tv Power Lunch CNBC October 21, 2015 1:00pm-3:01pm EDT
first day. different story for valeant. the pharma giant taking it on the chin on a report by a short seller. >> western digital buying sandisk. the tech stocks that could be next on the chopping block for the next to be acquired. >> and scott wapner just talked with carl icahn. he's taking his activism to a whole new level and realm targeting corporate tax reform. but we begin with the red hot ipo of the day, shares of ferrari are revving higher on their first day of trading. a bit of a rally in stocks overall. we're sitting at 12,290 but just earlier today we cracked above that 17,300 mark for first time since the august flash crash. it seems like we're tracking for the best percentage gains since october of 2011 for the dow and
the s&p, bob. >> s&p is up 6% for the month. a little bit of a stealth rally. really tina there, is no alternative, no other places to put your money right now. i want to start with the ferrari ipo. $48 to $52 was the price talk. it priced at the top at $52. it opened at $60. right now around $56. still enough for an 8% gain. 18 million shares changing hands. that's more than they floated, 17.2 million. that's a sign of very active trading for this particular ipo. it's very atypical of the recent ipo market. let me just show you, the last four weeks we've had 14 ipos. only two of them have priced within the expected range. now there's three with ferrari. the average price has been 22% below the midrange. by cutting the prices, the average ipo is up 11% from initial price. people bought it lower price and it's been helping them out. they've been making some money.
happiness in ipo land by cutting the prices overall. let's go back to the market to talk a little bit about what's going on and they're right, over there modest rally. over 17,300. now 288, but first time since the august flash crash. markets in october generally have a pretty good tone overall here. the s&p is up about 6%. germany has been doing well. europe has been doing well. the vix is back at 15, the same levels it was in august before all that china volatility. we had a very good couple days for industrials. you're wondering why we're up here. industrials had a good couple days despite the fact that we have very obvious revenue problems. we saw this yesterday with united technologiies disappointing on the revenue side. all of them are down 10% to even more than 20% on the year in the case of caterpillar, but i get back to this point, mandy, there is no other place to put any
money. t.i.n.a., and the important thing is a lot of people realize that, tyler, we're getting into the seasonally strong period of the year. we'll talk about that in the next half hour and where that might take us. shares of valeant pharmaceuticals tanking after a research report by a short seller and some inflammatory words in that report. meg terrell has been digging into it all and has more for us now. hi, meg. >> hi. valeant down about 30%. it's again in the crosshairs today. this time after a report from short seller citron research raised questions over its relationship with a specialty pharmacy. valeant says it uses specialty pharmacies like this one to streamline patients' access to medicines. sop analysts say the practice enables drug companies to keep the cost of medicines high. that in itself isn't under scrutiny today and there's nol illegal about that. the questions raised in today's report as well as one earlier this week from the southern investigative reporting
foundation. today's report goes so far as to allege accounting fraud. we've reached out to valeant multiple times today and so far no comment from the company. the valeant pain is stretching to other specialty pharmaceutical companies, allergan, horizon pharma, mallinckrodt and mylan. >> so those other companies would be declining on the concern that they might have similar relationships with specialty pharmacies as is alleged in valeant's case? >> that's right. there's been a lot of digging into the use of specialty pharmacies. valeant, of course, was subpoenaed by two attorneys general over its patient access programs, and so folks just kind of nervous about the use of these specialty pharmacies. however -- >> and what was wrong with cvs or walgreen's? >> the specialty pharmacies are used by these companies as a way
to basically streamline the process of getting patients their drugs which sounds good but what some people say is that it enables companies to keep the high costs high, provide co-pay assistance to patients so they don't feel the high price of those drugs. that's not illegal, but some of the things being raised in this short seller report today claim that in its relationships isr l valeant is shifting money around. >> sorry to be dumb. >> it's not dumb. it's confusing. valeant, please get back to us. we want to get your side. >> thank you very much. another big deal in the chip sector. this time it's lam research buying kla tencor. shares in both of those companies soaring. josh lipton joins us from san francisco. everyone is asking now, there's been a lot of consolidation, who is going to be next. >> well, mandy, you know, manic,
frantic, some of the words we're hearing used to describe the rate of consolidation going on right now in the chip space. you mentioned lam research agreeing to buy kla-tencor and western digital acquiring sandisk, a deal worth $19 billion. these are just the latest deals in the semi-conductor industry this year. remember, in may avago said it would buy broadcom for $37 million. in union intel agreed to buy altera for $17 billion. chip companies have now already announced $104 billion in m&a this year. last year in total it was $38 billion. chipmakers are consolidating because this is an increasingly mature industry where there's a lot of competition and growth is harder and harder to come by. as you asked, mandy, which chipmakers are the next logical acquisition targets. i caught up with craig ellis of b. riley. he gives us three names. integrated device technology,
intersil and cavium saying they boast value technologies. >> josh, thank you very much. he's one of the most high-profile activist investors, carl icahn, now taking his activism to a new level into a new realm forming a super pac to push for corporate tax reform. scott wapner broke the news. he spoke with mr. icahn in the last hour and he's here to fill us in with the details. >> and a whole new arena as well. you know carl icahn, usually taking on some of the biggest companies in this country. now he is taking that fight to washington, d.c., forming his own super pac, $150 million of his very own money to take on dysfunction in d.c. says he wants to end so-called tax inversions, which he says are hurting the country. we spoke just a moment ago about it. here is carl icahn. >> i'm putting a pac together and i'm committing $150 million of my own money to that pac, and that money is going to be used to make congressmen and senators
accountable. they're just doing nothing. and to say, to say, well, we can't compromise because we have to stick to our principles, i really don't think they understand their principles. >> so carl icahn wants to push repatriation legislation, allowing companies to bring what he says is $2.2 trillion that u.s. kourptiocorporations are c keeping overseas. he's talked to senator chuck schumer of new york, also talked to possible house speaker paul ryan, and he's not stopping there. >> if you have some wrong-headed leadership at the top of either party, that has to be held accountable and stopped, and we've got to get this thing done and we've got to get it done now. >> tyler, he has sent letters to every member of the house ways and means committee. he's sent letters to every member of the senate finance committee. he says he's going to raise third-party money. you can believe he's going to be talking to his friends in the hedge fund business about joining him on this effort, and
he's optimistic, i guess, at least somewhat so, that he can get something done by the end of december. he wants to get something done, he says, in the letter before the election really gets revved up into next year. we'll see if -- >> you asked him, you know, why this, and he said i have spent my life going after troubled boards, boards that aren't functioning well, so this is sort of the same. he thinks that the government isn't functioning well and it has to function well. >> i think he's simply just fed up with the dysfunction in d.c. as many others are. you heard the vice president in the rose garden in his own announcement mentioning that very topic as perhaps one of the reasons why d.c. has become such a difficult place to be. now you have a guy, one of the most reputable and feared in some ways activists on wall street taking that fight to pennsylvania avenue and beyond. >> interesting to see what happens. thank you. let's go to julia boorstin for a quick news alert. >> tyler, youtube announcing a new ad-free subscription service called youtube red and it's
going to cost $9.99 a month. it's going to be launching next week on october 28th. youtube's robert kin sell saying this is a new way to experience youtube without ads and it's going to be focusing a lot on choice for youtube viewers. it puts youtube into direct competition with hulu. it costs the same as netflix an, of course, there's also the hbo and showtime direct to consumer apt. youtube's bread and butter is ad supported content, a lot of that short form video. that's not going away but it's a new alternative, ad-free subscription service. they say they're going to be adding more original exclusive content coming next year and they're committed to investing more in the original content. interesting that google, which s of course, the ad-supported giant is going into this ad-free subscription space. back over to you. >> it's a little ironic. alphabet shares are down by half a percent.
thank you very much. youtube red. to seema mody for a market flash. >> industrials outperforming all s&p 500 sectors up 1%. dover, united tech are leading the gains both up nearly 3%. also fed ex, this as the company says eu regulators have no objection to fed ex's $5 billion acquisition of their dutch peer. the stock near session highs up almost 2%. mandy? >> gm, coca-cola, and biogen just some of the big names out with earnings today and our earnings squad is going behind the numbers to tell you what you need to know about those results. plus, starbucks facing the heat over claims about unpaid taxes, and it could be facing a big bill. you're watching cnbc, first in business worldwide. don't change the channel.
