>> services. gyms. >> gyms. >> that would be the way i would go. >> agree reality net lease and all the walgree s walgreen's perfect for that and doing well my final trade is b of a i have a negative view on rates. >> that does it for us here on the halftime report. thanks for watching. have a great weekend "power lunch" starts right now. >> melissa lee will be joining us in a couple of minutes, i'm tyler mathisen let's tell you what's on the menu the bears are out, taking a bite out of apple analysts worried that iphone sales may be worse than anticipated. the stock whacked. suppliers also getting slammed president trump takes aim at opec, accusing the cartel of keeping oil prices artificially high, and he says he's not going to take it crude sliding on those comments. is oil going back down a slippery slope and the fear about 5%.

mortgage rates, moving now to four-year highs, closing in on 5% will buyers hold off is that the threshold point? will sellers stay put? "power lunch" starts right now welcome to "power lunch. i'm sarah eisen live in washington at the imf meeting. stocks are selling off today on this idea of peak economic growth we have got a prediction from former treasury secretary larry summers coming for you on when the next recession will hit and what's causing the stock in bond yields he even gave us thoughts on that most importantly, we have got a live and exclusive interview for with you the fed governor, brainard she doesn't talk very often. she will be here to talk about growth, the potential for a trade war, and of course fed policy

that "power lunch" exclusive just moments away. for now, tyler, i'll send it back to you. >> it should be absolutely fascinating. you are right, a she is not heard from very often. let's talk about the dow right now, sliding triple digits down for a third straight day, down 218 points, .9% the s&p 500 what do you think, now negative for the year. the major averages are on the track believe it or not for a second straight positive week. they reason is have that kind of streak two weeks in a row since fed february apple on the slide, not helping the s&p 500. intel and microsoft also taking hits good news for a change, ge rallying on its earnings we will speak with a bullish analyst. he expects the stock to almost double from where it is today in the low teens. bonds on the move. yields on the two-year hitting fresh new highs going back to

september of 2008. the ten-year also moving higher, hitting 2.94%. for more on these wild and whacky markets let's go to bob pisani at the new york stock exchange. >> hello tyler i think the key point today, we were doing fine until about 10:30. and we just drifted lower very quickly. that's when we broke through the lows earlier in the week it was 2680 on s&p 500 a lot of people watch those lows for the week as signals whether they should stay in or out we saw volume pick up at 11:00 when that happened we had pockets of weakness apple and apple suppliers. apple is down on heavy vol suppliers, samsung all weak as well on concern has the i-kpoen x not doing as well as hoped i think it's important to note that consumer staples continue to drop. low lowser for proctor and

mills, kimberly-clark, hershey as well. brand names influence waning heavy competition, of course thin mother-in-laws. retailers, jcpenney, gap stores, "elle" brands also weak today. here's the good news we are getting rotation here it's not like thing are just down rotation is about commodities. we are seeing rotation in april into energy stocks and materials. that is the commodity play we keep talking about we have seen money coming out of semiconductors and notably coming out of consumer staples that's a big story, the continuing drop in consumer staples. retail also weak better news. earnings hit 20% growth for the first quarter. believe it or not the numbers keep going up. that is good news. the second, third, and fourth quarter numbers are holding up as well. back to you. >> robert, thank you we appreciate it apple sparking fears in the markets today, and how visitors also worry being the impact of raising interest rates. the president's tweet taking

down oil, and a a on the of earnings coming out next week. a lot to process what should investors. let's bring in the chief investment officer at castle investment and john trainer, chief investment officer at people's uniting. john and jerry, glad to have you with us. what do you make, jerry, of the raising interest rates how worrisome are they >> as we all know the front end of the curve has been moving up. it's now in a the back end is is starting to respond. all of that is good. it reflects a broad global economy that's moving from the twos and threes up into the threes and fours we shouldn't be surprised this is happening what is important is that it's happening gradually. there is no hardship that's going to affect valuations it's just a matter of getting used to a little bit more inflation and looking at the companies that have more pricing power. >> one of the companies that you like -- john, forgive me -- indulge me if you wouldn't mind,

i want to ask jerry a follow-up question here. one of the companies that you like is caterpillar. that might be, in the context of trade friction, a company that feels counter-intuitive. explain why you like it? >> so the trade friction side is obviously china. but when you look at their universe of clients they are all over the world, including the united states. and they are this great behemoth that global growth depends on. you need their equipment you can single them out. there are too many markets that they dominate and we just see a lot of earnings power that isn't being reflected right now. that's why it's still an exciting name. >> john, over to you i know you think that 2018 is stacking up as a good year domestically for the economy probably globally as well and that 2019 may continue that trend. but then you say something that feels a little more ominous, which is this -- if you are a long-term investor, go ahead and

buy equities if your goals are nearer term now is not the time to do that why? >> well, what we don't want are people to -- inwe have all learned sort of buy the dip. what we want client to focus on are their long term goals and not try to think i can trade the market or whatever daily tweet there is we agree with what jerry said earlier. the economy is doing well. we think the statistics are all moving in the right direction but we don't think it's going to get out of hand. we think this could actually be a good stock market for the next year, possibly longer, but clients need to be careful and focus on those long term goals. >> you and and jerry agree, john, that one area of opportunity is financials. your choice in that sector is keybank. >> yes. >> and jerry's is jp morgan bank a little different in terms of scale and reach. i would like you to make the

case for key and then jerry will explain j.p. >> we like the financials in general. we think they are positioned very well. we like key because it is a little more of a regional bank it doesn't have the international exposure that j.p. does we like j.p. also. we like key specifically because of some of the regulatory changes going on in the u.s. key is reaping the benefits of a merger they had. they are getting a lot of cost benefit. and their recent earnings report showed a lot of good organic growth in the loan portfolio so we like key, really in this environment. >> jerry, jp morgan, make the case. >> jp morgan has been lagging. these regionals -- i think the valuation behind them though is going to -- as you see it break through over 3% in rates you are going to see people drift in wholesale to the sector. and jp morgan just hits on all those markets. it hits the international, it hits all the capital formation stuff. j.p. has been a leader but i think there is a breakout

move that's yet to be really happening. >> jerry, thanks good to have you on set. and john trainer, thank you as well. >> thank you. >> look who arrived. >> i made it it is a long commute. >> long. >> from right over there president trump. slaing opec this morning for inflating oil prices tweeting look like opec is at it again with record amounts of oil all over the place including the fully loaded ships at sea. oil prices are artificially very high no good, and will not be accepted with us on the phone, the founder and president of energy consulting company husseiny energy sir, thank you for joining us. what would you say to president trump about his allegations, about prices being artificially high right now. >> well, melissa, i think mr. trump must have missed the collapse of oil prices over the

last three years they have been devastating to the oil industry and the $70 that we are at right now, about $65 for wti is barely enough to sustain the investments required to keep oil flowing. if there wasn't a recovery now, we would probably be seeing a severe shortfall by 2019 so i think president trump must have missed the fact that you need favorable economics to make investments. and at the 60, $50 that we were looking at, there just wasn't enough investment happening in the oil industry >> sure. now, this morning there was a report saying that opec wants to lower stock files further, implying that perhaps oil prices could be headed higher how much stock would you put into those reports that there could be further cuts ahead? >> no, what i read -- or what i follow is that the inventory

levels, very high commercial levels have pretty much set them at the five-year afternoon so this is a good number, good volume to have in inventory. and saudi arabia and looking at russia and kazakhstan and others at the long term regulatory effect they can play in trying to monitor prices so they are stable the idea isn't to allow volatility to undermine investments or in fact to underfine the consumer requirements you know, the barrels a day -- you need significant investment just the replace the declines and meet demand. >> why have oil prices risen as much as they have not just this year, but over the past couple of years, sir? >> if you look at the history of

theis proos they have actually been recovering. they haven't risen from say a high to go higher. they actually collapsed in 2015 down to almost 30, $40 and now they are coming back to a balance between what is required to replace the declines and meet demand, plus the cost of new capacity. we used to track almost 120 projects materializing over a five-year period back in the 2010-2012 era. right now, we hardly have 20 projects coming on stream in the next five years. so there has been a real rollback in terms of growth. and that's going to eat into the supply very quickly. so this is actually just coming in time, just in time to save the industry from a shortfall. >> all right we are going to leave it there thank you sir. speaking of oil, weekly rig counts are out u.s. oil rigs rose by five to a total of 820 during this week.

