Transcripts For CNBC Power Lunch 20160314 : vimarsana.com

CNBC Power Lunch March 14, 2016

Brent lower by a dollar, back below 40, decline of 2. 6 . More on the markets in a moment. First we kick things off with tensions running high on the campaign trail politics turning violent. This weekend, the fists come at a trump rally in illinois. The gop frontrunner blaming Bernie Sanders backers. Look at that person, that foolish person. All right, get them out of here. Get them out. Send them back to bernie. Send them back. This isnt the first time violence has erupted at a trump event. Watch this attack from just last week. Secret Service Agents had to make their move to protect trump after someone tried to get on the stage. If you see somebody getting ready to throw a tomato, knock the crap out of them, would you, seriously. Just knock the i promise you, i will pay for the legal fees, i promise. I promise. Hot rhetoric on the campaign trail. Tensions rising there. And meantime we have exclusive new data on who wall street wants to see win the white house this november. Steve liesman joins us with cnbcs fed survey result. A busy week ahead for you. Lets start right here. The president ial campaign on economic outlook. The full results tomorrow, what they look for for the fed, but out of the president ial campaign, 56 saying the campaign itself is negative for the economy. 39 saying no effect. Only 5 say it is positive. As to which party they would like to see win the president ial race, 40 would like to see republicans, 18 democrats. Over here, 42 say it doesnt matter or they dont know. Thats higher than we have seen and we have done this during other president ial campaigns. A little bit of indifference out there. And now on to the candidates, which candidate would they want to see, which one is best for economic policies . Zero percent of our 42 respondents, including economists, Fund Managers and analysts say Bernie Sanders. 8 rubio. 11 cruz. 13 trump. 16 clinton. And Governor John Kasich wins here, 42 say he will have the best economic policies. How about who would be best for wall street . Another goose egg for Bernie Sanders here, coming along 35 for kasich, and 22 , clinton does a little better in there. To me, one of the things you see here is kasich is the frontrunner here and then clinton holds the number two spot. This would be who would be best for the stock market . Best for economic policy. Who are we talking to here . Who are we fixed income types, 42 the establishment. 42 someone said the establishment over there. Your mike is open, michelle. The establishment. Gallery. A heck of a peanut gallery. I was i was wondering how it broke down by party lines as an aside so we can see whether there is any overlap. Thats the next thing im going to do is do a cross reference here, cross tab. Lets look here. Cruz gets zero percent. Not a lot of support for cruz. One thing they dont like, i saw in the commentary, they dont like the fed policies of cruz and rubio. They think it is important to the federal reserve, remain wide open. I got a few comments here. Do you have the comments . We promised everybody anonymity who answered the questions. Im favoring kasich because of his willingness to work across the aisle what michelle was whispering over there, which i believe the stock market would be more comfortable with. Another saying clinton is only good for the stock market if republicans maintain control of the house. This person looking for a kind of clinton block. A paul ryan alliance, the way clinton and Newt Gingrich were together. And associating any of the candidates with the word best is difficult to do. They strike me as equally awful. Steve liesman, thank you very much. Back to you, guys. A huge show coming your way this wednesday. We should point out. Big show. Big show. Why . Because that lady, we have the fed decision on wednesday at 2 00 p. M. , and at 2 30, Steve Liesman will be there to ask questions at the fed News Conference. Well carry it all for you right here. The big shoe, power lunch. Right now, though, lets move from wall street to main street. Voters in both ohio and florida head to the polls tomorrow. They will vote in their primaries. So what candidate do some Small Businesses want to see in the white house . Lets bring in roger jarman of atlantic models, a florida based Small Business that makes model airplanes and michael stannic, Vice President of hunt imaging, a cleveland, ohiobased printing firm. You must be feeling pretty good because you heard steves piece, 42 of those surveyed on wall street said that kasich, your guy, would be the best for the economy overall. Why do you support his economic policies . We feel that not only his familiarity with how washington should work, but his ability to lead and administrate has proven him to be a very strong candidate who can bring it back to where we need to be, he has been very supportive of Small Business in ohio and while all candidates support Small Business, verbally, sort of like motherhood and apple pie, it doesnt always make it into policy. You know as a Small Business guy, every politician will promise the world. Why do you think hell be able to deliver . I think hes shown it in ohio. One thing in ohio, we start the Common Sense Initiative. He initiated it, Lieutenant Governor mary taylor runs it, and it is a program where every policy, every rule and