tv Power Lunch CNBC November 12, 2015 1:00pm-3:01pm EST
job security and now some wage growth is starting to move up the food chain when it comes to luxury. so i believe that people who have been shopping at targets and kohl's are starting to look for a better experience which they get at nordstrom's. if they disappoint, they're just going to be one of the losers. there's still winners in there as we've seen. >> joey? >> have a wonderful thursday. >> you do the same. "power" starts now. you all have a wonderful thursday, too, everybody. welcome to "power lunch." here with mandy drury, i'm tyler mathisen. it is a day of ups and downs on wall street. you see the dow intraday there at the low point of the day. we were down 186 points, and right now not far from that, off 170-some points. there you see the s&p 500. it is off about 0.75%. and the russell 2,000 is off by 1.1%. >> day by day, ty, barrel by barrel. oil is a big story once again
today with oil down quite a lot. in fact, it's currently down by nearly 3% sitting below 42 bucks a barrel. over the last year oil has lost 45% of its value. who do the numbers stay? coming from the transport sector the numbers may be signaling a possible recession. we'll tell you what those numbers are and why you might want to take note. >> as we can see, stocks are sliding at this hour. get down to the floor with bob pisani. how much of this is due to oil, bob? >> a very large part of it. let's look at the s&p 500. we got down right at the open, 12, 14 points on the s&p and nefer looked bac ee eed back. mandy is right, it's the commodity complex, particularly energy stocks that's having a problem and this has been going on for days. big moves down in some of these names, and sop me of them are dn double digits, anadarko, murphy, down double digits. we've been talking about this
all week. we know the lowest level since august, a lot of warm weather. there was some disappointment we didn't get a deal on anadarko and apache. if these prices continue there's going to be m&a. it's the same story elsewhere. new lows in a lot of commodity names. alcoa at a new 52-week low. all of these stocks down again today. the other story is retail. surprisingly good numbers from kohl's. having a nice day. nordstrom, jcpenney, macy's all positive. we'll hear from nordstrom after the close. discounters kind of mixed today. often kohl's gets mixed in with the discounters. finally that move down around noon, a lot of people were talking about bill dudley, the head of the new york fed came out with comments. i didn't see anything he hasn't said before but some people focused on slightly more hawkish tones. i don't think it was hawkish. he said it before. he said the positives outweigh the negatives right now in the economy and he noted the
international outlook a little less problematic. tyler, back to you. >> robert, thank you very much. dominic chu for a quick market flash. >> some names are sticking to the. >> up site, yelp 6% to the upside. on news that competitors angie's list rejected a possible buyout offer. sally beauty nearing highs of the day at 9% as fourth quarter same-store sales beat expectations and then there's splunk coming off the highs but up over 4%. third quarter estimates were raised ahead of earnings. fireeye, go daddy, kohl's, all still in the green up around that 2% to 5% mark. >> thank you very much. let's reiterate this, it's a lot about commodities today which are getting whacked. ou hi oil, copper currently sitting at six-year lows with a drop of
2%. jackie deangelis is joining us from the nymex. >> three specific reasons here that the commodities complex is lower. we're talking both energy and also the metals. let's start with oil. of course, we have that inventory number this morning. it was a big build. a little less than the api, but traders were looking for a slight draw this week. we have the same problem on our hands. that's a problem of oversupply and that actually brings me to my next point, which is that opec came out with its monthly report. opec really not changing its outlook here. they're worried a little bit about iraq exports. saudi arabia and production came down ever so slightly but opec is saying nothing about global demand going up and that's part of the equation we need to hear for oil prices to get some support. the third issue is mario draghi. more dovish than ever. a lot of concerns that the euro will go to parity. that dollar index is going to go higher. also a fed rate hike in december could push the dollar up, and that will drive crude down as well. so at one point we were talking about seeing that three handle
again this year. this could potentially be the scenario that takes us there if we don't see any changes. back to you. >> thank you very much for explaining it to us. we should note in trade today the dollar is a little bit lower. it's currently below 99 for the bxy. a news alert in the bond market with 30-year bonds up for auction and a busy week. rick santelli is tracking that action at the cme. what is demand like for this one, ricky? >> maybe the veterans day holiday recharged some of the bidders in the auction, dutch auction process. this one is an "a" minus. "a" as in apple minus, solid auction. 16 billion 30 year bonds capping a 64 billion coupon supply monday, tuesday, and thursday. let's go through the internals. the yield was 3.07. i was shocked that that was the yield that moved the supply because i saw 3.08 and a halves and 309s trading up to the end. 2.41 on bid to cover.
$2.41 chasing every dollar's worth of securities available. definitely well above the 2.32 10 auction average. only a handful of 60 handles in the indirect camp, solid there. the only minus, and it's a small one, 10.2 on direct versus 10 auction average of 11. primary dealers take a whisker under 30% of the auction. mandy, tyler, back to you. >> rickster, thank you very much. big drop in orders for rail cars and demand for heavy duty trucks also falling sharply from last year. what do these numbers signal about the transportation sector and then in turn about the health of the overall economy. morgan brennan is following this story. hi, morgan. >> hey, tyler. so basically we've got a growing number of experts that are now warning we could be seeing the beginnings of an industrial recession. so take fastenall's incoming ceo. he told analysts the industrial environment is in a recession. i don't care what anyone says
because nobody knows that market better than they do. energy, mining, and manufacturing have all been slumping and now transportation equipment, which hasn't been a bright spot up until now, maybe the latest indicator of an industrial downturn. take rail car orders, those have plunged 83% last quarter according to the railway supply institute hitting their lowest level in at least 27 years. and class eight trucks, the big semis you see on the highway, are showing signs of weakness as well. str reports preliminary october orders while up from september were 45% lower than a year ago. so now orders usually jump at this time of the year because you've got companies that are buying new equipment as they finalize their budgets coming into the next year, but amid steep cap ex cuts, production of new rail cars, heavy duty trucks, and trailers will likely fall 20% to 35% next year. even more worrisome, wells fargo notes over the past 45 years, anytime both machinery and
transportation machinery has declined, it's signaled a u.s. recession. the wells says the risk of that happening is increasing heading into 2016. if we see the transportation side begin to drop, we could see a broad sustained slowdown. >> that last thing you said there from wells fargo, that anytime you have seen this kind of decline in transportation equipment, it has signaled a recession. >> yeah. and even more so on that, when you see a decline in railroad rolling stocks, that usually signals the broader decline of transportation equipment industrial production. >> fascinating stuff. morgan, thanks. let's go to europe now. problems flaring up again literally over in greece. clashes breaking out between riot police and youth at a demonstration in central athens. it comes during the first general strike since the country's leftist led government took power back in january. the protesters threw molotov cocktails at police who
responded with tear gas and stun grenades. thousands of folks taking to the streets to protest a new round of bailout related tax hikes and spending cuts. >> the economic and political future of fellow eurozone member, ty, portugal has also been thrown into you be certainty. anti-austerity lawmakers there forcing the country's new government to resign by rejecting its policy proposals. as you can see on the board, yields on portugal's 10-year note soaring in the past week. up about 8% over the past week currently yielding 2.78%. so we're seeing a sell-off here in the u.s. market so what do wall street's top money managers make of this recent market turmoil? well, our brian sullivan is speaking with hem. he's hopefully got some answers and he's joining us live from boston. hey there, brian. >> yeah, ironically many of the wall street guys are actually in boston today, mandy. thank you very much. it's a good day to be here at the schwab impact conference because there's so much going on not just with oil, with greece, but also over the past 30 or 60
days. we've seen big moves, particularly in bond yields. the question is what does that mean for financials and the banks? probably no better person to answer that question than the guy sitting right here, so move the candle ra to the guy sitting right here. been investing in banks how long now? >> 19 years. >> the ten-year yield moving down a little bit on the volatility but we're up big from where we were a few months ago. how is that going to impact banks and financials overall? >> they're going to get impacted more if the fed raises rates. if the libor starts to move up, if prime starts to move up, they're going to make more money. the yield curve is important. it's part of how they lend and price, but if short-term rates move, they'll be able to keep some of that move in the returns. >> do you believe the fed is going to raise in december? are you investing as if they are going to raise in december, anton? >> i never invest that way. i really try to pick stocks based on the underlying fundamentals and it will be a bonus if the fed raises rates.
