and selling the ua's best packaging business to a company for $1.2 billion in cash and stocks. cnbc.com news now, i'm courtney reagan. all right. welcome to the call, i'm melissa francis, we're awaiting president obama to speak live in moscow at a joint press conference with russian president medvedev. we'll take you there live just as soon as it begins this. is the call on cnbc. stocks lower right now, pressured by fallen commodities as investors worry about a delay in a global economic recovery on the bright side. and economic reports showing activity in the service sector contracted less than expected in june right now. take a look at the dow, it is down 54 points on the day. it's about 2/3 of a percentage point. really not bad. down about .8%, almost a full percentage point on the s&p.

ask the nasdaq is trading in the negative territory about 1%. >> we've seen these markets hold on to their levels here, down 53, a little better than earlier this morning and we've been staying in that range. but you know, really the economy is acting as an overhang on this market right now. we got that jobs report on thursday. it wasn't pretty, concluded have been worse some people said, but it was a lot more jobs lost than people anticipated. and as art cashin told me, this week is criminal. this is going to set the tone to how they're reacting. we're kicking off the earnings season with alcoa reporting on wednesday. so we'll get second quarter numbers, but more importantly, we're going to get guidance on the third quarter. and that's what's so critical right now. what does it look like in the future? here on the floor, rebecca jarvis in for bob pisani. >> great to see you. >> there was a lot of optimism over the last several months. have we kind of reached the

point where there's a bit of a reality check going on there? >> yeah, there's a question right now among traders, trish. that is have we overshot our optimism? you take a look at the s&p 500, this last month, it started out strong, but things have really weakened over the last couple of sessions. right now, we're at a very important level for the s&p 500. if we close below 893, that was the june 22nd level, we are back basically where things were in may, and as you mentioned, people are looking for indications of whether or not to believe in those green shoots, obviously earnings season kicking off this week will be an important indicator. >> absolutely. we talked about the commodities being a drag on the market today. again that goes back to these economic concerns. >> absolutely. back to the economic concerns, trish, back to the questions of the dollar, the dollar at two-week highs, as well as far as its index is concerned. but those stocks, alcoa, the first in earnings season comes out wednesday. but across the board, they are all weaker today and that is in part because the underlying commodities are weaker and the question is, do you believe in

the economic story that there are real green shoots out there? >> that's the question. are there any bright spots? >> with commodities down, some of the consumer staples names are going to benefit as far as their margins are concerned from commodities being weaker and you also see those benefits from this idea that perhaps this is the place where you put your money in the stock market at a time where things are uncertain. >> rebecca jarvis, thanks so much. we appreciate it. and we're going to head right back over to larry. >> thanks, trish. we're awaiting president obama's press conference with russian president medvedev. on the agenda, reducing nuclear stockpiles and improving trade relations. cnbc chief washington correspondent john har wood has more. hello, john. >> hey, larry, they're a few minutes late for this press conference. we'll find out when they come out whether that means they're having more fruitful dialogue. one of the things you mentioned they're pursuing is the possibility of a new round of missile limitations, nuclear weapon limitations.

that's an area relatively speaking where there's some agreement. they're hoping to use that to build for more progress on other issues, including iran, including trade, and we'll see when these leaders come out how successful it was. we've got to note that the relationship between obama and medvedev is only one of the crucial ones for u.s.-russian relations. the other is with vladimir putin who the president will see tomorrow. >> all right. john, sorry, i thought you had more coming. who runs russia, john? >> that's exactly the question. >> who runs russia? who do we do business with, john? >> i think most people who view russia today would say vladimir putin remains the guy to see, which is why you have this unusual situation where the president's meeting with the nominal head of state and then he's going to the back channel leading power in the country, vladimir putin, putin is widely

