Skip to main content

tv   Power Lunch  CNBC  October 20, 2015 1:00pm-3:01pm EDT

1:00 pm
>> too complicated. yes, it bounced off the 30 level. >> god, don't be in the stock. that's the yahoo take. >> keep an eye on baba goes, that's where yahoo goes. >> that does it for us. we'll see you tomorrow. "power lunch" begin right now. >> and indeed it does, scott. thank you, gentlemen. thank you very much. and welcome, everybody, to "power lunch." a ton of big names out with earnings right now. harley-davidson getting slammed on its results. marne half the dow members do report this week. and while we're still early into the third quarter earnings season, there are already growing fears about earnings in the next or the current fourth quarter. >> lucockheed kicking off for t defense stocks. with all the uncertainty over
1:01 pm
the debt ceiling and budget, can their winning streak continue? >> and the real read on the american housing market. one area that is on fire now and fueling growth for home builders. >> the third quarter reporting season is just getting under way. there are already fears about earnings in the current or fourth quarter. bob pisani on the floor, what is fueling the concerns, bob? >> revenues. and you're right. we're in the middle of q-3 earnings season. the professional community is already concentrating on q-4 and the guidance. and the guidance is a little bit troubling. it's two of the banks were okay. ge was okay. let me put up companies that indicated. the guidance is going to be tough or conservative guidance for the fourth quarter. it's not just one sector. we see mively cron talking abou issues. in the agriculture business, monsanto a week and a half ago talked about issues. the china consumer has been clearly impacting earning that's
1:02 pm
we heard a week and a half ago from young and wing ka seen yoechlt and in the commodities business, alcoa also indicated tough demand for aluminum. so what all this is creating, i don't want to concentrate on the earnings side, rev knees are the issue. it's a revenue recession here. so what we're seeing here, four quarters here, we're going to be seeing revenue object down side. q-1 revenues were down 3%. q-2 they were down. q-3 they'll be down. in q-4, the numbers are already negative. this is a revenue recession. now put up the problem for stocks here. what's happening here is the lower revenues are putting pressure on the margins. we've had tremendous margins. this is why the stock market has been holding up. 10.1%. that is near an all time record. but with the revenues keeping declining, we're going to see pressure on margins. when you have revenues declining, how do you keep the margins up? you cut costs. here is three companies today
1:03 pm
that talked about revenue issues. ibm, united technology, rambus, the chipmaker said q-4 revenue guidance will be 11% below consensus. those are big numbers that we've been seeing. back to you. >> all right. bob, thank you very much. we've had ibm after the bell yesterday. today, other dow members verizon, travelers, united tech out with profits. verizon and travelers beat. mixed quarter for utx. more than half of the dow components will have reported results. how have the biggest of the blue chip stocks been holding up? >> 18 stocks in the dow 30 will have reported the earnings by the time we finish out this week. you named a few. if you take a look at dow industrials, that's just about the time period when earnings kind of started. we're up fractionally. now all the things that bob pisani talked about, revenue recession possibly, some concern about earnings growth, cost cuts being put into place, year to
1:04 pm
date the dow is down 3.5%. gives you context there. ibm and then travelers, the two -- among those that reported earnings so far this season, these are the biggest die vernl divergences. if you take a look overall in this coming week here, wednesday, thursday friday eight more dow components reporting numbers. boeing, coca-cola -- >> these are big companies. we'll take that one out. >> eight others. >> it will be there some day. >> but anyway. >> that's what we got to look forward to this week. >> all right. >> yumm brands announcing ties to split the chinese operations into a separate company. yum china will be a separate brand. they'll have exclusivist to kfc, pizza hut and taco bell.
1:05 pm
they'll focus on expanding the chains around the world. the split come after a series of foo food safety scandals. the separation is expected to be completed by the end of next year. a lot of people have been waiting for this. >> all right. >> where sergio goes, i go. >> cubs-mets. >> that, too. >> the new report released minutes ago on auto reliability. they were talking a few minutes ago, a big setback for tesla. phil lebeau has -- well this is the right choice of words, breakdown. >> consumer reports does this every year. they ask all of the subscribers, those that have new vehicles, tell us what works, what doesn't work in your vehicle. they got about 740,000 vehicles that they then crunched the data on. here are the most reliable and least reliable in this year's survey according to consumer reports. top of the list, no surprise.
1:06 pm
lexus. followed by toyota followed by audi and there you have mazda. that rounds out the top four. the bottom of the list, that's not good news, especially for a man down at the nyse tomorrow, you're looking at the fiat chrysler brands. worst is fiat, jeep, ram and cadillac actually fell the most within this year's survey. one story line that's going to get a lot of attention is what consumer reports has to say about the tesla model s. because there's only one model they don't rate the tesla brand. but with regard to the model s this is the third year they had a commentary on it. for the first time, they're rating the reliability based on 1400 survey results as worse than average. what are the problems? here's jake fisher with consumer reports running them down. >> we're seeing all different types of issues. some of them are annoying issues. squeaks in the hatch or squeaks and rattles in the sun roof. we're seeing major issues in terms of the charging systems.
1:07 pm
the onboard charging stipulate. we're even seeing people who had to have the entire electric motor replaced. >> just a few of the problems that consumer reports heard about from tesla model s owners. we should point out if you take a look at shares of tesla, any time you have any manufacturer increasing production, you will have more flaws that pop-up. it's inevitable. people have predicted this for some time. as there were more model s being built, more of the vehicles being built, you would see more problems. >> can we put that stock chart back on? it's very revealing there in a lot of red numbers. is this what is known as initial quality or overall? >> predicted reliability based on ownership of the vehicles -- >> over time. >> over the last three years. >> is so it's not the first year experience. >> correct. that's why this survey holds so much weight with many people. the owners, owners are telling consumer reports this is what is not working with my vehicle. >> look at that dive. en that is just today. and look at the dive right now as you've been speaking there, down nearly 7% or $15 a share at
1:08 pm
$212. thank you very much. >> very telling chart indeed. to the elections now. former virginia senator jim webb planning to drop out of the democratic presidential race but maybe eyeing an independent run. he is holding a speech this hour. in the meantime, our chief washington correspondent john harwood is here. what is behind his thinking? >> i think his thinking is he hasn't made a dent in the polls. most people used it as a last line. >> he was annoyed, too. he didn't get enough time. >> he was annoyed he didn't get enough time. it was just an unusual debate performan performance. jim webb is about to decide this hour to drop out of the race and perhaps run as an independent. don't know if he's actually going to do. that let's get through the other campaign news. we have a new nbc news/"wall street journal" poll out today. the republican race is unchanged from the past. donald trump at 25%. that's up slightly.
1:09 pm
within the margin of error from the september poll. ben carson at 22%. marco rubio, 13%. ted cruz 9%. jeb bush 8%. you go to the candidates behind that, you have people like carly fiorina at 7%. mike huckabee at 3%. john kasich 3%. rand paul 2%. chris christie at 1%. that doesn't change any of the order of candidates in terms of who's on the first debate and the second debate next week in boulder, colorado. one thing we know that will come up in both debates are aspects of foreign policy, particularly our relation with our superpower rivals. donald trump has taken the lead in talking about china, insisting he is going to be more effective than president obama and president bush before him in cutting good economic deals with china. >> you made the argument that reason they're feeling economic strain is because the leaders are stupid. >> the leaders are incompetent, in some cases stupid.
