18.10, i thought we had much better upside from that level than downside. >> pete, quick. >> i'm looking at volatility. volatility tells me i can buy any equities i want now and hedge them. when you look at the volatility index, 14 being the base lower end, 17 giddyap, nice entry point. >> thank you. "power lunch" begins now. thank you, scott. welcome to "power lunch." i'm michelle caruso-cabrera with tyler mathisen, melissa lee and brian sullivan. former republican presidential candidate mitt romney trying to body slam donald trump in a speech earlier today laying out his point by point case on why america should not vote for him. you won't be surprised to hear that trump is set to react, just about 30 minutes from now at a rally in portland, maine and "power lunch" will carry it live. >> in the meantime, we start off with the mystery surrounding the death of former chesapeake energy ceo aubrey mcclendon.

as we first reported on "power lunch" yesterday, the engineer pioneer died in a car crash in oklahoma yesterday, less than 24 hours after he was indicted on charges of conspireing to rig the price of oil and gas leases. reuters now reporting the private equity fund emg halted new deals with mcclendon just before his death. bethany mcclean is a contributing editor at vanity fair and cnbc contributor. we knew aubrey was scheduled to be in court later on that day. and now this. what have you found? >> well, this is clearly a guy who was under siege from a lot of quarters and i'm connecting multiple dots, but you have obviously the indictment by the u.s. government, and having the weight of the u.s. government brute force come down on you is not an easy thing to live with. that's been an investigation ongoing for the last four years. he was clearly starting to have a lot of trouble raising money and keeping his empire together. he tried to raise $2 billion in an ipo for american energy partners, that fell apart. and energy and minerals group, which is the big energy private

equity firm run by john raymond, lee raymond's son was pulling back undoing recent deals with him and in the wake of the indictment said they weren't doing any deals. a source told me yesterday and reuters has the actual copy of the letter. this is a guy that was under an unordinate amount of pressure. >> your source tell you why they didn't want to do business with aubrey? >> well, it is in the letter. i think they're worried -- look, the guy just got indicted by the government and even if you think somebody is innocent when somebody has been indicted, you've got to be pretty careful about doing business with them, right? but according to the letter, reuters had, they were deeply worried about this being -- the fracking industry has been a wild west land and i think they're worried about this being the tip of the iceberg in terms of the government taking a more active role on what's gone on in the energy industry. >> what if anything do we know about his personal financial situation? apart from his corporate situation, was he in any kind of

personal money distress that we know of? >> really hard to be sure. but it sure seems like it. he had pledged his personal stake in the oklahoma thunder basketball team as collateral for a loan. he had a $400 million loan from goldman sachs that was a personal loan that i think the bank had syndicated out to other investors, so i'm not implying they're on the hook for it. so unless he had a stash of money somewhere that nobody knows about, it sure seems like per his personality, right, he was going all out. this is a guy who always took an an inordinate amount of risk in search of his goals and took risk with his own money and his company's money. >> go ahead. >> bethany, you wrote four years ago could chesapeake energy be the next enron? that's when aubrey mcclendon was running chesapeake energy. what more can you tell us about the way that he approaches business and his personal life

from a money perspective that might provide us some insight into the man? >> well, he's just an enormous risk taker and that was true of the way he built chesapeake. it was interesting, i was listening to you read john arnold's letter and a lot of praise showering down on mcclendon now as is appropriate, but he had aspects that bordered on being a con man and crazy risk taker, as might be true of all great entrepreneurs, right, but he was willing to skirt the fine lines of truth and how he ran chesapeake in terms of trying to enrich himself and taking out a huge loan from the company, he had to sell most of his stake in chesapeake to meet margin loans when the energy -- when the economy went into shock in 2008. this is clearly a guy who lived on the edge. both in terms of how he ran his business and how he ran his own money. >> if we get back to the original news -- new thing we think we know today, which is about emg, this other private

equity firm, which he did an enormous amount of business with, and them telling him yesterday that this is it, we're not going to do future deals with you, i mean, this could have been the straw that broke the camel's back on top of everything else, right? and to just -- so people know, there is a bunch of companies that are going to come public, right, that were a product of this relationship between aubrey mcclendon and emg, right? there will be legacy cop legac from that relationship? >> i guess the survival of those legacy companies is going to be somewhat dependent on the future of the fracking industry in this country, which remains to be seen. though i think there will be a future, a future of those companies are somewhat determined by that. but i mean aubrey is going to leave a huge, huge legacy. but i can't imagine the pressure of having all of this come down on you all at once. clearly a guy who was under a great deal of stress. >> bethany, what is your take on what the next steps are in the

government's case that was against aubrey mcclendon? >> well, look, it is a really weird case because in some ways the story that started this was another reuters story, 2012 story, about rigging in michigan. the government didn't end up charging michigan even though the reuters story was compelling evidence. they did charge oklahoma. but normally if the government charges a conspiracy case, they charge all parties to the conspiracy, right? and in this case they only charged aubrey, they didn't charge the allegedly the other side of it is tom ward who is aubrey's former partner at chesapeake and then was the ceo of sandridge, but he's not been charged. sandridge hasn't been charged. the indictment itself is odd, and aubrey obviously before his car crashed had put out a long statement protesting his innocence. >> the sources that you've been speaking with probably knew of

him. look, you look at the circumstances of how he died, there has been intense speculation as to whether or not it was suicide. any of the people you talk to speculating as to whether or not aubrey mcclendon was the kind of person who would or would not commit suicide? >> i haven't heard any -- i heard the same speculation you have. but i don't know if i'll ever know the answer to that. >> all right. bethany, thank you. >> a lot of speculation here that he wasn't wearing a seat belt. >> wasn't wearing a seat belt, the police department said there was no evident effort to avoid the abutment, the bridge abutment to slow down. could have had a medical problem. could have. >> a lot of things still need to be discovered. bethany, thank you so much for joining us. >> all righty. >> thank you, bethany. why the fed will raise rates more than the market expects. pimco head of global credit will make the case. and tell us how bond investors need to position themselves. that's coming next. you're watching cnbc, first in business, worldwide, and we are

waiting for the republican presidential candidate donald trump to, among other things, respond to mitt romney's scathing speech about him just about an hour or so ago. trump set to speak at a rally in portland, maine. minutes from now. and we'll bring it to you live.

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out as one of the best performing industry groups. shares of tenet healthcare, community health, universal health and hca all trading higher. and this despite the s&p healthcare sector underperforming the broader market, falling at nearly 1%. again, a bit of a standout in today's market. >> seema, thank you very much. well, overall, your investments appear to be at a bit of an inflexion point right now, considering this for the first six months of the year stocks tumbled and bonds soared. the past two weeks or so, we achieved a measure of calm as price movements slowed and people have time to re-evaluate. let us take this time to get a measured view of where we may be headed. mark keisel of pimco joining us now. we're going to get to your views on markets and where to invest in a second. given everything going on, when you go into your investment meetings, how much do politics and the presidency play in any strategy perspective? >> well, i think it matters,

brian, and i think there is a lot of uncertainty now with what is happening with clinton and trump and who the republican nominee will be. i think this will play out over time. and right now what we're focused on is a big opportunity in the credit markets where we see equity returns with a lot less volatility than equities. we think given the risks, given the political risk, we think that actually bonds and corporate bonds are the best place to be today. >> in any scenario, you don't say, well, if clinton is the nominee or wins by this or if trump is the nominee or wins by that, you think bonds overall are the better place to be in the corporate side? >> we do. there will be winners and losers depending on whether it is a democrat or a republican. but the reason why bonds are so attractive today, brian, is that 75% of the government bond market in japan and germany are offering negative yields and equities we think have significant head winds with global growth and the dollar, but credit is offering 4% to 8%

returns in this world of very low rates on one hand and very risky returns on the other. so credit is the sweet spot for investors today. >> what kind of quality do you have to get to do get 4% to 8% returns? junk or can i stay in decent quality corporates? >> so, michelle, that's the interesting thing because you can basically build a portfolio today, which is roughly 50/50 between investment grade and high yield and you don't even have to buy triple cs or single bs, you can buy companies that are double b rated that we think are trending up to investment grade that have the potential to deliver 8% to 10% returns. the fact is is that there is a huge disconnect now between economic fundamentals and company fundamentals and what the markets are pricing in. that creates a huge opportunity. there are numerous companies out there focused on the consumer, focused on housing, focused on health care. these companies are actually improving so there is a huge opportunity right now, the market is pricing in 8%

defaults. that's not going to happen in our opinion. so -- >> i'm curious, you know, the equity markets, we have seen in the past month, we have seen a lot of these being down sectors, materials for one, energy for another, really rebound. the sectors that have led us higher at this point, at what point in your view would there be an opportunity in investing and energy or materials credits within high yield? at some point that could make a great trade. >> sure. and actually we have been underweight energy, metals and mining in a lot of these companies for years. we just started to, what i call, dip our toe about two or three months ago in this sector and the reason is that we see, number one, oil prices bottoming and we're building a support base there. number two, most importantly for bond holders is companies have raised 6 to 7 billion of equity into this market. so basically what has happened is the commodity price environment has forced companies' management to have to act more bond holder friendly. they're diluting shareholders and they're building equity base

below the bond holder, that's a very positive sign. and that's why for the first time in years we have started to add in that sector. >> be as specific as you like here, mark. i think i heard you say sort of 8% to 10% returns in some corporates are possible. in what sectors do you find those 8% to 10% returns or in which companies? give me an example of one of your holdings you feel good about. i'm not telling you to show me your buy list but something you own now. >> sure, anything in housing, building materials. that company is organically deleveraging more than one turn of leverage a year. this company is going to be under four times levered in the next six months. so the company's fundamentals are significantly improving, and yet you're buying the bonds way below par at a yield close to 10%. that makes no sense.

