most of that is because of the legalized betting. i think it keeps going better. >> mr. new world >> interesting dillard's. we didn't get a chance to talk about that macy's, a very strong department store numbers. the same from dillard's. consumers are okay stay long dillard's. >> that does it for the halftime report, power lunch begins right now. here's what's on the menu today. the russell hitting another all time high is betting on small casts the way to get gains twhat does that say about te consumer we'll talk food, gambling and hoops. and a baby bust. the u.s. birth rate plummeting to a 30 year low could have big implications for the economy. power lunch starts right now ♪ ice, ice, baby ♪ vanilla ice, ice, baby

>> i'm not sure why ice, ice, baby is relevant right there but maybe someone will explain it to me oh, babies babies i get it welcome to power lunch, everybody. tyler mathson here you there. stocks wavering. small stocks outperforming right now. oil is a big mover crude hit the highest level since 2014 energy etf on pace for its tenth straight day of gains. some names that all time highs right now, nike, costco and jb hunt shares of cbs dropping and on pace for their worst day since 2011 after a judge ruled against it in a lawsuit. david faber is all over this complicated story and he joins us now from the new york stock exchange hi, david. >> complicatedici is a key part

it in order for people to understand what happened, let's go back to monday. that's when we got the bombshell from cbs the company itself, suing its controlling shareholder saying that national amusements represented a potential for irreparable harm to cbs by potentially forcing a merger that its special committee of investors were against that being a purchase of cbs of viac viacom they said they intended to issue a dividend that was allowed under the charter at the time of the company that would significantly dilute the vote of said controlling shareholder national amusements. and wanted a tro, temporary restraining order from a judge in delaware, to prevent national amusements from doing anything to interfere with its plan to have a meeting today you follow me so far if you've lost me already, i'm

sorry. the judge in this case down in the delaware courts said no, not going to give you that temporary restraining order. cbs, you don't get it. you can't interfere with the rights of the controlling holder did say a number of other things as well. would they get the tro they didn't. yesterday, national amusements moved to change the charter and the bylaws of cbs so that you would not be able to issue said dividend without 90% of the board of directors of the company agreeing a super majority it would take 20 days before that takes effect. all of which leaves us where it leaves us with the higher likelihood that the controlling shareholder is going to continue to have its right to do what it wants. and that is why cbs is down rather sharply it had been done as much as 7%, but still down over 5%

that being the stock, now down 4.5% the question still is, what remains and what will happen from here? a couple of quick statements to share with you, national amusements saying the court ruling represents a vindication of the right to protect its interests. the actions mooramount to a breh of duties. cbs says they can bring further legal action to challenge any actions by national amusements and will bring such action if needed they're still planning of having that special meeting of the board at 5:00. unclear what's going to happen there. whether they're going to vote in favor of the dividend. they said they would only do it with court approval. the court has said your controlling shareholder, not giving you a temporary restraining order and

restraining them in their ability to change the bylaws, which they did i guess you can figure out why it's complicated but i think it's safe to say at this point the acrimony between these two companies, national amusements and cbs, has only grown greater. at some point that controlling shareholder will replace directors and the company's ceo. it's more now than it was previously. >> the likelihood of the ceo being moved out is more likely today than yesterday >> than last week. once they went with the bombshell, some people have described it as the nuclear option, that they chose to pursue earlier this week with the lawsuit and the tro, that's when everybody said oh, man -- >> david, what about the likelihood of cbs merging with viacom is that now more likely? and if so, what's the argument for and against it >> it is more likely, i think, than it was earlier today when we didn't know what the judge was going to rule.

i think something that the controlling shareholder at national amusements has 80% of the vote strongly believes it will help this country gain the scale she feels you need in order to combat the growing trends that we talk about so often in media and the growing power of the likes of netflix, amazon, facebook or alphabet even. it's more likely, but it done mean it's going to happen right away i think the effect of what has gone on this week in terms of litigation is certainly going to have a delaying impact on anything that would have heard -- even those the two sides had reached a tentative agreement on the economics on it pending figuring out all the other issues this would seem to have the effect of delaying but not necessarily preventing what some believe is going to be the inevitable conclusion, which is these two companies do get together. >> thank you very much

from what i have read, you did masterful job explaining the ins and outs of the story. >> only for five minutes. >> it's a long one, man. it's a gnarly one. lots of hairballs in there. the drow utilities and real, they are lagging in this sort of rising interest rate world let's get more on today's moves. hi, bob. >> hello, tyler. we were up earlier we're flat right now take a look at the s&p 500 we've had a great market leader, semi conductors that are looking a little tired now amd, texas instruments, sort of rolled over late in the morning. i think that's bringing the market down a little bit in the retailers, we had a mixed picture. walmart beat on top and bottom, dillard's had very good numbers overall. children's place and jc penney were a major disappointment. jc penney missed on the comp and

earnings per share there are a couple of trends we've seen two are very obvious a lot are talking about bad weather, including children's place, penney, home depot. macy's didn't mention it walmart and dillard's didn't they all talk about the healthy consumer, particularly macy's and the ceo of dillard's talked for a while about that in his earnings call conference this morning. i have been asked about what the effects are of oil and geo politics and trade and do you want to see it this is one of the biggest shipping companies in the world that just had earnings, they're in copenhagen. they're down 9%. they said the higher oil prices were hurting them. trade issues were impacting them as well. bottom line is there's impacts on a lot of companies, back to you. >> thank you speaking of trade, reports of a contentious meeting between the u.s. and the delegation from china. we have more on the talks that are underway at treasury.

>> as the official talks get start woued with china, there'sg drama going on behind the scenes peter navarro said he had been shrewd excluded he's frustrated with what he sees secretary mnuchin's unwillingness to give up the crown jewels of intellectual duty for a short term cut for the trade deficit. there's at one reason for his exclusion, an outburst in beijing where he interrupted the chinese. he inserted an expletive we'll see if he gets invited to those meetings the drama underscores the divisiveness on the u.s. team. they work to present a united front to china whose dozen plus member delegation , and starting

right now the white house can green light tariffs on china as well as investment restrictions on chinese deals that could be considered by treasury as well as congress so these next three days of talks will be very instructive on how the relationship with china gets handled going forward. >> as you pointsed out, the talk that were held in beijing were described in frank which is usually speak for tough and rugged frankness seems to have continued in these discussions today, right >> indeed. i think that's safe to say. >> thank you very much. the dow in the red this afternoon. but off its session lows small caps having a stellar day. hitting a fresh all time high after a record close yesterday let's get down to what this market means for your money. joining us now are david le libowits and tim ang tim, let me start with you how worried should investors be

that there may be real trade tangles, the stuff on china is one thing. the possibility that we don't get an agreement, though prime minister trudeau seems hopeful >> i think the irchllications are great if we don't. in regards to the problems we are having with canada and nafta at this juncture and if that spills over in regards to a trade war with china, that could increase the overall cost for a lot of the manufacturing et cetera, et cetera. that could acceleration an increase in inflation rates. >> david, are you more worried about a trade error or an error on the part of monetary policymakers >> i think that we all need to be tuned into what's happening in terms of trade.

that represents a real risk to the global economy and markets to us, the greater and more likely risk does stem from monetary policy. the fed looks relatively set to continue hiking this year. we're looking for four fed rate hikes total. we think they could go three times next year. importantly, the tide is beginning to change with net asset purchases by the g 4 central banks turning never at the beginning of 2019 and hiking rates for the first time on the back of next year. for investors that have become accustomed to excess liquidity, the tide is beginning to change. this is an economy where inflation is being driven higher by rising wages and fiscal stimulus as well we need to tackle this from all angles >> you just made the bare case you listed all the big concerns out there on the market. yet, you like financials, technology and energy. which are all pretty cyclical. >> yes.

