don't care josh >> ablemarle hyperbolestic. >> groupon >> workday i like the momentum. still intact >> made it easy guys thank you. thank you. "power lunch" begins right now. >> i'm michele caruso cabrera. banking on earnings. jp morgan, citi, and wells fargo all beat big wall street is not impressed all those stocks are down big. what are those earnings signal being the future if you are hunting for a home this spring season listen up, there is a crucial part of the housing market facing its biggest crisis in a quarterce y century. we will explain. highway bitcoin current sees are fuelling america's opioid epidemic you will only see it here on cnbc pluchlk starts right now

"power lunch" starts right now. >> here comes chris with a camera that is service, chris welcome to "power lunch," tyler mathisen the dow was up more than 160 at its high before dipping into negative territory still the s&p 500 and nasdaq on track for their next biggest gain in five weeks oil highest since december of '14. price up 8% this week. and bonds on the move, yields on the two year hitting their highest levels since the beginning of the 2008 financial cries snis i'm contessa brewer sea world entertainment says it could face sanctions for alleged violations of u.s. securities laws the company has been under investigation by the s.e.c. about comments made by the documentary black fish and trading in sea world's stock qualcomm shares higher

former chairman paul jacobs is putting to the a group of buyers to take the chip maker private and review of the postal service and its financial problems this on the heels the president accusing amazon of costing the post office money with its deliveries. >> we begin with the markets, which are in the red after a strong start on this friday the 3th. bob pisani from the new york stock exchange what's the problem >> we ran out of steam i will be blun let me show you the s&p 500. this has been a great week we were up almost 3% for the week it's the best week we have had in six or seven weeks. we sort of ran out of steam because the two market leaders kind of ran out of steam, technologies stocks and bank stocks let's look at the market leaders. everyone is wondering how could the banks stocks be doesn't after they had good earnings calls today. energy is holding up i am happy about that we will put up the banks.

how could the banks be down? folks, four of the last five quarters when jp morgan reported, the numbers were down. it went down whether they beat or isn't beat. four of the last five earnings quarters when jp morgan reported on those days they were down there has been a recent tendency to sell into earnings news on bank stocks. i don't think everybody should be concerned overall wells fargo was a small miss but these numbers are very good it bodes very well for other trading companies. look at the beats here on trading on the equities overall. citi group, 38% increase in equities tradings. jp morgan, 25% this is all that chaos that we saw in february and all the concerns about trade wars. it helped all the trading desks. it's very good news for goldman sachs and morgan stai stanley. they get more revenues from the trading than jp morgan does. don't worry about all of this,

the news is good for these companies. the exchanges, too, bigger volume in february the numbers were up, they are trading up throughout the year ice doesn't get as much of its revenues from transaction fees more from market data. bottom line, don't worry about it yet very happy with leadership in oil stocks the whole week we have seen these stocks moving up a small new leadership group is emerging back to you. >> let's get more on what this earnings season means for the market and to do that we will bring in kate warren of edward johns. and ron insanaa. folks, welcome good to have you both here ron? >> yes, sir. >> i wonder, it feels to me on this friday the 13th that investors are a little shy, holding stocks and going long or longer into a weekend where stuff might happen. >> i would put syria at the forefront of that. >> exact three. >> that's a wide open question even though there has been

moderation in tone between the u.s. and russians. then you also have, i think this ongoing war of words between the president and james comey. you have concerns about rod rosenstein and jeff sessions again circulating. it is an uncertain weekend whom wants to be long ahead of that after a good week. one thing i would say, i think we are getting into peak earnings season here and peak earnings for this cycle. the fact the banks are down with such big numbers, a lot of it coming from tax rooks, some of this may be a concern later in the year. >> we will guilty you an appointment with dr. jack daniels later today. >> i am a little under the weather. >> i can hear. >> and honey and lemon -- no honey, just bring on the jack. >> kate, what do you make of what ron said, maybe we are getting near the apec of earnings for this cycle? >> i'm not sure we are getting near the apex of earnings because of course the impact of the tax cuts, especially the corporate tax cuts, will

continue through the year. in addition, we had the budget agreement and the consumer tax cuts which will mean stronger economic growth. and that tend to bode well for earnings to keep growing globe growth is picking up with almost half of the s&p 500 getting some of its earnings from the rest of the world i think that will also be a catalyst i would disagree that first quarter is the peak of the earnings season. but i'd also say there is a lot of uncertainty and that's causing a tension this the market right now and that's why i think stocks haven't moved higher >> where is the uncertain? mostly trade >> no, i think the uncertainty is much more on geopolitical risks. it's on what's going on in terms of the growth of the economy in the rheest of the world also the background, the feds raising interest rates there is uncertain there the investors need to look through that and focus on the strong economic growth and what i think will be strong earnings

growth for the rest of the year as well. >> stay long >> yes, stay long. >> if there is a strike on syria tonight or over the weekend, if it doesn't come, on monday week go higher. >> this market has responded to headlines almost on a daily basis. it's not doing anticipatory moves like typical in advance of earnings or strong moves it's whipsawing on a day to day or hour by hour base snis why is that when the markets looked through everything geopolitical for the last year. >> we have political issues in the united states. we have a brand-new fed that may be looking at the economy differently than the old fed that encompass three different federal reserve chairs that view things through the same prism and you have geopolitical risk that is becoming i think more and more likely to develop into the not a military conflict

maybe a proxy war somewhere. >> should we factor in consumer confidence at all? >> it's down a little bit, yeah. >> and gas prices are going higher triple a came in with the highest level since august of 2014 and we are not into the summer driving season and housing pricing are higher >> most of the surveys that are out right now so nominal gains to income. very, very small gains to most consumer incomes that may not drive gdp growth as had been expected. >> kate, one of ire stock picks is facebook. explain. >> yes well, i think right now what we've seen is facebook's fries down as similar to what ron just said all the headlines, all the concerns about privacy, which i think are actually very important. but at the same time, all those concerns may continue to weigh on the stock short-term. it's growing earnings at around 23%. its valuation is more attractive and with more than 2 billion

users and, and it doesn't look like the concerns have actually slowed that growth of users, we are likely to see facebook continue to grow over time we see this pullback as an opportunity to add a company that's growing fast and is able to make its own growth opportunities at a very attractive price. >> kate, ron, thank you. the big news in washington today, a new book from former fbi director james comey taking aim at the president ayman jaffers is live at the white house following the developments here. >> it's been a day of absolute rhetorical broad sides tween the former fbi director who was fired by the president and the pre of united states himself james comey's book being made public for the first time last night. it's called a higher loyalty two exermtsds to give you an idea of what he is saying about the president. the first is his general sense of the president this president is unethical and untethered to the truth and

traditional values he is ego different and it's about personal loyalty comey drops a bomb on john kelly what at the time of an anecdote that comey puts in the book was a homeland director. he says kelly called comey after comey was fired to commiserate with him and kelly said this, he said he didn't want to work with dishonorable people that would treat someone like me in such a manner i urged him not to do that comey saying that kelly said there were dishonorable people including presumably the president of the united states in the white house and that comey urged kelly to stay. kelly is now the chief of staff. but he has been embattled. there is some question today how the president will react to that particular anecdote. we know how he's reacting to the overall book here are some of the tweets he fired off earlier today. james comey is a proven leaker and liar everyone in washington thought he should be fired for the

terrible job he did until he was in fact fired. he leaked information. he lied to congress under oath he is a weak and untruthful slime ball who was as time has proven a terrible director of the fbi. his handling of the crooked hillary clinton case and the events surrounding it will go down as one of the worst botched jobs of history. it was my great honor to fire james comey. that's where we stand as of right now. rhetorical broadsides being fired back and forth but nobody fired there is speculation that the president is angry at mueller, rod rosenstein ands or in his administration and that he might take action against them so far no indication that that is coming. >> it's only 1:15. >> weekly rig counts just out. >> u.s. drillers added seven new rigs for the week, bringing the total up to 815. that's up 132 from a year ago, all according to baker hughes.