seen to be the person that medvedev answers to within russia. but, you know, the obama administration's trying to figure out whether they can find a better interlock ter. there's an old russia and a new russia, and he sees medvedev as new russia. >> let's talk some business in russia, boeing, pepsi, and john deere announcing deals with russia. boeing trading a little bit lower, deere a little bit lower. pepsico is trading higher. what are the investment opportunities for you in russia? let's bring in our panel, fund manager at fire bird management, nick, chief emerging markets analyst rbc capital markets, nick, let me begin with you. besides oil, i mean i always think of russia as oil, their

stock market trades along with oil prices up and down. besides oil, what do you see? >> well, clearly i think russia is the two-part story. oil and politics. and right now oil's recent correction and the political situation being as it is, i think suggests that the outlook in russia remains quite uncertain, and in fact, we expect that over the long-term there's a number of issues that russia has to deal with, specifically the banking system has a large number of non-performing loans that are building up, somewhere on the order of 35% to 55% and the fiscal deficit is ballooning, they're going to run through approximately $100 billion to fund themselves between this year and next year. we have a number of problems that need to be dealt with in russia. >> guys, the thing that makes me nervous about investing in russia is it is so volatile. i think we have a chart of the rts right here, it's the russian index. if you look at it, you know, it is up 56% so far year-to-date, but that's probably because it was down 72% in 200 compare

that to the rest of the markets, down 53%, basically amplifies e trend of other emerging markets. is there a way to play that volatility if you're an investor? or is it too volatile? what do you think, nick, why don't you take a crack at it? >> sure. look, russia is a high beta play in the emerging markets sphere. there's a number of ways of expressing your views, etfs or other means in the currency and the credit default swap space. russia is definitely a benchmark that we follow. and have clients trading daily. it is not too volatile, i think, really what you're looking at is russia trading heavily off of the oil price movements in overall risk appetite globally. and overall, russia's too big to ignore. >> ian, what do you think? >> well, volatility for many investors represents an

opportunity. because if you can buy assets at the dips and dispense with fears, which in the marketplace can be very much overdone at certain times, the return that's available to an investor is quite attractive. but it requires a very cold investment judgment to buy when the market retraces 60% to 70%. >> but let's be specific on this. let's look at brick. brick the index brick has had a great run. brazil, russia, india, china. but isn't russia by far the weakest sister? it really is barely barely capitalist developing country, right? barely capitalist emerging country, china much stronger, brazil much stronger, maybe india coming up. i mean, is it better to play bric? or is it better to subdivide and

do the countries individually if that's what you're looking for for a foreign emerging market exposure? >> i think if you're looking at the economic structure itself, russia does represent more of a commodities-related type of exposure. so, you know, in a world economy that's growing and in that case, you would see manufacturing and india and china booming, demand for commodities will keep pace with that, and therefore russia deserves to be in the same sort of category as bric. but when that category was designed, they didn't focus on commonalities that these economies shared, they just -- it's sort of a residual category. the largest emerging markets, which showed a tendency to integrate with the rest of the world. >> you know what? we're going to hold it there for a second. we're going to squeeze in a quicbreak before this meeting starts a right back with more from russia.

okay. welcome back, you're looking at a live picture of those golden doors there in russia where president obama and president medvedev are expected to walk out momentarily. we'll be going to that press conference as soon as it happens. we want to go back to our russian panel. joining us today.

nick, i'll send this one over to you. politically it seems like russia is a real wild card. how much does that factor in to your assessment of whether or not it's a worthwhile investment right now? >> it's a very important aspect of the overall decision making. we are very cognizant of the fact that powers divided up between medvedev and putin, and putin really doesn't want to let go. i think there's a bit of a power vacuum leaves russia a bit rudderless. and it needs to revamp the afri framework and it's not being done. and it's not making the required changes to really move russia up to the next level. >> but how has the country changed, nick, in that oil prices are not what they were? and really it strength, power base is coming in large part from that oil. how is that affected or shifted maybe its willingness to come to

the table to sit down with president obama and be more willing to work things out? >> certainly, i think, it makes russia more open to other options beyond its own borders. and i think that's why it's embraced the bric grouping, trying to pair up with china and brazil and india on various issues as it pertains to the u.s. dollar. i think it will make them more open to the u.s., but i think they have deep seeded concerns around the u.s. >> i think those are justified, right? ian, from people i've talked to, oil investors from texas, gone over there, drilled the wells, they paid, you know, to get into the country, and then, you know, they've had gangsters come in we're going to give you pennies on the dollar and taken their investment over. it seems it's very tough to get in. is that going to change? we see them walking out right now, so we're going to have to break away. >> the bottom line, property rights in russia are not yet institutionalized in law. >> yeah, all right. let's listen in right now.

