And welcome to power lunch. Im melissa lee. Were winding down what has been a very volatile week with losses across the board. The dow and s p 500 scratching out tiny gains on the week. For todays session, though, dow and s p down by half a percent. The nasdaq is a standout for the week, up 2 on pace for its best week in more than two months. Thats mainly thanks to apples 11 rally so far this week, pulling back a little bit down 1 right now. Were also tracking oil down about 2 at this hour. It is at a fiveweek low. Welcome, everybody. Im tyler mathisen. Here what else is happening. Iphone 7 hits the shelf. It is flying off of them. Ceo tim cook greeting elated customers, reports that some apple fans in hong kong have been buying the phones and then selling them for twice the price. Exxons accounting under investigation by new yorks attorney general. The wall street journal says the probe focuses on why exxon is the only oil firm not to write down the value of assets amid a price plunge. And another unicorn dies. Rico reporting that mode media is shutting down. The lifestyle publisher used to be worth a billion dollars, not anymore apparently. Welcome to power lunch. Profitable two hours ahead. And why do i say that . We have our friend marcus lemonis, the profit, ceo of camping world, with us for the two hours. Well have him involved throughout. We begin with the markets. Quadruple witching day on wall street. The final day we can talk about, the ten s p 500 sectors. Bob pisani. Whats happening, bob . It is a rare event, a new sector in the s p 500. Before i get to that, let me tell you about the banks. Having another tough day. Tough day over in europe. Take a look at the european banks, deutsche bank, u. S. Authorities say they want 14 billion more in fines. Thats not a typo. Down 8 . Does that sound like a lot to you . 14 billion. Let me show you how much it is. Deutsche bank has a market capitalization of 18 billion. Theyre saying give us the whole company at this point. Remember, though, they have set aside 5. 5 billion euros to pay for that. Thats only a fraction of what the u. S. Authorities are look for. U. S. Stocks also u. S. Bank stocks also to the downside today. Citigroup, downgrade over at goldman sachs. Wells fargo, horrible week. You see the whole group down about 1 . Back to the new sectors here, Real Estate Investment trust reits getting a sector of their own. There is going to be an 11th sector at the close today. There is 10 on the s p 500 including financials. Reits were in financials. No more. They were 20 of the financials sector. Now going to be a separate sector, an 11th sector. 3 of the s p 500. Reits have done very well this year. 6. 5 on the upside. Why shouldnt they be. Theyre beating the s p. Low longterm Interest Rates have helped. And the average repays a dividend of about 4 . Thats worth a lot in a low Interest Rate world here. So heres the weightings for the s p. This is what it looks like after today. Tech, the biggest sector far and away the s p, 21 . Thats why apple is so big now. You see the other ones going down, Consumer Staples about 10 . Industrials are about 10 . Look at Everything Else on the other end of it, on the lower end here, energy is only 7 now. Used to be 14 . Look what it has done to itself, gone down. Utilities, materials, telecoms, reits, all of them equal. Apple folks want to tell you something, 3 of the s p 500, 14 , guys, of weighting in the s p tech sector. Thats why apple moved the entire index this week. I heard the name apple once or twice on this network this week. Thank you very much. If it is friday and close to 1 00, that means the rig count numbers are out. Theyre out and up once again. Baker hughes reporting that two net new oil rigs were added. Not a lot, but, again, we have seen this trend, week after week for about two months now, every week we see another or two or three drilling rigs added as production starts to climb back in the United States. After a summer slumber, volatility is returning to the market in a big way. Next weeks fed meeting could add more. The s p 500 down about 2 over the past month. But your next guest says despite a pickup in near term risks, the bull run should remain in tact. Joining us, liz saunders. Everybody seems to be worried about something except for you. Why ware you still off the mystic . There is always something to worry about. I think the bull market is in tact. But we noticed were in a more mature phase, well see more frequent bouts of volatility and pullback. The reason du jour is not just fed policy. It is the realization were losing the efficacy of quantitative easing and it is not a global force ed ad infini. We may have to move to other sources of opportunity for both the market and the economy. I think there is something that the market has to digest. I dont think it kills the bull market. What about bonds . We had a lot of talk earlier this week at our conference delivering alpha about concerns about a bond bubble. Where are you on that, and where do bonds play in an individual portfolio right now . So, my colleague kathy jones runs the fixed income side and they really havent changed the view that this is effectively essentially a lower for longer type of environment. Though we have been more cautious, i do believe there is probably legs to this pickup in yield, it is not the beginning of a major move higher in yield. We dont see the growth and or inflation risk that would suggest this is the beginning of a significant move higher. But i think we are coming up off of those extreme lows and probably will see a bit more to go on the upside. So yields on the long side, you say, are essentially going to be capped. When it comes to the dollar, how concerned are you about the dollars gains because just in the past month, it is up by more than 1 on the dollar index. Could that be a head wind going to the end of the year for what you say is this in tact bull market . So we think the dollar at this stage in the game is probably more in a trading range. I think yield Interest Rate