>> as long this as they don't s something -- >> xle, still on the puts, i'll own them into this meeting and i expect them to be a little bit bigger on monday. >> a pleasure, guys. thank you. john, sarat, steven and jim. that does it for the halftime report. "power lunch" begins now. >> don't go anywhere. stay tuned. we have a very big wall street power player about to join us. this is "power lunch." i'm melissa lee with michelle caruso-cabrera and bill griffith. >> hello, bill. >> welcome. >> what is this "power lunch" show? >> as if he didn't know. brian and tyler have the day off. quick check of the markets here. don't let the fractional moves today fool you. in the last two months, the dow is up 12.5%. same for the s&p 500. both indices less than 3% from all time highs. the nasdaq is up 15% in that same period. >> let's bring in the head of

u.s. equity strategy at jpmorgan to talk about where the market goes. >> the coolest on wall street. >> reminds me of dubrovnik. melissa ran through the two month charts which look very impressive. you look at the dow over the last year and the s&p over the last year, it feels like we have careened higher and now we're back to this level that we keep fighting up against, whether it is the 21,000 leave, the 18,000 level or 2100 level. where do we go to from here? >> so market had impressive rallies since february lows. up 13%, 14%. i would say probably most of this has been driven by short covering. technicals i think for most part at this point have run their course. investor positioning adjusted, equity multiple is pretty much at the highs around 72.5, so i think in order to turn more constructive from these levels on, you need some form of

fundamental catalyst and some form of earnings and reacceleration. to me that pretty much means we need more dollar weakness. if we don't get that, i just don't see much more room for upside. >> within the markets, though, just this week, we have seen what seems like a change, we have seen a tilt more towards the cyclical sectors, a tilt away from the so-called buvg eb sectors, financials, even though with that -- with the exception of probably jpmorgan, every single financial that reported this week had some problem with earnings. and yet the stocks are up. aren't things different after this first tranche of earnings? >> keep in mind that technicals and a lot of these systematic flows that are not necessarily linked to the fundamental landscape, if you will, they have been a big driver of markets over the course of last few months, both on the way down and the way up. but i wouldn't get too excited because as i mentioned earlier, most of this, if you will,

positioning has been adjusted to this point. funds are pretty much neutral to our equities at this point. >> oil. equities in oil have been correlated for a while. earlier this year. started to diverge here recently. but doha is this weekend. if they're able to effectively convince the world that they're going to freeze production and oil rallies, will equities go with it, though, this time? >> i would say it will be a big positive for a lot of the oil sensitive equities. it will be big positive for em assets. yes, u.s. equities probably benefits some, i wouldn't say big benefit. i think the correlation between equities and oil has been quite high, but that's at low oil levels. if oil starts to rebound back to 45, 50, i think that correlation starts to decouple a little bit. >> sit tight. he speaking of oil, rig counts are out. to dominic chu with the numbers. >> let's count some rigs. it is friday. baker hughes has done this for us and now u.s. oil rigs down 3

to 351 in the last week here. falling by 3 to 351 total. this is a huge drop from the same time last year. you can see there, but still we're trying to figure out whether or not this will have an impact on the overall oil price market. oil is holding relatively steady given the news we have been getting. u.s. oil rigs down 3 to 351. >> i think oil just holds its own today until we know what doha does over the weekend, don't you? >> for sure. you mentioned earlier, you don't think the market moves higher or gets a better win unless the currency weakens more. >> we need better earnings, some form of earnings reacceleration. >> that's connected to the currency. >> i think that largely is connected to the currency, yes. for every 2% move in the dollar, you get negative 1% move in eps. >> sounds like you want a fed to be easy and then easier. you don't want them to raise rates at all? >> from an equity point of view

easy fed, more dovish fed prolongs the cycle. if we get further dollar weakness that could give us a lift in terms of earnings and then more constructive. >> do you think the economy is much worse than people think it is then? >> i mean -- >> by saying that earnings growth is going to be driven by dollar weakness is essentially saying that there is not the economic growth that will sustain any sort of earnings growth. >> i think growth is okay at best. it is lackluster. not strong. and we have seen that. i think oil declined, we have seen over the last year, year and a half, benefited growth on the consumer side. i would argue that oil has been masking the weakness in the fundamentals. >> are there different parts of the market where you think there would be outperformance, even if you're not constructive on the overall market. >> overall u.s. i think most likely the path forward somewhat of a range bound. i don't see the risk/reward very, very favorable. areas i do like, energy,

materials, parts of industrials, i like u.s. multinationals as well. that is linked to a more dovish fed, em and longer -- yes, absolutely. >> got it. >> great to have you. appreciate it. >> thank you for having me. >> good insights. two stories we're following here, both here and abroad. we're joined now by cnbc's josh lippen to and seema mody. josh, with you, the huge week ahead for technology investors, tell us about it. >> tech investors want to know if the good times can continue with the tech sector of the s&p 500 now up more than 15% since that market bottom in february. we could have a better sense when a number of tech giants report financial results next week that includes ibm, intel, yahoo! microsoft and alphabet. in q1 tech companies are expected to see earnings drop about 7% versus a drop of 9% for the markets. so less bad.

on the other happened, revenue is expected to fall 5% and that would be worse in the overall market. tech analysts get more optimistic in the back half of the year, which is why full year estimates look stronger for the sector as a whole. one big theme this earnings season will be currency, where a weakened dollar could give big cap tech a boost. >> now that that's the currencies have clearly turned and you're seeing a moderation in the dollar, absolutely that's the benefit for large cap tech that generates so much of its profits in revenue from outside the u.s. >> also investors want to see how f.a.n.g. performs, facebook, amazon, netflix and google. so far this year the lager in that group is amazon where we know investors were concerned about the online retailers disappointing q4 results and increasing competition in the cloud. more of that competition coming from google under the leadership of diane green, google parent alphabet reporting next week. back to you. >> josh, stay right there and

seema, sit tight for a moment. we have a market flash on apple. dom? >> taking a bit of an intraday leg lower here. this on headlines out of nikkei saying that, again, according to reports citing sources that apple will continue reduced production of iphones in the april to june period in light of sluggish sales. this according to some parts suppliers notified of the plan. a nikkei report citing sources, nothing official here. apple told parts suppliers again according to the report in japan and elsewhere it will maintain the reduced output level in current quarter and that apple apparently does not plan to produce large enough volumes of small iphones released last month to offset the slump of its flagship series product. these are all sourced reports coming from their parts suppliers. again, source reporting from nikkei, but that's the reason why you're seeing a little bit of weakness here in apple shares intraday. back over to you. >> down 1%.

these kinds of stories have plagued apple for the last six months or so. what do you make of it this time? >> well, we'll see what apple's response is. when you get these kind of reports, we know apple's response in the past has been, of course, that the supply chain is so vast and complex that you shouldn't extrapolate from one data point or a couple of data points. we'll see as more data points come in, though, can we get a theme here of what various suppliers are telling us and reach out to apple and see if they have a response. >> i think the concern here, josh, and dom, and the market is we have already heard from the suppliers, we heard from taiwan semi which said that it has seen weak orders. dom, back to you, did the reports indicate the weakness is driven by the se or could it be driven by six, which could indicate it is simply ramping down as well in anticipation of a serven. >> it is because of slowish sales across the board again, but they also say that the -- there is not enough of an indication here or plan to

produce large enough volumes of those smaller se type phones you were just referring to do offset some of the weakness in other parts of the supply chain. so, again, these are just headlines coming out now. they seem to be impacting the stock overall, that's the reason why at least we're bringing it to your attention. but no definitive reports here, and it is important to point what josh said, these are channel checks and this is not stuff that is hard and concrete coming from the company or anywhere else. >> right. thanks, guys. josh, see you later. dom, we'll hear from you soon. let's going to seema mody on this chinese gdp report out last night. >> well, china's gdp came in at 6.7%. industrial production and retail sales both beating expectations. now, investors may see the recent bout of chinese economic data as confirmation of a vital shift in china's growth story, but wall street pros say investors should not be credulous. turn arounds take time, four months of consistently good numbers. if you dig into the loan growth

data, it highlights an interesting trend. china's credit growth surged in march, which means the government is taking on a huge amount o debt in order to fund short-term growth. wells fargo says this is clearly a worrying sign and it is likely unsustainable. and that's one of the reasons investors aren't cheering today's china -- chinese data. the hashanghai closing lower. europe in focus down, about .4%. >> seema, thank you very much. up next, exclusive sound from billionaire investor bill ackman as a new documentary about his herbal life bet hits the big screen after this. atand that in a new house,tee a fyou probably don't sharece, the same tastes as the previous owner.

