calls. >> monsanto. buying calls in this one today. >> and retail is a sector that most people hate but within it there are winners and dick's sporting goods is one of them. that is one to own. >> we're going to send it over to "power lunch. dow is down 242 points more reaction that president of the united states is expected to name larry kudlow as the next nec director according to cnbc sources. let's send it over to "power lunch. >> welcome to "power lunch." i'm michelle caruso-cabrera with tyler and melissa. we begin with breaking news in d.c. president trump closer to naming cnbc larry kudlow his next top economic adviser let's discuss, guys. joining us on the news line is -- cnbc contribute jared bernstein, economic adviser to joe biden. jared, what do you think >> well i have a ph.d in larry kudlow so i'm thinking a lot about this i've been arguing with him for 30 years intensively, literally

30 years and we still really, really like each other so that is telling you something important right there. but of course we've been arguing about tax policy we see that very differently i'm not at all the trickle down supply side guy and we don't have to have that argument right now. we know where that stands. but when it comes to the federal reserve and it comes to trade policy, which he's very much on the other side of the trump on that, when it comes to employment growth and wage growth, we're on much more of a same page than a lot of people realize and the other point i'll make is that on those issues, not on the tax stuff but on those issues, larry really listens. so i think there is another grown-up in the room and i'm glad to see it. >> jared, we have to take a quick pause and bring in eamon javers who is covering this story from the white house and among the questions i have, eamon, what is this job any way and what is the national economic council that he will be the chair of. >> reporter: the council is a powerful force inside of the white house. the director sits in the west

wing, just upstairs from the oval office with a staff of about 40 people or so who sit next door in the executive office building. they devise policy options on the economy for the president of the united states. how powerful that job is really depends on the person who holds it and we've seen that wax and wain o over the years, under gary cohn it was the most that we've seen -- spearheading the president's tax policy through capitol hill a big legislative battle undertaken largely by gary cohn walking up to capitol hill and putting the arm on lawmakers to get that deal done along with the legislative team here at the white house. so for larry kudlow, the question will be, what is the economic agenda of the trump white house post tax reform. that is the big centerpiece of the trump agenda in the first year now what is the big centerpiece in the second year going to be so far it has been trade it has been protectionism. there is talk of new tariffs on

china. talk of restrictions on visas for chinese travelers coming to the united states and there is talk of a diplomatic effort between the united states and china to get china to lower the trade deficit with the united states by as much as $100 billion that is a massive effort larry kudlow will be somebody on the hook to help deliver that. but also more broadly, economic policy across the board. this is a white house that is talking about the stock market, the dow jones more than maybe any other white house in recent memory and larry kudlow will be part of driving all of that as well so it is a very powerful position that cud le will be stepping into when that formal announcement is made we expect as soon as tomorrow. >> so, jared, take me through some of the -- of the organizational chart of the economic policy-making in the trump white house. where does larry fit, jared, with respect to the head of the council of economic advisers, mr. navarro, who is a trade

councillor and lighthizer the ambassador jared, that is a question for you, but eamon can jump in and so can steve. >> he sits atop that process in everything -- everything in the economic policy process in the white house, whether it was taxes trade, budget or state of the union was run out of the nec. at that time larry somers was the chair and playing a powerful role but i've seen it operate that way elsewhere it doesn't mean you have the last word. but it means that you have a lot of influence on how the train runs, who is on the train and who gets to the input that you present to the president when it comes down to decision time. it tends to be a powerful organizational post with a lot of opportunity to influence the discussion i think on trade in particular, as eamon said, that where we'll see whether larry is willing to go toe to toe with trump because we know he's on a very different

page and on the right page as far as i'm concerned. >> our syrian-- our senior econc advisers here. steve, i'll start off with you eamon made the point that the power at the nec waxes and wains. what do you think larry cud le -- will be as the head of the nec as he has the opportunity to shape not just the policy on trade but having an influence of who fills the vacancy at the fed. there are a lot of them. >> those are three questions first of all, there is no economic job in the administration that is more closely tied to the individual personality of the person holding the job in the nec director that is one. two, i expect larry kudlow, my partner for years to dominate the debate in the white house. nobody argues the economics better and will have the

president's ear and speaks the president's language with a fine tune toward his policy toward maskt th -- market than larry does and supply side economics. >> don't agree with everything he said. he's brought me over to his side over the years >> and to your point, he's louder than almost anybody else in the room. >> and it is very eloquent it is one thing to be loud, there are a lot of people out there -- but as for the fed, great question i don't know that it matters very much. my understanding about the critical components at the fed -- breaking news here which is that i have a source telling me it could be months before the fed vice chair ever sits in the seat around the table. the reason is because of delays of democrats in congress and problems in the white house getting the nominees it is dual and it may be a long time before that happens i think that cohn's thinking and larry's thinking on who best people are for the fed not that far apart. i also understand they are fairly far down the road in

terms of picking these people. i don't expect larry to have a big influence on the initial wave, the fed vice chair, maybe one other appointment when it comes to the fed but not a big difference between larry and gary cohn on this. >> jimmy, we've been talking about boeing all day because it is been hit very hard on fears that it would suffer a lot if china did retaliate when it comes to trade, tariffs, steel, et cetera. looking at boeing intra-day, it is come off the lows in the wake of this news about larry kudlow replacing gary cohn. but it hasn't been that strong of a move. how much do you think he can actually change the president's thinking when it comes to trade. i think that is the thing. i agree with everything steve liesman said about larry's persuasiveness and dominating a room but the thing is that him and steve moore have already tried this with the president. they have already tried to make this persuasive case about trade over the past two years. and i can't see that ahead -- at

had any impact on president trump. so i wonder why more of the same will have any impact and make him more -- >> hold on, jimmy -- wasn't mexico and canada essentially exempted i have to think that was perhaps either -- some of them or whatever the reason, the actual policy was a lot different from what came out of the president's mouth on that fateful thursday. >> i would also say -- say that everybody thought that was a bad idea so it wasn't any one person. and my second point is that i fear that it will be a frustrating time in this job because the fun, sexy part that larry likes, the tax cuts, that already happened i don't expect much more to happen in this second year i'm sure there is some attempt maybe to try to extend the temporary part but this is not going to be a big year legislatively. so what it will be, i think, is defending the president and the president's move that -- things that larry probably doesn't really like.

>> well wait a second. there is one thing that larry like that's could beon the agenda and tra agenda -- and that could be infrastructure we've talked about this and he realized there is something needed to do in this space trump wants to do it, i don't like his plan, but when it comes to a private-public approach, that resonates with larry. >> won't take infrastructure off the table. >> to jimmy's point about whether or not he could convince the president to be any different on trade, the point i would make is that larry in the last week or so has very specifically said, let's do targeted tariffs on china. they are the bad guy in some ways he's moved toward the president's position on trade in some ways. >> except for the president's position wasn't targeted at china. >> i get that. >> i agree. >> but with larry kudlow and paul ryan, he's saying, let's put tariffs on china no, they won't be. he's dragged them that way. >> and let's not forget that it

was -- i think it was jimmy who said this, that i think the more kudlow duo tandem with the essential architects of the tax cut plan as it came out. so i guess my question is -- from this point, what is left for the president to do once he went -- and i think personally he went very far on this tax cuts leaving him less policy space for other things that were out there. because larry attack social security and the deficit, what is next on the agenda here after having passed such a huge tax cut. >> he expended the political capital. >> but the real capital. it is gone -- it is gone they went 20%. >> republicans don't have huge hopes for accomplishing much of anything this year with possibly the infrastructure but steve mentioned, there is one thing that the president and larry agree on, they don't care very much about those big budget deficits >> no. >> so this is another area that

will be very easy for larry to sync with the president. it is not a big concern to either >> i was going to make the same point. larry kudlow is not a deficit hawk again, i've talked with him about this over the years. i don't know that he would really even believe in the kind of crowd out theory that at least the conditions like these, high def sits lead to higher interest rates you have interest rates creeping up a bit any way but they are still historically low >> but he's advocated the idea, if we get more growth you could worry less about the deficit because you have more tax revenue to pay off those debts. >> right so when he talks about lower the budget, that is where growth lends probably less through a spending cut and certainly not a tax increase >> can we talk about the challenges that larry kudlow will face here at the white house. i think -- >> sure. >> one of the things to focus on is larry kudlow worked here in the reagan administration. and this is a very different president. it is also a very different time in the presidency and the news

cycle. one of the reasons that gary cohn was successful, even though at times he didn't really have a very good personal relationship with the president, was that he was able to out-organize the rest of the white house in many ways he had a big staff at the national economic council and a lot of people there that he relied on very closely over the course of his time here at white house and able to maneuver that big bureaucracy to bin the debates internally but t-- the speed of the news cycle and the mood of the president and this partisan tude -- this is a different washington, d.c. that larry kudlow is coming back so that is a challenge to see how he could navigate that once they do pin down economic priorities beyond infrastructure if that is even moving at all this year how can you navigate a changed washington from the last time he a high profile job lear at the white house.

