michael and something i would like to share during times of trades, you will have five or six that's going to be really good one the name i keep on talking about and keeps on moving higher i am buying more this afternoon, build a bigger and bigger position >> all right, that does it for us thanks for watching. "power lunch" starts right now >> i am melissa lee, here is what's on the menu trade tensions rattling investors. what's going to snap the losing streak ceo evans speagle speaking out. and president trump firing back of the immigration of separating children affray from parents "power lunch" starts radight now

all right folks, welcome to "power lunch," i am tyler mathisen s&p 500 posts their biggest decline so far and now is facing for a fifth straight section of losses best monthly gain since january. go figure. energy is the best sector and chevron and lululemon is downright now but it did hit an all time high earlier today. xlf flirting with correction levels falling more than 10% from its january high. >> courtney reagan, here is what's happening shipment of wearable devices expect for it to go. that's below last year's 10% raise. expect the market to post double

digits growth. playing video too much, it is bad for your health. gaming disorder as a mental health condition elizabeth holmes has stepped down and indicted on federal wire charges u.s. attorney's office accusing her of engaging of a million dollar scheme to defraud investors and doctors and patients she's facing 20 years of prison and plus fines if convicted. we begin with the white house about immigration about otherthings, trade fears and front and center cayla tausche is covering it from the white house today cayla. >> reporter: we are outside of the southwest gate there was a security situation on the north lawn of the white house that caused it to be temporary clear. executives here lockheed martin and others here at the white house discussing the policy.

during the meeting president trump calls for a six-branch of the military governing out of space. >> i am here by directing the department of defense and pentagon to immediately begin the process necessary to establish a space force as the s six-range of the armed forces. we are going to have the air force and we'll have the space force. separate but equal >> it is going to be something >> also, in that meeting the president defended the administration controversial immigration policy the department of justice of zero tolerance of separation the images have been dividing members of the administration. and earned criticisms from the first lady and melania trump and laura bush, here is what the president said about that policy

today. >> the united states will not be a migrant camp and it will not be a refugee holding facility, it won't be. >> you look at what's happening in europe and you look at what's happening in other places, we can't allow that to happen to the united states, not on my watch. >> reporter: the house is going to consider two separate immigration bills this week. two senators are going to be here at the white house to discuss border wall funding today. we'll see where the debate moves here the market is focused on trades here kellyanne conway acknowledged nothing is going to happen for at least a month that's when the deadline start don't tell that to investors who are worried about not only happening in china but with nafta, have a lot of investors spooked today. back to you. >> kayla

>> stocks are off the worse level of the session let's check in with bob pisani >> melissa i thought we may have a shot of going positive but when tech and financials both drooped. tech was doing well. we had some of the big names and adobe and facebook and microsoft all going positive but about an hour ago, they started rolling a little bit and banks have been doing nothing for weeks on end they were rallying nicely in the early morning and a lot of green names there and they too rolled over market head winds we got a lot of them. we are near 2800 that's a head wind, another list of tariffs could be going on there. >> they were down again today. a lot of them were closing of the emerging markets >> thailand was at the lowest of the year and vietnam was down

and malaysia is down as well all of those are down so far here maybe it is quadruple witching, i don't think so we had that quadruple on friday and the week after down 24 the last 28 years. this is the june one and average decline of 1%. there maybe some seasonal factors as well. >> guys, back to you >> bob pisani, let's get to phil lebeau right now concerning the fire in los angeles still. >> and melissa the national transportation safety board out with the statement many people are asking will the ntsb will be investigating this fire that happened on west hollywood on friday a few minutes ago, the ntsb is sending one technical specialist to observe tesla's examination of the vehicle and providing the opportunity to learn more about fire and all types of battery

powered vehicles this would not be an investigation. this is the ntsb asking to take a look at what tesla sees with the cause of this fire and this is a video of that fire. it was first posted by the actress mary mccormick because her husband was driving that vehicle. will the ntsb be looking at this this is not an investigation but it is the ntsb is saying we would like to be there when tesla examines this vehicle to determine what cause this fire >> the ntsb examines previous electric fire. their concerns is the emergency responders and how to put these fires out and not necessarily the type of vehicle involved

>> that has not yet has been determined and that's one of the things that no doubt and tesla will be looking at and ntsb will be there looking at it >> thank you, phil >> you bet >> economists don't expect tariffs and retaliation of having a big impact. steve liesman is here and looking at that for us >> i will tell you something right now, the trade dispute have wiped out his business contacts when it comes to economic optimism. i began the year with a decided upside of my risk profile for growth however, that optimism is completely faded among my contacts replaced by concerns or trade policies and tariffs there is a big consequence which is the one on sentiment and on investment here is what fed chairman jerome

powell said last week. >> concerns of trade policies are rising you begin to hear reports of companies holding off of making investments and hiring people. >> on "squawk box," even president trump's top economic adviser agreed >> we are in a period of uncertainty and it is invisible in some place and as you can see it in lumber prices. the president's long run objective is one that all economists have shared think of all of the barriers and china is stealing more than $100 billion a year worth of intellectual property. tax cuts were passed to boost cap ex >> what do economists think of

all of this being a tactic >> time is running out the president has been rattling on trades before he took office. and there is very little to show for that when it comes to actual results are negotiations nafta is not done and he everyone had a deal with china where china agreed to buy additional u.s. products the chinese says that deal is off. more and more the goldman sachs report says the position of tariffs in july is their base case those were not opinions of the economier economiers more and more the feeling is these tariffs are real and get use to them and they're going to grow >> should investors be worried about unintended consequences of

tariffs. joining us rachel achen, welcome to both of you >> what do you think is the biggest worry right now? is trade on the possibility? >> when we look at the markets, we find it relatively complacent at this point. investors are looking for the rhetoric to become reality and for us to quantify what that impact would be of corporate earnings and consumer confidence and business confidence as well. just a piece this weekend that was stated that we saws the impact possibly double digit decline of the industrial area and energy area and discretionary. once we can quantify that we can make business decisions. >> and wall street journal jack talking about the possibility of

corporate profits for this cycle have peaked of the forecast going into 2019 have been coming down of corporate profits that may well be affected if some of these tariffs take place >> a lot are latched onto this p.e. and forward earnings. the counter argument is forward earnings could be peak earnings and the first quarter of 2019 could be as good as it gets. getting it back to the tariffs issue and what i worry about is the political landscape and perhaps president trump is looking at this as short term paying for long-term gang. we have to keep in mind and china is cheating and intellectually and all that. something that democrats and republicans can rally around perhaps if possible if they're willing to look past some near term problems to get china back

in line longer term. for someone navigating the markets, that's problematic in 2018 and 2019. >> rachel, when you start to think how unquantifiable tariffs are to earnings, we got a couple of weeks the clock is running out in terms of how to factor it in when you look at multiples, it seems to me that the risk would be to the downside that it could only be bad, it would not superispur additional growth. how do you think of where we are right now and what it should be if the tariffs go into effect of a couple of week's time. >> definitely not a positive upside that we see we are looking at high quality companies with sizable free cash flow to be able to insulate and provide protection --

