Transcripts For CNBC Power Lunch 20160321

Well over the next two hours. Welcome, everybody. Im Tyler Mathisen with brian and melissa here and michelle in havana. But we begin this hour with john fortt in cupertino. This phone here might look old. The iphone 5s. We expect Something Like it to be the star of todays event. Perhaps called the iphone se. Apple is expected to resurrect this four inch iphone form factor in a newer phone with upgraded internals, better camera on the back, and upgraded chip inside, perhaps the a9, recently been in other phones. Now, part of the question is how much this will cost. Rumor has it could cost as low as 450, comparing to 650 for the iphone 6s. The latest out the gate. That could be important if this is part of apples move to get deeper into Growth Markets like india and china, which have had the strongest growth from apple thus far. It is not just about the iphone. We also expect new watch bands for the apple watch. Now the new watch itself, but new bands and also the ipad expected to get an update. This is the full size ipad. It is expected to get some of the features from the ipad pro, which we saw arrive at the end of last year. That does not seem to have changed the trajectory of the ipad at all. Sales are still declining. But perhaps adding some features, maybe a keyboard, pennsylvania capability, two of the full size ipad will at least improve the ecosystem there. Also, the possibility that we could hear tim cook Say Something about this apple versus fbi case. We expect to have a hearing yesterday sorry, tomorrow in Southern California on that case. Security and privacy an important part of apples product story. So all of that coming into play from cupertino today. Well be covering that throughout this hour and the next. Back to you. Jon, thank you very much. We just hear that mr. Cook has taken the stage out there in cupertino. Well be watching to see what if anything he says that is newsworthy or otherwise of note. Lets bring in Collin Gillis who covers apple for bgc financial. Welcome. From what john just said, it sounds like these announcements that we expect today are extremely incremental. A smaller phone, more watch bands for goodness sakes. Were covering watch band announcements now. And some enhancements to the ipad, which has been a little bit sort of stuck in a calm. What do you say in. I say it is a borg event. It is going to be a boring event. Thats great. It might move the needle incrementally, but it does not solve apples fundamental problem of being too reliant on sales of the iphone and not being aggressive enough and building up services, recurring revenue layer. Thats where you think they ought to go. What would that look like if they did it. Eye beacon. We havent heard much about eye beacon, home kit, home automation, another big area where i think they could be more aggressive instead of rolling out a four inch phone that will satisfy a lower price point. Fine, but we have beaten the iphone pretty much to death. Completely dependent the company is dependent on that margin and on that colin, i have a important question colin i have a question but we got to go back to jon fortt now, maybe breaking news. Actually, tyler, tim cook is on stage right now, talking about this controversy apple versus the fbi. He said that apple just in recent weeks said to the nation that we need to start this conversation, we need to decide as a nation how much power the government should have, he said, over our privacy and security. It is an issue that touches all of us. He said that apple does not expect to find itself at odds with the government over this, but that apple feels strongly that customers, that individuals, that citizens should have control over their data. So this event opened up with apple having a product story, 40 years in 40 seconds, talking about the products that apple has come out with. As soon as tim cook took the stage, he addressed the security issue and this battle, this court battle, this legal battle with the federal government straight on, guys. Back to you. Jon, thank you very much. Very important hearing tomorrow on that. Brian, you had a question. I just gave it to john, my question was tongue in cheek. You said ibeacon could be bigger. My question is what is ibeacon. It will allow them to build up an advertising revenue stream, some people walk into stores, it will signal, you know, hey, youre here, you got an iphone, perhaps you may be interested in seeing this product that is a few steps away, uses gps to build up an also related to privacy. So the privacy discussion apple is trying to drive is a big one. I dont think there is a winner or loser here for apple. It is not positive for them to be drawn so heavily into this case. In terms of the lower cost phone, is there a risk that it is going to pressure margins, pressure asps and you might actually get cannibalization, somebody who might be looking to upgrade a phone might say i dont want to pay 600 plus dollars for a phone if im only surfing the internet using it for itunes and sending emails. I want the lower cost one. Of course. But those risks are already happening in the Broader Marketplace. So at least apple is going to serve it with one of their own phones. I would imagine the margin profile will likely be about the same. Apple likes to sell high margin products. But the revenue impact will be there. And apple is going to have a tough few years ahead of it. And right now it is performing in line with the broader index. This is a name that is really well suited for Institutional Investors to use listed equity options to play. What is your writing on the stock . Hold and 110 target. So 42 diebuys, 7 holds. Well end on that note, tough couple of years ahead of it. Colin, thank you very much, with bgc financial. More apple coverage, second by second, throughout power lunch today. Were following a developing story on drugmaker valeant. The stock popping following news that its ceo is out. Bill ackman joins the board. It is interesting what is going on with Howard Shiller as well. Very much so. There is a big shuffle at the top of valeant. Mike pierson is out. Hell be in the role of ceo until they find a successor. Bill ackman joining the board immediately. Now the story is focusing on former cfo Howard Shiller who is on the board. He filled in as interim ceo when mike pierson was on his medical leave of absence. In the companys statements today, talking about all of the Financial Institutions they have run into, theyre talking about Improper Conduct from the former cfo schiller and the controller, the corporate controller. And schiller coming back in a Statement Today saying there was no Improper Conduct and hes not going to leave the board despite valeant asking him to leave. This is the real controversy going on at valeant now. The company and the board talking about the tone set by the top of the company, being one that is problematic and leading to all of these things. Another piece of news that came out today is the company saying they plan to file their 10k by april 29th and showing you some deadlines there. Thats very important for the 30 billion in debt. If they dont file their 10k for 2015 by that time, they can trip some covenants on the debt. They say they do plan to file, theyre still trying to negotiate with creditors just in case. What else is left for valeant at this point . Theyre looking for ceo successors. Theyre continuing that investigation, that board investigation into the accounting there and thats why people are still kind of concerned because what else could pop up there . The company even says in its 8k, they havent finished that investigation, could be more misstatements, more information to come. Folks will be closely looking at the outcome of that. And then finally, asset sales. Thats what a lot of people are talking about. Valeant has great relationships with banks as they were buying all of those things and banks are eager to start selling all those things for them too. A lot of news coming up. Well be talking closing bell more about this and potential successors. Is pierson also the chairman of the board or just the ceo . He was the chairman of the board, but they removed him from that and now bob ingraham is the chairman. Do we know more about this Improper Conduct from schiller. The Southern Investigative Reporting Foundation did great reporting about a month ago where they highlighted schillers propensity to take one of three valeant private jets, g 4, g 5 and g 6, costs 65 million, and they highlighted some trips to and from conferences, to ski house in colorado. Interesting you mention that. That is not what theyre focusing on here. All about fill door, but you mentioned the jets, i was looking at the compensation for the main executives at valeant and actually pearson had a much higher number for use of the corporate jets than schiller did. So it is interesting you mentioned that. You got to wonder if schiller is going to sue the company if that will entangle them further down the road and be a distraction as they try to get their house in order. If there is some sort of a lawsuit, what sorts of records might be part of this case. What might be exposed. Certainly. I think everybody would like more information here. If they were to come out through that route, would be interesting to follow. We have to see. But it is getting very heated with the statement from schillers law firm today. Meg, thank you very much. President Obama Meeting with cuban president raul castro in havana today. Some of the pomp and circumstance already has taken place. The two leaders are expected to make a statement within the hour and we will carry that live the moment it begins. In the meantime, Michelle Carusocabrera is live in havana for us. Michelle. Hi there, tyler. There is a large number of Corporate Executives traveling with president obama as part of the delegation. We have seen hotel executives, Telecom Executives as well, ursula burns on earlier, the ceo of xerox, the white house very much wants this to be a commercial event, not just a political event. There has been a major deal announced, starwood signed a deal to manage three hotels for the cuban government here, two of them part of their luxury collection, one will be sheridan. So a midgrade hotel. And also Arnie Sorenson is here. The ceo of marriott. He happened to be here at the same time, that he announced this morning that he and marriott and starwood have once again renewed their vow, so to speak, they are going to merge. Youll recall that just last week Chinese Insurance Company anbang had had disrupted a previous deal between marriott and starwood by upping the bid to 76 a share in cash. This morning, marriott upped its bid, increased cash, put cash into the deal, and also said that when all was said and done, when you included all the stock, it would come out to 79. 