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welcome back to plumpl. kimberly clark topping estimates on top and bottom line. raising its full year forecast despite pressure from a strong dollar. the shares are up by over 2%. thermofisher also beating earnings. the scientific solutions provider has benefitted from growth in china as well as recent acquisitions. the shares, however, are down by over 2%. and tupperware beating wall street estimates but its heavy
international presence causing pain from foreign exchange headwinds. emerging markets account for 70% of their sales. nonetheless, we're seeing a nice pop in the shares up by over 8%. ty? earnings season is under way. this is one of the heaviest weeks of all. let's dive right in with our earnings squad. sara eisen on coca-cola. good thing i didn't say sara eisen on coke, right? phil lebeau on general motors. meg terrell on biogen. >> biogen had a third quarter beat and raise. the headline was a restructuring to cut 11% of the workforce. shelving some programs it's working on and to save $250 million annually. it's going to focus on late-stage programs it has in development including it's alzheimer's including. also saying it's going to focus a lot more on its multiple sclerosis pill. that slowed growth a little bit. we might see some direct to consumer ads for that pill. >> phil lebeau in gm.
it is in drive today. >> it is. did you know it's been almost three years since we have seen shares of general motors rise as much as they have so far today. we'll see if they finish up as much. up more than 6%, and the rally really is driven by people waking up to, whoa, they've got a lot of things within the internals that are working here. growing north american margins, up 11.8% in the third quarter. they think they'll be over 10% for the year, a year ahead of schedule. in china they have a richer mix. they can charge more for those vehicles and the new model lineups coming here a fresher lineup in north america. you put that all together and finally, tyler, you have people saying wait a second, gm at $33, that looks pretty attractive and now it's up over $35. first time we've seen it there since june. >> fascinating story. phil, thank you very much. mixed quarter for coca-cola. some fizz in the report but the stock kind of flat. >> a little change.
the results were mixed. profit beat, sales mixed the mark. currency was a big part of the story cutting into sales 8%, worse than coke expected. currencies in brazil, mexico, and china in particular have plunged and slice sales in those key markets. drinks are still driving growth, we're talking about nonsodas. 11% volume growth in bottled water. 6% volume growth in noncarbonated beverages. soda is lagging, but diet soda is doing even worse. diet coke volumes down 8% for the quarter. it's also been a problem for competitor pepsi as well. bottom line, coke is doing some productivity or cost cuts. that's helping the bottom line. so is pricing, squeezing more money from smaller cans. all of that helping coke stay on track to meet its expectations it's setting for wall street in a very tough economic environment when consumers are rapidly changing the way they drink beverages, tyler.
>> thanks very much. sara, meg, and our own mr. cub, phil. let's go to seema mody. >> another stock on the move is vmware. shares are at session lows, down 20% after posting current quarter revenue forecast that came in well below consensus. this prompting a slew of rating and price target cuts from various brokerage firms. but keep in mind the softwaremaker's last quarter earnings and revenues were in line with expectations. remember, vmware's parent company emc is being acquired by dell. the stock is down 33% this year. mandy? >> thank you so much for that. see if you can guess this, folks. it is the best performing midcap stock this year. it is up a whopping 150%. that mystery chart is still ahead on "power lunch." you can tweet in your ideas if you've got them. >> up mex, power pitch jams out. >> it's the easiest way to learn to play guitar. >> are you trying to disrupt the instrument.
>> or skip this beat. >> as a beginning guitar player, how am i going to justify that price point? >> stay tuned to find out. job a developer! its official, i work for ge!! what? wow... yeah! okay... guys, i'll be writing a new language for machines so planes, trains, even hospitals can work better. oh! sorry, i was trying to put it away... got it on the cake. so you're going to work on a train? not on a train...on "trains"! you're not gonna develop stuff anymore? no i am... do you know what ge is?
welcome back to "power lunch." a ton of earnings out today. boeing beating profit estimates and raising its full-year forecast. the stock is up nearly 2% this hour. profit at illinois tool works falling because of weak sales but still managing to beat estimates. however, the manufacturer cutting its 2015 sales guidance. the stock is little changed.
and earnings at abbott labs coming in better than expected thanks to growing demand for its generic drugs in emerging markets. again, the shares virtually unchanged at this hour. ty, over to you. >> mandy, thank you very much. vice president biden says he's not running for president. meanwhile, the race for house speaker is heating up. eamon javers in washington with the latest. eamon? >> hi, tyler. a dramatic announcement in washington, d.c., just within the past hour or so. reporters given just about ten minutes to scramble to the rose garden to listen to the vice president's remarks. no indication of what those remarks would be, but the vice president was flanked by president barack obama and also his wife, dr. jill biden. he said ultimately he concluded that he didn't have time to put together a credible presidential campaign at this point in the presidential cycle. here is the vice president just over an hour ago. >> unfortunately, i believe we're out of time. the time necessary to mount a winning campaign for the nomination. but while i will not be a
candidate, i will not be silent. i intend to speak out clearly and forcefully to influence as much as i can where we stand as a party and where we need to go as a nation. >> we're also getting some more clarity now on the speaker's race, the race for speaker of the house to replace outgoing republican speaker john boehner. we saw paul ryan come to the fore last night and give his fellow republicans the conditions that he would need to accept the job if they draft him for it. that was met with a little bit of skepticism on capitol hill this morning among members of the conservative house freedom caucus. a lot of them said that that was a list of demands. they also said that ryan's condition that he be allowed to spend more time with his family and travel home on the weekends instead of out on the fund-raising trail around the country was maybe not appropriate. some of them saying this is not a 9:00 to 5:00 job. if he wants to do it, he ought to do it. so that race not to clear right
now but paul ryan said if he gets the support of the three main groups within the republican conference, he'll do it. he's trying to build that support today and as the day goes on we'll see whether he can get there. >> all right, eamon, thank you very much. and don't forget, cnbc hosts the next republican presidential debate. it is in colorado next week, october 28th. that's a week from now. same day, folks, as the next fed meeting. just make a date to be on cnbc, mandy, all day long. >> it's written down in the diary. okay. time now for today's "power pitch" where one startup is stringing out a smart guitar in hopes to be the next big thing in music. >> i'm chris heille, the music product specialist with zivix. the jam stick is the easiest way to learn how to play guitar. it will eliminate obstacles like tuning or trying to guess where your fingers are supposed to go. it was created to make that experience of learning how to play fun, simple, and convenient. our patented exclusive
technology sees your fingers on the strings and displays them in realtime onscreen in our jam tutor app with interactive video. many jam stick users are up and running playing with their chard within minutes. it retailed for $299 at apple stores in north america, uk, and australia. and it's online. next month we're adding more stores with apple and going into musical strumeinstrument with r leona leonard. >> you just saw the jam stick pitch, so let's meet our panel. on set, alicia syrett board member of the new york angels and from the bay area, david wu, senl partner at maveron. david also played bass professionally in a rock band
for many years. and in seattle angel investor gnat burgess is the president of corum group involved in more than $7 billion in mergers and acquisitions including deals with google and microsoft. chris, you are in the hot seat. alicia, you get to go first. >> talk to me about how many people at any given time are learning how to play guitar in the u.s. and what your typical customer looks like. >> gallup poll did a study back probably about ten years ago where 80% of americans reported that they would like to learn how to play a musical instrument. when we boil that data down we look and see that guitar was the most iconic instrument of the 20th century. you have to figure a lot of people who aren't playing guitar, that's the instrument they're going in to learn. our user demographic totals out 70% of our existing user base is purchasing the jam stick because that's how they want to learn how to play guitar and that demo kind of skews at kind of post-college male. but a lot of that is because we've targeted early adopters
and tech fans. >> david, are you trying to disrupt the instrument, the guitar, or are you trying to disrupt the music educator or more of a complementary tool to use alongside of a music curriculum? >> you know, we've always said that we're not out to replace guitar. people want to learn guitar. people are really excited about learning and so we're just kind of moving with what our users are telling us they want to do. >> given the fact you're skewing towards education, i'm curious, at a $299 price point i can buy six copies of rock smith, a pretty good entry level guitar. as a beginning guitar player, how am i going to justify that price point and is that reflecting cost of goods or is that reflecting a deliberate strategy in the market? >> the price point, to some degree it reflects a cost of goods but the other side of it is it is a musical instrument that has value and we're positioning it with ios systems. so if you're already in the ipad market, this is not your traditional app-cessory.