1:10 pm
what's happening now where we allow china to devalue the currency constantly, where we allow japan to devalue. they just did a big devaluation. we allow mexico to really take so many of our companies. what they're doing is very smart but very bad for our country. >> now nearly all the republican candidates agree that we need to get tougher with russia in light of their aggression in ukraine as well as in syria. there is one exception. that is rand paul. he's the nonintervention candidate. he says it is crazy for the united states to get involved in a no fly zone in syria to keep russia out. >> i interviewed marco rubio the other day. he said on syria he supports a no fly zone. >> he was willing to use force against the airplane it's necessary to enforce that. we are really lucky he was never president during the cold war. reagan avoided a cold war by
1:11 pm
setting red lines like that, continuing to have communication. we did not try to get involved in an altercation with them. >> you're not willing to shoot down a russian airplane to keep it out of syria? >> you know who invited them there? syria invited them there and so has iraq. lindsey graham polled 1% which means he is meeting the criteria for our first debate at 6:00 p.m. along with bobby jindal and rick santorum and the former governor of new york. >> i can't wait for next weekend. not least because cnbc is hosting that presidential debate. once again, it is in colorado, october 28th, same day as the next fed meeting. john, you'll be there. thank you very much. z >> thank you. >> a big day of earnings. we have it covered now.
1:12 pm
morgan, you go first. not so good news from harley. >> no. the opposite of high on the hog. this is low on hog. they're hitting multiyear lows. it's down 16%. the iconic motorcycle manufacturer missed on revenues. they cut guidance which is on track to be flat down 2% from 2014. the u.s. market is still the company's biggest. they claim the largest share. that's been falling as well. they slid 4% last quarter. that is thanks to discounted competition and the auto cycles. those are the three wheeled car/bike hybrids. in light of all this, executives saying they'll continue to maintain a brand premium meaning instead of cutting prices to better compete, they're going to curb inventory to match demands. had is marking a shift in the strategy. they're outlining a plan to drive demand. invest. in 2016 will be two-time what was last year as harley rolls
1:13 pm
out a long term initiative to get more riders and sell more hogs. we'll be getting more detail on that strategy tomorrow with matt levatich coming on "squawk box" for an interview. >> i wonder how he's going to arrive there on sixth avenue. i hope he rides up on a harley. >> tune in tomorrow. we'll find out. >> morgan, thank you. jane has the story on lockheed. >> tyler, another solid quarter. there is signs of tension between lockheed martin and the number one customer. 2016 is going to be a rerun of 2015 in term of sales. still 11%. the forecast is not include the impact of buying sakorski. and it excludes the i pampact o what they'll do with the government i.t. business. in a surprise, lockheed is self-fund something programs while it waits on the pentagon including the next lot of the
1:14 pm
f-35. the jet now accounts for 20% of company revenues. if congress does not come up with a full year budget, the pentagon will buy 19 fewer jets this year. that will impact the company end of next year. it's also self-funding the next round of c-130-js based on a hand shake deal. the pentagon is refusing to provide more funding until the contracts are signed. management seemed a little bewildered about this saying the suppliers can't handle a break in funding. they're going to continue covering the cost. that is one reason the ceo said on the call she takes issue with the pentagon's criticism of consolidation saying you have to be big to be able to float the suppliers. she said it's not about the sizesize of the company, it's about performance. >> josh now on yahoo after the bell today. there's been an exodus of top talent from that company. today analysts and investors
1:15 pm
focus on three key metrics. that accounts for 40% of yahoo's business. the street looking for $390 million. they're excluding traffic costs. last quarter, net display revenue rose 3%. so was that the start of a new trend or just a fluke. and second, investors pay close attention to that net revenue number which is predicted to clock in at 1.$1.26 billion. that would be a drop of 6%. they say that is actually a potential tail end for yahoo unlike amazon or facebook. there are low expectations from the company. they also want to see yahoo repo report. they typically meet or beat that's number. >> thank you all.
1:16 pm
mandy? >> bullish read on housing. the red hot area that is fueling america's housing right now and also jane wells broke down lockheed's latest earnings. in fact, defense stocks have been a great play for investors. however, there is a lot of uncertainty over the debt ceiling and budget so could the sector's winning streak keep on going? we'll try to find out. turns romantic why pause to take a pill? 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. if you have any sudden decrease
1:17 pm
or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a free 30-tablet trial. whyour boss?ork for? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird.
1:18 pm
1:19 pm
welcome back. apple shares up slightly today after ceo -- actually, i'm go to correct that. it's up by 2% after the ceo tim cook said apple music has more than 6.5 million paid users. it's at $113.92. this will be the first time since late july. aetna and humana shares aproferring the acquisition of humana for $37 billion. the deal is expected to close in the second half of 2016. both of those shares moving lower. and western digital is in advanced talks to buy sandisk. the two companies may reach a deal as soon as this week according to reports. they're down by 5.3%. sandisk is up by 6%. >> the american housing market and big numbers out on construction today. what's fueling it?
1:20 pm
dia diana olick in washington. >> this is fueling it. apartment buildings for rent. mostly in high end urban areas. take a look at the numbers. total housing starts in september rose about 6.5% from august and are up 17.5% from a year ago. it is mostly apartment construction driving the numbers. single family starts basically flat for the month. just 0.3% to the positive. multifamily starts at 17%. now take a look at permits. future indicator of construction. again, pretty flat to negative for single family and multifamily is down as well. nearly 15% for the month. only down 1% in a year ago. so we're starting to see some moderating and multifamily construction only because there has been so much started in the past few years. why if rents are up 5% from a year ago and have been that way for six straight months, well, it is a tale two of apartment markets. baby boomers are buying for all
1:21 pm
this year socialability n the suburbs where supply is desperately needed, developors and investors don't see the desirable returns. as for single family construction helping out, getting more renters into homeownership, well builders may be confident right now but they're also being very cautious. single family starts remain well below historical averages. for more on the rent numbers, go online. back to you. >> we will indeed. >> thank you very much. diana olick. defense stocks are the ultimate safe haven. >> we're shifting from motorcycles to missiles. the industrial sector has been hammered this year with one notable exception.
1:22 pm
defense stocks have been defensive plays as investors rotated out of more cyclical industrial name. we've seen international sales and steadfast buy back activity. take a look at lockheed martin. it's down today despite an earnings feed and full year hike. the stock is up 7% so far this year. it is handedly beating the s&p 500. northrop grumman has done better. and raytheon gained as well. only about 4% so far this year. so in the short term, there are some headwinds. the biggest perhaps coming from washington. the fiscal 2016 defense budget is up in the air. many analysts do remain long term bullish on this group. companies announce cost cutting efforts, continue to buy back shares and stand to benefit from increased geopolitical risks.
1:23 pm
tyler? >> thank you very much. >> ferrari is gearing up for the red hot ipo. just like the cars, shares are not going to be cheap. should you buy in? we have the latest next. good. very good. you see something moving off the shelves and your first thought is to investigate the company.
1:24 pm
you are type e*. yes, investment opportunities can be anywhere... or not. but you know the difference. e*trade's bar code scanner. shorten the distance between intuition and action. e*trade opportunity is everywhere.
1:25 pm
. welcome back to "power lunch "oich it's a red hot ipo of the
1:26 pm
year and it is expected to price tonight. we're talking about ferrari. kate kelly is here with the latest. what is the guidance? >> it's looking good for ferrari. this is the most market excit e excitement that i noticed. the timing couldn't be better here. hours to go before the pricing is finalized around 4:00, investor demand for the race car manufacturer shares are quite strong from what i'm told. so much so that companying is eyeing a prying level as high as a3. they may go $52 which is the topst range. so pricing toward the top is a real victory. not only is that an upside surprise in today's challenging market, it's a rarety in u.s. ipos in general. looking back at some two decades of debuts on u.s. markets, only a handful have been priced above $50 in any sector. this is according to s&p 500 figures. among them, goldman sachs,
1:27 pm
google and alibaba. last week you'll recall we had two disappointing stories. first data, the payment processor that got a very large public offering. the target price was well above where they ended up pricing ultimately and trading. and albertsons, the grocery store chain that put off the new issue after a market reversal still kind of hoping to pull it together perhaps in early november. we'll see. kids are looking strong for ferrari. >> bob pisani lhas that sexy factor, right? >> it's not often you see a $250,000 product with a two year waiting list. i think that is working to their advantage. >> thanks so much. >> let's get to the bond market. you have reaction from the cme. it's been challenging to expand the range. today is a bit different.