so the reality is is that there is tons of opportunities out there if you have the bottom up research to find the gems. and that's where the double digit returns are in the bond market today. >> 10% yields. love it. i was going to ask you the same question, but energy. any names you're willing to tell us that -- what kind of yield did you get in there? how deep into the messy territory are you willing to go? >> again, we started several months ago when the prices were near bottom. we were basically buying investment grade companies at 7, 8, 9% yield. those companies subsequently issued equity to protect the bond holder and now those bonds are up anywhere from 5 to 10 points. so we did get what i call fortunate in terms of our timing. i will tell you, at these prices today, we are being less aggressive in energy because there has been a significant run-up. i do think today the opportunity is tied to the consumer in housing, in building materials, and in health care. >> i was going to ask you, you

had been bullish on housing and mortgages and just mentioned a building company or remodeling company. are you still overall macro bullish on the u.s. housing market? >> yes, brian, we're very bullish. i just met with jamie diamond a few days ago. >> you buried the lead. what did you talk about in. >> we share -- he and i share optimism on the u.s. economy. the u.s. economy is 70% the consumer. you have real wage growth. real wage growth of 3.5%. job growth of 2. you've got 2.5 million jobs added. the banks are relatively healthy. jpmorgan looks great. and the reality is is that consumers have built their savings. consumer is as strong as it's been in 15 years. that's the diskeconnect. >> mark keisel of pimco, thank you for your insight. moodys cutting its outlook

on china, get morgue negative. what is the credit agency seeing ahead and the person who leads moodys sovereign risk team will tell us in another look live at portland, maine, where presidential candidate donald trump is expected to take to the lectern any moment now. we'll take his comments live as he presumably responds to a stern tongue lashing from mitt romney. black and beedenim co-found he started a second business, a coffee bar, in the same tampa, florida storefront. customers can now sip their joe and shop for clothes at the same time. for more, watch your business sunday mornings at 7:30 on msnbc. our cosmetics line was a hit. the orders were rushing in. i could feel our deadlines racing towards us.

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welcome back to "power lunch." i'm michelle caruso-cabrera. moodys odowngrading its outlook on china. moody's sights reform and fiscal risks. with us is ann van praagh of moody's sovereign risk group. i want to get into the specifics of what you talked about within your note and changing your outlook. normally i would never start on this question but today is unique. donald trump is coming up soon. he's talking about a trade war sometimes at some point with china and tariffs of 45% to stop their imports. at what point have you thought about whether you have to consider whether or not the election could impact china's outlook? >> yeah, for us right now that's not a major driver. the main drivers of our outlook change this week from stable to negative and affirming our double a three rating. first is china has significant rise in debt levels. it has direct debt levels that

have risen about 10 percentage points of gdp over the last couple of years. and it also has a rise in what we call contingent liabilities, these are liabilities coming from other parts of the economy. so if system wide leverage in china is about 180% of gdp, sorry, 280% of gdp, the portion of that x ante we would expect is somewhere in the 50 to 70 percentage point range. >> could i translate that. the federal government of china doesn't have all that much debt, however it is implicitly backed every state owned company, every local government, every municipal government and if and when all of those fail, at some point all of that ends up being supported by the federal government anyway, even though it is not officially theirs, and it is a huge -- what does it get them up to? you just said -- >> the total system leverage is 250 to 280% by most estimates. >> of gdp. >> how does that compare with -- >> it is not unlike other major advanced economies that have --

>> like? >> that have seen leverage in the u.s. and europe over the last decade. >> isn't it more greece-like than u.s.-like? >> 280% gdp? >> china's direct debt, the debt we count at the federal level, and the local government level are much smaller. it is about 40% of gdp. so much more manageable amount for the government to handle in terms of repaying from its revenues and expenditures, you know. it doesn't run a large deficit. a lot of the parts of the economy are doing fine, they're healthy. the parts of the economy that we see were at risk are certain corporates, certain parts of the public policy banks. and certain local government off balance sheet financing vehicles that have generated more debt in recent years. so debt was the main driver. >> what if gdp goes down? what if gdp falls? >> those ratios you referred to this didn't look that bad -- >> look worse?

>> less bad. >> certainly growth is slowing in china. we have seen growth come down from about 7% or 8% to something closer to 6.5% for 2015. we expect that to come down again in 2016. growth is softening. it is as expected. it will be a gradual slowdown. it is not going to be a hard landing in our view. so growth is part of the story. the other two parts of the story are reforms. china -- its state owned enterprises, it's a number of sectors in the economy that are quite overheated. and so the credibility of reforms and the ability to basically tackle what has now evident as a sizable challenge of reforming the economy, rebalancing the economy from what was an investment driven economy to a consumer driven economy is a pretty big challenge. and we saw last summer the stock market interventions, and, again, earlier this year, the trade-offs between managing

growth, managing financial stability, financial systems stability, social stability and economic stability are not always in unison. >> do you -- i'm curious, do you hear from the chinese after you make a move like this? >> can you travel to china? >> can you travel? i would say leave your cell phone here. >> we have, you know, we have -- >> do you engage with them? >> we have dialogue with most of the countries that we rate and that way it is a constructive productive -- >> when you take a move like this, lowering your outlook for them, what do they say to you? >> when we're moving the ratings up and moving ratings down, we have conversations, some conversations are more difficult than others, but we do think about that as an important part of our process and it really does help inform our views. >> like not much harder for you, not extra paperwork or extra steps to take. >> no, we have certainly visited china many times, we have offices in china, we have people who work in china.

>> does anybody own that much chinese debt? can you own chinese debt as an american? mostly -- is it dollar -- what is it? >> so most of the debt is now uninsured debt. there is diversifying sources of kinds of debt that are there. local government, the bonds, all these different kinds of debt. yes, certainly, investors can buy. as a foreign investor, there have been fairly strict controls over the kinds of things that you can invest in, the kinds of investments securities you can own. but and that's starting to loosen up now. last -- last friday, you know, this move to open up the interbank borrowing channel for foreign investors is a big -- is a sign that they're starting to loosen up the capital account, starting to allow more inflows. that's a natural place to start if you want to liberalize the capital account. >> panda bonds. they're cool. >> cute. >> thank you, anne. >> anne van praagh of moody's. another look, portland, maine, at any moment donald trump is expected to respond to

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welcome back to "power lunch," everybody. i'm tyler mathisen. there you see the podium, the american flags, in front of which donald trump will speak very shortly. any moment now. he's presumably going to respond to comments made earlier today by former governor mitt romney. trump is holding a rally up in portland, maine. we will carry it live as soon as it begins. in the meantime, let's get you caught up on where the markets stand now. fractional moves on the dow, s&p as well as nasdaq. sort of in a holding pattern ahead of tomorrow's jobs report. let's look at wti trading slightly higher, 2 cents a barrel higher, 4468 is the trade there. energy is the best performing sector on the s&p 500 led by chesapeake energy, up by about 23% in today's session. let's get to sue herera for a news update. >> hello, melissa. happening at this hour, house speaker paul ryan discussing the presidential race this morning. saying he will not remain silent if conservatism is being maligned.

>> if i see episodes where conservatism is being disfigured, if i see ideas and comments that mislead the people as to who we are as republicans, i'm going to speak out on those. south africa's constitutional court rejecting olympian oscar pistorius' motion to appeal his conviction for the murder of his girlfriend reeva steenkamp. he faces a possible minimum 15 year jail sentence. jordan taking delivery of eight blackhawk helicopters provided by the u.s. as part of a $200 million grant to bolster its capabilities in the war against isis. in a ceremony at the amman airport, american ambassador to jordan alice wells said washington will always support its ally. retired soccer star brandi chastain has agreed to donate her brain to science for concussion research after her death. she says she hopes her decision will increase the attention and research surrounding concussions. you're up to date. that's the news update this hour. back to you.

