puma bio tech. >> nice stuff. >> i mentioned this service a couple of times, breakout is happening now. >> rebecca wasn't talking to you -- >> steve wise. >> alphabet. >> buy today talk about it tomorrow. >> that does it for us power lunch right now. welcome to power lunch we begin with breaking news this hour >> the imf has released its report on the state of the u.s. economy. sarah has those broking eaking details. >> the administration's policies are not getting great marks here tax cuts, the imf says they'll have a modestly positive impact to the economy same with deregulation a modest boost to gdp. it's the budgetary arm of the trump policies that has the imf worried saying the deficit will

rise to 4.5% of gdp and that will elevate risk to the u.s. and global economy it will exacerbate what they call unsustainable debt. that number set to climb to 90% of gdp this will make life difficult for the federal reserve saying trump's policy raises the risk of faster inflation and will cause the fed to move faster than the market thinks when it comes to raising rates that will create disruption and volatility if that wasn't enough, the imf is criticizing the temporary nature of the tax cuts saying it creates uncertainty. it says the tax cuts help the rich fin finally, a rebuke of the trade tariffs. they hurt global supply chains and u.s. multinational companies. guys, the head of the imf is making some comments now in a news conference on these findings probably trying to tone it down

a little bit because they do say the u.s. economy is set to grow very fast we're going to have the longest expansion on record over the next year. but the longer and medium term impact of some of these trump fiscal policies on the debt, of course, and on trade is going to make it a little bit more painful. let's get some reaction. steve leaseman is with us. steve, i guess it's not hugely surprising, but the imf usually plays it pretty safe when it comes to politics. the u.s. is the biggest shareholder in the fund. i think there's a lot of concern about the trump policies. >> you know, i'm not sure this is politics, though. this is economics, right at least one hopes it is there is two kinds of people in the world. there are people who believe in the fabulous qualities of the trump tax cut and those that don't. yesterday we heard from the federal reserve. at least to this point, they don't. you find that by looking at their long run growth path, which is between 1.8% and 2%

they say 2.8% this year going back to around 2%. i haven't seen the growth numbers in the imf but they don't apparently see that either which is why they see the deficit ticking up so much the administration believes there are positive qualities to this tax cut they include a boost in capital spending, which will boost productivity that will pay back dividends they have 3% built in. my guess -- >> half it's half. >> what's that >> the imf sees half of what the white house sees. >> that would be very low, which means they do not see much at all. because you did say they saw some positive aspects. they see that going away i can look that up the bottom line is they see back down a trend and you have the bill left over. >> what is the imf's track record when it comes to forecasting? >> as good as anybody else nobody is good out there not any better or worse i would offer than the administration.

>> half of what the white house expects on growth, joe what camp do you favor >> i would correct steve because the administration hasn't been around long enough >> i meant administrations, joe. >> well you said administration. thank you. okay thank you. but, look, imf's forecasts are terrible i wouldn't put a lot of stock in what they're saying. it seems to me from what sarah just mentioned, there seems to be a tremendous political bent to it. i hope they're wrong for a lot of reasons i wouldn't put much stock in their numbers. >> are they the only ones that seem to be alarmed about the debt i mean, it was the topic five years ago, ten years ago it was all anybody talked about. now the past three years it hasn't been talked about much. >> there are reasoned to be worried about it the financial markets are telling us that right now it's not a problem. there are countries that have much worse debt ratios, such as japan. i mean, why don't they worry about them the u.s. is relative to some of

its partners not in such bad shape. the issue for me is growth can we get growth faster in turn, can we get the revenue share to gdp higher? to me, it seems like it's worth a shot i find the imf tends to be way too fiscally conservative with an ax to grind it's worth giving a shot i would argue on the corporate side, there is permanency here, these aren't temporary. >> how do you get there? i'm all in favor of getting there. >> sure. >> the trouble is the economics are very difficult, right? >> sure. >> our demographics are lockred in it's really hard to raise that number, which is going to give you less than a percentage point. you've got to get two points out of productivity or better. do you see that happening? >> it's certainly possible there is the growth when it changes trend people almost never see it there is a case to be made, i believe it, that we could see a

sharp acceleration in productivity if you don't get that you'll get the weak numbers. the administration plan was to designed to left the supply side of the economy through capital deepening and deregulation the estimates are that it will work we'll see. sometimes these things can widely miss the mark. >> you know, putting the imf aside, this is one of the biggest debate on wall street right now. we were having it earlier, and that is, how long -- whaut is te sustainability of the growth spurt? it looks good. >> it looks great. >> yes, they get credit, the question is is it frontloaded and is growth going down to 1.5% there are a lot of people that think it's going to happen. >> this isn't new. it happened under reagan, bush, clinton, obama and now trump

it's not new business cycles don't die from old age, they die from imbalances for me the big risk is the fed i look at what the fed is doing. i don't like it. it's a real risk that the fed chokes this business cycle off if they don't, there's nothing to suggest this can't continue i don't want to say indefinitely, but for another few years. australia hasn't been in recession since the early 90s. these things can go a long time. >> i want to get your policy prescription correct you're saying higher growth is possible even likely, but the feds should not be raising rates in the face of that higher growth >> exactly that's exactly right. >> you think 2% or so or less is the right rate for an economy that's growing real 3% which means, i think you are thinking a zero real funds rate is what is the right funds rate. i'm sorry, there's a little

skepticism in my question. it's warranted it's weird you want a zero funds rate. >> i want to see them run the economy high yes. i want to see them run the economy high to try to engineer a cyclical lift in inflation which they haven't seen since the early 90s. >> we're there, joe. >> we're not there on nflation no we're not there on inflation it's been consistently below 2% for this cycle and the better part of the last 20 years. >> i've been argue ing with joe on the same point. >> let's look at the -- it's not been running above 2%. >> let's see what the tariffs do thank you. good debate as always. we just got those predictions on the state of the american economy and its future. add to that the fed now eyeing four interest rate hikes instead of three in 2018 stocks mixed after starting out in rally mode as you see the dow

industrials off just a little bit. what do you do with your money now? we have the president of the permanent portfolio family of funds and the commonwealth network financial cio. did it cause you to do anything different in the money you manage >> our view is we're in a transitional phase to a more growth oriented economy. your last segment summed up the major issues pretty well no, i think all they did was support that maybe they're expecting growth to continue a little bit hotter to use that word and so maybe another -- i was thinking maybe they'd stop after june and maybe go to december it is a little bit more likely we'll see something in september or maybe a second rate hike versus just one. more into '19. maybe a little bit of a quicker pace, but nothing major. we still think we're in a growth economy. and there's a lot of opportunity there. >> rising rates can mean good things, right? >> absolutely. when i heard yesterday from

chair powell, the closest we're going to get to a declaration of victory from the fed the economy is solid the economy is great and inflation -- >> i believe that's the word he used, right? very unfed-ish sort of word, right? >> powell is very unfed-ish. >> he's chairing it. >> this says to me rates are going up but for the right reasons. when you go back to history when rates go up for the right reasons, that's been good for the market we have the fed ratifying things are getting better how can that not cheer the market up? >> you like financials, though e that's a trade that's not been working so far this year they are the laggards. we have j.p. morgan down 2%. what do we need to see this is a lead up to the

results. >> i think you need to differentiate here the global banks, which is what most people focus on, there's a lot of concern around europe in the u.s.,th the smaller banks which have been doing better they're going to benefit from continued deregulation they're going to benefit from faster lending there's a lot of good news there, but at the global level, we're seeing them held back by risk factors. >> michael, what do you like in the market right now what seems like a value to you >> i'd agree with brad's comments on the financials and we're mostly u.s. centric as well not only in that sector but probably throughout. the tax cuts, the growth perspective in the u.s., i mean, we're still growing a little bit faster than the rest of the world. we're bringing the rest of the world along with us. so the u.s. market seems pretty good i would say transports industrials. materials. resources. i mean, all of those asset categories that didn't keep up

in the market the last few years have a lot of work to do in this growth economy on the bond side, we are nervous about rising interest rates. they're going up for the right reasons. there's always a risk they go up too fast or too quickly or people stop buying bonds we're more high quality names and shorter duration in that space. we are focused in precious metals and real estate just given the fact that there is inflationary pressure out there, even though we're not seeing it at the moment. >> michael, brad, thank you very much, we appreciate it >> thanks, guys. let the media merger frenzy begin. fresh off at&t's big court ruling, will comcast win the fight and who is next? apple closing a major iphone security loophole. l llou why and how it affects your devices stay tuned