1:28 pm
whether you look at 5s, 10s or 30s, all maturities, look to have the possibility to have closing yields at the highest levels since a week ago friday. a 1 1/2 week high. is it a lot of time? no. there has been significant compression in rates. look at intraday of ten, we're up five basis points. all other maturities are up four. look at boons. they jumped right over that 60 basis point mark. they're at the highest yield since the 25th of september. look at september on for ten year note yields. you can see we're knocking at the door of 2%. the fact that we couldn't really stay below it speaks volumes. think about the positions that are put looking for that to occur and over time, like today they're unraveling a bit. tyler? mandy, back to you. >> thank you very much. amazon announcing it is creating more than 100,000 seasonal jobs for the holidays. courtney reagan is here with the
1:29 pm
details. sorting centers across the country, that's a 25% increase from last year's holiday seasonal jobs. retailers including macy's, target, walmart are keeping seasonal hiring levels the same. but they're also looking for the type of workers. plus, amazon had a prehiring -- or preholiday hiring blitz already. hiring 25,000 full time associates in just recent months. like many retailers, some seasonal workers are hired as full time. now amazon says only tens of thousands of seasonal employees were hired on for full time roles after last year's holiday season. however, the key, of course, is finding 100,000 seasonal workers. the retail strategist has been saying for some time the big issue facing retailers this season is the lack of qualified labor, especially for the
1:30 pm
fulfillment centers and the competition that might be available. however, because amazon's process is so automated, some say amazon employees could be less skilled. what's acceptable? the silver lining for competitors could be that the seasonal workers and amazon doesn't hire on could be more trained for other retailers going past the holiday. >> have we ever gone back and really looked at whether what they say they're going to hire they ultimately end up hiring whether it's amazon, walmart or macy's? >> it's hard to know because they're seasonal. they don't have to go back and later disclose it. you have retension of some but end up being full time. when you hear about it is now when they'll say remember last year we said this. this is how many we actually hired. so most of them are pretty close. >> interesting. >> thank you very much. >> thanks. >> mandy? let's look at gold prices which are closing right now. keep in mind, they touched a 3 1/2 month high last week. today we're talking on another $4.30. flip over the board.
1:31 pm
take a look at silver, copper and platinum. there we go. we just flipped it. copper is the one slightly lower, ever so slightly. the other three are moving higher. let's go over to the nasdaq and find out what is happening with the teches. >> the nasdaq is down by .7% today. if it ended the day in the green it will be the fourth straight day to do so. it's not looking so promising. we're watching to the down side. amazon as courtney mentioned, down by 3% on that news they're going to be hiring an additional 100,000 workers this year to cope with the holiday rush. another big story, western digital. they're in talks to acquire sandisk for $80 and $90 a share. micron is another name that san dishealth care spoken to. that stock is down by 2%. they're moving in the opposite direction. it is the biggest gainer and up near 6% on that western digital
1:32 pm
news. we'll keep an eye on that. back to you. >> thank you very much. kate rogers from the nasdaq. >> check the mid caps this year. down but holding up much better than the big cap and small cap rivals s this the sweet spot for investors right now? we have three mid cap marvels flying high in these markets. plus, have a look over here now. they say to look at this one. hi. plus national retirement week kicks off -- how did i miss i was national retirement week? it does. it kicks off today. then ask you why does it kick off on a tuesday? well, five smart strategies to get you to your goal. that and more when "power lunch" continues.
1:33 pm
1:34 pm
1:35 pm
hi, everybody. here is your cnbc news update for this hour. a new nbc news, wall journal poll shows hillary clinton increasing her lead over bernie sanders in the wake of the first democratic debate. also, more democrats say they do not want vpice president joe bie tone jump into the race. he is ahead of sanders by a 29%
1:36 pm
margin. five people are dead after an early morning fire in a section of row houses in northern kentucky. three home were damaged and as many as ten people were displaced from the homes. the cause is under investigation. >> an estimated 500 south koreans were reunited with their family members for the first time in six decades. attending a banquet in north koreian resort town. people have been clammering for reunions but relate live few happened. a new national retail federation survey says while shoppers spend the same as last year for the holidays, they are planning to shell out more on themselves. the survey says they'll spend $132 on them self, a $5 increase. are we getting more self ish? i don't know. thank you. let's take a look at the markets right now. a soggy day. the dow is currently down by 24
1:37 pm
points. it will be doing better fit wasn't for ibm. at the nasdaq, down by .7%. s&p 500 is down by .3%. they do remain on pace for the best monday monthly gain since october of 2011. >> yeah, ibm is an issue. really the broader issue is hk. let's look at health care. the biotech and pharmaceutical area, we've seen weakness here. so tech is weak on ibm. consumer discretionary is fractionally to the down side. a good 50 points. the reason the dow is down is ibm at this point. obviously very strong earnings. very disappointing earnings. ibm is the weak link in the dow. we had the same problem with ibm on the earns in july. we had another decline of disappointing numbers for them. meantime, you heard -- i hope you heard kate kelly talking about ferrari. a lot of excitement down here. they're going to bring sports
1:38 pm
cars down. i understand vintage ferrari brands will be out. maybe pricing above the range. ferrari is not tip calf the ipo market. it is very unusual. you want to see what the ipo market is doing. look at the farm read. it priced 6 million shares at $8. now look where it's trading now. $6 and change. ferrari is a bit of an anomaly. we'll talk about that tomorrow and what is motivating all that interest in ferrari. back to you. >> all right. thank you very much. mid cap stocks have been outperforming most small and large cappers so far this year. dominick chu with the names that led the way. >> if you take a look at this the dow jones industrial average, bluest of blue chip. the small cap index is all down over 3%. then all of a sudden the mid caps hoeding up relatively low. they're down but only down 1%. if you take a look at some of
1:39 pm
the drivers behind perhaps the particular moves here, look at scotts miracle grow. one of the stocks that has not just one three month but year to date relative strength. they're positive so far. fertilizer seed, that sort of thing is up 4%. also another one, j.c. penny on the retail side. we've been talking about the retailers, j.c. penny stock, yes, it's been beaten down. it's up 51% just so far this year alone. it's in that mid cap index. the one we rarely talk about, we talk about nike and underarmor all the time. when it come to footwear this company, skechers is on fire. they're down 4% so far. take a look at this right here. well, that's a little bit wrong here. anyway, we'll tell what you is going on. an interesting story there developing about what is happening overall with that particular shoe brand. >> thank you very much. where can you find value this earnings season? jewel me is executive director of u.s. strategy at ubs and jeff
1:40 pm
klinetop from charles schwab. thank you for your time. what do you think of the mid caps? >> it's an often overlooked area. people tend to gravitate to large cap and small cap investing. there is value there. that's why you're seeing the performance. >> if you're looking around the capitalization world, would you go more towards individual stocks instead of focusing on any particular capitalization? >> yes, we're much more focusing on individual stocks. and having catsh on balance sheets and in a rising market in october as we earlier said, one of the best performing months in 2011, you tend to concentrate on the individual stories. >> what about you, jeff? what do you think of the mid caps via vee the small caps? which, by the way, have been struggling in recent weeks. i it this russell 2 k had a hard
1:41 pm
time getting out of correction territory. you have the large caps that faced things like strong dollar and slowing global growth. >> that's a great point. they're not heavily into manufacturing as some of the large caps are and they don't have the energy exposure the large caps do. it's a nice defensive place to be during the earnings season. you're not probably going to get a lot of disappointments there. expectations are high for next year. for earnings growth and pes are up there, i'd be more cautious here longer term than outside the earnings season. we're neutral on mid caps right now. preferring to focus on cyclical sectors across the capitalization spectrum. >> okay. a moment ago you were saying focus on the companies that have cash. i know you like biotech. they have lots of cash. but in general, with so much scrutiny on the sector at the moment over their drug pricing which could potentially slow growth, why do you like the
1:42 pm
bioteches? >> first of all, their earnings profile has been among the strongest going back a couple years. and we look at this political noise. and we think it's just. that political posturing in an election season. the likelihood of seeing legislation next year is low. you know, these are the strongest most consistent earnings growers in an earnings landscape that's quite volatile to begin w. >> yeah. last to you, jeff. europe, i know you're casting an eye over that area of the world. why and what should we be looking at in particular? >> earnings growth is a bit stronger over in europe. we've had more of an earlier rebound in economic activity. profit margins are lower. there is more room for them to rise. we have more momentum over there. and more attractive valuations as well. financials look really good. technology looks good as well. we expect the european market to outperform the u.s. by a small margin over the course of the next year. you may want to look there for strength in earnings. >> thank you very much for your
1:43 pm
good ideas. go to our website to see why jeff says the global economy will be better in 2016. we're hoping so. >> the trick or treat trade, one market pro says get into these three sectors before halloween. and we'll tell you what they are. today, we're seeing new technologies make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions. our population's growing healthcare needs present growing opportunities for our clients:
1:44 pm
to advance the future of medicine with digital, and improve the quality of lives. ♪
1:45 pm
welcome back. team health rejected a bid to combine with amsurg. amsur goerly 4.5%. shares of ibm hitting five year lows after disappointing q-3 results and lackluster profit forecast. at least nine brokerages lowered price target on ibm after that earnings report. and shares of lockheed martin are lower despite topping third quarter estimates. the pentagon's number one weapons supplier expect full year revenue at the forecast. the shares are down by 1%.