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they found out who's been who? cking into our network. guess. i don't know, some kids in a basement? you watch too many movies. who? a small business in china. a business? they work nine to five. they take lunch hours. like a job? like a job. we tracked them. how did we do that? we have some new guys defending our network. new guys? well, they're not that new. they've been defending things for a long time. [ digital typewriting ] it's not just security. it's defense. bae systems.

maybe we cover the position, decide we're somehow interferie i because government is afraid to step in. we actually had a discussion and in the middle of that discussion, i got a call from our trader, head trader, bill, herballivestofe stock has been halted. i said, perhaps there is a god. >> that's from bill ackman about the fight with herbal life. let's take a listen.

>> what happened here, we didn't expect, very quickly became a wall street story. bill ackman versus carl icahn and the real story is the people being harmed. harmed in the united states it is millions of -- in many cases undocumented immigrants, often hispanic, low income people came to america to pursue the american dream, and they got ripped off by a pyramid scheme and were afraid to complain. and now their story will be told. i think that's really important. >> why do you feel they're a pyramid scheme. >> sell people on a false business opportunity. seduce a group of aspiring people who came to the country to get the american dream and invest 3,000, 5,000, 50,000, $100,000 trying to become an entrepreneur and turns out that it is basically a guarantee they'll lose all their money and misled about the possibility of making a profit and they suck their friends in and members of their family in and they lose everything. that's a horrible way to take advantage of people's, you know,

dreams and aspirations. >> how would you respond to those claims of self-serving activism. >> i'm not an activist like julie contreras, community organizer and -- i did not know that latinos were being harmed when we -- we had some understanding of the victims here, you know, i'm an investor. i'm investing other people's money. we made an investment originally on what we expected to miake a - i didn't want to personally benefit from this. i didn't want the victims to wait. we already committed $75 million of philanthropic resources, 50 million of which are going to the latino community. and we get $25 million to dream.us. this is interestingly a community i didn't know much about, but i learned about as result of this experience. >> great. that's all i got. >> that was ackman last night.

joining us, the director of betting on zero. herbal life declined our invitation to come on. i got the pleasure of seeing the film yesterday. it was clear that you try to involve herbal life in the production of this film, talking to them constantly in the film for the course of two years or so. the result of that of not having that participation, not having the participation of anybody who is the pro herbal life story, do you feel like the film came out in favor of bill ackman. >> the film is as balanced as a film i could make. i wanted to dramatize a conflict between two surprising entities, hedge fund billionaire taking a moraltand and a global nutrition and fitness company that offer people a chance to realize their dreams under allegations of being a pyramid scheme. contradictions on both sides. i tried to present them as fully as i could with the resources available to me. >> did you get the impression that mr. ackman is in on this

trade from the start? taking a moral stand? he said on the red carpet, as you saw just there, he wasn't really aware of the hispanic community really being victimized by herbal life until much later into the short position and that is when the short position was moving sharply against him. he sort of wrapped that moral crusade around that losing trade. what is your impression of how bill ackman navigated through the period and why he he comes out at the end being portrayed as a moral crusader? >> well, i think his thinking and attitude towards latino community did evolve during the course of his position and during the course of the production. however, from the outset, as i think you and your audience know, he announced he was going to give away any of his profits from the beginning because he believed what he was doing was right. so the moral position itself was staked out by him from the outset, which intrigued me.

it einvolved and became more focused on the latino community as the story involved and he became more aware of what was going on. he had a moral stand from the beginning, intriguing to many he. >> this is a very interesting subject matter, not necessarily a mean street subject matter to take an activist hedge fund manager and make him sort of one of the stars of the film. when you started production, he was a different sort of character than when you ended and when the film was premiered yesterday night in terms of his performance and what he was facing by investors. just in the past year, the fund was down, herbal life is up. are you surprised at how far and how different what you thought the film would be became? >> i expected to be surprised. i knew i was dealing with a kind of capitalist battle of volcanic nature and expected things to be unexpected and i was not

disappointed. and i think audiences that see the film will enjoy from a cinematic point of view the drama and dimension of this battle. >> ken, what happened to bill ackman? >> over the last six months. >> over the last 12 months, last 24 months. his style of hedge fund has been in concentrated positions but it seems of late, his concentrated positions have moved against him and he's -- as he moved against them, he sinks his teeth deeper and deep near ter into the posi >> you have high profile successes and high profile losses and that's what he's having right now. i will tell you, it is not just bill, active vism over the lastx to eight months had the worst relative time that it had in the last ten years. it starts to bounce back in february. but, you're right, he has high conviction like with valeant, like with herbal life. he's -- he has high conviction and he'll do what he can and to try to create value for

shareholders. >> are you surprised he participated in this movie? when you start getting involved with bill, about two years ago, but the trade was sort of not exactly moving in his favor at that point? >> when we started filming him, it was november of 2013. herbal life was en route to an all time high, he was -- he was down several hundred million dollars. >> is this a tool? is this sort of out of the ackman playbook? he's been a master at using the media in any way he can. is the film the latest example? >> he'll talk to anybody about it. whether it is one person or a thousand people that gets to a million people, but, you know, he did go public with this. you have a short that relies on government regulation, it is important to go public. it is almost essential. and i think had he kept quiet about it, and started talking to regulators quietly, and talking to attorneys general quietly and it was found out to be a pyramid scheme, people would say why didn't you go public with this

sooner, why didn't you tell us? i don't think there is anything wrong with him, you know, kind of talking his book in this one instance. >> how long can you hold on to this short and this and you couple that with his position. these are two high profile stories, both moving against him and both really contributing to heavy losses at his fund. >> he has some permanent capital, he has long-term investors that believe in him. and, you know, he was a short mbia for seven years before he declared victory there. he'll hold on to as long as he thinks it is good for his investors. >> right. >> documentary films thrive on people with conviction. people who are willing to go to the end of the earth to accomplish their dreams. that's what you look for, in any film. and we have that in the characters on all sides of this conflict in this film. that's part of what i think makes an engaging story and why it reaches many people. >> we're out of time. i have to ask you this, did

ackman have any involvement in the film in terms of funding or donating to charitable causes that you guys -- you or the producers or the writers of the film champion. any way, shape or form? >> zero. >> zero. >> zero involvement in the financial aspects of this film, zero involvement in anything related to any of the charities. >> donations. >> anything that people -- >> i had to ask that. >> i understand. >> thank you, both, ted and ken. ted's new documentary called betting on zero. coming up around larry kudlow sits down with john kasich. find out what he had to say on the economy, isis and ted cruz. "power lunch" is back in two. t, they work all the time. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop.

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welcome back to "power lunch." we want to call your attention to what is happening with a few of the suppliers on the heels of the nikkei reports about possible production scalebacks at apple for the iphone. if you look at shares of sky works solutions and qorvo, broadcom, falling in sympathy with the reports of apple possibly cutting production of iphones in light of possibly sluggish salesales. this is a headline coming from nikkei. broadcom falling as much as 2% here. now a check on the bond market, rick santelli in chicago with the bond report. over to you. >> thanks, dom.

maybe nothing better than a one week chart of five year note yields. we settled last friday at 115, settled yesterday at 125. where are we? 120 in the middle. that almost says it all. look at month to date of tens. the same place we start the the month is where we're currently trading. bucking up against the resistance on yields. munis in chicago, we pay a lot of attention to munis, chicago, illinois, has issues. this is the highest level at etf has been, mub, since january of 2013. snuck up on us, didn't it? year to date, drum roll, minus 11.5. new record. 20-year chart, never been down there before. boy, the nikkei was down, the yen, i don't know if that was a good decision. one good decision, be back here in two minutes when "power lunch" returns.

