risk/reward as a trade, keep your stock below that level. >> doc? >> skechers, unusual activity twice in the last week. >> so this is a trade that's not a stock trade but on fox i think the trade is steve bannon. >> "power lunch" starts right now. thanks, mel. we'll see you in a bit. what happened to the trump ra y rally? stocks have been stuck for two months. what will it take to get your money going again? we discuss. plus, break out your red pens, america. the president's first 100 days almost in the books. what should his grade be? we will ask george will to mark up the president as well. and walmart so far avoiding this year's retail wreckage. we'll hear from an analyst who tells you why and why it's her top pick. i'm brian sullivan. "power lunch" starts right now. and welcome to "power

lunch." i'm michelle caruso-cabrera. checking the markets, s&p 500 and the nasdaq higher, not by a whole lot. shares getting high since late last year. lower by nearly 5% on the back of earnings. it's not all bad news, however. shares are surging. chipotle over a one-year high. let's get back to the big market story that as brian moated check out the s&p 500 over the last two months, flat, after a very hot start to the year. so what is taking the air out of this market? bob pisani is going inside the numbers from the floor of the new york stock exchange. bob, what happened? >> reporter: good to see you as always. there's a dangerous uncertainty for stocks. fiscal reforms are being pushed out. the hohn y moon's over on tax

cuts and less regulation and infrastructure spending. the president said he was working on tax cuts yesterday. the market ignored him. weaker data to the consumer price index to the producer price index, economic data has been weaker. the odds for a fed rate hike 44%. close to 60% just a little more than a week ago. third, geopolitical risk. the french election, a tougher stance on brexit, particularly north korea, all background stories until just the last few weeks. the weaker data and geopolitical risks have put downward pressure and finally a new one, earnings risks. the risk is to the down side. this leaves stocks vulnerable to a sell-off particularly if there's even the slightest hint of an issue. you doubt me? look at what happened to goldman sachs and ibm. the worry is the first quarter might represent the peak for earnings growth which is now about 10% for that first quar r

quarter. there's no panic yet about this, guys. this could change if we get stronger second quarter gdp data and the fed did raise in june that would certainly push bond yields higher. a lot of this would go away. very tricky moment for the markets. guys, back to you. >> bob, thank you very much. yesterday it was goldman sachs that pulled the dow down. today we're blue. big blue, in fact. ibm shaving about 60 points off the dow. that is painting the overall markets red even as half the dow components are actually higher. let's bring in chief investment officers with matrix asset advisers and bruce mccain, chief investment strategist with key private bank. david, i will start with you. you have been an aggressive buyer of financials. goldman sachs fell 5%. are you still aggressive buying on the financials? >> remember, we've talked about financials for the last six months. we were early and right. they've had a great run. what we've said if there's any sort of pullback we would start to aggressively buy. our favorites would be a

jpmorgan or wells fargo. we like morgan stanley today. we think that stock has good upside. we don't own goldman sachs but if you wanted another financial we don't think their model is broken. it's at a good price that will do well along with the group over the next 6 to 12 months. >> david, would you how would you characterize earnings even though the numbers were quite good year over year. they didn't meet very high expectations. ibm today, they're dow components so they get a lot of attention. overall are you happy with the numbers you have seen so far? >> in terms of financials, the earnings have been very good -- >> how about the whole market? >> the earnings have been in line with the last few quarters. the numbers as of now are about 76% of companies have beaten the expectations and only about 10% or 15% reported. if you look back over the last eight quarters in the early report iing that number is usuay about 70% to 75%. pretty much in line. the outlooks companies are getting are pretty good. the companies are feeling pretty

good about the economy over the next 6 to 12 months. that's a good sign. it may not move the market this week but it should allow for a good year in terms of the economy and then the stock market. >> bruce, what do you think has caused the slowdown in the market, and is it a reason to get in or is it sending you a signal maybe we're going to see some kind of selling? >> we do expect to see the market higher over the next year, but obviously we made a lot of progress over the last few months he especially with at of anticipation about what might come out of washington in the near term. and i think that anytime you have that sort of a massive run-up, the market needs to consolidate a bit and we've been doing that really for a number of weeks. whether you get an active sell-off to use as a buying opportunity or whether you simply have to take some positions in quality companies as you go still we he would get additional money invested as you have opportunities here. >> what are the biggest risks for the market? is it a government shutdown,

talking about the remote possibility, or is it that remote? is it the upcoming french election and the threat to the euro or a lack of tax reform or all of those? >> i think that the biggest threat is simply that we've had a lot of surge of activity as you had the energy come back online and as you had some heavy stimulus spending in some of the oversea overseas countries. both are winding down. the question is whether the market is expecting more in terms of acceleration from here. we think that's probably a little less likely and so you want to make sure you've wrung out the excess expectations and then i think you can get good, decent growth over the next year. >> what does that mean in terms of what i do, asset allocation, the same question to both of you. bruce and then david. >> we're still focused more heavily on the united states. growth has done better here and you have a number of companies in the large cap space in

particular that have come down quite a bit in price over the last year. disney and a number of names that still have good quality franchises still growing very well and selling at much more reasonable levels than they were even a year ago. using those as an opportunity to flesh out positions and add a little bit of exposure we think is a way to be relatively safe this it late in the cycle and still be able to get good growth. >> david, you said you were aggressively buying the financials. are there any other ideas or anything you avoid? >> we think the best way to navigate an uncertain market and there will be volatility is buy companies that have great long-term outlooks but have already had pullbacks or declines. the dividend space has a number of these, companies like a general mills or a u.p.s., all very good businesses paying 4% to 4.5% out to shareholders and we think they probably have 10% or 15% upside so so you're getting current income, low

volatility and upside. >> we haven't seen the yield curve move nearly as much as people expected, the long end of the curve. guys, good to see you. david katz and bruce mccain. while the fed and u.s. has raised interest rates, the ecb still waiting. steve liesman talked to one of the ecb's executive board members, a key member, super important. what do you say? >> michelle, he said in new york this morning that despite a fed that is raising rates and talking about reducing its balance sheets the ecb not yet ready to join the tightening party. the executive board member spoke on an event i moderated. it's not yet time to change the ecb's forward guidance. >> the guidance has to be reviewed. it's too early to do it. it's too early to do it, still

has to firm and to broaden. >> now on a separate topic i asked coeure, who is french, about the upcoming elections. marine le pen has made it a key park of her economic platform. here is what he said. >> there is overwhelming support for the euro in europe. at the european level and each and every individual country including france, by the way. they want to keep the euro. that's what comes from the people. >> it remains to be seen if that overwhelming support is sufficient to motivate them to reject le pen. something we will know more about and you will know more about. >> yes. i'm heading to france tomorrow night. live friday and monday. it's so important we're sending two correspondents. >> i'm going to interview you for a second. answer his question, the notion that the french overwhelmingly support the euro. >> i'm not convinced of that anymore. >> you don't buy the problem

snis. >> no. >> so i can't ask the question. the question is, is that enough to create a rejection of le pen. >> so le pen is an on advice euro skeptic and now you have a new guy who has just surged on the team, admire earp of hugo chavez, melenchon. he's a euro skeptic. he says he's conditional on the euro as long as they let us do all the things we want to do and can stay in the euro. that's the same as the greeks want to do, spend too much money, lower the retirement age, et cetera, et cetera. >> i posted a handy chart to my facebook page because it's very confusing. we have two candidates. the french have four. >> that matter. there are ten total. >> ten total. four that matter. two of them, macron and fillon are more centrist. i don't want to say status quo but they would agree with coeure. melenchon and le pen hate the euro in different ways.

