and i think money goes in the u.s. and you will see something go into the cyclicals in europe. >> okay. stocks are going for six days in a row up. got some work to do today. the nasdaq, s&p, and the dow are all in negative territory. not by all that much. but that's where "power lunch" picks up the story right now. welcome to "power lunch." i'm michelle caruso-cabrera. tie tie, melissa lee, brian sullivan, we are all here. so is volatility. it's back today. well off the lows of the day. dow jones 17038. s&p at 1989, had fallen to as low as 1978 which i guarantee you was a bad year. wti lower by 36 cents per barrel. we start with the newest

activist attack on wall street. this time, united airlines. two hedge funds with stakes in united announcing they think the board stinks and they want its own birthdays. >> what is interesting i'm looking a the release from par capital and all item meter capital. they own united shares. and they say say we are not short-term traders nor are we activists. yeah, right. they are active right now on getting six people onto the board. including continental capital gordon buffoon. there are not people who will argue that united lagged its competitors. its performance over the last five years, it has been underperforming relative to its competitors. by the way what you are looking at right there those are members of a teamsters union protesting

out the jp morgan transportation conference today where the cfo for united airlines was giving a presentation to analysts. here is lebeau talking about the management team performing woef woefully. >> if in a horse race and you are in fourth place you are not. approximating. i believe the shareholders are not happy with having no airlines expertise at the helm. >> the man at the helm of united airlines is oscar munoz. he has had a rocky six months to say the least. for the last three months essentially he hasn't been in charge of day to day operations becaused a heart transplant. he released a statement saying they are nominating six director candidates which we believe is designed to put their nominees in control of the board and our company's future. and again, he returns to day to

day activities at united airlines next monday. take a look at shares of united versus southwest and delta over the last five years this. says it all. now, some people will look at this and say look the shars have more than doubled in the last five years. compare with it delta. delta is up mother than 300%. almost any metric you look at over the last five years, they have not been doing well. >> the i amming smells suspicious because it was just yesterday the company decided they were going to put on their own birthdays. >> increase the birthdays. >> right, which to me looks like a board by them to stem off the activists. >> absolutely. >> and get out in front of them. >> well, they have been talking. it's not as though far and al tim meter haven't been in discussion with the birthdays. it hit the point clearly the board decided to increase the size of the board to 15 members. clearly that makes it more difficult for them to take over the board. >> we have a guest who writes

extensively about these issues. what do you make of all this. and particularly gordon buffoon who has been in the airline industry for so many years and the platement. >> there are interesting personalities involved here. when you look at the slate phil said yesterday united's board added three new directors. jim white hurst among them. he was an executive at delta almost a decade ago. and there was a period of time before delta's current and since retired ceo was hired to be ceo, goredon buffoon was advising delta's board and advised against making jim white hurst ceo. he told me that in an interview a few years ago. interesting dynamics going back a long way. buffoon, his protege, jeff smizic replaced by munoz. all kinds of dynamics.

almost as phil mentioned, almost reminds whenr you of when franklin del for roosevelt didn't like what was happening on the supreme court and tried too butt had nis own delegates. >> 1930's reference is a good reference. what can they do. ? what actually can the board fix? >> that's the big question, brian. we ran a cover story when they appointed munoz. we called it the jockey or the horse. question mark. that's the reference to if a horse isn't running correctly do you have a slow horse or do you have buffoon a fat jockey on the horse slowing it down? because united has been -- it's true what the hedge funds are saying, an underperformer. but that goes back 35 years. american and delta both at various times have led the industry in the same period

financially. united never has been among the airlines that survived deregulation. is it this management team's fault or something structural at united that makes it harder to run. >> that's the question. what's answer? >> it is interesting. if you compare to it delta for example, united is a much more unionized airline. american is heavily unionized, too. things like that. you mentioned newark. newark is a good hub. united has a presence in a lot of good markets. what it doesn't have is hub cities that it dominates in the way delta dominates atlanta, where american dominates philadelphia and atlanta. it helps to run up the score. >> one quick thing to keep in mind this. board battle is intriguing in part because munoz was on the continental board with buffoon, there is a lot of ris. >> it seems like there is a lot of old scores here, old animosity. >> your audience, if you are not

an investor, you are saying can united get its act together. that's what oscar munoz is hoping to do. he is better with labor relations than jeff smizic. yes, the teamsters were protesting today. oscar munoz, will he have a chance to implement his plan? or does this distract him from that? at the end of the day that's what people who fly united are most interested in. >> just quickly, this is the only industry unless you can think of another one where you can be lousy and do fine. because 40 airports have a monopoly on -- out of the top 100. if you live in new jersey, you are pretty much stuck with united. >> brian -- >> if you live in miami you are stuck with american. >> this is the salad days toer this stli. it's not going last for long. >> i'm not talking about the profitable. i am talking about the operations. >> when the profitability goes away that's when you find out who has the management team that

works. >> phil, thank you for joining us. appreciate it. >> thank you. >> would any of these changes move the kneeled on the stock. >> jim corridor is an airline analyst at s&p global market intelligence. he as a buy riting on the stock. positive overall on the sector. united is his least favorite of the airlines. jim, do you get optimistic thinking about the board nominations and the boblt that the board changes? >> i am certainly more optimistic today. whether or not the slate gets elected or not, what is clear there is more pressure on united to improve and improve faster. it has long lags in almost every metric that we follow. they have been lethargic in responding to criticisms on this right now they are going to have to make moves what is the reason this airline has lagged its piers? is there something you or the

board can put its finger on and say we are going to go after that. >> their hundreds, they don't have a market share lock the way that airline and delta do on their hubs. they have a higher international share than delta and american. what is driving metrics right now is american travel. also they have mismanaged operations. they have a unit revenue disadvantage to peers. they have miss matched customer expecting as over the years. that's one thing that. >> last question, jim, at this point in time, as phil mentioned, these should be the salad days for the airline industry, the best time ever, and the stocks aren't reflecting that? is there a capacity problem? american airlines capacity up 8%. load factor, down. jet blue, soft first quarter guidance, it blamed increase in capacity. what's going on. >> the industry is growing

fraser and that's rightfully so. there has been a revenue problem in the industry for years. airlines are not growing for them to get the next step up in profitability they need to find a way to revenues. investorsr focused more on the unit price degradation than they are on overall profitability. i think that's a mistake for the long term. >> jim, thank you for your inviting. a news alert in the bond market right now. i know you've been waiting on it. three year bonds are up for auction. let's get the grade from the professor, rick, how would you grade it? >> sully, for demand, straight up one eastern, d plus. d as in dog plus. all right, 24 billion three year notes up for auction, dutch auction. yielded auction, 1.039, just shy of 1.04%. the bid side on the one issue

mark was 1 three and a half, roughly half a basis point tail. deteriorates from there. 2.71, $2.71 chasing every dollar's worth of securities available known as about it to the cover. the last one was 2.74. that was the weakest going back to july of '09d when it was 2.62. so this continues that streak, the weakest since july of '09. 46.2 on indirects. a little light but close to the average. 9.1 on directs. that's the weakest since september of 2015. no matter how you sloois it, the first leg of $56 billion in supply is a d plus. we look forward tomorrow of course to ten-year notes. brian, melissa lee, and the gang, back to you. >> i'm part of the gang. the gang of four. rick santelli thank you very much. let's get back to what's happening in the broader market and do a tale of the take. take look here. this is the one year chart of the s&p 500. all time high back on may 20th of last year.