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i'm sharon epperson. here is your cnbc news update for this hour. more fallout from the earthquake that hit southern japan earlier

this week. an after shock measuring 7.0 struck near the region. as a result, japan issued a tsunami warning for nearby coastal areas. the latest quake struck some three miles east of kumomoto. bernie sanders traveling to the vatican to speak at a conference on social and economic justice. he did not meet with pope francis, but called the trip a once in a lifetime opportunity. >> i am very excited to be here in the vatican. to have the opportunity to say a few words through the academy about the need for a moral economy. >> the kremlin apologizing to u.s. investment bank goldman sachs and a german newspaper y saying aides have mistakenly informed russian president putin that the american bank owned the

newspaper. he made the erroneous comment on thursday when he said who he thought was behind the leak of the panama papers, which were handed to the german newspaper. the nba has approved the sale of sponsorships on players jerseys starting in 2017. it is part of a three-year trial program that calls for patches to be placed on the top left of the jersey opposite the nike logo. that's a cnbc news update at this hour. back to you, michelle. >> thank you very much, sharon. the global marketmaker is now a publicly traded stock. began trading this morning. high bier by 20%. bob pisani with more on the biggest battle we have going with all these exchanges competing for listings, right? >> a good thing, not just listings, but good thing to compete in general, equities and options. they broke the jinx here, 13.3 million shares, priced at $19, the high end of the range. look how this traded all throughout the day. opened at $22.88.

that's a flat line across the middle there. hasn't changed much at all. they broke that jinx, that 2012 technology glitch that closed them to cancel their ipo. we got three big exchanges in the u.s. now. bats, nasdaq and ice and nyse. they compete fiercely. look how the equity trading volumes, nyse number one. bats is number two in terms of trading volumes. nasdaq is number three. you see, they're neck and neck with a little more than 20% a piece, let's call it that. dark pools are third of the trading volume. and these exchanges compete very heavily in the options space as well. so nasdaq and this is 2015 numbers, about a quarter of the business, chicago board options exchange, cboe, a quarter. nyse, 18%. ice, the international securities exchange, 15%. bats is a competitor as well. remember, nasdaq recently bought the ise so nasdaq has almost 40% of the volume. what do you do when you have a big exchange now and going public? guys, what you do is you turn

around and you use it as a currency to buy other businesses. i wouldn't be surprised it see them go into the, for example, the bond business as well. remember, there is another exchange out there, iex waiting for approval from the s.e.c. back to you. >> bob, thank you very much. the dow, the s&p 500 and nasdaq on track for another week of gains with the dow closing in on 18,000 once again. so will good earnings push stocks higher from here? joining us, lori hinel and lamar villary. good to see you both. thank you for joining us today. >> thank you for having me. >> lori, we asked what you liked and the first thing you said was cash. another manager said the other day, cash is worthless these days. you can -- you may not like the market, but you can always find something to invest in. why cash here? >> yeah, so, again, we're not entirely invested in cash. we have other investments as

well. we have been holding -- we have been holding some dry powder because we actually don't think the fundamentals look very good. and, in fact, you've seen a number of things recently, retail sales, inflation numbers, consumer expectations, sentiment, those things are really weighing on the market, we think. in spite of the fact we seem to be in a bit of a rally here, we think it is a head fake. we look for better entry opportunities. >> lamar, you're afraid of the global economy and the impact it will have on our markets here. you're going with that classic -- you like small cap blue chips here, right? >> that's right. we call them small cap blue chips, smaller companies, but better growth prospects. if you look at what small caps have done over the last couple of years, they have really lagged large caps. investors chased after some of the dividend yield you see in the large caps. we focused on our small cap companies that can dominate the niche. >> i'll get some names from you in a moment. you like financials, for example, why?

>> well, it is bifurcated. some sectors like reits which will continue to benefit from low interest rates. and our view is that the fed is not going to raise rates again very soon. the other hand, you got some banks that have been so beaten down that the ability for them to generate a little bit of earnings is quite positive and we're seeing that a little bit as we start to see some of the banks post numbers this quarter. >> you like the yields you're getting in those low yield environments. is that the idea? >> not just yields, but just the fact that they are so attractive on valuation basis that they're -- there is very little downside. >> okay. lamar, some of these small caps you like. there is a company called epic systems. there is taser, which we haven't talked about in a while. that is still around there these days and genesee and wyoming. i only have time for you to talk about one of them. pick one. >> epic systems, a company based in kansas city. this is one we owned, we have been a 5% shareholder for over ten years. we own 14% of the company.

we just nominated our own board slate because we felt like the current board and the ceo were a little bit entrenched. a guy who runs the company, tom olson, been there for nearly 30 years as chairman and ceo. so we put up our board slate and they sued us and even worse they sued our clients. so we're currently involved with that. and we think we have a great chance of getting really improving this company. >> all right. up a percent today. good to see you both. lori, i really wasn't picking on you. cash can be a valuable tool to have. thank you for joining us today. go to powerlunch.cnbc.com to see how lamar is playing large caps in energy. that's at powerlunch.cnbc.com. let's go to dom chu, another market flash. what do you have this time? >> we got shares of sea gate technology down for a second day after issued a revenue warning late on wednesday. the dividend yield about 9.5%. cut the stock to a hold rating based on challenges they see facing the company amid weaker

pc demand. back over to you. >> another 5% there. thank you. straight ahead, john kasich sitting down with larry kudlow. they talked about the economy, immigration, the presidential race, of course. and a lot more. that's coming up in two minutes time on "power lunch." ieve in tf active management. by debating our research to find the best investments. 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.

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that is not bone headed because you don't want to crush small business. number two, you got to lower taxes on business and individuals. that's what we always have to do. provide people at the bottom, incentive to work harder. and finally, got to have a fiscal path. you no he whatknow what i tell worked on this for 30 years, when debt rises, job opportunity goes down. when debt comes down, job opportunity goes up. >> but debt goes up when growth goes down. you know that -- >> say that again. >> every time gdp goes down -- >> yeah. >> revenues collapse, spending increases and debt goes up. the key is to grow the economy. >> right, but it takes three things. a situation where you -- you're not beating up businesses and gumming up the works. >> give me an example. you talk about deregulation. >> i've give you one good example. we're killing the small banks in this country. we're not doing all the things we had to do with the big banks but killing the small banks and small banks are selling to the

big banks, if i'm a small business person and i need somebody to take a risk on me and the local banker is not there anymore, i'm in trouble. >> small business people are furious. you look at the surveys, the national federation of independent business, getting progressively more pessimistic again. pin m minimum wage, they ask about that. >> the state of ohio raises it each year, we don't even vote on it. it is not political. i think it ought to be done state by state. >> has it helped or hurt? >> it probably had no significant impact on the economy. things are fine. you know what i'm for? skills. >> all right. >> training. >> skills. i'm for skills in high school, in vocational school, in the community college, in the four year school because when people have skills, when they are trained for their natural inclinations, for a job that exists, guess what, it works. and when we train them in a vacuum, give them the skills, they make no money. >> what do you say, look, you're a blue collar guy.

