tv Closing Bell CNBC September 21, 2015 3:00pm-5:01pm EDT
melissa, what's on the show tonight? >> take a look at shares of apple right now, brian, pretty much at session highs on that report that is developing an electric vehicle. how does this impact tesla? >> we will look forward to that. thank you. and thank you all for watching. "closing bell" starts right now. hi, everybody, welcome to the "closing bell" i'm kelly evans at the new york stock exchange. >> happy monday. it is for bulls -- by the way, i'm bill griffeth. biotech has been a big story today. that sector getting crushed on the back of a "new york times" story on drug price gouging, one company in particular was highlighted in that. then presidential candidate hillary clinton tweeted out saying that she has a plan to take on the drug price gouging that she sees out there. we have much more on this coming up in a little bit. you see the index is down over 4% right now. >> honing in on apple because a major cyber attack on the apple
itunes app store has malware affecting apps developed in china, could other parts of the program be at risk? we have a top security expert. >> what are those of us with ipads and iphones supposed to do with b. it? >> plus new data on existing home sales falling more than expected and now jpmorgan chase is making a move that could put another damper on home sales. that story is also just ahead here. let's start with biotechs getting slammed. those stocks down as you saw there after that "new york times" article on specialty drug price gouging during pharmaceuticals was pro filed in that piece after it raised the price of one drug from $13.50 to $750 per dosage. now, the ceo was on last hour, you told me go terrell that he would not be changing that price tag. >> we definitely planned on
raising the price, that's for sure. we paid a very, very large amount to buy an unprofitable medicine. we can't continue to make -- to lose money on the drug at that price. so we took it to a price where we can make a comfortable profit but not any kind of ridiculous profit. >> how about that. bertha coombs is at the nasdaq market site. >> if you take a look at the inter day chart you see it coincided with hillary clinton's tweet right at about 11:00 this morning. you know, express scripts, other pharmacy benefit managers have been reeling against high priced specialty drugs but in this case it rubs people the wrong way because this is an established drug, a drug that's been around for 60-plus years, used in the treatment of aids patients, you heard there the ceo defending the pricing, saying that they needed to raise money to improve the drug. certainly not appeasing critics today and that is sending biotechs overall down as people worry whether this could be the final straw that gets folks to
think about regulating drug prices. hillary clinton certainly saying she plans to take it on. she will, quote, lay out a plan to take it on tomorrow. so likely to be another day tomorrow when biotechs will be in focus and under pressure. back to you guys. >> thank you very much. let's talk more about this with len yaffi who is managing director of stock doc partners. len, thanks for joining us today. >> thank you for having me. >> you know, one person's free market price something another person's price gouging. what do you make of this move by turing and the response not only in the "new york times" but by hillary clinton? >> i think in the case of turing what's done is totally inappropriate and we had an example of a company about four years ago called quest core that did a similar thing with a drug that had been around for many decades when fda approvals recall under different circumstances and different regulation and i think whatever
can be done to reverse that m s massive price increase should be done. in terms of what hillary clinton said, she's focusing on the specialty pharmaceutical sector of the drug city and these are drugs that are often used for multiple sclerosis, oncology, hepatitis c and rheumatoid arthritis. they represent 1% of the prescriptions, but 31% of the dallas spent onpharmaceuticals so they tend to be more expensive. the issue i have with her focusing on that is if you look at our healthcare system, which i really think needs to be reformed, it's a $3 trillion entity. of that 12% are drugs and of that 31% of the specialty pharmaceuticals. so only 4% of the entire healthcare industry spend are specialty pharmaceuticals. so focusing on that to any extent will not change the growth curve in healthcare.
>> even if that's the case, len, and it's always important to put it into perspective you just told us you think this price hike is ridiculous and should be reversed. this is this a turing specific in your mind or does it apply to more companies broadly? >> in my opinion that's very specific to turing. this was a price increase of a massive magnitude and happened again with another drug four years ago. sfu look at the drugs and specialty pharmaceuticals, drugs for roim toyed arthritis, oncology, the my prices may be disappoint to go investors and to consumers, but the price increases on an annual basis are not nearly that dramatic, they are more on the order of 6 to 12%. so i think that the issue with turing is a terrible example of what can happen in the free markets, but i think the specialty pharmaceuticals that have come out in the last 14 years have done a great job at improving healthcare.
>> quickly before we let you go let's talk to investors for just a second here. what do you make of the biotech stocks, were they overvalg lewd, was this sell youf justified? >> when the biotech index, ibb was around 400 i had said i thought it was about 30% overvalued. it's corrected 15% and i think we are in a bottoming process between 280 and 350 where we will separate the haves from the have notes, it will be very volatile as we're seeing as we are at the upper end of that range and there is a slight overvaluation, any kind of negative potential news can cause the stocks to sell off, but i feel tremendously favorable about companies like regeneron, gideon, angen and i think that the prospects for those companies in particular extremely bright. >> do you think, len, that as an list has told our meg terrell these names if medicare is given
the ability to negotiate more with drug companies it said that some these biotech names could fall another 20%. do you disagree with that view or do you think that discount is already baked in? >> i think that that discount is not baked in if in fact the medicare negotiating is allowed to go through, which was specifically prevented from happening under pardon d implementation, then you would have to look at certain drugs that have used more in the medicare population, for instance, the pcs k-9 inhibitors that are coming out soon are not used significantly by medicare, whereas other drugs in oncology and inflammation are, so you would have to do drug by drug but that would have a negative for the entire drug industry. >> len, you are not excused official aechlt thank you very much. >> thank you very much. >> such an important topic. st. louis fed president james bollard on squawk box earlier this morning.
he did say what his vote would have been at last week's meeting. >> i argued against this decision, i thought it was time to move and i actually would have dissented on this decision. it's i think inappropriate to react to financial market turmoil, you know -- >> in china. >> in china. these things can go down but rally back a couple weeks later and then people say, well, are you going to now change your policy again? >> let's get reaction in our "closing bell" exchange today. joining us jim lowell, ben willis and of course rick santelli is in chicago. what do you make of that? the aftermath of the fed meeting and market response, it's been topic a since that time. what do you make of it? >> well, we didn't expect the fed to raise rates although we kind of hoped that they would to put another bullet back in their chamber. we did think that if the fed didn't raise rates it could
signal that they were maybe more concerned about the state of the global economy. at the same time i think it's exactly right to suggest that the u.s. economy remains in reasonably good shape, good enough shape for the fed to be able to raise rates and i think we will see them do just that because this year runs its course. >> ben, one interesting theme from what james bullard was saying was that the sfed was basically pushed around by markets. what do you think happens here with their december rate hike if we stay at levels here the s&p is at 1969 at the moment. >> i believe that the fed is going to have to demonstrate at some point that they have a backbone, that they are not the whipping boys or girls, if you will, of the other major money decision-makers, meaning the imf and world bank and the ecb. i still hold that this is a mistake that the idea that the fomc is the sent subtropical bank to the world it will go
down as a huge mistake in history and that they missed an opportunity yet again. for the overall market i think the pressure we saw selling quite frankly friday had more to do with the expiration than the actual move from the fed. there was a great deal of disappointment but again we get the fed being able to talk out of both sides of their mouth today with fed heads talking saying -- bullard saying he would have dissented but lockhart and like saying i'm still going to vote for t we weren't ready then. the markets have had plenty of time to adjust to the idea of rates naturalizing and coming into line so in case the market -- the economies do start to wobble again they do have the ability to adjust it rather than negative rates that are about the only thing left in the quiver. >> all the parts and pieces of the puzzle keep moving on us, rick. the 30 years press ri sharply down. the dollar has been higher today, oil has been strong, now equities are also strong. what do you make the markets and what's going on here?