it hovered around there for a couple of months. then you see what happened in august. thereof the big drop. coming back, dipping again in october. but then finishing the year hovering close to the all-time highs. then of course what happened? the calendar changed. you got 2016 -- i'm getting out of the light. oh, that makes them unhappy over here. make you even more unhappy. went all the way down there to february 11th, 52-week low. which brings us folks back to today. since our all-time high, the dow is down -- the -- excuse me, the s&p is down 7%. so the question now is what's next for your money? joining us in a "power lunch" exclusive, john haler, ceo of one of the world's asset managers, nearly $1 trillion under empty. john, thank you. we appreciate you are being here. we had to cancel last week because of breaking news. we're glad you came back. what happened on february 11th that turned things around?

what was the switcher the dog whistle or the phase of the moon that made things change the narrative? >> i've got to say if you don't mind me starting, there is a couple of thing we can talk about in the world, politics, religion, and airlines. and everybody has an opinion. it was quite fun listening on that end of it. hey, basically, i think what's beginning to occur again is locks like the u.s. is carrying a little bit of the markets right now and carrying the global economy. how long that lasts is going to be anybody's guess. i think one of the challenges you are going to face is the u.s. has gone a phenomenal job of almost, you know, having an amazing consumer based economy that has been able to protect itself a little bit from the down turns around the world. how long that can last i'm not really sure. but i think there was an overselling in the marketplace. so i think we'll recapture what happened in january and february throughout the year. but how much more we'll get out of that, i'm not really sure. >> you know, a month ago everybody was fretd being china. they were fretting about the

possibility of a u.s. recession. they were fretting about oil in the 20s. now oil back up. but now it seems to me and ultimately isn't it always the case that what really matters in the end is corporate profits? >> yeah, and i think one of the thing, you know, look, pes are a little better value than they were even years ago. you have seen them come back. they are not dirt cheap but there is a little bit more value. when you look at earnings growth everybody was projecting out 8h eight. we think it's run pg three or four percent range. that's still a positive sign. how much this can move the markets is going to be the big guess. we are talking about china, u.s., what's going on in europe, british -- the british exiting europe. all of these things can affect people and their portfolios. that's why you have got to have a longer term outlook than worry being the volatility in the

marketplace. i think that's going to be a big challenge. >> your guess is that all of these things aren't going to move the markets very much from where we are right now through the end of the year. you are predicting what? >> yeah. i think what you are going so see is probably gathering of assets, getting some valuation out of the investments you've made. i don't see a lot of great movement across the board, but at the same time i think it's a chance. if you thought something was cheap last year -- if you thought something was cheap in october, november, and you see it's even cheaper now and you have got a long term outlook why wouldn't you be looking at reinvesting and buying that? that's the key here. >> you are looking about 2100 s&p at the end of the year. that's about 1,000 points from where we are today. if i want to try to eke out more return than that would imply, what sectors would you directly to? quickly. >> i guess when you look at this and people keep talking about how long can oil stay at $40 a

barrel or beneath that? how much further will it go up? a lot of capacity out there. until that supply goes down. i think you are in that kind of challenging environment on oil over the next 16, 17, 18 months before you start to see that supply run out. is there an energy? depends how you are looking at it. if you are looking at short term, we see s&p up 2200 at the end of the year. 2250, if that ends up going there, we are going to have an all right year arc god strong year. but i think here you have really got to have people say why am i investing today? how does it match up with my portfolio? how does it make sense with what i'm doing long term? i think that's the chance. volatility is going to be in the market. here for a while. and i think that's the challenge. >> let me be clear. my notes have your call on the s&p at 2100 for the year. you just said 2200. which is it? >> the texas -- it's across the

board. one of the challenges for our firm, we have different managers with different outlooks. there is no one standard corporate outlook at our company. we don't have a top down approach to what the s&p is going to be. it varies from manager to manager. across the board everybody has a little bit of a different opinion on where they think the s&p. i'm not ducking the answer. just no top down approach. >> the difference between 2100 and 2200 is not the difference between 2100 and 3,000. it's kind of a meh year to not such a bad year. jn, thank you. always a pleasure. hope to see you again soon. what if i told you there is an easy way to put an extra $400 a month in your pocket? i'd like to do that. find out how in two minutes when "power lunch" returns.

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welcome back to "power lunch." i'm melissa lee. are you literally sitting on an extra $400 a month in savings? you just might be. diana oleic is here to explain. >> a stunning be number offer booers haven't refinanced their mortgages to today's low rates. i'm not talking about cash out. i'm saying lower your rate and save money. if you are up at 4.5% you are too high. the 30 year fix dropped 30 basis points in the first two month of this year and is now well under

4%. by the end of february, 6.7 million borrowers with higher rates could have saved an average of $3,000 per year arc collective 20 bmds in potential annual savings. and this is all according to an analysis by black knight financial services. these are borrowers with good credit and enough equity in the house. now more than 3 million borrowers could save $200 a month or more. nearly one million could save $400 a month or more. one and a half million are a pull percentage point above where they could be. yes, there are fees but nothing compared to what you save over the life of the loan. people, don't overpay. >> all right thank you very much diana oleic. i don't know. have you guys refinanced yet? >> a million times. >> are you serious. >> a million times. >> how many times. >> one for each dollar value of his home. >> he just does it a buck at

time. >> at least four times since i bought the house in 20064. >> are you glad you did it? >> it's a pain in the disturby. >> i was going to say. >> and it has gotten harder. >> it is a pain in the neck. >> the closing has gotten much harder. what they require you to show, everything. >> the documentation. >> the documentation is much harder. i just changed about a year ago because i know america wants the know about this, to a 15-year mortgage because the rates were so low. >> sure. >> it raised my -- it raised my monthly payment about about $1,000 a month but you end up saving hundreds of thousands of dollars over the life of the loan in terms of interest. i was able to do this because my alimony ended so i had a little more cash. >> yea! >> i don't give a lot of advice but i will here. i think you need to refi, max out the entire thing, cash out, and buy a boat. >> buy a boat. >> and a big screen tv. >> and anything else that

deappreciate yates. >> a boat with a big screen tv. >> and cars. >> explain. >> because that worked out well previously. unreal. that's oblsly not advice. on a real note i wonder what's happening to the housing markets five or ten years from now. serve refiing. you are going to be locked in a low loan. let's say mortgage rates rationalize and go back to 5% -- 5% used to be an amazing number. let's say that go back to 5 or 6%. is anybody going to move? the if they go up to that percentage, the economy is stronger. >> people don't buy homes based on the price, they bay it based on the monthly payment. i won der would melissa lee move or renovate my current residence because i don't want to deal with this extra rate. i wonder. maybe not. >> politicians on both sides of the atlantic land making noise that could affect your money. that story when "power lunch" returns. you both have a

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by looking at global and local insights to benefit from different points of view. and by consistently breaking apart risk to focus on long-term value. we actively manage with expertise and conviction. so you can invest with more certainty. mfs. that's the power of active management. all right. welcome back, everybody. stocks are off the lows of the session with the s&p 500 just points away from 2,000 at 1991. is the next move 2500 or 1500? where is the market headed? with us now, two portfolio managers. since we began with that question, neil, why don't i direct it to you. is the next stop 1500 or 2500? or neither? >> first of all, that's a 25%

gain and or loss. but tyler, you know me. i look at the dow jones. and i look at the ensuing year. and i see no reason why the dow jones should not surpass 18,000. you know, that's about a seven, eight percent gain for the year. and i sort of look at it that at some point in time tyler people are going to look at a ten year testry yielding 178% versus a dow jones yielding 2.75% and the in sun going to flow that way. i think that's why the market is going to be higher than it is now by the end of the year. >> our prior guest saw it going 2100 on the s&p, 2200. that's not a huge difference but it is a difference between 5% and 10%. >> exactly right. the s&p earned $114 a share in

