nominated, that news was an attempt to maybe the republicans look unreasonable. brian sandoval has now said i want to be taken out of consideration. obviously, gets blowback from within his own party when they look unreasonable for not considering him. so he said he wants to stay out of consideration.

republicans want to dissuade any nominee from participating in a nomination, which they say is going to go nowhere. to be continued, guys. >> thank you, john harwood, for bringing it us to. hunting for value in the beaten down market. we speak with one top five-star fund manager who is outperforming this year. the four stocks he really likes right now. "power lunch" is back in two.

welcome back to "power lunch." stocks are at session highs. we're seeing a gain, not a bad gain. up 106 points for the dow jones industrial average. not a huge percentage gain, but we're up nonetheless. oil, though, going the other way. so stocks up, even as oil falls, just a bit, not a big move down for oil, down 13 cents on a barrel of oil, but down nonetheless. now to sue herera for a market alert. >> a news update too. welcome back, by the way. here is what is happening this hour, everybody. turkey's prime minister says he's concerned russia will continue to carry out what he calls irresponsible bombings in syria cure during the upcoming cease-fire. he warned of syrian kurdish

militia against taking advantage of that truce for actions that threaten turkey's security. german lawmakers approving a package of measures meant to speed up the processing of migrants and cutting the number of newcomers. germany registered nearly 1.1 million people as asylum seekers last year and wants to ensure that number is lower this year. tennessee governor bill haslam endorsing marco rubio for the republican presidential nomination. he said rubio has the innovative policy agenda to reclaim the american dream for the american people. and one day after a series of tornadoes ripped through parts of north carolina, the storm victims started the cleanup process. nearly 20,000 people in the state were without power as the storms toppled trees and downed power lines. and that's the cnbc news update this hour. we had bad weather up here as well. not as bad as that. back to you guys. >> try landing in newark. >> you were flying through it. >> i think we were one of the last planes -- i'm tough on the

airlines, i'm tough on the airports. i'm going to give a shoutout to united. whoever the captains were of flight 1125 coming in last night, great job. >> it was really rough. >> it was -- we were -- one of those the whole way. and it was one of those ones where nobody said anything the last 30 minutes and you heard wind and jet engines going -- that kind of thing. >> amazing. i'm surprised the airport was open. >> i know. >> glad you're back safe. >> thank you. stocks at session highs. the dow and the s&p 500 trying for a third upday in four sessions. market guests now say it is time to bet on some large cap stocks. dave dunabedy at atlanta trust. welcome. why large caps now and in what sectors? you don't want to name specific names, but you want to, go right ahead.

>> thank you. i think in the large cap space we see important characteristics for what is a bumpy market environment. you have diversified revenue streams, very strong balance sheets, and you have opportunities to own very high quality names, especially after having had two market corrections over the last six months. we're seeing a little bit better relative performance out of the small cap sector but continue to favor large caps and from a sector perspective, we look at health care and market where it is very difficult to find revenue growth. you can find mid to high single digit revenue growth in parts of the health care space and, again, having had two market corrections, there has been the opportunity to buy names in this space, down 10 to 20% without any meaningful change in the fundamentals. the financials are also interesting. they have been the worst per forring secretafor i -- performing sector here year to date. the valuations look attractive. so we think there are

opportunities there as well. >> ben, you like some names we hear mentioned a lot, frankly. johnson & johnson, verizon, a good performer this year. i assume you're attracted not only to the overall corporate prospects, but to the dividends. >> yeah, we like dividends for lots of reasons and i went buoy with them here. what we look for, sustainable cash flows. and it is really sustainable, linking into what was just said you need good business models and we think sometimes from afar you get a better perspective. last year verizon trading 10 to 11 times price to earnings ratio. 5% yield. it was probably the cheapest telecommunication company in the world and one of the best invested that was interesting for us. johnson & johnson, you got a cash balance sheet that is completely -- not valued in, so you got $20 billion of cash. if we go into recession, that

cash is going to be very comforting. if they can find something to do with it, then for them, the dividend is 3%. well above the ten-year bond. ten-year basis, i like that. >> i want to ask you about iron mountain. it seems like a quaint pick if you will in a world where we store things on the cloud, we tend not to print things out. this is a document storage company. they store physical documents. what are the cat -- is there a secular store here? it seems there are fewer and fewer physical documents to be stored. >> yeah, it is a good question. i think iron mountain has been very poor performer in recent years. it has converted into a reit structure so it hasn't yet reflected that in the valuation. we all like to think there will be a paperless office, but we waited a long time for the paperless office. if you sign documents to take out a mortgage or a credit card, some of those documents with your signature have to be stored. and so that's part of it.

other parts of the world are growing. emerging markets are growing. faster parts of the world, documentation is still growing. and i think importantly what we quite like in a low growth world are companies that have an element of change. so i imagine -- just in the process of buying the biggest competitor, that brings restructuring. it is getting a 7% dividend yield they just increased today by 2%. so i guess we -- a statement i like to say, sometimes you get pay to wait. you get paid 7% to wait and see if actually this restructuring works, which, again, in this current low yield world, i find quite attractive. >> what is your biggest fear/market risk right now? >> i'd like to hear from both of you, actually. >> i would say it is certainly global recession. we don't think that's the most likely outcome. but clearly there is heightened anxiety about that.

you're seeing downward revisions for global earnings growth. we think -- don't think that's going to clarify real soon. we do think ultimately, though, the idea of a u.s. recession imported from abroad is highly unlikely because we are primarily domestic consumer driven economy and we're seeing some of the forward looking indicators on the job market, continuing to look strong. so it is going to be touch and go in terms of the sentiment for a while. we think ultimately, especially in the second half of the year, it will be clear that we're continuing to be in this kind of moderate economic growth zone and we're going to begin to see some earnings growth in the second half of the year. second half looking better than the first half. >> quick answer from you, ben, same question. what is the big risk you worry about? >> yeah, i think i would agree, not the u.s., biggest risk i worry about is china. and just, you know, whether the growth really slows there significantly from here.