meantime look at oil prices. they are unphased by rising u.s. production, now 10.5 million barrels a day and these rig count figures to boot. crude moved almost 9% this week all based on geopolitical concerns. shares of citi group, jp morgan, wells phago, all of them are down despite a beat in earnings is the earnings bar too high or is there something else at play we will dig deeping into the banking numbers. plus a cnbc special report on how the cryptocurrency craze is help to fuel the boyd opioid epidemic "power lunch" will be right back

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now you can get it, too. welcome to the party. welcome back jp morgan, citi, wells fargo, kicking off earnings from the big banks. all three beating expectations across the board look at the shares, though all three down quite a bit, 2 and 3% investors looking deeper into the numbers and not liking what they are seeing or is it something else we had a difference of opinion earlier. bob pisani said listen all these guys rallied into their numbers today and historically they sell off on their earnings report you know, that's just the trading pattern. ron insanaa thinks there is something more nefarious for lack of a better word going on here like it's as good as it's going to get and it ain't going to be as good for a very long time and these earnings have peaked

john, what do you think? >> i think the weakness we are seeing today is market frustration with traditional. >> abouting networks loan growth and loan interest spreads, the outlook probably srnt as good as what the market was expecting. i think the market was expecting too much i think the results have been good and consistent with my earning expectations for the rest of the year to the extent of acceleration in c and i loan growth and other thing priced in, that's where we are seeing softness. i don't think it's nefarious, it is a fundamental concern but the stocks really sold off with the exception of the last few days maybe it is a pivotal reversal but i'm not committeeing my thinking on the estimates. >> had he we think about banks they are supposed to disperse capital, run the economy, via loans. if loan growth is weak -- why

would it be when we are talking about such a strong economy, when unemployment is so low? >> that is an issue. if there is any fault on the quarter, on the first quarter, it's that some of these items may not be sustainable so you have very, very strong trading revenues, equity trading revenues in the first quarter thanks to nothing that the banks did but a very volatile equity market we had all of last year only eight trading days where the s&p 500 moved more than 1% in the first quarter this year we had 23 of those days. the question is yeah, is that sustainable going forward? we do think volatility is going to stay high maybe not as high as the first quarter. what you said about loan growth is accurate. it's not been a barn burner. margins should improve gradually this year with federate hikes. you have got some growth, the economic growth pickup is going to help with lending growth. but that wasn't the strength in this quarter. >> jeff, i want you to pick up

on what steve just tacked about. that is those trading revenues, which had been sort of a soft spot for a long, long time for a lot of these banks, and obviously the trading revenues have picked up a great deal. do you think that is a sustainable revenue tail wind? >> in the aggregate, you are talking overall trading revenues, yeah i think we have still got a tail wind. if you look at back at last year fixed income trading was good this the first quarter and bad the rest of the year having thick flattish in the first quarter isn't so bad i think it will hold on the rest of the year. equity trading is fantastic. better than we thought it was going to be. i don't think we will see that level of ebt trading hold up in the aggregate i think we should see year over year growth in trading equity if it holds up the rest of the year. >> can they do something with what they sell can they innovate in their products that they offer

steve, whydon't you take that. >> sure. not necessarily. i think where some of the growth is going to come from for jp morgan for example, is where are they plowing back into the franchise. in the asset management division they have plenty of room to go they are adding 400 branches, partly reinvestment of the corporate tax cuts that -- we don't talk about market share much when it comes to bank but i think jp morgan and bank of america in particular are taking share away from wells fargo and citi. >> i want to get you guys to drill down on your two different calls. jeff, you've got a hold on jp morgan steve, you've got a buy on citi group. jeff, you have got a bye, and steve you have got a hold. jeff, go first make your casequickly for thos two stocks and then seve, rejoineder >> i'm bullish on the universal banks. i think capital markets aring the to be strong i like them all.

my buy hold delta is a differentiation on valuing as. citi is trading cheaper than jp morgan >> okay. >> i think what's built into the numbers. can i see more earnings upside for citi group where the consensus is too low for jp morgan consensus is okay but it's hard for me to get upside. >> a valuation argument there essentially. steve, your thoughts >> well, you know, jp morgan is just a best in class you look at revenue growth was the quarter, 13% versus 3% for citi earnings growth, 44% the top line, 25% if you factor out the corporate tax cut. citi was much, much lower. more like 13, 14%. citi's roe is ruch lower jp morgan 19%. citi seems to be a constant work in progress. yeah they have upside or can do some more. with those numbers certainly it consistently trades at a discount and i see no reason for it to even trade at par with the other banks at any time this

year. >> thank you guys, jeff hart and steve bigger good to have you on. >> steve boehner now that he has left the white house is singing a different tune. why people are getting priced out of the housing market and atwh it means overall big picture. we'll be right back. alerts -- wouldn't you like one from the market

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news at the white house. >> that's right. the president as expected issued a full pardon to scooter libby you remember libby was vice president dick cheney's chief of staff. he was convicted of perjury back in 2007. president trump just now issuing a statement surrounding his pardon of scooter libby saying in part i don't know mr. libby but for years i have heard he has been treated unfairly. hopefully this full pardon will help rectify a sad portion of his life you remember that scooter libby was convicted of perjury in 2007 for his role in the valorry plane leak case. what is important and being read into this in terms of present day d.c. is that scooter libby was indicted after investigation by a special counsel the president has suggested that the current specific counsel is going too far in terms of his investigation. perhaps this is a signal that the president says people who are loyal to their political

superiors might be entitled to pardons in the future. nonetheless, the president saying he is being pardons because he had an unblemished record of service to thinks country before 2007 and since. the president issuing that full pardon to scooter libby and a lot of questions about what it means for officials who are currently in the cross hayes of a special counsel investigation. >> there is no connection between james comey and this investigation, was there. >> patrick fitzgerald was the investigator i'm not sure what comey's role was at the time. i will have to double-check that. >> i believe there may have been a connection about him appointing the special counsel. >> exactly right >> he appointed the special counsel. >> james comey did. >> right that was investigating scooter libby. and the real -- for scooter libby, remember it clears his

record but he didn't serve time his sentence was commuted. valorry plane whose identity was outed was scathing and she says it send a message to those who might cooperate with mueller's investigation now that punishment might be fleeting for those at fault according to the investigation by a special prosecutor. >> ayman jaffers reporting from the white house lawn >> lots of layers there. >> lots of layers and history. elon musk tweets and tesla shares react. plus, the american housing market is facing a major crisis that it has not seen on this yes.l in 25 ar we will explain what it is, and why it matters when "power lunch" returns