1:46 pm
>> financial chaos. wall street versus main street. political instability in washington. and a waning guilded age. that was the backdrop for the federal reserve when it was formed back in 1913. but the same issues resonate strongly today, perhaps, as they did 100 years ago. the new book is called "america's bank: the epic struggle to create the federal reserve." roger, welcome to "power lunch." i was struck yesterday, john harwood interviewed rand paul who called for the auditingst central bank. and mr. paul made the case that we put up with -- we would never put up with price controls over milk and eggs and gasoline and so forth. but his argument is that the federal reserve control the price of money. and we shouldn't put up with that either. what do you think? the fed has already audited what
1:47 pm
he and the other bill call for is much closer to strut scrutiny of congress the way the fed sets interest rates. i really question whether we want as a country to have elected politicians, some of whom seek re-election every other year to be deciding, you know, what's the best interest rate? actually, i question whether politicians who have to face their constituents want to be responsible for those decisions either. these were at the core wlf they debated the fed. who should run the federal reserve? bankers at the time thought it should be private bankers. woodrow wilson said, no. it's got to be president appointees. what should the money be? should it be private bank notes circulating or money that's strbted by the federal government? i think you have to have the
1:48 pm
government making the decisions. you want to be an independent organ as the fed is now and not people running on this. >> it is really independent? >> you know, it's as independent as congress will let it be. it's created by the congress, right? they could eliminate it tomorrow. congress did that twice in our history. jam madison, despite being a disciple of thomas jefferson signed the bill in the second bank of the united states. andrew jackson, a pop lift let that expire. and for 60 years, we were behind every other country in the world. every other country had a central bank to be a lender of last resort in a crisis. our banks were keeping their own reserves and going in the tank when there is stress. how many time do we have to learn that lesson? >> has the central bank become too central? not too power full but too central to our economic fortunes. has the legislative branch, the executive branch become too
1:49 pm
reliant on the federal reserve to bail us out of trouble? >> well, you know, that's a very good question. look, the whole forecast government has become more central to our lives than it was 100 years ago when there was a terrible depression in the 1890s. grover cleveland set people should help the government, not vice versa. an our attitude changed. the fed is much more up front and at the center of things than the founders, you know, could have envisioned. and it's more central. the fed was founded in 1913, the 12 banks existed for very physical geographic tangible reasons. they had to be physically near banks around the country to get them currency in time. the role of those individuals banks atrofied. and they've become more central. in the depression, it didn't work very well.
1:50 pm
that didn't work very well. i think we should be glad there was a strong central body in 2008 to say, hey, this system needs help and we're going to provide it. >> roger, thank you very much. good luck with the new book. it is called "america's bank." it ought to be on the reading list of all cnbc viewers. >> absolutely. in the latest incident of air rage, a pilot forced to make an emergency landing at lax on sunday night. and it was triggered by an alleged dispute between passengers over a reclining seat. it is not the first time and surely will not be the last. so if passengers can't keep their cool, is it time for airlines to ban reclining seats? we would like you to weigh in. can you go to cnbc.com/vote and give us your answer. you're watching "power lunch" on cnbc. first in business worldwide. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data
1:51 pm
you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.
1:52 pm
1:53 pm
welcome back to "power lunch." lexus tops the widely watched reliability survey. tesla stumbles and the shares are taking a big hit. kate kelly reporting ferrari's ipo will price at the high end of the range and the federal trade commission ending its investigation of walmart over
1:54 pm
products advertised as made in the usa. no action was taken against the retailer. >> only 61% of workers say they or their spouses are saving for retirement. how do you get that number up and make saving a top financial priority? we'll talk about that one next.
1:55 pm
why should over two hundred years of citi history matter to you? well, because it tells us something powerful about progress: that whether times are good or bad, people and their ideas will continue to move the world forward. as long as they have someone to believe in them. citi financed the transatlantic cable that connected continents. and the panama canal, that made our world a smaller place. we backed the marshall plan that helped europe regain its strength. and pioneered the atm, for cash, anytime. for over two centuries we've supported dreams like these, and the people and companies behind them.
1:56 pm
so why should that matter to you? because, today, we are still helping progress makers turn their ideas into reality. and the next great idea could be yours.
1:57 pm
only 61% of workers say they or their spouse are saving for retirement. fwhut week, folks, is national saving for retirement week. who knew? here with the trend and tips is matt summer. he is janis' director of retirement strategy. one of the lessons of this is start early and save often. give me that example about the difference between how much money you can build if you start saving it 20 versus 30. >> it is critical. for someone that starts at 20 and puts away $1,000 a year and stops at 29, they'll have more money put away than someone who contributes $1,000 from 30 to age 60. they put away a third as much, they end up with $10,000 more. >> they save for ten years as opposed to 30 years, the compounding ends them up with more. >> it's all about the time value of money.
1:58 pm
>> and 20 something's better listen. in my 20s, it was get cash, spend cash. when you get to 30s though, you say i want to be a millionaire when i retire. >> yes. one of the tactics that we suggest for 30-year-olds is to think roth. more and more companies are offering roth 401(k) plans. it's a great opportunity for people in their 30s. although you give up the detuction, the money will grow tax free. >> not only does it grow tax free, you withdraw it tax free, right? it's not just the growth that is tax deferred. >> that's right. >> if i'm given the choice between a roth 401(k) and standard 401(k)? >> my suggestion is for younger people to go with the roth 401(k). if there is a company match, the match will be made in the tax deferred bucket. that gives you an opportunity. >> are there income limits that apply to the ability to use a roth ira or a roth 401(k)? >> roth ira yes, there are
1:59 pm
income limits. as long as your employer offers that, can you take advantage. >> what is the focus that we need to think about when we get to our 40s? i'm listening carefully. this is me here. >> by the time we get to our 40s, we may have changed jobs a few time. >> that's common. >> people tend to leave the balances behind with their former employee. we suggest consolidating with your existing employer's plan or even an ira rollover. makes things much more easier to monitor. and much easier to achieve your goals. >> and the 50s and beyond which is my demographic, there are catchup provisions for roths and standard iras. what are they? >> so for iras, it's an extra $1,000 for 6500, for 401(k), it's $6,000. >> so take advantage of the catchup if you can. >> yes. >> matt, thank you very much. >> thank you. >> good to be with you. >> that will do it for the first hour. we're going to start to save
2:00 pm
now. >> yeah. we'll have to put a little money away. >> of course. >> catch up for those ill spent 20s of mine. >> brian, a man that would never not spend his years. >> don't put a little money away. there is new york and new jersey. put a lot of money away. thank you very much. hi, it's 2:00 on wall street. 1:00 p.m. in wrigleyville where the cubs take on the mets tonight. the dow slightly lower as big blue ibm gets a little smaller. hi, everybody. thank you for being with us as always. we start today with tesla. shares getting slammed after a could be assumer reports auto reliability survey cut the tesla model s to a worse than average rating. collin rush covers tesla. he has an outperform rating and $340 price target on that stock. collin, based on this consumer report survey, any change to either your rating or your price target?