and whether their currency falls significantly. that would be destabilizing. >> grateful for your time today. dave and ben. go to powerlunch.cnbc.com now to see a stock that ben says will do well in a low oil, low inflation environment. that's powerlunch.cnbc.com. donald trump may still release his tax returns, but mitt romney warns of a possible bombshell if he does. robert frank will tell us what romney might be meaning here. robert? >> i'll show you the three most likely bombshells in that tax return, which he may or may not file. and we'll show you a tweet that shows that the trump may be worried. coming up after the break. frank abagnale. convicted felon and con man. that was a long time ago. you know, they made a movie about it. you were shown to be quite skilled at fraud. times change. now i help catch the bad guys. me too. i help banks detect fraud by applying cognitive analytics to public financial records and social media.

so if somebody said, "catch me if you can...?" we can. let's do a sequel. it could be a buddy movie. i would like to have a buddy. steve, other than making i'm here atme move stuff,rade trader offices. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

♪jake reese, "day to feel alive"♪ welcome back to "power lunch." want to draw your attention to the price of oil. in the past ten minutes or so, it has doubled. wti up by 1.25% midsession.

keep in mind, this is a similar pattern to what we saw yesterday after the european close. we saw oil was the reverse, but it is interesting what happens after the markets close here in this sort of time frame. you have some news on halliburton here. >> yeah. another tough headline from a major oil company here. halliburton coming out, and forgive me for reading on the paper here, cutting another 5,000 jobs. here is the statement from halliburton, i'll summarize it, we regret having to make this decision, but unfortunately we're faced with a difficult reality that reductions are necessary to work through the challenging market environment. we thank all employees for their contributions. by the way, at the end of last year, halliburton had already cut 22,000 jobs, so this is another 5,000. there is 27,000 jobs being cut in halliburton. this is what we talked about. often with the oil story, i know there is a huge positive impact theoretically, but we can't ignore the hundreds of thousands of jobs either being lost or

where pay is being cut by 20% to 50% in the oil patch because these were good jobs, high paying jobs. halliburton, that stock not moving much, down .6. >> do we know how many are u.s. jobs? >> we do not. halliburton is technically based in dubai. >> is that true? >> like a mailbox. >> yeah. it is there. >> yeah. >> there you go. >> we're going to take a quick break and be right back. its intelligent drive is msystems...ng. paradigm-shifting. its technology-filled cabin...jaw-dropping. its performance...breathtaking. its self-parking...and self-braking...show-stopping. the all-new glc.

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mitt romney warns of a possible bombshell in donald trump's taxes if mr. trump decides to release them. what bombshell could there possibly be? robert frank has some speculation, suppositions. >> if we ever see it. romney saying donald trump's tax returns could be explosive. romney telling fox that, quote, we have good reason to believe there is a bombshell in donald trump's taxes. romney was vague on what that bombshell would be, but there are three possible areas. one, offshore companies to avoid taxes. remember, romney had this issue with the cayman islands. second, trump pays low taxes. technically his tax rate should be 39.6 for the top rate, but probably a lot lower given he makes a lot of his money probably through capital gains and he might be embarrassed about that rate versus what most americans pay.

now, third, this is the one i think it is, he's got, quote, low income. trump's biggest concern throughout his career is being perceived as not as rich as he says he is. and he's tweeted out today, quote, tax returns have zero to do with someone's net worth. if he reports an income of let's say eight or 10 million, which in his standards would be low, people might say, you're not worth the $10 billion you say you are. he's front running this by saying having income is not the same as having wealth. >> he has sued people including people we know journalists we know for what he says is misrepresentation. >> for accusing him of being a mere single digit millionaire or -- >> billionaire. >> worth nine figures. >> another speculation i read overnight was that mr. trump may be concerned about charitable donations that he either has or has not made. he's made a large point about how staunch a supporter he is of veteran causes. if his tax returns do not show

large support of veteran causes, that could be a problem. >> absolutely. and, you know, it is well known within the wealth community that trump is not a huge philanthropist, he never sign the giving pledge. you don't see him writing big endow ument oz os or big charit. for vets, that could be a big one. >> thank you. >> thank you, guys. are we headed for a global recession? some smart people say yes. some smart people say no. but for those who do say yes, not all the numbers are on their side. we'll discuss that. and the mac is back. outspoken cybersecurity pioneer john mcafee joins us again with his latest take on the comments from apple and the fbi. we're back right after this.

well, the debate continues over whether a global recession is likely this year. citigroup's top economist warning it is a possibility. but the federal reserve's james bullard differs in opinion, telling "squawk box" the chances for a recession in the near term are not high. listen to this. >> i don't think the probabilities are particularly high right now. of course, you always face risk

and we are at a lower trend growth rate, so you could always argue that there might be a higher probability of recession because your trend growth rate is lower than it was historically in the u.s. >> let's bring in now cnbc contributor joe lavorn. are you on the no recession this year or likelihood of recession this year? >> serious odds of recession this year, brian. not my base case. i imagine the economy will muddle through. but the risks are significantly higher than what i believe president bullard said. and markets are basically telling you that. economic data are notoriously lagging. just, for example, looking at the high yield sector, clearly those rates relative to risk free rates are suggesting some real growth concerns ahead. >> what is the biggest growth concern that you see, joe? >> the problem we have is that the economy as bullard alluded to isn't growing quickly. last year grew under 2%.