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hi i'm morgan brennan. here's your cnbc news update at this hour. the russian defense industry accusing britain of staging a fake chemical attack in syria last weekend it didn't provide any evidence as moscow threatened to retaliate against u.s. strikes

in the country. a ban includes powdered and liquid forms of caffeinated products when they are sold in bulk it does not include energy drinks. the winner of last month's $533 million mega millions jackpot has come forward 47-year-old vernan wall of new jersey decided to take the lump sum and discussed what he plans to do with his new found money. >> for us, we believe god has a plan for us the plan is to do a lot of good things with it we will be working with our financial team to make sure those things happen. it is a not only life changing money for me but i want it to be life changing money for others. family, friend, people in need we are going to try to to some good things with it. >> that's the cnbc news update at this hour back over the to you. >> nice sensements thanks morgan. let's common core on the

markets. stocks are trying to stage a comeback the industrials are lower by 25 points they had been much lower than that concerns over whether we are going the see a strike on syria. s&p higher by three points, the nasdaq is essentially flat. mortgage rates are going higher, and home prices are going up, all that is making it harder and harder to afford a home diana olick joins us with more now. >> it is the perfect storm, price, interest rates, demand all rising amid a critical shortage of homes for same it's. slaing affordable and causing buyers this spring to overstretch. affordability is expected to weaken at a the fastest peace in a quarter century. it's base on a homeowner's monthly payments weakened by 5 thrz this year and could weaken another 10 to 15% by the end of the year thanks to rises in interest

rates. the average payment could rise theresa taylor has been selling homes almost a decade and says she is seeing more buyers than ever getting in over their head. >> we have some concerns when we see people putting so little down, a small earnest money deposit down, and you can literally see on paper -- you could see them stretching to make this happen there were more inventory that wouldn't be happening. >> reporter: the share of borrowers with debt payments more than 45% of their income more than tripled in the second half of last year and continue this is year part of that is that fannie mae loosened some of its standards but clearly demand was waiting if you missed the numbers they are all on cnbc.com right now. >> for more on what the rising

mortgage rates mean for the housing market we bring a senior analyst with zillow. when we talk about this shortage of affordable housing we know luckry condos are seeing their prices lowered because they can find buy herbs at that rate. yet there are so many people who want homes and condos in the suburbs and they can't fine them hows to that change. >> we have seen sellers at the top of the market having less bargaining power than does the bottom of the market that's a trend we have been seeing for a year, year and a half as diana noted rising home prices and interest rates is going toing in if i phi what is happening at the top and what's happening at the bottom of the market now, what is happening at the top -- the looseness at the top

should filter town to the bottom of the market. that takes time. >> i have personal experience. i built a spec home and flipped a house as well. part of the reason you deent see developers or flippers going into the affordable side of the market is because there is no money to be made you would have to buy a home practically at rock bottom auction prices and then do most the work yourself in order to see any profits. i know zillow is getting into the flipping game in phoenix and las vegas. is that the economy of scales that makes that affordable and profitable. >> at zillow we are opportunity to be independent and protected from zillow's business decisions. you can speak to specific business models. but you are right to point out that building costs are high and rising land costs have been very high labor costs are rising materials cost on top of that, lumber tariffs were enacted about a year ago. that pushed up tariffs over the

last year. i estimate for the median home built the lumer everybody at thats alone have added $8,000 to $10,000 to the cost to build your typical new home. until we can get builder costs back under control and help builders build at the affordable price point it's going to be hard to see the supply at the lower end of the margaret. >> the reason they can charge more is because there aren't enough plumbers or electricians around. >> that's right. >> higher prices in theory will bring more homes on the market how long will that take or how long has that historically taken? >> prices are only going to drive new supply to the market if builders can build at that price point. the international trade market, lumber cost or labor cost. supply hasn't responded there. >> no, no, when the price of a home gets expensive enough, it compensates for all of those things you are talking about,

right? are we there yet >> our new home prices expensive? certainly builders are building at the expensive price point and at some point that will affect the bottom of the market if we get enough new supply at the top. >> aaron, thank you for joining us appreciate that. it is an incredible gap between what people can afford and what's available on the housing market. shares of tesla moving higher this hour, ceo elon musk firing back against the economist organization after the magazine tweeted that tesla would need to raise cash musk tweeting the economist used to be boring but smart with a wicked dry wit now it's just boring sigh tesla will be profitable and cash flow positive in q 3 and q 4. obviously no need to raise money. musk was on cnn this morning talking about tesla's quality issues. >> we got complacent about some

of the things we thought were our core technology. we put too much new technology into the model 3 at once this should have been staged >> musk also spoke about how many model 3 electric cars he thinks tesla can produce in this quarter. >> unlock some of the critical things that were holding us back from reaching 2,000 cars week. since then we have continued to do 2,000 cars a week we probably have a three or fourfold increase in model 3 output this the second quarter. >> musk also saying he's, quote, definitely under instruments so if i seem like i'm under stress, i am under stress. >> let me get this straight, he is maybe feeling a little stress. >> absolutely. >> a little stress. >> good to know. coming up here on "power lunch," the popularity of cryptocurrencies is helping to fuel the opioid crisis elon mui has that story for us. coming up on "power lunch," the bitcoin my how concludes are fuelling the

nation's opioid epidemic, next tomorrow, it's a day filled with promise

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the crypto craze has made it much easier poor for people to use the internet to buy and sell illegal drugs contributing to the opioid epidemic. elon mui joins us with more. >> reporter: lethal drugs like fentanyl are starting their journey on what's called the dark web, a network where criminals can conduct business freely and they even require

payment in bitcoin access issette simple. you just need a special browser. matthew switzerlander is a special at at the department of homeland security. he showed cnbc how easy the network can disguise his identity and location. >> there is a series of relays which are different computers that the traffic is going to bounce in between. >> reporter: that what makes it private? >> correct >> reporter: so people don't realize we are in fairfax, virginia the dark web operates like the internet sites sell illegal drugs drugs are clearly displayed and sellers even have star ragts their preferred method of payment, oi bitcoin. >> this one the unit price is going to be .475 bitcoin, right now, $4680 looks like he only accepts bitcoin. >> reporter: while every bitcoin transaction is public, no one can see who owns the coins

that makes it appealing to criminals seeking anonymity on the internet but demand for both bitcoin and fentanyl so hot they are spilling into the opener is net. >> we need to be diligent, one of the ways to do that is through the border enforce memet we are on the ground at the mail facilities. >> reporter: facilities like jfk's customs where they suspect 14% of all fentanyl shipments go down they have to serve all of these packages either by hand or with the dogs to find the fentanyl people bought here with bitcoin or other cryptocurrency and had shipped here to the united states through overseas. they put the pac package through an extra machine if they find something

suspicious they can open it up here then they take it to a detention center where they test it and find out whether it is really fentanyl so far this fiscal year, they found 150 packages of fentanyl. >> the majority of them are come from china and hong kong. >> reporter: these products you are finding are being bought on line >> absolutely. using the dark web. >> reporter: what kind of fentanyl are you seeing come through here >> the fentanyl we are seizing here is about 90% pure just a couple of grains will create an i don't have dose for you. >> reporter: online drug iers have used western union and even pay poll but bitcoin is popular because it provides more anonymity and that makes law enforcement's job harder. >> i want to get to the fwoin and the cc cryptocurrency that's used here. also, because fentanyl is so dead deadly, how dangerous is that job to try to irfairette it out

if there is a chance that one grain could give you an overdose. >> reporter: they only recently started using dogs to start to help them sniff out the drug because they were worried that the dogs would die jfk is one of the first facilities to use canines. they were able to train them so they don't explode the package and have grains going everywhere. >> this is coming through the united states postal service. >> that's right. >> i assume there are owes others using package delivery services dhl or fedex they must be studying it, too. >> one reason why it appears the drug dealers prefer to use u.s. postal mail is because they don't get digit al identificatio of where it's come from.

