this is "nightly business " with tyler mathisen and sue herera. tug-of-war with stocks sitting near record levels will the bulls stay in control or will the bears take over? >> red hot. the hottest stock in the s&p 500 just passed another milestone. is there anything that can stom the netflix climb. >> fooling s.e.c. why it is easy to pull one over on the agency that is supposed to protect investors. all of that for tonight on "nightly business friday may, 18th. >> good evening and welcome. for every buyer there must be a buyer and for every seller a buyer. and e pull theun and yang that makes a battle of

buyers and sellers, the bulls and bears is joined. today's economic report bolsters the bears. industrial reduction and consumer sentiment fell sharply following a raft of data economists lower the growth not just for the second quarter r released by the federal reserve bank of philadelphia. but despite the news the dow jones indust rose 20 points to 18,272 and rests nine one hundredths of a pent from its all-time high. and the s&p 500 has higher by a point finishing at another record close and for the week all of the major indexes are higher. so take that bears.

dominic chu with more. >> the stock is back to record highs again. we are less than half a% from those levels. so what are the experts saying about whether the current rally in stocks can continue or not? bad news first. what could derail the rally? analysts are watching weakness corpo profits and that could take the air out of the market. and they are keeping a close eye on the strength of the u.s. economy. and some are worried about the fed and how rising interest rates to shake things up. that is the bad. lou market volatility could move stocks higher and the drag on oil could reverse if i'll prices stabilize. some of the smart believe we could see the market takeoff if everyone starts to believe in the rally. if they get off the side lines and put money into the market we could see a more sustained move

upward. so there you have it. a few of the pros and the cons just to think about as we head toward the summer. for "nightly business report," i'm dominic chu. >> so let's turn to our two market guests here on to weigh in on that debate. we have jonathan goal on at rbc who is bullish and our bear james severitiy, welcome, gentlemen. good to be here. >> and we're sitting at all time highs and many of e indices make the case for the big run. >> it is important to separate gdp from s&p and i don't think we should see a economy that is at a bust but i think we'll see a slower economic cycle extend for longer than normal and that will draw investors into the market and push pe's or market

valuation higher and that is important. and the second thing and as we saw this in the second quarter, companies are pushing harder on margins and drawing the margins higher and buying back shares which means eps is on a good trajectory. mr. batta. you are worried, why? >> i think the market is subject to a 25% connection akin to 200 # or 1911 or during the thailand and the mtc crisis. it is simple if you look at the driverez of stock market returns it is a combination of earnings and variations. the decision to be bullish on stocks in early 2009, we've driven by the efficacy of the corporate restructuring going on big expansion of profit margins by companies and that

carried us through 2012 and it has been a market by price to earnings multiple expansion, like a baton relay that has been passed on from one driver to the other. as we stand here today i have a hard time lookint growth and saying that is the new driver for market concerns and thinking that the price to earnings multiple will expand further given where interest rates are and where investor perception of risks are. >> okay. jonathan i think those are interesting points. you probably don't agree with all of them. but the price to earnings ratio is one thing that a lot of people watch. >> it is. and right now there is no question that stocks are incrementally more expensive than they would normally be but the range of valuations is quite wide so it is not concerning. but what is really important to me if you see stock draw downs of let's say 20% they happen

almost exclusively when you have your next recession so a 3% or a 5% market correction could happen and that wouldn't be particularly concerning to me but if you ask what would cause a 10% or a 20% correction you need to have a real reception or a risk of one and i don't believe that is on the table at this point. >> and what about you, mr. abate, do you believe we could lapse into a reception. and number two, briefly, i look at where retch growth stands and it is not good and it may be negative when all it said and done and because of stock buybacks and corporatal chemi, corporations raise profits. >> you raise a couple of good points. let me talk about scock buybacks and the companies squeezing jeesous of the lemon, ie restructuring efforts, and if you look further up on the income statement, gross margins, that is the profit the companies