>> and so what is your view of the market and how do you defend those groups given your outlook? >> the first thing to acknowledge is with fiscal stimulus the economy will grow until the middle of nest yext y. subsequently it should lead the fed to continue hiking rates to me, that is a very robust late cycle environment and an environment where cyclical sectors can continue to outperform at least over the short to medium term 12, 18 months down the road. we'll get a bit nervous and take chips over the table >> and, tim, you, like david, like financials. you like energy, you like consumer discretionary make your argument for that. where do small caps fit in your universe >> we still think particularly in the financial sector, the rising interest rates.

we think the interest margins are improving. we're seeing the trading revenues for a lot of these financials improving we're seeing the consumer picking up, retail sales improving. a lot of those sectors are going to benefit small caps in the late part of the cycle, investors tend to pay up for accelerated growth or better growth rates at this point in time. we're seeing finally very, very good positive fund flow into the small cap sector over the past couple of weeks. >> it could be because they're in theory less exposed to trade hiccups. >> and the dollar. >> and the dollar. and, of course, the lower tax rates are going to help. >> thank you very much we appreciate your time today. >> thanks for having me. speaking of the consumer, shares of walmart are lower today after its earnings report this morning kroger, moving higher after making a big bet on robots and there's a big bet on food delivery we'll talk about that and maybe

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walmart shares are lower today despite beating on the top and bottom lines investors seem to be concerned about the negative impact from the $16 billion flip cart deal walmart says it could be a hit to its current year's earnings of between $0.25 and $0.30 per share. there's a target of $108

it feelslike the bears are worried about short term factors here the impact of the flip cart deal the slight decline we saw in u.s. traffic and store sales the long term investors say it's all worth it walmart's investing to catch up with amazon. >> you can put us in the long-term camp if i think about the quarter, solid start to the year. we saw same store traffic slow a little bit in the u.s. segment of the business. the company pointed to slower seasonal sales around lawn and garden and apparel in april in particular, we've seen a resumption of sales strength back into may the company is continuing to invest, laying down the gauntlet for the rest of retail e-commerce picking up 33% growth reaccelerating from the 23% growth we saw -- >> is that going to get it done when you're compete ing with amazon >> it is against a 63% growth

compared to the year prior i think it was a really strong showing for walmart. ultimately, as we move through the rest of the year, we should see reaccelerating growth. there's a 40% growth target. i think the bogey was 30% in this quarter -- we're comfortable with 33% growth. >> talk to me about grocery. walmart is the country's largest grocer and then you've got kroger what is the status of that race and at such an early stage of the grocery business, people actually ordering online >> certainly amazon purchasing whole foods last year sent substantial ripples through the market those are still being felt there's broad based fear i think among the company and

investors, uncertainty about what the future holds. walmart has proximity to the customer they're upped their services game over the course of the last several years. their stores are getting cleaner. pricing is right private label brands are good. i think they're in a strong position, not only to survive, which there's a big question of survivability of a lot of retailers broadly and more specifically in grocery. not only to survive, but i think to be a winner as it relates to kroger you know, they have been a leader in food for a long time they have the scale to compete they've also been really good with the rollout of their click list offering. you know, i think this move that we saw out of them today signals the seriousness of purpose with how they're addressing long term concerns that investors have it's a step in the right direction. we've been cautious on the name, but glad to see them do this today. >> cautious on kroger, out performing on walmart. is walmart the best idea in your space, of all the stocks you would recommend? >> across grocery it's the place to be. it's an embattled landscape, as

i said a lot of investor concern. i think it comes down to are the management teams making the decisions that they need to make to invest in the future of the business we've seen a reinvestment cycle particularly post tax reform across the grocery space in price and higher wages i think the question that's out there is are we willing to capitalize future earnings at a higher valuation for walmart i think they've demonstrated they're making salient investments and pointed investments that enhance their capabilities and we pick it as the winner in the space. >> it is down 14.5% now year to date, ben. we'll see if it turns around thanks for joining us. the birthrate in the united states falling to a 30 year low. why that could be a big problem for the economy. ckwer lunch is coming right ba let's begin.

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sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks. there are not enough babies. sarah, you did your part >> i'm trying. >> you did your part 3.85 million babies born in the u.s. last year that was a 30 year low according to a new report from the cdc besides babies being cute, they often grow up. >> i hate this video >> look at that, shoving the pacifier right in there. they become workers and taxpayers. something every economy needs. how big an economic problem is the baby derth now >> it's a challenge. i just think before you say

there aren't enough babies you ought to talk to a mother of a baby you might think that having the one toddler -- >> it's hard. >> two is doubly. hard the demographics are things businesses rely on things the government relies on. when they start to go down they create challenges at a time when immigration is not doing what it was doing before, which is replacing some of the lack of fertility in the united states when we look at some of the data here, for example, what we can see is -- which one? this is the number of births in the u.s., it's near a 30 year low. you have to go back before 1985. next chart here, this is the fertility rate women age 15 to 44 that's dropping down 60 births right now per 1,000 women. that's down from 62. >> i was -- the reason this matters is when people calculate gdp growth

it's population growth plus productivity growth. if the population doesn't grow, then you're totally reliant on productivity. >> it puts a premium on productivity people of a certain age will always be able to find a job in this environment never be able to retire for whatever reason. there will -- by the way, some of the things -- reasons why the birth rate is down if you look at it by age, by the way, a lot of women seem to be delaying those births until 40 to 45. >> that actually grew. >> that's a positive that the teen birth rate has gone down. 20 to 24 down. 25 to 29 kind of sideways. >> what about to the 30s >> that's the most important one. >> where was i going to put them down 1%. >> it's 100 births per 1,000 women age 30 to 34.

>> it's about flat to a little bit down but the issue is that for two reasons i think, we hear two different reasons. one is that it's the high levels of debt that people get out of college with also, they're doing better in the workforce, and so the premium for delaying births is higher >> every developed economy historically, the minute it really starts to develop, the birthrate drops. it just happens. >> it's the most baffling thing to scientists. >> people to have children, give them -- >> finland tried a massive social experiment trying to get women to -- >> yep. >> i guess a very quick question is whether or not american workplaces are removing or eliminating the motherhood penalty? both the actual one and -- >> not fast enough probably. >> i think there are different points of view on that. >> agriculture society needed lots of children when you didn't have social security, people needed children to take care of them. >> do you feel it's mutual for a

woman in today's workforce to have a baby relative to her career track >> no way. >> that's an issue there we could create a real -- >> there is a penalty -- >> i think male parental leave needs to be equal to female parental leave so women don't have to feel like they have to drop out and don't get promoted. >> fewer people to pay for the older age -- >> that's a big issue. >> that's one thing. the other thing is just the growth of the population and the immigration part of this whether or not we really want to be reducing immigration at a time when fertility rates -- >> japan. >> steve, our chief fertility correspondent. >> some may call it demographic. >> demographic >> distinction with that tillman furtito, we'll be talking to him we are going to update the standings and we're going to ask

mr. wonderful about the surging small caps russell 2000 hitngti record highs again today. power lunch will be right back need a change of scenery?

