Transcripts For CNBC Power Lunch 20240622

Dow down 37 points and the s p nudging back up towards the flat line at 2066 and change and nasdaq in Percentage Points the big lieutenantser, down twothirds of a point. Seven of the sectors are low for the year including staples, i. T. , financial, industrials, utilities and energy rounding out the bottom of the pack. Both down more than 9 year to date. Oil getting hit hard again today before staging a bit of a comeback. There you see its got modest losses right now. West texas intermediate at 51. 97. Ice brent crude at 56. 43, down 11 cents or about a fifth of 1 . And then ty yield falling enough that were starting to hear about lower mortgage rates. The tenyear right now earning 2. 221 . Euro Group Leaders meantime emergeing from a crucial summit on greece about one hour ago. The result nothing, according to reuters. Another meeting set for tomorrow. The eurozone summit is under way now. Yields meantime skyrocketing on the greek twoyear bond at 49. 5 . The etf that tracks greece all the way through, the gre is down 3. 3 today and down 28 year to date. International correspondent Michelle Carusocabrera is live in athens and where do we go from here michelle . Reporter supposedly another meeting, but in greece i think things go downhill from here because they ses bratly need the banks to reopen. They desperately need bailout money, and they can only do that if they bring a solid proposal and were going to tell you some of the scathing International Response to them showing up in brussels today in a way that was described as emptyhanded. Listen to what the president of lithuania said. Always waiting for a greek proposal tomorrow. Must speak spanish in lithuania because he said minyana cant be always. And listen to this. Im disappointed there were no greek proposals on the table and i have a strong impression that there is one government or minister of finance that doesnt feel the urgency of the situation and thats the greek government. So do you think after this meeting grexit has actually moved closely . Grexit like i always said will be a decision taken by the greek government and now well see what comes out of the euro club thats about to start now. Reporter lack of urgency by the greeks is now starting to raise questions by people here about whether or not the intention of Prime Minister tsipras all along was actually to leave the euro. Thats how people are looking at this situation right now. Our colleagues at cnbc europe said down with the minister of economy and he didnt say no. He said our mandate is to stay within the euro. Well play a little bit more of that interview coming up in power lunch and what happens today does not mean the greek banks will open any time soon and for the record were 48 hours after the vote and the greek Prime Minister promised he would have a deal and there is no deal. Back to you guys. A lot of talk and no action. Thank you very much michelle. We will check back in with you very shortly. But a news alert in the bond market here in the United States right now. Rick santelli is back. Good to see you again ricky, down at the cme. Are we seeing any Strong Demand there for the auction . Very Strong Demand and whats kind of funny is were seeing yields move up. Watch 2. 24 on the 10s and 3 on the 30. Back to a threeyear note auction, just auctioned off 24 billion threeyear note and. 932 and bid was. 935 and offered at 93. Pricing good in that respect. Bid to cover was the only metric that was a little light, 3. 16 versus 3. 29 ten auction average. Lows bid to cover but they have been tight since august 2014. 47. 7 on indirect beats the auction average and 13. 9 on direct. So, mandy, the demand for this auction in the grade form is a bplus. 21 billion tens followed by 13 billion 30s, draft up 58 billion in supply. Back to you. Okay. Bplus for the three years. Lets take a look at the tenyear and already 30 years as well. Treasury getting a safe haven bid hereing yields down. Tenyear at 2. 221 and 30year bond earlier and right now sitting marginally above the low. Counterpunching like floyd and mayweather. Dow was down 217 points at its low today but looky there. Now just off 56. The s p 500 had fallen below its 200day moving average. Right now back above that. Almost at the flat line. Mary thompson joins us now with the store fret nyse. Mary . Reporter hey there, tyler. One reason weve seen a rebound in the markets. The rebound weve seen in oil prices, but theres more to it. Lets look at the intraday chart of the s p 500. The selling or the lows of the session happened right around 11 30, of course when the european markets close, and that suggests there was a lot of selling possibly by european investors, and at that point it started to abate and the markets started to rise so the s p, as tyler mentioned, had fallen below its 200day moving average. Its now above those levels. We said one of the reasons for this is the rebound we had seen in crude oil prices. Right now down about 61 or 62 cents. Brent has actually turned boss life briefly and its pulled back a little bit lower recently. Also take a look at where the Energy Sector s p Energy Sector, one of the leading decliners among the sectors earlier today but now to the plus side. One of those trading positive. Along with the defensive groups. Utilities, Consumer Staples which will benefit from these Lower Energy Prices were seeing as well as telecom moving to the upside, though tech continues under pressure in large part because we had a warning from amd, a small stock nevertheless and it rippled through the semiconductors which is the large sector of the tech sector most notably the nasdaq so semiconductors and i. T. Remain under pressure. Also want to note materials reflecting the concerns about china because you see weakness in things like copper and so that, too, is putting pressure on a number of the minors. Gold also pulling back today, down about 18 right now. The markets though dow well off its lows of the day, down 63 points. Back to you. Mary, thank you. Another wild session overnight in china. Shanghai index and the techheavy shenzhen dropping 2 and 5 respectively despite the chinese governments attempts to shore up those stock markets. The shenzhen down 36 in the past month. Shanghai down 25 . That hurts. Commodities Traders Keeping a close eye on copper and may be the best indicator of a slowdown in chinas economy. Prices taking a hit right now, and down 11 or about 9 or so over the past month as that graphic shows. Sitting now around sixmonth lows. Veteran china watcher steven roche on squawk box today speaking about a china bubble. The mark took off like a rocket ship and made up for lost ground in about nine months. It went up 150 over that period which is be a enormous speculative frenzy and now the bubble is bursting. Who knows where its going in terms of the downside and possibly catch a falling knife, but they have unleashed a lot of measures to shore up the downside. So what happens in china usually spills over to the rest of the usa. Which companies have the most exposure to that region . Take a look at the top four. Qualcomm gets 84 of its total sales from asia. Texas instruments about 60 of its sales in asia. Thats followed by 55 for intel and micron technology. And to dominic chu and market flash. Copper and steel stocks are being sent lower here in the United States, some of the worst performers in the s p index today. Names like freeportmcmoran and Steel Dynamics and southern copper all down by about 2 or more so the materials trade playing out on the heels of all the concern, tyler and mandy, out of china. Back over to you. Thank you. Take a look at energy one of the hardest hit sectors in the s p 500 for the year. For today not so much. Coming back a little bit. There you see it. Up about half a percent. Take a look though at the yeartodate chart. Energy down about 7 . 7. 5 since the beginning of the year. Still ahead. It is bar none the most loved stock on wall street. Hes a lover, not a fight. Dominic chu tells you which stocks and why analysts are so bullish on it. Ou qualify for a sittinghams card today i can offer you no interest for 24 months. Thanks to the tools and help at experian. Com, i know i have an 812 fico score, so i definitely qualify. So what else can you give me . Same day delivery. The ottoman . Thank you. Fico scores are used in 90 of credit decisions. So get your credit swagger on. Go to experian. Com become a member of experian credit tracker and take charge of your score. Welcome back to power lunch. In a relativelily down market so far Retail Stocks are standing out as a potential bright spot here. They have now moved into positive territory, the ticker srt is turning positive just in the last few moments being led higher by Kohls Department stores, target tjx. The s p briefly flicked positive now its basically flat. The emergency meeting of europeans leaders getting under way. The Prime Minister are meeting right now and our jeff cutmore is there live in brussels. Jeff . Reporter let me backfill for a moment. We had what was a relatively frustrating meeting of finance ministers earlier in the day here in brussels. They came out of that meeting saying there were no new greek proposals on the table. Mr. Hollande and Angela Merkel the german chancellor arriving for a premeeting with Prime Minister Alexis Tsipras of greece. We understand now that they are in full session so we have a full meeting of these leaders of the eurosewn together and whats on the table here. The negotiations continue between creditors and debtors, but time is running out. Were know that greece has a huge payment to make to the ecb on 209th of july and with no proposals at this stage on how to move the negotiations forward, you can understand why markets are nervous. One thing the greeks may do is put forward a proposal tomorrow morning for access to the european stability mechanism. That would give them sufficient funds to make that payment, but it has to run through some of these