2014. $120 this year. that's only 7% over two years. to get to $2500 you are going to have to have a lot of earnings growth. it's not there yet. i think it's out there, but it's going to be a couple years. >> neil, if i between make extra money here, excess return, alpha, where would you direct me? name names. >> mid cap arena is the sweet spot. look at companies like pool corp. they supply pool supplies and other products to the pool industry. or you can look at manpower, where there is five million open jobs out there. soman power could be a place to make a play. you could look at good year tire because we're all replacing the tires on the older cars and the new cars. there is a lot of opportunity out there and all these companies are priced reasonable from a price to sales standpoint in their earnings and their dividends. >> andrew, you say whenever anybody outers the r word,

recession, jump in. >> the best thing is to go on the markets nchltd the last five years whenever anybody uttered the recession word and the market is down, get aggressive. then when the recession reseeds, get more caution. i think that's been the case. the u.s. economy has been far more resilient than people want to believe. and so that's been really the story of this market. we're in a slow growth economy. i don't think we break out until another year. >> i want to got your thought before i go back to neil for a second. your choices seconderwise -- i know you don't name it -- are taking me where you are running into the burning building here. >> energy materials. >> there is leadership change. we've been in an environment where growth stocks have worked. typically when you get to 50 # 5% unemployment, full employment, you start to see wage growth out there. and you get a leadership change in the market. i think value stocks will be better. >> tie it off with a quick

thought from both of you. neil, you first, on the politics of this year. does the political race, no matter who wins or loses, does that put a president on stock market movement until after the election when certainty kicks in? is that where you expect the big move to take place? >> no, i think it's gradually going to take place, tyler. i don't pay attention to the politicians probably any more than you do. and we'll find out who the two runners are once we get to october. and then you start to make some rational decision. to try to make them down doesn't make any sense to me. if i think if you buy quality and hang on it to you are going to be fine no matter who is in there. >> there could be something coming out of washington next year, very important. corporate tax policy reform could be a catalyst for the stock market after the election. >> thank you very much. we appreciate you being with us today. go to "power lunch".cbs.com to

see why an true is bullish on emerging markets. that's cnbc.com. >> listen to what mark carney, the governor of the bank of england, said about the debate over whether england should leave the european union. >> the question is if we changed our status what would be the implications for financial stability. in the shorter term, the transition could bring some challenges to financial stability. it's also one of the reasons why we have persistently seen global risks which include the risks from the euro air as some of the biggest, if not the biggest financial stability risks to the united kingdom. >> now, this british departure, exit, whatever you want to call it saga has more drama than an episode of done ton abbey. it is truly a crazy investing world that we live in. let's figure out to to make sense of it all with adam short.

adam, welcome. >> thank you. >> i guess every year has been crazy really the last decade or so here. are you nervous we are on the verge of a global recession and thus a decline in equity prices? >> no, we're not nervous. there are risk factors out there. we think the volatility of brexit will be one of them. when we talk to our companies and look at the data points we are getting from them we are seeing generally healthy conditions, healthy demands, not off the charts but generally okay. >> brexit being short for britain exiting the e.u. >> yes. >> what about the awful numbers out of china this morning and the fact their exports were down more than 20%. >> yes. >> are we overworry being china? have we just absorbed that and think okay we know they are slowing down? six months ago that number would have led to a huge selloff. instead we got a -- you know. >> that's encouraging that the

markets have i think put china in its proper place. i think many quarters, over a year we've sewn known the industrial sector in dhoin as slowing down. what has been holing up and what we think about will continue to hold up is the consumer sector on the services side. as long as that continues we think that china is not going to be the start of a crisis. if it gets worse we'll have to monitor it. but it's nice to see market properly take that into account. >> does china have the economic might to bring down the world if it slows further? >> i think if there is a deep financial crisis coming out of the china, i think if the consumer sector really implodes, then sure that's going to be a global issue. that's just not our base case. it's a remote case. and we think there is a lot of levers that the government can pull and a lot of factors that don't make that happen. >> what is -- based on your base case, as you say, what are you doing with investments right now? what are you telling clients to do in this environment?

>> he want people to feel good about equities, feel positive about equities. we think the markets in the last couple of weeks have begun to put some of these macro conditions in proper perspective. if you offset that with as i said decent valuations or attractive valuations in many sectors, and decent conditions with these companies, we thits' a good environment not only for investing in equities but for active investing in equities. >> what's the best place in the world to invest in equities? where should i buy stocks? i'm going to throw a dart at a globe, where do i buy? >> hopefully that dart ends up in the united states. we think that the united states has great opportunities. some of the sectors in the united states look attractive such as biotech, which has really been oversold for us. there is areas of technology that look good. and we think oil in 18 months or even at the end of this year will be a lot higher and that could be good for oil stocks. >> he is not just a homer. you invest all over the world, right. >> we do. >> you are picking the u.s.

because it looks the best not because you have got an eagle on your shoulder. >> we are showing everybody this graphic breks and it your money. you are not worried about breks sit in. >> we don't think it's going to happen. we think if it happens in the run up to the vote could be creating a lot of volatility. but my suggestion is don't make investments around breks it. make investments around these companies that are finding ways to grow and innovate inof what happens with the brexit vote. >> terrific. thanks for coming. >> you're welcome. thank you. >> good to have you on. adam. folks, thank you. a big retail mover that needs to be on your radar right now. "power lunch" will be right back. it's a fact. kind of like vacations equal getting carried away. more proactive selling. what do you think michal? i agree. let's get out there. let's meet these people.

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hello everyone. i'm sue herera. here is your cnbc news update. speaking at a young sbrup entrepreneur's event in dubai, vice president joe biden criticized the republican presidential candidates as he commented on the u.s. presidential election. >> if ron reagan were alive today seeking the nomination he could no more get the nomination

of the republican party than i could. i'm not joking. what you see is this movement to the extreme in the republican party. >> the defense department releasing video of an air strike last month that destroyed an isis weapons tee poe in iraq. the air strike near fallujah was part of a coalition effort to disrupt terrorist operations. german automaker volkswagen may be forced to cut jobs dpindsing on the size of the fines paid to authorities for manipulation of diesel emissions tests. banks are hoping your mobile phone will help protect you from credit card fraud. the wall street says u.s. bank corp. is one of the first banks planning to use a service that traction your mobile phone to ensure that credit card charns are legitimatest. >> >> that's the news update. let's go to dom chu. >> we are watching shares of urban outfitters.

up double digits having their best day since 2012. the retailer posted better than expected retail sales. ten brokerage firms raised their price target following the beat. sixth straight positive ta. longest streak since january of 2015. shares up 20% so far this year. urban still a big stock. a year ago in march it was a $37 stock now hovering around $33. >> up next, the war on business on the campaign trail. the candidates are naming names, specific companies they are calling out. we'll have more on that when "power lunch" returns. d my bestselling book "the bank on yourself revolution". over the last 25 years, i've researched more than 450 financial products. i found that one of the best-kept secrets to help you plan for your retirement is the home equity conversion mortgage. it's a line of credit for homeowners age 62 or older. and it's offered by a company you can trust- one reverse mortgage,