it is a musical instrument intended for to you learn music with. >> david, what have you found about the outcomes of novice or more advanced students using the program either by themselves or in conjunction with a comprehensive curriculum? >> our analytics shows they spend like ten minutes on lessons and then they spend a lot of time practicing or apply wag they've learned. we get reports they're transitioning to real guitars and finding they're much more confident than they've ever been and in some cases it's because they started with a real di garr and got discouraged and walked away. >> is the panel in or out? >> here is what i like about the product. they have distribution in apple. they've already had significant sales and they also have a patented technology around finger sensing. however, i remain concerned about the $299 price point and whether it's for the mass market versus a very niche fan base. i suspect with new products over
time they will have a broader audience but for right now unfortunately i'm out. >> okay. david, what about you? >> anything that can reduce the barrier and friction and frustration of learning a new instrument is incredibly near and dear to my heart. at the same time when i look at the breakout brands in music or in sports or in hobbies, people associate with the instruments that their heroes are playing with as opposed to a teaching tool. so i think it's a great idea and i wish them great success but i'm going to be out on the investment. >> so, nat, what about you? >> a plastic stick with a bunch of buttons on it, guitar hero, sold 25 million units, rock smith, 1.5. the consumers have spoken. they want entertainment, not a serious tool. osh on the other hand, we all have a problem getting data into our devices. that's why swipe was awired for $100 million. i'm in. >> that's two outs and one in.
what's your reaction? >> this has been a great experience and we're just looking forward to seeing what the next 12 months brings us with apple and other partners. >> all right. thanks so much to chris of jam stick and to our panel, alish sha, 2k5i6d, and nat, and that is today's "power pitch." >> and thanks to dom for filling in. you heard what the panel had to say. are you in or out on the jam stick? tweet us, tweet me @mandycnbc and @cnbcpowerpitch. by the way, if you want more on power pitch, visit powerlunch.cnbc.com. ty? >> mandy, let's take a look at gold prices. gold closing right now and take a look at the metals. there you see down $10, almost $11 an ounce at $1,166 and change. that's about a 1% slide on the day. moving on to silver, copper, palladium, and platinum. red numbers there. slight decline for copper. 2% fall for palladium at $676.30 and platinum down more than 1%.
chip stocks are driving the nasdaq meantime today. the semis crossing their 200-day moving average for the first time since july 6th. kate rogers is tracking the big movers at this hour. >> that's right. you just said it, right now the nasdaq composite down by nearly 1% but the biggest stories of the day the semi-conductor space. kla tencor the biggest gainer up by more than 22% after being acquired by lam research for more than $10.5 billion. lam up by nearly 6%. other big movers include sandisk, up by more than 2.5% today after being acquired by western digital for more than $19 billion. micron interestingly enough was also in the mix to potentially acquire san dick. that stock falling on the news. down by 2%. and finally keeping an eye on yahoo!, one of the biggest losers in the nasdaq 100 today after missing on the top and bottom lines and giving weaker than expected guidance down by
around 5% right now. back over to you guys. >> thank you very much. major averages rallying over the past month, and will that last into the end of the year? the three sectors you should be paying attention to, maybe even putting money into now. plus, energy stocks, they have been very hot over the past month. the names that may still have some room to run. next on "power lunch." in panama, which is a city of roughly 2 million people, we are having 5,000 new cars being sold every month. this is a very big problem for us
with respect to fast and efficient transportation. it's kind of a losing proposition to keep going this way. we are trying to tackle the problem with several different modes. one of them is the brand new metro. we had a modest forecast: 110,000 passengers per day in the first line. we are already over 200,000. back over to you guys. the names that may still have e. we are not only being efficient in the way we are moving people now, we are also more amicable to the environment. people have more time for the family and it's been one of the most rewarding experiences to hear people saying: "the metro has really changed my life."
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hello. i'm sue herera. here is your cnbc news update for this hour. united nations secretary-general ban ki-moon is urging palestinians and israelis to end the wave of recent violence. speaking at a news conference alongside palestinian president mahmoud abbas, he called on both sides to address the escalating tensions. a new york district attorney announcing that a 24-year-old apple employee has been charged with grand larceny and other crimes for allegedly recoding credit and debit cards while working at an apple store. the defendant, reuben profit, used the cards to buy letting gnat apple gift cards totaling $1 million. u.p.s. has agreed to a $4 million settlement with 14
states following allegations it overcharged its customers. the suit alleging that u.p.s. employees inaccurately recorded delivery times and took steps to prevent government customers from claiming refunds on late packages. the allegations came from a u.p.s. whistle-blower. and comedian chris rock will host the 2016 oscar ceremony in february. it's his second stint at the helm of hollywood's biggest night. rock, who hosted the oscars back in 2005 says, quote, it's great to be back. and that is the cnbc news update this hour. back to you, ty, and he's always entertaining, to say the least. >> always fun. a real character. that is great. seema, news alert. >> want to draw your attention to shares of valeant pharmaceuticals. shares are halted pending news. at the time the stock was halted, the stock was down nearly 40% on a short seller's report. we'll have to see what the news is, but again valeant shares at this point are halted. >> whoa, that's some fall there. thank you seema. let's look at the markets right
now. holding onto some gains. earlier today they were up above 17,300. right now at 17,225, basically flat right now. the nasdaq is down by 0.75% and the s&p 500 off a little less than 0.5%. let's go to bob pisani at the new york stock exchange. >> i'm here at the post. valeant pharmaceuticals. see the crowd here. valeant has been 4589halted fors pending. we had a short seller making allegations about a relationship with the specialty pharmaceutical pharmacy earlier today. we're waiting to see what, if anything, the company is going to say. the crowd behind me. meantime, a lot of earnings out today. we've been very busy with ferrari. the strong dollar a prominent part of what's been happening with the big global industrial companies. kimberly clark, for example, put up the full screen, specifically
said that higher dollar, stronger dollar reduced their sales by 12%. coca-cola reduced their sales by 8%. illinois tollworkolworks, 9%. part of the reason we've been seeing the revenue recession. generally the numbers have been holding up pretty well. kimberly clark beat on the top and bottom line, coke bet. a little of a miss on revenues. illinois tool, they beat. a miss on revenue. one other sector that's doing very well is the home building area, and anything that's related to home improvement, owens corning is just killing it. insulation. this is the do-it-yourself crowd, up 11%. roofing is up 6%. this was a great report overall and goes to the strength of the auto and the do-it-yourself home improvement crowd. owens corning, 96 cents i think it was well above the 68 cents estimate. you see to the upside. finally back up a little bit, we
want to point to the stock of the day, ferrari. priced at $52. high end of the range. opened at $60. trading right now $55.11. that's towards the lower end of where it's been throughout most of the day but still up nicely. guys, back to you. >> thank you very much for that, bob. where do we go from here? what will earnings do for stocks this week? let's bring in two guests. we now have gina martin adams from wells fargo securities and art hogan who is chief market strategist at wunderlich securities. art, the dow and the s&p have been involved in a stealth rally this month. the best monthly gains percentagewise since october of 2011. and as bob has been spelling out repeatedly, it feels like there's no al tern at this. it's not like there's a huge amount of conviction. it's just t.i.n.a., there is no alternative. do you agree and does it move us higher as a result? >> i'd agree with pisani on his take, but i think the larger issue here is we went through a real inflection point when you
go back to the jobs number that hit three fridays ago. market sold off and lo and behold we rallied and were up 9% from that point in time. one is the fed, that uncertainty about the fed has been pushed off until next year, like it or not. i don't but that's the case. and the other is china and the economic data out of china has stabilized. you remove two big headwinds and you get the seasonality of this time of year. i certainly think youga get a smoother glide path for the upside. it has to do with the fact we know more about china and we think the fed is next year's business. >> do you agree with that, gina, or is there something else you're seeing? >> i would. the only other thing i would add to that is that oil prices also have stabilized recently. it's no surprise then that energy stocks have led the rally over the month of october with oil prices up through the end of last week 20%. certainly they've come back a little bit this week, but still any stability in oil prices is
going to be very supportive for an index that has been plagued by persistent declines. >> does stability equal a blossoming process? >> we think so. you know, we've been whipsawed a lot with oil prices so far this year. we thought we might have been in a bottoming process in march to may. it looks again like we're in some sort of bottoming process. i think 2015 as a whole probably marks the bottom for oil prices and then we may inch higher into 2016. the only thing that may work against that is the dollar. we've talked a lot about that over the last few minutes, but if the dollar keeps rising, if we keep worrying about the fed coming back into the policy discussion and the dollar starts rising again in 2016, that could really weigh on oil. but in terms of supply and demand, we think we're finding bottom and we'll probably move higher into the next year. >> certainly the dollar index hasn't been rising the way it was before but thank you very much to boelt of you for joining us. you can go to powerlunch.cnbc.com to see how gina is playing the energy
sector specifically, but we do have some breaking news now. meg terrell, what are you hearing? >> valeant responding to reports today that sent its stock down as much as 40%. the company calling it an erroneous report. this coming out from short seller citron research looking into valeant's relationships with specialty pharmacies. one of the claims that had been made was a specialty pharmacy which valeant works with actually owned another specialty pharmacy called r & o. the reason it made that assertion was because two companies have a lot of the same language on the website including the same phone number. valeant addressing that directly in the first bullet point of its statement here saying that filadore handles the call center for r & o. valeant calling that report erroneous. the stock is halted down 40%, mandy and tyler.
