tv Power Lunch CNBC August 10, 2015 1:00pm-3:01pm EDT
trading, pushing toward 52-week highs, they held support, they continue to be strong. you can be long the market. >> i think cisco and retail sales are going to be the driver for the markets for the rest of the week. >> my baseball team, another long island championship. very proud of the kids. they did it again. >> there they are. ty? i'll send it over to you. "power lunch" begins right now. >> announcer: halftime is over. "power lunch" and the second half of the trading day start right now. scott, folks, thank you very much. congratulations to the team, joe. i'm tyler mathisen. welcome, everybody, to "power lunch." rally on, ladies and gentlemen. the dow posting big gains after last week's big slide. nasdaq, s&p 500, and russell all up 1% as well. gold. wow. wow. what a turn here for gold moving up 1% today. oil joining in it the bullish trend. look at brent, up 3% today, back above $50 a barrel. there's your dow
leaderboard. no bubba watson. it's right behind you -- there it is! there it is. caterpillar, apple moving up, boeing, intel, verizon, they're all there. mandy is still down under. kayla tausche down on the floor of the new york stock exchange. >> great to be with you here on this monday afternoon. we are watching the dow snapping that seven-day losing streak. also seeing its first 200-plus-point gain since the middle of july. bob pisani is here with me on the floor to look a little bit deeper into what exactly is pushing the markets higher. is it all industrials today? >> no, it is pretty broad rally. 4-1 advancing to deshriclining stocks. seven days down in the dow industrials. that doesn't happen very often. we're due for a bounce. there's hopes for stimulus in china for all the wrong reasons. look what happened to china today, both shenzhen and shanghai up 4% to 5%. economic data was very
disappointing overall here. ppi and trade numbers were terrible. but shenzhen and hang shy both rallied, hong kong did not because hong kong moves on the fundamentals. hopes for stimulus really moved the markets there. that's helping our markets if you look at the sectors today. beaten-up sectors, ones most influenced by global slowdown, concern with china, energy, materials and industrials are the ones rallying the most. also some nice moves up in technologies with some of the big four names also moving as well. oversold bounces in etfs. xop, dramatically oversold. that's bouncing. steel, dramatically oversold. that's bouncing. heavy volume. semi-conductors oversold. bouncing. brazil! remember brazil? even that's bouncing after one of the worst starts to the year anyone's seen in emerging markets. see what i mean? everybody's trend following, buying stuff that's been sold just about down to the bone. we also have a little m&a activity.
precision castparts is really helping companies in the metal space. they're very big selling into aerospace. companies that have metals that sell to the aerospace business like allegheny, carpenter, haynes international. all up today. a little bit of spice to the market. >> buffett says he's satiated for now but that doesn't stop people from bidding up some of the other competitors. >> precision castparts are the big kahuna in that metals into aerospace. >> bob pisani, more from you later. technology up 1.5%. we are seeing stocks rebound at the nasdaq as well. that's where we find bertha coombs. >> apple's big bounce today is a big factor in the nasdaq moving higher. apple contributing to about one-third of the nasdaq 100' gains, up for a second session. it is moderately strong volume, not as strong as we saw in some of the sell-offs last week. apple still below its 200-day
moving average but today's move does carry over to some of those apple suppliers that have suffered collateral damage like skyworks giving a boost to the chip sector which is now positive for the month with today's move after two straight months of losses. nvidia also at a fresh 52-week high today. among the losers are some big consumer names. j.d.com is leading the way south after alibaba's new deal seen pressuring j.d.'s electronics sales. whole foods still restructuring, today hits a new low. it will take a while for whole foods to really engender some optimism, both among its clientele and investors. >> bertha coombs from the nasdaq. the euro/dollar right now, something different happening here. the euro getting stronger. very close to $1.10. actually at $1.10. a little above it. if you look at the dollar index which is the dollar against a bunch of other currencies, that would be a bunch. that's a technical financial
term. you can see that it is falling, the dollar that is. as well, it had hit a nearly four-month high on friday. you see the index down just a little bit. another angle on the recent slide in the markets and today's bounceback would be the dow transports. dominic chu has been following them for weeks now and watching it for us today. what did you find? >> we look at these as an indicator for overall health ef the market. a year to date chart with the orange line being the dow transportation stocks and the white line being the dow industrials. we've seen this slowing down of momentum. we were waiting to see if this bounce in transportation stocks recently would translate into an overall bounce for the industry. maybe we are seeing that, nice gains today. but remember, we're very much still in this down trend if you will. the chart for the dow transportation stocks over the past month, you can see it here -- transportation stocks up 2% but it's been a bit of a
roller coaster ride as investors and traders try to figure out a direction. this index is very much in a no-man's land right now, at least on a short. term basis. it still sits below its average price for the laugh 200 days but right around its average price for the last 50. it's technical jargon. we're trying to figure out if this is break out higher. stocks kind of pushing and pulling this market here, this is a tale of land and sea. right? or air and sea. in this case here. the two worst performing stocks in the dow transportation index so far on a one-month basis are kirby and matson. both these guys do maritime shipping. barges, tankers. that kind of thing. maritime ocean freight. alaska airlines and southwest are the two that have kind of helped prop things higher on a one-month basis as well. if you look at this chart overall, what you're looking for is a sign here whether or not this thing is going to break out or not. we have seen this move here. still very much in a down trend. whether it can get higher here
may dictate some sentiment as to whether or not we see some more perhaps gains in the overall market. that's why some traders are watching the transportation stocks a little bit more closely, especially at this level. we're at possibly a pivot point or a change in the overall market. kayla, over to you. we're going to talk a little bit more about the markets here with kenny polcari. gentlemen, gordon, we just heard about the pivot point that the dow transports are at right now. what are you watching within that space? >> it is not just the transports. it's tech nollie, a lot of different sectors that you have to focus on. the interesting thing about the market today, particularly the traders on the floor, last week a lot of guys were hoping, look, let's watch them out, see this thing sell off, let's find a base, find a let level, let's turn it around. it took all last week. today they come in there, they take them. question is will we carry them through the rest of the week. that's what traders are focusing
on today. >> ken in i, is this the turnaround for the market. >> we had seven down days last week. at some point it needed to find a bounce. there are individual names and you pointed out whether they're industrial names, material names, energy names, names that have really gotten clocked that all of a sudden people are starting to do some bottom fishing, value plays. the second half of the year is going to be better i think. i think that tends to be the -- people think the second half of the year is going to be better. therefore, they're preparing. i think this is. i like the market right here. i don't think we're going to have this crash. i think it is going to trade in a range for a little bit longer, and then it is going to move higher as we move into the second half of the year. >> gordon, is it as kenny says? i tend not to disagree with you because you're usually right but is it a second of ha volitionist or is it a, whew! earnings are behind us and things are not get as ugly as we saw the last couple of weeks. >> earnings are done. it's august, vacation.