>> such as >> name some names >> names that we like in the portfolios >> one that's going to add some spike in your portfolios, right? >> the name you are referencing is with mccormick, it is a name that we like when you think of the changing palette of america and globally mcccormick is there on the forefront. they acquire the brand and as well as frank's red hot. >> that's the one, it is frank's hot sauce. my son keeps them in business. >> yes, and my daughter as well. >> oh, how old is she? >> 20 going on 35. >> oh, she's a little too old for my 12-year-old >> so you like small caps but

let me throw a curveball in here is there any market implication that derives from the disputes that's broiling washington right now, can you think of any? >> the cultural sector and manufacturing and food service hugely impacted by immigration and the fact is we are stuck at 2% potential growth rate, the only way we can get our growth rate up is either through innovation and which is cap ex that we sort of talk down and now we got tariffs and immigration the labor force growth neither of which we can rely on in the new york terms. we could get a growth quarter, it is sort of like beatin beating -- you can do it for maybe a quarter or two you can really change the under line structure and fundamentals.

it is not going to be sustainable. >> that's a graphic image. >> we thank you as well. >> we take you to the beaches where some of the biggest names in techs are hanging out this week with our very own with julia boorstin, what a tough break on this assignment >> we are working hard here. i sat down with matt speagle, we have some surprising answers coming up after the break. we were hit from behind. i called usaa and the first thing they asked was 'are you ok?' they always thank you for your service, which is nice because as a spouse you serve too. we're the hayles and we're usaa members for life. see how much you could save with usaa by bundling your auto and home insurance. get a quote today.

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. big names in tech in advertising meeting at the south of france this week for the 2018 festival our julie boorstin is there, we spoke with evans spiegel a rare interview, good job julia. >> reporter: thanks so much. evan spiegel is telling me that snap has evolved dramatically over the years with more options. he also admitted missteps when i asked him of how he handle the company's redesign >> definitely. we make some changes of the communication side of the service that we did not node to make >> do you plan to go such dramatic changes that we have in the app? >> the three spectacles are coming together nicely the little app inside of snap chat works together.

i don't think we'll see the same traction without that being an integrated service >> facebook is under scrutiny and that gives more opportunity to you when it comes to building out your -- >> some fantastic team have joined us. >> is snap chat one app. >> i don't want to give it away but we have a lot of work to do. >> another surprise when i ask spiegel if he ever considered giving up his voting control over the company, he said never say never. guys, back over to you >> julia boorstin. thank you. michael graham, great to have you with us. >> thank you >> i don't know if you caught the last end of the notion of spiegel being willing to possibly in the future to give up control of the company, what do you think he means by that?

>> well, i think it is pretty clear in the short term and immediate term he does not want to do that it is consistent with other big internet companies and google and facebook and it is a custom that has been established and more or less accepted by institutions these days that these large tech are going to be in founder's control i think he really like t to -- retain control snap for the time being i think he's trying to manage the company through a series of transition that are a little bit bumpy. one of the things that's true of his tenure is he's been true to a vision and has been able to keep the company moving more or less in the right direction. >> you put that diplomatically in terms of transition, where do you think the company is now in terms of turning the corner from that and especially as we had

news last week that it was opening up its platforms to developers >> yes, snap faced one major thing that its predecessor did not including facebook and twitter. facebook came in and copied a lot of things that snap was doing and created a tough competitor for snap on the user growth front and when it comes to getting mind share from advertisers. the company has been working through all different ways to keep its products and service differentiated and keeping that base growth going. we saw the company went through a major redesign of the service and part of the hesitants for me is it is a little too early to see whether or not it is going to be super effective but we do know from speaking with the company more recently that they are excited of the direction of some of the product changes

especially on ios which is a minority of smartphone users it is important to note that it seems alone the ios platform, it is effective in terms of driving better engagement. now, we want to wait and see if the company can do the same thing on the android front within of the things that you mention that we think it is some what important for driving more engagement is driving snap kit and bringing snap into the ecosystem and could potentially drive more engagemenengagement >> you touched on a moment ago that the idea that snap was vulnerable innovation than facebook sort of relatedly, are we getting to a point where there are so many ways people can communicate that the marketplace

for products are going to be so fractionalized that it is going to be harder and harder to stand out. >> there is a battle for time spent from a consumer and what we are seeing of the whole internet and social media ongoing revolution is just this continue shift of time away from things like print media or television and into newer interactive platforms. it was interesting of what evan said on the earlier segment around snap. the user base has a smaller social graph and a smaller set of friends they are connected to on snap an relative to instagram and facebook i think facebook would say one of its key strengths is the broad nature of social graphs of billions of users so it would be interesting to see overtime if that goes closer on environment

of snap can drive engagement of a longer term. >> you mentioned the snap kit that they launched opening up the app to other develop ers bu that open up to a lot of risk does it not. and evan spiegel would not name facebook directly. but its got to be something investors need to pay attention to >> you are right any time you open your architecture outside of developers, you are creating a lot of risks the latest innovation of pandora, snap is very strong with a younger demographic and pandora is a strong with a bit of older graphic and the two companies are allowing users of both platforms to go back and forth and share. facebook and instagram and twitter are already doing all

that i think it is important that snap takes the step and sort of evolve into allowing some other contents to come on the platform they have to manage on security and data >> michael graham. thank you, appreciate it >> a hollywood actress tweets a video of her tesla going on fire and then there is elon musk to odet those model three pruction targets, all about tesla, next on "power lunch. duncan just protected his family

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a lot of headlines for tesla. the ntsb is sending a technical specialist to aboobserve the mo that caught on fire. let's go back to phil lebeau for all the details. >> we are down for the final day of june which means crunch time for tesla whether hitting their goal of building the model 3's look we need radical improvements that's what's needed in order

for us to put out the 5,000 model three. i think they are already there at laeast that's what the analysts are saying. we expect production rate can be extrapolati extrapolation. the model may not be achieved until the third quarter of 2018. that's an important distinction. if you take a look at shares of tesla, they report the numbers early in july. they did not hit their production target on a sustained rate but they show the ability to hit a rate, i think about 22 or 2500 vehicles it was basically what they had been telling the street and there was a sigh of relief among investors even though they did not a sustained rate that's what they are expecting to happen at the end of this quarter as it is to third

quarter. >> i want to do on a quick follow-up. i assume that the ntsb is called in because this is regarded as a new technology there are car fires in every city across the country every single day >> you are right, right? >> tesla has a lower rate of vehicle fire which are fuelled by gasoline. >> you answer my question there. what do we know about the rate of fire of tesla verses other cars >> it is lower i don't know the exact percentage but it is sasubstantl liloer t the argument that you hear is lower population of teslas out on the road and they have not been on the road that long let's see what happens five or ten years down the road. tyler, this is not an investigation, the ntsb is not opening an investigation into the fire, it is simply sending a technical specialist to look at

what happened. >> let's talk about the arrest of the ceo of audi, what happened >> rupert stantley he was arrested in germany this is a video of him, he was arrested at his house in germany. the concern among german authorities is he may try to tamper evidence. that stock is down close to 3% of volkswagon. it was up 18% in the last year audi has been fined a hefty amount last week and you look at this stock and it continues because it has so much government ownership and basically it withheld a big sell-off >> all right, phil, thank you so much >> crude oil is down 10% a

month. will this opec meeting send prices we are all over the market ayun with us that's all coming up and more on "power lunch."