we can see there they're getting ready to get started right now. president obama and president medvedev in russia. [ speaking russian ] >> chief of the armed forces of

russia first deputy minister of defense, army general, and on the u.s. side chairman of joint staff of the united states army, that's admiral are to sign the framework document on the development of cooperation between the armed forces of the russian federation and the armed forces of the united states of america and memorandum on adoption of the working plan to improve military cooperation between the armed forces of the russian's duration and the united states of america for year 2009. >> okay. obviously, we've government a few minutes, i think, before we hear from either of the presidents. we're going to go back to our discussion for a second. john harwood, the point we were discussing before we went away, one of the big problems in russia still is property rights

for investors. >> there's no question and the rule of law is necessary for attracting business investment, president obama before he left gave some interviews to russian media talking about medvedev's promise to strengthen the rule of law. there have been questions raised as you know, melissa about the jailing of mchale, but these leaders right now are putting out a memorandum about military cooperation, in an attempt to take some edge off the missile defense disagreements between the two sides. we just got that memorandum on our blackberries a moment ago, those of us, at least, not in moscow. and they're talking about ways of continuing the dialogue without the united states backing off its desire to have missile defense locations placed in poland and the czech republic and trying to reassure the russians these are purely defensive for the united states in part to deter attacks from iran as opposed to something

that would interfere with the deterrent balance. >> john, let me take it back to the business economic stuff. correct me if i'm wrong, russia has actually withdrawn its application for the wto, the world trade organization. now, if you want the rules of law, if you want rules of the road, if you want american companies to come in there and do business and commerce and all of the rest of it, why aren't they subjecting themselves to the world trade organization? the way china has begun to? >> it's a great question. and there are a lot of u.s.-russian experts who are scratching their heads at that decision can't quite figure out exactly what the motivation is. is this the russia saying to the west, we don't need your stinking trade, or is it something else? are they about to indulge in a new round of protectionist measures, desire of governments across the world. we'll see whether or not the discussions that these two leaders had have any effect on that decision. but that's one that was strange,

especially since russia appeared to have cleared all of the obstacles. >> let me ask ian, how do you reconcile this as an investor. ian, you're a fund manager looking at russia constantly to put your money in. how do you reconcile the fact they don't have the same kind of property rights that we do or brazil does? what do you do about put your money there? >> from the point of view of a financial investor, you look at whether all the most likely risks are priced into the stock or not. and there are certainly are moments in russia when -- >> do you need -- forgive me for interrupting you. but what does that specifically mean? when you look at a stock or particular fund or whatever, are you looking for a different -- are you looking for a different pe ratio? >> absolutely. absolutely. >> absolutely. >> what's the range? >> that's exactly the point. if russian oil companies trade at 10 or 11 times earnings, that

is most likely too much given the weak institutional environment in which they operate. so we lighten up in the market when valuations become estranged. >> what is your ideal rate then? what are you looking for? not ten times earnings, but five, or six? >> five lower is always better. you know, it depends also on a lot of economics. where they are in their business cycle, the availability of credit, et cetera. but certainly right now, five or six times earnings is a healthy valuation for most russian resource exporting companies. >> and i just want to mention right now we are watching them sign the details of a nuclear agreement right now in case you're wondering what's happening on the screen as we await comments from both presidents. >> i thought it was a military coordinating agreement. i think the nuclear agreement