in the past, we have grown under 2%, the economy has always gone into recession. this time we might have avoid it. what both meers me is the manufacturing sector and the service sector is losing some momentum. it is vulnerable to outside shocks. whether it be further crisis from china, whether it is something geopolitical, whether it is just potentially a nasty presidential election cycle, those things could hurt confidence and hurt growth. >> let me turn to a question of phrasing. when people use the word global recession, as was in a -- i believe a citigroup report today, do they mean literally a decline in global output or do they mean something different than that? >> they mean something different. whatever you think -- global growth, say, real gdp growth is 3.5, 4%. if that's trend, recession would be something below trend.

they're not looking for an outright decline in global gdp. >> yet -- >> for example, when we talk about the united states, that's what we mean, right in. >> the national bureau of economic research does the recession dating. technically it is not two quarters in a row in which a recession is called because that didn't happen back in 2001. but the general convention among macro economists are two quarters of growth that is negative to some degree. >> feels like a mildly important nerdish distinction for me to make there, but -- >> it does. >> thank you for clearing it up. >> yeah. >> the other thing is this is going to add -- look, the economy may not have grown very much last quarter, growth may be very slow this quarter, and perhaps into next quarter where we don't have the downturn but that doesn't necessarily mean that things are feeling good. some of the equity recovery might retrace. we get a deeper drop in stock. in some ways a recession versus a stall speed if you will in growth may not feel that different. >> how important, joe, in your

view, is chinese economy to your forecast for the united states. what i found interesting in the citigroup note, they had another forecast for global growth which adjusted for quote, unquote, real chinese growth. the implication being that the data published is a little bit rosier than what the reality may be and then there is new york times article, essentially saying that beijing is airbrushing the data as the picture gets worse and worse. where do you stand on the impact of china and whether or not the reads that we're getting on the chinese economy are actually accurate? >> i can't speak to the chinese data because i just don't know it well enough. i do know that u.s. data has a lot of shortcomings. and china may as well. but i do believe to your first question, melissa, which i think is very important, china is very central to the global outlook. still the world's second largest economy, and if -- for argument sake, it is hard to see in the environment how the u.s. dollar would not further appreciate and

in turn for commodity prices, oil especially, and that sort of has been a problem to this point. the dollar appreciated so much, it tightened in the u.s. significantly. i don't see how you disentangle from china. at 4.5%, we could weather some type of asian crisis. but if china were to weaken substantially, then we have got a problem in the u.s. >> all right, joe, deutsche bank, you're saying odds of a global recession -- >> 35, 40%. >> that's pretty dog gone high. thank you very much for joining us. >> thank you. >> appreciate that. >> it is now 2:00 p.m. on wall street. let's get you caught up on where the markets stand now. sitting at session highs. the dow jones industrial average up by 139 points. the s&p up by 13, good for .7% gain. the nasdaq is up by 16 points, up .4%. russell 2000, small caps, strong performer in the past, one

month, up .6%. sectors leading us higher, financials, strongest sector of the day, up by more than 1%, followed by materials and consumer staples. telecom also making a strong move here in the session. apple shares, they aren't doing much right now. but the war of words is heating up between apple and the fbi. here is tim cook last night on abc. >> this case is not about one phone. this case is about the future. what is it at stake here is can the government compel apple to write software that we believe would make hundreds of millions of customers vulnerable around the world, including the u.s. >> and you have to write that system in order to unlock that phone. >> yes. the only way we know would be to write a piece of software that we view as sort of the software equivalent of cancer. we think it is bad news.

>> the feds responding to that interview within the last hour. let's get back to cnbc's eamon javers with the latest. >> you saw that interview with tim cook on abc last night. this morning we saw a very careful fbi director james comey up on capitol hill striking a diplomatic tone here and going out of his way at one point to praise apple. here is what he had to say. >> i want to be sure people understand no demons in this dispute or the larger dispute, apple has been very cooperative. we just got it a place where they were not willing to offer the relief the government was asking for. >> i can also tell you that privately, though, the tone is very different here in washington. i talked to a senior law enforcement official, just a little while ago, who said officials in the u.s. government are frustrated by that tim cook interview from yesterday, pointing to just those two sound bites you played, the issue of hundreds of millions and the issue of whether or not this is a cancer. the officials saying this is a solution for a single device by a serial number in a single

case. also the official told me if you're talking cancer cells, in this case, they, that is apple, would create the cancer cell, they would use the cancer cell and they would delete the cancer cell in their own facility where you would think that they would have very good security. so clearly we're seeing privately some frustration here, melissa, but publicly an effort by the u.s. government to strike a more diplomatic tone in the hearings on capitol hill this morning. >> thank you, aymeamon javers. let's bring in john mcafee. great to have you back on the program. a lot has happened in this war between the fbi and apple. you heard the fbi director say there are no demons in this. are there? >> there are demons in this, yes, indeed. here is the fundamental problem. i think that the average person and certainly the average person within government does not understand the implications of what they're asking apple to do. we learned a long time ago, in the 1990s, all software had back

doors. why? customer could call tech support and say it is not working. tech support could go in through the back door, see what the problem was, fix it. game over. people stopped doing that because within the matter of days, every hacker in the world, every foreign government, had access to that back door. once a back door is written, you cannot keep it secret. because number one, one person is not going to write this back door within apple. there are going to be hundreds. it is a complex piece of code. now, if you give me 100 people, i promise you there is going to be a bad apple in there somewhere. there is going to be somebody who says this is cool, i think i'll take it home if i need it sometime and pretty soon at large. if you give it to the fbi, even though the fbi says we will protect it, keep in mind, two weeks ago, a 15-year-old boy hacked into the fbi and took all of their personnel records, including undercover agents. we're talking about pan door pa

box. you cannot close the lid once it is opened. >> you've been on tv a number of times. even since the last time we have seen you. you appeared in print with your offer of hacking this one particular phone. has the fbi been in contact with you? has apple been in contact with you? >> no, they haven't -- >> why don't you think they are? >> well, i think if the fbi contacts me, they're going to tell me to come in to be arrested because i slandered -- not slandered, called them illiterate, incompetent and trying to point out to the world that what they're doing is deceptive. because there are other ways to do this. there really are. and to say, well, we want you to do it in this way, give us a back door, use it only once, thank you, no, they want the back door so that they can have access to every iphone on the planet. if they do that the next court order will be for google to put a back door into android. and everybody carries a phone.