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cnbc news update hawaii's kilauea volcano has erupted, shooting a plume of ash about 30,000 feet into the sky it comes after more than a dozen fissures opened miles to the east of the crater and spewed lava into neighborhoods. multiple ambulances are responding to the scene of a deadly school bus crash in new jersey at least one person is dead and multiple are injured after the school bus collided with a dump truck on interstate 80 earlier this morning. today marks the one year anniversary of robert muller's appointment as special counsel president trump blasted the probe in tweets calling it disgusting, illegal and a witch-hunt chuck schumer took to the floor to criticize the president's s rhetoric. >> it's not a witch-hunt when 17 russians have been indicted.

it'snot a witch-hunt when some of the members of the trump campaign has been indicted it's not a witch-hunt when democrats and republicans agree with the intelligence community that russian interfered in the election. >> that's the update this hour. thank you very much. let's look at markets right now. shall we there you see the dow industrials off bi.1%. s&p is down even by a slimmer margin and the nasdaq is basically flat as well. we've been forced to pay attention to the italian markets. new government could be headed by a 31-year-old the party hates the euros. the policy is unfavorable in terms of market participants.

comparisons to greece. they have since pulled back on that coalition perhaps talking back some of the worst of the rhetoric it's been a stellar run for small caps, hitting a fresh all time high today. kevin o'leary, chairman of shares otfs. >> that's close. >> you've been calling for this for months ever since tax reform happened you thought they would be the biggest beneficiaries. it took a while but here they are leading the market. >> it's not all of them. ftse russell maintains the russell 2000 the ones that are going to be affected are the ones that make money, which many in the russell 2000 don't you have to exclude rates. rates aren't taxed i went back to ftse russell and said this is a once in a lifetime opportunity for the next three years we'll have a remarkable increase

of free cash flows would you do the work, go back and get out of the 2000 anything that doesn't make money. 224 companies make the cut. >> only 224? >> that's it you can go online. >> out of the 2000 one out of ten >> it's inside of ousm you don't have to buy the etf. go online and look at what's inside and buy the names 224 names are going to be in my view, this is a personal opinion, obviously, but i'm owning those -- >> give us an example of the names? >> cirrus, a medical supply company thereat us company. 18% in crease crease cash flow industrials, bio tech. >> how much are you paying for the earnings >> they were -- actually they're still a discount to the s&p 500. s&p 500 has 47% of its revenue

in foreign markets they don't have the benefit of the true tax reform. the majority of revenues coming from the russell 2000 companies are domestic so they're going to have the full impact. you're not exposed to trade wars if it's all domestic revenue nobody's covering these companies. even the companies themselves when i call up the ceos saying can you give us an estimate? i haven't got the tax book yet from the irs i don't even know. >> by how much have those 200 outperformed the russell 2000 as a whole? >> it's almost unfair to compare. the rates have really slowed down the potential of the russell 2000 and even itself -- >> they're there >> you have to ask yourself who is going to benefit in the next 18 months? i argue the ones that aren't rates that pay high taxes now pay 21%. you have to be profitable to pay tax. why would you want a company that has no profits? >> are those 220 outperforming the broader -- >> they have started to that's why we had the big move. that's the point the rates held back to whole sector rates are bad news in my

opinion. >> let's talk about the stock draft. i'm sure you'll be thrilled to one of your picks was chevron. it's up 4% you have brent above $80 and crude rallying there you are in second place. >> the man knows what he's doing here >> you know, i've told tim seymour i can't hold two trophies when i win the second one after the super bowl and i've asked him, according to the rules of the draft, he can carry my 2018 trophy while i accept my 2019 and i'll hire a psychiatrist to work with him to take the pain away. >> blue apron has gone the other way. >> it's up for me about 24%. >> maybe a little bounce. >> my theory on blue apron, i was in this sector and i got to know all the ceos including the ex-ceo of blue apron they have to be acquired my hope is somebody buys the asset at around the $4 price range. >> we'll have tillman furtito on

in a few minutes he just bought a food delivery company. they're delivering premade food as opposed to blue apron and plated w plated where a person has to work is one better than the other >> the world changed with amazon bought whole foods all of a sudden, albertson's buys out plated. what's going to happen with, you know, let's say a kroger what are they going to do? a costco. >> they're making deals, too >> i think there's a lot of optionali optionali optionality. blue apron has a huge list of customers. i may not get it right on timing but if they do this in the next year, it's mr. wonderful again winning the trophy. >> you've got seymour right where he want him. he was leading for much of last year you're like the racehorse that's

measuring the leader coming down to stretch. >> be my grasshopper and learn from the master. >> you were complaining the kids didn't buy bitcoin. >> i don't want to own bitcoin imagine an asset you take real cash and give it to an asset that makes no interest why would you do that? ask that question. >> capital appreciation i suppose is the reason. >> how's that working for you? >> not right. >> it's either really good or really bad. >> good to have you on. >> you got it, thank you. let's talk bond action right now. >> it's been a day of curves steepening, that doesn't happen very often we're looking at long maturities the big outperformer for the last several plus sessions two day of twos, it's dipping down, down two basis points. go out to the far end of the curve, they're up two basis points so tens, twos, 30s, 5s

ke currencies is doing a little bit better let's look at the component parts. december 1st, euro versus the dollar, you can see it swandived. lowest levels since december if you look at the pound versus the dollar, lowest levels since january. switch it up dollar versus the yen, it's at the best levels since january. now, the dollar index isn't forging ahead in a robust fashion today. but like treasuries did for so long before they went guns hot this week, the dollar index strives for higher ground and moves sideways but doesn't lose the upper ground tyler, back to you. >> thank you very much up next, tillman friita will join us. he is buying and excited about that he's putting money behind it not nearly as excited as he is about the houston rockets tying up the western conference finals man they played well last night. we'll talk fd,oo basketball, gambling and more on power lunch. ♪

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cnbc's billion dollar buyer tillman feritta is adding an empire he will now get into the food delivery business buying a company called waitr and doing it through a venture he started with rich handler. waitr is a food delivery startup based in louisiana they have more than 5,000 restaurant partners in more than 200 cities in the southeast. here is tillman feritta. welcome. >> how y'all today >> we're great as i understand it, there was a time when you were a little cool on the food delivery business. tell us why and what changed your mind and why this one is the one to go after? >> you know, it's really funny

how things change. we all know, we're in just a different world today. and the internet is changing our world. i was never a believer that people would stay home and watch netflix and hulu and not want to go eat at a restaurant what's happening is, we're having to designate parking places and have people just handle all of our to go orders what's happening now is the soft' wasof software is coming in with all the company and their ability to deliver it to the customer what's happened is i really thought that like, blue apron and sunflower and all of those, we're going to have a huge hit on us in the restaurant industry and they didn't. because as the ingredients started coming in and people still had to cook for 45 minutes and still had to clean up, i think people realized why am i not just ordering food from my favorite restaurant and having it delivered so hey, i'm converted.

i'm changed. i mean, i've seen it happen in my hundreds of restaurants around the country. >> you're following the customer there. >> i am. that's what you have to do the consumer tells us what to do and the companies that don't do what the consumer tells them are the companies that aren't here again in a few years. >> how do you scale it up from its now strong position in the south and southeast to a national brand competing with, for example, grubhub or uber eats what's your edge >> well, one of our edges is that the restaurant only hits 15%. where i will not use grubhub, because they want 25%. you know, different parts, 20% 30%. we can't afford to do it, the quality of food that we serve. so one of the things that attracted us to waitr that got them in our restaurants was the 15%. they hire their own drivers and they can do more deliveries. and we won't use uber eats

because of the cost to us. so it kind of started getting our attention. and then, you know, jeffries and myself, rich and i were looking for a company to buy with this special acquisition corp we went to him and, you know, they kind of liked the idea because they already had a tie in with landry's we started talking i didn't think we were going to make a deal. as i watched their sales, you know, last year, $125 million, they're going to go around $250 million this year and projected to do $500 million next year. i mean, the growth is there. what i like about them is they're in the smaller markets we're the only company out there that's going to be public besides grubhub. so i'm excited about it. i wanted a real growth company i think this is it. >> to tyler's point, there's so many competitors it's hard to see where this industry is going. it seems so fragmented as a consumer,what are we goin to do, have like, seven different apps for restaurant