m&a has been off the charts again this year, bigger deals are happening. >> we chatted right before the segment and you said if the fed raises, its fine, but if they go more than 100 basis points, 1%, things will get different. what do you mean? >> earns may be up but banks that have been great at gathering deposits the last few years, how long are they going to sit there? what is going to lead people to go chase and go to money market funds or invest in other things like bonds if rates start going higher? so it's a question of where the consumers' attitude gets changed and i think you'll have to get multiple moves to get to 1%. people go, wait a second, i'm getting 0% versus 1% or more, let me move my money. >> we're going to try to get investing advice, ideas out of everybody. tell us about yachtkin and bank of the ozarks. >> yachtkin is the largest independent bank in north carolina. they're in all the growth markets. they have an acquisition that's
going to close down the road of newbridge financial. they're in charlotte, they're in the research triangle, they're in raleigh. >> red hot. >> $7.5 billion in assets. all the bigger banks would very much like that footprint. >> and ozarks. >> every deal they do adds to shareholder value. they just announced one two days ago which our funds own. when both sets of shareholders win, you're in a sweet spot. >> anton, always a pleasure. thank you for joining us. mandy, we have a lot more coming from the schwab impact conversation. 1,000 people here and we're going to try to talk to all 1,000 of them. that's not true. >> i would wanting in less than 1,000. thank you very much, brian. we'll see him later in the show. >> and liberty media's ceo is speaking exclusively with our david faber and that is next.
npr down by 0.7%. and angie's list is up by 11% with a cash takeover offer. helping to push that stock up more than 40% already this year. >> let's head to new york city where liberty media's investor day is under way and our david faber is there with a cnbc exclusive. david? >> thank you very much, tyler. yeah, we are joined by greg maffei no stranger to many of our viewers on cnbc all it's been a while, at least for me. >> i'm happy to be with you, david. thanks for having me. >> another day, another tracking stock. you guys never stop with the tracking stocks. today at least three, maybe more. you have the expedia spin two, the atlanta braves -- >> tracker. >> sirius. >> tracker. >> and what's left in liberty media. >> exactly. >> why are you doing this? >> well, a couple reasons.
first, we trade at a discount to the net asset value. a lot of what liberty has and controls is invested in public companies and you can clearly value the stakes. and then on any reasonable calculation from analysts we trade our stock price doesn't reflect that underlying value. our hope is by parsing these out, by dividing them more targetedly, we'll be able to see where the discounts reside, make it clear to people that sirius is sirius, the braves are the braves, and if there's a discount on the balance, we can take advantage of that by repurchasing stock. >> you reduce the discount and isolate the discount to your point where then you can take advantage. >> that would be the hope. when it comes to sirius, by far the largest single asset in liberty media, how is the tracker going to trade versus the common of sirius? >> well, i think they ought to trade pretty much the same but we'll see. that's what we're here to learn. >> that's your expectation, though we have no idea. >> we don't know.
>> it could trade at a discount though, couldn't it? >> it could. you could come up with reasons why but i suspect it will trade at less of a discount in any case than where liberty media as a whole trades. >> you keep accreting up in sirius. 60.7% unfrp from 58%? >> 57%. generating a lot of free cash flow. you made an offer for it once, now you're doing the tracker. where do liberty and sirius stand in terms of do you want to own the rest? are you happy with the current situation? clearly at a discount i guess it wouldn't have made sense -- >> right. i think your last point is what ooind lead with. given that it traded at a discount, we wouldn't want to issue our stock at a discount to purchase it. that wouldn't make a lot of sense. ultimately, i think it's very logical these companies belong together. there are some tax advantages to us for putting them together, but it's not something we're going to chase and it doesn't
have to happen anytime soon. we're in control of the company. every day that they buy and we don't sell, we get a bigger percentage, so i think it's sort of just a question of when, how these things come together. >> and the tracker to the extent it lowers that discount or eliminates it, does that make it more likely maybe you're able to move faster rather than slower? >> potentially, yeah. >> the atlanta braves -- >> i know you're a mets fan. stipulate up front. >> of course. we always do. >> nice season. >> thank you. although it ended in pain. what else. that's being a mets fan. but are they going to go on a winning streak and the tracking stock is going to go up? >> you never know. i think the real value created there though is a couple things. one is we have an amended tv deal which has added a lot of value. we're under construction on a new stadium, suntrust field at the battery that's going to add a lot of value. mixed use development around that and teams in general have gone up quite a bit. so there are a lot of drivers of
value at the braves. winning is not a bad thing. >> what's the long-term plan for that asset? you got it because it was a tax-free swap way back with time warner which was advantageous. do you really want to keep owning the braves? does it take you down a road where eventually the team gets sold? >> i don't think it says that. i think it says we've own the braves since '07. highlighting that value, potentially setting up ways in which it could become independent, create optionality owe are a positive but it doesn't suggest anything is going to happen anytime soon. >> the level of complexity associated with liberty a fairly high. you made a joke in your prepared presentation which was very funny on tape, i encourage people to watch it on youtube -- you are don't make it available? >> that's for a discrete audience. >> the banana in a jar was pretty good. i forgot what i was going to say. i started thinking abouted
banana in a jar and i forgot what i was going to talk to you about. >> can i suggest topics? >> sure. >> complexity is -- that's a relative concept. liberty has always been a complex animal and some people argue that tracking stocks add to complexity but we tend to believe and i think our history would reflect it that actually isolating the pieces, setting up optionality for the pieces has been a way to highlight value, provide clarity, and if you want to be an investor in the braves you get that choice, you want to invest in siri, you get that choice. highlighting those options has been good for our shareholders and i would say reduce complexity. >> and i appreciate your question i had asked before i lost my train of thought. >> helpful. >> you employ legions of hundred dollars guys that do nothing but pore over these guys. >> i got an e-mail saying we are
the hedge fund dream. >> our audience will never fire of you but apparently we have to go. >> the banana in a jar caused me to lose my train of thought, too, david, so don't feel bad. the battle of the billionaires, big ackman going after buffett's investment in coca-cola. buffett's right-hand man charlie munger going after ackman's valeant trade. who is right? we'll take it apart for you when "power lunch" continues on cnbc, first in business worldwide. when you do business everywhere, the challenges of keeping everyone working together can quickly become the only thing you think about. that's where at&t can help. at&t has the tools and the network you need, to make working as one easier than ever. virtually anywhere. leaving you free to focus on what matters most.
lunch." i'm mandy drury. go pro just falling below its ipo price for the first time. that stock is down more than 5% today. let's get to bertha coombs in the nasdaq. what's pushing it down? >> we had some real negative sentiment on go pro these days and some of the other usual suspects are down as well. we have the biotechs and the chips down but media today is where we're seeing some strength here at the nasdaq having the nasdaq outperform. viacom higher. the stock is higher on signs of improving tv ad sales. liberty media who you just heard from the ceo, that tracking stock at a new high after another spinoff announcement. chinese online retailer jd..cco at a new high. and pay pal, saying apple a looking to add peer to peer
payments through apple pay. >> and rick santelli is watching the action after the 30-year note auction. hey, rick. >> yes. 30-year note auction gives us a clue that the rise in rates is being slowed down by the sell-off going on in equities. look at intraday of 30s. you can see we made new lows after the auction but not much beyond that. if you open the chart up to july, you can see it looks like we are forming a top at least for now. but it's all about the spread. 30s minus 5s on the big chart, you can see it's had a lot of action. on the intraday, there's your clue. yes, it really sped up after that auction finished and we continued to monitor the difference in values between short ends that respond to fed activity more closely than the long end thinking about the economy. back to you. >> thank you very much, rick. and gold is hitting lows not seen since july. those prices getting ready to close right now. the key support levels that traders are saying to watch from here and also yahoo! ceo marissa
hello, everyone. i'm sue herera. here is your cnbc news update. the death toll from twin suicide bombings that struck a shiite suburb in southern beirut has now reached 37. dozens more were wounded. the bombings came just minutes apart during rush hour. no one has immediately claimed responsibility for the bombings. hud secretary julian castro announcing a proposal to make the nation's housing properties smoke-free. it would require more than 3,000 public housing agencies to implement smoke-free policies within 18 months of the final rule. the department of veterans affairs doled out more than $142 million in bonuses to executives and employees in 2014, even as scandal over veterans health care plagued that agency.