that's 132 more than a year ago. it is the third straight week rig counts have risen. apple is a big drag on the dow right now. more worries about iphone sales. we will have the latest. plus we will go back to sarah in washington. >> tyler we have got an exclusively interview with the see,woman on the federal rerv lael brainard after this break we'll be right back. and while we make more e-commerce deliveries to homes than anyone else in the country, we never forget... that your business is our business the united states postal service. priority: you anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird.

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welcome back to "power lunch. i'm sarah eisen at the imf spring meetings in washington. here with an important exclusive interview with you, federal reserve governor lael brainard nice to see you. thanks for taking the team the backdrop is the u.s. economy is set to have its best growth in years, yet people seem worried about the outlook. is this as good as it gets >> well, i think we are seeing synchronized growth around the world. i think financial officials from around the world are breathing a little easier. it's nice to see the recovery really gaining traction. here in the u.s. it's been growing well now for the last year and a half. but in other countries, they are really starting to see that growth taking hold but, of course, i don't think anybody can afford to let their guard down because there are risks over the horizon and so people are looking at those risks. and making sure that we're

guarding against any kinds of downside risk to the outlook. >> what's the biggest rick in your estimation? >> i think in the u.s., generally speaking, we have seen good growth. we've seen the labor market continuing to tighten. people coming back in to the job market inflation is moving towards target all of those things, i think, are very encouraging but we've also seen the addition of very substantial fiscal stimulus in recent months. and that kind of sizable fiscal stimulus at this point in the cycle is unusual and so, you know, we'll have to see at a time when we are growing above trend and resource utilization is tightening we want to make sure that we don't see any imbalances developing.

around the world, different countries are looking over their shoulders at different risks obviously, trade is one that affects everybody. >> how do you factor in what a trade war could do for growth in the united states? >> right now i think it's very hard to say how current discussions mighty involve very targeted measures and negotiations that result in openings of course i think would not be a material factor for the overall outlook. but if we saw broadening and retaliatory measures really spreading that could dent global confidence it could disrupt global supply chains so it's certainly an uncertainty, a material uncertainty to the outlook. >> i was going to say there is already an uncertainty as to whether these tariffs are going to play ut do you see it already starting to have an impact potentially on investment, confidence, and spending decisions from business. >> right now, i think the

discussions over trade are really ones that may be impacting individual businesses. i see it really as an uncertain to the outlook but of course, a broadening. and broader retaliatory kind of environment, that could get us into a more complicated situation. that could affect global confidence but that's not where we are today. >> what would it do to inflation? >> so, in terms the inflation outlook, you know, whereas we were seeing a disconnect a year ago between the strengthening labor market and inflation that had remained below target for many years, today actually inflation is moving more in line with what one would expect at this point and in fact there i think we are looking carefully at inflation and expecting to see it move

towards target in line with our objectives >> feels like we are -- the market is pricing in rising inflation expectations we've seen bond yields jump, ten-year is moving toward 3% question is, do you have confidence that it can remain benign, the healthy type of inflation? >> yeah, so right now i think the economic outlook is quite solid. again, we've been growing above trend. we've seen that the labor market has moved towards full employment there's some indications that resource utilization is tighten but we've experienced many years of inflation below target. and so it's i think just beginning to move towards target, which is very consistent with our dual mandate goals. >> what about housing? we've already started to see

mortgage rates jump. are you worried this could dent that recovery. >> we look across -- as we scan the development of rise that is may be developing in this cycle, there are two areas that i would say have caught my eye one is that asset valuations are somewhat stretched if you look relative to any kind of historical benchmarks. >> are you talking about stocks? >> and the asset valuation picture is broad in terms of elevated values, but there are particular areas for instance, junk bond strets, leveraged loan spreads are quite tight by historical standards and if you look at borrowing in the economy it's moderate actually overall the household sector remains moderate compared to historical standards because households had only just really completed

deleveraging in many cases so if there are any signs of developing imbalances on the leverage front they may be more on the corporate sector where we do see signs of leverage. >> there are signs that the federal reserve may have to be more aggressive than the three interest rate hikes this year that have already been forecast. how flexible do you think you are going to be based on the inflation rates that are starting to rise >> i will be focused on the incoming data. so far we have seen growth coming in a little bit softer than expected, perhaps, in the first quarter. but we've seen that before and we are coming off a strong fourth quarter we are seeing momentum picking up you know, my anticipation is the outlook is for continued solid growth and, again, you know, we are already in the range of full employment inflation is moving back towards our target the outlook looks consistent to

me with continued gradual increases in the federal funds rate but of course we will have to continue to watch the income data carefully as we make that assess men. >> i wanted to ask you about commodity prices which are also starting to make a move higher oil prices back at multi-year highs. aluminum, coco, lumber are we getting to the point where this is going to affect consumer spending and growth >> as i look at commodity prices, in many respects it is part of a broader picture we saw real head winds a few years ago. and now we are seeing some of those head winds -- those head winds that included a real drop of drilling and mining in the oil sector for instance turning into tail winds for the u.s. economy. so when i look at commodity prices, i see those as signs of strengthening global demand. but, again, if you look at the inflation picture in the u.s.

economy, you know, we are coming off a period where inflation expectations had been quite low, and where it -- >> $48 oil sounds like it doesn't bother you that's a good thing. >> as i look across the u.s. economy, i see demand having strengthened again, i think you know we'll watch inflation of course very carefully. but right now inflation seems to be moving as one would expect and moving towards target after a long period of being well below target >> we've seen some pretty wild volatility lately in the stock market do you see that as healthy, return to normal, or something more ominous. >> i think as we look across the various areas of vulnerability in the u.s. economy, it is certainly the case that we have seen some chopiness in some markets in recent months but we have to recall that was coming off a period of extremely

low volatility for a very protracted period of time. >> you are not worried about that >> not -- i would say generally as i look across again financial vulnerabilities i am keeping track of asset valuations which have been stretched even taking into account recent movements. i'm certainly focused on rising indebtedness in the corporate sector you know, that's in a broader picture, where our banks are so much better capitalized, and more carefully managing their liquidity, and we have in place a system of very robust liquidity and capital buffers. so the resilience of the financial system i think is an offsetting factor that's very important. >> finally, we are starting to see the trump federal reserve take shape he made a number of nominations. you are the last remaining obama

fed governor i think on therd bo how is this fed given under powell versus ylen and now that we are starting to learn who else is going to come on board >> as you know, the federal reserve institutionally has a very strong set of mandates that are given to us by congress. and we steer by those mandates our statutory objective that congress gives us. in that sense there is a high degree of continuity i anticipate there will continue to be. >> policy continuity, too? >> again, because we work under a guidance that's given to us by congress, you know, we have very clear statutory objectives, full employment, price stability. and those are the things that really determine our policy course. >> well, thank you for coming here and sharing some of your thoughts. >> thank you. >> i knows in a familiar place for you, former undersecretary for international affairs, lael brainard, who is now federal

reserve governor with that i will send it back to the studio. >> stocks lower across the board right now. apple a big drag and two retailers down as well, the story behind those moves in skechers and matel next on "power lunch." i am an independent financial advisor. for our firm, it's all about trust and transparency. trust that we do what's right for our clients, without the constraints imposed by the traditional brokerage houses. transparency in the way we're compensated. our philosophy is one of service, not sales... that's why i'm independent.