- i love my grandma. - anncr: as you grow older, your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide. - she outsmarts me every single time. - checkmate! you wanna play again? - anncr: prevagen. healthier brain. better life.

one day after at&t won a big legal battle to buy time warner. comcast making a $65 billion offer for the assets of 21st century fox. it's an all cash bid in december, disney agreed to buy the majority of fox for just over $52 billion in stock. the deal included fox's movie studios, networks, national geograph geographic, fx, and hulu as well as regional sports networks. the assets would increase

comcast's portfolio. for more and what it could mean for the media landscape, let's bring in jim stuart. what do you think disney does? >> well, you know, disney has thrown out a hail mary pass saying they think comcast would have regulatory hurdles to get over i don't see that after this opinion. i think the only weapon in disney's arsenal really is money. >> how much do you think disney wants? we had a guest on yesterday who said this is a nice to have for disney, but not a must have for disney. >> well, that's in the eye of the beholder i tend to agree with you i mean, what disney -- what's motivating the deal for disney is their move to direct to consumer and to create a package of quote unquote, must have programming, that will induce people to sign up. if you add all this content, you're going to draw in a lot more people who are going to be attracted to the disney package they can put on there. i think that's the same motive

for comcast, which already owns nbc universal. you want to get a big package of attractive content that is going to induce consumers to pay a monthly fee to get it directly if they aren't getting it on their cable. >> what's your read of what rupert murdoch is thinking, where he's leaning we've heard he's interested in something that would be tax beneficial, but also would pas muster with the regulatory authorities? >> on one level, murdoch has got to be happy. he's got a bidding war for a good chunk of his personal assets the tax thing is tricky for him. he has big tax consequences if it's an all cash deal. but many of the shareholders are not going to be concerned about that first of all, many shareholders are tax exempt entities. most people probably own these shares in a broad based etf or mutual fund so the tax

consequences will be not all that significant for them. the board of fox has got to consider what's in the best interest of all fox shareholders and a 20% premium is going to be very hard for them to turn down in my view that's why i think ultimately if disney really wants this, they are going to have to bid up for it. >> so the narrative was that way back when four, five months ago -- >> ancient history. >> -- comcast put in a bid that it claims was superior to the one that fox eventually accepted from disney. do you believe that narrative? if so, why would fox take that bid from disney as opposed to the one that comcast has characterized as superior that is now even more superior? is there some personal animus between the managements of comcast and fox that we don't know about are there hurt feelings or something like that that could be entering here or what

>> personal chemistry always enters into these deals on some level. not when you're talking about a 20% price premium. i do believe the original narrative. i think fox, murdoch, had legitimate concerns this deal would be blocked if they went with comcast look what happened with at&t time warner. the government did move in toon blo block that they spent a fortune fighting that in court before they finally won. i see no significant regulatory impediment to this deal going forward. the his this is a purely vertical deal this is not going to change in any way the competitive landscape for broadband providers. it does have horizontal aspects. nbc universal merging with fox or disney merging with fox both pose horizontal issues. but i've quickly run the numbers. this is a super competitive marketplace. it's not going to move the needle enough to trigger an

anti-trust review. if you throw in google, amazon and netflix into the mix, you won't have a problem getting a horizontal deal done here. >> we're going to leave it there. it great to speak with you >> thanks. apple is about to make it much harder for law enforcement agencies to crack into its iphones. we'll talk about that ahead. plus, shares of royal caribbean cruising, they are up more than 4% today the company making a big bet on ultraluxury. royal caribbean's o llcewi join us for a power lunch exclusive do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.

with a $500,000 life insurance policy. how much do you think it cost him? $100 a month? $75? $50? actually,duncan got his $500,000 for under $28 a month. less than a dollar a day. his secret? selectquote. in just minutes, a selectquote agent will comparison shop nearly a dozen highly-rated life insurance companies, and give you a choice of your five best rates. duncans wife cassie got a $750,000 policy for under $22 a month. give your family the security it needs at a price you can afford.

there's a market flash on crypto currencies. >> the s.e.c. has bitcoin are not securities, meaning they won't potentially face the same level of regulation asinitial coin offerings, which the s.e.c. does say most do function as securities these comments from the s.e.c. are being welcomed by investors. it's seen as a positive for the crypto currency market bitcoin is higher as is ether is lower for the year >> it's worth noting that the reason why we're seeing ether drop dramatically is there discussion as to whether the futures would be listed. this was a key question in terms of determining whether or not you can write a contract against

ether. >> so that, of course, is a big question in the market one reason we're seeing that big move today. >> thanks. and apple is set to fix a security flaw that could let third parties access the iphone, but not everybody is happy about it josh lipton is in san francisco now with more. hi, josh. >> that's right. so apple is now closing down what it calls a security vulnerability which could impact law enforcement. here's how this works. investigators plug the device, often they use what's called a grade key device into the charging port using specialized software the device extracts information from the phone apple is testing a feature that will disable that capability the indiana state police, for example, unlocked 96 iphones this year using grade key. the captain tells me if they can't now execute warrants, it

impacts their ability to take criminals off the street apple responded by saying that a vulnerability like this one is used by good guys but it could be exploited by bad guys so they have to patch it they received more than 14,000 u.s. government requests for information last year alone. it's another chapter really in the story of apple's tensions with law enforcement remember, the fbi back in 2016 wanted apple to write new software in order to by-pass the security of the one of the iphones used by the san bernardino terrorists. apple refused saying such software could fall into the hands of criminals. >> apple continuing its privacy fight there. thank you. as the federal reserve raises interest rates again and forecasts that more hikes are to come, what is that going to mean for the bank stocks and home building stocks? we'll drill down straight ahead on power lunch.

royal caribbean shares are rallying right now the company is making a big bet on high end luxury royal caribbean's ceo charts his growth plan next [phone ringing]

need a change of scenery? the kayak price forecast tool tells you whether to wait or book your flight now. so you can be confident you're getting the best price. giddyup! kayak. search one and done. at the marine mammal center, the environment is everything. we want to do our very best for each and every animal, and we want to operate a sustainable facility. and pg&e has been a partner helping us to achieve that.

we've helped the marine mammal center go solar, install electric vehicle charging stations, and become more energy efficient. pg&e has allowed us to be the most sustainable organization we can be. any time you help a customer, it's a really good feeling. it's especially so when it's a customer that's doing such good and important work for the environment. together, we're building a better california.

here is your cnbc news update for this hour secretary of state mike pompeo meeting with chinese president xi to discuss the recent u.s./north korean summit the two shook hands and sat down for a meeting with other u.s. and chinese diplomats. >> it was important for me to get here to share with you what president trump and chairman kim accomplished in singapore and share with you our hopes for how this process to denuclearize the peninsula and create peace there can be achieved in the weeks and months ahead >> mixed martial arts star conor mcgregor appears in court. he remains free on bail.