53. Higher bid compared to anbang. Starwood and marriott are once again on the table, merging, well see if anbang comes back again, with perhaps a counteroffer. Arnie sorenson spoke with us this morning about why he thinks his deal is more compelling even though the anbang deal has more cash. I think the offer we put on the table is compelling. And i think it is quite different because of the future Growth Prospects it offers. Is there any frustration bidding against a chinese company, which by its nature seems to have implicit government backing by the nature of the people involved, by what is from the outside appears to be an incredible desire if not desperateness by Chinese Companies to get exposure outside of china, their incentives are so much higher in a way that seemed to push you to places or to a price you didnt want to go to before and could push you higher. Is that frustrating . Were in havana, part of the council. And i do believe both personally and as a matter of business that we compete in a global platform. He says if anbang comes back with a higher offer, he wouldnt tell us what the answer to the question whether, whether or not he would counter higher. Well see. Hes potentially still in a bidding war. Guys, back to you. High stake game of poker it seems going on down there. And around the globe. Thank you very much, michelle. Well be back with you later during the two hours. Straight ahead, well drill down on energy with one of the biggest players in the oil patch. The ceo of apache joins us exclusively ahead. We expect more news out of the big apple event currently under way in cupertino. Well bring you the latest when power lunch returns after this. Here at td ameritrade, they work hard. Wow, that was random. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry 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. Td ameritrade. Whyour boss . Ork for . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. With extraordinary offersmance on the stylish, allnew rx. And the dynamic nx. This is the pursuit of perfection. Welcome back to power lunch. Im jon fortt. An apple event is ongoing, some news from inside. After tim cook gave that Opening Statement involving apple, fbi and apples stance on privacy, lisa jackson took the stage, a Top Executive at apple in charge of policy. This is interesting because her job before that was chief of the Environmental Protection agency with the federal government. Lisa jackson talking about how 93 of apple facilities right now run on renewable energy. 100 renewable in 23 countries. Also talked about how apple is moving toward paper packaging and introduced a robot that apple now has, developed internally, but calling it is a machine that takes apart eye phones and recovers materials from the phones to be able to to be used in other projects Going Forward. Not just phones, but solar panels and the like. Right now, Jeff Williams is on stage, another apple executive in charge of the apple watch and other projects at apple including the overall supply chain. Hes talking about research kit and apples work in health right now. So no product news yet, but apple making big policy statements, perhaps a bit of a pr and marketing push as well, arguing theyre good for the world and not just the privacy of its customers. Back to you. Jon fortt in cupertino. Now let us dig more into the recent oil rally. Crude oil up 30 over the past 30 days. Some of the biggest players in energy are gathered in new orleans for the energy conference, among them, the ceo of apache oil and gas, and we welcome in exclusively the ceo john crispen of apache. Thank you for joining us on power lunch and cnbc. We have seen a nice run for crude oil, we have seen a nice run for your stock. But how much more does 39 or 40 a barrel matter to apaches Balance Sheet than say 30 bucks. Does it make that much of a difference . Well, actually every 5 move in oil price means 450 million of cash flow to us. It absolutely makes a difference. We budgeted the year at 35. So anything with a four handle in front of it is very welcome. You know, thats an interesting comment. 35 is where you budgeted this year. What is that down from last year, john . You know, we budgeted 50 last year, brian. And, you know, obviously in the 53 price. Thats a huge cut. There has been a lot of optimistic bullish comments about the price of oil Going Forward to the back end of the year. I know youre cautiously optimistic, john. Why did you budget 35 . Is it just an overabundance of caution or is that really where you see the fundamentals taking oil. Well, i mean, what we have done, if you go back to last year, we took a conservative approach. And budgeted at 50. We had really geared our business to be flexible going into the end of the year, and we felt like 35 would be the appropriate level to balance, you know, our budget at this point in time. And clearly were optimistic in the future that price will improve. The thing we wanted to focus is our control. Thats our cost structure, overhead and our activity levels and gear them more toward s the 35 price environment and we can be in the position to benefit when things improve. Production will be what, compared to last year, john . Were going to be down seven to 11 at the corporate level. What is amazing about that is, a, youre one of the few companies we heard that is going to reduce production. A lot of people are ramping it up. But you have gone, i want our audience to hear this clearly it a pretty stunning number, youve gone from 93 rigs, drilling rigs, down to just four. 93 to four. Why isnt output expected to drop even further . Well, i mean it goes to the strength of our asset base. We have a lot of conventional assets. We have got a Strong International portfolio with egypt and assets that contribute nicely. If you look at our north american position, we have got large portion of our permanent is conventional oil. We have lower decline rates than a lot of our competitors. And quite frankly a very high production base, high Quality Production base. It sounds like youre profitable at 35 a barrel. Fair to say . Absolutely. And the key is were going to be cash flow neutral in 2016 at 35 a barrel. But much of the industry is not, as you yourself pointed out, the overall industry is expected to spend 150 of cash flow, a lot of companies are not profitable. If oil does not turn around further from here, john, what is your industry going to look like by the end of this year . Do you expect bankruptcies . Well, a lot of background noise there, but, you know, clearly if prices dont go up, spending level, overtime has to come down. As an industry, we have to be able to live within cash flow over a long period of time. All right, john, budgeting for 35 bucks, says theyre profitable there. We appreciate you joining us on cnbc. Have a great conversation. Thank you. From john back to cupertino and jon fortt with more news on apple. Apple has Just Announced care kit as part of its Health Software packaging. Care kit is meant to allow patients to take a more active role in their care. Parkinsons is the first disease targeted where individuals will have more insight into data about their condition. It will be individualized. Jeff williams, apple executive on stage now, talking about how in surgery cases also this will be important, go from being under the watchful eye of doctors and hospital staff to being out on your own. Care kit is meant to allow you to be more in touch with data about is exactly how youre doing and to share that data with medical professionals at the same time. Power lunch will be back in just a moment. E trade is all about seizing opportunity. So im going to take this opportunity to go off script. So if i wanna go to jersey and check out shotsy tuccerellis portfolio, whats it to you . Or im a scottish mason whose assets are made of stone like me heart. Papa youre no son of mine or perhaps its time to seize the day. Dont just see opportunity, seize it applause every Auto Insurance policy has a number. Seize it but not every Insurance Company understands the life behind it. Those who have served our nation have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. You dont want to live with mom and dad forever, do you . Boo laughs how do i check my credit score . Credit karma. Dont worry, its free. Credit karma. Give yourself some credit. And that what goes down doesnt always come back up. [ toilet flushes ] so when you need a plumber, we can help you get the job done right, guaranteed. Get started today at angies list. Welcome back to power lunch. Im melissa lee. Lets get a check on the bond market now. We have a bid on the one. For the rest of the yield curve we have pressure with the most pressure on the 30 year and that yield is up do 2. 711 . Look at the tenyear yield now, now just above 1. 9 , 1. 91 is where it stands right now. Meantime, coming up next, three names for the next year and some tech picks for right now. Much more power lunch in just two minutes. Welcome back to power lunch. Im jon fortt in cupertino with the latest from the apple event. Some news on the apple watch. Tim cook just announcing that the price of the apple watch, the entry price is going down to 299. Also new bands for the apple watch. There is a woven nylon band that apple is introducing. Also new colors for the sport and leather bands and a black milanese loop. And customers, one third of wearers tim cook says regularly change their bands, clearly hes not only trying to take advantage of that fact, people who have already bought the watch, but apple lowering the price trying to get more people in. Right now hes talk ing about apple tv. 5,000 Apple Tv Apps right now. And theyre talking about the ecosystem there with video. Were going to continue to bring you the updates as they come from this event here in cupertino. Back to you. Look forward to it. Thanks, jon. Gold prices are closing now. Lets take a check on where gold is settling out. 1244. 