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tv   Power Lunch  CNBC  May 12, 2015 1:00pm-3:01pm EDT

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f the time. it's not unreasonable to think as steve mentioned over and over again. we get a good economy. it's okay to stop. >> the pushing of the apple cart being pushed over as ray was warned about. what happens when they push the apple cart over? is the whole thing a mess? >> we have a long way to go. let's not forget. you know when power lunch starts? it started about six seconds ago. >> maybe five minutes. >> and save a drink for us. this is the warm up for the big cocktail hour. i'm tyler matheson. remember you've got mail. you have got a deal. verizon snapping up aol which practically invented the internet for many americans in the 1990s. verizon shares lower. >> the new test is out showing
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how poorly mid-size suvs performed in crashes. we will show you the best and the worst on the list and the mid-size suvs become a top selling vehicle in the united states. >> we will give you a sneak peek on the profit. it begins at 10:00 and look who is here. he is on billboards on the westside. he is here live the man, the and only. we have a lot to react to today. >> we sure will, but we want to begin with verizon buying aol for almost $4.5 billion. surging by about 18% right now. verizon down by a tad. more on what this deal means for investor and the media landscape. >> as you mentioned, it is not your parents's aol that we remembered that did represent the internet back in the early to mid-90s with the wild garden and the enormous market value
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that let it go into a quiet time-warner. a disaster for all the companies involved. not aol shareholders. back on that fateful day in early 2000 it was. aol goes on to be spun off by time-warner in 2009. as i said it's not that company any longer. the focus of the company while it has a lot of content sites including the "huffington post" and tmz shifted to ad technology. selling and delivering ads into digital mobile devices. that's the key and the company has been one of the key players in doing that. that seems to be the main reason why verizon is interested. they were talking about a joint venture and i'm told by people familiar with the situation and the talks went on and off and came back to this idea of aol
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getting bigger scale. hence verizon's willingness to pay $50 a share to buy the entire company. verizon itself is in the midst of trying to develop its own over the top products that is video products that will not be used in the typical cable network to be delivered. this seems to fit into that group of products that they are hoping to differentiate what may be out there. we did have a chance to speak with aol ceo tim armstrong who gave us more on their strategy. >> there is a larger strategy. verizon that has been centered around making the connection from the home to the phone to the car. very easy for content and services. i think what you will end up with is a much deeper relationship with verizon overtime in terms of doing a good job of serving you better content and commerce opportunities. aol will be one piece of that. >> interesting he said one piece
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of that. is verizon going to continue to potentially get bigger in this ad serving this advertising technology and programmatic ad-delivering world. that's a possibility. there were any number of other player that is it could choose to roll up. none of this a particularly large price tag for a company that has over $200 billion market value. this was a big deal. much smaller and headline-grabbing given aol is a part of it. for his part it will stay on at verizon, i should say which is acquiring his company. back to you. >> david, thank you very much. for all the details there, we have breaking news now. it's coming from the bond market. three-year notes up for auction. rick has been watching the action at the cme. what's demand looking like. >> surprisingly strong. a for apple on the demand for the auction. straight up 1:00 eastern. traders around me expected it.
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why? it was a built in concession. yields are a bit higher than they have been. so maybe you are grabbing this after the sell off and looking for a bit of a bid back to the market. 24 billion in three years and starting off the week's coupon supply. i gave the auction and the one issued market was around 1.01. they came in at 1%. the yield is one point. 1%. if we look at the bid to cover, better than a-auction average, indirects are 52.7 and not only better than the average, the best since december of 09. we see that the directs were just a smidge light under 12 versus 14% normally. it was a stand up solid auction with the built in concession. tomorrow we will have $24 billion in 10-year notes. the long end should be a lot more fun. mandy, back to you. >> you call that fun.
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talking about fun, let's look at what's going on around the world. speaking of the bond market, we have been watching the prices sinking over the atlantic and in asia around the globe. the 10-year trading at levels not seen since mid-november. on the long end, yields above 3%. they are up about 5% over the past one week alone. ty? >> thoughts on the verizon-aol deal. from somebody no stranger to deals and the corporate combinations. the host of the profit right now. the new season. we will point it out a few times. >> yes, you will. >> at 10:00 tonight eastern and pacific, marcus will be cohosting the two hours of power lunch with us here today. welcome. let's get your thoughts on the deal. what does verizon want to be or more into? >> how to deliver the ad
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technology. they are picking up the number of subscribers. i heard huff post and tmz not making it. i expect it to make the cut. that is content to new people and new opportunities to deliver the ads. >> we were chatting about no one uses aol. i don't use it and you don't use it. was this like thank goodness verizon came along for them? >> i think so, but it will morpho into something different to be able to use the content to deliver it and monitize it. it was trying to figure out how to monitize it. >> if you get your get your internet service at home through verizon, you will have the front end that said aol. you get video production and their own shows. >> it wouldn't surprise me if they started doing things like netflix or producing their own shows or hosting things and
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using that technology. >> one thing that was interesting was a deal that cut out the big banks. i think they used advisers and boutique advisers. big banks are not advising on this one. this was something we have seen increasingly. all cash. >> all stocks. >> i thought that was interesting. for the aol shareholders today, it looks like a good deal. verizon is trading down for a minute. >> aol at an all time high or the reconstituted. >> it's at the bid ask. >> the market will stay with us. we will check in with you on another topic shortly. >> a trading day with the dow down triple-digits earlier. that has been paired down 18 points. flat there on the 18,000 dow. bob pisani joins us. >> ten-year yields early in the morning, that's a problem for the stock market.