fewer teens are having sex than ten years ago those who are active are less likely to use condoms. illegal drug use is also down, but one in seven say they have misused opioids. one in three say they frequently feel sad or hopeless and that apparently is being attributed to increased social media use. that is the cnbc news update after this hour. i will send it back to you. >> wow, those are shocking numbers. one in seven have used opioids, one in three feel sad and hopeless. >> they don't socialize anymore. they chat virtually so they don't socialize. >> much more isolating sue, thank you as parents of teenagers or soon to be -- >> oh, no, they're teens i'll be there for you. >> thank you the white house is planning to rollout tariffs tomorrow on a

truncated list of chinese exports. that's according to three sources familiar with the matter the list is expected to include between 800 to 900 products. that compares to the original list of about 1,300 products published by the u.s. trade representative the final dollar figure targeted is unclear the president will be meeting this afternoon with his top trade advisors he does reserve the final decision on how to move forward. that being said, one senior white house official called it a fait accompli noted that talking points had been circulating among ten government agencies and that the list of products had already been uploaded to a government database for implementation the wildcard is how china responds considering the secretary of state is on the ground in beijing discussing progress on north korea. china has said it would retaliate if the u.s. puts tariffs in place as of right now, the white house is moving in that direction. the white house, the u.s. trade representative and the treasury department did not respond to a request for comment.

back to you. >> here we go again. thank you very much. let's check in on stocks at this hour. dow is losing some of its early gains. it had been up 131 points earlier this morning then reversed into negative territory. nasdaq remains strong as investors report deal making cisco and disney, verizon, the biggest gainers in the dow among the biggest movers in the day, insight, charter communications, also flying high seagate technologies let's go to the bond market for an update. rick is tracking the action as always. what an exciting day we're down four basis points we had good data and the fed was very upbeat. the increase in rates, the seventh up to 175 to 2% didn't seem destabilizing to the marketplace. it seems outside forces are definitely contributing to the

sma smack down this is going to be the tenth day we look to be closing in the 290s just consider the notion that when it comes to interest rates, what we're seeing in europe is much more volatile and it has a gravitational pull here. the euro currency did not respond well to the talk about future taper most likely. to get any context, maybe open it up a bit. if you open it up to midmay you'll see the one low there it traded down around 115 1/2. when the euro versus the dollar accelerated under 117 today where traders were trying to buy it picking the bottom, it just accelerated as their buys turned into sells back to you.

>> rick san tetelli thank you. the higher rate environment could impact a number of sectors, and specifically the financials and housing here to help us break this all down is jeffrey hart and the home building analyst. let's focus on the financials here we saw it narrow to the smallest we've seen since september of '07. why do you think this will resolve itself it sounds like you think this can't last forever. >> well, i mean, when you look at the fed hiking rates, the important question to ask is why are they doing it? it's driven by the belief that the economy is strong enough to remove stimulus. that's a bullish indication for the economy. the banks are a proxy on the economy because they finance the economy. there are things like concerns the curve will invert and flatten. but there are some concerns. we're in new territory as far as looking back at what happened

historically it's hard for me to see long term rates come down too far when the fed is just starting to unwind what is a big balance sheet. >> we have what's going on in europe holding down the longer end of the yield curve, correct? it's an interesting time to be a bank analyst so i'm wondering if you can rationalize how much in terms of assets do banks have levers to a yield curve versus other lines of business? can you break that down for us >> i think that's where you can differentiate a bit. to a large extent, larger banks are more asset sensitive you want to look at the trust banks that have two or less duration some of the universal banks have big capital markets operations we tend to look at the two year tenure, but for the most part the banks in the deposit market are borrowing a lot shorter than two year

the two year tenure has flattened, but i don't think it's quite the drag that people fear it is. >> who is going to fare the best >> well, i think everybody's going to do pretty well. i'm concerned that the market may have gotten ahead of itself as to how much the banks will be able to pay out. you're probably looking at some of the usual suspects. bank of america, citigroup, what have been underpayers getting up to speed and becoming at or above industry payers. >> you sounded concerned about morgan stanley. >> yeah, i mean, i think what it comes to the ccar, the equities markets are down that's going to hit the brokers at morgan stanley and goldman sachs more so than the pure banks. the morgan stanley goldman sachs is the area i'm more concerned about payouts versus what the streets are expecting. >> jeff, thanks.

to housing now the number of people applying for a mortgage dropping as rates turn higher again. this comes on the back of a new report showing homes are selling at a breakneck pace. we're here with all the number and the fallout from the fed >> well, homes are still flying off the shelves as you've said the average home sold in may went under contract in 34 days that's a new record, breaking april's pace of 36 days. that is according to red fin which began cutting this in 2010 homes are selling so quickly because there are so few for sale more homes did come on the market in may. it was not enough to boost supply total supply still down 5% compared to a year ago the shortage of listings is, of course, heating up prices yet again. and everything is going into a bidding war. higher mortgage rates may be coming out to start to affect these a little bit nearly a quarter of sellers in may dropped their prices that's the highest percentage

since last september that may be because people are seeing rates go higher and sellers know buyers are going to be cash strapped higher rates overheating home prices, it adds up to affordability finally hitting the wall as we see rates go higher, we could start to see prices come down although one caveat is while a quarter did sell with price cuts, over a quarter sold over the list price back to you. >> thank you very much more now on the impact of rising rates on housing with the home builder analyst at s susquehanna finance group. i would sum it up this way, the markets seem hot, the stocks stink, at least for the home builders why do you think there is that disconne disconnect >> i think people are looking at the market and thinking the market is predicting what's going to happenwith the underlying fundamentals. you know, diane hit the name on the head it's a supply -- demand

imbalance. we have excess demand and not enough supply. and when we look at rates and we look at affordability, you know, what's driving the market today, the entry level has begun to come back in a real way. a lot of investors forget that's in the rental market. >> so fundamentally, you believe that the stocks like dr horton, like toll brothers, which are down and double digit down this year are down because interest rates have moved up. if you tell me that on the one hand and you tell me on the other hand there is strong demand out there it's outstripping supply i would think that should be good for those companies >> it is and i think it will reflect that if you go back to the end of 2013 when we saw a similar move in the ten year, you know, the group was under pressure about

20%. and then within six months it self-corrected that's a very similar proxy to where we're at today we'll have the health of the spring selling season come through on numbers we visited over 100 communities this spring, myself and my team as we do every year. we're not seeing signs of slowing. >> i don't get it about the affordability. it seems to be going in the wrong direct you have a low inventory problem which is pushing prices up you don't think that will have an impact? >> no. if you go back to the mid 80s and look at the tradeoff between rental payments and mortgage payment, it's 10% plus or minus. it got out of whack in 2017. it was almost 40% more expensive to own than rent now we're conversely on the low end of that. it's about 26% cheaper on a payment basis to own versus rent we still have some room. we're not worried about rates until we get on the ten year into the forest quite frankly.

the other thing, the builders we talked tod were not seeing folks buy smaller homes. we're not hearing of folks optioning less we're not seeing a.r.m. demand pick up. we're not seeing buyers move to a.r.m. loans. >> let's switch to an interesting play here. you like some of the mortgage insurance companies, why >> we think they are levered to housing, they're levered to that dynamic of the entry level becoming a bigger part of the market you have a new fha head today who is going to shrink that over time you've got great returns, you know, mortgage credit went through a paradigm shift coming out of the crisis. we haven't made the first bad mortgage loan of the next

downturn i don't think the moerrtgage wi end up being a driver. the guardrails that are in place, the underwriting, the loan manufacturing, you can't fudge a w-2 anymore. it's all electronic. the cfpb and the fed and the rules that were put into place, some of those were for the positive and so we haven't seen the excess remember, the crisis excess was easy money we're not seeing that. this is demand this is millenials finally stepping into their home buying years. i'd say this is not a zero sum game i would say we're in a shortage shelter situation in the single family rental companies talking about strong demand. this is not just home purchase it's going to be, i think, more broadly throughout the system over the next five years. >> we leave it there thank you very much. cruise operators are getting squeezed by rising fuel cost and concerns about overcapacity. royal caribbean cruise line just made a huge bet on luxury cruises. we'll ask the ceo about the new strategy and how it l ayalpls into his growth plans. whoooo.

when it comes to travel, i sweat the details. late checkout... ...down-alternative pillows... ...and of course, price.