delivery depending on what we want for the night is there going to be one that's going to come in and dominate? or are restaurants going to have to do it on their own? panera is doing it by itself. >> panera is panera. they have enough outlets they can do it but the independents and smaller chains -- you know i have so many different chains, but they're still smaller chains but they have national recognition. it's going to be like any other industry the airline industry the television industry. the iphone we call it an iphone, but that's not what it is you know, something happened to all those other competitors. all we're going to try to do is apply the same business model that i did in acquiring restaurants. you've got to get out there. you want to be the pac man and eat up the small companies and see what happens you know, it's a plan. we know how to do it we've been there before. we're going to have $150 million

on the balance sheet after this deal and so we're going to be in the acquisition mode we want to eat up a lot of the competition and see what happens. >> you're on cable, so you've got to have a pun. you're going to eat up the competition of course. it's been a couple of days since we've seen this decision from the supreme court when it comes to gambling. now, that we've got a couple of days under our belt, anymore assessment about what the impact is going to be either directly on your businesses when it comes to the casino you own or the online market >> well, i think online is going to be huge when somebody's able to be at a game and go make a bet on the third quarter or fourth quarter. i've said this over and over think about squares for the super bowl you have people that aren't even sports fans or know what's going on, but the idea of betting a square and watching to see if you could have an opportunity to win that bet at the end of each quarter is what's going to happen in sports gaming. it's going to happen you're going to bring a lot more

eyeballs to the games because it's going to happen so fast from a casino standpoint, what it's going to do for me is you're going to have the sports book in the casino but then people that are betting online for sports all of a sudden are going to start betting online, blackjack, slots and everything else. as you start to open it up in these other states, it's going to have a good windfall for the casinos. it's not just the sports betting, it's the exposure because you have more eyeballs your teams are going to be worth more than they are today so when your television contracts come up, your radio contracts, because you have more people watching and listening, you should make more money once again, it's just like waitr, though, it's just a plan. let's see what happens in the future >> let's talk about last night's game you needed that one and you got a big win. you asked me yesterday, am i just saying i'm for the rockets

because i like you no, my son has a signed james harden jersey hanging in his room your friend, mr. handler got a little excited there last night, didn't he? >> you know, rich is a huge rocket fan he's my friend and we -- he came in yesterday, he brought a bunch of rochester scholarship students all the way from new york, came to the game, got back on the plane and went back to rochester last night and, rich is a great fan, a great friend and gets into it. sometimes i had to nudge him and say i'm trying to watch the game but they have great leadership but he knows how to havea good time. >> we wish you continued good luck in your quest for houston and the rockets. tilman, great to see you. >> thank you, tyler. thank you, guys. looking forward to it. a big outage at google's nest system giving us a glimpse as to what can happen when your arartphone isn't acting so tas xtsmt. for your heart...

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oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. welcome back to "power lunch. turns out smart home products aren't always so smart users of google's nest products found out the hard way last night. aditi roy has the story.

>> for several hours last night, nest users were locked out from their devices remotely it all happened while many of us were sleeping. while people could still use their smart devices manually, customers were unable to control their locks, thermostats, cameras, doorbells and smoke detectors remotely on the app or the web. the company says it was a network issue saying the problem temporarily prevented nest customers from accessing devices using the nest app the nest support team tweeted about the outage starting around 11:30 p.m. eastern time last night, by 2:30 eastern time, the company said the issue had been resolved nest has experienced similar outages in the past. one expert i talked to says it is just part of the territory as we become more connected but the bigger question, guys, is the vulnerabilities of these smart home devices while this case didn't affect the physical locks, it does open up a discussion about just how secure devices are >> aditi, i think a lot of people think, oh, burglaries, et

cetera but if you live in the north where it is really cold and thermostat goes out, and you -- your pipes freeze, there could be really big implications from this >> it really could it actually happened in january of '15 or '16 and a guy wrote about his experience and how he started off saying something about hating the company because if it is in the middle of the knight and you wa night and you wake up freezing, it can have a big impact on you. oil prices hit a 3 1/2 year high rising oil prices hit the economy, plus a big intraday fall forcbs. what it means for the company as koff the second hour of "power" next

i'm michelle caruso-cabrera. the downside of climbing crude prices as oil continues to climb, at what point will it start to hurt the economy? we debate. and could legalizing sports betting actually take a toll on the economy? one author thinks so, says don't bet on it helping to pay taxes either and youtube announcing a music streaming service, adding to the dozens of options already

available in music and tv. we're going to talk to music legend and youtube's global head of music "power lunch" starts right now hey, everybody good afternoon welcome to "power lunch ." the dow trading near session lows, but the russell hitting all time highs, up a third of a percent now. it sits at 1621 and change energy the top performing sector today, brent above 80. crude, 3 1/2 year high both are a little bit lower just now. utilities and real estate, they are lagging as rates continue to rise cisco, walmart, merck, dragging the dow, coca-cola leading after getting an upgrade over at barclays movers in retail jcpenney's children's place, not leaders then, both have weak results dillard's is higher. sales beating estimates there. sarah, over to you. >> here's what else is happening

at this hour bj's wholesale filing for an ipo expected to list on the nyse the company was taken private back in 2011 by two private equity firms mortgage rates hitting a seven-year high. the average u.s. 30-year fixed rate mortgage now 4.61%. and new reports say wells fargo employees altered customer documents in its business banking unit this was in an effort to comply with regulatory consent orders the activity taking place last year and early this year, michelle >> thank you. we begin with oil's rapid rise jackie deangelis looks at how we got here and why. >> take a look at this chart last time at this year, crude oil was trading about 45% lower than its trading right now if we had a pen and drew a straight line, you see the trend line moving up there crossing 72 today and brent over 80 at one point in the session, both oil benchmarks saw the highest levels that they have seen since november of 2014.

several game changing factors over the last year, guys number one, supply and demand did see some rebalance, better demand for oil helped work through that excess supply as opec and russia stay true to their promised cuts. number two, geopolitics. this theme comes and goes. right now it is back in focus. all eyes on israel, iran as well for any disruptions that could impact the market. number three, fx impact. the dollar is strengthening now, but on a relative basis, it is lower than it was this time last year that is supportive of oil prices too. things to watch, summer driving season, nothing bets prices moving seasonally more than consumers hitting the road and on the flip side, i just want to point this out, guys, with prices moving so far so fast there is a point where the price of oil can actually have a chilling effect on its consu consumpti consumption, the iea told us this yesterday most people i've been speaking with say there is still room to run here, at least to the peak

of the season, which is fourth of july. >> jackie deangelis, thank you. so as oil continues to climb, at what point could it start to hurt the economy? let's break it down now with shin can the head of oil supply and roberto freelander with seaport global thank you so much for joining us roberto what is the pain point for u.s. consumers at this point when you talk about rising oil and gas prices >> it is a point to differentiate pain point is more so to the gasoline markets than the crude itself optically seeing crude spike above 70, 72, and wti is meaningful, you have to look at the gasoline markets real tightness with supply with year over year with the different octane blends and refiners switching from winter to summer gasoline. the gasoline tightening of the market is going to be impact we're seeing that now. typical rule of thumb would be a 10% rise in gas prices impact