>> important issue. thank you, sue. prices closing now and gold is higher by more than 1% at this hour, gain of $15.50 per ounce, 12.57 is where it is trading now. the rest of the metals complex at this hour. and silver higher with copper, palladium, all higher across the board with copper higher by more than 1%, gain of two cents, almost three. stocks modestly lower ahead of the jobs report tomorrow. concerns about the economy been a drag on the market since the beginning of the year, of course. joining us now are jamie cox, managing partner at harris financial group and jack ablan at bmo private bank. we'll talk about your stock picks in a minute. first, to you, jack, if i may, does the political scene affect your investing approach now or will it later in the year at all or are you just plain past it? >> i think there are a couple of sectors certainly going into any election season that tend to be

the punching bags of both parties. and that's financials and health care. so i think for the most part, what we'll do is we run our normal analysis, but then put an overlay on it to just, you know, make sure that, for example, if we're going to buy financials in health care that they're cheap enough to offset some of the headlines that we would expect. >> and jamie, how about you, do you think -- let's say the front-runners succeed in winning the nominations, do you invest in any way at this point of the year with a president trump or a president clinton in mind? >> no, tyler. i don't make any investment decisions based on who the president will be. congress is far more important. the complexion of the larger bodies of government make a lot more difference than the president, so that doesn't play into our invested thesis at all at this particular stage. >> would you like to see gridlock persist? >> no i would like for gridlock to be over with. i'm tired of it. i think we need to move forward on lots of trade policies and on tax policy in particular. i would like to see this government get out of gridlock

and i would like to see things get done in and accomplished in washington. it is sad to be so close. >> other policies aren't so good. >> go ahead, jack. >> yeah. let me mack a point on gridlock. i think investors have embraced gridlock over the years because we had monetary policy on our back pocket. i think now that interest rates are zero and we have got a $4.5 trillion fed balance sheet, we do need to rely on fiscal policy. and i think that is a shift that has changed since the early '80s. >> all right, to some stock picks. jamie, you have some ones that you call recession proof. i don't think that necessarily means that you're predicting a recession, but these are ones you think could stand up to a slower growth economy. tell me about a couple of them. >> well, i like target. investor day yesterday, i like what the company is doing, they're a lot less levered to food than some of the grocers but have a technology-based

company. in retail, you hear about amazon and walmart and they fight back and forth between who is better and who is worse. and all the while target is motoring right through, they got a better shopping experience in the store, and online. and if they can get some of their stock out issues taken care of, it is a good place to invest. i like companies that invest in their capital and in their fixed equipment as opposed to just buying back their own stock. that's a very good place for target, get a nice yield, a little under 3% to weight and i think investors are good there. also, the telecom side if you look at this last couple of months, telecom companies shot the lights out, done really well. and if you look at cci international, what you're looking at is a company with a first derivative play that owns the towers. you can get the rents from all of the work that we do and all the mobile traffic that comes across those towers. a yield that is not that different from what you get on at&t. but you get traffic and also revenues from all four of the major telecom players. >> jack, one of your picks is

chevron, tell me why you think now is the time to get in. >> sure. so i was on a widows and orphans stock panel here last night in orlando. and we like chevron because the sector has been beaten up, but at the same time, chevron is what we would call a dividend -- this is a company that maintained and grown dividends consistently. even in 1998 when oil was $10 a barrel. and at current prices the dividend yield on chevron is nearly 5%. >> gentlemen, thank you very much. jamie cox with harris financial group, jack ablan with bmo private. go to powerlunch.cnbc.com now to see why jack says the economy is not as bad as the presidential candidates say. that's powerlunch.cnbc.com. any moment now, the donald. donald trump expected to respond to comments made earlier today by former governor mitt romney. they were not kind comments. romney called trump a phony.

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waiting for donald trump to take the stage in portland, maine, to respond to comments made earlier today by former governor of massachusetts mitt romney. let's bring in john harwood life in washington with more on what mitt said. interesting to put it mildly sort of full frontal assault on donald trump, the candidate, donald trump, the man. john? >> tyler it was interesting for exactly the reason you mentioned because there was so much emotion and depth behind what romney was saying, the way he condemned donald trump. let's first talk about the policy element. he went after donald trump's foreign policy as dangerous, and his economic policy as something that would result in a

recession. >> his proposed 35% tariff-like penalties would instigate a trade war. and that would raise prices for consumers. kill our export jobs. and lead entrepreneurs and businesses of all stripes to flee america. his tax plan, in combination with his refusal to reform entitlements, and to honestly address spending, would balloon the deficit and the national debt. >> now, that would be enough to condemn any politician within one's own party. but mitt romney went a lot further than that about donald trump. he essentially portrayed him as a bad guy at his core. take a listen here. >> now, i'm far from the first to conclude that donald trump lacks the temperament to be president. after all, this is an individual who mocked a disabled reporter, who attributed a reporter's questions to a menstrual cycle, who mocked a brilliant rival who happened to be a woman due to her appearance, who bragged

about his marital affairs and laces his public speeches with vulgarity. donald trump says he admires vladimir putin, at the same time he called george w. bush a liar. that is a twisted example of evil trumping good. >> now, the combination of both a policy and character attack makes this so strong and makes donald trump's response which we're about to hear so interesting, creates so many different angles too because chris christie, the keynote speaker at mitt romney's convention four years ago, just has been giving a press conference, he characterized his disagreement with romney as a political disagreement. this is headed within the republican party for a lot more than that, guys. >> you know, i'm reading a quote from john mccain, i share the concerns about donald trump that my friend and former republican nominee described in his speech today. i would also echo the many concerns about mr. trump's uninformed and indeed dangerous

statements on national security issues that have been raised by 65 republican defense and foreign policy leaders. what is going on here, john? is this -- is a split of the republican party in the offing here if something doesn't happen? >> tyler, i think it is increasingly hard to see how a fracture of the republican party does not take place because if donald trump goes on to win the republican nomination, given condemnations of the scale and intensity that we're hearing now, prominent republicans saying they could not support him as their nominee, i think you're looking at major republican defections in the fall that would make it easier to elect a democrat. on the other hand, if these efforts by mitt romney and other members of elite republican leaders, donors, the policy community actually end up stopping donald trump from winning the republican nomination, how do you avoid a scenario where donald trump, who repeatedly threatened to leave

the party, bolt and go independent, how do we avoid that sort of scenario from happening? i'm not sure it can be avoided. >> i was going to ask you about that, john. chris christie was speaking essentially when "power lunch" was on, there is headlines that said he urged trump not to leave the party. that is related to that, correct? you heard the speech. >> yes. and i did hear, you know, both romney and chris christie, sure, he's going to say as a republican politician that he urged trump not to leave the party, but it is hard to imagine donald trump heeding that kind of advice if he concludes that the republican nomination as some of his advisers have put it is being stolen from him by the maneuvering of republican leaders, a fissure of that kind between the rank and file, which is voting for donald trump, and the republican elite, which is trying to stop him -- >> to that point, john, does romney -- >> -- is tough to overcome. >> does romney help trump in any way being the definition of the

establishment that donald trump is fighting so hard against, that he's clearly tapped into a vein in the american public that has become so anti-establishment. romney doth protest too much, i think, to some people. it may help donald trump in some ways, prove his point. >> i think that's a distinct possibility. but we're at a point where the republican elite is so frantic about the idea of trump being nominated, that they have simply decided the only thing they can do, what they have to do is throw every possible thing at him. and we have seen many political tactics in regard to how people deal with trump, back fire this year, of course, all the people thought that donald trump was going to fade away on his own. that's what i thought too. and many other -- >> me too. >> many other people who covered politics for a long time thought he would go away on his own. we can't predict the effect it will have. they feel like they have no choice, they can't sit there and watch it happen. >> well, john, let's say trump

sweeps the table, right, runs the table for the rest of the primaries. and then the republicans pull this tactic at the convention. aren't the republicans then just saying, we don't necessarily care about the will of the people. >> yes, brian, that's what they would be saying in that case. but on your scenario there, if donald trump sweeps, they're not going to be able to do that. the only way they can step in and yank the nomination from him is if you can get a kasich winning ohio, a rubio winning florida, they amass enough delegates so donald trump can't win a majority on the first ballot at the convention and then try to through some maneuvering get somebody else nominated. that's where i think that scenario could come into play. >> you could make that accusation against the democratic party right now because the use of super delegates. bernie sanders may have had a chance, but because we know those super delegates were backing hillary clinton, the mountain he had to overcome to

get the nomination is incredibly difficult, right? the way the dnc is structured versus the rnc is very different. >> yes. and, look, if bernie sanders were leading hillary clinton in pledge delegates, and that they went to convention and the margin was the super delegates, that's the argument that bernie sanders would make and probably would succeed. politicians don't want to be in the position of defying the voters of their state. democrats set up rules that way because of an era when they appeared to not be able to win presidential elections. their voters were nominating people who could not compete and win in the fall and so party leader said we're going to maximize our ability to leverage this process to produce the kind of nominee that we want. but i'll say this, i don't think that speech of mr. romney's probably changed any trump supporters' mind about donald trump and why they like him. it was very interesting, john, to listen to some of the things that business man mitt romney

had to say about business man donald trump. let's listen. >> wait, wait, wait. is he a huge business success? doesn't he know what he's talking about? no, he isn't. and no, he doesn't. his bankruptcies have crushed small businesses. and the men and women who work for them. a business genius he is not. >> we can debate that. i'm sure mr. trump will fire back, john, in a few minutes. but those quotes and others in that speech, they are going to be seen over and over if mr. trump does get the nomination. they're going to be seen over and over and over again in democratic ads. >> tyler, no question about that. and the thinking behind that is, you know, attacks on donald trump on policy, on the way he has diverged from republican orthodox thinking, saying, for example, we don't need to do anything to medicare and social security. you enact my economic policies,

i'll grow the economy so much, we don't have to touch them, those are things appealing to a lot of working class voters, and so that's not a way to go directly at donald trump within this republican party at the moment. but the thinking is if you can say this idea that he's a strong guy who built a big business and therefore can make america rich, if all of that is fake, if it is, like, a hollywood set, a potemkin village that all these things haven't been successful, haven't been so great, that's the idea behind that kind of attack, hasn't worked so far and i got to say, you know, if you make a list of all of the things that people like us have looked at over the course of the campaign and said, that's going to hurt donald trump, that didn't hurt donald trump, it is a very long list. >> and the latest -- >> can we talk more macro here, just for a second, because it is, john, you know, every 50 to 75 years there seems to be this major realignment in american politics. we all get very comfortable with

