tv Power Lunch CNBC August 12, 2016 1:00pm-3:01pm EDT
question for sentiment on the markets. >> we mentioned your new gig. you are, what, the chief equity strategist at blackrock now? >> that's right. >> congratulations. >> thank you. >> between now and the end of the year, how optimistic -- well, i guess we got to go actually. sorry about that. my bad. >> okay. >> power starts now. that's it, wapner, your time is up. welcome everybody to "power lunch." 1:00 here in the east. 10:00 a.m. in the west. i'm brian sullivan. on the menu we are hitting the malls. wall street's number one rated retail analyst will give you some of his favorite retail stocks to own right now. also ahead, the three most interesting stocks in what we're calling probably the most profitably boring rally in stock market history. and later on, we're going to sink our teeth into burger king's new whopperrito. that's right. they're bringing it in, we're putting it down. and we're going to give you the honest take on whether the
whopperrito is worth your hard earned three bucks. th tyler, "power lunch" starts right now. it does indeed. thank you, brian. welcome everybody to "power lunch." i'm tyler mathisen. here's what else is happening at this hour. hillary clinton widening her lead over donald trump in some key battleground states. clinton now up double digits in colorado and virginia, according to a new nbc news/"the wall street journal"/marist poll. parts of louisiana and mississippi under a state of emergency at this hour as torrential downpours trigger flash floods. and team usa continues to dominate at the rio games with 38 total medals, 16 are gold. and a lot of those by the most amazing athlete i've ever seen, michael phelps. kayla. >> it has been fun to watch michael phelps. i'm kayla tausche down at the new york stock exchange. we have three hours left in the trading week. stocks have been headed lower
throughout the morning. dow down just about a third of 1%. the nasdaq down by about 0.1%. s&p lower as well. russell 2000, which has been closely watched for a while, is lower as well on the week. the dow is slightly higher, the s&p is flat, the nasdaq is very close to break even. it is of course eyeing seven weeks of gains. dig deeper into today's trading action with bob pisani here at the floor. and it's a low volume summer, as it always is, but highs nonetheless. >> that's right. and we're in a narrow trading range. but the important thing here is to focus on what really matters and that is we are at historic highs and there is tremendous rotation going on. so take a look at where we've been going on and where we've been moving in the last week or so. q-3 leadership we've had notable moves up in tech stocks and recently as oil has stabilized energy has come up. q-3 laggards, all the stuff that we were buying in q-1 and q-2, the utilities, telecom, consumer staples, dividend players have been lagging. one group still struggling trying to show some leadership
are those bank stocks here. focus on tech stocks. new highs in the big names we keep talking about. nvidia with their excellent earnings report new high overall. broadcom, amazon, google, these stocks all hitting new highs recently. another group, industrial stocks, some of this of course on less concerns about brexit but all of them have not reduced their second half earnings. and that has been the key driver for all of these industrial names at 52-week highs. finally, talking about all these old chestnuts we like to talk about not working. a lot of traders say sell in may and go away. that hasn't worked. we've been up, as goes january, so goes the year, the s&p is up 7%. august is the weakest month of the year, we're up in august. i think interesting point to hear talk about the presidential election cycle last seven months of the election years have been strong. only two losing years in 16 elections since 1950. and i think that's very important. and we have seen the influence of the presidential cycles. and that's what the stock
traders almanac insists on. >> so we'll take the year off for all those adages. >> no sell in may and go away, their point was it doesn't work in a presidential election year. you should not sell in may and go away in a presidential election year. >> thanks, bob. >> probably shouldn't invest based on a one-word slogan. that's not a good investing strategy. let's keep an eye on oil. bob maybe wants to hit exxon oil am some point in the show, they're higher right now despite the fact rig counts just crossed and they're not only up, but they're up a lot. drillers are getting back to work. baker hughes recount indicating 15 oil drillers were added. this again the seventh straight week we've added rigs. back to 396. still a very low total overall, but it is up from significantly more than 100 rigs from two months ago. oil not reacting up about 50 cents a barrel right now. tyler. 1999, the last time the dow, the s&p 500 and nasdaq