i am contessa brewer, president trump opened a meeting of the national space counsel by once again blaming democrats for not coming to the table to negotiate immigration legislation. >> i say very strongly it is the democrats' fault they're obstructionists and they are obstructing. the united states will not be a migrant camp and it will not be a refugee holding facility it won't e former pennsylvania governor ed randall announced he had parkinson's disease. he says early protection and aggressive treatments help stabilize the disease.

researchers say the biggest reason for the change is increase use of omega 3 fatty acids or melatonin that's your cnbc news update at this hour, i will send it back to you courtney. >> we got the data on triple digits but well of the lows of the day. nasdaq and s&p is also lower the russell 2000 hitting a new all time high. melissa. >> the threat of that trade war worrying markets today business leaders are hearing the worst as well. michelle caruso-cabrera spoke with the ceo of cbs and he's joining us now >> i am worried that once this

thing gets out of control and somebody is going to announce something on a more serious issue. we should not under estimate from a point of view, i would say geo political risk seems to be under control and it could be together of acceleration of interest or rate hike by the feds or concerning financial markets. >> like what something that goes into a territory of measures that are taken and start to impact business sentiment or growth which we should not forget in many countries we are at the top of the cycle >> cycle >> there is not a lot of room if you look at classes. and expectations for business

and profitability are quite high financial markets are not ready for any major and a growth and commercial and the commercial of ties between the countries >> you won't be surprised to hear that he's also worried of a rapid rise of the united states and he thinks that can also hurt the market and hurt the world's economy as well. back to you. >> thank you very much, michelle we want to ask you about german politics, angela merkel is facing some heat her position as chancellor is at risk in germany. one of the members does not want immigrants to register in another country to come into germany. a two-week deadline for it to

fix. it is a full-on you will ultimm the president weighed in on the issue of germany today he says the people of germany are turning away from their leadership crime ain germany is way up and allowing millions of people in who changed their culture. merkel has until the end of the month to come up with some kind of a solution. it is possible that this situation lead to the collapse of her coalition government and new election, guys the european market is finishing the day in the red with germany closing down more than 1%. >> angela more kerkel is going o

down in history. >> thank you, michelle rick santelli, i hope you are staying cool there i hear it is hot there >> we like it hot in chicago if you look at 10-yr, the trade is not really hot. sideways day we are at 292 highly unchanged to michelle caruso-cabrera's topic, there is one week of the bund they were down at base point of 39 last week we were flirting with 50 bases point there is another coalition that's under duress and that's prime minister theresa may and we'll take a look at that in a minute everyone though on friday we dipped down into 35 and today we spent a lot of time on 36. this chart is really is something that jay powell, the feds got to pay attention to

global growth is taking a toll on the long end. back to the story, prime minister may, there is the one week of the pound verses the dollar i has had a pretty big drop. 355 and 235 house of lords voted the mps a.p.s the brexit and the pro-eu groups are not getting along. >> tyler back to you. >> the fang stocks, pretty big over the past months so will fang fever continue on puch "power lunch." that's coming up next.

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we got jason helfstein is on the phone for us is this an opportunity to continue to buy even if we are higher here get in before we go or even higher still >> there will be some explanation. you said netflix is not participating. the s&p, next year's earnings growing and you have facebook trading at 20 times and should grow to 25% or 35% or better we are looking at it this year that looks too cheap that is why facebook will keep

on moving higher google is a bit different. we value it at 1245. we give it no create for wamo. and they likely benefited from gdrp having to talk with the rest of the names if you would like. >> when you look at wamo, is gm's potential ip cruise -- >> right now we don't give them any discreet valuation we are saying other bets broadly of 3 billion i mean if crude goes public or whatever the numbers end up

being. so yes, i think just overall all the headlines around autonomous or safety issues or address are good for google. >> which of these fangs are your favorite >> on an upside base, i would say facebook is number one and google is number two and amazon and netflix. i think the biggest challenge right now from a momentum standpoint of amazon and netflix has the most momentum. they're the run rone running ino people's price markets.net fl s netflix is trading above our stock. >> you are looking at amazon, what are you placing the most value in do you care of what's going on in the cloud or taking care of

ecommerce and what the perspective is >> that it is still early and we think we are in the top of the third inning for our analysts, tim moran, he believes the third party data center square foot is about 30% and it goes to 90% you are talking about a double of a shift to cloud and private cloud. that's the easiest to value. you can't ignore what's going to happen the next two years in grocery. there are market shares and uscpg is a few paeercent i think everyone agrees and you have not seen them put out the full play book and if every prepares to benefit and kind of left over and alexa and

advertising and there is a lot of things to be excited of amazon >> as we watch the media giant jockey to make deals to be more like netflix when it comes to distribution in content, do you take a look and say there is a combination best for netflix >> they build the first global media company that owns their own distribution what does it mean? >> the wholesale cut to be 20% to 50% >> they take the savings and spend more on the marketing and spend more on content and you have the fly wheel we are clearly in a world that's shifting to ott and eventually can the industry consolidate enough so they can come to the consumers and say okay, you paid for netflix and amazon prime video and you should pay for this thing

so now you can argue who loses the other thing. i think most people agree and consumers if they cut the cord to the cable, they're not going to pay for -- >> the question is, let's say comcast of cable -- >> let's say comcast gets a majority control of hulu, is that a greater challenge to netflix and amazon than some other media combination? >> i don't want to say relative because at the end of the day, it's how do you put enough ownership of content behind one platform so yes, if you had one owner of hulu or a majority owner, could that majority owner basically try focus it, right, where hulu has had many chefs in the kitchen if you had one economic owner, i think strategically, hulu could become a better competitor >> got it. thank you very much. you have an outperform rating on netflix, facebook, alphabet, and amazon perry ellis is going private. bj's is going public, and google