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as yields came down below the 2.3% mid-morning, the stock market took off and we are near the highs of the day. a minor reaction, but traders are watching that because it's important. interest rates and even the short end is being watched. interest rate-sensitive stocks didn't react that much as rates moved down. the next hour or so they respond. they all turned positive and utilities about to turn positive. a couple of stocks gap had disappointing numbers below expectations. all the retailers beginning this week including macy's. gap will be next week and down 3.5%. the only good news is they affirmed their earnings for the quarter. especially in line with expectations. that's the only reason it's not down more than that. we had oil near $61 near a high moving up and all the big oil names up 2% and 3%. we had a hot ipo and it's an
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energy ipo. this is natural gas partnership. 21 to 24 was the price talk. it's trading at $33. who would have thought that a natural gas ipo would be hot, but we had a few recently. another one later in the week. i will keep an eye on that. these natural gas energy ipos have been off the table for a while. the first couple came in the last week and they both have been successes. we have to keep an eye on that. >> bob pisani. are equities still your best bet? joining us is the chairman of holland and company. portfolio manager. gentlemen, great of you to join us. are you concerned about what we are seeing in the bond market and what that means for the stock market. >> the buy market is going to control the short-term direction of the stock market. 8:00 this morning, the german buns are controlling u.s.
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interest rates in the market as well. they are trading as the day went on and came down. they went from the loss. >> it's part of what you are talking about. that is companies are buying other companies at 20% premiums and the private market value of the companies that are doing this activity is well above where we are today. i think the fundamental values is higher than it is but short-term it would be nice to have cash. >> always nice to have cash. you are thinking the valuations might look a little stretched and given the risk-reward, is it better to be in stocks than bonds. >> i would argue that equities are trading at about 18 times earnings and long-term average and closer to 16 times earnings. when you factor in that they are
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well above historical averages. it's probably really even closer to 20 times. they do look stretched right now. at the same time it's really the best you can find out there relative to other financial instruments. i look to equities over fixed income. within them, there pockets of places that we think do look promising. we continue to like diffident diffident-paying stocks. taking place in june or september. we believe it's more of a when rather than if. once that happens, they should probably lead to increased volitility. we are seeing that. over a long time the stocks tend to be less volatile than the broader markets. the second point said we are doing internal research showing looking at the last seven interest rate-tightening cycles
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and going through those, payers tended to lag during the month leading up to that lift off. they tended to outperform in the 12 and 24 months following that. within that, we think that equities look better than the fixed income instruments and within that the dividend payers are the most promising. >> you like ibm and royal dutch. if you are talking about equities, which? you used to think europe was cheaper than the use and maybe not as attractive. # we like china, but you have h shares or a shares. >> with the premium. the european market.
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we had a huge run. a lot of the cream is off the cake right there, but in terms of china, after a huge move in the market all it's done is addressed a huge bear market decline despite the economy all be it slowing, the companies we invest in some of the companies have been for many years. they are still at reasonable prices and you have the withdrawal of the fed here in china. they are getting an introduction. >> they are just getting started. >> thank you very much for joining us today. you can go to power lunch to see why he is bullish on dividend-paying stocks as he out lined a moment ago. >> they are one of the types of vehicles on u.s. highways. do you own one. if you do listen up.
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you in fears about how safe they really are. three sectors you may want to buy on a dip. power lunch is back in two. card is designed to sync with your life it gets talked about... ♪ ♪ ♪ so you can live the way you live, and enjoy all the rewards. chase sapphire preferred. so you can. e financial noise financial noise financial noise financial noise
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>> the dow turned positive and
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earlier it was down as much as 180 points. we are watching a slow melt up and a break even here. wal-mart disney and mcdonald's are leading the dow industrials. charging the company with fraud saying they hid proper permoermance and the impact of two student loan programs it guaranteed. they were hoping to hear about a successful conclusion to the study and poll corporation up about 20% near the end of an auction that could see it told for more than $10 billion. up by 18.8% as we speak. >> do you drive a mid-size suv?
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new data show some of them perform bad low in crash tests. live in:00 with the details. a lot of people own these cars phil. >> they are popular and period cally the insurance institute for highway safety put them through a crash test. they show you how dangerous the vehicles can be when they call the install smash test. it hits another car or a pole at 30 miles per hour. three got acceptable or good but four didn't do so well and the safety is being questioned by the iihs. >> i think what we are seeing overtime is manufacturers are developing better crash protection for the small overlap-type crashes. there is still a lot of work to go. others are only offering poor protection.
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>> four of the vehicles tested are from fiat-chrysler. look at the ratings. marginal for the did you ringo and marginal for the hyundai santa fe. we evaluate the safety of our vehicles in real world crash situations. tyler, i talked about this in the past. whenever we get the report people say how much is this going to hurt sales of a brand or a particular model. i don't think it's going to have a lot of impact on jeep. the reason is when you look at the styling and the new models that they put out, they are red hot right now and they are in demand and we have seen this before where it might be a negative report out there about quality or safety. it really doesn't scare people away from the show room. despite the negative headlines, i think we will continue to see
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strong sales from jeep. >> let's get another perspective, the host of cnbc's profit. you own car dealerships and how many? a dozen stores? when there is a report, how does it translate into sales or lost sales? do consumers hear this kind of information and pull back? >> the products that jeep and dodge are putting out are exceptional. a lot of new benefits. the question i have is what has changed with the vehicle weight? in an effort to try to improve the mpg, has the frame changed and have the contents changed and are they lighter and is that why they are whipped around? i would love to see a history of the crash test and the weight of the frame. >> people buy cars on styling and cosmetics and price and safety. >> it is in there?
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>> yes. # jeep is a big, big college vehicle. >> my wife's niece has one. i know you wanted to jump in. i would lining to get general thoughts and if i'm recalling correctly, were cars and suvs had trouble is with this small overlap front crash. they went back and changed the frame and the design. now it received a good rating. so changes are made. we should point out that they are going with lighter frames but they were done on older
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designs of the current models. when they were updated, they will like like change them. also to marcus awe point, safety does sell. with honda, one reason why they continue to go well it may not be the most cutting edge but it sticks with people. >> let's go to sue herera for a news alert. >> hbo releasing the numbers on the may whether-paquiao fight and it shattered all the previous records. they say the mayweather and paquiao event shattered the records for total pay per view buys and it ranks as the highest grossing of all time. it's 4.4 u.s. buys and $400 million in pay per view revenue
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alone. it is expected to generate when they total the numbers in excess of $500 million in gross worldwide receipts. impressive numbers. we will see when they have a rematch. >> it was a boring fight, i have to say. >> that's what people told me as well. a major backlash over the bottled water. it is not too late to share the profit. for every social share on twitter or facebook the profit will donate $1 up to $100,000 to create more opportunities. power lunch is back in two with the prophet himself.