melenchon far left, a communist, wants to socialize all the ba s banks. so if you're the stock market and thinking they will be part of the french government. that's what he's proposing. >> guys, thanks for coming on the show as my guests. i appreciate it. i would say the risks out there seem to be fairly high right now in terms of the u.s. risks for what's happening. i think people are paying a lot of attention. it's interesting that you say those polls are wrong about the euro that maybe there isn't that support for the eurozone. >> you get to more than 40% who are against the euro. if they're going to vote for those two people in these elections. >> that will complicate economic outlooks. >> and michelle being live in paris, the one thing we have to remember about polts -- i think we learned about polls in our election here a few months ago which is the polls right now as far as the election goes are really a four-way poll. after this vote that michelle will cover, it goes down to two and then everyone will regroup and figure out if they're the

jets or the sharks, west side story. >> two weeks later. >> you would say that in french. >> i did. >> his french is very good. yes, friday live we'll be live in paris for that crucial vote live all day and also monday after the results. >> it will be big. >> ford, chevy, and dodge all love selling all of us those big suvs. that's where they make their big money. now that china has become the world's biggest market for suvs, chinese companies are taking on the american ones who really invented the vehicle. phil lebeau is live in shanghai with more on the suv story. phil? >> reporter: brian, those american suv brands, they're still very popular here in china but chinese consumers want a good value and that's why when you look at the chart taking a look at the growth in suvs here in china, one thing is clearly driving this and will be driving the growth in suvs through 2020. entry level or lower priced suvs. chinese automakers are winning

over buyers with the lower priced models, sometimes as much as 10% to 15% lower than their established brand competitors and those entry level suvs, they're putting pressure on the profit margins for the established brands. >> the global automakers have been slow to the game. this has been developing over the last couple of years yet global automakers are still struggling to get to that part of the market which is the fastest growing part of the market. >> reporter: so when you look at the global automakers to watch here in china, here is one that a lot of people it tend to not really pay attention to and it's fiat chrysler. why? it is the parent of jeep. jeep is expanding not only pr production but sales here in china. had is a huge growth market for jeep. and while there is pressure on pricing, guys, everybody agrees the brand name of jeep is known worldwide and that's why they expect it to do well and continue to do well here in

china. so that's it from a very wet and windy shanghai. back to you guys. >> thanks for putting up with that for us. thanks, phil. it takes oil to run cars and we have a news alert involving exxon mobil. sue, what is it? indeed we do. exxon mobil has applied to the treasury for a relief of the sanctions, a waiver of the u.s. sanctions on russia. they want to complete their partnership with the oil giant, the russian oil giant according to people quoted by dow jones. ex on has been seeking u.s. permission to drill in several areas currently banned by sanctions, and they've applied in recent months for a waiver in the black sea. now there is expected to be some big pushback by congress because of the shan meddling in the u.s. elections among other things. our current secretary of state rex tillerson is their former

chief executive. we will see how this plays out on capitol hill. the oil giant is looking for relief of the sanctions to partner up with the russian oil giant in the black sea. back to you. >> this is going to be so controversial because of rex tillerson. >> it absolutely is and very interesting to watch, to say the least. >> thanks, sue. >> sure. up next, a surprise visitor popped into the white house briefing room today. we're going to show you who it was. plus, new reports today saying that bill o'reilly will be out at fox news. what does that mean for the network for 21st century fox as a company and the stock? and also joining us legendary columnist george will will join us with his take on the first three months of the donald trump presidency. "power lunch" will be right back.

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on a lighter note the new england patriots visiting the white house. tom brady will not be there. he is with his ill mother. rob gronkowski is. as gronk always does, he enjoys his visit and he poked his head into sean spicer's press briefing. >> but i think there's an opportunity -- can i just -- >> need some help? >> i think i've got this but thank you. >> are you sure? >> maybe. thanks, man. i'll see you in a minute. hold on one second. all right. that was cool.

>> he should have let him take some questions. >> if i was spicer, you missed a giant opportunity. >> i agree. top republicans calling for action on tax reform as president trump approaches his first 100 days in office. in an op-ed in "the new york times" steve forbes, our favorite guy larry kudlow, asking the question why are republicans making tax reform so hard. keep it simple. joining us is syndicated columnist conservative commentator george will. good to see you, sir. >> the stock market in the wake of president trump rallied very, very hard because the idea was republicans control all arms of the government at this point. tax reform, corporate tax ref m reform. that is going to be a slam dunk. suddenly it's not. what grade do you give the president at this stage in light of that? >> well, there's a reason why we

haven't had comprehensive tax reform for 31 years. you had a dream team bradley, patrick, a committee capable of coming to grips with this. here you have a president who is a novice in washington, a treasury secretary who i think sincerely believed when he said they could do tax reform by august which is not going to happen. then it became hostage to repeal and replacement of obamacare setting the predicate by clearing up taxes. that didn't happen. then they seemed to be wedded to a border attachment tax which was dead on arrival. things went off the rails fairly quickly. >> as we've said the democrats still do matter.

what do you believe the republicans, if they're willing to give up anything will have to give up anything you just referenced to get anything that they want there has to be some quid in the quid pro quo. >> they have to give up the border tax to begin with. they want tax reform to be revenue neutral and the democrats will say we don't want this to be skewed to the rich. 75% pay more. the bottom 3% of bottom income earners, almost all the income taxes are paid by the affluence. so if you're going to cut taxes, you're going to cut taxes on the affluence. >> by definition. what grade do you give the president at this point? as all like to do as we approach the first 100 days.

>> filling the vacant supreme court seat. the hard work was done by the federalist society and mr. trump picked from that list. mitch mcconnell cleared the way by making clear that he would do so. in a way this was a layup that was easy for the president. beyond that the staffing of the government has been dilatory, tardy, i don't know who you want it to blame. there's probably blame to go around but the government is not up and running and staffed. if you're looking for achievements you have to say repeal and replacement is stalled. everything is stalled behind that. and, therefore, if this presidency is playing to type, he will find out as reagan did

that by september of the first year of a presidency the steam is gone and this is an administration that didn't have the steam that comes are from having in the first place a protracted honeymoon. >> you brought up a point on how to sell tax reform. we know that state taxes have gone up, et cetera. taxes are at 50-year lows. people don't want to hear that but they are. so your point about, well, up cut taxes, they're going to get cut by the people who pay which tend to be the affluent. how do you sell that? if you're the gop, the democrats, oh, they want to cut taxes on the rich. all of a sudden it's unpopular. how do they get through the huge hurdle, george? >> perhaps you should change the subject and say the american people, you don't want to tell them they're not overtaxed but want to focus on individual income tax rates.

tell the american people there are $2 trillion parked overseas and we should be more hospitable and enticing that to come home. tell them that we have the highest corporate tax rate in the industrial world and, therefore, if we cut it in half, which would be certainly not excessive we will be more competitive and jobs will flow from that. i think people will perk up their ears. >> you had a famous exchange with bill o'reilly which i want to bring up at this point because there are news reports fox has decided he's got to go as a result of these issues we've talked about over the last couple of weeks. any thoughts on that? he called you a hack at one point. >> it's like being called youug by a frog. on air he's reckless. off the air he's reckless and bullying.

there's a seamlessness here. i think fox news has to decide what it wants to be. it seems as long as bill o'reilly is the face of fox news and, let's face it, he is, their ability to expand their brand and to diversify their audience and become something other than a stale product depends on moving beyond bill o'reilly. >> he gets huge numbers. he has even higher numbers in the wake of all these scandals coming to light, incredibly loyal viewers. how does that square with what you're saying? >> well, the question is, are they loyal to bill o'reilly or are they loyal to the fox brand itself? when megyn kelly left and tucker was put in her spot, nothing happened. the viewers remained happy. i have a feeling mr. o'reilly is

replaceable. the graveyards are full of indispensable man as charles de gaulle said. >> mr. will, good to have you on. george will. >> glad to be with you. >> noted conservative columnist. >> an update on president george h.w. bush. according to a family spokesman president bush will not be discharged from the hospital today. he remains in the hospital after a mild case of pneumonia. his spirits are high. it's a vehicular edition of the good, the bad, and the ugly. gasoline, cars, and helicopters coming up plus bloomingdale's employees making demands. we'll tell you what they're asking for next on "power lunch." 're on to you, diabetes. time's up, insufficient prenatal care. and administrative paperwork... your days of drowning people are numbered. same goes for you, budget overruns.