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clinton be that calling for action against rising prices among big pharma companies but said she doesn't think her arguments are necessarily bad for business. clinton isn't alone. in fact many of the presidential candidates have mentioned specific businesses on the campaign trail. >> a auto parts company from wisconsin that all of us, we taxpayers helped to bail out with the auto rescue back in 2008. now they are turning their back on america. >> i want to go after the pharmaceutical companies like valiant that are increasing prices without any regard to the impact on people's health. >> while our people are working so hard, almost all of the new wealth and income generated in america is going to the top one percent. >> you have companies like goldman sachs who just recently raid a settlement fine with the federal government. >> i will stand with the people this country and end corporate

welfare. adopt a flat tax. and abolish the irs. >> i'm going to get apple to start making their computers and their i-phones our our land. not in china. how does it help us when they make it in china? so i'm going to create jobs. >> that's just some of what's been heard on the campaign trail. let's bring in libby cantrall with pimco. and larry kudlow. larry, what do you make of candidates versus corporations? it seems non-stop in this campaign? >> yeah, it does. i thought cruz had it right, i mean against corporate welfare, against cronies. that's a good.toic and an important reform we need to make throughout the government but i'm always a bit uneasy when you single out a particular company for a particular thing. >> cruz didn't, in that biyte. he didn't name a name. >> he didn't. others have. i'm uneasy about that. if you are not breaking the law

why be singled out. if you want to change the law over a principle like corporate welfare i'm for it. but i'm not comfortable for taking a company to the wood shed because you don't like what they are doing. >> at pimco what are you telling everybody on staff about what is happening in washington what the electoral situation means in terms of investing and what they should be telling clients about it? >> we've been talking internally a lot about this. what i say it's really important to separate the rhetoric from the reality. this is the silly season. rhetoric is running high. emotions are running high. but if you look at the areas where the candidates are talking about pharmaceuticals, financial services, the executive authority in those areas is actually quite limited. and many of the things that they are proposing on the stump actually require an act of congress. >> bingo. >> this is not something they could do via fiat. we don't live in an auto accuracy.

it's really important to be measured here to separate again the rhetoric from the policy reality. >> i think no one on this desk would think that much is going to happen this year with respect to corporate inversions libby. but i wonder whether you think, after the election, that that is an area where there could be some coalescing no matter who is elected president, no matter who controls congress. on that corporate tax reform and rates, and the repatriation of foreign income, which are big things about which there is a of the least, i sense, a little light among the parties. >> yeah, i would actually say we would agree. you've seen the treasury department try to rule on inversions to the extent they can. although their ability is limited. but i do think that going into 2017 we could actually see some common support for corporate tax reform. i think under a democratic administration, you could see -- say hillary, use corporate tax reform to get some policy gains

on infrastructure for example. and under a republican administration, well then i think corporate tax reform will probably be one of the first issues on the priority agenda. in 2017. >> if you do it right -- if you do it right and you have good corporate tax reform get those rates way down -- i happen to like the 15% rate from mr. trump. others have different plans. jeb bush had 20. i like that, too. you fix the repatriation. you fix the business expensing. america becomes a hospitalible place for investment. and capital will flow back to the u.s.a. lathe literally from all over the world including our own companies. the key to inversion is not to punish the company, it's to fix the corporate tax code and create incentives for american companies to either come back home, stay home, if you are home, invest, take risks for a change. and just one last point. libby is right. you have to separate the reality from the rhetoric on the campaign trail. but don't forget, presidents have the bully pulpit.

even presidential candidates to some extecht hant have the bull powell pit. i would like the american leaders be in favor of business. be in favor of business. we haven't have many start ups. ipos are down. >> rhetoric versus reality. what if hillary clinton wins? because there was a time when i would have said she is a moderate, very close to wall street. let's not kid anybody. yet she has moved so far to the left, to libby's point, do we believe her rhetoric or do we believe what is her previous known reality? she has been so hard on the pharmaceutical companies -- i feel like we could have price controls in this country if we get far enough. >> i wouldn't rule that from mrs. clinton. >> exactly. >> in the last debate she

basically said she was going to close down fracking. >> yes. >> oh, by the way -- what do you mean by the way? that's a gigantic part of our economy and a huge benefit. and she comes out with this. >> i thought we wanted energy independence in this country. for an entire generation and here we have an opportunity to get close. >> president obama, who hates fossil fuel is nonetheless taking credit for the fracking revolution. >> libby and larry, let's turn to the question of the horse race and the possibility of what could happen. wall street journal writing this morning about the possibility in a no one on the republican side would have the 51% or 50 plus one vote that would assure them of the nomination. and there is a lot of hand wringing over that and what happens next in termsed of pledged delegates being free to move on the the second ballot and on the third ballot even more so. would that kind of deadlocked

convention be a disaster or is it democracy at work? libby, go ahead. >> yeah. shoer. i do think the chance of a brokered convention are increasing. next tuesday is going to be incredibly pivotal in terms of helping to determine what the chances are. if rubio wins florida, if john kasich were to win his home state of ohio they are going to be in this race for the long term. and as a result, it is very conceivable under that scenario in a no one candidate gets a simple majority of delegates going into the convention. if they lose those states the chances of it becoming more of a two-man race are more probable. in terms of for markets -- market don't like uncertainty, right? and so a brokered convention, the outcome would be uncertain, so it could -- you could sort of see it wane temporarily on

market. but there -- on the other side of the coin there could be optimism in a the republicans would nominate somebody who might be more business friendly, more economy friendly. you know, the implications might actually be mixed under that scenario. >> look, i don't think my crystal ball is better than libby's or anybody else's. i would say this -- if donald trump wins tonight in michigan with the 15 to 20 point margin that the polls show not only is that going to give him a big boost it's going to really hurt marco rubio. really hurt marco rubio as marco rubio was hurt last saturday. i think there is a 50% chance he will not follow through in florida because it's suggested now -- >> that trump will not -- >> rubio will drop out. >> before play. >> a 50% chance after tonight if he gets the drubbing in michigan that people expect -- >> and the logic could that would be once rubio goes, you

give cruz a fighting chance if you assume -- cruz is ahead 42%. rubio is distant at 26, cruz is at 14. >> trump is first. >> i know that. >> but you said -- >> if rubio went away, you presume a lot of those people go to cruz it gives him a fighting chan in a winner take allstate. if i were running the party i would be telling him to go right now. >> no one runs the party. >> that's clear. >> least of all mitt romney. i will say this. while marco rubio doesn't want to agree with your logic. >> of course not. >> even though you may be right, cruz seth up a dozen offices in mid florida, orlando area, which is a key rubio stronghold really will cut into rubio and will really help trump. as i say if trump wins big in michigan -- and ohio is a fistfight. kasich should win, he may not. >> it's close and trump is leading. >> i think rubio is hanging by a thread. >> libby last word. >> there is a lot of money in

florida to support marco rubio. i think unlikely that regardless of how he does in michigan today that he drops out before florida. you about florida will be his missed tax. if he doesn't win florida it's going to be hard for him to say he is electionible on the national scale. >> libby, thanks so much. >> south carolina -- it started with south carolina. >> yep. >> and trump stubbed histoa little bit. beyond that he keeps rolling. however, cruz should not be underrated. >> no. >> only 80 delegates -- >> libby cantrall at pimco, larry thanks for coming in. up next, talking planes, trains, and automobiles. "power lunch" will be right back. ♪ today, we're seeing new technologies