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time now for our old friend,

the power rundown. courtney is here with three big stories to talk about in the retail area. google making a big investment in the chinese emercy compa-com company jd.com >> and they really want a stake in each other's game so google is paying $550 million and gets about a 1% stake and they want access to what jd.com is doing, particularly in markets like southeast asia they want to understand a little bit more of their inventory and logistics prowess and then jd.com wants to jump in here in the u.s. and sell its products on google shopping network we talk a lot about google shopping partnering with u.s. partners like walmart, like target, like costco. but jd certainly can be a player there too. >> number two is perry ellis, wants to go private. >> yes >> what are the various brands they own and what is driving this >> so, perry ellis is a company that both owns its own brands, manufactures them and then also licenses others. perry ellis is of course the big

one. original penguin is another one and the license is a lot of golf apparel, callaway, pga tour, they also license some nike swim wear and the founder has been involved with this company for a long time and then he was pushed out in the fall, in september. about five months ago, he made it known that he wanted to get back in. he was trying to buy up the shares that he didn't already own so he lined up that financing. his son is the ceo and he's able to take it private for about $437 million about a 21% premium from where it was when we first found out his intentions to take it private and he says, look, i need to be able to invest and do this more strategically in a way that's private and it makes it too hard to do this on the public market with the short-term results investors are focused on >> bj's wholesale wants to do an ipo. >> remember, this actually was public before in 2011, though it was taken private by private equity investors like leonard green and cvc capital, so they're going to spin this back

out, ipo it. they're looking for a price between $15 and $17 a share. that's going to value the company at about $2 billion. so if you're not familiar with bj's wholesale, it's like a costco or a sam's club >> more regional than national >> much more regional, on the east coast, only has about 215 locations. costco has around 750. >> do they have any online >> i don't know about the online they have some but it's not nearly as good as costco and sam's but that being said, costco and sam's were actually a little bit behind on the online game too so there is opportunity for bj's, actually, to catch up potentially in that area, even being much smaller than the other two. >> we shall see. thanks very much >> thanks for being here and having me sit with you today immigration, the hottist topic in the country right now the president speaking about it earlier and making it clear who he thinks is to blame. >> and i say, it's very strongly the democrats' fault >> what can be done to change the laws and who's winning the issue? the second hour of "power lunch"

begins right after this.

at fidelity, our online u.s. equity trades are just $4.95. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. good afternoon, everybody, and welcome to hour number two of "power lunch. i'm tyler mathisen and here is what we're serving this hour stocks are lower today with the dow now on pace for its fifth

straight down day. trade tensions, one of the reasons there. are we in for a summer selloff? we will discuss that one immigration front and center in washington as reports continue of children being separated from their parents at the border what it could mean for the president's agenda and those midterm elections that loom. and facing off against china, the story of how one business fought back against cheap goods from china flooding the market and one "power lunch" resumes right now. and welcome to "power lunch. i'm melissa lee. stocks are in the red today with the dow on pace for its fifth straight down day. we are off the session lows and that is of note right now. the dow is down by 136 points, about 0.5% the nasdaq is down by 7.5. semis, the big losers. nearly all the components in the red. intel you see there, a major

drag on the dow as well as on this etf financials meantime hovering near correction territory with the sector etf, the xlf, trading below its 200-day moving average. facebook, estee lauder, trip adviser and square i'm courtney reagan. here's what else is happening at this hour. a gauge of u.s. home builder confidence falling by two points in june while builders are optimistic about the housing market, they are increasingly concerned about rising lumber prices and sources tell cnbc that disney is expected to add cash to its bid for 21st century fox asset. the moves come after comcast outbid the company with an all-cash offer of $65 billion. and rent-a-center will be taking private the deal value of the retailer, $1.37 billion. that does include debt we begin with the markets, the dow giggebiggest one-day de.

bob pisani is at the nyse with the details >> we're making another attempt at break even, at least the at s&p 500. r russell has gone positive again. one of the main reasons we're attempting to go positive on the s&p is tech stocks, those big cap technology stocks, your adobe, microsoft, google, facebook, all negative at the open and all positive now here in the middle of the day another help, energy stocks, oil was down big right at the open but turned around, lowest levels since april for oil. but look at this some of the oil and gas exploration and production is up natural gas up 2.5% as well. nice move for the energy stocks today. last friday, consumer staples had a very big day they were heavily oversold and people said, we're getting rotation into consumer staples that's not playing out i wouldn't look for that to be a

market leader any time soon. elsewhere, emerging markets, tough time that dollar strength still is a big issue today. south africa, brazil, and the eem, which is the overall emarginaling market etf all down 1% to almost % maybe also there's a little bit of a time issue as well. cyclical issue here. the week after the quadruple witching, which was on friday that we had, usually is down in fact, it's down 24 of the last 28 years. thanks to my friends at stock trader almanac for that. a little bit of a seasonal factor as well, playing into the weakness today guys, back to you. >> bob, thank you. bob pisani at the nyse trade and immigration dominating the political headlines today. the president speaking in just the last hour. kayla tausche is live at the white house with more. >> reporter: melissa, at this hour, the president is scheduled to meet with the two republican senators who would potentially hold the purse strings for a wall at the southern border.

shelley moore capito chairs the subcommittee that deals with homeland security spending on the overaappropriations committ the senate which is chaired by richard shelby those two lawmakers are going to be at the white house talking to the president about this and broader immigration, which has taken on new urgency as the president asks for wall funding, tighter security at the border, and his zero tolerance policy that was put in place by the justice department a couple of months ago has garnered increasing criticism from other lawmakers within the republican party, even the president's wife as of today. nbc news is reporting that hhs has more than 11,700 minors in custody and just more than 500 in just the last four days so we will see what the president and those lawmakers discuss and what progress is made meanwhile, tonight, the senate is expected to vote on a defense package that would include limits on what the president can do to reprieve the chinese telecom giant, zte that is also something that the white house is watching closely as trade continues to be a

concern if it's on the back burner in any case for the next few weeks. today, the secretary of state, mike pompeo, was asked about the u.s.'s relationship specifically with its g7 allies in the wake of the president's withdrawal from the communique a few weeks ago. here's what he said. >> our relationship is not solely defined by trade, and so i am very confident that when these trade negotiations are completed, that the historic relationships between the united states and canada and the united states and our european partners will continue the way they have for, now, 70-odd years. >> reporter: so, while there are three weeks between now and when those chinese tariffs would potentially go into effect and months before a potential nafta deal could be reached, there is more nervousness in the market perhaps than ever about where this trade strategy could lead >> kayla, let me ask you a question about the immigration thing. the imagery, the optics of it seems so intense

is the president gambling that he's going to gain some tactical advantage in terms of negotiating with congress because of these images, or that this is an issue that is going to work for him in the gop ultimately in the midterms >> reporter: well, it depends, tyler, on who you ask. thereby unnam there have been unnamed officials who called this a negotiating tactic and one that could give the white house leverage in discussions with congress over an immigration package yet to be determined but it's unclear exactly where the president will come down on this you know, he has blamed the democrats. we know that he is very moved by images that he sees as he was when he saw the images after this syria chemical attack and the children in the hospital there. so, we will see exactly which way that falls, but it seems like the president is trying to definitely bring republicans to the negotiating table as they're considering these two packages