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. >> welcome back to power lunch in washington. we have a development in the trade promotion bill that the president of the united states are trying to press. it looks like the vote will be's defeat and a set back for the effort to get this. probably temporary. it's what they are trying to get to. the they will vote on this
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procedural thing. they will see if they can do it in time to strike the deal that president obama wants to get to. if you look at a chart of one month, notice how we were around 7:39 a.m. that's where we made the high yield. they made it about one minute before that. if this was our fed adjustment process, i would think they would show more strength. it's more about europe that triggers the event about a week and a half ago. >> a see saw day for stocks.
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wall street is getting rate for the they will tell us how it account affect small businesses and mid-size and more.
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>> hello, everyone. i'm sue herera and here's the update for this hour. politicians were forced to flee the parliament chamber after a magnitude 7.3 earthquake struck the country. more than 40 people were killed with another 1100 injured in the second quake to hit the region in weeks. the quake was followed boy at least a half dozen aftershocks. technical experts from iran and the six world powers gathering for the nuclear talks. they will be joined by officials later in the week. they are aiming for a final agreement by the end of june.
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verizon wireless will pay 90$90 million to settle investigations that revealed the build customers millions in unauthorized premium text messaging services called cramming. sandra lee said she is diagnosed with breast cancer and will undergo a double mastectomy this week. she is going public to encourage other people to get screened. she is the partner of andrew cuomo. we wish her the very best. back to you, mandy. >> we summer do wish her the best. >> a jump in mortgage rates. what kinds of impacts are you seeing? >> a 10-year yield means 4% is the new world order. that's for the very best borrowers and it goes up from there. we had been hearing earlier and in real cash money, compared to two weeks ago, the average buyer
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borrowing $200,000 will pay $30 more a month or $360 more a year. it doesn't sound like much, but it reduces power by $6,000. we did that math with prices pushing higher by the monday and bidding wars over the homes for sale. it makes a difference. >> thank you very much. over to you. >> thanks very much. stocks bouncing off the lows of the session. the dow was higher in positive territory a few moments ago. right now it's dipped back below the red line and there is more downside risk to the equity markets. joining us to talk strategy. the global investment strategist and one of the best and biggest of them all in the investing universe. welcome. what are you seeing now in the patterns of stock trading that tell you among other things that there is more downside than upside. >> we have been in a training
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rage. reassuring to a degree and we are not seeing break outs. >> not seeing higher highs. >> exactly. what could happen to the market it's hard to come up with the scenarios that drive the market higher from this point where you can come up with a couple of things. >> what are the couple of things. >> the fed being a big part of it, there is political risk out of europe. we have britain and more of a risk than it was before. >> because? >> because of the victory in the uk and a stronger position to push the referendum. always that potential for upset and not all that exciting. >> let's talk about the interest rates. i turn around and what happened here? a couple of months ago they were down in the 1 ache for the ten-year bond and now it's 220 and above. not just the bagmagnitude, but the speed. >> fundamentals are driving what's going on with the rates.
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it's the type of adjustments that we are seeing. the volatility and the quantitative easing and the distortion with buying bonds and liquid liquidity. we are in a different environment with the holdings and how they trade. we are getting these sudden adjustments like with oil. >> ultimately i think stock prices are most influenced by the level of corporate profit growth. what do you see? >> if you look at how earnings came in they were fine. 8%. the prizes were nice. that's not so much the problem. margins were high and we have a 17 forward on the s&p. # >> i want to ask you a wacky question which i did warn you about. i was reading a fascinating
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article in mother jones magazine about the almond business in california. i was surprised to learn that among many other investments, you are not just index funds. you own or invest in almond growers in california. i assume you tried to do it in ways that were sustainable in terms of water use. what role donuts play in your portfolio? >> we are a significant and the part of the universe that faced potential. when we make the potentials as a not for profit organization. and it's a significant part of the positions. they take it very much into could when we make the investments. >> what are percentage are invested in what i call and real assets or alternatives? >> less than 15% and within
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that, it's a significant chunk is real estate. it's a smaller part of the pie where there is a opportunity and growth. >> mandy. >> thank you. >> cnbc contributor is with me here today saying the fed is likely to raise rates this year. huh a change of heart. for the longest time you say no rate rise. on friday you explained why you are expecting a rate rise this year. do you feel like this is something that the market has forced you to do in terms of changing your mind? >> when they said when the information change i change my mind? >> we have seen the treasury break with the inflation. oil prices have turned and so have other prices that means headline inflation will start to accelerate. we had an interesting piece saying both the employment cost and the unemployment rate are at level where is the fed last raised rates over a decade ago. we might be in a situation where
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it would be prudent to test the waters and see what the economic reaction would be. >> the cost of money marks has been dirt cheap. for businesses that are small, medium and light. you literally photo bomb. as rates rise the cost will be a little less dirt cheap. what impact will you be seeing on the businesses in general? >> one on the acquisition side you will hurry up and get it now and how we spend capex. that means on the equipments and the infrastructure. that will be a minute of pause. >> that are matters to you. >> it absolutely matters. a quarter of a point or a half of a point, a point and you are now resetting things because you see the volume and you wonder if it starts to affect. >> the transmission mechanism,
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in other words, if upon capital that you have to put into paying for your existing loans becomes more costly you have less left over to invest. >> there is not as much floating this time as in the last cycle. a lot of them have borrowed long-term. when the fed started this process, it was atlas at the same time. by itself in the world of 2008. >> i'm going back to my college days. >> with the rock up the hill but now they need to shrug a little bit. the rest of the world is flooding with liquidity. we are not alone anymore. this has gone to china and japan. it might be worthwhile for the fed to at least see what the global and domestic economic response would be. >> we have profit. >> don't throw me like that. >> and shrugged.