eurozone member parents so that could take some time. So let me leave you with that. We have this meeting ongoing against what so far has been a relatively disappointing backdrop in terms of getting a new negotiated deal to save greece and the greek banks. Tyler, mandy, back to you. This is the thing, jeff. So much disappointment because theres so much talking and absolutely no progress happening. Any reason to believe even what the greeks are saying at this stage . Do you feel right now theres complete skepticism that anything concrete will actually happen this week . Well i dont think expectations could get any lower at this stage, and one things are that bad occasionally you do get a surprise and, mandy, i have to say the europeans over the years have been able to twist and turn and say what in effect as far as many are concerned is a project that shouldnt actually work economically. Youve got a central bank but no treasury and that has always been the difficulty with this single currency because its been difficult to restrain some of the members that tend to spend more generously. Well the rubber meets the road here. The greeks are running out of options. The banks are still closed. They have to get a negotiated agreement or grexit is a real possibility. Thank you very much jeff cutmore. Lets take a look at the markets in the u. S. As the dow and s p turned positively the dow very briefly and the s p holding in positive territory at 2068 and the dow only down 14 point, down by 200 points earlier on in the day and as weve been mentioning, its not just greece, its very important to note its also whats happening with the Energy Sector hear in the states thats hoping to pull our markets back up higher as were also seeing crude rebound somewhat as well. Wynn resorts, transocean and Chesapeake Energy leading the s p and p g and coke and pfizer are leading the dow. Keep an eye as the markets continue to recover. Austin texas the latest testing site for a selfdriving car. And advanced microdevices amd tanking 15 warning its Second Quarter revenue would be lower than expected on weak pc demands and Carnival Cruise lines planning to offer trips from miami to cuba starting next may, carnival saying it will become the very First American Cruise Company to visit cuba since the 1960s trade embargo. The euro under pressure hitting a fiveweek low and sara eisen covering it all from the nyse. Reporter a few things going on. Concerns about greece the future in the currency clearly front and center hitting the euro, but its more than just the euro. The dollar is up against pretty much every major currency today which tells you there is concern out there. People buy the dollar as a safe haven. Youve seen stocks selling off even though they are coming back a bit on worries about greece and china and youve got the commodity selloff. That pressures economies and currencies dependant on oil or metal like canada on australia. Add it all up, and the dollar rally could be painful for u. S. Companies. Look at todays trade data. Exports are slow in part because a stronger u. S. Dollar makes u. S. Goods less competitive. Definitely already having an impact. Stronger dollar. Sara thank you very much. Of course the same things that are pushing people into the dollar pushing people into the safety of u. S. Treasuries. Yields on the tenyear heading lower. They are now at 2. 222 down from above 2. 4 just a week or so ago. Tied closely that tenyear to mortgage rates, of course so does this mean lower rate mortgages are coming . Diana olick watches the numbers closely in washington. Di . Reporter well, ty in the short term the answer is yes but not as cheap as you might think. Take a look at exclusive access from mortgage news daily. The green means rates are coming down. Today were seeing from 4. 125 down to 4 . Will it break below 4 . Mat two graham says lenders are hesitant to pass along the rates when markets are as volatile as they have been. Its just too expensive for them. They also hesitate to lower rates too quickly because that muddies up loans that are already locked. Still, i know some of you are asking well should i refi . About 6 million of you could be eligible, even though rates are not the record lows that we saw a few years ago. About 550,000 u. S. Borrowers could save 500 bucks a more or more as todays rates and over 3 million of you could save over 1 hub a month. Add in more than half a million borrowers that could use the harp refi for underwater borrowers and new refis could bring a collective 1. 66 billion in savings per month. All of this is thanks to black knight financial services. If youre eligible though do it now. Just a half percentage rise in rates knocked 2. 5 million of you out of the running. Tyler . Thanks very much. Mandy . Are you looking for the bright spots, folks. This is wall streets most loved stock right now. We will tell you the name and why analysts are so bullish on it. As we head out lets get a check of the big dow movers. Currently down about 33 . Again, we were down by 200. P g up by over 1 leading the comeback there. Still do have quite a number of them sitting in the read red and well see if we can keep on recovering. Power lunch is back in two. Summer travel is about to get a lot more entertaining. Virgin america announcing a partnership with the inflight Internet Provider viasat to offer athome quality wifi while in the sky. Stay tuned. Cramer has the exclusive with the companys ceo tonight at 6 00. Mandy . I kind of like being unconnected in the skies. Very, very rare moment of peace. Okay. Lets take a look at whats happening in the markets. Greece, china, oil, all kinds of things moving in all Different Directions and sparking investor fears. Weve got the s p 500 which earlier broke below its 200day moving average and negative for the year. It did move into the positive territory just a moment ago but its now back in negative territory. Nonetheless, definitely recovering from the lows. Lets get to art cashin director of ubs financial services. All right. Weve been hearing that part of the recovery in the stock market is due to the recovery that weve seen in wti crude. So to what degree is the market actually moving on anything related to greece . Well actually its reverted now to internal ss. Whats happened is first we found out that the greeks showed up with an empty briefcase and that made stocks and other commodities week and then when the finance ministers meeting broke up they sounded very tolerant and very patient and stocks started a rally. They rolled over again when Angela Merkel came out and said that this is not an infinite time period but we want back and pretty much retest that had morning low so we had a kind of intraday double bottom. That has brought us back here. I think stocks are slightly ahead of themselves on the rebound. If you look at the dollar and you look at the yield on the tenyear, that flight to safety still out there so the market started out wore egabout greece and now its kind of worrying about its own internals . Just take a look at the sector themselves on the s p, art. How many have we got now. Seven out of ten of the major s p sectors negative for the year and several of them are at very crucial technical junctures as well. Its not what you want to see going into earnings season. You know it indicates that even though there havent been a lot of downgrades to earnings so far, that some of that the jury is still out, so well wait and see what happens. Well go into it tomorrow. Greece will still be the flavor of the day but well look to see what happens in the Chinese Markets overnight. That also is critical. Not only to stocks but to commodities also. See whether its a tasty or an untasty flavor when youre talking about flair of the day. Thanks very much art. Always good to get your thoughts. Tyler . Folks lets get a check on the bond market on the back of the threeyear auction at the top of the program. Rick santelli following it for us at the cme. Hi, rick. Hi tyler. Indeed, there was a little bit of an uptick in rates, a little selling in the treasury complex despite a great auction of the threeyear note at 1 00 eastern as you see on the intraday chart, but also remember the s ps, the dow and nasdaq were all making big comebacks. Thats most likely say traders, the reason and also reason to open the chart up. Where do we settle tens at the end of last career . Basically one point away from the low yield of the day and settle up at 2. 17. Guess where we settled the s p cash, 23. 50, and now far from where its trading now and it got very close to unchanged and backed away. An old day trading range when you have a big move and cant get back in the positive, net change camp thats usually a negative. Our final chart. Midmarch starts a septemberment1. 10 and thats very technically significant. Thank you ricky. Lets take a look at tech stocks. That sector today in the red for the year and many names are in correction territory. Time to hit the sell button further, or is it a buying opportunity . Plus, its only up 2 this year but its the, quote, most loved stock on wall street. Well tell you which stock that is and why analysts like it so much. But as we head out lets take a look at the winners and losers on the nasdaq. Right now power lunch is back in two. Hello, everyone. Im sue herera and here is your cnbc news update. Federal Officials Say an f16 fighter jet and small plane have collided in midair in South Carolina about 11 miles north of charleston. Plane parts appear to be in an rv parking area. Air force Officials Say the pilot of the f16 has been taken to a base for observation. No word yet on his condition. More fallout from Donald Trumps negative comments about immigrants in mexico which he made last month. A pga pro golf event scheduled for october at a rump course in los angeles will be moved in the best interest of all involved. Wildfires continue to burn in northern idaho. 300 people have been forced to evacuate. 