>> i am. >> that's how you always presented yourself. you grew up in -- >> mckies rocks in pennsylvania. there are many unemployed in this state, upstate, are you saying to them? they're saying i'm angry. >> they're afraid. >> they're blaming china trade. they're blaming mexican trade. they're blaming illegal immigrants. they're all taking jobs from them. where are you on trade? where are you on immigration? what do you say to the blue collar folks so angry at the establishment? >> i say we have the worst -- the worst recovery post world war ii. and if you go to a doctor and say how can i have economic health, he says lower taxes, balancing the budgets. so i go back to the doctor, doctor, i said, the things aren't working out. he said what is going on? i say, well, we overregulated. we overtaxed. and we have blown up the budget. i wonder why we don't feel well. you need -- >> what about trade? you used to be a free trader in

congress. >> i've always been a little bit like let's enforce the trade rules, but here's what i tell people at the rallies, or the town halls. what happened to the american car when japanese cars came into the united states? you know what everybody says? they got better. competition, innovation is good. i think, larry, the problem is when we do not enforce the trade rules. because these countries interest sneaky. >> a lost the wage earnings who have not had an increase since year 2000, as i said, i'm not asking a partisan question. it is democrats and republicans. >> we have to have a system that controls our borders, that has orderly immigration, because i favor immigration, it needs to be orderly. and guest worker program. >> increase immigration? if it were legal, you would increase -- >> i don't know i would increase it at this point but i wouldn't walk away from it. i have to look at the numbers.

we would have the guest worker program, have people come in and then leave. and if they haven't committed a crime since they have been here, paid back taxes, a fine, they can be legalized, but not a citizen. i think we have to hold the employer accountable for what they do. when the employer is paying under the table, that can't be tolerated and we have to go after them. >> so a lot of -- >> does that make sense? >> yes. but i want to get more of your views than my views. i'll tell you this, governor, we're old friends, we're in a war and i worry a lot about isis. >> so do i. >> game playing and getting into this country. i personally -- not about me, about you, my view, no new visas now. until the fbi says we can do it. >> like syrian refugees and all that, no. we have to know who is coming in. we have to know who is coming in. you're exactly right. >> we agree on that. >> we need intelligence. >> yes. >> good intelligence across the country. the president of the united states should be bringing the

world, the civilized world together so we can have appropriate policing and intelligence, so that presidents down in cuba with castro instead of coming home, sending a crack team over to europe and saying let's knock this stuff off, let's figure out who the people are, where they are and destroy isis. >> if there is a recession right away you could cut taxes? >> oh, yeah. >> and corporate taxs? >> we have to bring -- look, you and i had a long discussion about this. in fact, i used you -- everybody uses you. you're like everybody's foil, right? i told somebody, we're bringing the corporate tax rate down to 25 and you said, hey, you bring the rate down, we have growth. i had to calculate how many revenue we lose. you said you're wrong on that. i love to get it down so much lower and we have to allow them to expand. these companies have to expand. we have to bring profits home, stop double taxing. >> right on all counts. why can't congress get this done. paul ryan, friend of yours. paul ryan, friend of mine. he would like to get it done.

senator mcconnell, never gets it done. why can't the -- why can't they lead? >> you can't lead out of congress. you can lead to a agree, but it is hard to lead when you have a president who doesn't want to go for all of this. how do you unite the party? the party is is so divided, with a robust agenda in the first 100 days, fix social security, control -- take care of the border, we're going to freeze regulations for one year, except for health and safety. i'll have a vice president that will unravel all of those silly rules. and we're also going to lower the corporate taxes, push personal, lower rates, 28, 25, 10, capital gains at 15. eitc, that, and then have a plan to shift welfare, you know, welfare, medicaid, education, job training. can you imagine that we don't do job training in the states, federal government sends money to the states and tries to tell them how to spend it. >> that's for the next

interview. good details. final one, my only horse race question, my only horse race -- you're in a battle for second place in new york. trump has a lead in his home state. you're fighting senator cruz for second place. which i think is important in terms of delegates and so forth. >> it is. >> what is your pitch to the voters why they should vote for kasich and not cruz? >> well, i live on the hope side. i already have done these things. when -- today, voters think that if a politician's lips are moving, they're lying. so i have -- i can show evidence that what i say i've already done and i could accomplish it again. both in washington. i moved the system down there. >> you're inferring that senator cruz does not have the leadership skills. >> he didn't accomplish anything the whole time he's been in. so, i mean -- is he going to say, okay, i didn't do this all this time and now all of a sudden i can do it? come on. >> strong words about rival ted cruz, who happened to be on "squawk box" with strong words

of his own, not on john kasich, but impending economic crash. listen to this and then we'll get your reaction. >> the fed has, for those with assets, driven up stock prices, driven up assets values, but that's not built on anything real. it is not built on an increase in the intrinsic value, just based on playing games with money, which means a crash will be coming. >> a crash will be coming. >> he's a little ahead of me on that one. i will say this, economic numbers come in, you saw today with industrial production and manufacturing, earlier this week retail sales down. business confidence down, business inventory is down, business equipment is down. i don't -- profits are down. i don't know about a crash. i think we're barely holding on to zero, the economy, so these growth arguments they're making and pretty good growth arguments, trump last night, we heard cruz this morning, i thought it was quite good.

kasich from me last night. it was good. the gop is moving toward a growth model. one last point. now that the circus is over, the debating circumstance ous, pardon me, they're all getting to make their own individual points and to me they sound better and that's very positive. but i think the economy is quite lousy right now. >> you didn't want to ask kasich too many horse race questions. where do we stand as we head to the convention here? >> i think donald trump is a major one on tuesday. i'm just looking at polls but also getting vibes. last night, by the way, split republican party, that whole crowd was pro trump, solidly pro trump. he did a very good job i might add. kasich spoke well, cruz spoke well. if trump gets his 50, 55%, he'll win 85, 90, maybe 95 delegates. if that happens, it gives him a tremendous leg up. he's well ahead in pennsylvania. well ahead in maryland, et cetera. ted cruz looks to me slowing a

bit here. and kasich looks to me like he's got a -- i won't say a foot hold, but moving to second place. >> a lot made of the fact that donald trump actually read a speech last night. he's got new management and he's learned that he's got to act, i guess we call it more presidential instead of doing this kind of -- >> off the cuff. >> off the cuff, you know, free range discussions. >> free range chicken. so, yes, but, yes, but, the last part of his speech, yes, he read it. that's when he tore into cruz about new york values. quote/unquote, and defended new york on 9/11 and the spirited 9/11 recovery. it was very good, but he did read that. before that, though, he spent 15 or 20 minutes talking about how, for example, the hotel last night, the hyatt regency used to be that horrible old commodore hotel, he rebuilt that in the mid-70s, but the javitz convention center, the apartment

houses on the west side, he has -- factually he has rebuilt a lot of new york city. so what he said, he was giving us examples, we had to deal with ed koch with the skating rink, hugh kerry for the west side. >> bureaucracy. >> precisely. he said i knew how to deal with them and i won the red tape battles and then i can do this for america. that was his compelling message. >> do you believe it, being a ceo of a company is very different than being ceo of the country. we learned that. dealing with congress is not like -- they don't have the same incentives as everybody else does. we'll see. >> good free market. i would just say this, i'm not -- i'm not endorsing anyone. you have three solid candidates here. trump has a leadership quotient and potential and potential. he has more work to do, but, for

example, the new york post endorsement lays that out, my friend, mark cunningham. we'll see. it is a matter of we will see. >> good interview with john kasich. >> yep. >> see you a little later on, larry. coming up next, big changes coming to your netflix bill. what it means to the stock and your wallet. and kissing fools. a couple so in love, they don't see an armed robbery take place under their noses. you pay your car insurance premium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again. why pay for insurance if you have to pay even more for using it? if you have liberty mutual deductible fund™,

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learn how you can be prepared at pge.com/beprepared. together, we're building a better california. viacom's sumner red stone will not be deposed nor give testimony in his mental competency trial. viacom is down by a third of a percent. and volkswagen posting a 16 monthly sales job in 18 months. though the pace of the drop slowed for february. volkswagen is down by more than 2%. >> this is where we say good-bye. thanks for joining us for the hour. what do you have coming up on closing bell. >> ed morris at citi who says if there is no credible agreement out of doha this weekend, look out below for the price of oil.