>> i want to see how larry kudlow does with 12-hour days. >> are you kidding me. he has all kinds of energy. >> thank you good to have you let's bring in patrick cheffanik from columbia university international school and chief trade negotiator for nafta during the clinton administration mr. shapiro, let me start with you. larry kudlow, pro-trade, advocated against the imposition of tariffs on our allies like canada and mexico. are you heartened to see him going to the white house >> well i am heartened to see him going, but frankly any president -- this president or a democratic president, would have been looking for a stronger trade policy toward china. what you wouldn't do, however, in carrying out that policy, is threaten to withdraw from nafta, abandon the tpp, impose global steel tariffs, or withdraw from

the climate agreement. all of those things have strengthened china's position while hurting ours and larry kudlow's challenge is to steer the policy so it is stronger vis-a-vis china without disrupting every other trade relationship we have >> patrick, we've had extensive conversations with larry about exactly that over the last couple of weeks as we talked so much about the imposition of steel and aluminum tariffs and he has been vosiverous about saying -- leaving nafta would be a bad, bad same question to ambassador shapiro, are you heartened that there is a voice in the room that defended nafta. >> we're going to agree. i think that -- it is good that you have a voice for trade in the white house. i'm not sure -- and you talked about it in the segment before this, how much president trump will listen. because he seems to have some very core beliefs of his own

about the united states losing from trade and so one of the things that you want to do when you go to china and we do have real issues with china real problems about the way that they protect their markets, the way they create an uneven playing field but one of the things we want to do is go there with the other countries that have a problem if you go alone, unilaterally it will make it easier for the chinese to target industries in the united states and retaliate. if you go with a lot of other people who are -- own -- other countries with the same issues it becomes harder. but we have burned a lot of bridges over the past month in terms of working with those countries on china >> two questions, ambassador shapiro. when all is said and done. this big, bold global tariff initially declared a week or so ago with the exemption of canada and mexico, when all is said and done, how many countries do you think will be hit by this

tariff, if any >> i think he'll probably -- the administration will probably hit several countries. besides china, i think they will hit russia i think they will probably do some damage in -- even to korea and japan. but the concept of what they are doing makes very little sense. and -- >> because -- >> because the president should be focusing on the fundamental trade challenge posed by china if you were doing that, you wouldn't be attacking your friends and your neighbors he has done incredible damage to our relationship with mexico, some to canada and a lot to the european union all of which was not necessary and not desirable. >> i want to make a quick observation here picking up on a -- a point that eamon made that larry was a part of the reagan administration and

this white house is different. and want to point out, gary cohn was out maneuvered on trade. the story is that navarro and ross went around him to the president. i've heard that people think that larry's experience in the reagan white house will be a huge benefit or asset because he knows how these things work and to the extent that he can be a so-called almost parallel chief of staff when it comes to economic issues, such that something does not get to the president, but that it has gone through him. that will be a big and important change in the things and -- they wouldn't happen such that on a thursday afternoon we learn immediately about steel tariffs. >> the in-fighting between kudlow and navarro may be very interesting. >> i expect larry to have the upper hand and i want to ask the ambassador -- patrick, how important is it to have that kind of coordinated focused economic policy inside of the white house and the impact on trade -- the trade policy from

that. >> yeah, it is a very important question because we've seen that, yes, good management for instance by general kelly has kind of tamped down some of the chaos -- of the white house and that is important and it is good but the ability to actually step back and take a look at the fundamental issues, not just whether a particular tariff is going to hit china or not. but to ask the question -- one question that i have it -- are these tariffs aimed at china, are they primarily aimed at trying to open up about the chinese market, or are they primarily about closing the u.s. market and imitating chinese protectionism. because there is a big difference between what your objectives are and how you go at a tariff, if your objective is to use it as leverage to encourage trade rather than shut it down. and the fundamental reason for the u.s. trade deficit isn't bad deals.

it is the structural imbalances in the global economy. the im -- the balance of consumption, savings and investment here and abroad and so what we need to do is have a strategy about talking to the chinese, about the kind of -- reforms necessary to rebalance the economy and put it on a more even and sustainable -- >> a topic that larry is so familiar with. he's talked about the issue with trade deficit and with the president's obsession -- >> will the president listen. >> we all wonder gentlemen, thank you so much we appreciate it >> when we come back, another developing story at this hour. form former they aranos ceo charged and we have the latest on that. and sam watsel from the biotech company em clone w whoas ousted because of his own scandal will join us global markets,he beatf the rhythm of the world.

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stocks are sliding today as you see there. the dow industrials off well over 240 -- well 240 points on the button boeing is the big culprit. the champion of the first couple of months of the year has taken a dive joining us no, jeff rosenberg chief income strategist at black rock always good to see you >> good to see you. >> let's talk about interest rates and what you expect there and whether you see any signs that the economy may be

overheating. >> so not so much overheating in the economy and in signs that we're seeing today but it is about the shift in the narrative around the risks to the outlook. we saw leo brainerd capture this in a recent speech talking about headwinds to the economy turning to tail winds. and so what we are talking about now is the risks to the outlook -- while the outlook is good for growth to pick up and not necessarily overheat, that the risks are shifting from too little growth and too little inflation to potentially too much growth and too much inflation. >> that sounds like somebody is a little concerned that the seeds are there for the economy to get a little too percolated. >> yeah. there is a bit of that and one of the seeds -- and we put a chart together called diverging paths that sort of highlights what is driving this shift in the outlook, is the change in fiscal policy. we've had a significant expansion in fiscal policy support for the economy in the

form of the tax reform, in the form of the budgetary agreement and so this is shifting remarkably in the divergence that you see there is historically unprecedented to the extent that you are seeing -- at this late in the economic cycle, fiscal policy becoming this supportive that is one potential source of this shift in the narrative. and that is some significant downstream impac downstream -- impacts when it comes to interest rates or the fed. >> how do i tweak or reposition my portfolio in light of the hypothesis that you just put out there, that the headwinds have turned into tail winds and while we used to worry about too little inflation, and too slow growth, now we may be at a turn: sort of a reposition. >> the turn is creating really important changes in the short-term -- shorter maturity area of the interest rate markets. what you are seeing now is interest rates going up because they are reflecting more properly what the fed is saying

in terms of the normalization path we expect the fed to raise three or four hikes next week, it will be big news around that, around the dots plot and what they are signaling getting the median up to four hikes and you have the front end of yield curves start to price that in we have another chart talking about playing catch-up for the last two or three years in the period of normalization, the market has discounted the fed's expectations around normalization. that gap, that discount is now closed and part of the reason for that is this -- this headwinds turning to tail winds is giving the fed and the market more confidence that they can actually normalize the impact for investors in the portfolio front end short-term interest rates have risen to a level above inflation. that makes a viable investment alternative for the safe asset part of portfolios that you haven't seen since the crisis. >> how do you layer in tariffs, they should be inflationary but could also be a head wind to growth those are two things that don't

go well together >> yeah. absolutely the tariffs is sort of directly mechanically inflationary, but as you talk about today in terms of the news on boeing, there is a confidence impact and a concern over spill-over and trade wars that can dampen economic activity, not through the direct channel but through the indirect channel around financial confidence and wealth. we think we're far away from that but yet there is uncertainty and we have the china ip trade news yet to come that is more impactful than what we've seen so far on the section 232, steel and aluminum tariff so the tariff picture is unclear. we see it as a risk to the outlook whereas the base case out look is still for good growth in 2018 and good financial market performance. >> jeff, thank you very much we appreciate it jeff rosenberg with black rock well the big breaking news this hour, president trump expected to name our own larry kudlow as the next top economic

adviser, replacing gary cohn jim claimyramer joins us next wh his take (phone ringing) baker architects. this is anna baker. this is what our version of financial planning looks like. tomorrow is important, but you're ready to bet on yourself today. spend your life living. find an advisor at northwesternmutual.com.