>> and the postal service can't monitor as much as they need o >> there is legislation moving on the hill trying to change that. >> back to the cryptocurrency part of this, it is almost exclusively bitcoin or are there other cryptocurrencies used in these transactions >> bitcoin is the most popular but you are also seeing other types of cryptos rising in popularity because they have even tighter controls. monero is another that's popular. but bitcoin is so widespread because so many people knew about it you are seeing dealers and users turning to that currency. >> thank you for the story more on cnbc.com. coming up, how sanctions against russia are affecting one public company, and what your state may be doing to help you get around the new federal tax laws we'll be right back. you know what's awesome? gig-speed internet.

you know what's not awesome? when only certain people can get it. let's fix that. let's give this guy gig- 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. following the decision by the u.s. treasury to sanction various russian companies and individuals rio tinto saying today it is reviewing arrangements it has with a russian metal company, controlled by one of the individuals sanked by the u.s. testry rio tinto says it is in the

process of working on the contract and working with customers to avoid disruptions. he was a long time critic of the marijuana industry but now john baner is getting on board testimony former speaker of the house joined acreage holdings an investment company in the cannabis market. daner on squawk on the street earlier today explained thinks change of heart when it comes to medal marijuana. >> congress over the last couple of years has pretty much stopped any real enforcement university takes federal funds they don't want to get anywhere close to it. you have got the banking system that are scared to death to take this money so there is a lot of cash rolling around and so it's time for the federal government to take another look at this. and i think descheduling this drug, allowing for the research, would be very helpful to the american people. >> boehner was asked if he had

ever tried marijuana and he said no he has never used it. doesn't expect to. boehner also weighed in on the trump trade and the president's negotiating style. >> i have a different style. i would have reached out to our friend and our friends and looked them in the eye and said, listen, you're taking advantage of us we need to fix this. we need china and japan and south korea more today than ever if we're going to solve this problem we have in north korea and i don't know how we expect to get their support when you're beating the hell out of them over these tariffs and so -- but if you step back, the president is bringing these people to the table, not the way i would bring them to the table, but they're coming to the table, and i'm frankly feeling pretty good about the fact that we're going get this resolved without a trade war. >> it's always interesting to hear what people have to say after they've left office. here's john boehner, who now has no governmental influence, specifically, on whether the federal laws regarding marijuana

change, and yet he's saying his thinking has evolved it will be interesting to see whether his colleagues think the same thing but on this issue of financing, i recently met a marijuana mogul who's carrying around easily six figures in cash on a regular basis. he says, i do a legal business i got into it where it's legalized and yet i'm forced to essentially do criminal activity in order to get my money into the system >> he's got to launder the money in some ways, yeah there's a big story about it going through the casinos. >> the federal government that does not recognize it as a legal activity still wants him to pay his income taxes on the profits he makes >> yes, or else you get al caponed. >> i'm sure he counts every single dollar and would report that income. >> i saw that interview as well and what was interesting was to see him talk about the spending levels of federal government at the moment and it's got to burn john boehner that the tea party made his life hell and he's not in office because of the tea party. >> and now the spending bill is where it is. >> and now the spending bill,

not a problem. i mean, just tus realit's just y got to burn. >> a lot of deficit hawks think it's not a problem paul ryan is very conservative >> a lot of those deficit hawks are still in power he's not >> all righty. going to the other side of the political aisle, new jersey governor phil murphy expected to sign a bill passed by the state assembly that basically lets the state's residents get around the new federal tax rules. and other states are doing the same robert frank joining us now. do tell, mr. frank >> that we're all interested in this we live in new york and new jersey certainly new york and new jersey are about to become the first states to pass legislation that helps those taxpayers avoid the new federal rules on state and local taxes which means the battle lines are now drawn with the irs and the stakes are super high. more than $36 billion in federal revenues just this year. now, as part of its budget, new york created a new payroll tax program and new state charitable funds that allow high earners to write off some of their state

and local taxes. the new law limits tax deduction to $10,000 under new york's 5% payroll tax, companies basically pay your income tax for you they pay the tax, they get the deduction because they can still deduct but employees' gross pay would be loss so probably not going to be that popular with employees, plus it's really complicated. both new york and new jersey have also created new charities to accept taxes. taxpayers could theoretically deduct those donations to those charitable causes, get a charitable contribution, and then get state tax credits now, the laws allow municipalities, counties, and school districts to set up those charitable funds the taxpayers with ccan supporto offset their state and local taxes. new york and new jersey are suing the federal government, saying the new limits are unconstitutional treasury secretary mnuchin has called all of this, quote, ridiculous and illegal and said, why don't states just focus instead on cutting their

budgets. >> very good question. >> that would help a lot is there going to be a countersuit by the feds to say all these charitable workarounds are really, i mean, transparent fixes. we know exactly what they're doing. >> yeah, i don't know that it's going to take a suit it's just going take a rule by the irs that said you're not allowed. >> you're not allowed. >> and we've never seen states not only allow something but legislate something that is illegal by the federal government standards so you could get millions of taxpayers caught up in this saying, well, the state told me to do it they passed a law told me i could do it and the federal government's going to say, no, you can't. >> it's like pot >> exactly that's a good analogy >> pot i mean, there are a bunch of collisions like this right now, immigration is -- the first and foremost among them where the state -- where there's a real question of federalism that comes into play. let me tell you an interesting story. you know i've sat on this desk and talked about how i felt it

was unfair to limit the state and local tax deduction because i think it's fundamentally a form of double tax i'm being taxed on money that i do not have access to that has already been spoken for by another taxing authority >> right >> when i did my taxes for 2017, my accountant ran -- and i thought i was going to be killed under the new tax law. killed >> doesn't take effect, though >> no, for 2018, ran my exact 2017 return against the new tax law in 2018. >> and >> i'm a lucky guy >> because you created the tyler madison, llc >> i did not the difference was $2,200 more tax. that's all that's all >> and why >> why here's why because the lower tax rates obtain to your income for more of your income >> 39.6% to 37%. >> that brings -- if you touch that top rate, and you have to have a lot of -- i don't even think i got there, but at any rate, the brackets are lower

longer >> yes >> so, the result was, i lost -- i'm not going to put a hard number on it -- but tens of thousands of dollars in state and local tax deduction, tens of thousands of dollars >> but made it up. >> but i made it up because the rates were lower it's $2,000 more okay $2,000 more, don't like it, but the other thing that i don't think people are aware of, you lose the writeoff for miscellaneous business deductions >> yep >> if you claim, as some of us in our business do, business expenses like an agent's commission >> yeah. >> the agents. >> out of here you lose it. so the deductions lost are extreme. >> but your original point about the offset between the lower brackets -- >> surprised me. >> i don't think it should we had a lot of guests on who told us, fore shadowed that, where they ran numbers and said a very small percentage of people are going to end up really feeling the loss of that. >> only 20% of the top 1% of taxpayers will pay more under this new tax law

so, that's -- that's a very small group. they're outliers but these governments have to show those donors, political donors,that they're at least trying to do something. >> trying to fix it. >> and next week we'll interview our agents and see if they're going to lose clients because we can't deduct the fees. stocks starting the day in the green and sliding into negative territory the s&p and nasdaq rebounding at this hour. we're seeing it off this hour. plus, tillman, did he get a bargain when he paid $2.2 billion for the rockets his team is the favorite to one the nba titlat ae time when the basketball business is booming we'll talk to him on the second hour of "power." (indistinguishable muttering) that was awful. why are you so good at this?

