And welcome to power l lunch. Im melissa lee. Mixed picture on wall street with the nasdaq in the red by about a tenth of a percent. The dow adding 30 points. The s p up by three points itself. For the dow and the s p, this would be their fourth day in a row of gains. That has not happened since the month of february. Consumer staple hitting an alltime high on pace for its fourth straight day of gains. Monster beverage, campbell leading there and it has been a volatile day for the Home Builders after rallying on the back of toll brothers. The sector now turning negative as new home sales fell more than 11 . Much more on that story straight ahead. Take a look at herbalife shares, tanking, about 6 . Reports the companys china chief has abruptly left. Well bring you more details when we have them. Im which will fred frost. Here is what else is happening. New clues about the economy, data that measures the amount of freight transported by trucks showing a surprise drop. And a Retirement Savings regulation known as the fiduciary rule will go ahead on the 9th of june. More on the fallout on power lunch coming up. And the death toll rising to 22 in that suicide bombing at the concert in manchester, england, and an arrest has been made. On that note lets get straight to manchester with the latest developments at this hour. Reporter yes, will. The mayor leading a vigil outside the city hall not too far from where im standing here, not too far from manchester arena, the site of the horrific attack last night. Teresa may has been up here this afternoon signing a letter of condolence, visiting some of the injured in the hospitals of the 60 or so injured being treated in eight hospitals, 22 of them we learned are children. Teresa may also meeting with the police chief of greater manchester, ian hopkins. Weve been talking about the name of the suspect they believe is salman abedi. There are still some unanswered questions, though. Our priority along with the Police Counterterrorism network is to continue to establish whether he was working alone or as part of a network. Reporter metropolitan Police Arrested one other man, a 23yearold. The suspect himself was 22. Theyve conducteded a number of search warrants in properties a couple miles in southern manchester and are continuing to try and piece together clues about what exactly happened and why. Melissa . Thank you so much. The Trump Administration sending a 4. 1 trillion budget to congress this morning. There you can see the books being released. The president s plan calling for sharp cuts in programs for the poor, boost to military spending, and doesnt touch south dakoed is social security. Reporter those cuts total 3. 6 trillion over the decade. About half of them come from changes to entitlement programs. Social Security Disability insurance, food stamps, lowincome tax credits. Those are a few of the programs that could face significant changes under the president s proposal. On the flip side the administration is also suggesting that they want to include large tax cuts, as we know, and theyre counting on Regulatory Reform as well to boost Economic Growth to 3 by the year 2021. Earlier this morning omb direct or pushed back against critics who say those are unrealistic. That is a pessimistic look for what this country and this countrys people is. We reject that pessimism. We probably should have gone in and assumed 3. 5 or 4 growth because that would be aggressive. 3 growth is just getting back to normal. Reporter the white house says its budget will balance by the year 2027. Copies of the budget were sent to capitol hill this morning and mulvaney will be on the house to testify. Diane black said she praised the president s budget for including greater accountability for taxpayers and for increasing funding for defense. Meanwhile, john yarmouth, the ranking democrat on the committee, said the Economic Projections are, quote, absurd and the president s proposal should be resoundingly rejected. Guys, all president s budgets go through the wringer once they hit capitol hill. He will need democratic support. This was just the opening salvo in a very long battle. Ylan, thank you very much. Well see you soon. Steven mnuchin sitting down with our own john harwood. Admitting we will not get 3 Economic Growth this year or next. But it will phase in over time. Also stating tax reform will not happen by august. Here now to talk about this and the budget Jared Bernstein and jimmy with the American Enterprise institute. I would imagine you think this budget is doa in congress. I do think its doa. Weve heard republicans say that. I fear there are components of the budget that are not all that different from budgets weve seen from, say, paul ryan, writing budgets when they didnt have the majority in congress. So im still concerned about some of the deep cuts. Im also and i want to be very clear about this the accounting in this budget is really just crazier than ive ever seen and probably than jimmy or either folks on the other side have seen elsewhere. They do not count the cost of lost revenues in this budget yet they count these alleged growth effects from them. What lost revenues . Be specific. Okay. So theyre going to cut taxes by maybe as much as 5 trillion. Thats a number thats been out there. They dont count that revenue loss in this budget, yet they do count growth effects. So, for example, they count revenues from the estate tax in this budget yet they say theyre going to get rid of the estate tax. So nobody should believe any of this nonsense about balancing the budget in ten years. Its not going to happen. I think mnuchin is now saying and, again, this could change by the moment, that that tax cut will actually be revenue knneutl on a static basis not the dynamic effect. They have given no indication what tax breaks will limit, scaleback to pay for it. Thats the only way that would make sense. I agree the accounting is screwy. To what extent does any of these plans rest on the fact 