thanks so much brian sullivan covering this for us all week. that does it for "power luncthe" now time for "power lunch. >> we'll see you in just a moment tyler mathisen here with melissa lee. new at 2:00 today, boeing battered again europe now grounding the 737 max 8 jets why are u.s. carriers? the faa elected to do the same and president trump weighed in as well. elizabeth warren fueling calls to break up big tech and college entrance exambribery plot. this has been uncovered by the feds ensnares hollywood stars, ceos, coaches and billionaires all busted the details on "power lunch" starts right now >> and welcome to "power lunch."

i'm melissa lee. let's get you caught up on the markets here s&p 500 and nasdaq for the second straight day. two day gains since the end of january. boeing, biggest drag on the dow. stocks sinking more than 7% this hour shaving off about 200 points from the dow all on its own but amex and visa, apple we begin with the latest developments with boeing and 737 max 8 jet. europe now suspending all operations on these planes let's get straight to philip lebeau for the very latest in chicago. phil >> reporter: melissa, the u.s. as well as north america, stands alone relative to the rest of the world when it comes to grounding or not grounding the boeing 737 max line of airplanes. the latest is we now have 32 airlines comprising 58% of the 73 max global fleet. those are grounded most notably within the last hour, european union as well as china, australia, you've got a number of other countries in

asia that have decided they don't want this plane flying right now. what about here in the u.s.? american airlines and southwest are the two airlines that fly the max 8 version of the 737 american, by the way, has 24 of these and today, the flight attendants union for american airlines put out a very public statement saying, they believe the flight attendants believe perhaps their airline should shut down the plane as well. writing many respected global carriers are grounding the planes we are calling on our ceo, doug parker, to strongly consider grounding these planes until a thorough investigation can be performed. as for boeing, full confidence in the 737 max airplanes noting they are deemed airworthy by the faa and in fact, the faa putting out a continuing airworthiness note last night. finally, look at air castle. an aircraft leasing company. macri out with a note today saying if you look for potential stock plays, those who might be

benefitting. if there is a benefit for anyone as these airlines in countries ground the 737 max, aircastle has perhaps the best log of the 737 mid cycle planes that's the previous generation, the older 737s that were replaced by the max. take a look at shares of aircastle. back to you. >> phil, thanks. philip lebeau, the pressure on boeing is mounting from dc president trump among a host of political leaders weighing in. eamon javers has more at the white house. eamon? >> reporter: the president issuing this tweet earlier today. the white house though, not explaining what the president meant here take a look at the tweet from the president. rather lengthy but suggested airlines generally have gotten more complicated over the years and he's concerned that you have to be a super confident technician to fly one of these planes the white house not answering questions about whether or not this means the president wants to do something about this

issue. does he want southwest or american to take action? does he want the faa to take action white house officials say the tweet speaks for itself. on capitol hill, we get bipartisan reaction from lawmakers. take a listen. >> the 737 max 8 should be grounded immediately >> well, i think out of an abun da dance of caution, it makes sense to ground the aircraft that's been involved in two very tragic accidents in only six months. >> white house officials tell me they'll get back to me if there's any development in the president's thinking if the white house wants to take a stand one way or the other if the planes ought to be grounded. >> i'll pick it up, eamon javers thank you from the north lawn. a number of countries now grounding that 737 max 8 jet but not the u.s., not yet. and let's get a pilot's perspective. joining us now is les abend. a contributing editor at flying

magazine good to have you with us let's start with the two most pressing questions do you think this plane should be grounded and would you get on one today? >> well, let me be honest. i feel comfortable getting uncon it today the faa needs more data. you can't just discontinue an airplane based on suppositions at this point in time and that's all we have. we need more facts at this point in time. so the other countries are, i respect the fact that other airlines are operating with an abundance of caution and grounding their fleets >> i'm curious if you say on the one hand, as an experienced pilot with decades in the cockpit, that you would feel uncomfortable getting on this plane today, but you don't think it is premature for the u.s. aviation authorities or for individual airlines to ground it? >> listen, the faa is a united

