ford, all of these basically weaker than expected although slightly better than expected for fiat and chrysler. the real concern is when you look at car sales. we're not talking about suvs and pickups. we're talking about car sales. the numbers, that's not a mistake there. that is accurate. fiat chrysler cars down 39%. gm down 25%. same with ford. toyota, down 15.9%. what is happening here? a couple things. moderate gas prices are having an impact. people are saying if i have gas at, what, $2.32 a gallon on average in this country, hey, it's still relatively cleep to where it was a few years ago. as a result, you see people rotating to crossovers, suvs. so when you take a look at the japanese automakers sh the reason we're showing you the stocks is because these guys have more exposure to the car market in north america relative to gm, ford, fiat chrysler. keep in mind, those guys have much greater exposure to trucks and suvs relative to the japanese automakers. any way you slice it, they're not pretty numbers coming tout day. >> phil, stay right here. pleasure to you have on set, by the way. the big autos are still struggling, can tesla be immune? let's bring in dave wiston who in addition to tesla covers the traditional automakers. also with us is collin rush, senior research analyst covering tesla. of course, phil sticks around for this one. dave, i'll start it off with you. can you explain away the big decline that we have been seeing? what is really a concern is the mass declines we're seeing in autos and cars specifically. >> yeah. i think phil described it pretty well. the headline numbers, let's say gm, for example, down 18%. it's a horrible number for sure. there is a story behind the numbers. every month the media focuses a little too heavily on just the volume. you have to look at things like mix or what other stories they're in. in this case, quite bate wia bi gm. you had four plants shut down in late april for two weeks. they were making a lot of new products. they were making the malibu and cruz. you also have a very large intentional reduction in gm's rental fleet volume which i love. it was down 49% in may. that's a big decline. 22,000 units. largest decline in '15 and '16. >> the extrapolation is not that we hit or nearing peak auto sales, there are fewer selling days in may. you're looking through this? z to a point. i'm on the plateau side. low growth, we're staying at these volumes, gm, ford, everybody, they're very profitable at these levels. those are so obsessed on growth. you may be disappointed. >> so in an environment, whether it is plateau or peak auto, in particular when we see declines in car sales, when you take a look at tesla, it's reliant on sales of model s which is a car in order to ramp up production for the x as well as the three. is it immune? >> tesla is in a category that is not in a broad auto sales category. it is for the experienced driven sale. and folks that want the vehicle certainly have enough liquidity and disposable income to buy these cars still even in a challenge macro environment. >> collin, given the fact we're seeing the big focus for tesla being the model 3, i know we don't see deliveries until the end of next year. they don't start ramping up until 2018. they are moving into that mass market car arena. should there be some concern there if you're a tesla investor? >> not athis point. i mean we already have backlog through the end of 2019 into early 2020 in our model at this point. so we're not thinking about demand until the end of the decade. >> orders are going to come to fruition. you have people putting down $1,000 or whatever it, is how can you argue that it's a good thing for tesla to go mass market and say also, you know what? it's immune from the mass market trends which is a decline in sales? >> i'm talking about two different products here. >> three. three. >> no, i was talking about the model s. we were talking about immune. when you look at the model three, you're looking at a different buyer. you have to take that into consideration. my argument here is that they have enough backlog and folks have put that $1,000 down. even if you have an excessive cancellation rate into the teens or 20s, we still have backlog into the end of the decade into 2 2019 and we'll see a new wave of orders. so we're not very concerned about that demand issue for them at this point. >> dave, i'm curious. given the profitability that we're seeing for the traditional automakers, feen we're at plateau sales, not peak sales, what's to give people excited about the stocks? why should somebody be excited about gm or ford, fiat-chrysler, any automaker? what is in the future that you would say, i like that. that's why i would buy this stock? >> yeah, great question. i get asked that a lot. and the hard thing for people to accept is that they're not sexy but they're also turn around stories and turn around stories take a lot of time. gm is not done transforming themselves and giving them economy of sale. that's what you can be excited about as an investor and also that very nice and very safe dividend yield. >> all right. we'll leave it. there dave, collin, our thanks to phil lebeau. misch snell. >> two sports giants falling today. nike is lower after a pair of down grades. under armour shares are also in the red. for the year, both stocks down deep in the red. off by 13% each. >> not the same story though for lulu lemon. that stock is rising this year, up 27% so far. despite the gain, lul has far underperformed at nike and under armour over past 2 1/2 years. that's about the time the current managemen was put in place toon open letter to the board just posted minutes ago on cnbc.com, founder chip wilson writes, unfortunately, lulu lemon lot of its way and i believe a call to action is needed. goes on to say, we cannot continue to seed the market opportunity we created to under armour and nike. lulu lemon joins us for a power lunch exclusive. >> there is a plaintiff letter that you have written to the board and basically to the shareholders of the company that you founded. i was doing yoga this morning with my deer taeeacher who wear lulu lemon all the time. i said to heshgs ways going toinlt view. she said, why? i said because he has written a letter. >> what does he want? i said i think he wants his baby back. do you want your baby back? number one. and number two, what would you specifically do differently than the current management and board? >> do i want my baby back? my life has gone further than probably lulu lemon at this time although i'm still the largest shareholder. it is my child to a great extent. it's everything who i am and who i -- how i live my life. i believe that it's really up for me at this point of view to bring forward what has been happening over the last three years and be very clear that lulu lemon greatly underperformeded. under armour has gone up 75%, nike 45%. the s&p 500 has gone up 19%. and lulu lemon has gone down 8%. these are really -- these are really, really tough numbers. it's really up for me right now to bring this forward and to try to get the board to change the context of how they operate. >> what would you do different? you have a staggered board that makes it difficult to effect change on the board. what would you do specifically to reorient the company? cultural? it is what? >> four or five years ago i started bringing this up to the board. the real thing is that everything that i am is vision, culture, innovation, technology product. these things are almost impossible to quantify. with the board structure the way it's set up, you have eight members that are mostly interested in that and mostly are in the 1% shareholder and really scared of git litigation. for them to jump in and say that i want to have -- i want to believe in this guy. it is just not in their nature. >> i guess i -- what i'm still waiting to hear and what tyler is asking, so if you were able to effect a change you want with this letter, if you get a new board or change the board, how would the company be differently run or what would you do or have them do to not lose market share to under armour and nike. >> vision is really missing. they're just rolling out stores. but they're not morphing into anything new. they're not -- they say they have technology. they say they're doing innovation. but i might be the number one person in the world to understand that. i don't see it anywhere. so words are different than reality. >> can we put up a two year chart of lulu lemon? that is the time frame that we're talking about here as we look at that. so far this yeeshgs the stock has performed pretty well. a lot of people would love a 20% return this year. over the past two years, there is two year chart, chip. that says it's up almost 50% from just two years ago. i'd love to have a 50% return. so some people would say what is the beef? two years ago i told 30% to 15% of the ownership to bring up the staggered board which is really holding so much of the value of the company inside of it. so by building two private equity people that i can make a change, so the stock went right up after that to where it is now. and then because of miss management, the stock dropped. and now it only found its way up. this is in the midst of lulu lemon buying back half a billion dollars of shares. so has the management done anything? i would say no. >> some say that lulu lemon invented athlesiur. women change the way they dress on the a daily basis for yoga but for every day. they wear them like pants. we are at a moment though where fashion is shifting. a lot of people think athleisure peaked. flair is n flair is very different than wearing a tight rowinga pant s part of the issue that the game has changed since you invebted this company? >> well, sure. i was in the snowboard industry and then into yoga. they went to 500 and down. someone i think from "glamour" magazine or someone came up with athleisure. i would never use that. as i invented the market, i like to say that name -- i use more like street nic. it is street, technical and stretch. so, yes, you can say oh, this a athu a athleisure thing has gone by, but technology never changes. and technology, as long as you keep pushing it will always affect fashion. >> don't you always have also have a lot more competitors at the high end and the low snend everybody is producing athleisure at this point. >> yes. but there say difference between athleisure and technology. i mean, if you look at how lulu lemon is built, everything is around the fabrics, the silver