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here's a retail bombshell. bloomingdale's stores clerks are asking for commissions for sales made on the internet. the union representative yesterday say they deserve a cut of online sales for two reasons. that customer goes out and buys it online. two, the clerks say handling in-store pickups cuts into their time on the sales floor. that is one reason sales are not as profitable as one might think. courtney reagan explains how it all breaks down. courtney? >> reporter: this model was

built for cnbc by alex partners to show the profit differential for traditionally store-based apparel retailer selling a $100 outfit in store, online or a combination. asosociated operating costs lik rent and labor of $28 and around $40 cost for the goods. that same $100 outfit with the same $40 cost but bought online and shipped free to a shopping center has costs of $30. distribution costs and overhead three times more. when shipping and fulfilling individual orders compared to truckloads to stores for a profit margin of 30%. what if a shopper wants to order online but pick up that $100 outfit in store? now you're running two channels to fulfill that order. the operating costs jump to 37%

and shrinks to 23%. it is the least profitable m model. 48% and even higher overhead and infrastructure costs to operate the site and the store and ship the goods twice. the profit is now just 12%, below the margin of a pure in-store sale. what makes online even less profitable but not accounted for in our models because it's impossible to figure out is the cost of returns. returns can be six times more to process than an in-store return and 30% to 40% of clothing that's ordered online is ultimately returned. if the retailer is paying shipping both ways that's a very expensive order. >> and is it obvious to say things bought on line are far more likely to be returned? >> exactly. 30% to 40% of all clothing

bought online is returned something around 18% maybe in store. >> are you giving us a reason to hope that brick and mortar may not be dead? >> possibly. i'm giving -- i'm sort of giving a counter tu tiff explanation for why it still makes sense for retailers to offer in-store options. at some level, at some point i think we'll hit equilibrium which will then maximize profits. right now it's very, very differe different. the stores are the legacy. you're still investing in online so the profit margin is much, much smaller. >> courtney, thank you. today calling walmart their top pick. an overweight rating and a price target of $82 a share and check

out shares of walmart this year versus the retail etf. let's bring in karen. great to have you with us. >> thanks for having me. >> you said one thing before is e-commerce. what do you like about it as opposed to others in your coverage universe? they're basically leapfrogging where walmart would be. it's a presence that at least when it comes to food amazon is struggling with to figure out. you do need both and walmart is well position ed to have the bet of both worlds.

>> those seem to be standalone online channels. how do you see it coming? >> trying to broaden the appeal. as frequently as a target market that wal mort could have a penetration with. most have been very small. they've saved more than anything to take all the poe toes and the imprints to catalog. you have a much broader demographic you can appeal to and sales have accelerated in. >> what is walmart trying to do, go straight up against

amazon.com? >> i don't know that i would say straight against amazon.com. walmart 67% of their sales are food or what you'd find within the four wiles of, say, a crowikroeger. what walmart has is they're a dominant food retailer. they have the lowest prices in the country and the frequency of the shops. so they have an advantage over amazon that they are still figuring to figure out from my point of view. so i think what walmart is trying to do is addressing something head on. that's why the title was poking the bear. they have the advantage of the food dominance already. >> karen, thank you. >> we are giving you cars and helicopters and what michelle called the vehicular edition of the good, the bad, and the ugly coming up. online u.s. equity trades...

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hi, everybody. i'm sue herera. here's your cnbc news update this hour. president trump will host palestinian president abbas in washington on may 3rd.

white house spokesman saen spicer making the announcement at his press briefing. >> they will use the visit to reaffirm the commitment of both the united states and leadership to pursuing and concluding a conflict ending settlement between the palestinians and israel. researchers at mt. sinai say many people don't take their cholesterol lowering statins after a heart attack. they found that after two years only 42% were still taking their medicine. and talk about mo innkey busine a monkey ran wild after it wandered in by accident. he was running away from everybody, took more than two hours to catch the animal in a net. and then he will be released into the wild.

no word on what he ordered. that's the news this hour. he was just look iing for takeo. >> you wanted it to go. >> they didn't have it. >> sue, thank you. >> sure. >> let's get a check on the markets and where we stand now. the dow is now lower, the s&p 500 and the nasdaq clinging into positive territory. one reason for the wait on the dow, ibm is getting crushed. gross margins were deteriorating as well. growth in their high growth part of the business declined for the first time. car stocks doing well. posting better results. >> melissa, time now for "the good, the bad, and the ugly:"an auto dealership company beating first quarter earnings expectations up nearly 11% this hour. on to the bad, tech strong stock down more than 2% after bell helicopter missed revenue expectations cutting its

four-year forecast to cut arctic cat for $247 million. ugly day for murphy ausa. it's down roughly 7%. announcing preliminary first quarter results that were weaker than expected. it's a chain of gas stations located next to walmart stores. all right. now to the bond market. the guy who is sometimes good, sometimes bad but never ugly, rick santelli tracking the action. >> reporter: michelle, some traders wish it would get uglier sometimes. if you look at a two-day chart of two year what you really want to see is we held 115. we're up two basis points. all three of the lows are 114. you need to pay attention at these levels. it looks like we're up and we are four base points.

another key level. we violated 100. we're testing it. if we fail or not, maybe the next big test will be lower. brian, back to you. >> goldman sachs had a drop yesterday. now goldman down 12% in a month. here is the question. with that drop is now the time to buy. morgan brennan gets what probably is the coolest assignment of the year so far testing out fighter jets for lockheed martin. morgan? >> reporter: so this is the t-50a, the proposed plane for one of the biggest defense contracts of the year. we got a ride inside this plane. buckle up because after the break we're going to give you a wild ride.

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president trump has promised to rebuild the military and spend a lot of money doing it. defense companies are scrambling to build the best stuff and win the contracts. morgan brennan is live in greenville, south carolina, where she got to ride in a lockheed martin fighter jet. everybody here is jealous, morgan. >> reporter: so it wasn't act l actually a fighter jet this is a trainer plane, but this is one of the biggest defense contracts in play right now. this is the $16 billion tx trainer competition to replace the 50-year-old planes that air force pilots are currently training in. so this is the t-50a, the plane that lockheed martin are proposing for this contract and, as you mentioned, i got the change to ride in one yesterday. ♪

oh, my gosh. >> 7.1. nice job. we can roll the airplane. >> reporter: roll the airplane? >> you can watch it if you want. >> reporter: which way? is there a certain format? >> push the stick as hard as you want. >> reporter: oh, boy. okay. >> we'll keep you out of trouble. >> reporter: okay. ♪ >> reporter: now that i'm down here i feel a little knocked around. i'm not going to lie. so i have to give a shout out to elliott clements who is the navy fighter pilot turned lockheed test pilot who took me up in

that plane yesterday. but as i mentioned this is the propose d plane from lockheed bt there are offerings from boeing and leonardo. analysts expect with the focus on costs at the pentagon this competition could come down to a price shoot-out. it's really considered something of a fierce competition that we should get results on late they are year. guys? had. >> how many g-forces did you go through there, and did you throw up? i ask that only out of experience. >> reporter: oh, yeah. so we pulled 7.1 was the highest we went and as you saw we did some barrel rolls. the flight in general was about 45-50 minutes. i did not throw up. >> you didn't? >> that was amazing. okay. good for you. morgan brennan, really appreciate it. guys, over to you. it's pretty hard to follow up that cool story with something -- >> sitting here uncool. >> we're pulling like 0.01 of a

g here. it will be spectacular. >> if that. >> it's our daily dive into the wall street calls of the day. melissa, talk to us. >> goldman sachs, upgrade to go a neutral leaving the price target unchanged at 225. the firm believes gs shares are a good value. cost of equity 10.2% and more in line. they say it's a mistake for investors to extrapolate that trading miss in the first quarter to future quarters. >> hpq the ticker. barclays goes positive raising the target to 22. the combination of improving pc trends and a looming end of the printing supplies glut sets the stage for earnings momentum to return. also thinks the company can attract greater investor sponsorship. that price target is about 18% higher. morgan stanley, by the way, raised their price target a couple days ago. third stock, t-mobile.