off the lows of the session, let's bring in bob pisani on the floor of the new york stock exchange. >> the s&p 500, the minute we heard larry kudlow would be nominated. people were happy and he is beloved by me and others because he's here a lot and he has a lot of friends and people think highly of him as i do. it is not moving the market that much and that suggests the market doesn't believe there is a big change in trade policy the market has issues today. there is three or four let me -- show you what is going on the biggest one -- i don't understand the retail sales number it was not good and we saw a number of downward revisions to the gdp and from goldman sachs and the fed. growth is there. anything attacking that a problem. number two, the trade war issues, you saw the industrials particularly the aerospace stocks that move up and down with the tariffs they are down again today and

not just boeing, nordstrom and lockheed martin. and third issue, inflation concerns have muted. you have noticed the jobs report, ppi, cpi, not big inflation so the yield curve is flattening, but this is good news and less worry about inflation but put pressure on banks and they've stopped going up and that is a market leader and the old cranks out there in the bond world are saying maybe economic growth isn't as strong in the bond market that is telling us that. and the end of the quarter, folks, you sell your winners and we've had some winners i'll show you quickly, the market leaders like semiconductor have been down in the level several days and market leaders in some groups like banks that are down and market leaders in some other sectors we'll get to in the next hour. >> thanks, bob. the big breaking news. larry kudlow expected to be named as president trump's next economic adviser he's never been shy on his opinion of growing the american

economy. here is larry in his own words right here on cnbc >> that is a revolutionary thought. let me just have one quick point. i think you'll like thirks t-- >> the president has done a great job lowering tax rates and rolling back regulations president trump and i agree on many aspects and disagree on some aspects. >> with trump's reform on tax cut and deregulation and energy, the united states becoming the most hospitable investment climate in the world. >> this pro-growth is is showing up in the economy and it makes america more competitive. >> watch the dollar. i've said this a million times the dollar is your signal. >> i don't like blanket tariffs. i think we should reward our friends and punish ourenies. i want to talk about steel why not have direct subsidy. >> i think it has a bad impact on our economy. >> we have about 160 different quotas and tariffs on steel. never seems to work. you know what is less harmful

than tariffs make a deal with canada and mexico >> if the steel industry has problems, then keep them alive with subsidy. >> i would have loved to see full bore targeted tariffs on china. >> china's probably of the most offensive trade deal breaker in the world. that is why i would have gone after them first really hit china with a coalition behind you that will agree. tariffs aimed at china, that is what i want. >> never shy joining us now is "mad money" jim cramer welcome. good to stick around and chat with us. you hosted alongside larry and you're obviously friends and -- and what do you think >> well first i want to congratulate larry he is one of our own and a great friend and this is something that i think he's been preparing for all his life whether he may have known it or not, but i have to tell you, when you watch that montage,

there is a journey here it is from being free trade pretty much everywhere to maybe some fair trade to in the end acknowledging that china is targeting some of our industries i think he's right to do that. but there will be some -- i would say some tension in the white house because larry talked about -- about offering subsidies to companies like nucore they would crush the chinese they don't need subsidies. and that said, boeing if you look at moment that larry got the job, boeing had a big run. >> jim, crossing the tape right now -- crossing the tape, larry kudlow said trump offered him position as economic adviser and he's send according to thompson reuters. on your last point, jim, i think you are right and i wonder if you look at trading in boeing today, i thought that we'd see a bigger move in the markets upward when we heard larry kudlow's name, very pro melissa

lee -- pro free trade and maybe it is because what you just said and what you saw on the tape, the revolving view on how to treat china. >> and cowan said today that the quarter may not be as strong or maybe not as many simts. so for the stock to bounce back you need to say this is great, which it is by the way for boeing not that they could do without boeing one of the things that i think larry -- has to understand from the navarro camp, he introduced me to navarro. is the chinese are paper tigers to some degree they can say they are going to do things to us, and yes we do want them to buy our bonds, but we c we can stand up to them more than we think and larry has to come over and make in a journey because that is when the president is and he -- he serves at the best -- of the president so he will be have to be more

nuanced about how much he favors free trade with everybody. >> it does feel if recent days as you point out and michelle said, that he has moved a little bit on this to a more targeted fair trade stance and if the other guys are cheating, then let's go at their cheating as opposed to -- i don't think he would ever yield on the idea of having -- of opposing broad blanket tariffs which, as he points out, is just another word for tax. >> he's got to get more mckinley like and open door policies. the last time we let the chinese -- this is what we're going to do and this is what you have to do, that is under mckinley i have to tell you, that the idea of subsidies for steel is repugnant. we have an unbelievable -- our largest company in nu core, clean balance sheet and special dividend and great work force and the chinese -- their cost to capital is nil because their

government subsidized them and we need larry to come out and say we are fine with everybody playing on a level playing field but if you target our industry we will come after you and that is really important. that is where the president is >> jim, donald trump is touted himself time and time again as a stock market kind of guy he looked at the stock market as a barometer of his success larry is a friend of the markets himself. as much as you might have believed that there is a trump put in the market, did that put get stronger and more solid for the appointment of larry kudlow. >> yes, melissa. there is something that larry does better than anyone i've seen i've worked with him for four years. come on tv and argue for a position that makes you like him even if you don't agree. so he will neutralize a lot of the haters he can do that i know that he and i agreed on nothing. and at the end of every single show we felt great talking to each other because he is pro-growth and pro-american and a patriot and

very difficult to take on when he disagrees with you, because he is a rigorous -- rigorous man of great argument but you finish and in the end and you say, i learned something, he made some good points. >> and the other art of kudlow which you share with him, you could disagree and i've seen it happen a million times on our air, when he disagrees with somebody at the end of the conversation, they leave as friends. there is -- i've never seen anyone better at it. i get too mad. and i stay mad so i can't pretend that i'm -- that i'm saying i love you, man, but larry can do it. and it is -- it is a great talent. >> one question quick story. my pop and i disagreed on politics in a lot of ways. and and i -- i used to bring pop to the show to show how you could argue with someone and love them in the end i would bring my guests on and i knew that larry didn't agree with them but you know who he was nicest to -- you know who he

had the most rapport with and so apologetic to if he got out of line, my guests. because at the end, he felt it was important to win people over -- kindness, gentlemanly and i think that is something that the president frankly needs. >> well, thank you, jim, again, for being with us today. we appreciate it as always. >> congratulations. >> and what fun the two of you had together let's bring in -- let's bring in rick santelli at the cme so let's talk kudlow, shall we, rick. >> reporter: yeah. i'll tell you what, i was working on some charts, what else do i do and when i heard the official news, because i'm trying to keep a low profile, from the cnbc family side of this, it gives me bagoosebumps because everybody said their piece and mine is not different about larry except for in one way. we have a unique president and you can define unique in any way you want but he is unique and in that regard, i think his uniqueness is set in concrete.