you sort of have to be patient. wait for things to come to you. that's what we're seeing. i think as you get towards the end of the year you'll start to see more motion. people taking bigger commitment into some of their positions. i would think that we will trend to the upside. >> so kenny's right, right? listen, last two weeks of august don't pay too much attention because it is vacation time not only in europe but here. volumes tends to be lower. moves tend to be more exaggerated. just be careful. once you come into september and everyone's back i think is when you see the push. >> volumes, are they pretty good considering it is the middle of august? >> we're low, right? we're in the low end of the volume right now. as we get into the end of this week and next week, expect them just to kind of dribble off a little bit even more. >> we're still watching sentiment, gordon, kenny -- >> the vix is also down today which i think is an important thing to note. again, it sort of speaks to the sluggishness of the market at this present time. >> we'll keep our eye on that as well. >> thank you. shares sf precision
castparts soaring nearly 20% today. the company makes parts for aircraft. berkshire hathaway bought that company for $32 billion. he called in to "squawk box" this morning and said it is one of the most expensive deals he's ever done on a price to earnings basis and revealed his plans for the near future. >> we'll probably be buying a few small things in the next six months. we're in negotiations on a couple. but in terms of a deal of similar size, it pretty much senses out what we will probably do on this one is we'll probably borrow about $10 billion and use $23 billion of our cash, on that order. we'll be left with over $40 billion of cash whether we get all through. >> buffett's comments on ibm also sending that stock higher today, though it is basically flat for the year. we'll have more on that in the next hour of "power lunch." and you can find more on
powerlunch.cnbc.com. a news alert for now. this should hit home to anyone who flies. scary stuff. phil lebeau is in chicago with this story. >> within the last half-hour the associated press is out with a report. they have gotten a copy of a 2011 study that they say was commissioned by the f p.aa and by study -- people running the studies at nasa basically looking at air traffic control fatigue in the 2011 study. they surveyed 3,268 controllers. they say that the average sleep per day for those controllers is 5.8 hours. but for some on certain shifts, it was just 3.25 hours. here's the scary conclusion in this report, according to the associated press. 1 in 5 controllers committed what they call significant errors during their shift. over half of the controllers blamed those errors on fatigue. we have reached out to the faa for a comment on this report. we have not heard anything. but again, that's scary stuff,
guys, in terms of what was reported in this survey in 2011 of air traffic controllers. >> have those errors led to any in-air or on the ground incidents that we know of? >> not according to the report by the faa. there were some that they talk about that might have been some questionable circumstances. but no reports of accidents that were directly tied to reports of fatigue. >> phil, thank you very much. phil lebeau reporting. they are cleaning up over in taiwan today after a major typhoon hit the island. many. roads still look like this, like rivers with cars just washed off to the side. look at the damage there. strong winds and heavy rains pounding taipei city. media there report six people were killed and nearly 200 injured. severe storms though not that severe are threatening the eastern u.s. today. chris warren of the weather channel has more. >> reporter: it eventually is going to be very stormy for some of the big cities in the
northeast. that's what we're keeping an eye on here. look at the set-up first, how things are going to play out. this is what's going on. we had a dip in the jet stream, you have the moisture here. the ingredients are coming together for the threat for some strong storms for the rest of day for parts of the northeast. but it is the big cities tomorrow that we are watching for some of the stronger storms to move through. this does go from d.c., philadelphia, new york, not quite to boston but anywhere in the orange or the red, thunderstorms will be possibly but it is here in the red where there's the greatest chance for some of the strongest storms which does include the possibility for some damaging winds. now for washington, d.c. this is how it is going to play out. later on tonight you're going to have a chance for some thunderstorms. then by morning still looking at that hit and miss storms. then we're going to watch more of those storms moving through against some of the other big cities in the northeast. >> thank you very much. social security may not be the sexyist issue, but the older i get, the is exisexier becomes.
where do the candidates to be the next president of the united states stand on this issue? we will break it down for you and we will continue to watch this big bounceback rally in stocks as the dow is moving up by 232 points. this is cnbc, first in business worldwi worldwide. hi my name is tom. i'm raph. my name is anne. i'm one of the real live attorneys you can talk to through legalzoom. don't let unanswered legal questions hold you up, because we're here, we're here, and we've got your back. legalzoom. legal help is here.
welcome back to "power lunch." texas instruments shares are coming off their best level so far today, up by nearly 4%. the electronics component company and semiconductor maker was upgraded to outperform from neutral at mcquarry. the firm cites valuation and the complete the semiconductor cycle is bottoming out. mcquarry under its price target for the shares to $60 from a prior $55. back over to you, kayla. txm not the only stock we are watching here on "power lunch." shares of tesla also down for the third straight day. that stock has loss more than 10% of its value over just that time. the latest revelation being the company's losing more than $4,000 on every car sold. tesla stock down by about pr.5%. astrazeneca announcing a
deal with inonivo. the stock up 25%. azn up just over 1%. finally, sysco, the food company, earnings higher than a year ago. they say sales were hurnt t by currency exchange. that stock up 2%. what company this quarter didn't have some foreign exchange issues? >> that's -- that's this season's weather problems, the currency issues. we've heard a lot from the presidential candidates. maybe more than we should from those candidates on some issues. but where do they stand on social security? it is one of the key issues for millions of americans and john harwood is here to explain. >> two different trends affecting social security are putting it at the center of the campaign debate. one is the massive retirement of the baby boom generation which
is placing more and more pressure on the social security fund. the second is the diminishment -- stagnation of wages, the elimination of so many pension plans that leaves more and more workers -- or retirees dependent on social security. if you care more about debt, you want to cut benefits and find some way to make the program sol vanit so solvent. we saw that last thursday night. >> let me tell you exactly what we would do on social security. yes, we'd raise the retirement age two years and phase it in 25 years. we'd raise it one month a year for 25 years. secondly, means test social security for those who are making over $200,000 a year in retirement income. if we don't deal with this problem, it will bankrupt our country or lead to massive tax increases. neither one that we want in this country. >> 60 million americans are on
social security. 60 million. one-third of those people depend on 90% of their income from social security. it's always that the government figures that they can do this off the backs of people, many of whom are poor and depend on that money. i just think it is fundamentally lying to the people and stealing from them and we shouldn't be doing it. >> as that debate was going on, bernie sanders, the socialist running for the democratic nomination tweeted out, all you have to do is raise the cap social security taxes and you can make the program solvent for decades. bernie sanders wants to go beyond that for the existing program. he also wants to raise those minimum benefits for people at the lowest end. you've got some republican for that, too. paul ryan, the conservative chairman of the house ways and means committee, he's been interested in that same idea. so there is a lot of ferment around this program as we get toward 2016. >> we can appreciate them drilling down a little bit deeper on specific policy
issues, less rhetoric. i think we can all agree that's a good thing. john harwood, we appreciate you drilling into that for us today as well. gold getting back above $1,100 an ounce today. we'll check on that. as we head into the close for metals. and also much more on this big market rally. we're cnbc first in business worldwide. we're back in a minute. defiance is in our bones. new citracal pearls. delicious berries and cream. soft, chewable, calcium plus vitamin d. only from citracal. 40% of the streetlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank.
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no sixth grader's ever sat with but your jansport backpack is permission to park it wherever you please. hey. that's that new gear feeling. this week, filler paper and folders just one cent. office depot officemax. gear up for school. gear up for great. sharps of twitter are bouncing back today along with the rest of the market. on friday the stock sank to lows it hadn't seen since the ipo. now some executive including
jack dorsey are buying stock, and that is giving shares a boost. we're also watching shares of shake shack. that one up more than 200% since its ipo earlier this year. can it report growth to live up to that? that's the question. we'll have the results after the closing bell. we have the close in the metals market right now. gold is up. it's up by just about $10.30 an ounce. it is still hovering above that $1,100 level. it had been falling for seven straight weeks, but today touched its highest level since june. silver, copper, palladium, platinum, let's take a look at where the rest of the metal complex is closing. we're seeing green arrows across the board. silver up by 3%. copper up nearly 3%. platinum up 2.5%. palladium up by 1.7%. the bond market, mr. santelli must be away. that means you are stuck with me.
we focus on the 10-year note, the yield at 2.23%. the prices are lower, the yields up a bit today. a lot of red on the price action across the curve. all the way from the 2s to the 30s. and that is your abbreviated bond report. where is santelli when we really, really need him? futures of ceos of america currently being trained at harvard business schools. what are they teaching these kids? we'll talk with one of the school's deens. plus, apple bouncing back today. the stock which has been pummeled in recent weeks. overall markets moving higher as well. you see that one-month move in apple. but today up almost 3.5%. we're all over all these stories when "power lunch" returns.