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♪ ♪ don't work your way upfront without it. ♪ ♪ and don't watch her dance, like nobody's watching without it. ♪ ♪ early ticket access... another way we have your back. the powerful backing of american express. don't live life without it. hi, everybody. i'm sue herera here's your cnbc news update southwest airlines sent a letter of apology and is offering $5,000 and a $1,000 travel voucher to the passengers who were on a flight earlier this

week that made an emergency landing following an engine explosion. one woman was sucked partway out of that jet. she later died of her injuries. students in the d.c. area marching to capitol hill this morning as part of a nationwide school walkout demanding stricter gun control laws. they carried signs and chanted, the nra has got to go. it falls on the 19th anniversary of the columbine high school shooting. nato staffers moving into their new headquarters in brussels last year, president trump inaugurated the organization's new billion dollar meeting of the. on a lighter note, take a look at that that's a semi trailer that crashed carrying popsicles on an interstate in kentucky this morning. nobody was injured but both lanes were closed down as the mess was cleaned up, which you could call a sticky situation. thank you for the sound effects. excellent.

that's the news update this hour back to you. >> they could just wait and hose it off. >> they could. >> sweep up the sticks. >> that would make more sense. it's easier to do it the harder way, i think. >> sue, thank you. let's get a check on the market dow down triple digits down 181 points right now. to the session lows. s&p 500 also off the lows. and the nasdaq, take a look at that, down 1.1%. apple is the biggest drag across indexes. the stock is down about 4% on hoff volume today. yields on the two and the ten hitting fresh new highs. let's news on bitcoin. >> bitcoin investors are getting back in after selling their crypto holdings to pay taxes on capital gains from last year we are looking at the cryptocurrency rebounding. genesis capital says whether it was perceived or real there was a market overhang that existed for investors believing that people were going to sell

bitcoin to make tax payments the pressure he says has largely subsided buyers are coming back in in a big way. bitcoin on track for a 7% gain this week. making it the first back to back weekly gain for the cryptocurrency the next big even is may 15th when bitcoin cash will split that's seen as a potential oev po for the broader market. >> sketchers and matel both down big today. courtney reagan here to explain. >> let's start with matel. it's getting its fourth ceo in four years the current ceo is moving to ancestry.com she joined matel from google it was announced that kreitz will take over as chairman he is the former ceo of disney's maker studios. he has a media background, expertise in children's entertainment specifically

that something that hasbro has done better than matel in recent years. he takes over during a restructuring that just got underway shares of matel lost half of their value under the current ceo. meantime, skechers shares are down about 27% on a disappointing current quarter sales and earnings forecast. the first quarter was strong comps were up more than 9% but the company says it was a timing shift for shipments to key quarters that's going to hurt the second quarter, the quarter we are in now. shares have be on a tear for skechers, up 16% over the past year that's despite the plunge we are seeing today. >> i don't want barbie to take this the among way but is barbie just not hot >> actually, some of the changes that they have made to barbie have actually proven to be better they used --

>> changes like what >> they introduced new shapes and sizes for barbie, new skin colors actually that really did take off well so barbie is doing better. but it's not consistent. so you will see some strength sometimes, and then it sort of falls off again. >> is barbie still their lead product? >> barbie is probably their lead product. when you are talking about the marquee product in the size. one of the big problems for matel is they lost that disney hns to hasbro. that was worth $400 million. that happened a couple of years ago. they had a bunch of smaller items thatwere trying to make up toer the big business loss. it hasn't gotten there. >> courtney, thanks a lot. good luck, barbie. in a down day for the markets, ge is lead the dow. did its results convince investors that the worst is over for the big industrial conglomerate plus, another shoe drops at nike more executives leaving as the company scrambles to rakeme its corporate culture. the fallout is ahead need a change of scenery?

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welcome back to "power lunch," everybody. the dow is struggling because of apple. but general electric is the biggest percentage gainer in the index after posting an earnings beat how long since we've been able to say that?

morgan brennan joins us with more on those ge numbers. >> beat on the top and bottom lines. and industrial cash flow was as expected ge also reaffirming its 2018 earnings and cash flow guidance. that was seen as good news by investigators who worried that could be lower aviation, health care, transportation all fuelling profit growth. oil and gas in particular power still a point point that the ceo john flannery address on this modern's call. >> power continues to be our biggest challenge. the team is making good progress on execution, but the market is challenging. as we've said before, this will be a multiyear fix >> now, on divesttures, management saying active discussions on multiple smaller aviation platforms, current and lighting, distributedive power and even ge capital. just a short while ago getting a headline from bloomberg perhaps the rail business could be sold. we have reached out for comment. haven't heard back yet

jamie miller telling me there is strong interest in multipell parties, expecting teels to materialize in the second half of this year miller alsoing the me, quote, we have no current plan to cut the dividend again guys, the biggest take away here, no more skeletons came out of the close wet the latest earnings report, no surprises that took investors off guard. that's the reason shares are up 5% right now worth noting shares of baker hughes, majority owned by ge, also higher up 3.5% on earnings as well. back over to you. >> morgan brennan. our next guest remains bullish on the stock expectsing it to almost double from here in the next 12 months he has a buy accumulate rating on the stock welcome back. >> good to be here. >> do you think all the shoes have dropped which could have been the perfect tune to kitchen sink it and they didn't? >> they didn't because there isn't left to kitchen sink. >> you are confident in that.

>> certainly not 100%. >> but as muches possible. >> yes >> you are comfortable >> yes. >> and you are comfortable the dividend will stay intact. >> if we have another dividend cut -- >> what is ge going to look like two years from now >> health care could be a stand alone company, ge would be just an aerospace business. i think the other miscellaneous businesses could be gone, to. >> transportation? >> gone, it could be gone today. >> lighting? no more ge light bulbs. >> it doesn't make any money. >> you don't buy light bullness, anymore. l.e.d. lights. >> l.e.d. lights. >> passe, tyler. in terms of that business are there reasons you believe as an analyst in a those remaining businesses should actually be one company? >> no, i don't >> in a word >> no, i don't think there is a lot of value in the conglm rat you have a centralized r and d

function i don't think it's creating a lot of value you have a management system that for 15 years hasn't created any value. why keep it together. >> how vulnerable is general electric to trade tension? particularly with china. they do a lot of infrastructure business in china. water, et cetera. >> they do less than you would think. the reality is they have lost a lot of share in china. really i would say the big risk is aerospace boeing sells a lot of airplanes to china and ge makes the engine. other than that it's not as big as you might think. >> let me ask you about power. i was speaking with a person who is in the power business about week ago he says if you ask people how many big sort of power installations they have bought over the past year, it would be like one, two. nobody is buying right. >> you don't need a lot of new power right now. for sure and renewables are picking up. >> and there is more emphasis on sort of micro power, right

smaller -- am i right about that, or overstating it. >> yes and wrong -- yes and no. >> yes and wrong that sound like my grades in college, yes, and wrong. >> it's friday afternoon i can barely talk anymore after today. >> that's all right. >> you have got the extremes, the basal gas, the disturbines that they tell andologicalized power. on both sides the barbell are winning and everything in between are being squeezed >> good the see you. >> yes, and wrong. i like that. i'm going to remember that my wife tells me that all the time yes, and wrong. apple isn't reporting results until may 1st but investors are already worrying whether the iphone sales are going to disappoint. that is hitting stocks of apple's key suppliers. we have got all of those angles covered, ander mo. please stay with us.