70 an ounce. Green arrows across the board with the biggest gains seen in palladium today. Technology stocks getting a low start for 2016. There you are. Our next guest has three tech names you should buy today and hold for the next 12 to 18 months. Lets bring in brian bellski. Brian, always good to see you. Your three names are really unfamiliar to me. Ive never heard of any of them. Apple, one called google and then a third one, i cant even remember. It is so obscure. What is the third one . Really obscure. I think our strategy has been for several years, we want to buy big Brand Companies that everybody knows, that isnt going to surprise anyone. Remember, were all still kind of waiting around for the big rotation, the great rotation to come back to stocks and when investors finally come back on the retail side to buy names, we think theyll buy names they know. Lets talk specifically about apple as we start now, apparently to get some details on this new iteration of the iphone. Back to jon as appropriate. One of our prior guests said it will be a tough couple of years for apple. You disagree . We do disagree. The impending doom of apple has been looked at for years now. And what we find really interesting is that investor behavior for apple, lets say the last three or four months, we saw very similar type action in 2013, 2014 when am wpple was used as a redemption tool. They had to sell things. Because apple is the Largest Company around and Technology Companies in general are the largest sector in the u. S. Market, it has been used as a redemption tool. Easy stock to pick on. Kind of microcosm for the United States stock market. Everyone trying to guess when the bull market will be over, just like everyone is trying to guess apples impending doom. We look at apple as what we believe is a really attractive combination of both growth and value. And we throw it into our garp bucket and look at Technology Companies and three buckets, garp, and growth overall. What role do dividends play in the picture in the next 12 to 18 months . All three of these companies and especially cisco and am, looking at apple, cisco in particular we have to go to jon fortt with news out of apple. Apple has officially now announced the iphone se. This is a four inch iphone. The same size as the old iphone 5s. Apple saying this phone is going to be two times faster. On the outside, it looks pretty much the same. It has got some changes, the way theyre going to do the logo on the back is more similar to the 6s already out. They have a rose gold version. Inside is where we expect to see or are seeing more changes, the a9 chip is inside this phone. They havent said what pricing is going to be yet. But greg jives is on stage. He said there is a couple of reasons why they kept this four inch phone around. One, some people just like that size. You can get your whole hand around it. Some people cant do that with the iphone 6 and 6s size. Another is because it is a lot of peoples first iphone, introduction to the ecosystem. He hasnt specifically called out price, but thats the implication. People are just getting to know the value proposition, want to make it affordable to them. There is a 12 megapixel eyesight camera on this phone, which brings it in line with todays higher end phones. So the question that were waiting for is exactly what the pricing is going to be. The camera and image capabilities in this phone are up to par with the 6 and 6s. Where do they price it and how does this change the overall ecosystem and competition with android is what were going to continue to watch here, guys. Jon fortt, thank you very much. Back to brian bellski. I was asking about your three tech picks because they all have dividends. How important is that in terms of picking stocks the next 12 to 18 months. Thanks for asking. I think it is a really important thing. Especially given the fact that the feds next moves over the next 12 to 18 months are clearly higher now that that is slowing down. At the end of the day, we need to continue to provide income for the clients and thats coming from equities. Over the last few years, Technology Companies in general have shown some of the strongest and most consistent dividend growth. So we think it is a very, very important part of a longer Term Investment strategy in terms of Equity Income and Equity Income growth. Doesnt sound like youre worried about apple at all. Im listening to what john is bringing us here. A new watch band and theyre going back down to the 5 with logo is different. It is like ford unveiling a new ford focus that has a six cylinder, not a four cylinder and shiny rims. Other than that, they could come out with something later on today, but were not hearing much that seems groundbreaking from apple lately. No, apple has been pretty consistent though, brian. There is the big trend over the last three or four years is that the phones have gotten bigger. As you know, markets are cyclical, politics are cyclical. The size of phones are cyclical as well. So we would imagine that the phone size is going to now turn the opposite side and go smaller. Brian, thank you very much. Brian bellski of bmo capital markets. Over to sue for a news update. Here is whats happening at this hour. A dubai plane landed on saturday killing all 62 people on board. It nosedived and exploded while trying to land in strong winds. It happened in the russian city of rostofodon. The United Nations warning that hotter temperatures are here for good. The u. N. Weather agencys annual report predicting more pockets of both dryer and wetter conditions depending where you live around the world. Fan duel and draft king, two online Fantasy Sports sites no longer accepting bets in new york. It comes after todays agreement with the states attorney general. Under the deal, they will stop paid contests and delay an appeal until september as they work out legal clarity issues. And former wrestler hulk hogan due back in court in connection with the gawker sex tape case. Jurors will decide how much money in punitive damages hell get. He already got 115 million for both economic and emotional damages and that was actually more than they wanted in the case. Well see where this one goes. Thats the news update this hour. Back to you guys. Thank you very much. Back to jon fortt with pricing information about this new old iphone. Thats right. Big news here, the iphone se is going to come in at 399 for 16 gigabytes, 499 for 64. Thats cheaper than a lot of people were expecting. A lot of people were expecting 450. This is interesting because apple executives, greg jobs was saying 30 million fourinch iphones sold in the past year. Not an insignificant number. That 30 million largely coming from Growth Markets. Apple is coming in at a price point with a new phone significantly cheaper. Bottom line, this is the cheapest new iphone that we have seen. It has nfc and secure element that is Near Field Communication and security built in. So it does apple pay. Has the a9 chip, has a 12 megapixel camera on the back, allowing 4k video. Has i mentioned the a9 chip inside and m9. This is significant. It will be interesting to see how apple avoids cannibalizing the other phones. March 31st this phone goes on sale. To that point, what accounts for the price difference in your view . Sounds like the features are very much the same and if i were up for an upgrade now, i might go to the se considering how much cheaper it is. You got to consider, melissa, the price difference, it is able to be cheaper because they managed through the manufacturing process for the iphone 5 form factor. They have been building this since the iphone 5. They very much have the cost down and also this a9 chip, building that for along time, they also got the cost out of there. The camera as well and the smaller screen also helps them to keep costs down with this. At the entry level, there is only 16 gigabytes of storage inside. The price has continued to come down. So thats another benefit. When you add all of those things up, and consider the margins that apple is able to operate under, even when the phones are new, there is a lot of cost that they can take out of the manufacturer of this phone. What you just said, the word you used, john, for apple investors out there, may be the key take away from the event. It may come down to pricing and the m word. Margins. We heard john earlier report that the price of the apple watch was going to come down. If youre an apple investor, moores law, the price of technology and manufacturing coming down if that comes down at the same rate or more than this new price, then apple will be fine. But if theyre pricing comes down faster than their costs, their margins will get shrunk a little bit and thats something investors need to pay very close attention to. This new iphone looks like an iphone. Right . I feel validated, jon. I tweeted out i had gone down i went from a 6 to a back to a 5s for a number of different reasons. Number one, pocket carrying, and i thought the lightning adapter on the 6 couldnt support the weight in a vertical stand and got a little loose, little wobbly, like top heavy, got loose and having trouble charging it. I went down to a 5, so i feel validated for the early adopter of the downgrade. Good for you, brian. Good for you. You should and watch the margins. Thats a big deal. Lets watch havana, cuba, where president obama and raul castro will be speaking very shortly. We will take it live when it happens. Stay with us on power lunch. Its more than a network. Its how you stay connected. With centurylink as your trusted technology partner, you get an industry leading Broadband Network and cloud and hosting services. Centurylink. Your link to whats next. Serena williams. Hi watson. You are a fierce competitor. Ive heard that. I have analysed your biggest matches. Oh really . When down a point, you serve an ace 5. 