>> so educate me, mr. mcafee, you said something very provocative there. there are other ways to do this. what is this? and what are those other ways? >> first of all, i need to explain the difference between a true hacker and a trained computer scientist. there are individuals born with almost super human talent, mathematicians who can multiply two 100 digit numbers in their head and give you the answer. bach, mozart, beethoven, they have an innate talent. i worked with a programmer at mcafee, one of my first programmers who could look at a screen of 1s and 0s and within seconds tell you what the instructions meant and what the program was. a stanford computer science graduate would take months to do that. so the hacking world is filled with these people with innate talents. i know most of them. you give me that phone, i put a

team together and promise you in three weeks we'll have the data. >> so why can't the government do exactly that? by getting -- if what the government wants are the secrets that are held inside that phone, they say they don't -- whether true or not we can dispute that, they say they don't really want the keys to the kingdom, they want apple to develop the keys to the kingdom so they can get to the contents of the phone. but why can't -- it is a very interesting question. why can't the government contact the very same mozarts and beethovens that you know and sit them down and say, okay, if you're not going to give it us to, we'll find our own way in? >> do you think the fbi is going to sit across the table from a 24-year-old boy with a 12 inch purple mohawk, a tattooed face, who demands to smoke weed while he's talking to you? do you think that's going to happen? it won't. this is the problem. >> i don't know, you know.

>> they won't even do that. seriously. our government has become a bureaucracy that is so engrained that if you're not wearing a dark suit or red tie and polished shoes, somehow there is something wrong with you. and secondly, most of these hackers, if the fbi called them, they would hang up and move. we need to open ourselves up to the unique in the world of computer security. the chinese have done so. any one of these kids can go to china and say, would you hire me? they say, yes. >> you think the fbi is lying, just straight up lying? >> yes, absolutely. >> why would they? >> they want the keys to the kingdom. and i can understand it. they're in law enforcement. and if they suspect somebody is a crook, wouldn't it be nice just to get access to the phone. >> they have repeatedly and even today fbi director comey said we don't want the keys to the kingdom. apple can keep the keys to the

kingdom and destroy the keys to kingdom, we don't want them. we're operating on a case by case basis, not looking for precedent to be set. why when it is laid out so explicitly, you say -- i'm not trying to be a government defend erk b er, but why do you dispute so ardently what they say in front of congress? >> either the fbi is lying or tim cook is light. because it is going to take a lot of programmers to develop this back door. and i promise you, that back door will get out. even if it is watched by the fbi, if it is watched by the fbi, the fbi will walk out with it. this is the way the world works. >> so lying comes from either having something to gain or something to lose. who do you think has the most to gain and the most to lose? >> not apple. >> well, apple is saying that they could lose this key it the

kingdom as you say. >> yeah, absolutely. it is not apple who alsos. it is me. and you. and everybody who uses an iphone. we are the losers. the one when has the most to gain is the fbi by getting the key to the kingdom without thinking. without thinking what the implications of that key are. you cannot keep such a key secret, cannot be done. in cyberscience, in cybersecurity, over and over and over, there has never been a case of a back door that did not get out. tim cook is smart enough to know that. >> to that point, educate me, i -- forgive me for not knowing the exact answer on this, as i understood it, prior versions of the iphone did have, quote, a back doorway in that was controlled by apple. and i don't know that back door was ever cracked by malefactors. >> do you know what that back door was and what it accessed?

it was extremely limited. not what the fbi is asking and used for tech support and was dropped for the same reason that all back doors are dropped. >> it was too easy to get through? >> yes. >> it was too easy to get through for people. i understand, on prior versions, they could unlock a locked phone with a pass code unknown. >> they could. but they found out it was the wrong thing. like, you know, apple is -- >> they found out it was the wrong thing not because the key to unlocking was leaked. am i correct on that? >> no, every hacker in the world knew that key. >> they did? >> every hacker in the world. >> yes. >> if the premise is that if we have this back door and the keys to the kingdom, every hacker can have access and the world will come to an end as we know it or however you phrased it in the article that you wrote for business insider, then why didn't the world come to an end when there was a back door

before. >> that everybody knew. >> because the back door was limited. and it was only on the iphone. if the fbi succeeds in getting apple to make a back door, next is android. that is 5% of the world market. android is 95%. if that happens, we're all at risk. this is a precedent that cannot be allowed to continue. if you ask any cybersecurity specialist, they'll tell you exactly what i'm telling you. i've been in this business for 50 years. >> how does it play out? if you could script the ending to the story, could be years out, this could go to the supreme court. how does this play out? >> i hope it does go to the supreme court, it will then be years and maybe the fy will have forgotten by it by now or by then and the world will have smartened up. here is the issue, the world of cybersecurity is very subtle and unfortunately very complex. and the ripple effects extend to