have more stuff or at a higher price we are seeing that sell over and that starts in the fourth quarter the last year and when you don't have the benefit of share repurchase and lower interest charges and other things that tends to mitigate the concerns that we see. the other point about the federal reserve, that cat liezs a recession, i think is very much in play if this was a normal business cycle and that is the thing that i think about every single night, we're in a very different environment than we are in historically. we have not seen the transition of monetary to the policy and me to believe we are susceptible to a correction due to the broesh. >> we have to leave it there. thank you, gentlemen. >> interesting. netflix the hottest stock in the

s&p 500 this year guess how much it is up. 8% in 2015. and today the company zoomed through a key milestone, $600 a share just a month after it cracked $500. what could cause the run to cooloff? our julia boorstin takes a look. >> china is driving netflix to new highs. there are reports the company is in early talks with jack ma and best new media market. >> there are 200 million broadban china and 100 million in the u.s. and so there is say middle class that can subscribe to netflix so there could be tremendous opportunity there over time if they split with a local partner. >> but netflix wrote to shareholders in january that in china, it is exploring options all the modest. and we'll learn if we can operate in china centrals on

globally licensed content. in addition to regulatory challenges including restrictions on foreign online content, there is the issue of china sensoring what it considers objectionable consent and high level of piracy. up to 60 million subscribers some may wonder if the stock may have gone too far too fast but crockett projects the company will triple subscribers by 2020. >> each million subscribers drop0 million to th bot line and i think you will go vertical in earnings and you want to own that. it is at the forefront in home entertainment. people want online home content and they are changing to that. >> house of cards is already popular in china. the first two seasons on

thetreming site and widely pirated there. i'm julia boorstin in los angeles. >> avon has discussed the poeg us takeover with the fbi. as we reported yesterday, a fake fighting was made with the s.e.c. offering to buy avon for nearly triple the stock price but how did that bogus filing happen in the first place. eamon javers has been looking into that. good evening. >> good evening. it turns out anyone can post anything to edgar. edgar is where invest yorz and journalists and public go to find up to the minute publications from companies and large shareholders but because so many people need to file documents it is easy to get access to the system. fill out a two page securities and exn form i.d. and they do not check the forms to ensure that the filers

are actually real. >> you put in your information, you have to notarize it but you can notarize whatever informat they give you the code and you are good to go and from the s.e.c. comments we understand they are doing nothing at all to vet this information. and yesterday a fake company used that access to edgar to file an apparently fake document a form disclosing a bogu tender or for -- offer for avon and that spoke talk that even after the hoax and debunk ended higher. >> and the s.e.c. said they are not responsible for the truthfulness of the documents filed on the edgar system. the filers are responsible for that and they can be subjecting to penalties for lying or filing inaccurate information, if they can be caught sue. >> if they can be caught. and it begs the question why the s.e.c. doesn't check the accuracy of the filing given

they can be market moving in the case of avon. >> two reasons. one is logistics and the bhan power and the expense of that cost is enormous. and the other one is getting into policing what is true and not true in every corporate document filed out of thousands of documents and the line between where corporate spin ends and a lie begins is a fine one and you get into fine judgment calls and the s.e.c. doesn't want to get into that business. >> if i read between the lines the answer to my next question is yes, could this happen again? and but what more do we know about who may have perpetrated this? >> we don't know much. and this could happen again. it could happen on monday process is still in place. as far as who did it this is a classic whodonit? we don't know. and the s.e.c. has informat forensic probably the ip address that uploaded the bogus form and the e-mail address they

sent the edgar credentials to from the first place when they filed the company with the s.e.c. it might be a one-time only e-mail in lithowayne yaup or nonextradition area but that is a point to start. >> it is not obviously. thank you. why gas prices this summer could be cheaper than they've been in years. the number of u.s. oil rigs in use fell for the 23rd strag to baker hughes the number sits at 60% below the peak of october 2014 and the report is clowely watched and