281 palms are being threatened. Fema saying 100 fire fighters, 1 air tankers and 3 helicopters are helping to battle the blaze. Two americans and one briton was gored in pamplona for the running of the bulls as part of a nineday festival. Back to you, ty. I dont know why they do it but do it every year. Apparently the runners needed a little more red bull wouldnt you say . Yes, would i. Should have had a little more red bull. There you go. All right sue. Gold under pressure. Let take a look at what cold is doing. It was down earlier. Still down 20 an ounce, about 1. 75 . Copper, that has been a big story as weve been saying because copper is widely thought to be a proxy for the health of chinas economy and there you see it down modestly today. Nevertheless about 3. 5 lower. Jackie deangelis covering those commodities and more at nymex. Hi jack. Good afternoon to you tyler. Red in the commodities complex pretty much across the board, strength in the dollar part of the reason for it but the 0 move that we saw in gold traders telling me its based on the fact that they do think there will be a resolution with the situation in greece even if it does take time and thats why theres no safe haven buying at this point. You mentioned copper a 3 loss on the day. About a 10 loss on the week as well. That rock material demand really not out there when everybody is concerned about what is happening in china. Now, metal traders are telling me they do not think that the fed can act in an environment like this that that could provide some support for these metals and at the same time if the dollar continues to strengthen that could send us parter lower so its a push and pull balancing act. Staying in the commodity space, Oil Rebounding at this hour prices down 2 earlier after a nearly 8 plunge yesterday. Big day in the oil pits. Brent and wti down 10 over the last month and down 71 for west texas and 25 cents for ice brent crude. Mandy . Lets take a look at the stock markets once again. Dow, s p and nasdaq have certainly slashed their losses but were still sitting in the red just ever so slightly after being down significantly more at the beginning. Day. In fact the dow and the s p 2 move into negative territory for the year so far. James lew of Jpmorgan Funds and joseph kwind lan join us now. Thank you so much for your time. I feel like were walking in circles, trading in a fairly narrow range and back to where we were. S p and dow once again in negative territory for the years. James, what does the second half look like more than a little more than halfway through the years. Get some resolution on issues like iran greece and china, of course, and with the resolution we can focus back on the earnings picture which has been relatively meager for u. S. Stocks and with oil hopefully stabilizing a little bit, despite whats happening today and with the u. S. Dollar hopefully stabilizing. Had a that means is that earnings can bounce pack in the second half starting in the third quarter. If that happens it means u. S. Stocks should rebound to some extent extent. Were still expecting single digit gains for the s p 500 for the end of the year. Expectations fairly tempered. What are the most important things out of all the things that james mentioned to you . What needs to happen for us to significantly pull higher in the second half . Have to watch the dollar. We dont want the dollar to overshoot on the upside. But i agree with james. I think were hitting like a global soft spot that well go beyond. China will settle down. Well get the greek problem behind us. The u. S. Economy is in great shape relatively speaking when it comes to employment, more hiring, more consumer spending, so were looking for this opportunity to put some money to work, whether its financials technology, give dend payers, a good time to be in the market right now, right today. Joe you dont think the ducks are lining up here in terms of global hot spots that might actually stay the feds hand until next year . No i dont. Not at this point, mandy. As i said i think the eu will grow by 1, 1. 5 . China will settle down. Weve got a very good economy here at home and i do think were still looking at a september rate hike. Lets talk about opportunities here rather than concerns. James, i just mentioned seven out of ten s p sectors negative for the year. Which sectors do you buy, or is there going to be further selling pressure . Are we at the bottom for some of the sectors . I think the answer is still the cyclical sectors. Were in the second half of this recovery and bull market at this point, but what you typically have when the fed starts to raise rates is that areas like consomer discretionary, financials, those clyke cyclicals start to do better and i would favor cyclical over defensive sectors and still favor u. S. Equities in this environment. You agree james, that the fed will go ahead with a rate hike this year as utilities will lag as rates start to rise. Yield at the moment is moving down. This is one of the most dovish feds weve seen. I still think that september is when well see the first rate hike, skipt october and then december well see another one. Very consensus these days with some people thinking about 2016 but given where the labor markets are, given where oil and inflation will be five years from now i really think the fed needs to get moving on this. Okay. Both of you the fed remains on track. James, joe, good to speak to you. For more on the Market Outlook you can see where they think there might be a flight to safety. Go to powerlunch. Cnbc. Com. All righty. Lets check back with cnbc achieve International Correspondent Michelle Carusocabrera live in athens. Michelle, its getting dusky down there. Reporter it is the prettiest time of day here, tyler. All this week on cnbc weve been trying to show our audience what its like to live with capital controls if you run a business or if you live here and its incredibly difficult for most businesses. Got now one business thats actually doing okay if not really well as a result of the capital controls. Joining us here on the balcony is alexis patisi sy a ceo of helis direct direct to consumer Car Insurance, 30,000 policy holders in greece 31 employees. You launched this business in the heat of the crisis in 2010. Yeah. How are you being affected by the capital controls . Thanks, michelle. My Business Partner and i started this company two years ago. Its actually been a pretty good week for us actually been a very good month for us. I think as people wanting to run down the balances that they have on the cars and the banks and are buying Car Insurance which is obligatory. Big cost item 300 euros a year. A year. Almost 350 a year. And as a result people are trying to pay use the cards to buy high insurance. Lets highlight. People are eager to pay you because they dont want the money in the bank cant physically take it out but can do electronic banking. Why would they be fearful of still having their money in the bake . Clearly theres a haircut happening and thats on the way and if thats the case a lot of people will not be able to access the money. Capital controls are quite strict and at the same time a lot of concern about the subsidiaries of Bank Insurance arms of bank and they are safe themselves and moving to other providers like ourselves. In case people arent aware what the bailin in or haircut, deposits lost a ton of money. They didnt punish just the shareholders, not the debt holders, even people who had deposits in the bank lost their money and greek people here tell us all the time they are worried about that and why they would be eager to pay right, because they dont want the money there . Weve survived two capital controls. Ed with the bailin it took two years to lift the controls and that sucks the liquidity out of the system. What are you doing for money . Did you have any money here in greece . Most of the capital has been from day one has been sitting in london london, in euros in london so weve avoided to manage the haircut. At the same time, you know, people are paying by the card so we are building up reserves over here and clearly were paying people back when they crash. Youre not greek, youre a cypriot, correct . Greek cypriot. Did you have an account here . Did you have money here . On a personal basis i did have an account but it was more for day to day kind of spending rather than anything else. Is that because you knew it was coming or you could see the writing on the wall . Combination of that plus most dont have much cash. In reality, in the cypress example, something to keep an eye for, and over the last six months weve lost quite a bit of deposits from here so a lot of people were getting the feeling this was coming. Youre also benefiting because the economy is weakening, right . Yeah. Explain that. A lot of people want to look at other options to cut costs and were a technology provided direct to consumer and very much like a geico Business Model that. Msnbc were much cheaper than the competitors and also people dont drive as much so when you have a crisis like the one were going through now the loss ratio in insurance talk in other words, how much people crash and how much people drive actually goes down so the frequency drops. Alex itsies thanks so much for joining us here. Thank you. Tyler, back to you. Lets take a look at utility sector one of the bright spots on the s p today. Up more than 2 tracking for its best day, since, can you guess, march 18th . Take a look at year to date and its a very different story. Down, as you see there, about 1. 5 for the year. Plus, there is one stock, one stock thats more popular than all the rest right now on wall street. Dom chu has that story. Dom . Survey after survey poll after poll wall street analyst after wall street analyst say that this is the most loved stock on any exchange out there. The most loved stock on wall street is shhhhhh. Im glad we believed it out. Do not give it away dom. The whole point of the tees. That what power lunch comes right back. [ female announcer ] who are we . We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. Here at td ameritrade, they work hard. Wow, that was random. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens every third tuesday. We have Pattern Recognition Technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. For all the confidence you need. Td ameritrade. You got this. There is one stock, everybody has been waiting patiently for this segment to begin. One stock thats move lord on wall street than all the others right now. Dominic chu who we had to bleep, often have to bleep you. Im sorry. Had to bleep you there. I almost gave it away. Heres the thing. This is with caveats, so heres what well say. Our friends at cnbc pro took a look at the larger cap ones and tried to figure out which ones have the most favor among sell side analysts. Now we all know that analysts dont always get it right but on average this one no . They dont. On average this one stock though has 19 Analysts Covering it and all of them say buy, so lets take a look at what this is. Quanta services myocap stock, and what these guys do is they build the infrastructure for electricity transmission think power lines and pipelines in the ground for oil and natural gas, Construction Services company and do a lot of work for Utility Companies and power and Gas Companies so this one, again, covered by 19 analysts. Every single one of them says buy and theres a 36 average price target on the stock. That implies a pretty decent potential upside from the current levels but heres the caveat and why i want to say it. Take a look at this chart. Over the last year this stock is down 19 , okay so up until now if you followed those average analyst target prices you had not really been wining . Would have been skunked. The estimates have not come down as of yet. Dont know whether they will or not, but we do know for right now the price target for this stock, again, 36 bucks a share, could be 8 higher than where it is right now so this right now is our loose interpretation what have we call the most favored stock on wall street. Again, 100 of analysts who cover it say buy. All right. Very interesting. Dominic, thank you very much. Appreciate it. The story is up on cnbc pro and read it on powerlunch. Cnbc. Com. Mandy . Thank you very much ty. The tech sector tanking so far this year with 20 Tech Companies in correction mode. Josh lipton is live in San Francisco with more details. Hi, josh. Reporter hi, mandy. The tech sector of the s p 500 actually slipped into negative territory for the year today. Some analysts are telling clients to brace for more challenging months ahead. If you drill down into that sector mandy, the worst performers so far in 2015, micron, sandisc, seagate and Western Digital and one reason a disappointing pc market. World wide shipments are expected to drop by 6 this year according to idc. A member of jmd securities points to another broad concern. Some of those names, micron and sandisc, in particular are hypercyclical, worried about china and greece some investors will steer clear of investing capital and amd preannounced negative guidance on disappointing pc demand. Amds shortfall was worse than expected and a bad sign for the pc market in general. Windows 10 microsofts new operating system might not get the pc market as strong a lift as some think. Thats because microsoft is offering consumers a free windows 10 upgrade which means they could put off buying new hardware. Tech valuations are rising in one place here in Silicon Valley but because Companies Like uber and airbnb are private, its reflected in Capital Venture portfolios so there is value in tech but most of us cant buy t. Tyler, back to you. Cnbc stands chu, nothing but chu. I hope not. Terrible for the audience. Tyler thank you very much. Well look at macaw stocks. Credit suisse analysts calling a bottom to the sharp gambling in macaw upgrading names to an outperform rating. A fundamental shift towards supportive policy and a seasonally stronger month are ahead. Casino stocks have taken a beating and right now one firm couldnt see the bottom. Back over to you. Thanks very much for that. Negotiations between greece and its creditors to say the least. Greece, by the way, has actually made some concessions. What are they . That is ahead in ten minutes. Also, take a look at the s p industrial sector. Positive for the day. The s p itself was positive two seconds ago. I think its now back in the red, but, well, do we have the numbers there . I can tell you whats going around. Its around the flat line. Meantime the sector has gone negative for the year down over 4 year to date. S p 500 sitting marginally in positive territory. Y dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . I take these out. To put in dr. Scholls active series insoles. They help reduce wear and tear on my legs, becuase they have triple zone protection. And reduce shock by 40 . So i feel like im ready to take on anything. Welcome back to power lunch. We want to call your attention, of course, to whats happening with the markets because the dow at one point was down over 200 points and now getting back most of those losses. Did actually get back to flat at one point here. Can you see the dow down by about 19, 20 points. The s p just about flat right now. The daze knack still trying to claw its way back and finding positive territory at some point. Very much off the worse levels. Standouts include utility stocks, the Top Performing sector in the s p 500 by a long shot. Up about 2 tracking for its best day since midmarch. Among the leaders, duke energy, ppl, cms energy and electric power all up by around 2 or more. When you talk about utility stocks, they have taken a beating, but when Interest Rates fall like they have for the past three or four days you do tend to see a bump up in the utility stocks. Back over to you. Thanks very much for that. A number of sticking points in the negotiations between greece and its creditors, but guess what . Greece has made some concessions. Steve liesman is here with me and i also michelle want to bring you back from athens. Steve, lets start with what greece has done. What . I think the story is a little onesided in terms of creditors complaining greece hasnt compted all the reforms. They have completed some reforms that would cause even worse political upheaval in the United States if they were not. First thing i want to show you is whats happened to the greek deficit here. Take a look at this chart and what you can see its gone from double digits to just barely you know almost 20 , to just barely below 1 now. That kind of strong decline in Government Spending and revenue. Of course, it came along with that at a time of severe recession so thats exhibit number one, and this is something, thats by the way, hurt the greek government and hurt the Greek Economy in a really strong way. It hurt the greek people. And that is part of whats led by the way to the political upheaval we have there. Exhibit number two is theres going to be some pension reform. I believe michelle will have a real fun time knocking holes in this, but this is according to the economist magazine. Benefits have been cut 14 to 40 . The pension age was raised to 67 years, still below germanys 70. The replacement rate how much you get of your salary when you retire from 96 to 54 . However, as michelle im sure will say, they have grandfathered in many about to retire. Right. The problem is the reforms greek has done have not helped the economy. Those that it hasnt done had the chance of affecting the economy but its not like its all onesided where greece has done nothing and the credors. They have done some things. Michelle, would you argue with just not going far enough . Reporter pretty much and even though they have raised the retirement age eatfective retirement age of government workers is still 56 and when you look at the most recent proposal not the one put forward today, because there wasnt much to it but the one they actually wrote out 37 pages a few week ago, the effective retirement age doesnt get to 65 for a government worker until 2026. Thats because there are still way too many incentives to retire early, so just because they raise the retirement age doesnt mean that actually people are retiring that much later. When it comes to cutting Government Spending what they tended to do instead of really reducing the number of employees, they just cut everybodys salary instead, instead of making government smaller and more effective, and then this government by the way, actually has hired back thousands of Government Employees and then one more thing, steve. This is the the most recent greek imf review from the summer of last year the last one because the imf gave up reviewing greece because the last government this is full of things that the last greek government refused to do. So, you know, theres so much that they could have done. By the way, i dont carry around a 1,000page oecd report of all the good reforms that would make this economy dynamic that they have never done. Do have a story on cnbc where you can read. A lot of recessionary things but not a lot of things that would make the economy more dynamic. Yeah. Okay. Thank you very much. Good points on both sides. As you say its important to notice its not just onesided. Back to you shortly and thanks very much steve as well. To coffee prices those prices dropping but starbucks raising prices on its drinks. Smart for the stock or not coming up. Pect it. Intercourse thats painful due to menopausal changes. Its not likely to go away on its own. So lets do something about it. Premarin vaginal cream can help. It provides estrogens to help rebuild vaginal tissue and make intercourse more comfortable. Premarin vaginal cream treats vaginal changes due to menopause and moderatetosevere painful intercourse caused by these changes. Dont use it if youve had unusual vaginal bleeding breast or uterine cancer, blood clots, liver problems, stroke or heart attack, are allergic to any of its ingredients or think youre pregnant. Side effects may include headache, pelvic pain, breast pain, vaginal bleeding and vaginitis. Estrogens may increase your chances of getting cancer of the uterus, strokes, blood clots, or dementia so use it for the shortest time based on goals and risks. Estrogens should not be used to prevent heart disease, heart attack, stroke or dementia. Ask your doctor about premarin vaginal cream. Leer are this hours power points. Concerns about greece sending the dollar up against every major currency as investors look safe haven. Number two, google choosing to test its selfdriving car in austin, texas sending the suv to roam the streets for continued research and the s p 500 tech sector officially slipping negative for the year and analysts predicting more challenges ahead. If you missed any of the big stories in the past hour visit our site powerlunch. Cnbc. Com. Come on over here ty. Ill join you for a change. Well guess who is back . Guess who is back . I dont know. The big man is back. That will do it for the first hour. Brian, over to you. The great somebody standing behind me . Guys thanks very much. Good to be back. It is 2 00 on wall street. 