regulation that is proposed from the state of ohio has to go through the small through the Common Sense Initiative to be reviewed for its impact on Small Business and adjustments are suggested back to the department or the legislator who is proposing it so we can make changes that limit the impact of Small Business from a time and cost perspective. So, roger, lets go to donald trump now. Do you feel like you know enough about Donald Trumps economic policies to make you feel good . Doesnt have a voting record, career record, but not a voting record. Why do you support him and Small Business side . Well, first of all, nothing worth having is worth having easy. And i look at trump and his experience, i happen to be a customer of his about six months ago for an event we had at their Doral Golf Club here in miami, and it was the difference was night and day on how they run their operation from the previous operator. And then because of that event, we happened to donate a model to the employees at the hotel, thats what we do, so we donated a trump model. And then as time went on, and we had the opportunity to meet him at the rally, i just looked back through him and i think needs to be said that before i was for trump, i was for Governor Walker. Ive been with rubio, been with jeb, but every one of them disappointed me because if you look at today, i dont see anywhere in the government where we can say this is a shining star of results and efforts. And hes obviously mr. Trump is like your third choice, just sort of the best of the rest . No, im very soundly with him, because this process started some number of months ago. And i dont believe trump was even in the market when Governor Walker was started in the race. And i think a lot of it, too, when you hear mr. Trump at the beginning, ill take this deal, you kind of have to chuckle a little bit and over time listen to him, ive tried to read up on all of the candidates, and i think of the Opposition Research that must be going on about mr. Trump right now and if they had a anything on him, you would bet that they would be all over the airwaves now. Roger, it is michelle here. What do you make of all of the violence over the weekend . Does it bother you . A theory about it . What do you think of donald trump saying you see somebody i think it is horrendous that these agitators would be allowed to come in and take his ability to present his side. Number one, i dont for instance, i respect very much president obama, Bernie Sanders, howard dean back before, because you knew where they stood and they did what they said they were going to do and they all tried to do that. The other politicians as time has gone on, have shown that they just change their core values from day to day. Mr. Trump, yes, hes a little hard to get used to, but hes a good leader, his employees love him from every exposure ive seen from him and they run a tight ship. Got it. We are going to wrap it up there tomorrow. A big day in both your states. Get out and vote. Roger, michael, thank you. Thank you for having us. Take care. On deck, more people are paying their car loans late. Is this reason for broader concern . Plus, the incredible story of how bomb sniffing dogs found two hell fire surface to air missiles on a passenger plane. Were going to bring you the latest there. And millennials may be changing the game when it comes to Money Management. Were going to talk about the continued disruption of wall street. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. 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 woman man yes. A newspaper . Woman its quaint. Man did you read about this latest cyber attack . Woman yeah, i read it on my watch. Man funny. Woman they took out the whole network. Man they had to hand out pens and paper. Woman yeah. Man could it happen to us . Woman no. Were okay. Man we are . Woman yeah, we brought in some new guys. Man what do they know that we dont . Woman that you cant run a country with pens and paper. Its not just security. Its defense. Bae systems. Early defaults on auto loans stoking new fears of subprime trouble. Phil lebeau joins us with more. This is getting a lot of attention because we have seen a growth in the number of sales to those who have subprime credit ratings. Some of the weakest consumers out there in terms of the ability to make their monthly auto payments. Fitch is out with a new report saying in february, 60 day delinquencies of subprime loans that are in that have been packaged together in a bond, theyre at 5. 16 . The highest rate since 1996. By the way, february dlenk win delinquencies was up. Fitch tracks auto loan bonds, bonds that are backed by auto loans where they package them together and sell them in a bond. 38 of those auto loan bonds are subprime, but heres the thing to keep in mind. Thats just the bonds that are in where theyre packaging these together. You look at overall auto loans, subprime borrowers make up 0. 78 of all auto loans, that comes out to 7. 