in the house specifically this week >> kayla, thank you very much. kayla tausche at the white house. tariffs and trade troubles still at play, of course, in the markets. stocks off their lows of the session but the dow still on pace for its fifth straight negative session so are we in for a summer selloff is this the beginning? let's bring in eric, chief investment strategist and doug mccay, president and chief investment officer with broad leaf partners. eric, let me start with you. of course we have seen the markets shrug off trade issues in the past but the last five days we've been stumbling so what do you think? is this the beginning of a summer selloff or is there an opportunity here to buy because the market's only going back up? >> well, you look at a one-year horizon, we're expecting kind of single digit returns out of the u.s. equity marketplace. the big problem overhanging u.s. equity markets in our view is valuations we have very elevated valuations in our mind, the cyclicly

adjusted pe, you have a whole host of measurements and i think that's the problem the market, any time there is concern about the rate of growth of the earnings, either related to economic growth or some other technical conditions, you're seeing the market reevaluate its evaluation levels. we just think we're going to be living with a more volatile world with lower returns than people are maybe expecting, but i think all in all, over the next year, you'll be paid. >> what do you think, doug maybe lower returns, but still relatively solid economic footing here, especially when we're talking about what's going on for the u.s. economy? what's your projection for the summer and then beyond >> is this courtney reagan hey, you're a fellow miami of ohio alumni. >> go red hawks or redskins depending on the year you were there. >> look, i think we're in what i would call an earnings void right now, which means all the companies from the quarter of past through earnings so we've got a few more weeks now before the earnings engine starts to

pick back up again and it's not as though the macro issues aren't important but when we're not in a period of time where companies are talking about this, these issues like tariffs come to the forefront and i think that's what we're going through i still expect good things going forward for the markets. >> doug, don't you think when the earnings start to pick up again, when they get on the company conference calls and the tariffs actually go into effect on july 6th, that all of a sudden that's going to be dominated by we are not sure what the impact could be, we see a slight slowdown, some cautiousness i mean, that's going to be kitchen sink, no, in the next quarter. >> well, you know, you have to realize, too, though, in addition to the tariffs, we just had big, big tax cuts, and those things really won't be kicking in probably until the next couple of quarters and i would argue that the tax cuts are much larger in relation to $50 billion in tariffs, and i would also say there's some worries that the -- china would come back at us with $100 billion in tariffs and they only came back with $50 billion,

that suggests they want to stand their ground but they're not really wanting to get into a big fight over this. so i don't think it's -- it's something to be concerned about, certainly, but china has stolen a lot of our intellectual property i know that firsthand being a tech fund manager, and i think we have to hold them accountable in some areas. and i think that's symbolic of that >> erik, what is your reaction to the idea put out in the "wall street journal" today that corporate profits are going to slow down? >> well, i think certainly the rate of growth of profits are going to slow down i mean, i take issue with my co-contributor here that, look, earnings were up 24% plus on the s&p 500 in the first quarter i mean, earnings growth this late in the cycle doesn't get any better than that and the market reaction was a yawn again, we think because of the valuations yeah, i think there's going to be softness. your going start seeing guidance about the strong dollar and its implications for both revenue and earnings on corporate america. again, we're not expecting a recession in the next year, but

in the next 18 months, yeah, one could be lurking out there in the early 2020 and at some point, this market's going to start pricing back in. >> so you're nibbling around the heart of my question there, which is if interest rates are going up and profit growth may be slowing, it may just not get any better than what we had in the first quarter and the possibility there might be a recession somewhere 2019, 2020-ish what does that tell you you should be doing with your equities >> well, one of the things we're doing is underweighting u.s. equities because we think the valuation difficulty in u.s. equities, think about the faangs the faang stocks are an expensive u.s. equity market, they are really expensive on a relative basis and the best i think you can say about the valuation is that they're not quite to internet level bubbles so i think the reality is the symmetry of the risks you're facing right now are asymmetrical, very relatively modest upside with potentially

major downside fz you get a major hit to earnings due to a recession so i think your portfolio should reflect those risks. >> go ahead, doug, and jump in >> i mean, first of all, faang, these companies have earned where they've been i was a tech fund manager in the year 2000 so i know what the bubble was and i can tell you the ten stocks i was touting were all a hundred times-plus earnings a lot of those companies have free cash flow yields of 3%, 4%, they're growing much faster, so i take issue with the fact -- and the reason they are at a premium is they are the few companies that can grow, regardless of the economic cycle. doesn't mean they won't be hit hard if we go into a recession, as apple even got hit hard in 2008, but i think they can continue to do well, so i'm not -- i'm not of the belief -- markets could stay overvalued for a significant period of time, and -- >> and they already have been. >> we're going to continue to watch it from here, of course,

because we've got a lot more to play out in this trade issue that we're going to see between the u.s., china, and potentially other partners thank you both for joining us. erik and doug. just coming up on "power lunch," the backlash of breaking up families at the border. will immigration policy be the deciding factor in the midterm elections? then one small business owner's fight against china. why her win in court doesn't mean her battle is over. we have her story ahead. plus crypto's kryptonite, its size what imes r t anfothe cryptocurrency market. "power lunch" is back in two

[thoughtful sigh] still nervous about buying a house? a little. thought i could de-stress with some zen gardening. at least we don't have to worry about homeowners insurance. just call geico. geico helps with homeowners insurance? good to know. been doing it for years. that's really good to know. i should clean this up. i'll get the dustpan. behind the golf clubs. get to know geico. and see how easy homeowners and renters insurance can be.

welcome back to "power lunch. the backlash over breaking up families trying to cross the border and getting caught while doing it is growing. what it could mean for the president's agenda and the midterm elections. to discuss that and more, let's bring in bill kristol, it toedir at large for the weekly standard the president suggests, i would say, i mean, apart from blaming the democrats for what is going on down in some of the border states, blames the democrats but says this is a matter of law others say that the enforcement that is taking place now under which people who are caught are sent to jail and their children are put into other facilities is a matter of choice, deriving directly from attorney general

sessions' zero tolerance policy allowed last month is it a matter of law or is it a matter of choice >> i think it's a matter of discretion under the the law there will be some lawsuits. we'll see whether this is legal but it may well be legal but one can choose not to enforce the law in this way, obviously there are many areas where that's true and the president has directed and sessions has been very candid about this. that he wants a zero tolerance policy and he's going to treat everyone coming across the border as breaking the law, as committing a -- breaking the law in such a way that we're going to have a -- the full weight of the law brought against them, which means, in this case, family separation. so it's trump's choice and you know what's striking to me is that he doubled down on it this morning i thought over the weekend, he might find a way to defend his broader immigration policy, make the case for the wall but to say on this one, we've recalibrated a little, we're going to suspend the family break-up. there are ways you could have tweaked this