3 growth is necessary for any of the sums to start to add up . Well, in terms of getting the sums to add up, the 7s is important. I think they have 2 trillion in ex tra revenues in this budget that are generated by hitting 3 in 2020 or 2021. Thats not going to happen because despite mulvaney saying we shouldnting constrained by pessimism but we should be by arithmetic. So in order to try to diminish the sea of red ink theyre making these phony assumptions. Once the official scorers get ahold of this, the cbo and jtc, youll see thats a dead impasse. Given that reliance to hit 3 , are they too focused on the cuts and balancing the budget with all the changes in the last decade . Listen, if i was going to create a progrowth, proinnovation budget, list en,i dont think i would be slashing science research. Google and apple will not do our basic research. It has a role. I would be spending more on that. Republicans love to talk about the reagan tax cuts. We had the reagan tax cuts in the early 80s. We did not see a big productivity boost for 15 years. You can give the reagan tax cuts credit, but theres no reason to think if we get these big tax cuts well see a big productivity boost anytime soon. Thats what theyre going to need to get 3 growth much less the 4 mulvaney thinks we can do. Jerrod, hold on. I want to push back on something you said. You said we do not have the labor force. I will say that the budget does assume that certain cuts will be made that will force some of the 95 Million People not currently in the workforce that are of working age back into the workforce. Dont you agree thats kind of the goal is to maybe slash disability, slash things that have suggested people have been pushed out of the workforce and get them back in and those extra people no. Why not . You agree that is the concept . I dont know. First of all, the 95 million number refers to a group that includes people over and people who are in college. Now if youre talking about work requirements in poverty programs, those have never been shown to have anything but the most marginal effects on labor supply. So you have to really look the cbo tells us that the decline in the labor force or the Slower Growth in the labor force accounts for 70 of the slowdown in growth are from about 3 to around 2 . Now if you could do some really great demand side stuff and get that 70 to 50 , then we might have a few basis points faster growth. But to get from 2 to 3 from this stuff based on work requirements and poverty programs, its just wishful thinking. Listen, republicans will it continue to put forward budgets like this one as long as they think, a, we are in some sort of crisis and need to balance the budget within ten years but not cut entitlements and, b, that were going to rely on deep tax cuts to juice up productivity growth like the day after tomorrow. Those are fallacies. As long as those are the two huge constraints, youre going to end up with ones where the pieces dont ultimately fit together. Exactly. We could have had the same argument. Lets not forget that bill clintons balanced budget act of 1997 made huge, sweeping cuts to medicare and basically made welfare work fair. Im not defending the cuts of the budget. Im saying the concept the 97 cuts for medicaid were the biggest since 1981. Listen jerrod first and then jimmy respond. Bill clinton achieved a Budget Surplus but it wasnt at all based on the stuff you are talk i talking about. Cbo projected the budget would be in deficit. What bill clinton actually got was precisely he was talking about. Faster growth and that was after raising taxes. Im not saying that raising taxes did it any more than jimmy is saying reagans tax cuts led to a productivity boom and it was a different demographic. I get it. But it was steep and deep, medicaid cuts, and it was a push to work. Again, im not defending any part of the trump budget. Im trying to figure out, jimmy, where the blueprint may have come from because its been widely criticized as many parts of it should be but there is a historical somewhat precedent. I think the blueprint is based republicans think we need to balance the budget within ten years. Theyve been talking about it. Its a great thing to rally around. That is a political thing not based on any previous nick blueprint. And the tax cuts are base d on reagan. Its on a deep misinterpretation which has been repeated about the impact of those reagan tax cuts, which i liked, but a misinterpretation on the impact in the 80s and 90s and these errors keep getting compounded year after year budget after budget until you end up with this. Jerrod and jimmy, i have a feeling the Budget Discussion and debate is not going anywhere anytime soon. The budget itself may not either. We appreciate you coming on. Well said. Thank you. We want to bring your attention to shares of Fiat Chrysler. It crossed the tape moments ago. The department of justice officially filing a civil complaint against Fiat Chrysler for excess diesel emissions. You see the stock has been down most of the session. It got sent back down to session lows moments ago. 10. 41. Its now down 2. 9 on the news. We do have a news alert in the bond market. Twoyear notes. Rick santelli, twoyear yields. What does that tell us . Reporter well, it tells us that something did move on the budget because the budget director mulvaney while he was talking, hopefully you can see twoyear note yields, they popped up. When they go up, price goes down. There was builtin concession, 26 billion to be exact. 1. 316 was below the market just in the last hour. If you look prior, it wasnt. We grade it up to 1 00 p. M. Eastern. If you look at all the internals they were fairly strong. 2. 90 bid to cover, the best since may of 16. 57. 2 on indirect. If you forget the last look at 58. 