2 00 a. M. In beijing, china. Im Brian Sullivan and i am happy to be back with you. Melissa at the nasdaq as well. Stocks are the story, but not in the same way they were just a couple of hours ago. The markets kind of lurching towards a comeback. The dow down 30 points but it was down more than 200 points earlier in the session, and the nasdaq also touching a threemonth low. Even with the slight comeback it does remain a world of worry out there. There are the big stories were following at this hour. Number one, you might have heard about greece a little drama coming out of that nation. That continues. Well take you there in a sec. The market chaos in china continues, and another dip in crude oil, and crude oil, folks, is where we begin on this tuesday. Krood oil bouncing off its lows like stocks this session, but its still down. Was as low as 50. 58 per barrel today. Oil now down 12 over the past month. Lets get right to jackie deangelis. Jackie, is this simply an economics 101 story, too much supply, not enough demand . Reporter it really boils down to that brian. One of the things traders are watching outside of Production Supply and demand story is the Nuclear Talks with iran right now, and they are concerned that the fact that we got another extension of the deadline to the end of the week means that progress is actually being made and thats why that they need more time. Now, iranian oil, we know a lot of it is sitting in floating storage. It could flood the market and be that factor that really pushes us lower. But, remember, even if a deal is put in place, there are approval periods, et cetera. It will take some time for that oil to come back on line. Still, seeing a 63 cent drop in oil. 53. 92 is where we stand at the moment. Back to you. Jaek, well see you for the close here in 30 minutes time. Crude slide is taking out the oil stocks as well and unless we see a big turnaround later this week Energy Stocks are likely to end the week lower because of yesterdays big drop. If they do end the week lower, it will be a tenweek long losing streekt for the overall Energy Sector. Folks, thats never happened going back to when our data began tracking in 1999. Not all oil stocks or areas are created the same so here on power lunch weve built index groups for you so we can exclusively show you how the oilproducing areas are faring over the past month. Offshore drillers have been hit the absolute worst. Names on average are down 19 , thats an average. The canadian oilrelated stocks the holding up the best though the quote, best is down 2 over the past month. When it comes to single stocks. A look at the worst performers over the past month. Unit corp, unt, down 21 and oasis petroleum, continential resources both down 19 . There are names like a Comstock Resources that are down more but, folks, their market caps are getting so small, really tiny, that they are simply too small to highlight here. All right. The drivers no doubt will love lower gas prices and are likely to come in the weeks ahead but this could also be very bad news for americas workers. Mike kelly with Global Hunter Securities joining us. Mike, with prices where they are now, falling back below 60 bucks a barrel should we expect another round of Capital Spending and or job cuts in the oil patch ahead . Hey, brian, thanks for having me on. Actually we dont expect that under 60 and really for two reasons. One, the budgets, that you know these guys have set were really done at the end of last year the time that oil was around 50 a barrel so not a big difference from where were at today, and, two, actually operationally these emps are doing better this year than expected. Drilling bigger wells and drilling them faster and a lot cheaper than expected too. A survey that we did after q1 earnings showed that 50 of the companies that we follow at global hunter about 70 companies, actually are potentially set to increase their budgets, and that was done at a time kind of a 55 running up to 60 oil. We dont expect major cuts in most programs going forward. Actually we could expect Second Quarter earnings maybe guys increasing budgets. How can they increase the budgets, mike, when you and i have talked many times in the past, there are Many Companies at 20 bucks a barrel and also many at a average cost per barrel production. How could they do that . Something you said right before you came on is not every oil play is created equal and theres truly the haves and the have knots in this space. And youre going to see the guys are really high quality acreage potions, those in the permian or even the core of the bakken to be able to press on here and on gas sides of things. The longer lets say Oil Prices Stay where they are, could rebound and stay where they are or even go lower, this is going to be less of an oil style story and more of a Balance Sheet story. Who has the best looking Balance Sheets out there . Theres a number. Guys that we rattle off. Theres been 11 billion equity deals done this year for guys to shore up their Balance Sheets and we would expect that maybe some more of that is maybe going to is to set to come. I do think probably the most important thing is first to assess who has the high rates of return plays, and guys that can make money at 50 oil, those will be the names that investors will be fine with funding the next round of equity raises. And in terms of the Balance Sheet, who has really got great ones names that come to mind conshell, simerex at really top quality plays. Your top picks, Parsley Energy as well as gulfport im wondering do we really need to see a higher trade for wti because while these have outperformed the declines weve seen in wti, they have not been a gift to your portfolio if you he had them for the past year. In a time where wti was basically halved in the oneyear pier, these stocks are still down 40 , 30 , and when you take a look at year to date as well where wti has been flat gulfport was down 9 better compared to wti, if you had them youd be pretty disappointed right now. I agree, and thats why we think in these stocks in particular theres an important. Gulfport is one, commonly mistaken as a play on oil but this is a gasweighted name in the best gas basin in the country in the marcellis and out camp over 70 production coming from the utica next year, a gas play, and thats off 25 here in the last three months. Taken some big opportunities. One of the best growth stories. Partially one thats hung in there, oil play year to date but we do think that this is a name that is in has the best rock and the best oil basin in the permian. An infliction point type of quarter where the high on the street for them for 16 at oil growth and we think it might ultimately be conservative. Mike kelly, Global Energy securities, mike, always a pleasure to get your view. Thanks very much buddy. Thank you. Great time to check in on our power city indexes where we aggregate the Stock Performance in 39 metro areas around america. Look at houston, the houston power city index by far the worst of the 39 over the past three months. It is down on average 8. 2 . Compare that to just under a 2 drop for the dow. Energy names like Kinder Morgan Conoco Phillips halliburton, baker hughes and aog all negative over the past three months. Houston, the worst of our power city indexes over 80 days. European leaders gathering in bruce brussels. Cnbcs chief International Correspondent Michelle Carusocabrera is live in athens but we start off with jeff cutmore live in brussels. Hi jeff. Reporter yeah hello. What we have here is an ongoing meeting, Alexis Tsipras, the greek Prime Minister, game here and held a preliminary meeting with the german chancellor Angela Merkel and the french president also the president of the commission also. Disappointment earlier in the day there werent any new greek proposals as far as a new deal is concerned but it does seem that mr. Tsipras has tried to push this story forward by suggesting if interim financing were providing until the end of this month, then potentially the Greek Parliament could move forward with some reforms, but at the moment the negotiation really is about trying to head off a big Debt Repayment that the greeks have to make on july 20th. So at this stage we have really no sense that significant progress is being made in this meeting. What we are learning though is potentially there will be a full eu leaders meeting on sunday which would take us some way forward in trying to work out where this greek negotiation goes and whether greece remains a member of the eurozone. Back to you. All right. Geoff, thank you very much. Lets bring in Michelle Carusocabrera who has been on ground in athens for more than two weeks. Great stuff. I know youre holding up terrific. You know its getting even uglier with greek debt than debt around the world. Were showing our viewers right now a live chart of a twoyear greek bond. Its now yielding 49. 