Skip to main content

tv   Power Lunch  CNBC  November 4, 2015 1:00pm-3:01pm EST

1:00 pm
morning celgene. i think they could be very interesting. we've heard a lot of good things from biotech. >> ralph lauren is tomorrow before the bell which is certainly going to be interesting along with celgene, energy names as well. guys, thanks. thanks to all of you for watching. "power" starts now. indeed it does, scott. thank you. gentlemen, thank you very much for bringing us over here to "power lunch." welcome back. >> great to be back. >> welcome, everybody, to "power lunch." i'm tyler mathisen along with mandy drury. a precipitous, some would say violent reaction to gjanet yelln on capitol hill. you can see stocks start to dive during her testimony. the dollar picking up steam as she puts the possibility of a december interest rate hike squarely in the middle of the conference table. >> we saw a big impact in the bond market. we are minutes away there an auction on two-year note. we'll see whether we see the yields push up even further.
1:01 pm
>> and, folks, a key part of the estate tax, controversial tax to begin with, being almost totally ignored. is the irs about to strike back? we'll tell you about that one. >> we certainly will. we start with fed chair janet yellen getting grilled on capitol hill on regulating the banks and also her comments on the economy. steve liesman, take it away with the highlights. >> she's just finishing up testimony now, mandy, on the last question of the hearing that gab at 10:00 a.m. this morning that was supposed to be aboutbac banks but ended up mak news on monetary policy. chair janet yellen told markets to wake up and get ready because december is a live possibility. >> what the committee has been expecting is that the economy will continue to grow at a pace that's sufficient to generate further improvements in the labor market and to return inflation to our 2% target over
1:02 pm
the medium term, and if the incoming information supports that expectation, then our statement indicates that december would be a live possibility, but importantly that we've made no decision about it. >> so she said no promises, but the market heard rate hike. two-year popped, the stocks fell, and the dollar strengthened. i want to play you one more piece of sound from the hearing in which she characterizes the u.s. economy in a stronger way than i believe she has in the past and talked about the impact of global economic developments on the u.s. >> we take global performance into account, and at the moment what we see is a domestic economy that is pretty strong and growing at a solid pace offset by some weakening spilling over to us from the global economy. on balance, as we said, we still
1:03 pm
see the risks to economic growth and the labor market is balanced, but the global economy has been a drag. >> and all of that had the effect of hiking yields on the two-year note. it was up north of 80. settled back down just a bit. stocks fell. they were positive on the day, now they're down about 52 points or so on the dow and the dollar strengthened quite a bit. what you saw is the euro fall through that 109 area into 108 and that's going to be a problem, tyler and mandy, for the federal reserve to consider as it talks about raising rates, the dollar strengthens, which ends up having a deflationary or disinflationary impact and moving it further away from the goal. it's a catch-22 here, tyler. >> currency markets have been moving on that yellen testimony. hawkish tone. the dollar rallying as you see right there, and there you see it against the yen, the pound, and the euro, where the euro is
1:04 pm
down more than 1% against the dollar. still a lot of uncertainty out there. europe, brazil, biotech, china, some of the bricks in the wall of worry as we like to describe it. what are the new bricks? dominic chu taking a look. >> tyler, again, it's interesting here because fed chair janet yellen gave us a whole bunch of new bricks. they're not new, we've known they were worries for a while but look at the ones that have been brought to the forefront yet again. first of all, you have what will be u.s. troops, albeit in a small amount, in syria, heightening the idea of geopolitical risk. the syria equation playing part of the market story as well. you heard janet yellen talking about the u.s. economy. she says it may be strong, others tend to disagree. still, the u.s. economy will be a huge focus and the relative strength. then the ipo market. a lot of larger ipos are now trading at or below their initial offering price. perhaps signs of weakness there.
1:05 pm
and then transportation stocks as well. people are moving stuff around but maybe not as much and not as robust as some would like. transports a leading indicator, and, of course, mandy, we just talked about the u.s. dollar and what's happening with currencies. if the dollar strengthens appreciably from here you could see more headwinds for the large multinational u.s. companies, mandy. back over to you. >> thank you very much for the new bricks there. do you buy this market or sell it? joining us are ben willis of princeton securities group and matt tuttle. thank you for joining us. ben, we're in spitting distance of those record highs. do you think we're looking a little overstretched, at least near term. >> for near term, yes, it's possible we are slightly overbought but it doesn't change my bullish tone. the corrections that will come from an overbought situation are buying opportunities without a doubt. i think the market will, the dow jones, the s&p, the nasdaq where we are today will be higher on december 31st. between here and there will there be a better opportunity to
1:06 pm
buy? absolutely. but today was one of those days. you're seeing the broad markets come off, yet some of the higher beta stocks like the f.a.n.g. stocks from jim cramer's world are putting on a great performance and i think that's what's going to happen in the broad market as well. it will be -- the broad market, unfortunately, will be driven by a select few stocks. that's why this is a stock picker's market. it's hard to be bullish on the broad market in that sense but for those people like josh brown looking to beat their portfolio numbers, it's going to happen by buying individual stocks that have been sold for the wrong reasons. >> and a year end rally but maybe narrower leadership. matt, you're a little more bearish on the market . is the rate hike on the table feeding into that? >> the rate hike is definitely feeding into that. it sounds like the fed is trying to get us ready for a december hike, but the way they've been throwing curve balls this year, who knows. you know, both of our etfs right now are sitting on a decent
1:07 pm
amount of cash because we do think that near term the market is extremely overbought. we also don't like the fact that investor sentiment is at nose bleed levels. so we are looking for an opportunity to get back in here, but we do think that there's going to be a sell-off that will present that opportunity for us. >> yeah, absolutely. the latest readings showing bullish sentiment increasing, bearish sentiment decreasing. thank you very much to both of you for your pulse on the market. let's take a look at what's happening with bonds. we have a news alert in the bond market with two-year notes up for auction. as we saw the yield hitting its highest since april 2100. >> demand isn't very good. i gave it a "d." it's a one-off auction because the debt ceiling issues, jack lew was pretty quick on the trigger to cancel it.
1:08 pm
yield at the dutch auction, 0.824. looked to me like 82 basis points was trading when the market turned into a one-issue market. consider this, highest yield in an auction for a two-year since, let's see, what was it, april of 2010, 3.01 bid to cover. 10 auction average is 3.37. that's the weakest since may, since may of 2010. so april, may, you see what i'm getting at? there's a lot in common with the last time we saw yield this high. in indirects at 40 was the weakest since -- 40% since april of this year and 11 on directs wasn't great but we have seen not great directs on 2-year. so a "d" for the one-off auction. maybe many investors apprehensive to be owning something that is unable to be handicapped, meaning the fed. >> thank you very much. a lot of people have oks to the
1:09 pm
estate tax and now there may be a new problem with it. eamon javers is in washington. >> this is a story that came to me from a tip from a high ranking swiss banker who asked not to be named but this swiss banker sees this area as the next potential explosion point in the global tax wars between the united states and europe and countries around the world. it's the foreign estate tax. what he said was foreigners generally are just ignoring this law that not many people know actually exists. take a look at this form i have got here. this is form 706 na. if you were a foreigner and you own u.s. assets, including shares in american stocks like apple or a condo in miami, real estate throughout the country, if you die, your estate has to paes state taxes on that, but we ran the numbers and looked at it and it turns out not very many people around the world are paying that tax. just 849 people filed a 2014 nonresident alien estate tax return and they paid a total of
1:10 pm
$60 million. now, contrast that to just the amount that foreigners own in u.s. equities, about $6.7 trillion in u.s. equities alone let alone all the real estate and other real assets that foreigners own in the united states. we showed all of those numbers to an expert, and she said substantial amounts of tax are not being paid, and guys, we have alots more detail about this on but it raises the question of why this estate -- foreign estate tax is on the books and if it is on the books why it would appear the united states is not doing much to collect that massive amount of tax. >> thank you for joining us. next up today, new polls on where the republican party stands. clearly there's a lot going on. many have called it dysfunction, but is it really just democracy at work. larry kudlow will be joining us. >> mandy, i'm bringing on former republican national committee chairman and mississippi
1:11 pm
governor haley barbour and senator ron johnson from the great state of wisconsin. we've got a lot to talk about next up on "the kudlow report" -- oh, no, no, "power lunch." two minutes away. please stay with us. proud of you, son. ge! a manufacturer. well that's why i dug this out for you. it's your grandpappy's hammer and he would have wanted you to have it. it meant a lot to him... yes, ge makes powerful machines. but i'll be writing the code that will allow those machines to share information with each other. i'll be changing the way the world works. (interrupting) you can't pick it up, can you? go ahead. he can't lift the hammer. it's okay though! you're going to change the world.