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welcome back to "power lunch," cow transportation stocks falling for than percent on a pace to break their five day winning streak, the longest streak since november of last year. the index tracking for its worst daily performance since early last month. with today's loss, the index down on the week. jet blue, kirby, avis, rider

system down the most. transportation stocks are possibly an indicator for the healthful economy overall and perhaps a leading indicator of the stock market. >> they were down before the industrials fell, they were up before the industrials started climbing back up. >> and they bottomed you out early on. february 11th the diamond bottom when stocks turned to the s&p. the transportation stocks back on january 20th. generally outperforming since their lows. >> has anybody gone back -- this is a 1 hundred-year-old theory but i wonder if it's applicable. the transportation index used to be trains and trucks. >> trucks. >> now it's jet blue. i don't know if jet blue. >> it's avis budge. >> avis budget, are they can iive of the competent. >> airlines, we do more traveling on airlines than we did. >> airlines didn't exist much then. >> that's right. thank you jon dom. the ceos of exxon and chevron promising to keep their

dividends safe. can we trust them? after the break. over cable for 15 years. (father) how 'bout over 15 satisfying years with that woman over there boiling your clothes. her layers and layers of...layers. hair that i've rarely seen because it's always under that bonnet. and how she fought off that grizzly and made him into these slippers. that's satisfaction son. (vo) don't be a settler, get a $100 reward card when you switch to directv. so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.

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and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis and a $200 savings card welcome back to "power lunch." i'm michelle caruso-cabrera. it's after 2:00 p.m. eastern

time. ceo john watson of chevron reiterating the importance of dividend growth and maintaining a balance sheet. this is what he had to brian sullivan back in december about dividends. >> that's our number one priority to pay the difficult den. i've made that clear to the financial communities. we generate enormous cash flow even at low prices. we are going do what we can to cut future spending but the dividend is something -- in fact we have encriesed it 28 years in a row. fake the dividend is a priority but we've got to live within our means. >> just last week, cnbc's becky quit spoke with exxon mobile's ceo. here's what he said about the dividend. >> when we make decisions about the financial structure of the company, our financial programs we are really thinking 20, 30 years out and thinking about the long term share holders. we no the difficult den is extremely important to them. the difficult den is safe.

we have, again, it's part of what we feel is the obligation to our shareholders. >> plenty of other energy companies have been slashing their dividends. some even suspending them until under financials are in a better place. can you trust the dividend with some of these oil companies. let's bray in david deckel balm and david whoo wits. david, let me start with you. is there some way to think about a company for our viewers who want to know how is it you can decide whether or not a difficult den is safe? should you just look at a yield and say wow if it's too high it's too good to be true? or spl some better way to do it? >> it is a difficult ballness. you have got to consider a lot of things. consider where the debt is trading. consider the capital allocation no and consider the pressures on operational cash flow. a lot of these companies came into the cyclical downturn with too much leverage and a lot of their monies were based on

historic returns that in this day aren't realistic. and now that you don't have the cash flow to meaningfully deliver thele aboutance sheet and cut costs there is pressure on dividends. >> david, what advice can you give in terms of trying to, if you are somebody at home looking at different companies what's something to think about in figuring out whether or not you can trust whether the company is going the keep paying the dividend. >> i think the ceos laid everything out for you when they were speaking in the interviews. the difficult deputy is extremely important to them. they are getting a 30% premium relative to the others for maining a healthy difficult den. the companies have multiyears of cash to support the difficult

den on their balance sheet. adjusting the program to sperch within cash flows allows for the sustainable dividends structure. >> darren, that's it. listen, this is accounting 101, chevron spends $7.99 billion a year on its difficult den. do they have $7.99 billion left of free cash flow at the end of every year? >> well, that's the relevant point a. lot of it also hinges, too, on what their debt is rated, if they are investment grade. you know, how emphatically do they want to defend that investment grade rating? lot of big companies absolutely want to preserve that. at the end of the day it is a balance to what your organic growth capital sbumt if. you are looking at near term value relative to maximizing long term intrinsic value by not dramatically slashing growth cap and ex but using cash flow to generate decent returns maybe

expectations of a future dividend growth possibly outweigh the expectation of cutting that difficult den in the short term. >> let me jump in and ask a different question, i'm flip it a little bit. john watson told us basically they can make money at $15 or $20 a barrel still because they have been in business so long. ? any reason to own some of these stocks if they didn't pay a dividend? >> well there, would be a different reason to own them. >> why? >> total return and income investors, total return and income investors would gravitate away and deep growth or deep value guys could come in and look at it on a sum of the parts basis. i think you would have a different investor set but from income orientation you would cross it off the board. >> david, let's talk about how much money is there to pay for a difficult den? the payout racial yes for exxon right now, in other words, how much do they bring in in

profitability and profits is lower than what they are supposed to be paying for difficult den. their payout ratio is above 100%. how long do you think that can last? they have got strong balance sheet. do you think they raise the difficult den? keep it steady or do you have to see how it plays out with oil prices? >> >> i think they are looking at the business model for 20 to 30 years. i don't think -- right now this isn't a question of liquidity, not a question of cash flow. in the question of liquidity, the liquidity for exxon right now is tloertically unlimited. supporting the dividend is important for them for the long term business model. if they were to match cash flows yeah, i think you could argue if we were to live in this lower for extremely longer environment you would have to adjust your pay out ratios but you would also see costs come down for and start to see margins improve. one of the things we have been spending time on this year is

focusing on the ability of niece companies to go out and raise secondary equity in this mark. we've seen $9 billion from large cap e and ps. by and large the investors are loving the ability to raise capital because it prolongs the duration of these names through a down cycle which is viewed kshly as unsustainable. i think if this was not viewed as a cyclical business, you would see those pay out ratios change. >> david, is there real concern some of the big guys are going to go under? one of the conclusions at a conference i was at is that bigger doesn't equal safer. would you agree? >> i certainly think that bigger is better than smaller. at least in the case of survivability of these e and p companies and majors. i think the larger ones here -- look, you can't necessarily uniformly talk about large is large. there is large names with large amounts of debt on those books.

and you have seen those stocks be devalued signature conditionally auto i'll name two because i don't want to be perceived as picking on one. marathon oil and hess. marathon oil one of the biggest oil producers in the united states down 76%. when you see a company fall of that size that much, what is it saying to you, david. >> i think what it's saying to you is effectively right now, the equity is turning into a call option. the company came into town turn over leifered. the debt metrics unattractive and the asset portfolio is not attractive enough for investors to look at this as a company that can survive prolonged down cycle. however, that starts to change. saw this week the epx was up over 50% over the last week or so. some of that was dragged up by smaller cap name. but this group is tremendously oversold. i think it's getting down to levels where investors are

saying this is option value on a more robust commodity. >> david, darren, thanks so much. david deckel bomb of argus research, and david horowitz of raymond jams. let's switch gears, looking at shares of shake shack, down nine, ten% after weak guidance last night. >> if you think about the places they have been successful, high labor cost environment like new york and big cities. i'll see what happens. >> chicken is supposed to be the most important thing ever. yet we don't know what it's going to be mean you about it's going to be great. >> i wouldn't touch this stock on valuation. i think it's still a no touch. >> i have never felt more confident on our team and excited about the future of the company. >> the issue here is valuation. look at the forward pe of shake sharks around 105. the industry average is 62. so you are paying for better than expected guidance and that's exactly what we didn't get. tim see more was talking about a

