the past couple years is rhetoric about the fed has heated up, that they were going to raise interest rates, that's what's made long bonds rally. the long bond wants the fed to cause a depression. if you want to buy a ten-year at 1.60 sor a long bond at 2.40, you want there to be zero inflation or negative inflation. the long bond says, go ahead, fed, make my day. go and raise rates. so they're not raising rates and i actually think there's less downward pressure on long-term interest rates because they basically act inversely to the attitude about the fed raising rates, so i don't think the ten-years will go much lower. i said in july of 2012, i said this is the low rate at 1.38 on the ten-year. i think that will remain as the low on the ten-year. it's possible something bad happens in the world and there's a massive flight to quality, never rule that out, but my baseline is we saw the bottom in rates of 2012. >> jeffrey i have to leave it there. thank you for calling in today. good to speak to you again. >> my pleasure. talk to you soon. >> that does it for us, of

course. "power lunch" begins now. in a week we'll know. did the brits vote to stay or leave europe? this is "power lunch" with tyler and melissa. i'm michelle caruso-cabrera. brian is out today. this was the big trade yesterday. right now the pound versus the dollar at this hour, $1.43 is what it's going to cost you. pound is stronger again. that little yellow arrow indicates the strength of the dollar. european markets jumping sticks days before the vote. the footstse finished up 1%. a statement being made following the fatal shooting of jo cox yesterday. brexit campaign officially suspended only for today. let's bring in cnbc's wilfred frost who is on his way to london tonight. >> tonight but not quite yet. the latest in terms of polls,

"the financial times" poll of polls says 48% say they'll vote leave. 43% say they'll vote to stay. i'm delighted to say that we're joined now by kate, british labor politician, a member of parliament since 1989. she is in the leave camp, one of the few labor members that is in the leave camp. thank you very much for joining us, especially given recent events, and may i take a moment to pass on my deep condolences to you and to the labor party more widely following the sad loss of your colleague yesterday. >> yes, it was a terrible, terrible tragedy, and we're all incredibly sorry and just really words can't say anything about it. >> indeed. and i'm going to step back to start from the events of the last 24 hours if i may. the story i suppose of the last few weeks has been one, in fact, of great momentum for your side of this debate, for the leave campaign. what do you put that down to?

why has momentum grun for peoow people who want to leave the eu. >> of course, we're not leaving europe, but we want to leave the eu, and over the past number of weeks i think i find when going around the country that people have been listening to the arguments. i don't think they've been scared by all the terrible, ridiculous stories about being put out by the remainers if we were to take back our own country and our own borders and our own trading, and our own democracy. i think what's happened is there's been so much of a bringing together of the establishment, leadership of all the main political parties, the big banks, the big institutions, the international bodies, the prime ministers and leaders of other countries all telling us how dreadful it would be if we would leave, and i think the public have actually come around to saying, look, hang on. we've never been asked about this european union, how it's changed over 41 years.

we've had treaty after treaty imposed on us, and this is our opportunity to say, we don't like how it's changed, and i think what has happened now there's a kind of confidence amongst the british public particularly outside london who are just beginning to say, well, hang on. we're going to show you that we think you have been wrong as the political elite who have led us into this european union, and we're going to vote leave. >> so do you think when the likes of jamie dimon, the jpmorgan ceo came over recently and helped to outline the case for why the uk should stay, do you think that helped your cause? do you think that helped the leave camp gain traction? >> well, i think it actually did in a way, and i think also when we had your president obama over, everyone thought, oh, this is going to make such a difference, and actually we saw the polls shift the other way after he'd been -- because it was nice to have him here and he visited her majesty and wished

her happy birthday, but really it wasn't up to president obama to tell us how to run our country, and as people said to him and to other americans and to your public, you know, you would not -- you have a trading relationship with mexico and with canada, but you wouldn't allow a mexican court to overrule your court, and you wouldn't certainly have open borders with those other countries. so no one is against a trading relationship. we want to trade, but what has happened over the 41 years is that the original common market has become a political structure over it which is now more important to the elected commissioners than almost the trading attitudes, and so that's why i think people are beginning to feel very strongly that it's time to get out. >> you mentioned some aspects of the remain camp, be it financial institutions, the president, the uk prime minister. one aspect where there has not been a united front amongst the remain camp has been between the prime minister david cameron's

conservative party, your party leader, jeremy corbin, and the rest of the labour party yet this morning for the first time they appeared alongside each other. do you fear the tragic events of the last 24 hours might help to boost the unity of the remain camp and could that hurt your cause in the final few days of this crucial vote? >> no, and i don't think it's seen -- i don't even want to sort of answer that sort of question because that's not what i think this is about. ultimately people will vote next week. the british public -- i have a lot of confidence in them. they have a lot of common sense, we have as a country, and they will be taking the decision on what they think is the best interests of the country, not whether in the long term as well and not whether two leaders of two political parties appear together in a very unified way, very rightly over what has been a dreadful tragedy, and, you know, couldn't have happened to

a nicer and better member of parliament. >> i'm sympathetic to not wanting to answer that question, ma'am. thanks so much for joining us. michelle here. but to follow up -- >> yes. >> -- on wilfred's question, when this horrific event was announced 24 hours ago, everything seemed to change. the markets, the pound rallied, bookies' odds changed, the stock market rallied. all of the markets, all of the indicators we follow seem to suggest that this horrific event would give more power to the remain campaign. we are littered in history with many, many incidents, violent incidents, that moved elections, polls, legislation, civil rights legislation in the united states, for example, many believe occurred because of the assassination of jfk. so i want to go back to that question which is yesterday could have been a very pivotal event for the remain camp, and

it could hurt your cause. and there's one more thing i want to tell you. the uk police according to reuters has just said that the lawmaker was the victim of a targeted attack and that they are investigating whether or not it was right wing extremism. they think it's the priority line of inquiry into her killing. >> well, i mean, we don't know the full facts. what we know is that this person certainly had mental health problems, and i think that until we get the full facts, you know, whatever his history is, the reality is if he had mental health problems and he wasn't being treated properly, who knows why this happened, but certainly it's very, very worrying if the person was -- the member of parliament was actually targeted, because that means members of parliament from all parties and all sides have to be incredibly vigilant, but your initial question really, i really don't think this would

change something in that kind of way that you're implying and i think we'll see in the polls that are coming over the weekend not a shift. of course, the markets go up and down. and they can change with all sorts of things. similarly, with the betting odds. the betting odds have been moving towards -- they have been way, way in favor of the remain campaign just a few days ago. so they had begun to move back towards leave. so, you know, i'm not in the game of working out what the markets are saying. i believe in what people say and not particularly worried about what the markets are saying. >> you know, we americans have some history or familiarity with rebelling against foreign control of our destiny, and so my question is, is that what this is about for you personally? apart from the effects that membership in the eu may have on

wages and job availability, is it really about democracy and the ability to control your own destiny? >> well, for me and for many of us, the democratic element is the crucial thing that underpins it all. you know, we really have lost so much power from our own parliament, and as i always say, the train is only going in one direction, and if we remain in the eu, we lose even more power. and i think that is very, very important because, you know, we've been -- we're the fifth largest economy. we're an independent -- we should be an independent, free nation, and, you know, only -- out of all the democratic nations that we recognize in the world, it's only 28 that seem to feel that in order to have a trading zone you have to have this political structure, and i don't think probably the american public understands that it's not just about trading. it is actually now a directive to try to change things we do in

our own country, our own parliament can be overruled. we can't deport people back into european union countries sometimes because of various rulings from the court of justice. so it is about that to me very much, but also the european union has changed from what many in the labour party supported. it's now from the left we're seeing it as a supporter of the global corporations, the multinationals. it's a neo-liberal organization, and it's also trying to have a relationship -- the transatlantic trade partnership with the united states which we're very much opposed to because it would give the multinationals huge power. there's a very coherent argument from the left as to why we would like to leave the european union which is why there's quite a vocal group within the trade union movements working right