tripadvisor helps you book a... ...hotel without breaking a sweat. because we now instantly... ...search over 200 booking sites ...to find you the lowest price... ...on the hotel you want. don't sweat your booking. tripadvisor. the latest reviews. the lowest prices.

shares of royal caribbean rallying today having its best day in more than a year the stock is up 6% right now it's at the very top of the s&p 500. the cruise line operator taking a big stake in a high end rival. we have some details on the deal. >> royal caribbean announcing it's buying a controlling stake in privately held luxury cruise line silversea, based on an enterprise value of $2 billion it's a deal that gives royal a larger footprint in the ultraluxury segment, which right now it doesn't really have exposure to. analysts say it heightens competition with carnival and norwegian which have both been trying to elevate their cruise offerings to attract baby boomers who are now retiring and spending more time on money and travel joining us now in a power lunch

exclusive is richard fein. great to have you on the show. >> thank you for having me great day for us. >> it is help investors understand. what does it mean for royal's big picture? you're paying top dollar for a relatively smaller cruise line. >> we are. it's a growth opportunity. it's a part of the market we haven't been addressing. and silversea is at the top of its market segment and our philosophy has been to be the top end of each of our market segments. we had this one gap in the ultraluxury area and we really needed to fill in that space and to have the leader in that space open up that opportunity, this is for us a deal -- this is the answer to a prayer. >> you reaffirmed your earnings

guidance despite a number of analysts recently pointing to some caution over a stronger dollar, higher fuel costs, also the upcoming hurricane season denting demand for caribbean travel what makes you so confident you can land these numbers >> well, you know, i know there's been -- there are some headwinds going on but our business is just doing extraordinarily well the public is really appreciating buying experiences these days over buying watches, refrigerators or cars or tv sets that's our sweet spot. we offer amazing experiences and so while we are facing headwinds from some of the things you've said, interest rates, fuel, et cetera, our business is continuing to be extraordinarily strong and i think the acquisition of this controlling stake in silversea takes us to the one area that we didn't have a presence in.

and really fills out our portfolio, so we think it's not going to have a big impact in the short term but longer term -- and we're a very long term business -- this is what we ought to be doing. >> just wondering what you're doing on pricing one of the analysts notes high demand for cruising, but not so much an ability to pass on higher prices of rising oil and fuel costs and a stronger dollar onto your customers. >> well, you know i know there is concern about that. but we've been producing the goods. we've been adding capacity and we've been raising our prices. earlier this year we gave an estimate that we would raise our prices sort of in the range of 2.5% this year then we raised that a little bit at the end of the first quarter. and the indications that we've just given the market are that it's not only continued to be strong, but the fundamental business is actually doing quite a bit better than we earlier

expected so i have to look at what our actual results are very strong. our forward bookings are strong. this is a good year for us. >> right richard, i want to pivot to hawaii, which has quickly become a pain point for the travel and tourism industry we know royal has temporarily canceled some stops to highlilot which is on the big island that is seeing volcanic activity. what are you seeing as to when travel could resume to the island >> for us, it's a very, very small part of our business so we don't really see any noticeable impact on us overall. but the hawaiians are very resilient. they're all working to get this quickly behind them. i think it will. so i don't really see a long term impact from this. short term, obviously, it

affects tourism there. but i think that will be short term >> thank you for joining us on this deal today. richard fain good to see you thank you very much. i read that these cruise tickets can cost as much as $200,000 for the new luxury line. >> up $200,000 for the new luxury line. >> but you get an all-suite access, private butler so luxury to the limit >> tyler >> sign me up. i'm ready. all righty, folks. another thing i'm ready for is the u.s. open. it is under way out in the hamptons tiger woods will tee off right about now. how tiger's return is fueling the big business of golf we will talk about that and more with the ceo of the pga tour super store. r le building on a record year fosas. "power lunch" is back in two minutes.

the 118th u.s. open championship is under way on eastern long island. tiger woods teeing off just a few minutes ago. it is a big week for golf, and that means big business for golf retailers, not just golf retailers who are doing well overall retail sales coming in better than expected for may, so what is the state of golfing and golf retail right now? who better to ask than dick sullivan, the ceo of the pga tour superstore. mr. sullivan, welcome back you guys are off to a very

strong start with comparable store sales up double digits how are you doing it >> yeah, it's -- first of all, it's great to be back, tyler thank you for having me on last year was remarkable we had 15% comp store increases and we were all a little nervous going into 2018, and we're having double digits comps again. this week actually, father's day week, we will break history for our company. it will be the biggest sales week in the company's history and saturday will be the biggest selling day of the year, so it's really exciting right now. i know you had david on from taylormade earlier in the week there's a lot of good progress and interest >> we're glad you watch "power lunch. we appreciate that how important is it that tiger woods is prominent again in golf does it boost sales? does it help taylormade which is now his manufacturer of choice >> well,it certainly doesn't hurt it definitely helps.

you know, but i'll say this. the beginning part of the year, certainly in markets where golf was at a fever pitch, whether it be florida or arizona or california, he wasn't really active, but i will say, when he became active in march and in april, certainly the products that had tw or anything associated with him peaked at unbelievable levels so we're certainly selling a lot of his product and i think that resonated across the stores. so i think it's exciting i think obviously viewership is way up when he plays so i think everyone in the industry is excited to have tiger back in the game >> jordan still sells a lot and jordan hasn't played in 20 years. tiger just is a brand unto himself. you know, a lot of your competitors in this marketplace have struggled, whether it's -- i don't mean to name names or pick on them some have gone out of business dick's sporting goods has had a hard time. what's the secret sauce? why have you been able to stand out in a field that has had some trouble? >> well, it's a great question i know you're a loyal customer

in our paramus store so hopefully you see some of these differences but you know, we're owned and our chairman is arthur blank, who owns the nfl atlanta falcons and as you know, founded home depot i've been with arthur for 27 years now, and a lot of the same dna of home depot is applied inside the four walls of pga tour superstore. we have broad assortments. we have incredible associates on the floor of our stores, just like the orange aprons in the home depot we have great associates they're so well trained. >> that's very true. >> and i think the -- and the technology that we have in our store is so different. we just invested millions of dollars in new technology, and as you know, it's so important to be fit for golf equipment, and so we're probably at the highest level in terms of fitting, and it's expected with the name, the pga tour, on the front of our stores. people expect that level of quality, so i think a combination of the assortments, a combination of the training and the service levels and then the services we gave 50,000 lessons in our stores last year, we put on over

1 million grips so we're not your typical brick and mortar sort of golf retail store and we're in 33 stores in 14 states right now. >> and expanding >> and expanding it's actually been fortuitous that, what is it, the second or third largest bankruptcy in the united states is toys are"r" usd we just secured another location this week. the auction is still going on. but we've been fortunate we're opening new markets like indianapolis, like boston. we added another store in chicago and there's two or three more auctions coming up. >> got to leave it there, dick thank you very much. have a good weekend. i know you will. happy father's day >> same to you thank you. >> all right still ahead, trade trouble brewing. president trump about to get tougher on china we'll fill you in. plus, lowering the price of prescription drugs, easing regulation, and the future of health care in america an exclusive interview coming up with the ceo of eli lily and this stock is up 10% in the past three months.

we'll reveal it the second hour of "power lunch" after this break. imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. 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. we perform over 50,000 operations a year in places like this. for the past 15 years, chubb has identified ways that we can strengthen our safety measures.

and today, our hospitals have some of the best patient safety records in the country. now, we're constructing new buildings that will define the future of piedmont and chubb is here, insuring our expansion. two million patients a year depend on us. and we depend on chubb. you mighyour joints...ng for your heart... or your digestion... so why wouldn't you take something for the most important part of you...