the way things are. and then something happens. you can look at mcgovern in 1972. a third party system got created. it seems weird going back that far. but we get used to a system, do you believe this is one of those times in political history we're going to write about and look back in 40 years and say, wow, 2016 in many ways completely remaid the american political system? >> that would not be my expectation, but the point that you're making, you know, various agr degrees in which your point could be a correct one. does it blow up the two party system and create a third viable party? i'm skeptical of that. does this accelerate the process of renewal and rebirth within the republican party as it tries to adapt to changing economics, to changing demographics and figure out how to make a majority coalition? yes. that is possible. remember, democrats changed as a party when they lost

presidential elections consistently over a 20-year period and lost them so badly they thought they had no chance of getting the white house back. if republicans -- they haven't had a lot of that kind. they lost relatively narrow. john mccain and mitt romney lost relatively narrowly, even bob dole and george h.w. bush. you haven't had a 49 state blowout like the democrats suffered that made them think, wow, we have to do something different. donald trump could be a change agent in that way, whatever happens in 2016, there may be a different and stronger republican party that comes out of this. >> you mentioned all the various steps, bumps along the way, that we thought could impact the trump run and they haven't. tax returns is probably the latest one. let's take a listen to what mitt romney had to say about the -- i was going to say about the donald's -- trump's reluctance to release the tax returns. >> i predict despite his promise to do so, first made over a year ago, that he will never, ever release his tax returns.

never. not the returns under audit, not the returns that are no longer being audited. he has too much to hide. >> and so far he continues with that stance, john. they're being audited. of course i wouldn't release these tax returns, that's just -- that's ludicrous. >> right. now, look, i'm skeptical that failure to release tax returns is going to hurt donald trump as an attack line very much. however, this goes to what i was talking about with tyler a moment ago, the idea that maybe the tax returns, especially if they can bait him into releasing them, maybe they'll show that donald trump isn't so great and rich and successful as he's been portraying himself. you know how thin skinned he's been about his wealth and he says i'm worth more than $10 billion and he sued writers who suggested he exaggerates his wealth. what romney and others who are pedaling this line are trying to suggest is that he's hiding not just the potential for chicanery

on his tax returns or ways to reduce his tax -- and donald trump said proudly, i tried -- i do everything i can to pay as little tax as possible. but they're trying to suggest he didn't have as much money as he claimed and tried to undermine in that way. >> i find it ironic, didn't mitt romney wait until late september to release his tax returns, september of 2012, so -- i don't know. >> therein lies the problem. >> there are multiple problems with this. we haven't even mentioned yet the fact that mitt romney, after donald trump had displayed many of these personal qualities that mitt romney finds so repellent today, and after he had advanced the birther discredited birther issue against president obama, mitt romney happily went and received his endorsement. that is something that has been retweeted today by trump advisers, all to undercut mitt romney's message and convey it as the republican machine striking back, not out of real conviction and authority, but because they simply don't like

trump and want to protect their own interests. >> john, stay right there. we're still awaiting donald trump to respond to all of the allegations being put forth by mitt romney today. stay with us. "power lunch" will be right back. at ally bank, no branches equals great rates. it's a fact. kind of like social media equals anti-social. hey guys, i want you to meet my fiancée, denise. hey. good to meet you dennis.

woman:man: yes.a newspaper? woman: it's quaint. man: did you read about this latest cyber attack?

woman: yeah, i read it on my watch. man: funny. woman: they took out the whole network. man: they had to hand out pens and paper. woman: yeah. man: could it happen to us? woman: no. we're okay. man: we are? woman: yeah, we brought in some new guys. man: what do they know that we don't? woman: that you can't run a country with pens and paper. it's not just security. it's defense. bae systems.

all right, folks, welcome back to "power lunch." tyler mathisen here. donald trump not there. we're waiting, though, for him to appear at a rally in portland, maine, to respond to comments made earlier today by former governor of massachusetts mitt romney. that rally is getting ready to get under way and we will carry it live as soon as he begins. we will return meantime in two minutes. it is time for the your business entrepreneur of the week. black and denim co-founder roberto torres took a shot when trying to brew up sales at his clothing company's new store. he started a second business, a coffee bar, in the same tampa, florida, storefront. customers can now sip their joe and shop for clothes at the same time. for more watch "your business" sunday mornings at 7:30 on msnbc. our cosmetics line was a hit.

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welcome back to "power lunch," everybody. just a few seconds shy of the top of the hour. i'm tyler mathisen. donald trump is getting ready to any moment now as we have been promising you for the last half hour or so respond to comments made earlier today by former massachusetts governor mitt romney, scathing comments, trump holding a rally in portland, maine. and we will carry it as soon as it begins. as we await trump, let us talk some markets and do not be tempted to buy bank stocks, especially with the risk of interest rates potentially turning negative around the world. bond king bill gross making that call today as part of his new e investment let and joins us now. we'll get to those investment ideas. but good grief, with everything going on and by the way, if the donald walks on, i are tohave t apologize and jump in, does

everything make you want to hide under the desk and just buy treasuries or gold? >> if i'm an investment standpoint, perhaps. i do enjoy the reality show for the past six to 12 months and the ensuing 12 months. it is good entertainment, but somehow to my way of thinking the political system deserves to be more mature, and shortened in terms of time. >> does it affect your investment outlook at all though, bill? >> no, not really. we don't know who is going to win and to be fair all of the candidates talk a lot, but they have a congress to go through and so ultimately what comes out of an election is highly uncertain. so, you know, perhaps six months down the road, but not yet. >> i do think -- i think that's an incredibly important point you're making, that presidential candidates and presidents can say whatever they want, but congress is ultimately in control of the law-making in this country, that gives us a measure of comfort, i suppose. we look at maybe who is running

the world, i don't know if it is a political party, might be the central banks, maybe they're the most powerful entities in the world. and if they continue to drive rates where they are, japan negative, germany, ten-year bund, nearly negative, why does that make tank banks a stay awm investment? >> i wasn't picking on banks in particular. i was talking about banks, but i was suggesting that the credit generation, which has hour powe the u.s. economy is of losing its oomph. banks and insurance companies, pension funds and, yes, investment management companies will be hampered going forward by low interest rates, flatter than historic yield curves and their ability to earn historic levels of return on equity and assets. it is not a bank specific thing, but it simply means that you -- the margins that -- the nims as the banks call them, net interest rate margins, are much lower and therefore, you know, the return on book has to be

adjusted to a new historic level where interest rates are low and yield curves are flatter. >> is there any asset class investment, whatever, bill, that wins globally in a negative interest rate environment? >> well, sure. the borrower wins, right? if you can borrow at a negative interest rate, the governments that are borrowing there win and what i suggest on your program in the past is that if you can find a convenient way to borrow money, not to go to a bank and take a loan, but to borrow money through the equity market, then, you know, perhaps you should do it over a long-term basis. closed in fronts, many of them, borrow money, 30 or 40% of their total net assets and they produce returns that are 1.5 to 2 times more than the asset class. examples being black rock build america, bbm, or nbb, those are closed in funds that invest in sort of guaranteed types of government securities and they borrow money and they produce yields of 6% to 7%.

so you should borrow money as they're lower or negative and invest in hopefully safe assets on a mildly levered basis. you can do that with closed in funds. >> it is michelle. i want to understand a little more about what you're saying about banks. i get it with net interest margins. are we going to -- no, that's not him yet. not yet. sorry, bill, we thought it was donald trump walking out but it was his introducer. >> see you later. >> what are we doing here, guys? >> okay, bill, don't move. we're waiting for donald trump. he isn't out yet. banks, we understand negative interest rates bad for them, obviously. are you saying stay away from the stocks and the bonds? are you worried about the banks' health to such a degree you would avoid them? >> no, i think the banks are well capitalized, we know that. neel kashkari, basically suggesting that there is no bank that is too big to fail. but the system itself, michelle,

is, you know, highly levered. when you have a system that is dependent upon credit creation, which our system and the global economy is, then you need to create credit at a faster and faster pace to basically stay in. and so we haven't been doing that. credit in the united states has been growing at 3% to 4%. we need 5 to 6 to 7% to produce an acceptable return on assets. that's the cost of assets and the historic basis. so the problems in the system not necessarily in the individual banks. >> the -- we had a number of guests come on that said they think the ten-year yield will go to 1% or less. do you think that's possible and what would that mean for the economy and also for fixed income investing? >> well, it is possible. i don't think in the united states, let's put it out front, that u.s. economy is growing at 2% this quarter and probably, you know, isn't look at a recession. so 1% treasury yields, i don't

think so, but on the other hand, 45 to 50% of the global market in terms of sovereign yields are less than zero. so central banks are printing money as fast as they can. and, you know, it pays to know that if japan's ten-year is less than zero and if german bunds are less than zero, then perhaps the u.s. treasury rate should be relatively low not 1%, but relatively low. it is a market that depends on relative values. >> there has been a tremendous rally off the -- what appears to perhaps be a bottom when it comes to the emerging markets. have you looked at that area at all, been tempted in any way, why yields that were quite explosive? >> well, i think the yields are tempting. and in some cases the emerging markets, take an example of venezuela as and easy one. dependent upon commodities, dependent upon oil, and then they sell it at a decent price or they ultimately go bankrupt.