consumer demand by 3% short-term but longer term, it could be double that. it is important to watch the gasoline markets more than the crude markets. >> shin, do you agree? if so, what predictions do you have for crude oil and gas prices >> nice to be here so, yes, oil prices heading up to $80 is an incredible move we in our view think that the fundamentals are not quite suggesting this much strength and really it is in the markets' hands. oil markets are tight, stocks low, heading into summer driving season, of course. we'll see 3 million barrels a day of incremental demand on crude runs and the opec restraint is really something to watch here we have a lot of news coming out of iran, venezuela, all of these geopolitical risks are really putting -- pulling on markets. we see opec production might be down this year and the combined, what this means is any escalation of

geopolitical tensions, any mistakes, miscalculations could send prices up another 10, even $20 from here. >> roberto, talking about those geopolitical risks, venezuela will hold an election this weekend, emphasis on the air quotes and there is talk that there will be more sanctions in the united states. they have talked about possibly banning the import of venezuelan crude. i know they're doing their best to implode on their own, but is that priced into the market? what would happen if we really saw even more of a dropoff of what anybody could buy from venezuela for whatever reason? >> i think the venezuelan situation, a lot of that is certainly factored into the market i think we have to look at both in terms of u.s. rig count and u.s. production, which is just on a tear. we have the rig count in the u.s. going up straight six weeks in a row and you see a lot of activity obviously in the perm et cetera. we can more than compensate

producers like russia and the saudis can compensate for any falloff from areas like venezuela. there is a geopolitical bid put in, any type of dovish type commentary can have prices retraced to low 60s on wti. >> shin, roberto just said that the venezuelan risk is priced intothe market from where you -- what if anything isn't right now >> well, we forecast that their quarter prices should be based on fundamentals 75 to $80 for right now, for the third quarter. we don't have in these balances priced in and part of the balances a reduction in iranian imports, a greater -- we have a 500,000 barrela day decline year on year on venezuelan imports. but it looks like things are more difficult than we expected so we could see more downside to that there is a lot of geopolitical risk that is sort of pulling prices above $80 a barrel, so anything that tightens the

balances already further from where they are now will lead to more upside. >> where are the saudis? why aren't they stepping up here to plug the potential gap in the market and the loss crude oil that we'll get as a result of president trump withdrawing from the iran deal? >> right, saudi arabia has shown incredible restraint and discipline in their production and at this moment, probably they're focusing more on the short-term revenue than they are on the long-term but there is a lot of political and economic reforms under way, so it still remains to be seen what they will do if markets stay too high for too long >> roberto, a lot of people think they want the price high, they want aramco to go public and they don't need aramco to go public. >> i think that plays into it for sure i think we also have to factor in the iranian sanctions go on and they're ramped up and iranian production the russians and chinese aren't too particular where they buy their crude from

>> guys, we'll leave it there, thank you very much. shin can and roberto freelander. president trump making comments on trade and north korea at the white house just moments ago the dow falling on the news. eamon javers is covering it for us. >> the president talked to members of the media here in another event about his position on china trade those talks on going today the president saying that china has become very spoiled on trade according to wire reporters in the room and that the u.s. has been ripped off by china for years on trade saying china won't rip off the united states anymore and also saying here, something interesting, about that zte comment that the president made on twitter over the weekend, where he seemed to imply that zte, the telecommunications firm in china, was losing too many jobs and they needed to create jobs in china

now the president is saying that president xi jinping of china asked him to look into the situation with the telecommunications firm zte. we'll listen for those comments which we'll get here momentarily from the president of the united states for more detail on what his position here is now, on zte, sounded very friendly to zte over the weekend that set off a dispute within his own trade team we see this split now between peter navarro, the trade negotiator and also steve mnuchin the treasury secretary and angry exchanges reportedly between the two of them over the past several weeks now over just how conciliatory to be toward the chinese. the navarro wing inside the white house wants to be very aggressive with the chinese and the mnuchin wing said to be a little bit more amenable to a deal how close are they to a deal in these negotiations that are on going now here at the white house is the question and we'll see the president, his comments on that in a few minutes. >> we got the two-minute warning. let's keep chatting here

we heard from justin trudeau earlier today who was very optimistic when it comes to trade that there was a nafta deal very close at hand, except for the sunset provision so the market didn't budge at all. >> right the opposite of the boy who cried wolf you're the boy always optimistic, that doesn't move the needle the other thing to watch for here is whether or not the white house actually schedules a meeting between the top chinese negotiator who is here in town and also the president of the united states at the white house. what sarah huckabee sanders said in the briefing that just broke up a few moments ago is that the president is likely to have that meeting with the chinese official, but not that he will have that meeting with the chinese official that will happen sometime in the later afternoon hours if it happens and it seems to me what is going on here, by not pinning down that meeting, the white house is holding it over the head of the chinese, based on how these negotiations that are happening now behind closed doors go, the white house seems to be willing to decide one way

or the other whether they will allow that meeting which would be a feather in the cap of the chinese side to happen with the president of the united states we'll wait and see whether they actually announce that that will give you some sense of whether the white house thinks the negotiations are going well. >> you're chiron said -- we'll go to the president now. he'sappearing now. >> thank you very much it is an honor to have secretary-general staltenburg with us, nato has been working very closely with the united states our relationship is very good together we have increased and really raised a lot of money from countries that weren't

paying or weren't paying a fair share. we have a little ways to go, but many billions of dollars of additional money has been raised and i really appreciate the great job that you're doing. as most people know, you've been extended for a long period of time and that was very much at, i think, with my leadership and really the fact is we pushed it very hard because this gentleman does a tremendous job at nato. and i appreciate it. thank you. >> thank you so much thank you so much, mr. president, for hosting me once again here at the white house. let me thank you for the leadership you show on the issue of the defense spending because it is very important that we all contribute more to our shared security and it is really having an impact because as you said, allies on our spending war on defense, all allies are increasing the defense budgets and -- >> do you give me credit for

that >> your leadership has been important and had a great impact we see that because all -- increase and add billion to their budgets. that's important because we live in a more unpredictable world and we need strong nature yo and to invest more in our security. >> thank you for being here. it is an honor >> nothing has changed on north korea that we know of. we have not been told anything and if it does, that's fine. if it doesn't, i think we'll probably have a very successful meeting. but we have not been told anything we're just reading -- we're just reading stories like you are we heard certain things from south korea. but we'll see what happens if the meeting happens, it happens. if it doesn't, we go on to the next step. >> typical thing that north korea does did you expect that? >> i don't know. i want to give efb the bverybode

benefit of the doubt i think i can only say our people are literally dealing with them right now in terms of making arrangements for the meeting. so that's a lot different than what you read, but oftentimes what you read if it is not fake news is true we'll see what happens we're dealing with them now. we may have the meeting, we may not have the meeting if we don't have it, that will be very interesting. we'll see what happens the border is still quite strong, i think things change a little bit when they met with china, they met the second time. as you know, kim jong-un had a second meeting with china, a little surprise meeting. and we have many of the chinese here today as you know, big delegations, negotiating trade, because the united states has been ripped off for many, many years by its bad trade deals i don't blame china, i blame our leadership of this kun friday fr country from the past. we have been ripped off by china. an evacuation of wealth like no country has ever seen before

given to another country that has rebuilt itself based on a lot of the money they have taken out of the united states that's not going to happen anymore. but there has been a big difference since they had the second meeting with president xi with that being said, my attitude is whatever happens happens. either way we'll be in great shape. >> would you consider a personal outreach to kim to get him moving toward -- keep him moving toward - >> i'll see what happens you have to want to deal it, with deals, that's what i do with deals you have to have two parties that want to do it he absolutely wanted to do it. perhaps he doesn't want to did it perhaps they spoke with china, that could be right. president xi, a friend of mine, great guy, but he's for china, i'm for the united states. that's the way it is i suspect it is never going to change i will say this, we are continuing to negotiate in terms of location, the location that is due, where to meet, how to meet, rooms, everything else and

they have been negotiating like nothing happened but if you read the newspapers, maybe it won't happen. i can't tell you yet, i will tell you very shortly, we're going to know very soon. steve? i've been telling china, we are -- you people have been covering trade and covering china and covering everything for a long time. have you ever even seen a negotiating and in trade nobody has seen anybody from our country, even negotiate on trade. trade with china and with other countries, i'm in the just blaming china. china is the biggest trade has been a total one way street right outside of this nation, you take money out like it is -- by the bucket loads into other whether it is the european union, which you know so well, whether it is japan or south korea or i could name almost every single country in the world. we had nobody representing us.