apple shares down about 4% that pushing the stock into negative territory for the year. apple has been dropping three days now, about 7% in all in that time. growing fears on the street about iphone sales and demand. let's talk more about this with the manager director at guggenheim securities. welcome. >> good to be here. >> how do you view the iphone sales? has it been a disappointment >> frankly, it has been sort of four or five months now that it looked like the iphone x in particular, where expectations were pretty high, the sales there have been okay at best i think it's definitely been disappointing relative to a big cycle. if anything, iphones look at

this stage maybe in unit terms to be flattish for the year. i think the expectation certainly going into the year were that they would have better growth than that. >> why have they been soft, robert it is an elegant product did it not break through and bring more newness to the category is it overpriced what >> well, i think the biggest fundamental hurdle is if you look at it, i mean, you know, i-phones really haven't grown for the last three years i think there is a broader issue here, which is that the smart phone market itself has really stopped growing. i think one of the thing is sat raitt race who do you know who doesn't already have a smart phone and peep are keep them longer. so the replacement cycle of phones is stretching out it used to be people would replace them every yao twoers. now that's pushing up against every three years. i think the biggest problem that apple faces is just the market

itself has stopped growing i think the higher price point for the iphone x -- actually they did raise prices on even the eight a little bit i think the price point is one of the strong points because their average selling revenue will be up double digits. >> i just noticed that actually the total revenue from iphone is going to be up. >> that's our expectation. again, driven wholly by higher price points not by higher units. but that's better thannan not. >> what do you say for the stock? >> i still like the stock. it has been weak in the last weak weak signals out of supply chain, tsmc, yesterday, who is a

big chip maker for apple guided weak we have to get through the march quarter. i think that will be fine. i think the june quarter will be the trough, it's always the weak quarter for the year then frankly people will start looking forward to the next iphone cycle, which should ramp in september we should get a refresh of the main sfreem and the lcd version. and a new bigger owe led or x version. i think you have a big refresh cycle coming this september. and once we get past the june quarter we can look forward to that. >> thanks very much. rip arel effects from apple's pain being felt far and wide shares of its suppliers getting dinged a lot today let's bring in a hardware analyst who covers a lot of the chip names we have seen under pressure in rene days. thank you for joining us i feel like the pillars of the growth in chips kind of bull

case have been threatened. we got the date from taiwan semitleg doubt that apple's iphone could provide the sector. zte is yanking potential from some of the u.s. chip makers and throwing into question whether or not trade wars will impact the sector and then you have what china is doing with qualcomm and nxpi and that sort of also threatens the notion that there could be a lot of consolidation in the sector, if you have chinese government throwing up barriers to two non-chinese companies to merge. i mean, what are the catalysts that you are looking at here >> thanks for having me. i would add one other thing to the things that you mentioned. cryptocurrency abouting soft isser in head wind for the semiconductor names. >> what is going right for the sector then? >> i think the good thing for the space is you are potentially at the peak of uncertainty

i think once we get past may 1st to some tree, apple is a head wind ride now. wants you get mast may 1st and you have a better sense of what things look like folks will start to look at what's estimau have from an apple perspective that's one the other part is this nontech part of the business, the automotive, the industrial center of the market, that is going well and for a company like texas instruments, for example, that accounts for more than half of their revenue stream so i understand the concern, i don't disagree with most of them but i think apple issues get past sooner versus later and i think the nontech piece is growing very well >> do you have an outperform on shares of qualcomm we are not really sure what's going to happen with that deal in china and they are going to lose some revenue stream because they can't sell to zte >> yes, we do and we think qualcomm is, you know, perhaps a

large cap value name to look at, especially at these prices you know, to your point, the apple issues, the china centric issues will all impact them. what we find compelling is if nxp doesn't get done by july 25th, their plan b is fairly simple, which is they'll go out and do a $25 billion buyback to drive $1.50 of accretion in that scenario, i think the stocks should work igher, not lower. so i think in either way, the deal gets done >> so there's a floor effectively in the stock what's your top pick in semis, amit >> our top pick name in semiconductors is broad com, avgo >> all right we're going to leave it there. thank you. good to speak with you rising interest rates threatening to grind the spring selling reason for real estate to a halt. a 5% on a 30-year? well, it may not seem to those of us who remember double digit numbers but it is high enough to scare away some potential buyers "power lunch" will be right

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and as bond yields soar, home mortgage rates, you know what they've been doing, they've been going up as well. the rate on the 30-year fixed loan hitting now a four-year high, so will this make a tough buyers market even tougher diana has that story hi, di >> reporter: hi, ty. yep, buying a home just got a little bit more expensive and this is a big weekend for buyers as real estate agencies and home buyers are running big spring promotions and sales, mortgage rates which loosely follow the ten-year treasury yield hit their highest level since yesterday since the end of march, breaking out of a tight range where they'd been sitting for a while. the move came as bond yields

surged higher. now, while the increase won't mean a ton of difference in terms of the average monthly payment for a home buyer, it could be signaling the start of another steady rise, which we saw at the start of this year, and that can take an emotional toll, not just on buyers but on sellers as well. as rates rise, fewer homeowners will want to sell, and buy another home because they'd be likely giving up that record low rate in the 3% range to move and pay on rates closer to 5%. the entire nation is in the midst of a supply crisis and home builders are not ramping up as much as hoped because of higher costs for materials and a labor shortage that's just pushing home prices ever higher. more, of course, on cnbc.com back to you guys >> thank you very much, diana. the dow now off of session highs. we're down by 150 points a third straight day of losses here s&p 500, negative for the year now, so what should investors do we'll speak with one four star fund manager beating this market very nicely. we'll get our best stock picks r isart the other side of this break

i'm melissa lee. here's what's on the menu. four star advice, the fund manager who's leading the market by betting big on tech tells us the new names she is buying right now. and outspoken minneapolis fed president joins us

the path of rate hikes, the state of the economy and why he thinks it's not the fed's job to protect investors from losses. west world is back "power lunch" starts right now >> good afternoon, everybody, and welcome to the second hour of "power lunch. glad you could join us on a friday afternoon stocks, however, they're not cooperating. down for a third day in a row as tech is a drag the s&p and dow are now negative for the year take a look. now, the dow is down about 0.75%. nasdaq down a full 1% or even more at 71.62. russell, by comparison, doing better bonds on the move. the ten-year yield hitting the highest level since february and the two-year at its highest level since all the way back a decade ago ge, nike, and merck are your dow

leaders and get this, apple, ibm, and cisco, they are lagging. apple down 5% this week alone. consumer stocks, multiyear lows. let's tell you about a couple of them kimberly clark, campbell's soup, kraft, heinz, and pepsi. >> coming to you live from the imf spring meetings, covering the biggest issues affecting the markets, the global economy, and financial policy coming up, i'll have more from my conversation with the fed governor, plus some surprising comments on amazon from the former treasury secretary larry summers and his predictions about what we might see a recession. >> look forward to that. but first, let's get a check on the markets, over to bob at the nyse >> hello, melissa. it's very simple what's going on here this is all about rate hikes and inflation issues, and you can see this in the stock market, because this is the month for commodities. we've waited for a long time for