he's set in his ways and he has his ideas and he was elected by people that think like he does but putting larry there isn't going to necessarily make him change his mind. but i think it will be the type of thing that where having somebody like larry who is much easier, much easier to get along with, much more predictable has not only market experience but the academic and the political experience i just think having a great classy american in that role like a larry kudlow is going to help the country and most of all, i think it will help president trump. i didn't say change his mind but in the end, we don't really know why the president maneuvers in certain ways, especially whether it is about tariffs or it is about tpp or nafta, but in the end, whatever is in his mind will turn out better, in my opinion, with larry there. >> rick, thank you very much rick santelli. more breaking news on this

busy afternoon elizabeth holmes, remember therrien os charged with a massive fraud. meg tirrell has the details. >> well the silicon valley start-up trying to revolutionize the blood testing theory has been charged with massive fraud alleging $700 million that the company raised from investors through an elaborate year long fraud where theyage straighted or made false statements about the business and the elizabeth holmes, the ceo has been charged along with former president sonny bellwanny and the holmes and the company have settled with the s.e.c holmes agreeing to pay a $500,000 penalty and barred from serving as an officer or director of a public company for ten years and she'll be striped of control of the company, relinquishing voting shares of 18.9 million, they say she obtained during the fraud. however holmes nor theranos have

admitted or agreed that they perpetrated any of these fraud charges from the s.e.c therrien os independent director putting out a statement saying, quote, the company is pleased to be bringing this matter to a close and looks forward to advancing technology the former president of theranos has not settled and we got a statement from his attorney saying they believe the enforcement action by the s.e.c. is unwarranted just a stunning tale -- conclusion to this story sh the unraveling of the silicon valley start-up. >> thank you for bringing us the details. joining us now is sam waksal we wanted to have you on because you were on cnbc two years ago and you were adamant saying theranos is a fraud. why were you convinced and tell us what the signs told you. >> well, first of all, i wanted to take 30 seconds to say congratulations to larry kudlow. i'm a huge fan and larry knows

that and i think it is great for the country. and on to theranos, i have always carried about science and i want you all to remember and to know that in the world of science, we care about intellectual property. and so when we talk about things that are scientific break-throughs we may say everything that exists within a scientific paradigm that might not allow us to protect that science. but the one thing we don't do is when asked about a scientific break-through, we don't simply say it is a secret and what i said a few years ago and it was actually more than two years ago on cnbc on "squawk box" to show to joe concernin and i said if somebody tells you something and it is a scam --

and that is a big issue in science and they still haven't said at theranos whether they've made any breakthroughs and one of the things that i did at imclone and everybody does one has scientific and medical advisory board if you are making breakthroughs they are renowned individuals. theranos had wonderful board members like carl schultz and henry kissinger and others none of which knew anything been. >> are they fooled, sam? why were they fooled why were they all taken in by her? >> henry kissinger and carl schultz, as much as they know about the world of international relations, they may not know a lot about the world of medical breakthroughs and they didn't have anyone that could interestingly explain to them what was going on, what was being done, and what the

breakthroughs were and what we were told over the years was that in one single drop of blood, they could do a thousand of tests on multiple panels of infectious diseases. >> right. >> roche, atbiand others were t trying to do that and have done great work and it is not easy. >> putting aside the celebrity board, it was able to -- to raise millions of dollars in venture capital presumably these folks did due diligence. what do you think the affect on the vc community has been of this theranos experience does it make them less apt to -- to invest in something like a theranos versus something very -- something sim perrer and more straightforward like a gaming app or a dating app or something like that. >> well, you know, i think there

are different sorts of vc's and those that invest in gaming apps or dating apps are one greoup of people and then some great vc investors that invest in bio technology and med tech and health care. and i believe that as great of minds as people like carl schultz and henry kissinger are, they aren't people that can judge whether or not there is a breakthrough in a medical area and i don't believe this will have any affect on the medical venture community or biotech i think that we've seen over these last years investments in companies like gooen editing companies that do crisper castine work we've seen --

>> sam. >> flagship invest in a brand-new technology in -- >> sam, i apologize. we have cut short because of the news about larry kudlow. i want to ask you one final question it is likely a sore subject. but you were prosecuted by the s.e.c. for insider trading way back when with imclone with martha stewart for the following reason, what is elizabeth holmes about to go through here >> well, you know, it is a different thing than i went through. i made a phone call to my daughter that probably shouldn't have existed but it wasn't anything to do with the company, nor it's science. but nevertheless, i think that what is happening here with fraud -- about the science is going to put elizabeth holmes through the ringer >> got it. and absolutely fair point. she is charged with fraud. about lying about the actual underlying technology and the

science, not a trading issue thank you so much for calling in. >> great to talk to you. be well. >> you too. well reaction to the big breaking news this hour, president trump expected to name cnbc larry kudlow as the next top economic adviser some reports saying that larry has, in fact, accepted the job this comes amid threats of trade tariffs. what this means for the white house and the trump economic agenda

so lionel, what does being able to trade 24/5 mean to you? well, it means i can trade after the market closes. it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪ you're not gonna say it are you? big stories right now according to sources close to cnbc the president is set to name larry kudlow as his top economic advisor replacing gary cohn. and elizabeth holmes accused of fraud. the u.s. alleging the company

raised money through an elaborate fraud including exaggerated or false statements. for more is jail school of management senior associate dean and cnbc contributor jeff, great to have you with us. >> nice to join you. >> elizabeth holmes is a story i think everybody on wall street wanted to believe from silicon valley to wall street. they wanted to believe in a woman who is revolutionizing the blood industry how did everybody get taken? >> they all got fooled as you were talking about before with sam, people got sucked into george schultz, henry kissinger, i believe jim mattis -- secretary mattis -- was on the board. senator bill frist people were drinking the kool-aid and nobody on the board was doing due diligence. wells fargo, dick kavasovic was defending her to the end

people suspended their diligence trusting the names on the board. meanwhile she was the toast of the town, not just in silicon valley people defending her without knowing what es the big secret here not published in journals the whole media world, many of us -- not me, but many were guilty nobody wanted to be the kid who says the emperor is naked. somebody had to do it. eventually it was george schultz's grandson it created fischer and the family he wanted to protect his grand dad. he was working there and told the "wall street journal" the truth. after he tried telling elizabeth holmes and she didn't want to hear it and the president -- >> jeff, i will ask you something un-p.c., how much of it was because she's a girl, a woman, and everybody wanted a hot woman out of silicon valley to be up there with the big unicorn billionaires >> since we are just talking privately, i have to tell you

there is a lot to it as i was raising questions reading some of the issues, some of the quiet dissent thinking something is wrong here i was often criticizing how can you attack this woman? i said, why? because she dresses like steve jobs there are great ones out there support ellen coleman, ann mulcahy, mary barre, great woman leaders. but don't take a fraud, celebrate her because she dresses in a black turtleneck like steve jobs. thank goodness for the "wall street journal" for blowing the cover off. this poor kid suffered half a million dollars his family had to take a second mortgage on their home they didn't get support on grand dad either george schultz who said if you do this you are not going to succeed he was threatened by everybody his outside law firm was the heroic david boise, people defending -- >> was the board in over its head scientifically?

they were just taking the word of the ceo and the scientists and they had no way to figure it out? >> tyler, good for you for asking the question. there was a scientific board that preceded the political board. they resigned en masse the chief scientist committed suicide and left a note that said none of this works. this technology didn't work. they were using the same siemens equipment everybody was using. it wasn't a miracle drop of blood she claimed. and the test even then didn't work it was a 50% chance of working it's horrible that for years people were getting false positives, false negatives they didn't ask the question the widow was threatened with defamation for revealing what her deceased husband said in his suicide note terrible >> let me turn the conversation to larry kudlow. what advice would you give him