threads in it, the thumb holes, the 12% stretch, the preshrinking. and compression. so as long as that is -- you keep pushing that and you move yourself out of the commodity market. >> you basically say what kevin plafrpg says, i'm a technology company that happens to make apparel and foot ware in his case, sfligt that's sort of what you're saying here. you're a technology company. you left the company. you went on a he s sabbatical. then the company went into the hard times there. you came back. and when you finally stepped away from the board about 15 months ago in february of 2015, you said some very nice things about the then management and board. i wonder what changed in those 15 short months in the face of a stock that turned nicely in the last six months, what changed since you said those nice things on the way out the door and what are the questions you want to ask the board and the management today? >> management hasn't produced. it is the structure of the board? that is my question. the questions i would like to ask the board are lulu lemon is worth double the amount of under armour two years ago. it's now half. does the board plan to get that money back? that is eight or $9 billion on top of a bunch of other stuff they could do. what are the metrics we should be looking at quarterly to see that happen? the second question i would like to ask is around the staggered board. the shareholders can only vote for three shareholders at a time every year. the world is changing too fast. >> do you want your baby back? do you want to take back this company and run it? >> you know what? the company can't afford me, quite frankly. >> nice place to be. >> it is. the real important thing though is that it is -- it's very frustrating for me knowing that there if lululemon can grab the culture, innovation and vision back, at built to get to $8 billion or $9 billion increase in value is easy. >> i still don't understand what you want f you don't want the baby back, if they can't afford you, i don't buy. you're the biggest shareholder. this is your money on the line but, okay. if you get what you want and they change the structure of the board, then what? >> first off, they would have to change the structure of the board. >> yeah. okay. if that happens? >> all shareholders to do that. and then i would have, i believe sh i could have more board seats and i could effect the management and then i could -- i believe i could go and help as a consultant because what's happened now is that the management got rid of everybody that actually knows how to use the business model. they brought in wholesale people that don't understand how to leverage it. they have nobody left to train the people on what -- how the business model works. all there needs to be is a short amount of time in order to put that back in place and they can be a rocket ship. >> i don't want to let you go without remarking on your kit and ace shirt which is this technical cashmere. it is very cool. i touched it, folks. you throw it in the wash, right? this is the new venture with your familiarly. congratulations on. that and we got throughout interview without calling him flip wilson. >> right. >> it's chip wilson. lululemon's founder. thank you. >> all right. thank you. let's take a check on the markets here. the s&p 500 turning positive briefly. we're now down by a point as we await the beige book which is due out at the 2:00 hour. we're seeing big moves within certain sectors. take a look at tell come. that is down by 1.25%. on the flip side, in the positive, we got consumer staples up by .4% right now. for the annual coke conference is under way in california. jeff bezos speaking last night and making a the love headlines. what he said about artificial intelligence next. plus, sundar pichai will give us an interview in a few moments. with usaa is awesome. homeowners insurance life insurance automobile insurance i spent 20 years active duty they still refer to me as "gunnery sergeant" when i call being a usaa member because of my service in the military to pass that on to my kids something that makes me happy my name is roger zapata and i'm a usaa member for life. usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life. my m...about my toothpasteice. she eveand mouthwash.ice... but she's a dentist so...i kind of have to listen. she said "jen, go pro with crest pro-health advanced." advance to healthier gums... ...and stronger teeth from day one. using crest toothpaste and mouthwash makes my... ...whole mouth feel awesome. and my teeth are stronger too. crest-pro health advanced... ...is superior to colgate total... ...in these 5 areas dentists check. this check up? so good. go pro with crest pro-health advanced. mom's right...again! great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. i think it's gigantic. i think national language and artificial intelligence, this -- it's probably hard to overstate how big of an impact it's going to have on society over the next 20 years. so it is big. it is -- it doesn't mean that, you know, phones are going to go away or anything like. that it's not like -- it's not like voice interfaces are going to replace screens. >> that was jeff bezos speaking at the code conference. is he right? let's bring in andrew macfee. good to have you here. it was so interesting to hear jeff bezos talk about the implementation of ai. the discussions about artificial intelligence thus far have been driven by people like mark cuban or elan musk who say they are worried about robots taking over. whose viewpoint is correct or are they boning correct? >> i'm with jevon this one. this tl are two really important things unfolding in front of us. we can interact with computers on our terms using our voices, using our ears and eyes. as opposed to on their terms with keyboards and mice and desktop icons and things like that. it's a great change. it's going to influence how we deal with technology out there in the world. the second thing, which i think is even more profound, for the first time ever we have a global, an artificial second opinion who can look at a bunch of evidence and reach some conclusion or see some patterns in that. and help us with our work. >> help me visualize how it is in my home. we can't play the whole section. but jeff bezos says we'll have many ais in our house, same way we have maybe several ipadors whatever format or several kinds of apps under many apps an our phone. we'll have many ais that specialize in different ai functions. what does that mean in my real life down the road? >> you may have a peefs background working on your schedule and travel. you'll have a different one making sure the household staples stay in stock so you don't run out of stuff. you may have a different one to help you in your professional life or get writing or research done. there is this invisible army of antibiotics in the background help you get your work done and increasingly interacting with you in the term that you freer if. >> that sounds to me like really super fast computing. but when i think of ai, when people talk about the fears of artificial intelligence, it's robots that can think and act like humans. this is going to sound weird. i took a whole seminar once on ai. the professor said he dreamed of creating a robot, a robot with feelings. and went on to say when we invented, we probably won't know it. we don't know even today if frogs have feelings. so the day of robot has feelings, maybe we don't know it. but that's where people on the cutting edge really want to go. it's not about an app for my schedule. it's about something much bigger. >> i talked to the guys on the cutting edge, the people making the technologies. and they tell me over and over, there is nothing on our current trajectory that gets us to the scary babe yind of ai, that has feelings, has a will and decides to rise up against us and becomes conscious and doesn't like humanity. my favorite way of explaining that fear is to say that it's like worrying about overpopulation on mars. >> okay. andrew, thank you for joining us. we have breaking news. we'll be talking more about artificial intelligence coming up on the show. in the meantime, we'll listen in in a few minutes. let's get to sue herrera standing by with breaking news. >> thank you very much. there is a report of a shooting on campus at ucla which is located in west wood part of los angeles. you're looking at the knbc chopper live shot of the campus. the campus has been put on lockdown. the reports of the shooting are reportedly at engineering 4. the alert went out, it is called a bruin alert. it went out this morning. it said the shooting at engineering 4, go to secure location. and deny entry. in other words, put the campus on lockdown. we are still trying to get some more details on that. you're taking a look at the live shot of the campus. for those that don't know, ucla is right in the heart of westwood. and there are a lot of residences around that area, a lot of businesses. there are several high-rise apartment buildings surrounding that campus as well. it is a very popular town, not just because of the university but because of all the businesses and restaurants and things like that, that are there. but once again, they've locked down ucla. there is a report of a shooting that occurred earlier at engineering 4. they put the campus on lockdown. we're going to continue to monitor the situation as it becomes a little bit more clearer exactly what happened and when it happened. guys, i'll turn it back you to. >> got it, sue. thank you so much. keep on top of that. >> we're still waiting for the google ceo. he's going to be speaking live at the code conference coming up. we'll be right back. can a toothpaste do everything well? this clean was like - pow. it felt like i had just gone to the dentist. my teeth are glowing. they are so white. 