2:01 pm
when y >> no. when you look at the rating, tesla is in line with the porsche. but then i think the number that we're looking at more closely is overall customer satisfaction. tesla is still head and shoulders above the rest. they're coming in at 97% satisfaction versus the next closest competitor which is the audi a-7. >> when this came out, the first thing i said to my producer kevin flynn, i said nobody's not going to buy a tesla that can want one and afford one because of this survey. if you want this car, you're going to go get it. honey, it has a bad consumer -- no one is going to say. that they're going to buy it y do you think then the stock falls 9%? why are traders so quick to dump or buy this stock? >> the stock lives in high penitentiarybly.
2:02 pm
negative news gets jooverblown. they're piling on to this trade. you're hit something critical levels at $212 that people are trying to test. the next level below that is $200. there is a lot of sent. in this. i think it's just going back to making mountains out of mole hills with the stock. >> recently more investors are are willing to punish the stock for bad news more so than give the stock credit for good news. we saw a couple of notable down grades on the stock recently siting execution issues going into the new vehicle. you yourself acknowledge this is a really sentiment and technical driven stock. if it does break $200, will you advise clients that maybe it's time to step to the sidelines? after $200, it's probably $181 which is the year's low. >> we think there is a still a lot of fundamental value here despite the trading opportunity.
2:03 pm
we want to hedge the positions out. $225 $200, yes, we would step in and buy the stock. >> so hedge meaning what? >> put options. calls our puts depending on your position to make sure you're covered on your overall exposure. >> all right. collin rush, no change to the rating or target. thank you for joining us. >> thank you. >> there's an old saying on wall street, pigs get fed but hogs get slaughtered. really refers to the risk of being overly greedy. but today a different hog is getting whacked. that is harley-davidson. hog is the stock ticker. they're down by more than 13% after it cut guidance due to weaker sales. joining us now is our reporter that covers the name. based on the news you're seeing, is this an overreaction on the sell side by traders and investors? >>, no harley lost considerable market share primarily to
2:04 pm
japanese who are taking the end in the fluctuation last year to cut prices, to increase discounting and increase promotions and laurnlg nnch new products. >> you're saying that yamaha and suzuki are taking share from harley? i thought it was a completely different purchaser? >> yeah, honda and ckawasaki as well. here in the united states, harley is losing share over the last several quarters thanked to the renewed competition from japanese as well as a couple european based manufacturers. >> any sign of turning it around? >> no. i think the primary reason why the stock is off so much today. >> what happened to that loyal customer, the harley-davidson
2:05 pm
life. they don't sell motorcycles. they sell a lifestyle. >> absolutely. it's an american icon, a global brand. and very well known. they still have half the market for heavyweight motorcycles in the united states. but thanks to the renewed competition, you have another competitor, polaris industries. i think this economy tigs is just a little too much, too soon for harley. >> we've had polaris on, we showed the indian bikes. the same for harley davidson on cnbc. is india cutting into harley's share? >> they certainly are starting to. polaris broadened the product offering. so that is yet another reason that harley is losing share in the marketplace. >> all right. good for polaris. thank you very much. >> thank you. >> big interview coming up tomorrow. matt levatich, harley sooeg. a lot of questions to be answered. hopefully he'll have answers. >> also making headlines, sandisk. sources note that hard disk
2:06 pm
driver may be in talks to acquire the chipmaker. sandisk trading higher by more than 4%. western gauis down by 7%. they think the acquisition is very unlikely. she joins us now. betsy, you cite kblicomplicated agreements with jby does that take sandisk off the market? >> thanks so much for having me on the show. it seems as if the deal is maybe getting, given all the bloomberg reports that there could be a deal much closer than we think, maybe it won't get done. it's hard to say. but bloomberg has been all over this and just came out with a report this morning that said that it could potentially be all cash.
2:07 pm
western digital is in the ssd business and the royalty business is well as well. that's 35% of overall revenue of last year's numbers for sandisk. so you're buying a lot of things that you just don't need. that's what really i think investors are struggling with today and the stock is going down. >> so ssd meaning solid state drives. >> that's correct. >> so if it's not western digital, this enwhat could it be? would sandisk find another buyer elsewhere? >> definitely, no question. if the stock were trading on the pure fundamentals, it is very weak. pricing is on a continual decline. if you look at the performance of sandisk in terms of revenue, it's been declining on quarter
2:08 pm
on quarter basis since request. q-4. they're looking for the capacity that sandisk has to offer. the problem is the real tradition alibieal buyers that out there, they would like that for the enterprise and like that for their pc business as well. and then seagate, of course, micron but i'm not sure how micron could even begin to afford an acquisition like that given how much debt they already have on their balance sheet of $6.9 billion. consolidation in the industry would be nice. once again, you have this really complex situation with the joint venture between sandisk and toshiba. toshiba owns, we believe, greater than 50% of the capacity which is very, very important.
2:09 pm
>> we fleed to do the same with the good calls, right? we made a pretty good one. back on september 1 st, that fim put out a note sowihowing when y have a awful august, stocks tend to rally. we had an awful august. since they put out that note, the s&p 500 up nearly 7% from its low of september 1st. we have head of energy free raiding. history accident always work out. did you a deep dive and said when august loses more than 5%, we tend to rally. so far, so good on that call. so nice job. do you see it continuing? >> thank you. i heard you say wall street saying reminded me about a squirrel and a nut. i do see it continuing. i do.
2:10 pm
>> we had anxiety about china and we had a horrible august ro rollover into september. what happens you is have a quick velocity move downward in august. many money managers are out. they're on the beach and come back after labor day and there's a real need to reconfigure the portfolios. we have another down draft and we retest the august lows which we did at the very end of september. >> try to do it without mentioning kris kringle. >> there is a great report that mass university put out in albany about three years back. what it said is globally, season alt from the winter months called from november first to april, all the returns were global. as a matter of fact, the six moves the year outperformed the balance of the summer months by about 6.25%.
2:11 pm
>> why do you think that is? >> it's an extended sell in may which comes to fruition. i think if you look at the s&p 500, the way it topped out in both may, june, july, we tested tops of 2130, 2135. we failed each time. we came into the summer months, late summer, august really light volumes. a lot of retail plays are still involved. it rolls over on itself in september. >> oil has taken another turn down after giving us a little tease a month ago. do you think energy stocks, oil stocks in particular are going to take another leg down as well? >> i think we're going to hold 45, 46 in wti. i see finishing the year closer to 50 to 55 range. there is a lot of crowded short subsectors in energy. you are seeing them lift today with commodities and crude lower
2:12 pm
which is very good sign. >> all right. roberto freelander, thank you for joining us. great call about six weeks ago. appreciate it. >> thank you. >> much more to do including canada and forget the election. we've got the numbers that you have got to hear about canada. plus, why one trader says it is time to sell one of america's most well known companies and red hot stocks. later on this is our question to you. after another scary incident, should airlines end the reclining seat? or is there a right to recline? we have a live poll coming up. we want to know what you think. at mfs investment management, we believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive.
2:13 pm
it's active. that's the power of active management.