comment made the ceo on the conference call saying changen is going to be the most monumental addition to our menu, but we don't know what it's going to mean. that's not what you want to hear. >> they sell meat on a bun. >> delicious meat on a bun. >> it is delicious meat on a bun but it is meat on a bun. i willsty see your stats and trump you the habit burger. frequently named the best burger in america. that company's stock trading at about 60 times forward earning. much less. but has a comparable growth rate of 173%. shake shack at 213% over three years. shake shack because of the new york or the meyer sexiness is giving a people couple to other fast growing restaurant chains. >> food fads to me. >> where is it. >> based in california, operates here and arizona and other places i don't know. >> food fads. donuts -- it's like trying to

figure out what teenage remembers going to wear. a bad idea. >> in today's street talk, five big analyst's calls straight ahead had. you are watching cnbc first in business worldwide. man 1: [ gasps ]

man 1: he just got fired. man 2: why? man 1: network breach. man 2: since when do they fire ceos for computer problems? man 1: they got in through a vendor. man 1: do you know how many vendors have access to our systems? man 2: no. man 1: hundreds, if you don't count the freelancers.

man 2: should i be worried? man 1: you are the ceo. it's not just security. it's defense. bae systems. we need to be ready for my name's scott strenfel and r i'm a meteorologist at pg&e. we make sure that our crews as well as our customers are prepared to how weather may impact their energy. so every single day we're monitoring the weather, and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. during storm season we want our customers to be ready and stay safe. learn how you can be prepared at pge.com/beprepared. together, we're building a better california. welcome back to "power lunch." we want to bring your attention to what is happening with directv. there are some complaints across the nation root now about channel outages on directv's service, namely a couple

channels that have been referenced specifically. cnn, also others. directv's service, which is their twitter handle for customer service, has tweeted out, multiple national channels are experiencing loss of audio and video. we're working to restore your service. thanks for your patience. we have reached out to directv for a comment. we have yet to receive one. but we will keep you up to speed on what happens on that front. this of course, brian, gang on direct fv of tv, it is now owned by at&t, the telecom giant. >> i will say this, any of our viewers out there that watch us on directv. if we are not working right now, let us know. except i can't say that because you won't know that i'm requesting it because it's not working. >> basically you said all that for nothing. >> i did. more air time. >> time now for street talk. the analyst recommendations on stocks you need to know about. first stock is auto nation. goldman sachs says sell. selling auto nation. cut it from a sell to a neutral

concerned over profit margins both because of car pricing and too much inventory. and higher spending on marking. they simply say there is more competition this the car market. a luxury sedan inventory apparently because of recalls a lot more cars are sitting on lots. they cut the price target to 49. that was this morning. stocks is down 6%. >> they also cited dealer trenz. what's going on in the used car market is there is too much inventory of passenger cars when people want to buy suvs because of low gas prices. >> i am trying to sell a car. >> is it a passenger car. >> it is. >> nobody wants that. they want a gas guzzler because prices are cheap. coup dallas par is a paint and coatings company, the risk reward is balanced. that means it is a not going

anywhere from here. in china, balls par 1% of sales. >> sherwin williams upgrade a couple weeks ago was upgraded because the analyst believed they were taking shelf space from balls par. >> maximus is the next one. analysts cites a pipeline he thinks could support ten percent organic growth. boosted the price target to 60. about 15% upside seen for maximus. >> it sounds like a phony hedge fun name. maximus capital. >> sounds like a character in a

russel crowe movie. >> oh, yeah, it was up 14%. look at these charts here. dealer solar falls award. sun edison failed to consummate a deal. lots of analyst commenting including bare pointing out that uncertainty remains about potential legal action. sun edison could be liable for an amount higher than the $34 million break up fee if there is a court hearing on a settle men. for now a nice pop on this suck. >> i don't understand sun edison. we highlight good calls. i'm going to highlight a bad one. andale research upgrated -- them, and now they are down to $2. a bad call.

>> on the risk reward bases i guess -- >> a lot of percenters there. underrated name of the day is shippo phi. a company that helps you sell stuff on line. it used to be called the jaded pixel technologies corporation. upgrading shoppi phi. the valuation still is at a premium to peers, it's becaused it is deserved. target, $35. 35% upside seen for shoppi phi. >> and this is a real turning point in the coverage of the stock. those three reasons were why the analysts initiated a the lower rating. all three reasons are gone now. important to know. >> that's it. that wraps it up. up next, rumors -- well not

rumors. it's not a secret meeting. it was basically a georgia big event where all these rich guys went. and guess who was the topic of all those rich guys, that rich guy, donald trump. is tech teaming up to topple trump? "power lunch" returns after this. [bassist] two late nights in tucson.

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welcome back to power lunch, everybody. time for the tur power run down. federal reserve members saying seeing signs of inflation, and that the signs are not consistent. the differing views are showing -- are we getting more transparency from the fed? are we getting more clarity? the two are not equal. >> no, they are not. can we play a game? who will win the super bowl next year. >> i have no idea. >> just pick a team. >> the broncos. >> patriots. >> patriots. i think it will be my chargers. we now have a lot of transparency on who we think

will win the super bowl. do we have more clarity? we might have less clarity. i think that's what the fed is doing. there is too much dialogue, everybody has an opinion, we are hearing them all. >> there is a lot of talking that seems to be confusing the markets in its -- not in its volume in terms of amplitude but in its ton a.j. >> it made things clear, you out approximate 16 economists in a room and you get 16 different answers. we used to think of them as monolithic. and now when they all start talking this is a bunch of people that don't necessarily agree with each other. >> going back to the volker, greenspanish fed when it was more likely to speak in one voice, and a voes you couldn't understand. >> because he spoke out of both sides of his mouth. >> and he used 40 words where thr -- would be sufficient. >> i think at one point he said

if you understood what i said, you mistook it. >> that's the jeckyl island madness. the fed's too secretive and they have got a briefcase. no one is ever going to be happy. but if you are hearing important officials say -- they have different views and they debate the views. but i'm confused. >> are we better off with the wizard or oz or with the curtain drawn back? >> ceost saying top tech guys and women met at an exclusive event on the weekend where the main topic evolved into stopping donald trump. silicon valley, trump, gop, not generally the crowd you might expect to be discussing gop strategy. >> american enterprise institute. listen who attended.