6x cleaning*, 6x whiteningá in the certain spots that i get very sensitive... ...i really notice a difference. and at two weeks superior sensitivity relief to sensodyne i actually really like the two steps! step 1 cleans and relieves sensitivity, step 2 whitens. it's the whole package. no one's done this. crest - healthy, beautiful smiles for life. welcome back to "power lunch." let's take a look at the final gold trades. bounce off the bottom for the price of gold in just the past hour or. so still the move just abo about .25%. the biggest move today, the most distinctive is of that copper. that is down by 1.1%. let's check in with the code conference where our google ceo is speaking. >> -- so much. zrint to do anything to prepare. just watch google. but, you know, to me, the big theme that you personally set out and you introduced a bunch of products, but there was a theme running through it and that was artificial intelligence, machine learning. and i think i heard you say this is the next ten years. this is the -- you know, you didn't exactly say it this way, but i did when i was writing about it. that we've had smart phones -- the smart phone has sort of been like a black hole. there is nothing bad about it and it's certainly not dead. but a lot of the developer energy, a lot of the hardware makers, energy, everything has been poured into this smart phone market. and now as can you see from mary's slide, it's kind of maturing. and we're on to ai. >> i think that's a good summary. for us, we definitely see a huge opportunity. we started seeing about it three to four years ago whether what we call is deep neuronets and use it for voice recognition. we just translation. we just saw significant step changes. we've been working on these things for a long, long time. even very, very early on we obviously, you know, use training all the time. but the actual way in which machine learning can actually, you know, do a much better job in many, many specific instances, that's been much more recent for us. so we felt we were at an inflection point. it was a big shift internally. we've been focused in how to do we bring all of that outside? i think the opportunity to do it, mobile gives a great platform, great way to do it. it's a very different paradigm. people use it all the time. they use when it they're on the go. and so the bar is much higher. >> i thought you almost -- well, i said this so i better own it. i said that you sort hf a declaration of war, i thought. and you did qualify. you said it is early days and will take a long time. jeff bezos said something simil similar. i said it is first inning? he said it may be the first guy to bat. it's that early. so you said. that but you did say it's ai and we at going. >> caller: do we are than anyone else. now apple has siri, microsoft has bots, facebook has, you know, intelligence. why is google able to do this better? >> we've been doing it for a lot longer. when i look at the scale at which we do today, either in term of the power we apply it to, how many years we've been doing it or if you benchmark it in term of any quality metrics. if you take any conversational, you know, conversations you have with google our ability to answer questions at scale globally indepth, for example, that enables you vo to have a follow on conversation, we've been doing this for a long time. and many people have been asking questions to google for a long time. >> so are you willing to say you're better than apple and am done and better than facebook? at this. >> you know, first of all, these are phenomenal companies. >> yes. >> you're a good guy. i did not say that they were not. >> this is more like, it's not a game of thrones. it's like the nba championships or something like that. >> i kind of think it is west roast. >> we're trying to bring -- >> i think that map of westrose at the beginning of "game of thrones" is not different from the one of silicon valley. >> we're not necessarily trying to kill each other, hopefully not. there are no lives at stake. but point is well taken. i think when it comes to machine learning in ai, the ability to bring that in a meaningful way to users, i know i do think, you know, pretty important what we accomplished. it is too early for all of us. we do a majority of benchmarking so we feel we're ahead. >> are screens dead? if we're going to do this by voice, do we need screens? >> in some cases, yes. so, for example, you know, today when people get into the car, you know, people do talk to their cars and, you know, the screen is convenient as well. you stop thinking about it as i think we're in the face of transitioning from computing being the physical devices and screens and how you think about them to you just expecting them to be there ambiently and working for you. you know, screens are not that expens expensive, per se. you look at how much it costs to put class there and actually putting screens or costs could actually make sense. so screens and r. not that expensive. so wherever it makes sense and you need it to work for users, i think i will the get there. i think computing being available to assist you throughout whatever your doing. >> so it's more like captain picard. he is standing in front of a giant screen but he ignores it and just says computer -- >> you're listening to walt mossberg interviewing the google ceo live at the code conference in california. we're going to cut away for just a moment. you can continue to watch this interview right now on cnbc.com. let's get a check on the bond market. we turn to rick santelli. rick? >> a very strange day in the bond market. just when everyone thought we were going to test and break under a very important technical level, we didn't. how i can explain what happened? let's start with the one week chart of the s&p 500. look at that 2.90 level. when the s&p 500 opened below that and rose above it, right when it did, next chart, ten year note yield is when the ten year note yield started to rise. they held basically right in the low 180s which is the 50% move of a low and high yield since february 1st of 166 and 198. as we look at that clart starting in february, there is a lot of cross currents in treasuries. but what treasuries seem to be doing today, trading everything in the macro and cognizant of the key levels. "power lunch" is going to return. don't change that setting. you wouldn't order szechuan without checking the spice level. it really opens the passages. waiter. water. so why would you invest without checking brokercheck? check your broker with brokercheck. with usaa is awesome. homeowners insurance life insurance automobile insurance i spent 20 years active duty they still refer to me as "gunnery sergeant" when i call being a usaa member because of my service in the military to pass that on to my kids something that makes me happy my name is roger zapata and i'm a usaa member for life. usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life. it took 17 years and billions of dollars to build. meantime, donald trump is blasting the pga tour for its plans to move a major golf tournament to mexico from his course. and that is in miami. said the pga put profit ahead of thousands of american jobs according to the golf channel, the tournament will be played near mexico city and sponsored by a conglomerate. >> iraq's prime minister visited a military camp today where he met with military commanders. he said that he hoped the iraqi flag will be flying over the city within days. iraq is trying to take back fallujah after two years under isis control. greek's waking up to a new wave of price hikes that have been in demand about it government and n. return for the international bailout loans which were issued to that country earlier this year. the highest increases targeting the main ingredients of the country's cafe culture, coffee and beer. prices increased on internet, fixed telephone and paid tv subscriptions. meantime, pizza hut is removing artificial ingredients from the pizzas. they will cut out preservetives, bha and bht from all of its meat by next month and chicken used as a topping will be free of human antibiotics by march. >> all right. there is an extended version of the news update. we're still following the situation in los angeles as well. i'll be back in a short while with an update on. that back to you. >> got it. thank you, sue. stocks regained most of the losses on the first trading day in june. so what is the best strategy for investors in a slow growth environment? we head into the second half of the year, joining us are lisa shallot, at morgan stanley. lady and gentleman, good to you have here. li lisa, what do you make of the market right now? you are nervous about it. valuation tooz high at this point? you are piling in? >> not at all. the fact that we've seen resilience here in the face of the fed likely to hike rates in july, it's a very good news, i think. and suggests that the world economy is a lot stronger than some of the bears think it is. we're not seeing the negativity that we've seen last time when we had a temper tantrum. so emerging markets held up here. and that makes us quite constructive in the equity market. >> you could like the financials. but you think long term rates, are they ever going to rise that way the banks can make a loan that makes a profit for them? >> look, the financials are clearly going to be challenged by the current flat ebbing of the yield kerve. but financials are very good example of where we are focusing in the market which is the intersection of value and quality. in a slow growth environment, our view is that you really want to have that valuation support. you want to have strong balance sheets and have kind of a steady business model. and financials, industrials, health care, old tech would be examples. >> got it. michael, she is sanguine in the face that it looks like we're going to get a rate hike this summer possibly. yet, the markets are okay. are you okay with it? >> we are okay it with. we had a good test in december. the market had an additional bound of volatility there. i think we've seen the markets accept one or two hikes this year. they're more accepting of the concepts. rates are still low on an absolute and relative basis. if the market can handle it with less volatility than december, i think that bodes well for equity returns. >> we have to cut you off. we have to go to sue with breaking news and the situation in ucla. >> once again, there were reports earlier this morning of a shooting on campus at ucla in westwood which is the city in los angeles. the campus was put on lockdown. it looks like we're now seeing some students come out of the buildings. it was in the engineering building, building number 4. we do know that the two people have been shot. their condition is unknown at this point. we're waiting for some sort of clarification on their conditions. two people have been shot. the campus of ucla was on lockdown earlier. the shooting occurred in the engineering building and that is when they did put that campus on lockdown. we don't have any confirmation that lockdown is lifted. although from that live shot from knbc, it looks like some students are walking around at this point. that's what we