Good day, everybody. Welcome to power lunch. Im Tyler Mathisen. Stocks are mixed right now. Very slight gain for the s p 500. A little more for the nasdaq. The dow is off, ever so slightly, by about 6 points. Lets check out oil, getting hit hard with wti trading at its lowest level in a month, off nearly 2 at 51. 15. Melissa . Hi, everybody. Im melissa lee. Adp blowing job expectations out of the water. Announcing 290,000 jobs were added last month, far exceeding the 190,000 expected. Pimco announcing a new Management Structure for its total return etf. Current management remains in place for Pimcos Total Return Fund and President Trump is talking infrastructure at the white house. Later in the day, the president will meet with conservative leaders to Talk Health Care as well. A very busy two hours coming your way. Brian sullivan is with us from houston. Whats on tap . Tyler opened the door and im going to walk right through. He talked about oils decline. Were back in the low 50s, well above where we were last year. Well talk to a great lineup of guests. Why cant oil get out of its own way . I liked michelles rocky road pun. Oil may have a rocky road ahead. Were also going to ask the Natural Resource minister about the Keystone Pipeline. Is it going to get done . Does he have a good working relationship with rick perry and President Trump . And peter thiel talking here last night. We have a lot to do. See you in a few minutes. Brian, thank you very much. In the interview of the day, the investor, david tepper taking a bullish tone. Saying basically hes all in on america. Were more long on u. S. Stocks. The bigger bet is listen, its the same sort of bet. If were short u. S. Bonds were betting on a stronger economy here. Right. Thats the bet. Were betting on strength one way or another here, strength around the world. Okay . In one way or another. Like i said, the only thing thats on the horizon Different Things can happen. Hopefully, nothing happens political. Different things can happen in france. Once you get through there, theres nothing else in the year. So tepper is short u. S. Bonds, long stocks. Should you take those positions as well . Lets bring in joe tanius, principle at bessemer trust. Paul, let me start with you. Are you adding to equities right now . Are you bullish on america and stocks . Yeah. Were positive on the market. But more sector basis, adding to positions, added u. S. Steel this week. The thing were looking at here is rather than the market that lifts all boats its more the feddriven market. Were seeing an economically cyclically driven market. Were going to see economically cyclical response. Technology, financials. Its very its important to remember that this is not just a trump rally. We also have an economy and earnings rebounds driving stock prices here. You have to keep that in focus when youre looking at what your decisions are going to be. Joe, i see that you are constructive on equities, whatever that means. Ill give you a moment to explain t but not euphoric, you say. Do you believe that an awful lot of positive anticipation is already priced in . Is that a concern . It is a concern. I mean, you just look at the pace of this rally that weve had, not only since the election, but just so far this year, in the first two months of the year. S p 500 up almost 2. 5 , 3 per month. I dont believe that trend is sustainable. While i agree with a lot of underlying themes here, this is momentum in the economy. Corporate profitability looks strong. Guidance has been encouraging. I do believe you will get tax reform done this year. I worry at just how long in the tooth this Business Cycle has become, how stretch valuations are. With the fed raising rates, i suspect that volatility is likely to rise in the months to come. Teppers point is, look, stocks arent cheap, but Corporate Tax reform, as you mentioned. He believes its coming. The mere election of donald trump over Hillary Clinton meant that regulation stops and also gets rolled back. He thinks that needs to be put into your calculus when it comes to whether or not you should be buying stocks here, joe. So he thinks theres more to run, provided those things happen. Yeah. And i dont disagree with that. I think all these things are supported for risk assets. The issue of tax reform, is that all necessarily going to hit the bottom line or is competition, at some point, going to eat into Profit Margins and then you ultimately see that savings passed along to the consumer . This is where it does come down to the industries and to sector by sector. Overall, im willing to bet that markets end the year higher from these levels but i dont think the pace of this rally is sustainable. I do think well see some chopiness. The other side is short bonds. And tepper said brace yourself, guys, because the fed is so behind the curve when it comes to raising rates we could see so many rate increases in the back half of the year. Dont get used to the idea that the fed can only raise rates when theres a press conference afterwards. It could happen more often. Is that something that will be bad for the markets in terms of volatility and rockiness or will it be perceived well . As he puts it, its probably going to be put done on the back and face of economic data. I think it depends how fast the fed goes. Do they find themselves behind the eight ball . Well have to see what happens. In the comments before he said after the election its smooth sailing. Whenever you hear that comment smooth sailing by anybody, it makes me cringe. When everyone thinks the coast is clear theres usually a wave coming over the horizon that nobody is expecting. What that come notice form of, you never know. You have to be on the lookout for these things. You need some worry in the market to keep things going. Otherwise theres nothing to climb there. But as far as the fed is concerned, that