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we know it was just a reference. this was all too much for me. >> i think we have to be careful. for a lot of these companies, they need a bit of a pause. you see spending with caterpillar or cisco, it will give people a pause. i don't know that that's a bad thing. >> we will get back to you in a second. >> good to see you. the disruptors list highlights the way business is done. in the second hour of power, we will talk to the head of a company that is getting rid of the ocean fashioned job interview how does that sound for you? it took tennis legend serena williams, fencing champion tim morehouse and the rockettes years to master their craft. but only moments to master paying bills at depositing checks at the atm and transferring funds on the mobile app. technology designed for you.
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>> this is why this show is so good. they all stopped. they stopped to watch the drama unfold there. it's the season premier of the profit. cnbc. this is a story -- i'm not oprah. these guys run a drum company
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and tatted up. the level of sincerity with the apologies, when this item said i'm sorry thaw felt that i did this it puts it over on them. as employers, when we are making mistakes mistakes, i'm sorry that you felt that the health insurance was not good as opposed to when you were at the hospital we failed you. we want people to take ownership whether in the personal relationships or in the business. we are missing that. >> it's about tone isn't it? saying i'm sorry as opposed to i'm sorry. if you put a but on the end. i'm sorry, but -- that was not a real apology. come back when you have the tone right. i don't think we would want to be her children. >> they get away with murder.
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>> when is an apology -- that's all you care about. when do you go there? >> not when the employee asks for it or demands it or threatens to quit. when you know you make a mistake, regardless of what your role is you have to own it and move on. i think people will appreciate it. the level of respect builds. >> you are obviously looking at this from the employer point of view, but none the less how should an employee apologize that retains or gains the respect of their employer? >> that's a difficult situation. employers are feeling vulnerable and at risk. i would say it's the same. you have to own it and it's full transparency and honesty. ty is laughing.
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>> when is the last time you apologized to mark kaufman. >> that's getting personal. >> he is our president who is a wonderful man. brilliant. i have to apologize. i'm not sure i had to lately. >> now you know how to apologize. >> let's go over to sue with breaking news. >> we have breaking news to report. a helicopter has been reported missing while supporting the relief efforts as you will recall this morning, a 7.3 magnitude earthquake hit nepal and 40 were killed. several hundred basically have been evacuated.
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we have a statement from army major general dave east port who was the spokesperson for the command. he said at approximately 10:00 p.m. a uh 1 y hew we two nepal ease soldiers and two marines from the attack helicopter squadron 469 were in support of the joint task force and it was declared that that helicopter was missing while supporting operations for humanitarian relief. we don't have much detail other than that but we know that this helicopter is missing and was involved in the humanitarian relief experts. we will continue to keep you updated on what is still a developing story as human carian aid for the earthquake. we will have more on this as it
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>> verizon purchases aol for $4.4 billion giving access to the advertising and web video technology. a sharp lead to over 2.25% hitting levels not seen since november of 2014. mortgage rates are rising and according to the news the 30-year fixed rate means the average home buyer will pay about $30 more a month. if you missed any big stories, visit >> verizon plans to buy aol is a good move. 41% said absolutely and 59% said no. i don't think so. no bosses and supervisors and job titles. zappos style of management made 15% say no thank you. we will see what marcus thinks about the way that company is
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>> you have got a deal. what verizon will get out of the bid for aol? is that about to undergo a major change? the battle for a 200-year-old company and the growing backlash with bottled water in california. first back to mandy, tyler and marcus. >> thank you very much. our cohost not just for our hour, but brian's hour as well. we want to turn your attention to leadership. this is our age-old question of how to motivate and retain your workforce. of course there was news starting with zap owes and walk away after the ceo adopted a radical management plan called whole ocracy. it does away with bosses and job titles and a lot of the staff
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were unhappy with his plan. my question is if you don't have a clear career advancement letter how do you motivate and reward and discipline? >> the method is good and you are doing projects. if a company is designing a new product or developing a new launch. it's managing by committee. in the absence of leadership people will listen to anything and anybody. the 2 pen people that left, the jury is out. he knew they were going to leave and it was a way to shake it up a little bit. >> maybe they wanted the three-month difference. i can walk and take the three months and get another job. >> in an overarching management style, you have to have a level higher. the building is burping down. are you going to decide which door to go out of? in a crisis does that work or in a robust environment that that
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works. >> instead of empowering the employees, it makes them powerless. they are operating a structure. >> for empowers them and gives them a lot of independence and they have a committee style. when they communicate they have their own roles and responsible for their activities they make it in a bit. >> does anything get done in an overly democratic situation. everyone has to say without coming out and being the leader does anything get done? >> it pushes creativity to the boundaries which is what you want. i would like to see a combination of that method on managing projects and really a traditional method. >> i can see where it would work on a project level. you have a much flatter thing. eventually somebody has to be in charge. this sounds like an idea that might appeal to topic number two, the millennials. the largest single cohort.