states government agency and boeing is a u.s. company i mean, it's a tough position to be in but let me go ahead with what i as a pilot would be saying i'd be going, okay, i've got an airplane that might have a potential problem. the chances of this problem ever rearing its ugly head are fairly minimal but now because of the lion air crash and some of the facts that have come through in that investigation that still isn't totally complete, there's a remedy to it now, the remedy to it is something that i've been trained to do and i'm going to review those procedures and i'm going to be very cognizant when i get this airplane airborne, especially on takeoff. if something that is reflective of what's been in the news that i take care of this problem by the remedy boeing has provided >> i take your point here. maybe we'll come back to the idea that the u.s. and canada

among others stand apart from europe, australia, china and others on grounding this plane and i want to delve into the training that pilots eceive. because some of the training that either followed or didn't follow a change in some of the aiavionics software used without getting too close to the subject has left boeing subject to criticism by pilots but let me ask you this if i am a certified 737 pilot using the 737 mid cycle planes, the 737, 700, or whatever it was that was the predecessor plane to the 800 max, how much time in training would i get and what would the nature of that training be if i then wanted to step up and get certified to fly that 800 max would it be in the cockpit, a simulator, on a computer, at a desk, what what's the nature of it?

>> it's a great question and the bottom line is you're going to get a typewriting, that's what we call in the business. it physically goes on your license and they would get a 737 800 type rating. now, sometimes, you would be required to get also the differences part of it and in this particular case, you're dealing with the same cockpit. there's some differences that are involved primarily, the engines, and some of the systems. >> what would i go through >> you wouldn't go through anything different than any other variant with a 737 in other words, there were different generations of them but at this point in time, you wouldn't go through any other training other than to get the differences when you transition to this airplane. >> how would i receive those differences?

>> the differences would be in the ground school that you attended prior to beginning the transition >> on the ground school, it might be a part manuals, could be on an ipad. it doesn't necessarily mean that i'm going to experience it in a simulator, these differences, or experience it in the cockpit of an aircraft. >> well, that's not necessarily true there are scenarios where we have, it's an old standard procedure that boeing is recommending for this particular circumstance called run away trim, the horizontal stabilizer that makes the plane go up and down if it runs away and goes into an uncommanded situation where the pilots are not controlling it, you disconnect the pinches >> it's part of the tail structure of the plane, correct? >> correct. >> it controls the pitch of the plane. >> correct correct. >> we don't know, there are obvious similarities with the

crash in ethiopia and the crash in the indonesian airline. there seems to be some differences observed by people on the ground that the plane was spewing smoke or white could have been vapor of some sort, that some people say there were items coming out of the plane. it may be a completely different cause. these may be two different anomalie anomalies, correct, les? >> i agree with you and that's the way the investigators will approach this but remember, very often, witnesses vary in the details. they see things that may not necessarily be there so i am very skeptical about witness accounts on accidents, but your statement is correct. this could have a different cause. >> one more time, i want to come back to it you say that today, you would feel uncomfortable getting on one of these planes, much less getting into the cockpit and flying it. but you stand by the idea that the faa or the national

transportation safety board or individual airlines in the united states have not grounded the plane. you said, wait and see we need more information. >> yes, that's exactly right actually, just to clarify, i would feel more comfortable getting into the cockpit because that way, i would have control of the situation >> thank you very much we appreciate your time today and your explanations. >> my pleasure shares of american and southwest airlines taking some big hits today both carriers have the largest boeing 737 max 8 fleet among u.s. airlines and both continue to fly jets and stand by their safety what are the risks facing these airlines joining us is david vernon, at bernstein. thank you so much for joining us. >> thanks for having me on. >> you break it down on some charts within the latest note you put out as a percent of hours flown, southwest is 6% on the max 8. american airlines has 2.4% what if we took the max 8 out of the equation altogether?

what would that mean in terms of a hit to earnings for these companies and how would you look at it, would they be replaced with other planes? so the revenue could be recouped in some way or would this be lost revenue >> i think it would be a question of duration for first of all, how long would this last if you took this aircraft out of service immediately this time of year, when schedules are probably what they would be in peak flying, you might be able to cycle sol aircrame aircraft e fleet. make changes as a network carrier if you're banking aircraft in and out but certainly require you to spool up some old aircraft and incur additional costs and look at the consequential losses of the consumers saying do i want to switch to another aircraft or book another one i think the real long-term implications like this would be from, frankly, the flying public, getting a little bit more concerned about the air