keep an eye on that. we'll talk about that and much more coming up. >> incredible. >> incredible is the answer, the important word. >> thank you, bill. >> speaking of oil, crude taking a big leg lower ahead of this weekend's big oil producer meeting in qatar. up next, we'll drill down on doha. "power lunch" comes back. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.

welcome back to "power lunch." oil prices falling today. large amount of skepticism about a deal out of the big meeting of oil producers in doha, qatar, this weekend. whatever happens, or doesn't happen, surely going to have a big impact on prices next week and maybe for the rest of the year. jackie deangelis joins us with more. >> it is interesting because the headlines that have been coming out the last two weeks about a potential freeze in doha have job on the price of oil a little higher. today, moving lower because it has been made clear we may not see the iranian oil minister at that meeting but another delegate. you need an agreement between the saudis and iranians to have something fruitful come out of doha. if they're not sending their top guy, people are skeptical about this. that said, there was this doha risk premium in oil prices and we are holding over 40.

we have seen a 10% move in wti in the last month alone. our exclusive survey we conducted found that 56% of people polled said they do think there is more than a 50% chance that something will come out of this meeting, but not exactly sure what that something will be. and if that deal materializes, yes, it will support oil prices, but will they go much further from here? probably not. maybe $45 in the short-term is what a lot of people think. in the event of a no deal scenario, the majority view is that prices are going to move lower. but oil has bottomed for the year. earlier this year hit the $26 level, that probably is our worse case scenario. what is going to happen to oil prices? street expectations have been on the high side that we're going to see this rebalancing happen and we're going to see prices 60, 70, some people saying $85 a barrel. our survey showed that people are thinking right now $40 or $50 for wti and for brent. so this shows a little bit of a

change in viewpoint here. who is holding all the cards? saudi arabia certainly is number one on that list. the russians are very important here. the iranians, the venezuelaens as well. all of these people have to come together, get on the same page, for us to be able to move forward here and remember they have another chance in june at the opec meeting, so maybe this sets the stage for that. back to you. >> thank you, jackie, for that setup. let's talk more about doha because at the very moment our "power lunch" co-anchor brian sullivan is on his way to doha, qatar, to cover what could be one of the most pivotal moments in the move of crude oil right now. >> it is a global game of political intrigue with hundreds of billions in oil dollars on the line. major oil producing nations gathering in doha, qatar, on sunday, to try to win a hard fought deal to stabilize or possibly even cut global oil production. the world is still producing a million barrels per day more than it needs. even with american output falling this year.

many of the countries attending the meeting face a catch 22, they desperately need higher prices to fill their budget holes, but they also cannot risk slowing production because they need every dollar they can get. the biggest conflict comes between saudi arabia and iran. the saudis along with russia reportedly have agreed to cap production at current levels. they say they need iran to do the same. but so far iran rejected any deal, and continues to increase exports. iran needs the money and wants to rebuild global market share. oil ministers in tehran also have no doubt recognized the saudis and russians are trying it freeze their own output at near record levels. and if the two sides can put aside long-standing animosity and agree to a production cap, crude oil prices are likely to continue to rise. oil, of course, not the only place saudi arabia and iran are at odds. both are fighting in syria and yemen with proxies, sometimes even with their own troops. in syria, saudis want assad out.

yemen, iranian backed rebels fighting with massive help from iran to push the sunni led government out. both countries, yemen and syria, are now in ruins. so while the outcome of sunday's summit is uncertain, one thing is certain, every oil producing company and country in the world will be focused on what happens in a hotel 7,000 miles away from america on sunday. and cnbc will be there. >> in the meantime, let's bring in halema kroft, and john killdove, the founding partner of again capital. guys, we asked you this constantly, but things changed because now we understand the iranian finance oil minister is not going to show up at the meeting. how does this change the calculus? >> they are sending their opec representative and i think it is political theater. they want to get a deal down. i think the big problem is the

saudis don't want the deal at this point. i think they're the biggest wild card. if they change their position, they get a deal. >> why don't we see oil selling off more than. it sounds like a deal is all but off the table, unless there is a miracle. >> i think the only freeze, only place it will be applicable is to describe the state of relations between iran and saudi arabia at this point. i would submit to you that these folks stand on ceremony. and by withholding back the oil minister himself, a slap in the face to the saudis and the balance of the cartel and russians being there. they have drawn a line in the sand, pardon the pun, to say that they're going to ramp up this market share come hell or high water and the fight is on. that's why i'm unconstructive on oil prices. >> if we all seem to be in agreement on this, why isn't to her original question, the price

of oil lower? you think the market will be surprised or is something else at work here if we all know the geopolitics makes this almost impossible. >> the sheer fact they're meeting people i think is important. the fact that russia is saying we want to get this deal done, countries like qatar, kuwait, that we think are okay saying we want this deal done. and many respects, saudi arabia and iran are the only two holdouts at this point. so i think that has changed the dynamics of it. >> there is there something to be said about iran not being able to ramp up as much as people thought or promised? they talk big -- >> 600,000 barrels, hardly something to sneeze at. >> we think it is closer to 400,000. because of residuals, they're not finding it as easy to get this product out. they're going to need significant new investment to get the 4 million barrels. that's why people thought there could be a deal. >> that's the number i was focused on. they were talking about doubling by the end of the year.

600,000 -- >> reports as high as 600. and -- >> doubling would be what? another 2 million. there is a big widespread between what they hope to do originally. >> that spells bad news for the oil market. >> i'm not sure they physically can do it. >> they could say to iran, do a couple hundred thousand more, fine cap there, you can't do 4 million, bow to market realities. >> the presumption has been left and right over the past several years the countries can't,back that quickly. look at libya after the aftermath of gadhafi, for a time, they were back full bore and until -- not until they disintegrated when their government did things collapse again. everybody wants petro dollars, so the infrastructure hangs in there. >> incentivized to get it going again. >> everybody wants to get it going. for iran, residual sanctions, not been as easy as they thought it would be. >> head of the iranian central bank complaining about this very

thing that they still got hundreds of billions of dollars stuck overseas and says the u.s. administration hasn't done enough to get that money back. >> in terms of the downside risk on monday, this week we're on track for oil. worst weekly slide in two weeks. we're seeing the dow enter the market now. what do you think is a downside risk on monday? the upside risk? >> i think the downside risk is the low from the beginning of the month of 35, just playing off the chart here. upside risk is $42.50. get a breakout above there, those are sort of your parameters if you ask me. >> what do you make of the falling below 9 million barrels per day in the united states? we have seen such a key level. we're talking about supply coming off, that he's what we have been waiting for. finally we cross this number. that's a step, right? >> that's a step. i think part of the reason why the saudis think they don't have to do anything is it is working. we can basically ride this out. if we just wait, market will rebalance anyway. i think that's part of the

reason why the saudis are saying maybe we can take a pass at doha, maybe turn in our favor anyway. >> all right. >> like $100 crude, 9 million barrels struck a psychological cord with a lot of folks. a lot of attention in the market and it has attracted some investment, no doubt about that. >> thank you. brian sullivan, our co-host, will be live in doha monday on "power lunch" and all day long on cnbc. bernie sanders last night taking on 10% of the dow calling ge, verizon and mcdonald's, calling on. larry kudlow back with us and you know he's got something to say about the senator's war on business. >> of course. >> no doubt. >> "power lunch" will be right back. o be the boss of you? (patrick 2) pretty great. (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone.