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>> you can relate to that. >> i can't because i'm a baby boomer. my goal is to crush them. what do they want? how do you motivate them? >> what millennials want is business with purpose and social responsibility and if you don't like employees that have voices and opinions don't hire a millennial. they have them. i prefer to have a combination of both. you have the traditional follow the leader and you have ones that are really becoming leaders on their. millennials want to see the business is responsible and life and work business is there. >> what do they bring to the table that other generations have not? >> knowledge of technology and a deeper creativity and understanding social media which is the new way to communicate for less money. >> what are do they not know? >> the same things that i don't know that you know. time. wisdom and time are something you can't teach people. you have been through more than
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i have and you know more about things. it's a compliment. there is an important balance. i like to surround myself with both. we don't know everything. people have been around. >> does the sense of entitlement give you cause for concern? >> no because i want them to have high self worth. if you can keep them in check, the energy level is great. >> marcus thanks so much. stick around for another hour. always fun to be with you. you make my work very easy. that is it for the first hour. >> another hour of marcus coming up. brian, for that it's over to you. >> thank you very much. 2:00 on wall street and stocks are making a come back. the dow is down but we are 100 points off of the low. the yield and the 10-year treasury is 2.27%. we have seen a halfpercent move in
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bond market recent memory. another move to the upside as well. crude oil remains above $60 a barrel. more markets momentarily, but big story that $4.4 bill kron buy out by verizon. aol likely overjoyed. frank, aol does just $2.5 billion a year in sales. verizon does $127 billion a year in sales. it's not a material deal for verizon. does it signal the start of a bigger transition for the company. >> this is very much in keeping with the long-term thesis they had. they are actively shifting their business to be more dependent on media and content delivery away from the cyclical voice data networking. they are trying to fill it up with more media and content. what they bring is advertising. they have an ad insertion
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program with the services network and aol is good at this and this is a way to move more into the advertising space. not so much the content or the dial up even. those are sort of things that people think about, but it's the ad platform that they had that they can marry. >> you may not want to touch this one. you can ask it any way. you talk about the content and verizon has some content, but they are not structured the way our parent company does. do you believe that this could be the predecessor for verizon going after cbs? >> no. i do not see verizon wanting to get into content. they are in networking. this is a way to fill it up with a better growth characteristic and long-term growth profile with less cyclicality with the traditional networking. this is not a precursor for them
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at all. >> peter what does verizon do with the crown jewel. they had been in talks to sell that off. axle had been a lead contend. what now happens to that. >> verizon will cut the sale price to something less than that. it doesn't want to be in that business. the biggest part of that is the most valuable. verizon was quite clear. they said it this morning. what tim armstrong has bought because we like to pay attention to the "huffington post." that's what verizon is buying. you have at&t you have revise on with aol and ads.
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how do they compare? >> they are both diversifying into video and content. you look at where you see growth. that are are now that we know who they are tying up with which is better? >> for the long-term strategy we prefer the long-term of verizon. it's a harder road where they optimized the core and we're going after a video and pushing it out to the edge. they take content and optimize the core network. they go after the same thing. they go back on the margin and they pay off a little bit better. by the way, someone else might be able to come in with a higher bid. . >> here's my question. hanging out in the wind for
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yahoo. >> that is everyone's obvious question. obviously they will go to at&t right now. the question that yahoo is in the same place. they have a content business that they don't value very much. in retrospect the question is does someone want to buy all of that or do you cut it into parts. >> i guarantee the bankers are on the phone. thank you very much. speak of bankers, goldman sachs hates oil. that firm out with a note calling the gain in prices a self-defeating rally. ken is joining us now and it's a big note. i will give you the cliff notes version of goldman's thesis. the capital spending cuts of the first quarter combined with non-oil buyers coming into oil because they thought it was cheap pushed up the price of oil in the short-term but it will not last. agree or disagree? >> disagree over the longer term.
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we think that oil below 50 corrected to the downside. that's where it will equalize and it will go up and down. we think 60 plus or mine us $5 is where the market seems to want to be. i keep hearing oil is going higher because production is going down. and saudi arabia is now back above 10 million barrels a day. where is production going down? the u.s. is getting ready to. you are taking it down by more than 50%. production is going to start falling. not a lot of people talking
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about that. if iran comes in that pushes recovery and oil prices further back. the u.s. doesn't work at below $50 a barrel. the oil sands don't work. we don't think there is enough production growth and if there is a deal with iran they come into the market. that pushes it back by 24 months. >> another key point is enpx of stocks trade at historically high multiples. is that beyond what we have seen already? >> i tend to focus on the stocks and we have the same issue in my area. valuations seem stretched. they price in the oil.
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the issue is there is so much money out there looking for a home. if the fed starts raising rates and money comes out of bonds an industry like energy where it's a hard asset, it has been under performing and you are buying reserves and assets to reduce reserves in the physical commodity. >> in your space, if you are right, it remains at a $10 trading range. everything else remains equal. what are the best sectors or single stocks to own in your environment. it talked about apparently drilled uncompleted wells that is a big topic. the completion services, the pressure pumpers will benefit from that. is the count starting to go up as they try to restart their growth engine.
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you will see more drilling and completion and a lot of completion. companies like the services and spn and c and j service are top services right now. >> thank you. >> thank you. >> shares of vertex halted right now as a panel of advisers reviews the company's treatment for cystic fibrosis. this is going to be key to the bull case. they saw a huge run last year. >> absolutely. they sell cystic fibrosis and now they are meeting to discuss approval. that could expand the population by a lot. the stock went up 40% in one day. we made an animation to show you how the drugs work. take a look. cystic fibrosis is caused by a mutation to the gene. this hampers the movement of fluid and leads to the
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production of thick mucus in airways and other areas. the first medicine to address it restores the protein's ability to allow chloride to pass through the membrane. only about 2 hundred000,000 patients have that. many more have a bigger problem. the protein can't get to the membrane at all. that aims to help the protein get to the sele wall. the combination of both drugs can help more than 14 times as many people. >> the 28,000 patients is the goal right now. they are considering what is applicable. hearing the testimony is very, very moving and a huge business for vertex. it could be a $5 billion drug. now they are considering whether to recommend approval. most investors and analysts are
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optimistic, but if it goes south and there have been critical kez, if it goes south, it's a downside. >> a lot of managers will be watching this carefully as well. the price hike is estimated to be $287,000 per patient annually for this treatment. that's important. >> while the approval is expected, it will be that pricing division that people will look at. it's 200 or $300,000. >> thank you. >> i like to joke around a bit and that was fantastic. i am enthralled. you are smarter than i am but we are not going to lie. half the time i am confused as heck about what they do and how their drugs work. that was spectacular. >> thank you brian. that was nice. here's what's on the menu for the rest of the hour.
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the board battle at du pont. the growing backlash of one everyday item in california. later on we are talking bonds. treasury not barry. the prophet returns with us on set. s gotten you far but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running.
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tomorrow is a huge day. better known to you and i as did you pobt. it's a showdown of shareholders
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and a vote to decide whether or not this millionaire will get a seat on the board. back with us is marcus. i will flip everything backwards. it kicks off at 10:00 eastern time and pacific. this is not a little company. this is a 200-year-old dow component with tens of billion s in i will provide resources and.