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so far today are names like freeport mcmoran, alcoa, you will up 3% or more. at least some green on board for one sector that's been fairly beaten up a little bit over the past few weeks. >> green across the board for the s&p sectors. nine sectors out of ten are in the green today. let's check the broader market. dow up which 227 points. nasdaq up 58 points. s&p up by 25 points. bob pisani joins me here again on the floor of the nyse. we talked earlier about the breadth of the market. >> 4-2 advancing to declining stocks. most importantly it hasn't fallen down yet. look at the s&p 500. professional traders come in and they say, okay, we're buying oversold markets today. today we're buying energy. but if at 11:00 it starts looking weaker, they'll sell it very quickly but that hasn't happened today. it's been strong throughout the day. this is a good example. people say what do you mean by oversold? this is what i mean. these stocks have had the stuffing knocked out of them
this quarter. caterpillar, chevron, dupont, even intel, united tech, they're terrible performers. they're the market leaders today. this is what i mean. there is such a thing as an oversold rally. chevron's down double digits. dupont, united technology, caterpillar, even intel's down 3%. those are terrible performers, those are the market leaders today. that's what an oversold rally looks like. of course you have the china hopes for stimulus even though the economic news was bad. that's what's moving it. look at the other side, that's underperforming? what's not doing so great today? remember the nasdaq internet names? they were just on fire a week or so ago. they're underperforming the market. biotech was on fire. it's underperforming the market. consumer staples, defensive names were doing very well in july and august. it's underperforming the market. my point here is, you can see exactly what everybody's doing. they're staying with the beaten up names today. and they're sort of lightening up on the big winners. one thing i don't like, one thing i don't see, is volume.
indon't see aggressive buying in oil names. i don't see aggressive buying in some of the beaten-up big industrial names. i see rallies but that's more like there's nobody out there aggressively selling the names or aggressively trying to buy them. i don't see a lot of enthusiasm. i just see oversold -- >> is there more than just a one-day -- >> that's what i want to see. you think these stocks have been beaten up so badly, people come in and try to buy them on the idea they are bargains. if there was big volume i might be more tenthusiastic. to me this means people still don't think there is going to be a sustainable bounce. >> at least a little lift for today. bob pisani, thanks so much. let's take a closer look at the nasdaq 100. as you see, more than 4 out of 5 of the hundred stocks in the nasdaq 100 are higher today as you might well expect. breadth is very good, the size
of the moves very good. applied materials, texas instruments, nvidia, network appliance and apple obviously among the leaders on this day. intel. viacom is up there as well. warren buffett's berkshire hathaway paying $3 billion for precision castparts. the company wasn't necessarily having a great year -- until today. stock up nearly 20% today. if you take out today, you'll see a drop for the year of about 4%. jamie cox of harris financial owns the stock. jamie, we were together on friday evening on "nightly business report," and you named this company as 1 of the 3 stocks you love right here. you've been talking to buffett. come on! tell us! you've been talking to buffett, vnts yo haven't you? >> no, unfortunately, tyler, he doesn't consult me when he makes
his buying decisions. i take no credit for that. i just liked the company. the fact that it was in aerospace. every single jet engine that's being manufactured today uses parts by precision castparts. the dreamliner. 13% of their revenue comes from general electric. i think this company has enormous opportunity. i'm sad than buffett took out a lot of the profit for the rest of us who like to hold this stock. >> you made this a bet on the growth, the expansion of the airliner business. were you looking at this stock through a buffett-like prism? in other words, that you saw an undervalued company, a diamond in the rough? >> i don't know if i necessarily would use buffett's name in regard to that. just sort of the way we look at things, we wouldn't really buy a share of a company unless we were willing to own the whole thing. the problem is i don't have the capital to buy the whole company. warren buffett does. that's the position he's in and makes tremendous investment
opportunity for him. but i did think a lot of people were looking at precision and thinking it was an energy type name and selling it now for all the wrong reasons. i think that if you look at the economics of airline engines, there's one fuselage for every two to in some cases four engines. i like the economics there. if you looked over the weekend, you take a look at the way an engine is manufactured. over the weekend there was a delta air lines flight that went through a hailstorm. the nose cone was really beaten up but the engines were able to sustain those hail balls going through it. so this is a really important piece of an air frame and i think that that's why i like the company. >> i would describe the engines as a very important piece. i think that -- we can agree on that, jamie. and the idea, by the way, that you just said, you like to buy companies where you would theoretically be comfortable owning the whole thing. that's really a page from buffett's book. let me turn to the next page here and let you describe another company that's either in your portfolio or on your watch list, that sort of meets those standards of being something
that maybe the market doesn't appreciate the way you do, that you would be comfortable owning all of it if you could. >> well, we talked on friday night about rockwell. i love the way rockwell automation has been going through restructuring over the past couple of years. they've really gotten big in the stop/start battery market. hybrid vehicles have been using these batteries for a number of years. a couple of gas powered cars are starting to use them for fuel efficiency standards and i think that is a place where it has the broad application just like amp engines where you can see vehicles outfitted with these stop/start batteries at production scale. i think rockwell is also a good place that people could take a look at. that sort of has the same characteristics as precision in my view. >> jamie, thank you very much. nice call on precision castparts. final only we could all pick stocks like that, ty. great stuff. meanwhile, the broader market is still rallying.
let's bring in the chief investment officer at oppenheimer funds. christian, great to have you. we have earnings largely behind us. we have the jobs number behind us. we have janet yellen not making an appearance at jackson hole later this month. is volatility dormant for the time being? >> no, not at all. i think we are still dealing with two very important issues -- china and the you slodown in china, and the fed tightening at some point in the not too distant future. we'll have to slog through all of this. today is a good day but last week was terrible and we'll have quite a few of these types of weeks in the future as well. >> how do you read the china market? on one hand you have data that are weak today but you have the market in china rallying because of these hopes for further stimulus from the chinese government. shouldn't we here be focused more on the data if that has more implications for the companies that we follow that are operating there? >> but data is what it is today. stimulus is what data could be tomorrow. i think if they put in a lot of stimulus, there is a case to be
made that the chinese economy actually grows a bit faster than what people are expecting. and as a result, the demand for commodities and materials may improve significantly and the outlook for global growth changes dramatically as well. i think there's good reason to be hopeful if there is a lot of stimulus coming through. we saw that in the u.s. in 2009-2010. we saw that in europe in 2012-2013-2014. >> how do you play that if you are an investor here? what's the likelihood that investors who have exposure to revenue in china say that's what's hurting their revenues? >> absolutely. i think we'll hear a lot of that but a lot of it is really about buying assets at good prices. when you see a significant correction in large cap names like chevron and you have this opportunity to buy because china was bad and commodities were going to fall apart, i think finding those opportunities for long-term investors and
capitalizing on those opportunities is what will make or break your portfolio. >> names like wynn resorts, broadcom, qualcomm, samsung. companies that have huge revenue to china. do you stay away? >> again i think it is question of company by company what the valuations are. there are companies that offer really good value for long-term investors and finding those makes sense. it is really more finding a good asset at a really good price. >> you like technology. the knock on technology has been the whole sector is so concentrated in amazon, netflix, google, apple. how do you play outside of those? >> i think you can approach it two ways. one, it is probably the growthest sector of them all in biotechnology in a world where you have growth that's not coming about as fast as you like, people are willing to pay a premium for that. in addition, there are really old-line technology companies
that will offer you decent amount of value or businesses are very stable or cash flows are relatively stable and you get really good, cheap assets. >> like what? >> like hp, like ibm. there are quite a few of these types of companies. >> you and warren buffett both like ibm today. >> they're good companies. >> the jury's still out on that one. at least the turnaround. go to "powepowerlunch.cnbc.com now for more. the biotech etf crawling back after falling more than 4% at the end of last week. is now a time to buy biotechs? can interim twitter ceo jack dorsey and a big new partnership turn the stock around for good? don't go away, "power lunch" returns in two minutes. but yos permission to park it wherever you please. hey. that's that new gear feeling. this week, filler paper and folders just one cent. office depot officemax.