know at this hour. we know there are two victims. we don't know their conditions. and we'll keep you posted on it. ty, i'll send it back to you. >> thank you very much. let's check back in at the code conference and listen to google's chief talk about privacy. >> you know, to date, every time we do important things, you know, people ask us this question all the time. users, take photos, for example, we came last year. the premise was to research and organize it for you. lifetime worth of photos, right? users reacted phenomenally well. we search through them. and so for me, the onus is on us to give value that people strust us. privacy is something we'll actually i think all the machine learning and the ai work we do will help us to use prycy better. a lot of times it is hard to do privacies. we rely on a lot of manual logistics and give you settings and controls to do these things. we're doing that better. very soon can you come in and say your name to google and we pop-up your account settings and can you control all. that about a billion people go throughout settings just in the last year aloevenlt but sometime you want to do better. you should be able to tell google, hey, maybe the last four hours, you know, just take it off and go off. maybe you're able to do those things. we did that when we bought chrome. can you use chrome any way you want. you can switch in between if you want to. we do it with the mess efrpging products. we give users choice. over time, i think we can give users sophisticated privacy controls. i want to save every conversation i have with my daughter for eternity. i want to be able to go back and look at it, et cetera. some of the conversations, you know, you know, i want maybe with my general counsel at google i want to be private. we want to be able to do those things. we can be smart better it over time. >> let's switch and talk about android. so, you know, android is phenomenally successful. i think mary had a slide about this. but we didn't even need that. >> we're going to breakaway there from mr. mossburg. you can watch the on going interview on cnbc.com. less than a week to go before the primaries in new jersey. they're very close in california. could we see a sanders upset in the golden state and how would that destabilize the race if at all? with us now, cnbc contributor larry kudlow and former pennsylvania governor ed rendell. he is one of the guys in one of the most highly contended states, i would say, governor rendell, in the country in the general lection. let's talk mr. rendell about democratic politics. six weeks ago everybody was talking about how the republican party was fractured. it couldn't come together. it was atomized. the same is being said about the democratic party. that it is fractured. it won't coalesce f miss clinton loses in california, how bad is that going to be for repairing the democratic party? >> that would be a clear message that the sanders people have fought hard and done roarkbly well but lost. they lost the popular vote and the elected delegates. i think you it will begin the unity process coming to be. >> and would you call on him to get out if he loses california and those races? >> no. >> i'm sorry. >> no, absolutely not. he has every right to put his name in the nomination at the convention and he, in fact, in some ways he owes it to delegates. i was a delegate in '08. i wanted to cast our vote for hillary clinton as governor. she won our state. she took the microphone and moved it. and we were all -- all the clinton delegates, we were terribly disappointed we didn't get a chance to vote for her. so bernie has a right to put the name in nomination, be nominated, secretaried. have the role call. but at some point vermont is near the end of the role call. and urge people to get together. >> secretary clinton, presuming she does secure the nomination is going to go into the convention basically as a slightly above 500 ball club. she's got a lot of losses on her record. >> look, ed rendell is one of my favorite democrats. he's a great guy. governor, to be honest with you, if hillary loses california, all hell is going to break loose. that is my position. i'm not as relaxed about it as you are. i'm not involved in it. so maybe i can be more objective. they put it well in "the wall street journal," he said among other consequences, the sanders team will be so embolden by a win in california, they're going to force a rules change on the floor which will say all the super delegates have to vote for the primary or caucus winner of their state rather than just vote for mrs. clinton. and my pal says it even more interesting thing. steve forbes czthinks there is clause in the democratic rules, you tell me if this is not right that, allows delegates for reasons of overwhelming conscience, i love that, overwhelming conscience to not vote for the candidate for whom they pledged. in other words, mrs. clinton's cushion may be completely overturned if she loses in california. what is your take on that, sir? >> first of all, this is not unusual. and roll back the clock to 2008. hillary clinton won nine of the last 11 primaries against senator obama. and the same thing was said by clinton delegates -- >> including california. >> including california. and i said, look, she's clearly the better candidate. the super delegates have to support her. they didn't. barack obama had won the majority of elected delegates. hillary clinton will, three mill wron more popular votes at least. she will have won sigma jofrt lekted sell gats. if you got rid of super delegates totally and just did it on elected delegates, she would be the nominee going away. and so -- >> what about this conscience clause? just opens it up. they have rule votes. as you know, anything can happen. >> most democrats, but larry, most democrats are democrats with a big d and small d. we believe when you get the most popular votes and when you get the most elected delegates, you should be the nominee. it's interesting. >> i agree. >> it's interesting. in february the bernie sanders people didn't like a super delegates. now in early june, they love us again. >> let me pose something to larry if i may. there was a piece in the "wall street journal." it was floated the idea that hillary may not be the nominee. >> that's right. >> and it could be a joe biden, elizabeth warren ticket. >> right. >> where i sit, i think that will be the last thing the gop would want. because people like joe biden. >> i actually tend to agree with. that. >> i think he'd be harder to beat than hillary. >> even though i disagree with vice president biden, he is a wonderful man. i mean personally, i love him as do a lot of things. it's a great point. i want sto to ask governor rendell n your heart of hearts, really, no one is listening here. we're completely off the roared. in your heart of hearts -- >> between you and me said connie chung. >> just between us, don't you think joe biden would make a better candidate than hillary clinton against donald trump? seriously, sir. >> well, i actually think that hillary clinton is going to be a great candidate in the fall. the folk us is going to be one-on-one. and one-on-one she does very well. one-on-one she knows the issues. one-on-one her personal strength -- >> you're a company man, governor. her negatives are so high. i mean, can you acknowledge that? that you got one of the most unpopular candidates environmenter that is potentially at the top of your ticket? >> look, when she was secretary of state, it was almost 65% favorable. it goes up and down. i believe that before -- >> we have to leave it there, guys. >> i hear you. i'm calling this a nondenial denial. we are minutes away from the beige book despite the title can be exciting and move the markets. let's bring in steve liesman and our cnbc contributors. gentlemen, do we have to assume that these have to bolster in some way the idea that we're going to get potentially a rate hike sometime in the next four months? is that what we're looking for in the beige book data which is a survey? >> what you're looking for is the moderate to modest growth continue? does the economy continue to expand? and we'll be looking for any hints of, for example, wage or price pressure. i don't expect to be. there they have to also show prices not falling. so it doesn't have to sort of be pro it burt it can't be against it. they're not looking at much for the current economy. zbh and we should explain the beige book is a survey of economies around the country of market conditions and business conditions. >> and very impressionistic. it's not like hard numbers. it's very impressionistic. >> it's a monet. >> well, monet was an impressionist as well. i like realism. >> there is socialist realism, remember? >> okay. >> i actually -- >> right. i don't think tlooked at the is morning. not bad, no the great. you're at 51. but here's the thing. if you look at it versus a year ago, the overall index is below. production is below. proiment is below. new orders are the same. i would argue that manufacturing sector is flat lined. >> flat line is progress. >> but it's not tightening. >> it was declining and now it is stabilizing. >> i don't want it to move on the economy. unless the inflation rate spikes up. >> are we going to see a rate hike? >> i hope number. i mean the fed has an ax to grind. it seems their hell bent on raising rates. the philips curve in the fed's mind still alive and well. and they want to raise rates. i think they'll go once this year. i'm still of the view it's december. but if they have the excuse and the data given the leeway to move, then they'll probably do so. i would say july is more likely than june at this point. >> can i ask a question? if there is 150,000 jobs on friday, you're continuing the jobs slowdown, was does that mean? seriously? >> continue to go back to what fed officials have said which is that 150 is enough. look at the unemployment rate. if the unemployment rate remains the same or goes down a little bit, the fed is looking for 100 for from this economy given what workforce growth s joe, i just want to deflect a bill lit. y little bit. you had a half and now it's one. i'm going to call it a victory for you. that's okay. >> you're a good man. >> you were ahead of the pack. and i want to just point that out. so now where are you on the second quarter? we need your insight? >> i have 1%, steve. koibt better. but it's under 2%. >> under two? >> the over under -- >> the point, is look this is not tightening territory. and anyway, the fed -- joe's got this storey. the fed shouldn't be raising rates in this environment. >> you heard joe kernan every morning? >> if you see a spike -- >> do you read the journal editorial page? >> i know. most conservatives don't agree. >> it's a man if heaven. what will the federal rates are. >> if you see an inflation spike, yes, the fed's job is to stabilize prices. i don't see it. i don't see an economy. i think jobs are slowing down. profits are falling. business is weak. >> all right. everybody hold on one second. we got to get to amen. he has details on the fed's beige book right now. >> most federal reserve banks describe modest economic growth since the last beige book report out in april. the exceptions were in chicago and kansas which said the pace of growth has slowed. in new york they call it activity generally flat. several districts reported the contacts had generally optimistic outlooks and employment grew modestly and tight labor markets were widely report add long with wage and price pressures. now wages grew modestly with increases concentrated in areas of labor tightness. many districts reporting wage increases for entry level positions. they reported pressure due to compensation at energy service firms. consumer spernding up modestly on balance in many districts. again, there were exceptions here like new york that reported weakened sales. retailers across many districts reported increased competition from on line sales. also manufacturing activity is mix add cross the districts. richmond and atlanta reported stronger activity. construction and real estate activity generally expanded and outlook for those sectors remained positive. overall loan demand was up moderately. crop conditions were promising in many districts but low commodity prices continue to pressure agriculture incomes. the energy sector is weak. real estate and construction activity generally expanded. in the state that's have legalized sales of canebus products, they noted pickup in demand for retail store front property. that it is for you from here. >> states with canebus products. i'm comforted by that and comforted that hogs are doing well. >> the fed has no power over hogs. none whatsoever. >> nieve, stodest growth except in chicago and kansas city it sounds like. some wage and price pressure except in dallas. >> so tired of the n wordm word. minneapolis, everything is meth out. there the one thing that is not -- tight labor markets in some districts. a little inflation pressure. look, here is the story. i know we're going dom back to. this as far as i know, the story is this. you look at the current rate of federal reserve. you look at the idea that we have say 14 million more jobs that growth is in and around 2%. you can't justify a 0% interest rate. can you not, larry, justify a tight policy. >> thank you. >> but that doesn't mean you should be on the bottom. >> a 3% nominal gdp and everything else you described would suggest that fed is tighter than you think. all i'm saying -- >> unless they went negative. >> i don't want to go negative. that's okay. half a point on excess reserves. the whole system has to be changed. why don't they just wait for a big, fat corporate tax cut that would rejuvenate the economy? >> that's the bottom line. >> they could be waiting a long time. >> joe, go ahead. >> so the one point i add to what larry is saying, if you look at the yield curve, of course, it is distort bid the central bank qe. but even so, the 210 spread is flattening dramatically. but when you look at the futures market, it is basically saying that the terminal rate is somewhere around 1.25%. it's not 259 they give us that is the problem. it's the market then having to come back to this notion that where the fed wants rates to be and where the market sees it are worlds apart. >> let me just say if you agree with an idea that larry talked about last week. i believe it was on the show in that seat. the fed should follow the market here. that's what you're saying? >> yes. >> the bond market. okay. >> not the stock market which is, you know, i won't say anything. but the bond marked is more considered. >> but on that note, the stock market has behaved very well in the face of potential rate hike. and we increasingly think that they care what the stock market thinks. don't you think they're looking at this and saying the stock market is not afraid. let's do it when we have a moment to do it. >> they're going to look at this initial floating of -- >> maybe you don't like that. >> but joe makes a point. as i understand your point, if the fed moves and they're sa talking about sequential rate hikes. >> it's the one or two moves they have left after this year rment four next year and four to five they have in '18. that's the problem. if you believe there is a recession coming within the next three years as i believe there will be, the funds rate will be where it is today if'lower. that is the problem the fed has. >> but miss yellen on friday when she was speaking up there in massachusetts said basically very measured, very, very gradual. >> joe, let me make this point. they delayed and delayed and delayed that initial rate hike many months past when it was initially flat ened. they waited until december. they finally did one in december. we are now in the month of june with perhaps a rate hike now or july. the idea that the market is going to feel like the fed is accelerating here, i think the evidence is -- >> and if they go in the summer, i think they'll wait another six months. zbh but steve, listen. >> you can't control what the reserve bank president says. this is what stirred the pot last december. you had a whole string, joe, remember? all the reserve bank presidents came out and started talking about sequential interest rate hikes. >> here's the point. i want to say one thing to what you said earlier. you made a very good point about 150 on jobs. we're talking about the fed raising rates when growth is around 2.25%, 2.5% by the fed's calculations, last year it was nearly 4% at the same time. job growth was closer to 300 than 150. yet this year they're raising rates. this is what comes back to your point, larry, possible policy error. >> look, i know it's not going to happen overnight. i still believe this. if you slash the corporate tax rate, listen to me for a second, the economy will rejuvenate real interest rates will go up. and the fed should follow them. that's the way i would do it. if that means waiting a while, let them wait a while. i don't see the urgency much that's all i'm saying. they need fiscal help. >> i'm surprised, steve. we heard janet yellen talk so much about the problems in the employment sector. when we see wage prices, specifically they said entry level jobs, she must love. that she talked about how concerned she is about certain areas. >> that is minimum wage, michelle. >> yeah. >> that's a rolloff. you get the bump. >> but the spirit of -- so nay normal world the fed is concerned if there is accelerated wage growth. that is a reason for them to raise interest rates. janet yellen is a very different person. >> it's 2%, 2.5%, the product is lack of productivity. the other problem is because of the lack of productivity and the slight rise in wages, profits are falling. and i think that's a problem for the whole business sector. >> inflation now is running 1.6 on a core basis on what the fed follows. you're going to have a rolloff of some of the effects of the strong dollar and also weak oil price that's increase the headline rate and perhaps lead into the core rate. what i think the fed is thinking about now, and i'm trying to tell what you they're thinking, is they're trying to get ahead of that bump and get maybe 50 basis point out of this. i think tyler has the pacing about right. think the do a quarterer in june and july and then are they sub-1% on fed funds rate? >> pcd factor. 1.1% year on year. and marty fellstein keeps saying we're all underestimating inflation. it ain't there. >> thank you, guys. steve, joe, larry. we have to go to sue. >> indeed. we're continuing to follow the situation at ucla in los angeles. michelle, we can now confirm by the lapd two people are dead in the campus shooting earlier this morning which took place in the engineering building and engineering building number 4. school still in session. the university is in session. exams begin next week. graduation for engineering students is june 11th. this is a very large campus. it is 419 acres. 43,000 students. boelter hall is one of the engineering buildings. there are several of them. the campus to the west is santa monica. to the -- a little north is belaire. and it's smack dab in the middle of westwood which is a very bustling part of los angeles. the lapd responded even though ucla has their very own large campus police force. atf and fbi are on site at the request of the lapd. and they also have called a citywide tactical alert asking people to avoid the area. the campus was on lockdown. it looks like maybe, maybe some of that has been lifted. we're seeing students. ronald reagan medical center was on lockdown earlier this morning as well. two dead in the shooting at the ucla campus in the engineering building. boelton hall. all right. "power lunch" is back with more in just a moment. the heirloom tomato. when you cook with incredible ingredients... you make incredible meals. fresh ingredients, step-by-step recipies, delivered to your door for less than nine dollars a meal. get your first two meals free at blueapron.com/cook . jeff bezos is getting rave reviews for his paerns at the conference. here is a tack of how the different diversions of amazon work together to help the bottom line. >> when we win a golden globe, you know, it helps us sell more shoes. >> simple as that. but all is not sunshine in the tech world. here's vanity fair correspondent nick builton talking about the outlook for twitter. >> that's where was a belief th fixed and solved. and i think it still has a ways to go to be quite frank. >> meantime, amazon, mr. bezos' company setting all time highs. up nearly of 6 will 8% in the past year. twitter is down nearly 59% on that one year clart that you see right there. let's bring in our own john ford. i know there say lot more discussed out there than amazon and twitter's fate. i'm sure it's out there some. where and what are people saying? >> i think you said base yoes got rave reviews, ty. i think that is exactly on the mark. i'm just making a list of words that people have used to describe bezos' appearance last ni, amazing, brilliant. i