across the european union. the united kingdom is not alone in having problems with the european union. we're seeing more growth in the other countries who would quite like to have a referendum and that's part of the reason that there's been this really trying to push us from other countries because they're worried what might happen to other countries. >> i want to zero in on that very point. if you look down the road if your leave campaign succeeds, if you look down the road and look at the ramifications and see europe as a whole being stronger, including britain, because many people say this will lead to weakening of the euro, the currency, and then also a weakening of the european union with the periphery wanted to come out. this could potentially if your campaign succeeds, lead to the dissolution of the european union. do you think this is the future in which britain will be stronger? >> well, i think we are looking at a referendum that is not

about the status quo or leave. it's because we have no idea what is going to happen to the eurozone within the european union and, therefore, there is huge uncertainty about staying in, and i think what is certain about leaving is that we then as the united kingdom can control our own destiny and decide our own future in terms of our trading relationships. we will still be trading with the rest of the world. we're trading more now with the rest of the world than we are with the european union. our trading relationship has gone down. it's a dysfunctional organization only people don't really want to admit that, and, therefore, leaving it will give us, i think, as a country not in the eurozone the ability to go from strength to strength, but i hope that it would actually also lead to a fundamental change within the european union itself and it is going to have to completely change the way it works, then i think that may well have to happen. we could be a catalyst for that

change that is necessary if it's going to survive at all. >> sitting here in the u.s. as i do as a brit here in the u.s., a lot of people often compare the rise of the brexit movement with the rise of donald trump, but given the case you've been outlining, the working class case -- >> why? >> because there are anti-immigration feelings, anti-establishment feelings, there's a mop of blond hair on two of their significant leaders. i'm not saying they're the right assertions but they're made. my point wag going to be do you think there are more similarities with the case you're plakimaking to leave the with, in fact, the rise of bernie sanders? >> well, i think there is an anti-establishment in all of that which we're seeing not just in your politics in the united states but right across the eu, but i would want to stress that, you know, people talk about it being anti-immigration. what we want to see is control of immigration so that we decide as a country. no one is saying there shouldn't

be immigration, but i find it very sad that our former commonwealth countries, now, i have great difficulty getting their citizens to come into this country even to work whereas countries in the european union automatically can come in. so it's about controlling immigration and then looking at the kind of skills that we want in our country, as any other democratic country does. this is what the american public needs to understand that. it's nothing new about controlling your own border and who you take into your country. we have given that up to the european union, and that's part of the reason the democratic deficit that we want to get back. >> ms. hoey, thank you for being with us. i will be on the ground in the uk next week and would love to have you join us again. >> good. we'll see you. lovely. thank you. >> she would be a terrific guest to have on again. very well-spoken. >> thank you. weekly rig counts out moments ago. let's get to dom chu. >> back to our side of the atlantic with the weekly rig

counts on friday. we have total u.s. rigs up ten to 424. now, let's break it down by the particular commodity class. rigs for oil up 9 to 337. gas rigs up 1 to 86 and misly miscellaneous rigs unchanged at 1 for right now. the u.s. rig count for oil is down 294 rigs from the same time last year. also a nod out to canada. canadian rigs up 4 to 69. those are the numbers. the big one a lot of people focus on, plus 9, again, oil rigs to 337 total. back over to you guys. >> we did see a slight pull back in terms of the gains of wti. the battle for viacom has cost five members of the board potentially their seats. if the move holds up in court, we'll bring you the latest in this escalating legal war. plus, one international airline offering a startling new deal, unlimited international business class flights.

is it worth the price tag? we'll tell you straight ahead on "power lunch." ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

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man 2: it's not just security. it's defense. it's not just security. it's defense. bae systems. great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. two years ago right here on "power lunch," a battle royale. the founder and ceo of iex went at it with an executive in the high frequency trading industry with author michael lewis weighing in as well.

>> do you think the markets are rigged? >> i think it's really hard to put -- >> he said it in a book. you said it in a book. that's when i knew the markets were rigged. it's disgusting you're trying to parse your words now. do you believe it or not? because you said it. it's a yes or no question. do you believe it. >> i believe the markets are rigged. >> there you go. >> and i also think you're a part of the rigging so if you want to do this, let's do this. >> i really do. >> he said that and he also said shame on you. how do you react to that? >> so -- >> i'll say it again. >> so i think he's outrageous. i think he's part of the problem. >> the s.e.c. is expected to rule today whether to grant iex's request to operate as a national stock exchange. let's bring in bob pisani who was part of that discussion a couple years ago. hi, bob. give me some history here. what has iex been doing? how have they been operating absent this kind of designation from the s.e.c.?

>> they're a little less than 2% of the overall trading. they're an alternative trading system and they're seeking to become an exchange. there's been some question about how much a stock exchange would be allowed to slow down trading. iex will institute a 350 microsecond speed bump. their argument has been very simple. the exchange is separated by wide distances and sometimes traders can take advantage of the distances between the exchanges and their databases by essentially taking vac of the time -- advantage of the time delays. they have a speed bump. a number of the exchanges have been pushing back saying wait a minute, the rules, the s.e.c. rules, specifically say you can't institute any speed bump. that's been the controversy here and the s.e.c., the question is who has been right on that? the s.e.c. is going to make a ruling on that today, tyler. >> who would want to do business

with them? i mean, i don't understand the order flow and all of that as well as maybe i should and certainly as well as you do, but if i'm being slowed down, why would i want to do business with them? >> well, the argument is it's not going it affect the overall trafficking. it will simply make the playing field more level. the s.e.c. has been trying to grapple with this for a while. they issued a reinterpretation of the rules a few months ago where they said anything below 1 millisecond would be consistent with our rules and, of course, this is a whole other can of worms. nasdaq has implied they might sue them over this. the basic question is, is it okay for them to institute some kind of speed bump? i think a lot of people would say if the s.e.c. feels it's in the public interest, then the answer is yes, but it's controversial and even if they vote in favor of it, it's possible there could still be some legal challenges. it's a very, very interesting issue but the bottom line here is we've got one, two, three

exchanges now and a good possibility we're going to have four before too long. >> thank you very much. if you like your equities liquid, you're going to want to stick around. the business of water ahead. "power lunch" returns in two minutes.

welcome back to "power lunch." name of the game today respite after a big rally in the safety trades and that goes for gold. the final gold trades have crossed. $1,293.60 an ounce, down by

0.4%. for the week gold gained 1.25%. taking a look at the rest of the metals complex, a mixed bag here but we do have palladium, platinum, and silver down by more than 1%. as for the bond market, well, we had eight straight days of gains and a rest today. let's check in with rick santelli from the cm e. rick? >> hi, melissa lee. well, let's look at the biggest gains for the week, what maturity are there? did i hear somebody say five-year? you're right. five-year, you see the one-week chart, down six basis points. those -- the maturity that found the fewest buyers which yields closed down the smallest amount, that was the long end of the market, 30-year bond down two basis points you see on the chart. dollar index did have some u-turns this week. one-week chart reveals basically a quarter cent below unchanged. not that big a deal. and, of course, that wonderful interview wilfred had, this is going to be a big deal no matter how the vote goes. the pound versus dollar this week, pound is doing a little bit better. a little bit better at 14315.

closed at 1.4260. we'll continue to monitor but the volatility probably starts to ramp up the closer we get to thursday and friday next week. melissa lee back to you. >> thank you very much, rick. stay or go? britain's decision on the european union will affect the market. how do you brexit-proof your portfolio? we'll tell you straight ahead on "power lunch." it's final for the your business entrepreneurs of the week. omar and camille knew nothing about the restaurant business when they opened their daytona beach based kale cafe. they knew a little more when they opened their second store. they want to keep growing but they need help so we're giving them a "your business" makeover. for more watch "your business" sunday mornings at 7:30 on msnbc. will your business be ready when growth presents itself?