what strikes me is he's willing to have this fight this reminds him of the glory days of the campaign when he said mexican rapists and muslim ban and we said, you shouldn't say that and it turned out to help him in the republican primaries and i think he's trying to frame this, if you look at his tweets this morning, some of his rhetoric today, as a big fight about what kind of america do you want. do you want us just to become europe with crime and terror so, he's using this as an occasion for a big fight on immigration, which i think makes all kinds of future compromises harder >> so, do you think -- do you think this, then, is an election tactic, so to speak, or a capitol hill sort of legislative tactic or both in other words, does he think that this is an issue that works for him and for the gop this fall, does he think this is an issue that can be used to drive a legislative success out of the capital, one that comports more with his broader immigration

priorities like building the wall >> i would have said a legislative tactic a couple of days ago that seemed to be where he was going, but now it looks to me like he's willing to forego legislation in order to have the issue for the election we'll see it this week, actually but i think the chances, for example, of trump being willing to close the government on 1e september 30th over not getting the wall, the chances of demagoguing the immigration issue in a way that heightens tensions about it in all kinds of ways, i think those odds are much greater than i would have said a week ago. >> the president plays the negotiating game rather differently, let me just put it that way he's a different kind of cat, i think we can all agree and he certainly plays hardball and he is doing that now with our trading partners, whether it is china or the eu or canada or mexico what do you see as the end game there as the issue of trade plays out? >> you know, it's a good question, and i think it could be, unfortunately, i would say,

a good analogy in that people like me have sort of assumed that the saner heads were going to prevail, we're not really going to have a trade war, we'll have some tariffs but pretty small in the big scheme of things i now wonder about that. gary cohn is gone and justas a immigration, trump is willing to take what you would think would be a sort of negative set of facts and perceptions and play it out i wonder on trade whether he's decided trade and immigration are his two signature issues and he believes them, sort of. and in both of them, he thinks he may be able to win politically so i would be less confident than i would have been two months ago that the trade thing really couldn't escalate in the way the immigration thing has escalated. >> it fits -- just from my observational point, his two biggest branding gambits are america first and make america great. and this fits right there, doesn't it, bill >> it does, though the consequences of both cases, i think, are rather the opposite

but he may not -- he may think that we won't see much in the way of consequences and he may think he can just rouse passions on this and denounce his opponents as elitists who don't care about jobs that are being lost or about crimes that are being committed. and he seems -- as i say,i'm more pessimistic about trade sailing out of control than i was a few months ago >> bill, thank you, as always. bill kristol, weekly standard. still ahead, the story of one small business owner who took china to court and won. look at her battle and why it isn't over next. whoooo.

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welcome back to "power lunch. president trump has repeatedly talked about the impact trade disadvantages with china can have on american companies gate rogers joins us with the story of at least one small business owner who's taken matters into her own hands >> this small business owner decid decided she was losing too much business to china to wait any longer so she took on chinese dumping firsthand. take a look. cathy leonard has run auburn manufacturing for almost four decades. the small company has two facilities in maine and manufactures heat and fire

resistant fabrics industrial use, selling to businesses in oil, petroleum, ship building and even the u.s. navy a few years ago, she began losing sizable contracts leonard watched about 30% of her business in silica fabric disappear, causing her to lay off ten employees, about 20% of her workforce. she began to explore why >> we found that the materials were coming from china. >> reporter: the products were being discounted up to 30% and being sold to her competitors. leonard hired a law firm that handles trade matters. it helped her file an anti-dumping case with the department of commerce 18 months and almost $1 million later, the d.o.c. ruled in auburn manufacturing's favor, placing an import duty on that same product her competitors were buying from china >> i felt ebulliant for a moment and then just grateful it was over and then moved quickly on

to wary about the future because it doesn't mean you win-win and all of a sudden you get all your market back and you make more money. it doesn't work that way >> now kathie has hired back about seven workers. she's very happy to have won this battle but she says the business is still feeling the impact of this situation because so much of this product made it into the u.s. so that has to be sold off and used before she can really regain what she lost but she did not support president trump during the election, but she said she really appreciates the back and forth that we're having now with our trade partners because she thinks china's been undercutting us for some time. >> you mentioned $1 million in that report. she spent $1 million the company spent $1 million >> yes she's a tough lady she's the president and ceo of this company, she's run it for decades and she said, i'm the person in charge this is my money to spend. not every small business, obvio obviously, can spend $1 million but she worked with this law firm on a monthly payment plan

and it was worth it to her >> wow >> kate rogers still ahead, energy one on the only four sector authorize positive so far this year. can that continue in dominic chu has that story >> we got to look at a few companies in particular, exxonmobil, chevron, but some more companies might have more pop for your investment dollar we'll have those stocks coming up after the break keep it right here on "power lunch. it can power your apps with public services without starting from scratch. it brings your business up to speed, doing more with systems you have in place.

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i'm contessa brewer. attorney general jeff sessions is defending president trump's immigration efforts that separate migrant parents from their children he spoke at the national sheriff's association annual conference in new orleans. >> we cannot and will not encourage people to bring their children or other children to the country unlawfully by giving them immunity in the process why wouldn't you bring children with you if you know you would be released and not prosecuted

the department of health and human services released video from inside detention centers for children in brownsville, texas, and san diego, california members of congress are scheduled to tour the facilities today and tomorrow a new survey by credit cards.com finds millennials are much less into tipping than older adults 10% of americans ages 18 to 37 say routinely they leave no tip when dining out. who's teaching these kids? 27% of millennials want tipping eliminated altogether, even if it means paying more for their food in the meantime, somebody needs to corral these young people it might be me that's the cnbc news update at this hour. >> they are too focused on the experience of dining out, con at the scene -- contessa. let's get a check on the markets at this hour we are in the red for the dow as well as the s&p and the nasdaq the russell, though, managing to go into the green. the dow is down about 11 points

or 0.5%. s&p down by 6 points and the nasdaq is down by 1 point. basically unchanged. as for sectors, telecom and staples are your laggards, energy and utilities are your winners right now and within the dow, intel, procter & gamble are the worst performers chevron and microsoft are leading. well, the oil market is closing for the day, so it's time to get over to jackie >> the stocks are up despite the fact that the dollar was on an uptrend and some speculation in the market about opec's plans for friday's meeting. even though both factors i just mentioned are somewhat bearish, there's still this push and pull in the market right now with seasonal strength that we see this time of year. inventories have been starting to draw down at a time when demand typically rises so it would have to be an extreme rise in the dollar or an exmotreme me on friday.