infinity. so the general public goes, yeah, why don't you go ahead and do it for them? we can't. we can't. because we learned in the '90s this cannot be done safely. it can't. and we are already 20 years behind the chinese and russians in cybersecurity. they walked off with 21 million records from the office of personnel management. >> this is -- that's a different issue, john. i was going to ask you about it. i think you brought up a very important point. we're talking about apple and the fbi and compelling story and important story and all these implications, both ways. probably going to be an important legal precedent i'm guessing when this is all said and done. in the meantime, every day hundreds of millions are probably being stolen from around the world, credit cards are being hacked. is there a risk this is going to distract our attention from the real problem? all the other stuff going on every freaking day? >> i will say this, if we get back doors in our smartphones,

which we all have, all of our credit cards are going to be hacked. all of our bank accounts will disappear because everybody carries one. it is a computer that we carry with us. a spy device. but, yes, it is drawing attention away from the bigger issue. and the much larger issue is there is a cyberwar coming. everybody knows this. we're ill prepared. we are way behind. and we will not survive. a report to congress last year stated if a major cyberwar occurred with china, 90% of the american populous would parrish within one year. think of this, this is the big issue. this is a small part that fits into that issue. we need a global cybersecurity strategy and back doors can't be part of that. >> let's turn quickly and by conclusion, we would like to come back to that comment on global cyberwar that we would all be dead if one does break out and you seem confident one will. let me ask you about your

presidential campaign. how is it going? >> i'm running on this libertarian party, we're a very small party. we're up against two massive machines. the democratic party and the republican party. that basically chew a human alive and suck up their soul. we all know this. we need change. go to mcafee 2016.com and read my platform. if you agree with it, help out, volunteer, donate. even if it is just 50 cents. mcafee 2016.com. it is a very hard road that i'm traveling here. i truly believe that i am best qualified to solve the greatest problems that america faces, solving our cybersecurity issue, i've run a billion dollar company. i have some small degree of experience and i am 70 years old. don't have a year to waste making a statement. i intend to win. >> what do you think of donald trump? >> he seems angry to me. >> that seems pretty apparent.

>> yeah. >> go ahead. >> i'm not angry. i got over being angry after my third wife. i think the problem with trump is he is so popular. and he plays on the phrases that are populist. like, yes, we should boycott apple. my lord. do you understand what that means? he is siding with putting back doors in software and he wants to be a president of a country that is behind in cybersecurity, it makes no sense to me. it means he's ill prepared and not tutored in the art of cyberscience. that scares me. o other than that, he seems likable. i would like to have a drink with him or go fishing or golfing with him. >> no way you golf. do you golf in. >> no, but i -- >> you would ride around in a cart and have a cocktail, but not be golfing. >> when i was 20, i did golf.

i understand the principle this morning. >> i'll go golf with john mcafee. how about you and i? i'm not donald trump, but i'll -- we'll drink some pbrs. >> do that and talk about back doors. john, thank you for joining us. >> thank you very much. >> john mcafee. >> 76 on the score card, even though i shot a 140. we do want to get back into the markets. big move in crude oil in just the past half hour or so. look at wti. pretty much close to session highs at this point in time. it is up by at last check 2.75%. there you have it. it is going higher as we speak. 33.18 a barrel. in as the markets are also finding more footing here at session highs as well and looking down at my computer to take a look exactly where we are. one point off of session highs on the s&p 500. so it is providing some lift to the market.

>> here's what's on the menu for the remainder of the hour. at 17 past, up next, the one furniture maker growing sharp criticism for how it is couching its dismal results. get it? one analyst is slamming the brakes on a shale driller. and save the shales. more on that call ahead. and fighter jets and rail cars are the place to be according to one top money manager. those names when we "power lunch" returns. man 1: [ gasps ]

man 1: he just got fired. man 2: why? man 1: network breach. man 2: since when do they fire ceos for computer problems? man 1: they got in through a vendor. man 1: do you know how many vendors have access to our systems? man 2: no. man 1: hundreds, if you don't count the freelancers. man 2: should i be worried? man 1: you are the ceo. it's not just security. it's defense. bae systems.

time for street talk. the analyst recommendations and stock calls you need to hear about every single day. the first stock is a name we had a guest on -- guest recommended this as part of his portfolio, microse microsemi. rbc capital was bullish. company remains one of the rare semiconductor companies with a current valuation near 2008, 2009 trough, and also mainta maintaining notable growth. the target from 46 to 45, that's at 34. so 35 or so 35% or so upside. >> second stock one we talk about a lot. waiting petroleum. had a tough run. it is a shale play, of course. getting a downgrade. mike kelly, a guest here on

"power lunch," cutting from neutral to a buy and slamming the brakes. reported earnings production beat capex 15% higher than street estimates. that's what you don't want to hear. and more than 8% higher than guidance for the full year. whiting taking production down 8%, capex down 78% year on year. still down 90% over the past year. >> good guy. tough time to make it a downgrade. >> a little late. >> third stock is hill top holdings. a dallas-based bank that had a rough year, energy loan concern. happy with what they saw from earnings last night, operating earnings came in ahead of consensus. analyst calls the quarter a nice close to last year. they reiterate their outperform. that's a 50% upside, not so much this morning when i wrote this, this was 50%. now 45% on this day. $16 stock, kbw saying maybe the worst is behind it. >> solar, the best performing

solar stock in the group, getting price target raised by credit suisse. that target goes to 72 to 65. 10k was filed yesterday. and the company posted a beat on earnings this week. highlight out of the quarter, stronger growth margins on component sales. that's very important because what is important to all of the solar stocks, cost advantages in a time when they're competing against price, looking at a xhod tiesed product. here you are. look at that performance. >> didn't get a lot of press because the saudi oil ministers comments about production cuts got all the attention. but he was asked about renewables. he said saudi arabia is investing a lot of money in solar. wind too, but solar really. saudis are going after solar for domestic energy production. solar maybe get a saudi boost too. finally today's under the radar name, the advisory board. that's the name of the company. abco. washington, d.c. global research and consulting company focus ed primarily on health care. deutsche bank upgrades it a buy from a hold.