1:12 pm
awe believe active management can protect capital long term. active management can tap global insights. active management can seek to outperform. that's the power of active management.
1:13 pm
welcome back to "power lunch." shares of bojangles are surging today near the highest levels of the day up around 4% at this point. this is all ahead of its third
1:14 pm
quarter earnings release after today's closing bell. analysts are looking for 18 cents a share on sales of $122 million. the stock is down 5% since its may debut. it will be a stock to watch as we head into the close, guys. back over to you. >> thank you very much. and welcome back to "power lunch," everybody. i'm tyler mathisen. new quinnipiac university poll out today shows that donald trump leads the republican party race for president at 24%. dr. ben carson one point behind. senator rubio scored 14%. 13% for senator cruz. former florida governor jeb bush came in at just 4%. cnbc contributor larry kudlow is with us today. you know, larry, i got to thinking over the weekend that we in the media, not just mainstream media, we throw around the world dysfunction a lot these days. washington is dysfunction. the political process is dysfunctional. the republican caucus in the
1:15 pm
house is dysfunctional. the 14 candidates on stage last week or however many there were, that's dysfunctional, but it began to occur to me that maybe what we're seeing is less dysfunctional than the glorious untidiness of democracy. >> yeah. wasn't it churchill who said democracy is the worst system ever known except any other one we've ever discovered. >> it's messy by definition. it's what the founders wanted. >> i guess. the last time i talked to jefferson -- no, but you're quite right. you have a lot of people running for president and it's a management problem. it doesn't mean it's dysfunctional. i want to ask haley barbour about that who is a former rnc chairman. regarding the house and senate, we have senator johnson coming on, a leader in the senate from wisconsin, they're not getting stuff done the way i'd like to see gem ththem get it done but again that's the rules.
1:16 pm
you vote, you elect, you have legislation and it may not be what i want, what you want, but that's the way it works out and it's a pretty darn good system. >> and at points of high tumult and change where there are philosophical struggles within the republican party as there are within the democratic party, fighting for the soul of the party, you would expect to see some of this let me call it untidiness. >> look, this whole -- >> or dysfunction. >> if you buy the polls, polls are the polls, there's great anger, angst, and crankiness and unhappiness by the voters, particularly the base of the republican party, at what's going on, and you're seeing that. that is being reflected and there are divisions, and the primaries ultimately -- >> let me ask you, i believe it was karl rove who said americans don't elect angry presidents. do you agree with that? i think he was talking about john dean. >> perhaps. i don't know. perhaps. >> but the electorate is angry. >> the lectelectorate is cranky
1:17 pm
angry. i want to bring on my guests to shed more light on this. we have former mississippi governor haley barbour who was a republican national committee chairman himself many years and my great friend senator ron johnson from the state of wisconsin. mr. johnson is in a tough re-election race. gentlemen, thank you very much. governor barbour, let me begin with what tyler has been saying. you have that somewhat unwieldy process, 15-some-odd candidates, a revolt by the candidates against the rnc. so what's the solution or do we need a solution at all? what's your take on this? >> it's a very large field, but, look, the first thing is all these debates are about polls, about process, about tactics. what the american people want to know is our country is going in the wrong direction at warp speed. about 65% of americans think america is going in the wrong direction. that's more than there are
1:18 pm
republicans. that means a lot of democrats, a lot of independents think we're going in the wrong direction and how can that not be only 48.5% of adults have a full-time job in our country. last quarter the economy only grew 1.5%. manufacturing is going backwards. half of americans think we're in a recession, and yet you have a debate and everybody wants to talk about polling, wants to talk about how somebody looks. the american people want to know what's your plan for getting our country back in the right direction? how are you going to grow the economy? how are you going to create more jobs in our country? what are you going to do to get us going back where we were just a few years ago? you don't hear that in these debates. >> that's an indictment. that's a very interesting point. senator johnson, i want to ask you the same point. with these debates and we're basically polling mostly on the basis of the debates right now, not a single vote has yet been cast agree cast, as you know. so is what haley saying right?
1:19 pm
is the gop not getting out a message of economic growth because the polls show the economy is issue number one, it's been issue number one, it's going to be issue number one for the duration of the lest periel period. are republicans having trouble getting the message out? >> it could be because it's somewhat messy. one message getting through is we want to see america great. that's a message that's getting out. kind of going back to the founders, the founders designed this process to make it difficult for government to grow because they knew as government grew, our freedoms receded and you send up with this mess here in the federal government which is creating all this frustration, all this angst, so there's no doubt about it. our message should be about opportunity, about economic growth. we need to be concerned about, you know, those that have it and those that don't and how do you bring up those people that are disadvantaged, how can we create those kind of opportunities and the way you do it is you have pro growth tax reform.
1:20 pm
let's keep energy prices low making sure we have a clean environment. we know how to do these things. that's the good news. we've been doing it for a couple hundred years. we have to return to those principles of economic growth. >> governor, why not look at the new polls, okay? this is all being poll-driven, these debates. maybe the cutoff is too low. look at the quinnipiac poll, you have basically four front-runners. you have trump, carson, you have cruz, and you have rubio. suppose they become the top tier. just let them go at it and we talk a lot more about growth and regulations and taxation, things senator johnson just mentioned. maybe that's the best way to solve this. what do you think? >> well, again, larry, you're trying to make this more about polls. i think we ought to make it less about polls. i think we ought to make it about substantial. i think, you know, in america today we're very evenly divided. yesterday your network, nbc with "the wall street journal," published a poll.
1:21 pm
said 45% of americans want a democrat president next time. 45% want a republican president. we are very divided evenly, but we're more polarized than i can remember any time in my life. >> senator johnson -- >> what we need is so solve problems. >> let me stay there with haley's point. senator johnson, a lot of the republican base is very angry over the house and the senate, all right? maybe not you particularly, but they think you have broken your promises. they thought when they gave you a majority in the 2014 elections, you'd create a lot of sweeping bills, roll back obamacare, broad based tax reform, energy reform, sweeping bills, house, senate, put them on the president's desk. if he wants to veto it, fine, let's go to the elections. that didn't happen and i think a lot of the gop base is very unhappy about that. >> well, there are an awful lot of people overpromising what we can't deliver. here is one thing a majority of
1:22 pm
republicans have done, we stopped president obama's legislative agenda. what we haven't been able to stop because you can't defeat a president legislatively unless you have two-thirds of both bodies which obviously we don't have. now what president obama is doing is he's putting his agencies into hyperdrive and we're seeing that with the ep a and other agencies that really are burdening our economy, job creators, with these excessive regulations that harm economic growth -- >> but, senator, you know -- look, you could have used 51-vote reconciliation to drive through obamacare, to drive through tax reform, to drive through any darn thing you want. i used it years ago when we worked for ronald reagan. you could have done that -- >> we're going to do that. >> will the new speaker, paul ryan, be graggressive and start using this process? >> we are going to use reconciliation to roll back as much of obamacare as we can
1:23 pm
under those procedures. it's somewhat limited. we're going to be taking that vote. i'm very encouraged with speaker ryan now. he's talking about setting an agenda, taking the next couple months, working with the house and senate to lay out that pro-growth opportunity type of agen agenda, tax reform, regulatory reform and welfare reform so we can actually create -- provide that strong social safety net, care about people, provide opportunities because that's really the best thing for all people. >> governor barbour, you mentioned before, you hinted, that the gop doesn't have a growth message to your liking, a and and i want to ask you about that and ask is the gop reaching out to the middle class? do they have a middle class message? >> in fact, several of these candidates have a very good growth message and it's very middle class oriented, very working class oriented. the problem is when they go to these debates or get interviewed by the press, all the press wants to talk about is polls and
1:24 pm
a horse race. one thing i think very important for your audience to hear because they don't hear it, the house has already passed a reconciliation budget bill that does roll back a bunch of obama stuff but as senator johnson says, you can't do everything through reconciliation. it's not allowed under the law. and one of the problems of the senate, senator harry reid said in the spring the democrats would not let one appropriations bill come to the floor because it takes 60 votes for appropriations bill it come to the floor. they have not allowed an appropriations bill to come to the floor, but the press has never said to the american people that hasn't happened much less why. senator reid said no appropriation bill will come to the floor. the senate democrats will stop it because the republicans aren't spending enough money. now, that's why the president vetoed the national defense authorization bill last week, because the republicans aren't spending enough money. the press needs to be talking about that when the republicans
1:25 pm
mention it but it never makes the front page. >> i understand, but, okay, so this is kudlow. this is your pal, larry. i want to tell you all have not been aggressive enough. you have not. you have not used the tools at hand. senator johnson knows, you know how this game is played. you can make anything you want out of reconciliation. senator, you have a tough race in wisconsin, you're running again against mr. feingold. what is the biggest issue in your race against wisconsin? >> it's going to be obamacare and the explosion of government at the expense of the private sector. now, i'm a guy that actually wants to limit the growth of government, believes in wisconsinites versus senator feingold who thinks he's smarter than wisconsinites, is going to impose on them and tell them what kind of health care plan to buy, what school to go to. it's getting so ridiculous, larry, they're telling bhau size soda to drink in new york city. this is about big government versus small government. this is about growing our economy, having faith in the
1:26 pm
american people, the good folks of wisconsin, i have that faith. i don't think liberals and progressives do. >> haley barbour the last word, ben carson showing up really, really well. i know they're polls but he's showing up really well on a consistent basis. i think he's the biggest surprise of the season, maybe bigger than donald trump. in your opinion, governor, can ben carson be president? >> what a wonderful man. i think the american people have looked at ben carson and said this man, what a great story, what wonderful things he's done with his life. i can see why the american people are enamored of ben carson, how well he'll be able to do as we get further along and this campaign becomes more about issues, solutions, and implementtation, but, boy, i can see how people look at him and say ied ed admire ben carson. >> speaks well of the gop to have a candidate like that in my opinion. we think both of you.