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-- some great businesses who treat their workers and the environment with respect. verizon happens not to be one of them. and what we need to do is to tell this guy immelt, the head of general electric, doesn't like me, well, that's fine. he has outsourced hundreds of thousands of decent paying jobs throughout the world, cut his workforce. and in a given year, by the way, turns out that both verizon and general electric, in a given year, pay nothing in federal income tax despite making billions in -- >> well, senator, bernie sanders goes on to push for $15 minimum wage saying consumers should be

willing to pay a few cents more for their mcdonald's hamburgers. effectively calling out a tenth of the dow. look at mcdonald's, higher by about .1%. and looking at ge and verizon, trading to the downside, down by .3%. >> let's bring in our own larry kudlow and ariel fishman, professor, to discuss bernie's war on at least one third of the dow. what did you make of bernie sanders calling out jeff immelt like that? >> jeff immelt is a big boy. he can take it. factually i'm afraid mr. sanders doesn't have a throwing stand on. what i really want to emphasize, at the top here, the solution here is tax reform. what we have is high tax rates and thin base because ofeductho credits. if you want to grow the economy and create jobs, can we please

have a competitive tax system with a 15% tax rate at all? >> ariel fishman, weigh in here. what did you make of what bernie sanders said and does he have the right message? >> i think the message is right, the solution is exactly the opposite. it is, in fact, a problem with our tax structure. right now, if i work for many years, i've accumulated a salary every year i pay taxes, but if a company works, they can just magically shift their identity to -- through a legal loophole to operating overseas and they don't pay any taxes. so i think that the challenge that sanders is trying to overcome is trying to identify how do we create a system where taxes are, in fact, paid by the very corporations that generate those revenues. >> what everyone gets frustrated with is the issue of the territorial versus global. the fact that the u.s. is one of the only advanced economies in the world that makes their corporations pay taxes on everything that they earn overseas. they just want to -- they want

to pay taxes on what they make in the united states, which is how it works nearly everywhere else in the world. >> they may pay taxes over in there, but there are companies, like fiji water, not to call them out too much, but they buy their water from within their own subsidiary for a very low price, and then charge a very high price internally in the united states. the revenue overseas looks like it is small, but all that revenue is coming here. and that's where this revenue needs to be taxed. we can -- that's not going to -- >> let me come back to you. i don't like inversions because i'm a tax reformer. i want to clear all that underbrush out so we don't have to do that kind of thing. but you're incorrect in one important point. if, for example, pfizer had merged in with allergan, they would have continued to pay taxes in the united states. in fact -- it is a tricky business, but the key point is this, let's go to mr. sanders'

criticism of verizon, okay. these guys who are walking off are averaging $130,000 a year, thank you very much. that's pretty good money. and there has to be a limit to how much these labor unions can get from these large corporations. otherwise, it costs jobs and there is a whole history of that, the american labor movement and the last 40, 50 years, unlike in its origins, is trying to get so much out of the rock that they wind up bankrupting company after company. mr. sanders can go on the picket line, good for him, he's a man with integrity, but you got to be realistic in a profit making capitalist system. what is wrong with -- $130,000 a year? that's not enough. >> well, a capitalist system is based on the notion of a free market. now, for investors in a free market, you can buy and sell stock all the time. could have done it ten times in the span of our conversation. but for a worker in a free market, not the same thing, you can't quit your job and change it quite so easily.

even if you could, you made tremendous investments in your personal capabilities. so the notion of saying that no matter what people's worth is, if they want more, and they earned more and if, by the way, they create value for their company, i think that they probably deserve more. it is not a function of how much their salary, but how much value they create for the company. >> they can -- these are skilled workers. there is a labor market. it is by and large not entirely a free market, right. you got wage interference and employment -- i get that. but by and large, america has a free labor market. they're free to where they go. if they want to walk off verizon, go to another company theerbz a, these are skilled workers let them do it. but taking out verizon, the guy that is ceo of verizon, lowell mcadam writes back, they have created -- let's see, they have created $15.6 billion of profits in the last two years, okay. it is a 35% effective tax rate

for 2015. they have invested $35 billion in infrastructure, okay. and they created $16 billion of dividends, which, ariel, those dividends go into union pension fund investments. so, verizon is really doing the lord's work. if you want to change the tax code, i'll work with you on that. that's what we need. but to just blast verizon and blast the ceo, come on, bernie sanders can be better than that. >> i think that the prevailing narrative not only in verizon, but in these types of strike situations, is that no matter how hard people are working, the efforts of their labors go to the owners of the shareholders of those companies and to the top executives and not to the people who work for those -- >> they are the owners, ariel. now with pension plans, 401(k)s, i.r.a.s, the workforce -- these guys, by the way, that walked off, are owners. they are in the pension fund, which has a lot of verizon stock. they are. this is, like, new capitalism,

all right, investor capitalism. >> the notion that they -- that they are owners would suggest they're getting a greater proportion of their own economic productivity than they are. and i think that that's what the source of their frustration is and what the source of frustration is of strikes in general. if we juxtapose the very issues they have are not terribly different from strikes that come in other sector as well. public sector unions, they aren't owners in their companies, they bare no upside, but face the same issues. the issues are not strictly economic ones in terms of ownership of the company but having enough of a stake in the future of the company. >> i want to make one point, you talk about public sector unions, public sector unions have among the best wages, total compensation, pensions, health care benefits, they are, in many cases, twice what their private sector counterparts are doing. so while it is a government, and they're funded by taxpayers, they he have bargained their way

into a position where in these large states, half of their packages are unfunded, which is a potential disaster. the problem is they're given too much, out of the line, out of the marketplace. >> the problem is they are inherently because of the capitalist structure we're in, which, by the way is fine, they have no upside in the organization. if you work for an organization where you own a share of the company and the company does well that's great. if you're in a public sector and you have grown successful, the best thing you can do is hope for a raise. that's not a bad thing. that's probably why public sector unions need it get more because they don't get the same upside of people who own a share of their own organizations would get as we would see in the private sector. >> and, michelle, they never get fired. >> ever. >> public union guys have the most job security of anybody. i know we got to break. i appreciate the discussion. but i'm afraid i disagree. >> ariel, thank you for joining us. appreciate it. larry, good to have you here.

>> thank you very much. let's take a quick market check. we're hitting the lows of the session, the weakest sector on the s&p 500, no surprise, would be energy ahead of the big opec meeting on sunday. and with oil prices down, we're tracking for the worst weekly loss in about two weeks. as for some of the biggest weights, look at shares of apple. they doubled their loss in the past 45 minutes on that nikkei report that apple will have another leg of production cuts based on weakness in sales for iphone. we're seeing apple towards the low of the session today, down by 1.9%. shares of netflix up more than 60% in the past year. but with price hikes kicking in next month, can the company keep its customers? that story is next on "power lunch." .. quite like the human foot. introducing the 241 horsepower lexus is 200 turbo. with almost twenty percent more base horsepower. once driven, there's no going back.

-- while pulling a tooth. one father found a way and posted the video on instagram using a drone that looks like the millennium falcon. he was able to force a loose tooth from his daughter's mouth. do not try this at home. great stuff. netflix shares down 3% so far this year after being a top performer in 2015. the company is reporting

earnings on monday. it will be interesting to hear what the company says about its subscriber numbers. julia boorstin is live with the story. >> subscribers are always the key number in focus for netflix, a miss or beat sending the stock swinging in one direction or another. investors are hoping that netflix will top the 80.9 million streaming members it forecasted back in january. the company projecting 4 million international users, but fewer than 2 million u.s. users. the real question is how a price hike kicking in next month up to $2 to $9.99 will impact netflix's forecast for its second quarter. shares sliding this year on concerns about growing competition from amazon, hulu and hbo now. but the stock is up 60% over the past 12 months. working in netflix's favor, the fact that the price hike reflects 2 million u.s. s

subscribers. it is still less than hulu's service, hbo charges $15, showtime, $11. the only services less expensive are stars $9 service and amazon prime. its $99 for the year, but users have to pay up front. netflix rather than hbo had the best original shows, that bodes well for netflix even at the slightly higher price. oil falling ahead of the big meeting in doha. will it hold on to the $40 a barrel level? we'll take you to the closing trades when "power lunch" continues. what if it were your job to make the world a more beautiful, colorful place? at ppg we think that's something we all need to do.