a buy rating, $76. since the management change in 2012 the company has challenged the industry with innovating pricing and packaging undercutting its competition scooping up the post paid market share and poising itself to gener generate over $5 billion in free cash flow over the next two years. >> and your final stock is gulfport energy gpor, oil and gas producer. after falling all year upgrades to their focus list. despite the stock price drop they've seen, quote, positive data points. they add new completions could add $2 a share net asset value. gulfport announced a slight beat but had a 23%. heikkinen took that as a good thing. the stock is up nearly 2%. >> all right. as the spring selling season kicks off for real estate, there is a problem. there aren't enough homes for sale. what that could mean for the economy next. most etfs only track a benchmark.

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welcome back to ml "power lunc lunch". despite mortgage rates falling to lowest level since november, total mortgage applications down 23% compared to the same a year ago. all right, tumbling mortgage apse, dramatic drop of numbers homes on the market for sale. inventories declining 18 straight months. why are so few homes being put on the market this spring ja, a what about the impact on prices? why such a lack of supply? >> thanks for having me. there is a lot of uncertainty at the top of the year. not only in financial markets, not only in politics, also on the part of homeowners. they didn't know if this was the right time to buy or sell. we see the market is actually off to a late start. we're hopeful that listings will come on in later months, but they're just not there now. new listings up less than 1% year over year and pair that with the record-breaking demand we'd seen from home buyers, not enough supply to keep up with

all that. >> i thought you were talk about home builder, not bringing supply on. you're talking about individuals not wanting to list their houses? >> the bulk of the supply comes from existing homeowners. you have to be fairly confident you'll find something else to buy. that's a key problem for sellers. but you're absolutely right. home builders have not kept their weight up there. we are still seeing a market underperforming in terms of new home construction. not nearly at historical averages yet. we actually slid back in march instead of moving ahead. we are still seeing the supply and labor shortages suck up new construction supply. so we have it at built-ins. inventory coming in both directions. >> you mentioned uncertainty, impacting people's decision to list their home and are seeing that on the demand side. are people uncertain, or have people been uncertain in wanting to buy a home?

shoun sounds like it's impacting one side and not the other? >> a lot of intrepid buyers. low mortgage rates is spurring mand. getting people off the sidelines. we have this new generation of home buyers, as millennials age who want to be part of this market. and real estate is still a very good bet. so people are really excited about the housing market. they want in. the problem, when in, there's nothing to buy. we're seeing record numbers of offers, but a limited only by supply. it's not a demand story. it's only a supply story right now. >> i got a lot of friends that are realtors, some in your area including family and have done spectacularly well over the past six months's do you expect this to continue? if there's nothing to sell, may make it hard to do well, because there's nothing to sell. >> exactly. usually the market peaks in about june or july. we don't think year going to see a peak there. there's just not enough listings. this level of sales we saw in

the markets, the largest metro areas, sales up 9% in march. that is unsustainable when inventory is dropping 13% year over year the past 13 months. imminent slowdown, hopefully temporary as more listings come to the market. so it's still a hope that we'll have a good second half. that hasn't been played out right now, though, when you look at the data. >> okay. thanks for bringing us up to date. good to have you on. kne the latest reading on the overall economy coming up called the beige book. the most boring name in the world but news of potential market reaction are anything but. going to give you the live reading of the -- beige book. coming up. you always pay

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oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade welcome back to "power lunch." seconds away from the beige book. meantime markets mixed. s&p 500 nasdaq higher, dow dragged down by ibm. down 62 points. goldman sachs meantime after yesterday's disappointing earnings release. goldman sachs can't get a balance despite upgrade from

citigroup. trading lower. noted, financials on the s&p 500, successions now. other loser not getting a bounce. netflix. trading lower building on losses yesterday down by about 2.5%. head down to d.c. check in with hansen pierson for the beige book. >> hello, melissa. economic activity increased in all 12 fed districts between mid-february and end of march. the pace of the expansion described between modest and moderate and across all economic sectors. consumer spending varied. strong light vehicle sale, softer sales, however in non-auto-related retail spending. housing construction accelerated but home sales slowed somewhat due to lack of inventory. more than half the districts are reporting that loan volumes increased. energy-related businesses also noting improved conditions. turning to jobs and wages. employment expanded nationwide, modest to moderate increases,

tight labor markets seeming to rule. districts are having problems, some districts having problems even filling low-skilled workers and strong demand for high-skilled workers and modest wages across the board with higher wages for workers with those tough to find job skills. businesses say they are expecting labor demand to increase moderately in the next six months. prices have risen modestly since the previous report. some price increases for building materials were noted. energy prices described as flat. businesses expecting mild to moderate price growth in the next six months. a few snapshots in pressure points from around the country. cleveland, manufactures, yes, improving but caution among manufacturers going forward. both chicago and kansas city are telling us lower crop prices are putting stress on the agriculture sector, at kansas city in particular, noting a slight improvement in cattle and soybean markets. in dallas, fabricated metals

market benefitting from the overall rebound in the energy sector. next up for the federal reserve a two-day meeting may 2nd and 3rd. >> what is the beige book telling us about the economy? our market's reaction and what does it mean for the fed? mark zandi, chief economist at moody's and from merrill lynch management and cnbc senior economics reporter steve liesman also here. karen, start with you. >> sure. >> always do that. call you kim. karen, based on what you heard here today, clarity where you think the fed moves next? >> i think they clearly will move higher, and this keeps the door open for them to hike. i'm a little mystified why the market is pussyfooting back and forth. entirely based on activity described as moderate or modest, but broad based across the nation. pressure in the income market, incomes rising, jobs expected to

be filled. all good, not too hot. exactly what the fed wants. a nice, steady pressure upward in activity and inflation allowing them to hike. >> assuming you think a hike is coming at some point. any clarity when? which meeting it will happen? >> likely june. i think the key language in the beige book is around the tightness in the labor market. jobs, labor shortages, and they mentioned, i think, the -- hampton said unskilled laborer as well. that's the keenchts having trouble filling low-skilled jobs in some markets. yeah. >> there you go. actually, that's business' number one problem. finding labor. pretty much across the board. with that, i think that's a signal the fed has to normalize monetary policy more quickly. not in may. too soon. but in all likelihood june. the next time it moves. >> quick, something hampton mentioned, loan growth the fed is seeing. that's really important.

discussion whether we're seeing sufficient loan growth. now a sense maybe that's starting -- >> because of bank earnings. big news, loan growth slowing, seems to say the opposite. >> anecdotal but suggests maybe turn the corner in the next stosix to 12 months. >> borrow, you need something, need the loan, buying something. former? >> corporate sentiment improved and incomes and jobs. >> given steve more than enough time to get the glasses on. furiously strolling lou a through a document. >> looking for one thing. here's the deal. help solve the puzzle. the puzzle, soft data, sentiment data surging, hard data, sales, soft to weakening. the question, can you look to this beige book and find answers? there are a few mentions. if you don't have a lot of time and need to search words, search the word election.