8 billion worth of loans in a market of almost 1 trillion. The concern being, as we have seen auto sales increase at a very steady clip over the last five years, is there a concern that perhaps the subprime borrowers, these buyers, are inflating sales and that as they start to struggle with their payments, we could see auto sales fall back. Keep in mind, this is such a small, small percentage of the borrowers out there for auto loans, most do not believe it is a threat to the automakers. You look at shares of gm, ford and toyota over the last year. And one more thing to keep in mind, guys, the subprime market is so small that you really only want to be concerned about it when you see defaults in repossessions spike higher and they tend to do that when the Unemployment Rate drops. Were seeing a little bit of an increase now, but certainly not to the degree that many say there is a huge problem here. And, again, were talking about the bonds of those packaged subprime auto loans. Phil, one question, what happens to inventory, what happens to the cars should they come back on to the market. They go to dealers and that would create more cars on those lots . Now youre getting into repossession rates, which are lower than people who are in delinquency. And they eventually do go back into the market. It is so small right now that it is not going to impact the demand in the new vehicle market. Did i hear you say about when unemployment come down you see a spike in defaults . No, no, no. When unemployment goes up, when there is more people struggling to get a job, therefore they struggle to make a payment. If i said it was going down, it is wrong. It is when unemployment goes up. Far more intuitive, thank you. This is interesting, phil. My uncle owns a big car dealership. He was saying that it seemed to him like in 2008 and 2009, that a lot of he started to get a lot of calls offering credit. He was saying, who are you. Youre not my normal bank. He got the sense there was a lot of people who used to be subprime mortgage lenders who got laid off or firms shut down, had just transitioned nicely into the auto market. That doesnt surprise me. I think what you have is also the growth in buy here, pay here dealerships. If people buy a car, because they have checkered credit, at a particular dealership, they got to make their Monthly Payment at this dealership. It forces them to come in to make a payment, those people also hire on default rates. You see a lot of this at the lower end of the market where people who are looking to make money on the credit end are going to go in there because there is demand out there. Right. Phil, stand by. Lets bring in Rick Santelli here to talk about the bond part of the story. We hear subprime, you think back to the housing crisis, financial crisis. This is a little different, though, correct . I think it is. Since black swans usually dont wear name tags, i think i would look at it in the following way. This tells you more about lending and the consumer than it does anything else. Where im going with that is the car is the new house. I think many consumers after the credit crisis couldnt find access to the credit to buy a home. But they easily, as brian pointed out, and exactly right, there was a clear road for the subprime or lower credit quality with regard to cars. And i also think that when you look at Student Loans, i think the financing there is somewhat mirrors the issue. What you have is youre going to have a consumer that has a lot of issues whether it is Student Loans or auto loans and it may be even the subtext of the crowds doesnt intersect, but going to impact the future. Theyre loaded up. I dont think it is going to trigger the same thing that subprime and housing i dont imagine a lot of banks out there have when it came to mortgages, german pension funds, german banks, european banks, u. S. Banks, everybody and their mother, even like cfos of Companies Buying mortgagebacked securities filled with subprime stuff, i dont get the same sense of dispersion throughout the Financial System when it comes to auto loans or people buying cds on the auto loans. Thank god. The market isnt ready to handle it. After the subprime market, the markets were in full bloom, they could deal. They were a good transmission for the activity as ugly as it was. And im not sure i heard a difference. Is there any indication there is leverage . 10 in wall street instrument on every dollar that tyler owes on his bentley . I think there is an income issue. Unfortunately depending what side of the trade youre on, i talked to a lot of young people, the rates theyre getting on the cars, some are pretty sky high. So there is a lot of cash flow that goes on the lending side. I think theymoneyed up to deal with what the issues, but i dont think easier to repossess a car than it is to foreclose on a house. A lot of the pricing is easy to calculate. Phil, last word in. I heard you. No, not too often that rick and i agree about the state of the auto market. Im enjoying this. Two chicago guys making peace. What is this . Come to new jersey to do it. Thank you very much, Rick Santelli and phil lebeau. Tempers flared around the world. Well bring you the headlines and how it affects your money. Stick with us here at power lunch. Its more than a network. Its how you stay connected. 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Start saturday, missiles discovered on an air serbia passenger flight destined for portland, oregon. The missile shipment originated in bayrou. The lebanese say it was on the up and up. Still unclear if they were fitted with warheads designed for training or for battle. These missiles can shoot down airplanes several miles high. Sunday, german voters punished

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