is -- is it a preliminary agreement? all right. preliminary agreement. >> ian, let me ask you. it seems like as -- there's a lot of signing going on here. we're trying to sort out what's what here. it seems like if you're going to trade russia, it trades directly with oil. why would you -- do you trade it like oil? why would you not trade oil instead? >> there are moments when the correlation with the global oil price diminishes. and that's usually when the russian economy is flush with pet ro dollar liquidity that starts to flow into other sectors, and these other sectors can also be extremely attractive. while the overall economy and much of the stock market because of the capitalization of the company is driven by the oil price, there are nevertheless a variety of very interesting opportunities in the non-oil space. >> well, look -- you look at a chart of the russian stock market, it really, really

correlates and corresponds with the oil price, i'll put that aside for a minute. does russia still have a 13% flat tax? >> yes, it does. >> that's the best part of the story. the presidents are about to begin. we're going to have to switch back. mr. obama, mr. medvedev, hang on one second, i think we're going to get something out of this. >> and the decision has been adopted on setting up the joint russia-u.s. presidential commission to develop cooperation. >> translator: gentlemen, ladies and gentlemen of the press, colleagues, we have just completed our negotiations with the u.s. president. the first visit of u.s. president barack obama in russia was a very busy one. the first day showed that we

managed to discuss all the items of our agenda, and it was a very big one. i would like from the outset to say that there was a very useful and very open business-like conversation. this no doubt was a meeting that has been expected both in this country and the united states of america. and on which, not only the future of our two country defense, but also to a larger extent the trends of world development. i would like to emphasize once again. of course, the first day of negotiations, our meeting one-on-one and limited composition and larger composition were very open and sincere. and this is extremely important. we have agreed that we will continue to communicate in this

mode further on. in reality for our relations, it is very important, and it is not a simple job because the backlog of problems is quite impressive. but we had enough of mutual wish and will and the positions of principles we have always occupied and still occupy to make the discussion of this problems in a business-like manner. and we have reached mutually beneficial results. i would like to emphasize that each of our countries understand its role in its own way, but at the same time we realize our role and responsibility for the situation in this world. especially in a period when the level of globalization has reached such dimensions, such parameters that the decisions we

make very open determine the situation in general. and such powerful states of the united states of america and the russian federation have special responsibility for everything that is happening in our planet. we have many points of convergence, many mutual interests, and global and economic ones, and a variety of others. but our desire to discuss this subject was mutual, mutual. and this is also one of very important results of our meeting since the work we are doing requires good will, mutual respect, and honest understanding of each other's positions. we also came to the conclusion that russian american relations

and the level achieved to date does not correspondent to the potential to their other possibilities of our countries. and the important thing is that the level that we have today does not correspondent to the need of the current age. and without active development of our relations on the foreign affairs, specific trade, educational relations will not be able to be i would the road to defense of the 21st century. we have spent several hours in very business negotiations, very specific. and at the same time we dwelled on the questions of philosophy of our culture. i'm grateful to the president of the united states for the understanding he showed on the principles that we put forward and our attention to the

proposals made by the american side. so despite of the fact that in several hours wecannot remove the burden of all the problems, we have agreed that we will go forward, we will make the decisions that are needed for the development of relations between our two countries. we have discussed quite specific problems and i would like to share some of them with you. we, of course, discussed inrnational sjects. we spoke about such difficult problemss the process of middle east settlement. we agreed to continue work taking into account the business we had in the middle east recently, and the plans that we discussed. we discussed the possibility of holding moscow conference on the middle east. we spoke about very important

subjects. that is extremely -- requires the cooperation of our activities. this is the problem of afghanistan. without our joint work in the area we would not be able to achieve success in that area. and on that score, we have reed on a special statement. our relations will be also consolidated by our links in humanitarian field, field of science, this has to be done by all means and we'll be dealing with this after this meeting in a very persistent way. now a few specific results of our negotiations you are aware of them, we have agreed on a very important subject, the new agreement on strategic offensive arms. this is a basic element of our mutual security. the work was very intensive, and