in cleveland, noticeable pickup in product feasible studies since the president's election. also in cleveland. >> trump bump. people are more optimistic. >> the thing, does your optimism translate into the your taking your wallet out of your pants and spending more money? >> yes. they're borrowing more money. >> so far it's not shown up in the real data. >> in the retail -- >> not just retail. talk to melissa. >> the fed data. >> it's not showing up in. >> it has not shown up. >> maybe square this is circle, but sees confidence motivated activity, just not seeing it necessarily show up. another part of the puzzle, if i may, which is we've had parental weak first quarters. look through the week's first quarter, you know what? bounting back in the second quarter. a pretty good play. or is this weakness perhaps a little more for real? i don't know the either to either question. those are the ones we're looking for in the days ahead. >> want to square the circle, as

steve said? >> give it a shot. hard data, vehicle sales, gdp data is weak but biased down. measurements. steve and i work on residual seasonality, shows up in q1. >> i didn't call it that, for the record. >> you didn't? i thought you did. gave you credit for that. okay. but so the economy isn't as soft as that data would suggest. but the economy's is not as strong as the soft, surf va data. biases in that as well. there is a -- surveys when they interview people, if the people interviewed flips each time you do the survey, they'll get people more excited, who respond to the surveys. >> here's a -- >> weighing in with something, present a full report tomorrow morning. looking through the all-america survey. we find the sentiment data is related to the election. there is a surge in republican optimism. we cannot tell if that's going to result in a surge in

republican spending. >> but mark zandi had a reversal -- on that note, ask -- >> look at surveys that track the same people over time. they're not taking different people in the survey each time. those surveys have not increased nearly at much. that goes to the excitement that the people who wanted trump to win, they're very excited. so they're, yeah, i'll take t t survey and respond. overstates the case. >> a story on the website about you, written by jeff cox. he says you've done a flip here. you predicted a lengthy recession under donald trump. and you have since changed your mind. reality regarding the economy's performance is not nearly as good as trump supporters believe, nor as bad as claimed by trump detractors. you have predicted a lengthy recession. not anymore. rye not? why not? >> that's not true. jeff and i talked and hopefully he'll correct that piece. the exercise in the summer was,

what if candidate trump got exactly what he says he wanted? remember back, what did he want? he wanted big tariffs on china and mexico. he wanted undocumented immigrants, 11 million to leave the country. he wanted big government spending increases, big tax cuts, lead the big budget deficits. if that's what he got, yeah, he'd get a recession. pretty intuitive. you get a recession. but no one thought he'd actually, after being president, get what he said he wanted during the campaign. in no small, everyone would realize that would be a disaster, and he ends up winning. >> failure in a way to get things done. makes you more optimistic. >> i am no less optimistic than i was six months ago. the economy was fundamentally strong six 12shgs months ago, is fundamental strong now. take a lot to derail that train. given what's going on in washington, nothing coming from washington that will derail that train. very little i. remember clearly when that came out. everything had to go right in

terms of what donald trump wanted to accomplish in order for that conclusion to come about. >> took exactly as given. he would get exactly what he wanted. >> right. karen, quickly, financials. price option not good, across the board, except goldman sachs, pretty good. we see in the fed beige book, loan volume picking up. don't see it in the data yet. >> that's right. >> now what? >> what gives? >> yeah. >> we still like financials. we think honestly, in a rate rising environment and think there be opportunities for loan growth to eventually come and the sector is really important to the overall s&p and expect that will be picking up. go ahead? >> jump in quickly on melissa's point. is it possible because of the different loan places not necessarily fed governed have popped up we're seeing more loan activity outside the fed's data sphere? >> it's possibly more broadly credit extension is happening outside of -- >> not reported -- >> talking the bond market, for

instance. >> could be the bond market. private loan companies. prosper, on deck, whatever they might be. >> part of a bigger capital market we now have. i would say corporate sentiment 3w50679 it's we've seen whether due to trump, republicans aren't going to spend, that drives corporate activity. >> quickly, guys. >> got to get to the president. quickly. >> the probability of a june rate hike is now down below 50%. it's 44%. i think this is a pretty big deal. the market is beginning to doubt the resolve of the fed to hike in june, and that's because of this weakening data. if it turns around, we go right back up to pricing it in, but the market has begun to price it out. that's a big change. >> all right. >> we've done it. >> before thank you, lady and gentlemen. good to have you on, mark, karen and steve. president trump hosting the super bowl new england patriot at the white house right now, a notable late cancellation, quarterback tom brady saying the reason for absence was family related. here's president trump. >> the newly led patriots are

big supporters of our military and america's veterans. joe cardona -- where's joe? where is he? there he is, in his beautiful navy -- thank you, joe -- serves in the navy reserves and is a graduate of the naval academy. coach belichick is the son of a navy veteran, and bob -- that's bob kraft. he's becoming a pretty famous guy for winning. i'll tell you that, between him and belichick, wow. you do so much to support our military. bob's been my friend for a long time, and he wants to support our military. so what a group of champions, all of them, and, bob, i want to commend you for building sufficient an extraordinary organization. five super bowl victories since 2002. really, unbelievable. i'll say this right now. george steinbrenner, as you know, is a very good friend of mine and george was a great

champ, too, but there was a little more turmoil -- right? a little more turmoil in his vick tricks and that's okay. he was another great one. since bob bought the patriots in 1994 they've won more division titles, conference championships and super bowl wins than any other team. no team has been this good for this long. [ applause ] he's built a culture dedicated to winning, and he started it with his coach and i want to tell you that is some special man. it's called the patriot way, and that really starts with coach belichick and i want to thank all of you for being with us. the patriots are an incredible organization, and this super bowl victory was a complete team effort. that's the beauty of what they

do. they win as a team. with your backs against the wall, and the pundits, good old pundits. boy, they're wrong a lot. aren't they? saying you couldn't do it. the game was over. you pulled off the greatest super bowl comeback of all-time. one of the greatest comebacks of all-time, but the greatest super bowl comeback of all-time and that was just special. i think i looked at odds. they gave you less than one-half of one percent of winning the game, and then the coach said, let's go for 3. he's losing by so much. he said, let's go for 3 and i say, what is he doing? that was a great decision, coach. i tell him that all the time. the fourth down conversion by danny amendola. where's danny? -- right there. way to go, danny.

the big sack by trey flowers. big sack. where's trey? come on, put your hand up, trey. see? he's shy a little built. you weren't shy when you hit that guy, were you? you weren't shy about that. he didn't mind hitting. thank you. great jock. great job. the incredible catch by julian edelman. what a catch. we all said, no. that ball was dropped. isn't it good? you know, in the old days they might have said that was dropped. those replays are good. you're starting to like the replay. right? great going. i think of guys like marcus cannon and the offensive line. marcus? great by. that's some line. or max slater, awarded the 2017

bart starr award for the character and leadership he has shown both on and off the field. malcolm mitchell -- it's true. pl malcolm mitchell as a rookie handled the pressure of the super bowl like an absolute true veteran. way to go, malcolm. good job. or nate ebner, who played on an olympic rugby team last summer. pretty good athlete. right? and in brazil, and he was in brazil playing and doing really well, and is an all-pro special team guy and player. so, nate, congratulations. where's nate? which is a tougher sport, nate? football or rugby?