>> thank you very much. earlier today vice president joe biden said he's not running for the democratic nomination. now we have reaction from hillary clinton and donald trump through twitter. let's see if you can tell who said what. hillary clinton said the vice president is a good friend and a great man. today and always, inspired by his optimism and commitment to change the world for the better. mr. trump on the other hand said, i think joe biden made the correct decision for him and his family. personally, i would rather run against hillary because her record is so bad. >> oh. >> to the bond market, rick santelli at the cme. >> i'm sorry. i have to -- pretty funny stuff. listen, we're going to do a gourmet bond hit today. look at treasury pairings. one and two-day charts. look at gra intraday of two-year notes. the further down the curve the more the pairings stand out. let's look at the long end. look at the intraday of 30s.
big down in yield, not necessarily paired up with yesterday. see, the point of this is the bond market has a decent volume day going, but it's stuck in the sand very close to 2% if you're looking at the 10-year and there really aren't a lot of fundamentals in the wind shield at least in the immediate future that might change that. on the dollar index, might be the great excuse of all times for multinationals. lack of revenue, but the month to day chart and even a bit longer, yeah, we're holding the bottom of a range but certainly going nowhere to the upside quick. mandy, back to you. >> exactly the point i made two seconds ago. the same page with that one, ricky. meantime, let's look at ferrari. up over 7% in its ipo. we'll take you down to the new york stock exchange once again where the luxury sports carmaker is showing wall street how to go public in style. and some big moves in the mortgage market this week after slumping in the beginning of october. mortgage applications may be back in a big way. we'll tell you why straight ahead on "power lunch."
we'll listen. we'll talk. we'll plan. baird. morgan stanley upgrading coach to equal weight from underweight. the firm saying bad news like market share declines and n negative earnings revision have all been priced into the stock. intuitive surgical topping earnings estimates. they were helped by an increase in surgeries using its technology. that news however not really -- actually not really helping the stock. sitting flat with a downside bias. and new regulations have meant big moves in the mortgage market over the past month. diana olick is live in washington with the latest. diana? >> mandy, it is a roller coaster ride that just keeps on rolling. mortgage applications shot up again last week after plummeting the week before. total apps up almost 12% for the
week. break it down, refis up 9%. loan applications to buy a home up 16%. so what's with all the swings? well, on october 3rd new regulations went into effect that require lenders to provide borrowers with new disclosures three days before the loan closes. there was all kinds of anxiety that this would delay or scuttle some loans. so people rushed in before the deadline, then applications fell off after the deadline, and now they are coming back up again. so where are all -- when we remove all that noise where are we? about back to where we were in august and september. refinances are down nearly 9% from a year ago and purchase applications are up about the same. interesting though in this report we did see a jump in government loan applications. fha and virgina which are low o down payment loans. this could be an increase in the much-needed first-time home buyers. there is predicted a drop in originations next year. they are looking for a 10% gain
next year in the much-needed purchase applications. back to you guys. >> thank you very much for that, diana. we were bringing you a story about intuitive surgical topping earnings estimates. let's bring up the correct board here and we'll show exactly what that stock is doing if we've got the chart. there we go. intuitive surgical is the correct stock and on the back of good news about an increase in its surgeries using its robotic technology, the stock is up by over 7%. tyler. >> meanwhile, a stock moving exactly the other way, take a look at valeant. it's halted right now but not before it was down nearly 40% today. the company responding now to the short seller report that tanked the stock. we are all over it. we've got an analyst who is defending valeant and that is ahead on "power lunch." down $58 a share today at $88.68. "power lunch" continues on cnbc after this.
let's go to seema, what are with he hearing? >> valeant has resumed for trade. this, of course, after the company said that citron report that came out was erroneous. at the time of the halt it was down 40%. paring back some of the losses now, down nearly 31%. so we're keeping an eye on valeant shares which have resumed for trade. again, down about 31% at this time. mandy? >> okay. thank you very much. we'll keep a sharp eye on what's happening with valeant. we're going to go for a quick break. "power lunch" is back in two. p. that's 5 extra gigs for the same price. so five more gigs for the same price? yea, allow me to demonstrate. you like that pretzel? yea. 50% more data for the same price. i like this metaphor. oh, it's even better with funnel cakes. but very sticky. get 15 gigs for the price of 10. and now get $300 credit for every line you switch. now at at&t
i'm brian sullivan and we have a whopper of a show ahead including the very latest on the stock story of the day. why one firm has sent a big-time stock down nearly 40%. valeant halted, expected to begin trading any moment. it's trading right now. thank you all very much. the voice in my head. but an analyst that says that call is completely wrong. plus, has chipotle finally lost its market mojo? and what a treat, baseball great and big time car racer c.j. wilson is here. we'll talk sports, sports cars, his car dealerships. all that and more on a huge market day. we have a lot more to do. mandy and tyler, back to you. >> i feel like he's in his element. >> thank you very much.
it's october 21st, 2015. fans of the 1989 classic "back to the future 2" remember this date. well, as the future. how does the film's version of 2015 stack up to the reality. here is nbc's kevin tibbles. >> reporter: ready for a little time travel? >> when are we? >> wednesday, october 21st, 2015. >> reporter: let's go back exactly 30 years when in 1985 michael j. fox and christopher lloyd blasted onto the screen in "back to the future," and to celebrate, we've met ken smith, who, frankly, is the spitting i am imagine of marty mcfly. he spent three years rebuilding a souped-up delorean to be his time machine. why did that movie have staying power? >> sense of family. sense of possibility. >> reporter: so how many of those future visions back in 1985 came true?