other countries are not as close to that bankruptcy level, but commodity producing countries like brazil, that produce potentially oil and all other, you know, commodity basket types of goods and services, you know, have to -- have to cover their debt and it becomes much, much harder. so, you know, the emerging markets are at a very crucial point in which if central banks are -- can successfully reflate the global economy, then they'll do fine. if they can't reflate, and if we continue to deflate as evidence by the oil price more specifically, then, you know, those emerging market companies have problems. >> speaking of emerging markets, back to donald trump, who is at one point talking about a 45% import tariff on products from china, which would ultimately lead to a trade war, we don't know if he'll be the gop nominee, we don't know if he's ever going to be president, but what kind of policy -- what kind

of effect would that policy have? is there any way to see justification for that or what would that do to investing? >> well, free trade is driven the global economy for 30, 40, 50 years at least. and so anything that stands in its way is an impediment to global growth. actually global trade in the last year or two pointed out by several news dailies in the past few days has been retracting as opposed to growing. and so global trade is important if we put a 40% tariff on global imports like perhaps trump is suggesting, and that would certainly be a negative from that standpoint. might be a positive from the stand point of the middle class worker as they, you know, are afforded an increased opportunity for a job. but it has a serious negative in terms of economic growth. >> bill, you've been investing for a while. just leave it at that. has there been a political

environment in your investment career that has looked as absolutely gonzo bonkers nut so as where we are right now? >> well, no, we had prosper row in t ross perot in the '90s, but it wasn't gonzo. it should be more mature, more intellectual and we haven't gotten to that point where, you know, intellect dominates emotion. i suspect at some point even trump, if he wins, you know, the nomination will become more intellectual. he's a smart guy. and he knows that he's got to talk about ideas as opposed to dominating personalities. we'll see what happens. but, yeah, it is a goofy year ahead of us. no doubt about it. >> where have you been making money so far this year, bill? where do you expect to make money for the remainder of the year? and what kind of money are we talking about? >> let me give you a few ideas.

you know, unconstrained, unconstrained means the entire universe of investment ideas, what you want to do is you want to find the one with the highest return and the least amount of risk. hard to do but that's the job. >> bill, we -- it is that time. but we got a lot of time, we appreciate your patience and your insight. as always. bill gross of janice. thank you. if you can still hear us. we have a lot of signs up that say trump. we're waiting for the man, tyler. >> yes. >> he will soon appear -- >> there he goes. >> the governor of maine. i recognize it wasn't trump because it wasn't the right hair. >> thank you. thank you so much. what a turnout. what a turnout. wow. thank you. i want to thank paul. boy, i'll tell you, i love tough people. you need tough people and he's a tough cookie.

and when we got his endorsement, we were thrilled. i will toll yell you that. he's a great guy. i was doing a little bit of a thing called a debate. get him out, please. get him out. what are they doing, right? what's the purpose? whatever. well, it gets a little television time, i guess. but -- you know, i was going to the debate. i was going directly in from florida. i'm down in florida. we're campaigning. we're doing really well in florida. we're campaigning against a guy that has the worst voting record in the history of the state of florida, named rubio.

he's -- i call him lightweight. he's a lightweight. but the worst record in the history of florida. i don't know. i should do well there. let's hope i do well there. i love florida. but i was -- i was going to detroit. and i said to my people, i have to stop in maine. i felt so -- i just had to stop in maine. so i wouldn't say that it is a very direct route, would you say? instead of going this way, i went this way and this way and that is good. i'm so glad. and, you know, to put -- to put this incredible sold out crowd and you have thousands of people outside, to put this crowd together in a period of, what, 24 hours is pretty amazing. and maine is amazing. maine is one of the most beautiful places on earth. and people don't realize how large your landmass is. i was talking to paul -- as large as all of new england, when you think of it. that's some piece of land. can i buy some, please? can i buy some?

can i buy some? so, you know, i've been watching with great interest as we get, you know, go down the line. we had some amazing results. and right nearby with new hampshire, it was an amazing, incredible thing. and, by the way, every single time i went to new hampshire, whenever i met with people, they say number one problem, number one problem, heroin. number one problem. and i would say, how is that possible? you look at these beautiful fields and the beautiful little roads and everything is so beautiful. and it was the number one problem. and it comes from our southern border. and we're going to close up that border and we're going to build a wall and we're going to stop the drugs from coming in. believe me. we're going to stop. and people are going to come into our country, but they're going to come in legally. they're going to come in legally. but we're going to solve the problem. but, you know, i watch these pundits and when i first started, my wife melania and i came down the escalator and i

first started and it was an amazing thing. i said we have to do something. we have people that don't know what they're doing. they don't know what they're doing in running our country. and i got some of that today. just in hearing some of these things. but they don't know what they're doing. we have to do it. and it takes guts to run for president. i'm not a politician. i'm not a politician. all talk, no action, nothing gets done. and, anyway, we're coming down, and i said to myself, you know, there is so many things, and then i watch the pundits and they said, oh, trump, i don't know, we have some great talent running. i'm trying to figure out where. where. what's the talent. what's the talent. but, you know, you come down and you do it and start talking about trade and see what happens with trade. trade has -- trade has been such a disaster. but the pundits all said, i came out at 3%, first one. my wife said, you know if you run, you're go heing to win. people still say you're not going to run.

she said, but if you run, you're going to win. i said, oh. she's my pollster. she's my pollster. i paid her less money, but she's better than the -- so you know what happened? i started at 3, the first day here something i was at 3, which i wasn't exactly thrilled about. then it went up to 6 and it went up to 12, went up to 18. and then it kept going up. and every time i went up, the pundits would say he's plateaued. plateaued. well, he's always going to get 6. that's a 6 solid group. then i went up to 12. well, you know, that's a solid group. then up to 24. and they said, don't forget, that's 17 people, we had 17 people, that's a lot. 24 with 17 people is pretty good. we went up to 24. and they said, well, that's the max. there can't be any more. than 28, 32. so cnn just came out with a poll, trump, 49. that's high. that's high. and i'm very proud of it because

this is not a plateau. this is a movement. we have a movement going on, folks. time magazine did a story recently, a couple of weeks ago, talking about what is going on. and they never have seen anything like it. people have never seen it. they say, actually, and i don't think i'm exaggerating this at all, and i don't want to exaggerate, but many of the great writers of which there are very few because the media is among the most dishonest people i've ever dealt with, but they said -- they said in the history of this country there has never been anything like this, what is happening. we were in huntsville, alabama, the other day, we had 35,000 people. 35,000 people. we were -- we went to arkansas, which you saw, is that another one? get him out. get him out. get him out. they just don't stop. all right. get them out. thank you. bye-bye. bye-bye.

terrible. incredible. now you know you can be nice, but if you're nice, they'll say, you were so soft. then you can be vicious, get out of here, right, and then they'll say you were too harsh. so i developed a nice, all right, please get them out. it is incredible. i love you too. i love you too. i love you too. and, by the way, you know, i'm self-funding my campaign. i'm putting up all my money. but you have to do -- all i want, i don't want your money. i just want one thing, your vote on saturday. get out and vote. don't forget, i did that big long turn, slightly long, did a big turn, so you can get out to vote, okay? that's the least you could -- so -- thank you, thank you very much. so our country and our theme is make america great again.

and over the last little while, i met so many people, thousands and thousands and thousands of people, we have like this, now we're only confined by the size of the room. this is packed, but this is the size of the room. thousands and thousands of great, great americans and i have more confidence in this country now than i've ever had before. i have seen -- i mean, millions of people, really, because when you get 35, 40,000 people for rallies, and we have by far the biggest rallies. i will say that. and bernie is second. he's second. but a distant second, but he is second. i give him credit for that. but we have by far the biggest and i see by far the most people and this country has unbelievable people that love our country. just remember that. and i want to see the day in the not too distant future when apple makes their iphones in this country and not in china and all of these other places.

now, i heard and i saw just a little bit of it, but i heard that mitt romney made a fairly long speech. and i mean, honestly, i'll address it quickly, because it is irrelevant. look, mitt is a failed candidate. he failed. he failed horribly. the third debate -- he failed badly. that was a race i have to say, folks, that should have been won. that was a race that absolutely should have been won. and i don't know what happened to him. he disappeared. he disappeared. and i wasn't happy about it. i'll be honest. because i am not a fan of barack obama and that was a race that i backed mitt romney, i backed him, you can see how loyal he is, he was begging for my endorsement. i could have said, mitt, drop to your knees, he mwould have dropped to his knees. he was begging.

he was begging me and did you see how great -- he said, i'm not big like him, he's the great businessman, all that stuff, well, since then i've done much better. and now he tries to -- we'll talk about that in a second. but mitt was thinking about running again. he ran a horrible campaign. it was a campaign that should have never been lost. you're running against a failed president. he came up with the 47%, he demeaned 47% of the people in our country, right, the famous 47%. once that was said, i'll be honest, once that was said, a lot of people thought it was over for him. then the last month and a half he disappeared. and i called his people and i said, you have to do yourself a favor. obama, say what you want, he was on jay leno, on david letterman, all over the place. the last three or four weeks, mitt was looking for zoning for nine car garages, something, in california. right? i said what is he doing? who cares about a garage? you're running for president.