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reporting a larger than expected drop in second quarter sales. those sales were hurt by lower volumes as the company kept prices high despite a drop in raw milk cost. that stock still down by 88 cents. target announcing it will remove gender-based labeling in several departments, including toys, bedding and entertainment. the company says the decision was based on customer feedback. of course some of that which went viral. meanwhile, adobe is the latest company to adjust its parental leave policy. the softwaremaker saying it will offer time off to 26 weeks from 16. that appears to be a good move for the stock, up 1.33%. each day this week on "power lunch" we'll talk to some top business schools. we kick it off with maybe the top of the top -- harvard business school counts u.s. presidents, dozens of fortune 500 ceos as alums.
felix observe eoverhoelzer is tf the business school. where are harvard's graduates going to work after they leave, how is that different from say five or ten years ago, and do the brand name employers have the same sway as they used to? >> thank you for having me. this is a very interesting question, tyler. in fact, we see quite a dramatic difference. you know that the millennial generation is often described as being self-centered, even narcissistic sometimes. i find this to be a very poor deskrigs of our students. our students are very eager to get out, to create value, to shake things up and we see this in market differences in the patterns of employment post graduation. if we had looked at the names of the companies that our graduates would join one, two generations ago, these would all be brand names. today there's huge
diversification. students are looking for opportunities at smaller companies, often unknown companies, also. and the idea is that what they seek is that they take on responsibility, far greater responsibility, earlier in their career. >> they want basically to skip sort of the intermediate steps and have a lot of responsibility earlier. are they more relatively interested in microbusinesses, entrepreneurship, than they would have been ten years ago, and relatively less interested in finance or consulting? >> if you look at the overall patterns of employment, they actually have not shifted that much. it is roughly about one quarter of our class that goes into consulting. about 30% of our students ends up in financial services. it is more within these sectors, the kinds of companies that can provide interesting job market opportunities, that can provide opportunities for leadership, opportunities for taking on
responsibility. they have become much more attractive over time. among other things, that tends to benefit companies with relatively shallow hierarchies, companies that are often smaller in size also. >> what are the must-have courses or subjects that you want your graduates to have had by the time they exit? >> we have more than 80 electives in the second year of the mba program. of course, all of these are exceedingly important. we only have one year though. so i think what it boils down to is choosing the kinds of courses that further your career over the long period -- over longer periods of time. we often say that we educate our students not so much for the first five, ten years after they graduate, we educate them for the last five, ten years, when they're really in senior positions, when they take on significant leadership roles. that's what many of our graduates are looking for as part of their education here at
harvard business school. >> i mentioned -- you mentioned in one of your discussions with one of our producers here that one of the interesting case studies that either you have developed was buzzfeed, a disrupter in the media space with which we here at cnbc are most -- quite highly familiar. py wonder if there are other case studies that you've got percolating in the back of your mind that you'd go, boy, that's one i would love to work up. might it be twitter? might it be -- what? is there one that you've got your eye on for the future? >> so if you look at the companies that we cover, you would be very hard pressed to find interesting ventures, interesting organizations that we do not cover already. so our students, because we're such important producers of case studies, our students greatly benefit from the availability of case studies on almost any company that is out there.
when i watch your program, i -- there are very few instances where i hear names where i cannot think of a case study that is at least related. but while we remain committed to case studies as an educational institution, we think case studies are the single most important way to learn how to think about business. we have now changed the curriculum in a quite significant fashion to include many more experiential studies. making business decisions are two very different things. now we have augmented the curriculum. there is no graduate at harvard business school right now who has not had an opportunity to work in a team and start a microbusiness. a real business that is selling products, it's selling services. there's no graduate at harvard business school who hasn't had an opportunity to work in an emerging market context on an important innovation challenge.
>> interesting. fascinating. >> so the shift in the curriculum that goes along with the interests and passions of the millennial generation have a little bit of course to do with what kinds of companies do we cover, what kinds of case studies do we run. but more importantly we want our students to hint the ground running and that i think in an important way can be accomplished with real life experiences as part of a business school curriculum. >> dean oberholzer, thank you very much. we hope you'd come back and join us again. >> would love to do so. >> we will. when we come back, the man wing walking on top of this airplane you are about to see is not a professional daredevil. that silhouette you are see something tesla and spacex ceo elon musk. while he may think it is a good idea, do shareholders feel the same way? do ceos have a responsibility to be responsible? that debrat is stillate is stil. "power lunch" is back in two.
whale that goes by migilou. but australian seaworld sciences director says it was another albino mammal dubbed son of migilou. he says this mammal is smaller than the original and is known as "the other white whale" which has regularcy been sighted off australia's east coast. still a very rare sighting in the waters. >> look at that thing move. that is just grace, grace, grace. "power points," this hour the dow picking up ground after a week of losses, up 1.3% so far today. many of the media stocks also badly beaten last week making up some lost ground. disney up almost 1% today. biotech and technology shares also staging a rally today after they dropped last week. biotech up more than 1%. the nasdaq up 1.2%. if you missed any -- any -- of the big stories over the past
hour, please visit our website at powerlunch.cnbc.com. take two interactive is set to report earnings after the closing bell. stock up 12% in just the last month. is now a good time to get into that stock? that's ahead on "power lunch." you're watching cnbc, first in business worldwide. i accept that i'm not 21. i accept i'm not the sprinter i was back in college. i even accept that i live with a higher risk of stroke due to afib, a type of irregular heartbeat, not caused by a heart valve problem. but i won't accept giving it less than my best. so if i can go for something better than warfarin, ...i will. eliquis. eliquis... reduced the risk of stroke better than warfarin, plus it had less major bleeding than warfarin... eliquis had both. that really mattered to me. don't stop taking eliquis
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another big hour on tap for your money coming up. what is really moving the market on this monday and what is maybe a little concerning about this rally? plus, one of the most widely traded and lately widely hated stocks getting a big news boost. and an upgrade. that name in the intervupiew ahead. and a celebrity ceo pulling one of the most dangerous stunts you've seen in a lifetime. very cool or just dump? you decide. the unbelievable picture ahead. >> thanks so much, brian. take two interactive set to report earnings after the bell today. the stock is up 11% in just the last month, though today it's taking a breather, down by .5%. let's bring in eric hanler and
michael baxter to debate this stock ahead of earnings. michael, you are the bear in this conversation. i'm just wondering why you think that take two, which has had such a spectacularly successful run with grand theft auto, can't repeat that? >> i'm hardly a bear. i hope, kayla, as you know, i really think the stock should be rated sell. i know how to put sell on it and i have several of them. they are a good company, great assets. i think the management does a phenomenal job managing the company. i just don't think that the management does a very good job with investors. so we have no information about half of the company's business. guys who make grand theft auto, rock star games, are just shut-ins. they don't talk, they don't go to e3. there's no press releases. i think the last time we heard about a game from rock star was
2011 when this he told us about grand theft auto 5. it came out in '13 and they've been milking it phenomenally well for the last couple years. we don't know what's coming next. we don't know what's coming next year. possibly nothing. the studio has 900 people. they do one game a year. i think analysts are giving them way too much credit that their next gram is going to be their other big franchise. i think the next big game is midnight club. >> there's still a ways to go before that happens. your price target is $26. eric, your price target on take two is $40. i'm wondering what you see coming up this quarter that leads you to believe the stock has another $9 to run given how much it's already raised this year? 25% in just the last three months. >> look, it is not necessarily about one quarter. what i think michael is missing here is you have a company
that's got just about $10 per share of cash. it is 30% of the company's market cap. they've done a great job. turning this business around, consistently profitable now. margins are rising. the digital business is growing. and they still continue, yes, to milk grand theft auto. we think that will be a big part of what they report in the first quarter this year and i think there's good up side to estimates. in a trough year, a trough year for a company used to mean a lot of losses. now a trough year could be upwards of $1 a share of ets and margins this year should be around 11%. margins, a cycle ago, was the peak margin. peak margins now are double that. so i think the company's made tremendous strides over the last eight years. and yes, there's sometimes visibility is lacking. but this is a company with a deep portfolio of assets and a big pile of cash. >> we appreciate your views this afternoon. we'll see which way that stock goes whether it reports after the bell. eric, michael, thanks so much.