well, there was the hover board. pretty soon we might be able to buy one just like it. how about video phone calls? >> hey! >> everyone is doing that these days. >> reporter: and those dog walking drones? drones are everywhere. back in the present, the town of reston, virginia, has renamed itself hill valley for the anniversary. >> it is a wonderful community, and it's nice to connect it to hill valley. >> reporter: the entire trilogy will be screened her with proceeds going to the michael j. fox foundation for parkinson's research. there's a time travel dreamer in all of us. >> i think i'd like to do the roari roaring '20s. >> i'd love to go to the future. >> reporter: as for ken smith, there's no time like the present to celebrate his favorite film with the future generation of fans. kevin tibbles, nbc news, reston.
make that hill valley, virginia. >> he really did looked like michael j. fox. >> that was really kind of freaky. >> i think it's my 10-year-old's favorite movie as well. >> my kids love all three. it's going to be a very busy hour coming up on the second hour of "power lunch." thanks for joining us for the first. >> thank you. and, brian, over to you. >> and i think i speak for biff when i say, mandy and tyler, why don't you make like a tree and get out of here. >> done. >> it is 2:00 p.m. on wall street. lunchtime in boulder, colorado, where in one week we will host the next gop debate. the dow is up today, oil is down. hi, everybody. it is a big market news day. la let us jump right in with melissa at the nasdaq. biotech particularly one big story is the story right now in the market. >> it's a story we've been all over all week. we start with shares of valeant just resumed trading after being halted briefly once again. shares hit hard on explosive short seller report from citron research. that's bring in meg terrell, our pharma and biotech reporter on this.
meg, at the very crux of citron's report is a question, is valeant using phantom pharmacies to boost sales? does the statement released by valeant just moments ago address any of the concerns in either the citron report or the other report out from the southern investigative reporting foundation earlier this week? >> so what the valeant statement addresses is an allegation in the citron report that two of the specialty pharmacies that valeant works with, philidor and r&o, citron alleges they are the same company, and then it alleges as part of that that there's some accounting fraud on valeant's behalf. valeant in its response says nothing about accounting fraud necessarily, although it does go into some points of how it books revenue from these specialty pharmacies, but one point it focuses on is the idea that these two companies have the same customer service phone number listed on the websites which is one of the reasons that citron gave for these two companies in fact being the same company. valeant says that philidor is a pharmacy licensed in
pennsylvania and provides back end services including call center to other pharmacies including r&o. that's as far as it goes. it directly responds to that claim in the citron report, mel. otherwise it reiterates what it said on monday about how to books revenue. >> it's an odd thing, meg. when you look at what citron is claiming, it's probably way too complex to go into on a three or four minute hit on tv bir but i think you nailed it which is basically citron research is confused as to whether or not philidor and r&o are actually the same company. now, valeant coming out, and i'm reading their response, and all they seem to suggest and maybe this is why the stock is still getting crushed, is that, yeah, well, we ship stuff to them and they record it when they sell it, but they don't really get, as far as i can read, to the heart of the matter about the real relationship between those other two pharmaceutical companies. >> yeah, and there's a lot of really confusing details going
on here. there was a report earlier this week from an investigative reporting service that essentially said that there was a lawsuit where valeant was claiming $69 million from r&o and then citron comes out and saying r&o and philidor are the same company and then on monday in its earnings call valeant said it had an option to buy philidor. there's just a lot of confusing things about all of these companies and what's going on here and it would be great if valeant would come on and explain it to us a little more clearly. >> yeah. and valeant has not said actually -- because it has an option or had an option to buy a stake in philidor and in this specific statement it doesn't say whether or not there is any sort of financial relationship at this moment in time. it also doesn't explain why there was no invoices between valeant and r&o. that's the other piece of this mystery. >> yeah. there's a lot of confusing things here, and essentially i think what they're saying is they were saying something about recognizing revenue from philidor as part of their own
essentially because of the way they distribute their products through philidor as a specialty pharmacy, and so that is very confusing. there's just a lot of details here that folks don't understand, but clearly an unraveling of the stock down 30%, at one point down 40%. it seems to belie some -- a lack of confidence in the business model altogether. >> it's a complicated story and why this philidor company is so interesting all of a sudden, our viewers is probably thinking who the heck is philidor. i haven't heard of them either. they're based in an office park in philadelphia, pennsylvania. all of a sudden a couple days ago valeant suggests not only we have a relationship with them, in fact, we have an option to buy them. so this company that has sort of come out of the woodwork. then this other company, r&o, just to complicate it further, got a $70 million bill from
valeant and r and o. sa says we never done business with them. but they have the same privacy hotline telephone number. citron has done some good work. they've done some work that has not been so good. but right now, meg, it's clear, and melissa, that investors are maybe not believing valeant or citron entirely but valeant is getting crushed. >> well, this has been a shoot first, ask questions later kind of stock, brian, for weeks and weeks. meg, as you know, the argument going in, it was one of these high-flying hedge fund hotels that could have been construed as being held within strong hands but at this point you have to wonder what they're doing and how that is emphasizing or exacerbating this decline in the shares. pershing square, 24% of the portfolio as of june 30th was in valeant shares. and you take a look at the knock on effect, i know you have been covering this, some hedge funds are in all three of these stocks, getting caught
completely on the wrong side of the trade and the one that comes to mind is paulson and company as of june 30th with sizable positions in all three. so we also have to take a look at the knock on effects on this. meg, do you think this provides stronger hands or weaker hands at this point for this trade? >> well, it's interesting because allergan just came out trying to differentiate itself from valeant and other companies that use specialty pharmacies putting out a statement saying that it doesn't rely on specialty pharmacies for its branded products. in terms of its shareholder base, you know, we've been wondering if the hedge fund interest in valeant has been unwinding for some time as a result of kind of looking like a shift in its business model, not really liking that valeant might have been going towards being more of a traditional drug company investing in research and development. so it would be interesting to hear from its holders now. clearly there's a lot of selling going on and who is selling and who is holding on seeing this is a good buying opportunity now. >> and also just to give credit where credit is due, if you want to call it credit at all, the
southern investigative reporting foundation which you mentioned at the top of the report, they have also done some work on this. i think the so-called smoking gun, if you will, on that report, if again you believe this and this is just allegations and reporting by either citron or southern investigative reporting foundation was a guy named russell wright who apparently runs r&o has done business with or is a part of philidor as well. there's the confusion. a lot to get cleared up. the story is nowhere near being completed. meg terrell, we'll let you get back to work. >> thanks, guys. >> all right. let's get now to a news alert with julia boorstin in l.a. what's going on? >> well, brian, jack dorsey taking the stage at his first big event since being named permanent ceo of twitter offering a new succinct definition of twitter is. he's saying it's fundamentally a simple messaging service. dorsey kicking off a day of announcements and presentations to developers by apologizing to them.
>> we want to come to you today and first and foremost apologize for our confusion. we want to reset our relationship, and we want to make sure that we are learning, that we are listening, and that we are rebooting. >> dorsey asking developers to tweet in their "for what they want to see the service do. today he's talking a lot about how twitter is opening up to get a wider range of partners, integrating more with other apps will be a key way to grow twitter's base. >> julia boorstin, thank you very much. another big stock story today involves tacos because chipotle's numbers came in weaker than many had hoped and that stock is down over 7%. bob darrington lowered his price target and he joins us now. bob, chipotle has a problem that
many fast food restaurants would be happy to have, which is growth of around 5%. but that's not what investors had hoped for or been accustomed to. is this a blip or a serious turn for chipotle? >> you know, it's a fair question. what i would say is part of the issue around the industry right now is chipotle has had great trends. there's no doubt about this. it's not a carnitas problem per se. it more relates to, i think, the competition within the industry. because the industry itself is lapping really strong trends from last year, and so most of the other brands are really competing to grow their business at a period of time where obviously chipotle does, too. consumers have never had more options and especially at pretty attractive price points. so i think chipotle is literally while it may be a differentiated business model, they're competing with the rest of the industry and the industry keeps getting tougher and tougher. >> you know, chipotle, bob, has made a lot of investors a lot of
money for years. it's been a spectacular success story, spectacular growth story, spectacular wealth creation story. when you look at the stock chart and see the gains, one wonders now that they're much bigger, has the easy money been made and maybe it's time to move on to greener pastures. >> that's a great question. this is a company that has had spectacular growth. there's no doubt about that. however, when i look at the projected growth going forward whether it's same-store sales, whether it's unit growth as a percent, the growth overall, there's still growth there, but it's at a slowing rate. so at some point, you know, we're going to have to look at more likely a longer term contraction in the valuation. that's the biggest risk i think. it's not so much the earnings numbers, it's especially the multiple and that's what's affecting the stock today. >> can't chipotle solve some of its traffic problems by slowing the pace of store openings.