>> the only thing i have to say to add to the people who have spoken already on this show that know larry so well, as do i, is that larry has to continue to hold his ground speaking truth to power it's not popular to say it on campus let alone in the media. this president does listen to differences of opinion he really does he does like the challenge he doesn't like being ridiculed, if you haven't noticed you can't do public attacks as some on the cabinet if they don't get their way, you're going to get in trouble. you have to disagree consistently kudlow does on the trade issues and other fronts he's a free trader i talked with president trump around this time last year the council on economic advisors job. i was promoting larry for the position trump wanted him for that position you heard it here first. he didn't get it there was a lot of backlash because he's not an academic too bad. he didn't have the pedigree.

he's too sensible. he'll do very well in the role >> makes me crazy when people say he was not an economist. he was the chief economist for bear stearns. >> he's not publishing in scholarly journals all the time. >> he has a ph.d.. what do you think about the dead dog at united and whether or not these guys can ever improve their image. we were having a long discussion at the office. they have a very strong union for the flight attendants at united perhaps there are fewer repercussions if they don't do things correctly at other places like delta, they are not unionized and they are friendlier, nicer to the passengers >> i don't know. when united used to be the friendly skies, delta's pilots are unionized but the rest of the workforce is not delta has been bun big happy family united, it's the leadership and

the board. fantastic board. people who appear on this network that are friends of ours are on the board they should know better like enron and theranos, the board should know better this is the fifth strike against oscar munoz. dragging a bloody passenger down the aisle. he defended those who did it that was his instinct. in october they had a ridiculous statement on the 6% capacity growth and couldn't defend it. analysts were bewildered where is the justification for the capacity growth? they are attacking wall street even this week saying you don't understand our industry. the rest of the industry can explain it and this rewards package they were getting rid of bonuses. everybody else gets thousand dollar bonuses with the new tax plan every quarter if they hit goals. employees were getting a couple hundred dollars. the ceo and president said we'll give you a lottery one person wins $100,000 they were outraged what's going on here

it's like united we fall, not united we stand. time for munoz to go >> thank you, jeff good to see you. we are all over the market moves. the dow was down by 340 points we are well off the session lows, down 120 we are seeing signs of life in technology we saw a turnaround in boeing lfich carried the losses in we have another hour of "power lunch. stick with us. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪

good afternoon, everybody. welcome back to "power lunch." i'm tyler matheson here's what's on the menu for hour two larry kudlow will head to washington as the president names him his top economic adviser replacing gary cohn. what it could mean for tough tariff talks and the trump economic agenda. stocks posting their worst day so far this month. they are down again 108 points for the dow as you see right there. are we starting to see maybe fissures in the market where do you go and what do you do the president headed to a boeing plant today where he'll tout the administration's tax plan among other things but will the proposed new tariffs and tough talk on china offset some of the benefits from tax reform

michelle >> welcome back to "power lunch. down day on wall street. the dow giving up a 123-point gain it had earlier. the dow was down 340 points at session lows now 118 points down. a large chunk of that is boeing. s&p lower by five. the nasdaq higher by 16.5. boeing, a big drag on the markets accounting for nearly a hundred points of the dow's drop in trading it's off the lows. down to 322. now it is off by $5, a decline of 1.5%. trying to move to positive here intrasession. utilities currently the only s&p sector in the green. materials and industrials are the worst performers a few standouts in technology today. expedia, paypal and netflix are all up between 2% and 4.5% >> back to the news of the day

larrykudlow is headed to washington as head of the national economic council. ben white joins us on the phone. i know you've got color on this because you tweeted some out what did you learn >> thanks, melissa as i understand it, president trump called larry kudlow last night while larry was at dinner in manhattan he formally offered him the job, had a lengthy conversation as larry was headed home in an uber talked about upcoming policy issues trump expressed a desire for larry to get on the job as soon as possible. that's my understanding about how it went down. >> did you say larry was going home in an uber? >> that's my understanding. >> you're being specific wow. >> yeah. >> how many conversations had they had prior to this one i wonder what the courtship process was like >> short. >> short because gary cohn just

resigned. >> they had conversations over the weekend when the president started to think seriously about kudlow larry's name was high on the list early on. it dipped a little bit after larry was critical of the president on the aluminum and steel tariffs both on cnbc air and in print and op-eds. that kind of knocked him down a bit. as other candidates rose and fell trump kept coming back to kudlow, someone he's known for years. larry was an adviser to him during the campaign, helped write the tax reform plan. he wanted somebody experienced, good on television. >> i was going to bring it up. how much of that is a factor in that larry is so good at messaging. long before we were talking about him in this position we can recount drill baby drill drill, drill, drill. free markets are the best path to prosperity. i mean, he's good at encapsulating an issue in a

really short messageable way >> yeah. it's a huge factor in why he's selected for the job president trump puts a high premium on people who can go on tv and explain the administration's policies and tout its achievements in a cogent way doesn't always feel he has that many people to do it that made kudlow attractive. you go back to kudlow joining the reagan administration many years ago after he presented some reagan advisers with charts on supply-side economics and how cutting taxes on capital could be a good way to get economic growth going they were wowed by his ability to do that it goes back many years, his ability to sell economic policies in ways that make sense to average people. >> he had been a self-styled informal adviser to the campaign he didn't take a formal role there. certainly on the airplane with steve moore before a critical speech to, i believe the detroit

economics club where he rolled out the tax plan larry and steve moore were pencilling it there with the president. so there is clearly a rapport that goes back. >> reporter: there is a rapport that goes back trump certainly remembers the role those guys played on the campaign and in putting together the tax plan trump likes bold, relatively simple ideas in policy that's what he did with the tax plan he said we'll cut the corporate rate by this much and expect this much growth out of it he likes the way larry talks about the round numbers trump likes so much. it definitely dates to the campaign and being on the plane and putting together the tax package that took the trump campaign to another level in terms of policy. it was a bare bones operation to start with not a lot of senior policy advisers the first big cogent policy they had was the tax cut plan larry and steve moore helped write. >> it remains to be seen what

are they going to do when it comes to trade >> yep. >> you can say larry kudlow has moved closer to the president but he is very pro free trade. it will be a tough hurdle to get over, i think. >> it is he'll spend a lot of time inside the white house arguing with peter navarro, wilbur ross, two senior advisers who are more protectionist. larry has been outspoken against the aluminum and steel tariffs they will be closer together on the china tariffs we expect soon from the administration. larry has spoken on the air that he thinks that's the problem we have to address is unfair trading practices by china we have another free trader in there who can serve as a foil to some of the protectionists and continue to have the argument gary cohn was having inside the west wing with the president to his credit trump said he wanted a voice that would not necessarily agree with all of the protectionist stuff he wants to do.

>> ben, thank you very much for sharing your reporting with us ben white of politico. >> cnbc senior economic correspondent, he may be in line for a job at the white house steve liesman joins us now with a look at three things to expect from larry kudlow as the chief economic adviser. >> you know something, i don't know >> just putting it out there. >> you flatter me. let me talk about three things they are not coordinated with ben white. my number one thing larry has to do is promote trump's tax cuts he doesn't have a lot of people out there. michelle said it nobody coins a phrase like larry kudlow speed up economic appointments there are critical jobs. fed vice chair, treasury secretary, no undersecretary for finance. he needs space inside the administration and focus economic policies. that's a little bit loaded

it includes the idea of trade and not letting the end runs happen we talked about on trade. >> the first time we talked about him being the nec director there was discussion about whether or not larry had a ph.d. i went back and read stuff when he was chief economist at bear stearns. when they introduced jimmy cane he's like, larry kudlow is the very best guy that we can put out there. his messaging is fantastic our clients love him you can see why the president would want him being a surrogate. >> it's interesting having worked with the president to create the tax cut structure they need somebody to sell it, to tell the public what's good about it >> yes. >> larry is not an academic economist. i worry there aren't enough of them inside the white house. i might be the only person who worries about it. >> economist or academic