your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain-health supplement in drug stores nationwide. prevagen. the name to remember. this is no ordinary coffee. it's single-origin kenyan coffee from the nyeri highlands, 6,000 feet above sea level. but how do you really know that the beans journeyed to the port of mombasa and across the pacific? that you can trust they're 100% authentic? ibm blockchain. a smart way to track every step, ensuring this coffee did indeed come from 6,000 feet above sea level. and not a foot lower. ♪ ♪

i'm melissa lee. here's what's on the menu. trade troubles the white house set to roll out tariffs against china, but how will china respond plus let the bidding wars begin. comcast making a $65 billion offer for the assets of 2 1st century fox, topping disney. is merger mania about to hit the media space? plus, a soaring commerce stock that's not amazon that has more than doubled this year. we will reveal this mystery chart. "power lunch" starts right now welcome back to "power lunch. i'm sara eisen the dow is struggling as you can see, nasdaq is a clear winner among the major indexes at this hour s&p still holding on to 0.33% gain some video game makers putting up high scores as they're rolling out marquee games at e3,

the industry conference. take-two interactive, learnielec arlt arts, all higher today kohl's, nordstrom, jcpenney all down check out facebook, that stock hitting a new intraday high for the first time since february 1st. it is up more than 2%. the other faang names feeling the nasdaq twitter keeps flying higher. again, this stock is soaring today, now up almost 20% in the last week alone, another 5.7% gain for twitter, melissa. >> all right, sara, the trump administration preparing to slap new tariffs on china as soon as tomorrow kayla tausche joins us from washington with the very latest. >> reporter: hey, melissa. the bhous white house is plannio roll out those tariffs tomorrow. it will be a truncated list of chinese exports. the list is expected to include between 800 to 900 products, compared to the oshriginal listo

1,300 products publish bid the u.s. trade representative. the final dollar figure is unclear. the president will be meeting this afternoon with his top trade advisers, and he does reserve the final decision on how to move forward. that being said, one senior administration official called it a fait accompli, noting that talking points had been circulating among ten government agencies and that the list of products had already been uploaded to a government database for upcoming implementation the white house, the u.s. trade representative, and the treasury department did not respond to a request for comment. the wild card at this point is how china responds, considering the secretary of state is on the ground in beijing discussing north korea. china's foreign minister addressed u.s. trade unprompted today, saying there are two options. one is cooperation and win-win the other is confrontation and lose-lose. china will choose the first and we hope that the u.s. will make the same sensible choice of course we are well prepared in case america chooses the second option.

china has said it would retaliate if the u.s. goes forward with those tariffs and as of right now, the white house is moving in that direction. >> kayla, do you have any sense of what is going to be included in these tariffs i read on politico, we apparently import a lot of birth control pills and apparently some of these manufacturers are warning of a shortage. >> yeah, well, there are a lot of products that are going to be on the list. a couple different sources that i spoke with this afternoon touched on a few different products, but they're all extremely nuanced. think like ball bearings, dishwasher parts, and they're very specific. so at this point, i think we have to wait until the actual list comes out before we can start talking about what those specific products are and which specific companies would get hit by those but i know there are a lot of companies that lobbied ustr when that initial 1,300-plus product list came out, saying this would be extremely detrimental to us if you put a tariff on these

products, and i'm told that the ustr did in fact try to take those issues into account. >> a lot of industries are going to be pushing to get their products off the list. kayla, thank you very much for that news on china meantime, imf director christine lagarde weighing in on the state of the u.s. economy in the past hour, warning that the trump administration's policies on everything from debt, trade, and taxes is elevating the risks to the economy in the medium and longer term. the imf, in fact, sees growth in the u.s. at half the rate that the white house is projecting in the next five years, saying by 2023, we're only going to see 1.4% growth. imf calls out the impact of trump's tax cuts on the deficit, saying it will rise to 4.5 pl% f gdp by 2019 and the stimulus will raise risks of faster inflation, cause the fed to move faster than the market thinks on interest rates there were some positive, guys, imf noting tax reform and deregulation will have modestly positive effects on growth but

broadly critical on the medium and long-term and the economic policies just want to note that the treasury department has responded in the last hour clearly it disagrees we differ significant lowe on the -- significantly our policies, including the productivity >> boosting mix are will result in more sustainable economic growth >> more growth, lower debt overall as a percentage of gdp >> that's why the white house says our policies will pay for themselves of at least partly so >> when does that growth sort of wear out and will the higher deficits eventually weigh on growth as they can do? >> and what happens -- and with interest rates in the mix there as well, if they come up, does that slow growth let's talk more about what is moving the markets right now with bob pisani and mike santoli. >> i think the bulls should be very happy right now the important thing is we saw the last half hour, we moved up

a little bit i think that's partly in response to the news on the tariffs, 800 to 900 instead of 1,300. that's generally better. but more importantly, the fed yesterday, all right, mildly hawkish, four rate hikes instead of three and a very, very modest reaction i think this would have happened six or nine months ago, you would have had a much more negative reaction overall. >> i think it's fair that the market definitely is kind of won by hanging around the flatline for this week, essentially absorbing these messages that generous monetary policy is not going to be around forever you're seeing a dollar rally you're seeing the treasury yield curve flatten even more today. so far, stocks okay with it. banks a little bit weak. i just wonder really if it's more about the position we're in got up 7 % or 8% in 10 weeks, not too far below the march highs and now it's a logical time for a rest for the market but i don't think it changes the trend. >> if you look at the market, it's about as good as you get. the advanced decline line

continues to hit new highs, which i think is the most important thing. the selling pressure that we've seen is definitely on the down trend. new highs are holding up the volume generally on most days, we're getting more volume going, the stocks on the upside than on the downside that's what i mean when upside is expanding so, virtually everything about the internal workings of the market look pretty positive right now. >> i think the -- checking off all the boxes. it is just a question of whether it needs a breather before too long >> all right, guys, thank you very much for the analysis pisani and santoli >> we've got this new imf call on the american economy plus the european bank and the fed planning more rate hikes ahead what does it mean for the markets? craig callahan with us and mark matson so, craig, you say the markets's going to go up 10% from here, you like financials and technology technology's working, tnls not so much. what turns that around >> well, we're value investors at i.c.o.n. and right now we're

measuring the market at about 1% below our estimate of fair value. so that would equate to about a 10% expected return over the next year. financials are among the better bargains and i think investors are wrong worrying about how interest rates affect banks' margins. we think they're wrong we think banks can do just fine so we're very content holding them at this point >> mark, you also like financials and technology along with energy and health care. is there something about the environment i just laid out and you heard bob and mike talking about with the fed and the ecb and the warnings on debt from the imf that makes those sectors in particular attractive >> well, it doesn't -- the imf doesn't bother me. they're largely a socialistic body it's not a surprise. you can always be bull if you're focused long-term. the investors need to be focused at 10 to 20 years, not 10 minutes. there's never been a 20-year

period where stocks underperformed fixed income or t-bills. yeah, we own those sectors in the portfolio, but where the real expected premiums come from are microcap stocks, or large stocks, and then value stocks. stocks that have a high book to market value investors always focus on what's in the news t retail stuff like financials or health care. stop focusing on that because that's not where the academic premiums actually come from. >> value stocks, though, have been underperformers to put it nicely, mark so at what point do we see that turn from growth to value? you're probably underperforming the s&p 500. >> yeah, so, you know, every investor should have a tiny bit of s&p 500 in their portfolio. but there's 95% of the 20-year period, value stocks beat growth stocks or s&p 500-type stocks so yeah there's going to be splaul perio small periods of time but since

most investors are already highly focused on the s&p, they can add 10% or 20% of value into their portfolio, increase the expected return, and reduce volatility you don't have to pick one or the other. you should have both >> of the worries, craig, that you look at, what is the one that stands out? is it trade? is it raising rates? what >> in terms of rising rates, people have been predicting that and been totally wrong for 37 years so when i hear somebody predict rising interest rates, i say you sound just like the person who was wrong 5 and 20 years ago. >> but they have risen >> of course the federal reserve is raising short-term rates but we don't fear rising rates probably trade would be -- could be the most disruptive start having tariffs, that could disare rupt the market >> mark, i wonder how you're noofgti naflgting that tricky situation.