2:14 pm
2:15 pm
welcome back to "power lunch." housing starts shooting higher with a huge spike coming from multifamily homes. multifamily permits dropped. let's bring in diana olick to explain. >> they're really pushing the total construction numbers. we may seeing that ease up as new product comes on the market like this new rental building here in d.c. if enough is enough apartments, then why are rents still up more than 5% annually from a year ago? and occupancy is up over 95%. these numbers are historically high and persistently high. the answer is that it really is a tale two of rental markets. you have developors and urban cores targeting millennials and downsizing babyboomers with
2:16 pm
class a pricey high end product. the pipeline there is full. meanwhile, they're not building enough out in the suburbs or secondary class b markets where demand is also high. that's because they can't push the rents so the return are just not so good. back to you. >> all right. thank you very much. according to red fin, just last month residential construction jumped 6.5%. that is the second highest level since 2007. what are they building? not really houses. it's apartment buildings. safe to say that we are officially in a renter's nation. chief economist at red fin is joining us now. people assume this is bad for home buyers. is it that simple? >> if rates are going up, it's bad in a sense that it's harder to save for a down payment. that's bad for home buyers. we still are in an environment where mortgage rates are very, very low. that's been good news all year. and we expect that good news to continue into next year. >> so is it possible that both
2:17 pm
renting continues strong and home buying continues strong? >> you know, as long as population growth is strong, household formation is strong, then both can continue to be strong. the question is what -- at what price point? right now we see that builders are following the dollars and not the buyers. we need them to follow the buyers a little bit more. and that's where single family and affordable single family come in. there is just not enough to go around. so some people are renters because they have no other options in the for sale market. not necessarily because they choose to. >> and there is two different renters. this is important when you talk about the houtsing market. there are people that cannot afford to buy because the rent is too damn high. then you have people renting and get sick of renting. the prices go up and say let's hold our nose and buy a house even if we think it's overpriced. is there a way to gauge how much of which is which?
2:18 pm
we see it all the time in terms of foot traffic. we collect the number of people who are going on tours, making offers and we have seen all year long the demand is there. the demand for new construction, for existing homes and for rent aals is there. the question is, is the supply there? and the story in the housing market shifted. it shifted from buyers to sellers. from people demanding to people supplying. that's where we're seeing the real headwinds on the supply side. demand side is fine. it's doing really well compared to a year ago. >> okay. good discussion as always. we'll see you soon. take care. >> thank you. >> all right. >> so let's find you opportunities in all of this. bob wendhall covers buyers. it's great to you have with us. what's great about your list of stock picks is that doesn't matter if it's a rental or a purchased home. you still need cabinets and appliances and doors. so let's get right to some of your picks here.
2:19 pm
fortune brands is coming out tomorrow. what you are expecting? >> great company. fantastic product with moen faucets. we think they'll meet or beat and we like sustained consumer demand as the underlying driver. super clean balance sheet. great m & a strategy. this is a stock to own into the print and one to own for the next three years. >> all right. we'll mark your words on that. in term of whirlpool, they have a big latin american exposure. we have seen from different consumer type companies that things are not so good right now. why what you are anticipating from whirlpool? >> huge headwinds with real and the currency issue there is severe. that being said, we expect management will reiterate guidance. sentiment on the stock is so negative that if whirlpool is able to come close to a $12 ep sfl, the stock is going up. out 22 names, it's our top pick. >> i preface the segment by
2:20 pm
saying whether it's rental or a purchased house, you still need all these things. does it really matter to the companies? in other words, for a rental unit, does somebody put in a cheaper line which would be lower margins for some of the companies and some of the products versus somebody who actually owns the home might invest in a little more money and that might be a hee higher margin product? >> great question. and you always will have a lower mix at the bottom of the market or the entry level. but overall, whether it's rental, homeownership, you still need faucets, doors, sanitary ware, the full suite of products. so the building products companies in the u.s. are benefitting from strong consumer demand. we expect this to continue in the second half of ''15 and 201. great growth stocks, strong management, good capital allocations strategies. fortune, mohawk, the litany is long of companies that are
2:21 pm
leveraged to the rebound in new residential construction in the rental markets and the for sale market. >> what is the fly in the ointment? sounds like you're optimistic about the stocks. everything is coming up roses. so what is the one factor that you're watching that could be what royal the story? >> investor skepticism. concern about interest rates is always the bogeyman for this group and also the builders like d.r. horton. we see robust demand. today's housing starts number attest to. that and we also think that consumers doing well from lower gasoline prices. and very good job creation numbers. so overall, i think the right way to frame it is the demand side is. there supply is building to meet it. through multiple beneficiaries out of investing in home builders at this stage in the cycle. when we move into the spring selling season next year, we'll re-evaluate. >> thank you, bob. >> still ahead, a hot debate question for you.
2:22 pm
listen up. should airlines ban reclining seats? we want you to weigh in on this one. you can go to cnbc.com/vote in a couple minutes. we'll open it up for a live voting. see how everybody else feels. should airlines ban reclining seats? because everybody is acting like a jerk on plains these days. speaking of debates, cnbc is hosting the next gop presidential debate. that is next wednesday october 28th live from boulder, colorado. go buffs. it's about your money. be sure to watch "power lunch." stick around i
2:23 pm
2:24 pm
2:25 pm
. welcome back to "power lunch." a big change in power to can d.a. voters elected a new leader. the liberal party won a majority seat in parliament bringing an end to conservative stephen harper's near decade in office. so canada's election got us thinking about canadian stocks. get this. the average return for the canadian oil and gas names that trade here in the states is a decline of 32% over the past year. the gold and silver companies
2:26 pm
based there but trading here, they're down 28% on average. all other companies down 13%. by the way, there are more than ten of the 71 companies we follow that are down more than 50% in just a year. ouch. all right. up next, the trick or treat trade. one market pro says getting to these three sectors before halloween but first a final oil trade crossing for the day. we have the closing price coming up when "power lunch" returns. ye premium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again. why pay for insurance if you have to pay even more for using it? if you have liberty mutual deductible fund™, you could pay no deductible at all. sign up to immediately lower your deductible by $100.
2:27 pm
and keep lowering it $100 annually, until it's gone. then continue to earn that $100 every year. there's no limit to how much you can earn and this savings applies to every vehicle on your policy. call to learn more. switch to liberty mutual and you could save up to $509. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance.
2:28 pm
2:29 pm
jim webb kbland did he not get the chance to make his views fully known at the first democratic debate. a subsidiary of conagra coal agreed positive take millions of dollars for moving hundreds of millions of dollars through the u.s. financial system in violation of sanctions between iran, sudan and other kun tridz. the misconduct took place between 2003 and 2008.