apple ceo tim cook. google cofounder gary page. napster creator and founder shawn parker. elon musk, karl rove was there. i don't know if it eaudio he involved. but the point was they are nervous about trump. if you are a tech ceo, you are nervous because you use a lot of immigrants. you are worried about donald trump and what he is saying. >> talking about visas. >> yes. and apple has to produce in the united states. what good is it for us to have them producing in china. guess what, the phones would get a heck of a lot more expensive if they were produced in the united states. >> even if there was the technocloj clojical no how to make them right now in the united states. >> the capacity would be difficult. two issues important to technology that they would be worried about trump. >> but i have heard on other forums i think there is an idea for some people this was a

special meeting designed to stop trump. it has been an annual conference. 50 years. secret thing. you can't get in there. >> what are the major benefactors. >> kato is coke. >> ricketts. >> a big supporter. >> going back to the earliest days. >> kato, another thinking similar to aei in washington. let's go to a story that broke yesterday. maria sharapova one of the top earning athletes in the world top tennis star announcing she failed a drug test. quickly, nike among others suspended their endorsement deals with her. and it's raised a question of whether they would have been so quick had it been a male athlete in a large team sport. >> no, i don't think you can separate it by gender. here's the reality. she cheated. >> yeah. >> if that drug can be used to

gain endurance. we have seen cyclists take itful she says she has health issues. >> said she didn't know it was on the banned list. >> it is a performance enhancing drug. and i think that's the reason. >> a of the will of the discussion focused around tiger woods, the sponsors surrounded tiger woods. tiger woods did not break the rules of golf. he broke the rules of decorum. and tiger woods is the most important player to golf in decades. maria sharapova is not as important. >> nike, porsche, and -- >> going to dom chu. >> watching shares of lumber liquidators right now. down about 6%, near their lows of the session right now. this after a fund manager whitney tilson is issuing another presentation on why he is short lumber liquidators stock. this 132 page presentation outlines the case for why he thinks he should be shorting the

stock again. he goes into a lot of details about why he thinks that. in the presentation, he thinks there is a 50/50 chance the company goes out of business. more on that about lumber liquidators. "power lunch" is back in two minutes. stay here. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

welcome back to "power lunch," everyone. i'm sue herera. here is your cnbc news updhat hour. the white house says iran's recent ballistic missile test did not violate the nuclear agreement with the world powers but added it would review the launch to determine the appropriate response. mississippi voters heading to the polls weighing in on the presidential primary. 40 delegates up for grabs on the republican side, 36 in the democratic race. whole foods is partnering with national solar providers nrg and solar city to increase the number of roof top solar units on its u.s. stores. the company aims to install up to 100 units. if that is reached it would be among the 25 largest commercial roof top installations in the country. pro golfer rickie fowler takingrdth part in an ernie els

event gets a hole in one on the million dollar hole. the crowd went crazy. rory mcelroy & lifting els into the air. els's son is autistic, the charity benefits the you a test -- autistic. wti at $36.50. we lost almost 1.50 on the day. the intraday high, 38.39. we were in positive territory this morning. shows how volatile the oil market is. why did we pull back? the weak chinese news. goldman note also saying this commodity run up saying this run up was too far too fast. renewed concerns about dollar strength is an issue. also the eia came out this

afternoon taking down its 2016 world oil demand growth forecast. demand coming down when supplies rising not a good thing. a build up of 3 million, much less than the 10 million we saw last week but a built nonetheless. traders telling me the run up is due to short covering and market chatter that opec headlines were coming back to fundamentals here. nothing changed in supply and demand. do have to be worried about it. >> let's check on lumber liquidators. a efl doing story. the stock down 7%. after whitney tilson again shorted lumber liquidators. he made his case in a 132-page presentation. dom? >> first of all it is a little bit perhaps interesting and maybe somewhat controversial. the fact that he was short this stock for aed goo amount of time then made a high-profile covering of that short bet in

december and now going short the stock again. he goss through a number of different points during the presentation. one of those slides of the 132 that you mentioned is about why he covered his short in december. he says among other things i received information that leads me to believe the senior management wasn't aware that one of their products had high levels of lead in it. there was no smoking gun. those are reasons why he covered. why he put the short back on, he says he continues to believe that the senior management was unaware of the toxic lamb nant but he has new information that leads him to believe the odds for a bad outcome have risen materially because of things like media coverage of the cdc rating of the cancer rates and that the cancer rates are

greater than the cdc's revised estimate. this is again his opinion. >> he is talking about stuff they iced to sell is that they stopped selling. >> correct, they stopped selling. >> but but raising the possibility that the cancer rate is higher, i'm assuming he thinks more lawsuits. >> for downside risk. he goes on in slide 7 of 132 to talk about the chance he believes fls a 50/50 chance the company goes bankrupt. this is all one person's view. we should put it out there. there are multiple cases to be made for this company. >> due to lawsuits, due to the cost of covering lawsuits and things like that related to -- >> that could be. they talk about the idea that the cancer risk also possibly the likelihood of a larger legal and regulatory liable. he says that specifically. >> a couple things here. it is a bizarre short here. because the stock was $120 three years ago. it's now $12. >> more serious, it depends when

he covered in december that stock was almost 19 there for a lot of december and hit a seven year low when it reported earnings just last week. >> he made a fortune on his short. >> he could have state short. >> this is an important point. the company has taken its lumps. certainly. consumers don't seem the care about any of this. this is the risk. the stock has gone from $120 to $12. last quarter sales were $234 million. >> it had a decrease in the number of customers billed and the average sale in the fourth quarter. and had a decrease across the board. >> $234 million in sales last quarter. $272 million in the same quarter in the previous year. it's come down a little bit. but it's not like sales have fallen 75% because everyone is afraid this wood. it has gone down a little bit. >> but in the cancer scare mushrooms then people who have that lamb nant flooring in their homes are going to find class action lawyers and number two

are going to want to take it out, remediation. >> a lawsuit trade. >> it's like an asbestos trade. >> earnings were tear lk. yes because they are setting aside money for the liability. i'm talking about sales because mom and pop are going into lumber liquidators and buying hardwood floors. sales are only down 7%. >> we are in the process of reaching out to lumber liquidators to say what they have to say in response to this. >> new ceo there. >> there are moving parts. but we want to make sure lumber liquidators gets their chance to. because right now it is a fun manager who has made a lot of money shorting the stock, covering it and shorting it again. it leads to questions about j he covered it in the first place. >> the other thing, can i put on the conspiracy hat just because it's fun. the 60 minutes special came out in march 6 last year.

the stock was 75, 6 # 0 bucks. it had lost half of its value before the 60 minutes special. you wonder -- because sometimes these hedge fund guys they will talk to members of the media, say you should check in out, check that out. by the way, ceo of lumber liquidators put his $28 million mansion up for sale. who knows why. >> and the ceo stepped down yesterday. >> the ceo may need some liquidity. >> thank you dom. >> i'm concerned that directv is out in at least one home in rural virginia. my father's. >> tradings nation is on deck here on "power lunch." don't move. you pay your car insurance

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to learn more. switch to liberty mutual and you could save up to $509. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance. time now for trading nation. traders do trade better together. today let's trade the s&p 500. todd, first to you and the charts. are you surprised to see stocks stall out a bit here after a little mini rally that has made some investors fairly happy? >> i am a little bit brian. i don't show technical

resistance in this s&p until above 2,000. i have ben been positioned to get up to that level. first chart shows we might have turn turn resistance around 2100. if we happen to fail at this level then we're going to put this head and shoulders pattern to work. which is nothing more than a high followed by a lower high. that will bring in a test of about 1800 which you content want to hear the downside on that. brian, you and i have spoken about oil. we mentioned a 38 to $40 potential resistance zone. we seem to have held with it this fundamental information. that could exacerbate the selling and get this head and shoulders pattern to work. >> eddie, what do you think? what are you expecting in the next few months and quarters. >> i think coming next week we have a federal reserve meeting. that's going on on tuesday and wednesday. there is still a big spread between what the ted is saying and what the market expects. i'm not expecting a rate increase next week but if we see