among the recipients were claims processors in philadelphia, and that's where investigators dubbed it the worst in the country. ted cruz becoming the latest presidential candidate to file for new hampshire's primary. afterwards the texas senator thanked the state's voters for taking the job of choosing presidential candidates seriously. you're up to date with the news update at this hour and let's go back to you, mandy. >> thank you very much, sue. as we promised, let's bring you the gold close right now. jackie deangelis at the nymex, how low have we gone now? >> well, gold did not have a great day today. it started with the draghi comments this morning, that super accommodative stance, the concern, of course, is that the euro is going to go lower and that will push the dollar higher which is bad for gold. gold broke through critical support at $1,087. it's not closing there at that point. $1,067 to $1,072 is more likely the next level lower. all the metals of course lower today. dollar index slightly lower. this is more in anticipation of what's going to happen, mandy.
back to you. >> jackie, thank you very much. i'll pick it up. down week for stocks, it's continuing today. the dow down roughly 350 points so far this week. bob pisani joins us from the new york stock exchange and the s&p earlier today at least, bob, was now negative. >> and the important thing is we've had six days, maybe seven trading days where the trend has essentially been to the downside. remember, we were close 2130 was the old historic high, seven, eight trading sessions we were talking about hitting a high. it's about down since then. jackie is right, dollar strength and commodities remains the focus. breadth 4 to 1 declining and advancing. the volume, let's call it borderline on the heavy side. volatility, vix almost at 16, a three-week high for that. the sectors, it's the energy stocks and the material names, all the big names getting hit, industrial names as well, consumer staples also on the week side. rick was talking about that strong 30-year auction. i just want to note reits had a
very, very nice move up on that auction. guys, back to you. >> thank you very much, bob. so is the market downturn this week something that investors should be concerned about? joining us now john buckingham, chief investment officer of sm capital and craig columbus, ceo 6 tower square investment management. john, not only the market downturn but renewed vigor in the commodity rout. is this something that could change the e quitiquation in te whether or not the fed hikes next month? >> we really only have seen a 2% or 3% pullback here, mandy, in this downturn and we have to keep in mind volatility is not unusual. going back to 2009 there have been 26 different times where we've had a 5% or greater pull back without an accompanying 5% rally to offset that. so volatility is not unusual. this shouldn't delay what the fed is going to do and obviously we have the strong jobs report
and the consensus suggests that we're going to have a fed rate hike in december which i don't think is going to be a bad thing. >> so, john, you seem fairly sanguine. when i see you have a modest overweight in the energy patch as well, you're obviously sanguine about weak energy prices, too. >> i'm always looking out three to five years. when wall street has a sale, few people want to come. and right now there's sales going on in energy, materials, even some technology. interest rate sensitive stocks have been hit hard. i think for those with a long-term time horizon, provided you're able to invest in companies that can make it through, especially in the energy and materials sector, i think there's great opportunity and we'll look back five years from now and think of these as some of the buying opportunities of a lifetime, but it's going to be a tough row to hoe in the near term. >> craig, john says this is an opportunity, right? yet you're saying this is really not the time to be deploying new money in the market. why? >> well, i'm a little less
sanguine because if you look at the catalyst for the october rally, one of the keys was commodity stabilization, and as you've been talking about, commodities are rolling over. i thought it was very significant oil couldn't hold $44 as support. i think that brings the $38 low back into play. but more importantly from a macro sense, it brings back in all the issues is causes the summer sell-off, high yield stress, potential default, potential monetary inflection point. i think we have to watch that commodities can stable ooze before we go higher. >> one year from now, craig, do you see the market as higher or lower than where we are now? >> higher, because i don't think we're in a recessionary period. the service sector is strong and job growth as well. >> maybe just short-term bumpiness. craig, john, thank you very much for joining us. go to powerlunch.cnbc.com to see what john and craig say are risky. that's powerlunch.cnbc.com. and tyler has just come over and joined me. >> yeah. >> we have a very -- and jon fortt, hello. the whole crew. we have a very interesting story
to talk about here. it's from recode from kara swisher. according to swisher last year yahoo!'s ceo marissa mayer made her top executives dress up like characters from the wizard of oz. so here she is. take a look. dorothy, the picture was made into a poster, a promo for the wizard of oz themed holiday party and the report says it cost $70,000 which upset some staffers. does that raise a bigger question about her leadership? ie, is there anyone around marissa mayer who can tell her no? not just about small issues like this or holiday party dress-up but major issues involving the country. jon, some people have said there's some disjointed and strange strategic decisions and even acquisitions because maybe people are not able to say no, marissa, not that time. >> i think it's true there have been some strange decisions, but unfair to take this photo shoot and make it into an issue. yes it's $70,000, it sounds like
a lot of money but when you're talking about a holiday staff party budget for an internet company, this sort of thing is not completely out of line. also remember a year ago, alibaba was riding high. it looked like yahoo! had tons of money in the bank like home equity. so spending money on a holiday party not -- >> alibaba gave her a bit of breathing room but it's not going to in the future. >> a year later it doesn't look so fun to have all the executives dressed up -- >> and when you're laying off workers as they have had to do. i suppose that her character choice was actually the best of the ones she could have chosen. the scarecrow doesn't have a brain, you don't want to be that. the tin man had no heart. you don't want to be that. and the cowardly lion had no courage. so best dorothy? >> dorothy. she's got brains, she's got heart -- >> or a munchkin, i don't know. >> there's no place like the home page, i suppose. >> toto 37. >> toto is innocent in all of this. leave the dog out of it. i think this is an issue of
yahoo! being in an especially tough spot. this comes up and makes them look bad. the question is can they grow? if they were growing -- if elon musk dressed everybody -- >> if they weren't laying off people no one would blink maybe. >> even with the layoffs, you consider there are lots of companies that are growing and doing layoffs at the same time. that's a common thing for a company in transition. even that i don't feel like you can nail them on for spending money on this sort of thing. it's really they're not growing. anything they do that's a little whimsical looks bad. if they decided to give free meals to everybody now, that would look bad. >> here is what yahoo! said when we asked them for a statement about the recode article. they say it is not our policy to comment on rumor or gossip or speculation and we will leave it at that. >> and your little dog, too. >> and your little dog, too. >> thank you, j.on. >> severe weather has been hitting the midwest. look at these photos of
lightning strikes in chicago and heavy winds knocking down treeings and power lines. nine tornadoes in iowa, heavy rains, winds strong enough -- look at that. wow, man. >> man. >> blow over an 18-wheeler. the weather also impacting the airlines, causing delays and cancellations. >> the runaway -- >> look at the thing there. going to hit the plane. oh. this is not good. >> it's not. >> look at the snow. >> incredible. >> where is that? >> midwest. >> we're going to move on. we have to move on. that was denver. shares of sirius xm trading near nine-year highs. stock is still pretty low. $4 a share, ladies and gentlemen. can you still make money in this stock? we have an exclusive interview with the company's ceo next on "power lunch." it's time for the "your business" entrepreneur of the week. josie dance in fargo, north dakota, is hard at work on sundays.
those companies in the downtown area are closed that day but she supports the open sundays campaign. she wants people to have a place to shop every day of the week to help fargo thrive. for more watch "your business" sunday mornings at 7:30 on msnbc. the orders were rushing in. 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 open.com
so wi got a job!ews? i'll be programming at ge. oh i got a job too, at zazzies. (friends gasp) the app where you put fruit hats on animals? i love that! guys, i'll be writing code that helps machines communicate. (interrupting) i just zazzied you. (phone vibrates) look at it! (friends giggle) i can do dogs, hamsters, guinea pigs... you name it. i'm going to transform the way the world works. (proudly) i programmed that hat. and i can do casaba melons. i'll be helping turbines power cities. i put a turbine on a cat. (friends ooh and ahh) i can make hospitals run more efficiently... this isn't a competition! welcome back to "power lunch." let's head back out to new york city with david faber.