could have a negative impact on the market. This bull market has been going on with tenyear yield anywhere between 1 and 4 . All the gains in stocks have tended to come during periods when Interest Rates were rising. So, i think you have considerably more upside cushion in yields before the stock market becomes overly worried. So, joe tanious, lets say im just about to receive my big fat tax return from 2016. In fact, im going to get an even bigger one for 2017. If its retroactive. Thats right. Lets say im going to get my big fat tax return. What should i do with that capital if i want to deploy it for longterm purposes . Not a quickie. For longterm purposes. Thats the way we advise all clients to think about assets. You can make tactical shifts from there. As far as our view on the markets and the economy today, we want to beat neutral risk assets. We mentioned there are some what does that mean in practical sense, joe . What does that mean . For instance, you are at a 70 30 risk profile, my risk would be right around 70 . I wouldnt necessarily go overweight. However, within your equities, i think there is room to be leaning a little more toward the United States, considering the underlying backdrop. Gentlemen, thank you so much. Appreciate your insights today. Paul, joe, appreciate it. David tepper says hes short the bond market. Tenyear notes up for auction. Rick santelli is at the cme. Any signs of shorting there, rick . Not a sign of shorting. Who would have thought we would have had such an aggressive auction at the time that rates are moving up to the top of the range . Hold your hearts, i gave this auction an a plus. Apple plus. Doesnt get much better than this. Nineyear, 11month security, first reopening of a tenyear yield note opened in february. 2. 56. That does happen to be the highest yield at a dutch auction since july 2014. Here is whats interesting, all right . Go through the internals, youll see what i mean. When we look at the percent that went to primary dealers, only 18. 6 . 2. 66, cover well above 2. 45. The only metric that isnt like awesome is 65. 8 on indirect. Still better than the 65 average. And, last, directs. More than double the ten auction average at 15. 7 best since may of 2015. I dont disagree with mr. Tepper on being short. But ill tell you what, somebody better be buying to take these people off the hook on what they paid for this auction. Back to you. Thank you, rick santelli. Stocks off session lows of the day. We go deeper into the afternoon trade, lets go to courtney reagan. It looks like a bottom or intraday low when oil spiked lower as well. Exactly. Thats one you can see pretty clearly in the charts. Its mixed if you look at the pure numbers between the dow, s p and nasdaq. Dow lower. It will be the Third Straight day, something we havent seen in a little while. Financials are leading the charge. If you sort out what those sectors look like. Thats not a surprise. The expectations for a rate hike from the fed around 90 . We got that strong adp report this morning. We still have the jobs report friday. Consumer discretionary also strong and health care, too. And, actually, the past 33 rate hikes, prior financial and health care were a leader. Thats something to Pay Attention to, at least what history tells us. Bio tech having a pretty strong day there as well. Energy is lagging. Thats sort of what we were talking about, what brian was talking about and what hes going to talk about throughout the show today. Back to banks. Typically they become more profitable as Interest Rates rise. Even with the recent run higher weve seen for the bank stocks, expectation that well see some roll back, weve got another higher today, goldman and morgan stanley. A defiant move after those inventory numbers came out at 10 30 that showed the increase. That is whats driving the move in the Energy Sector today. Michelle . I can see that. Thanks, courtney. Thanks. Coming up, nonbank lenders taking over the Housing Market. Good idea, bad idea . Closer look ahead. First, back to brian in houston with whats on tap there. Brian . Do we have highlevel leaks in the show . How did courtney know i was going to talk about energy, oil and gas, huh . Its not on the rundown anywhere. Kidding. Great lineup. Coming up, the job market is strong but the one industry that really hasnt grown jobs, in fact has lost jobs is oil and gas. Laredo petroleum ceo will join us about whether well see job recoveries, where gas prices are heading. Theres a lot to discuss. Well see you after this short break. The first stock index musicwas createdughout over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Welcome back. Were live at the ceraweek conference in houston, texas. Were joined by randy fautsch, ceo of laredo petroleum. Were higher than last year but still in the low 50s. Oil down again today. Seems every time oil makes a bull move higher it gets pulled back down. Where do you see pricing headed . Its a little bit of a question of timing. We see today for the next few months or years we have half a Million Barrels in storage, half a Million Barrels of gasoline, added a number of rigs. We could see some oversupply short term. But the facts are our base production declines at about 4 a year. So we have to replace that amount. Over the next two or three ye s years, i think Oil Prices Recover very nicely. You think well be back over 60, 70 bucks a barrel . Maybe 60 plus. In a year timeframe . Two years maybe. Two years . Yeah. Expect volatility and what prices are doing today, falling . Volatility is part of the oil and gas industry. Its a very tradeable commodity. Short term, we could see some price pressure. You know, we had a very strong private sector payroll number. Jobs market in america is very strong overall, except for oil and gas. Lost hundreds of thousands of jobs. Its turned around a little bit in the last