we are expecting the u.s. to announce more tariffs on chinese products as soon as tomorrow >> yeah, i'm a free market capitalist so i don't like tariffs, i don't like tariff for china, i don't like them for the u.s. tariffs increase the cost of goods on both sides of the ocean. the freer the market, the better however, we do believe you should diversify internationally. we have china in the portfolio we have even russia, finland, thailand, finland, egypt, you need to be in 45 different countries and you don't always put just all your money in the u.s. we have over 17,000 issues globally, and i agree, don't predict future interest rates and don't predict future stock prices you got to diversify long-term and on the dips, on the dips if they go down, you have to rebalance. >> how do you buy an egyptian company, mark? >> very carefully. >> how do you get the financials >> yeah. they're published. all of those financials are

press briefi published. all the emerging market countries. you make sure we have less than 1% of the emerging market portfolio in any one country but you have to make sure that you're globally diversified. for that matter, how do you know what the real financials are in america? remember enron and world com and global crossing? everyone thought they knew -- >> are you comparing the regulatory authorities in the united states to that of egypt and china? >> what i'm say is that there's knowable information and there's theoretically knowable information and not even the ceos of large companies know what their profits are going to be you guys ought to know that because there's always a forecast and often wrong >> unique recommendation haven't talked about egypt much. craig and mark, thank you. and here's what's coming up on "power lunch. the fight for fox's assets as cnbc's parent company comcast comes in with a big bid. how will disney respond?

we will break down the numbers and what's at stake. plus lowering drug prices and the future of health care in america, an exclusive with the ceo of eli lilly plus an e-tailer taking off and it's not amazon liouho dngn w'soi o onne sales right that and more as "power lunch" motors on. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities - trade confirmed - and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you.

let's get to eamon javers at the white house with breaking news >> reporter: that's right. this inspector general report from the department of justice is out, looking into the conduct of the hillary clinton e-mail

investigation that was done by the fbi. that's been the flash point for years now of controversy and criticism during the 2016 election campaign. this sort of the final review of the conduct of that investigation finding ultimately that there was no political bias in the investigation but also finding that there was a lot here nonetheless to be concerned about, particularly two text messages between fbi agents during the campaign in which one fbi agent said to another one, donald trump won't become president, will he the second fbi agent responding, no, he won't we'll stop it. that one being flagged as potentially concerning here. also, the decision by james comey to have a press conference without the department of justice signoff in the hillary clinton e-mail investigation was -- is described as being extraordinary and insubordinate and then finally, the then-attorney general lynch not cutting off the tarmac meeting with former president bill clinton is described as an error in judgment here

obviously, that tarmac meeting led to james comey deciding that he had to be the one to go out publicly and say that the fbi was not moving forward in recommending charges against hillary clinton in that extraordinary public news conference so, this is something that has been gone over for two years it will be gone over again, but i think these new text messages are going to attract a lot of attention, and fbi agent saying to another one, we'll stop it, in reference to a presidential campaign is quite something to see, and we'll see what the ramifications are from that going forward, gaze. >> eamon, thank you. eamon javers at the white house. shares of comcast are up more than 4% today and leading sne media stocks higher. for more on what is next for the deal, let's bring in managing director at ljh. you come at this as somebody who's watched the space for a long time and as a shareholder of all three companies

let's say you own these companies, which you do today. five years out from now, what is the combination you want to happen today to make those shares go higher what's the best outcome for you? >> i think the best outcome at the end of the day would be disney ownership, melissa. i think that if you look at businesses that are likely to be under pressure as technology involves, comcast has more of them than does disney. i think you have to be worried longer term about cable, less so about broadband, and i think that disney has more international exposure and more brand franchise and that the fox assets would be very, very complementary to disney. >> does this assume that disney matches the bid? >> i think there's a fiduciary

responsibility on the part of the fox board to jim stuart covered that very well in the previous segment, and i think that it's highly likely that we get into a very contentious bidding situation where, at the end of the day, you're dealing with three extremely rational, experienced players, and all of these companies understand free cash flow, i think, as well as any companies i've seen in my investment career, and we're going to go to the level where basically the free cash flow accretion and brian said on his call that there would be with his bid, the free cash flow accretion is going to get willed away as the bidding war increases. i think this is the world series of poker and we're in an early round. >> so these are three major leaguers who are at the table here so, if i'm understanding you correctly, the thing that seems to appeal to you about fox-disney play is it is a purer

content merger and that what concerns you about the possibility of a comcast-fox play is that comcast, the corporation, our parent corporation, we should take pains to point out, has a large and capital intensive cable component and distribution component to it. >> well, i think that's correct, but i think the thing that -- that's dismissed in that is comcast has really more motivation than disney to get involved in this and the motivation is simply that they are very, very underrepresented in global markets right now versus disney or the other media tech players, particularly the tech ones, and they have to get big fast, and you can't do that organically.

you have to buy your way into those markets. and fox had done an extraordinarily good job, particularly in the cable networks in recognizing the underdeveloped nature of some of these businesses on foreign soil, particularly in latin america. now, latin america isn't terribly attractive right now. i was in argentina last year and the currency's down almost 50% but i think looking at the population demographics down there and the likelihood that things will get better, the international assets are very, very attractive to comcast, particularly since there's a deficiency the other thing that comcast has going for it is that at the end of the day, the roberts family controls the company, and i've watched them for 30 years, and they've been tremendous investors. they've assimilated a number of deals, and they are not afraid of leverage, and leverage is

very, very reasonably priced right now. so, the financial markets are very, very amenable to this. the rates of interest are low. investors seem to not mind comcast getting in, and i think they understand that they're going to bid aggressively, and the government regulations are pretty favorable as we saw in the court yesterday. so, all the lights are green for some very, very contentious and unpredictable margin activity or merger activity here >> all right, larry, great to speak with you thank you. >> thanks a lot, melissa >> larry haverty the university of chicago making a big change to its admissions program, getting rid of a requirement that has been making high school students 'ltet for almost 100 years wel ll you what it is. that's ahead on "power lunch."

see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman?

hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade for decades, the s.a.t.s have been an important part of the college admissions process but now one top university says applicants don't need to take the test university of chicago announcing it will no longer require the a.c.t. or s.a.t. scores from u.s. students. the school hopes this will provide opportunities to

students from all social and economic backgrounds in addition to the new test optional policy, the school's also providing applicants with the opportunity to create video interviews and self-submit transcripts in order to eliminate fees i think it sounds like a good thing. i don't know i found the s.a.t. stressful a long time ago. >> yeah. all right, straight ahead, an exclusive with jamie dinan. stay with "power lunch." with tripadvisor, finding your perfect hotel

at the lowest price... is as easy as dates, deals, done! simply enter your destination and dates... and see all the hotels for your stay! tripadvisor searches over 200 booking sites... to show you the lowest prices... so you can get the best deal on the right hotel for you. dates, deals, done! tripadvisor. visit tripadvisor.com

hello, everyone, i'm sue herera here's your cnbc news update at this hour. one year after being seriously wounded in a shooting rampage at a congressional baseball practice, representative steve scalise returned to the field. scalise is still undergoing physical therapy and needs the aid of a crutch from time to time but he was all smiles as he took up his position at second base >> they're going to let me start. look, we probably have a low talent level if i can make the starting line-up but just to be able to walk back out there again and even field some balls is a special moment and it's been a long, long road the last year

migrants on board the charity ship "aquarius" to valencia in spain after italy refused to let it dock at its ports. two other italian vessels are selling in the convoy. the ships are expected to arrive on saturday. two nasa astronauts are installing high-def tv cameras during a space walk at the international space station. the iss commander floated outside with ricky arnold. the cameras are to provide some sharp views of new crew capsules coming in to dock. it never gets old, looking at those pictures. that's the news update this hour i will send it back to you, melissa. >> sue, thank you. i want to get you caught up on the markets here we've got the three major averages the nasdaq is doing the best out of all three of them dow has dipd into the red right now but the nasdaq is higher by 0.8% media shares are being lifted by all the media activity and faang stocks are very strong utilities and telecom, your

sector leaders in today's session, industrials and financials are the laggards here the market is closing. let's go to jackie at the cnbc commodity desk >> crude prices pretty much holding steady today and waiting for superman superman, of course, would be opec, potentially taking some sort of action on the 22nd the expectation according to the rbs note that the cartel could add back about a half a million barrels a day to make up for some of those shortfalls that could come from other producers. with some guidance, those numbers could be changed and raised quickly as well today, wti saw a session of high its session low was 66.36. we'll be watching closely, guys. >> thank you very much, jackie the "wharton school is holding -- in new jersey leslie, take it away.