it seems like they're cannibalizing themselves. >> that's a risk, no doubt. they're competing against themselves somewhat, but in the big scheme of things, consumers really are passionate about this business. this company's product. and given the returns on those smaller stores, their a prototype restaurants, i think it makes a lot of sense for the company to continue to grow those. so, you know, the problem is do you cut back on growth and, you know, affect your comps? maybe. but i think in the big scheme of things, this company has a lot of ways to grow its business, melissa, especially when you look at the back of the restaurant, the make table where essentially they have another production line that ultimately i think they're going to find a lot of leverage in this business model to come. >> all right. bob, we are going to leave it there. bob darrington, telsey advisory group. thanks. >> thanks, brian. here is what's your on your "power" menu for the rest of the hour. ferrari making its debut at the new york stock exchange today.
it's exciting to help a customer with an energy efficiency project because not only are they saving energy but they are saving water. we have a lot of projects at pg&e that can help them with that and that's extremely important while we're in a drought. it's a win for the customer and it's a win for california. together, we're building a better california. [female announcer] if the most is the staying awake part, day sleep train has your ticket to a better night's sleep. because when brands compete, you save during mattress price wars. save up to $400 on beautyrest and posturepedic. get interest-free financing until 2018 on tempur-pedic. plus, helpful advice from the sleep experts. don't miss mattress price wars at sleep train. ♪ sleep train ♪ your ticket to a better night's sleep ♪ shares of ferrari, ticker race, what else, taking off in their first day of trading and
that is creating some instant billionaires. let's get now to robert frank live outside the new york stock exchange. oh, man, why do you got to get these -- you get the best assignments, robert. >> you know, brian, it's only for you. i wish you were here and as you mentioned, the race is on as ferrari started trading this morning. you wouldn't believe the crowds we have at the stock exchange. there are just hundreds of people in front of me looking at these cars. it is the definition of scarlet fever. we want to show you a few of the cars we have outside here. behind me the blue car, that's a california swb from 1961. like a lot of vintage ferraris it's worth more than $10 million. shows the durability of this brand and why stock buyers have just given this stock so much of a high premium. ferrari started as a race company. they built road cars starting in 1947 just to fund their race car hobby. and this shows that ferrari is still in the race game. formula one coming up this weekend, as you know. this is their current formula
one car. but now we have the creme de la creme, a la ferrari, a $1.4 million car. they only made 499 of these. they all sold out. we have one for you today. this, by the way s a hybrid. now, as you mentioned, we have created a lot of wealth today given the share price run up and one of those beneficiaries is a newly minted billionaire, piero ferrari, the son of enzo ferrari. he officially today became a billionaire. also becoming wealthier john elkann. they own 24% of ferrari. they are worth $2.5 billion. a lot of new billionaires created and a lot of billionaires going to be buying these cars and future ferraris after this ipo. brian, back to you. >> i'm not in the advice giving business, but i'm going to offer you some unsolicited advice. do not drive that la ferrari
around the nigh ysnyse. it wouldn't make it with those roads. >> i think the clearance here is -- it's about three inches. look at that. >>out still hit a rat sitting in a pothole in that car. trust me. don't do it, robert frank. i'm jealous, buddy. thanks a lot. let's bring in brian hamilton, chairman of sageworks. brian has been watching the ferrari ipo closely. brian, you're a successful guy, probably a wealthy guy. you may own a ferrari yourself but you would not buy ferrari stock right now. how come? >> hey, bri, i have a highlander to give that perspective. >> that's hot. >> sorry. look, here is the thing with this company, i like the financials. i like that they're growing. the sales are up 18%. they're profitable, they've got net income. the thing that kind of bums me
out, bri, is they are trading at 33 times trailing profits which is pretty rich. if you can compare them tob mw, bmw is at 8 and i know ferrari is better than bmbmw, but all t other automakers are trading at much lower multiples. the company has great brand, obviously everybody is excited there about the car, but at a financial level they're a little high i think. >> shouldn't it trade at a premium though, brian? isn't it unfair to compare the pe of ferrari versus a bmw or a daimler? isn't that like comparing a louis vuitton to kors or coach? >> yeah, that's funny. remember, a learjet is still a jet. we have to go from point a to point b. a car goes from point a to point b. here is the answer to that. i would give them a little bit of a premium, but, remember, they're three times the premium. so in a market that's been a little bit chaotic, as you guys know, the ipo market has been a little shaky, you are paying
quite a bit. so if the market goes down again, i think this could be a risky stock. >> first off, melissa, michael kors on line one for referring to the company as the low end. >> well, no, no. a bmw is a very nice car, brian, but it's not a ferrari. the bmw doesn't have the same resale value as a ferrari. a bmw doesn't only make 7,000 cars a year ramping to 9,000 in a couple years. completely different story, right? that says -- just playing devil's advocate but that tells me the -- >> bmw and its i-8 may disagree with you. >> that's one car. every ferrari that is manufactured is a collector's item potentially. >> remember, one -- >> what -- >> an important point though. are some stocks which -- i'm not say the business is not solid, are kind of just vanity stocks. you own it because you want to own a piece of ferrari and go to a formula one race and go i'm a
ferrari owner. i don't have a car but i got a piece of stock. and that has value. >> it does. like the green bay packers football stadium but you can't sell it. so the bottom line here is the brand is excellent, but remember, if you buy the stock, you're paying three times the normalized value of that stock. and that's a lot in a market that's been shaky, and remember, you know, the expansions don't last forever. the stock market doesn't go up forever. and when that happens, new ipos or when that market goes down, ipos suffer a lot. >> brian, got to leave it there. great discussion. thank you. brian hamilton. coming up next, a mighty big return in the mighty, mighty midcap. and speaking of midcaps, one last look at today's mystery chart. the best performing midcap stock up 150%. entric,
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annualized return of 14%. thank you for spending time with us on cnbc. we talk a lot about the strong dollar and how the big companies will get hurt because they export the small companies, they're domestic, they don't have an impact. is there a way to define the midcap space easily? >> no. the easiest way to do it is define it by market cap. at the low end 1 to $2 billion. the higher end $20 billion to $25 billion. even some $30 billion companies but it's a fantastic asset class. it has performed well on a one-year basis. a lot of people would be surprised to learn it's outpmped small and large cap on a 2, 5, 10, 15, and 25 year basis. >> i had a second brady bunch reference in seven days i think. we always joked the middle child
gets ignored. the oldest and youngest get all the love. are there some great companies that are just ignored because they're not in the dow. they're not these up and coming small caps and they're just kind of killing it, doing their thing, but no one is paying attention, no one but you. >> most of them, they graduated from their small risky, you know, sort of startup phase, but not everybody knows them like they noknow amazon or ibm or cisco. here you have all these great companies that still have a lot of growth ahead of them but yet have not become kitchen table, kitchen brand names. lots of them out there. >> all right. give us a couple stocks that you particularly like in your space right now, brian. >> last time we were on we talked about signet because it's a sat category killer that has yet to kill its category. >> up 20% since that visit so nice call. >> thank you. there are a couple others that are still out there. not every category has been killed by the likes of home
depot or bed, bath. so signet is one of them in the jewelry space, but in the used car space carmax is still out there. they have about 4% or 5% of the late model used car market. i would not be surprised if, you know, we have this conversation five, ten years from now. they have 10% or more of the used car market. it's a fantastic company. >> all right. brian, we are going to leave it there but we appreciate. watching signet and some of the other names. thank you. see you again. >> thank you very much. >> i'm a middle child, brian, so i'm not sure what that says about me. >> are you really? >> i am. >> what's that like? i'm an only child which is pretty obvious. you're number one to us, melissa. >> that's so sweet, brian. my heart is touched. time now to reveal today's mystery chart. here it is again. the best performing midcap stock this year and it is sketchers u.