1:27 pm
tyler mathisen, democracy is what you're hearing. >> it's messy. it really is. it's messy. larry, great to see you. >> thank you. >> mandy. >> helicopter pads, jacuzzis, submarin submarines, the booming business of mega yacht. you have to see this and it's all ahead on "power lunch." stay with us.
1:28 pm
1:29 pm
welcome back to "power lunch." rick santelli on the floor of the cme group. look at a two-day of 2 years.
1:30 pm
having closed at these levels since beginning of 2011. let's look at september 1st of 10s. haven't had their yields there since the 16th of september, 30-year bonds at 3%. haven't closed there since the 21st of september. last chart, this is a dollar index. since tax day. how important is '98? we're knocking on it. guess what? "power lunch" will be back in exactly 120 seconds.
1:31 pm
1:32 pm
1:33 pm
hello, everyone. i'm sue herera. here is your cnbc news update for this hour. authorities say a suspect stabbed five people on a university campus in central california before he was shot and killed by police. a university of california merced spokeswoman said two of the victims were taken by helicopter to hospitals for treatment. the other three were treated locally. britain has temporarily suspended flights to the egyptian resort city of sharm
1:34 pm
el-shei el-sheikh. mercedes recalling more than 126,000 vehicles in the u.s. to fix a problem that can cause the air bags to inflate without a crash. that recall covers the c-300, c-350, and c-63 models from the years 2008 and 2009 as well as the glk-354 from the year 2010. and the investigation of a woman accused of posing as a nurse and giving hospice care to bobbi kristina brown widened today as police sought more information about other patients she may have treated. the 22-year-old brown died last july six months after she was found facedown and unresponsive in the bathtub of her home. ty, back to you. >> thank you very much. it is yet another big day of earnings. we have it covered for you right
1:35 pm
now. meg terrell, julia boorstin on time warner which signed up jon stewart the other day and morgan brennan on soda stream. meg, you go first. >> it was a beat and raise for regeneron in the third quarter on both the top and bottom lines. all eyes on eye lea, the big eye drug. that came in with a beat but the company said the fourth quarter could see slower great. they weren't about potential bad weather, the holiday season, and inventory stocking. a lot of eyes on the launch of their new cholesterol drug. for the first quarter on the market, analysts described it as a modest launch. the company saying it is going to be an initial gradual uptake of this cholesterol drug. finally, some encouraging updates on the pipeline. they have drugs for rheumatoid arthritis, atopic dermatitis. why is the stock down today on a beat and raise? some saying that because the stock rallied into the quarter, others say because regeneron said next year will be a year of
1:36 pm
investment, but overall a very positive response to the third quarter. >> thank you very much. julia, time warner stock selling off. >> tyler, that's right. time warner shares plummeting down 8.5% as the company spends about ig to make sure content remains king. the stock falling on a lower outlook for 2016 earnings. the company cited an increase in content investments which could run into hundreds of millions of dollars. sparking concerns about the cost of competing with netflix and other newcomers into the space. the company also saying that ratings at some of its domestic entertainment networks declined more than expected. they also noted a bigger than expected subscriber decline. initially time warner shares traded higher on better than expected earnings and revenue. that was led by growth in hbo subscriber as well as content revenue. >> thank you. morgan, you have soda stream. >> the stock is bubbling up today. >> you had to, didn't you? >> it was low hanging fruit.
1:37 pm
soda stream reporting mixed results. quarterly profits beat but they are still down 76% from a year earlier. currency headwinds, also the company is restructuring as it tries to shift from being an at home sodamaker to sparkling water dispenser. c o2 refills, the canisters you use to keep refilling and making more sparkling water rose 10%. the ceo saying refills are a great indication of increasing consumption that he expects using rates to continue to grow. the u.s. has been a trouble spot b for soda stream and the company says they will start testing home delivery later this are month. they will use u.p.s. to do that. they hopes it is a move that they will expand to the rest of the country and will boost sales of these co2 refills. >> sort of the way espresso sends you the little pods for your machine. i get them overnight.
1:38 pm
morgan, thank you very much. >> let's take a look at what's happening with the markets at the moment. the three indices are moving lower. in fact, they really got extra pressure put on them after fed chair yellen's hawkish comments. joining us now, the head of equities at bmo asset management and manager of the morningstar four star value fund. also rob lutz, chief ninvestmen officer at cabot wealth management. rob, you see equities rallies 5% or more by the end of the year despite the fact we could have higher rates. why do you say at this stage you believe the market wants higher rates? >> i think the market is yearning for higher rates and the reason it's yearning for it, it wants normalization of the economy. i think when you have interest rates for seven years at virtually zero, you create disturbances in the markets. so last week when the fed commented about maybe a little bit hawkish attitude, the market reacted very favorably.
1:39 pm
i think that's a sign to us that it's okay to move rates up now, and i actually think it could be received very positively by the markets. and further than that, i think earnings are going to also be driving this market forward. lower energy costs, you've got belt tightening by lots of corporations and that factor of innovation is continuing to drive earnings. i think more many companies higher without top line growth. so i think this is -- and one other factor, the international considerations i think a lot of people are worried about the emerging market slowdown, china, india, brazil all weighing on the markets. i think we've basically gone through that phase and it's very likely that the next set of data points out of that group are going to be better than expected today. >> okay. >> very much negative attitude has been priced into those, so i think that could also help our market quite a bit as well. >> so a lot of points but generally a bullish tone. what about you, ernesto?
1:40 pm
>> i think bob hit it right on the mark. we also think that the fed will raise rates in december and it actually is going to be a relief to the markets that it's done, but remember the key here is the fed is our friend because they're going to do 25 basis points and the real difference between 0 and 25 points is really infinitesimal. they're starting on a tightening cycle and we think it will be positive, good for home buyers to start buying that home they've been waiting to buy. at the end of the day it will be about earnings and we think we see positive earnings growth for the s&p 500 in the order of 10% to 11% for the next 12 months and it will drive the market higher. the fed is going to be our friend. they're not going to kill this recovery. they just need to do what they promised they were going to do at the early part of the year, which is raise rates in this year and they're going to get it done in december and they're
1:41 pm
going to sit back and wait. they're not going to -- they're not going to hurt the equity markets. >> a hike will be a validation of a strengthening economy. thank you for joining us. you like citigroup, leer, and gener general dynamics. you can go to to see which sectors rob is avoiding. >> still ahead, the big business of mega yachts. plus -- >> coming up, a power pitch bringing the outdoors in. >> we've designed the grove ecosystem, an intelligent indoor gardening appliance. >> but will the panel give the green thumbs pup. >> how should we think about the investment on return? >> it's going to be difficult to get traction. >> stay tuned to find out.