8 times more than other top players. You sound like a coach. I am not. But i can customize Training Programs based on biomarker data. Watson, thats pretty impressive. You might say i am the Serena Williams of cloudbased cognitive systems. Nah, i wouldnt go that far. In new york state, we believe tomorrow starts today. All across the state, the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. Like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. And in syracuse, where imagination is in production. Let us help grow your companys tomorrow today at business. Ny. Gov patrick 2 pretty great. Ke to be the boss of you . patrick 1 how about a 10 raise . patrick 2 how about 20 . patrick 1 how about done . patrick 2 thats the kind of control i like. And thats what they give me at national car rental. I can choose any car in the aisle i want without having to ask anyone. Who better to be the boss of you. patrick 1 than me. I mean, you. Us. vo go national. Go like a pro. Hi. I just wanted to just wanted you to get a chance to look at me for a couple of seconds without me talking, a rare thing. Now to Michelle Carusocabrera live in havana, cuba, with more. Were learning more details, brian, about what the deal that google has achieved here in cuba, google has been pursuing a deal here in cuba for more than a year and now were learning that they are going to open an internet cafe so to speak. A very famous sculpture artist here, sculptor, and hes got a cafe. And there has been Internet Access provided there before. Google has gone in there apparently and provided technology and equipment that will give Free Wifi Service and Free Internet service that is 70 times faster than what is currently available on the island. So once again, google deploying some kind of technology here within a cafe that is going to provide free wifi and Free Internet service at a much faster rate than cubans are used to. The internet here is atrocious. It is incredibly slow. If you are even able to get it and very, very few people have access to it. We plan to see the studio later on today and have pictures of it for you tomorrow here on cnbc. Once again, google deploying here in cuba. Back to you. Michelle, even if the Internet Service is faster, is the internete censored there . Thats a good question. I asked that. There are certain sites written by dissidents that are blocked out. But i have so on government controlled visits, i have been brought to an internet cafe and asked that very question, they say, you can try anything, you can do anything you want, and i typed in things to search for, such things that would be not nice about fidel castro, raul castro, et cetera, and they all come up. They knew i was coming. They did that perhaps for me. So it is hard to know if everything is available. I can tell you what cubans really want to do when they get on the internet, they want to get on facebook, want to use google. They want to use twitter. So thats really what theyre after. When we have been to internet ca cafes, theyre on facebook and theyre very fast about it, because it is so costly. All right. Michelle, thank you. Crude oil has been in rally mode for past five weeks or so, climbing more than 35 and now there is a new crude reality that could push prices even higher. Halima croft is here with Rbc Capital Markets and a cnbc contributor. You had a nice run, a lot of it was short covering, opec chatter. Now you say Political Risk could enter the equation. Were starting to see politically driven supply outages. The market hasnt priced this in yet. Were starting to lose hundreds of thousands of barrels out of stress producers like nigeria, like iraq. New concerns about security facilities in nigeria. Were starting to see potentially the return of Political Risk premium to the oil market. What is the biggest geoPolitical Risk in your view . We were very concerned it would happen in 2013 in algeria when facility was attacked, it is worrying what happened on friday with the rocket attack on the bp facility. We watch that. But in terms of where we could lose volumes quickly, nigeria and iraq with the northern pipeline off line. Is there any risk premium now . You foresee it, im sure traders in the pitch see it. We look at crude just below 40 bucks a barrel. How much is in that price already . I dont think the supply disruption is in the price. I think it is the opec story, i think it is the short covering. I think it is the u. S. Production coming down. But if you start it see larger volumes coming off and start to have the supply overhang really collapse, i think thats when it comes back in terms of price. Back out to jon fortt, more news out of apple. Thats right. Apple announcing a smaller ipad pro, based on the 9. 7 inch display size. Recognize that as the original ipad display size. They have not announced pricing yet, but phil schiller, head of marketing at apple, is touting this as the ultimate upgrade for ipad users. That upgrade is important because a lot of ipad users have not been upgrading. Sales volume has been declining for years now. Also touting it as a pc re placement, there are 600 million windows pcs out there that are due for an upgrade. Apple hoping to get a share of those as well. Of course, theyre going to have to compete with microsoft. Samsung, many others going april those users. Apple stock not responding tw w this. Most of the announcements had been expected. Biggest surprises the price drop on the apple watch. And the pricing of the iphone se at 399, which many expected to be 50 more. Well continue to monitor this for the details on pricing on the ipad pro and any other news on the ipad line that might come out. Back to you. Jon fortt, thanks so much. Looking live now at some exterior scenic shots of the city of havana. There with the ocean in the distance. And now to the interior of the palace of the revolution where in just a few minutes, president obama will be speaking alongside raul castro, the cuban leader. Meantime, well go there momentarily when it begins. Meantime, lets check back in on apple. The stock now down about two thirds of a percent at 105. 19. Here is what we know so far. The four inch iphone se priced at 399 for the basic 16 gig version. 100 more for 64 gig. It is available for preorders beginning march 24th, thursday. The price of the apple watch has now been cut to 299. And finally, a smaller ipad pro will be made available, the 9. 7 inch form factor, i assume that means the size of the thing, the form factor. Smaller is the new bigger is the headline so far. Small is big. Yes. Small is the new big. Thats right. Now, joining us, jason ware, cio of albyon financial and tim lesscoe of granity investment advisers. Are you blown away . Is this a needle mover or not . I dont think anybody is going to be blown away by the announcement. It is one of the most telegraphed announcements i can recall in apple history and i dont think people are waiting for the old one more thing that we used to get from steve jobs every time they had an announcement. But it is essentially what people expected, not sure the stock is going to move all that much either way. But it is nice to see apple continue to build a product line so they can bring more people into the ios ecosphere which is their goal over the long run. You have 15 million worth of apple shares. As we look at the stock, where do you see it trading a year from now . Well, we look out to the next event. This event, you know, like you said, well telegraphed and didnt really, you know, nothing new was announced beyond our expectations. But if you look at what happened with apple, say in 2014, the stock did very well, though Revenue Growth was very sub par, around 6 , 7 . The stock up 38 . 2015 was a lackluster year for apple stock, down like 4. 5 in terms of price return. Revenues were up 28 . So what that tells you is that apple stock is a discounting mechanism looking out over the next 12 months and we think the event coming up in september is going to be an event that is much more exciting, that you need to look out to the iphone 7 and the next iteration of the watch to get excited about what the future holds for apple. As an investor, you need to look at the fundamentals as opposed to here is the event today that was in line with expectations. Stock is not doing much. What is going to happen over the next two quarters. We prefer to look at what is going to happen over the next four to six quarters looking at this new product coming out this year. How much better than a market performer do you guys think this stock is . Tim, why dont you go first and back to you, jason . Is that the reset were watching here . Well, you have to define the market. If you look at it compared to what the nasdaq has been doing year to date, apple has been a good performer. When you look at it against the s p of which it is the largest component, it has been a market performer. But as value managers, stock trading at ten times earning with the kind of stability apple is beginning to build into its business and long run business, it is pretty cheap. You could actually see multiple expansion with an apple regardless of what the market does. I think we could put better than a market performer on apple. Jason . Yeah, i would agree with that. You know, depends on your view. If you look at the last 12 months, the answer is no. If you look at the last five years, the answer is yes. If youre looking at it over the shortterm, there is going to be some volatility and certainly going to be some frustration. But as we look at it as a fundamental investor, we this i it outperforms the Broader Market at large, better growth rate than the market and trading at a cheaper multiple and they have so much cash and so much opportunity to continue to attack the innovation markets theyre going after and the Management Team is so competent we think there is a lot to like there. Jason, thank you very much. Jason wear, timothy lesscoe. We expect to hear from president obama at any moment live in havana, cuba. That is the setting and well bring it to you when it begins. Welcome back to power lunch. Apple shares down actually half a percent now. New ipad pricing just being announced at the big event in cupertino. Jon f ortt is live with the details. We have pricing on that new ipad pro. This is 9. 7 inches. Smaller than the original ipad pro. The price starts at 599. 600 bucks for 32 gigabytes. That compares to the usual 499 or 500 price for an entry level ipad. It has twice the storage that entry level ipads at 9. 