>> reporter: melissa, thanks so much and thank you, jamie, for joining me >> great to be here. >> now, about half of your assets are an event-driven strategies namely merger arbitrage and we've seen a huge news story this week with the judge approving at&t's purchase of time warner and subsequent m&a opportunities stemming from that as an arbitrager, how do you play that? >> this is big news. i mean, the arbitrage community as well as the entire m&a community has really been waiting for this at&t-time warner decision, because it has to do with something called vertical mergers not buying your competitor but buying someone who does a business different from you, usually sort of in the food chain and there's lots of health care deals, for example, as well as media deals that were basically the on-hold, up in the air, people were very nervous maybe they would get challenged. we have not had a successful challenge of a vertical merger in about 35 years. the decision that just came out the other day was an excellent

decision, very well thought out, and basically it rebuked the department of justice trying to almost like reinvent or recreate what they think is anti-trust law. and my prediction is in addition to a number of announced deals like cvs buy, aetna, comcast now jumping into the fray to buy the fox media assets in competition to disney, the gates are wide open gates are wide open for more deals, for the closure of existing deals you might have seen yesterday there was a complete collapse of the spread in other words, risk reduction in all these aforementioned deals. comcast came after the close on wednesday and what we are is we're back to the rules that we thought we had you know, and that's good. uncertainty is not good. certainty is good. >> so the decision actually provided opportunity for merger arb then >> it provides opportunity for the successful closure of existing deals, but it's also bringing in new deals. so, we saw comcast we saw 24 hours later, show up

now we have a bidding war for these fox assets i'm predicting over the next couple of months we're going to see a lot of these types of deals come that have been on the back burner, basically on the sidelines waiting to see how is the judge going to rule. is anti-trust what we thought it was or is there a whole new paradigm good news is, it's back to what we thought it was. >> now, the other side of your fund and your firm is credit opportunities. >> that is correct >> and we've seen a lot of activity yesterday with the fed and today with the decision out of the ecb in terms of rolling back their bond purchase programs as you start to see more stimulus taken out of this system, what does that mean for your credit opportunities? is that good is that something where you can start to see more hedge funds outperforming as a result of this or is it something that is causing you to do some portfolio rebalancing? >> it's a very good question, and keep in mind, we do a lot of

these and so sort of offshoot to that in the credit tends to be more distressed credit investing as opposed to buying government bonds. but everything's connected in all the markets and particularly the fixed income markets with the fed tightening the ecb announcing by year-end, we're done with buying bonds, although they were slightly dovish -- he talked about rates staying the same, terminal through 2019, what that means is rates are kind of going back to where they used to be the normalcy of rates. is that good or bad? the fed put was great, in other words, the fed being on your side if something got choppy, they would inject reserves or lin-manu liquidity into the system like after brexit so they didn't really lose that much money that's over. so there's more risk to the downside if things systemically get choppy but we like it because it's raised risk awareness and by raising risk awareness, you make investors

basically price risk better. one of the things that's been frustrating for so many investors, particularly active investors in both equities as well as fixed income over this whole quantitative easing cycle is there was a much lower level of risk awareness among investors. the fed was your friend. fed's not your friend anymore. the fed's actually doing the proverbial taking the punch bowl away the party's over it's back to almost like the old ways of making money where stocks go up, stocks go down, bonds go up, bonds go down and if you can pick them right, you can make money if you don't pick them right, you're going to lose money >> so in terms of that risk awareness, what's the best measure of risk? is at this time traditional volatility or is it something snels >> that's a really good question i think when you look at risk, you got to look -- volatility is definitely a good indicator that, you know, the it a forward indicator, a backward looking indicator, probably more of a

backward/medium indicator. i don't think it's a very good forward indicator. when we look at risk, we look at what can go wrong, either systemically or what can go wrong specifically and how much are we paying -- you know, above where that would send -- so it's a matter of how much we can lose if bad things happen specifically or systemically sel specifically, we just limit the size of individual position, depending on what that downside could be systemically, when volatility is low, you can hedge it out pretty cheaply. when volatility is high, hedging becomes very expensive and you almost have to reduce your long book >> now, your panel here at the wharton conference centers around the future of finance i'm curious, we talked a lot about all of the issues that haveplagued the hedge fund industry over the last ten years or so. but what do you see is the future of the hedge fund industry where does it go from here >> scott baio rbsd

>> everybody asks that question. none of us have a clear crystal ball we can only gaze into a foggy ball and today, not to avoid your question directly, things are changing so fast i've never been -- in my life, ever seen the world change so fast and the rate of change is actually increasing, so it's very difficult to make these predictions. but i will say the following there's always going to be opportunities, you know, in the financial industry okay everybody looks back, says it was so much easier years ago than it is today i said that 20 years ago i said that 15 years ago a i said that 10 years you can still make money >> hedge gunfunds are going to exist. >> hedge funds will exist. >> fantastic >> if you love investing and love finance, it's a an amazing place to make your career. >> i guess i'll still have a job covering hedge funds thank you so much, jamie dinan >> leslie, thank you, and our

thanks to jamie dinan as well. the piper j fa frey summit is also happening today. bringing together the biggest names to discuss the changing face of their industry meg tirrell is standing by in minneapolis with more. >> reporter: hey, sara all of those topics and more on the table here at the summit and coming up after the break, we're going to be joined by one of the biggest news makers, eli lilly's ceo.

it's pretty amazing out there. the world is full of more possibilities than ever before. and american express has your back every step of the way- whether it's the comfort of knowing help is just a call away with global assist. or getting financing to fund your business. no one has your back like american express. so where ever you go. we're right there with you. the powerful backing of american express. don't do business without it. don't live life without it. and the nx hybridhe 2018 lexus nx with a class-leading 31 mpg combined estimate.

lease the 2018 nx 300 for $339 a month for 36 months. experience amazing at your lexus dealer. it can grow out of control, disrupting business and taking on a life of its own. its multi-cloud complexity creating friction... and slowing innovation. with software-defined solutions, like hpe onesphere, you can tame the it monster. hewlett packard enterprise. clouds, apps, and insights faster.