>> well, i think the biggest variable i would pay attention to would be the dollar. up over a penny. up against all the majors right now, pretty much all the seven currencies we have in the futures markets and i think it gives us a lot to by this with regard to what the fed because because in the end if the euro ends up weaker much of what they worried about with their activity that they didn't do in raising rates to effect a particular and a stronger territory is occurring anyway. and when you consider we are all here debating about the left hand, the right hand. i will tell you what, no corporate board ever behaves like fed officials, maybe that's the way it's supposed to be but it certainly does seem like a very disconnected group. but in the end if they are so worried about international, why don't they try to at least put forth some type of discussion as to the globe has taken on 57 trillion more of debt since 2007, growth has been outpaced by debt as a form of gdp growth
since '07. so if this is their stance, exactly what are they going to do to correct it because the way i read the markets and the way i read the statement, my guess is that we're going to have a global rescission, if not a servicing problem with debt because much of it is dollar denominated and a strong dollar aggravates the situation. but i don't see how it's not going to get aggravated either way. >> and jim lowell, a government shutdown wouldn't help. begin all of thighs cross currents and uncertainty about whether they do raise rates this year what are you advising clients to buy? >> we continue to think there's a lot of safety in the u.s., especially in the larger cap camp. we continue to think that europe and japan present invest i believe opportunities for true long-term investors especially in the hands of good active managers like jed wise of fidelity international growth, for example. we are staying away from china, staying away from the emerging markets, we think there are more falling knives there that we don't simply want to be under and trying to catch. we are really focused on
established markets, rule of law, transparent marketplaces as a way to safely navigate what we fully expect to be much more volatile times. >> and speaking of which, ben willis, what will cause that volatility. >> what's the catalyst now that we have the fed meeting? it's an eternity until december assuming they are not going to move through the october meeting at this point. >> i think the biotech story is by far and away the most important story to follow. healthcare has led this market higher since mr. obama was elected president on the platform of changing the way we deal with healthcare and those people that have invested in it have become very wealthy. what we are starting to see now is the uncovering of how that happens. i would love to see cnbc do a full coverage the way they covered greece on what's going on in the biotechs, why mergers and acquisitions happen. you just had a ceo of a company come out and say we spent a lot of money to buy this company, we're justified now in our pricing mod snool exactly. >> so you will have -- don't forget, hillary clinton has been
through this before when her husband was elected president, she had a situation where she was in a hedge fund that was shorting the healthcare stocks. that's -- would be a great place to carry a story to see what kind of exposure she has in the funds that she has invested in at this point. you have the republican side will now have to address if you think obamacare is that serious an issue how are you going to deal with a situation where you see price gouging as part of the mergers and acquisitions pricing the part of the market that has driven this market. this is a big, big story. >> ben willis our new -- >> executive producer. >> managing editor here telling us what we're covering. thanks, guys. >> appreciate it. 45 minutes to go until the close here. nice day for the dow, up 141 points. even while those biotech names have been under pressure that's affecting the nasdaq more today which is only about a quarter of a percent higher, 12 points. the s&p meantime dealing with interesting reversals like we saw in lenar today which
currently down 1%. we will have more on that shortly. the s&p up 12 points at the moment. >> apple pulling malicious apps from the itunes store after a major attack. this may be unprecedented. we have a cyber security expert to explain how worried consumers should be about this coming up. >> chase mortgage explaining why the bank is taking giant leap out of the fha loan business. stick around his for his sub prime comments. the e-class has 11 intelligent driver-assist systems. it recognizes pedestrians and alerts you. warns you about incoming cross-traffic. cameras and radar detect dangers you don't. and it can even stop by itself. so in this crash test, one thing's missing: a crash. the 2016 e-class. see your authorized dealer for exceptional offers through mercedes-benz financial services.
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welcome back. some of the market movers today, we have pandora higher, what a day they have had after a report that it won a favorable preliminary ruling by the copyright royalty board essentially that ruling will allow pandora to pay lower costs for content. so shares were halted at least twice today after a rapid spike triggered circuit breakers, the stock now up almost 7%. paypal has been upgreeted from a buy to hold. the analyst calling paypal's one touch feature a critical innovation that could drive growth numbers by the end of this year.
he has a $40 price target on the stock which today is trading at $34 plus. apple removing malicious apps from the itunes store. josh has more on this story. >> when it comes to hack attacks even the most vulnerable company is not immune. hackers made their way into the app store and specifically targeted messaging app we chad as well as the ride hailing app which is an uber like service. apple provides developers with a set of tools to create apps. one of which is called x code. now, in china it looks like some developers used a counterfeit version of x code because it downloaded more quickly. hackers were able to modify this counterfeit version and then plant malicious code on to the apps. so once downloaded these compromised apps could prompt fake alerts to phish for user date at that or exploit vulnerabilities in the ios
system. apple has removed the apps known for create with the this counterfeit software and there is no evidence that any user data was actually stolen, but ryan olsen, director of threat intelligence at palo alto networks tells me apple's reaction is the right one. he said this app looks to be contained but we can also be sure that other hackers will move in and copy cat this technique. the only thing we don't know is how successful they'll be. back to you. >> josh, thank you very much. joining us for more on this hack is joe lumas. do we really call it a hack if these guys got duped into using a counterfeit code. it's not like the hackers made their way into the app store themselves. they duped somehow the developers themselves to use the counterfeit code. what do you make of that? >> it's actually the hack is attributed to the actual authors of the application itself. so it's kind of a by-product. i'd say apple is taking
by-product of exactly what happened at these organizations. that's the scarier part. we're starting to see hackers get into organizations that develop these apps and then deploy malicious software that they think is legitimate and then step away and let them do all the dirty work for them. it's a brilliant scheme, but the bigger problem is detection. you're looking at a true pro january horse capability. that's why there is a bigger concern. apple is going to have to start really attacking this with much more force of scanning their products for these applications on the app store and i was talking to caleb at blue box and they inn crypt apps and try to protect apps from being reverse engineered. a lot of arps are showing up at counter fits all over the place. you are looking at the landscape of mobile application security changing very rapidly. >> joe, that's to be expected, though, amid the huge popularity of the app store. so at this point what concerns should we as users have? what more do you think apple if
anything needs to do or is this simply a case of as the threat changes you have to respond to it? >> it's both. consumers need to trust that the companies they're getting these applications from are actually doing best practices to protect themselves from these type of companies. in this case it's not apple's fault that the authors of the software is where the malicious software started although i can envision that now apple is going to start scanning applications as part of their vetting process before they make it to the consumer market and i think they are going to start penalizing organizations for not having best practices in developing code. >> let me just advance it a little further. for those people out there like kelly and i who have apple products, we've gotten nothing from apple at this point. we don't know which apps we're talking b they've identified three somehow that have been affected, but there are more, there are hundreds of these apps that they pulled off. we don't know whether we've downloaded any of these. what are we to do as apple
users? >> unfortunately right now that is something that you are going to have to wait. unfortunately -- or you are going to have to deploy some type of mobile application security. there's products like lookout, there's products like agv anti-virus, there's products like sofos. sofos has a mobile application that you can scan your phone for any malicious activity. that will scan all your applications and i would actually -- if you really want to be hyper paranoid, delete all your mobile apps. what they will do is scan all your apps as you are installing them, looking for any malicious code. >> it would be nice if that was part of the next upgrade or somethin something. >> thanks, joe. >> thanks, kelly. >> the market here, the dow is up 125 points, the s&p 9, the nasdaq 5 about 37 minutes to go. >> coming up, all aboard. railroad stocks have been having
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failing to hold on to early gains, the home builders better than expected earnings overshadowed by a report showing weaker than expected existing home sales overall. that stock on an otherwise up day is down 34 cents. >> let's get more on the report. diana olick has the details. >> august home sales lower than expected. take a look. down nearly 5% month to month led by steeper drops in the south and west, those are the regions where home prices jumped the most. the median sale price nationally was up 4.7% a year ago, up 6% in the south and 7% in the west. first time home buyers are having a hard time with those higher prices and with qualifying for a mortgage. the low down payment fha loan is a first time buyer favorite, but the nation's big banks have all but gotten out of the business because they keep getting sued by fha when these loans go bad.