1:42 pm
at ally bank no branches equals great rates.
1:43 pm
it's a fact. kind of like ordering wine equals pretending to know wine. pinot noir, which means peanut of the night. welcome barck, everybody. it's time for "power pitch." entrepreneurs get 06 seconds 60
1:44 pm
make their pitch and then a panel decides if that company has what it takes to become the next big thing. let's listen. >> i'm gabe, co-founder and ceo at grove. we've designed the grove ecosystem, an intelligent indoor gardening appliance about the size of a bookshelf that helps everybody grow their own sal lid greens, herbs, peppers and tomatoes in their own home. the ecosystem uses aqua uponics where fish and plants live together to grow organic food. it's all monitored and controlled by you with the hope of our intuitive app that guides you every step of the way. connects you with other urban farmers and gives you all the supplies you need. 50 early adopters in boston love their groves. with their feedback we've improved our design and we're ready to launch nationally this fall on kickstarter. just imagine, a grove in every home. inspiring and educating the next
1:45 pm
generation while reliably producing food you and your family know you can trust because you grew it. >> welcome to today's "power pitch." i'm mandy drury. you just saw gabe's pitch. on set with us a is aaliyah syrett. also with us here on set is natalia o berti noguera. and also will rosenzweig, the executive director of the food business school. he's a managing partner of a vc firm that focuses on health and sustainable living companies and he's also by the way an avid gardner. >> there are a number of indoor gardening systems coming to market that sell for a few hundred dollars. why will consumers spend several
1:46 pm
thousand dollars for grove? >> i think what we've done is built a lot of technology that will make our system easier and more delightful to use over the long term. i think what you will see with a lot of systems is people sort of impulse buying them or buying them because they can quickly afford them and over the long run you won't see the engagement or the real passion for growing your own food. one of the other main differences is our system is much larger and you can grow significant amount of food for you and your family. >> is the technology different? >> we rely on aquaponics, a natural symbiosis between fish and plants. that's a way to get super flavorful, super organic food that grows faster than it would outside. no products i know of work like this. >> natalnatalia? >> i can see grove happening where there's winter and snow and people don't want to go out and yet they still want to garden. i would love to hear how you are thinking about weather. >> we see a lot of interest from
1:47 pm
places that have winter. we see interest in dense urban areas. grove uses 90% less water than you would have to use outside. >> beyond your kickstarter campaign, what's your sales around marketing strategy? >> we'll sell directly to consumers through our site. we are exploring different options for sort of distributions and sales and marketing partnerships. growing your own food in your home is a booming market. >> how should we think about return on investment? >> if you're growing high value crops, the return is shorter. you're growing iceberg lettuce, the return on investment could be ten years or more. >> we heard what gabe had to say. now we need to know if you're in or out? >> i'm excited about intelligent indoor gardening systems.
1:48 pm
i think it's a very, very cool space. and i think that this team is pretty sharp and they have some real great backers. however at $4,000, it's pricey. it's also quite large and requires consumers not only to take care of the plants but the fish, too. i'm not sure whether this will be the hit. unfortunately for now i'm out. >> okay. natalia? >> the potential to feed lots of different people and a great team that includes women right off the bat sounds like a winning combination to me, so i am in. >> will, you are the deciding vote? . >> well, i love the intention and i think the time is coming in our culture and society and our cultural awareness around health and sustainability, but i do agree that i think the go to market cost, the complexity of the system is just going to be very, very difficult to get traction to continue, so, unfortunately, i'm out. >> okay. seems to be for the same reason though. gabe, what's your reaction?
1:49 pm
>> i think with any revolutionary idea or technology that can help people live differently, there's going to be immediate reactions against it. the proof is really with our customers. >> thank you very much for joining us today. best of luck. thanks to gabe of grove and also to our panelists and that is today's "power pitch." >> and an update for you. it just so happens grove has already officially launched its kickstarter campaign. so are you in or out? you can tweet @cnbcpowerpitch and follow the conversation with #power pitch. stocks are taking a leg lower as we speak. we're down 71 points on the dow. basically miss yellen is saying a rate hike is a possibility. and robert frank is going yachting.
1:50 pm
>> virtual yachting. we'll take you inside a yacht with four bars, jacuzzi that con verts to a disco. we will tell you what it costs after the break. this bale of hay cannot be controlled. when a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. faced with horses that needed feeding and a texas drought that sent hay prices soaring, the owners had to act fast. thankfully, mary miller banks with chase for business. and with greater financial clarity and a relationship built for the unexpected, she could control her cash flow, and keep the ranch running. chase for business. so you can own it. (vo) wit runs on optimism.un on? it's what sparks ideas. moves the world forward. invest with those who see the world as unstoppable. who have the curiosity to look beyond the expected
1:51 pm
and the conviction to be in it for the long term. oppenheimerfunds believes that's the right way to invest... this big, bold, beautiful world.
1:52 pm
tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around.
1:53 pm
welcome back to "power lunch." i'm mandy drury. hawkish glencomments from fed c yellen sending the dollar higher. among the individual names, merck, boeing and visa are leading the dow. the yacht making industry is bracing for a slowdown but don't worry too much. the high end super yachts are si still doing just fine and robert frank is here to take us on board the two biggest ones on the market. >> the ft. lauderdale boat show kicks off tomorrow. mega yachts, those over 200 feet, that's vong in demand. here is one of the biggest. 280 feet long. can accommodate up to 16 guests, crew of 29. two jacuzzis, an infinity pool and a jacuzzi deck that converts
1:54 pm
into a disco. you can head down to the spa which has a sauna for ten, steam room, hydrotherapy bath, massage tables and an ice maker. it has a movie theater and a garage for jet skis. price tag $190 million. if you're looking for something smaller, there's lady lolo. 205 feet, a pool with a waterfall, prit owner's deck with a grand piano, and a golf tee. the automatic golf tee allows you to hit balls into the water with floating targets and floating golf balls. >> i'd never get close to the target but at least the balls float. i'll pick one up. robt, thank you. >> thank you. >> a new way to save for retirement that's billed as no risk. the details coming up next. ♪
1:55 pm
♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ [ birds squawking ] my mom makes airplane engines that can talk. [ birds squawking ] ♪ my mom makes hospitals you can hold in your hand. ♪ my mom can print amazing things right from her computer.
1:56 pm
[ whirring ] [ train whistle blows ] my mom makes trains that are friends with trees. [ train whistle blows ] ♪ my mom works at ge. ♪ you ppremium like clockwork. my mom works at ge. 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. 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
1:57 pm
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. here is what's ahead on this busy wednesday. we have been in a terrific little market rally lately, but there is one big thing happening which could mean the rally will not last. what that is ahead. plus, another shocking revelation from volkswagen about its growing emissions scandal.
1:58 pm
and one of america's top fund manage whose has never done a cnbc before is here and he's bringing three stock picks, names, guys, you have also probably never heard of. mandy, welcome back. >> you have to be gentle with him. >> i'll be nice. >> for once, yeah. a new retirement plan is launching today. zero risk and backed by the government. is this a good way to save for retirement? sharon epperson joins us now. it almost sounds too good to be true. >> think about it like this, like it's a simpler, safer, starter retirement savings account. for the 55 million americans who have no retirement coverage and no access to an employer sponsored retirement plan, this is a place to start. you can open a myra sponsored by the treasury department. it introduced it at the end of last year and now the individual retirement accounts are being offered to anyone who qualifies. myra is a roth ira.