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hi, everybody. i'm sue herera and here is your news update this hour. the iaaf says individual russian track and field athletes not tainted by doping with apply to compete as neutral athletes. this follows the agency upholding the doping ban against the russian track team prohibiting it from competing in the upcoming rio games. russia is considering an appeal. in denmark secretary of state john kerry responding to dozens of state department employees who endorsed an internal document that advocates u.s. military action asense the assad regime in syria. that position is at odds with

u.s. policy. >> i agree with the process. it's a great process. gives people a chance to express their views and we will deal process it now. the second black box of the egypt airplane that crashed last month was pulled out of the mediterranean sea. this a day after the first black box was retrieved. all 66 people on board were killed. it's still not known what brought that plane down. and it was a bad day for motorists on a busy new jersey highway no matter how you slice it. a truck carrying deli meat collided with, you guessed it, a truck carrying bread. the accident spread the contents all along the highway causing a massive traffic jam. no one has hurt but we're wondering if there were any heroes on the scene. >> oh! hold the mayo, right? >> hold the mayo, ty. welcome back, by the way. >> michelle said all we needed was a mayo truck to come in there and we'd have a sandwich.

>> absolutely. it was a mess, nonetheless. >> yes, traffic sandwiched. yes, thank you. >> welcome back. >> thank you very much, sue. good to be back. stocks extended loss on concerns about the brexit vote next week. let's bring in katy nixon, chief investment officer of northern trust wealth manager, nancy tengleer of heartland financial. how big a risk is brexit? >> it's a lot bigger arriving than many investors thought a few weeks ago. the polls are not tilting the way many had hoped and certainly you're seeing that in the risks off market. the risk of a brexit, the real risk, the economic risk, is very, very high. >> as you, nancy, look at the hierarchy of risks in the markets whether it's interest rates, economic slowdown, profits, brexit, whatever, which one is the paramount one in your view? where does brexit call in that hierarchy? >> well, it's a short-term risk to be sure. a few months back we were

wringing our hands over the price of oil and slow down in china. now it's brexit. this is what the market likes to do. our time horizon is three to five years. so i'm looking at earnings and corporate profits, top line growth, and the economic slowdown. where are we precisely? and where is the consumer? where are jobs? and what is this fickle, feckless fed going to bring us next? >> fickle, feckless fed, i love that. that is good. that is good. >> but the production of this fed is not so good. >> yeah. >> i'm much more concerned about earnings, and i understand the short-term implications of brexit, but i'm not focused on that in the medium to long term. >> react to that. is this your view? i was speaking earlier for the team with the other show i work on here, and we were talking about ultimately what's going to matter most to u.s. stock prices is u.s. corporate earnings, not the brexit vote. >> absolutely. the brexit is clearly our number

one near-term risks, but i would say it's more a symptom of a broader populist uprising that we're seeing all over the world right now, and what implications may that have for policy decisions and economic growth going forward? so i do think that's something that should be on investors' radars although i completely agree ultimately fundamentals will prevail and i think the news we got out of the fomc this week is a boyfriend because it takes off the table what was another risk in my mind, which was a fed flub, and we don't think that the fed is going to raise rates anytime soon. we think the fed is coming much more down to where the market has been all along with regard to the pace and trajectory of rate increases -- >> you ladies with your fed "f" bombs. i'm telling you, this is really something here. so, nancy, you say you're looking out three to five years. what do you like three to five years? >> well, so, tyler, i hate recommending a stock after a great earnings report, but we have owned oracle, we have been

buying oracle. i really like where the company is right now. larry ellison always understood the cloud. he was ridiculed for a speech he gave but he has understood and been pursuing the cloud with impunity. so i love that the cloud revenues popped. the other side of the story is that while it's only 10% of revenues, i think that's the good news, and i also believe that he has marc benioff in hi sighhis sights much like he used to bill gates. it was a stop watch back then, how long would it take him to trash talk bill gates. now it's marc benioff. i love that story. and goggle, especially because of the downgrade. the price target was maintained. it's a short term potential, maybe shortfall in earnings. i love that stock.

ruth brought financial discipline and we think at this multiple it's much more attractive than an electric yult. >> oracle, a man with his head in the clouds. kade kat katie, you are moderately overweight risk assets but conservative -- the less risky risk assets. >> meaning u.s. equities and u.s. high yield bonds which across the risky asset spectrum are the ones with the most clarity around expected return and the lowest volatility right now. so we do like u.s. assets. we think a fed on hold makes that even a stronger case. >> all right. katie thanks very much. nancy, thank you as well. nancy with heartland and katie with northern trust asset. go to powerlunch.cnbc.com to see another stock that nancy says has an attractive dividend right now. that is powerlunch.cnbc.com. melissa? well, if you have never heard of the stock xylem, you

are missing out. >> there are a handle of names hitting new 52-week highs in today's session. >> take a check on xylem, this is a water company on the all-time high list on a number of days. >> a water frinfrastructure company. let's find out more about this company. joining me patrick decker, the ceo of xylem. your company has a pulse on what the economy is doing. 33% of your revenues from public utilities, the more stable side. 44% from the industrial side. what are you seeing in those parts of the businesses? >> sure. so again thanks for having me. what we're really seeing right now, especially in the water utility space in the u.s. is very rapid growth. you've seen a lot of pent up investment over the last decade or more. investments in water

infrastructure have been off 20% in the last two decades. on the industrial side, our exposure to industrials is less to the heavy industry. it's really more general light industrial. we continue to see low single digit growth there, so it really does speak to some renewed health in that part of the sector. our exposure to oil and gas and mining is less than 8% of total revenue. >> so that's not really an impact right now. >> that's correct. >> or is it getting better? is that part of the business getting better? >> we've seen mining continue to be off 10% year-over-year. we expect that to continue for the next year until we lap some of that exposure. oil and gas has really flat lined for us. we're heavily exposed there to fracking in north america, and so that really has been kind of moth balled for us and so we're lapping that exposure in the second quarter. >> i see. in terms of we've been talking a lot about brexit and you're an international company. what is your projection should there be an exit from the european union by britain? what do you foresee in terms of economic growth in europe? how does that impact your

business? >> so our business in europe is pretty well protected other than any impact on the euro. so our business in europe is largely local and national. very little cross border movement there in terms of economic impact. specifically the uk. we're actually entering into the sixth amp cycle in the uk. it's a very structured five-year program that's very predictable, and that is a very much a domestic focus, and so we expect that to continue. that's been going on for 30 years now and it's weathered all kinds of political cycles. >> sure. we've been closely watching dollar/pound or pound/dollar in terms of the reading on the brexit vote at any moment in time but important to you is the euro and that could also be a casualty here if there is a brexit. how does that impact you if there is a dollar spike because that is an important part of your earnings? >> sure. we weathered that last year. we saw a significant headwind in our eps expansion last year from eu euro. that has moderated this year. search a strengcertainly is

strengthening dollar is not good for us. it has little or no economic impact. it's something we keep a close eye on. we weathered the cycle before. again, we are a global business. about 30% of our revenues and earnings come from europe but we're heavily exposed in the emerging markets and north america as well. >> is that a risk to current quarter earnings if there's a spike to the dollar? >> no, it's not. >> patrick, thank you for your time. patrick decker. who should you trust with your money? humans or robots? why some investors are making the switch. the rise of the robo adviser. that story is ahead on "power lunch."

welcome back to "power lunch." i'm melissa lee. apple shares under pressure right now down 1.7% following some conflicting reports on iphone sales out of china. let's get to cnbc's josh lipton with all the details. josh?