>> thanks for having me. kayla, thank you for joining me on this first hour of "power." the rally continues and brian sullivan is here to take us forward. brian? thank you very much. 2:00 on wall street, 11:00 a.m. in bakersfield, california. the dow is surging up 240 points as warren buffett spends nearly $40 billion. i'm brian sullivan. melissa lee joining us from the nasdaq. much to do on a busy monday, including an amazing and some say foolish thing that one celebrity ceo just did. but we have got to start with stocks to start the week. coming in to today, the dow was down seven days in a row. but that turned around in a big way today. bob pisani is at the new york stock exchange. what are the one, maybe two biggest drivers of today's big rally? >> exactly the right question. oversold, bounce and china. the important thing is we have had seven down days in the dow and sectors including industrials and materials, some
of the other -- some technology stocks as well, all have been beaten up. it is time for a little bit of a bounce. on top of that, hopes for stimulus in china despite very poor economic numbers, we saw the chinese market 5% overnight. the s&p 500, we started strong and we stayed strong. we are at the highs of the day. that's very important because there's been no broad attempt to sell off the market. what i don't see is strong volume but that's a petty thing to argue about when you have a rally this strong and broad. all the beaten-up stocks, perform erps fers for the quart the ones that are up today. apple, caterpillar, intel, boeing and shechevron. the names after apple have all been terrible on the quarter. exchange traded funds have been beaten up. xop, xls, semi-conductors, the sms on the bottom, those are your market leaders.
on top of that even emerging markets are rallying. everybody talks about china but we've been emphasizing recently brazil. a new low in brazil just recently but it is up 3%. not saying this will rally any time big time, but even brazil is rallying today. finally, sectors not participating so much, modest rise in interest rates. you get those interest rate sensitive stocks like utilities and the reits not doing too much but overall, brian, 4-1 advancing to declining stocks and no sign that that's deteriorating in the middle of the day. >> nobody wants to throw a bucket of water on a nice rally. but i will. brazil is endemic of my concern about the markets. the best performing stocks in the s&p 500 outside of precision castparts which has gotten bought, genworth financial, freeport mcmoran, diamond offshore and joy global. the best performer of those four
is down 35% year to date. my concern is the stocks that are leading this rally are heavily shorted, low quality names. >> you're right. they're all -- particularly the energy names like diamond offshore, all heavily shorted. i'd be more comfortable saying this is nothing but a short covering rally. if i saw much bigger volume. but we're seeing roughly average volume. in a real short covering valley you get people coming in covering. i agree they're heavily shorted names. i think we've got a mod yes, sir oversold bounce but i don't think this is the start of anything. if i believed it was, i would have seen -- if everybody believed it was, we would have seen much more notable volume. that's the only thing that's holding me back right now. >> bob pisani, thank you very much. this morning on "squawk box," becky quick got warren buffett on the phone to talk about his $37 billion deal to buying oregon-based precision castparts. he also talked about why he is
so bullish on ibm. take a listen. >> i love it when it goes down. it means the company buys stock cheaper and it meansfy want to buy more talk, you can look at our 13-f, it means i get to buy cheaper. >> on the cnbc news line, kim f forrest. an ibm shareholder. it sure sounded like warren buffett was buying more stock in ibm last quarter saying just wait until our s.e.c. filing rolls out. you obviously agree with that but ibm's been a difficult company for a few years, why is it a good investment? >> oh. well, i'm not going to go if warren thinks it's good, i think it's good. but that's also not a bad bet, right? >> maybe he cited you. >> pardon? >> if kim forrest is buying, i'm buying. he might have said that. >> that's right. he just didn't know it.
no. we continue to hold it for a couple reasons. it has the largest base of very heavy-duty data users. right? one of the two biggest drivers in tech right now, first big data, second is the cloud. if you look at their product called watson, it is a poster child for both of these things can what can be done in the cloud, with big data. i think that is exciting to a lot of corporations around the world and i think they're going to come to ibm and have that sort of thing done for them. because we're still in early innings for both of those things, big data and the cloud. >> very early innings, kim. at the same time all these exciting growth initiatives that you cited are very small contributors to the revenue. ibm has seen 13 straight quarters of revenue decline hand a stock that's been falling since 2013. how long are you willing to say to your investors, yeah, we're in this stock that's been declining for the past two years
and with growth initiatives that are small contributors to the bottom line? >> sure. well, i have two answers for that. i was a software engineer. here's the thing. most of the trends that get people into the door are icing on the cake. the cake has to do with selling them about how to get that data in and out of the system and how to manipulate data. those are things that the company does really well and they make a lot of money on that. so that would be things like main frame, storage systems, then software and services. even though watson is very small to them, it is at least enough to get people in a conversation and then buy the rest of the products that are necessary to make that idea get off the ground. and the second thing is, ibm has had a lot of challenges and we are patient investors.
we're three to five-year, at a minimum, holders. that doesn't mean we just set it and forget it. we're watching this company and all the companies in our portfolio but we're not trading stocks, we're buying companies that should return shareholder value. that's why we're in that. >> kim, there is the more bullish view on ibm. kim forrest of fort pitt capital, thank you. now for the other side on ibm, scott kessler has a hold rating on ibm. scott, what are you seeing when you look at this company, to melissa's point, the stock's down, revenue is $104 billion a couple years ago. it is $90 billion now. they have shed some assets, granted. what do you think warren buffett's looking at that makes him think this is a good buy? >> i've heard warren buffett on your air multiple times talk about ibm. i thought his comments this morning were interesting indicating that he liked when the stock went down because it provided the company and him with an opportunity to buy at lower prices. but of course that presupposes that at some point the stock price is actually going to
increase. and to be frank, although our 12-month target price is notably higher than where we're at now, we see ibm as a market performer. you referenced the decline in revenues. i'd also point to the fact that if you look since the end of 2010, cash in investments has declined by one-third, yet long-term debt has increased by 50%. ibm is doing a lot of things right, but unfortunately they're captive to the massive shift in what your prior guest was talking about, which is to the cloud and their legacy products and services just don't play. >> seems to me with all this stuff and the complexities of the company, there's just one simple question that needs to be answered. which is, is ibm going to be able to lead in all these markets? win in cloud, win in data, win in whatever? >> my take on that is somewhat. i agree watson is a very exciting kind of opportunity for
ibm, but it is really de minimis when you think about how big the behemoth is in new york. basically the way we think about it at this point is ibm, look, it has that brand, it has a lot of customers. as warren buffett has said to you guys, it has a pretty substantial base of recurring revenues. it's just that that base seems to be shrinking and their levers to kind of increase and accelerate growth to a large extent seem to be to us non-existent. look elsewhere, that's our opinion and the stock price over the last couple of years bears that out. >> look elsewhere from s and p capital iq. equipment forrest likes it. that's what makes a market. buffett also made a few comments this morning on food stocks. listen to what he said about companies like mondelez. >> it would be hard for us to make a deal that made sense.