9, youd have to go back to january 16 to find a better number and the best on direct. So an aminus, tomorrow five followed by seven. They stepped in and bought. Melissa, back to you. Rick, thanks for that. David einhorns hedge fund stepping up its fight against general motors. Leslie picker has the details of the letter gm is sending to shareholders. Einhorn has sent a few letters since launching a fight a few months ago but the timing of his latest letter makes sense. It comes on the heels of the ford announcement yesterday where the board ousted ceo mark fields in part due to lagging price. Gms stagnant performance pushing a different plan to separate gm stock into dividend shares and Capital Appreciation shares to boost the price. Gms management said that would lead to a down grade in the companys Credit Rating and moodys suggested as such. Einhorn said in todays letter that the board wasted 15 million by, quote, misrepresenting his plan. Gm told cnbc that a vote for any of green light candidates is a vote for its flawed and highly risky idea. Einhorn has nominated three directors urging them to vote for him. Einhorn increased the stake so is upping the ante not just in terms of the letter but had his stake. This is a uniquely activist position for einhorn who traditionally serves as passive investors taking stakes with long and short and gets in them and has obviously been a big frustration of his, but he sees that this plan could increase the value. It seems there is just investing because this is how every hedge fund is operating. Theres no way to make money unless youre a computer or a socalled activist. But, also, before it used to be they would announce a stake, a plan and the stock would go higher. We havent seen that of late. Its true. And were seeing this not just in hedge funds but Family Offices are getting into the t activist game. We saw with tpg last week getting into etsy. Its a very crowded space. The market is just discounting the fact that a lot of people are trying to do these things and theyre really hard to do. Etsy is one thing. Gm is another. You talk about banks. You did in england and do here now as well. Is it just me or the activists are trying to fell goliath. Not going after these mid Cap Companies anymore. Shareholders all have these votes and you could have been critical of the Investment Managers for not looking at it. Leslie, thank you. Lets get a market flash. Were looking at shares right now halted on a report from dow jones that the big london listed Mining Company is potentially making a takeover approach of bunge, the trade theyre would indicate the Mining Company is look iing to diversify its asse. Were looking at shares of bu e bunge. It was halted and now reopened. A big winner. We have reached out and will be sure to come back, melissa, with any details that we get. Back to you. Well go live to amazons annual meeting where theres surely a lot of happy people considering the stocks run but not this group. Well explain why. A new drug helping to solve the Opioid Epidemic. This is a story about mail and packages. And its also a story about people. People who rely on us every day to deliver their dreams theyre handing us more than mail theyre handing us their business and while we make more ecommerce deliveries to homes than anyone else in the country, we never forget. That your business is our business the United States postal service. Priority you welcome back to power lunch. Amazons quest for World Domination continues. Ear earlier this morning the Company Announcing a bigger push into the wedding business with the launch of the wedding shop. The site offers thousands of hand crafted eye it thames from decorations to jewelry. Amazon also announcing it will offer lifetime for the first time in europe. It will include diskocovery and itv. And the company is shaking up the banana business. I had to stick with my pronunciation. Will, its banana. They are offering free bananas to everyone at its headquarters. So far its given away nearly 2 million. They call themselves banistas. Maybe banana is much nicer, more so fphisticated. Foreign. Amazon also holding its annual shareholder meeting. The stock is up 40 so my guess is that the group is probably largely going ba nanas with happiness. Do we expect anybody to have significant beefs with amazon or jeff bezos . Reporter well, guys, i dont know if you can hear all of this around me but there are a number of groups protesting. The group in the background behind me is urging amazon to a pilot that is here representing an organization that has some complaints with amazon. I want to bring you a few headlines from inside the meeting which just wrapped up. Jeff bezos took the stage and one of the shareholders asked what he thought of Warren Buffetts comments at that annual general meeting and he responded and said that warren was his hero and he was deeply flattered by the comments and they were very meaningful to him. Another asked whether a stock split was on the cards so other people could afford to partake in those returns that we have seen from amazon. He said theyre thinking about it but they dont have any plans to do so. A lot of the focus was on where amazon is investing. Its prime membership program, alexa, the virtual assistant, india and logistics. Amazon is building up its airplane Delivery System but we have here with me one of the pilots that is working on that push, now you are here and i know our audience, behind are 50 pilots. The Airline Industry as a whole is suffering from a historic Pilot Shortage which is trickling down to the vendor carriers. We got about 65 from various airlines to the family and were out here trying to picket to help the shareholders and the press understand the problems. Reporter now why do shareholders need to understand what is the risk to amazon . The risk is when jeff bezos has stated the goals for prime air. Those goals will hardly be achieved if they cant retain pilots that operate for prime air and deliver everyones packages. Reporter thank you very much. Amazon build out its logistics business. Back to you. Thank you. As the stock continues to hit alltime highs, wall stre