>> well, melissa, there's been a lot of confusion about this story today, so let's start with the facts. a patent tribunal says it violated a local company's patents for phones you're seeing here. this tribunal says apple should not be allowed to sell these iphones in beijing but apple immediately appealed that ruling and now that injunction is stayed. the case has to make its way through the chinese court system, but as of right now there has been no disruption to apple's business, so all its products still for sale in beijing today. apple stock though trading lower on that news. not everybody is worried just yet. i just got off the phone with rbc. they don't think apple will be ultimately barred from selling these iphones. his point is if the chinese government really slapped apple with such an injunction, then it would also be hurting apple supply chain, much of which we

know is based in china, so the point, hard to see the chinese government ultimately doing that. still, certainly these headlines come as we know there's uncertainty about that flagship iphone franchise, its health and future in china especially. the companies revenue in the last quarterly report did fall more than 10%. >> let me ask you this, it would hurt the supply chain. is the theory then because they would sell fewer or no iphones, that would mean less business for apple, that would mean less jobs and less income for the supply chain companies that make those phones? is that what you're describing? >> well, so the points were find of twofold. one is he was sort of speculating it was hard for him to see why the chinese government would take an action that might result in hurting its own companies. two, he's arguing if you really do see this kind of injunction, it looks like it would ultimately only hit sales if it did happen in beijing. he doesn't think ultimately if

that happened it would have some type of material negative financial impact on apple's gross sales there. but we'll see. this is a case that now has to work its way through the court system there. >> and you got to wonder if there's going to be a pull forward of demand because maybe people are afraid they won't be able to get that phone sold in beijing so they go out and buy them. josh, i'm wondering if this has any impact, if you're geditting read that this dispute could have an impact on the iphone 7, whether that's not different enough that it would also spark some sort of dispute. >> that's a great question. certainly when i sort of looked at those images we all just saw, what would be the knock on effects. not just for the 7 but if you really barred the 6 and 6 plus based on those images, wouldn't you also have to bar the 6s and 6s plus? and is the chinese government really willing to make that kind of move? of course, you know, listen, the backdrop is you have investors that --

>> josh, with he have to cut you off. with he have to get to jane wells. >> sure. >> we have to go to jane wells for a news alert. jane? >> folks, eight years after the housing collapse, it appear that is the final attempt by the government to go after angela mozilo of countrywide has gone away. there are reports that a federal civil prosecution investigation of mozilo has been dropped now by the justice department. mozilo has all along said he was not guilty of any wrongdoing. of course, in 2010 he did pay a large fine to the s.e.c. as part of a settlement there, $22.5 million. however, countrywide's insurers covered that money. again, reports that the justice department has dropped an attempt to go after angelo mozilo civilly. long ago it stopped any sort of criminal prosecution, and at this point it looks like there will be no more government attempts to go after the guy who had one of the largest mortgage companies at the time.

back to you. >> yeah. caused the famous phrase, friends of angel loo. josh, let me go back to you. implicit in what the analyst said is the belief that china does not have a justice department or a court system that is independent from the government, that it does what the government wants, and when i see this injunction or this decision, it suggests to me that apple after all of these efforts, the charm offensive, still could very much be in the crosshairs of the chinese government. i mean, were their efforts for naught? >> well, i think it's not just apple. if you talk to financial analysts who cover tech companies and specifically tech companies that do a lot of business in china, they'll tell you that this is simply a risk of committing capital in those companies that you can wake up with headlines like these. so it's not just apple. interestingly, it's usually not

the consumer tech companies we wake up to headlines with this. it's often the enterprise side that you wake up to. often it seems like the chinese government wants to try to encourage business for the homegrown teams. that's a risk analysts say when you're committing capital and verying in compani investing in companies that do business there. >> we were just talking about tim cook being in china. >> right. all the twitter posts. >> a big show of how they're friendly with china, and then this comes and it's like a slap in the face. >> yeah. >> i would think. >> that's what i was thinking. >> yeah. all right. still ahead by companies like facebook and alphabet need to pay attention to the bitter board room battle at viacom. and then the one airline offering unlimited business class flights for a one-time fee. just how much? stick around to find out. ♪ there's a lot of places you never want to see "$7.95." [ beep ]

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oral-b. know you're getting a superior clean. i'm never going back to a manual brush. thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. shares of viacom shooting higher yesterday on news that sumner redstone was removing five of its board members. those board members fighting back now, but shares are down today following weak third quarter earnings guidance from the company this morning.

back to the issue at hand. the war for viacom. let's bring in ed and jeff. gentlemen, this story not only is juicy on its face or many faces, frankly, but it also has implications for other companies with similar stock structures to viacom, to companies that are led by long-standing patriarchs or matriarchs, so jeff, you wrote an article for "fortune" saying here is how viacom could have avoided this game of thrones. how could they have avoided it? obviously we don't have -- >> go ahead, jeff. i'm sorry, your mike wasn't open. >> sometimes i do better in a pantomime anyway. they really did have opportunities going aback from jonathan to tom freston who melissa lee had a tremendous interview with him, congratulations to melissa on

that, but those people had an argument and perhaps sumner redstone should have kept them. the one argument that shows that redstone has his wits about him is he has the good sense at least now to get rid of dohmen. this is a category i have called the hero's farewell, a monarch. they leave there is one person indispensable. sumner redstone said to larry king in 2009 that the people who are afraid of dying are the people who are going to die. i'm not going to die. rupert murdoch has a very similar view on his own longevity and it does create problems. >> in "hamilton" there was written, death does not discriminate against the sinners or the saints so i don't know if mr. redstone has that right. let's pivot a little bit. how does that play out in your sort of -- >> i think at this point whether sumner or his daughter

exercising his influence, philippe is out. he's done. he's over. and i think the irony here is all the confusion, all the lawsuits going back and forth stems from the fact that, you know, all the power rests with sumner himself, and the fact that the board is basically saying i don't believe you are who you are. i don't believe these letters are actually coming from you. we think they're coming from sheri so why don't you tell us face-to-face and then we'll -- >> some of the very same people who are criticizing whether he is acting of his own free will were those who defended his capacity -- >> not that long ago, right, when there was a lawsuit. >> four or five months ago. >> it's clear they're just defending their own self interest and not the shareholders' interest. even in some profiles in "vanity fair" and other obligations over the past few months, they've been defending redstone's competence when it was in their interest. now they flip. but to use shareholder values this way, surely the perfect metaphor is this outgoing board

is the board that champions teenage mutant ninja turtles. the new folks coming in are fantastic. they tower over this old board. the worst thing you could say about these five people coming on board is i have been proposing their names to companies to bring on -- >> pa wha if they disagree with sumner redstone? are they going to be able to stand up to them. >> i think every one of these people can take an independent position -- >> i doubt that's what he wants. >> nicky, nicole, is pretty tough and independent minded but right now she would do the right thing. i think sheri redstone and others would realize that basically there are assets they couldbetter val oue out of. ron nelson goes back not only as one of the co-leaders of dreamworks, he goes back to a succession crisis like this that

only one of us on this call, tyler, in the gulf and western situation, he was in the top team after the old original -- >> jeff, i have one last question for ed and this is the possible outcomes here. ubs had a really interesting note. everybody is saying something has to be done about the balance sheet ultimately whoever the ceo is. they have a lot of debt. you either sell part or all of paramount. you remerge viacom and cnbc cbs, or cbs buying viacom. >> that's the most interesting one. given cbs' leadership, les moonves, everybody thinks he's the guy to turn both companies around, if you have to pick one guy, that's the guy to pick. >> les is more. >> les is more. >> interesting that paramount was at the center. >> and the guy who took over was

martin davis. >> you're right, i did remember. i was -- what were you trying to say there, sonnenfeld? ed, jeff, thank you very much. stick around, folks. we have a big money trifecta coming your way. your best bets in bonds, stocks, and commodity looking at brexit. "power lunch" is back in two. the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t. it's time for the "your