yeah. but who knows what happens down the line. but if you look at -- whether you look at kellogg or campbell's soup or mondelez, they have -- their prices, to some extent, i think the market has put into those companies prices that reflect an expectation that kraft/heinz type margins are possible. and that may be the case but i haven't seen it elsewhere. >> let's bring from senior food analyst at i know you like the stock and you jai alaihig highlight a num positive things that are happening right now. the stock got a boost. but it doesn't sound like you think this is a fundamentally poorly run company as it is. >> i think for mondelez, there are opportunities here to really get the margins going. that was what nelson pelts was saying two, three years ago.
he's now on the board. it is really right now that those margin improvements are starting to kick in. this is a fundamentals story. have you an opening new low across plants around the globe. have you them right-sizing the size of the organization. you've got them reducing the number of suppliers. so they're on the right path but there is a huge positive margin improvement to come over the next two or three years. >> mondelez had been rumored to a takeout target for about a year or so, or might be involved in some sort of m&a. do you still see that happening now that you see this evidence of a turnaround taking place? >> i think if they can stay out ahead of the expectations and keep delivering good performance, that will probably keep them away from the clutches of possible deal making down the trood. at least in terms of them being taken out. i do think that eventually we've heard nelson pelts talking about a possible merger between mondelez and frito lay, but that would be something they'd sort of happily participate in rather than them being taken out.
>> thank you very much for your time. the nasdaq biotech etf i about. b crawling back after falling more than 4% toward the end of last week. is now a time to buy biotech stocks? eric, start off with you. is that just the kind ever market that we're in right now that in a time where we're going to see selling pressure we are going to see investors take money outs of the stocks and sectors which have seen the most gains for the year? >> we think so. we think the fundamentals in biotech are very strong coming out of a q2 earnings season. we saw excellent financial performance from really all but one company, biogen. the weakness we saw last week didn't feel like panic to me. i didn't have a lot of fund managers on the phone saying what should i do. no, it felt healthy. like they were taking some profits. >> seems like you both favor some larger company companies. if it helps that biotech is 22%
of the index. does that favor stability or some sort of floor or put in some of the larger biotech stocks. >> i think it does. i think another important point that's consistent with eric's comment is that sell-off is healthy. valuations are still very much in a comfortable range and the fundamentals most importantly of the sector are stronger than they have been in my career. the fact that these companies are large and global i think does create a defensiveness and a base that is different than we've seen in prior years. that's become specifically true to the large cap stocks. our bias is toward the growthier ones, biogen and gilead. >> biogen was the one miss amongst the large cap biotech stocks. eric, what are your thoughts? why do you like it? why are you saying, it's okay
with the tech news. >> there is no doubt we grew as a wall street community a little bit xa sent on this drug. it is slowing down. we did have to rejig our expectations for future growth. but stock has rejiggered its valuation as well. at these levels we think you're paying very little for any upside surprise. this company still has one of the best pipelines in biotech, led by their drug for alzheimer's disease. it could be a huge blockbuster, possibly even the industry eb's biggest-ever drug. we think the valuation is washed out. >> thank you, guys. >> we'll take a short break. but coming up, we have much more on today's big market rally, including some sort of off-the-radar buying opportunities for one all-star fund manager. a sector check as we head to
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stocks hitting new 52-week highs in today's session including mastercarding with royal caribbean and the maker of old bay seasonings, mccormick. it seems like whatever's been down this year is up today. gold, no exception. down 7% over just the past 90 days but it is higher today. it is dragging the gold miners up with it. let's get more from dom chu on the gold rally. >> gold prices are up today and that typically drags these gold stocks higher. the chart for the past three years, it used to be close to $1,800 per troy ounce. way back in the day, three years ago. today it hovers around this $1,100 mark. yes, an update for gold prices but in the grand scheme of things, perhaps just a little bit of a bounce. if you look at how that's translating into the gold mining stocks, we are seeing a hefty top today, because yes, they have had such a rough time over the course of the past at least
three years. arguably five. year to date, comex gold is down 7%. but leading to a pop is what's happening with the gdx, the etf that tracks the bigger gold miners out there. if you look at these names, these are some of the big e ones out there, all up between 5% and 9% so far. perhaps some say a bit of a relief rally, perhaps some short covering. if you look into the etf overall, over the last year, it's lost nearly half of its value but today, a slight little uptick here. in the grand scheme of things, the gold price story is still playing out in a down trend and what has been so for the last three to five years. the question then becomes whether or not this buying actually gets a little bit more momentum right now. for right now a lot of traders say this is just an oversold bounce that's being bought to perhaps cover some of their shorts or perhaps just maybe nibble a little bit here. but again not a lot of conviction so far.
>> great stuff. still ahead, the latest trend in ipos is -- surprising. it has something to do with the 20-somethings out there. we're headed back to the floor of the new york stock exchange to tell you what that is. keeping an eye on oil. the final trades set to cross for the day. stick around. >> announcer: the cnbc real-time exchange market snapshot is sponsored by interactive brokers. i'm only in my 60's. i've got a nice long life ahead. big plans. so when i found out
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hey. that's that new gear feeling. this week, filler paper and folders just one cent. office depot officemax. gear up for school. gear up for great. like most groups, when you have a rally like we are having today, the transport stocks are also higher. they are pushing higher in the session, up more than 1% right now. 1.6%. among the leaders you got kirby corp. they make barges. kansas city southern, a railroad company and avis budget group. undoubtedly you know what they do. update on two companies that went public last week.
amplify snacks, down almost 2%. planet fitness down 30% since it went public. this is a big trend with what's happening now in the ipo. bob pisani is going to tell us -- this has something to do with age groups. >> millennials. let's bring in the expert. when i'm not sure what's going on, i bring in the ipo expert, kathleen smith from renaissance capital. last week we notice amplify, popcorn, planet fitness, fitness, blue buffalo, marketing to pet food, to millennials. why is it suddenly there is a lot of ipos they're trying to get millennials to buy their products? >> health is very important to millennials and emotional attachment to the brand is very important. a digital platform and i would say doing well by doing good. this is what the millennials are looking for. >> they seem to be very socially engaged. they want companies contributing and giving back to the community. healthy epipos. fitbit came public and has done very well.
another one floating out there, jawbone may be coming. >> wristband technology, jawbone is a piece of that business. you connect and it tells you how many steps you've run during that workout. it has a social connection and uchlsed ve used very much by millennials. >> soulcycle is now coming probably in the next two weeks. >> soulcycle is huge. millennials are paying $1 a minute to be riding that bike and their social connection is very big. i think soulcycle has maybe 60,000 followers on facebook. >> does jessica alba's honest company have a chance here? that's going to compete in the natural consumer product space. >> we call it the millennial mom is very important to the honest company. nontoxic baby products and cleaning products. so tho this point, they make al of their sales digitally.
they don't have brick and mortar. it is interesting to see how this company has moved noord wi forward with a digital platform that addresses millennials. >> amplified, the popcorn business, did not do very well. >> general mills is a competitor to amplify and companies like chobani in the yogurt business, the eyeglass company we expect to see a big attraction to millennials. they are not without issues. >> opportunities but also a lot of pitfalls out there. we'll be covering these companies very likely in the fall hopefully. and we'll of course have you back. kathleen smith, renaissance capital, thanks for joining us. meantime, a new report out raising some serious concerns over how much sleep our air traffic controllers are getting. phil lebeau joins us now with more on this story. >> brian, this is a study of air traffic controllers surveyed in 2011. the associated press got its hands on this report.