150%. let's bring in corinna. it's sort of taking advantage of these great trends going on right now in terms of athletic ware and athleisure. >> it's a very powerful trend, particularly in the u.s. and now growing internationally. we're starting to see nike at a premium price really blow out that market which is opening up space we think at the lower tier for companies like under armour and skechers to participate. >> is skechers competing against an under armour. >> it's a lower income consumer. it's somebody who is shopping for value, not particularly for brand. >> i feel like skechers is the athletic shoe company that gets no respect. when i think of skechers, i think of shapeups and toneups which were those weird shoes with the thick soles that sort -- allegedly helped your calves form but it's gotten some legitimacy now. >> now they're more into performance, more into technical footwear. they are also big in the casual sports which is a slip on trend.
they've been blowing those out as well. >> you like the fact that it has high goals in terms of international revenues. you expect it to reach 50% of total revenues by 2020. what areas are they targeting and are these areas where now we are seeing maybe some glimmers of trouble? >> that's the difference between this cycle for skechers and the last cycle. last cycle shapeups were only a domestic trend. this time they're a more diversified portfolio and international. china could be a billion dollar market. they think 50% of revenues could come from the u.s. and 50% international. we think that's will be an incremental $1.4 billion to the company which will equate to $10 in earnings in fiscal pe 20. >> you make a point the valuation is a premium but it's worth it. why? >> they're putting up some very strong top line numbers. for tomorrow we're expecting 30% top line which breaks down to about 25% in u.s. and 50% internationally. so it's very hard to find
companies with strong top line momentum. and they're also putting some leverage also in their operating expenses which is dropping down to the bottom line. so we think very strong earnings numbers for tomorrow. >> corinna, great to see you. $50 price target. >> thank you very much. let's get a check now on the price of crude oil trading at the nymex. closing in just a about a minute's time and we are down. we had a big inventory report that sent prices down. that's exactly what we have now. barrel of crude oil going for $45.21, down 2.3%. every time oil pops its head up, like a whack a mole, somebody comes back in and hits it down. i don't know what you're paying, but overall the price of g gasoline, ougat a low. i filled up this morning in new jersey, $1.79 per gallon. that is fantastic. oil set to close down though about $1.10 per barrel.
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i'm sue herera, here is your cnbc news update. vice president joe biden says he is not running for president. he made the announcement at the white house this afternoon with his wife, jill, and president obama at his side. he says he believes he ran out of time to mount a 2016 campaign. a pilot was killed in a jet crash after taking off from a u.s. military base in england. officials say a marine corps fa 18-c hornet jet crashed in farmland this morning. there were no other injuries. the european union demanding starbucks and fiat chrysler repay up to 34 million each in tax breaks they received. starbucks says it plans to appeal while fiat chrysler denied it received any state aid that led to those charges. and new government statistics show more and more americans are smoking marijuana. usage by adults has more than doubled since 2001. the increases were most notable among women, african-americans,
hispanics, and those living in the south. the report is from the national institute on alcohol abuse and alcoholism. that's the cnbc news update. brian, back to you. >> you'd think yum brands would be doing better given that statistic. >> yes, the snacking, yes, indeed, you would. >> it's not benefiting. sue, thank you very much. >> you're welcome. time now for "street talk," the first stock twitter. i guess until valeant, this was the attention getting call. down grades to an underweight. they got a $24 target, 20% below the current price. limited user growth, declining engagement, and a lack of material incremental ad demand and competition from instagram and snapchat and even youtube. that's interesting, youtube. >> yeah. thanks morgan stanley for that sell rating. the stock is down 42% over the past 12 months. it's really helpful to investors out there. number two stock, brinker
international. a downgrade to a market perform. management wants to re-emphasize value at lunch and dinner, things lick bottomless chips and salsa and these initiatives will take time to gain traction. here is what's interesting, sales trends in texas and other oil and gas markets have softened further. and for them that's about 30% of company-owned chile's. >> you know, when your pay goes down in the oil fields and so many people's have, you have a little less money to eat out even as gas prices have come down. the only worse performing midtier sit down, the parent company of outback. darden and cheesecake stocks are higher. it's not a sector issue. third stock waste management. upgraded from a buy to a hold. their target is 60 bucks. 13% upside. they see higher waste volumes, specifically they note they should be able to manage a 5% to 7% free cash flow growth rate. >> good times and bad, there's always trash.
fourth stock here, micron technology. the deal to acquire sandisk is official but a couple analysts downgrading the stock because of what a competitor announced yesterday. bank of america cutting them to an underperform the day after intel announced it itself is investing up to $5.5 billion to manufacturer flash in china. needham also cutting micron to a hold citing intel. >> here is the reality. micron is a commodity company. their commodity is computer memories. >> d-ram. >> and the price has been terrible. you and i were both -- we've both been doing this long enough to remember 15 years ago when micron was a $95 stock. >> so many stocks were like that. >> ouch, yeah. finally all scripps health care. chicago based technology company. avondale partners starting coverage with outperform. $19 tash get, implies 30%
upside. they think it's undervalued and the market underestimating their ability to win business in the bigger hospital arena. breaking news with scott wapner. >> that breaking news is that someone who continues to believe in shares of valeant and a big investor at that, big ackman telling me just a few moments ago that he bought an additional 2 million shares of valeant today. that would be a purchase of some $200 million worth of stock today based on at least $100 share price or there about. pershing square was already one of the largest shareholders in this company, the third largest by recent filings. it would take the size of the position to more than 20 million shares that pershing scare now holds. you know about the long history of bill ackman involved with valeant, allergan trying to consummate a transaction between the two companies that ended up not happening but at least because of this news that was
out today that has taken valeant shares down by some 40% at the low. at least one of the biggest sho shareholders is not wavering. bill ackman buying an additional 2 million shares of valeant. guys? >> i'm curious whether or not ackman commented on any of the allegations and whether or not he believes -- what he thinks, are they categorically false? has he talked to the company himself? >> all he would tell me is the purchase speaks for his belief in the company, melissa, and i guess $200 million worth additionally goes a long way towards doing that. he also made the point in telling me through this whole saga and all of the other controversy that had been swirling around this company, whether it was around drug pricing, whether it was around acquisitions and things like that, that pershing square had never sold a share of valeant. so that should give you a little bit additional color into where his belief of this company is,
not only not selling stock but today who knows if it was at the absolute low of the day or what, but bill ackman adding an additional 2 million shares of valeant to that portfolio. >> yeah, and that is resis tating the stock just a little bit. great job getting that news from ackman breaking the news about 2 million shares being bought. stock is down but well off the lows. we hit the other side of it. i guess if you want to take the bullish side of the case, if you look at the bonds, and i actually brought up some valeant bonds on my screen. the bonds aren't moving a whole lot. so the credit markets aren't killing valeant. it's more an equity issue. >> and this is a stock, brian, as you guys know, we've talked about so often as being a so-called hedge fund hotel. many big investors have been in this name, something like 20% of the outstanding is owned by big investors, some of the biggest
hunds. th hedge funds. it's been a name that's been around and believed in by big investors who at least ackman himself isn't wavering. i can't speak to the other institutions or hedge fund guys who may be in here but it speaks to his level of conviction that the company's business model is legitimate and not believing much of anything that citron had to say in its pretty damning report today that was the talk of the street and took these shares down by nearly 40%, and now you can see the volume obviously is reacting quite heavily. the stock is way off the lows. >> and listen, this is a big boost to valeant obviously and the stock right now, it's crazy. i can't wait to see the volume on this name by the end of the day. again, this is also a name for john paulsen, he was a big owner. according to the last filing, he was a big owner. d.e. shaw, for all of our
non-henon nonhedge fund viewers, t. row price is the second biggest holder. specifically the prhsx, the health sciences fund was as of the last filing a big holder of this name as well. so for all of our viewers and listeners, if you own a biotech or health science mutual fund or etf probably good advice tonight to go home and look at what you own, right? >> the other good point you made, brian, is as of the most recent filings, things -- >> it could have changed. >> things can change quite often because at some point today it was reported that another 4u7nd fund and that hedge fund contacted me immediately and said we don't own it at all anymore. you don't know truly what the situation is if you look at the filings. however, it's clear that at least towards the very top, pershing square is there and is bigger than it ever has been in
valeant. >> you got to wonder, scott, what the pershing square investors are thinking at this point with him digging in his heels. he's had a tremendous track record, but this is a tough position to take and he's taken other tough positions in terms of stocks that are moving against him and getting in deeper. valeant specifically as of the last filing was 24% of his entire portfolio. that's a pretty outsized position. >> knowing bill like i think i do, and as all of you guys have seen from his appearances on the air here, he's not a guy who lacks conviction about the positions of which he takes, right? and whether that's herballife and being short that name or for ma matter any of the other long positions he has, it's not like he has a massive portfolio of a million different names. it's somewhat concentrated, so the positions that he takes are going to be larger than maybe some other funds that are maybe a little bit bigger or that have a whole run of say a couple dozen names. he doesn't run the book that
way. so you're going to have situations like this where, yes, he is going to be vocal in the fact that he is supportive of the companies that he's invested in and today maybe he's not doing so so much with his mouth as he is with his money. >> by the way, i went through -- again, this is all coming from capitali q, pershing's investments, he has some personal investments. i made a quick index, and i looked at his year-to-date. he would be -- if he is equal weight which he's not, ackman would be up 2% on his public investments. three big names have done well for him this year, herbalife, jcpenney, and mondelez. valeant including today has been crushed, canadian pacific has been hurt as well as air chemicals. t. rowe price -- >> they're key point is that these guys hedge their positions.