economists. >> academic. >> steve, let's go to eamon javers at the white house. got off the phone with larry kudlow >> reporter: that's right. just hung up with larry a few minutes ago. he said he was honored to accept the job. he's spoken to the president four times this week including last night and today he told a funny story about being called at dinner last night and jumping in an uber and talking to the president during the course of the uberride the uber driver was shocked that the guy was on the phone with the president. he said something important and hits on the tension you were talking about about larry disagreeing with the president on tariffs larry said he understands the president's position on tariffs and the president understands his position on tariffs. he said ultimately as national economic council director he said once the decision is made it's made. i understand that. he said i might not agree with every crossed t and dotted i but it no longer matters

our job is to execute the policy not to continually hold meetings and rehash it but to execute larry is telegraphing that he feels once the president has decided the decision is final but he will argue his position until that decision has been made. >> there was a tweet in which the president said larry understands that tariffs are acceptable for negotiating purposes. >> right. >> that was a thing. >> he said it on camera, yeah. >> i wonder who was acknowledging that tariffs were good was it the president was that a precondition for larry to say, i'm not coming into an administration that's going whole hog on tariffs, but i will join one that uses tariffs as negotiating positions. >> i'll tell you what my sense is these are two guys who like each other and are trying to meet in the middle on that larry agrees with the president

that tariffs can be useful to bring other countries to the negotiating table and the president concedes larry doesn't support broad based tariffs but using tariffs as a negotiating tactics. what larry was saying to me a few minutes ago is he agrees when the president makes the decision it's final. that's when the conversation has to stop. he also said he'll be here tomorrow in washington for the formal announcement of this. there is a trade meeting at the white house he'll attend tomorrow it's not clear when gary cohn's last day will officially be. he said gary cohn has been extraordinarily helpful to him in walking him through a lot of the basics of how the nec works, how the white house day is structured it changes from administration to administration. kudlow needs to get up to speed on that. he also talked about his long-term relationship with the president, having known him and interviewed him in new york over the period of 20 years these are two men who know each

other well and who are familiar with each other's views. larry kudlow said he's comfortable coming to work with the president. he's in step with him on a number of positions. one thing i was surprised to hear is the issue of immigration. larry said he's entirely supportive of the president's positions on immigration, the wall, ending chain migration and the dreamers and bringing them into the united states and getting a final deal on that larry views it as an economic issue as well as a political and social issue there is a lot that the national economic council will tackle in the coming months. >> i worry about one thing particularly tyler earlier mentioned the detroit speech that was a great speech for the economy in the 1950s the president talks about the trade deficit, just the goods, at $800 billion. not our services surplus we have a dynamic economy that's changing where manufacturing

jobs are replaced by all kinds of jobs. i worry and i hope larry incorporates younger blood into the administration that includes some forward-thinking about the dynamism in the economy and they let it run and don't try to bring back a golden era in their minds of the 1950s. >> larry has decried the president's obsession with the trade deficit on cnbc. >> it's important. >> he'll message that a lot. >> got to get on board that the jobs of tomorrow haven't been created yet. government doesn't know where they will be created and shouldn't hold the line on old jobs for the sake of old jobs. >> are we going to get a ceremony, the whole thing? what are we seeing tomorrow? >> it's not clear. the president will be back in town he's going to be in st. louis. he's giving a big speech at boeing talking about tax cuts. he'll praise the success of the

economic agenda so far we might hear about larry kudlow now that the news is out in that venue. at some point there will be an official announcement at the white house. that's expected tomorrow i'm not sure if we'll see it on camera or if it will be a private event. we'll get to the bottom of it. one point larry made with me is the biggest nationalist here in the white house on the economic team is peter navarro who is seen as a proponent and advocate of tariffs and the protectionism particularly against china that was seen as a dynamic of gary cohn versus peter navarro in the white house it would be expected by people that larry kudlow and peter navarro would be at odds on that, too. larry had peter on his show many times on "the kudlow report" on cnbc he's known these people for years. kudlow saying he has a great relationship with them. >> can he sleep on your couch until he finds a place

>> he's welcome to i expect to pick his brains. >> live from the white house off the phone with larry kudlow who always says -- thank you, steve -- always says corporate profits are the mother's milk of the stock market so what would kudlow and the white house mean amid tariff threats? let's bring in chief investment strategist with raymond james and the president and chief investment officer of castle rock management. guys, good to have you here. jeff, what do you make of this we have seen the markets move a lot depending on what they think the president's position will be on tariffs and trade to the degree that larry can move the needle, soften up protectionism, will it help the markets >> yeah. i think it will help out the markets. the markets look like it was ready to recover until the rumor yesterday that the administration might as soon as next week put stiffer tariffs on china. i think larry is an excellent

pick i differ with the previous guest. i think it's good he's not an academic economist. >> jerry >> what's interesting from our perspective, the market wants a form of credibility. with gary cohn, everyone understood this was somebody from the inside who has a high degree of effectiveness. probably the guy to do tax reform i don't think anybody in the community doubted that we now know there is a multi disciplinary approach to this next round the idea of getting all the national interests aligned and cutting bilateral deals is going to take something with outside expertise. i don't know who would fill the bill better than larry would he's got the ability to explain people in simple terms what a policy is. i give trump a ton of credit for grabbing him out of dinner last night and adding him to the team folks on our side are going to enjoy hearing the logic behind

the move. >> imagine what the uber driver was thinking when larry kept saying, yes, mr. president shock, i would imagine i want to go back to how you are positioning yourself in the market while they are an uncertainty now, you can't factor them in. we don't know the worst case scenario you look at the tech sector which has been leading the markets, up 11% year to date a stock like boeing up 12% year to date. niece a these are areas where the market is focused on negative impacts with tariffs do you pull money from them because they have been top performers or do you stick with them because they have been market performers? >> i think one of the problems with boeing is that if china retaliates they can stay within the wto guidelines or rules instead of guying boeing they could buy airbus i don't think i would make a

call on boeing right here. we still like the market we think you're in a secular bull market. we like tech, financials, industrials. believe it or not we like the down and out energy space. energy stocks are trading at the same valuation levels they were when crude oil was $26 a barrel. >> jerry, same question. the context of the market is areas where the tariffs could hit the hardest are areas that have been performing the best this year. >> right start with the fact that the nasdaq is up today when the rest of the market is down. there is no fear and i don't think it's well placed for there to be fear. >> by .006 of a percent it's higher >> take it to the bank that area which has had all the money continued to see that in the face of something like tariffs is probably a better statement of what the outcome will be which is not particularly onerous to tech

companies. i want to follow up on what jeff said the real story underlying the market is the fact there are places like financials and energy that aren't capturing in the forward outlook or the current valuation the upside that the current environment poses them the oil stocks that are looking at $60 oil have ridiculously low valuations all need an upgrade it could be 20% to 40% before year end i wouldn't underestimate financials why not let a group with this much deregulation, spread income and loan growth ahead, let's get them to 15, 16 times earnings. that's what a bull market ends with it fills the valuation of the undervalued groups and takes a rest it is not there yet. that's why tech is still happy that's why the lagging groups can go. >> got it. thank you. good to have you on.

>> my pleasure. >> thank you. >> elizabeth holmes charged by the s.e.c. with massive fraud. details and fallout. plus, president trump headed to st. louis to talk trade, tariffs and taxes. which companies could be helped d iccod ht the tariffs? feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

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index. the company has been betting on biotech saying they can't build them fast enough they have more than 200 properties in north america with tech names like google joining us is the chairman and ceo. joel, great to have you with us. >> pleasure to be here. >> you are near 100% occupancy >> we are. >> do you think this is a function of the economy and what it's done under the trump administration the past year or so or is it specific to the sectors? >> both. the economy has been super strong, as you know. plus this sector has been white hot. if you think about one factor of human diseases today there are about 10,000 diseases known to mankind. only 500 have been addressed by therapies. we are in the early innings of the biology revolution that's the reason so much capital is flowing into the sector to help humankind. >> we mentioned in the

introduction that you can't build the space fast enough. at this point, obviously this is cambridge, new york city, san francisco. is there a desire to move spaces outside of large cities where the cost of living is high >> interestingly enough it's the opposite if you look at cambridge, the number one cluster actually in the world, most of the big pharmaceutical companies have moved into the cluster and the reason they do it even though the cost would be higher than the suburbs, it is the only way to recruit and retain great talent, scientific talent, technical talent they can't do it in the suburbs as effectively. >> what's happening in the spaces you have? do you walk in and see lab coats and people conducting experiments? >> exactly it's scientific research more and more there is -- and this is interesting as opposed to the tech area which operate independently. this industry collaborates and innovates. so it's a communal environment.