we've asked the faa for a comment and so far haven't heard one. essentially the report says in 2011 a study was done. nasa researchers at the request of the faa surveyed 3,268 air traffic controllers. on average those controllers get 5.8 hours sleep per day. but for some shifts, they're getting just a little over three hours of sleep. here's the concern. . report talks about chronic fatigue for air traffic controllers saying 1 in 5 controllers committed what they deem significant errors over half of the controllers blame the errors on fatigue. if you remember back in 2011, there were a number of reports of commercial airliners landing at airports where the air traffic controller was asleep at the time. remember, shortly after that happened the faa administrator at the time, randy babbott, said we're going to scrap the air traffic controllers and modify
it a bit. we've asked the faa if they have a comment and have not yet heard back from the faa. >> phil lebeau, thank you. closing in on oil's close. we've got a stat, even though oil is up right now, that may make you think twice about where oil is going. ahead. you're watching cnbc, first in business worldwide. you totalled your brand new car.
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i'm courtney reagan. here's your cnbc news update for this hour. authorities charging 18-year-old tyrone harris with assault on law enforcement and other counts. he was shot by plain clothed police in ferguson, missouri and is in critical condition. the father of the suspect is calling the police's verse of events a bunch of lies. the confrontation between police happened during the demonstration of the one-year anniversary of the brown shooting. astronauts are installing equipment on the international space station, cleaning windows and conducting some scientific experiments. a new development in the
drinking water in colorado. the environmental protection agency says the toxic sludge spilling into a river may be three times larger than the original estimate. the concoction coming from an abandoned mine. there's also concern it could affect new mexico, too. the epa caused the spill four da days ago while trying to do a clean-up. a rare disease is killing rattlesnakes. biologists say it could completely wipe out that population of rattlesnake. no word on where the fungus may have originated. that's our cnbc news update for this hour. back to "power lunch." meantime the final oil trades are settling for the day. jackie deangelis is at the my next. i think we just ran a red sticky at the bottom of the screen. i know the price target shows that oil is up right now but earlier today we briefly broke below that six-year closing low. things are not all well with oil
yet. >> absolutely. there's a reason i call you an oil geek, brian. because that point is very salient. we closed at $44.96 but you're right, we touched $43.35. if we can break that level and close under that level probably we will see more pressure. what accounts for the buying that we saw today? probably this buying, the dip mentality, short-term trading and a little bit of a dip in the dollar index. but i will point out that wti had its best day since july 9th. brent is back over $50. it had its best day since june 9th and they both broke three-day losing streaks, so this one is one to watch. >> i take that as a compliment coming from you. thank you very much. time for "street talk." analyst recommendations on stocks you need to know about every single day. stock number one, monster beverage. after meeting with management, evercore isi boosts their target. they see a number of possible catalysts including a successful price increase that goes out, execution of their current plans
and a china launch in the first half of next year. their target implies about a 25% up side. >> pretty optimistic call considering the disappointing earnings monster has reported. coca-cola has a 17% stake in the company so we could be just a headline away from coke saying it will increase its stake. >> they've also got a stake in green mountain keurig. >> that's true. not good investments for coke. second stock we're watching applied materials. sentiment in the sector very negative and there is a lot of anxiety over chip and end market demand. but the analyst says semi-equipment demand is still reasonably good. sub sub $17 is a good entry point. >> we've been doing this longer than we care to remember probably, but a-mat used to be a hot company. the stock is the same price it was ten years ago! i understand it went single
digits during the financial crisis so if you traded it you made some money. but same price as ten years ago. unbelievable. third stock, nielsen. the target boosted to $35 from $46. about 15% up side. the analyst says he's received more encouraging comments from industry contacts, media, that's our business. also he seems it seems like nielsen is better addressing the needs of a changing media landscape. he put in a higher revenue growth. bottom line is, he's upgrading nielsen. >> changing media landscape, they are going to have digital ad revenue track region by the end of the year. so that could address concerns about nielsen being behind the times. intuit. raymond james days the current price reflects the company's favorable business prospects for the next two calendar years. pt share should be range bound for the foreseeable future. that stock is off marginally on
that downgrade. it's up about 30% in the past year. kind of a stealth rally for intuit. today's under the radar name, ttm technologies. circuit boardmaker primarily for aerospace and defense ticker. ttmi, the ticker. upgraded to a buy by stifel nicklaus. they note 30% drop in the stock's prices since june highs because of guidance disappointment but they call that a "reset" and see steady margins ahead for ttm. >> is it's been a rough ride for investors. >> melissa, thank you very much. "street talk" down. time for our other daily segment, "trading nation." andrew berkeley, craig johnson. craig, you've got an interesting view on so-called market corrections. everyone of our listeners and viewers knows what a price correction is. a 10% drop from a high. you have something you call a
time correction. what does that mean? >> so whoever said that the market has to have a correction in price? you can also have a correction in time, meaning that the market can just go sideways. we actually saw it happen last year with the russell 2000. the market went sideways from february to about february. it gives the market an opportunity to catch up. you get a strong push up in the market, you trade sideways for a while. a correction in time allows all the fundamentals to catch up with the price action you've been seeing in the market. that's kind of what we've been starting to see happen with the s&p 500 now, more of a timed correction. every time the market tries to push itself lower, you find good support at the rising 200-day moving average and a sharp rally comes out of it. that's what we saw happen today. then you rally right up to the prior highs at about 2135. you see buying pressure start to fade and the market comes back in. you are getting this correction in time happening. it is actually a healthy thing.
when you look through history, you'll see these time corrections have proven to be a positive for the market as it gives the market time to digest, build a foundation and a base to move higher on from there. that's exactly what we think will happen this year. >> okay. andrew, from a fundamental perspective, what do you make of craig's argument? >> brian, i think it is a great way to think about things. basically what you're looking at is a market that's really not done much all year. if you go underneath the hood there's obviously been a lot of big divergences. commodity prices and commodity stocks off a lot, but a lot of the leadership has held up pretty well. it is the question of will the weak drag the strong down or is the strong going to be healthy enough to revive the rally. we would agree with craig, that strong leadership is going to revive the rally. we just need commodity prices and stocks to stabilize, give the market a chance. as we go through earnings season, it's not been great. we obviously have this overhead of the fed lingering out there. but all said and done we think
the fundamentals would still suggest buying the dips. the model we run in terms of ow mark market model is still buy dips and be constructive to the year end. >> the best way to start going higher is to stop going lower. no truer words were ever spoken. interesting stuff. for more "trading nation," head to tradingnation.cnbc.com. u.s. stocks are rallying today, major averages all up. mark travis, president and portfolio manager with intrepid capital funds. there seems to be a shift going on in the market from growth to value. do you see that continuing for the rest of the year? >> i sure hope so. we need all the help we can get. it's been tough to find discounted securities the way we look at it at intrepid capital funds. we're trying to come up with a conservative estimate of private market values the way we look at it. just like the proper speaker was
talking a bear market at time, the love the quote from warren buffett years ago when he talked about the dow going from 66 to 66. it could last longer than a year. we've kind of through friday midday we were kind of flat year to date. we've had a very good period over the last three to five years in the s&p and there's very few securities. i have a couple that i think represent discounts. >> i want to get some of those picks. coach. you say it is a nice balance sheet. i'm looking at valuations though. pe is 23, forward pe 17. michael kors trades about half for the current as well as forward pe. value by what metric, mark? >> i think you've got a very liquid and attractive balance sheet with more than $1 billion in cash. you've got a new ceo. they're going to stop kind of discounting like they've done to improve their brand. certainly china, asia is hurting
them a little bit. but you're talking about a business that dates back to the early '40s. it was spun out of sara lee i believe in the late '90s. i think at $32 a share, you can get a materially higher price than where you are today. >> when you talk about value, you are talking about appreciation for current price as opposed to valuation metrics, like price to earnings? >> well, absolutely. you talk about michael kors. i think michael kors has done well vis-a-vis coach. but i'd also say that michael kors share price has even been more decimated year to date than coach's, last time i looked. so i'm looking at it on kind of an enterprise value to ebitda, operating income, and try to figure out what those free cash flows are worth to maybe a private equity buyer. >> this morning i asked warren buffett on "squawk box" if he was investing in oil and gas companies. he really said not yet, although the deal he made, they're about 15% of the revenue coming from the oil and gas industry.