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>> i'm sure you agree with this and you don't want a hedge fund manager coming in but i will have to now defend them. studies show they can return above market averages overtime and maybe they are a get thing. >> they had every right to shake the company up. now she did everything an actist would do. she pun out performance coatings and chemicals creating a new company. she is focused on high growth high margin businesses. she has a clear strategy and this is one of the best boards in america. it would be a tragedy to knock off three or four of these people. beyond that if nelson said he
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would break up the company and shut down central r&d, that would be a great loss to the united states. the central labs are. >> it's obvious that we want a shareholder of any company to have a board that pushes our management and challenges us and pushes us against the wall and does it in an educated way instead of telling people you will eliminate research and development in a company that is based on that seems a little odd to me. >> i'm stuck in the role of defending the activist. as i said to the viewers, i don't want to call them. i don't know who they are being activists for. i don't know their motives other than the profits for themselves. maybe the stock goes up i don't know. i'm stuck in the kroelrole not to defend. you would have said you know what, this could have been an environment and a perfect environment. >> absolutely. go in -- go ahead.
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>> i will give you some. they have come into home depot and putting them in and getting rid of them. the work that they did did a good job. they had done a good job at hp. not a top performing dhauchl increased going forward 19%. to talk about somebody doing that, if they own 65% of the company, they have a right to call the shots. it seems disrupt to a team that has their acting to and a staff that has their act together.
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>> i have studied this board and this is one of the best boards in america. this is one of the best boards in america. a group of high tech people nine ceos and they said i don't want her coming in. neither one said they said no to him. they really need to support management when they are doing it right. if they are doing it wrong, turn them out. you have the board making changes. either way, thank you very much. please stick around. coming up the growing backlash over bottled water in california. plus marcus made a bet on cupcakes cupcakes, but is that going to crumbs. he has a candid answer on one of his big investments. you won't want to miss that. stick around.
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>> an all new season of the profit kicks off with a bang. two brothers trying to secure a major account for the drum company. here's a sneak peek. >> we know they need a retailer to get to the next level.
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it's important to me that mike do a good job. i heard he's a great salesman, but i want to see it. this company need this is account. >> we never met. pleasure to meet you. >> my brother and i started the company out of our brand ma's basement. this is my brother's initials. we are instead of being a custom shop, we are developing a product mix. a better model where we would love to have the better kit available in your store. >> oh, boy. price-wise, where are you? >> this kit would be about $1100 where you can retail it at about $1700. >> i'm sorry. you picked a very difficult category. you are competing with the biggest companies that has huge things have have been around for many, many years.
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it's not what we see. >> it's a tough start. find out what happens to sjc drums. 10:00 eastern and pacific here on cnbc. the man himself, with us here for the hour. let's talk about that. we talked about it on the commercial break and you come on and you are a good guy. not trying to embarrass you. >> you can embarrass me. >> you said i can tell your stories. it was rough. guy working behind the counter. people left without paying. i wanted to hospital guy out. how are they going? >> it was an investment that i made in my position. the investors and the fishers were a big lender. they went into bankruptcy and i came as an investor and i can't affect change. i was there this morning and didn't like the experience either. >> wait wait. you were there this morning.
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>> didn't like it either. >> do they know who you are? >> yeah. i didn't like it either. i will tell you what the issue is. the original plan was to diversify the offering. i own an ice cream and a candy company and a cookie company and the ability to get that product in there and change it has been a lot harder than i thought. >> sorry the lesson for our viewer listeners that are enterprises or thinking about becoming entrepreneurs and never invest where they cannot affect change? >> you have to accept that not everything will work all the time. i wouldn't be surprised if one of the brands born ends up having a with some of the stores at a point in time. i get 100% control of a talk
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ug to about how it's going so far. >> for the last three weeks, we have come up with a campaign to donate $100,000 to small business across america and we did it by taking profit content by asking people to share or retweet it. we are at about 90,000 now and we need to get to 100,000 tonight. >> no doubt you will reach that
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goal. here's an interesting story. speaking of crowd funding and sourcing this is interesting. it's just breaking in the last hour or so. new england patriots fans have begun an initiative to pay the $1 million fine issued against the patriots yesterday by the nfl. >> robert kraft can't afford it. because he can't afford it. >> this is pocket change for mr. kraft. >> we are trying to get to 100,000 to make a donation. >> marcus. >> i'm a dolphin fan. >> i will say this. this is not about the money. this is about new england fans saying you know what nfl, we will take the hit for this. >> they're didn't do it. >> whoerve played know it's a half pound that will not make a performance. >> not the point. there is a rule for a reason. >> i'm not saying that's not the case. you going to pay my parking
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violation? >> you get a ticket here at the parking lot, i will pay the $0 bill. >> i think they should pay their own bill. >> tom brady is suffering. >> he's a great guy too. >> we disagree. oil and water do not mix except here on power lunch. up next both the story about the backlash over bottled water in california and a live check on oil with jackie. who is your football team? >> my team is the giants and that is crazy about them paying the fine but here's what's happening with oil. we are over $60 a barrel despite the fact that goldman sachs said the rebound is premature. why we are moving like this today and what you can expect next, stay with power lunch.
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why do any of it? why do all of it? because if it matters to you it's everything to us. the xc60 crossover. from volvo. lease the well equiped volvo xc60 today. visit your local volvo showroom for details. >> here's your cnbc news update. the military is hopeful that the missing marine corps helicopter in nepal landed and is just out of communication. it was carrying six marines and
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two soldiers. an indian helicopter overheard chatter about a fuel problem. the chopper had dropped off relief supplies at one location and was en route to a second when it lost communication. secretary of state john kerry met with vladimir putin in sochi. the war in syria and the conflict in ukraine. tensions between the two have increased since the west accused the russians. >> with the racist franchise name, they denigrate across the country. it exploded into flame at the
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side of the highway. the massachusetts turnpike the driver noticed smoke and pulled over and evacuated the bus and no one was injured. let's look at the stock market. the dow was down about 60 plus points. even just being up a couple of points doesn't tell the true story. these are the top four stocks. you know what else is higher? crude oil above $60 a barrel. let's go down to jackie live at the nymex. >> hi brian. we settled over $60. it was a 2.5% pop. closing over 60 is key. here are the reasons we were higher. opec was saying that it was
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disputing what the "wall street journal" said yesterday. prices will stay low for an extended period of time. there was no basis to that report. traders are eying continued conflict in yemen. pictures of that for you. the pentagon is monitoring a cargo ship on the way with huey humanitarian aid. a ceasefire is scheduled for tonight. everyone wants to so that happen, but the conflict moved through before. all eyes over there. at the same time we're also monitoring a dollar and a stronger euro. that is a big story and part of the picture as well. we broke over 60 on the reasons. still you have goldman sachs saying that the rally is premature. traders are saying that 61 $62 is not out of the question from here. back to you. >> thank you very much. it is time for street talk. our daily look at analyst calls trying to find opportunity for you, america, and the world. edward's life science upgrading.