think people are considering that maybe a sign of a new chapter in the way he is viewed inside and outside of tech. >> i that i is true. he doesn't talk very often. when he zshgs it's special. and also at the code conference, you tend to get the figures like an elan musk and larry ellis son over the last couple years. when you have the founder billionaires on stage, they're a little less incumbent. a key theme i think this year even more than the last year is fly wheels. something that jeff bezos talked about. the idea that one success begets another success. they feed each other. that is what they were talking about. getting people to buy shoes. we see something similar with google and the way they handled its businesses. youtube and facebook as will. twitter never figured thought growth fly wheel that is causing them to both grow and get revenue. >> you know, when you're going through the words you used to describe jeff bezos' speech, i was thinking this sounds like and call me a conspiracy theorist, but this sounds like it could mark the top. it sounds very topee for a ceo today we get a gloelden globe and sell more shoes and it's as easy as that. my skepticism radar goes flashing. bright red lights here. any reaction like that in the audience? >> i that i is natural conditioning to what we've seen over the past life psycycles ine totali totality. base yoez is talking about where theret tip of the sphere. and the companies personified about it appearances, google got asked about the eu. ibm was zd point blank what is ibm? so they're all feeding the narratives built for them already. >> i think that's true. i think when you're concerned about an amazon topic, a volume i had concern, especially what is sended to cause the stock to drop is what jeff bezos starts making big investments. he sounded confident enough to go forward with that big investment. >> yes, to do grocery and grocery, believe me, is going to be ridiculously expensive if they start to roll that out broadly. but, yes, but that doesn't mean that he won't eventually succeed. so if you're placing bets, you have to be careful with. that. >> and if the produce arrives frozen, i'm done with them. that's what happens not in amazon's case but in others. what is so jobsian about what he said yesterday apart from the idea that there is a certain mystique about bezos. he doesn't show up in front of the cameras very often. he doesn't sit for many interviews so what was so mind blowing about what he said? >> for one, the rareness of his aerns pa. it is the specificity he put on a myriad of issues. as john said, building multiple pillars, some of which we haven't seen from them before like amazon studios. everything but the one more thing in some areas. >> i wouldn't say it's jobs. we got to get out of that mode of comparing everything great on stage to steve jobs. but i think what was similar to what you see from leaders like that is his clear philosophical point of view on so many different things. he didn't have that edge, that kind of chip on his shoulder that you tend to get from steve jobs talking about a the love stuff. in that sense it wasn't jobsian. but having that clear point of view whether it's about the first amendment or the future of artificial intelligence or the future of retail and what is not going to change that, was clear. >> i will say the three major themes and it's only been half a session this morning, voice really interesting, getting a the lot of data given to us. google estimates 80% of voice is now intelligible in a quiet room. ai, obviously, although ibm calls it cognitive and autos. your interswru mark feelgdz went a long way in saying that they think the united states could be the global auto hub once again. >> yes, and transition to the idea of cars as a service. the idea maybe there won't be as many individual cars sold but people are going to spend more time in cars. if that happens, who gets the financial benefit from cars? or the various service that's people might have time to consume when they're in the backseat instead of at the staerg wheel. >> fascinating stuff. our thank touz. we should mention here you just sought the amazon chart, it is sitting at session highs and the broader markets are at session highs. we just turned positive on the s&p 500, up by 2.3 points. the nasdaq up is by .2% right now. the fed detecting more than 50 cyber breeches in the past four years. and congress now weighing on the swift bank hacks. how vulnerable is our financial system? you need to hear that next. and there was a multibillionaire was cut down to zichlt we'll tell who you when "power lunch" return. d back by compromise, businesses need the agility to do one thing & another. only at&t has the network, people, and partners to help companies be... local & global. open & secure. because no one knows & like at&t. perfect driving record. >>perfect. no tickets. no accidents... >>that is until one of you clips a food truck, ruining your perfect record. >>yup... now, you would think your insurance company would cut you some slack, right? >>no. your insurance rates go through the roof. your perfect record doesn't get you anything. >>anything. perfect! for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. and if you do have an accident, our claim centers are available to assist you 24/7. for a free quote, call liberty mutual at switch to liberty mutual and you could save up to $509 call today at see car insurance in a whole new light. liberty mutual insurance. new today, u.s. law makers are investigating the new york fed and handling of a computer hack that led to more than $80 million to be siphoned out of the bank of bangladesh's account at the fed. we broke that story this morning. we have more details. >> yeah, hi michelle. the house science committee lamar smith sending this letter to the new york fed president william dudley yesterday asking a whole host of questions and demanding documents and communications relating to the new york fed's hand willing of the bank of bangladesh hack. also the new york fed's oversight over the swift system as a participate in that international consortium. in this letter in, light of the recent cyber attacks on our global financial system, the committee believes it is imperative to receive information from the new york fed about its response. it's oversight of swift, the status of the investigation and any remedial steps taken to address vulnerabilities. we haven't gotten a lot of detail so far about what exactly the new york fed has discovered about its systems here. the committee on capitol hill now saying they want answers to the questions as well. they're giving now the new york fed until june 14th to produce all of these documents and communications. so we'll see how this one goes over time. but it's an indication now of increased interest in all of this up on capitol hill. >> all right. thank you for the rundown there. let's bring in the ceo of the velosky group. he was the spt of financial sstss from 2011 to 2015 with oversight of major banks on wall street. what do you makest situation with the swiss system? this is the mess efrpging system that allows the transfer of billions and trillions of dollars all over the world. is congress right to be looking at the new york fed's hand willing of the situation? >> i think the more pressure that's out there to start to improve things when it comes to cybersecurity for our entire global financial system the better. i don't think it should become overly politicized. it shouldn't become too much of a who's to blame? this is something we're working on collaboratively, government, private sectors and others to try to really improve cybersecurity around our global financial system. >> is that happening? if not, why not? >> i think it's starting to happen. it's way too slow. we were talking about this, you know, back in 2013. and, you know, we were saying you have to look at this with the kind of urgency that you would look at when there is real threats for physical security. in other words, we should be thinking of worse case scenarios. and we should be really worried about what the worst case scenarios are and then work with that kind of urgency before we have a worst case scenarios. >> is it possible that some kind of cyber hack steals enough money from bafrpg, billions that, the capitalist hurt and brought to its knees, it can't fund itself? could we get to that kind of situation? i mean, 80 million in one hack from the bank of bangladesh is startli startling. >> i like to think none of that would he ever happen. we flif a world where the sow fission indication and capabilities of hackers. you have groups of hackers around the world innovating all day long. all they do is try to figure out ways to disrupt our system. >> so what do we do? >> we should do the low hanging fruit first, for example. let me start with that. so a lot of systems today still use a user name and pass word to get n our entire internet enfrom a structure was built with it. it's a terrible system. turns out for moderately sophisticated hacker, i heard some people say it's like having a lock on a screen door. we should be moving to multiauthentication and i would like everyone to think about it today. if you sign on to your bank account and they don't offer zsh ask you for a second identifier beyond your pass word that is randomly generated that time and stoent your phone, you should be worried and you should be worried about waking up tomorrow and looking at your bank account and your money is gone. our entire system should move to a multiauthentication system. it is something we can do. there is google authenticator. it can be used. >> on another topic, back when you were in government, you went after standard charter. they had to pay a fine for doing deals with iran. >> a couple fines. >> yes. exactly. john kerry, secretary of state is now encouraging all the european banks to do business with iran. how do you feel about that? he's encouraging them to do business with the country that u.s. banks can't do business with? >> obviously, our iranian sangs regime changed some what since i was at dfs and we took actions against a number of banks. i think there has to be a balance. i think there has to be -- we have to make sure that we're not funding rogue actors who are trying to really harm our country. at the same time, we're trying to have a global banking system. and we don't want so much derisking around the globe that we actually make things worse. so i think secretary kerry, my guess is