david has another exclusive interview. who do you have this time, david? >> we're going to talk about radio. sirius satellite radio and the man who runs it with jim meier. his chairman is gregm affei who was with me not long ago, but you run the business, you make those decisions. i'll start off where i might end up sometimes which is howard stern. contract is up in, what, a month and a half or so. >> really surprised you asked the question. >> isn't it a shock? >> it's one i hear five times a day or more. >> is that all it is. if you listen to his show, i bet he's talking about it, too. where do you stand? >> to start with, howard's show has never been better, never been better. if you listen to it, we're just really, really pleased with where it is. if you listen to howard, howard will tell you he couldn't be happier than where he is right now at sirius xm. he will tell you he and i have a great relationship and what he will say is we only disagree on one thing and that's value.
you know, all kidding aside, i'm very hopeful that we'll get an agreement done with howard. we very much want howard on sirius xm for a long time to come. we obviously don't have an agreement yet but we're working really hard. stay tuned. >> i don't play in quite the same neighborhood he does but i like to take negotiations down to the end, too. i would assume that's where you're going to be here. you only got six weeks to go, right? >> the good news is i won't have to answer this question after six weeks. so we only have six weeks to go. you know, you should assume we're spending a lot of time talking to him and his team. >> get la faye involved. he can give him a tracking stock. >> howard would love to have his own stock i'm sure. >> i'm not even kidding, they might do that. they have the braves now. why not a howard stern tracker? >> all kidding aside, we very much want howard to stay. our listeners love him. >> when it's a matter of value there's always a price you're
unwilling to pay, correct? >> that's correct. >> free cash flow at your company is quite strong, $1.3 billion? >> we're predicting a little over $1.3 billion. >> you're using a lot of that to buy back stock. i made that point with greg because that means liberty itself accretes up and that's 60.7% in terms of its holdings percentagewise of serious. what else could you use the free cash flow and would you consider doing something else with it? >> we're actually using more than our cash flow to buy back stock. we're buying about $2 billion of stock back a year, and today we think that's the best use of our capital. i will -- >> why? >> i will tell you we look at everything. we look at everything. and i'm -- and we have every banker come to us with every opportunity you can imagine. and i'm open to a lot of them. we bought a company down in texas about a year and a half ago that was a leader in the connected vehicle systems. we fully integrated that business now within ours. really pleased with that acquisition and put us in a good
place and we continue to look for things like that. what we're not going to do, you know, our hurdle is very high. and by that i mean we're not going to do one unless it's clearly strategic or clearly accretive, and we just haven't found anything that magically fits in that space that matches what we think needs to get over the hurdle, but trust me, we're going to keep looking. in the meantime, we're very comfortable and we think our buyback position is the right thing to do with our capital in the right way and a good use of our capital. >> for all your shareholders, not just liberty? because it obviously benefits them. it's a way for them to own more and more of you. >> liberty can participate anytime they want. they choose not to right now, okay? i don't know whether they will continue to do that or what they'll don't -- you'll have to ask them that. but i talk to a lot of shareholders, a lot, and i can tell you many of them value very much the share buyback program. >> jim, in the brief time we
have left, of course, you mentioned the connected car. some see it as a significant threat to you. i'm in my car and i can get just not my itunes library but spotify, pandora, anything i want. is it a threat to sirius? >> i don't see it as a threat. i see it as an opportunity. what i will say to you is the connected vehicle is coming, and it's coming in many ways. it's going to come through embedded mode ms and methered modems and a variety of new things will come from that. but it will allow us to upgrade our service in ways we're only beginning to show the public now. >> such as? >> give us true two-way connectivity. you can do very, very clear two-way personalization. things like that. more importantly, more importantly, it's going to make our customer user experience and our customer, how they engage with us, so much simpler. that's an area we really can do better on and one we're really committed to and i'm excited about the communities connectivity will give us.
we have a technology we're developing called xsm 17, that's the code name. we'll be showing more of that in the first half of 2016. >> all right. we'll be watching and listening. jim, thank you. >> appreciate your business. >> that's right, i'm a customer, as are 29 million other people. >> thanks very much for that, david faber. which company is more iowa moral, coca-cola or valeant pharmaceuticals? that is the battle, believe it or not, that bill ackman and charlie munger are currently having. >> ackman criticizing buffett and berkshire for it's $17 billion stake in coca-cola saying coke causes, quote, enormous damage to society and coke does more to create obesity and diabetes than any company in the world. >> but it wasn't ackman who threw the first punch, it was charlie munger, buffett's right hand man and berkshire's vice chairman. calling valeant pharmaceuticals
deeply immoral and accusing them of being to aggressive and ignoring moral considerations. ackman's pershing square a valeant's third largest shareholder. ackman taking a jab at buffett saying he hasn't had water since the mid-1950s. buffett is known to drink several cherry cokes a day. he says it displaces water children and adults consume with sugar water. >> it clearly isn't hurting him. ackman's stance on sugar isn't so clear cut. he has a $5.5 billion share in mondelez which makes oreos and candy. >> in regards to his position in mondelez, ackman tells "the wall street journal," everything in moderation. it's complicated. complicated, indeed. there we go. >> there we go. >> hasn't had water in 35 years.
and then charlie munger taking on ackman here. he's such a cute little fellow. >> he really is. the yield on the 10-year note now around 2.3%, a big jump in the past month as the market prepares for the fed to raise rates. so which stocks do well in a rising interest rate environment? and which don't? plus, lasers pointed at helicopters flying over new york city. we'll show you how that turned out when "power lunch" returns. moves the world forward. invest with those who see the world as unstoppable. who have the curiosity to look beyond the expected and the conviction to be in it for the long term. oppenheimerfunds believes that's the right way to invest... ...in this big, bold, beautiful world.
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welcome back. we are live in boston at the schwab impact conference. all next hour with thousands of the smartest money managers and investment adviser are gathered. we're going to get tactical, actionable, and exclusive investment advice just for you all hour long with some of the best minds in the business. plus, more on oil. i know you have hit it, but we have got a chart that will make you go, hmm. it may not just be about inventories. we have a big show from boston all coming up. right now i'll send it back to you. >> looking forward to that. two men in brooklyn arrested for directing a laser at a helicopter flying overhead. the chopper was covering a story
with the local nbc station in new york city and when it was reported to police, the men hit the police chopper with the laser, too. not so smart. mandy? >> i'm sure they thought it was hilarious at the time. okay, hereby are this hour's pow everybody points. stocks selling off with the dow and s&p down 1%. the s&p and dow are negative year-to-date. materials, energy, and consumer staples are the biggest drags in terms of sectors and along the leaders, united tech, cisco, and disney are trading higher. this is the moment when 24-year-old joe mckeown won $3.7 million. wow. that is the world series of poker champ right there and he will join us next and we'll ask him about how much luck and how much skill he thinks is involved in poker. he's having better luck at the poker table than the 76ers are having. they haven't won a game yet. we'll be right back with more on
"power lunch." here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.