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i'm sharon epperson. democratic presidential candidate hillary clinton campaigning in east harlem, new york, before a group of senior citizens. prior to the remarks she walked through the senior center, stopping to shake hands, pose for selfies and played a game of dominos with residents. in court documents unsealed today, federal prosecutors said sheldon silver abused his position by giving preferential treatment to two women with whom he had extramarital affairs. silver was convicted in november

in a $5 million corruption case. and update on the two 10-month-old conjoined sisters in texas who were separated earlier this week. doctors say the whole separation process went extremely well and the babies are recovering. the parents say the two are physically adjusting to being separated. and the villanova wildcats brought their national championship trophy to wall street. the team visited the new york stock exchange and had the honor of ringing the opening bell. that's the cnbc news update at this hour. back to you, michelle. >> thank you. the oil market closing for the day. to jackie deangelis at the nymex with the numbers. >> looks like we'll close somewhere around $40.40. don't have the exact print yet, but i will say this, about a 3% decline on the day. for the week, finishing up slightly, about 1% gain. and for the month, 10% is the spike that we have seen in oil prices. today's move taking a little bit of the wind out of those sails. we're also watching to see that happens on sunday in doha.

interesting one trader pointed out to me the fact that opec production went up last month, getting closer to 32 million barrels a day. he said, of course, that's what they're doing, they're trying to get numbers up so if they do freeze, they're at these higher levels to continue to produce oil. so a lot of variables here. will we get a deal on the table, we have been discussing it all day. we'll have to wait and see. >> thank you, iing of doha, qa brian will be in doha all day long. you used to get a nice deduction at tiax time this yea but that may not be the case anymore. diana olick has more. >> it used to be a big factor for first time home buyers, owning a home gets you a tax break. not so much anymore. at least not for young buyers. near record low mortgage rates and a higher standard deduction make it hard for a lot of buyers to qualify.

here's why. the standard marital deduction has risen from $1300 in 1972 to $12,600 today. meaning that the first $12,600 worth of itemized deducks have no benefit to consumers. a typical first time home buyer financing 95% or less of a median priced u.s. home, which saran $200,000, pays less than $12,000 in mortgage interest and property taxes annually. that is not enough to hit the itemization level. even with other deductions that bring the taxpayer over that limit, the tax savings are minim minimal. the mortgage interest deduction is one of the largest federal expenditures at about $70 billion a year, but it does very little to boost home ownership because it favors wealthier buyers, purchasing more expensive homes. about 77% of benefits went to the homeowners with incomes above $100,000. oh, well.

if you want to talk more about home ownership, buying or selling, live on my facebook page at 3:30 joined by red fin ceo glen kellman. don't miss it. >> those are all great numbers, diana. the trade-off of about whether or not buy or rent and what really pushes you at the moment when you're doing that first time home buy. it is super interesting. speaking of the wacky effect of low interest rates, don't move. i thought of you, diana, this morning, i read this in the wall street journal, the impact of negative rates having really weird effects in europe. in denmark, some homeowners get paid for having a mortgage. a wall street journal article today about a danish couple that got a quarterly interest payment of $38 from the bank that holds their mortgage because denmark had negative interest rates for the past four years. they still ahave to pay the principle and the fees, but the bank is paying them the interest rather than the other way around. bizarre, right? would that be good for home ownership? i assume it would. i don't know if banks would cut that mortgage these days, though. >> well, wouldn't that be awesome for all of us if we got

paid to own our homes. that's not going to happen in the u.s. because the vast majority of mortgages are fixed rate. while that protects you if interest rates go up, it hurts you if they go down or go negative because you're still at that fixed rate. are there some people floating? with arms that have adjusted lower and lower and lower? sure. but i don't think if we got into that kind of a situation that you would really see much of a surge in home ownership because banks will be charging for your money. >> all right. the weird impact negative interest rates. it is bizarre. >> i'm sure a lot of people would say, that spells doom for the economy. >> you would be nervous about buying a house. >> who would want to take that risk on. >> thanks, diana. microsoft, the latest big company to fight the government. they say they're looking out for your privacy. the government says they're looking out for your safety. where have we heard that before? , we believe in the power of active management. we actively manage with expertise and conviction.

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if this is supposed to be a balanced film, why did the film not include any of our 4 million current members? the statement goes on to challenge the movie further, see that statement in its entirety and learn more about that story now at powerlunch.cnbc.com. this is -- continues to -- the story never goes away. >> continued fascination. >> ever since the big fight. >> the director made the point that bill ackman is a fascinating character. what drives him, this conviction, where he's willing to lose all this money. >> he had a real vision of bill ackman as a moral crusader. i'm sure he's a nice guy. i find that incredibly hard to believe. wall street guy, that's not a criticism. just what it is. >> it is just fact. he didn't enter the trade for -- on behalf of any of these communities that were allegedly preyed upon by this company. allegedly, at the end. only at the end did he say that is a great cause as well. >> this one is over privacy,

privacy rights in the technology world. microsoft is suing the u.s. government over a federal law that allows authorities to-like at customer e-mails or online files without that individual's knowledge. microsoft says the justice department is abusing a decades old law. who is right here? microsoft or the government? ross conel with brain link, and he supports microsoft's decision to sue the government. and jeff lanza, former fbi special agent. tell me why you support microsoft? >> the law the fbi was using was passed when reagan was president. the law states any e-mail held online over six months or unread can be aggress -- can be accessed by the government without a warrant and it is not fair, or appropriate for the fbi to use a law that is about 26

years old and to treat americans like they're enemies of the state. the average american is not a cyberterrorist. and in the real world we don't let the fbi or the police department enter homes or offices without a warrant and all microsoft is saying is, the government wants this data, we'll give it to you, you want to notify the user. >> i don't buy the law is old, so we shouldn't use it. the constitution is old and we use that. it is even older. the other is interesting. mr. lanza, what do you make of that, the idea of going into somebody's house, you need a warrant, why shouldn't you need a warrant for this and why shouldn't they know? >> they should get a warrant or a subpoena or some court order that compels microsoft to turn over the records. i'm not arguing that point. the point is that should be argued is that microsoft should not be able to go and run and tell their customers that this is happening. >> why not? why not, jeff? >> that could impede the investigation. the whole idea of getting records is to prove a case against someone.

that could lead to cover-ups and eraser of other information that might be available to the fbi at a later date. >> when there have been cases like this and national security cases, the courts will allow the government or law enforcement to hide targets investigation. this is used in intelligence cases and mob cases. but in -- since the patriot act was passed, the fbi has abused national security letters, not to go after terrorists or master criminals, but to go after low level drug dealers. and it is not appropriate in this democracy for the fbi to treat the american citizenry as if we're living in east germany. >> should there be a different -- sounds like there should be a different standard for a physical search of whatever it is, house, car, papers, versus a search in the cloud. or an electronic search. should there be a different standard? why should i know my house -- why should i have the right to know my house is being searched, but i don't have the right to

know my e-mail is being searched? >> right, well, you can take the house as an example, but what about other records that you may have stored in some other place that is under the control of a third party, physical records. those can be searched and a company should not be compelled or feel that it is necessary to tell the individual as well. if we look at this document, this 17 page complaint, the lawsuit microsoft filed, it could have been written by their marketing department because that's purely what it is here. they're trying to endear themselves to their customers that they're out there to protect their interests. >> that doesn't make it wrong. >> right. but they're really not protecting their interests, they're helping -- helping potential criminals become aware of criminal investigations. >> speak to the whole issue, the slippery slope that he brought up, it is about national security, we saw that with the apple iphone, this is about terrorism. but we discovered they're trying to get the phones open regardless even if it is low level crime or low level drug dealers. should it be all -- should they be able to do this at every level or reserved for mr.