chase mortgage which is the nation's second largest mortgage lend sr not even in the top 100 of new fha originators. i sat down with the ceo this morning to talk about why. >> we've significantly reduced our fha. if you look we are not even the top 100 fha lenders. if my dat it is social security over 80% of new fha origination right side done by nonbanks. >> do you even want fha loans anymore? >> they are down to a 520 fiek co and you only had to put 3.5% down. that's sub prime lending and we are not in the sub prime lending business. >> chase will do some fha loans but only with much higher fiek co requirements and they charge much more so really borrowers wouldn't want them. meanwhile today in a speech ginny may's president was talk being all those new independent lenders and he said he was asking for more money to police those nonbank lenders doing these loans but so far congress
has said no. back to you. >> diana, just to add another blow here for housing potentially, we have the huge star wood colony deal which is basically a bet on rentership in this country remaining as low as it is today. >> it's a big bent on rentership, i don't know that it's a blow to the housing market in general. it is going to give more renters more ability to get more homes because they say they can help with pricing power there, but it's again a big play on the rental, the single family rental market we've been talking about so much. >> all right. thank you. our diana olick on the housing front. >> let's get to a cnbc news update with sue herrera. >> the white house said it was, quote, quite concerned about the reports it's seen on volkswagen's compliance with the clean air act but ultimately the white house said it is the responsibility of the environmental protection agency. last week the epa said there was software in some vw u.s. cars that falsifies emissions tests. for the first time the u.s. may
abstain from voting on a united nations resolution demanding the lifting of the cuban embargo. this comes as the u.s. and cuba recently reestablished diplomatic relations on all 23 previous votes the u.s. has voted no. the next vote is expected next month at the annual u.n. general assembly. is it divine intervention or just bad timing? pope francis's trip to the east coast may cause delays in the delivery of apple's iphone 6s and 6s plus. in new york, philadelphia and washington, d.c. where the hope of course is visiting. ups one of the biggest shippers of fichlt phones sites heightened security measures for potential delays. >> speaking of apple looks like american kids love them. apples for almost 20% of all fruit consumed by kids in the u.s. rises to 30% when apple juice is included. you are up-to-date, back to you
guys. >> thank you, sue. i'm just thinking about the drones that might help solve this delivery problem of iphones in the future. it's going to be crazy gridlock around here. >> yes, it will. i'm thrilled the pope is coming, but -- >> u.n. general assembly -- >> plus it's the u.n. general assembly week. i know we sound like we're complaining but we are not. welcome, pope francis. >> 30 minutes to go into the close here. the dow is up 138 points, the s&p adding 10, the nasdaq adding just under 7. we will keep an eye on that nasdaq. it's only up by a tenth of a percent here as biotech is underperforming. >> how about this barons article over the weekend slamg gopro. we have a stock brawl on whether you should be buying db pro's dip or is there more of a dip coming. coming up after this.
going negative on the nasdaq that has just happened here, down about 6 points and continuing lower. all of this amid a rally in crude oil again today, rallying amid the drilling slow down in the u.s., drillers have cut the number of operating oil rigs for three consecutive weeks. less supply, price goes up, that seems to be what's happening up another 3.7% on wti crude. >> bill, thank you. gordon is here with me on the floor. we're losesing altitude here what's going on? >> coming in here a little bit imbalance. still to the buy side but not egregiously so. we're anticipating we will hold them around here. this is the way the markets tend to be, they fade in and then will take off later. >> later do you mean you think they could take off again right into the bell? >> we were up close to 150 on the dow. we will probably see more strength before we are done today. >> what does that tell you about
friday's negative session? why does the world look different today than it did after the fed's decision thursday and friday? >> last week was an emotional week. it was a fed decision which people were looking at and focusing on but you also had a quad witch and you had reweighting going on here. friday was a busy day, you knew the monday afterwards was not going to be as remarkable. i was surprised at some of the emotion we had coming in here. it seems to have dissipated somewhat. it's the end of the third quarter coming in a week's time and then you start to get ready for fourth quarter. october 8th which is the same thing as the event in this history the rows en blatt global exchange leaders conference, something i'm sure people are excited about. i know i am. >> i am guess you would be participating there. biotech, how big a story is this today? it seems like one of those that is not staying in terms of the pain just in its own sector. >> it's one we will have to
focus on. we've been starting to see action in certain sectors, biotech is one that we are focusing on right now, is it true, is it just a collection correction, is it some moment did you mean play? >> all right, gordon, we will let you get back here. >> and the emotional gordon charles up is there. railroads taking hit with the s&p railroad industry group down about 25% year to date. so what we're asking is is this a good time to get in and ride the rails or is there more down side to come? jeff reeves thinks it is time to get here, he is here along with collin worths who is saying not so fast. i will start with you, mr. bear, on the railroads yes. they are down but the economy is recovering? the fed tells us and oil prices have been down net net this year. wouldn't that be a recipe for higher rail stocks? >> you might think, yes, but one of the things we know is that
there's an old adage, a stock gets cheap and then it goes lower. so when does one say today is the day? one could have tried this three days ago or a month ago. there is a lot of correlation between the s&p energy sector and railroads. ever since opec said we are not going to cut railroads have been basically in a free-fall. the recent bounce in railroads, we are up about 10% from the august 125th low is just in line with the bounce in energy stocks. we would rather let someone else do this first, we are happy could no, ma'am in tenth or 12th but we don't want to be the first guy through the door. >> jeff, why do you like the transports here, the railroads specifically? >> i'm taking a little bit longer view on record stocks. warren buffett, bill gates are big holders of railroads, gates is the biggest shareholders in canadian national. i think you can kind of be a little early to this trade, i'm
not going to pretend i know when the bottom is going to land in railroad or crude or anything but i do think investors can find decent value, the pe are 12 to 14, dividends 2.5 to 3 and you also have to ask yourself opportunity costs. if you're look at other assets, you're going to go consumer staples, campbell's soup trades for a forward digit of 20. i'm not going to act like it's all clear to take a ride on the reading but beats some of the alternatives particularly for long-term investors looking for income and will give them a cyclical upside when we see some of this negative around energy pass. >> he is taking long-term perspective, doing the warren buffet thing as it were. >> one can get bailed out by time. you could be early for two years. what we do know is that v bottoms are exceedingly rare and we are at this bottom three or four years ago, if we were to
continue at this rate of assent it would be a v bottom. we would let those who believe there is some value start to act and let the thing start to bottom out. before we can figure out it's going up we have to make sure it's not still going down. >> jeff, is this still to you as much a barometer of the broader economy as it once was or is there something else going on here just in terms of the valuation, the great pro spects specifically? >> there is a balancing act. the biggest thing in railroads has been the drop in coal and oil. you had the report to show is that the rig count continues to decline. i will say i expect the third quarter is going to be a little rough we will see easier comps come in after we bake in some of these pain in the energy market, some of the drawing down on the local oil rigs. so, again, i don't think that i'm necessarily two years early on, might be a little early, you have to ask yourself what are the opportunities.
you could go to cash or could continue to chase these high flying momentum stocks with 4 ps that are in triple digits. if you are the warren buffet crowd looking at 20 years you could do worse than the income in consumer staples where high pe dividends of 2% as opposed to low pe dividends of 3. >> good to see you both. thanks for your thoughts on the rails. by the way, i don't know if you saw, but they announced today that alaska oil investment fund that they have, the payout each citizen of alaska this year as a result of what's going on with oil an pumping each citizen gets $2,076. so you are paid to be a citizen of alaska. >> we knew that, i didn't know if maybe it was going to collapse because of what's happening with oil prices. that's why you have to hand it to norway. 900 billion sovereign wealth fund built on oil which they are mostly exporting. they have a nice cushion. >> you have to hand it to norway. that wasn't exact lit response i
expected from kelly evans, but you never know what to expect and that's why we are here on "closing bell" as we head toward the close the dow is up 92 points, but the nasdaq with those biotech stocks heading lower right now. >> by almost 10 points. barons says danger ahead for action sports favorite gopro. we will debate the future of the pham ra company stock next. >> still ahead jeffrey tambor one of amazon's biggest winners at last night's emmy awards. we will see if their golden is that stus give it a leg up on netflix. coming up. you get an industry leading broadband network and cloud and hosting services. centurylink. your link to what's next. which means you can watch movies while you're on the move. sitcoms, while you sit on those. and even fargo, in fargo! binge, while you lose weight!