first prize. and now that he's done celebrating he joins us on "power lunch." i hope you're still celebrating, joe. >> of course. celebration will last for a long time. >> what are you going to do with all that money, go to disney world and did you do any swaps or deals where you split or share any of that prize money with anybody? >> i did a couple. i'm not going to get too deep into that. as far as the money goes, i think i'm going to end up putting a lot of it away. >> putting all of it away, but obviously minus the portion that you share with someone else. roughly what percentage of the $7.7 million do you keep, roughly? >> i keep a pretty large amount of that. >> more than 60%, 80%? what is a pretty large amount? >> i'd rather not answer that question. >> all right. how do you describe how much of poker is skill versus luck? as i understand it, and i don't understand how these competitions work terribly well,
but at one point you were almost on your way not out of the competition but you needed a card to come up and it did, which kept you in. so how much is skill versus luck? >> there's definitely a lot of luck in the game, but the people that win consistently are generally going to be the more skilled players. it's generally just about the short-term versus the long-term and in the short-term, having a lot of luck is great, but in the long-term, you can't rely on having great luck so you have to be a pretty skilled player in order to make money and succeed. >> let me turn the conversation to something that is very much in the news and see if you have any perspective on it, and that is these fantasy -- daily fantasy sport sites like fan duel and draft kings that have come in for some legal challenges in the state of nevada, from the attorney general of new york. do you view those games online as games of skill or games of
luck? in short, to you do they feel like gambling? >> they are definitely games of skill. i know a lot of the people that constantly win on daily fantasy sports because they're spending countless hours on it. so i don't think it's gambling very much, but, again, there's devil a little bit of short-term luck involved. you might be very high on a player that should theoretically have a great match-up and he comes in and has a poor game, but over the long run, again, you're just going to continue to win if you're a skilled player in daily fantasy sports just as you are in poker. >> so you see it more a game of skill than a game of luck and therefore should be treated legally that way. joe, congratulations. i hope your 76ers start to win. >> me, too. >> yeah, they haven't so far but they got some good players. good luck to you, continued good luck in poker and to the 76ers. joe mckeehen, world series of poker champ. >> that's it for the first hour. we'll hand is over to brian who,
of course, is over in boston for the charles schwab impact conversation with lots of great guests lined up. brian, over to you. >> well, all right, mandy and tyler, thank you very much. it's now 2:00 p.m. on wall street and the same time here in boston. we're at the schwab impact conversati conference. hello, everybody, it's a great day to be here and be surrounded by smart money advice because it's a tough day for your money. stocks taking a hit. the dow is currently down 160 points. stocks now at their lowest level for the month of november. oil also or maybe because of is in the red as well. crude oil down nearly 3%. right around that 42 buck a barrel mark. you have new reports that there is simply too much oil out there in the world to meet demand and that's why prices are down. we're going to get more on oil in a few minutes but we begin by asking a very simple question, what should you be doing with your money right now? luckily, we've got the perfect people to ask.
we're joined by schwab's chief v investment strategist. i say welcome but you have us at your conference so -- >> yeah, welcome, brian. >> i appreciate that, everybody. liz anne, one day does not a trend make. november has been a little tough. a lot of talk about the globe and oil and a lot of talk about the fed. what are you advising clients right now? >> so our official rating on the u.s. equity market has actually been neutral all year which just means we would suggest investors stay at their normal allocation. one of the more fun ways i have described what that means if you're more trading oriented is add on the dips and trim on the rips to stay at that normal allocation. i think what we're seeing recently is really just a consolidation of the unbelievable gains that we saw over the past month or so. >> you know, it's tough though, liz ann, you and i have been talking for a long time, and i think it's hard sometimes for investors to do nothing.
>> i know. >> we're sort of trained to -- i need to buy or i need to sell. sometimes holding is the best strategy. >> sometimes holding is the best strategy and if you're going to do something you're often better to go against what your gut tells you should be doing which is why sentiment tends to work in a contrarian way. not doing anything sometimes is the best thing. >> new data, jeff. $12.5 billion pulled from u.s. equity mutual funds, one of the biggest declines in years. i know you look around the world. it seems that people are pessimistic right now. how come? >> you know, that's a great question. i've been talking about advisers, why are your clients so pessimistic? they klclearly are. the answers range from i'm worried about china, the refugee crisis, a long list. what it comes down to is they're simply concerned about what is the trajectory of the global economic growth. our view is it will be stronger next year. >> driven by what? why will it be stronger? >> consumers, not commodities. we're seeing solid consumer
demand. look at the report from nike, from apple, from starbucks. contrast that with caterpillar. good momentum on the consumer side. services and the consumer are 80% of the global market. >> where is a good place to put money? >> i like japan right now. it's driven by technology and financials, our two favorite sectors and also a little cheaper than stocks in those sectors elsewhere in the world. plus, you have the bank of japan has your back right now. printing lots of money, and we know maybe that doesn't work so well in the economy but it sure works on the marketed. >> long-term there may be pain, we don't know. the keynesian experiment in japan makeses ou ours look smal. >> which sectors should we put our money in. >> we have to go back to 2000 to see the last time it was the
biggest sector. still the value story actually in technology. you've got -- >> big cap tech, what? >> we don't have -- we have sort of neutral on cap right now, so we have the ability to have an outperform rating on large versus small but right now we're neutral to cap. i think you have to be mindful of avoiding some of the real high flyers within tech. the good news is unlike say 2,000 where you had a pe of 190 on the nasdaq 100, you have ap e of 20 right now. . >> i want to ask you something we asked a guest earlier this week, are you worried at all this market seems -- forget about today. we're down today, but overall we seem to be driven -- the gains seem to be driven by about five stocks. i don't need to name them. you know who they are. does that worry you? >> actually when you came up off the correction lows that we had in september and into the rally in october, on october 27th, you
actually got, and i'll use his great name, marty zweig for whom i worked in 13 years, invented so to speak, invented this. when you had a big massive nine to one up day -- the breadth has been -- it's deteriorated a little bit and that's why we're seeing the rollover -- >> what you just said is the entire premise of the question i just asked you is incorrect and you said it in a polite nice way. >> you are right there's high flying stocks. >> that's fine. if i'm wrong, i'm wrong. it seems like and -- maybe -- >> they get attention. >> so it's a self-fulfilling prophecy is what you're saying. >> what's nice is if the cyclical sectors that have led the way, it wasn't a rally in defensive -- >> a lot of these names have nothing better about their balance sheets than they had
three months ago before they went 30% up. many of the best performing oil stocks right now are the worst performers this year and have the worst performing bond. that makes me a little bit nervous. >> it is concerning, you're right and there's a high yield issue with energy as well, but broadly speaking we are seeing generally the more cyclical areas of the market lifting us here and it gives me some confidence it's a bit more durable. i think we're going to get better than expected economic data. look at the citigroup economic surprise data. the line keeps moving higher giving us some momentum into 2016. >> you know what i also think is important is investors have to realize markets move more on better versus worse than good versus bad and i think -- >> better versus worse versus good versus bad. >> i think it's the rate of change that matters for markets, not the level, and i think a lot of investors make the mistake until all the data is exceptionally good before they become enthusiastic. if you can catch that inflection point to jeff's point where
things stop getting worse and they start getting better, that's -- >> and we have to leave it there. i think you're making an excellent point because you get these people, i'm sure they bug you all the time, you go to cocktail parties, they say i'm waiting for things to get better. i'm like have you realized the dow has doubled in the last four years so what are you waiting for? you can wait for perfection and you may never get it always we could maybe use that to define the federal reserve. i didn't say that. thanks for having us here. >> we're thrilled to have you. >> you're welcome in our home as well, too. melissa? >> if you're looking to get in on the banks, you might do it through the financial etf, the xlf. it's down right now but it's up nearly 5% over the past two months. while you might think the financials are your single best investment to make, there's actually another surprising sector that could do even better. cnbc's.com chu has more with this. >> let's pick it up with brian left off and that is the fed,
tech, financials, all of it playing into the discussion about whether the fed raises rates and if so, what does well. let's put it in perspective here. the s&p 500 overall versus financials. financials have been a laggard year-to-date although they have seen some signs of life over the course of the past couple months like you said. now, we asked our data partners at kensho to look at the three times prior to this, the last three times where we started a fed interest rate hiking upward cycle. 1994, 2004, 2014. what were some of the average returns. sectors one month before that first rate increase happened? so kensho crunched the numbers. it turntion out technology on average up 6% in the month leading up to the first rate hike. if it does happen in december, we're about a month out from there right now. technology may be a sector to watch. materials up 6% as well. industrials up 5%. so three more cyclical economically sensitive sectors that do relatively well approaching the first fed rate
hike in a while. the market overall up 3%. now, what though happens once the fed hikes that rate between that first and second interest rate hike? things start to tail off a little bit. 1994, 2004, 2014, between the first and second fed rate hikes on average energy is only up about 1%. technology falls off as well, about up 1%, and utilities up by a half a percent. meanwhile, the overall market falls by about 2. so technology, brian, the interesting sector here. everyone focuses on financials, but technology like jeff and liz ann said, technology could be a focus for some investors it plays out like it has in the last three rate hike cycles. >> thank you very much. your other big story today is the continued slide in oil. crude oil back below 42 bucks a barrel. most people blaming the weekly inventory data which is true, but coming up, we're going to
show you a chart and bring you some stats that you need to hear, especially if you think that oil prices are likely to go higher. that's all i'm going to say. you have to hear it to believe it. it's coming up in 20 minutes from now. so coming up on the rest of this show, we are back here in boston and we continue to do work for you. we've got more big money advice from the schwab impact conference with two money managers and their stock picks, their views on the fed, and everything else. they're running a combined $450 billion. should be a good show. stay tuned. we're back right after this.