1:59 pm
you have to earn less than $135,000 to contribute or less than $193,000 if you're a married couple. and you can only contribute $5,500 a year or $6,500 if you are 60 or older. in a myra your money will only be invested in a specific u.s. treasury created for this program. it currently yields 2%. treasury officials say this investment is guaranteed to never fall in value. also the maximum balance is capped at just $15,000. you can make contributions to a myra from your paycheck or bank account or even federal income tax refund. you just sign up at you can roll it over to another roth ira. with a 150$15,000 cap, it can o be a drop in the market of what
2:00 pm
you need. it's simply designed to get people in the habit of saving. >> we have no time but if i put in my $5,500 every year or three years i'm over $15,000. >> you're there. you got started saving, you got into the habit and now you'll do it with a roth ira. >> it gives me my 2% a year. >> exactly. >> thank you very much. >> sure. >> great to have you back. >> good to be back. >> nice to have you here. that will do it for the first hour. it went by fast. brian and melissa will take it over from here. >> 2:00 on wall street, noon in boise. stocks down a bit as janet yellen says a december rate hike is, quote, a live possibility. hi, everybody. much more on the markets and vw's latest revelation around the emissions scandal in a bit but we begin with the fed because the dollar and bonds are moving on those yellen remarks and while you may not care much about the bond market, it's kind of boring, you should because it could have a big impact on your mortgage. letsga get to diana olick.
2:01 pm
>> we're watching the ten-year treasury yield. it spiked on word from fed chair janet yellen that a december rate hike was a live possibility. she added a gradual rise in rates would not hurt housing. yields have held on higher enough to push some lenders to raise rates again today. mortgage rates were already moving higher after the fed meeting last week. the mortgage bankers association reporting the average rate on the popular 30-year fixed crossed 4% to 4.01%. that's the high nest well ov-- in well over a month. they have high refinancing but mortgage applications to purchase a home were also down last week by 1%. still up 20% though from a year ago. now, while the moves are not dramatically higher, some are warning that continued talk of this december rate hike possible has really put a floor on mortgage rates which had moved significantly lower earlier this year. brian? >> all right diana, thank you very much.
2:02 pm
interesting story there. now to the stock market because, you know, we are in the middle of a nice little rally lately. today's slight down move aside, the dow jones jones industrial average is up nearly 9% in 30 days but there's something about this rally that doesn't look so hot. the stocks leading it are many of the same stocks that are down the most this year, names like those, diamond offshore, united rentals, mattel, transocean just to name a few. some may call it a low quality rally. let's bring in jack bouroudjian and jim you'rel. does this bother you or is it a case of somebody has to lead so why not them? >> brian, this is a perfect scenario. this is what i call my meltup scenario. it's got three phases. it starts with short covering which is what we're going through right now. these are the stocks that got beat up all year long. then you get into what i call the chasing of returns and the lifestyle trade. they want to maintain their lifestyle.
2:03 pm
they're going to be worried about not being in the market. that's usually followed by a euphoria which really caps off that rally and melt up which might not happen until next year but it's all part of the process. it's only the beginning. i love it. >> okay, jim, lack loves it. what about you? >> i'm never as sunny as jack is. you know that. i do like it and i'll tell you why, most of the names are energy and remember what happened in energy is we were going to tighten at the same time the ecb and theb oj was moving towards more dovish and accommodative. that's why the dollar rallied. in the last month or so both the dollar -- today notwithstanding -- and crude have con solidatconsolidated, t sideways. if oil starts to rally -- the reason i like it the most is if we're a hair away from the highs after the huge rally, if we're going to chew through the highs,
2:04 pm
we kind of need all cylinders firing. there's also some of the names like google and apple that are doing quite well as well. so i think that if the downtrodden join in, that might be what we need to take it to the top. >> yeah. i want to build on that point, jim. the rally is in the eye of the beholder because you could view it as a low quality rally because we had a lot of junkie materials and energy names lead us higher, but we also had big cap names make sizable gains. apple, disney, mcdonald's up 12%, google up 15%. is this a broadening of the rally or is it really a low quality rally? they're two different things when it comes to how you view the markets. >> one of the things we want to pay attention to is not only the low quality or bead up names coming back, but the market is starting to show new leadership. look what's happening with new tech, bill data, software as a service, infrastructure as a
2:05 pm
service, this is really the platform. i was saying it yesterday, by which the next generation of business will be built. all of what we're seeing happen around new tech is acting as a leadership for the market right now. it's what we've been searching for. so, again, we're getting misled a little bit but pay attention to some of the leadership. the f.a.n.g. stocks are a good example of that. >> go ahead, jim. >> whafs going to say, sully, is we're only calling them downtrodden because they were -- they had the crud beat out of them because oil got beat up. these are names -- these are very viable names. this is not -- come -- >> i'm not saying, jim, they're bad companies. i was just saying they've been bad stocks over the past 12 months and you know -- >> i know but --
2:06 pm
>> there's a big difference between the quality of a company and the quality of its standard of care. >> amen brother, but it was the implication these were the cubs of the stock world and i'm saying they were a victim of circumstance. by the way, the cubs were good this year. i don't know why i said that. historically. >> they were good until it mattered. jack and jim, we have to go. you have to drive the dagger into the hearts of all the cubs fans still in mourning. here is the good news. >> i knew i could count on you sully. >> at least you're not the mets. jack and jim, thank you very much. >> the tech heavy nasdaq 100 and etf counterpart qqq rising to all-time highs yesterday. right now slightly off the gains is now the time to buy in? jerry castellini has a bullish stands and hugh johnson takes the bearish side. the dividing force between you is valuation. you say the nasdaq has moved too far too fast and is overvalued,
2:07 pm
why? some would argue that valuation should have never reached where they were at their lows. >> well, you know, we had a real design. good news is we had this recovery in the stock market from the august 25th lows. that's really good news, but whether we're talking about the overall market or nasdaq, each one of us comes at the valuation issue in different ways, but the problem is that we've reached levels are that overvalued. that's on a short-term basis. what i'm saying is we're back to the kind of problems we had in the first part of the year. valuation is a real problem so you've got to be really good on picking entry points, really good on picking sectors and individual stocks. but entry points is the number one feature here, and that is not at current levels. that's below current levels if you really care about valuation. so you've got to be patient. >> jerry, where do you stand because you say that the qs are
2:08 pm
derisked, which seems to be the hop sit of what hugh is saying. >> we finished a period where anyone that considered companies in this sector to be high risk. so that's been a place where people have avoided for the better part of the summer and then that final dump at the end in september. now you're in a place where you're only reluctantly going to look at the space again because you're worried maybe that slowdown is going to happen. that's the ideal entry point ironically for growth names that populate the nasdaq and, by the way, the qqq is an example. there's not just a bunch of tech names. you can get a ketchup company and a coffee company and a beer company in the nasdaq now. you can get cheap tech like apple and like cisco and expensive tech like facebook and amgen. so it's a neat blending of all of those forces right at the time when the average investor has taken risk out of the portfolio. >> jerry, you're making an important point because mattel, i'm not picking on mattel,
2:09 pm
mattel is in the qqq. if you're thinking you're only getting technology, guess what, barbie is in there, too. >> that's right, and you're getting big undervalued names and you're also getting strong growth names. the key to this point in the cycle is we've seen enough liquidity put in the global economy, people are derisked in the overall portfolio alignment and now we're at the point where maybe we're about to see growth break out again and if you watched global pmis, a big indicator of where next six, nine months of economic activity is going to happen, that's going to be on the upside globally and you want to follow that in an index like this. >> but even you, hugh, who thinks the nasdaq is overvalued, you like a couple stocks and they overlap with what jerry likes ironically. >> yeah, no question about it. when you're looking for upside potential, i mean, they might be on a short-term basis a little pricey, but apple, google, we own them. i own them.
2:10 pm
really, really good valuation. ong on a longer term basis they'll be just fine. we have come very far, very fast. you don't even have to crunch the numbers the way i do. you have some companies, netflix, yahoo! i look at, facebook, a wonderful company, but very far, very fast, very pricey on a short-term basis. on a short-term basis you have to really be a good investor, especially in a sort of low earnings growth environment. so be patient. i couldn't emphasize it enough. >> all right. great to get to two sides of the trade. >> lumber liquidators shares a big winner. the company appointing a new ceo. whole foods moving lower ahead of earnings. they're due out after the bell. the street looking for 35 cents a share. and a few names hitting
2:11 pm
record highs, amazon. we just talked about that. priceline and refiner phillips 66. on deck, a top performing fund manager who has been never been on cnbc before is here with his under the radar picks. wee got three new names for you. plus, how d.c. plans to take on drug pricing. and the ceo of one of the most black balled apps in corporate america here to defend his company and tell you why your company's i.t. policies are all wrong. that's the drop box ceo. stick around.