boost their target to 53 from 43. stock is at $28. so nearly a double on the stock, but -- >> that's back to where it was three months ago. >> you read my mind. you read -- or the script. >> not in the script. >> on the chart. i read the chart. >> a lot of downgrades recently. but it is important to note to melissa's point, this was a $53 stock. the guidance has been awful. the stock is just falling off a cliff in the last couple of months. but deutsche bank saying that this is an attractive long-term entry point because the growth story here is still pretty attractive. >> interesting call there. tyler, over to you. >> up next, pointing fingers, wait until you hear who won retailer is blaming for its crummy quarter. and as we head out, a look at how all 30 dow stocks are trading on this thursday. only disney and exxon are lower. and they, by a very small fraction.

welcome back to "power lunch." 2:27 on the east coast. good to have you with us here. to the couch comment that tyler

made. i'm jealous he got to it before i could. restoration hardware, that stock needs some restoration today. investors losing a ton of money. stock having its worst day ever. it is down 27%. regarding the quarter, restoration pretty much missed, well, everything. and the company drawing criticism for blaming wall street for its miss. the company ceo saying the increased volatility in u.s. stock markets, especially the extreme conditions in january, contributed to our performance. what? they also, by the way, blamed oil. saying weakness in oil heavy markets like texas and canada did contribute. maybe sending out a 17 pound catalog every quarter doesn't help. >> is this suggestion there that people became so rattled by the volatility or so wealth affected that they stopped going in and buying distressed wood tables or what? >> you say that with -- >> i can understand the point that if, you know -- >> if you're about to buy a

$10,000 distressed wood dining table, you might decide to put that purchase off. >> you look up and your investments are down, get your end of quarter statement, maybe we shouldn't get the $10,000 distressed wood coffee table because melissa lee already ordered it. so it is back ordered. >> we should note there are a lot of analysts defending the stock in today's session, even though it is suffering its worst loss in a single day ever. guggenheim saying that they look out did they say product -- the product demand remains strong. margin opportunities are there. so they're still bullish, the stock, despite this huge decline. let's get to seema mody for a market flash. >> distressed plexiglass -- >> we are going to go from retail to guns. gunmaker stern ruger up over 6%, hitting a fresh two year high. the company's fourth quarter results beat expectations after the bell yesterday and today the ceo michael pfeiffer mentioned the company expects more gun demand if a democrat becomes

next president. shares are up more than 45% over the past 12 months. see the stock up in today's trade by 6.5%. >> seema, thank you very much. the oil market is set to close for the day in a couple of seconds. and close on a bout of bullishness because oil was down much of the session, 1.5 to 2%. oil looks to close up nearly 3%. the problem now is a 3% move for oil is only 96 cents to 33.11 as the numbers got small, the percentages got bigger. it is also important to note that almost -- i think only -- forgive me if the numbers are wrong, you get the idea, it is five days this year only where oil has moved less than 1%, highly volatile, up 3% or down 3%. >> look where they were ten days ago on oil to where we are now. >> yeah. >> one of the other topics in houston at this conference was if an oil company, not only do you have to deal with the price of oil falling, which is the biggest worry, but how do you

run a company when your core commodity is up or down 4%, 5% every single day. the volatility, almost somehow maybe would rather have it stay at 40 for a while, so they can know where the heck oil is going to be. >> good point there. listen up all you air travelers out there. we found the absolute, absolute best time to book a flight to get the biggest deal. we'll tell you what it is when "power lunch" returns. ♪ every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪

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hello, everyone. i'm sue herera. here is your cnbc news update this hour. nevada republican governor brian sandoval informing the senate democratic leader harry reid he no longer wants to be considered for the supreme court vacancy. earlier in the week it was reported that the white house was vetting sandoval for that position left vacation and by the death of antonin scalia. six states filed a lawsuit against the obama administration over the affordable care act. texas, wisconsin, kansas, louisiana, indiana and nebraska taking issue with the health insurance provider's fee assessed to insurance providers to pay for federal subsidies. democratic presidential candidate bernie sanders

campaigning in ohio, drawing a large crowd at baldwin wallace university. during his speech, he contrasted his record with opponent hillary clinton. an appeal mostly young crowd to get out and vote. and a brushfire has burned nearly ten acres in a steep and rugged area of malibu. a voluntary evacuation order was in effect for residents in the sparsely populated area. no structures have been damaged. they have been having hot and windy weather there. that is the cnbc news update this hour. ty, back to you. >> very hot out there, in the 90s on multiple occasions. low oil prices mean cheaper jet fuel, of course. the cost of filling a 747 is at a multiyear low. so that means the airline is going to pass those savings along to the consumer, right? you know the answer to this one as we head closer to summer vacation. airfares are actually rising. phil lebeau joins us live from chicago with the numbers. why are they going up, phil? because they can?