viewed by some as a proxy in the oil industry. oil prices fell to $59.69. gas prices are rising in recent weeks but don't worry if you are planning a road trip this summer. you almost certainly will pay less to fill up in the coming months than you have in quite a while. jackie deangelis has the details. >> next weekend is the official kickoff to summer memorial day. triple-a suggests that 30 million americanwi hit the road next weekend, up 5% from last year. the reason -- cheap gas. the national average is now $2.69 a gallon and still almost a dollar cheaper than a year ago at the same time. in fact gas buddy said this is the cheapest driving season since 2009 right after the financial crisis. and more good news. while we tend to see a seasonal

boost in prices because of the summer driving s falls off in the fall and the prices drop and the energy department is forecasting the $2.43 and for next year $2.69 and with the u.s. household spending $275 less this year on gas than last year and more consumers will hit the road but the bad news there, more traffic. for "nightly business report," i'm jackie deangelis. >> and you may think about buying a car. this year more than 40 million used veh will be bought and sold in the u.s. most after lots of haggling and awkward test drives but a start-up is changing all of that. meet b.p. phil lebeau has more. >> so this is the new civic. >> miles johns from mountain view california just bought a new honda civic for 16,000

dollars and he ordered it through beepy and it is being delivered to his house where he is s i for the first time. >> it is a little bit weird, but i have a feeling it will all work out. >> it was created by owen severe and a friend who figured there has to be a better way to buy and sell used cars. >> in today's age, where you buy everything online on amazon on zappos i buy everything online it doesn't make sense to go to a physical lot to buy a car. >> for decades, dealers or classified ads have been the way most of us bought sold a preowned car. but this is changing that. it only buys a car less than six years old and fewer than two owners and never been in a crash and must look and run in excellent shape. they inspect every vehicle and

if everything is okay they quote you a guaranteed price. that is it. no haggling or negotiating. >> we scan prarkt prices in your area and we seven kbb and see what dealers are paying for the car and give you a price that is guaranteed higher than any other officer you will accept. >> bp says they sell prices within the market but with a cap at #% and sellers are likely to get more than they would at a dealership or sold on their own. dan of mull bury california sold his 2013 nissan leaf for 20,000 dollars. bp cut him a check and hauled away the leaf and convinced lima this is a better way to sell a car. >> just meeting one set of people to inspect my car and take the photos was way worth it than finding five prospective buyers.

>> a new way to shop for used cars in a world doing more and more online. phil le beau "nightly business report," mill bury california. investors give keurig's new cold drink reception an icy reception. and that is why we gib. it is a cold beverage maker but not ready until next year holiday time and costing about $300. and so later and costlier. shares tumble to $98.26. worst performing stock in the s&p 500. some top hedge funds are dropping apple. omega advisers and felipe couture management reduces or slashed stakes in the first quarter, shares off a fraction finishing at $128.77. cisco has a lot riding on

the planned margin with u.s. foods and cisco will be left with a $1 billion bill because they have spent money on the potential combination. shares of cisco were off a fraction to $37.27 and u.s. foods is privately owns. j.p. morgan downgrades deere, a rare call citing a potential cash crunch for u.s. farmers. shares fell 3% to $89.13. a market monetor is betting on the consumer and has stocks she said will rise 10% over the next year. she is margio patel from wells fargo funds management. good to have you with us. you are banking on the consumer but today's news on consumer sentiment was dower. why do you think the consumer is going to do something they haven't shown the preddelection

to do and that is depart with their cash. >> well there is improve in the finances. and we have the unemployment numbers improving, here and there improvement in wages and will continue to benefit from energy prices being low and the dollar being low and that will keep the lid on imported goods and will continue to see the income grow and have the money to spend. >> what about the stock market itself. we came into the year with increased volatility and you think that is passed us and the volatility is lower, what kind of market do we have as we go into the second half of the year? >> i t it more of the same. low volatility low growth lowen flation, nothing unexpected from the feds and more of the same but i think the economy is grood you'lly improving and we'll see stocks finish higher and if in the second half of the year we acceleration i think we have the potential of doubl returns from the equity market.