7 inches typically have had. Im comparing that to the ipad air 2 older versions of the ipad still being sold at lower prices still. Apple is saying because this has the a9x chip, in essence more colors, vibrant color on the screen and true tone display, thats a display that changes the temperature of the color. The type of white you see is warmer, in a warm room, colder in a cold room. Depending on lighting. This makes it work keep in mind with apple products, usually the high end is not where the volume is and ipad is a product that has seen declining sales for eight quarters, two straight years now. Apple is announcing today, not likely to change that overall trajectory. Back to you. All right, jon fortt, well see you in a few minutes, thank you very much. If you want to better understand where Oil Production may be going down the line, you want to follow the rigs. Thats why every friday we bring you the weekly rig count, how many drilling rigs are operating in the United States. Your next guest does not need to wait, his company lives rigs every day. Andy hendrix, he joins us from the conference in new orleans. To better understand your company, you know, exxon is a consumer facing company. People see the logo. When ive been out to the rigs, ive been out and seen these things in the mittle of middle, you help companies drill wells. The number of rigs has come down dramatically. At 62 now, down big from where you were. Do you think we have seen the bottom in new drilling rigs . Hey, brian. Thank you for having us on today. We eat, live and breathe drilling rigs every day. We provide technology and services to the oil and gas industry in north america. One of the largest contract drillers, also one of the larger pressure pumping companies in north america as well. It is good to be here with you today and explain that. Were down to 62 rigs. Were at a peak of 214 rigs pack in the fall of 2014. So it has come down significantly, roughly 70 . We had projections that we gave at our Earnings Call for this quarter and were about close to that exit on the quarter at 62 rigs right now. So we dont see a change in that trajectory yet. We still see the rig count coming down a little bit more. Were not quite at the bottom yet. You think that number could go down before it goes back up or is the expectation that it may be an l, in other words, goes from 214 to 62 or 60 or 58, whatever it is, and stays low for a while . It is really hard to say right now. You know, were very close contact with our customers. We talk to them on a daily and weekly basis. Our customers being the emp operators. And with wti trading where it is. Though it moved up, it is still not quite at a level that really gives any confidence for our customers. So it is really hard to say how the future projection of the u. S. Rig count will play out. And thats why we think ours comes down a little lower. Were about 10 to 12 of the u. S. Market share. So glad youre on. Not a household name, patterson uti, you may be the single best leading Indicator Company out there because of companies, your customers will start drilling more, youre going to know before we know. What are you hearing from your customers . Are they optimistic . Are they depressed . What is the mood . I think the mood in general is still caution. Like i said, even though wti is traded up, it is not traded to a level that really gives confidence in the market. It had big moves since january. But, you know, were still trading below 40. It doesnt really give, you know, our customers, the operators confidence to make a lot of changes yet. I think oil needs to come up higher. Is there a magic number, which if oil hit x and stayed at x for a while, your customers would reinvigorate their activity . Thats a question we get pretty frequently. You know, we attend these investor conferences with the banks and we just dont have an answer right now. You know, if we roll back the clock to 2015, back in june, oil was trading at 60 to 62 a barrel. That seems to promote some confidence. Oil traded down since then. I dont think oil necessarily has to get back to 60 a barrel. But i dont think as an industry really know what that number is yet in terms of, you know what price wti is going to settle in and inspire a little bit of confidence. Were still a ways off from that now. We have to break you off. Thank you for joining us. Live to havana, cuba, with president barack obama and cuban president raul castro. Translator good afternoon. Mr. President barack obama. We are pleased to welcome you on this, the first visit of a president of the United States of america to our country in 88 years. We have observed in the years that have passed since the decision was made to establish our diplomatic relations, we have obtained concrete results. We were able to resume direct postal exchanges and we signed an agreement to resume commercial flights. We have signed two memorandums of understanding on the protection of the environment and maritime areas and another one to secure the safety of sea navigation. Today another one will be signed on cooperation in the area of agriculture. At the moment, another set of bilateral instruments are being negotiated to cooperate in such areas as counternarcotics, the safety of commerce and travelers. Above these last issue we have agreed to deepen our cooperation in the prevention and treatment of transmissible diseases such as zika and nontransmissionable chronic diseases. Cancer included. This is only for cuba and the United States, but also for hemisphere at large. Following the decisions made by president obama, cuban enterprises and their american counterparts are working to identify possible commercial operations that could material ize in the still restricted framework of existing regulations. The fact is that some have already materialized, especially in the area of telecommunications. An area in which our country already has a Program Designed on the basis of its priorities and necessary technological sovereignty. One that can secure their proper views at the service of national interest. Progress has been made toward the acquisition of medicines. Medical and equipment for Power Generation and Environmental Protection. These among others. Much more could be done if the u. S. Blockade were lifted. We recognize the position of president obama and his administration against the blockade. And his repeated appeals to congress to have it removed. The most recent measures adopted by his administration are positive. But insufficient. I have the opportunity to discuss with the president other steps that we think could be taken in order to remove restrictions of the remaining force and make a significant contribution to the debunking of the blockade. This is essential because the blockade remains in force and because it contains discouraging elements and intimidating effects and extra territorial outreach. I put forward to the president some examples on this, showing their negative consequences for both cuba and other countries. The blockade stands as the most important obstacle to the Economic Development and the wellbeing of the cuban people. Thats why its removal will be of the essence to normalize bilateral relations. And actually it will also be benefits to the cuban who wish the best for their families and their country. In order to move forward to its normalization, it will also be necessary to return the territory illegally occupied for guantanamo base. Since those are the two main obstacles, these issues were again dealt with in the editorial ran on march 9, by the official newspaper of the communist party of cuba. And four days ago in the press conference offered by bruno rodriguez, both pieces extensively reported by the med media. Other policies should also be abolished for normal relations to develop between the United States and cuba. No one should intend to have the cuban people renounce the destiny it shows in freedom and sovereignty. The sample which made enormous sacrifices we also discussed international issues. Particularly those that could have an impact on Regional Peace and stability. We had thought to discuss other issues, but we did not have enough time. I have planned to raise our concern over the destabilization so trying to promote venezuela. Something which we consider to be counterproductive to the overall situation in the continent. I do not have the chance to raise it with him, and raising it here. Likewise we talked about the ongoing Peace Process in columbia. And the efforts to put an end to the conflict. There are profound differences between our countries that will not go away. Since we hold different concepts on many subjects, such as political systems, democracy, the exercise of human rights, social justice. International relations. And world peace and stability. We defend human rights. In our view, civil, political, economic, social and cultural rights are indivisible. From cuba live picture of raul castro, the leader of cuba. Michelle carusocabrera here in havana where we have been watching this and were going to wait for president obama to speak as well. Raul castro going through some of the advances that have been made between the two countries since they attempted to normalize relations and reestablish diplomatic relations. There is now Postal Service between the two countries as well commercial flights are expected to start now that they have come to an understanding. But raul castro not surprisingly reiterating two things that he has reiterated since day one. He wants a full lifting of the embargo against the country and also wants guantanamo to be returned. The naval base to be returned to cuba. Im surprised he didnt also mention that continuously demanded billions of dollars worth of reparations as a result of the embargo, but he didnt mention that. It is pretty significant that he said we didnt have time to get to venezuela, thats going to be painful to the leadership of venezuela, very much wanted to be wanted that to be as part of the agenda the criticism that the United States has posed toward the Economic Situation and the economic model in venezuela is something that has bothered them tremendously and, in fact, the president of venezuela was here just two days ago, ahead of president obamas visit. But once again, were waiting to hear from president obama at this News Conference. What is crucial is to see whether or not they take questions. Protocol for these kind of events is that the host countrys journalists ask a question to the host country leader and the visiting leader and then the visiting countrys journalist, two questions, one to the president that theyre traveling with and one to the leader of the host country. In the past, for example, with china, we have seen that didnt happen on occasion. And we were told it was unlikely to happen today. But we werent certain at this point. If raul castro were to take a question from a u. S. Journalist, it would be it would be a key moment and it would be very, very telling. So well have to see that at the end. But my bet is that it will not. Guys, back to you, as we wait to hear what president obama has to say. As you apply sort of the analytical lens to what you just heard, michelle, it would seem to me that there was a short list of accomplishments that he talked about, and a rather longer list of ongoing grievances that cuba has with the United States. Did you hear it that way . Welcome to cuba. Absolutely, tyler. That is definitely true. That is always been the case, ever since those complaints have long been the embargo of guantanamo and we want reparations that those have been true for roughly 50 years. And behind the scenes i can tell you repeatedly, even after president obama announced back in december more than a year ago that there was going to be a change in relationship with every single executive order that happens, cubans say, but he could do more and he should do more. He could do more and he should do more. They hired a lawyer that gave them a list