he's trying to figure out how to get that balance right. the geopolitical situation which i'm not an expert in is obviously changing. i think we should always have a bit of caution, too, when talking about doing business with nation states who have a history of trying to hurt us and hurt a lot of our allies. >> thank you for coming in. appreciate it. >> thank you. oil is about to close. we'll get ahead of tomorrow's opec meeting next. don't move. great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. hello, everybody. here is your cnbc news update. a shooting on the ucla campus in los angeles. lapd confirming that two people are dead. the shooting took place at the university's engineering building where there is a huge police and s.w.a.t. team presence. knbc, the nbc affiliate in los angeles reportsing a handgun and suicide note were found at the scene. that is from a single source. the campus on lockdown. minnesota's u.s. attorney declined to file civil rights charges against two minneapolis police officers in the november death of a black man that sparked weeks of protests. he cited insufficient evidence to support the charge enz against the two. ken starr resigned as baylor's chancellor a week after removed from president of the texas school. amid a scandal over the treatment of sexual assault cases involving its football players. he says he will continue to teach at baylor's law school. and flooding in texas has left much of that region underwater. rivers rise to historic levels. northeast of san antonio, floodwaters swept this jeep down the river. torrential rains over the past week prompted mandatory evacuation orders. we didn't have that footage. trust me, it's been a dramatic week of bad weather in texas. that is the cnbc news update this hour. i'll send it back you to. >> i know you pretty well, sue. i know there was a jeep there fully submerged. >> unfortunately. >> you would not fool about stuff like that. >> i would not. >> the oil market closing for the day. we have the nymex report. >> the closing price for wti, $49.01. so we came off the session lows today. still negative for the day. and obviously just a day away from that big opec meeting. the question at this point is freeze or not to freeze? it really is the important point right now. the analyst traders and major energy fund investors that we spoke, to the majority of them feel we are not going to see any kind of a deal at this meeting tomorrow. today venezuela said that it feels there is a de facto freeze in the market because we see nonopec producers cut production. the u.s. is one of those. yesterday the uae oil minister said he feels the rebalancing has been constructive for the market. that took prices lower. and this talk to dave a little bit of a ceiling being put in place by the other members and sources out there created a situation where prices moved up. so all eyes on opec tomorrow. back to you. >> all right. thank you so much. speaking of opec swreshgs to go to brian sullivan. he's not here today because he's on the ground in vienna, austria. that is the site of the big opec meeting this week. brian? >> michelle, yeah. opec is headquartered right there. that is the headquarters here in vienna austria. there is a lot of interest around this meeting. in fact, you know how it goes. you go to various hotels all throughout the day to day and wait for the oil ministers to arrive. we'll show you videos of the ministers coming from various countries, angola, iraq. you can see the media. i mean literally it's like people shoving, doing this kind of stuff. you're hoping for any clues or comments on what they may be pushing for as part of their aagenda yachlt pretty much everybody is close mouthed. they say we have a meeting tomorrow. we'll give you more information there. i think when we look at the number one agenda for tomorrow, it's what are we going to get? are we going to get basically a production cut, very few expect that. a production freeze, maybe some headlines crossing all throughout the day that that's going to be pushed again. doja part two if you will. or it is going to be no deal and sort of every country for itself which is what we saw post doja? that is number one. number two is you need saudi arabia. for the first time in 25 years, they're bringing a new head oil man here. he is a proxy for the king's 30-year-old son. what is he going to do? what is saudi arabia going to do? it is them against everybody else? also you want to watch the call? i know there is indonesia but let's focus on iraq and eiran. they need the cash as well. the question is, can they sustain it? and now with higher production, is iran ready to make a deal and say, okay, we'll freeze production and then be way the troubled twos as i call them, venezuela and you talk about this all the time and nigeria. the countries are in relative dire economic straits. they need higher prices. but at the same time, they need to pump more oil so it is kind of a catch 22 about what they're going to be able to do. either way sh it's going to go down starting very early tomorrow morning, 10:00 a.m. local time in that building. press conference. closed door meetings. hopefully comments. we're going to be literally planting our hindz on this street corner and in that building for the next 24 hours. because this is going to affect the price of oil and the price of gasoline that everybody pays. >> all right. plant away. we'll see you tomorrow. >> i think the risk outweighs the possible reward here. we had a 95% rally over 75 trading days. that looks excessive us to given the short magnitude of time. also, when you look at oil in relation to a 200 day moving average, you're very, very stretched relative to trend. i don't think it's over the we overcoming weeks and months that we rechallenge that two day average on the down side. that is about $40. that makes more sense us to in terms of a level where we want to get involved. we have seen the latin -- we have seen the dollar rally here as well. we've seen pairs contract. i think all of that is in favor of an environment where oil comes in here. >> so the environment in which oil may retest $40 a barrel, you would still buy energy stocks? >> we actually would because we think that, you know, although the short term may look rough for oil, over the coursest next six months, oil in energy stocks, they look promising. production should come down more than expected which should lead to higher oil prices. and the way this relates to stocks is even though production may be contracting as long as oil prices arizing, the share prices can not outperform. i think oil should be -- >> so what kind of energy stocks in particular, isn't that correct. >> we like chevron. so chevron is in our portfolio, unfortunately, for quite some time. we did experience the pullback. but chevron is a very solid company. it is certainly paying a great divide dividend. it has a dividend yield of over 4%. >> got it. chris and mark, appreciate it. we have more market insights on line. tonight on cnbc, secret lives of the super rich. robert frank is here with a sneak peek. >> we're going to take you inside most expensive mansion in vegas. more than a million dollars worth of trees. we're going to take you open top of the most expensive "penthouse" in mont he could and the world's tallest water slide and a man cave worth more than $20 million. that's coming right up. you pay your car insurance premium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again. why pay for insurance if you have to pay even more for using it? if you have liberty mutual deductible fund™, you could pay no deductible at all. sign up to immediately lower your deductible by $100. and keep lowering it $100 annually, until it's gone. then continue to earn that $100 every year. there's no limit to how much you can earn and this savings applies to every vehicle on your policy. call to learn more. switch to liberty mutual and you could save up to $509. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance. all right. the season finale of "secret lives of the super rich" is tonight on cnbc. always a treat when robert frank joins us for apreview. first up, a tiny street in las vegas where lots of the rich people who run vegas live. >> that's right. we all think about the strip. but the guy who's oent casinos, they live on a place called enclave court. our secret lives of the super rich got a tour of one of the only 7 homes in that gated community. this is a 22 million dollar mansion owned by wealthy fans of high fashion. check this out. >> the master suite is any girl's dream. it is modelled after the coco chanel suite at the ritz in paris. and it's divine. exquisite, perfect. >> the 24 karat gold sconces hanging from the walls are replicas of the ones coco had. even the bed is an exact copy of chanel's. in matster bath, the owner's etched an outline of coco's favorite flower. and what better way to pay hommage to the queen of couture than designing a closet inspired about it first ever chanel boutique in paris. >> piano lacquer finish, beautiful tuscan suede. such a beautiful, beautiful space for your designer gowns and all of your perfect handbags. >> the house actually has two master closets. the other looks like a ver tachy store on steroids. >> aside from making the closet look like the stores, they flew in half a million dollars worth of trees, a million dollars worth of palm trees and 2400 rose bushes because they wanted the vegas desert to look like tuscany. that's what you need to do. >> think of how much it costs to keep those things alive. the water bill zblichlt mean . >> let's switch to mont he could. 