wti and brent are still both more than 7 % lower over the course of the last month speaking of oil, energy stocks, leading the markets today. one of the only four sectors higher for the year, so will the rally continue and if so, where should you buy dominic chu has been drilling -- sorry, we had to do it -- where the profits might be, found in coming months. >> we are drilling and pun intended there like jackie just pointed out, we have seen oil prices move generally to the upside with a bit of a pullback now. if you take a look at the stocks, we did see them outperforming the markets over the course of the medium and longer term, only to give some of that back take a look at the s&p 500 etf, up 14% the energy spider on the right-hand side just in the last week and a half, two weeks or so, we've now fallen below the performance of the broader markets so just about in line between energy and the sector overall. take a look within energy.

we are seeing pockets of strength in certain areas within that energy trade. that's the oil services side of things, up about 1.5%. meanwhile the energy overall, 13% and that orange line here of 31% is oil and gas exploration and production that's where the real strength has been as oil prices have risen. now if you take a look at stocks that could benefit the most, took a look to find out which stocks have the highest upside potential to their price targets for analysts if they are indeed correct. take a look at these names cimarex. concho resources, new field exploration, 35% haliburton, perhaps it does a little bit of a pickup of 33% and then range resources up 32% as well. a lot of those names, exploration and production are key here so we'll see if those oil prices and opec's meeting will have any effect on them we stick with energy now

key opec meeting coming up on thursday next guest has a bearish view on oil prices both in the near and longer term. here to explain why is senior oil strategist with jpmorgan welcome. good to have you here. let's start with opec. what do you expect to happen there? why? >> so, opec is really confronted with a really difficult situation here you've got, of course, very strong withdrawals, which they had aimed for, taking the averages down and they have achieved that. however, unintentionally so, they have also overtightened the market to a level where we are seeing oil prices being well supported toward the $80 level which is now trying to threaten potentially demand and that remains a concern for opec members in russia so here they are moving into summer term, which is high demand quarter, and now they want to basically make sure that the decision that they make in the june meeting does not involve basically taking oil prices once again towards the $80 or above because

that could potentially be basically counteract what they had initially done was to balance the market >> is opec unified or divided? >> most definitely it's not unified right now. i think the bigger players or the stronger players such as saudi arabia and russia clearly see the bigger picture, which is they do want to bring in those extra barrels, which have to help balance otherwise the decline seen from venezuela, an angola or even iran, but the smaller ones cannot bring additional, are the ones who are objecting to that. >> how to do you factor in, if at all, the fact that china's retaliatory tariffs would include a tariff on oil. >> well, what it does mean is that if china was to retaliate in terms of tariffs, especially involving u.s. oil, at least that means that opec perhaps

might first have to consider it in the upcoming meeting, but they might have to then perhaps look into that -- those extra barrels that china perhaps will have to lift from countries outside of u.s., and the first country, perhaps, one can think of where china might try and get those barrels might be from iran and the question comes back on the table whether iranian barrels that one is anticipating could be taken off the market because of u.s. sanctions, how many barrels would really get taken off if china was to basically compensate for the lost barrels from u.s. to iran >> well, what about your forecasts for the dollar the dollar has been strengthening. i understand that you're bearish on the outlook for oil prices and does that play into it how are you forecasting the u.s. dollar >> our u.s. dollar analysts do expect that the dollar should come off from where it is right now. the recent trend is more idiosyncratic and rather than that, we do expect the dollar to

come off still towards the end of the year and on -- although u.s. -- although oil prices and dollars, the correlation has kind of broken off and oil itself has been driven more by the geopolitics as well as the -- as well as stronger fundamentals that we have in the market however, if the dollar was to perhaps go -- come off, by the end of the year, it perhaps will have some impact in supporting prices but overall, i think for the second half of 2018, i do believe that oil perhaps will be driven by what opec decides on 22nd of june and also generally speaking where we see fundamentals, which is basically getting weaker as we see opec's -- opec-nonopec deal unlikely to survive. >> weaker fundamentals, less demand, supply may be going up or whatever, where do prices spend most of the second half of the year >> so, second half, we believe that first of all, our oil price forecast, we are below the

forward curve and basically, it's our original forecast that we had given earlier in the year we haven't really revised 2018 for brent so basically we expect brent to trend towards $63 on average for fourth quarter this year and then towards $59 on average for first quarter 2019 and then gradually recover towards the end of 2019 toward $66 on average for fourth quarter, but the real pain and the real pressure possibly will come toward the end of the year into first quarter when we see the fundamentals at their weakest. >> thank you very much we appreciate it coming up, why bigger isn't better when it comes to kro cryptocurrencies what it could mean for the industry that's next.

welcome back to "power lunch," everybody. the footwear maker puma landing a big endorsement deal eric is here with more puma has not been in basketball before >> they haven't been in hoops for 20 years, since 1998 they actually have two big

endorsement deals. one was from friday, marvin bagley jr. out of duke and that's ayton they may be the top two draft picks in thursday's nba draft so they got two of the host high-profile rookies going on right now. they have a new twitter handle that just came out and more signings are expected this week so puma is all of a sudden back into hoops with a bang it all started with walt clyde frazier back in 1973 he had shoes made by puma back then he's got a lifetime deal so he's still involved with the company and all of this could make a big difference for puma's stock. there you see the five-year chart there. they're trying to compete with nike, adidas, under armour, all these players but what's interesting about puma, these players they signed, they said they like puma because of the entertainment factor that this brand provides because they've got deals with mike mill, rihann rihanna, kylie jenner but they

had been absent from the nba for 20 years so this is going to be a big fight with the chinese companies. >> can rihanna dunk? she's a tall person. >> she's a lifestyle brand ambassador >> and meek mill i assume he can dunk >> not a lot of people can dunk, actually i can touch the rim. i don't have a lot of good hops. but this is going to be a big thing because all of a sudden, think about it, any business we cover, if someone's not in it for 20 years and they're like, we're getting the biggest, high-profile guys many one week, it's going to cost them a lot of money. >> and kylie jenner is really big too, talking about the multifaceted brand ambassador. >> think about basketball shoes. it's much more about the off court sensibilities. that's why these guys wanted to get involved with puma and this way they're not behind lebron james or kraevin durant. they could be the best guy for that brand >> interesting >> thank you >> thanks. switching gears, the bank of international settlements is out

with its annual economic report and it's not very bullish on cryptocurrencies and that's putting it politely. the group saying transactions are slow and costly, prone to congestion and cannot scale with demand they add that cryptocurrencies are likely to suffer a breakdown in trust let's bring in the cofounder and president of coinless. andy, great to have you with us again. >> thanks for having me. >> i want to also read you what the general manager of bis said because as the report is damning, what he says is even more damning, perhaps. he said it's a combination of a bubble, a ponzi scheme and a an environmental disaster what was your take and can this report be viewed in any way as political? >> i do think report was a little bit misguided and i think a lot of what we have to remember here is that crypto is so early in its development. bitcoin hasn't even celebrated its tenth anniversary yet and there's a lot that has to be built. if we think back to the internet, there were scalability issues, speed issues, quality issues, and those had to be solved with new technologies and