energy stocks to move and finally they are so, look at the outperformers here energy and materials, this is the commodity play we keep talking about for the month of april and we're seeing money coming out of semiconductor stocks, notably out of consumer staples, retail also to a lesser extent let me show you some of the stocks this month. big moves in philip morris, in clorox, in kimberly clark, campbell's soup, kellogg's, 52-week lows all over the place in consumer staples. to a lesser extent, we're seeing retailers who held a little bit better also selling off late in the month as well so you're seeing companies like kohl's and dillard's and gap. the third group, semiconductors, i won't put them all up for you but the main semiconductor etf has been drooping here in the last couple days there you see it for the month of april i think the important thing, overall, earnings are continuing to improve

when was the last time we saw a 20 in front of earnings growth for a quarter? it was bway back in 2011 revenues up 7.5% second, third, fourth quarter also holding up very well. the problem here, guys, is a little bit of sell on the news i think a lot of people are just betting right now. it's not going to get necessarily a lot better on that earnings front for the second quarter. back to you. >> all right, bob, thank you very much. let's go back now to sarah in d.c hi, sara >> hi, tyler fed governor giving a pretty optimistic take on what she called a global synchronized growth recovery around the world. in the u.s., she says we've seen good growth, strong labor market conditions, and inflation that's now moving toward the fed target that's a bit of a reversal from her. she used to be worried about too low inflation. but she did lay out a number of risks for the global economy, including trade. listen >> right now, i think it's very

hard to say how current discussions might evolve very targeted measures and negotiations that result in openings of course, i think, would not be a material factor for the overall outlook but if we saw broadening and retaliatory measures really spreading, that could dent global confidence it could disrupt global supply chains and so it's certainly a material uncertainty to the outlook. >> a material uncertainty to the outlook. little elaboration there on what we got from the discussion in the minute of the last fed meeting. she also highlighted that asset valuations appear to be stretched and particularly noted junk bond spreads there and the level of corporate indebtedness, which is interesting and a new risk we've heard from fed members. with all this uncertainty around the outlook, i had a chance to talk to the former treasury secretary, larry summers, and asked him, things look good now.

are you thinking about a potential recession soon here was his answer. >> the odds of a recession are about 20% a year that means that it's better than even that we'll have one sometime in the next three years. exactly when, i don't know what scares me is the brittleness of the economy we've already used up a substantial part of the fiscal policy room, and with interest rates where they are, normally we get out of recessions by cutting interest rates by 500 basis points and we're not going to have anything like 500 basis points of room to cut interest rates. >> former treasury secretary larry summers on some of the risks that this economy faces, melissa. my overall takeaway is that people here, the top economic policymakers, are rejasing about the state of the global economy, the best that we have seen in years, but watching a number of risks on the horizon, global

indebtedness, sovereign and corporate indebtedness, also global central bank policy and the tightening of that with the rising inflation expectations and the fact, melissa, that we are in the ninth year of an economic expansion in the united states >> yeah. >> which cannot last forever >> yeah. sara, thanks people are wondering, is this the peak see you soon we got a big week of tech earnings on top. plus bringing a fund manager now who's heavily focused on tech, owns a lot of those names on that screen. beating this market up 5% this year up 24% in the past year. she's the portfolio manager of the clear bridge large gap growth fund. margaret, great to have you with us you're going to have a business week next week let's start with alphabet. this is going to be an interesting one given what's gone on with facebook, given new privacy controls that are going to go into effect in the eu in may. what are you looking for here? >> i think the results will be fine, but of course you're never quite sure with alphabet

i think what everybody wants to hear more of is how big is youtube, how profitable is youtube, and where are you -- where do you have risks and where are there opportunities for you as it relates to consumer data. how are you using consumer data in advertising how are you not using consumer data >> i read in the notes you're talking about passive investing and how it's sort of exaggerating moves in the market >> yeah. >> i'm wondering if this is going on in technology we saw the facebook swoon specifically take down tech overall. today, we're seeing an apple swoon take down tech overall >> i think it probably is. it's interesting because if you think about redeeming ets, it's like a margin call it means sell my position by the end of the day, regardless of price or fundamentals, and so by definition, that means that if you have folks worried about apple and the semiconductor market and handsets, all of those names -- >> it's indiscriminate selling

>> that should be good for fundamental investors. as long as you're willing to see the dislocations and take advantage of that, that should hopefully play to our hand >> the fang stocks are not the fang stacks but you like oracle. >> yes you know, to us, oracle reminds me of microsoft circa 2012, 2013 when nobody wanted to touch microsoft either at the time -- >> why why does oracle remind you of that >> because at the time, everyone said, microsoft is a dinosaur, everybody's moving to the cloud, and microsoft is not there therefore, we'll value it like a bond oracle is actually in the very same position. they're pivoting their business to the cloud in three years, a third of their business is going to be cloud revenue. so i think as we move forward and as that business grows, that stock deserves a rereading too by the way, it's half the price of microsoft so, a lot cheaper than some of the more expensive tech names. >> are you worried about the trade wars impacting your positions in technology? we've seen in recent weeks a couple of interesting movements on that front when it comes to the foreign ministry of china blocking or putting up roadblocks to the qualcomm/nxpi

deal which is unusual and we have the u.s. action on zte which is also impacting a lot of u.s. companies here. >> i'm more worried about the trade wars affecting business leaders' confidence, because capx spending plans are quite high for 2018 and 2019 and that's the reason tax reform is so great for gdp growth over the next couple years and if you think about where people are going to spend that capx, it's not just diggers a lot of it is on technology because that's a great return on your investment. to the extent that business leaders are not confident about the health of the economy or the outlook going forward because we have a trade war, that may impact all of our tech companies. >> is that the sense that you're getting right now, that they are being impacted >> no. we feel really good about enterprise tech spending right now. >> margaret, thanks for your time all righty oil has been on an upswing and that has not gone unnoticed by president trump. he tweeted this morning, this looks like opec is at it again with record amounts of oil all

over the place, including the fully loaded ships at sea, oil prices artificially high, exclamation point. no good and will not be accepted exclamation point. wti -- what would he do without exclamation points i don't know wti crude above $68, up 36% over the last 12 months so is the president right and what could $70 oil mean for the u.s. energy market and the consumer let's bring in bob, the former senior director for international energy on the national security council under george w. bush you know, bob, i make light a little bit of mr. trump's tweet style but he is certainly not the first president to be concerned when oil prices or more may be tellingly gasoline prices rise as they have because usually, it creates anger in the population, the voting public, against the incumbent. >> tyler, you're right i can tell you from direct

personal experience, nothing terrifies an american president more than rising pump prices it is a genuine emergency. president trump is looking out at memorial day coming up next month. he's seeing gasoline prices now at three-year highs. there's been news around that the saudis want now $80 oil and then $100 oil. he's not liking what he's seeing so, this is par for the course, and really not too surprising. >> but he must be liking what he's seeing in the permian basin, in oklahoma, in -- up in north dakota, you know, ohio, pennsylvania, and so forth where these prices are pretty good and they're helping lots of producers. >> you know, you hit it perfectly. we're a bit bipolar here on supply management and manipulating the oil market. after saudi arabia and russia move to stabilize prices in late 2016, the state of oklahoma

declared sort of a day of thanksgiving and publicly thanked opec for doing that. and some leading shale oil producers went to the middle east to thank producers for doing that so, when it comes to responding to or preventing price collapses, that hurt oil states and oil businesses, we like to see a little manipulation there. what we don't like is when prices rise and consumers face higher prices. that's when we tend to get critical about opec. but you know, we kind of try to have it both ways there. >> three-year highs, though, bob, that's not very high. i mean, there's not -- >> that's right. >> there's not much the president can do, right? was this a -- if this was an effort at jawboning, i'm not sure how effective that is to move the price of oil and influence a global cartel. >> you know, you're absolutely right, melissa we are at $2.75, we're well below levels that would cause consumer pain. you'd have to go well towards $4 or above, really

>> people are still buying suvs, right? i mean, they're jacking up the production of suvs so obviously consumers don't really care that prices at the pump are 14% higher than they were a year ago. >> that's right. that's right i think the consumers aren't really bothered. it's not a drag on the economy we could go to -- we'd have to go to double these prices, i think, before you'd really see real pain. but the president is still sensitive to it. it's a risk. it's a rising risk and we can't overstate how sensitive he's going to be to those pump prices. the news is being made they are at three-year highs and the saudis are supposedly talking about $100 oil i don't think they are i think that's a misunderstanding but i think it's the combination of those signaling from opec and the record levels from the last three years that is getting him preemptively worried and concerned. >> bob mcnally of radian, thank you for your time. >> you're welcome. "west world" returns to hbo. why the timing couldn't be better but first, another can't-miss

interview. steve leaseman joins us live fo an exclusive sitdown with neel play "do it like this".

