Transcripts For CNBC Power Lunch 20140805 : vimarsana.com

CNBC Power Lunch August 5, 2014

Well show you how this thing works. She, lets put it this way, she lights up when there are germs in the room. The market is a big story. The dow and s p 500, there they are, heading lower right now a lot of head funds. Though, sue, given the record of some of these hedge funds this year, im not sure im paying a lot of attention to them. Its the complexity of their holdings, ty, that has everybody concerned. Specifically the worry is over the drop in the junk bond market. Many big names in the Hedge Fund World are saying watch for an imminent spillover into the stock market. We might start to be seeing it now. Theres a lot of talk about this on on the floor of the new york stock exchange, and those highyield bond etfs kate kelly, tell us what you know. Sue, junk bonds of seen by many as sort of a frontier investment. But theyve been pleaing the junk bon etfs, the jnc has dropped more than 3 . Amplifying results and also let alone other things. The pressure continues to be on. Including ellington, and max capital are shorting the junk bond indexes, have for a little while, steps appear to have helped generate returns of about 7 , 120 and 9 respectively so far this summer granted, the to hedge even they and others of the ilk are skeptical of the stock market, too. Thinking we could be in the middle of a substantial leg down, even if it doesnt materialize right away. Managers use the world be able to describe certain sectors earlier this year. Elliott management has called the stock market frost frothy, even the likes of steve cone late this summer, which would be right around now. Absolutely it would. To dominic chu. A group of bondholders is suing the casino operator, accusing the company of transferring money between entities to quote unquote protect its got assets. No comment from caesars ago of yesterday. Were down about 80 points on the dow. You cant blame europe. Were seeing not today anyway. Weakness in the crude markets. A lot of big shale names are getting hit and all have many momentum behind them. Those two are bakken plays, so keep an eye on that. Retail target lowered its outlook, i think its more than a hit from the data breach. Walmart, costco, tjx only down a little bit, but weve seen target down rather notably today. Lets move on. You wouldnt think theres a lot of worry in the restaurant business. Bloominbrands, they lowered the numbers greatly, but look at the rest. They dont seem very worried about it. They specifically talk about business being down despite general weather. Everyone seems to be giving everyone is pass here. Very interesting story, we just had about whats going on in the highyield funds. Theres avis, by the way. Renting a car this summer . Youre going to be paying a lot more. These highyield funds, here as the problem with them. During times of high volatility, highyield bond funds tend to act like symptom funds. Thats one of the reasons we saw they funds hit. When you get that volatility, they tend to act like stock funds. Depending on which one youre in. Its not necessarily bond yield funds that cause the stock market the stock market drop dramatically causes high depending on which etfs, some are highly leveraged as well. There are a couple you can actually sit there and they are actively managed. Some are actually performing a bit better. Theyre not all the same. Okay. Thank you, bob. Ill see you in a few minutes up uptown to seema. When you look at the stocks that are getting hit on the nasdaq 100, aside from expedi expediters, its the stock that has had a pretty good run over the past couple months. Intel, broadcom, have benefited from the rotation into Large Cap Value tech plays. You take a look at our tech giants that have had such a big weight okay the in a nasdaq, ive spoken to analysts this morning. There isnt seem to be a specific reason, and of course a certainly level of nervousness in this market around the prospect. Lastly its been earnings that have in some ways kept the market going. Bloominbrands reported disappointing earnings. The focus now on groupen, tonight reporting earnings followed by act vision, blizzard tomorrow. Thank you, seema. Robert and darren, gentlemen, welcome to you both. Mr. Richards, let me begin with you. I assume you heard about the report about the possible pillover to the equity market. You own or have owned a fair amount of highyield bonds over the years mo recently. What do you think . Yeah, well, theres definitely a correlation between highyield bonds and stocks. Youre seeing that play right now. Yields are very, very low in highyield bonds on a relative basis, but what makes it attractive to us is the default rates are low. So i think that attractiveness, even though yields are lower than norm article. Do you lie International Foreign high yields better right now . We have a global mix with a bite toward international. Bob, lets talk to you about what you see in the market for the remainder of the summer, in ominous kind of warnings from some of the big hedgies. What is your i think you take a step back and understand what was going on with the market last week. There was some concerns that the Federal Reserve is going to start moving on Interest Rates, especially when you had this loan dissenter, and then the employment cost index going up. I think people were starting to pear back, from a longterm investors perspective, you have to push this off as noise. The economy is actually moving forward at a pretty good clip. We saw 4 . I dont expect to see 4 going forward. I do expect around 3 for the entire year. Thats a Pretty Healthy rate. You look at manufacturing, i sm manufacturing, the Chicago Purchasing Managers