welcome back to "power lunch." shares of kohl's moving higher after reporting an earnings beat. they saw bigger than expected jump in same-store sales last quarter. that stock up by 6%. advanced auto parts cutting guidance on the back of an earns miss. shares are down almost 15% right now. alcoa at its lowest level since october 2013. kinder gor m eer morgan at leven since 2013. what goes up must come down and that is certainly true for startup valuations. ari levi joins us now. great to have you with us.
obviously there are still startups whose valuations are being marked up even as we speak even though the headlines seem to be being grabbed by the ones being marked down. which ones are being marked up at this point? >> melissa, the idea is we tend to look at startups as going as one direction or another, as a monolithic group and that's just not the case. you have had the recent headlines of late with portfolio managers marking down snapchat and drop box so we were poring through some filings over the last couple days and we noticed, in fact, uber, lyft, airbnb, spotify, flip cart are just some of the companies that money managers are marking up, and so what you actually see happening is that these portfolio managers that have been buying into startups are valuing them based on individual performance based on the conditions in their market and based on execution. so it's really a healthy sign as
opposed to some of the ways we traditionally think of startups. >> and also based on what competitors there are in the private or public marketplace, when you look at snapchat, you might look at a decline in twitter shares and see that as a factor behind that valuation. is that factor in the mark downs? >> the job of the money manager is to look across a variety of factors. they have to look at many factors and take that information, information that is public with stock prices, with information on the competitive landscape, and then take in a bunch of imperfect pricing measures because there is not a fluid stock in these companies like jaw bone. they have to factor that all in and make an assessment. so, yeah, you're seeing jaw bone has massive headwinds ahead of it. snapchat still hasn't figured out its business model. drop box is moving in the enterprise where it has massive competitors.
very different scenarios than what uber is facing as it tries to conquer the world with ride sharing. >> what happens to these valuations -- what happens to these startups whose valuations continually get marked down? does it mean they won't be an ipo or perhaps they will be acquired or maybe they'll stay private? >> yeah. obviously what you don't want to see is a continued mark down. the don'ted -- continued downward trend creates problems with optionality. if you get marked down to such a point that share price equals a few hundred million, there's really not a lot that company can do to pay back its shareholders and so you get into sticky situations there. but if it's a scenario where you get marked down one quarter by 10% or 15% and then all of a sudden things start to click, you get marked back up and who knows what happens from there. you're in the same situation as any public company. you just have to execute.
so it's really on a company-by-company basis. >> are folks out there pointing to the mark downs as evidence of some sort of bubble out there? >> well, that's sort of what we were trying to get at with our reporting which is when you see things going -- everything going in one direction, if everything is going up, you question the rational thinking of the market. if everything is going down, then you think everything is collapsing. but if things are going in both directions, that actually feels pretty healthy. so it's just important to have sort of the full picture as we look at what fund managers are doing with these stocks. >> all right. thanks a lot, ari. appreciate it. ari levy of cnbc.com. we're watching shares of allergan. the stock is moving here and we want to tell you the reason why. there are right now as yet unconfirmed reports coming out that there's possibly an objection that the treasury department may have for a proposed deal with drug giant pfizer and that's the reason why
those shares did take a bit of a move to the downside. they were positive. now you can see down by about 1.75% in trading. volumes are picking up a bit but, again, unconfirmed reports right now but that there were concerns of a deal between allergan to be bought by pfizer might be in jeopardy via the treasury department objections and that's the reason the stock is moving lower. just want to call your attention to it. we'll monitor this throughout the course of the afternoon and bring you more if it does develop. >> thanks so much, dom chu. pfizer shares are lower by 0.8%. a story we will continue to monitor. meantime, if you haven't noticed, we're in the midst of a thursday sell-off. the dow is down by more than 1%. the loss right now 190 points. coming up on "power lunch," we're headed back to the schwab impact conference to find out what the nation's top financial advisers are telling their clients on a day like today. you want to stick with us.
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all right. welcome back, everybody. a reminder in case the background didn't give it away, we're live in boston at the big schwab impact conference where a few thousand investment advisers and money managers have come to talk about the markets and talk about where their industry is headed. technology also rapidly changing the way that pretty much everybody around here behind us is being impashthed in their job. let's dive into this. bernie clark, vp of schwab adviser services. bernie, thank you very much. before we get into the technology issue, it's interesting because we had jeff clinetop on, talked about how people are nervous. you survey all the men and women standing around us and you think there's more hidden optimism than anybody we think. how come? >> we talk to advisers, advisers have told us, they're optimistic about the market. 70% of them think the s&p will rise just one simple measurement to say it might be happening, but they've also told us they're not assuring their clients as
much as they have in the past. in fact, need for assurance is at a three-year low. we think that's a great indication. >> here is the criticism and it's probably fair. people will say people who want to sell you stuff are going to be optimistic on the stuff they sell. and that's the criticism. of course they're bullish. but there's other reasons, too. you have big numbers you brought in. >> absolutely, absolutely. advisers don't sell people stuff. what they do is help them plan for the future. they create financial basis for everything going on. they're retaining close to 98% of their clients because they have lifelong relationships with all of them. there's $23 trillion in investable high net wealth coming to this space. high net worth you talk about the millennials, they've already amassed $3.5 trillion. >> those numbers are so big, bernie, i think they bear repeating. i want to make sure we heard you right. $23 trillion coming in, 3.5 of that from milliennials who i'm told hate the stock market.
>> well, i don't think they're going to hate the stock market as they go forward and start thinking about their investable futures and what they can do and they start to learn how to put that money to work, but also some of that $23 trillion is clearly sitting in assets that will be -- they'll be heirs to and as more of that money finds their way to them -- >> when there's more buyers than sellers, asset prices go up. technology is disrupting everything from fast food to maybe even the corner suite. technology a big concern among the men and women here. how does it impact their job? how does it impact your role with them? >> when they look at things that are most important to the futures of their firm, they think about talent and technology. they're embracers of it. look around. the examples we have. there's 1,500 exhibiters here helping them think about their technology and they embrace it. >> it's not going to take all of their jobs. listen, there are computer-based advisers, you have them but there's still a need for the men and women investment advisers
that are here. >> they're all about relationships based in trust and transparency. technology is an enabler and that's how they're using it. >> i found that robots are less fun at cocktail parties. bernie clark, thank you very much. $23 trillion coming into this market overall. that's a big number. all right. we have much more coming your way from the schwab impact conference right here in boston, including big money advice from two wall street pros who help manage more than half a trillion dollars. but first, we are getting set for the final oil trades of the day. black gold in a sea of red. oil around 42 bucks a barrel. it is ugly out there. how low will we close? you'll find out but only if you stick around after this short break. stake care. take care.
hello, i'm sue herera. here is your cnbc news update this hour. the pentagon says a b-52 strategic bomber flew over chinese manmade islands in the south china sea. it was contacted by chinese ground controllers and flew on. two of venezuelan president nicolas maduro's relatives have been indicted in the u.s. for cocaine smulg. the one-count charge against the nephews of his wife were filed
in new york city. the two were expected to appear in court today. smoking rates have gone down except for those with health insurance. the percentage of u.s. adults who smoked dropt to 16.8%. the average number of cigarettes smoked per day also decreased according to a new report from the centers for disease control and prevention. and kentucky fried chicken is testing home delivery in parts of california. the chain is expected to expand the service into houston by the end of the year. that's the cnbc news update this hour. brian, back to you. >> sue, thank you very much. let's get to jackie deangelis at the nymex for what is going to be yet another ugly oil close. i guess, jackie, unless you're short oil, and then it's beautiful. >> exactly, brian. it looks like we're going to close under $42 a barrel. a steep loss again on the day. the volatility continues.