5 . Creditors staying theres a huge risk were not going to get paid back here. Is there any sense of the change in mentality in athens over the last 24 hours . You know what happened today where they went to brussels and suddenly all these European Finance ministers came out and were very angry saying we were here to hear something new and they didnt bring anything new. They brought old proposals which were out of date because the economy has suffered so dramatically and they have to implement even new measures. Its led to discussions here about whether or not this is all by design. Does the Prime Minister actually want to leave the euro . And all of this bungling is on purpose to drive the country to that point. Our colleagues at cnbc europe sat down with the minister of economy, not the minister of finance, two different positions here in greek, a phd in economics and was asked very directly do you guys want to leave the euro . The issue of the drachma, this government has no such mandate so our commitment is to find a solution because we all along i think well get a solution within the euro. Reporter so what was the explanation for what happened today . Well, he said we brought forward the stuff from a week ago, but it was literally a twopage letter that was an addendum to the thing that had never been put forward. We can go on and on like they are talking like this. They are going to talk on sunday now. Theres a payment due to the ecb in a little more than a week. Meantime, the banks are closed. The economy is getting squeezed day by day, and we wait to see if and when they start printing ious. Guys, back to you. Michelling im not going to let you go just yet because a couple days ago i tweeted out it felt like based on commentary from krafrkies, i know hes gone, what they said and the strength of the negotiating position may have simply relied on one thing. They do not believe, and i mean they in the higher echelons of the greek government do not believe legally that they can be kicked out of the eurozone do they . They dont believe all this grexit talk is legally viable. No okay and if that is the case, heres the situation. They have done all kinds of things that end up pushing the ecb, very violate all kinds of rules that push the ecb to do what they have done right, to cut off cash to the greek banks and start imposing greater haircuts so the banks have to post even more and more collateral . Legally they cant be cut out, sit here strangled by a Banking System that doesnt work or doesnt function and doesnt have money, okay. I mean if thats what they want is to sit there in this limbo state forever or until their people cant take it okay thats what they get. If you go to an atm tomorrow will you be able to withdraw cash . Were going to check. We check every day. I mean, any day now its expected they wont have cash. Many atms dont give the full 60, only give 50 because they are running short on 10s and 20s, things like that. Its getting pretty tough. Michelle thank you very much. Excellent reporting, as always. See you soon. Heres whats ahead. More on the markets and the money. Dow reversing a tripledigit loss. Now down only 18 points. Will the dow turn positive in this hour after being down more than 200 earlier in the session . Well find out. Plus citys top Energy Analyst ahead on the oil slide and the market chaos continues in china. Their version of the nasdaq down nearly 40 in just one month. What that means for you and your money coming up. Xco0 chinas shenzhen falling 5 the index down 37 over the last month. The shanghai composite falling adding to its 25 drop since june. Weibo, jd. Com and ja solar and baidu all deeply in the red right now. We asked the question is it still safe to invest in china or should you avoid it . Mike holland is chairman with Holland Company and longtime investor and also on the board of the china firsthand which trades under the ticker chs. Always good to see you. Good to be here, thank you. Scary for this a lot of u. S. Investors their access is through the etx, which is chinas large caps and conceivably they should be the safest place and yet thats where weve seen a lot of carnage. In the past month its been down 15 . Whats your message to investors at this point . Well i stopped using etfs and index funds or recommending them to people a long time ago because of the crazy valuations that had been going on in the highpriced companies, melissa. To give you just you mentioned the shenzhen. Shanghai which isnt quite so crazy, pretty crazy, lass dropped from june 14 a pe multiple of 108 times to today 55 times. Thats the price earnings multiple so what you have is these really expensive companies, like the dotcom boom. The closest i can come and its the wild west. If you cant take that kind of activity you shouldnt be there. You do have recommendations though, and these are Foreign Investors who have have access directly to these markets and they are insurance companies, large caps and financials. Walk us through, mike. The smartest way to invest melissa, is to find a manager on the ground and what ive done for the last 20 years, and fortunately the china fund that you mentioned has had a great group of managers over time and made a lot of money, including these horrible bear marmts and the crazy valuations which get pictured but if you stick to the fundamental analysis by companies, a whole swath of High Quality Companies and even the Hong Kong Exchange itself these are companies which actually make a lot of money, have not crazy valuations and you can find companies that are trading at 15 20 times earnings who are solid companies who make a lot of money and pay dividends. Its incredible to think that when you have the whole swath of the market trading at 50 75 100 times earnings that people would actually invest in those but thats what the individual investors in the wild west casino of the Chinese Markets do and its all fueled by margin buying. Invest investedor, margin buying, they have partied on until the last three weeks. Thanks for putting things in perspective. Mike holland of Holland Company. The Semiconductor Industry taken down shortly. Chris roland is with fbs Capital Markets and joins us now. Seems like semiconductors have been caught in the crosssector of weak pc demand what we heard from amd and that stock is taking a beating today and also concerns about china. Were actually seeing some of the China Telecom stocks that trade here in the United States off sharply today because theres the concern there wont be the upgrade. People wont be buying the smartphones as much because the emerging middle class are the ones that are playing the socalled casino that mike holland was talking about. Thats absolutely right. We saw weak handset data coming out of china for both april and may. We were expecting probably mid double digit year on year growth but instead it looks like its closer to midsingles. Which are the ones with the most exposure . Qualcomm comes to mind. It has a High Percentage of revenues directly from china and they feed directly into the mobile trade. Qualcomm is a big player broadcom, other players like nxp and then you know theres virtually, you know i can think of probably 30 other companies with exposure there in the 4g handset space as well. Are you telling investors to avoid certain stocks specifically because of china exposure sand there a stock being thrown out with the bath water . Weve actually done a study. We look at the sell in may and go away theory for stocks since its creation in the mid90s. What we found from november to may, they would return 15 on average. From may until november they actually returned negative 3 so this type of seasonality that were seeing in the stocks is very, very typical and we actually recommend to our clients to take advantage of that opportunistically. Any sort of a debt or selloff that you would see out there in the stocks so were actually recommending picking up some of the broken names here our favorite being mxp. And also nfc sore mobile payments. Sure. They have a huge catalog of products out there. Standard projects that go into everything and not just in china. Okay. Chris, always good to see you. Bryan, over to you. Thank you very much. Despite oils drop its not all bad for the oilrelated names. A couple of the refinery stocks are higher today. Look at that. Generally lower priced could be good news for refiners and we are keeping a close eye on oil with just a couple minutes left before the oil closes. Where will it finish on the day . Jackie deangelis will tell you in just a couple of minutes. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Your moms got your back. Your friends have your back. Your dogs definitely got your back. But whos got your back when you need legal help . We do. Were legalzoom, and over the last 10 years, weve helped millions of people protect their families and run their businesses. We have the right people onhand to answer your questions backed by a trusted network of attorneys. So visit us today for legal help you can count on. Legalzoom. Legal help is here. If youve been long coffee the commodity over the past couple of months, its fair to say you have been roasted. Coffee commodities down nearly 30 . Better than expected wet are in brazil, the worlds biggest producer boosting crops and thats driving prices down. But while coffee bean prices may be lower, it doesnt matter to starbucks. Beginning today that nonfat dolce lahti may cost you more prices rising on some by 5 cents per. Lets bring in a senior restaurant retail analyst with morningstar. Got a neutral rating on starbucks and 15 tart the stock is a couple cents away from that target. Anything that would change your view in the price increase to be more bullish on starbucks stock, r. J. . It will be interesting to see how soon they can pass this to consumers and given the success they had in 2012 and 2014, i think they will be very successful passing this on. The other interesting thing thats happening right before the nationwide launch of the mobile Pay Initiative which the company has which will be interesting, wont be as transparent to the mobile ordering system and they will have a good chance of success when that initiative launches. I think they can pass that on and at that point i do become more incremental and positive on the name. Economist like to call it the famous term of price inelastic or price elastic. Is star tux effectively immune to any price hike . Are there customers going to go no matter what . I think its one of the strongest brands in the consumer space. Thats a foundation of what we call a wide rating. What i like about it it not only carries a lot of cache with consumers themselves but consumers will pay up for the brand at the Grocery Store aisle, a much higher profit margin and business line for the company itself. Consumers love the experience. Youre making ive got to go. Making a lot of positive comments about starbucks, r. J. But a neutral rating on the stock. I think right now the valuation reflects the outcome, current outlook of the company but right now it has a lot of product catalyst so a name you want to be holding though it may get a bit ahead in terms of valuation. R. J. , a good pleasure. Thank you. Oil moving deeper into the red as the final trades are set to cross for the session. Were going to take you live to the nymex to find out how clowe crude Oil Prices May go right after this break. Stick around. It took Tim Morehouse years to master the perfect lunge. But only one attempt to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. Hello, everyone. Im sue herera. White house spokesman josh earnest says talks if convenient that on Irans Nuclear program are close to a deal and worth continuing. He says extending the talks gives both sides a chance to address their differences. The talks have been extended a second time to july 10th. President Obama Meeting with vietnams general secretary in the oval office the president saying they discussed the importance of resolving maritime disputes in the South China Sea in accordance with international law. Afghan official says a government delegation has met with taliban representatives in pack stop. The talks marked the First Official meeting with the two sides since the taliban was ousted from power in 2001 by a u. S. Led coalition invasion. And this is an amazing story. A secret passageway in vatican city has been opened to the public for the summer for the first time ever. The elevated half mile long passageway links the vatican with the castle st. Angelo. It was used as an escape route for popes during times of danger. That is your cnbc news update at this hour. Back to you, brian. Great stuff, right . Yeah, it is but it didnt look that secret. Kind of looked like a viaduct for water, windows and with the hat sticking up above the parapet. I just revealed my ignorance on that. Thanks, brian. Sure theres an official name for that cap. Oil is down again but off its lows of the day. Lets go to jiangy dangelis at the nymex for the final trade of the day. Reporter we did come off the of the session lows paerg the losses to close at 52. 33 for wti. But, remember, that session low was 50. 58. Started to pear the losses when we saw brent crude turn positive. 55. 98 is where its trading right now and they both started the session a little bit higher because we did see the second biggest drop of the year yesterday, very significant losses so technical buying perhaps coming into play here but, of course the focus is still on the dollar. Focus is still on Nuclear Talks with iran as well. Back to you. Thank you very much jackie deangelis. Lets bring in ed moore, citigroups head of research. Putting out something really important and youre changing your thinking and our viewers need to hear this so thanks for coming on which is for months now as the rig count has gone down, oil prices have reacted in one way. You say now the relationship between the rig count and the price of oil should invert. Explain. Well, sure. Actually its same relationship. Since oil recount is inverted so is the price relationship. We saw recounts going down and with it the Financial Community going longer and longer on oil and now now that weve had one week of data, one week of data points with it going up not only strongly but across all the major plays, Investor Community is going a little short fearing that theres going to be a rebound on the u. S. Supply side. Its an inverse relationship but the database the rig count has changed direction. Yeah. We look at cost of production. As Service Costs have come down cost of production has come down. Is a jump or even flat lining ed in the number of rigs that are drilling, is that a necessary a negative for oil prices . Probably flat lining and will be neutral and any jump will be bearish for oil prices. We dont really know productivity gains will continue a pace so eventually keep the rig counts steady. Eventually the efficiency gains will make for higher production but in the short run it probably is kind of neutral. Ed you called it exactly right when it comes to brent or oils reaction to to this deadline was that today and had been moved of course. You wrote that the iran talks failed to meet todays deadline. If they dont meet the deadline the selloff could reverse and could also reverse meaning get weak before we can sharply into q4 refining season. Is the resumption that a deal with iran is inevitable and that oil will come to market by the end of the year or 2016 or is that further weakening into the year and will that i be driven by q4 refining season . Its a timing issue. We think the probabilities are higher than the agreement and the question is will the iranians surprise the market by by agreeing to and implementing the sanctions and instead of being a sixmonth wait between an agreement and more oil its shortened to maybe two months. The iranians have indicated that they have already taken one major step forward, namely to get rid of the enriched uranium they have to get rid of. They have diluted it and the iaea has confirmed that. Oils problem isnt really complicated, ed just math. 9. 9 billion barrels here and if we get an iran deal how many barrels a day extra would come online to an already overstretched market. Its hard to come up with an exact number of how much Oil Production has been shut in and you can start producing. We believe they have overstated that number by a goodly amount. Twoebl in the neighborhood of 300,000 gallons in the market a day so whether thats bearish or another input no the database we have saudi arabia indicating it will increase production and iraq and the 9 million a plus day from the u. S. So its a supply and demand issue. We dont really know. You could even argue that one barrel a day is one barrel a day more than this market needs right now. Ed morris of citigroup, a real pleasure. Ed, thank you very much. Time now for trading nation. Traders do take the s p at one point and now down two points. Craig johnson from piper jaffrey, ill start with you. When we see big reversal days not always but often they can mean something technically. Does this reversal today mean anything . Boy i think its a very interesting reversal and the best phrase i heard all day is november short a bull market. When you have limited trading like right now you can see the reversal days unfold and thats exactly what weve seen happen today. Came right down to the rising 40week moving average and have seen support hold and were starting to rally off of that level. As we look at the short erer term on that chart also. We found that there. Were find inging indication to us when the market sells off hard in the morning and claws back the losses and weve seen that for two trading days in a row which tells me people want to own this market despite all the negative sentiment were hearing out there day in and day out about greece and china and other markets. Lets talk about earnings and maybe people not timing the market, look at it a little more long term because earnings season is about to kick off yet again. Four of them a year hard to believe. Anyway, when you look at the earnings expectations for the s p 500 do you see more equity gains ahead or have we peaked out valuationwise . Valuations look more reasonable trading at about 17 times forward earnings. Going into earnings season right now, we have really low expectations, right now looking at about a 4. 3 decline mostly because of energy but there are five sectors that are negative or very low Earnings Growth so very low expectations. Now if we have an earnings season like last year where 80 of the Companies Beat estimates, it went up about maybe 5 above what we started in the quarter, great, could end up with a really great quarter, but that remains to be seen it. May happen may not. We could end up in the red for the First Time Since 2009. However, second half of 2015, earnings are looking great and in some cases 2 two to three times what were looking for in the second and First Quarter and very Strong Revenue growth for the second half. Thats where i expect the pickup and when people start focusing on the second half i also expect the market to pick up. Marion gibbs and craig johnson, a pleasure. Thank you very much. For more trading nation head to our website at tradingnation. Cnbc. Com. We do two additional segments a day. Stocks trying to make a comeback, the dow 150 points off its lows today. Perhaps the next big obstacle is the one we just talked about, earnings season. Dont worry. Weve got your earnings playbook next. And now your trading nation stats of the day and a word from our sponsor. Theres an investing strategy called the dow theory saying transportation stocks can confirm or deny a Broader Market trend but its important to realize transportation stocks can be very vulnerable to oil prices and other influences so be sure not to rely exclusively on this strategy when making an investing decision. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . [ male announcer ] eligible for medicare . Thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. 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Cocacola the best performing name. 18 of the dow 30 are higher right now. In the s p 500, the second best performer out there is Chesapeake Energy. Were talked a lot about energy names. That is the best performer. All right. Are you ready, america, because as hard as it is to believe another earnings season is already upon us. The unofficial starter is alcoa. They report tomorrow. The big names all coming next week, but the predictions not optimistic. Dominic chu joining us now with that. Dom . Perhaps some of that turnaround in stocks is because we are upon that earnings season yet again and we have a whole slew of cat lifts that could, could propel the market higher if they come to fruition. Again, lets talk about the bar. They have been set really low right now. Earnings, we youre pecting a 3 decline for s p 500 stocks. On the revenue side were expectinging a 4 Top Line Sales revenue decline over the same time last year so expectations already low. Lets take a look at these pause these are the sectors that are going to stand out the most for many investors if the expectations from analysts are correct. First of all, no surprise here. Energy stocks the Energy Sector forecast to be the biggest drag for Revenue Growth and forecasting, analysts are, for a 30 decline in Energy Companies year over year. The biggest drag coming from energy and the second biggest one coming from material stocks steel, copper lower today on some of those concerns and about an 8. 5 drag in terms of earnings revenues in terms of the macro. Now the bright spots for Revenue Growth, health care stocks. 6. 5 gains in revenue. Top line growth there and, of course, Technology Stocks about a 2 gain in revenues there so if you take a look at those sectors, if the analysts are correct, thats where you could see the biggest drags and the biggest tail winds. Back over to you, melissa. That is a big caveat. Dom chu, thank you. A predictor for whether Corporate America is growing and lawrence joins us now at the nasdaq. Good to see you. Thanks for having me. Explain how you get this data and why its important . Every month we get actual revenue and profit information from hundreds of real u. S. Companies in the real economy. We put together this index so that we can share on a broad basis trends and growth rates in profit and in revenue and really instead of having survey data or estimates that are subject to revision after revision we can provide real insights into middle market companies. Got the real data for the first two months of the Second Quarter. What i thought was interesting is that it shows a picture that is directly against consensus. I mean dom had run through what consensus is for s p 500 companies for earnings as well as ref knew. Both are contractions so what youre showing is the opposite. Youre seeing growth. Thats right. In q2 were seeing revenue continue to grow at about a 9. 2 rate which is an increase in growth rate of two percentage point. On profit side the rate of Profit Growth is positive 569. 9 but the rate of Profit Growth isnt as good as the rate of Revenue Growth so were seeing profit margin compression. Lets talk about individual sectors and which ones look to good earnings and which ones look like they might have trouble. Well, the biggest growth in revenues in the health care sector, not surprising with continuing tailwind from the Affordable Care act. Weakest growth in industrials. In terms of growth and profit the greatest growth in profit is Consumer Discretionary and the worst growth in profit is actually industrials where profit has outright declined. When you look at the margins though actually health care which was the winner on Revenue Growth rate, has had the sharpest margin compression so even though profits are going up, the margins havent kept up with that and are shrinking. On a highlevel basis health care will look great in terms of the top and bottom lines of growth rates but if you look deeper under the hood its actually getting squeezed. Thats whats happening in the middle market. In the middle market for health care. Why do you think that is . I think theres greater demand for Health Care Services as a result of the Affordable Care act, further penetration, but theres cost escalations that have come with that, drug prices going up labor costs are going up and Many Companies may have mispriced or intentionally or unintentionally gained share. Well compare notes after earnings season. Thanks. Brian, over to you. Thank you very much. A bigname stock on a huge one and one analyst says it could have another 30 upside that. Name coming up. And look at the turnaround for the s p 500. It was down 25 points on the day and now higher by six points. Much more market coverage coming up. When a moment spontaneously turns romantic why pause to take a pill . 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For a free 30tablet trial go to cialis. Com time for street talk. Analyst recommendations. First stock disney. Upgrading it saying it is taking a fresh look at disneys valuation and given the, quote, phenomenal strength of disneys franchises, believes it is more valid to value the stock like a consumer blue chip name rather than a media name. New target 150. 30 more upside. There are a couple of ways to look at it. Something for this analyst to come out and upgrade it close to a high here. At the same time where was this analyst 30 ago . Credit suisse saying the worst is over for the macau casinos, upgrading them. Saying the negatives are priced in. There is a shift to more supportive policy from the chinese government. Construction of new projects slowed. I wonder if they factored in a 40 drop in the shenzhen index. Are they looking at that as a wealth effect . Well see. Stock number three, lululemon. Gugenheim naming lululemon, lots of bang for your buck. They see underlying momentum and Comp Store Sales growth. It should be good. Their target 80, about 20 upside. Athletic wear the golden children within the retail index. Lululemon, nike under armour done well. Advanced micro devices. Sitting on a 2 1 2 year low. Earnings would be weaker than anticipated because of weak pc demand. Its down 16 . Pacific crest is piling on saying it sees downside to 1. 70. Saying new designs are not winning new customers. You used to need a new computer every three year because of processing capability. Now you can run a 5yearold computer and it runs fine. Todays under the radar number ophthotech corp. Working on cures for eye problems. Cowan and company starting with an outperform and 80 target. That implies about 50 upside. The analysts saying it should support about 2 billion in peak global sales. Seven analysts cover the name. Average target of 76. 14. That is tremendous price action in a market like weve got. Get them on fast money. Thank you for the suggestion. Its hard to say. Good thing we are all sober here. Coming up the bright spot in the markets where. That is. [ male announcer ] legalzoom has helped start over 1 million businesses. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. The major averages are making a major comeback. Some sectors are moving higher than others. We promised bright spots and we deliver. Homeowners, put, lennar d. R. Horton, Toll Brothers all up 2 to 3 . Tobacco stocks Philip Morris and reynolds. Altria up 3 . This is a cool stat brought to you by our great markets team here at cnbc. If the dow closes higher today, it would be the biggest single day reversal for the dow since october 4, 2011. This would be the biggest reversal in more than 4 1 2 years for the dow industrials. One wonders if its on expectations of a greece deal or just perhaps more buyers than sellers . Thats my number one pet peeve, more buyers than sellers. White house is set to launch a 520 million Solar Initiative pledging to make 20 more electricity from renewable resources. Solar stocks not picking up on this news. Taking their heat from the crush in Energy Prices. How can you invest in solar . Lets bring in colin rush. Its interesting because the correlation has been to oil. When oil goes down solar stocks go down. Even though there is no fundamental connectant between oil prices and solar. Its competing against other things like nat gas. Nat gas down 38 yeartodate. Isnt that a problem for solar stocks . Potentially long term. We are seeing a fundamental shift to being deployed for the grid and delivering electricity. We are seeing diversification. We are looking at delivered Energy Prices. Delivered electricity, the fuel prices is 20 , 25 of total cost. Then the costs around that infrastructure. Solar is so competitive pricewise. Even with gas prices solar is more competitive. In minnesota you went headtohead on a 400 mega watt bid and solar won out on a cost bid for consumers. Its still trading down because Energy Prices are down. Which ones do you tell investors, you know what go into this one . Well see a sequencing here. You look at sun edison and solar city. Sunpower and canadian solar. You have mix of project and manufacturing assets and prices are moving up. Tonight on fast money at 5 00 we are talking about shake shack. The chicken sandwich weve got one. Weve got a few. Well taste test. We look forward to it. Delicious fast money. Thank you very much. Dow heading for its biggest reversal in more than four years. Thanks for watching. Closing bell starts right now. Welcome to the closing bell. Im kelly evans on a big reversal day here at the new york stock exchange. Im bill griffeth. All of us are standing on the floor saying what have you heard . Whats going on . The dow has come back from what was a 218point deficit midday. You see there just before noon eastern. Now up 85 points. We are setting highs for the days. There have been concerns about the chinese governments attempt to stabilize its own stock market. That early on was weighing on u. S. Investors. And the