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welcome back. shares of gopro tough session down 9% today. barron's latest article doing serious damage to the stock calling it, quote, a one product wonder comparing it to blackberry and saying gopro could call to $25 a share, that's just $1 above its $20 ipo price. >> he agrees with the barons article he is our resident bear on this. alex gonna has a buy rating on gopro and $105 price target on the stock. good to see you both. alex, we will start with you. what did barons get wrong?
>> well, i think that barons pointed out that there's competition coming from smart phones. that's something that was in effect well before gopro even got into this market so it's not race k factor in our view. j and p would argue the opposite, that the smartphone popularizing of social networking and imaging is a boone forego pro because gopro is a perfect companion device for anybody who is an athlete or r or has an active lifestyle who are has children, those are the kind of things you will be capturing with a gopro and won't be risking your investment in smartphone hardware. the other thing is there really is no competition showing up. the competition is going backwards, sony is a broken brand, not making it in the market. you look online and see gopro still on top of all the camera charts, whether it's best buy or amazon. gopro we think has a great holiday season ahead of it and still is a brand that can go a long, long way. >> chris, do you agree they are a one trick pony? >> i do indeed.
i think this is a story of iterations versus innovation. if we look back this isn't the first time we have seen an action camera like this, cisco stride to do the same thing with the flip camera. granted gopro has take continue to the next level but even gopro knew when they went public they stressed it was more than just the camera, it was the media. when you look at the media side of things their website traffic peaked last december and has been going town. there's somebody else out there that already does t i don't think google wants to sell youtube so i don't think you are going to see success in the media area forego pro and that's a lot of what investors were buying into after the achlt r ipo. i do think this is going to end up being a one time pony. >> this reminds me what people have been saying about those wrist bands. >> fit bit. >> the fit bit that you wear, that that's a one trick pony but yet that stock keeps going up and there are those who feel like it's going to diversify, come out with new models for different applications and i think gopro has the same idea, don't they, chris?
>> i think to some degree, yes. bill, let's also take a wider position here and look at t i think there's something bigger going on which is the ipo status, whether it's fit bit, which is kind of falling back here lately, whether gopro or alibaba all of these ipos have been struggling and that's a little bit of a warning sign that, again, iteration versus innovation, let's see new products out there. >> alex, we have to go. do you still have $105 price target on a name barons thinks is going to 25 and currently trading at 32? >> kelly, we do and it's because we do fundamentally disagree. this is an innovative company, it's an image testify brand t can go a lot of places in media, it's made investments in virtual reality, it has the session that fits into new rigs for virtual reality. there are a lot of places is this brand can still go and we think it's going to get there. it's in a whole other league than when you mention blackberry in our view. >> it better be, i guess.
>> thank you both for being here. 12 minutes to go. keeping an eye on markets, dow back above 100 points, nasdaq almost back into positive territory, s&p up 7. >> dennis lockhart the atlanta fed said an str rate hike could still come this year, but cathy jones of charles schwab says market not looking for a rate hike this year. we will get a reaction when we come back. hey! hi! our cloud - it's a platform based on awesome-ization!
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about eight minutes left. the dow up 96 points, nasdaq has been pulled lower by biotech stocks. we will get to that later. joining us is charles schwab's fixed income strategist cathy jones. we've seen a steepg on the o curve, the yield on the 30 year was down. you feel like the market is backing away from expecting a rate increase even though there are those out there who feel like we still could get one before the end of the year. >> we could get one by the end of the year, they've obviously said that over and over again, but the question is what's going to be different three weeks, four weeks, five weeks from now that's going to change the way the fed looks at things.
>> the stock market, i mean, for one we don't have the august turmoil that people have been referencing. >> they're looking at credit spraeds, the dollar, looking at financial conditions, which is largely credit spraeds and currency spects and those two things are still moves in the wrong direction. maybe they will settle down and reverse, but at this stage of the game they are still moving in the opposite direction. i'm not saying it's off the table, i'm just saying i doubt october is in play. we will have to see how december looks. >> are they adding too many ingredients to this? initially they were saying we need to see unemployment -- we need to see inflation expectations reach 2% and full employment. we seem to be at full employment, we are not the inflation, but now we're getting these market turmoil worries about china and so forth. >> i think they've always watched financial conditions it's just rarely that important to overrule some other factor. so in '99, '98, '99 time period when we had the emerging market crisis they held off on a rate
hike because of financial conditions, global financial conditions. i think it was the tequila crisis in '99 if i'm not mistaken. it happened to be my birthday, that's why i remember it. it's not unprecedented but it's unusual that's elevated to the point of overruling other things. >> all right. cathy, thank you for joining us. >> thank you for your thoughts on that. >> bob and i will have the closing count down as we recap what had been a pretty good rally today. >> stay with us. this bale of hay cannot be controlled. when a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. faced with horses that needed feeding and a texas drought that sent hay prices soaring, the owners had to act fast. thankfully, mary miller banks with chase for business. and with greater financial clarity and a relationship built for the unexpected, she could control her cash flow, and keep the ranch running. chase for business.
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welcome back. three minutes left. bob pisani is here with me fort closing countdown. a wild day. it was off to the race this is morning. this is the dow today, up almost 200 points then when word got out about the price gouging or the biotech index went lower with the turing price increase and then hillary's tweet and all that, so that took the wind out of the sales of the rally. this is the ivb biotech index from i shares and it's finishing the day down 4.5%. that was a key feature in today's market action. another one in the treasury market, you saw the shield on the 30 year just continue to go higher today. for a time it was up 11 basis points, here it is up 9 to 302.