welcome back to "power lunch. let's get to dom chu with the market flash >> so, sara, we're keeping a close eye on what's happening with a number of big cap technology names as the nasdaq hits another record high and did so earlier today the faang stocks, you got facebook hitting an intraday all-time high for the first time since back in early february and finally, guys, impa want to cal your attention to what's happening with twitter, adding to its gains on pace for its best week since february and on pace for its second best month ever and tyler, i'm still getting used to saying twitter in the s&p 500. >> all right, dom, thank you very much. biggest names in health care gather now in minneapolis to

discuss the changing industry landscape. meg tirrell is there, of course, with eli lilly ceo david ricks >> hi, tyler thanks so much and thank you, dave, for joining us i want to ask you something about the near term, a lot of people waiting for news or a decision about your animal health business. what can you tell us there >> last olkt, ctober, we announw were going to conduct a strategic review because we've grown that business to a substantial global size and as our pharma business is in good shape as well, we felt it was time to step back. we're in the middle of that review we plan to announce on our q2 earnings call the results of that strategic analysis. that will be july 24th and of course all options are in front of us. hold the business. it's a good business it has good growth characteristics. private sale and there are some interested parties out there and/or ipo, which has been a successful path for many health

care companies as well pfizer did it. so all that's in front of us meanwhile, the business is performing well, and should be a good discussion with the board here coming up and then we'll communicate quickly with investors. >> on the pharmaceuticals front you had a disappointment with your alzheimer's program and we've seen so many of those in this space how would you describe lilly's commitment to this space do you still believe in the hypothesis, that these plaques are driving the disease. >> we announced we stopped the study early for lack of drug effect this isn't so surprising coming after the merck failure with the some mechanism but it is disappointing for patients and our heart goes out to all the participants in these studies who are looking for some hope. unfortunately, the studies aren't designed to definitively answer your question, does sequestering ameloid work. we do have a phase two program ongoing which is a combination of this same type of medicine, a base inhibitor, with a

plaque-specific antibody which will be as close as we can get to eliminating all amyloid in the brain. that study is under way now. it's being done in a very precise way. we could get the results as soon as late '19, early '20 and i think that would be a more definitive answer to the question you're asking, does amyloid amylomatter in case it doesn't, we're also running a study on another protein in alzheimer's that's thought to affect the brain. so we remain encourage bid the science but of course it's been a tough road so we need to see some good data >> you mentioned the merck outcome, sort of influencing how you were thinking potentially about how your drug would do there's another huge trial being run by biogen. how important are those results for your outlook on the field? >> i mean, it will be important for the field and for funding, et cetera, in the field. i think we'll get our phase 2 results before they get their phase 3 and i think the way we're doing our study is a little more modern way with much

more precise instruments to look at tao progression in particular so of course we pay attention to all the external news but this study really for us would be the definitive amyloid answer based on what we know today. >> got it. i also want to ask you about drug pricing, of course. there's been a lot of news in washington we spoke last year at this conference about the idea of getting rid of rebates, these are the discounts you pay back to the pbms. and they negotiate them and sometimes profit off the size of that rebate. the secretary of the hhs has talked about getting rid of those completely what do you think of that idea >> we think reducing -- certainly reducing the spread between what list prices are and what the biggest purchasers pay, which, by the way, are the government who pays the lowest prices for our products, typically, is a good idea because with the adoption of high deductible plans, patients are subjected to list price. really, they're paying the most. and in many cases, they have a chronic disease that won't be change bid the fact that they

have to a pay a lot or a little. they're just suffering so it's time for a change to the system we think azar got that right in the blueprint, let's push these together many -- they've put together many proposals, 50-some odd proposals. there's a lot in there some we like, some we don't like we'll have to see how that develops but clearly this administration is moving the market in that direction. i think it's a good thing. one kmafexample is we just laun a new rheumatoid arthritis drug. patients who have out of pocket or coinsurance can benefit from that lower price we think it's a better system, and in long-term, more stable for us as an innovator >> well, i want to ask you about insulin as well because those prices on a list basis have gone up quite a bit i know you're paying big rebates back into the system but you still hear story after story of patients who are rationing, patients who are harmed because they didn't afford their

insulin. how do you make sure every patient can get the medicine they need? >> we're deeply bothered by that the facts you lay out are true, our net pricing is basically flat since 2009. where's all that money going in the middle it's going to negotiators in the middle but not to patients who are increasingly subjected to the list price and they have to make choices like that, that they shouldn't have to make we have launched a number of programs to try fill that gap. we have an initiative with blink health as well as inside rx. any american can -- who needs insulin can receive that discount right now so that's something we've done of course we offer co-pay discounts, and we negotiate with vendors to make these products available at a low cost on formulary. we recognize that doesn't cover all situations and ultimately, this is sort of of a case study, why gross to net spreads probably should come together and, you know, we're working with the administration and other actors in the system to see what other further options might be available to help this situation. >> well, i could ask you

questions about this all day but we'll have to leave it there thank you so much for being with us guys, back over to you on "power lunch. >> pretty supportive of the administration's approach to pricing. dave ricks and meg tirrell when we come back, check out the chart. it's a pricing. when we come back, check out the charts, an e-retailer, up 2 211% in 12 months. it's not amazon. according to the founder, he took the name from the italian phrase, meaning oh, yes. we'll reveal the stock and the growth straight ahead on "power lunch. f time to launch thousands of attacks. luckily security analysts and watson are on his side. spotting threats faster and protecting his data with the most securely encrypted main frame in the world. it's a smart way to eat lunch in peace. sweet, oblivious peace.

it's a smart way to eat lunch in peace. with the new chase ink business unlimited card i get unlimited 1.5% cash back. it's so simple, i don't even have to think about it. so i think about the details. fine, i obsess over the details. introducing chase ink business unlimited with unlimited 1.5% cash back on every purchase.

time for trading nation now. reveal the mystery chart, etsy, soaring 30% to an all-time high today, and if you were puzzled by the clue, the co-founder kept hearing the italian phrase for oh, yes, and thought it was a good name, and the rest is

history, etsy. transaction fees for the sellers, shares rallying over 200% in the last year. too late to get in on this monster rally? stacey and arie are here, quite a moon shot of a shot. is it too late >> well, let me start by saying this the stock's up close to 30% today. i would not consider today the tactical entry point for the stock, but one of these most important investment rules out there is to let your winners run. if you're in the stock, i think you stick with it. it continues to do well with positive momentum. here's the levels to watch looking at the chart first off, on a technical basis, it started in the first quarter in the breakout above $16. the level to watch now is $36. this was the stock post ipo peak dating back to 2015.

we rushed true t eed through thl today. prior existence level come to support, viewers, buy more on pullback >> fundamentally speaking, this raised revenue guidance to the mid-30s. better than the mid-20% growth they saw previously. are you a buyer? >> yeah, no, what's interesting about etsy, it's a great example of the market rewarding growth growth is a story here in the marketplace. here's the situation where companies investing back into itself, it's growing, and the market says, yes, we'll reward you for that from a sentiment perspective, not the price where we see everything happen in the options market today some are buying puts why wouldn't you when you have the return that you have some are buying calls to get embedded protection that's built into owning options and calls. what's interesting for the levels that ari mentioned, with etsy up 100% year to date. only thing about options is they

give you a probability for a stock to be a certain price in the future what's the probability they end up down on the year? it's less than 10% what's the probability we get to the level that ari mentioned at 36 30% probability. this is important. at any other probability sound off, this market is the right place. >> headquartered in brooklyn, guys, thank you. for more, head to our website, tradingnation point cnbc.com and follow us on twitter @trading nation check please it up next. and now, the latest from tradingnation.cnbc.com and a word from our sponsor. >> traders short stocks when th they think they are going longer short interest is used to gauge market sentiment a rising short interest means investors are becoming more bearish on a company however, when short interests reaches extreme levels, it's a

contrary indicator because traders are often forced to buy back short stock driving the stock much higher.

this is my headquarters. this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities - trade confirmed - and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. when it comes to travel, i sweat the details. late checkout... ...down-alternative pillows... ...and of course, price. tripadvisor helps you book a... ...hotel without breaking a sweat. because we now instantly... ...search over 200 booking sites ...to find you the lowest price... ...on the hotel you want. don't sweat your booking. tripadvisor. the latest reviews. the lowest prices.

for my check please, bitcoin has a new famous fan, steve bannon >> oh, my. >> he likes the unsurprisingly, there's no government or central bank backing the digital currency we don't know what his plans are, but, clearly, he's

interested >> has the appeal. >> the fcc made important comments about etherum >> temperature seconds to talk about the end of time. time warner going to at&t, and in a month's time, "time" magazine, s.i., money, and fortune sold by meredith thanks for watching "power lunch. this is "closing bell," a wilfred frost, a big announcement today, ending the bond buying programs by the end of the year, what it means for your portfolio coming up i'm phil lebeau in chicago, saying boring company has a major rapid transit project. can boring deliver on the high speed promises >> we're at the new york stock exchange a man in charge of