traffic safety in the u.s. which remains incredibly safe. we don't have data points to handicap what the issue is but the real issue is going to be around near term revenue loss from passengers kind of moving to different flights additional costs to accommodate this with less efficient aircraft maybe with schedule changes and then the inconveniences you've had that might affect your customer perception that could ripple into. >> the way i understand it, it's hard to quantify depending any sort of stoppage would be. at the same time, don't the airlines have to weigh the immediate hit to revenue from service disruption and also reputational risk? doesn't it look bad for american to stand by the flight, the planes but have the flight attendant say, we don't feel safe on these planes >> it's a very good question i think it's hard to really respond to that. i would bet that the anxiety levels in the boardrooms making these decisions are high i would not characterize this as

a situation where either american or southwest are sitting with the head in the sand, hoping the faa says it's okay you have to step back and look at this. right, there's two airlines flying this aircraft southwest and american they've got a lot of experience with it. they've got a lot of feedback from pilots. they're also two incredibly safe airlines if you look over time they are balancing the risk of the what might happen in the short time when they might get with the crash or consequential risks if they were to shake interest and potentially create long-term consequences i think that's what they're trying to balance. incredibly difficult position to be in and because we don't just know yet what exactly caused this crash or how it could be impactful to the long nature of the air. >> southwest this week, just to

push back a little bit, southwest lost 3% so far this week 2% roughly does that size of market cap, is that greater or less than the hit to eps, short-term, if they said, we're going to ground these particular planes for this particular week? i mean, when you're also in the board room, weighing the sort of pros and cons of grounding this, you've got to look that too. >> i think the stocks are volatile and react to changes and people are concerned about the cycle. the competitive dynamic that's happening. is there enough growth to kind of meet everyone's lofty expectations and will the market support that issue this kind of data point that could show up is certainly not good for any of the airlines and it's not just southwest or american united is feeling the pain delta a little bit free but down yesterday on this news i don't think you can look at this in any way and say, wow, this is good for the u.s. and

domestic airline industry. that said, these stocks are volatile and react to these data points and if this does turn out to be something that, with training or with a small sort of fixes, we can get through, this will be near term noise. if bigger, then you have a bigger problem >> delta and ual don't have any exposure according to bernstein. thank you so much for joining us we do appreciate it. david vernon >> thanks for having me. in the meantime, we're minutes away from what could be the most crucial vote on brexit since the actual vote itself two years ago. we speak one money manager overassess with almost $200 billion on why he's making bullish bets on the uk and overassess markets over the u.s. hear what he has to say. the mystery chart, the stock having a huge rally right now up 'lta than 100% this year wel lk about why it could be headed even higher we're back in two. measure up? a cfa charterholder does.

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welcome back we are moments away from a crucial brexit vote. it could be a major moment for the markets. luke, chief strategist got more than $200 billion in assets under management. got a strong preference for uk equities in the u.s. and bob pisani here as well.

bob, i first want to start with you. the british pound rallied a lot last night came off that a little bit but how much are u.s. and international markets hanging on the outcome? >> the street wants a new referendum i don't know how likely that will be. >> a new referendum? >> the street believes if you get -- >> say no? >> the vote will be to stay and that's what they want. this is too disruptive everyone wants business where it is they don't want businesses move around and cross border difficulties, just status quo. i don't know how likely that is, but yes, it's very important and i can tell you the s.e.c., we had the head of the s.e.c. on with you clayton expressed his concern about the disrupted nature of brexit on u.s. corporations. >> bullish on uk equities. brexit is going to happen or not? >> bullish almost regardless of the outcome of brexit. it sounds a little bit strange reality is that if you look at uk markets, there's really nothing to do with the uk economy. if you have, let's say, a good deal, if you are a u.s. investor, what's going to happen is the pound goes off and you

can benefit from that. if no brexit or let's say there is a bad deal or brexit, the pounds fall. a lot of corporations would actually benefit we feel almost any outcome, the uk equity market would do well assuming global growth remains weak >> is it enough to offset the brexit >> for the uk economy it will be a problem but the uk market, uk stocks, basically, nationally. >> a lot are exporters to europe, the eu region. so brexit, i mean, is that enough to offset the potential weakness that will come from brexit, the impact on the eu countries? >> obviously, we need to wait what kind of outcome is going to be what's going to be decided today is really not the end of the story. it's a long story we continue the next few days. i think if there is really a hard brexit with no agreement