as the market seems to be backing away from expectations for a rate increase right now, bob. >> not to rail against the fed because i don't like doing that, but here again we missed a great opportunity and we are back where we started from. what do we have over the weekend? fed officials out saying the rate hike is on the table. >> yes, and bull lard saying this morning if i could have voted i would have voted for a rate increase. >> and how close and contentious it was. this is my point about last week and i know i was on the wrong side of it but they missed an opportunity to do something so we are back doing the same thing. >> the question i have is what is the catalyst from here on? >> earnings. >> for a while, right? >> i was happy about leonard today, i think the numbers came in good for them. pricing was up, sales were not, maybe not as much as all the bulls wanted, we will get nike later, autozone, these are companies that are consumer companies this week that have slightly different reporting seasons than everyone else. we need to be ahead of this and
i'm terribly concerned that the top line growth isn't there. again now we are negative 2.5, 3% revenue growth. i'm also worried about the financials. about a quarter of all the earnings on the s&p 500 are financials. most people don't know this, about 1 slrks 4. earnings of the s&p 500 are financial stocks and i don't particularly see it happening. they're expect tg to be up 7, 8, 9, 10% compared to the same period last year. i don't see it happening. they're expecting growth on the interest rate side on higher interest rates. we know that's not happening. loan growth is okay, but i don't see it and i see bank earnings estimates coming down at this point. i expect them to come down a little more as we get closer to earning season. that worries me a little bit. >> that's what i want to see. i want to see top line growth and we don't have it. >> try and sleep well, though. don't let it worry you too much. anyhow, stay after very typically quiet day after a quadruple witch. >> we go out with a rally, a bounce from that selloff on
friday. stay tuned, we have more on this selloff in biotechs and a response to maybe what hillary clinton is going to propose for pricing tomorrow. plus a very interesting story, who really is in charge of fed policy, the fed chair or the stock market? that's coming up on the second hour of the "closing bell" with kelly evans. see you tomorrow. thank you, bill. we will come to the closing bell, everybody, i'm kelly evans, we're kicking off the week with the do you up 126 points, by far the strongest performance of the three major indexes, s&p 500 only adding half a percent or 9 points, the nasdaq eeking out a gain of 2 points, a little less less than that is correct 4828 is the level there. it did dig into negative territory biotech concerns as bill alluded to weighed down
heavily on some parts of that market. let's talk about all of this now as we continue to digest the federal reserve's lack of policy moves last week and so much else with the panel today. we have mic santoli and sara eisen, guy adami joins us as well. guy, i want to bring us something we're watching the news headlines on. prospects of a government shutdown amid all of this. has it gotten enough attention? is it going to happen and what's that mean for markets and for the fed? >> has it gont enough attention? we're talking about it so it's getting attention. i've heard it over the weekend. what does it mean for markets? people will downplay it and then the market reacts to it. i don't know what it means for the markets and i don't know what -- the bond rally would have continued so the backup in rates has me scratching my head,
but here we are right around that 2.25 percentage in ten year which has a pivot point for quite some time. i do think yields go lower you a bu today has my scratching my head on a number of different levels. >> alley the 30 year. the longest part of the yield curve jumped that yield back above 3% on a day when people are buying the dollar which usually supports them buying treasuries instead of selling them off. there are a lot of interesting different moves. >> parts of the treasury curve have been moving along with crude oil prices that might have been one of those chews excuses long-term inflation expectations have been moving with the day to day price of crude. also a general reversion trade, stocks got relief from friday's selloff and we got a modest turn around, the bounce today in stocks was unper sideways sieve, it's better than nothing, volatility did come? a little bit so you were helped out in certain areas. i think all these rallies are running on nothing but hatred. basically negative sentiment is
so extreme. we have a test on whether that's enough to get us more than one a one day bounce. >> sara, part of this i guess to your point, mike, is the dollar, the dollar index up a point. i mean, that's a pretty big moch for a monday. >> it perked up today and has been up strongly since the federal reserve decision. the narrative today on the fed seems to be shifting toward a more hawk i wish position and there is still an interest rate hike on the table. whether you are going to listen to jim bull lard on sidewalk who does not have a vote but has made himself clear that he would like to see interest rates go higher. existing home sales weren't too great but there is this fundamental belief that the u.s. economy is on track and that perhaps we will get an interest rate hike which it seems like, mike, i don't know that that is being interpreted as a good thing for the symptom market. >> people came into this week with lots of overheated theories on what the fed was up to here and i think today's morning
comments were a reminder that nothing necessarily radically changes, it was a close call, still on the table, somewhat soon, somewhat later not really a change. >> i guess that's why i bring up the question about a government shutdown, if we're talking about honing in if not october because there is not a press conference, but december, what are the events between now and then that could push them just enough over the edge just like we saw with the markets in august to say, hey, do you know what, now isn't the time? >> it's definitely a good question. i think the markets have put congress in that category of things we don't have to worry about so maybe they will have to worry about it. is that might come right ahead of what's now become an expected first quarter slow down in the u.s. economy. so i don't know that those are the big swing factors but they are out there. >> although we have been here before with congress. even though the chances are rising for a government shutdown we've been here before and investors have brushed it off and looked past it and focused on the federal reserve snoot taper was 2013 which would mean that happened in december the
same year as the government shutdown. >> after the fiscal cliff. >> exactly. let's pivot and talk about biotechs, the ibb closed down 4% today. we will hear more from hillary clinton tomorrow. how radioactive might this area of market be for now? >> extraordinarily so now. this dove tails a lot of the things that kyle cass has been saying. she comes out and makes these comments. a space that was under pressure seemingly recovering last week now finds itself under pressure again. over the weekend you heard chatter about potential m & a, potential mergers, that all went by the wayside on the back of these comments. how radioactive? extraordinarily so because the rhetoric will continue. whether it's baseless or not or founded in truth or not doesn't really matter. the market will do the sell first ask questions later motif. >> what do you do as an investor, guy, if you are in biotech that's one thing how do you react? if you are not in biotech as well does this complaining at
all because you know it's been a momentum play, you way that you view the most attractive parts of this market. >> i think that's the question. what i will say is sometimes the etf drives the individual stocks and i think that's what you're seeing taking place now. the etf, ibb is driving the price of the individual names. the stocks that we talk about all the time on your show, gilead, amgen, those are tremendous companies, the most expensive which is amgen is really not expensive when you look at the space historically. they will have great balance sheets and tremendous pipelines, the problem is people will sell first, ask questions later and that's what we find ourselves in. if you have sort of the tamarity to get in the space these stocks are attractive but the pressure will continue to mount. >> speaking of headlines, there were fresh headlines from atlanta, fed president dennis lockhart saying the fed will be ready to raise rates as soon as the market settles down. so who or what is actually in charge of the fed right now?
eric chemmy took a look. >> the fed's decisions are almost entirely based on the stock market. if you look at the data from deutsche bank going back a few years they have a point because in the last 20 years the sfed has never hiked once, not once, with the market down year offer year. deutsche bank said by that logic forget the dot plots, obviously we know the dot plot is where the individual members pin their expectations for rates. they said focus on the market. if the s&p 500 is below 1989 come december, expect another hold. now, the most amazing point might be the following, from 1994 to 2011 if you only owned stocks for eight days a year you would have made 80% of the total rise in those 17 years. those eight days that mattered, the 24-hour period before each fed meeting. the average gain was half a
percent. deutsche bank's conclusion, it's very hard to say which is greater, its fed's influence on the market or the market's influence on the fed. >> we will ask mic santelli that very point. that was the point of your piece today, who has the greater influence, who is the dog and who is the tail. >> we don't know what the dependent variable s what the independent variable is or just really they are react to go similar forces, right. forward looking take on the economy and all the rest of it. so i think we just got through this storm of intention on the fed and i think it probably was overstated exactly what the role is in terms of what it means for the market going ahead, but obviously the fact that the market was upset beforehand is a problem. >> she had a direct quote, janet yellen did in the press conference, kwoetd, the fed should not be responding to the ups and downs of the markets and it is certainly not our policy to do so so even if they are they're certainly saying they are not. >> she certainly has to say that. the market was react to go certain things going on in the world. >> and look at lockhart today.