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welcome to hour number two of "power lunch. we're going to wrap out the week in fine style, big time. here's what's on the menu. analysts expect earnings to show the biggest year over year gains since 2011 is the bar too high? expectations too grand what could happen if results disappoint and a big call on apple, amazon, facebook, netflix, fangers, the analyst says they can all rally double digit including one, he says, could jump 38%

and a slam dunk. the nba on a roll, record attendance surging tv ratings and merchandise sales. we will speak to the houston rockets and an drooes owner, our friend tilman fertitta he's taking on the resurgence, the consumer, much, much more as "power lunch" hour number two starts right now >> that's the music they play at the stadium. welcoming, tilman. stocks are mixed right now generally in the red the dow off of the session highs of 163 points. the s&p and the nasdaq are on pace for their best weekly gain in five weeks, however dow is lower by -- part of a percent. they're all flat all the major averages are flat. let's go on to some of the specific sectors, energy, utilities and staples, those are the leaders, gains of between 0.5% and 1%. the financials are lagging today, lower by more than 1% in the wake of the financials

reporting earnings today, including wells fargo, jpmorgan and citigroup. regions is off more than 2% as well oil stocks are sooraring, howevr marathon, hess, they are all higher between 2% and 4% tesla's getting a pop. ceo elon musk says the company will be profitable later this year contessa >> thank you, michelle i'm contessa brewer. let's start with the markets now. mike, what's the rollover in bank stocks telling you today? >> well, tells us a few things, contessa i mean, obviously, the numbers were, i like to say, better than expected as expected, because basically, everyone did expect the numbers to be a little bit better than published forecast but also you have a very narrow treasu treasury yield curve right now so the ten inform year yie-yeart cooperating. i think in individual instances, there was a sense that maybe costs are going to go up on things like deposit rates that they have to pay out

so you know, i wouldn't necessarily say that it's too much of consequence to the overall market on a day-to-day basis but it does show you how it's going to be interesting, this earnings season, just to see how much is priced in. >> so there's sort of two schools of thought about this. the first school of thought is this sort of peak earnings crowd that is a small minority but still trying to push very heavily and the idea is, guys, you know, going into 2019, we're going to peak out on earnings, the earnings growth is not going to be as big as this year, which is understandable. and then there's another crowd, the chillout crowd,s which is me, by the way, i'm the chillout crowd. my attitude is we've had the last five days with jpmorgan has reported four of the five, it's been down and the bank stocks have been done on that day, regardless of whether they beat or not now, this week, we had a nice run in bank stocks, most of the regionals are still up 2% or 3% and i think right now, we should justice say it's a sell on the news kind of day and the numbers were not bad

i'm for the moment in the chillout crowd >> yeah. and i think the market, by the way, is also kind of chilling out. it's sort of extending what was going on yesterday, a little bit of an attempt to get back to some norm tal state it seems there's a lot of two-way action that's not about running the indexes up on a good line or selling them off hard on something that's bad >> good point. happy friday today's banks, the earnings, are they any indication of what's to come the bar is high for companies to exceed expectations. chief investment officer and dan, managing director with monit montgomery scott good to have you here. what should we be doing right now, chris, when it comes to all the uncertainty that we keep talking about, the strikes

syri should investors be looking through this volatility or taking some off the table? >> i think you should be looking through the volatility i think today's a great example of just taking a step back you need to look at the fundamentals fulla full fundamentals are really good for the economy, corporate earnings are good. in the short-term, the market had very high expectations, it's hard to surprise to the upside more than those expectations were already priced in but taking a longer view, as long as the fundamentals are good, the economy's good, you want to take that longer view and you want to stay in this market. that's what i would do, based on what i'm seeing. >> dan, same question to you when you see what's happening with all this volatility, is it time to take some off the table or do you stick with this. >> that's the message we're going out with to clients these days we had the volatile period coming into the mu year. markets were very overheated coming into the january, february time frame. there was against that built a subliminal wall of worry, if you will, and so if you get any kind

of escalation on the geopolitical front or certainly any misfires on the earnings front, you'll see volatility creep back in, but ultimately we think there's a bottom being put in place here as far as the s&p is concerned and we like the cadence of what we're seeing and the trends we're basically telling folks on a long-term basis that there's enough economic growth there's a great demographic profile in the u.s. in terms of our credit system. it functioning properly and so we see really the effects of multiple expansion for years to come you look at the valuation basis on the s&p stocks are not ridiculously expensive here >> what number are you using >> i use 16, 17 times. that's where we're trading at around today if you had any more volatility this year, which i would give some allowance for, you could drop that multiple down to maybe 15, even 14 times. basically, secular bull markets have never seen peak multiple. they've never been terminated at that level in terms of valuation. they've always been much, much

higher, so based on what we're seeing in terms of economic growth, demographic growth, we think the current multiple actually understates what's going on in the broader economy at this point. so, any volatility you see in the short un, you know, we're effectively trying to tell people, use that as a buying opportunity if you can >> so, chris, let's talk about expectations, then there's beating expectations and then there's just crushing it flat and kicking it to the curb. where do these companies have to come in with their earnings in order to make investors feel enthusiastic about what they're doing, rather than just oh, great, they beat expectations, we were expecting that >> that's exactly -- >> chris, go ahead >> sorry, i'll take that that's exactly the point you know, i think really, if you look at sentiment, it's changed materially last year, sentiment was overly optimistic this year, sentiment is probably overly pessimistic so to the extent that you can beat expectations, you know, expectations have been raised, people are expecting companies to beat expectations and it really isn't moving the market

that much higher if you miss expectations, the market's going to go a lot lower. it's going to take some time this year to continue to see good earnings growth, not just this quarter but the next quarter and the quarter after that if we can continue to show earnings growth, that's growing and those expectations will be more measured going forward, i think you're going to see a lot bigger move from the market, so i think it's a sideways market with good -- if you beat expectations otherwise, for the market to go higher, it's just going to take time >> dan, give me two sectors you like and one you loathe. >> widow i like, life sciences, bioproduction within health care and biotechnology both of those we see as growth sectors here. i also like the banks despite some of their misfires what's going on with the ten-year note yield, i realize that struggles around 3% or so but we see a very high correlation between bank stock performance and what's going on at the long end of the curve and that's regardless of, you know, spread tightening that we see.

in terms of loathing, that's a tough one because we're in a really strong market tied here, the majority of sectors and stocks are participating but what i would say is if we do believe or if you do believe interest rates are going to push modestly higher going forward, you want to avoid some of the rate sensitive sectors, so possibly mlps. it's not that they're going to get crushed on a nominal basis but on a relative performance basis, you may see underperformance out of those groups >> dan and chris, thanks very much >> a big weekend for president trump as we wait for possible military action in syria and james comey, the fbi director, he fired, blasting the president for being unethical and untethered to the truth. in a new book. how does all this impact the trump presidency joining us is nbc news political analyst hugh hewitt. first of all, on syria, as we wait for possible strikes, they

were threatened over twitter, what's driving the decision to now from the oval office >> well, i think i watched more of a security council meeting of the u.n. today, more of it than i have since before the gulf war, the iraq war. there were some very blunt things said today at the u.n., the french ambassador to the u.n. said the regime's end is near, they're at the point of no return, france will carry its burden nikki haley was very direct. i think that the combination of president trump, prime minister may, and president macron of france are much more resolute about bringing about regime change or regime evolution immediately than were president obama, prime minister cameron, and president alon in 2013 and the armada that is amassing close to syria is large and growing. the truman carrier and its carrier group dispatched a few days ago i am thinking that we're missing the biggest story here, which is that we're close to major action against a country with wmd that

iran is in, that russia is in, that's close to israel, that's close to our troops in the north. it looks to me like a very serious situation, and i don't know that we won't be talking about it for weeks to come >> you know, hugh -- that's what i was going to get to next but you know, the market was talked about this morning being lower on the expectation that perhaps we are going to see some kind of strike imminently and in fact, a lot of people saying, you know, why go into the weekend long or short or anything when there's potentially something really big coming that could really drive the markets. what's your take of the comey book if i could opine, it seems like it's a poor man's version of "fire and fury," lots of stuff we kind of already knew, maybe more details we didn't know, but do you see any big bombshells in here, anything that is so detrimental to the president that he's at risk? >> there are no bombshells now, i got to say, i've been reading this book, andy's new