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their target goes to 155 a share. they note the big drop of the stock since march, but say that the long-term story is intact and the concern over fears of slowing sales or the transcatheter replacement market doesn't appear to be reaccelerating. >> they are saying the major drive that we are seeing is pen into the risk patients and there has been an up tick in volume since the college of cardiology conference is recent. that translated into an up tick for demand. >> biotechs were hard to talk about. >> they are very complicated. thank goodness for meg. the second stock thatty woor watching bank of america. the big rise with drexel-hamilton. they have the most leverage to hire rates. an immediate rise in rates across the yield curve would increase the earnings by 19.4%
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over the following 12 months. the next most positively impacted financial cit that would see a 12.1% increase in 12 months. >> bank of america would benefit by 50% more than the next highest in that universe. >> for you top the slice it that way, yes. >> the stock is quietly up about 4% and investors are starting to notice. eqt, upgrading this giant gas company today to accumulate. they raised the net value, the target to $113 a share. buy any valuation and the strong balance sheet, that should help weather any kind of a weak north eastern season. >> this is an interesting company. it has a couple of codes. one trades and one went public today. if you can pull up ticker symbol eqgp, it debuted and the demand was off the charts. that is doing well in the
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session. more stock that we are watching, apple predicts it will likely launch apple tv this year. the acronym is mvp d. multichannel video programming distributor. whatever. the analyst said an apple could shift the landscape and that networks will benefit the most and the losers would be traditional mvp d players like comcast, the players of the network. >> mvp d acronym. >> can i say it for the 100th time. it's a black box. >> i have it too. >> i use it and i layer it on top and they get the revenue. i get the bill at the end of the month. i have got it. cnbc has an app. finally the daily under the radar name which is national sin media. apparently that's the company that as i understand it, they are looking at the website. they provide the commercials ahead of the movies that you see
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when you are waiting to see the new avengers and the commercials that come up courtesy of this company. they are upgrading to to outperform. about 15% upside and about the same as the ninan lifts who covered it. >> expensive stock. the pe is around 36. >> the box office i guess. i'm just guessing. thank you. your big market story the last few days the surge in bond yields. ka you will it a taper tantrum or whatever you want, it has been's steep, fast move. what is the best way to trade bonds right now? welcome to trading nation. once again with you, head of technical analysis at oppenheimer, a macry strategist with bk asset management. is this the big bun sell off that some not all have been waiting for or a momentary blip before interest rates turn back down?
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>> no. this could be dangerous. it looks to be different than before. simply because what happened prior to it was absurd and so incredibly bubblicious. we could be in a danger of having a melt up in yield like a melt up in prices that. could be dangerous all across the world. at this point it doesn't take much. 1% increase would be a massive move that can take a lot of people out of the market. you surprised by the move of the 10-year? >> i am surprised. the disturbing thing about this you can see it's a qe issue and not a growth issue. the dollar is not participating. they suggest it's strength about that. >> i don't know how to buy a bond. there etfs for the most popular. the ticker is tf. how does it look?
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>> it doesn't look great here brian. this move does look a little bit different from some of moves we have seen. speaking in terms of the tlt, they made a lower high in april and now we have broken the support level. the lower levels it should be respected and on an oversold bit of a rally, you find selling pressure at 123. this correction and if you look at it and the frothiness starts to unravel and one survey we track, 60% bullishness. if you look back at the rally coming into early 2014. that was below 30%. we are well away from a contrarian opportunity here. i stick away from this tlt for now. >> stay away from them.
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can't be more clear than that. thank you very much. for more trading nation, head to our website. trading nation. we do two more segments every day. call it the bottled water backlash in california. drought conditions are serious so why are companies still bottling water there. plus our cnbc highlights companies that change the way business is done and we are going to speak with the head of the company that is getting rid of the old fashioned job interview. 1-800-345-2550 [ male announcer ] your love for trading never stops tdd# 1-800-345-2550 even on the go. tdd# 1-800-345-2550 open a schwab account, and you could earn tdd# 1-800-345-2550 300 commission-free online trades. tdd# 1-800-345-2550
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components like huntington bank share and they are trying to move into the green and they are having a new high. >> unveiling the third and disruptive list. we are highlighting the venture private companies whose innovations are revolutionizing the landscape. it was selected from 400 different nominees. coming in on the list they help hiring managers decipher between good great, and horrible. and not just looking at the resume. hacker rank's cofounder still with us here. does the resume matter at all? >> how good of a program you are
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from your resume. an example for us is a nail file at the salon is not working in one of the top companies. he got through that because of participating in the challenge. that can tell you how valuable it is. >> what you are telling us is the hr supports in these companies that have professionals assigned to hiring managers have no idea what they are doing. you are going to solve for that. # >> to judge somebody from the resume. we are trying to change that. baseing it on skill. >> how do you finish what they are applying for tie together. >> the way the product works and
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we give them the challenges for the roles that you are hiring. it's different from twitter and bloomberg. you can find the right programmers based on that. the challenges does that mean once this business has a successful one, you will open one for starbucks and make sure people know how to make coffee? cooperate you take what you are take what you are extending across any business anywhere? >> the growth is big enough. we wanted to be the leader and we will expand to other doe domains. >> great. thank you. >> we will leave it there. thank you very much. insightful stuff on the list. appreciate it. >> cnbc's series will continue on the closing bell with the ceo of wealth front. a digital etf investment service. breaking news out of washington,
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d.c. let's go to john. >> the senate is voting on whether to end the filibuster is take up the bill for trade promotion authority. if it passes to an asian trade deal later this year. now past the 41 votes, the democrat s needed it to pass legislation. they have just suffered a set back and what that means is there is going to be additional negotiations on provisions being demanded by democrats to be included this this bill. ultimately they will get the bill, but they are not there yet. this was an embarrass am for the proponents today. >> keeping us up to date on that. this is a trade bill the tpp that is dense. we don't know what's in it exactly. people are fighting over it. >> it's for ten years. >> you run a company that buys and californias globally.