whatsoever >> or if we had that kind of event, would it be similar to maybe the trump election, a huge sell-off that night and then the rally. the uk has questions to answer about how well it could make itself, singapore or hong kong, if it leaves the eu entirely but after getting over that reality, do you think markets could come around >> i would be very careful about equating the trump election with that with this particular event this is a major economic event that was a political event that led to some economic issues. no, i think it's not a good idea overall and i think the market hr vot already voted on that. there's still a real issue with the backstop remaining that's going to be unacceptable. the vote will fail, right? >> i think very likely the vote will be a no it would be a new vote tomorrow about other options. i think it would be very, very spr surprising if this deal today is

going to pass. >> what's the chances for a referendum a new referendum >> very low. because we have to understand that also, the position party, the labor party, not completely convinced about the second referendum not that obvious there's a lead but not clear, and legally, i think, very difficult. >> you think we're not headed for a new vote necessarily, so an extension then? just kicking the can down the road >> exactly what we normally do in europe and probably the most sensible thing to do in a few months, there may be a new government and things will change and potentially find a compromise currently, i think the most logical solution. >> if the extension happens, theresa may is out >> probably yes. i think so. >> u.s.? >> i feel that even if the u.s. corporations have the most profitable, probably the best in the world, still craving multiples. you have now negative earnings growth which obviously is important. global growth. also, u.s. growth is weakening

and a big question mark on margins with a record high, wage growth with an impression. >> hearing a lot about that lately thank you, luca. >> thank you, luca and bob pisani coming up, two well known hollywood actresses among several wealthy and powerful people charged with breaking the law to get their kids into college. desperate housewives the details and the dollars, reveal the name behind this mystery chart, folks the stock soaring today. the right fit for your portfolio? we continue to watch shares of boeing that company lost 12% over the last two days. right now, down, i guess, 5.75 r iseson% we'll be right back.

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welcome back to "power lunch. i'm michael santoli at the new york stock exchange. stitch fix ripping higher today up near 30%. the company joiningw wayfare and etsy some of the best performers on the retail etf so far this year, so are these new leaders of retail worth a buy mark newton from newton advisers

and aaron gibbs from s&p global are your "trading nation" team today. welcome to you both. erin, customers seem to be attracted to this group. investors think they have fundamental momentum any of them make the agreed for y -- grade for you >> etsy. it hasn't seen the super decline from q4. earnings stable as the stock price. the only one that's really growing. the others rebounding from massive defamation and hesitant to get in. it's the one that's growing steadily and has expanding profits. >> what do the charts tell us? >> it is a pullish move but well ahead of itself. it needs to pull back a buyer in the week or months to come but etsy just broken out a couple of

weeks ago. 23 million shares and really a much better technical chart than stitch fix at this time. my thinking, you can buy current levels and the stock to the upper 70s. high as $80. from my nickel, etsy looks very nice to me compared to the others >> some agreement that etsy is the best player on the junior varsity of e-commerce, as i like to call the stocks thank you both follow us on twitter at @tradingnation. >> thank you very much, michael santoli. pencils down here's what's ahead on "power lunch. 50 people charged in a nationwide college admission bribery scandal. shocking details straight ahead. breaking up big tech is it becoming a real possibility? a big call on the auto industry. major speed bumps ahead? all this when "power lunch" returns. >> and now the latest from tradingnation.cnbc.com and a

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welcome back everybody i'm sue herera here's your cnbc news update at this hour. honda recalling 1.2 million honda and acra models to replac defective takata air bags on the driver's side. the vehicles involved in the recall were previously repaired with a moisture absorbing chemical previously believed to be safe. free repairs expected to begin immediately. the mooezles is spreading once again according to the cdc. there are now at least 228 confirmed cases in 12 states from coast to coast. that is up 117 cases in one month. health officials say vaccination

coverage for the measles in the u.s. currently stands at 92% if you're a verizon customer and text messages weren't going through, not just you. verizon confirmed widespread outages on the east coast this morning in a series of tweets saying the problem affected, quote, a ton of customers, end quote. it appears the issues have been resolved and texts back to normal. historic avalanches, cut off from everything south of ohio 550. much of the red mountain pass currently buried under dozens of feet of snow and state crews say it could take another week to clear it all wow. they have had some rough weather. you are up to date that's the news weather. ty, back to you. >> thank you very much, sue. the democrats arrange a field of candidates for 2020, some questions that once seem settled are coming up again. john harwood joining us from washington right now hi, john