2:12 pm
2:13 pm
my name is peter tran. i'm a gas service representative. i've been with pg&e nine years. as an employee of pg&e you always put your best foot forward to provide reliable and safe service and be able to help the community. we always have the safety of our customers and the community in mind. my family is in oakland, my wife's family is in oakland so this is home to us. being able to work in the community that i grew up in, customers feel like friends, neighbors and it makes it a little bit more special. together, we're building a better california.
2:14 pm
welcome back. 2:15 here now in the east. another shocking revelation from volkswagen topping your headlines today. let's get right now to phil lebeau. phil? >> brian, what we are looking at right now is volkswagen and the two brands underneath volkswagen, porsche and audi. you know, up until a few weeks ago it was just volkswagen that was the biggest concern. well, now they're stopping diesel sales in north waeshg. the volkswagen touareg, the porsche chiien and the awed yi a 6, a 7, a 8, q 5, and q 7. audi is the second fastest growing luxury brand in the united states right now. the problem is that these models
2:15 pm
they may not be fixed until early next year. a number of dealers may be sitting on them for a while. that stop sale order including the original back in september, that remains in place. the financial impact, it is growing. to what extent remains to be seen at least on a global basis and as you take a look at shares of volkswagen, keep this in mind. this is a company that while it has deep pockets, brian, at some point you're really going to start to see the impact. we saw it with shares of -- melissa, shares of volkswagen. look how much the stock dropped down. a lot of people are saying we're nowhere near close to seeing the bottom because they may not have their arms completely around this problem. >> thank you very much for that. lawmakers on capitol hill responding to public outcry over drug price hikes. meg terrell joins us with more on this story and this just keeps developing. >> it keeps developing from all sides. this morning house democrats formed a task force on drug prices. in a press conference calling out the ceos of valeant and
2:16 pm
turing. i think we have some footage. they showed posters showing the ceos of those two companies. one of the congressmen here addressing what they're trying to get here with this task force. >> if drug companies are going to make the argument that they need to price these drugs at such exorbitant rates because of the cost of r & d, then they need to be proving it. the drug companies are taking advantage of the system and really ripping off consumers. >> the bio industry group saying they're disappointed the task force will focus on the price of drugs and not the benefits they will bring to society. we have heard drug prices are only 10% of overall health care spending but the industry is not happy about this. the senate also investigating drug price increases, focusing on turing, valeant, retrophin,
2:17 pm
and rodelis. the entire biotech index down a bit. there's been so much focused on that. >> people are really believing that nothing is going to be done at least in the short term so this is a much longer-term issue. >> it seems that way but it seems like the intensity of the focus is really only going to continue not just with the presidential candidates but also now sitting senators and congress people. >> let's switch gears because we're waiting for a key data set. >> ash conference is in december but the data sets drop tomorrow morning. there will be key data in sickle cell anemia, these blood diseases. people are looking at blue bird bio, a very volatile stock, and global blood therapeutics which
2:18 pm
have a potential threat in sickle cell to blue bird. also blood cancer, folks watching updates from celgene and kite which works in this volatile area. a lot of things to watch tomorrow morning. >> have we seen these stocks move up in anticipation of this? >> yeah, and with other -- especially with blue bird just with like any sort of inkling with anything, it's moving a lot. it's a volatile stock. >> brian, over to you. >> up next, what may be the biggest threat to the american economy right now. one top wall street economist tells us what keeps him up at night. later on the manager of one of this year's best performing mutual funds opened up his playbook. he's never been on cnbc before and he's got three small cap stock picks for you. those names when "power lunch" returns. important than your health.
2:19 pm
or the freedom to choose what doctor you want to see. so if you have medicare parts a and b, consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, these let you choose any doctor who accepts medicare patients. you're not stuck in a network, because there aren't any. plus, these plans help cover some of the part b medical expenses medicare doesn't pay. so why wait? call now to request your free decision guide and find the aarp medicare supplement plan that works for you. like all medicare supplement plans, you'll be able to stay with the doctor or specialist you trust, or look for someone new - as long as they accept medicare patients. but unlike other plans, these are the only ones of their kind endorsed by aarp. rates are competitive. so call today.
2:20 pm
and learn more about choosing the doctor's you'd like to see. go long.
2:21 pm
welcome back to "power lunch." i'm steve liesman with the first
2:22 pm
look at the fourth quarter tracking survey for gdp and the number coming in at 2.5%. our nine economists who do a tracking survey, we do this for the first time in the quarter when the vehicle sales number comes out. it was a strong one north of 18 million and that's helping power beliefs that the fourth quarter will be relatively strong at 2.5%. the range among the nine economists 2.1% to 3% and a nice improvement from the 1% -- 1.4% we're tracking in the fourth quarter. here are the estimates by the banks. bank of tokyo-mittsubishi the most optimistic at 2.9%. and at the bottom of the rung morgan stanley at 2.1%. but brian, all of the forecasts coming in north of 2%. looking for something of a snapback from the third quarter. you can go to and pick your favorite economist and go
2:23 pm
with that forecast for the quarter or listen to the smart guy you have coming up next. >> steve's data confirming what we know. the american economy continues to grow, but at the pace of a turting with a bad knee. let's bring in michael froly. before we get to your concern about the biggest threat globally right now, what do you make of that, 2.5%? do you think that's a fair read on gdp? >> i mean, that's what we have so i think it's a fair read. we have to recognize it's very early in the quarter at least in terms of the data cycle, so right now it's more of an early guess more than anything but to us it looks pretty realistic given some of the inventory drag we saw in the third quarter should be abating in the fourth quarter. we think 2.5% should be reasonable. >> do you see 3%-plus any quarter anytime soon? >> i think it's possible we could see something like that this quarter. i think given how wide open the data is right now, can't rule that out just yet. >> if we don't get an abrupt global slowdown which i
2:24 pm
understand is your biggest global concern right now, how likely do you think that is to happen. >> 3% quarter this qua you arrt? >> no, an abrupt global slowdown? >> certainly not my baseline scenario. but global growth has been the biggest risk off and on since may of 2010. i don't think we're out of the woods yet. there's certainly still a lot of uncertainty about how fast china is growing. a lot of concerns about em debt buildups, so things are looking a little better. i don't want to be alarmist here but if i had to pick a risk for the u.s. economy, it would still as it has been many times in the past -- >> let's end on a good note. the most beautiful day of the year in this area and we're stuck inside. let's end on a high note. what's the best part of the u.s. economy right now? what's the best thing? >> the best part, consumer spending. it has been and it looks like it's going to continue to be. we saw that yesterday with those
2:25 pm
really strong auto sales numbers. consumer has been doing very good. that's the best part. >> let's both get outside and buy a milkshake. thank you very much. >> thank you. up next, the man behind one of the most black listed apps in corporate america, that guy, drew houston will join us. first, the final oil trades are crossing. jackie d. is at the nymex. >> up 4% yesterday. down 3% today. is this the new normal for oil? what is driving today's volatility? we'll break it all down for you and tell you what you need to watch for the rest of the week when "power lunch" comes back.
2:26 pm
2:27 pm
california's coastline is a welcoming, wonderful home to everything from surfers to seals. attracting visitors from around the world, around the year. along the coast, protected areas are set aside to preserve a fragile community of animals and plants. to protect these natural wonders, here's what to know before you go. stay at least 300 feet away from seals. this is their home. don't touch marine life in tide pools. take away your trash and your happy memories. always enjoy and protect our marine habitats.
2:28 pm
i'm sue herera. a shooter is reportedly firing sporadically in a san diego apartment complex. police have responded. no one has been reported hurt but a ground stop has been put into effect at nearby san diego airport halting all incoming flights because the suspect reportedly has a long-range high-powered rifle. a car bomb targeting a police club in egypt's sinai peninsula killed six people and wounded ten more. isis egypt affiliate claiming responsibility for the attack.