and now you have somebody that is very good at this stuff, me, representing us. and china has taken out hundreds of billions of dollars a year from the united states and i explained to president xi, we can't do that anymore we just can't do thatanymore it is a much different situation. but with all the years and all the years that you've covered trade and nations and wars and everything else, you never have seen a people come over from china to work on a trade deal. now, will that be successful i tend to doubt it the reason i doubt it is because china has become very spoiled. the european union has become very spoiled other countries have become very spoiled. because they always got 100% of whatever they wanted from the united states. we can't allow that to happen anymore. we're an incredible country. we have incredible potential the potential we have is incredible

but we lost $800 billion on trade last year. if you add it all up, of which china was around the $500 billion mark we lost $800 billion, can you believe that is that an amazing thing to even think about? we lost $800 billion on trade. we're not going to be doing that any longer zte was a company i spoke to with president xi. he asked me if i would look at that, it was harmful to them in terms of their jobs and probably other things and i said i would. he asked me to do it and i would do that. i had a great respect. i like him he likes me. we have a great relationship he asked me to look at zte don't forget, it was my administration with my full knowledge that put very, very strong clamps on zte wasn't anybody else. it wasn't president obama. it wasn't president bush it was me. i put very strong clamps on zte.

they did very bad things to our country. they did very bad things to our economy. one thing i will say, they also buy a large portion of their parts for the phones that they make and they're the fourth largest company in terms of that industry they buy those parts from the united states. that's a lot of business so we have a lot of companies that won't be selling those parts. but the president of china, president xi, asked me to look at it. i said i would look at it. but anything we do with zte is always -- it is just a small component of the overall deal. i can only tell you this, we'll come out fine with china hopefully china will be happy. i think we will be happy and as the expression goes, when you lose $500 billion a year on trade, you can't lose the trade war. you already lost it. we had horrible representatives in this country that have

allowed other countries to get away with murder and those days are gone. those days are over. so we just want fairness for the workers of this country and for the united states. that's what's going to happen, okay i'll let you know about as time goes by, we'll let you know. as of this moment, everything we know, i mean, north korea is actually talking to us about times and everything else. as though nothing happened will it happen will we be going on that very special date and can some great things happen you know, we're going to be looking at it very soon. the libyan model isn't a model we have at all in libya, we decimated that country. that country was decimated there was no deal to keep gadhafi. the libyan model that was mentioned was a much different deal

this would be with kim jong-un, something he would be there, be in his country, running his country, his country would be very rich, his people are indust russ they're hard working, incredible people but the libyan model was a much different model. we decimated that country. we never said, oh, we're going to give you protection we're going to give you military strength, we're going to give you all of these things. we went in and decimated him and we did the same thing with iraq whether or not we should have, i can tell you i was against it from the beginning look what we have now. we have spent $7 trillion, can you believe that $7 trillion in the middle east right out the window might as well throw the money right out the window and we have done a lot of infrastructure, had airports

approved, saw that, a lot of things are happening we spent $7 trillion in the middle east. and look where we are right now. it is pretty sad but the model, if you look at that model with gadhafi that was a total decimation we went in there to beat them. that model would take place if we don't make a deal most likely if we mackke a deal, i think kim jong-un would be very happy. i think he would be very happy this is just the opposite. i think when john bolton made that statement, he was talking about if we're going to be having a problem, we cannot let that country have nukes. we just can't do it. so that's the way it meant just the opposite. if you look at syria, that was a total decimation >> what security guarantees are you willing -- >> i'm willing to do -- we're willing to do a lot.

he's willing to i think do a lot also i think we'll have a good relationship assuming we have the meeting and assuming something comes of it. he'll get protections that will be very strong syria had never had protections. if you look at syria, look at -- or if you look anywhere around the middle east, you look at iraq, you look at libya, with libya, certainly they didn't have protection, they had the exact opposite that was absolute decimation and that's what we planned to do and that's what we did we're going to say he will have very adequate protection and we'll see how it all turns out i think this, the best thing he could ever do is to make a deal. i have a feeling however that for various reasons, maybe including trade, because they never had this problem before, china never had this problem with us, it could very well be that he's influencing kim jong-un, we'll see what happens,

meaning the president of china, president xi, could be influencing kim jong-un. but we'll see. that's just -- look, if you remember, a few weeks ago, all of a sudden, out of nowhere, kim jong-un went to china to say hello a second time to president xi i think they were dedicating an aircraft carrier, paid for largely by the united states thank you very much, everybody >> some inaudible questions there concluding a 13-minute discussion with president trump, taking multiple questions. we're rejoined by eamon javers at the white house i thought it was very interesting the way the president at the end said that china may be influencing mr. kim in north korea and i wonder whether that is a

suggestion that there is somehow a nexus between what is going on with the united states and china regarding trade and what may be going on or not going on between the united states and our discussions with north korea over nuclear weapons in other words that china is pressuring kim and in return would expect some kind of quid pro quo from the united states with respect to trade. >> that's exactly the way i read it as well the president seemed to be suggesting that president xi of china is influencing kim jong-un and that might be the explanation for the sudden tactical reversal we have seen on the part of the north koreans who seem less likely to have a meeting with the united states and the president has said we'll see whether it happens or doesn't happen now, those negotiations with the chinese delegation are happening now, here in washington, and what we're told is that the white house will decide whether or not president trump meets with the chinese delegation later this afternoon

i thought it was interesting in that context that the president said that he asked about the chinese negotiations, will this be successful, i tend to doubt it, that's because china has become spoiled, he said, in terms of the trade negotiations with the united states, painting himself as the strongest negotiator from the united states who ever dealt with the chinese in terms of trade. and he said, now you've got someone who is very good at this stuff, me, representing us china has taken hundreds of billions of dollars out of the united states. he said we have been ripped off by china, this is an evacuation of wealth like no country has ever seen. that doesn't sound like a president who is anticipating a successful outcome to today's talks. so the right puff of smoke to look for here in terms of whether the negotiations are going on is whether or not the white house adds that meeting between president trump and the chinese delegation later this afternoon at white house he'll put out an official release on it if it comes. >> you can add to the concerns, the same time he said china has

become very spoiled, he also said the european union has become very spoiled. they have always gotten 100% of what they wanted out of the united states. so even though china is immediately on the table right new, there is still this issue he has with the european union and his concerns about the trade relationship there >> absolutely. he's sitting in the room there with the leading official from nato also talking about his efforts to prod nato allies to give more money, to spend more money on defense to live up to their obligations and said, he asked the nato official if he should get credit for the fact that they are in fact spending more money the president pushing on a number of fronts, the allies and the eu generally multisided problem. >> they didn't show stoltenberg's face, his reaction, when he turned to him. >> maybe the wide shot might have captured it we'll go back and check the tape. >> thank you the dow was flat most of the day until making a big turn lower perhaps on the comments by

president trump. why did the markets act atreth way? we'll discuss coming up on "power lunch." need a change of scenery? the kayak explore tool shows you the places you can fly on your budget. so you can be confident you're getting the most bang for your buck. alo-ha. kayak. search one and done. ♪ ♪ (baby crying) ♪ ♪ don't juggle your home life and work life without it. ♪ ♪ and don't forget who you're really working for without it. ♪ ♪ funding to help grow your business... ♪ ♪ another way we have your back. ♪ ♪ the powerful backing of american express. don't do business without it.