mitt was a disaster as a candidate. what happened? and it was very strong and i think if the press goes back, they'll see it, when i heard he was running again, and i wasn't sure i was going to be running, but i was very, very strong to mitt. and to everybody. and publicly. not to talk to him. i didn't want to talk to him. i was so disappointed. because he let us down. he let us down. it is one thing you lose and you work and you work and you go. he let us down. he should have won. something happened to him. he went away. he was gone. he was horrible in the third debate. it was a horrible -- something happened. i don't know what happened. maybe some day, though, he'll write a book. his campaign guy was terrible, terrible. he had a terrible campaign manager who is always on television. stewart stevens or something, always on television, knocking everybody. the guy ran one of the worst campaigns in the history of modern politics. and mitt ran probably was the worst run that most people have seen.

most people thought that the republican candidate would win. so when mitt started raising his head a few months ago, i was very strong. i said, mitt romney should not run, he's a choke artist. i said it very strongly. i wanted to keep him in. and then jeb bush actually convinced mitt not to run. can you imagine jeb? jeb sold him. jeb, he's a good salesman. now that he's out, i'll say jeb is a good salesman. a high energy salesman. but mitt was afraid of jeb because he was afraid that jeb would get the money and jeb would get the whatever. and, you know, i wasn't afraid. i wasn't afraid of jeb, i can tell you that. what happens is jeb bush convinced mitt not to run. mitt was going to run. a third attempt, the second one being one of the great catastrophes. the first one just didn't happen. so that's okay. but the second was a catastrophe. and what happened is he went to see jeb, and jeb had him convinced he's going to run, he

has the money, and mitt chickened out. i'll tell you the real reason he chickened out, it wasn't jeb it was me. because i said he's -- if you remember, mitt was all set to run. i know this from people close to him. and i think he probably still has a desire maybe at the convention to try and get some kind of a thing. hillary clinton will destroy him in the election. assuming she's allowed to run, assuming she's not arrested for the e-mail situation. which is so terrible. which is so terrible. i mean, so terrible. but let's assume that the democrats are going to protect her. let's assume that i will be running against hillary and i really want to. i would love to run against hillary. and by the way, we have numerous polls that show me beating her easily and i haven't even started on her yet other than four weeks ago, i did. remember? she called me sexist, and i hit her with the husband and that was the last time i ever heard

the word sexist. they had a rough weekend. that was a rough weekend. bill was not happy. i guarantee you he said, don't you ever say that to him again. say it to somebody else. but not to trump. that was a rough, rough weekend they had. but mitt was going to run as sure as you're standing here, i'm sorry we didn't get to -- too many people, he was going to run and i was very, very angry that he was going to run. i didn't know i was going to be doing this. but i felt i wanted to. nbc came to me, wanted to extend the apprentice for two seasons, 28 episodes, steve burk, steve burk of comcast, great guy, came up to my office with the people at nbc, please, donald, we would like you to run, we would like you to not run, we would like you to run and do the apprentice. the ratings after 14 seasons were still fantastic. they were still great. and i said, steve, i think i'm going to run for president. no, no, no, you're not. i think i'm going to run for president. they didn't want me to. they wanted me to -- the show

does great. and ultimately i decided to run and you're not allowed by law with equal time laws you're not allowed to do both. and we chose arnold schwarzenegger, how will arnold do? does anybody know? who would be better, arnold or trump? ready, arnold? trump? well, we're going to find out if arnold is quick. if he's not quick, he's not going to look good. when you have omarosa and the other ones coming at you, you got to be quick and smart. we'll find out. we'll learn a lot about arnold. i hope he does well. i hope arnold does really well. i was going to do that. they renewed the show with me, in the up-fronts, and i just -- i just said i can't do it. i'm not going to do it. i gave up a lot of deals. i gave up a lot of things to do this takes a lot of effort, a lot of -- those are the people trying to get in. can you believe it? okay, how about everybody in that clearing out we'll let a new group in. is that okay? so anyway, when i heard mitt was going to run, little before this

period of time, i was very tough. i said, he can't run, he can't run. he was going to run. he can't run. then i started to say, look, we got to keep him out because he's going to lose. he's a choke artist. he's an absolute -- i started hitting him so hard. people say why did you hit him so hard? we cannot take another loss. we can't take another loss. and mitt is indeed a choke artist. he choked and choked like i've never seen anyone choke other than rubio when chris christie was grilling him. that was one of the great chokes. i know. rubio of florida, that was one of the great chokes i've ever seen. he was shaking, sweating, i was getting ready -- i'll standing here like this, he's right over here, i'm getting ready to grab him, bought i thought he was going down. but mitt did a big, big choke. and we had to keep him out. a couple of things i heard he said. first of all, he doesn't mention the fact that i built a city on the west side of manhattan. that i built buildings all over manhattan.

didn't mention this. you talk about a beef, he talked about water company, which i still have, i used to supply all my clubs with the water. numerous of those things i have. the magazine, other things. get them out of here. get them out. get them out. by the way, speaking of mexico, i won the hispanic vote by far in nevada. right? we won the hispanic vote in nevada in the polls during the -- we won nevada, we won south carolina, we won new hampshire. then we had the big, big tuesday where we won a tremendous number. and i have to tell you this, so ultimately mitt chickened out. and now he's saying, probably sees hillary as very weak and saying, i wish i went, i wish i tried -- but ultimately he didn't because he would have gotten beaten very badly. but i'll tell you what, a couple of things were mentioned that we have to discuss. first of all, when he talks

about me, i wrote a couple of them down, when he talks about me, they don't want to talk about 92 story buildings all over the place, they don't want to talk about the bank of america building in san francisco. 1290 avenue of the americas. they don't want to talk about the west side railroad yards where i built the city on the west side of manhattan, a tremendous city on the west side of manhattan. they don't want to talk about 40 wall street and all the buildings. they want to talk about water. which i still have. i supply all my clubs. i have a water company. they want to talk about a magazine. i have a magazine. it goes to all my clubs. they want -- little tiny things. by the way, a school, little deal, but very -- i loved it, when it was there. trump -- they call it trump university, trump initiative, but i will tell you, just so you understand the school, the school had 98% approval rating. but you had an attorney that felt, maybe i can sue trump and get something, the school had a 98% -- 98% of the people that took the courses we signed

report cards. that's why you can't settle a case like that. put somebody up on the stand? did you write this? the most beautiful thing. they did a commercial, took it down, two people were going and saying negative and showed them the statement that they wrote, they had to take the commercial down. because 98% of the people that took the course, that took the courses said really wonderful things. the other thing, got an a from the better business bureau. so i say, how do i settle a case like this? b plus would be okay too. b plus would be okay. but we did better than a b plus. so -- so i can't -- here's one thing i say about business, i watch these bankers, and they get millions of dollars, 40, 50, million dollars. it is ridiculous. and then they'll settle with the government if they're sued by the government for two billion, three billion, five billion and i say why don't you fight it? they say, it is the government, we don't want to fight. i say, you got to fight it.

if you don't fight it, everyone is going to sue you and that's what happens. they settle for $2 billion, next week get sued again. you got to fight these things out. you have to do things, you have to do what's right. so with university, i knew i could get bad publicity, but i have to do what's right. do we agree with that, by the way? so it is the very small case, it is a civil case, it is not a big deal. and i'm going to win it in court. and it will cost me more money to win it in court than i could settle for in my opinion. but i'll win it in court and i said this lousy timing because it is too bad it wasn't later because i happened to be running for president. but i have other suits too. any business man or business woman has lawsuits. people sued to get their money back, sued for this, sued for that. they sued for a million different reasons. just so you understand, 98% approval rating, and a from the better business bureau, we'll win the case, mark it down, we'll win the case, it will be forever because it takes forever. but that's the way it is. i don't like to settle cases i don't like to do it. once you settle cases, what happens is everybody says he's a

settler, let's sue. that's not me. a lost people don't sue me because they say it is too hard. so -- so one of the things -- one of the things that mitt brought up, which i think so serious, he said about trade. we have to keep trade. nobody knows more about trade than me. i made so much more money than mitt, you know. i have a store that is worth more money than mitt. it is a store. and actually it was funny because i made that statement jokingly when i was in iowa. and the des moines register, a paper that is actually a terrible paper if you want to know the truth, but they called up, they said, that's a terrible statement. that's a terrible statement for you to make that statement about -- and the people put me on and said, what do you say? they said you have a store worth more than mitt. let's say mitt is worth 150, 200 million. i said what is he worth? they said 150 million. i said, yeah, the store is worth much more. on fifth avenue. it is gucci, the gucci store. so i said, yeah, it is worth

much more. we don't believe a store is worth 150 million. i said go ahead, get a couple of -- they went out, got three appraisers, and they said, you know what, that store is worth from $400 million to $1.2 billion. this isn't me talking. you can check your local des moines registrar, if it is still open. i'm not sure it is still open. but anyway, but i built an amazing company. and one of the reasons you know it is amazing, the hottest development, the hottest development site probably in the history the general services administration, the gsa, the government service, is the old post office. that's where the post office is built in washington, d.c. an entire block, fronting on pennsylvania avenue. in other words, if i don't get there through the white house, i'm getting there anyway. and fronting on pennsylvania avenue, but one of the most beautiful buildings in the country and incredible, a landmark building, and the gsa for many, many, many years owned it and they wanted to develop it

for 30, 35 years and it just sort of never worked out. big job. and never happened. and then they went to bid and bidding it, they had more bidders and more high level bidders, i think, than they ever had before. let's assume just about, just about the hottest job they have ever put out to bid, every hotel company wanted it. i got it on building a 300 room super luxury hotel. but they bid it and every hotel company, every office company, everybody wanted it. they went out to a public bid and one of the things in choosing the bidder was how strong is the bidder and how good is the bidder's idea. they loved my idea. what we're going to do, this will be one of the great hotels of the world. it is now two years ahead of schedule. going to open in september. supposed to open up in september, in two years. we're two years ahead of schedule. the gsa people are terrific people. and we're under budget a little bit. the only reason we're only a little bit under budget is that i'm using marble instead of teraza, not a bad idea, right?