of dozens and dozens of things they said the president could do with executive orders. Theyre constantly saying it is not enough. That being said, what youve seen today is an incredibly warm reception to the president in a country where historically they have called the United States the enemy, used terrible words to describe the United States throughout the last 50 years. So michelle, have you have you have they backed off on that language at the highest level . Have you heard mr. Castro or mr. Castros or anybody at the high level say, you know, we take that back . Or still sort of standing. What is the reaction from the people on the street the politicians will say one thing. The people youre interacting with every day, what are they saying . No, there has been no backing off on some of the harshest rhetoric from the top. One of the things that raul castro said was there was an editorial in the state run newspaper which was highly critical. The tonality was incredible. Would have thought that nothing had happened between the two countries in the last year. There hasnt been that much of a change. The people on the ground are very, very excited. Theyre very happy to see a thawing of relations, primarily because it means it will be easier to see family that they have been separated from for decades. Remember, many, many cuban families left in the early 60s and then didnt see their families for 20, 30, 40 years depending, because cubens were not permitted to leave the island. Remember, there have been no elections here. No Political Freedom here, zero. There is almost zero economic freedom, even though in the last couple of years they have allowed people to buy and sell their homes, that was a tremendous change, by and sell cars, that was a tremendous change. But they havent been able to do those things up until then and they havent been able to travel. Those are some of the changes, just in the last few years, been able to travel and exchange houses. Those changes have happened. But up until then were going to listen to president obamas rejoineder here. President castro, to you, cuban government and the cuban people, thank you for the welcome that youve extended to me, to my family, and to my delegation. For more than half a century, the site of the u. S. President here in havana would have been unimaginable. But this is a new day between our two countries. With your indulgence, mr. President , i want to go just briefly off topic because during this weekend i received news that one of our outstanding United States Armed Service members, marine Staff Sergeant luis f. Cardin of california was cooled in Northern Iraq as we assisted the Iraqi Government in dealing with isil, the terrorist organization there. I just wanted to give my thoughts and prayers to the family there and those who have been injured, it is a reminder that even as we embark on this historic visit, there are u. S. Armed Service Members who are sacrificing each and every day on behalf of our freedom and our safety. So im grateful to them. My wife michelle and i have brought our daughters and, by the way, they dont always want to go with us. Theyre teenagers now. They have friends at home and they have things to do, but they wanted to come to cuba because they understood and we wanted to show them the beauty of cuba and its people. We were moved by the cubans who received us yesterday, smiling and waving as we drove in from the airport. We were grateful for the opportunity to experience old havana. And some excellent cuban food. Our visit to the cathedral was a reminder of the values we share, the deep faith that sustained so many cubens and americans and it also gave me an opportunity to express my gratitude to cardinal ortega, who along with his holiness pope francis did so much to support the improved relations between our governments. This morning i was honored to pay tribute to jose marte. Not only his role in cuban independence, but the profound words that he wrote and spoke in support of liberty and freedom everywhere. I bring with me the greetings and friendship of the american people. Im joined on this trip by nearly 40 members of congress. This is the largest such delegation of my presidency and it indicates the excitement and interest in america about the process that we have undertaken. These members recognize the new relationship with the cuban people is in the interests of both nations. Im also joined by some of americas top Business Leaders and entrepreneurs because were ready to pursue more commercial ties which create jobs and opportunity for cubans and americans alike. Im especially pleased im joined on this trip by so many cubanamericans. For them and the two million proud cubanamericans in the United States, this is a moment filled with great emotion. Ever since we made it easier to travel between the two countries, more cubanamericans are coming home. For many, this is a time of new hope for the future. So president castro, wasnt to i want to thank you for your courtesy youve shown during our talks. Last year you said were willing to discuss every issue and everything is on the table. So with your understanding, my statement will be a little longer than usual, president castro always jokes with me about how long castro brother speeches can be. But im going to actually go a little longer than you probably today with your indulgence. We have a half a century of work to catch up on. Our growing engagement with cuba is guided by one overarching goal, improving the lives of our people, both cubans and americans. Thats why im here. Ive said consistently after more than five very difficult decades, the relationship between our governments will not be transformed overnight. We continue as president castro indicated to have some very serious differences including on democracy and human rights. And president castro and i have had very frank and candid conversations on these subjects. The United States recognizes progress that cuba made as a nation. Its enormous achievements in education and health care and perhaps most importantly i affirm that cubas destiny will not be decided by the United States or any other nation. Cuba is sovereign and rightly has great pride. And the future of cuba will be decided by cubans. Not by anybody else. At the same time, as we do wherever we go, around the world, i made it clear that the United States will continue to speak up on behalf of democracy, including the right of the cuban people to decide their own future. Will speak out on behalf of universal human rights including freedom of speech and assembly and religion. Indeed i look forward to meeting with and hearing from Cuban Civil Society leaders tomorrow. But as you heard, president castro also addressed what he view s as shortcomings in the United States around basic needs for people and poverty and inequality. And race relations. And we welcome that constructive dialogue as well. Because we believe that when we share our deepest beliefs and ideas, with an attitude of mutual respect, that we can both learn. And make the lives of our people better. Part of normalizing relations means we discuss these differences directly. So im very pleased that we have agreed to hold our next u. S. cuba human rights dialogue had here in havana this year. And both of our countries will welcome visits by independent United Nations experts as we combat human trafficking, which we agree is a profound violation of human rights. Even as we discuss these differences, we share a belief that we can continue to make progress in those areas that we have in common. President castro, you said in panama we might disagree on something today, on which we would agree tomorrow. And thats been the case over the past 15 months and the days leading up to this visit. Today i can report that we continue to move forward on many fronts when it comes to normalizing relations. Were moving ahead with more opportunities for americans to travel to cuba and interact with the cuban people. Over past year, the number of americans coming here has surged. Last week we gave approval for individual americans to come here, for educational travel. U. S. Airlines will begin direct commercial flights this year with last weeks Port Security announcement we removed the last major hurdle to resuming cruises and ferry service. All of which will mean even more americans visiting cuba in the years ahead and appreciating the incredible history and culture of the cuban people. Were moving ahead with more trade. With only 90 miles between us, were natural trading partners. Other steps we took last week allowing the u. S. Dollar to be used more widely with cuba giving cubans more access to the dollar in international transactions, and allowing cubans in the u. S. To earn salaries, these things will do more to create opportunities for trade and joint ventures. We welcome cubas important announcement that it plans to end the 10 penalty on dollar conversions here which will open the door to more travel and more commerce. And these steps show that were opening up to one another. With this visit we agreed to deepen our cooperation on agriculture, to support our farmer and ranchers. This afternoon ill highlight some of the new commercial deals being announced by major u. S. Companies. And just as i continue to call on congress to lift the trade embargo, i discussed with president castro the steps we urge cuba to take to show that it is ready to do more business which includes allowing more joint ventures and allowing Foreign Companies to hire cubans directly. Were moving ahead with our efforts to help connect more cubans to the internet and the global economy. Under president castro, cubas set of goal of bringing cubans online and we want to help. This afternoons entrepreneurship event ill discuss additional steps were taking to help more cubans learn, innovate and do Business Online because in the 21st century, countries cannot be successful unless their citizens have access to the internet. Were moving ahead with more educational exchanges. Thanks to the generous support of the cubanamerican community, i can announce my 100,000 strong in the Americas Initiative will offer new opportunities for University Students to study abroad, more americans of cuban schools and more cubans at u. S. Schools and Going Forward, educational grants and scholarships will be available to cuban students. In partnership with the cuban government, well offer more english Language Training for cuban teachers, both in cuba and online. Even as cubans prepare for the arrival of the rolling stones, were moving ahead with more events and exchanges that bring cubans and americans together