>> hey, tyler. lots of questions. not too many answers let's just run a few of them about this unpredictable democratic race. first of all, the basic question of capitalism. no brainer throughout the post-war period. easy question and for elizabeth warren, it is an easy question the former college professor said i'm for market capitalism but not theft. she wants more regulation. but john hickenlooper, former governor of colorado who himself is a small business owner choked on the question on msnbc the other day. capitalism isn't delivering. he wouldn't call himself a capitalist bernie sanders, one of the co-leaders in the polls of the democratic side, no bones about it he's a democratic socialist. crime issues as well traditionally, tough on crime has been very popular but kamala harris, the african-american senator from california, under fire from the left for her career as a prosecutor some say she's on the wrong side of history on the other hand, senator harris in a party that's now

increasingly reliant on non-white votes advocated reparations for slavery. that's a policy too radical for bill clinton or barack obama to touch. finally, the question of how big your plans should be as a democratic candidate monmouth university poll found 56% of democrats favor a more electable candidate. that's joe biden's calling card. but the nbc "wall street journal" poll found 55% wants a candidate with bigger more expensive more costly plans to produce more change. that is right up elizabeth warren's alley she's called for a wealth tax and called for breaking up those big tech companies, guys so the questions are going to be settled by the democratic primaries and everyone should care about the answers because the democratic candidate is going to have a significant chance in the 2020 election against donald trump >> let's dive deeper about elizabeth warren's call to break up big tech.

getting a lot of attention facebook removed an ad which called for facebook to be broken up exactly her point. >> well, that is her point i do think at this point, a realistic view of the political situation would say her proposal has no chance of getting enacted but it's going to be interesting to watch how other democratic candidates react to her proposal as long as you've got a republican senate, you need 60 votes to pass something, that plan isn't going to go anywhere but if you start seeing more momentum and becomes an issue that helps democrats in 2020, they could elect a few more senators, we will see. but from a business point of view, this is something that business is going to be hostile to and it's not clear whether voters are going to rally to this call either because they like their tech devices and their apps of various kinds, guys, despite the privacy questions. >> you bet they do thank you very much, john harwood. >> what this could mean for the tech stocks. on the cnbc news line is dan

niles, alfa one partners >> thanks, kelly nice to be on. >> as it stands, do you like fang, let's just use the shorthand. are these names you're invested in >> in general, i do. the things you just talked about in terms of politicians wanting to regulate the technology companies, you know, i hope people get smarter than that because most politicians lack the financial literacy as shown by, you know, some of them thinking they have $3 billion to spend when they kicked amazon out from coming to new york or some of the questions asked to facebook last year, like, how do you sustain a business model and what users don't pay for your service. so when you've got senators asking those kinds of questions or understanding those things, it makes you worried the good news, most of the american public is smarter than that i think they understand you get search for free. social media connections for free we're used to that, right?

if i look at the u.s. technology companies, we're invested in some of them and then the chinese names that we like a lot where some of those stocks down 40% from their highs and china, we seem to be going after them and for a lot of those, a lot of them better and an issue for the chinese. >> i don't quite understand what you're saying. i understand you're saying that politicians in general don't have the financial literacy when it comes to technological issues or even economic issues, that ultimately what they do is popular and you say that the american people you think are smarter than that and supersede what the politicians want to do to regulate technology they wouldn't call up for that in imposing privacy regulations if the american people didn't want it then

>> i look at it differently. a lot of fringe politicians in my average american, here's your choice you can get as you want to see, and get the services for free. especially if you go to emerging markets where they don't have $60,000 per person per gdp i'm an immigrant and going to indian, they like having services for free, et cetera people sort of lost track for that and what we get and in general, more people in the middle though may not want to come out and say it what is being popularly portrayed because the sound bites are great. i got amazon kicked out of new york >> let's talk about some of the sound bites and the targs