>> yeah. because they can, tyler. they're in the business to make money. they're not in the business to give you a cheap seat. take a look at the airfare increases that we have seen this year. this data comes to us from fair compare.com. so far this year, there have been three successful airfare hikes, a total of $22 round trip is the increase. that's exceeded what we saw all of last year. and it is on pace to outpace 2014. again, the airfares are going up because the airlines have pricing power. there is strong demand right now. fewer empty seats. i don't know last time you took a flight. every time i take a flight, nearly every seat is full. that demand is not slowing down and that's why fair compare points out these increases, you're primarily seeing it on the business fares, but ultimately we're all going to be paying more. however, when you look at airfares, this is the step and i love to show people, inflation adjusted, going back to 2000, airfares are actually down. hovering around $375 round trip.

so even though jet fuel has gone down about 48% in the last year, you are not going to see those savings passed along to you in the form of lower ticket prices. you're going to see higher ticket prices because of that strong demand and that's the reason when you look at shares of united, or delta, or american, really any of the airline stocks in the last month, starting to take off, had a rough year last year, but many believe because of a relatively strong economy, you're going to see the airlines continue to do well, particularly this year. >> and, phil, we talked about debating a global recession, a recession in america. i understand there is a lot of things out there to worry about, manufacturing numbers, perhaps peak auto, but i'll talk -- i'll anecdotally say this, last time i flew was yesterday, monday after i left work, i went to newark airport, i parked in the same area so i never have to worry about where i parked. genius, right? couldn't find a parking space at newark airport. literally every parking space was full. i have never seen it that crowded on a monday afternoon.

>> i'm not surprised. i'm not surprised. i'm going to be flying tomorrow, when i fly tomorrow, it will be a full seat. that's what we're seeing everywhere, brian. with the exception of certain markets. you go to houston, you know because of the energy business and how it has been under pressure, united had to cut back flights going to houston. aside from a few isolated cases like that, generally speaking, the airlines are seeing strong demand around the country. >> they may have cut back capacity, but they didn't cut back on prices because i can assure you i know what i paid for the ticket. wasn't cheap. >> all the seats are full and all of them are so comfortable. we want to -- a new study out -- >> too much room. >> too much room. too commodious for me. cheap air.com says the magic number of days -- everybody looks for the best time to buy and go on and keep checking in, go in at 3:00 in the morning. here it is, 54 days in advance for a domestic flight. that's the sweet spot. that's about seven to eight weeks before your departure

date. why? travelers who have guaranteed plans on specific dates, they tend to book way in advance. last minute travelers are willing to spend more. the dip in prices tends to be at 7 to eight weeks before the departure date. remember, airline weekly seth kaplan says don't book on mondays. too many people coming off the weekend want to book then. so instead wait until tuesday or wednesday for better fares. phil, does this make sense to you? >> it makes sense. seth is a smart man. he talked about this before. there are magic windows in there let's be clear here. this doesn't always work. because you have so many people who are flying and there is so much demand, those windows are getting smaller and smaller for finding those great deals. >> friend of mine was -- friend of mine who we all know here at this desk was looking at flights to italy for later this year on an airline i won't mention. the price miraculously dipped from 900 some dollars round trip overnight to 580.

>> no. >> i'm not kidding you. >> he's asking. >> i hope they grabbed it. it probably didn't -- >> somebody on this desk that i know who loves italian food. >> phil, thanks. >> tomorrow on "power lunch," don't miss our exclusive interview with the ceo of hawaiian airlines, mark dunkerly. routinely the best on time record. >> yes, no bad weather. >> they fly to -- >> they go to kauai. >> he'll be on tomorrow. >> can we do that interview in kauai? another look at oil, by the way, oil down most of the day. you'll be surprised by where it closed. the price of crude oil ending up 2.8%. that's 88 cents on 33.02. still, pretty good rally in the last 20 or 30 minutes of oil trading. >> yeah, it is. surprising. up as much as 3 plus percent. quite a little run there we saw. meantime, chinese stocks took a big hit last night. but the u.s. stock market remains mostly flat today.

are we uncoupled for weakness in china. we're going to get the read from two top traders, trading nation is on deck when "power lunch" returns.

all right, time for trading nation. because traders do trade better together. and today, we are talking about the relationship between the u.s. and the chinese stock markets because even though the shanghai composite fell dramatically overnight, the american markets are shrugging it off. the dow is up 140 points. joining us now, macro trader larry mcdonald and options expert dennis devit. were they ever coupled? >> well, we had had a nice bounce in oil. there was rumors of a special march opec meeting that is going around the market. that supports oil number one. number two, there is also market chatter of a swap line between the central bank of china and the fed. that's been very supportive. and we had a nice bounce in european banks.

the systemic risk globally because of the weakness in the european banks and the cocos. that's also a big positive. so those three systemic issues have been relieved overnight and that i think is driving u.s. equities. >> and may have been what is giving opec a bid or oil a bid. can you repeat that? what did you hear about oil? >> there would be a -- a special meeting in march. >> that's just a market rumor going around now? >> yeah, it is on twitter, out there, venezuela supposedly lobbying for this. and you got to remember, 90% of these rumors in oil have been wrong over the last couple of months. put the market does react to them on a daily basis it seems. >> dennis devit, talk to us about what you view is the relationship between the shanghai composite and the stock market if anything. >> well, i think what has happened is it is kind of breaking down. and, you know, like cramer talks about the pajama traders all the time, it has become less profitable to try it guess that

game. i think another factor you have to look at is we saw an enormous amount of sovereign wealth funds selling out of assets globally, and it feels like they have stopped selling their u.s. assets and may still be continuing to sell other countries assets. that, to me, is a bigger play. so the correlations breaking down and not being as profitable or becoming far more risky to do that shanghai u.s. trade is going to move people out of the space. and then the lack of selling in the u.s. and then record short interest in futures on the s&p 500 in the u.s. so even if you're in that trade, if you go to liquidate out of it, you're in buying u.s. futures, covering your short position, making it that much harder to do the trade. >> okay. hey, guys, thank you very much. dennis, before i let you go, larry, thank you very much, macro guys, you probably wouldn't have this, we have headlines on williams and energy transfer partners, do you have any position or options expertise in ete or williams?