2:30 pm
the ftc closed an investigation of walmart stores regarding products advertised as made in the usa. it closed the probe without action after walmart dropped all the made in the usa logos from products on its website. and restoration of the golden mask of egyptian king tut is under way in cairo. over a year after the beard was descentally knocked off and then hastily glued back. a german egyptian team of experts showed off the mass income a lab in the egyptian museum detailing how the beard will be reattached. you're up to date. that is the update this hour. >> almost sort of symbolic though. like the hipster beard is going away. they're related somehow, sue. >> i'm glad i wasn't the one that knocked it off in the first place. >> king tut, original hipster. >> he's on a bike with tight pants. the oil market closing for the
2:31 pm
day. it didn't do too much today. around $45.85 a barrel. a run last month, could they continue the losing ways down 2% this week? it is only tuesday. hard to say this week. just nine trading days left in the month. there are three sectors that can bring a bag of treats by halloween. that is according to jeff kilberg. we're going to talk about sector rotation. if you invest in major sector etfs, jeff has this thing. you love the stuff we have to buy and you love the stuff we want to buy. >> this year, 2015, has been the year of the sector rotation. no doubt about it. we are seeing outperformance month to date, year to date in the consumers, specifically to the discretionary and staples. we also like technology. the three sectors, of the ten sectors, should see continuing momentum going through the end of the year as people are starting to figure out, they need to rotate the portfolio. >> why? >> because consumers fall
2:32 pm
asleep. now consumers come to live, we're going into the holiday season, can you see that money that is saved by cheaper oil and gas. >> do you think they're starting to buy? do you think consumers are thinking low gas is here to stay? >> yes, but it's also the holiday season. you make the purchases that you maybe shouldn't but you made the purchases for your family, for your loved ones. i think the consumer sees momentum. >> what about technology? what you say technology, that's a giant statement. because everything is tech. >> yes. but the etf, that allows that you blanket swath kind of exposure. i think infotech. it's $100 off where it vaulted. there are single stocks we like. the technology sector is a nice outperformed from the s&p 500 this year. >> fancy way of saying 3%. what do you not like? >> we're a little adverse to some of the materials. some of the names that we see in there. we're a little adverse to. and also, i think right now
2:33 pm
health care, on a grade one. >> i'm going to do something i should never do in television. >> head butt? >> no. i could head butt you. i have to do this which is normal. usually we send the internal e-mails around and keep the contents private. my trusty colleague melissa lee knocked you this morning when you sent your note. she goes, what doesn't he like? because you had a lot of sectors that you liked. >> there were five sectors that, is half of the s&p 500 sectors. >> i'm calling you out, lee. >> i will stand by that comment. i mean half of the s&p 500, jeff, on top of that, i get your thesis about the consumer coming to life. but we've already seen the run in consumer staples. clorox is at a new high today, in fact. kimberly clark trades at a current pe of $68. why you would stick with staples when so many analysts say that they're trading high in historically compared to themselves? >> how we derive the five
2:34 pm
sectors out of the ten, yes, 50%. we're utilizing jobs data and gdp. the position has a slight contraction. so, therefore, we see the momentum sticking. we rebalanced this outlook every month after a new jobs dat yachlt yes, we do like 50% of the s&p 500. i'm going to stick to that. >> we're safe across the river. >> how about staples? many people argue they're expensive right now. >> they are. but they're outperforming. you can say the same about discretionary. there is a lot of exaggerated movement. it's been 2015's undercurrent, no doubt about it. >> all right. >> am i in trouble for calling -- >> no. >> we're safe across the river is the point here, melissa. >> are you afraid of me? >> we're hiding in new jersey. phil lebeau is standing there. why is all of chicago there whether you have a big baseball game tonight? >> it's already a forgone conclusion we're going to win. it's 60 degrees in chicago. cubbies are coming to play.
2:35 pm
>> another call. cubs are coming to play. all right. time now for "trading nation" where traders trade better together today. we're trading nike. paul, nike shares, they've been hot. they're up 15% in just a month. some are saying the gains are done. do you see more gains ahead? or should we sell the stock? >> i think this is a classic situation where nike is on a run. people have seen a strong back to school so they're saying, hey, if they just did their analyst day and they upped the long term forecast, they're seeing a lot of futures orders acceleration. they're going to have a good holiday season. i'm just nervous about valuation. i mean, i've got the stock worth 28, 29 times forward earnings. and i'm the low on the street. the street is valuing it over 30 times. that is above historical. i'm worried about the long run making a decent return. >> what is your biggest concern around nike, paul?
2:36 pm
>> again, right now they've got a really strong growth rate in china. they've also got strong growth rates in europe which is almost a zero gdp growth area in the long run. and then they've also had big growth in basketball. so some of the areas are slowing, running slowing. one of the big ways they're going to grow is they're going to expand the jordan brand. that might work in the short run. i don't know if the jordan brand can be nearly as bill as nike in the long run. >> bottom line. it's a china play. pay attention to china. craig johnson, welcome. what are the charts on nke telling you? >> so we look at the chart here. before i get into that, i want to mention that inside of the consumer cyclical sector, anything athletic or footwear is where the momentum is at this point in time. certainly nike, underarmor are right there. charts on nike look very constructive. we've been in a four plus year. momentum is giving a little extended here in the stock. i don't think you have to sell it today.
2:37 pm
keep in mind that i'd rather be buying it on a little bit of a pullback. be back 10, 15 points. then i back up the truck and buy it. right here, not a new -- >> do you see the likelihood of that pull back coming, craig? >> every time over the last four, five times we've seen the rsi readings this high and they start to fade, you've had that pullback occur. so i think the odds are, yes, you'll get that pullback and you'll get a better entry point. >> all right. >> stock is still on a great up trend. >> even if the cubs win since they're an underarmor team. >> throwing the cubs back in it again. >> that's a long shot. thank you very much. relative strength index, fancy technical acronym. thank you very much. for more "trading nation," head to our website. another day, another scary episode of air rage. this time a fight over a reclining seat on a southwest airlines flight. given how miserable the flying experience, is we're guessing this won't be the last problem
2:38 pm
on a plane. seats are so darn small anyway and more and more problems, should airlines ban reclining seats? just make them nonreclinable. we want to hear from you right now. go to cnbc.com/vote. live voting is going to kick off. we'll see how america feels. ban the reclining seats to avoid fights by passengers. stick around.
2:39 pm
i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline.
2:40 pm
so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. when a moment spontaneously turns romantic, why pause to take a pill? and why stop what you're doing to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating 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. if you have any sudden decrease or loss in hearing or vision,
2:41 pm
or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use. insurance coverage has expanded nationally and you may now be covered. contact your health plan for the latest information. welcome back to "power lunch." check out shares of valiant. this is a story we brought you yesterday. day two of the slide. it's down 9% today. it's down 15% so far this week. the concern here, brian, is that valiant is becoming another company. it is backing away from the core strategies such as minimal r & d
2:42 pm
spending, increasing in drug prices. all things under pressure, under focus for the sort of back pedaling away from. investors are re-evaluating where valiant stands in the portfolio. so we're seeing the stock down by 9%. >> it's kind of like solar city. we talked about that yesterday. it's one the names where you have a the love smart people on within side that are convicted one way and smart people on the other side convicted that way. i don't know why the average investor at home would bother when there's people saying such wildly different things about a company. >> i think that there's something very different about valiant versus solar city. solar city, there's divide in how people are regarding the company. is it essentially a leasing company or a solar company? for valiant, in and of itself is changing the business strategy. we're going to quadruple r & d spending. they're saying we're not dpog to make as many acquisitions. we're going to focus on buybacks. we're not increasing drug prices as much as anticipated because
2:43 pm
of the environment. itself is changing the business model. people aren't casting judgment on it. >> why? if something is working, you don't make that -- i'm going to use the word i hate more than any word this year, pivot. that means you screwed something up and you're going to change. >> it is pivoting. it is acknowledging that environment is changing. you have two different possibility. you say our business model is right and fight to the end which is one path it's not taking or kit go the other way and say we're going to acknowledge the change and we're going to get out in front of it. >> valiant shares are no prince today. thank you. in the latest incident of air rage, a pilot was forced to make an emergency landing at lax on sunday night. it was triggered by a dispute between passengers over reclining seats. here is more. >> when police boarded the 737, the female passenger was in
2:44 pm
tears. witnesses say she was choked by the man sitting behind her after she reclined her seat in flight. the south west flight was headed from los angeles to san francisco sunday night when pilots radioed in there was trouble. >> police were waiting on the tarmac when the plane returned to lax. southwest called it a rapidly escalating situation involving passengers. the male traveler detained and questioned. over the last ten to 15 years, the standard amount of leg room on most major airlines has shrunk by three inches. there were more than 38,000 cases of unruly passengers. >> all right. phil lebeau join us to talk about this story. this is just one incident. if the police are called at 10:30 at night.
2:45 pm
my guess is a little alcohol may have been involved in this one. before you get into you and i discussing, we want to hear from the audience as well. fellow american and weary air traveler. should airlines ban reclining seats on planes? go to our live vote to weigh in. we're making this point. i know they're never going to do it. we talk about the morning meeting. this sounds like some jerk going after somebody else. >> right. >> but the flying experience is almost inhumane in many ways. who can blame people -- not this case. but people being ticked off. >> let me take the counter argument. i know that in that piece they were talking about how many air rage incidents there have been, 38,000. the question is are we noticing it more because of social media, because people are quick to tweet and go on stainstagram any there is a jerk on my flight or is this a case of all right, we're just noticing it more -- >> i don't think so.