differentials will define whether youre on the upper or low end. It is absolutely important. Because moves in the dollar are at the heart of whether financial conditions are loose or tight, which the fed is keying off of. In an environment of a strengthening dollar which tends to cause credit spreads to widen out a little bit, causes problems with earnings, weakness in the equity market, higher volatility, all of which has the effect of tightening financial conditions, which the fed backed away from certainly recently they become more dovish, the dollar sells off, financial conditions loosen, it sort of opens up the opportunity for the fed to become hawkish again and this is this, you know, policy loop that we have been in for some time and we dont think we get out of it. So where the dollar sits, even within a trading range, i agree it is important. Liz, this is marcus lemonis, when i think about that is happening in the overall credit market today, it feels like the credit market is still pretty robust. Out into the market today and tried to upsize or addon or new offer, there is not a lot of pricing resistance, not a lot of really resistance much at all. Are you seeing that same thing or am i seeing Something Different . I think we are at that point. But i do think the backup in libor is worth watching. The reasons for it happening, of course, are money market reform. Nonetheless, it is circular in nature. Chicken and the egg. It has crept up enough that certain corporations are going to start to be bit by that. Thats the one area were keeping a close eye on within the credit markets is are you borrowing in your business . I am. Im in the market as we speak right now. I did not see a lot of head wind in the marketplace. So even when i tried to change terms and look for no soft calls or changes in pricing or upsizing are you doing that because because the market is allowing it. Because the market is allowing it, not because you think the market is about to turn. Im doing it because the market is allowing it. When i think about corporations across the country, were thinking about leverage today. Were thinking about what the market is allowing in terms of leverage. One thing i will tell you is that the market doesnt have amnesia when it comes to understanding where leverage should be. Youre not seeing leverage back to the 5, 6, 7 times like you did five years ago. So conservative leverage with good ratings are still giving you the ability to borrow. And the spreads arent expanding. This is the problem, youre doing it, and shes doing it, and tylers doing it and im doing it and everybody is doing it millions of times over, when things turn, all of a sudden, were the big risk is, arent we going to have everybody sitting on all this leverage that you cannot unwind. That seems to be the big fear. I dont think so. The fed fear i think thats wrong. Were doing it because were choosing to grow our business and make acquisitions and open new businesses and do things of that nature. Not just refinancing the debt . The idea is youre supposed to build something that puts people to work. Thats what the feds hold gold. There is only two reasons people go into the credit market, to take a dividend or do it to put more cash on their Balance Sheet to make strategic acquisitions. If the leverage is the principle guider of whether people can do it or not, then leverage is fine. If we come back to the reality of saying three times, four times, thats the limit, youre okay. I dont know if liz is seeing that as well. You know, im not terribly worried about leverage in the system. I think our natural need to be attuned to that say function of the muscle memory of the financial crisis and, boy, we dont want to get back into that situation again. But i agree with you. And i think there has been a rational decision on a lot of corporations part, even if theyre cash risch ch to borrow. I think if we started to see that turn, i think that would be a positive next life for the economy. At some point, liz, i take your point that you see the lower for longer sort of reasoning. At some point, this 30 plus year bull market in bonds is going to end, isnt it . It can end, but it doesnt have to end with a bang. With a huge surge in yields. It can end because you dont go back to the lows that we saw, the historic lows on the tenyear. There is two different types of finales to a long bull market. Doesnt have to end if borrowers fundamentals stay the same. If the fundamentals change, it ends. If they stay the same, why should it end . Liz ann saunders, great to have you on the show. The nfl and twitter scoring big last night. What does this mean to the future of legacy tv . Should tv be worried . Plus, wells fargo ceo facing ai grilling by congress over its aggressive practices. The stock lower once again today. The question here, will wells drag other banks into its mess . All that next. With this level of engineering. Its a performance machine. With this degree of intelligence. Its a supercomputer. With this grade of protection. Its a fortress. And with this standard of luxury. Its an oasis. Introducing the completely redesigned eclass. Its everything you need it to be. And more. Lease the e300 for 549 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. There really is a big serious structural problem. It is not about one person. It is about or even about one bank. We still have a problem on wall street where the giant Financial Institutions think they can make money, they can build profit models around cheating the american people. That was democratic senator Elizabeth Warren of massachusetts on power lunch yesterday, weighing in on wells fargos scandal. The stock lower again today, down more than 6 on the week. The house just announcing it is calling on ceo john stumpf to testify later this month. Stumpf will be grilled by the senate next tuesday. So will wells fargo drag other banks into its mess . Edward mills is senior financial policy analyst at fbr Capital Markets. Good to see you. Thanks for having me. What i thought was so