in a way you get a tell from some of the other fed members. you heard dennis lockhart who is somewhat middle of the road when it comes to the fed ideology saying it was this august period of market turmoil that had us worried, that just -- that kept that decision from maybe going the other way. >> i think that extends to commodities which could have deflationary signals which is part of the federal reserve mandate and extends to the dollar which we know they have been worried about and bond market. it's not just the stock market. the fed does get a lot of criticism for responding to the stock market moves. >> at inflection points it's always going to be ambiguous, kind of a touchy situation and when it's a close call and they seem to want to err on one side or the other that's what you have. >> i like your point, mike, what you were saying is maybe what's happening is the interest rates reacting to the price of crude oil. if there's one thing -- a couple different factors, stock market, there's inflation, the reports have been horrible, the expectations are not there for
inflation to get back to the fed's goal which she was explicit about last week saying we want it to be 2%, maybe you see, i don't know, a $1.50 bounce in the price of crude per barrel and they start to think maybe that will get us there. >> i'm saying that the machines know the correlation is there right now and that's what seems to be moving it. >> guy, listen, what parts of the market here do you think are the best bet for this kind of unusual backdrop we now have for the next couple of months? >> you have to look at things that have been trading well now with the volatility. there's one name specifically that's been trading well if you look at it, facebook is quietly back to 95 bucks, doing everything seemingly right in their earnings release, you try to look for seems that have outperformed on a tape that has been less than stellar. another name in the content space, is lion's gate under michael burns' leadership. that stock was north of 40 today, gave a little back, but that's another one of those names. there are few names out there. the thing to focus on are days
when the tape is lousy, look at names that outperform. i do think although this biotech selloff will probably continue for a couple days you are going to get tremendous opportunities in names like selgen. bristol meyers, gilead just to name a few. >> what do you mean this market is running on hatred? >> i meant that the negative sentiment has been so profound and extreme that you're getting everybody saying i can't be a seller here, everyone else is too negative. you don't see a lot of other things that are bullish catalysts except for the fact that people have been so skeptical. >> we are going into earnings. that could be it. >> it could be at some point. day to day right now things get stretched to the down side, people leaning against the market too hard. >> everybody, thank you. guy add amy, threw. be sure to catch the rest of the "fast money" crew. they're asking one tesla investor why investors are so cared about the potential of an apple car. you may be shocked by just how much one pharma company has
nice day for tech and financials. let's tend send it over to dominic chu who has a market flash. dom. >> -- by about 1.25% on 22000 shares worth of volume. jack in the box up 1.25%. after the company has authorized that it has authorized a new $200 million share repurchase program that's going to start in their next fiscal year. the ceo saying that the new program boosts the company's confidence in its business and growth plans. again, more shareholders -- point out, though, for context shares are down 6.5% year to date, up 18% over the last 12 months. back over to you. >> more activity after that fed decision. thank you, dom. ak zon one of the biggest
stars in hollywood at last night's emmy's, it won five awards and is casting a shadow over netflix. for more on what this means for netflix let's bring in u self qualitiy. and michael pack card joins us as well. yousef first to you. what do you think about the awards handed out and how much a tell are these for the stocks? >> look, i think it was a great day for the stop steamers, certainly hbo was was the big winner, if you look at netflix or amazon, amazon in particular, the number of nominations was impressive. they didn't win as much as we thought they would win. 46 nomination ss a huge increase from last year. overall i feel good about over the top guys in general. >> so you are not worried about netflix begin that it took home relatively fewer prizes this year? yousef? >> yeah, i don't think it's a
netflix versus an a.m. surgeon. i think it's a netflix and amazon and hulu, et cetera, versus the traditional linear tv. i think it's materially better than it was before so three years ago these guys weren't even in the game of producing their own content. this year they were contenders. i think that's a huge positive. >> but, michael, you think this is a bad sign for netflix, correct? >> i think yousef is right, the story is really the ott guys against linear television. netflix has as yet to produce any of its own content so i have to correct yousef on that, amazon owns its content, netflix is producing other people's content they don't own the rights. hbo won 15 creative awards and netflix won 2. that's how distant or wide the gap is between the two. i think many investors think of netflix as the next hbo and the truth is hbo is the next hbo. they have much, much better content, it's going to last for
many, many years. >> we saw that in the awards ceremony. michael, i find your position on netflix so interesting, the bear on one of the most loved stocks and best performer in the s&p 500 for 2015. is the problem as you see it putting aside the awards and how many emmy's they took home this idea that they're spending so much to acquire subscribers and on these original series that they are just not reaching the kind of critical mass that would lead to profitability? is that your bear case? >> you know, they certainly have critical mass, they just don't have it all in one place and i think that a lot of the bulls think international is a place. in fact, i think they need more than a million subscribers in any country to justify the content deals they're signing. they are there in canada and in the u.k., they're probably not there anyplace else. so this myth that they are going to be profitable internationally is a myth. they will be contribution profitable which is a made up term by netflix t ignores their over $400 million of tech spending and that tech spend
something to deliver their content. their content costs are going up much faster than subscribers are going. i don't think they will be profitable internationally. i think the market has overvalued this one. i don't get donald trump, either, so i'm definitely in the minority. >> yousef, you suggested that this is not properly viewed as a zero sum game necessarily but what does netflix specifically have to do to stay relatively relevant? they don't want to replace the entire cable network bundle, they don't have to be better than hbo in every respect. there a bet to be indispensable enough and have just enough originals to people people wanting to have it as one of the services that they pay for? >> look, it's a matters of a value proposition, we think netflix is one of the best value propositions on the line. for less than $10 you can have access of a repository of hundreds of thousands of titles. two, we think that to michael's
point earlier in terms of profitability, all you have to do is do an analysis, look at how much profitable they are in the u.s. already and this is not a made up term. there are a whole bunch of other internet companies that use the same contribution profit terms. so on that basis the u.s. is already highly profitable at some 35% penetration. canada they were able to add over a million users [ inaudible ]. >> streaming business. u self squally and michael pack ter. a big name reportedly dropping out of the presidential race. >> nbc news's chuck todd has confirmed that wisconsin governor scott walker will remove himself from the republican presidential campaign for president of the united states. he will do that at an event scheduled for 6:00 p.m. this evening. walker one of the early republican favorites in this broad presidential field failing to gain traction throughout the
summer, we saw his poll numbers sliding, we saw some dis affection among his donors over the past week or so and then he really had a make or break moment at the debate last wednesday night and failed to break out of that 11-person format debate up on the stage that cnn hosted last wednesday night. so scott walker now the second major republican candidate to remove himself from this race, kelly. >> eamon, wow. guys, reaction to this. >> i guess given that he was polling so low it's not as if there are a lot of supporters to be reallocated across the field. i think there's another remind that are this is not going to be a nomination that's driven by the elites who decide who is a great mix of attributes. this is it. he had the early lead among those pundits. >> it's also a reminder that the debates matter. because he was having a lot of the lead and the momentum leading up to the gates and then he barely performed. that's why it's going to be so important to watch cnbc's the next time. >> you can watch the next republican presidential debate
on cnbc, it is october 28th. you won't want to miss any of that. later on in the show hear from jeff son felled on who he thinks carly fiorina was a terrible ceo. again, that's all coming up. how can the price of a lifesaving drug go from under $14 to $750 overnight. that's next. look out tesla. bob luntz tells us whether apple has what it takes to dominant the electric car business. stay tuned. or stop to find a bathroom? cialis for daily use, is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours.
big pharma stocks getting hit hard today as the dow is up 125 points. merck down 2% pfizer 1%, j and j down a third of a percent and the biotech index down 4.5%. a drug used to treat a life-threatening pair sit tick infection received a massive price inn december, up to $700 per pill or more creating outrage from the media and shall contenders. meg terrell has the story and spoke to the ceo of the pharma company making this move. >> so essentially what's going on here is there is this drug called deraprim, it was approved in 1953, it's been around for a long time. used on few patients but is an important drug for that population. a company called turing pharmaceuticals bought the drug this year, raised the price from $13.50 a tablet to $500 a
tablet. that is raising the ire of a lot of folks including infectious disease doctors who say they are having trouble accessing this drug for their patients who need t hillary clinton picked up this story, tweeted it out and said that price gouging like this is outrageous and tomorrow she will lay out a plan to take it on. that spooked a lot of spokes. down 4.6% at the close. folks are worried that when she lays out her plan or if she is elected that she will do things like giving the u.s. government the ability to negotiate on drug prices. i was speaking with an list at bernstein who said if that actually happened that could cut drug industry valuations, including company stocks by 20% across the board, analysts are skeptical this could happen. we did talk with the ceo of turing pharmaceuticals. >> we definitely planld on raising the price. we paid a very, very large amount to buy an unprofitable
medicine. we can't continue to make -- to lose money on the drug at that price. so we took it to a price where we can make a comfortable profit. >> so it's saying they need to be able to make a comfortable profit and also telling us they're planning on using those revenues to make a better version of the drug. this ceo had another biotech controversy has been in and out of the headlines in the last few years. >> he's going to become a lightning rod for the political focus on this whole area. so the risk as one of our guests last hour put it there's a difference between a high cost for drugs and massive price hikes for existing ones. is it a half and half split? which are the companies trying to justify r and d and which are the ones slapping high price ons existing drugs. >> a lot of companies are taking on a lot of risk to develop drugs and have to be able to charge high prices in order to just die taking on that risk,
other people say that turing raised the price to where other orphan drugs are priced. this drug has been on the market since 1953, no real innovation went into what this company did to t there is a lot of question behind it. >> i find it interesting that the market moved on the hillary clinton comments. maybe she is doing better in the polls than we think she is according to the market. also does the president really have any power over this? even if she were to get elected, isn't this a congressional decision? mike and i were talking before the show, maybe this speaks to how fragile the sentiment is around biotech. >> i think a lot of people say even if the president wants to give medicare the ability to negotiate drug prices getting it through congress is a whole different question. >> that's a point. meantime, we have his claim that he had to raise the price because it was an unprofitable medicine. is that going to hold water? is this a drug that was somehow subsidized by its prior owners because they had other profitable businesses and he just said we're going to take
this on and make it a handsomely profitable, whatever the term was? is there any validity to that claim? >> it's a great question, something we addressed in the interview, biotech companies work for things for decades. regeneron was unprofitable for 25 years, now it's turning a profit. when we address that had with him he said we are not a biotech company, we are a pharma company and we need to be able to make a profit to keep operating. >> was it an unprofitable drug begin they overpaid for it with the intention of raising the price? on what basis was it unprofitable before? >> the people who were making it were they selling it at a loss? >> it does save lives, right? that's the other thing, how do you put a price on that. >> that's right. that raises the question do we need a better version of it? that's what turing are saying, do we need a better version and they say we do. >> more, again, as you have heard from hillary clinton tomorrow. stay tuned, everybody. time for a cnbc news update. let's get out to sue herrera.