as well. We all look forward to tomorrows matchup between the Tampa Bay Rays and the Cuban National team. More broadly were moving ahead with partnerships in health, science and the environment. Just as cubans and american medical teams have worked together in haiti against cholera, and in west africa against ebola and i a special commendation to cuban doctors who volunteered and took on very tough assignments to save lives in west africa in partnership with us and other nations, we very much appreciate the work they did. Our medical professionals will now collaborate in new area, preventing the spread of viruses like zika and leading new research into cancer vaccines. Our governments will Work Together to protect the beautiful waters of this region that we share. And as two countries threaten to buy climate change, i believe we can Work Together to protect communities and low lying coasts and were inviting cuba to join us and our caribbean and Central American partners at this springs Regional Energy summit in washington. And finally were moving ahead with our closer cooperation on regional security. Were working to deepen our Law Enforcement coordination, especially against narcotraffickers that threaten both our peoples. I want to thank president castro and the cuban president for hosting peace talks between the colombian government and the although we did not have an extensive discussion of venezuela, we did touch on the subject, and i believe that the whole region has an interest in a country that he is addressing its economic challenges, responsive to the aspirations of its people, and is a source of stability in the region. That is, i believe, an interest we should all share. So again president castro, i want to thank you for welcoming me. I think it is fair to say the United States and cuba are now engaged across more areas than any time during my lifetime. And with every passing day, more americans are coming to cuba, more u. S. Businesses and schools and faith groups are working to forge new partnerships with the cuban people. More cubans are benefiting from the opportunities that they travel and trade bring. As you indicated, the road ahead will not be easy. Fortunately we dont have to swim with sharks in order to achieve the goals that you and i have set forth. As you say in cuba despite the difficulties, well continue to move forward. Were focused on the future and i absolutely am confident that if we stay on this course, we can deliver a better and Brighter Future for both the cuban people and the american people. Thank you very much. That concludes the News Conference with we might actually were going to take some questions . Looks like there might be some questions. Looks like the president and raul are going to take questions. This is unprecedented. Lets listen. Translator thank you, president castro, for your hospitality here in havana. Did you use to urge him to expand human rights here in cuba, will you invite president castro to the white house . We know hes been to new york. And why did you not meet with fidel castro . And president castro [ speaking Foreign Language ] my fathers cuban. He left for the United States when he was young. [ speaking Foreign Language ] you to see a new and democratic direction for your country . [ speaking Foreign Language ] why do you have cuban Political Prisoners . [ speaking Foreign Language ] Hillary Clinton or donald trump . Thank you. As i think we both indicated, we had a very frank conversation around issues of democracy and human rights. Our starting point is we have two different systems. Two different systems of government. Two different economies. And we have decades of profound differences. Both bilaterally and internationally. What i have said to president castro is that we are moving forward and not looking backwards. That we dont view cuba as a threat to the United States. I hope that my visit here indicates the degree to which were setting a new chapter in cubanamerican relations. But as is true with countries around the world, where we have normalized relations, we will continue to stand up for basic principles that we believe in. America believes in democracy. We believe that freedom of speech and freedom of Assembly Freedom of religion are not just american values, but universal values. They may not express themselves exactly in the same way in every country, they may not be enshrined in the founding documents or constitutions of every country the same way or protected legally in exactly the same ways, but the impulse, the human impulse towards freedom that freedom that jose marte talked about, we think is a universal longing. President castro, i think, had has pointed out that in his view making sure everybody is getting a decent education, that those things are human rights as well. I personally would not disagree with that. But it does not detract from some of the other concerns. And the goal of the dialogue is not for the United States to dictate to cuba how they huh govern themselves, but to make sure that we are having a frank and candid conversation around this issue. And hopefully that we can learn from each other. It does not mean that it has to be the only issue we talk about. Economics, health, scientific exchanges, International Cooperation on issues of regional as well as global import are also important. But this is something that we are going to stay on. And, you know, i actually welcome president castro commenting on some of the areas where he feels that were falling short because i think we we should not be immune or afraid of criticism or discussion as well. Here is the one thing i do know is that when i talked to cubanamericans, and, jim, youre Second Generation and so i think i speak not for you directly, but for many that i talk to around the United States, i think there is enormous hope that there can be reconciliation and the bridge that president castro discussed can be built between the cubanamerican community and cubans here. Their family ties and cultural ties that are so strong. And i think everyone would benefit from those ties being reestablished. One of the impediments to strengthening those ties is the disagreements around human rights and democracy. And to the extent that we can have a good conversation about that, and to actually make progress, that i think will allow us to see the full flowering of a relationship that is possible. In the absence of that, i think it will be a powerful irritant. And, you know, this is not unique to u. S. Cuban relations, one that as you know i have conversations with when we go to bilateral meetings with some of our close allies as well as countries that we dont have as close of a relationship to. I think it is something that matters. And i met with people who have been subject to arbitrary detention and thats something i generally have to speak out on because i hear from them directly and i know what it means for them. Translator i was asking if he was if his question was directed to me or to president obama. You talked about, no, you talked about Political Prisoners. Donald trump and hillary. Translator for him or for me . For you, president castro, what did you say about Political Prisoners . Can you repeat that question about Political Prisoners . Did you ask if we had Political Prisoners . Did you ask if we had Political Prisoners . I want to know if you have cuban Political Prisoners and why you dont release them . Give me a list of the Political Prisoners and i will release them immediately. Just mention the list. What Political Prisoners . Give me a name or names or when after this meeting is over, you can give me a list of Political Prisoners, and if we have those Political Prisoners, they will be released before tonight ends. And what about your preference for my greetings for president obama. I cannot vote in the United States. My question is for president raul castro. My name is boris fuente from the cuban tv. President raul castro you repeatedly stated and today once again that we must learn to coexist in a civilized manner with our differences. Could you broaden this concept at this historical moment that we are living in. And i have a brief question for president obama. President obama, could u. S. Government give more space to eliminate u. S. Blockade during your mandate so that another generation of cubans would not have to suffer this economic and commercial blockade against cuba . The first question was for me. Please repeat your question because i cant hear well. You have said repeated ly that e must learn to coexist in a civilized manner with our differences. Well, president obama himself has referred to that. We have given the first steps. Many for being the first steps. And we must continue giving these steps. And im sure that we will be able to coexist peacefully in an environment of mutual cooperation as we are doing already in many fields for the benefit of both countries. And for the benefit of other countries as we have already done. In haiti, when the cholera and in africa with the ebola, that is the future of mankind if we want to save the human species. Though the water grows and or the level of water grows and the island may become smaller. That is you are making too much questions, too many questions to me. I think questions should be directed to president obama. So we have administratively already made a number of modifications on the embargo. I referred to a number of them in my Opening Statement. And we actually have been fairly aggressive in exercising as much flexibility as we can, given that the law putting the embargo in place has not been repealed by congress. There may be some technical aspects of the embargo that we can still make adjustments on depending on problems as they arise. So, for example, the issue around the dollar and the need to make modifications in terms of how the embargo was implemented to encourage rather than discourage reforms that the cuban government itself is willing to engage in and to facilitate greater trade and commerce, that is something that grew out of the dialogue between our governments and we have made appropriate adjustments to it. It will take some time for commercial banks to understand the new rules, but we actually think that this is an area where we can improve current circumstances. But ill be honest with you that the list of things that we can do administratively is growing shorter. And the bulk of changes that have to be made with respect to the embargo are now going to rely on Congress Making changes. Ive been very clear about the interest in getting that done before i leave. Frankly congress is not as productive as i would