book and i'm sure he'll be on to talk with you about it but i've been reading the excerpts of the comey book and i'm going to wait to read the whole thing to characterize it but if there were any bombshells, they didn't make much noise. they clearly don't like each other. >> shocking. >> when george stephanopoulos said, did he have a right to know that the steele dossier was paid for by opponents, he said, i don't know, i can't answer that i think people are going to sink in over time but it's going to end up confirming everyone's already held opinion, and therefore i don't think it's going to move the needle -- mr. mueller's going to move the needle, mr. rosenstein, the cohen sweep, the cohen raid is going to move the needle i don't think james comey is, and it may not, in fact, help him too much but i also think it's a short story >> i want to come back to the what i think is a far more serious issue and that is syria. if you read between the lines of

some of secretary mattis' testimony, he seems to be taking a much more cautious stance as i guess is prudent for the head of the military, than some on the more political side of things. the difference here, if there is a move toward regime change, the critics -- as opposed to what was the case in iraq, the difference here is that you have a nuclear power allied with the regime we want to change and a would-be nuclear power in iran similarly allied. this seems to me to have the potential to develop into, if not a major conflict regionally, something maybe even more than that >> tyler, i think you're right and i hope we're not playing your tape predicting that a week from now we've heard the term deconfliction a lot but when you have iran, israel, hezbollah,

the united states, and turkey all jammed up against and we expect a bunch of cruise missiles and jet fighters to strike and we expect cyber attacks on syria to disable the s-400 system that the russians have placed around strategic syrian sites, many miscalculations at issue here, and i should point out, israel struck syria in a very controversial move earlier this week, so the prospect of a direct iranian/israel confrontation on the desert that we call syria, like the romans used to say, they made a desert and they called it peace it's a terrible place. it's hell right now. but it's going to be -- i think it's a, you know, like the cuban missile crisis kind of thing, but there's so much news that we're not paying much attention. >> hugh, and on that note, i'm going to go to something that's going to be more salacious, we're already seeing fallout from the raid of cohen's office and the "journal" is reporting that he negotiated a settlement with a "playboy" model on behalf of a republican fund-raiser,

which highlights what everybody realized they're going in looking for a, but this lawyer's got a lot of paperwork. they're going to find all kinds of stuff in there. how much impeachment risk does the president face as a result of this? >> well, the democrats will certainly impeach him if he -- if they take the house in november that's given but they won't convict him because the senate -- he only needs 34 votes to turn down so i don't think the president cares about that i do think the attorney/client breach authorized by deputy attorney general rosenstein is a very significant issue for lawyers. i'm a lawyer i don't know but one lawyer in 35 years of practice who's had their papers seized and they got them right back because it's so rare to do this. and i would like to know where are those papers, who's got control of them, who is reviewing them, the taint team gives me no confidence whatsoever, and michael cohen worked for a lot of high-profile people, including the president and i'm very, very concerned about the precedent that was set here with the breach of the cohen papers and i believe it's not playing well with the public >> thanks so much.

>> it's funny, isn't it, how the special prosecutor things often end up at sex. >> that doesn't surprise me at all. once you understand human nature >> right >> i thought you were going somewhere different with that, to be honest >> no, i just -- it was white water and it's russian collusion. >> it's differently mission creep. always mission creep >> it's creep. yeah here's what's coming up on "power lunch." the nba is on fire i've been to two games in the last week. multiple records for attendance and on other metrics, we'll tell you just how good a season it has been and it's about to really get under way with the playoffs houston rockets and cnbc's billion dollar buyer tilman fertitta will stop by to talk about that and more. plus it could be straight out of a spy movie part of the plot involves a grain of rice. it's a fascinating tale that you don't want to miss and two pharma giants going

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see clinical data on monday morning out of the conference in chicago that will have important implications for the medicines' market share going forward the clinical trials are both in specific kinds of lung cancer, a tremendously important area for medicine and because of the size of the market, also for stocks of drug makers it's the leading cause of cancer deaths in the united states and they peg the market at $10 billion to $15 billion both companies have said these clinical trials met their goals. merc back in january driving its stock up at the time and bristol meyers to a more mixed reception from wall street but on monday, we'll get details on just how well these drugs worked. going in, investors appear most bullish on me arc's products. and there's going to be a lot of interest on monday morning >> especially for all the people who could benefit from whatever the results are. >> most importantly. absolutely >> thanks, meg so coming up, the nba's record breaking season, houston

rockets owner and cnbc's own billion dollar buyer, tilman fertitta, is going to join us live to talk about that and a whole lot more also, bolt calls on fang stocks, including a 35% coming rally for apple? what's making our ne gstxtue so bullish. stick around to find out who wants a donut? it use to be everyone had to be in the office. we lacked the technology to be flexible and productive. then cdw orchestrated a collaboration solution for us. using the lenovo x1 carbon. powered by intel core processor technology. now we can access our network and work together from anywhere. hey! hey everybody. you coming back for the team building? mobility by lenovo. no? it orchestration by cdw. ♪

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i'm meg tirrell. president trump issuing a full pardon to scooter libby, a former top aide to vice president dick cheney, saying he heard he had been treated unfairly by the special prosecutor he was convicted of lying to investigators and obstruction of justice following the 2003 leak. former house speaker john boehner was on "squawk on the street" this morning he said he thinks robert mueller and rod rosenstein are doing a good job >> they're both long-time public servants they have a great track record and they've got a job to do. let's let them do their jobs they're either facts or not. there's either crimes been committed or they haven't and there's no reason to have any doubts about the outcome of the investigation.

and starting tomorrow, new tsa screening procedures will take effect at airports across the nation any electronic device larger than a cell phone must be placed in a separate bin. the new step will help get clearer x-ray images it does not apply to precheck passengers and that's the news update at this hour. back to "power lunch." >> one more thing to slow down the line >> yeah. some of the biggest names in tech down 8% or more after the last month is there a big buying opportunity in tech's terrible month? let's bring in brian white, global head of technology hardware software. brian, welcome you liked these big names. we've got a list of stocks to go through, the fangs we've got three as in there. no "g" anymore let's start with apple you are just starting coverage of it, right is that right? >> yeah, we just initiated coverage >> and you love it >> yeah, i think, you know, apple's such a great story, because i still think it's

misunderstood. you know, it trades at 11 times x cash they're in this durable iphone cycle with the iphone x. this is not a super cycle. it's a durable cycle, which means you're not going to have the boom or the bust and you've got a huge capital distribution announcement, i think, on may 1st. so, you know, they've promised they're going to return $300 billion in capital to investors through march 2019 i think they can at least hike that to $400 billion to $500 billion >> you mentioned the multiple but isn't that expensive, but social security alwa it's always been that way with apple. look at netflix and amazon, they get these bigger multiples why do you think apple is going to now be given a bigger multiple >> the multiple over the last couple years has started to expand and the fact that, you know, warren buffet got involved in this name should tell you something. and that is this stock is significantly undervalued, and you know, i've talked about this before, the sugar water

companies are trading at 20 times earnings right now and they grew 1% over the past five years. apple's grown 14%, 15%, the s&p has grown 5% so if i think about apple, it's not going the wayside of black bear and motorola. >> you see it going from $235 from $173. are you worried about any tariff troubles that they might face? >> i don't think they will i think they're going to be able to avoid that. you know, great china's about 20% of revenue right now there is an insatiable appetite for apple in china and the middle class, not just in china, around the asia, really, which is 80% of the middle class growth. >> should we do another "a" stock? or do you want to go to an "n" netflix? which would you like >> alphabet is one that i think is also very undervalued >> all right >> and it's 18 times x cash right now. this is a company that's probably one of the most ubiquitous tech brands in our