as a matter of fact, this is the lowest we've been since late august for wti. it's lost almost 10% in november. it's on pace for its worst month that we've seen since july. so what happens here? we got a massive inventory build. that was one of the issues. also opec out with its monthly report saying its outlook is unchanged and it doesn't see demand going up from this point. also, you had draghi today increasing his dovish stance. that could take the euro lower and send the dollar higher and as we know, that is not a good thing when it comes to crude oil. so again we're having these conversations about that three handle being just around the corner, brian. >> all right, jackie. before we let you go, i understand the weekly inventory data is a big deal but so is this, and this comes from the monthly opec oil market report which i'm sure you read as well. opec shows that demand growth for oil is around 1.6 million barrels ber day. that's a lot. but here is the problem, supply growth is nearly 1 million
dollar barrels more than demand. there's too much oil, more oil coming. ultimately i know there's a lot of moving parts to this, jackie, we have dug into them, this is not a complicated story. the world is simply awash in oil and more is coming. >> you're right. it's a glut, brian, and that's exactly the point. until we see the demand side of this pick up, we have to do something about production and while -- the report also said saudi arabia came down ever so slightly. they're worried about iraqi exports. that also makes sense. here in the u.s. we've come off of our records but production all over the world right now is still very high. so as you said, it's not a complicated topic here. >> yeah, two quick points. kind of a sad irony that iraq, their oil production is helping to hurt our nation's growth and more oil tankers on the water filled with oil. i think we need a sequel. how about this "captain phillips
66." >> the storage certainly is an issue and you braut up iraq. iran is going to be an issue, too, when the oil comes online. so right now the problem here is the demand side of the picture and there's really nothing out there indicating to me or anybody else, including opec, that that's really going to change. so when you have that kind of equation sending prices down, this is one of the days where i think oil actually is fundamentally impacting the equity market as opposed to vice versa. >> tom hanks can draw happy face on a barrel of oil on an island and talk to it all day. thank you very much. >> i'll go see it with you. >> there you go. captain phillips 66, i'm trademarking it today. meantime, most of the metals are also getting slagged into this market. got gold extending its losses to the lowest levels since 2010. you have copper at a six-year low. palladium also under pressure down about 3% today as well. silver really the only metal i don't want to say holding up.
it's not falling so i guess in this market today that's holding up. also take a look at glencore. one of the most important and hotly debated stocks in the world right now. glencore getting hit again. that stock is down 8% today. the switzerland based mining giant falling below one pound in london trading. we've had some debate about glencore. a lot of people have very different views on that name. let's go to bob pisani on the floor of the new york stock exchange for a market check. bob? >> the commodity market still weighing on the stock market and the weak stock market last six or seven trading sessions not good for the ipo market. there's a big ipo scheduled to price at the new york stock exchange. that's loan depot, a direct to consumer lending platform. 30 million shares, 16 to 18, that's $500 million. that's a huge ipo. can they get it done? it's not clear. these other pcp lenders like
lending club, that went public, remember that, back in january, at $15. that has not been terribly successf successful. it's below it's original ipo price. they're more hopeful about next week. match group, the online dating and square payment provider. mime cast also in cyber security. i'm hearing the road show is going very well for square, standing room only. i think the ipo business, brian, needs a hit in the next week or so. back to you. >> well said, bob. thank you, buddy. time now for our daily dive into the five analyst calls that you need to know about every day. this is a boston to manhattan version of "street talk." melissa, are you ready? >> always ready. >> should have been in cambridge. first stock paypal, concern over the potential new apple pay person-to-person product sending shares lower butb tig analyst mark palmer says don't sweat it at least yet. before you hit sell, consider the lack of impact other firm's
efforts have had on paypal. he keeps his target rating. >> the key here is person-to-person. it's being labeled as a venmo killer. that's a startup ebay bought to get into the space. we certainly saw very sharp reaction immediately to the headline in yesterday's session. stock number two, cisco. drexel hamilton is reiterating its buy rating ahead of the earnings report. the analyst says the uneven spending environment will likely be highlighted on the call tonight but cisco is performing well and the stock is inexpensive. dividend yield nice one, 3%. of course, we have much more on cisco later on in the show to get you ready for the earnings report. >> it's going to be a big one on "fast money" 5:00 p.m. eastern. cisco systems, not the food company. next stock, electronic arts. despite a heck of a run, oppenheimer sees more upside. they start coverage with an jut
p outperform and an 83 upside. they have a blue ribbon franchise. they think future profit growth will be driven by revenue than just gross margin expansion. they also say despite the fact that the stock has had a heck of a run, the valuation remains attractive. >> heck of a run? it's up 53% year-to-date. this has been a standout group. ea is in the middle of the pack. check out shares of act vision which are up 75%. year alone. the fourth stock, pisani was talking about the rocky road for ipos. this may be a poster child for that. fresh pet. this is a small market cap name and smaller than we usually talk about, just under $300 million in market cap. a recent ipo, went public a year ago and it's been doing terribly. the company was out with earnings which were in line with drastically reduced guidance but gross margin ebitda missed badly. this is cut to a neutral,
slashes the price target to $9 from $19. the decline in the stock we should note has been dramatically. it was 25 bucks in april. >> i think you would say best if i did this call, you would probably say where were you, analysts? >> nice neutral. >> nice neutral now. if this is is a fresh pet, i'd hey to see an unfresh pet in this market. last stock is brkr, that is our under the radar name of the day. since we are in boston we found a company that's based near here. stifel nicolaus starting with a buy. they see a turnaround in growth and margins. stock is pretty hot already, up 27% this quarter. >> they just made an acquisition of jordan semi-conductor accretive to revenues and eps immediately so that's one to watch. >> there you go. when in boston, find a boston or
nearby boston-based company and with that, "street talk" is over. okay. on deck we have a half a trillion dollars of market knowledge coming your way. that is some big money advice. stock picks and why the federal reserve may not be that important to the bond market. schwab impact conference, more from it, stick around.
welcome back to the schwab impact conference in boston. we're joined by john bellows from western asset management, nearly $600 billion under management. not him but the whole firm. including two five-star bond funds and the fixed income manager of the year from morningstar last year. congratulations, fantastic. what have you done for us lately? i'm kidding. don't answer that question. this is interesting. you think the federal reserve is not the, quote, main event for the bond market. i thought the federal reserve was supposed to be everything. >> that's right. first of all, we expect the fed to hike rates in december. the stars have aligned over the last few weeks. fed speak, economic data, the markets. it's all priced, it's well anticipated. i don't think that will be a surprise to anybody. it would take a pretty big surprise to knock them off
december. the bigger question is what's going drive long-term bond yields and i think 25 basis points on the front end of the curve is not going to make a big impact on ten-year yields, 30-year yields. those are driven more about inflation, by growth, and i think investors are better served looking at those fundamentals rather than focusing -- >> we've gone from 2% to 2.3% on the 10-year. has the bond market already moved on the fed? >> i think there's a little bit of that. you have to remember equities have done quite well. we've been generally equity positive, risk on environment. those are probably contributing to the upward pressure on yields. the fed may be part of it but i don't think it's all of it. i think there's a bigger story here what's going on with growth, inflation, the risk outlook. >> all i hear from the bond guys i trust is that there's a growing lack of liquidity in bonds, that high yield looks in some ways dangerous because the spread between high yield and either, you know, double a rated corporate debt or treasuries continues to widen at a fairly
rapid pace. is it something we need to be worried about? >> so definitely true that high yield has underperformed but what's interesting is right now there's a disconnect between valuations and fundamentals. the valuations are pointing towards a drastic scenario of much higher default rates. where the faculties are much more stable. corporate balance sheets are relatively stable. u.s. growth is relatively stable. monetary policy is still accommodative. there's a distekt between valuati valuation. >> the federal reserve raises rates and the 10-year yield does what? >> i think it's in the same range. i don't think it's a material event. i think the 10-year treasury is in the same range. >> does it kill the stock market? >> i don't think it does. i think the stock market is driven by those bigger events. fundamentals matter and the fed is not the main event. >> john bellows, safe travels out west. we'll see you again in a couple
weeks. appreciate you coming on "power lunch." just ahead we have the fixed income view, we're going to get the equity view and don't tell anybody, three stock picks from neil hennessy, just between you and i. we're back with more from the schwab impact conference right after this. stick around. you pay your car insurance premium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again. why pay for insurance if you have to pay even more for using it? if you have liberty mutual deductible fund™, you could pay no deductible at all. sign up to immediately lower your deductible by $100. and keep lowering it $100 annually, until it's gone. then continue to earn that $100 every year. there's no limit to how much you can earn and this savings applies to every vehicle on your policy.