like during president ial election years. But the fact that we have such a large congressional delegation, with democrats and republicans with us is an indication that there is growing interest inside of congress for lifting the embar embargo. As i just indicated in my earlier answer, how quickly that happens will in part depend on whether we can bridge some of our differences around human rights issues, and thats why the dialogue i think is so important. It sends a signal that at least there is engagement between the two countries on these matters. Okay. I promise to the president i would take one more question. And Andrea Mitchell of nbc. Andrea, if you can get the mike. Thank you, mr. President. Do you feel after your meeting today that you have made enough progress to even accelerate the pace and that the cuban government is able to move quickly enough so that the changes that you have made through the technical adjustments to the embargo will be permanent, cannot be reversed by the next president , and what advice have you given to president castro about the ability of having the blockade, the embargo lifted because he has said again today this is continuous issue, which is blocking progress from their standpoint. And you said the conversations about human rights were frank. And candid. And that you want to move forward. But even as you are arriving, there were dramatic arrests of peaceful protests. What signal does that send . Can you have civilized coexistence at the same time you have such profound disagreement about the very definitions of what human rights means as president castro today. And for president castro, for many of us it is remarkable to hear you speak about all these subjects. Could you tell us what you see in the future . President obama has nine months remaining. You have said you would be stepping down in 2018. What is the future of our two countries given the different definitions and the different interpretations of profound issues like democracy and human rights . Thank you. Well, andrea, i the embargo is going to end. Wh when, i cant be entirely sure, but i believe it will end and the path that were on will continue beyond my administration. The reason is logic. The reason is that what we did for 50 years did not serve our interests or the interests of the cuban people. As i said, when we made the announcement about normalization of relations, if you keep on doing something over and over again, for 50 year and it doesnt work, it might make sense to try something new. And thats what we have done. And the fact that there has been strong support not just inside of congress, not just among the american people, but also among the cuban people, indicates that this is a process that should and will continue. Ing a having said that, lifting the embargo requires the votes of a majority in congress, maybe more than a majority in the senate. And as i indicated to president castro, two things i think will help accelerate the pace of bringing the embargo to an end. The first is to the degree that we can take advantage of the existing changes that we have already made and we see progress, that will help to validate this change in policy. For example, we have said that it is no longer a restriction on u. S. Companies to invest in helping to build internet and broadband infrastructure inside of cuba. It is not it is not against u. S. Law as its been interpreted by the administration. If we start seeing those commercial deals taking place and cubans are benefitting from greater access to the internet and when i go to the entrepreneurship meeting later this afternoon, i understand were going to meet some young cubans who are already getting trained and are using the internet and interested in startups. That builds a constituency for ending the embargo if we build on the work were doing in agriculture. And you start seeing more u. S. Farmers interacting with cuban farmers and theres more exports and imports, that builds a constituency. And the possibility of ending the embargo increases, so hopefully taking advantage of what weve already done will help. And the second area which weve already discussed extensively is the issue of human rights. People are still concerned about that inside of cuba. Keep in mind, ive got fierce disagreements with the chinese around human rights. Ill be going to vietnam later this year. He have deep disagreements with them as well. You know, when we first visited people questioned whether we should be traveling there because of longstanding Human Rights Violations in our view. And the approach that ive taken has been that if i engage frankly, clearly, stating what our beliefs are but also being clear that we cant force change on any particular country, ultimately it has to come from within, then that is going to be a more useful strategy than the same kinds of ridge it rigid disagreement. I think if you meet cubans here and cubans meet americans and they are meeting and talking and interacting and doing business together and going to School Together and learning from each other, theyll recognize people are people. In that context, i believe that change will occur. Now im done but i think andrea had a question for you about your vision, its up to you. He did say he was only going to take one question and i was going to take two but i leave it up to you if you want to address that question. Shes one of our most he steamed journalist from america. She would appreciate an answer. Translator andrea, the other day i asked a question to our foreign minister, andrea but there is a program here to be fulfilled. I know that if i stay here youll make 500 questions. I said that i was going to answer one. I answered one and a half. President obama has already helped me out with the answer. I was reading here something i think about human rights but im going to make the question to you now. There are 40 there are 61 International Instruments recognized how many countries in the world comply with all the human rights and civil rights that have been its pretty clear that raul castro is not going to answer a question about democracy. Basically denied there were Political Prisoners in cuba, which is untrue. There are Political Prisoners. He may say they violated laws but laws you cannot criticize the party and castros. There are Political Prisoners here. But it was extraordinary to see him actually take a question from an cubanamerican journalist who asked him directly about democracy. Didnt answer. About human rights as well. Denying there was Political Prisoners here. It was an incredible moment to see, guys, really, extraordinary. You would have to say as we watch him that taking questions is not his forte, he does not seem comfortable doing it, apart from the fact hes trying to deal with the technology of a simultaneous translation. But clearly i would say this is me talking not anybody else, irritated with some of the questions as one would expect, brickly in response to that, which one might well expect. While he didnt expressly deny there were Political Prisoners there, he fell back on the old rus of saying, give me a list of them and then ill answer. If there are Political Prisoners, theyll be out by tonight. Which of course we would love to see. Michelle . He was clearly angry about the fact that he was told he was only going to have to answer one question but you know how the American Press is. We all know and that of course when a reporter stands up, they ask two or three questions to both sides. I mean, any reporter standing up that second time was going to ask raul castro a question. And the fact that he didnt expect it or wasnt ready for it is very telling about what their sensibilities are here in terms of their ability to deal with the international press. This is a very closed place still. It is opening quickly. What weve seen here, sound like tiny things but for cubans they are a very big deal. To have a starwood managed hotel is an extraordinary change, if and when it finally happens. But still, this place needs so many changes. If the embargo went away, cuba would still have to deal with cuba and the laws here and investment rules here are so draconian and backwards, it would be very difficult for this country to advance. Thats what they are going to start to learn as all of these and have been learning as all these companies have come in and tried to do business here and told them, look, things have to change. We have to be able to hire our own people directly you cant do it for us. You have to improve the infrastructure and youll have to partner with private companies in deals that are going to be profitable to them. You cant have everything. But well see if they actually learn that lesson as time goes by. Michelle, there was a mass arrest i guess of dissidents this morning, i believe it was or late yesterday, in havana. What is being made of that if anything . It happens frequently lets go back and listen to raul castro. There is a commitment that we should end in time. Its not correct to ask me about Political Prisoners in general. Please give me the name of a political prisoner. With this is enough. We have concluded. Thank you for your participation. Give president obama for putting him on the spot the Second Time Around to say, andrea asked you a question, do you want to answer it because clearly he had been told in advance he would only have to answer one. He pushed him along. Honestly from our view here, its opening up and i cant speak for melissa and tyler, it seems i dont know how to say aim amateur. You could tell he was uncomfortable and seemed he was having trouble with his ear piece when they were asking difficult questions. Hes not used to answering question about political decemb dissidents, probably a historic moment just for that reason, michelle . Reporter absolutely, youre spot on to use the term amateurish, you would see that a lot when you try to interact with government officials and taking the question on human rights, absolutely historic moment. Even though he didnt plan to and didnt want to. Clearly he did not. And was terribly uncomfortable with it. Then at the end basically abruptly said were done, thank you very much. Long way to go. Thank you so much, well check back with you for the rest of the afternoon and indeed for much of the rest of this week. Closing bell is up next. What an afternoon it has been. Were here at the new york stock change. That is remarkable. Ill bill griffeth, a smaller iphone and smaller ipod pro and a robot named liam. Well be live in couper teen no with the latest from the apple event. And the shakeup over at val ya valeant, the ceo and why it reminds mike