interesting about your note, everybody is so focused about wells fargo, the impact, the tarnishing of the reputation immediately. Longer term, you think that this could actually have an implication on regulators and wells fargos ability, for instance, to get capital plans approved. How regulators view it and see car plans. There is all sorts of ramifications down the road for this one company. I think for wells fargo specifically here, one of the big things about dodd frank is a lot of the regulations are subjective, and for a reason. They didnt want to have a hard and fast rule. So you do need to make sure you have a Good Relationship with your regulator and wells fargo has had a bit of a special status among the too big to fail institutions out there. They were the ones that were the good guys, didnt have the Capital Market centric Business Model. Next month we have to see if their living will is going to be deemed credible. Next year we go through ccar, you have seen other banks that had missteps with regulators, and then just gets that much harder on the subjective side of a lot of these regulations. All right, lets focus on the implication on the broader industry, ed. There are a lot of calls for increased regulation, particularly surrounding ironically incentivebased compensation. Do you see that having a greater likelihood of actually passing now that this has happened . Yeah, this scandal or this enforcement action is a political gift to regulators. We have seen a real change here in d. C. , where Financial Products should not be sold, they should only be bought. And when you are kind of dealing with any consumer, their best interests always has to be kind of the driving force behind that. We saw that with the department of labor coming out with a fiduciary standard earlier this year. As i mentioned, regulators are working on an incentive comp rule, this is a different political reality in d. C. , where best interests of the consumer has to be the driving force and you have to really look at incentives, gone are the days of the trips to hawaii, gone are the days to being able to kind of sell whatever you want in terms of financial we should make a distinction about what happened at wells fargo, a problem in the Consumer Bank as opposed to wall street as be that as it may. Always in these kinds of circumstances, mr. Mills, people call for the scalp of the ceo. If the United States were japan and thank goodness it isnt, the ceo of the company probably would have resigned. I would like to get your thought on whether he needs to, or how he can show that hes got his head on this, and is contrite about it. I want to get your thought on that. Stumpf does not need to resign. Going into the hearing next week with the Senate Banking committee and ultimately with the House Financial Services committee, he really has to take personal responsibility. It might be about separating that chairman from the ceo role, announcing there is no bonus this year, similar to what jamie dimon did around the london whale, or even working for a dollar a year. He has to go into the Banking Committee next week and say, which executive has been fired or has been penalized, what comp has been clawed back, because if he tries to make this about rogue employees, which has been the part of the initial response, that is not going to work because ultimately what the senators are going to try to make this about is there was a toxic culture or it is too big to manage. Marcus, does the ceo need to go in a state like this a situation like this . In any business where there is activity that just is flat out wrong, somebody has got to go. It starts from the top. If Something Like that happened in my own business, i would expect to be held accountable for it. I want to go back to something that ed said where products should be sold, should be bought and not sold. And i would like some clarity, ed, on what you mean by that. Are you saying that we should not be developing products in banking that add value to consumers lives or we should not have products that have commission oriented to them . Yeah, so, thats not a personal opinion, thats more of the kind of theme that im picking up near d. C. What is your opinion . Im curious about your opinion. In d. C. Here that think that when the incentive kind of allows the person to receive a commission, acting outside the best interests of the consumer, that is a bad product. So my i guess my opinion on that, tyler, would be that ceos responsibility to make sure there say culture of transparency and were developing and selling products that add value to consumers. The fact that we pair employees and incentive so that everybody isnt was your first move, lets just say you were mr. Stumpf. Would your first move have been to go to the board and offer your resignation . No, my first move would have been to find out exactly what happened. And to really come back with a transparent analysis. I would probably acknowledge if i knew that there was a Sales Organization doing these things, of course, you have to resign. I guess you wonder why youre even there anymore. But i dont know if there has been enough swiftness in determining how did it happen. Wasnt like five accounts were opened. A think a million and a half. Jim cramer sat down with him, great interview, but stumpf was very guarded. He was going to be. On your show, the profit, sometimes you got people, maybe two partners, right . One partner is whining about the other partner. It is his fault. I didnt he did youre, like, shut up, run the business. Stumpf kind of did that with the board. Well, there is a board process. Well he said that numerous times about being a board like im not really running the company. Thats how it came across to me. My response would have been, this is a big problem and youre the ceo. We deceive people, im the leader, i need to get to the bottom of it and if ultimately that means i have to leave, then that may be it. Last word, ed, does a cloud hang over the financials as a group at this point in your view . I think fo