2:29 pm
the group has killed hundreds of soldiers and police since the army toppled islamist president mohamed morsi in 2013. several thousand iranians set american flags on fire and chanted anti-u.s. slogans during a rally in tehran. hardliners have intensified a campaign to undermine the president's outreach to the west. and new york mets general manager sandy adlerson collapsed briefly while talking to reporters during a news conference. he was there to announce a contract extension for the manager. he was assisted to his feet and into a chair where he asked reporters with a smile, so where were we? hope he's okay. we wish him the best. that's the news update this hour. back to you, brian. >> scary scene there. best wishes. thank you very much. oil about to close for the day. let's go to jackie deangelis at the nymex. >> as i mentioned, downside pressure in the oil patch today.
2:30 pm
the strong dollar the first reason for it. probably coincidental as you would look at the chart as the dollar started to strengthen today, crude really got hit. also that inventory report this morning. a build of nearly 3 million barrels. it was womore than traders were expected. u.s. production within the report actually went up. it was very slight but still it's going in the wrong direction. that's what people are worried about. but still holding over $46 a barrel. that's significant. the 50-day moving average, that's where we' seeing some support, $45.84 is the technical level to watch to the downside. brian? >> we're watching that level very closely, jackie. thank you very much. another level we're watching is the s&p 500. now less than 2% from its all-time high. will we soon be at record levels or is this doomed to fail and we make new lows? todd gordon, boris schlossberg. todd, we're going to go technically to you first. do you think a record is on the horizon in the near term? >> in the near term --
2:31 pm
>> because eventually we'll hit a new record, could be 20 years from now. >> obviously i think we will hit a near-term high and timing is everything especially in "trading nation." i have done some technical work and gone back and compared this correction to the most comparable correction which is 2011, and what you will notice is the two are tracking very closely. they both completed with a double bottom. since then this rally has come back rather sharply. the only thing we're missing so far is one more setback. we need some profit taking which will probably coincide with the nonfarm payroll and a fed rate decision. we need to sed back quickly, shake some longs out before we move higher. so i would say two to four weeks before we make a new high but i think in the near term we'll set back. >> maybe sometime in december.
2:32 pm
boris, fundamentally do you agree? >> when we were talking about this earlier in september and august and when we had the big swoon, i said seasonally it's a great time to buy and i was very lucky actually that buying the dip was a great strategy into october. now we come to a time though i think where we could be very much in a process of setting up a blow off top. if we don't correct like todd says, if we get just simply straight to new highs from this point on, we could be in for a more severe correction. i'm a little cautious about how we trade going forward. >> brian, just to make this point underlining boris', this point gain we've seen in the rally has been larger than the point loss in the august flash crash part two as i call it. it's well overdue for a set back. >> it's been powerful, 9% over 30 days. and i heard christmas music in a store yesterday. it was november 3rd or whatever it was. >> watch the retailers. >> yet it's 70 degrees in new
2:33 pm
york city. >> bah humbug, we're doomed. for more "trading nation," head to melissa, can you believe that? christmas music on november 2nd or 3rd? >> starbucks has the red cups out. >> halloween just ended. it's like the british soccer season. it never starts or ends. >> it's a great time of year. >> i'm a humbug. >> actually. drop box holding a big product event in san francisco. let's get to kayla tausche. >> it's the first ever drop box open in san francisco taking the wraps off a more collaborative drop box for business, the first ever of these types of events showing a new and richer platform for more than 150,000 paying businesses to use. let's talk more about it with drew houston, the ceo of drop box, who joining us fresh off the keynote from drop box open. it's great to have you. >> great to be here. >> what is so different about
2:34 pm
the new drop box for business that you felt merited an event of this scale and how much do you think it will help to woo in that very lucrative corporate customer? >> well, we found that drop box has been taking off in businesses. we're in -- we've got 8 million businesses using drop box, 150,000 of them have become paying customers recently, and we've put on an event because this year has been the tipping point where we've gotten much larger customers up and running, news corp., expedia, in many cases rolling out drop box business to tens of thousands of their employees. >> in the beginning the enterprise market was described as a david versus goliath deal. you have google, microsoft, amazon. on the other hand you have drop box and box and other newer entrants. ed a as you add new customers, how would you describe your
2:35 pm
customer base compared to microsoft, compared to google? >> well, i think it all starts with people love the product. we built something hundreds of millions of people use and things have been growing. what they love about drop box is a few things. they love the design. it just works. it's a really easy experience and they love the freedom to use any platform. those are a couple things that are unique about drop box. >> we talked to you in may and we asked you about pricing. there seemed to have been a price war that continues in the cloud space. at the time you said that it wasn't drop box's priority to be the cheapest product in the cloud but we've seen google put out new offers to woo people into google for work, we've seen microsoft. i'm wondering if you're feeling more pricing pressure or if any of your partners like microsoft have become more competitive than you originally thought. >> well, again, people love the product. if anything we've been keeping
2:36 pm
up with the growth and this is our first customer conference, and so if anything we've been delighted by all the adoption we've had. we've added 50,000 new business customers in the last year alone. >> part of that is due to a new sales force that you guys recently instituted and you know you have new partners on the two-tier side to bring in more of those customers. drew, the stats are staggering. every second 4,000 edits are made on drop box. you have a very sticky customer it would seem. i'm wondering what you need to do to make revenue more predictable in the business and to make the valuation more predictable for investors like blackrock and fidelity that are trying to gauge where growth is going. >> well, i think one of the great things about drop box is we're sort of a bunch of businesses in one. we combine a lot of great elements about a consumer internet company so really predictable and scalable viral growth. so i can't think of too many
2:37 pm
examples like that and we're sitting in a huge market. even at the kinds of numbers we've reached, we're just scratching the surface of the opportunity. >> do you think we're close to seeing investors like blackrock, fidelity, which have marked down their investment, are close to being able to break even if you continue growing at this rate? >> i think for any private company, there's really no -- you don't have sort of an ongoing valuation and, of course, any company will -- or one function of valuation is how the public markets are doing in general, but i think what our investors pay attention to is our opportunity and how we're executing against our mission. >> it's certainly been fun to watch the growth at drop box in a competitive space. we always appreciate you joining us here on cnbc. drew houston is the ceo of drop box. >> thank you. >> brian, back to you. >> thank you. on deck, the analyst kals y calls you need to know about. we call it "street talk."
2:38 pm
plus, bitcoin surging recently but nobody seems to know exactly why. so, america, if you know, let us know. we're back to talk about the bitcoin blitz right after this.
2:39 pm
♪ 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
2:40 pm
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: to advance the future of medicine with digital, and improve the quality of lives. ♪
2:41 pm
hi, everyone. welcome back to "power lunch." i'm sue herera with this news alert. according to reuters a former new york fed employee named jason gross has entered a guilty plea in the goldman sachs leak case. that's according to a court hearing. the background to this which we told you about last week was that a former goldman sachs banker was accused of taking confidential documents from a source inside the new york fed. this is the fed side of the
2:42 pm
story, the new york fed employee, jason gross has entered a guilty plea in that goldman sachs leak case. brian, back to you. >> sue, thank you very much. well, bitcoin, remember that? has been rocking lately. the digital currency doubling in the past month. because they're a decentralized krip co-currency, nobody really knows what's going on. sop analy some analysts have pointed to investor fear of missing out. you can see bitcoin is up 31. either way, bitcoin up another 7% today. every day we dig through piles, literally like stacks of analyst research to find the most interesting calls of the day. we call it "street talk." let's get started, shall we? >> uh-huh. >> first stock, groupon. negative comments following guidance which was well ba lelo
2:43 pm
expectations. bank of america cutting it to an underperform with a $2.75 target. stock is down 27% right now and still not at their price targets. crt cuts to neutral. saying the new strategy will take time to play out. i wonder if there's time to play out. >> you know what comes with a new ceo in general is kitchen sinking it. so maybe in the neck quarter you can see the bar set lower. kellogg getting an upgrade. the business showing signs of stabilization, management acting with a greater sense of urgency. also the analyst likes the cost savings. they quantified $100 million in savings in north america on top of the $100 million from project k restructuring. >> m ismmira saying this is sti cost reduction story, not really growth in the core cereal mark.