i must admit that our teams, our delegations worked on this subject in a very fruitful way. they have showed reasonable compromise, and i would like to thank everyone who took part in this negotiation or is going to take part in them. the result of this is that we have reached not only mutual understanding of how we should move forward and also to the basic levels on which we will advance our cooperation in this field. we agreed on the levels of carriers and warheads, meaning that this is a very concrete subject in the mutual understanding that we have just signed with the president of the united states. it is said that our two countries can have from 500 to 1,100 carriers of strategic arms and from 1,500 to 1,600 for

warheads. these are the new parameters within which our dialogue will be going on, and where we hope to achieve final agreement that will be part of the new treaty. we have agreed also that the offensive and defensive systems of both countries should be considered together. we have adopted the joint statement on abm and this is also an important result of our work, even taking into account that we have divergences on a number of items. nevertheless, we managed to sign, to prove a joint document. we have discussed measures of cooperation in the nuclear field, and the most important is that we will continue our cooperation in every area, a lot depends on our countries.

we have signed an agreement on military transit to afghanistan. we decided to create a prestial commission on cooperation, which wl be coordinating relationsmong various agencies of the united states and the russian federation respectively in all priority areas, including economic and military areas. in the military area, these questions will be dealt by the chiefs of staff that have just signed the document. soon all these documents will be published and you'll be able to familiarize yourself with them. on the call by characterizing our first day of work and the results of negotiations that we've had. i would like to say that i view them as the first but very important step in the process of

improving full scale cooperation between our two countries, which should go to the benefit of both states and if both states benefit by it, that means everybody will benefit by it. i would like to emphasize in conclusion that our country would like to reach such a level of cooperation with the united states which would be realistically worthy of the 21st century, which will ensure international peace and security. this is in our interest and we are grateful to our american colleagues for the joint work we have done. it is true that the solution of many world problems depends on the joint will of the united states and russia. thank you. >> good afternoon, everybody. and i want to thank president medvedev and the russian people

for their hospitality. michelle and i and our children are pleased to be here in moscow and to be here so early in my administration. we've just concluded a very productive meeting. as president medvedev just indicated. the president and i agreed that the relationship between russia and the united states has suffered from a sense of drift. we resolved to reset u.s.-russian relations so we can cooperate more effectively in areas of common interest. today, after less than six months of collaboration, we've done exactly that by taking concrete steps forward on a range of issues. while paving the way for more progress in the future. and i think it's particularly notable that we've addressed the top priorities, these are not second-tier issues, they are fundamental to the security and the prosperity of both countries.

first, we've taken important steps forward to increase nuclear security and to stop the spread of nuclear weapons. this starts with the reduction of our own nuclear arsenals as the world's two leading nuclear powers, the united states and russia must lead by example, and that's what we're doing here today. we have signed a joint understanding for a follow-on treaty to the start agreement that will reduce our nuclear warheads and delivery systems by up to 1/3 from our current treaty limitations. this legally-binding treaty will be completed this year. we've also agreed on a joint statement on nuclear security cooperation that will help us achieve the goal of securing all vulnerable nuclear materials within four years. progress that we can build upon later this week at the g-8 suit. together, thesare imrtant steps forward in implementing the agenda that i laid out. as we keep our commitments so we

must ensure that other nations keep theirs. to that end we had constructive discussions about north korea and iran. north korea has abandoned its own commitments and violated international law and that's why i'm pleased that russia joined us in passing a u.n. security council resolution that calls for strong steps to block north korea's nuclear and ballistic missile programs. iran also poses a serious challenge through its failure to live up to international obligations. this is not just a problem for the united states, it raises the prospect of a nuclear arms race in the middle east, which would endanger global security while iran's ballistic missile program could also pose a threat to the broader region. that's why i'm pleased that we've agreed on a joint statement on cooperation on missile defense and a joint assessment of the ballistic missile challenges of the 21st century, including those posed by iran and north korea. second, we have taken important