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welcome back to "power lunch." i'm michelle caruso-cabrera. we're coming up on 2:00 p.m. on wall street. stocks are in the red at this hour. the major indexes down six of the last seven sessions. the s&p 500 having it's worst week in over four months. the dow is off by 58 points. the s&p lower by 7. the nasdaq is lower by 37. energy the leading sector right now. technology and health care, however are lagging. all right. we are less than a week away from the brexit vote. imf chief christine lagarde spoke to cnbc this morning about the referendum and the fear it's causing among world economists. >> what i did today in vienna was to actually explain not the dark side, not the fear side, which brings all the economists of the world pretty much

together to say that there are downside risks in a choice to withdraw, but i wanted to identify the benefits. >> is she right? are all world economists saying leaving is bad? joining us gregory dacho and david malpass. gentlemen, good to have you here. you know, it's brexit vote so i will be a little cheeky today, david. david, are all the economists of the world saying that leaving the eu would be a bad thing for the uk? >> hi, michelle. no, i don't think so. i think christine lagarde is part of the establishment so most of the establishment economists want to stay in the status quo. >> what do you think? >> i think they should leave the eu and the reason is the eu is just too big. it's too expensive. it doesn't work. they haven't even made progress on their mission, which was

fiscal responsibility, banking reforms, defending the external borders. they're just not doing the job, so this is the uk's chance to get out. >> chance to get out. i see in the notes you say it's a sinking ship and they may not have another chance. >> that's right. you know, the last referendum they had was in 1975. that was 40 years ago. so these opportunities come along once in a generation where people actually get to vote on what they want. so the establishment is going to say no, no, don't change anything, it's working for us, we're getting rich, but i think for people it's just not working. >> mr. dacha, what do you think? should they stay or should they go? >> i think what's important from an economist's perspective is the fact that overall it would probably be negative for the uk economy and probably likewise for the european economy. if you take a broader perspective, it might not have that much of an impact on u.s. economy per se, but overall i think it would be a negative, especially in the short run. >> why would it be a negative?

what would it do? >> i think it would hamper trade, and that's an important component of the bilateral exchanges between the european union and the uk. i think it would also hamper investment. you cannot forget that financial services are a huge part of the uk economy, in particular in london, and being out of the european union and perhaps being out of the single market would probably hamper trade linkages and financial linkages and hurt both economies quite importantly. >> greg, i'm curious because there's so many economists who sort of say the impact is going to be kind of limited. you take a look, for instance, at the european financials. you mentioned them briefly and how they're trading. we saw deutsche bank -- many of them are trading below financial crisis lows. does that tell us something, that we may not be addressing that the potential impact the way we should be? >> i think it's very much a question of what happens, and there's a tremendous amount of uncertainty in global markets, and i think that's what we're seeing right now. we're seeing that global

uncertainty, whether it's uncertainty as to global growth, whether it's uncertainty as to policy decision or political events like the brexit or the upcoming elections in the u.s., and banks in particular are worried. businesses are also worried. and increased uncertainty would certainly not be good to increased economic activity. >> you know what? there's been so many notes put out by various banks. jpmorgan has a note out, david, i wanted you to address talking about the issue of grade. christine lagarde also brought this up. he points out if we can bring up that graphic, that there are many non-eu members out there, non-eu countries, that actually have plenty of trade with the eu and doesn't necessarily think it's going to be an issue. talk about trade specifically because in essence what the uk is in right now is a trade agreement. they don't use the euro, david. >> that's right. they're also in the wto, so lots of countries are looking for ways to trade. it's a very globalized world. so i think the uk could exit the

eu and still be an ally and a friend of europe and trade extensively with europe. they run a trade deficit so they're in a good bargaining position to have good trade relations with europe, and they may add better trade relations with the u.s. if they're separated from the eu. the problem is the eu is just too big and it's sinking. coming back to the neg at ththi this -- negative, to the bank stocks, bank stocks have been getting crushed. i think it's ball game negative interest rates are a negative for banks. the central banks are buying all these bonds and driving down the yield. so what's a bank to do? >> david, you know, we reached out to a couple economists -- after christine lagarde, we reached out to several. it was easy to find ones who disagreed, who said actually it wouldn't necessarily be a negative, but most of them wouldn't come on because they work for major firms and they were worried they would get in trouble saying that on television. why do you think that is, david? >> i don't work for a major firm and so i can say a view.

i think that the establishment or the status quo is just very strong. if you're already set up to do business, you don't want anything to change, and that's plaguing -- that's actually a global phenomenon. that's one of the political phenomenons in the u.s. of how do you break -- how do you get an upheaval, a break out of the status quo? that's a little bit what's going on with this brexit vote. >> gregory, how do you react to what david just said there? and i'm thinking specifically of the financial services businesses in the city of london, that they want to keep things pretty much the way they are because they're accustomed to it, they're making nice money from it, and they would be vulnerable to losing market share, i guess is the best way to put it. >> i think that overall we're in a relatively weak environment in terms of the banking sector. as was mentioned, the fact we have negative interest rates is, indeed, hurting profitability, and increased uncertainty would not be good from a banking perspective. but that being said, even if you take an unbiased approach like

i'm suggesting, it is overall the fact that you have an increase in incertainty would overall be quite negative for the banking sector in the short run. that does not mean that over the longer run you can have structural reforms that increase or improve the european project. i think that's also important to keep in mind is to distinguish the very short run effect of having banks having access or easy access to the european market from the longer run structural issues as to whether there can be a further improvement in the european structure. >> when i was watching christine lagarde it reminded me of mitt romney's speech criticizing donald trump and i remember watching that speech and thinking, mitt romney is exactly the kind of guy that donald trump supporters don't like and the more mitt romney talks, the more it helps trump. when i listen to christine lagarde, i thought she is the establishment defined. the more she and people like her talk, the more likely it is to

actually make people in the uk angry because they're trying to influence this. do you worry about that, greg? and do you agree or disagree, david? david, let me start with you. >> i agree with the point that if you show that clip of her in england, it's going to cause people to want to more vote to leave the eu. it's not that she's bad. it's that she's part of the establishment, the status quo, and the people that have already gotten rich from the system keep fighting the change, and so if you're sitting in england, you want to vote for change, so you're going to vote to leave the eu. >> greg? >> yeah, i think -- in general i think there might be also a misperception as to the underlying reasons for the vote. and the political element to that vote is quite important because we're asking sometimes individuals to vote on topics they might not fully understand, and as we're seeing globally, we're seeing this anti-establishment movement around the world. it's not just in the uk. it's around europe, around the u.s. >> so let me ask the two

economists, if britain stays or goes, how is that country's growth going to look over the next five years? does it grow faster over the next five years if it stays in or faster if it leaves? very quickly. greg, you go first. >> i think it grows slower. i think the impact would be quite significant especially in the short run because you do have to trade, you have lower investment, you have heightened uncertainty in the private sector, and that's very important in an environment where you're already -- >> greg? >> i think they grow faster. same in the u.s. if you have an upheaval, if you have a better system, it's going to grow faster. we can't do much worse than what we're doing right now. >> all right. >> thank you, gentlemen. good discussion. appreciate it. gregory daco, david malpass. britain's vote to leave or stay in the eu having an impact on the financial markets and your money. so coming up, we'll look at it from all angles, stocks, bonds, commodities, currencies. stay with us here on "power

lunch."