obviously there could be option strategies we're not seeing to make what appears to be a losing position not as big of a losing position as we think if es he's selling premium or options against the position. >> let's hope. that's a good point and that very well may be true in this particular case as well, but from my speaking with him albeit briefly, there was no wavering at all in the level of belief he continues to have in valeant's business despite those allegations today which have just devastated the stock at one point. >> listen, there's a lot of questions here. they are strong allegations. "the new york times" poking around, the son investigauthern investigative reporting. it could turn around to be garbage but there's more people sniffing around. scott wapner, awesome job. just getting off the phone with ackman reporting that he's
bought an additional 2 million shares of that stock today. val aineant still lower but welf the lows. time for trading nation and let's talk vegas and a little macao. we're looking at las vegas sands, boris sha lossberg. todd, which way does it look like this stock could break on earnings. >> it looks supported here. the 40 level 4e8d well. there was a strong golden week which gives a lot of activity to the asian center. that stock looks reported. if we break up through 50 i would say the upside is in play. we just put a trade on on the live trading nation show which actually took advantage of a short chinese etf in the fxi and you should note there's a 77% correlation between the lv s and the fxi. we are bearish by proxy in china so that says i don't think that 50 is going to break. i think we stay under pressure here. >> all right. boris, from a fundamental
perspective, can we read into a macro china based on what lvs tells us? >> no, but i think the most interesting fundamental point i saw regarding china was the travel information that showed if all the region of the world who are doing well as far as travel, far east, which is china, is doing the worst. only up 2% in august. i think travel probably is going to correlate relatively well with lvs. lvs may bounce back because they had that good golden week but anything here is just going to be sell the rally move because ultimately the chinese consumer is still hurting and i think the chinese story is still negative long term. >> todd and boris, we will await lvs results tonight. don't go anywhere because we have to do our online version right after this show is over and you can see all these, two more a day, folks. tradi trading natination.cnbc.co tradingnation.cnbc.com. "power lunch" will be right back on a busy day. don't you go anywhere. back after this.
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>> from simple geographic coverage of the rest of the world. it's a big world. we only have 204 points of sales. we only have 180 only have 180 salesmen that really cover that network. i think the potential is much larger. high net worth. the population keeps on going up. >> let's bring in phil lebeau. it's a big world. but it's also an expensive car. >> yes, but there are a lot of very, very wealthy people in the world. when you take a look at what happened with ferrari today, you saw a stock in heavy demand. sergio ringing the opening bell. the open was at $60. what's it trading at now? a 55, $56? i was talking with bob pisani about this. he said it's very much in demand. the valuation for ferrari, a little under $10 billion. and it's the issue of demand.
sergio talked a little more about it and how they believe they can keep it growing. >> we need to grow before we try and supply it. and really destroy the brand. it's a very careful walk and a very, very tight relationship between us. >> they didn't stay up at $60. nobody's complaining at $56.27. >> if he doesn't have to wear a tie, i don't think we should either. cars and baseball, and a guy who knows and loves them both. c.j. wilson of the l.a. angels your guest next.
shares well-off the lows of the session. take a look at other biotech shares that are being lumped in. allergen issued a statement distancing themselves from valeant. more "power lunch" after this. pages per second. that's fast. my analysis shows your major themes are that time passes. and love fades. that sounds about right.
there's going to be a lot of after hours action in shares of e-bay today. they report earnings. we'll be all over that conference call tonight at 5:00. we'll continue our coverage of the valeant decline. >> also, jay leno's garage. the guy in tonight's episode, one of them anyway, joining us from l.a., angels pitcher, race team owner, car dealership owner, c.j. wilson. it's great to have you on "power lunch." i'm a huge angels fan. thanks for coming on. first off, you're also a rich guy and an investor. did you buy shares of ferrari? >> yeah, i was in on the ferrari ipo. it was one of the things with
such a great ticker, like race, you've got to get in on that. >> what attracted you to the stock? obviously the cars are awesome. the company's awesome. why the equity? they're different things. >> i think it's such a strong brand. you have to look at their goals and see how they're trying to -- you know, i follow this stuff a lot as a dealer, and as an enthusiast. they're actually in growth mode right now. they're a strong brand. everybody knows what ferrari is. >> you've got one of the top ten mazda dealers in the united states. do we talk a lot about the consumer here? that's what the c in cnbc stands for. how is the consumer? how are car sales right now? >> car sales are very good for us because i feel like we differentiate ourselves from other dealerships by providing customer service experience. at the end of the day, you just want to be taken care of. if that's a $100,000 car or a $30,000 mazda, that's what we feel like we can do you. >> what were you showing off? >> a couple guys. a couple porsches and one of my
mclarens. >> do you honestly drive the p1 around town? >> rolling in my mclaren on pch. i actually take it on track days. i drive it to the stadium. i have about 6,000 miles on it right now and i've had it for about a year. so i drive it quite often. >> if there's one car you do not possess but that you could possess, what would it be? >> the mclaren f1 is still out of my reach financially right now, because they're about 12 million bucks, but i think that's the best car ever made. i would buy one of those if i had the cash. >> well, listen, i hope you guys make the playoffs next year, by the way. it was tough coming out of that last game this year, c.j. >> yeah. >> kill it next year, get a huge contract, and get yourself that mclaren. there you go. as simple as that. >> there you go. that's the american dream. >> it is. race team owner. watch you on the track as well. thank you for joining us. busy news day. appreciate that. thank you all for watching "power lunch." huge closing bell. valeant on the move. i'm sure this will take up a lot
of time. >> i'm sure it will. close close starts right now. we'll see you tomorrow. >> welcome to "closing bell," everybody. i'm kelly evan of the new york stock exchange. >> and i'm bill griffeth. you know the stock story that has everyone talking, valeant pharmaceuticals. noted short seller was out with a new note accusing the company of fraud, calling it the enron of pharmaceuticals. that stock got slammed. hit a low of around $88 a share. our own scott walker just reported a little while ago that the hugh jackman fund manager bought an additional two million shares of that stock. shares are now off their lows. we have all the details on a wild story about this company coming up in