450 million dollar penlt house there with a roof top water slide and i hope wine drones to bring you wine. >> lots of stuff on this. it is the torodeon. the tallest building of all of monaco. the pent house is 550 in the air. it is just beautiful. i was up there. these views will cost around a half billion dollars or 450 million euros. that is the current asking price, 450 million euros. >> it is called the sky pent house. the apartment is not finished yet. the renderings show how the mansion to be include the the roof top water park with a massive infinity tool and water slide. >> you literally on edgest pool looking down. you can see your own yacht in the background. year luking down on the world from here. you have 35,000 square feet of space. over five floors. gives somebody the potential to really start with a blank canvas. >> that means the super rich buyer will have to shell out even more cash to finish the overthe top pad. >> somebody who buys this is going to be worth multibillions, maybe tens of billions of dollars. >> exactly. >> so you think about that. just the shell, the unfinished space is 450 million euros. so to finish that out, more than 30,000 square feet -- >> i -- >> pretty soon you're talking real money. >> i really love starting with a blank canvas. i want a blank canvas. >> you want somebody else's taste in there? please. the ultimate man cave. >> there are a lot of super rich in orange county, california. one exclusive gated neighborhood there is a competition among the home owners to build the most impressive poker room and we saw one that is equivalent of the royal straight flush of man caves. the owner of this mega mansion went all in and built a massive one of a kind man cave. stacking the deck with all the essentials like a full bar, wine cellar, pool table and more than a million dollars worth of electronics. >> the auto make system that we have installed in this home is the same system installed in every disney theme park in the world. >> but what raises the stakes in this luxury fantasy land are the homeowners' rides, lots of them. right now spinning around in the car cave -- >> this is the ultimate full house. two after theon martins including a db 5 also known as the james bond car. a 1927 bugati, 1930 austin and these. six super rare pre1970ser if 0 each worth millions. >> it's not even a man cave. it's like a super subterranean playground. >> that is very cool. i love. that i'll be watching tonight. thank you very much. don't miss the season finale of "secret lives of the super rich" tonight at 10:00 p.m. eastern only right here on cnbc. the unicorns, the billion dollar hot startups are facing serious heat lately over the businesses. our venture capitalists more interested now in getting the deal than in vetting the deal? what you hear will surprise you. billions are spent to confuse and, dare i say it, flummox the american public. "save 16% on car insurance." "switch now..." well at compare.com, we say enough's enough. so we constantly scrutinize millions of rates... answering the question once and for all, who has the lowest. just go to compare.com and get up to 50 free quotes. choose the lowest, and hit purchase. so you can get back to whatever it is you civilians do when you're not thinking about car insurance. compare.com venture capitalists are saying that start-up funding is down 11% year over year and last week "the new york times" wrote a piece about how start-up companies have really have work to do and work harder for the funding recently. benchmarks general partner bill gurley will this to say about investing in startups. >> the one thing i would remind anybody who is thinking about getting into late stage unicorn investing right now, you are the lender of last resort. they're coming for you. and pay nounding partner of up arise ventures joins us here onset. great to have you both with us. daifds i'll start with you because today we got if story out of forbes about theranos which has within under fire. they have got an lot of high profile investors. the article from forbes is saying the valuation is more like under $900 million which is quite a change here. you make a approximate big point at looking at who was in and who was out on that deal. >> you know it seems like fraud and misrepresenting fact is a age old problem. it is not a new problem. but in reality most venture funded companies don't have as black or white issue as we may see here. but this macro environment in the last five years has created this frenzy where investors are more moefted by agreed than fear and more afraid of missing out on the hot deal than actually doing the deep diligence in vetting out the details of what's really happening there. and i think theranos is an interesting example because when you look at the investor pool and the eco system a lot of the traditional investors are not participating in the theranos investments along the way. and you see a lot of other investors that maybe it is not in their core competency are not as much domain experience as you would expect and even their advisors tend to be more industry leaders in fortune 500 companies and politicians and world leaders and not necessarily medical device company people. >> other side is regulations. in general regulators have a favorable view. and when you are a start up and trying to innovate and you are having to plane a very complex regulation it is very hard to succeed. i think regulators need to do better also working with start ups to help them succeed. >> are you saying a theranos or u beam where the former i think the title was senior vice president of engineering was questioning whether or not this wireless charging technology could actually work. you're saying it is regulations that sunk these companies? or are the companies overstating what they could do and deliver? >> i think it is both. u beams up to the investors to do the diligence and whether this wireless powers. it is not up to them to have to prove it. theranos, ity as the kbangs of both. i think companies trying to do things differently and disrupt but have to play by the old status quo rules are set up for failure and i think they are vilified and i think we have to work on that. >> whash what's your case david. seeing more and more examples of start ups that don't necessarily have the goods. or questions are raised after they have already done a series of fundraising. is this a bigger problem today? or are we just hearing about it more. >> i think america loves the all american scandal and they have been vilifying some of these companies that have fallen from grace. but i do think there are some macro environmental change that are kind of raising the bar on this. one of the big ones is 5 or 10 years ago technology was changing less important things like entertainment. or games. where today, big giant, massive industries are being disrupted by technology. things like fin tech, health and wellness and med tech. and what's happening is the lot of the skills and traits that made entrepreneurs successful, sort of this reality distortion field, the ability to tell a great story and dream the impossible is at odds with the pace and the environment with the regulatory world that is a lot slower. >> so it sounds almost like david, i don't know if you agree. but the disruption that's happening these days is happening in different industries for which you really have to be an industry expert in order to truly vet and vcs are sort of over their skis. >> i don't think that's accurate. i think vcs have a great way of doing diligence. advisors, regulators, etsds. the vcs that have come in just haven't done the proper due diligence. when i started in venture we would spend months doing diligence on a company. i'm asked now in one or two weeks. so how can we possible do it in that time frame. so where the the frenzy people are making decisions maybe they shouldn't be making. >> thank you guys. the major averages are turning positive. the dow was down at one point 122. it is now up by 1 point. dupont, procter & gamble, j.p. morgan leading the dow. and lulu lemon beating rivals. why is lulu lemon founder so worried about the company then? we'll tell you who what he told hus charge! so why would you invest without checking brokercheck? check your broker with brokercheck. we are the world's connectivity company. we are business & entertainment & innovation. we are at&t. we're mobilizing the world like never before. that's the power of &. incredible bladder prthat lets from always discreeyou move like you mean it now comes with an incredible promise. the always discreet double your money back guarantee. always discreet is for bladder leaks and it's drier than poise. try it. we're so confident you'll love it, we'll give you double your money back if you don't. incredible bladder protection. double your money back guarantee. that's always discreet. welcome back to power lunch. i'm michelle caruso-cabrera. it was an exclusive you saw only here on power lunch. lulu lemon's founder taking aim at the board. saying the company has lost its way. wilson speaking was about his desires and fears. >> vision is what's really missing. if you see what lulu lemon is doing. they are just rolling out stores but they are not morphing into anything new. and they are not -- they say they are doing. they have got technology. they say they are doing innovation. but i would be the number one person in the world to understand that. and i don't see it anywhere. >> lulu lemon has just sent a statement responding to that interview. mr. wilson has had no involvement with lulu lemon since stepping down from the board in i may 2014 and as evidenced we have the right board of directors in place to support the execution of our strategic five year plan. >> i have to say when i finished i wasn't quite sure what he wanted to do with the company. >> i wasn't sure what his specific ideas were beyond the idea that he doesn't like the staggered board terms and wants three directors -- currently they have three directors coming up once every three years. he would like to be able to move more expeditiously. i think he's not happy with the fact that the company is not under armour. but it isn't. >> we might come away with the impression that he would embrace even more technological change more quick. because the pants, the first pants women new and made you look so much better than maybe you were. and that was all about technology. >> shaping technology. >> in the pants. he seemed to suggest mofr that but wasn't great about articulating it i thought. >> he wasn't very adamant or forceful you walk away thinking he wants change but owe don't know exactly what he wants. >> but he is the largest personal shareholder. and i was looking. i own the stock through my 529 fund. >> oh do you? >> which is american funds group fund. anyh anyhow, that is how you own stuff sometimes you don't even know. thanks for watching power lunch everybody. ♪ good pick. welcome to the "closing bell" everybody. i'm kelly evans. >> and i'm bill griffith. the new beige book survey. ooh it has more than half of the feds regions seeing modest growth right now. we'll talk about the impact this could have on the rate hike decision coming up in a couple of weeks here. >> and elon musk's surprise the owners of the upcoming tesla model 3. using the super chargers may not come free. how that could impact the number of pre orders coming up. >> just ahead. go a