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you know what's not awesome? gig-speed internet. 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. welcome back to "power lunch. let's get to steve liesman, who's live at the minneapolis fed. steve. >> thank you very much i am here in minneapolis at the minneapolis federal reserve bank with the president of the minneapolis fed, neel kashkari thanks for joining us. >> thanks for having me. >> i think we need to first point out, we got the great mississippi river running behind us and i think like nine out of

ten americans don't even know that the mississippi river runs through minneapolis. >> i have to admit, before i decided to come here, i didn't know that. >> and we're not going to spend time talking about the weather it showed here 16 inches >> it's great to be here it's brisk >> brisk let's talk about what everybody is talking about, which is interest rates and one of the things that's happened recently, the ten-year now approaching 3%. there's two parts i want to talk about that one is the level and the other is the spread. let's talk about the level first. have things risen higher than you expected say, at the beginning of the year >> no, i mean, i'm surprised they haven't risen more. i would have expected on the back of the tax cut and the big spending bills and the fact that we are slowly rolling off our balance sheet, as we says we were going to do, i thought that would put more pressure on the long end of the curve to come up it's come up a little bit this week i'm surprised it's not higher. >> so, when you say you're surprised it's not higher, does that mean that you're not

concerned that at knethese leves it has the potential to restrain the economy. >> i'm more concerned about the flattening of the yield curve. the fact that in the back of tax cuts, a lot of spending, increased spending, and our roll off of the balance sheet, the fact that the yield curve is flattening into that, i actually think that's a signal that we may not be that far away from neutral. >> i want to get there in a second but first i got to check something off. a flat yield curve, no spread at all, completely flat, has been a signal of recession. >> correct >> do you think this is a signal of recession >> i think it's a signal of caution. it's at least a yellow light flashing people will say that the term premium is artificially low and so it's apples and oranges, you can't make a direct comparison to prior episodes. maybe. but every time says this time is different, it makes me nervous about that and again, i look at the fact that the committee's been raising rates and the yield curve has been flattening. i think we need to pay attention to that. i think there is information contained in that. >> let's go back to your other

idea that you think the market is telling us this is a neutral rate here that you are about where you need to be to keep the economy neither slowing nor speeding up. >> i think that's one interpretation inflation is now -- i agree -- slowly building. >> you dissented the three times you had a chance last year >> i dissented but now i do believe that inflation and wages are slowly climbing. they're not accelerating but they're slowly climbing. that's good. we're approaching our target on inflation so we should be moving towards a neutral stance so now the question is, where is neutral? the fact that the bond market is telling us the yield curve is flattening, on the back of all of this fiscal stimulus and tax cuts, that tells me we probably are closer to neutral. some people think neutral could be a 0% real interest rate, 0 plus 2% inflation is a 2% fed fund rate. we're not very far away from that >> if you think the market is telling you neutral, you can't sound like a guy who'd want to

raise rates again in june, even though the market's at 89% or 90% for that >> i want to look at the data. i want to look at what's happening, are we hitting our inflation target, what's happening to inflation expectations and then i am going to pay attention to what is the bond market telling us and our other models this is a fundamental point for central bankers, where is neutral. i wish we could tell you with precision. we have to make estimates of it. the bond market is one input >> i don't want to push you further than you want to go but i got to do this given what you know now, would you then not raise rates in june >> again, i don't want to make such commitments because i want to look at the data but i think we are closer to neutral than other people might think >> let's talk about trade. this area here, a lot of trade going on, a lot of agriculture right here but also in some of the higher tech manufactured goods as well. and the beige book was full of complaints, it appears, from businesses to the fed about this astr trade issue. how serious sh being taken

around here, this potential of a trade war. >> i hear about it all the time from businesses across our region weav we're very export centric. from a major local manufacturing or construction company said that steel products firms are raising prices because they can. because they're pointing to the tariffs and saying the tariffings are coming, we're raising prices now, even though the tariffs have not actually taken effect yet so a lot of people are alarmed by this i admit, i don't know how this is going to play out i don't know what effect it's going to have on the economy and i am sympathetic with wanting to push china to open up their markets and have fair trade. we need two-sided free trade, not just one sided but it's hard to game this out >> how concerned are you about what impact it could have on the economy? >> i think the biggest impact on the downside risk, i think right now, mostly, it's a lot of rhetoric and not a lot of action yet. but if it leads to a crisis of confidence in the global economy, and in trade going forward, then that could lead to a pullback of investors and market participants.

that's the part that's very hard, the psychological element of this, that's very hard to measure. >> let's talk about a final thing that everybody is talking about, which is market valuations people may or may not know this about you but you are one of the principal people inside the treasury that dealt with the aftermath and while it was going on i covered you when you did that. i don't want to do that again. i think you don't want to do that again how close are we to experiencing that again are we in the middle of a bubble right here >> you have to segment we had a tech bubble that burst in 1999 and 2000 and that did not lead to a financial crisis just because stock prices are high, does not mean a correction leads to a financial crisis. the difference is, there's all this debt under the housing market there's nothing -- we at the federal reserve are looking everywhere we can for signs of a potential financial crisis we're not seeing bright red flashing lights that there's a crisis that's coming we do see asset valuations are stretched but i've been saying if markets correct and investors take losses, that's the point of markets.

so be it we're not here to try to support investors from bearing losses. we do want to avoid financial crises, but if it's just a market correction, that's part of living in a free market economy. >> do you think markets are overvalued here? >> i'll leave that to others but if markets correct, i don't think that's going to be what drives our interest rate policy. >> last question gdp this year. can we do 3% are you changing your outlook? >> i think high 2s this year it's possible we could hit 3% but it's easy to get short-term economic growth by cutting taxes and spending more. that doesn't take a lot of science to do that the question is, is this going to lead to a higher potential growth rate for the economy over the long-term? so far, that's entirely unclear. >> neel kashkari, minneapolis federal reserve bank president in the great state of minnesota. back to you guys in the great state of o new jersey. >> gentlemen, thank you very much still ahead, apple shares

taking down. the trading nation team will take a look ahead and a home explosion caught on a police dash cam watch this well, i guess not yet. wait wait for it. there you go we'll have more. we'll show it to you again and xtain. ne with this level of intelligence... it's a supercomputer. with this grade of protection... it's a fortress. and with this standard of luxury... it's an oasis. the 2018 e-class. it's everything you need it to be... and more. lease the e300 for $569 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing.

quick check of the markets your stocks are lower for a third day as tech and consumer staples weigh financials the only sector in the green right now, but by barely, the dow is down more than 200 points loss of 0.8% s&p down by 22 and the nasdaq composite taking the biggest hit. some names on the move, twitter higher after being upgraded to a buy over at mkm. meantime, skechers is sinking by 27%. weaker than expected guidance and baker hughes, a ge company, jumping on a strong beat chip stocks taking a leg lower texas instruments, intel, qualcomm, all down more than 1%. and lastly, take a look at bitcoin on the exchange. it is up nicely today. 8,500. it's holding on to that level right now, up by almost 3% weekly gain for the week, second in a row, in fact. >> melissa, thanks

next, the content wars are heating up one of hbo's biggest shows, "west world," back thisweekend and the timing couldn't be better we will explain why ahead. but first, sara is back in washington hi, sara >> hi, tyler everyone's talking about global growth looks great. but why are people so worried about rising debt and rising interest rates coming up, i'm going to talk to a former central banker about why you should not fear rising rates around the world live from the imf spring meetings here in washington when "power lunch" returns. you know what's awesome? gig-speed internet.