>> and our views want to hear what stocks you recommend and they do all come from the consumer stream i would say. home depot is number one. why do you like it? >> well i think home depot benefits for a number of reasons. first of all, we have a new home cycle gradually taking off so new building construction for professionals. we a lot of people remodeling and so that will be anotr big source. and in addition they sole products that consumers use, lighting carpets, outdoor products and things like that. i think they will benefit. they are a good conserver of cash and pay a good dividend about 2.1%. they have not expanded andized -- used up all of the cash and they bought back shares and they are u.s. sent rick -- >> and you like the company that

makes the crock pot and other things as well. >> a company that makes household products but the company is not well-known as a house hold name. they have many products with strong brand recognition. crock pot. >> mr. cop coffee grill master coleman camping products that everybody uses and knows, priced as relatively modest prices so all consumers at income levels can afford to buy these products and they've added new products within the brands and have strong recognition. they've added extensions of those brands. and although they don't pay a dividend they have good growth in the sales. >> and we have 15 seconds for the final pick the parley on the the cvs. >> yes.

they have growth in the pharmacy benefit management and in the front of the store, the health and beauty aids reasonably prices that appeal to consumers and i to grow also. >> margie patel, wells fargo fund management. still ahead, what's he worth? why american pharoah earned a lot more than the title kentucky derby winner when he crossed that finish line. here is what to watch next week. on tuesday, dow components walmart and home depot report earnings. on wednesday, federal reserve release the minutes of the last meeting and housing data is due

out, including housing data and now starts. and that is on the agenda last week. >> carl icahn took a stake in lyft. in this case he is taking a position in a young company with an unproven business model. lyft valued at $2.5 million. uber recently valued at $41 billion. the nation's largest peach farm was locked in a standoff with the united farm workers which returned to demand a new union contract. an appeals court ruled in favor of the farms saying a state cannot force a contract on a farmer if both sides do not come to terms. and finally tonight, facing the triple crown, run tom in baltime favorite to win is american pharoah.

we introduced you to this thoroughbred before he won the kentucky derby and since then his value has gone up. robert frank talks some horse sense. >> two years before american pharoah took first place at the derby, before he would run even a single race he hit the auction block in saratoga springs, new york selling for 300,000 dollars. over the next year he won five races. purses totaling $1.4 million before setting the foot in the run for the roses derby, experts pegged his value at around $10 million. this big derby finish at churchill downs made him worth much more. some of the top thoroughbred blood stock agents now estimate his value between $15 million and $20 million, based on racing performance, physical shape, and most importantly, his potential to breed another champion.

he is now the favorite at preakness and if he goes on to take the triple crown experts expect him to rule the thoroughbred world vals north of $30 million. for "nightly business report," i'm robert branch. >> they are such beautiful horses. >> i think he has the number one pose position so that is helpful. >> i don't know that much. but i love to watch it. that is it for "nightly business have a great weekend. >> enjoy the preakness, folks. i'm tyler mathisen have a great weekend. we'll see you here on monday.

gwen: upheaval everywhere. as a trade deal muscles its way through congress. a train accident revives the infrastructure debate. arab leaders come to camp david and jeb bush comes to grips with the legacy of iraq. tonight on "washington week." >> as we compete in the world economy, americans should not be patsies for other countries' cheating. >> we've got to be in the real world where we can trade with all these other countries. and receive all the benefits of those free trade agreements. the president happens to be right on this. gwen: labor unions corporations republicans and democrats square off. as the president attempts to nail down a legacy enhancing trade deal. a tragic train derailment revives another washington debate. >> we were just on the train. and all of a sudden it started to shake. gwen: could