i had a feeling you might say that. but everyone played a role, and everybody played as champions. it was the first overtime game in super bowl history, and it ended with a legendary victory for this proud franchise and for these absolutely terrific players and coaches. you had the best record in football with 14 wins and only 2 losses, and that doesn't happen by accident. it takes hard work, dedication and a commitment by every member of the team to work together in pursuit of the ultimate goal. a goal that very few people achieve. and you've achieved it five times, many of you. and our coach and our owner have achieved it five times. great, great talents. great, great people. whether you're trying to win a super bowl or rebuild our country, as coach belichick

would say, there are no days off. and just a quick story about the coach. so i had won the primaries and i'm now in this rather heated election that a few of you have read about, and he wrote me this beautiful letter after the primaries. congratulations. he said all sorts of things that were really good. it was really a beautiful letter, and it was very close to going before the election, and i called up and i said, coach, do you mind if i read the letter tonight to a stadium full of people in a very, very big and important state, and he said, you know what? i'd rather not have you do that. could you send it back to me? i'm going to give you another one. i said, no. that's okay. nope. i want to give you another one. now, immediately to me that means he's going to tone it down. because what he said was so nice. and you know what he did? he toned it way up.

it was much better. it was much better. he made that the greatest letter and i did very well in that state. thank you. but he's just a very special guy, and he's touch. is he tough fellas or a nice guy? really tough, right? he's tough. he's smart, and he's got a great heart. so the patriot coaches and these great players iconic american sports moments that will last forever. we're going to watch that game over and over and over. that game will last forever. five super bowl wins in the era. a free agency, which is really, really tough. what an achievement. so, again, congratulations to super bowl champion new england patriots, and with that i'd like to ask a very special and talented man and a great friend of mine for a long time, bob kraft, to say a few words. thank you all very much.

>> thank you, mr. president. it's a true honor -- >> all right, we were listening to president trump meeting with the super bowl champion new england patriots and head coach bob kraft -- owner, excuse me. that's me, you know. don't know anything about football. the owner of the new england patriots taking the podium. any other news we'll bring that to you. meantime, all eyes on fox, reports the murdocks are ready to cut ties with bill o'reilly. the latest after the break. and google, setting sights on your body. take you inside their new geno mans experiment, and later, a big upgrade for coca-cola. one analyst thinks coke is ready to refresh their brand. their cup runneth over here on

"power." we'll be right back. let's go, she's a dog.

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quick market check. the s&p 500. the tech in the s&p 500 turned lower pap news alert. >> melissa, steel industry executives meeting with president trump and commerce secretary wilbur ross tomorrow at the white house. some of the big companies

represented will be newcore, u.s. steel, timp kinn steel and ak steel in addition the head of the united steel workers union will be there, too. we're told discussing the potential for an investigation into how imports, particularly from china, are affecting the types of steel used for national security purposes. think armored plates, military personnel carriers even the fasteners used in battleships. sources say the white house is considering an executive order that would direct the commerce department to look into this issue. if violations are found that could result in additional tariffs on foreign steel. this, of course, comes on the heels of an executive order the president signed just yesterday seeking to tighten the rules requiring government agencies to buy american products. industry sources say they hope these actions will send a message to beijing aspups together the 100 day plan on trade agreed to during the president's visit to mar-a-lago.

>> see how it goes. meantime, firmly eyes on the u.s., primarily the equity side. heading up the five-star etf only fund ranked in the 99th percentage the past ten years. welcome to "power lunch." thank you very much for joining us, paul. appreciate it. a lot of stuff going on today. keep it tight. can you give us your macro viewpoint on the markets and a couple etfs and investments you like right now? >> sure. thank you for having me on. pretty neutral now on the market. which means about 75% invested in u.s. equity etfs. sector holdings, one kbe, the banks, and xop, oil, both spyder etfs. had them since september in the fund and recent holdings in there, vanguard health care, vht, and we also own xlp, consumer staples. on the broader marketed si side

little overweight small caps and a little overweight large cap growth. >> oil is weaker again today, paul. i know that the oil etfs are have of your favorites out of the whole market. do you still remain bullish on the oil and gas sector? >> yeah. well, oil looks nice to us. i mean, again, we've owned it. it's pretty flat since we owned it since the fall. the one nice thing about the oil is, we build a really diversified portfolio of etfs. so the oil helps us out a lot. it's about 50% correlated to the rest of our holdings. a little longer leash on that and a little more patient with the oil. >> and patience of oil. fell more, you'd still be a buyer? >> well, the position is a 5% position. it's not killing the fund either way on the up side or down side. not saying we'll add to it here. if something else comes in stronger and look goods in the portfolio, we'll get out of oil and probably get into that. >> all right, leave it there.

paul, pleasure. thank you very much. appreciate t. thanks for having me. up next, is bill o'reilly about to be shown the door at fox news? and if so, will his replacement be able to bring in as much money as he did? pretty tall order. what does this all mean for 21st century fox? that's next. why pause a spontaneous moment? cialis for daily use treats ed and the urinary symptoms of bph. tell your doctor about your medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure.

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hey. pass please. i'm here to fix the elevator. nothing's wrong with the elevator. right. but you want to fix it. right. so who sent you? new guy. what new guy? watson. my analysis of sensor and maintenance data indicates elevator 3 will malfunction in 2 days. there you go. you still need a pass.

breaking news on bill o'reilly. we go to julia boorstin. >> fox announced bill o'reilly is out after careful review of the allegations the company and bill o'reilly agreed he will not return to the fox news channel. of course, this follows the boycott of over 50 advertisers of the "o'reilly factor" after a "new york times" report of secretaries wal harassment allegations and the report that fox and o'reilly together spent about $13 million to settle those allegations from five different women. so the story has concluded as expected. in the wake of the boycotts, fox decided he will not be returning to his top-rated cable show. guys? >> julia, stick around. we bring in james dix, senior analyst at webb bush, covers

fox. what financial aspect is this? >> near term, ad revenue. fees are locked in and fox news gets most of its revenue from fees. you're not going to see impact there. advertising suffered a little bit due to the afterer pullout. not a big near-term impact, but there will be some. >> does it single the younger murdochs are returning the company? >> fox tried to signal that for a while now by giving them the sea level spots. >> talked about rupert murdoch was behind o'reilly and the children were not? >> of course, roger ailes, who hired bill o'reilly, is gone. so i think that was probably an important part of, you know -- >> update the stock to 20th century fox, 2/10 of 1%. not a huge reaction.

remember amidst all the other stuff going on, bill o'reilly is 67 years old. just fair disclosure. i used to work at fox news and fox business. bill o'reilly, literally, a towering figure inside the company. very tall, but ran sort of his -- he's . so it wasn't as if he was going to go on forever. from an investor perspective, say, okay. this is a big headline, but the plan was probably already in place at some point. >> yeah. absolutely. that's a fair point. you know. given his age. also just given the fact the schedule strengthened around him over the years. five years ago this would have been a bigger deal, because he towered over the rest of his shows more in terms of ratings. look at the other shows that are on the schedule around him now, they're closer to where he is. and, you know, so i think to some extent the fact that given his age, they knew there was a transition. they built out a schedule around him. i think that makes it easier for

investors to -- >> people looked at the megyn kelly situation, thought she was so important. tucker carlson, his ratings are even better. is it possible, bill o'reilly, the same happen there's? is the platform stronger than he is or is he stronger than the platform? >> the real test would be if he went off and did something else to compete against them. at the moment, if he lives, exits, where do his core fans go? if they don't have an obvious place to go that leads to less of a negative impact for fox news. >> how many executives are perking up the phone right now calling bill o'reilly's agent saying, the minute he's available we'd like to talk to him? after he goes out to his, whatever. >> cnn doing it? i doubt it. i mean, there's not that many places which have a format right now with full distribution in the cable network universe which can pick up that phone and say, hey, we've got an equivalent platform. >> hold on. julia with more information.