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hello, everyone, i'm sue herera here's your cnbc news update at this hour. ivanka trump is in cleveland promoting her father's tax plan. u.s. treasurer appearing with her as part of a round table discussion the forum was held at the rocky river senior center where about 300 community members were in attendance army officials say they will not meet their mission to recruit 80,000 active duty soldiers this year and as a result they have lowered their goal but they say the service has been able to encourage more experienced members to stay on in order to satisfy the military's growing demand for troops syrian military leaders are

releasing a video today of what it says is the ongoing offensive against an isis-held zone in damascus the footage shows tanks and artillery firing and iair strike on that air. the dj known as vvicii has been found dead. avicii was a pioneer of the contemporary electronic dance music. he was 28 years old. that is the news update this hourment hour >> wow, that one is a shocker. i loved his music. >> and so young. >> wow, wow. the oil market closing for the day. let's go to courtney reagan at the cnbc commodity desk. >> hi, tyler despite a trump sweet, oil prices settling just about flat on friday. early this morning in his first tweet about opec directly, the president said, quote, looks like opec is at it again with record amounts of oil all over the place and with fully loaded

ships at sea, oil prices are artificially very high, no good and will not be accepted, exclamation point. it is true, prices did hit highs not seen since november 2014 earlier this week but mostly that's largely because of the geopolitical worries sparked by trump's protectionist policies they point to the deal by opec to address the global supply glut >> all right, court, thank you back to sara in washington >> lots of talk of rising protectionism here at the imf meetings i am here with jacob frankal, former governor of the bank of israel always a pleasure. >> my pleasure >> always a familiar face here at these imf meetings. i talked about protectionism at the top because that seems to be one of the clearer, most obvious risks to the global recovery, which is looking pretty good right now. >> it is a major risk, and indeed there is a global

recovery this year's data look very good and in fact, next year may even be shielightly better on the gll sense. but the main cloud in my judgment is the trade protectionism, because after all, it's becoming a slippery slope. the two large countries, united states and china, are engaged in either a loud, vocal negotiation or maybe the beginning of skirmishes of trade war. we know one thing. a trade war will be extremely dangerous for the world economy, and once it slides, it will be very difficult to turn it around and that's why this is what we should watch for in the most serious way. >> when you say very dangerous for the global economy, you've studied history. but it's almost hard to predict what would happen now because the global supply chain is so much more interconnected >> it is interconnected. but we know one thing. when in the early '30s, smoot

and hawley introduced the global tariffs of the united states, they never thought that it may be the beginning of the great recession. but it was in other words, with the best intentions, unintended consequences can be disastrous in the trade area, even more so because the united states today, in fact, is much more integrated into the world economy and you mentioned supply chain, it's now asia this is not something that we can predict, nor should we try just to see let's see how it goes it's an experiment that is too expensive. >> we've heard that from a number of people, including lael brainard who was here, the fed governor she said the u.s. economy looks pretty good and a gradual pace of interest rate increases is warranted. this is something you've been calling for for a long time. let's get rates back to normal are you pleased to see that

they're moving now in that direction? >> absolutely. the very name, normal, means that we will subnormal -- >> we're still sort of subnormal. >> we are and therefore we should see several rates hike, not only in this year but also next year. even if we had three additional rates hike this year, and three additional next year, we will still be below the long-term normal, so i would not be -- >> i guess the question, can the markets and the economy handle it >> the markets can handle it in fact, nobody could blame the fed of being too aggressive in raising the rates. in fact, the fed showed great prudence, great responsibility, and now under jay powell, if he continues now to lead the fed of a gradual rate hike, this will be, in my judgment, a vote of

confidence in the u.s. economy and in its ability to absorb it, and therefore, i would view this as good news, because let's remember, for a long time, when we spoke about raising rates, the idea was not because raising rates will derail growth but because of a delay in raising rates may have significant cost, especially in the financial markets. most of the large crisis in the past several decades came from financial crisis, and never a crisis or chaos when interest rates are too high, only when they're too low. don't fear raising rates but make sure your financial sector is sufficiently strong >> should we fear rising debt levels >> absolutely. >> that's -- >> a debt level means vulnerability. means that you borrow from the future but if you borrow from the future, you must make sure that the future is rich enough to pay for the principal and for the

interest rates and it is always the case that when there is excessive debt, there is fragility we know that in the financial industry, there are three principles we need to have high capital, we need to have low leverage, and we need to have high liquidity high debt is not voting in this direction. >> well, we've certainly heard that message from a number of policymakers like yourself maybe president trump, treasury secretary mnuchin listening. we'll leave it there thank you. jacob frenkel, chairman jpmorgan chase international, former governor, bank of israel >> one of hbo's most popular shows, "west world," back for season two this weekend, just as one of hbo's biggest rivals, netflix, reports better than expected growth. so what does it all mean for the content wars julia weighs in right now. hi, julia. >> hey, tyler, well, hbo is spending big to stay ahead of netflix from the battle for subscribers. the first season of "west world"

was the most watched first season of any hbo original series a year and a half later, season two returns sunday night hbo has a lot riding on this show and not just because it's pricey the first season cost a reported $100 million to produce. hbo's other mega hit, "game of thrones," isn't returning until 2019 and that's for the show's final season to draw back viewers, hbo spent millions of dollars on this "west world" park outside austin during south by southwest, and hbo reported its highest ever increase in domestic subscribers last year and its best revenue growth in more than 20 years now with 142 million global subscribers, including 5 million for its app, hbo now ar argus research says for at&t that hbo is arguably the most important of its assets, and just yesterday, at&t ceo randall stevenson testified that at&t needs to own premium content that, quote, drives engagement, just like hbo. stevenson also pointed to the

fact that rival netflix has a big advantage in all that valuable viewing data that it has. it added 7.5 million subscribers last quarter and netflix is ramping up its content spending to $800 billion this year. >> who are the other rivals in this world i can imagine that hulu is a lot of others. >> amazon. remember that amazon -- so if you're an amazon prime subscriber and now we know that there are 100 million of them. you get access to prime video. showtime they're programming differently. so, amazon may be spending billions of dollars on content, but it's thinking about the content differently. it's thinking about what content it's going to get people to think, hey, paying for prime is good for more than just the free shipping and then you have netflix, which is a separate direct to consumer subscription service only whereas hbo, all around the world, is bundled in with the

cable paneckages and then you he showtime that's owned by cbs and it's a different model so that's more similar to the hbo model but different than netflix and amazon and then you have hulu, which is smaller than all of them but investing to scale and hulu is really just in the u.s. right now so, different models, but they're all competing for our eyeballs and attention >> wow all right, julia, thank you. coming up, why cannabis sales in california are going up in smoke we will explain. and a home explosion caught on police dash cam the story behind this video. wow. next so, my portfolio did pretty well last year. that's great. but the market was up nearly twice as much. that's a tough pill to swallow. exactly. so i started trading. but with everything out there, how do you know what to buy? well, i think my friend victor has just the thing for you. check this out, td ameritrade makes it easier to find the investments that might be right for you. like our etf comparison tool it lets you see how etfs measure up to one another.