welcome back to "power lunch." i'm melissa lee. three areas impacted by the brexit vote. we're talking about stocks, bonds, and commodities. joining us is david seaburg, todd colvin, and jeffrey.

david, i'll start it off with you. most people say a spike in the dollar, that's bad news for earnings and that's bad news for stocks. how do you break that down? >> i mean, look, if they decide to leave and you have a dollar significantly weakened just based on the fact they left, it doesn't necessarily mean good news for stocks, mel. you look at the reverse. if they decide to stay -- i'm sorry. >> i'm sorry, you meant the pound going -- >> the reverse. >> the -- going down. >> and dollar spiking. dollar spiking. no, if that occurs, it's not necessarily good news for stocks, and we've talked about it on "fast" for a long time. we're looking at a market right now that is teetering on i'd say a brink of a massive pullback either way. i mean, i think if they vote to stay, there's no move there, the market is going to take off. it's going to ignite. it's going to be a risk-on sort of event that's going to be short lived. if they vote to leave, you will see a lot of massive -- >> let me throw this possibility

out. what if there is a vote to stay but it's a very, very close vote which could imply that there could be rumblings in the future. so there's really no finality. >> so that's even just as bad a case scenario. you have a scenario where there's more uncertainty in the marketplace. why is the market goitraded they it has? uncertainty. they hate uncertainty. they would like to have certainty, let the market react, flush it out, and traders and investors can come in and make their bets. but, look, i think you have to keep in mind, if they vote to exit, right? what's going to happen to the dollar? the dollar is going to move big time but it's going to be short lived. short lived because the fed is going to be paralyzed, absolutely paralyzed, and you will probably see it come back in retreat a little bit based on that fact alone, but i'll tell you what, it concerns me a great deal. and i think another really good point to make, we talk about these yield chasing stocks -- >> last word. >> yeah, yield chasing stocks

are going to come off big time if you see a risk on trade if they decide to trade. they will underperform the overall market because that's where the money has been crowded into, defensive. >> thank you. david seaburg. >> let's switch over to bonds and bring in todd colvin. do you agree with david's general assessment that if they vote to stay -- >> that was big ben, by the way. >> if they vote to stay, it's risk on. if they vote to leave, it's risk off. and i would say that would tell me that if they vote to stay, then we're going to see treasuries fall, correct? >> well, i doubt we'll see treasuries fall that much. i believe the risk-on trade comes if we see them leave but ultimately if they stay, you have to ask yourself why. were they able to forge new deals, get better deals they have now like mr. trump speaks about getting better deals out there. the uk has been paying a lot of

this -- contributing a lot to the eu but not getting benefits. i think treasury yields would remain low because of the fact we saw this week the u.s. economy is not as strong as people think. yes, it's been a risk-off trade helped by the brexit to keep yields low, but the multimately we see yields going down. >> the british pound has added gains now at $1.43. >> take a look at the intraday chart. this is a leg higher on the pound versus the dollar. if you take a look at the intraday it's very distinct. >> generally speaking, every time we've seen the pound rise, it more and more leads to the idea that the remain vote -- >> remain. >> bremain. >> what happened to treasuries if they vote to leave? >> well, if they vote to leave, i think you continue to see this risk-off trade accelerate a little bit. obviously today yields are a

little bit higher. we heard from mr. bullard, he talked about rewording some of the fed's communication and that's been what's driving the bond market this week. obviously since fomc. if the uk leaves, it kind of open's pandora's box a little bit and we will see risk strategies kind of take it on the chin. we will see bonds continue to rally, see equities sell off. and gold is out there, it's been rallying very strong and that's been a great indicator for the risk-off trade. >> thanks, todd. todd colvin. >> since you raised the question of golds let's move to commodities with jeffrey grossman, a brg brokerage individual. good to have you with us. i assume you would think if britain decides to stay, that is not good news for gold. if they decide to leave because gold is a fear trade right now i would say that it would be good for gold. >> absolutely. gold is an uncertainty type of a trade here. again even yesterday we were at the highs of the most recent

move, and the minute the rumor mill came out there was a poll that said it was 60% to stay, the market has come off $30 off the highs. again, as you said it's going to lock step with what we spoke about the normal parameters. can i remind everybody that even after the referendum there's a two-year negotiation period that's going to take place. there's going to be many gyrations along the way. we have a long way to go. >> longer term, after next thursday's vote and the results that will come in on friday, where do you see gold moving apart from whatever happens on brexit? >> i'll put it this way, i think we have a little sideways action. we'll work been a range. i would say 1260 to 1340 is a fair figure for gold near term without any game-changer coming into play. >> jeffrey, thanks very much. appreciate it. jeffrey grossman. financial firms are increasingly using robo advisers to answer client questions. do you trust a robo with your money? that's next on "power lunch."

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they are called robo advisers, digital wealth managers. they take the place of human financial advisers at least in part. and big firms like charles

schwab, vanguard, blackrock increasingly using these algorithms, cyborgs, if you will, to answer client questions or automatically update portfolios. our next guest is giggling here as i said that. he's bo lu who runs the robo advisory for blackrock's $4.5 trillion empire. why did that seem funny? because i called them cyborgs? >> a little bit, yeah. >> are they not? >> well, i think robo advisers is just a term for bringing digital experiences to wealth management. computers have always been a part of the wealth management experience. you just haven't seen it because your adviser is using it to run simulations and robo advice just allows advisers to share that sophistication and share that work with their clients. >> my expectation was that my financial adviser is using a computer -- >> yes. >> inputting all of my dauta, m

age, my risk tolerance, my current holdingholdings, lookin them and seeing if they're appropriate for me and then changing them based in part on what the computer says, right? >> yes. >> how is this different than that? >> this is that, all of that, but also giving you a mobile experience on your phone when you can check in at any time, and it's also giving you an ability on your ipad to look at it and to converse with your adviser at your convenience. but that's just of above the water line. think about what's happening on a daily basis. your adviser can use computers to look up particular opportunities for your portfolio and then have the computer take action when those opportunities arise even if you're out having a meeting. >> your future adviser is the name of your product company. if i sign up for it, what does it cost me? and then what happens as i turn my money over to you guys with my existing positions? how does the money then get redeployed and what does it cost? >> great question. so to be clear, our strategy at

future adviser, part of blackrock, is a b to b strategy where we work with banks and broker dealers, financial firms you already have a relationship with, to empower them or their advisory teams to use the technology as part of a relationship with you. so we don't set the prices. you know, we work with our partners and they use the technology as part of an overall broader offering. >> if i go and sign up for ththis, what is the cost? >> depends on the partner. >> if it's fidelity or this guy or somebody else, it may be -- it's a fee structure that they set. >> the fee structure and the offering structure are all partner dependent. >> if i decide i want to do this and out comes my plan and it's got me in these etfs and these index funds which is basically the products involved here? >> mostly, yes. >> low-cost products by and large. and i don't like the selections. >> uh-huh. >> i'm the client. >> uh-huh. >> what do i do?