>> i just think it's worth noting here that o'reilly's show generated the highest revenue, highest ad revenue, of any of the shows on cnn, msnbc or fox news. even though there is a lot of reasons to believe that those ad dollars would be reallocated elsewhere on fox what a powerhouse for fox news. worth noting. with the exception of everything that's happened since the boycott. he was generating, $325 million in ad revenue for fox news between 2015 and 2016 and he really sort of helped sustain and focus that lineup. so he was the centerpiece in a lot of ways for that lineup and helped create a very strong lead-in for the other shows on the network. even though ad dollars probably will be reallocated this comes on the heels of a massive transformation of fox news over the past year. not just rogers ailes and also greta van susteren and -- a huge

turnover at the network. >> number in context. $325 million in revenue. look at the cable network programming revenues, read this right? $3.7 billion or bigger? >> fox news -- over a billion in profit. and $325 million in revenue annually for the, for bill o'reilly alone. i doubt it. >> 21st century fox itself, $28 billion, roughly, in revenue. correct? >> the entire company. >> the entire corporation. take the $235 million in revenue, looking at what? 1.5%? not saying it's nothing. bill o'reilly definitely important, but from a macro company perspective, what we're looking at now, the stock. is it that relevant? >> i don't think it is, in part because fox news, the majority of its revenue comes from subscription fees. the nature of the cable news business. they, you know, they're a must-have channel in terms of that bundle. >> in order for this to be

damning, somebody has to say, i'm so ticked off you fired o'reilly. cut my cable. other than that, they won't be hurt. >> exactly. >> exactly why they had to fire o'reilly. they wanted to make sure they didn't jeopardize those subscription fees. jeopardizing subscription fees are hard, of course, fox channels are sold as a bundle to those different cable distributors, but i think the key thing, this was a decision that had to be made. the second advertisers boy cost raising questions what would be done down the line whether putting their relationship with the distributors at risk and thought it was a no-brainer ultimately. there is a previously scheduled board meeting set for tomorrow. this was a decision made before they even had to consult with the board. >> so do i understand correctly, then. we are saying the issue is, so the next point we see the biggest financial impact, would be if during the next round of negotiations they say, you don't get as many viewers, fox news.

therefore we're not paying as high as we do for all of your subs? subscribers? >> absolutely. one of the key drivers of fox news. a big driver of the stock. how much they've been able to go from below cnn to now vastly surpassing cnn in terms of fees per subscriber. >> give me context. cnn versus fox is paying what? >> oh, fox is -- well over $1 now. >> about $25, something like that. >> espn, $5. fox news -- >> espn is a different story, a different genre. >> in terms of what everybody's cable bill what dollar value goes to the cable company. >> hold on. i want to bring a statement from 21st century fox regarding bill o'reilly. amp thorough and careful review of allegations the company and bill o'reilly will not be returning. >> that's what i read. >> this was the same statement julia just read moments ago. in terms of thinking that where

bill o'reilly could go. talking other cable channels. thinking way too narrow will, who could pick him up with a meaningful impact to their brand, whether it be online or smaller cable channel? >> this is the era of skinny bundles? right? glenn beck went off, had streaming service. the issue, is that something that bill o'reilly wraunlts ant? >> a huge book business. worth hundreds of millions of dollars. >> plenty of wade for bill o'reilly to get paid without figuring. >> can we read into the statement. julia hit it. melissa, bring it back up. what it doesn't say says a lot. there is no thank you for your years of service. there is no, we appreciate the contribution. none of the things that we see, when the ceos are forced out we read on cnbc. even though, we appreciate his contribution, none of that. this is, he's gone. anything to read into that?

>> i mean -- >> acrimonious. >> the only thing i would say, just from perspective of investment, is fox news manages its shows as a portfolio, and a portfolio of hosts. to some extent, maybe one of the subtexts of that message is, you know, no one host is bigger than the overall network. no one host is bigger than that overall portfolio and the brand. >> perhaps we'll find out. >> yes, indeed. >> thanks so much for joining us on this. julia, staying on the story in case we get more. right? >> of course. >> thanks. obviously a big news story, media story, society story. more bill o'reilly out at fox news. big decline for oil. more in your markets and your money, coming up.

welcome back to "power lunch." i'm seema mody, a look at commodities. oil sliding into the close down nearly 4% on the day. a combination of factors. build in gas inventories, seen by traders as a larger bearish signal for the price of oil. also you have geopolitics in focus. rise in geopolitical tensions

bringing up the question whether saudi arabia will continue to support the current oil production agreement. lastly, president trump reviewing the current sanctions in place against iran. something to keep in mind as well. oil closing down 3.8%. $50.41. michelle? >> got it. thanks. back to julia boorstin with breaking news on bill o'reilly. >> right. we have obtained an internal memo that was sent from the murdoch to fox news employees saying that they want to address what has gone on in his future at fox news and say they've decided against -- after reviewing allegations agreed he will not return. the interesting part, say by reading standards, one of the most accomplished tv personalities but trying to move the story forward saying, "fox news demonstrated again and again the strength of its talent bench. we have full confidence that the network will continue to be a powerhouse in cable news" and "we want to underscore a

commitment built on the values of trust and respect." underlines why they're making this decision. that they've evaluated the allegations against him and are confident that the company and that the network will continue to be strong without him in their lineup. guys, back to you. >> all right. julia, thank you very much. michael wolf of the "hollywood reporter" is on the phone right now. michael, what's next for fox in terms of the hole in its primetime lineup? >> i think the new world, it's a new world for fox. what this means is really two things. and both major. it means that rupert murdoch is no longer running the company. it's a company that is run, principally run by his sons. they've made the decision. they've wanted to get rid of roger ailes this past july. now they want to get rid of bill o'reilly, and they want to do that, because they fundamentally

want to get rid of fox news. or they want to change fox news in ways so profound that -- that fox news advocates for 20 years will in short order be unrecognizable. >> why change it now? >> become what? >> at the peak of its ratings. >> trump in office? >> because they're embarrassed -- because, a., the murdoch boys are liberals. b., fox embarrasses them. c., it is their father's legacy and roger ailes' legacy and not their legacy, and they see a new world of -- well, as james murdoch puts it, of global opportunity in the television news business. >> so what does that mean, then, when -- to me that means eventually hannity's gone, tucker carlson's gone, et

cetera? >> look like a lot of other news channels out there today? >> absolutely. exactly what is happening. after roger ailes left the network, james murdoch went around and said he wanted a network that was more like cnn. very -- >> more global. is that a fair way to say it? brian sullivan. more global, combine global assets, make it a more recognizable single brand throughout the world? make sure sky linksing up with fox links up with other assets? >> you sound just like james murdoch. absolutely. >> in an american accent. >> yes. that is the -- james murdoch has an american accent, too. that -- that's the sell, and that's what they've convinced rupert of. although i don't think that they've convinced him. it's just that i think rupert has decided, you know, they run the company now. he's 86 years old, and, you know

what does he need this -- this turmoil for? so that's -- that's what we have here. we have the beginnings of a major change in the television news business. fox which has dominated television news, dominated american politics. we are now very clearly at the beginning of the end of that, of that phase in american life. >> what are you hearing about how this went down? i'm betting that bill o'reilly did not go quietly. >> you know, i think biffle o'reilly was backed into a corner here. you know, they did exactly what they did -- you know, they're getting very good at this, because they did exactly what they did to roger ailes. they -- they called a law firm and told them to have an investigation, and that investigation took you know, functionally a matter of days. they didn't call -- in july they didn't ask roger ailes for his