world today. and i think about the google cloud starting to ramp i think about the opportunities and artificial intelligence. you know, i think google's a very, very attractive story right here and so you know, with a pullback and what's happened with facebook, google's very attractive for sure. >> which leads us to facebook. >> yeah. you've got it as a buy, target's $200 lowered from $210 what's the issue >> so, the previous analyst said a price target of $210 we have $200 i will just say i think zuck crushed it this week very contrite. he was well composed and i think he was very believable and so while this is a crisis, you know, at facebook, obviously, and it's rippling across tech and hurting all online companies, i think they're going to come out of it a lot stronger i think this brand is going to be a lot stronger and this, at 18 times x cash, is unbelievably cheap. you're starting to see value investors poke around in facebook and i will tell you with 50% operating margin, this

company is a money machine and so this is really an attractive buy here. if there -- if there wasn't this crisis now, i could say, hey, maybe i want to put a 30 multiple or a 40 multiple. this is a great company. >> you had zuckerberg under fire from congress. you had amazon under fire from the white house. and you have a $2,000 target on amazon share prices. tell me why. what's driving that? >> you know, amazon is on this unstoppable trend. and so if you look at their market share is a percentage of global retail, it's 1% in the u.s., it's single digits so make the argument that this is some type of monopoly will be very, very difficult >> so, i'm hearing you say that on those two stocks, facebook and amazon, both of which worry this week was regulatory risk, you don't see it >> i don't think it will ultimately pan out i really don't there's obviously facebook -- they're going to have to change. i mean, facebook is experiencing growing pains.

you know, move fast and break things was kind of the motto at facebook they've got to step back from that they're becoming -- going to be an adult soon, and they've got to change the way that they operate and i think this is the reset. do it now, and i think you'll get a lot more credibility from advertisers, from users, from investors, and the brand will come out a lot stronger. >> so you've got buys on all these. >> we do >> buy, buy, buy >> great secular trends in this group for sure >> should have had that nsync music. nice to see you, man time for a market -- no. >> i think we're going to do the oil market instead because it's closing for the day. there's the market i don't know >> jackie d. >> all right, guys >> take it away. >> oil was a big story this week crude prices are modestly higher on the session today, going to close over 67 for the week, almost a 9% jump on geopolitical tensions with syria, the conflict in saudi arabia so just over a week ago, it

seemed oil was stuck around 63, now it could cross the 70 mark quite soon what will it take to get there, an escalation in conflict or information showing that more supply is coming offline today's report saying that total global stocks are just a stone's throw away from the five-year average. they could hit that target in may. that is pretty significant, guys, when it comes to what we've been watching over the past couple years. the nba scores big, setting new records for attendance merchandise and more houston rockets' owner tilman fertitta joins us. plus, are you ready? here's another throwback to my high school days rice, rice, baby >> oh, gosh. >> but they've got the pink panther on instead it's the spy story involving one america's ofo america's food staples

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welcome back to "power lunch. let's talk sports. it's been a great season for the nba, the league setting several new records. eric is here with that story, love and basketball. >> it's interesting because if you look at the trends in other sports, like ratings in football and hockey, it's really been down, and so basketball bucking that trend by actually showing an increase in this past season,

double digits increases when you look at the tv ratings on espn, turner, nba tv, abc as well, and then not just ratings but also the in-game attendance because you might think, all right, people are -- they're watching on tv, not going to the games, which has been another trend but that set a record high as well 22 million people came to an nba game so they're watching on tv and in the stadium you saw a lot of empty football stadiums what does that mean for dollars? valuations going up, forbes estimates the average team is worth $1.6 billion, up 22% from last year and even that might be an understatement because we had two minority ownership deals that just happened in the last couple weeks, the memphis grizzlies valued over $1.3 billion, brooklyn, that's the other day, yesterday, $2.3 billion these are losing teams in a small market if you consider brooklyn not even the main new york team, so those are big numbers for losing teams the 2.35 number on brooklyn,

that's more than the $2.2 billion record that tilman fertitta paid just last year for the best team in the nba, the the houston rockets. so, that's the growth we're seeing this year and that's before we talk about what happens in the playoffs, their esports league they're starting now and if sports betting becomes legal, that's another growth area. >> we're expecting to hear that out of the supreme court and that changes the game not only in the sports world, in the gambling world as well >> that's you guys >> right, we'll be taking a big look at that do you think it's because they've priced the tickets right? is that why people are showing up is it the pace of play >> we should ask tilman. >> part of it, though, they did change the commercial structure a little bit this year in terms of going to breaks on tv so i found just watching this year, it felt like it was coming back quicker, the pace of play did seem quicker, the games are not as long as football or baseball. >> scrtrue that. >> it is a much more compressed, compact product. >> the main question is, who you

rooting for in the playoffs? i better say the rockets i like the rockets i really do. >> why would you say that right now? >> because one nba owner is cheering the record breaking year for the league is tilman fertitta, billion dollar buyer and he will be courtside this weekend when the rockets kick off their playoff run. cheering on his rockets and his choice for mvp, the beard, james harden he's got a message for the rocket nation. i want fans to be really, really loud during the timber wolves game because if they do, nba victory is close at hand he's here for the nba board of governors meeting in new york. rockets owner tilman fertitta, tilman, great to see you >> hey, tyler, how are you >> it's -- i feel this is a rare treat. you're wearing a tie i don't usually see you in a tie. >> you have to wear them when you need to wear them. >> yeah, you got to. >> governors meetings and funerals and weddings. >> you know, we can talk about the nba and its success.

i've been to two games in the past week in different cities, both a very enjoyable fan experience really, really good. but my question for you is what have you learned over the eight or ten months since you bought the team about the business of basketball what has surprised you what have you learned? >> you know, it's really interesting, because i've been a rockets fan my whole life and have sat on the front row next to the owner that was the owner for the last 25 years, but you really look at it differently in the way you dissect it and your players today, your major players and your big markets and even your smaller markets, they're rock stars, and that's what's different than the nfl and major league baseball is that they feel close to the stars. they sit there in the stadium. they recognize their faces they don't have a helmet on. they're not such a huge distance away and then as you said a few minutes ago, the games last about two hours and seven minutes so you're able to get in and get out.

it's not a four-hour ordeal, and it's fun and interesting, and remember, in basketball, your star can touch the ball every single play. in football, how often does it happen except for the quarterback and in baseball, they come up every nine players or a pitcher pitches every fifth day. >> much more concentrated experience tilman, we know that for a long time you eyed an nfl franchise in the category of you'd rather be lucky than good, are you glad you ended up with an nba franchise when you look at what's happening in the nfl. >> for sure. and at the same time, i mean, nfl is the nfl and it's always going to be wonderful and great. and i think it will be interesting to see what the charlotte team sells for but i much prefer having 82 games a year to go to and a lot of night games instead of having to get up and go to 16 games a year on a sunday at noon so, the nba definitely fits me

better, but i have all the respect in the world for the nfl. but the nba is just fun and interesting, and the crowd is into it for the whole two hours, and people relate to the stars >> you hit on something that i was going to bring up just a -- you hit on it a couple moments ago and that is i think the nba has done a brilliant job at marketing its stars and building the experience around the stars, who, as you point out, they're there for you to see, that you can see their faces, you know who they are and practically every team has a marquee player you guys happen to have three of them at least. >> for sure. and the way that basketball is is what makes it so interesting is, if you have one super star, you're going to always be extremely competitive and most like get to the playoffs but you really have to have two super stars like we do with chris paul and james harden, and really a third one like a capela or eric