>> how much of your investments are built new as opposed to repurposed. >> today, most are built new in the early days of the company we have been public 20 years on the new york stock exchange. in the early days we would find buildings usually in the suburbs, repurpose them and lease them as we move to the clusters we -- >> why is that why does that work better for you -- building from the ground up rather than repurposing >> in the early days of the company we were investing in one-off buildings in the suburbs because we were a garage start-up once we came public and had access to public debt and equity capital we made big bets in 2004 in mission bay and san francisco when it was a rail yard. in 2005 in new york. our big campus there when it was a contaminated laundry site. and 2006 in the binny corridor near kendall square.

>> my college. >> exactly created big campuses with amenities where the companies now want to be next to m.i.t. >> you have a venture fund. >> we do. >> about $500 million worth. you hear the theranos news i don't know if you were pitched theranos, if you came across elizabeth holmes. >> they may not have done much testing based on the indictment. >> i had two interactions with theranos one is real estate and one is business model on real estate, a year, year and a half ago the owner of their laboratory property in stanford research park put it on the market we loved the location near stanford, part of the technology research park. so we underwrote the asset and were going to make a bid we looked at theranos and we had a hard time underwriting the company and we realized the reputational risk a year, year and a half ago was high so we

didn't bid another one bought it. >> you couldn't even buy the property because there were red flags about the property. >> correct if they went into bankruptcy you would have a work out and a problem because you would not have cash flow i was at a meeting for ceos and elizabeth was being interviewed at the meeting i asked her a question about the company. i said you are in the blood testing space. why would you enter that space when you have quest and lab corp., two dominant companies competing. they have massive marketing, massive customer bases and you are competing on cost. you're going against two big guys trying to be a lower cost provider her answer was i believe everybody should be tested either free or at the lowest cost price point i thought, well, that's not a good business model. i wouldn't invest in that

company. >> joel, great to speak with you. >> good to be here she was once a shining star silicon valley but the s.e.c. now charging theranos founder elizabeth holmes with massive fraud. the latest on the allegations. plus, billionaire and oil titan harold hamm joins us to talk trade, larry kudl, x llsoanoil.owre mercedes-benz glc... ...with its high-tech cameras and radar...

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the s.e.c. announcing that theranos ceo elizabeth holmes and the company's former president have been charged with massive fraud. now the latest news. >> we are putting a punctuation mark on this saga of the secretive silicon valley start-up theranos which was saying it would revolutionize the blood testing industry the s.e.c. saying in the charge they perpetrated an elaborate, years-long fraud to raise more than $700 million from investors by exaggerating or making false claims about technology and business theranos had a private valuation of about $9 billion before the "wall street journal" started a remarkable series of reports at

the end of 2015 raising questions about the technology essentially the company said it could take a single drop of blood and test for all kinds of things it turned out as a result of the reporting we learned they weren't even using their own machines for the tests they were using existing machines from other manufacturers. the s.e.c. in the complaint lays that out with other charges. we know now theranos had to void two years of test results for customers. they were putting these things out into the public and people were using their test. as they have settled the fraud charges elizabeth holmes and the company, she's agreed to pay a $500,000 fine, will be stripped of control of the company. she's also barred from serving as an officer or director of the public company for ten years theranos and holmes, neither has admitted nor denied the allegations here today in the settlement the former president of theranos is charged here also

he has not settled he's disputing the claims. want to play a quick clip from 2015 from "mad money." jim cramer interviewed elizabeth holmes as this was unraveling. >> this is what happens when you work to change things. first they think you're crazy. then they fight you. then you change the world. >> that was a lot of the theranos buzz at the time. the way elizabeth holmes talked about the business they were going to change the world, revolutionize medicine as this was unfolding she was saying people are attacking me because we are different. >> all the words the disruptors love to use. these are civil charges. what about criminal charges? >> that was the question every reporter had the first three questions were what about criminal charges. they wouldn't comment on whether anything the going on, whether there is an investigation or whether something could come one person on the call noted civil and criminal cases will come out at the same time. the fact that it hasn't happened

here, what does it mean? it's unclear the "wall street journal" reported there was a criminal investigation going on people will be wondering what's happening. >> meg, thank you very much. coming up, billionaire and oil legend harrell hamm, founder of controversial resources joins us to give us his take on larry kudlow headed to the white house, oil prices, and the departure of rex tillerson i'm not a bigwig. or a c-anything-o. but i've got an idea sir. get domo. it'll connect us to everything that's going on in the company. get it for jean who's always cold. for the sales team, it and the warehouse crew. give us the data we need. in one place, anywhere we need it. help us do our jobs better. with domo we can run this place together. well that's that's your job i guess.

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really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. hello, everyone. here is your cnbc news update this hour. thousands of students across the nation walking out of school to demand action on gun violence. outside the white house students carried signs and chanted. they were urged to leave class for 17 minutes one minute for each victim of the attacks at the stoneman douglas high school in florida but many of those walkouts have lasted much longer the parents of one of the victims of sunday's helicopter crash in new york's east river

filing a lawsuit against the operator of the company. they charge the harness their son wore prevented him from escaping a lawyer for the family calling the helicopter a death trap. house republican leaders say the pennsylvania house special election is yet to be determined even though nbc news called democrat conor lamb the apparent winner house speaker paul ryan weighing in claiming that lamb did well because he took conservative positions. >> both of these people, these candidates, the republican and democrat ran as conservatives, pro gun, pro life, anti-nancy pelosi conservatives that's the takeaway here >> you are up to date. melissa? >> thank you, sue. let's check on the markets major indices spiking after the bell but reversing dow hit a high of 123 points, plummeting to a session low down 303. we are down by 240 or 1% now

the s&p is down by 16 and the nasdaq is down by 15 utilities is the only s&p sector in green this hour materials and industrials, the biggest laggards your dow losers -- boeing, dowdupont, johnson and johnson and pfizer oil market is closing for the day. jackie d is at the commodities desk looking at today's opec report >> good afternoon, michelle. crude back and forth between positive and negative today finishing to the upside. the bullish factor is today's opec report showing production declined in february it is still over 32 million barrels a day. the rex tillerson exit, could see policy changes down the line that would be supportive of oil prices eia reported this morning. expect the push and pull to continue over the $60 mark, the

critical level a break to the down side and there could be pressure to come. the lows keep testing closer to 60 meantime the interesting nuggets coming out of the opec report. saudi production rose but still under 10 million barrels a day iraq and iran saw a decrease these are usually the countries ramping production iraq, near four and a half they are near max capacity. venezuela is one to watch. political strife in the country imblpacting oil output venezuela was about 2.5 million. now about 1.5 million. possible u.s. sanctions could erode more quickly overall the report is supportive tomorrow we hear from the iea. the market will be looking to hear what it has to say about demand trends if they are strong enough to absorb excess supply from the u.s >> we'll watch for that. thanks, jackie. breaking news in the past

hour that president trump will name larry kudlow as chair of the national economic council. we are joined by controversial resources founder harold hamm, an oil man and a big supporter of president trump what do you think of larry kudlow being named to replace gary cohn, mr. hamm? >> i think it's fantastic. larry has been in trump's camp a long time. very supportive when trump was a candidate. you know, he's got great policies and he'll be loyal to the president. so i'm glad to see it. he's a great man. >> what do you think about rex tillerson leaving? a big oil guy. ran kpexxonmobil what are your thoughts >> rex was the right person for the right time for america he stepped in, made a very good transition into this administration he did a good job.