>> right now i don't. >> okay. wouldn't be fair for me to comment on it. >> okay. thank you. the reason i ask that, guys, is right now williams corp. and energy transfer partners are both halted. the two of them were involved in a deal. ete, energy transfer, was going to buy -- is going to buy williams companies. the new york times citing sources just out with a story a minute or two ago saying that energy transfer partners has considered pulling out of the williams company deal. i actually ask the ceo of spectra energy, we had him on yesterday, a pipeline operator, like these two names, before the interview, not off the record, but i said do you think the deal will get done? he said probably because it is a hostile deal and therefore the breakup terms may be very onero

onerous. energy transfer just started trading again, up 5.7%. i'm sure melissa you have talked about this a lot on fast money because williams companies is one of if not the single most owned stock in hedge funds because the arbitrage over this deal. >> it is a favorite. and what really spooked investors a couple of weeks ago or so is the departure of the cfo of energy transfer equities. so that really sort of threw into question what was going on with the deal, why the cfo would leave just as they were trying to negotiate this deal. weeks later, a lot of analysts are asking on the conference call what happened. the ceo said the decision was made that we needed to make a move and we did. but that really sort of threw this whole deal into doubt. into doubt. >> so ete looks like it reopened, did you say? >> it has. it is up. williams company is down. >> energy transfers -- >> now down. so the market is trying to find the right price for the companies. this was a deal that would have created the biggest pipeline operator in the united states,

becoming bigger than kinder morgan. a huge deal surprising a lot of people when it was announced a few months ago. we know what has happened to the entire market. i mean, williams company was a $57 stock, less than a year ago. now $15 stock. many companies, the pipeline space, will tell you, we're not exposed to direct commodity prices. >> they don't. but they have exposure. >> to the companies -- their customers. >> exactly. >> if you look at chesapeake, we all know chesapeake has been a distressed company. its debt is trading, yields on the debt are very high. there were a lot of contracts that were in question by investors that energy transfer has with chesapeake. and the concern there is that chesapeake won't be around to honor those contracts. and so there is exposure, even though they'll say that, you know, the price of oil is not material to our business, but it is in that way. they have got customers that depend on the price of energy to be higher. so -- >> all righty.

we'll keep following -- >> i'm going to -- we had kelsey warren on of energy transfer a couple of months ago. i'll text his handler and see if i can get a comment and figure out if the story is accurate. >> chelsea's handler. >> good. >> we'll be right back. >> and handler? >> good.

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welcome back, let us continue to update you on breaking news that just occurred a few minutes ago "the new york times" reporting that energy transfer equity, ete, two stocks, actually four under the full umbrella is considering abandoning its deal for williams company's both those stocks are briefly halted. energy transfer ete and williams is down. david faber, i know you've spent

a lot of time on this. thanks for jumping on set with us. is etp, williams, it's a complicated thing? >> the buyer for purposes to confuse people even more, something called etc, yet to be fully created. but the deal itself of course is something that we've reported on many times as being -- i think it was middle of january, very problematic given the declining nature of the business itself and declining cash flows that ete is seeing and etp which reported earnings, had a conference call this morning. they were asked about this deal and would not comment on it. why is it a concern? well, part of the deal to acquire williams involves a $6 billion cash payment, $8 a share. we pointed this out many times, a large part of the consideration. when they did this as a $48 billion deal largely in stock, that 6 billion was a very small part of it. they have 3 billion in debt that may also be accelerated should

there be a downgrade in wpz, which is controlled by williams. and they have huge capex requirements. all of that being said, are the cash flows enough to sustain those types of numbers or do you look for a way to get out? what the "new york times" is reporting not much more than the market has been wondering and questioning for some time. the operative part of their story is simply the consideration and recent efforts to get out of this deal and the fact they were contemplating a payment to williams although it was not something actually presented to williams. we have continued con tell plags of how do we get out of this deal because if we do the deal, we may be in a position that's very difficult in terms of sustaining the kind of debt load we're going to have and the capital commitments we have. >> is this why the cfo left?

>> jamie left a few weeks ago, filed on a friday night. >> one of these sort of -- nobody like at this. >> i've been trying to reach him for a couple of weeks and haven't been able to. i don't know specifically what was behind his departure, however, they were facing many difficult times and it was very curious to say the least that a guy who was one of the architects of this, along with kelsi warren should just depart the company -- zblo do we know anything about the terms of any break-up because the way the deal was done. energy transfer had to get aggressive and i haven't seenle deal, there's some sort of massive break-up fee. >> there is a large break upfee. if i recall it was as much as 4 billion -- >> the point is it's big. >> the break-up fee is enormous but beyond that the contract which has been reviewed by so many market participants and by so many lawyers is very tight. so it's been speculated how

could they get out? could they call -- none of it is something they are able to do hence you get these kinds of stories how much would we have to get them. >> every hedge funds owns williams or shorted or has an option. >> the mlp space overall, there's been so much pressure -- >> williams management will be saying no, ain't breaking up. >> unanimously the board came out a while back, we're not getting out of this deal. >> thanks so much for updating us. >> we'll let you know if we hear anything more. >> for more developments, continue watching "closing bell" which is up next.

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drives and thinks like nothing else on the road. the all-new glc. the suv the world has been waiting for. starting at $38,950. hi, everybody, welcome to "closing bell", i'm kelly evans. >> and i'm mike santoli in for bill griffeth. two hours they started to both go vertical and the fed telling cnbc chances for a global recession are not high. >> after citigroup had come out saying maybe they are. >> cracks in the high end restoration hardware, it's really getting hammered today, down 27% or so