testimony. in this investigation, and in this current investigation, they didn't ask for bill o'reilly's version of what happened. so -- you have a kind of kangaroo court situation, and the -- the decision was a forgone conclusion. >> gabriel sherman, by the way, "new york" magazine, written extensively about roger ailes. reporting his sources tell him that tucker carlson moved to 8:00 p.m. and 5:00, ensemble show "the five" moves to 9:00 p.m. for now. if this is true, michael, fox news has been built on, some of my friends, by the way, big personalities. do you think the age of sort of the mega star is over? >> well, i would put it in a different way. the age of anybody thinking

about fox news in terms of programming seems to be over. what has fox news done so brilliantly over the past 20 years is that they've created these stars. that they have very -- this programming this relationship of personalities to audience has been -- has been the thing that has defined the network. i mean, it's really been roger ailes, perhaps primary talent, to be able to make that happen. >> isn't that also because, michael, he recognized there was a large chunk of the audience that wasn't being served by general media, and that they were hungry for an outlet that maybe spoke to their political views, and on that note, or on that -- well, bill o'reilly, hired by somebody else? >> no. well -- hold on. i just want to answer that. i think that is part of it, but that is only, only the

theoretical part of it. what was the really original part of it is to be able to find these personalities who spoke to this audience. remember, hannity is -- you know, is a -- look when it comes to fox news is a $40,000 a year radio guy. so the creation of this kind of talent, which no other network has been able to do. >> right. >> has been extraordinary. so they're now going into a situation, in the new fokz fox news, first thing, noble there he valley a program be there and sort of shifting around, the proverbial deck pieces. desk chairs at the moment. >> telling us one of your predictions post-bill o'reilly, fox will of liberalized in its viewpoint, leaving a void?

someone to be the conservative channel? if fox turns away from its conservative roots? there are a lot of ears out there who still want to watch that viewpoint. >> let me put it a different waway let's ask the question like this. this. will roger ailes get the band back together? >> yeah, exactly. what do you think? >> i think it is an enormous opportunity. >> yeah. >> and if i were roger ailes, that's what i would be thinking right now. >> so you don't get the basic cable channel at this point, so where -- what kind -- the band comes together and what's its platform? >> you know, i think it can be -- there's -- we're in a new world, and in that world there's a lot of opportunities, a lot of ways to slice and dice things. you don't necessarily have to go in, into and build cable carriage at enormous expense.

>> quickly, michael, you've been with the president. has the president talked about this at all? i know the news just broke, but has donald trump mentioned the bill o'reilly scandal as you have spoken to him? >> i was not with the president. i was in the white house today, i was not with the president. >> maybe not today, in the past. >> in the past, yeah, or, you know, the president is very fond of fox news. you know, i think the president -- i think it is safe to say the president is not a happy camper right now. >> michael, hold on because david favor has news as well. david. >> yeah, michelle. you know, interestingly of course there's been a great deal of coverage of this possibility now for a number of weeks, but it was only this morning that the final decision was made by the three men who run 21st century fox. of course, the company's ceo, james murdock, his brother

lachland and their father rupert murdock, along with counsel made the final decision this morning, i'm told by people close to the company, sealing mr. o'reilly's fate after recent revelations started to stack the deck even more so against him in terms of a couple of things i guess that have come out over the last few days, new people with certain allegations. so this was not a fait acompli, even though this morning it seemed to be, but the final decision made this morning after the three men who run the company and who essentially control it meeting with their lawyers on the phone, decided his time was up. on the financial impact here, i don't know if you guys have hit it at all, and we're watching the stock price here. not expected to be much. i have spoken to a couple of investors this morning. you know, you can kind of back into a revenue number that might say somewhere between 100 and $200 million, although a lot will be made up.

so it is obviously a much larger statement in terms of the cultural -- the culture that they want at 21st century fox and the future of the network in particular at fox as it is a financial statement of any kind, at least at this point, though, of course, as we all know it is a financial power house for the overall company itself. >> david, yeah, everybody is trying to minimize it. last week i heard a a number of 400 million, now you're saying 300 million, we work in cable. wouldn't we like that kind can of number? i bet you could command that. let me ask you, is it possible that somebody else hires bill bill o'reilly after he goes away, does his mea culpa? >> we'll see. the man has a loyal audience. i guess the key question for fox will be does the audience remain

with another host. glen beck is another man who left who chose to be a pioneer in terms of the digital distribution of a news product at "the blaze" and has gone in a lot of different directions, some of which have been very lucrative for him. i don't know what mr. o riley's plans are. there's no doubt he could command an audience in whatever forms he chooses to broadcast. >> you know how it works. i got to ask you this because melissa hit this, i think it is the biggest topic for the stock. i will ask you to editorualize a little bit because you interviewed the cable leaders so much. you can dodge this one if you want, but do you think there's a chance they're thinking, hey, let's pick up the phone and renegotiate the fox news deal, we have to cut their carriage fee? >> i don't see that as a possibility. it is interesting. i suppose you could try to enter some sort of negotiations but those are pretty iron clad deals as you know, brian, and they tend to go for a long period of time and you don't typically get

an opportunity to renegotiate them. unless somehow this was written into those contracts, i'm not aware that that would be the case. >> yeah. david, thanks so much. david favor. of course, our thanks as well to michael wolff. in case you missed it, bill o'reilly is out at fox news and more on the big breaking story next.

with's poul tding ol rig at yo fgertips, you have access to in-depth analys, leveta, and a team of expericed traders read help you if y y neeit. it's ke hing the power of a ading floor, wreveyou are. it's your trade. ♪ tre. ♪ startrading toy attrade.m ♪ big business story breaking in the past half hour. bill o'reilly is out at fox news. let's bring in senior analyst.

what kind of financial impact are we talking about here, anthony diclemente? >> i think a lot of numbers are being overreported in terms of what the ad revenue is from o'reilly's show. we think it is less than 80 million. >> oh, my gosh. last week was 400 million, now 300 million, now you're saying less than 80? >> yeah, definitely. definitely less than 100, i would say. also, you know, i think what is also being underreported is that the affiliates number is just multiples more than what the advertising number is. you guys have talked about it, but it is all about the fees, right? so the domestic affiliate fees for fox are north of 9 billion this year in our model, and, you know, that's basically five times greater than what the advertising is. so basically, you know -- >> anthony, don't they command those fees because they get so many viewers, bill o'reilly

being the guy that got the most? >> well, the viewers -- they're still going to get that passionate, rabid fan that will be upset if there's a carriage disruption and call the cable company and be livid, and, you know, that's the switching cost that you have. i mean that's the -- kind of, you know, if you don't have fox news as a cable company, then you're going to suffer subscriber losses from people moving to another platform to see fox news. i hear your point. you're saying if you don't have the big personalities, will that be an issue, but, you know, megyn kelly is gone. she was replaced by tucker carlson and his ratings went up. so if the platform continues to be powerful, they will be able to develop other personalities that, hopefully, don't have sexual harassment issues attached to them. i think it is more like the platform being kind of the engine that drives the creation of the personality. i mean you need to have a special talent in there. >> sure. >> but the platform gives them a chance to create -- >> anthony, wanted to bring viewers up to date on the line-up. o'reilly fakor will continue

with guest hosts for remainder of the week. on may 1 a one-hour program hosted by eric bolling will debut. 7:00, story with martha mccallum, tucker carlson with "the five." that's the new line up. >> "closing bell" starts right now. ♪ >> hi, everybody. welcome to t"the closing bell. >> a lot going on suddenly in the last hour. breaking news, matter of fact, in the last hour. bill o'reilly is out of fox news in the wake of the news of sexual harassment suits and advertising pulling ads from the show. >> snapchat's ipo was great business for its last quarter. find out more when we speak with the