>> you talk to your adviser or bank and say exactly that i don't like my selection. they will work with you to see why don't you like it? did the machine -- did you have a good dialogue with the machine or with me? did we understand your situation? was there something else about your situation we failed to take into account? >> what's the difference here between this kind of approach and a target date fund where i'm basically self-identifying by age or when my goal is. i'm retiring or i have college expenses coming in eight years where the portfolio is then assembled to take that into account. how is this materially different from that? >> it's a great question. there's actually two ways in which it's different. the first is that it's more personalized as opposed to saying, well, you and everybody in your plus or minus five-year age range is going to get exactly that portfolio. we can do things to account for maybe what your spouse has or

what your other hold ths miging be. the second is it can be done at a personal level, applied to your particular situation in saying that we can do tax laws harvesting which you couldn't do unless you did it on a person by person basis. tlt ov so it's that it's personalized and that it is applicable directly to your situation and we can make changes for you and not the guy next to you that looks like you and has your same age. >> bo, thank you very much. appreciate it. >> thank you. >> it's a coming thing. i can guarantee you that. bo lu with future adviser through blackrock. a growing wave for president obama and secretary of state john kerry over their handling of syria. we'll talk to two men who know the situation and the deputy crown prince of saudi arabia here in the u.s. what does he want? what's he doing? plus oil rallying a bit

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russia's track and field team for the upcoming rio summer olympics. agency president sebastian coe with the reason why. >> although good progress has been made, the iaaf council was unanimous that she had not met the reinstatement conditions and that russian athletes could not credibly return to international competition without undermining the confidence of their competitors and the public. cases of the zika virus are rising rapidly in puerto rico. the cdc is following zika infections by analyzing the blood donor supply there. it found 1.1% of blood donations are infected by zika, and they expect that could go as high as 2%. france paying homage to two police officers knifed to death this week by an isis sympathizer. french president hollande spoke during the ceremony saying measures would be taken to

ensure anonymity for police when they are out of uniform. and thousands of people gathering in charleston to mark the first anniversary of the slaying of parishioners at a black church. it was held at the college of charleston's td arena. ty, i will send it back to you. >> thank you very much. the oil market closing now for the day and let's check in with jackie deangelis at niymex. >> we saw strength in oil all day and hitting new session highs into the close but finishing at $47.98, just under that $48 mark. still about a 4% move on the day. interesting that yesterday's close under $47 indicating that we could see some more momentum because we took those technical levels out to the downside, but it's not surprising on a day heading into the weekend that you see a little buying the dip mentality come into the trade. remember, the dollar has been a big part of this trade and the dollar did come off a bit today, so that's supportive of crude prices, and you need to continue

to watch the moves alongside the dollar, especially as we head into the critical brexit vote. today rig counts were out. they went up again here in the united states, but that didn't really seem to impact oil. back to you. >> thank you so much, jackie deangelis. so speaking of oil, saudi arabia's deputy crown prince mohammed bin salman visiting the u.s. this week. he's meeting with president obama today to discuss the conflicts in the middle east as well as saudi arabia's efforts to diversify its economy beyond oil. let's chat more about this and a couple other issues in the middle east. jim smith served as u.s. ambassador to saudi arabia from 2009 to 2013. steven sech was charge deaffairs to syria during the bush administration. good to have you here. we'll get to saudi arabia in just a moment but i want to start with syria because dozens of state department employees according to "the new york times" have gotten a copy of a memo have protested to secretary kerry and complained about president obama's policy in syria saying that the u.s. should be using military air

strikes in syria to force assad to a diplomatic solution. ambassador smith, i want to start with you. not only are you a former srve, you're a former member of the air force and you flew combat missions during operation desert storm so you would not more about the effectiveness of this type of measure. what do you think of this move by these members of the state department. should we be doing that in syria? >> well, from a tactical viewpoint, eric strikair strike certainly do damage to assad's forces. the problem with any strategy is you have to ask what next. if we're going to undertake a bold and aggressive military campaign against the assad regime, then you have to ask yourself, what does it look like when we finish that? unfortunately, i don't think this memo recognizes that there is a big push back against the last 25 years of what i would call liberal intervention, and i

don't think there's strong domestic support or support in this administration for a much more muscular approach. >> not to mention it would put u.s. interests and u.s. war planes presumably up in the sky against what had been russian war planes. >> well -- >> who were fighting on the side of assad, right? >> you certainly have the challenges. the real problem here is it has nothing to do with assad. we should be focused on how to stop the killing. and at a strategic level, that means the united states spending its time with russia, with china, with the p-5 on a coherent strategy to stop the killing, and it really doesn't matter what it looks like afterwards. you can deal with that if the killing can stop. i don't think us coming in conflict with russia on behalf of a notion of attacking assad helps us in that process.

>> ambassador, what do you think? >> i think what we've seen in the state department is basically five years of enormous frustration bubbling over on the part of the foreign service corps in the department. i think it is interesting, it is a very useful exercise. i don't think it's going to impact as jim said the united states government policy. the white house and the president have set a course pretty firmly to stay away from this -- >> are they right about military air strikes and i ask that knowing the american public has almost no appetite for this situation at the moment due in large part because of what happened under george bush. >> i don't know if they're right or not and i don't think they've thought this through. i don't think they've got ton the point that says what will happen if there is a confrontation with the russian air force. what will happen if it goes south. this is more of a kre decorps.

>> let's move on to saudi arabia. what do you think is happening behind closed doors and what should the message by from president obama to the deputy crown prince ? >> the deputy crown prince wears two hats. he's part of the restructuring of the economy and he's the defense minister. they'll be talking about syria and how they can lash out in the same direction and bring all of our assets to bear as well as in libya and the war in yemen and try to bring some level of stability back to the region which it sorely needs at the moment. on the economic side, the deputy crown prince is looking for us to say to him this is a watershed moment a very important exercise you have undertaken in saudi arabia. we want it to be successful. we think diversification of your economy in this now low price oil atmosphere is essential so we're going to do what we can and get the investment community to help you at the same time. >> ambassador smith, what does the crown prince want and how would you characterize our

relations with saudi arabia right now? >> i would submit to you that our interests are the same. the priority of those interests have changed, and that's why there's debate between our two governments. for example, in yemen the kausas have been focused on the huthi. the u.s.'s focus has been al qaeda and our government wants saudi arabia to move back toward that threat. so it's an issue of priority of interest as opposed to different interests. i do think the deputy crown prince is here mostly on an economic campaign. they've released saudi vision 2030 which is a campaign to move to a private sector economy.

i cannot overstate the complexity or challenge of doing that. as steve says correctly, they're going to need support by other private sector economies and certainly the united states government in the execution of that plan. >> the challenges are going to be enormous. to the two ambassadors, thank you so much. >> good to be with you. >> it's been a bad year for big tech. the nasdaq 100 down almost 5% while the s&p 500 has risen more than 1%. hear to discuss is erin gibbs and todd gordon. erin, do you think this is going to be a reversion? do you think that finally tech will catch up in some way? >> i think eventually, but right now i think we're looking at this global deflationary environment for at least another quarter if not two, and we're seeing investors really prefer the more defensive stocks. we've also seen the s&p 500 get

a little boost from the improved oil prices versus the nasdaq. so i think as long as the u.s. market is sort of the best house on a bad block and we keep looking for more defensive stocks, particularly with the brexit coming up, i think that we're going to continue to see this trend of the s&p 500 outpacing, but longer term when we're talking a year, absolutely not. valuations are really getting rich on the s&p 500. growth is exceptional on the nasdaq. we're looking at almost 40% earnings growth over the next year and it's really starting to look attractive from a valuation standpoint. >> what are the charts telling you, todd? >> the deflationary scare is pushing bonds up and yields down and you're seeing sector that is pay heavy dividends far outperform. the s&p is about flat, 1% on the year. as you mentioned, technology is underperforms but it's not just tech. it's health care. it's consumer discretionary. all the higher beta names you'd

like to see leading in a good bull market are not there. provided the fed continues to remain dovish, rates on sold, the staples and utilities and dividend payers will continue to outperform. a weaker dollar will help precipitate that. while central bank policy is what it is, i guess we'll continue this way. >> no near-term relief for tech say both of you. thank you. we are les than a week away from the brexit vote, but that may not be the end of it. what should you be doing with your stock portfolio to be ready for whatever happens? we have that next on "power lunch." todd spaletto, president of the north face, we are working on the prototype to match customers to gear. watson, let's give it a try. say it's mid-june and i'm backpacking in yosemite. of our 353 jackets, i can recommend nine. watson, what if it rains? there is just a 3% chance of rain, so i recommend the breathable stretch fleece fuse form dolomiti jacket. a perfect choice watson. no wonder our customer loyalty numbers keep climbing. i believe we can do even better.