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>> that are reduces the tariffs. >> it was supposed to regulate jobs and working continues. >> you can do a lot of stuff and some people have a beef against it. you run companies in asia or at least buy and sell goods from asia. do you want it? >> i don't know. i have to be honest with you. i don't understand what else it has and we are scared to be a proponent or a detractor. >> it is negotiated in secret. that's part of the problem. they keep telling us here's what's in it and why you like it. it's fascinating that the president wants it but many in his own party do not want it. now they are going at each other and this is oversimplified the heck out of it. nafta is a four-letter word. >> any time commerce is allowed to flow back and forth, i'm in
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favor of that. what are the underpinnings of that. >> i feel like i'm a smart guy. >> have you had a chance to glance at it. been negotiated in secret and that's one of the problems people have with it. >> everything is negotiated in secret, whether it's legislation or -- >> fair point. >> -- whether it's a trade deal like this. this is not a new alignment. a democratic president bill clinton in the 1990s pushed nafta, he got it with republican help and china's entry into the wto. the democratic base is liberals labor unions environmentalists. they have peace with this bill. democratic presidents bill clinton and barack obama have both decided they think it's in the interest of the united states economy and national security for that matter to advance these trade deals. that's why they move ahead despite opposition within their
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base and despite the fact that their allies are republicans who they normally fight against. >> isn't flex coemexico canada and australia also part of this? >> yes, 12 countries are part of it. >> new zealand. >> yes. the administration makes the argument that canada and mexico being part of this is one of the reasons why they have negotiated provisions which meet some of the objections that labor unions and environmentalists had to nafta in the first place. >> right. >> what they say is they are forcing countries in asia as well as in this part of the world to live up to higher standards on labor and environment and that if we don't change those or set those rules of the road china will. that's the argument of the administration. >> thanks, john. >> john harwood. thank you very much. breaking news out of washington, d.c. yes, america, another acronym. in a one-hour show we've had three acronyms.
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the war over water in california. stay with us. we're a-okay. ♪ ♪ ♪ at chase, we celebrate small businesses every day through programs like mission main street grants. last years' grant recipients are achieving amazing things. carving a name for myself and creating local jobs. creating more programs for these little bookworms. bringing a taste of louisiana to the world. at chase, we're proud to support our grant recipients and small businesses like yours.
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so you can take the next big step. there is an ancient rhythm... [♪] that flows through all things... through rocky spires... [♪] and ocean's swell...
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[♪] the endless... stillness of green... [♪] and in the restless depths of human hearts... [♪] the voice of the wild within. california's facing a huge drought. why are big companies like
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starbucks and nestle using the valuable resource for bottled water? jane wells is live in chatsworth california. jane? >> reporter: i'm outside an arrowhead facility owned by nestle. they've been sourcing water in california for own a century. crystal geyser get their water here. is that such a good idea? there are over 100 bottling facilities in the state. some of them getting their water from natural springs that companies may own water rights to or buying it from municipalities. much of the water comes from the lake shasta area. never been that much of an issue and never been that much scrutiny. this arrowhead bottling facility gets its water from a national forest and it's based on tribal land. people who don't like the industry in general like crunch nestle campaign in sacramento are using this to get action even though bottled water probably uses a mere fraction of
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1% of the state's water, though nobody has asked for sure. >> we're asked the city of xreemt -- sacramento to put the issue on the agenda. they refused for over six months. bottling water for profit is absurd. >> well, that opinion is starting to hold water. nestle is saying look they're trying to do what's right. they want to be good stewards. while companies like starbucks are sending their ethos water out of state to be processed somewhere else nestle says going out of state creates its own environmental concerns. we should hear more from nestle tomorrow on "power lunch." back to you. >> you have businesses in california. this is serious stuff. how does it impact it? >> i'm not washing units as much. i have grass in some of my businesses and i'm changing it to astroturf. it's a real issue. the profits, bottom line, next.
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there's some facts about seaworld we'd like you to know. we don't collect killer whales from the wild. and haven't for 35 years.
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with the hightest standard of animal care in the world, our whales are healthy. they're thriving. i wouldn't work here if they weren't. and government research shows they live just as long as whales in the wild. caring for these whales, we have a great responsibility to get that right. and we take it very seriously. because we love them. and we know you love them too.
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catch the season premiere of "the profit." it stars the same guy sitting next to us. is this the best show on the network? >> i don't think about it that way. i think of the share the profit concept, #sharetheprofit. we started it to make donations to small businesses across the country. we're almost at 91,000. we need to get to 100,000 by 10:00 p.m. tonight.
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very easy go to twitter, hit the hash tag. doesn't cost you anything. >> if you threw in 94 bucks we could make it an even 91,000. >> i'm doing it as we speak. >> you already did it melissa. >> brian get on it. i'll see you tonight at 5:00. "closing bell" starts right now. hi and welcome to the "closing bell," everybody, i'm kelly evans down here at the new york stock exchange. bill, we've seen a pretty big turn around today. >> we have. a big sell-off on the open this morning. trishry yields moved to the highest level on the ten-year since we've seen since last november. got to 2.36 on the ten-year note pushing stock prices down sharply. everything has reversed itself now in the last few hours. >> it's like a staircase watching that ten-year. yesterday it was 2.2. the session before it was 2.1. it's been relentless even though we've come off the highs.


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