steps forward to strengthen our security through greater cooperation. president medvedev and i agreed upon the need to combat extremism. and today we've signed an agreement that will allow the transit of military equipment through russia to afghanistan. this is a substantial contribution by russia to our international effort and will save the united states time and resources in giving our troops the support that they need. thanks to admiral mullen and his russian counterpart, we've agreed to resume military to military cooperation between the united states and russia. this provides a framework for improved cooperation and inner. we've also agreed to -- which will allow our governments to cooperate in our unwavering

commitment to our ssg servicemen and women. and third, wve takenmportant steps forward on a full range of issues that affect the prosperity of our people. president medvedev and i are creating a u.s.-russian bilateral presidential commission to serve as a new foundation for this cooperation. too often the united states and russia only communicate on a narrow range of issues. we've let old habits stand in the way of progress, and that's why this commission will include working groups on developments of the economy, energy and the environment, nuclear energy and security, arms control and international security, defense, foreign policy, and counterterrorism, preventing and handling emergencies, civil society, science and technology, space, health, education, and culture. and this work will be coordinated by secretary clinton and the minister, and secretary clinton will travel to russia

this fall to carry this effort forward. just to give you one example of this cooperation, is the new memorandum of understanding on health. we've learned most recently with the h1n1 virus that a disease that emerges anywhere can pose a risk to people everywhere. and that's why our department of health and human services will cooperate with its russian counterparts to combat infectious, chronic, and commune call diseases. i'm pleased that russia has lifted restrictions on imports of u.s. lifestyle. the cost of these restrictions to american business is over $1.3 billion. and we've now important progress toward restoring that commerce. i won't pretend that the united states and russia agree on every issue as president medvedev indicated, we've had some frank discussions and there are areas where we still disagree. for instance, we had a frank discussion on russia on georgia

and i reiterated my belief that georgia's territory and integrity must be respected. even as we work through our disagreements on georgia's borde borders, we do agree that no one has interest in military conflict. we must speak candidly to resolve these disagreements peacefully and constructively. president medvedev and i are committed to leaving behind the suspicion and the rivalry of the past so that we can advance the interests that we hold in common. today we've made meaningful progress in demonstrating through deeds and words, what a more constructive u.s.-russian relationship can look like in the 21st century. tomorrow i look forward to broadening this effort to include business, civil society, and the dialogue among the american and russian people. i believe that all of us have an interest in forging a future in which the united states and russia partner effectively on behalf of our security and prosperity. that's the purpose of resetting our relations, that is the progress we've made today, and i

once again want to thank president medvedev and his entire team for being such wonderful hosts and working so effectively with our teams. thank you. >> translator: colleagues, now we begin the joint press conference of the president -- >> president obama and president medvedev detailing their efforts to cooperate on a variety of issues, the most significant of which being a preliminary agreement to reduce nuclear sympt stockpiles. if it is signed later this year as is hoped, it would become one of the most significant arms agreement since the cold war. now, coming up on the other side of this break, we're going to talk about this market off 32 points. we're going to talk about oil, which is down today and, of course, investing inrussia, we are back. my lower back. feels kind of like knives. aleve works all day on my ck pain. only two aleve liqd gels can stop pain all y. that would take twe as many advil or ibupren.

aleve allows me to get through myork day.

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to gettarted, that won't go down -- aranteed. call fidelity at... for tas about guaranteed iome for life, about your retirement savings. welcome back to the call everyone. you're looking at the big board, we were off 41 points. we should point out that this market has been steadily working its way back. we were off almost double that earlier in the session. so some up there. weighing concerns about the economy. what else, melissa, and you've got oil, of course, struggling