i see here that you've been buying shares of patterson uti, a drilling rig company, down 47% over 12 months, 19% over the last three months. are you making a call and saying you think the bottom might be in for many of these oil names or is this a specific one-off investment case? >> you know, brian, i think you ld made an interesting comment about the morning show looking back to the '70s on on inflation adjusted price. i think you said $48. >> going through my math month by month for 25 years because that's what i do for fun. >> i'm glad to know it. it helped me. i think that, one, i'm not a believer in the clean power plan that we're going to only use 35% of our energy sources will be renewables. i'm not a believer that's actually going to happen. i think over time oil prices and bt uconn instruction will continue to drift up. but i think in patterson uti, if you look at the 240 rigs they have, most of which are electric and high horsepower and using
horizontal drilling, they have a secondary market for it. most of them are committed over three to five years before they even build the thing. so i think on a kind of asset liquidation basis, patterson-uti is worth more than $16 a share, in my opinion. now what happens to the price of oil in the short run? i really don't have any idea. >> how long have you had this? what's your cost basis for patterson? >> my basis is right in here, probably 16, 17. >> mark, thanks. appreciate it. >> thanks for having me. >> thanks for watching in the morning, mark. do appreciate it. on deck -- can interim twitter ceo jack dorsey and a big-time new partnership turn that stock around for now? it's higher but we look at it longer term. let's take another look at the energy sector. energy is up today. you heard mark travis going with one name -- patterson-uti. you're watching cnbc, first in business worldwide. >> announcer: and now the latest
. twitter attempting to make some sort of comeback today after falling to new lows at $26.87 in friday's session. the stock is higher by just about 9% today. james, great to have you with us. >> sure. thank you. >> you upgraded the stock of twitter. a lot of the positive catalysts that you cite or reasons why twitter has fundamental value, all these things could have been listed two weeks ago, three weeks ago, a month ago, strategic value, seasonality is strong, december, it is going to also benefit from the election cycle, new products look promising. it seems the one thing that has changed in the last month or so is the value of twitter now that it is close to the ipo shares. is that the primary reason why you upgraded the stock? >> it's a factor obviously the stock has gotten chopped in half
from its high. but really it is what we heard on the 2q call from jack dorsey. for the very first time we heard the why twitter is starting to be explained. dorsey delivered the most cohesive argument for what twitter's mission is, as well as critically the challenges that the company's facing that we've heard to date. i think that there's newfound focus in the company that wasn't there today. at the same time when you look at what are the risks to the stock when you look out and the estimates, we think that with the election cycle, with twitter in a very core beneficiary december and the seasonally high december quarter i think the downside risk estimate is quite limited at this point. those are the kind of crux of what gives us confidence today. >> how do you get your head around the downside risk estimates when we're -- when you have a cfo who on the conference call which was periscoped used the term "considerable period of time" for his estimates.
as an analyst i would think that's difficult to factor into your model when the cfo gifves you a sort of open-ended timeline. >> to be fair, those were circled largely around mau numbers. i think what maus are going to do is take a back seat to the total growth in audience. what's twitter have right now? they are synonymous with real time content. they have the content. they have to organize the content and present in an engaging way to consumers around the world. if they can categorize it and present it in that fashion, get the total eyeballs on to the site and advertise and monetize, via contextualize, you can convert those over time to maus. the mau argument and the fear around that will take a back seat as the total audience grows as the experience changes. >> i'm curious, what sort of conversations are you having in your office when you are talking to hedge funds or clients, et cetera? because it seems like most
investors who have invested in twitter so far, most of them have lost money or are flat so far on their investment with tr twitter shares back to their ipo shares. in terms of attracting buyer, a getting the calls from guys out there that don't have the position and want to increase the position at this point? >> yeah. obviously people have been burned on the stock. but at the same time, there's a lot of people that hadn't bought into the twitter story because the same reason why consumers don't. why use twitter? because of that, there's -- we have been having conversations with long-term oriented investors taking a much closer look at it today with the pullback. but i think ultimately what it does boil down to is the future of advertising, it's going to be mobile and native as, where ads look like content. facebook, pinterest, snapchat, linkedin and twitter are the
only ones that can do it. and we think the risk/reward at this point has pivoted to a positive outlook. >> james, thanks for your time. >> thank you. the dow is looking for its first 200-point gain day since all the way back on july 13th. remember july 13th? 28 stocks in the green. only two over in the red. those are coca-cola and visa. we're setting you up for the final hour of trade when "power lunch" returns. th grader's everh the eighth grade girls. but your jansport backpack is permission to park it wherever you please. hey. that's that new gear feeling. this week, filler paper and folders just one cent. office depot officemax. gear up for school. gear up for great.
pebble beach classic car auction starts on thursday. more than $400 million worth of cars up on the auction block. robert frank somehow got stuck again with this insufferable assignment. >> classic cars have been the top collectible investment over the past year and the past ten years. but the biggest test for the market will be starting thursday at the auctions at the pebble beach telegons. and sales expected to hit $415 million. in 2010, just 36 cars sold for
$1 million or more. there are over 128 vintage ferraris selling. so we'll see if there's demand for those ferraris. the most expensive is 1956 ferrari 250 gt sold by r.p. sotheby's for up to $20 million. a ferrari given to the pope could fetch several million. s that a heavenly ride. check this out, mclarened f-1 the price could top 12 million bucks. and we could see the most expensive porsche every sold. it could hit $9 million. it was moved in the movie "fast & furious 5." and the americans are coming up fast. this 1970 plymouth convertible
could hit 3 million bucks. >> how many guys right now, dudes, i think, were jamming around with sticks on the eight-track of a barracuda and now just watched you and thought -- >> why did i ever get rid of the barracuda? >> and the japanese cars are coming up in value. >> i said that a couple of years ago. >> you've been right and right and right every years. the 1980s and 1990s ferraris which were terrible at cars -- >> they were terrible, with all due respect to magnum p.i. >> these dollar values are coming up the food chain. a lot of stuff coming up on friday. and there's a slide show on cnbc.com to see the top ten cars of the auction. >> you asked me what i would pick if i had -- >> if you could buy one. >> number two at ferrari 250. i didn't know one was coming up. very cool.
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worst is over for gold. he'll join us tonight at 5:00 on "fast money." >> and we'll do that wing-walking story tomorrow with a great debate around it. it's going to be good. we look forward to tomorrow. the dow is up 240. it's going to be a big final hour of trading. "closing bell" starts right now. welcome to the "closing bell" clchlt i'm sara eisen. >> and i'm bill griffeth. you don't have to wait till tomorrow to see that wing-walking story. we have it, too. if you want to know who this is, stick around. news that berkshire hathaway is buying precision parts. the biggest deal warren buffett has ever made helping market sentiment and the rebound in oil is helping the broader market as well. we'lsc