new products as the e cosystem developed. that exact same thing is happening in crypto and we're seeing a lot of very exciting solutions around some of the environmental concerns, all being developed right now as these things start to reach scale and run into these problems and a big part of what we're seeing at coin list is we help these companies manage their sales, we're looking at great teams from academia and industry working on solving scalability issues >> in terms of users, without users, bitcoin or any other crypt currency is simply a worthless token. you used the parallel of the internet back in the '90s. people were signing up for aol accounts, exchanging e-mails, and there was an ecosystem being built around that for e-commerce and goods being exchanged, et cetera. it doesn't feel like the same sort of buildout right now in

cryptocurrency in terms of use case and all the different applications being built around it that we feel in our daily lives. >> yeah, we think those products are just being built out right now so we see bitcoin as a store of value, like digital gold and people are using it as a way to store value. a lot of the new products that will have more specific use cases, held initial coin offerings in 2017 which was really when that boom of cryptocurrency happened. they're shipping product, we're excited about products like auger and a number of others that are coming out over the course of the nikolext six or n months right now we're focused on developing the applications. these applications need to exist. we need users for these products, and that's going to happen this year and early next year >> when you're talking about crypto and you talk about a store value and it's being used right now, can you say in the same breath that that very same

coin is also a means of transaction if it's being marketed right now as a store of value. does that just flip overnight? >> we think the bitcoin isn't really meant to be a means of exchange, a medium of exchange for transacting value but rather just as a store of value and other cryptocurrencies will be used as a means of exchange. we're excited about stable coins, tokens pegged to a specific value as a medium of exchange you need stability if you're going to use something as a medium over the course of weeks or months, and so looking at stable coins as a solution to that is interesting. looking at case specific tokens, things like file coin or block stack that support their own networks is really interesting and looking at things like bitcoin as a store of value, we see those as different categories and not necessarily that each of them fits into all three. >> so in five years or less, do you foresee that somebody like me or you would have a portfolio or a wall let filled with different coins for which each has a different use?

that seems like a lot of effort. you want to be able to solve a problem and not create more problems for people to be able to contract threes coins, rely on the stability of these coins and use these in specific use cases. >> we totally agree. and that's where i think the stable coin point comes in, that that can be used as a medium of exchange for a lot of different applications separately, we look at these tokens that are meant for specific networks. those won't be used by every single person and perhaps we'll actually be using applications built on top of those protocols. look at something like a file coin, that's an incentive system for allowing for transactions on top of a file storage network. i might use an application that doesn't apply to me in the same way i might use drop box without realizing that i'm actually interfacing with something like amazon s-3 another example of that is something like original protocol, which is a sale that we're recommending to your investment clients right now on coin list and that's a product that will allow for sharing economy marketplaces like a

decentralized uber or airbnb to be built it won't be that the end users have to interact with that token but they can use these applications built on top of that token >> thanks for joining us appreciateandy, thank you, appreciate it. >> caller: thanks for having me. >> well, semistocks having the worst day since april. the sector was on a hot streak is it in the beginning of a leg lower or a pause in the chip rally? that's next on "power lunch. at crowne plaza, we know business travel isn't just business.

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stocks under pressure tracking for the worst day in a a few months, intel down 4%, and applied materials are down, and michael is here, and, michael, it's talking chips considering we're going into earnings wednesday, and that's been a high flier this year as well as the past 12 months >> usually we don't look at politics and political agendas affecting the fundamentals of companies, but given the trade wars politically right now, we think there's a pause in the

uptick of the semiconductor space. that being said, everything we do in this technologically expanding world, whether it's a artificial intelligence or the cloud, we love the chip space long term. we own it on dips. int intel, if it dips more, we'll buy it as well as taiwan semi. the space of technology can't exist without the chips. until someone figures out a way to do it, we own them. >> bullish long term what do you see in the charts? >> well, we're not making an active bet on semis or against them either. our recommendation to clients is to place our bets elsewhere in the technology sector. here's why if we chart the semi smh, rising above the 200 moving day average. it's a long term uptrend that's higher our concern is how the industry is performing versus the rest of the tech sector. the bottom panel there is semis

relative to the tech sector spyder at the march high, semis did not confirm relative to the sector, there was a lower high, and now the relative profile is breaking down we see the relative flows built elsewhere in the sector. we like the software side of the sector instead >> all right, gentlemen, thank you. for more, go to tradingnation n tradingnation.cnbc.com now the latest from tradingnation.cnbc koi tradingnation.cnbc.com >> volatile markets are a good time for long term investors to review their asset allocation plans on core holdings if you are overly concentrated in a stock or sector, volatility does more damage to the portfol portfolio. diversified accounts fair far better when volatility increases. still a chance here.

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willingham tucks it in and puts the championship to bed. sweet dreams, nighty night. as long as soccer players celebrate with a slide, you can count on geico saving folks money. fifteen minutes could save you fifteen percent or more on car insurance. pressure, what pressure? the players on the... check, please! >> welcome back to "power lunch," finishing the show, doing our check please, mine is retailers going private. we talked in the show about what george is doing with his company, taking it private, and i think it's a different animal when skrus thinki ijust thinkins "r" us those are retailers, aggregate brands they sell this is a wholesaler they manufacture and license their individual brand there's going to be a different success story when you're talking about taking a name like

that private versus a retailer >> a difference, right, if a founder takes it private by himself versus a firm. >> sure. >> they want low debt levels if you is a lot of debt, you're not a candidate. >> definitely. that was an issue with nordstrom. >> right >> we're just talking about this, look at shares of square, up by 2.4% they got a bit license or permission from the department of finance in new york state to allow residents of the state to buy and sell bitcoin through the cash app now, let's be clear, the company is not a crypto stock per se they made it clear the accounts were a small percentage of revenue, but people get really excited when you mention the ability to buy and sell bit coin on an app and you see that today in the shares. >> one of the many reasons i like working here, apart from working with guys like you, but i get to congratulate my son and rec league baseball team that was undefeated, something no

team his father has been on has ever done. winning friday night under coach rob, a white hat of a guy, a great coach, mac, my son, second from the left in the back row. nice win to the dodgers in the rec league undefeated. >> well-deserved thank you for watching >> congrats. >> really cool >> and the "closing bell" starts right now. i'm wilfred frost. banks preparing for stress test results. which banks could fair best? >> reporter: i'm phil lebeau in chicago. musk racing the clock for production targets and taunting those shorting his company's stock that their time is running out. buiitcoin is, quote, useles, unsafe, and dirty, according to the bank of international settlements. i have the other warnings coming up i'm michelle caruso-cabrera in for kelly