couple of months, randy. Are you hiring . Do you see a jobs recovery in your industry any time soon . Thats a good question. What were seeing is that while were hiring, we dont need nearly the number of people to do the same job. Much more efficient on our drilling, doing a lot more footage with the same crew and the same rigs so we dont need to hire as many people to come back to the industry. Youre saying that technology is supplanting people in oil and gas . Technology and innovation both. Best practices. Its a combination of things. But, yeah, were getting more done with less people. Now, we are going to hire. Theyre goodpaying jobs. Lets talk about your stock as well. Its getting hit with the price of oil. Uhhuh. Analysts i talked to, theyre a little frustrated not at you, but at the industry. Every time we get higher prices, we produce more, prices go back down. With the stock down nearly 5 , give them a reason to be optimistic. For us, weve had a longterm view. Weve not viewed this certainly with the kind of resource play were doing, 90dayatatime project. Were very well hedged for the foreseeable future. Our game plan has been to drill within cash flow, see what happens. Weve done that the last couple of years. I anticipate well do that going forward. So for us, while theres this negativism, our game plan is the same its been the last couple of years, well protected on hedges, within cash flow, no longterm debt due for several years. Lot of liquidity in our reserve base lending. Are you seeing cost inflation . Things we dont think about, frac sand, water, but things that you need going up. Frac sand, were seeing price increase. Were hearing a lot of that is because they stockpile sand up until the winter and when things got cold they dont mind. We used a lot more sand than anybody anticipated. Once the spring hits, that sand will come back into the market. Water for us is a little different in that we built you have your own water infrastructure. We knew all along water was going to be an issue. Prices, Service Costs always go up. Are you bullish on trump . He says hes a petroleum president. Nothing has happened with that. Do you expect some action . I do expect some action. The point ill make is just the fact that hes pro oil and gas has been wonderful. Theres a sense of exuberance and the sense of having someone understand we are a job creator. We are a vital part of this. I dont know that he has done anything directly benefiting us, keystone and other thing. We saw the executive order. That helps. For directing epa to roll back certain regulations. Actually had a couple of people protesting that earlier. I saw that. You saw that as well. Thats an order. We havent you havent felt it yet, have you . Not in a direct rollback of a regulation or change or tax. That takes congress. But just the enthusiasm that he has demonstrated for business and the oil and gas business has been very positive. Youre going to speak to the president , offer him one piece of advice with oil and gas, what would it be, randy . We need to recognize if you look at texas, were about number six in terms of if we were a country in world supply. If you looked at the permeate, brian, were about 12 or 13. Thats a significant position. When you think about the basin being one of the top 12 or 13, if it was a country, we need to acknowledge that we have that type of oil and gas stamina and supply. And act like it. Randy foutch, laredo petroleum, pleasure to meet with you. Thanks for coming on cnbc. Tyler . Disneys Shareholder Meeting under way. Future of espn. The latest from the meeting straight ahead. Attention homeowners age sixtytwo and older. One reverse mortgage has a great way for you to live a better retirement. Its called a reverse mortgage. Call right now to receive your free information kit with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money and more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home. And heres the best part. You still own yohome. Call now take control of your retirement today disneys annual shareholder is under way. Two unknown, the future of bob iger and espn. Julia boorstin has been monitoring the meeting and joins us from los angeles with the headlines. Julia . Thats right, in ceo bob igers opening remarks he talked about the potential for espn in this digital age, amid layoffs and subscriber declines. Espn on a variety of new multichannel platforms, services and a growing number of mobile apps. By the end of this year, well also be streaming a new espn branded experience directly to consumers through our partnership with major league baseball. Iger defended his decision to participate in President Trumps business council, responding to a shareholder saying half a Million People signed a petition demanding he step down. I made a decision that i thought was in the best interest of our company and of industry to have an opportunity to express specific point of views directly to the president of the United States and to his administration. And i did not believe nor do i believe that my membership in that group in any way endorses or supports any specific policy of the president or his administration. The big question for disneys board when they meet this afternoon is what happens after bob igers contract expires in june 2018 with no clear successor. Iger alluded to extending his contract, saying he is more appreciative of his opportunity to run disney every single day. Disneys proposals, including reelecting the board were approved and neither the shareholder proposals were approved. Theyve lost potential successors, right . Thats why were facing this issue. There had been people that we thought would be the heir apparent but theyre gone . Yes. Tom stags was pushed out, he was expected to succeed iger. There are questions over whether that was iger wanting to stay longer. The expectation is that iger