so et cetera. a lot of different things. we're going to super end, highest end. and the reason i got chosen was number one, my financial statement was so strong that it could guarantee completion because they didn't want to have a mess where they built 25% and it goes out of business and number two, we had the best idea. when i listened to this mitt -- this isn't the obama administration in all fairness, i wouldn't say i had an advantage. in fact, i said to my daughter, very much involved with that, i said, you know, maybe, maybe we're not going to get it no matter how good we do. my financial statement is so strong, and by the way, i put it in, you know, romney talks about taxes, right? why isn't he doing his taxes? maybe there is -- you don't learn anything from very little do you learn from taxes. very little. look at the taxes, you can't learn very much. i did file almost 100 pages of financial statements with the federal elections. and it shows s that i have a n worth over $10 billion, probably over. i don't want to do that in a bragging way. i do that because that's the

kind of thinking we need. we have 19 trillion as paul was saying. $19 trillion in debt. it is the kind of thinking we need. i have very low debt. i have tremendous cash flow. it is an unbelievable company, and i filed my financials. when he says, maybe there is something in his tax return. there is nothing. but i get audited every single year. and because the company is so big, they audit, i understand, fortune 500 companies every year. because my company is so big, or some other reason, which is unfair, because my company is so big, let's leave it at that, they audit me every year. i think it is very unfair they audit me every year. i've been audited every year for many years. when the audit is finished, i'll release my tax returns. i have nothing. i don't want to do it. nobody in this room would say you're being audited and here is your tax return. routine stuff. you finish and then you release the tax returns. if anybody wants to, like, mitt would like to go down and go to the federal election office, you'll see almost 100 pages of

financials that were filed ahead of schedule. i could have delayed it for six months, i filed them within 30 days and, believe me, i had to work hard with the accountants. they worked overtime. i didn't want them saying, he's asking for extensions. that's really the thing. so with mitt, i just wanted to tell you that he came out, it was very nasty. i mean, i thought he was a better person than that. i did help him. i raised money for his campaign. i actually had two fund-raisers for him. in fact, the first fund-raiser was so successful that we had this second one that same day, his wife was a lovely woman, by the way, a really lovely woman, she came up, had a fund-raiser in my apartment at trump tower and it was so oversubscraibed. i did a great job. they couldn't have cared less. they said, donald, he's a stiff, he's not going to win. he'll be fine. he's a stiff. i should have listened to the guy. but we had a fund-raiser and it

was so big and it was raining out. it was raining and really raining, it was a miserable, miserable day. and the people came in hundreds of people phase one. and then we said, there is too many people to put them in one, so we call for another one, an hour later, after it ended, one hour. because everybody's shoes were so wet, i ruined my carpet, that's why i -- this carpet was wiped out. and nobody thanked me for the carpet. hey, maybe i can send mitt a bill for carpet ruined, right? but i always, you know, you help somebody, when you help somebody, he asked me to make robocalls. i made six robocalls for him. every single place i made the robocall, he won, north carolina, six different places. so you help somebody, and then he turns. now, i will say this, i will say this, i will say this, he probably had a right to turn. because nobody could have been nastier than me in getting him not to run by saying he's choke

artist. the reason i say that, i love our country too much. if he would have run, and even if he would have won, it would have been bad. he doesn't have what it takes to be president. that i can tell you. he doesn't have what it takes to be president. so i do want to mention one thing, because it works so well, because the speech was long and they covered so much territory, it was ridiculous. and, you're right, he did mention many of the many, many buildings. we're building over 120 jobs and in the works over 120 jobs all over the world, we just got turnberry in scotland, one of the great places of the world, doral, where they have the tournament today, they have the world golf championship today. and i'm in maine. i'm in maine with you! i don't know. rory and rory mcilroy, everybody is down there. and tiger is going there later. he's go to be better. he's going to be fine. they're all there. they're all at my place and here i am making a speech in maine.

okay. see? so if i don't win on saturday, i'll say, boy, was that a mistake, right? anyway, i think we will. but i will say this, look, trade, he talked about domestic. bye-bye. bye-bye. bye-bye. get him out. get him out. i love you too. these people. i'll tell you what, your police are fantastic. do we love our police? do we love our police? where would we be without them? in all fairness. they are so abused and, you know, one stupid incident or bad incident or if there is one bad person, which happens, out of the whole country, and it is the biggest story in the news and it plays forever. and people don't realize how

great a job the police of this country do. i have to tell you. so one of the things that mitt was talking about, who was domestic policy and we need trade and we need trade and we have to deal with china, we have to deal with all these people, look, last year in terms of a trade deficit, we lost with china $500 billion. okay. we lost with mexico. that's why mexico is going to pay for the wall, folks. mexico -- look, the wall -- we need actually -- it is 2,000 miles. we're going to pay -- we need a thousand because we have a lot of natural barriers. the wall is going to cost $10 billion. expensive wall. a trump wall, bring it under budget, ahead of schedule. but -- i have to name it after myself because maybe, you know -- should i name it after myself? i don't think so. we want more than a wall. but we're going to have a real wall, and it is going to be a great wall and it is going to work and we're going to stop zrug drugs from pouring into maine and new hampshire and all these

places. walls work. properly done, walls work. it is going to happen. but just so you understand, they come up to me and they say, but mexico will never pay. the politicians. people on the dais with me. first they said there is no wall. can't build a wall. how can you build a wall? china built a wall 13,000 miles long, we can't do one that is a thousand miles. believe me, we can. now they realize that. and the other day, i hear this guy cruz saying, we can't build a wall. then i hear him saying, we're going to build a wall. and my wife came -- darling, could you come back and listen to this. first time i heard him say that. i don't know if rubio said it. i think rubio has bigger problems than worrying about walls. but now all of a sudden they're talking about walls. here is the thing. we have with mexico a $58 billion trade deficit. if the wall costs $10 billion, that's a tiny fraction, if the wall costs $10 billion, i guarantee you, folks, that mexico is going to pay for the wall. just as sure as you're standing

there. now, a politician wouldn't say that. and you saw this vicente fox, the previous president, who, by the way, threw a horrible word out. he threw the f word out, the f bomb. he threw the f bomb. can you imagine if i used that word? man, this would be a big story, that would be all over the world. he threw it out, nobody cares. and then we had our vice president apologize to him. now, look, i love mexico. i love the mexican people. i have many, many hundreds and hundreds and hundreds of mexican people, thousands over the years, thousands have worked for me, the hispanics are phenomenal people. i told you, i won the poll in nevada. these are phenomenal people. i won nevada. and i won with the hispanics, which is so good, right? so good. but look, here's the problem, their leaders are too smart for our leaders. we're getting killed at the border. we're getting killed on trade. nabisco is moving in from chicago. they're closing their big plant. they're moving in. you look at ford. ford is building a massive,

massive car complex there. that means they're closing places in michigan, great places, michigan and other places, and they're closing and they go to mexico. can't let that happen. the other day, carrier announced air conditioners -- i buy carrier air conditioners, good air conditioners, i'm not buying them anymore, they announced 1400 men and women are being laid off, and somebody had to the cell phone going, you saw that. big story. 1400. and this manager was -- well, ladies and gentlemen, we are closing our plant, moving to mexico. bye-bye. pretty tough for this was not a guy with social grace, believe me. so they're going to move to mexico. here's what we have to do, folks. mitt romney said, we have to keep free trade. right. well, if we keep free trade the way we have it now, we won't have any companies left at all. and you people know more about nafta than anybody. anybody. you know how you were stripped with nafta, which was a disaster. but we're going to do something much different. we're going to be smart people now, okay. i built a tremendous fortune and, believe me, a started off with very little, they like to

say, my father -- my father, if my father would have given me 200 million -- my sister, brother called me up, they said, don, what are they kidding? these people are such liers. borrowed a tiny amount of money, started something and now it is worth billions and billions and billions of dollars and i will tell you something, with the carrier plant, what you have to do is you have to be smart. so this isn't free trade. we have to have smart trade. china charges tremendous tariffs and taxes when you want to sell -- i have a friend who is a manufacturer. he makes great product. he puts it into china, they send it back. put s it in, they send it back. third time, they take it but has to pay a tremendous tax. he sees me, he goes, oh, donald, you have no idea how tough it is to negotiate with china. they don't want the product. h and when they take the product, they charge you tax. that's not free trade. now, china, they sell their product to us, no tax, come on in, folks, take our jobs, everything else, no tax, no nothing. not going to work that way. mexico the same thing.