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background by visiting smartcheck.gov the countdown is on to the big brexit vote less than one week to go. while everyone is concerned about what to make of the potential eu break up or at least one defection from it, we wonder what's in store for u.s. markets. where can investors safely continue to put their money? let's bring in robert luna of shore vest wealth management and mark usco of morgan creek capital management. robert, let me start with you. if i want a brexit-proof my american portfolio, how do i do it? >> i think, tyler, you have to look at companies with minimal to no exposure to the eu right now, and i think there's a lot

of great names out there. if you look at a day like today, you look at the russell 2,000, that tends to be outperforming because of that nonreliance on international revenue. names like amerco which is u-haul. it's one of the can. s companies that people will continue to move in trucks. the stock was up 30% last year. it's been consolidating. we think this is a great entry point for long-term investors. >> and nordstrom and travels are on your list. mark, how about you? do you think that the brexit is a likelihood or not and either way, how do i invest? >> yeah, you know, we think it's much ado about nothing. we think it's a whole lot of tempest in a tea cup. we don't think they will exit. we think they'll remain.

however, if they were to vote to exit, i think you really want to be very defensive in the u.s., hold things like gold, gold miners and treasuries. i think things could get very ugly, but as i said i don't think it's going to happen, and i think even playing a little bit of offense coming into the vote next week could be interesting. >> how do you do that? >> well, you know, one way is -- it's a nonu.s. play but you could actually buy these european banks that are just flat on their back. i think they could rally a lot. everybody is short these things and there could be a nice short squeeze. you could do the same with u.s. financials. i think with a remain vote, that will give the fed the green light to at least talk about raising rates again. >> mark, doesn't that imply if you're saying there could be a short squeeze in these european banks, doesn't that imply that people were shorting them because a brexit was going to be an issue for them? because they have been in decline for this entire year. first it was worries about ex

pope sure exposure. they still stayed flat on their back. what is the catalyst? >> well, long term i'm with you. i don't see much catalyst. we think the banks are not out of the woods. we think the copper prices in particular are not actually turning up. they're actually heading back down and that's what glencore and the other things are exposed to. i think from the short-term perspective if you really think that they're going to vote to remain, you're going to get a risk-on pop, and what's probably going to happen too is they're going to revise last month's unemployment number up -- i mean not unemployment, jobs number up pretty heavily because of the verizon strike and they'll talk about raising rates again. it will be good for financials. >> the two banks you mentioned, deutsche bank and credit suisse. robert, back to you, do you think brexit is just a speed bump or something more? >> well, i agree with the other

guest. i don't think it's something that's going to happen. i think it's a lot more about politics than it is economic prosperity. even the bulls on brexit that are talking about britain leaving the eurozone are essentially saying 2030 is about the time they'd start to see the benefits. that's quite a long ways away. you know, i don't know. i don't see anything exciting about jumping in the banks right now, but i think there are good companies like you mentioned, nordstrom, that's a stock that's got pummeled due to some peril issues. the stock is yielding 4%. ten times forward earnings. travelers is a great company with less than 5% exposure to europe right now. 2.5% yield. i think there's good companies at good valuations that don't have the headwinds that financials or european stocks have right now that investors can look at -- >> can i interrupt you? there's a new opinion poll, jpmorgan analysis, their researchers, they see a leave for the leave camp of 3% to 5% in the eu referendum vote.

does that sway you at all? we're going to show the pound here in a second. >> i think it's going to go back and forth. you know, it's hard to tell. i think it would be a huge mistake. i think you could see some short-term volatility, but our investors are longer term. we're going to take that into consideration, and, again, these are names that i don't see any impact really brexit or not. the financials are something that really could get hurt though if that does occur. >> and there's the pound moving a little lower, right? >> yeah. i wonder who knew about this when. this is only hitting the wires now and we saw a spike earlier. we didn't know what it was. i'm suspicious. that's all. >> we'll leave it there. robert luna and mark yusko. business class buffet. a company offering unlimited flights to europe for a fee, of course. people talk to the ceo next. ne. real is making new friends. amazing is getting this close.

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how many people do you think will be out there who will say, yeah, i think it's worth it over the course of the year? >> well, actually, we are very confident that we're giving the requests and needs of the passengers. we've been there two years on the paris to new york access. it's an answer to request we already had from some of the passengers. >> so you've had requests already, so you think you'll sell these ten unlimited passes and bring in, what, another $350,000 in revenue? >> well, actually, we already have a lot of very frequent travelers. a lot of very loyal customers. among those, a few of them were traveling at least two times a month or something.

they did request some kind of plan. so we thought that was a very good way to reward a limited number of people, ten, as you said, no more, ten people, will be granted the possibility to get that $35,000 unlimited ride business class honors. >> and frantz, if you cancel, you have to do it at least three hours in advance? >> you just have to let us know a few hours in advance, certainly. p it is a good way for us to second your birthday. >> last question, frantz. up 35% from london to new york.

are there too many business class seats from new york to london right now? >> well, usually the demand decide, the passenger decide. in the end, what we are seeing is that we started up two years ago. of course, the first months we had like 30%. these days we are between 75% and 90%. so we know there is a demand for typical product. we are up from a year ago, a tremendous success. i think if the other airlines are offering more capacities, usually that does demonstrate the fact there is a demand. i think in the next future, we are going to see some kind of increase.

you have the coach class, for example. >> frantz, i hate to wrap you up. but we're at the end of this segment here. thank you for joining us from paris. michelle, tyler, we'll see how many people take him up on this offer. $35,000 for unlimited business class travel for a year. >> you're already on the site, michelle. >> frequent flyer here. >> just a single flight, business class to london is very competitive for a business class ticket. >> all right. nasdaq, s&p lower right now. but almost at session highs. we have been in a tight range. the three major averages down 1% still for the week. caterpill caterpillar, walt disney, dupont. energy materials, utilities, industrials, the leading sectors at this hour. "power lunch" is back in two.

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check out the pound versus the dollar. it's been strong all day against the dollar. opinion poll analysis researchers see a lead for the brexit leave camp of 35% when it comes to the eu referendum vote next week. with the big vote on whether the uk will stay or leave the european union, just six days away. we spoke with kate, and she made her case why the uk should leave the eu. >> no one is against a trading

relationship. we want to trade. but what has happened over the 41 years is that the original common market has become a political structure over it, which is now more important to the unelected commissioners. almost a trading attitude. that's why i think people are beginning to feel very strongly that it's time to get out. >> very articulate. >> she was very interesting. i was particularly interested that at the heart of her argument was this sort of ceding of sovereignty. >> very anti-democratic. >> that's what it was. it had less to do with nativism, or fear of immigration per se, and more to do with what they're giving up. >> jpmorgan, an analyst there put out a couple of graphics saying, wait a minute, when it comes to trade, and we can show it to you, there were three

non-eu countries that traded a ton with the eu. norway, iceland and switzerland. >> exactly. >> all right, folks. we've got eight seconds to go. fathers, have a great father's day. thank you for joining us on "power lunch." "closing bell" is right now. welcome to "closing bell." i'm sarah. in for kelly evans at the new york stock exchange. >> tgif. i'm bill give frith. grith fifth. >> only one more rate hike through 2018. this is from what had been the staunchest hawk on the fed. we're going to talk about what it means for the markets coming up here. >> countrywide, one of the faces of the financial crisis, front