index, durable goods orders, the service sector, these are all very positives. A higher Interest Rate environment isnt something that should scare the longterm investor out of the market. Actually it should be drawing them in, because it brings back inflation to the economy. The fed is all about putting liquid into the economy to try to increase inflation. We mentioned some of stocks that you like this. But 67 and then youre going to have to you right, but at the time you have to get out. Lets go to darren. Your favorite sectors. Toward the technology, primarily to valuation reasons, and we think cap ex will pick up. I agree, utilities and some of the other sectors bob mentioned that were attractive earlier, i think are coming around, you think people are starting to say its kind of run its course. Gentlemen, thank you very much. Bob, darren, put them together youve got bobby darin. Sue . I cant leave you alone up there, ty. You never know whats going to happen. The chief economist at the s p saying the growing wealth gap specifically is slowing down economic growth. Larry kudlow joins us. Hes here at post 9, along with the former chief Economic Policy adviser to Vice President joe biden. That would be jared bernstein. Welcome, guys. Go to cnbc. Com vote and let us know if you think the wealth gap is hurting american growth. Set the table for me, jared. You think near term or short term it is hurting growth, but its a little less clear longer term . Right. I commend this s p study to anyone viewing this, very well done. Ill put a link to it on my blog later. Were at a near 70 consumption economy, and right now income and equality or wealth inequality is working as a wedge, funneling or channeling gdp growth to the top of the scale quite narrowly. We know for example the medians Household Income is down in real terms a few percent over this recovery, while at the top income has been growing gangbusters. Since the propensity to consume, the marginal amount that you buy over your last dollar is a lot higher in the middle thain at the top, that will slow growth down. Over the longer term there are good issues that we can get into. Theyre fuzzier, but i think they probably hold as well. Larry, i know before the show you and i were talking about this, and you made some interest points about the way capitalism works, so tell me, do you take issue with what jared said or not really . Im a big fan of jared, but he should stick with the long term. He got the story partially right. Short term im afraid hes got it wrong. Hes got it backwards. Look, grout Growth Growth in a capitalist system does create a certain amount of inequality, though i dont think individual inequality is changing, its households, but growth creates inequality. I agree with that. Go to north dakota, look at the boom in oil and shale oil shale fracking. Youre creating lots of millionaires, but youre also creating new jobs of 70, 80, 90, 100,000 a year. That makes inequality. It also means a rising tide is lifting all boats. This s p study i think ignores that. It has some positives to it on the need for education reform. We can get to that in a minute, but i do not believe this inequality issue has any bearing on the economy whatsoever. You want to solve the economy . Slash the Corporate Tax rate, deregulate, dodd frank, obama care, things like that are holding back all the ships. Its not zerosum. Hold on, jared, to your point, the psychological impact or the perception of income inequality which is in a lot of headlines these days, tends to slow things back . No, no, i dont agree. I want jared to speak. Do not filibuster. I do in the believe the mainstream has impact on the economic data. I dont need to invoke the media here. I can in fact invoke a fact that larry kudlow makes every time i talk to him, and he happens to be right. He complains about the growth rate of gdp during this recovery. Its intimately connected to the point that i raise. We actually have a very brought middle class that isnt readily getting very much houst economys growth thus far, and of course that damping consumption. Over the longer term, of course we can all embrace but the thing this study points out is the proclivity, the abundance of cheap credit and debt accumulation among middleincome families whose income is stag innocent in order to keep their consumption going, they leverage of excessively. That creates bubbles and hurts growth. I thought that was an interesting channel. But, look, we have had thats a separate issue. Weve had so much deleveraging, in fact deleveraging may be part of the slowdown in the economy. Look at any chart of debt to income, debt to asset. All im saying is if you measure the genie coefficient measures income and inequality. Thats a horrible word, but thats what it is. For individuals it hasnt changed since 1960. Jared, youre a good labor man, you know this. Household inequality has changed. Why . We have too many singleparent households. That goes to the real issue here. Family breakup is a huge factor in the low ser quintile, which i do worry about, and i think education reform is very important, but for heavens sake let the animal spirits rip and youll see a rising tide lift all the boats. The idea that you could that rising tide will lift all boats has really been blown out of the water, to stretch an analogy too far has really been blown out of the water by decades of inequality and Family Structure plays a have i minor role. Cmon, jared. Let me finish. We have a did not an unheralded concentration of wealth in the top of the scale. Its influencing politics in a negative way and i think its hurting growth as well. Ive got to leave it there, guys. You finish it off camera. Thank you very much, both of you. Lets lock in the viewer vote. We asked you whether you think the wealth gap is hurting american growth. 