particularly with an eye towards the sound bites themselves would make you more or less inclined to hold the stock. the idea they're pointing fingers at facebook or l fa bet and say these big tech companies ought to be broken up, does it move your needle at all with one more or one less dollar into those stocks as opposed to more dollars into the chinese stocks you mentioned which are on sale in your view >> today it does not because i think people are inherently smarter than the politicians that are there and i inherently believe that will work out obviously, we've got a lot of years until we get to the election and find out how much momentum these ideas have and we'll see. butt to your point, i look at the chinese companies and say, i'm not going to have a barrage of headlines somebody wants to be more

radical than the person before them it's a lot easier when i said that on air the stock is down 40% from the high. they don't have these issues and the chinese government wants them to succeed and alibaba to succeed and do everything they can to help them the thing i think people don't realize, artificial intelligence is right around the corner if we don't support the u.s. companies, we may not have a tech lead in five years from now. >> one that people have made, but we'll see if this just continues to sell. dan, thanks for joining us dan niles of alpha one partners. breaking news. let's go to philip lebeau on boeing what do you know >> kelly, earlier today, the president sent out a couple of tweets regarding the complexity of airplanes nowadays and basically the question, are airplanes too complex? shortly after those sent out, we have confirmed that the president did have a conversation with boeing ceo

dennis mullen berg, told dennis expressed his confidence in the 737 max line of airplanes. these planes obviously are front and center in this controversy with airlines around the world but not but decided to ground this plane. but again, we're told that it was a conversation that dennis mullenberg had with the president of the united states where dennis expressed his confidence in the 737 even as investigators continue to look into what caused these two accidents. >> do we know whether the president raised concerns about aircraft being too technologi l technologically advanced and kind of a desire to go back to the day where the pilot actually flew the plane, not a computer >> i don't have that clarity on the conversation but wouldn't be surprised if he expressed that pretty much an open book what he's on twitter is what he

says to people >> i think likely want to say to make sure you have the proper amount of technology assisting pilots but never want to take the pilot out of the cockpit i don't know anybody in the airline industry whether it's boeing or airbus, any of the manufacturers or the airlines to take the pilots out of the cockpit. so i think that's likely to be his answer >> phil, thank you keep us posted in chicago. >> will do. coming up on "power lunch," bribery, mail fraud. number two pencils new scandal hitting america's colleges hollywood celebrities and the rich caught in the middle. the jaw dropping details next.

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big story everybody's talking about. two hollywood actresses, lori loughlin and felicity huffman among those charged with paying in some cases hundreds of thousands of dollars to help their kids get into college. >> we're not talking about donating a building so that a school is more likely to take your son or daughter we're talking about deception and fraud, fake test scores, fake athletic credentials, fake photographs, bribed college officials. >> for more on this story, let's bring in nbc news' pete williams this is the case, in some cases of desperate housewives doing desperate things, pete >> parents across the country according to the justice department here. these are some corporate ceos, some people from hollywood, lots of people with lots of money were basically buying their way in for their children to attend some of america's best known and most competitive schools

yale, stanford, ucla, usc, university of san diego, ut austin, georgetown, for example. eight of them in all including yale where prosecutors say one set of parents paid $1.2 million to get their child into yale who otherwise couldn't have gotten in but getting them in on phony athletic profiles and the man at the center of this, they say, william singer of newport beach, california, had a college preparation course and they say ultimately, he took $25 million in bribes from parents to have him phony up academic credentials for their children, sometimes photo shopping the faces of their children on to pictures of actual student athletes to get into these schools. he pleaded guilty today. he was not charged along with a group of coaches and university officials. 12 in all they say now the justice department says the schools themselves were

victims, that they, for the most part, did not know this was going on did not know that their coaches were putting these children that otherwise didn't qualify into slots for their schools, and of course, what the justice department says here is not only was somebody getting on to a team who wasn't qualified but the point is they were getting into these schools and for every one of the students admitted who wasn't qualified on these phony credentials someone who was qualified was not getting in they say none of the students are charged. in fact, some students didn't know their parents were paying someone to basically change their test scores after they had taken the a.c.t. or s.a.t. tests to get academically to some of the schools. the justice department says the investigation is continuing but it does appear that this is the bulk of it here. these eight schools and some 46 parents across the country. >> pete, thank you