he's used his business acumen in the state department had a great deal of knowledge. as we saw yesterday, rex is a class act. i support the president to make the choices that he needs to make for those who work with him. but, you know, we are going to miss rex he was -- he's a great man you know, we need to thank him for his service to america. >> at some point, mr. hamm, obviously if you have a right-hand person, in this case mr. rex tillerson who was the right happened on presumably foreign policy and you don't agree with the individual at some point the chief executive has to make a call whether that individual stays or goes in this case obviously mr. trump decided it was better for both of them and for the country that mr. tiller son leave i wonder if you were an investor trying to size up a company and

you saw the amount of internal management turmoil that's beset this white house what would you think what conclusion would you draw would you invest >> we need to let the president be the president let trump be trump he's going to organize his group as he sees fit he may change over time, one time to another picking the right people at the right time he has a knack for doing that. you know, there's policies that he believes ought to be put forward and once he puts them forward, that's what it needs to be he needs to go forward with those and with the people that support him. so i wouldn't make too much of that these last changes obviously he felt like he needed to make those. he's done it

we have seen good people take the place of those that leave and certainly this is the case with larry kudlow. >> mr. hamm, where do you fall on the issue of trade? the president has divided the republican party with what he originally wanted with blanket tariffs on steel and aluminum including canada and mexico. that exception for the countries finally occurred and larry is very much on the other side of what wilbur ross and peter navarro stand on this issue. where do you stand and how do you think that will play out >> nobody likes to see the corrections that you have to make with trade. we have all known that for the past eight years that we have been run over in the areas of trade. that's why the american people elected donald trump they saw that. they knew it was happening we were totally taken advantage

of nafta just basely had fallen apart. what trump is doing is restoring america to greatness we are not talking a lot of protectionism. we just want a level playing field. certainly that's what he's doing. he's a great negotiator. we have seen it happen just over the last week, how quickly these countries come to the table and, you know, they want to protect their markets. america is a great market for them but, you know, we can't be cheated on trade the american people know that, know the correction's got to be made this is a guy that's negotiating and doing a very good job. >> all right, mr. hamm good to have you on. harold hamm of controversial resources discussing larry kudlow replacing gary cohn at the white house. >> and guess who's coming to "closing bell.

larry kudlow in a cnbc exclusive. our man larry coming up. "closing bell" at 3:00 p.m. eastern time. >> how did we manage that? how did we get that? does somebody know him >> this will be his last interview as a cnbc contributor, presumably. >> we hope not his last appearance on cnbc. >> certainly not we hope to get a home team advantage. >> i hope so after all these years. time for trading nation. boeing weighing heavily on the dow today. the stock was down more than 10% from recent highs. now in correction territory. let's bring in the team for more craig johnson is with piper jaffery. boris, we'll start with you. this is a performer this year but it has lost momentum what do you do >> the question is it's really not economic it's political at this point it's down because of the tariff concerns now about the fears that the trump administration will

institute maybe $60 billion in tariff against china and the reprisal that could occur. i think it is difficult. boeing does business with a lot of governments across the world. if the u.s. policy now will be combative instead of conciliatory against everybody in the world, it's going to make boeing's business more difficult. not an economic grounds but political ones it's hard to handicap how things go until we see the political policy. >> would you sell? >> i would stand aside for now until i see how policy catches up it can get ugly fast. >> craig, what's the technical picture? >> the technical picture really isn't rosy this is a stock that went parabolic, up too far too fast it is a great company but not a great stock now. we broke the 50-day moving average today. if the stock is to pull back to a big area of support that would be the 200-day moving average putting the stock around 267 you have seen this divergence in price and strength for a while

there is more down side. i don't have to buy this stock today. in fact, most advances like this correct almost 100 to 110% of the advance. be careful >> mel, just one point boeing is one of the most expensive components of the dow. if it goes the dow goes. that's a key point to remember. >> we have seen it day after day here boris, craig, thanks more market insights on our website, tradingnation. cnbc.com. >> boeing may not get love from traders but they are getting a presidential visit trump expected to arrive at a boeing facility in st. louis in the next hour. that's where they make fighter jets he'll talk taxes we get a preview of what to expect next. >> announcer: and now the latest from tradingnation.cnbc.com and a word from our sponsor.

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counting down to president trump expected to speak in a

boeing plant in st. louis over the next hour. tax reform is on the agenda, but will the president's recent tariff and tough talk on china, maybe outdo benefits of the tax changes according to american companies? let's bring in john rutledge cfio and former economic adviser to president reagan, and we will talk taxes, tariffs, and more, but john, i begin with you your initial reaction to larry kudlow's appointment in the white house and how do you think he will navigate the tough trade talk on the one hand from the so-called economic nationalists from within the west wing and larry's more nuanced view of tariffs? >> larry and i met in 1976, 42 years ago. we wrote the reagan economic

plan together. i've known him forever i love the guy, i just love him. he's a principled man, more loyal to the principles than to any individual including president trump. he's the perfect man for the job. the four legs of the old reagan plan were taxes, spending, regulations, and sound money those are exactly what we need today. i'm a big -- i'm a huge fan of this happening, and i think larry's the only one i know that could talk president trump back from the brink and essentially displace our other friend, peter, in the tariff talk. >> larry, as we pointed out, is an incredibly forceful exponent of his position, and i'm sure he can go toe-to-toe well with anyone turning to the tariff talk here and get your thoughts on it. i find it ironic that the president today is visiting a

boeing manufacturing plant, which would be exactly the kind of company that, a, might be a target of retaliation if the tariffs begin to bite, and, b, would be the exact kind of company that would see costs go up if tariffs are put on steel and aluminum >> that's a great point, and i hope somebody mentions this to president trump. maybe larry can point it out to him. yeah, i mean, it sounds simple in theory, imposing tariffs, everyone backs down, and that's great for u.s. industry, but it's a lot more complicated than that boeing illustrates that. governments and a private companies abroad have a choice between boeing and an airbus airplane when they are mad at the united states for threatening tariffs, they could shift to airbecause, which is bad for boeing, and the tariffs cost boeing more when they build their planes, and that puts them at a disadvantage

compared to airbus the tariffs are just not good news for boeing. we'll see what kind of reaction president trump gets when he talks to the people there. >> john, how much of a chance are we going to see retaliation from china, lay odds, probabilities on that. you know china extremely well. >> there's a sneaky part of the tariffs. trump came out announcing tariffs against china because they are an of political chump to go after. fact is, we don't buy steel from china. china is our no. 11th supplier they supply 2% of our imports and 1% of the consumption. they just don't matter, so he got a free political shot for no danger of retaliation. the danger of retaliation from china is if you go after capital exports. think of the broadcom decision made yesterday that sort of thing, not that company, but that sort of thing could draw fire from china, and if they do, china buys 60% of our soybeans the real reaction here is going to come from the eu.

he's already exempted mexico and canada, but it's the european issue now. >> ending it there, john, thank you very much, and simon lester, we appreciate your time today. it's been a volatile session for stocks they have taken a leg down again. the dow downright now by 234 points, 300-some was the low it was up as much as 123 points earlier, so volatility is back reminder, larry kudlow joins cnbc f aorn exclusive interview on "closing bell" at 3:00 p.m. eastern time check please is next t. demand a cfa charterholder. cfa institute. two,that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches?

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larry kudlow on the closing bell, and mark cuban congratulated him on twitter >> congrats, larry thanks for watching "power lunch. >> "closing bell" starts right now. ♪ live from the new york stock exchange in new york city, this is the closing bell, i'm kelly evans. >> i'm wilbur frost. we'll break down what this means to they's economic future and talk with larry live and exclusively himself coming up. stocks on the move lower today, dow down 338 at the lowest, and right now, down 210. let's get right to the reporters watching all of the markets fo