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seriously anything, to help you invest for the future. sure. mom,what's up son?alk? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. [ chuckles ] download the xfinity my account app and set a password you can easily remember. one more way comcast is working to fit into your life, not the other way around. hello. i'm sue herera here is your cnbc news update at

this hour. house democrats are asking republicans to scrap a planned vote on a new five-year farm bill it is centered on the snap food stamp program. house republicans want to expand work requirements for recipients democrats say that is misguided. >> the gop wants to cut $23 billion from child nutrition, nutrition, the snap program, endangering a lifeline for hungry children, seniors, students >> investigators are combing through the wreckage of a deadly school bus accident in new jersey at least one person has been killed and there are multiple injuries investigators say the accident ripped the undercarriage completely off of the bus after it collided with a dump truck. a famed world war ii bomber is on display at the air force museum in ohio the memphis bell exhibit furblly op officially opened this morning and it was 75 years ago today

that that plane completed its 25th successful bombing mission flying over nazi germany well worth the trip to see it. that's the update at this hour ty, back to you. >> thank you very much. you just heard president trump speaking on china and trade among other things the market is taking a little dip lower, about a quarter of a point, quarter percent down now. after he spoke, they cut those losses in half karen cavanagh is senior market strategist with voya investment manageme management you're smiling that's nice to see karen, what worries you if anything about the market now? is it trade? is it rising interest rates? is it somewhat peaked forecasts for earnings going forward is there anything that is troubling you? >> i actually have to tell you, i've never been more not worried. i see fundamentals are very strong i see that earnings are moving

forward. there is always geopolitical risk i think that investors are missing the tax cuts, really working their way through the economy and we're starting to see capital expenditures go up and that mean less reliance on china. china is now not the alternative and companies will be building and investing here in the united states that's good for the economy. i think this investor skepticism is healthy because we don't like to see the markets go straight up i'm not really worried about rising interest rates because the economy is doing well. >> brad, how about you, number two, i was have interested in the wall street journal story that pointed out that there is in fact a capital spending boom, but companies that do a lot of spending on plant and equipment often underperform the broader s&p. >> that's been a big problem we don't have the -- we don't have the capital spending because it makes a lot more sense financially in the

short-term to be able to go and just buy back shares your return on that in terms of earnings per share is locked in. so that's been a lot of what's driving. that's one of the problems behind the productivity problem. i agree things are good now, the question is how much better can they get without that kind of capital spending which we're starting to see it tough to see how things can get much better. in the short-term, i'm good. in the medium term, i'm worried. >> how are you in the worried about trade? he doesn't know if the trade talks will resort in some sort of deal. clearly there is a lot of uncertainty here. >> well, yes of course, uncertainty is never a good thing the longer that these trade deals kind of play out, the more businesses are kind of holding off on their plans that is a little bit of a head wind i think the fact that this is all being talked about is a positive and going back to what brad said, the productivity, once

we're going to see an increase in productivity, that's going to be good for long-term economic growth that's been the missing piece of the puzzle and when we hear the workers get this capital spending, their tools back in their hands, things will be good i'm actually bullish for the long-term too. but trade, yeah, having uncertainty about trade, that's always an uncertainty, it is never really good for the market i worry about that a little bit. still, overall, i'm not that worried. >> what are you doing here based on everything you just said. can you just buy the market broadly or have to be specific in your tactics? >> i think the trend is up for all of the concerns out there, the interesting thing is they haven't really rocked the market we have the dog that is not barking here with everything going on, the market keeps bouncing and going up you have to respect that trend at the same time, there are opportunities, for example, financials, deregulation is the point that isn't appreciated

there. financials are going to did bet we are higher rates, even better with lower regulation. and that is something to take a look at. >> okay. good takeaway. thank you. there was a ruling today by a judge in favor of a company called national amusements that decision sent another company's shares plunging more than 4%. cbs was attempting to cut national amuseamusement's voting power. the judge's decision means national amusement can be part of the plan. this say complicated story with a lot of characters. cbs and viacom, redstone would like them to merge les moonves doesn't want to do that deal unless he has more control. have i explained that basic part

correctly? >> in broad strokes, yes i think if you drill down to the weeds, there is some particular things that you can point out. one is that sherry is denying she would force the two companies together against their will cbs is suing because they're scared she was planning to do that or thought she was planning to do that i think what you've got, big picture, is a really messy court fight that is going to take maybe six months or so to sort out. the first kind of round was fought i don't think that's the last round. there will be a board vote tomorrow that will be contested. we're going to see this drag on. but, you know, at the end of the day, you see at cbs, the management team that is doing everything they can to reflect and protect the interests of the shareholders that don't have a majority of the bulk but have a majority of the economic

interest and, you know this is creating a lot of uncertainty around cbs. >> the shares of cbs are getting hit very hard. the basic read i see from this is because of this ruling, it is much more possible they could be forced to marry viacom and cbs shareholders don't like that is that a correct assumption >> i think it is correct to read that people are certainly trafficking in unprecedented kind of realms and i think there is a lot of uncertainty. i think people dislike uncertainty. i think that's what's weighing on cbs' dock today it is down about 20 bucks, you know, over the past several months into this i think that whichever way this works out, i'm recommending cbs, it is a good company and troubled sector, trading at 9 pe, i think at some point in the future we'll have less uncertainty than we have today and at that point, i think you

can spend a lot of reasons why cbs could be a good equity to own in this sector you look at discovery scripts, discovery was pressured into that merger, now that the merger is done and getting synergies, the stock recovered. mergers with viacom, may be debate about the merits or lack of merits, but at this price, i argue that the stock would tend to work even if that merger is completed. and if it isn't completed and cbs is participating, the stock can really work if you look at what happened to time warner with their at&t merger could be a lot more contact and consolidation and could be interesting here. >> pending merger. you're saying that these two companies might well be stronger together than they would be apart. if that happens, is les moonves likely to be the ceo of the company? >> well, look, to be clear, i'm not saying these two companies should merge i think the best outcome for the two companies are other suitors. they could get a lot more value

from other players than this kind of forced marriage that has been contemplated here that was my first point. what was the rest of your question >> if the two got together, do you see any way that les moonves would be the chairman of the combined company >> i kind of doubt it. i mean, you know, it is hard to see if the merger happens that he's there. >> who would the potential suitors be for either of the companies. you mentioned that tantalizingly. >> i'm sorry what did you say? >> who would the potential suitors be of the two companies which you mentioned. >> there has been some reporting that verizon made an approach. at&t is successful, with time warner, you know, verizon will have to think about that again i think that there is a lot of interest among internet companies and deeper into contact and i think that if at&t and time warner beat off the doj's antitrust suit, there will be a lot more reason to think about marriage, internet platform with content and being

able to, you know, use that combination to innovate if in advertising and get scale with customer data. that's what you need to compete with the likes of google and facebook and -- >> got to leave it there, thank you. when we come back, youtube taking on spotify and apple music. we got an exclusive interview ute'glaleaofndustry icon and youbs ob hd music, next you know, i used to be good at this. then you turn 40 and everything goes. tell me about it. you know, it's made me think, i'm closer to my retirement days than i am my college days. hm. i'm thinking... will i have enough? should i change something? well, you're asking the right questions. i just want to know, am i gonna be okay? i know people who specialize in "am i going to be okay." i like that. you may need glasses though. yeah. schedule a complimentary goal planning session today with td ameritrade.