53 say yes, but 47 say no. Thats closer than i thought it would be. Coming up, the second american ebola victim arrives in that the today, as concerns widen over on how to protect our borders from this deadly virus. One weapon in this war is this lady. Its s. A. R. A. , a germzapping robot. Well meet her right after the break. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Yyyup. With xfinity internet soyour family can use all their devices at once. Works anywhere in the house. Even in the garage. Max whats going on . Were doing a tech startup. Were streamlining an algorithm. Were going public [cheering] the fastest inhome wifi for your entire family. The x1 entertainment operating system. Only from xfinity. The dow is off by about 80 points. You can see it there, just a shade below. Leading the way lower for the dow, intel followed by chevron, exxon mobil, and then health care, ibm, all these large caps helping to propel the dow to the lower side of things. A developing story from afghanistan, a gunman dressed in an Afghan Military uniform opened fire at a military Training Facility in kabul. He killed three people, including an american general. Hes believed to be the highest ranking American Military office to be killed in action since the vietnam war. A highranking german officer was also killed along with the gunman and 14 orders were wounded. Sue . Ty, nancy writebol, the american missionary has just arrived at Emory University hospital in atlanta. She joins dr. Content brantly who arrived on saturday. British airways announced it is spanneding flights two and from liberia and sierra leone until august 31st due to the deteriorating Health Situation in both those countries. Very interesting segment coming up, one company hoping to fight in the war and helping already in the war against ebola. Is the disinfection services. It makes a germzapping robots that says can destroy the deadly virus and any organism in five to ten minutes. More than 250 hops sorry i touched you the thing is named s. A. R. A. They now use such robots, including s. A. R. A. They name their robots. The ceo is moreries miller. Good to have you with us. Nice to be here. How does this work . Can we make sara come up and get into her working position . Obviously theres a cooling fan. Inside of sara, as it moves up, you will see a column. Inside the column with a xenon tube in it. It puts out light thats 25,000 times brighter than night. It basically can disable the dna of any kind of virus, pathogen, spore out there. Its uv emissions. Uvc that does the disinfections. Kills viruses, kills bacteria. If you were to bring this into a typical hospital room, how wide is the radius over which she has power . Its going to go somewhere between 2 to 3 meters around the machine. Thats why we recommend running it on the left side of the bed, right side, and ten minutes later the room is disinfected. Ebola isnt in most of the hospitals, thank god, but when it would get rid of middle eastern respiratory system. We did this a few weeks ago in Orlando Health to stop the, meth a cillin, all the things that people are scared of contracting in the hospitals, it does. Do you recommend using these machines only in the rooms that are treating the most highly infectious patients, or is it better to treat every single room . Its better to treat every room. Youre trying to bring now the microbial load in a hospital. Weve been able to demonstrate that. How many hospitals are they machines . How many have you sold . How many does a typical hospital have . A hospital could have anywhere between two for a small hospital, 10 or 12 for a large hospital. Westchester Medical Center has them, in ucla, stanford, harvard, all the leading hospitals have adopted the technology. This is a shift from the old way to the new way. How much does sara cost other her sisters or brothers per unit. I assume if you buy more, you get a discount. The price is about 104,000 for a robot. The key number for anybody thinking about this is that it boils down to about 3 per patient room. So 3 if youre in the hospital, average length of stay its about a dollar a day to keep you safe. You must have numbers that tell you how effective these machines are at reducing the inhospital infections. What is the result . Absolutely. We have peerreviewed published studies, thats the Gold Standard in medical. In general the hospitals are getting greater than a 50 reduction in infection, more importantly for them, theyre able to get a return on investment, the three years of service, all the expense, they pay that back in four months units 50 reduction in those kinds of infections. I could not be in the room if this thing were really emitting. It would automatically shut off, you couldnt be in the room. Thank you for the germfighting robot, sara. Sue . That is fantastic. I wonder if hes planning to go public soon. Well see. Hawaii facing a double whammy, isabel followed by a tropical storm. Thats coming up next. What would you do if a loved ones only hope were an experimental drug an the Companies Making it said no. Outrage often ensues, but who is really to blame . All of that straight ahead on power lunch. If energy could come from anything . Or if power could go anywhere . Or if light could seek out the dark . What would happen if that happens . Anything. 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And expediters international, Motorola Solutions on weak earnings and international flavors, now to josh lipton in san jose with some breaking news. Josh, over to you. Hey, dom, some breaking news from ricoh. Reporting that apple ha

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