serious crimes? >> i think if the fbi or any federal agency has the appropriate court order and it is based on probable cause that a crime has been committed or about to be committed, they should be allowed access to those records. do you really think microsoft is going to go running to their customers and say, hey, we got this order to releaseour e-mails. they're not going to do that anyway. they're trying to posture themselves to look good for potential customers because they're making money on cloud storage. >> on the other hand, jeff, the fbi has been disingenuous. in the physical world, if the records are held by a third party, my office building or my bank, the fbi or law enforcement wants to get records, they have to go after me and get my records. they don't say, give us a copies of everything in this building. where as in the online space, law enforcement doesn't say just give me a -- they say, give us data on everybody. let's do stingrays on the whole neighborhood or cell tower and the problem with digital data is

they're not going after very fine grain targets, doing mass trawling and innocent citizens are getting trapped in massive digital -- >> evidence of that? give me an example of an innocent person that has gotten trapped? >> two years ago, the fbi put out gps surveillance tags against cars and went to court and the fbi lost the case and they were told pullback all those gps trackers. the government is not allowed to do 24/7 continuous surveillance on any targets without court approval, and as we're seeing in jurisdiction after jurisdiction, the fbi and the government have given stingrays to local police departments and they're not able to tell in court they're using stingrays because of the agreements with the fbi. >> last word. >> i don't agree with mass grabbing of information of innocent people. the point i'm arguing here is if microsoft has data that is related to an investigation that is criminal in nature and the fbi has probable cause to get

the data and not have to have microsoft go run and tell their customer about it. >> all right, guys, thank you. big story developing this hour, look at shares of apple, falling after this report we told you earlier about the company will extend iphone production cuts into the next quarter. dominic chu has the latest. >> up to speed on what is happening with am stock pple st. shares lower on the trading day until around 1:00 p.m. eastern, when the stock moved lower on headlines from japanese news outlet nikkei. apple notified some suppliers of plans to slow iphone production, that's according to sources at the certain suppliers. it is worth noting that these types of reports have surfaced in the past around other product launches apple made. however, this time it did move the stock, hovering near the average price over the past 200 days. cnbc did reach out to apple and it declined to comment on rumors. supplier names have been linked to apple and they took a bit of a hit. take a look at names like

broadcom or sky works or qorvo. apple is slated to report earnings on monday, april 25th after the closing bell. on average, analysts looking for earnings of $2 a share on revenues of $52 billion and according to fact set, 85% of analysts have a buy rating on the stock and the average target price of $132 and change, 20% higher than current levels. back over to you guys. >> got it, thank you. big update to a story we brought you on "power lunch" yesterday. will you be able to text in movie theaters or not? the people have spoken. >> new update. >> we'll tell you what they said next.

♪ i only have eyes for you ♪ >> please look at your screen. unbelievable. a couple evidently so in love, they don't seem to notice that the bar they are in is being robbed. even when the gunman walks right past them, they're still kissing. made off with an undisclosed amount of cash, no one was hurt. no broken hearts either. >> maybe they were drunk. maybe they were in on it. >> oh. >> so many possible explanations

for what appears to be something really odd. we have an important update on a story we brought you yesterday about amc entertainment, considering allowing people to use their cell phones in people allowing people to use cell phones in the theaters. it got a lot of negative feed dts back. there will be no texting allowed in any of the auditoriums at amc theaters, not today or tomorrow or foreseeable future. let's bring back julia borsten. >> hello, i'm sorry, i was just texting. >> so melissa, people apparently can't put down phones for a second but the movie theater is supposed to be sacred. it's interesting that a lot of people who go to the movies regularly and probably have month problem finding a xraening where texting is not allowed made this such a big deal that amc thought they were better off

just saying we're not going to have this happen at all it speaks to the fact that theaters are trying to find ways to evolve with the times and be more aappealing to millennials who have streaming unlimited content on netflix. >> this is so easy to solve. you text under your jacket. put your jacket over your head then you text. no one can see the light. >> you can still see the light. it's still annoying to everyone else in there. the question is whether -- >> you are still annoying, stop it. >> with a light coming out from the side of the jacket. >> okay. >> i think this really -- it's really interesting if you look at movie ticket sales have declined 7% since 2009. the actual number of ticket sales is going down. the total box office is going up because tickets are more expensive but they have to figure out how to become something that people still want to go to every week. people have too many other options right now.

>> yeah. hulu, netflix. >> huge screen tv. >> it was "star wars", i was texting a source. >> okay. >> julia, thank you. >> put it down for two hours. >> it's very difficult. >> self-driving cars are the future and they are coming whether you like it or not. you might as well make money on them. we'll tell you how to invest in self-driving next. (patrick 1) what's it like to be the boss of you? (patrick 2) pretty great. (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone. who better to be the boss of you... (patrick 1)than me. i mean, you...us. (vo) go national. go like a pro.

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just released new research on break through technology for self-driving car market. we have good self-driving stock picks for you out of that report. with us now the manager director and senior semiconductor analyst and phil lebeau also joins us. phil, i'll let you set the table. a lot people think of self-driving cars and think of cars where you don't need a driver. but right now we're seeing technology that is helping to progress the car in that direction. but there are lots of steps in between. >> you have to think about the guts within the car and it involves things like radar and camera systems that are built by suppliers and it's those chips that go into that i think vj has been focusing on with the latest report. give us sense in the continuum of where we are as far as the development of autonomous

driving cars. how far are we from where it really starts to take off? >> sure, thanks, phil for asking the question. when you look, it's probably zero level one, which is the level of braking, the advanced electronic braking and lane departures, a lot of massive safety systems. what you're seeing is that is starting to pick up now but in the next two or three years, a little more active safety where the car starts to slow down by itself. in order to see that being pushed by tesla with the auto steer and pilot and even working on the road map. you have progressing towards that goal already. >> i see in the notes here that there's a glossary of autonomous cars, is that you that came up

with that, level five being fully and humans have nothing to do with the car and level four is fully autonomous and they still have drivers and they do some stuff for you. did you come up with that? >> that is the industry standard. the new car assessment programs, those are set by ntsa and euro cabinet in europe. level four and five is a couple years out. we're getting there. you're seeing many of the disrupters like google and apple and tesla start to push towards that. >> is this investable at this point? i'm asking because a lot of chips you cover that you have in this report, only a percentage of the revenue comes from abs systems, i'm wondering if there's a high margin on those systems? >> absolutely. this is a long term trend.

especially towards autonomous drivers will be one of the biggest trends in history, by the number of components not just in u.s. but in hong kong and europe that play to that. the distributors in the supply chain and drawing even consumer focused oems into the automotive industry. it's going to be a big secular trend. >> your top pick? >> top pick nxp and we like it here, very well positioned in the cockpit and the power train. the guts and networking and dominate for console so -- >> you hear these reports about apple and talk about coming out of japan and suppliers that perhaps they are going to extend their production cuts for another quarter. what do you make of that? >> we did a repreview and we still expect most of the supply

chain to have in line quarters. obviously some of the supply chains definitely soft but seeing upside from samsung, and a lot is already factored in. investors already see that. >> you don't believe this report that's coming out of nikkei because it is taking apple stock down and those suppliers include sky work solutions in your coverage universe. >> i think we are sticking with what we said last week. you will see these news comes out and fluctuations in the stock but we think some of the near term trends of soft but you have our brands to help the supply chain. >> thanks so much. this apple story, will be one to watch as it gears up for earnings next week. >> i really want level five

autonomous driving. >> i can't wait to never have to drive the car. >> exactly. >> totally on that one. >> have a good show later tonight. >> we'll see everybody at 5:00 on "fast money" tonight. >> "closing bell" starts right now. >> welcome to the "closing bell", i'm kelly evans down here at the new york stock exchange and bill you're hanging out with other people. >> yes, i am, i'm here at the world headquarters i'll do nightly business report on pbs, if you can join us. stocks lower today, lackluster for the major averages once again though we're near the lows of the session but crude oil is the big story today. you can see that the utilities are the best performing sector so a pretty defensive section today. but energy, pinned at the bottom, that sector under pressure a