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welcome back youtube announced a new music streaming service. julia boorstin joins us with youtube's global head of music and music legend leor cohen. >> thank you for joining us today. big announcement for you you're going up against spotify, apple music. what makes youtube music so different? >> well, i think that youtube music has such an incredible opportunity. first of all, i don't think it is a winner win all category youtube music has the largest consumption of music around the world. and our partners, the labels,

the artists, and our customers, they want two engines. ad supported, and they want subscription and that's the huge opportunity for us it is a very nascent business. there is a huge opportunity. this is a new music subscription is relatively new. >> but people already know they can go to youtube to watch videos, listen to music, i do it myself how many people do you think will be able to convert to paying subscribers >> let me just put it to you this way i think there is such a great opportunity. we have the world's largest consumption of music on our platform and the customer should have the choice to decide whether they want to pay with their eyeballs or whether they want to subscribe. and we have heard the industry they want to get two engines they want both engines to work they want advertising supported and they want subscription

so there is a huge opportunity in front of us. >> so what do you think your number is? is it 50 million just like apple music recently announced >> we don't talk about numbers, but we think that there is just an incredible opportunity for us. >> how much of this has to do with the fact that advertisers are demanding safe content a lot of concern about brand safety, on youtube, and youtube has done a lot about this, trying to dress these advertiser concerns about the safety of user generated content is there more pressure on your business now to compensate for what's going on, with user generated content? >> this has to do with us listening to our partners and the creative community and also our customers that said to us that they would love for us to build a really substantial subscription business alongside our advertising business. >> when you look at what spotify and apple music are doing, do you think you're going to be stealing over their subscribers or going after an entirely

different market >> i have never looked at my competition. i only focus on my own business and i think that we have just an enormous opportunity youtube is where the world's most consumption of music happens. and we are so connected to our consumer and our partners that building the subscription services really exciting for us. >> but it is interesting if you look back at youtube historically what made it so popular is that it is free and it is hard sometimes to convert people who are used to getting something for free to start paying for it. what are you going to do to explain to people why that's worth it >> i think that the consumer is going to decide whether they want to continue paying with their eyeballs or want to have a subscription service i think there is an enormous amount of benefit and a lot of work that has been going on in developing this product. we have the world's biggest

catalog, as well as now on top of the google context server that we actually are starting to get to understand what you would like, when you would like to have it. it is all there. you know, in fact, last week one of the most important cultural moments happened on our platform with childish gambino. you would have to leave your service and go to youtube to see what the video was like. with us, it is all there they have the ability to, whether it is a saturday night live performance, or whether it was his video, they don't have to jump around between two or three apps to enjoy. >> now, speaking of one of the other apps, spotify made a big and controversial move in the decision to not promote songs by r. kelly

part of a whole new strategy that spotify is embracing about hateful content and people whose values they don't support. what did you think of that decision and are you going to do something similar with youtube music? >> we take it very, very seriously and there is a lot of internal conversation happening now. >> so does that mean you consider pulling names like r. kelly from different play lists? >> we take it really seriously and like i said, there is so much dialogue happening right now. >> and but i guess it comes to a larger question, spotify clearly thinks of itself as a curator, editor in deciding which songs to surface for its subscribers and do you think that people's track record or their life outside of the music is relevant to the choices that you're making for your listeners in terms of the music >> i can't speak for spotify, but i know that one of the unique benefits of youtube music is the personalization of the

app. so it will get to know you and have context for you, so let's say that you have date night, barry white will show up for you. and you're on your way to new york, you forgot to cash all that music, it would have already known you needed six hours of music for the flight. so i think that there is a lot of opportunities to personalize the app. >> interesting, you'll have to keep us posted on what you decide to do if you have to choose to make similar editorial decisions. thank you for joining us we really appreciate it. back over to you. >> thank you for having me. >> great to have you here. >> julia, thank you very much, for bringing us that interview speaking of music, they took the '90s by storm and now they're back we're talking about the backstreet boys. they're out with a new single and music video. song is called "don't go breaking my heart. part of an upcoming album, came

out today, already at the top of apple music's list. >> elton john, "don't go breaking my heart". >> a lot of songs. there is a lot of lovers of the backstreet boys even though they're old now. started 25 years ago. >> >> can make barry white appear in my house for date night, that's a good evening right there. >> oh, all right rising dollar -- let's change the subject. rising dollar continues to put pressure on the emerging maet rks.now time to jump in as "tra nation" is next.

welcome back, time for "trading nation," and emerging markets sink again today the eem down more than 1% flirting with correction territory, down 1.5% this amid a soaring u.s. dollar and other issues larry mcdonald with the bear traps report, and mark with strategic wealth partners. larry, brazilian stock hit hard today, but you're bullish, why >> well, our thesis for the year, we laid it out in january, and with bond yields moving

higher, the countries around the world in bonds, those assets have to move somewhere they move into commodities commodity producing countries, 30% of brazil's gdp is related to the commodity space so from an economic standpoint, that's a positive now, there's a global supply shortage of dollars that's an offsort dollar crisis affecting the emerging market with alot to do with the fed, and the fed's going to have to back away from their policy path, and when that happens, the emerge markets are going to get a swift, swift move higher. >> well, that's a big bet on the fed's policy path, i don't know if it's consensus, but you look emerging markets too given political problems and market problems that highlight that like a rising dollar give us a few ways you play it >> first things first, put in perspective these stocks are going to a higher volatility play so you have to be willing to deal with the ups and downs

there's a lot of values in emerging market stocks right now, trading to a price to book discount of 30% to the world index on average it's normally 14%. that being said, the emerging market consumer is still one of the most powerful forces in investing, and naturally, what we want to play is the consumer. the growth of the middle class in china, india, it just remi represents a ton of potential. the stocks suffer because of the trade war talks and strong dollar, but if we play the consumer, best way to play that is through the etf's econ, e-c-o-n. >> oh - >> there's a small cap dividend called ddg, great dividend play, lower data, and at the same time small caps do business locally, not internationally so they are not impacted by trade issues whatsoever >> all right we'll look at what's in the etfs, for now, guys, thank you

very much for weighing in, and for more, go to doppler rad tradingnation.cnbc.com follow us on trading nation, and check, please, is next now, the latest from tradingnation.cnbc.com and a word from our sponsor. when you own a stock going higher, lock in profit by raising the stop order, the risk-reward ratio could fallut o of balance so raise the exit point to under a significant support level to ride the trend as long as possible.

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check, please. >> for me, highlighting the biggest winner in the dow today, which is coca-cola on an upgrade from barclays to buy, bullish, transformation working, and notable because we talk about doom and gloom, it is the worst performing group of the year, down more than 13%, but coke has been a bright spot on some of the new strategies from their new ceo. >> new flavors >> yeah. new flavors of diets, actually >> orange and mango, ginger lime >> it's a good one >> we have analysts on halftime report, and she called it sparkling turn around. didn't like the baby video before, crying babies, so many happy babies on youtube, right so we got happy video babies for check please >> there you go. >> we need more babies that's the point >> that's much better.

>> more babies can help in a lot of ways. >> birthrate is down to a 30-year low. >> right that was the economic story behind this baby video >> what are the babies going to do other than the vomit there? >> eat >> they are going to eat, how? home delivery. still rocking. >> thank you for watching "power lunch," and "closing bell" starts right now >> welcome, i'm david faber in for wilfred frost in a day filled with news we have new tensions on trade that investors are paying close attention to rising inflation, 3.1% yield on the 10-year, and don't forget rising oil prices. >> reporter: we're in los angeles, shares of cbs fall hard after a judge ruled against the battle, and we have breaking details in the fast moving story very soon. >> reporter: in san francisco, a bi