garden that takes you to the next level but the other side of it is, that's why a team can change so quickly in basketball is because you go out in free agency or through the draft and get a great rookie, you can totally change your team in a matter of one season or two. >> if -- tilman, if the supreme court sides with the states rights on this, legalized sports betting, nba has already said it wants a piece of the action. you have the team and of course the stake in las vegas too with the station casinos. give me a sense of how that's going to change sports in general if it's legalized, and gaming >> let me correct you real quick. i have the golden nugget casinos and my cousins have the stations >> the fertittas are a big name in las vegas >> we want the casinos to do well i think it will be great and the nba has talked about certain things and as soon as i'm through with this, i'm going to

get back at my board of governors meeting and listen to a presentation about this. but it would be great -- why have illegal gambling in so many states where the government needs to let states decide on their own is it all right to have gambling. right now, what people don't really understand is, the federal government has said nevada is the only state that can have legalized gambling. we're waiting for the supreme court to rule that it's up to the states, and when the -- when it happens, you're going to see a lot of states approve it immediately. you're going to see sports books all over the country, and i think there's a really, really good chance the supreme court is going to do what we need them to do >> tilman, price of oil, $67.39 for wti. really good news for texas but it's kind of bad for consumers across the country if their gas prices go up so you've got restaurants and exposure on both sides because you're in houston. what do you think about the

price of oil and what it's doing for houston versus the rest of the country? >> well, if you go back to my predictions 2.5, 3 years ago and i said if oil goes into the 30s and 40s, we're going to be in a lot of trouble i have to say, i was wrong i mean, the crane steps continue to build, and we just never really got that slowdown >> in houston. >> if we can keep oil in the 70s -- in houston. in houston but if we keep oil in the 70s, 80s, i think gas will go up a little bit, which the consumer got used to paying $3.50 a gallon and that's not where it is today, but there's that right number that's great, but you are right. i mean, i am definitely conflicted at times because i have so much in houston, but then i have five casinos and 600 restaurants around the country, so let's just keep it right where it needs to be >> you're not conflicted, you're hedged think of it that way thanks, tilman always good to have you on, owner of the houston rockets still ahead, stealing trade

secrets from america, one grain of rice at a time. no joke. we're going to explain next. polk county is one of the counties that you don't think about very much. it's really not very important. i was in the stone ages as much as technology wise. and i would say i had nothing. you become a school teacher for one reason, you love kids. and so you don't have the same tools, you don't always believe you have the same... outcomes achievable for yourself. when we got the tablets, it changed everything. by giving them that technology and then marrying it with a curriculum that's designed to have technology at the heart of it, we are really changing the way that students learn. and i can't wait for ten years from now when i get to talk to them again and see, like, who they are.

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chinese national was sentenced to ten years in u.s. federal prison for stealing trade secrets. a permanent u.s. resident with a ph.d. from a u.s. university worked as a rice breeder for a company in kansas. department of justice says he gave the seeds of the company's genetically engineered rice to a chinese delegation traveling in the u.s. customs agents found the seeds in a brown envelope in the suitcase of a member of that delegation who was headed back to china joining us now is the ceo, scott dieter good to have you here. >> thank you, michelle it's good to be here >> first, can you tell our audience, why is your rice so special that somebody might want to try and steal it? >> well, i think that's right. it is special rice what we do, we're a biopharmaceutical company that develops products for gastrointestinal and infectious disease. we have a program with bill and melinda gates foundation and if the technology that we've

developed allows for an affordability and a scale that is unmatched, and i think that's what makes it so attractive and why that might have been the target >> so, i just want people to understand the rice that you grow is essentially a factory for a product that gets sold for medicine you're not selling rice. you're selling a product that is created by growing the rice. >> you've got it exactly we use the sun as our energy source the soil is our raw material and the rice is our factory, and we can do that at large scale we do that today in kansas we make a protein from the rice, that's our product we never sell our rice >> how did you find out that the seeds had been stolen? tell me about the moment that the fbi called you >> well, that was an interesting day. got a phone call from an agent that mentioned -- asked if we had products that looked like this we were not aware of this prior to the situation

>> and what did you think? i mean, were you frightened? >> yeah, we were, because, you know, we take great care and this is a regulated market we have products that are recollected by t regulated by the usda and compliance with that regulation is extremely important to us so we take care to protect our custody of our rice from start to finish. >> what if that rice had gotten to china excuse me, what if the seeds of that rice had gotten to china? >> you know, we're the only company that can legitimately make the products that we do we make a recombinant serum and our rice contains all of our technology so, we have put probably $85 million into the technology and to the development of this, and so we want to protect that and also, i think maybe more importantly, is to protect the creativity and the ingenious

developments that our scientific team has made. you know, we've got to protect that creativity, i think, more than anything else, and create a level playing field, you know, where we have civilized laws that are consistent and reciprocal that are consistent and reciprocal so that we can insent the developments of the innovations. >> probably one of the reasons why the trump administration talked so much about intellectual property. tell me how else did you know the employee surprised? work closely with him? anonymous? >> yeah, you know, we know him well, knew the family, knew his children, you know, it's a very sad situation, quite frankly, because it is a if any in a small company. >> wow mr. deeter, thank you so much, appreciate you coming on telling us about the situation >> thank you, michelle >> shares of ge on pace tore bak the longest monthly losing streak ever. we take a closer look next let's begin.

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time for trading nation, long beleaguered, up today, going positive for the month it's on track to snap the longest monthly losing streak ever that was 13 straight months in a row. bring in the trading nation team, we are with our guests, mike, you're bearish on ge why? >> yeah. i think ge, if you're investing in ge right now, it's nothing more than a dead cat bounce. you look at ge, and they are in the middle of a middle, the beginning. the history of ge is they outspent their cash flow, cut their dividend, ill-timed acquisitions, debt on the balance sheet. this is going to take a lot of time i don't think it's investful right now. i think ge is paying the piper for all the quarters that they beat earnings by one penny each and every quarter.

>> gina, do you have a different opinion or in agreement? >> right with mike if you look at ge, you have a an aerospace business, but in the middle of that, there's going to be probably another earnings miss and dividend cut. i don't think it gets better from here. this is all predicated on rumors they are disposing of assets, but they're still in the middle of an fec investigation. there's uncertainty, and, frankly, i don't think out of the position to fix the problem. >> thank you so much, ladies and gentlemen. for more, go to tradingnation.cnbc.com check please is next

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check, please. i want to come back to the story about the rice the seeds delivered by an

employee of the company is the employee, do we know whether he was an agent of china? >> we don't know the motive. was he a plant sent to the u.s., get ph.d. in chemical science, go in the company, and steal stuff. >> right >> or was this just an opportunity where there was a delegation that knew about this, and asked him, you know, offered money, whatever, and there's also things to consider about with china with the following. remember the case of the chinese grower that did not want to row in the olympics, made him do it anyway, and said, if you don't row, your sister will lose her job, your father loses his job, your mother loses her job. you need to row. you wonder if they had leverage on the individual even though he was living here. >> that's got to be dozens of trade delegations coming to this country every week from china and other countries, and this

would be an alarm to me for anybody. >> yep what's your sense, too, i mean, this is a small company without a lot of added layers of security are big companies less vulnerable >> that's a very good question i mean, you have to be very cognizant of what your employees are doing at any given time. i don't know >> fascinating story the dow down 104 points. last hour of trading coming up thank you for watching "power lunch," and "closing bell" starts now ♪ >> live from the new york stock exchange, this is the closing bell, i'm wilfred frost. >> i'm sarah eisen the s&p 500 and nasdaq on pace for the best week in the last five weeks, could push the market back to normalcy. we'll discuss coming up. >> combination of rising rates an