welcome back to "power lunch." i'm melissa lee. solar stocks have seen better days to see the least. sun edison certainly one of the solar stocks struggling. shares are down 65% in the past three months. axiom management downgrading the stock to a sell rating with a $2 price target. gordon johnson is the analyst behind the call and he joins us on the phone. great to get your perspective. >> thanks for having me. >> sell ratings are rare on wall street. kudos to you for putting that sell rating on at this point. tame at the same time people criticize wall street on this name because wall street has been so slow to move ahead of the stock decline. the stock is down 80% from the highs.
what specifically happened in the course of the past week or so since sun edison reported earnings that got you to go from neutral to sell and why did you wait so long? >> yeah. so listen, we downgraded the stock at our prior firm close to $20, and the reason why we kept the hold rating on is because the company was telling us that they could sell projects into the secondary market at 19% to 18% margins and told us they were going to sell 60 mega waltwatts this quarter. they sold 41 megawatts and this company is in dire need of cash. we believe they're going to be unable to sell significant amounts of projects into the secondary market at high margins and if that's the case with $11.7 billion in debt, they have major problems ahead. >> yeah. you know, you have a lot of interesting market psychology reasons behind the downgrade. the structural lack of interest in long-only investors, career
risk for analysts who were responsible to getting that fund into sun edison. the average cost being $20 to $30, significantly higher from where the stock is here. you hit the nail on the head when it comes to cash burn. how much longer does sun edison have given the significant amount of debt it has compared to the market equity valuation it currently has? >> i mean, based on our analysis, we think they need to execute on significant project sales within a two to four-quarter time frame. given the appetite out there and given the fact that they forced essentially their yieldco tara fo -- terraform power to take on $88 million of additional liability when three weeks ago terraform told us they weren't going to do that, we think the risks are extreme. they need to execute in two to three quarters and i don't think they'll be able to do it. >> what happens in three quarters to it? >> well, i think essentially
what happens is they either have to do a major equity issue or you can potentially have some type of liquidity event where they need to do a restructuring with their debt holders. either of those two events happening i think suggests the stock is downgrade but if you had ridden this thing from 30 to 10 you can justify that because it's been a quick move, but if you ride it to 10 to 1 or 10 to 0 i think you face career risk as an analyst and that's also going to weigh on the stock. >> restructuring from the bondholders or some equity issuance would be bad news for the bondholders as well as the stockholder. i'm curious because the levels of debt across the sector are very different. which solar stock do you think weathers the storm because all of them are being painted with a broad brush. >> the problem is that everybody assumed that yield codes were going to be around forever, also the low dividend yields,
everyone took on billions of dollars of debt and now that they are gone they took on this debt to build the projects and now that the yield co-story is going to be going to buy all these products. you have an oversupply of projects and that's a scary dynamic given what happened to -- remember sun tech, they did the same thing, they couldn't sell their projects and they went bankrupt. they were the biggest solar company in the world. >> gordon, thanks for phoning in. we appreciate it. gordon johnson of ax i don't mean. while there is carnage in the solar sector sun power has managed to hold up year to date. the stock is down by 1.3%. we have the ceo of sun power tom warner on the heels of its analyst day. "fast money" 5:30 tonight. much more "power lunch" straight ahead.
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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. appropriate. the dow is down 210 points right now, we are now down for the month of november, we've got the fed concerns, oil concerns, china concerns. do you feel any differently about the stock market today than you did one week ago?
>> no. absolutely not. >> why not? >> because i think the market is in good shape. what we've seen this year is a tremendous amount of volatility. the market on the close the dow jones has traded 27,000 points on the close and it's down 300 points. that's all the dow is down. >> that's a lot of numbers there, sounds interesting, but what does it mean? >> it doesn't mean anything from the standpoint that it's just a traders market. we've been in a correction for the last 9, 12 months but it's been a sideways correction. we saw the market come down 20 p. rs in the summer, it's down 2 1/2%, it feels like we've been down. >> well, here is the thing, because we've been up for four or five straight years, some of them pretty doggone good years, i think there's a viewpoint and maybe there's some validity to it which is if we are not up there's concern. people are not optimistic enough about something to buy the overall market. >> when you look at the markets
there has to be euphoria in the marketplace on one side or the other, fear or greed. i think you will agree we have no euphoria in this market. you look at corporate profits at all time high, cash flow on all time high. the market is ready to go. what's happening in here today the market is down 200, 250 points, it's giving you the opportunity to get out of fixed income and get into equities. i mean -- >> a lot of fixed income people. did you hear what he -- >> how are you going to make money in fixed income when rates are going to go up? >> maybe you are not worried about making money in fixed income you're worried about not losing money in stock investments and that fixed income is a place to hide. >> well, you can hide but your principal is going to come down. you're not going to hide anyplace in that market. i know janet is thinking about raising maybe december but it's a quarter point.
who cares? they can raise a quarter point for the next three years and we will be at 3%. >> you still love shares of foot locker, how come? >> the retail is continually going to do well. >> we have macy's today, everybody is peek freaking out about retail. >> every year holiday season comes out and everybody says sales are going to be down, every year they're up. you could take foot locker, pilgrim's pride, there's value in the whole marketplace. i mean, if you look at the dow jones, i look at that because that's pretty much what's the headlines every day, the price of sales ratio is 1.7. >> good or bad historically? >> i oent buy something over 1.5 because i'm looking for big value. 1.7 certainly is no cause for your honor is. so when i look at the market they the call me the ultimate bull but essentially i think we are in that market of 82 to 2000 where the market was up for 18 straight years with the
exception of 1990 when it was down one half of one percent. >> you quietly gave us three picks, you mentioned them all in the same pick as the consumer, but shoes, doors and turkeys are different things. >> chicken. >> chicken. pilgrim's pride and shoes at foot locker, those are the names you like right now. >> because they have low price to sales ratio, and when you're buying, for instance, pilgrim pride, their price to sales ratio is .6, you are buying a dollar revenue for 60 cents. it just goes to 6.5 you've got a 10% return on your money. i mean, it's -- there's plenty of value out there, there's just skepticism because of the volatility, but the market is in very good shape. >> okay. we will leave it there, market is in good shape, foot locker, masco pilgrim's pride.
when i went to college our mascot was a turkey and somebody said it was a butt kicking chicken. melissa, various forms of foul and poll friday aside the take away from the conference is there is concern out there personal, but there's a lot of positive points you can point to even on a day like today. >> yeah, and speaking of a day like today, brian, we should note that the s&p 500 right now sitting just about at session lows as we enter the final hour of trading. we are seeing the weakness being driven by materials as well as energy stocks. this is a team we have been hitting with oil at two and a half month lows, we are seeing the xle town by more than 2%. this should be a real interesting session going into this close. >> you know, i've said it for over a year now and i'm going to say it again, it's driving people nuts, low gas may be as good for the krps probably not really good in the short term for the stock market and they're different things. >> absolutely. absolutely different things.
big show tonight on "fast money," we're going to talk cisco earnings and also the sun power ceo so you won't want to miss it. 5:00 tonight on "fast money." >> that is a big interview, we will look forward to it. i will see you back in the new york metro area tomorrow. from the schwab impact conference in boston, i will be back in new jersey tomorrow. "closing bell" starts right now. welcome to the "closing bell," everybody, i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth. okay. so it's a selloff today in the stock market. energy weakness, it says here there are concerns the fed might not raise rates next month, but i think there's a concern that they will raise rates as well. so you get it both ways here. we will talk about what's behind today's pull back coming up in a moment. >> it's not just oil and energy getting hit today. take a look at copper. also feeling pressure. a lot of people have been watching that