in addition. >> oil prices falling to a five-week low as investors worry about a global economic turn around. right now, take a look at where oil is trading on the day. down significantly, actually happened down even more, but right now down about a little more than 3.5%, 6,434 the last trade. sharon epperson is live with more. why is it down so much today? >> well, all of the lows, as you said, but still down significantly, more than $10 in the past week, and the slide we've seen over the past four days contributing to across the board selloff in the energy complex.qñ we're looking at three main reasons here why oil is down, the economic uncertainty for one, the fact that the dollar has stabilized slightly higher here, and also money flows a factor. when you talk about demand, you have to look at gasoline, because gasoline prices have probably been the biggest -- seen the biggest run-up in the commodities sector this year. but keep in mind, we're looking at gasoline demand and over the july 4th holiday weekend aaa says it's down nearly 3% versus

a year ago. this coming right after we learned that the jobless rate was up to 9.5%. so that is a factor. in terms of the dollar, we have seen the dollar strengthen a bit in the past week, it's up about 1%, the dollar index, but crude is down nearly 12% in that same period of time so the correlation there has been waning a little bit over the last week. i think money flows is another factor when you look at the fact that we're up about 12% since june 29th. keep in mind that merrill lynch is now saying there's about $125 billion invested in commodity indices. and so when you have a fake trade like we had last week and unauthorized trade causing that spike up to $73 and then when people found out that it really wasn't supposed to happen, you saw the selloff afterwards, the technical factor is something else to consider here when you look at the oil price selloff, melissa. >> sharon, stay with us. john, thanks for joining us.

john, you know i'm watching gasoline demand fall over the fourth of july weekend, 2.6% or something like that year-over-year. that's really rare. there was a time when we never saw demand fall. it seems to me like it's going to be very difficult for oil to breakthrough highe or ver much ove 70 until we see siificant economic turn around. >> i tnk that's right. anfor me therealicator is e ployment situion, the blessness, the talk this number cou go as high as 11% real goes to the heart of generating more gasine demand, more diesel fuel demand, because without people working, the engine of commerce just is not running. that's my biggest, biggest indicator. >> john, what about the impact on the economy from the higher retail gas price? you've gone in round numbers from $1.60 to $2.60, washington is hostile to drill, drill, drill. they're hostile to refiners, what's the take here? maybe we're underestimating this mini oil shock impact on the economy. >> larry, you have to look at

the fact that gasoline prices at the pump were over $4 a year ago, $1.50 higher than they were today and the jobless rate was 5.6%, it's 9.5% now, but yes we have seen gasoline prices rise -- >> the question i'm asking, sharon, is what is the near-term impact? we've had a steady increase the last few months, that shows up in paychecks, folks get in the car, they drive to work, reasonably long distances, i'm just asking that question because i thought the oil last year was an underrated economic impact. i wonder what about this mini shock, john? >> even at full employment, larry, we couldn't handle $4 plus gasoline and certainly at 10% unemployment or near there, we can't handle the numbers we've seen recently the $3 a gallon gasoline. it's much more impoverished consumer. >> that's what i'm worried about. i'm worried about. just what i'm worried about, my friend, thank you. >> i will say the slide we're seeing now, though, is going to

be temporary, and to the fourth quarter, things start to turn around, look for these prices to shoot up markedly again. >> shoot up, what does that mean? how much? >> $80 a barrel, i'm not sure $100 is out of the question for this calendar year. >> is it going to get to $55 before it hits $80? >> i think that's about the number. >> all right. thanks very much. let's take a quick break. then our hot hand segment. we've got a top portfolio manager leading his global tech fund to 26% gains this year. pretty darn good. he joins us live toalk tex stocksp next here on the call. this is ni gerations () of theorld's most revered luxury sed. this is a history of or 50,000 crash-tested ca... this is the world record for longevity and enrance. and one the most technologically vanced automobileon the planet. this is the 9th generati e-class.