>> here is what's happening. speaking of the campaign trail, there will be one less gop presidential candidate. nbc news says governor scott walker will announce he is dropping out at a necessary conference scheduled for 6:00 p.m. eastern time in madison, wisconsin. a national poll had him at 0%. the former owner of a gar peanut company stewart parnell stasis a life sentence for knowingly shipping salmonella peanuts to customers. the 2009 salmonella outbreak killed nine and sickened hundreds. more than 2 million muslims are expected to gather in saudi arabia for the heart of the annual hajj pilgrimage. it lasts about five days t includes a series of rituals meant to cleanse the soul. saudi arabia has deployed more than 100,000 security personnel to oversee that event. i have always wanted to say this, a moose is on the loose in upstate new york. it found its way on to the
streets of troy and it's a big one. authorities say the 8 foot tall young male moose swam across the hudson river, took a bit of a stroll. wildlife officials tranquilized him and brought him back to the woods. he is a beauty, but i hope for his sake that he stays -- whoops, there he goes -- stays away from troy. he is okay. they tranquilized him, took him back to the woods. >> what a guy, swam across the hudson. man. troy is a nice play. >> wanted to take a little stroll there. >> better a moose on the loose than escaped convicts this time. >> definitely. up next, former gm vice chair bob will you tell us gives us his take on the volkswagen candle. then carly fiorina's biggest krit sick jeff sod felled to react to his jump. we thought we'd be ready. but demand for our cocktail bitters was huge. i could feel our deadlines racing towards us.
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welcome back. here is a look at how we finished the session on wall street. the dow adding 125 points, smaller gains to the s&p and nasdaq, up 8 points and just under 2 points respectively. apple reportedly speeding up its time sfabl for an electric car, set ago target launch date for 2019. former general motors vice chair
bob lutz, he joins us with his reaction. bob, great to see you. is apple doing the right thing here entering this market? >> no. i don't think so. if i were a shareholder i would be very upset because they are currently engaged in a very high margin business. the automobile business at best is a very low margin business and you can't show me one company in the world that to date has made a nickel on electric cars. they are generally money losers and the only reason that everybody is producing them is because they are necessary to meet european fuel economy regulations and u.s. fuel economy regulations, but there is absolutely no reason to assume that apple is going to be financially second susful in the electric car business. >> i'm glad you brought up that aspect of it. why do an electric car?
do you think they will be able to bring some sort of approach to it given their experience in batteries and consumer devices that's at all going to change the economics of this in the next couple of years? >> no, first of all, apple has no expertise tease in batteries, they won't make batteries, the specialized companies like batteries. when it comes to actually making cars there is no reason to assume that apple with no experience will suddenly do a better job than general motors, ford, volkswagen, toyota or hyundai. i think this is going to be a gigantic money pit, but then it doesn't matter. apple has an embarrassment of riches, they don't know where to put the cash anymore. so if they burn 30 or $40 billion in the car business nobody is going to notice. >> bob, some of the speculation surrounding this initiative is that perhaps apple could use third party manufacturers the way it does with its consumer devices.
is that in your mind at all feasible to have another company manufacture the actual vehicles if they are going to have to do that? >> well, yeah, they kochlt they could get hyundai, kia or a japanese or chinese manufacturer to manufacture the cars for them and then they would put all of these software and their interconnect tift in it afterwards, but i don't see the advantage to that. i mean, if you take a look at what goog sl doing, google says we don't want to manufacture cars. we just want to be the suppliers of all the equipment to enable total car connect fifth and to provide the software and hardware for the ought mouse cars which are definitely coming. that's one thing. but then to say, well, we are going to do it with an electric car, which is from a cost standpoint the toughest way to go and, by the way, the electric car market still minuscule, that just doesn't make sense. >> i know, bob, why wouldn't they just take the traditional fuel approach? i'd actually like to know how
bad or high are the fuel economy standards that that's not even viable to them or is it because they're targeting the worldwide market, including europe, where it's just not worth developing a vehicle that won't meet those standards? >> well, i think that one of the things they probably hoped to do with their electric vehicles is to sell the -- to sell the electric vehicle credits to other manufacturers who need them and currently for tesla that is the only large sustainable source of revenue that tesla has. they're losing a ton of money on the cars so maybe that's the calculation. but i will tell you what, if i were a board member of apple i would -- i would ask some serious questions about this whole thing. >> speaking of serious questions, bob, i wanted to ask for your reaction to the volkswagen scandal, the biggest car company by sales today admitted that it's been cheating for years on u.s. air pollution tests. what is going to happen to vw? >> well, i hope -- i assume is
that the government is going to come down on them very hard because unlike toyota, unintended acceleration, and unlike the gm ignition switch scandal, if you want to call it that, those were acts of you could say negligence or lack of proper oversight, but this was willful cheating. i mean, this is like a deflating footballs or taking drugs in the tour de france. this is willful. to me that makes it a lot worse. to me it vind dates the engineers at gm. before i left gm i was always asking our engine engineers if volkswagen can do it why can't we? they kept saying we don't know. we cannot believe that volkswagen is passing the 50 state -- >> but what was it like from what volkswagen did. >> you could argue, well, it depends how serious you think diesel pollution is. it is described as a hazard to
health and possibly it is because these cars were emitting up to 30 to 40 times the legal limit of oxides of nitrogen which is a particularly harmful pollutant. >> do you think there will be criminal allegations, bob? >> it seems to me if it was willful misconduct and to me willful misconduct has a good chance of being treated criminally. >> bob lutz, thank you for joining us. good to hear there you. >> okay. thanks. >> carly fiorina surge to go second in the polls after the last gop debate. no everyone has switched their vote. up next jeff sonnenfeld on why he does not think she should be president thanks to her track record at hewlett-packard. netwok and cloud and hosting services. centurylink. your link to what's next.