some softening from the fed, i think that could help spark a rally. we're also going to start seeing some revisions as first quarter earnings season approaches. and the last several quarters we've seen downward earnings. this would break our streak and we'll final esee some earnings increases. good thing i'm seeing out there is that the breadth is expanding. even though the s&p 500 is currently down for the year, about 2%. we're seeing that most stocks in the index are green. so we're seeing that -- a broader rally and we're also seeing high quality stocks. i think that could bodyr bode well for the next several weeks. >> push back, loss of technology i have a hard time continuing that the market can continue to rally here. >> todd, thank you, eddie thank you. for more trading nation head to our website. big news, whitney tillson is

shorting again the stock, of lumber liquidators. what do you think? >> it's hard for me to comment on what whitney is sachlg i cover lumber liquidators closely. just looking back at the company's report from a few days ago and looking at the fourth quarter results and i think this is a company that still hasn't found a bottom fundamentally. we satisfy weak sales. moirns continue to deteriorate. my thinking here is that yes there is still a lot of these litigation type issues out there. i think more importantly, the consumer to a large extent continues to shun these stores. >> dom chu is on set with a print out of this report and power point presentation that whitney tillson is making right now. he is suggesting the concern relates to a higher level of lawsuits related to the former product that they had to discontinue. how are you assessing that in terms of what you are thinking about the company right now? >> well, again, that's really difficult from my position to

assess that because -- and i've -- >> i'm a he not asking about whitney tillson. i'm asking specifically about the issue of lawsuits they are going to have to face as a result of this product. how do you model that in right now? >> it's tough. 'really difficult to put any type of number around what that could mon for the company. obviously the ps numbers could be big. and that would be a problem. it's very, very difficult to put numbers around that right no. >> do you even put it in the model? >> no -- i do not have an asmg in there. >> got it. >> yeah. >> okay thank you so much. we appreciate you calling in. >> thanks for having me. >> all right. take a look at the hyg and etf that tracks the major bond market a. major reversal over the past month. what's responsible for the high yield bounce and should weigh--n should you buy in. one bull is going to weigh in.

seeing in the high yield north. since february #th the track is higher. let's bring in the head of ultrahigh net worth. andrew recently initiated an overweight position on high yield with a larger unweight position on u.s. treasuries. andrew, great to have you with us. what has changed since february 11th? is it that recession is off the table in your review. >> we are not pricing in u.s. recession in our view. what we are looking at in high yield is really the fact and we initiated the small overweight position a week and a half ago on the valuation story. yields to maturity have reached 9.9%, and spread levels exceeded 800 basis points, historically attractive to initiate overweight position. >> are you thinking the crisis is over for the high yield in

terms of the hiccups we saw at the beginning of this year. sales and new debt haven't recovered. $17 billion this year, down 17% from last year. and also a deal led lot longer to do. >> sure. look, i think in our view the corporate fundamentals are in place and i think a lot of the markets basically priced in what our expectations in terms of default rate for overall yield. at the 9% level roughly and spreads that are basically at our target, we think it's attractsive. >> how has the stabilization of oil been in your tactical overweight of high yield? >> we've benefited over the past week and a half since we initiated the position and spreads have touched 808 basis points when we initiated the overweight and tied into our six-month target. certainly we've benefited from

that and also from the significant flow over the last week and a half or so that's benefited pricing as well. >> we see oil go back down to levels we were at in february 11th or so, you would be less constructive on high yield? >> well, we think it's more of a longer term place. if you see oil prices persist at these leflsz for a longer period of time it's priced in. there are some correlation in terms of one month correlation of high yield to oil prices. if you see sharp moves down, it's an interim risk but we think it's an attractive carry play. andrew lee, thank you. brazil corruption crackdown and malaysia money mystery. "power lunch" is back in two.

the crackdown in corruption in brazil leading to a ceo going to prison and for 19 years. the ceo of a major construction company, his conviction comes in connection with a massive multibillion dollar kickback at oil company and ceo of one of the greatest business empires in latin america and sits in prison for money laundering and bribery. the highest ranking executive to be convicted in this sweeping corruption probe. it was just last week the former president was brought in for questioning in the same scandal.

>> meanwhile, a former goldman sachs banker, involved in fraud in malaysia's state investment find. mary thompson joins us now. >> the former head of southeast asian operations, subpoenaed by the department of justice as part of a money laundering investigations. calls were not return and goldman and the fbi all declined comment. leissner left goldman in february, according to a source, after goldman discovered he made unauthorized statements in a letter sent to a financial institution last year, reportedly promised an internship of a child of a person involved in the mining deal. when goldman discovered the letter the firm put him on leave. his departure combing as goldman is undergoing scrutiny linked to the money laundering investigation which centers on one mdv.

helping the fund raise 6.5 billion through two bond offerings, much higher than average fees. the fund was set up to fund inf infrastructure projects which was funneled into accounts for the country's prime minister and reports that he was denies. >> an interesting story here, robert frank joins us and malaysian intern? >> it gets even better -- >> how can it get better than that? >> it involves paris hilton and art market and pent house owned by jay-z and beyonce. this thing is widening. first of all, we should say, the swiss banking chief says this could involve $4 billion of misappropriated money. we're talking about a huge amount of money. >> the fact that the swiss banking chief came out and said it was extraordinary of itself.

>> absolutely. the second thing is say key player in all of this, not making this up, jolo, a whale in the real estate and art markets and bought $100 million worth of real estate, including a penthouse at the top of the time warner center which was owned by jay-z and beyonce and big place in beverly hills and -- >> there he is, that's him on the right. >> not to be confused with j.lo. could be called j.lo. >> or yolo. >> bought $200 million worth of art in past five years and secured a $100 million loan from sotherby's, bought a pit kas sew and sold it for 47 and there it is -- >> what's the link between this and malaysia --

>> he is a guy who was a key figure between one mdv, that big development fund and petro saudi that fund invested a billion dollars in, a lot of that money could be up to a billion and went back into the personal accounts of the prime minister. so -- >> we need an hour for this story. >> bottom line is this, it is possible that the prime minister of malaysia has misappropriated a billion dollars. >> that is what investigators are looking into. >> potentially with the help of goldman sachs? >> well, goldman sacks played a role on deals -- >> goldman sachs led the bond offering. sort of the key intermediary between the saudi and malaysians and during this time spending hundreds and millions of dollars on real estate.

>> all of those luxury purchases bought with dirty money. >> that's what they are investigating. >> the higher than average fees that goldman got, several hundred million dollars, do we remember that correctly? very like eye-popping amount of money relative -- >> relative to the size of the deal, it's significant. >> we were looking at goldman sachs and wells fargo, rolled into this thing. what we're learning is money is sou global that when corruption investigation -- who cares about malaysi malaysians, it's expanding into all of these other areas. >> and got fired for writing a letter misrecommending somebody. >> thank you. >> let's take another check at lumber liquidators, the crux of the case is that they could be exposed to several lawsuits the stock is down 9%. whitney tilson will join cnbc in

the next couple of hours. >> that should be a good one. stocks on the move. one of the most talked about out there. thank you for watching "power lunch". >> it's been great to have you. "closing bell" starts right now. ♪ >> hi, everybody, welcome to "closing bell." i'm kelly evans. >> i'm bill griffeth. today the energy sector is the biggest loser after being the biggest winner yesterday. we'll tell you what's behind that reversal and the next hour by the way, chevron ceo will be here for a live exclusive interview and questions continue to swirl around the company. they've cut back on their capex and investment in their own business and you wonder about the dividend. john watson still maintains it is safe. >> a big project of theirs came online. we'll talk about all of that and more and global investment