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and welcome back to the call. it appears as though the chicago cubs sale by the tribune company is almost done. cnbc has confirmed that the deal, at least, has been agreed to in principle, the term sheets are into major league baseball. it's around a $900 million deal. slightly less, it includes the famed chicago cubs team, wrigley field. the guy who has been -- the guy up top all along is the -- would be the new owner and still has a couple steps to go here, that

includes going through a creditor committee, a bankruptcy court, of course, and then the documents to major league baseball and the major league baseball owners would have to approve it. but if all goes well and it could take a couple of weeks, tom ricketts is the new owner of the chicago cubs. >> there you go. thank you so much. we are focusing today on top money managers with hot hands. rich power heads the global tech fund, which is up 26% year-to-date. he joins us right now with some of his investing advice. good to see you here. >> thanks for having me. >> rich, when you look over this landscape right now, technology, you say you like growth at the right price. >> correct. >> but given the run-up that we have seen since march, what is looking like the right price if you're trying to get into tech righnow? >> sure. well, we're still finding a lot of mpanies that sell products enterpris, a lot of software mpanies that are still tradinat very reasonable

valuations. we have companies in t securi softwareusiness that are tradi at 10 and 12 mes free cash flow. which gives you an 8% to 10% free cash flow yield. ask those businesses are going to grow. so setting aside the next quarter or two, what's going to happen over the next 12 to 24 months, and are these businesses going to get back to top line growth. >> looking at a longer time horizon. you're not worried about buying in at potentially what could be a top because you're saying, okay, 24 months from now, i think i'm going to be ahead of the game. >> well, if we're buying now, we're looking at tactically at when to buy something. if we think the market's going to go back, we're going to add to names we like. there's the tactics of getting in short-term and the strategy of investing in companies that are going to grow earnings and free cash flow in double digits for the next few years. >> you've had a hell of a run this year, congrats for that. we just posted your stocks to some of your picks up on the board. maybe you want to take another look at that. it's like the big guys,

microsoft, cisco, intel, dell, they really haven't done anything in ten years. i mean, i want to ask you, you can say the overall market hasn't done anything in ten years and that would be fair too. but i want to ask you, do you prefer niche investing? do you prefer the big guys that everybody owns? give us a little guidance on your excellent track record? >> generally what we've invested in is mid cap companies over time. we do own some of the large cap names when the opportunities present themselves, but we have 16 research analysts and we can differentiate our stock picks better by going into names that are less followed by the street. >> check point, symanc, tell us about that. >> they're both in securities software. securities softwareis going to continue to see strong demand as long as hackers want to attack corporations. what's happened over the last few years, they've gone from hobbyists to professionals, stealing credit card data and companies like symantec and check point help protect the corporate data.

they continue to come out with new products, you need to see change in technology for companies to continue to sell their products and sell more of their products. that's why we like both of these companies. check point excludeing about $6 of cash is trading at about eight times next year's earnings. symantec is trading at about 10 times free cash flow now. >> are you add -- hang on, larry, are you adding in terms of what you own right now? >> well, i couldn't tell you if we were buying today, certainly, but they're in our top five picks. we have pretty heavy wading in both stocks and we're pretty happy with what we own. >> i want so ask one quickie, richard, we're out of time. two big names have done well in recent years apple and google, your quick thought? >> we still like apple quite a bit. there going to be a bumpy ride for the rest of the techs for the next few months. they've extended their leadership from the music business online and we think they're going to extend it into video and that's going to continue to move.

great new itouches and ipods. so we think over the long-term, apple will continue to do well. google is going to follow advertising over the next 6 to 12 months, better leverage to advertising, and so if we start the theory there, google should continue to do well. >> thanks so much for joining us. >> thank you. >> appreciate it. well, our hot hand coverage continues today on cnbc bringing you top fund managers with their top stock picks. coming up next on "power lunch," we're going to have picks from a health sciences fund. up 10% this year, melissa. a quick break and we'll be right back. you're watchincnbc, first in buness worldwide. foetting things,

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morgan stanley smith barney. a newealth management firm with over 130 yearsof e. all right. we're down about 40 points on the dow. you can see europe's not fairing better on the day, down about 1% there in france, the rest of the market's down a little bit more than 1%. that is it for the call. i'm melissa francis. thanks for watching, everyone. i'm trish regan. >> and i'm larry kudlow. and now "power lunch" up next.