2:46 pm
i don't fly as much as you. but i fly a lot. i noticed in the last couple years, there appear to be more verbal altercations. >> it strikes me as being similar to what we saw right before 9/11. that's when the airlines are in the spate saame spot in terms o capacity and how full the planes were. here's the problem. we got used to those years between 2008 and 2011 when there wnt as many people on the flights. you had an empty seat next you to. you never have that now. >> no. melissa, right, the planes are smaller. you know as well as i do. listen, nobody really has to fly unless do you, say work says you have to be somewhere. from the moment you get out of a cab or your car and the moment you land, it's a miserable experience. >> it is. i'm a small person. i don't notice as much of the seats are small, brian. but at the same time, we're so demanding as a nation now we want the lowest price possible as well. so that's causing the airlines to cram more seats in there. there is a give and take. are you willing to pay more for the leg room? by the way, you can with the
2:47 pm
economy plus. these options are available. the bottom line is here is that people are just -- they have bad behavior. and they should be punished. >> i do lot of genius of the model though. what they did is they had economy. she shrunk it and then went back to economy and charged you extra. >> we want lower air fares as well. >> that's true. >> but we also fly cross country. >> if you're going to be unruly, you're banned from flying for a year, my bet is that nobody would be that unruly. >> well, that's a great point. that's a great point. and you don't want to get to the point where if you make a comment about having a bomb in your suitcase at the airport you're in a world of hurt. nobody wants to get to that point where you're in that much -- >> the reason -- i want to let the viewer know why we brought this debate up. somebody said there is a right to recline and i screamed, there
2:48 pm
is no right to recline. when you recline, you're now in my space and with my size, i have to move the legs. so now i'm in your lap. and it's just this chain reaction of people getting frustrated. >> well, i understand that. i've been on flights. you and i are the same height. you're a little taller than me. it's not comfortable flying on the flights. but that's the price you pay. that is the price you pay. and i think this debate of do you recline and -- or do you ban to recline. come on. seriously? >> yes. seriously. >> just be nice. that's the bottom line. >> i agree with melissa. >> be civil. >> wwmld. what would melissa lee do? >> people say don't recline the seat, melissa. >> if we fly together and you're in front of me -- >> i'm going to recline right away. >> i won't let you. >> i'll turn around and say excuse me, sir, i'm going to recline my seat right now. >> true story, i had someone
2:49 pm
break my laptop last night. they reclined, boom, broke the monitor. done. let's lock in the vote. look at this, big boy. 57% say that airlines should ban reclining seats. 43% say we have a right to recline. what say you, sir? >> we have a right to recline. >> you're in the minority. >> it will never go away. i know you voted for it. >> melissa lee and you are now -- >> right to recline. >> there is no right to recline. >> right to recline. >> i have a right to bring a stinky sandwich on the elevator but i don't because i don't want to stink up everybody else. i was going to say pass gas but that would be rude. ferrari, we're going to talk about them coming up. (cole) alr.
2:50 pm
we all know that directv's better at this whole tv thing. so, to beat them, we're gonna get bigger. we're gonna merge with cableworld. (exec 1) cableworld? i can't stand those guys. (exec 2) they're the worst. (exec 3) they're totally incompetent. (exec 4) that company stinks and i mean they smell. i used to work there. i had to breathe through my mouth the whole time. (cole) shh, shh, shh, they're here. (newhart) this is gonna be fun, firing everyone. (vo) get rid of cable and switch to directv. call 1-800-directv.
2:51 pm
every insurance policy has a number. but not every insurance company understands the life behind it. for those who've served and the families who've supported them, we offer our best service in return. ♪ usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life. ♪
2:52 pm
ferrari, expected to price its ipo tonight and officially go public tomorrow. the question is this: can
2:53 pm
ferrari keep its cars exclusive enough but also make enough money to satisfy shareholders at the same time. robert frank joining us with more on that. >> it is a delicate balance. one of the reasons ferraris is so expensive and desired is that there aren't many of them. they make only about 700 cars a year. they say they will ramp up production to over 9,000 cars by 2019. they have suggested they could even go to 10,000. that has some ferrari collectors worried since more ferraris mean lower resale prices and values. >> you have to keep it exclusive. production numbers are key. if you increase those numbers you may damage the brand. >> he told me last year that ferrari hasn't kept pace with the explosion of wealth in the world. did i a chart showing the number of people worth $30 million or more, people who can afford ferraris, that has grown nearly
2:54 pm
80% since 2008. ferrari's production at the same time has grown only 10% which explains why the wait time for the company's new 488 gtb that's over a quarter million dollars for that car, the wait time right now, over two years. one of the reasons those shares are so hot tomorrow morning. brian, back over to you. >> i will take it, robert. pricing expected sometime tonight. coming up, five big analyst calls you need to know b straight talk is coming up next. here at td ameritrade, they love innovating. and apparently, they also love stickers. what's up with these things, victor? we decided to give ourselves stickers for each feature we release. we read about 10,000 suggestions a week to create features that as traders we'd want to use, like social signals, a tool that uses social media to help with research.
2:55 pm
10,000 suggestions. who reads all those? he does. for all the confidence you need. td ameritrade. you got this.
2:56 pm
2:57 pm
take a look at these shares down 1.5%, yahoo and cmg both reporting after the close tonight. we will track that on "fast money" tonight at 5:00. >> i'm actually reading here apparently disney world's small world is building new boats because they can't handle the bigger americans. >> goes to our airplane argument. time for street talk. digging out stock recommendations. pfizer, upgrading it to a buy, they say the stock offers, quote, above average growth at a below average multiple. they add the innovate testify core of pfizer's business is growing again. we think bought the stock for 43 bucks. >> and that dividend yield 3.3%. by the way, this stock has outperformed its sector, the
2:58 pm
healthcare sector. second stock here the fresh market. take out interest. the rating going from a neutral from underperform. the stock we should note up 14% over the last few days on this and the analyst says the deal seems possible. the left side the appointment of a new ceo optimism so lead to reviews of its growth plans. >> everybody was buying everything with the word organic and fresh in it. >> start three parker hanifin. they cut it from a buy to a neutral, cut the target from 110 to 130. parker hanifin's exposure to sick cliekel. >> interestingly the analysts also cited outlooks from other industrial distributor companies recently, conservative outlooks so that leaves them to be cautious on ph.
2:59 pm
the fourth stock in the oil and gas sector con co phillips added to bank of america merrill lynch's list. the analyst says it's not the highest baet at that name but has option value from woert restructuring t sold a lot of assets and that differentiates it in the face what have the analyst says looks increasingly like a bottoming process of this oil psych snool target 70 was a $70 stock almost to the date one year add. >> under the radar name, monroe muffler, mnro. after years of flat the down same store sales they may finally be able to turn positive. rising drives miles helping business. all the potholes are knocking everybody's muffler or brats off. they have an $81 target. >> that and gas savings leaving people to spend more. that sector getting a boost there. earnings october 22nd that's worth watching. >> i know you guys have the sort of obesity trade, maybe we need
3:00 pm
to have the pothole trade. good year, monroe. >> tire companies. >> lkq, o'reilly. >> yeah. >> no reclining. last word. thanks for watching "closing bell" -- or "power lunch." "closing bell" starts now. again. i did it. hi and welcome to the "closing bell," everybody. i'm kelly evans here at the new york stock exchange. >> and i'm bill griffeth. i look forward to the day when low heels become fashionable again. >> as do i, by the way. >> okay. tesla, by the way, have you seen tesla shares today? >> yeah, ouch. >> they were down 10% earlier, down a little over 8% right now on a new consumer reports survey that says that the model s reliability is worse than average. we are going to have more details on this breaking story coming up in just a few minutes here. >> and the trail that are broke the internet. fans flocking online to buy tickets for the new "star wars"

54 Views

info Stream Only

Uploaded by TV Archive on