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and flexibility. with centurylink you get advanced technology solutions. including cloud and hosting services - all from a trusted it partner. centurylink. your link to what's next. my next guess bending a piece in "politico." that's caught the eye of donald trump today. today he tweeted out a link to that piece. joining us is cnbc contributor jeff sonnenfeld who found himself in the cross hairs of the last debate. >> thanks, it's like being in a wwf wrestling match between the two of them snur' willing to take it on. this is a lengthy piece that addresses many of the points that came up in the debate. here is a central question, though, i have for you. the track record of businesspeople as president is actually not all that great. why does it matter so much if
the track record ever carly fiorina was not all that great in terms of her bearing as a president? >> no n. most countries in most continents all cultures folk heroes have had setbacks, there's nothing horrible about failure. as a matter of fact, it's failure that punk waits a successful career, whether or not it's political leaders or ceos, you name your great ceo and we could fill the rest of the afternoon talk being his resilience to adversity if they have made it back. with her she is in a perpetual state of denial. for her denial is not more of than a river. she doesn't get the idea that you have to acknowledge your mistakes, she shoots the messenger regularly, she has a very high handed style, she insists that black is white and hot is cold and that losses are gains. she sliced shareholder wealth in half. the company is worth half the value it was when she got in there. she got reward $100 million for doing it and continues telling everybody what a triumph it was
to staple together the carcasses of obsolete cast off businesses. >> if she got up there and said i made mistakes but who out there could have seen the revolution in tech coming or something like that or maybe shear is kwha would have done differently but instead by saying no regrets that to you is what's wrong with this? >> they've done that all the time. when al milkahey took over, took a sick company and brought it back to life, carly fiorina took a healthy company and made it sick. ann milkahey said things are worse than you thought. mark fields of ford saying we are not blaming you, we're blaming us. he showed devastating towns and plants being closed and he said it's because we made the wrong mist iks and you are paying the price. it builds trust and credibility. jamie diamond he was the hardest on himself. is it wasn't the senate that would beat up jamie dimon, jon
stewart used to beat up on jamie dimon. >> jeff, one interesting thing about this campaign is that people are putting themselves forward, at least couple of them are as great business successes in a sometime when the public doesn't necessarily think of business heroes and something they want to follow. donald trump is seizing on your work on carly fiorina. how would you characterize his success or lack thereof as a businessperson? >> well, you know, business leaders are, again, actually on the edge of folk heroism. we may not want to acknowledge t but at the turn of the last century and now again is the way we used to look at sort of the edisons and fords, we have that with zuckerberg and steve jobs and of course in many of these folks that -- people who have started new businesses, revived great enterprise right side a source of great energy and excitement, but in fact its the
aidel man trurs prompter shows business leaders tower over public officials, however, you are right, mike, to ask the question about do we talk about setbacks enough? i think trump is making a mistake. i think he shouldn't talk about the art of the deal, he should talk about another book he wrote called the art of the come back. it was an excellent book. >> yeah. >> people ask about his favorite book in the bible he should talk about the book of joeb. it punk waits a great career. people who are on the rebound. that's the is a ga that should be told. >> jeff, let me ask on that point as well, i mean, what you are saying about in a sense people being, you know, honest about what they've been through in life and the lessons that they've learned. do you see that same humility in hillary clinton? >> this is a problem. bill clinton by contrast most times when he wanted to be the effective bill clinton and wasn't parsing words, but when
he wanted to like a marshall art would he take the full vector of your attack and own t he would say it is worse than you think and here is the way it is. he would reframe t he would own the attack and criticize himself to it and hold high standards, again, the monica lewinsky situation was an sbepgs. most times under pressure i managed to own the criticism. it is a shame that hillary clinton continually gets caught up in these trends, these denials, these you don't get the full story. it is not mastering the problem and, no it is not her strong suit, being defensive that way and you get caught up -- being defined by scanned dals. >> and in your piece i know that you explain your relationship with the clintons, which carly fiorina suggested you were on their payroll. it's interesting your perspective on the person of hillary clinton there as well. have to leave it there. >> that's another thing about carly fiorina she likes to blame the messenger. she always likes to deflect and make the story about me.
i'm not running for president, she is. >> trump got your title wrong, too. >> oh, my gosh. dean of the law school, he gave me job of dean here, which i'm not, i have a boss and i had dinner with the president of the yale last night, i'm glad he didn't give me his job. med school would be okay. >> we got a lot of job shifting this afternoon. thank you for joining us. the art of the come back, good to see you. that's jeff sonnenfeld much more of his piece on "politico" today. biotech is booming. up next, we will go behind the scenes of one that is disrupting the drug discovery and development process, this as the sector remains in the market's cross hairs. you're watching cnbc, first in business worldwide. opportunities aren't always obvious.
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welcome back. this week we're running a series called designing disruption. it looked at those disruptor 50 list. julia boorstin is joining us with a look at the unconventional approaches and different places that encourage different thinking. julia? >> well, kelly, the number one company on the disruptor list moderna has a revolutionary approach to bio tech. the drugs reprogram your cells
to fight disease. it has tackled a wide range of problems and a model it learned from the incubator it came from, flagship ventures. it takes an unusual approach to discover disruptive ideas. >> big technology disruptions are neither predictable or planable nor efficient. the only process that i was efficient familiar with is a process of variation selection and iteration, basically from this evolution. >> flagship ventures creates proeto companies. only 10% are fully funded start ups. >> if you give them money the competitiveness goes down. and they think is this the right thing to be working on. >> moderna used flagship's approach of constant exploration as part of the business model. today it has 63 drugs in development. unprecedented for a company its age and size.
>> we make an investment in science. we have no ideas if it will take three months or six months or if it will work in our lifetime. >> we create absolutely value creation in these companies. >> flagship is still very much involved with the moderna flagship. they think of themselves as co-founders of the companies not just investors and because of the process they are never shifting gears of one area to another but in a constant state of what he called evolution. kelly. >> julia boorstin on moderna for us today. and i mean, again, against the back drop of biotech as a sector today in the market, having the worse session in over a year. >> and the idea that because of all of the innovation, the radical advances, no price is too high to pay, i think we're going to have a question of that. there is no shortage of new companies or doctors trying to get into the game. >> and i love the remarks that
followers say if there wasn't a market to award a 30 times valuation to some of the emerging biotech companies you won't get some of the most amazing cures, if you want to call it that, that you are seeing it out there. do they have a point. is there a danger of throwing out the baby with the bath water. >> it creates a public good down the road, within intended circumstances. >> but to your point, the technology is profound. and if you talk to doctors about the new drugs, the biotech companies chrks is different than traditional pharmaceutical companies are doing is sinno vative and the high valuation. and i find it internationaling that janet yellen called out biotech a sector in that famous monetary policy report. >> or riding on the rails of the cable boom, the fiber boom of the late 90s, even though that ended badly. the pope arrives in the u.s. tomorrow afternoon. pope paraphernalia is on the streets and line, from
u.s. soil tomorrow. he will travel from washington to philadelphia, and then here to new york. the faithful aren't just lining up to buy tickets. they purchase souvenirs ranging from free-standing cutouts to dolls to flip-flops and of course the usual offering guys of more mundane mugs and t-shirts. what do you think about the business around the pope's visit. >> it is what america does. i don't know there is any great mass phenomenon that we wouldn't turnt into opportunities to sell. >> people are excited about the pope and the catholic church. >> and you go to the vatican in rome, every corner, you watch six feet and there is merchandise everywhere. i don't think it is inconsistent. thank you for joining. mark and sara eisen. thank you for joining us on "closing bell." "fast money" is coming up with melissa lee. >> we're talking biotech and dennis gartman is going bottom fishing in the oil sector and he's buying stocks and we'll
tell you which ones. you'll be surprised at what he is dying. >> this i have to hear. how is this the pope francis's visit going to effect you there at time square. >> no one in or out. we're staying here all week. we're camming out at the nasdaq. >> there is a show for you. >> a reality show. life from the nasdaq markets overlooking time square. i'm melissa lee. tim see more, steve grasso, karen finerman and guy adami. apple speeding up efforts to build a car and that has tesla motors slamming the brakes. what has them scared. and some believe the s&p is going to rally 13% by the end of the year. which stocks lead us there. but first price gouging. hillary clinton taking to twitter saying, quote, price gouging like this in the specialty drug market is outrageous. tomorrow i'll lay out a plan