pete williams joining us with all the details. let's bring in robert frank. robert's taking a closer look at the wealthy people that made the payments. >> yeah. so the big names on top of this, of course, two actresses but for our audience they know more of the other names, more than 30 ceos, entrepreneurs and others including hodge, the former ceo of pimco, also bill mcglashan from tpg an he is a partner with bono making a lot of investments. manual henriquez that stock down almost 10% on the news an if you look at gordon kaplan, a most surprising one to me. he is the co-chairman of the global law firm wilke farr an phone calls and wiretaps of the

call that have him agreeing to things clearly illegal and the chairman and ceo of dragon global, bob zangrillo and agustin hunee you s charged. also the parents wrote off the payments on the taxes since it was done through a fake charity. >> they have to repay that what happens now >> i think that's the least of their -- >> so sad. >> the fact that the organization was designated by the irs as a charitable organization first that makes you wonder about the irs and then all kinds of clawbacks both on the tax ends and penalties. again, none of these people have responded. they are, of course, innocent until proven guilty and will have to see what they say. >> i have to wonder if they face

disbarment for breaking laws. >> fraud. >> exactly whether it be the american bar association or the securities -- >> one public traded stock down 10% and indicate shareholders think there's a leadership possibility there that could arise from this. lots of names and more to come. >> thank you, robert. >> where did robert go to school did your parents - >> i went to state university of new york at binghamton. >> took your own s.a.t.s >> i guarantee that. coming up, moody's is negative on the auto sector. we'll continue to watch shares of boeing, a huge drag othn e dow, cost the index around 200 points imagine traveling hassle-free with your golf clubs.

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a big call on autos. moody's citing falling demand and tariffs as risk. bruce clark with moody's and the co-author of this report good to see you again. >> glad to be here. >> in terms of this recovery not coming back meanfully this year or next year, that's even besides these other political risk, correct? >> correct. >> this is just because of slowing economic growth?

>> yes >> and then you add on the potential for tariffs, and then what happens to that forecast? >> all right our basic view really is this. you are still going to see modest growth in the global industry next year we are not calling a downturn but if you have the very low growth rate with the backdrop with the risk of tariffs, brexit, emissions regulations, it is a difficult environment. now, we don't expect this environment to lead to any rating changes but it is clearly a more difficult and more challenging environment. >> i'm surprised that the u.s. you think sales down 3% for the year does that happen outside of recessions we saw the same thing, housing last year down and the economy growing. what is going on with autos? >> context we think that sales will be 16.8 million units next year, a healthy industry we think that companies competing in the u.s. market can make a pretty good profit. so again, we don't view this as

a disaster we don't think that it leads to a ratings downgrade but it is a more difficult environment and when growth slows in the autd toe industry this industry does not have a good track record. >> you can see that again. >> yes so it's not really -- like i said, we are not looking for a downturn or a very serious collapse in sales but it is a more difficult environment we had a stable outlook. this is simply a negative outlook and the environment is more difficult. >> why is it happening is it happening because the prices of cars got so high because people hold on to them longer loans are six-year loans what >> a couple of things. take the united states as an example. it's been benefiting from something that we consider to be a very accommodative financing environment. interest rates low the terms on loans have been extended about 24 of all -- 24% of all

loans made are 72-month loans. six years. a long period. you have a lot of leasing and providing a lot of tailwinds for the industry those tailwinds are being pulled back now and that's contributing to - >> because why not because interest rates are that much higher. >> you can't keep moving in that direction, extending the terms on loans, can't keep increasing the penetration of leases. so when that trend, that tailwind begins to die down it will have an impact on demand. >> which automaker looks the best financially from your perspective? >> globally? >> sure, yeah. >> globally, toyota has been and remains a very formidable player never sell them short. north america, you got to give high marks to general motors they're essentially going down a list getting things done. >> tesla in here >> tesla's got some challenges we have a b-3 rating on that

company which is a relatively low rating the's challenges there. >> bruce, great to see you thank you. >> great to be here. >> we took bruce to the end, didn't we? >> right up to the end. >> right to the end! >> he did it - >> you did right to the throw. exactly where to end it. thank you for watching >> "closing bell"! ♪ good afternoon welcome to "closing bell." i'm wilfred frost. >> i'm contessa brewer boeing is under some pressure as airlines and countries suspend operations of the 737 max 8. the international transportation union calls for the faa to ground flights we'll talk to its president coming up. plus crude oil up more than 25% year to date and bp's ceo will join us in a first on cnbc interview. you don't want to