2:44 pm
i just wanded to say core cereal market. range resources are selling virginia assets, a bunch of wells and everything in virginia, for $876 million. they're going to use the proceeds to help pay down debt, shore up the balance sheet. citigroup upping it to a buy. their target is $40. about 30% upside from here. iberia capital partners chiming in saying the deal helps alleviate leverage concerns. >> this reduces debt on the balance sheet by 24%. so this is a massive step in shoring up that balance sheet. fourth stock, blooming brands down to an outperform from strong buy. that's a little confusing. >> still good. >> but it's still down. still a downgrade at raymond james. eps visibility has deteriorated. there's been less effective promoting.
2:45 pm
there's also possible monetization of real estate assets and we've seen that time and time again in this space. >> and because this is the parent company of outback steakhouse did you pick it because mandy returned today? >> mandy is back. >> with kangaroo steak. finally -- >> kangaroo. >> the medicines company. new jersey based biotech reviewing strategic securities. the company could either sell itself entirely or break up into pieces and sell them, hop off into the distance. four potential block buster drugs. the average target is $44.38 per share. >> they also have ten marketed products in the u.s. market and a lot of options. they could sell assets or spin out into different companies. so a lot of options here and analysts seem to like it. >> the ang kangaroo appreciatio
2:46 pm
society is on line two. i'm hopped up on cold medicine. ignore me. just ahead, the manager of a top performing mutual funds joins us with three small cap top performing picks. "power lunch" is back in two. sure, tv has evolved over the years.
2:47 pm
2:48 pm
it's gotten squarer. brighter. bigger. thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv.
2:49 pm
one thing we love to do in this hour is to comb through results and find mutual fund managers who are performing well but may not be getting any attention at all like your next guest. steven he runs the fed rated kaufman small cap fund up 7% even as the small cap 600 is basically flat. this is steven's first time on cnbc and he comes equipped with some of his favorite stock picks. i was told to be nice because it's your first time on the air. >> i would appreciate that. >> the next time you're toast. >> let's go at it. >> congratulations, you're doing well. is there one or two stocks you have purchased that you've been particularly proud of and contributed or really has it just been a bunch of different names that have outperformed? >> sure at fed rated kaufman funds we have a team of nine sector portfolio managers. anything that we do is a team-based approach. but certainly in this market where we're living in a very fla flat, not a lot of growth you
2:50 pm
can find exciting small cap names is visible exciting growth ahead. >> one of your names, and you have three picks. we literally found you by digging through results. u.s. concrete,u scr. how did you find this this nam? what's so good about the stock? >> sure. i love this name. by the way, they report tomorrow and i think they're going to have fantastic results. the stock was down this week. as a larger competitor announced results that isn't really a great read for the company. but they're the largest manufacturer of ready-mix concrete in the united states. historically not a great business. but if you look where we are today, there's been very expansive consolidation in their markets. that consolidation allows the company to have pricing power. there's something called material spread. it's what they're buying their raw materials at and what they're selling at. that material spread is going to expand pretty dramatically as we go forward, as the non-residential construction recovery moves forward. if you look, 52 out of 54 metros in the u.s. today are above
2:51 pm
occupancy rates of 2006. this company is earning more than they did in the last construction peak. >> i think you're saying the stock is built on a solid foundation, but i would never say that. the next name, and we're bringing in a new guest on the show. you're bringing me a new name. a stock i have never heard of before either. the ticker mpg. car related company. why do you like it? >> well, think about the symbol. mpg, miles per gallon. metaldyne is a new ipo. they're a forging and casting business. another business that on the surface can be very boring. yet they have the highest margins of any auto supplier out there, yet one of the lowest valuations. in addition, their bookings were up 40% year over year. metaldyne, their growth is going to be based on automakers trying to achieve their cafe standards. so higher efficiency. when you have higher speed transmission, instead of a four,
2:52 pm
five, six speed transmission, metaldyne makes the components that go into that. >> so every time one of our investors goes to a car lot and the salesman says this is a seven-speed transmission, they'll know that maybe mpg is behind that. your final pick today is tyler technologies. plano, texas, based software company. 14% run this quarter. a big run. you've obviously made money on it. are you trimming? >> sure, look. this company has a 98% retention rate. it's a software solutions company for state and local governments. tyler comes in there. it's hard to get a government to fix a pothole. it's very unlikely that they're going to switch systems once tyler gets attached to them. very low capital needs. almost 80% of their business is recurring. i can tell you today in november
2:53 pm
that they should have 20% earnings growth next year, and they already have it booked. so as state and local spending increases, as we moved on since the great recession, tyler technologies is perfectly positioned to benefit going forward. >> all right. steven, i want to say thank you very much. you nailed it. and by the way, got a tweet from a friend, a frequent guest on cnbc. he says tell the newbie that you move some of these stocks. mpg shares spiked. thank you very much. >> you're welcome. >> see you gun, buddy. >> thank you. facebook soaring to new heights as the stock is up nearly 33% year to date. we're talking to two analysts who tell us whether they're still hitting the like button on facebook's stock. that's straight ahead on "power lunch."
2:54 pm
hello, ken jennings. i haven't seen you since that tv quiz show. hello, watson. you can see now? i can recognize people, analyze images and watch movies. well i wrote a few books, did a speaking tour, i... i've been helping people plan for retirement. and i help doctors identify cancer treatments. is that all? i recently learned japanese... yeah, i was being sarcastic. i haven't learned sarcasm yet. i can help with that.
2:55 pm
our cosmetics line was a hit. the orders were rushing in.
2:56 pm
i could feel our deadlines racing towards us. we didn't need a loan. we needed short-term funding fast. building 18 homes in 4 ½ months? that was a leap. but i knew i could rely on american express to help me buy those building materials. amex helped me buy the inventory i needed. our amex helped us fill the orders. just like that. another step on the journey. will you be ready when growth presents itself? realize your buying power at just to recap, tyler technology metaldyne performance group and that stock, uscr, i don't know if you ever heard of this company. i have not. i haven't heard of any of them. we're not cheerleading the name at all. he did. he talked about how good the company is and the stock moved up about 3%. quarterly revenue estimates
2:57 pm
of $4.36 billion. what should we be looking for in today's earnings call? oppenheimer has an outperform rating on the stock. jason, great to have you with us. in terms of what we are looking at, for a long time, the focus had been on spending. will that once again be a focus for this quarter? >> of course it's still a focus. a year ago, spending accelerated from 18% in the second quarter. while we do think spending will be high, we think it moderates over the next few quarters and they continue to beat the margins. i think they're really focused on what instagram brings to the table. the company started to let on performance advertisers in august. so you might pick up some initial bit on instagram.
2:58 pm
i think the street is looking for what can instagram do to the stock the next 12 months. >> the user base is at 400 million users, so do you expect them to actually talk about the revenue bump that they will see -- that they expect to see given the changes they made in the ad platform? >> you know, you have a lot of moving pieces. they continue to evolve what advertisers want, whether it's making video ads. whether it's 100% viewable ad. we saw them not charging advertisers for likes and shares, but only for click-throughs, which is what google does. so it's evolving. but again, the interesting thing is instagram is growing unbelievable right now. they're getting significant pricing over the core facebook
2:59 pm
ads. we just don't have volume yet. i think the street is really going to be looking for how incremental is it. most people do not have this in estimates for the fourth quarter for next year. >> we have literally 30 seconds, jason. once a property gets to 1 billion, he's going to lay out montization plans. do you expect to hear a glimpse of that? >> i don't think so. i think this will be more about instagram. i think we'll cross our fingers. maybe he actually waits for the billion and talks about it on the fourth quarter call. >> bumping up against the price target, jason. you're almost there. >> based on 30 times our etfs for next year. plus $75 for instagram. there are others valued at 100, 110 a user. i think we have some room there. we can also move to valuing this more on revenue with cash flow.
3:00 pm
people will get more comfortable with the value. >> thanks for your thoughts, appreciate it. more on facebook in the conference call. >> a big night on "fast money." we'll see you tonight. and thank you all for watching. "the closing bell" begins right now. hello, and welcome to "the closing bell." i'm kelly evans here at the new york stock exchange. >> and i'm bill griffeth. six words weighing on the market today. that would be december would be a live possibility. i feel like i'm on wheel of fortune. that's what janet yellen said during a congressional hearing as stocks moved lower on that news. the dollar strengthened, hitting a new high against the euro. and oil down more than 3% on the session so far today. >> checking out that dollar index. it's nearly 98. something to keep an eye on as weav


info Stream Only

Uploaded by TV Archive on