so ford goes out, builds a plant, they're going to make cars, trucks and parts, right? and they're going to send them into our country, no tax, where is that good for us? so when i watch a guy like romney who truly is a lightweight, you watch a guy like mitt -- no, think of it, he's talking about trade. and i love free trade. i am a free trader. a lot of the conservatives they say, donald trump does not like free trade. isn't that -- i want smart trade. i want trade where at least there is an even balance, right? i don't want to be losing -- i don't want to be losing $500 billion a year. i don't want to be losing $58 billion a year. i want to make money or i want to break even at worse, okay? so i tell people, if you had, like, lightweight rubio as president, he would -- he's all controlled by the special interests. 100%. he gets all his money -- remember, i'm self-funding, they're not paying me anything. he gets his money. if you have a guy like ted cruz,

getting a lot of money from a lot -- a lot from oil and other places, okay, so i mean honestly that's the way life works. what happens is oil, 100%. they'll get a lobbyist, 100%. won't do anything. me, it is different. here's what i do. tell carrier, ford, whoever wants to listen. the only way you can do it. the only way we're going to stop this tremendous outflow of companies is the following. and by the way, pfizer, great, great massive company, drug company, pharmaceutical company, leaving, going to ireland. wonderful. that's wonderful. but you're not going to take advantage of us, okay? you're not going to take advantage of us. so here's what happens. let's use carrier as an example. i know it is not presidential. my wife called just before and she said, darling, would you act presidentially? be presidential, like you were the other night you had all the victories. you stood on the stage and everybody liked it. i said, i have incoming. i said i have incoming.

so here's what happens. a lot of truth to that. they said act presidential tonight. i said i'll act presidential, but if somebody hits me, i'm going to hit him back harder, right? so what happens? you know, that's one of those things. what happens is they will not do anything because the lobbyists will call and say you cannot do anything to carrier or ford. they gave you a contribution, you can't touch them. they have been loyal to you. they have been good. and they'll go, all right, okay. that's the end of that, right? here's what i do. i call up and i would like to use one of my guys, carl icahn, great businessman, endorsed me. i have a lot of endorsements from businesses. and i would announce them, but nobody cares. these are the most important people in a sense because i will use the greatest -- we have the greatest business people, the greatest negotiators in the world. but this is so easy, i want to sort of do it myself. it is so unpresidential for me to be calling up carrier, i'm the president of the united states, and i call up, and i

say, hi, donald trump, president of the united states. i hope -- i hope you enjoy your stay in mexico. i hope you build a beautiful, beautiful factory, beautiful plant. and i really want to wish you well. but let me tell you something, you moved out, you hurt 1400 people, these people were devastated, by the way, i watched it. they have done a great job. you hurt 1400 people, and there is no free trade because it is a totally imbalance. their politicians are smarter and streetwise than ours. i said, here is the story. every air conditioning unit that you make, and every single air conditioning unit that you make and comes across the border into the united states, we're going to charge you a 35% tax. okay? 35% tax. and that's it. now, here's what happens, okay. as sure as you're standing here, look, they call their lobbyists, you got to speak to the president, can't speak to me, i didn't take their money.

that's not going to work. here's what's going to happen. as sure as you hear, they're going to call me up within 24 hours. they're going to say, mr. president, you have any second thoughts? i say absolutely not. they say, sir, we have decided to stay in the united states. see. very simple. now, we can be cute and we can say we're coming up with -- in washington, they're playing around with all sorts of formulas. there is no formula. that's the formula. mitt made the statement, he said he will ruin free trade. ruin free trade? if i'm losing $505 billion with china, if i'm losing $58 billion a year with mexico in terms of deficits, what do i want that kind of trade for anyway? ruin it? who needs that kind of trade? seriously. who needs that kind of trade? now, mitt admitted i'm a much better businessman than him and i am. i'm a much, much better businessman than him. he will actually have better relationships with mexico. we will have better

relationships with china, they'll respect us. they don't respect us now. they think we're the dumbest people on earth led by the world's dumbest people. now, look, let me just tell you something, china, in the south china sea is building a massive military fort with runways, and tremendous complex. they're not supposed to be doing that. they didn't tell us. they have no respect for our country. with me, i'll cut -- i'm going to rip up those trade deals and we're going to make really good ones. and, by the way, we have the cards. just so you understand, remember i wrote the art of the deal which is in all fairness i think the number one selling business book of all time, but just remember this, we have the cards. we have rebuilt china with the money they have taken out of our country for many for many years fairness. i call it the greatest single theft in the history of the world, what china has done to our country. they have trains that go 300 miles per hour. we have trains that go chug, chug, chug. and then they have to stop

because the track split, right? they have trains that go 300 miles an hour, japan, china, a lot of countries, we're like third world. you go to our airports and laguardia and you go to dubai and you go to qatar and different places in asia and see airports like you've never seen, then you come home and you land at kennedy and lax, you land at laguardia with the potholes all over the place. it's a sad thing what happened. it's very, very, very sad. we're going to make it a lot better and make it different. we're going to get rid of those horrible trade deals. at some point it's going to burst. at some point we can't continue to lose $500 billion with individual countries. we can't continue -- you add it up. whether it's india or vietnam, whether it's anybody, every single country in the world that deals with us takes advantage of the stupidity of the united

states and a lot of it is because they have the right lobbyist and right negotiators and hire the right people on pennsylvania avenue. we have -- they have the right people. and they are negotiating with hacks, political hacks, not our best people, almost our worst people. we're going to make our country so strong and make it strong militarily, very, very strong. our military is very depleted. our military is badly depleted and the whole country is depleted and we're going to make the military strong and take care of our vets. our vets are treated horribly. horribly. we're going to get rid of obama care and we're going to repeal it and replace it. we're going to bring education local. we're getting rid of common core, which is a disaster. you know, in the world, in the world educationally of the 30 countries that they look at,

we're number 30 in education, meaning we're the worst and yet per student cost, number one by far. number two doesn't even exist it's so far back. we're number one in cost. and we're number 30 in terms of success. we're ranked the worst and yet we spend the most. okay? and part of that is common core. it's terrible. part of it is a lot of other things. part of it is theft and waste and fraud and abuse and everything else. we're going to straighten it out. it's very interesting. when i won new hampshire, they came out with a report, donald trump spent $2.5 million and i won't mention names but other people spent $45 million. okay? i don't think he likes me. do you agree? but think of it. wouldn't it be nice -- i have the lowest expenditure by far and i have the biggest result by

far, way, way, way number one. wouldn't it be nice if we could do that for our country, instead of the other way around. we're going to do that. that's what we're going to do. so we are very simply we're going to make america great again and win, win, win so much you're going to get so tired of winning, you're going to say, please, let us have a couple of losses. i will say no way i'm going to let you have -- we're going to make america great again. you'll say, okay. thank you very much, i love you. please go and vote on saturday. i love you. thank you. thank you very much, everybody. thank you. thank you, everybody. >> tonight in detroit, michigan, detouring on his way there to portland maine for a rally ahead of that state's voting on saturday in a republican primary, the governor there is i believe a trump supporter, mr. trump giving his usual i guess,

trump on the stump speech there with lots of touch points from trade to immigration, to tax, to common core -- >> what else? >> and romney. >> and of course, romney, who he went back at. >> the way these things normally work, somebody speaks and we tend to take notes so we can go back and say he said this and this. i gave up trying to take notes. >> it was -- >> free form. it was -- yeah. >> as his appearances are. john harwood, to state the obvious, we can't seen a candidate like donald trump who does not ever it seems work of a prepared text among other things. but let's start with his rejoinder. >> i don't think he was reading all that off a teleprompter. >> no, no. let's start with us comebacks ats mitt romney. what did you think? >> well, look, i think whether or not mitt romney's speech

hurts donald trump politically or not, it's certainly got in his head. donald trump was very at pains to rebut the idea that he was a bad business person. mitt romney didn't talk about all of the buildings i built and he tried to portray a whole serialries of deals that he had been involved with big success and suggested that mitt romney was focusing on trivia and stuff on the periphery and also tried to cast mitt romney as he particularly does with political opponents as weak, a failure. he said mitt romney, if i asked him to, would have gotten on his knees to beg for my endorsement in 2012, all attempts to disdiminish the people coming at him and the typical stump speech that he gave. he's going to have the opportunity to repeat those lines at that debate. you can guarantee the other candidates are going to be quoting mitt romney and coming

back at him very hard. >> there was a particular thing that romney said that was clearly leaked to everyone because all of the morning shows were talking about the phrases that he was going to use, whether or not donald trump is a fraud. i want to play that for you. -- we don't have it. the message romney really tried to make over and over again. he's a phony and fraud. do you think donald trump came back hard enough on that? >> you know, you can't just by conventional standards, michelle. so i would say from donald trump's perspective, yeah, he came back in all of the typical ways that have been successful for him in terms of saying, he was full of it, he was a failed candidate and terrible. he was doing this because he didn't run this time and now maybe wants to get in at the convention, tainting it with a bit of the self-interest and saying mitt romney said back in

2012 that i was a better businessman than him and i am. all of that is classic trump. >> all right, folks, john harwood, thank you very much. an interesting evening ahead. it's been an interesting two hours. >> sure has. >> another eight months to come. >> eight months to come. >> thanks for watch the "power lunch"

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"closing bell." i'm kelly evans. >> and i'll bill griffith, low volatility, trying to extend the win streak to a third straight day. the dow hasn't been in very wide range, down about 79 early in the session, up about what did i say 23 points at its peak, steady comeback. we'll see what we do in the final hour of trade. the final hour before tomorrow's jobs report. >> by the way, the final hour before tonight's debate and everyone around here in the past hour while the