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welcome back to "power lunch," everybody. today is 4/20, the day known for cannabis consumption, but california cannabis companies might not have as much to celebrate. >> dottie: >> hi. >> hi there, tyler we are here at hippie hill in golden gate park in san francisco. this place is filling up fast and this is the iconic spot to be in san francisco on 4/20 and especially this year, it's memorable because, of course,

it's legal this was the scene just last year at hippie hill as tens of thousands of people descended upon golden gate park in san francisco to smoke marijuana this year, they're celebrating legally. but despite the changes in state laws, cannabis entrepreneurs say there are more barriers to overcome a recent report from cannabis data firm bds analytics says that in the first two months of legal recreational marijuana sales in california, consumers spent an estimated $339 million worth of cannabis products if sales continue at the same pace, that's down 11.5% from state estimates. >> the restrictions and the rules and regulations that the state put forth are very, very stringent, so some dispensaries are still in this limbo area >> cannabis entrepreneurs say regulations are preventing some companies from getting licensed. another barrier? local jurisdictions can still ban weed sales

cannabis company weed maps reports in this map that 85% of cities and counties still ban marijuana sales. and we reached out to state officials who tell us that their estimates bake in the expectation that sales will continue to ramp up as more companies come online. they'll come out with their updated numbers next month back to you guys >> all right, thank you. aditi roy in san francisco another shoe has dropped at nike sarah is in d.c. with more with what's going on at that company. >> besides the global economy, i've been working this story so far, melissa, nine executives have left nike in the last 35 days, including the number two at the company this is all coming amid an internal investigation into allegations of misconduct. we're talking about violations of nike's hr policies of bully,ing, harassment, and discrimination and it's reached some key positions, including the head of

footwear, as you can see it hasn't affected nike's stock much the company is seeing growth in china and europe and promised a turn around in north america the ceo came out at the beginning of this scandal, said he's committed to staying on as ceo until 2020 also keep in mind nike is a company with more than 4,000 director level positions it has over 1,000 senior directors, and more than 375 vps. 20 vps in footwear alone so yes, there are some big holes to fill here but there are also a number of other high-level positions. still the question is, at some point, does this become a board issue or ceo issue when so many people beneath parker have been found to violate these policies? i can tell you that people on the buy side, mutual funds, are making calls on nike, wondering what is going on inside the company, but for now, this is, guys, totally a separate situation than, say, under armour, which has also seen an executive exodus over the past

year, but that is related to sharp sales slowdown and questions about whether it can continue to grow, and you can see that in the stock. under armour down 16% in the last year. nike stock is up 16% over that exact time period. >> it is amazing that the product seems to be more important, obviously, than the people, at least so far. >> so far. it's not just product, but that is a big part of it. and they are in this sort of innovation period, a hot streak right now. they've got the new vapor max and yes, investors do appear to have faith in that, especially in the turn around of north america. but i think this is a vulnerable time for the industry, which is athleisure is slowing. it's certainly not as hot as it was a year or two ago, and the innovation needs to continue, and so does the growth that nike has shown and there are questions when you have so many key executives out about whether you can have that continuity but

i think according to nike, what they would say right now is that we've got plenty of talent and a very deep bench and a lot of people there but yeah, we'd like to hear if that is the case, and if nike can continue its turn around that it promised next earnings report is in june. >> thank you so much, sara appreciate it. appreciate your time in washington my hometown. some incredible video to show you out of hurst, texas a house explosion caught on police dash cam. watch this wait for it. watch this officer come up here from the left. oh my goodness this after a vehicle crashed into the home. it hit a gas line. two officers -- and maybe that one who was just walking in from the left, suffered minor injuries the family of three was inside the home the husband and wife suffered burns. they remain in the hospital. their 30-year-old son was in the back of the house. he also suffered injuries but has been released from the hospital the driver, not injured. he was arrested for traffic offenses the cause of the crash, still under investigation.

man, out of nowhere something like that happened >> i mean, that officer, if he had gotten out of hvehicle five seconds earlier. >> it could have been fatal. >> different story yeah well, apple shares are down for the third consecutive >> yeah. apple shares down for a third consecutive day. what's next for the stock? trading nation team takes a look that's next. let's begin. yes or no? do you want the same tools and seamless experience across web and tablet?

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time for trading nation, shares of apple tumbling for a third strags session near correction territory right now, close to session lows, if not at them, down by 4.1% with ongoing

concerns around future iphone shipments. we bring in krig johnson, and chad morganlander with the washington crossing advisers craig, starting off with you because correction territory gets people's ears wondering what's going on with the stock the biggest, if not the biggest in the s&p 500 what do you see in the charts? >> looking at the charts here, we have a daily chart going back several years. two things observe first, look at the upfriend support line, off of the mid 2016 lows we are retesting that now as well as the 200 day moving average on the shares also, so a break below that's 165 area violates not just one, but two technical support levels and leaves the next area of support at 154, which was the lows seen in february of this year now, we had a chance to chat

with mike and he was surprised the negativity was not baked in with the iphone numbers. surprised it's off the way it is >> confirmation of what people thought that slower sales from taiwan semi? >> yeah, but it's about forward sales within the emerging markets, within china. that's the concern what is baked in is the future forecasted growth of this year and next year, but what's happening in 2022? that's where the valuation problem happens. not only that, but gross margins as well as operating margins compression over the course of the next 24 months if the top line does not come through so that's one contribute cam reason for in downdraft. we have a hold or we would not be entering the situation at this point in time we look for a better entry point, perhaps, 10-15% below where we are today >> all right caution on apple from both of you guys

thanks, have a good weekend, craig and chad for more, go to tradingnation.cnbc.com check, please, is next and now the latest from tradingnation.cnbc.com and a word from our sponsor. position sides and risk-reward ratio are two important aspects of building a winning trade. you don't want a single position to be too big a percentage of the tradeable asset. make sure there's enough profit potential to justify the risk you're tinakg. consistently constructing suitable trade and adhering to your exit plans can help you build on trading successes alerts -- wouldn't you like one from the market

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check please we're all very excited for the 2018 stock draft it's next thursday at 2:00 p.m. on "power lunch," and on monday's show, we're going to select the draft order, melissa, live on tv right here using this very official drawer, the envelopes are inside if i pull them out, it's going to say "lala land" i promise you. there's no complaints. names are in the envelopes they are there sticking to the walls by force, and monday, we're going to go one by one, and kevin o'leary went on to win last time with the first pick. whether mr. wonderful is mr. lucky again. join us monday to find out exciting >> that powerful spin. >> it's high speed >> over to you

>> reporter: i'm excited for the stock draft. i wanted to also, my take away from the show, corporate indebtedness that's something the governors warned about, so it's not just government debt. we need to be watching now, but it's company debt too. >> absolutely. great work out there, sara, see you back in studio >> thank you see you monday >> taking my glasses out of my mouth to tell you that "closing bell" starts right now i'm wilfred frost, and this is michelle caruso-cabrera the new york stock exchange. >> we have three components in focus today. ge, apple, nike. >> all on the move, driving the market action, and energy and rates also in focus. >> the biggest fine of the trump presidency for banks $1 billion for wells fargo all coming up on the "closing bell," don't move. >> good afternoon, everyone, kelly