simultaneously closed at record highs. a trifecta. the question is what happened next back then? seema mody knows. hi, seema. >> hi, tyler. that's right. calling it a market trifecta, dow, nasdaq and s&p 500 closing at all time highs at the same time, it doesn't happen often. that's why investors are now trying to understand how stocks typically perform after a milestone like this is hit. the last time it occurred, as you mentioned, was september of 199, but spoke investments points out one month after the major indices hit all-time highs, the s&p 500 fell by 5%. but potentially not a good bullish sign, but some investors out there like jeremy siegel making the case that this time is different by looking at market valuations. all right. stocks could potentially have more room to run. choke out the price-to-earnings ratios back in 1999 before the dot com crash, the s&p 500 traded at around 29 times while the nasdaq 100 traded at 72
times. of course much higher than what we're trading at here in 2016. so valuation wise 1999 versus 2016 a very different story. another thing i would point out, tyler and brian, is interest rates back then around 5% to 6%. right now here in 2016 we are living in a low rate environment. that is of course seen as another catalyst for equities. >> seema, thank you very much. so are these new highs the sign of a market top? joining us are brian jacobsen, chief portfolio strategist at wells fargo funds and gene perrone, chief investment officer of perrone advisors. you heard what seema just said about the history, the history lesson last time as far as it goes didn't auger well for the s&p over the next few weeks. but valuations were really so much higher. brian, what do you think, is this market too toppy for your taste? brian? >> no, actually, it's not. i think kind of we have to think about -- you know, we have to
think about the history in a little different way here. the last time that we had this trifecta was in 1999. but think about when was the first time that we had it? it was basically 1984 it happened a couple dozen times all the way until 1999. so instead of comparing ourselves to the end of the series in which we had these trifecta moves, think about it in terms of the beginning of this series, 1984, maybe 1990, happened a couple dozen times every year. so i don't think this is a sign of a market top. we shouldn't be comparing it to the end of that series. >> but 1984 -- 1984, brian, was much closer to the beginning of a bull market than we are now, right? >> well, that's very true. it was. and if you think about it though in terms of where are we in terms of the double dip corrections that we have had over the last year, i think that there's a strong argument to be made that maybe this is more like 1990 or 1991. not necessarily 1984. my point is that compare this
more towards maybe the start of the series as opposed to the end of it. >> okay. gene, over to you. you have a summertime target of about 19,000 for the dow. that would be about another 400 points from here. year end 19 to 20,000. that's a fairly big range, but not an implausible move. how do we get to 20,000 this year? >> well, this market -- i think you have to really regard this market as on a threshold of another significant move to the upside. so i do agree with brian you really can't look at the history of 1999. that was near the end of the market. and that was a market cycle toward the end that was being driven by a microtheme, mostly technology. this market is still being driven by many different and diverse sectors, so it is far from a market top. and if we are to take the cue from the previous two market cycles, i believe we're in a bull market trilogy, this being the third installment, this market, i think, will not end until there's more
acknowledgment of the uptrend, until there's more urgency to buy. so i'm encouraged after a day we had so-called trifecta that the market's pulling back a little bit. >> market's pulling back a little bit. people are taking money out of equity funds and putting them into bond funds. so there isn't just unbridled speculation or enthusiasm for stocks. and you cite, gene, the idea that the market advance has been pretty broad based. that does sound encouraging and important. >> it's been broad based almost throughout the entire cycle dating back to 2002. this is a really super cycle here. and i don't think we've seen the best of it yet because the previous two cycles did end climactically and we're far from that. valuations would speak to much higher levels. so while i think that the longer term target could be 22,000 with just a few things going somewhat correctly, we could see a much higher finish to this market in the dow other than major averages with many different sectors doing well, not just technology or manufacturing or health care. >> i want to ask both of you,
but let me start back with brian, what sign would be a worrisome one for you? what indicator would you look at and go, hey, wait a minute, now maybe it's going to get a little tougher? what would you be watching? >> well, what i'm watching is at least on a daily and weekly basis is whether or not the moves up in the stock market are matched with moves up in yields on the 10-year treasury. when we have the 10-year treasury yield moving down and you have the stock market moving up, to me that doesn't look all that sustainable because then that's just -- this is just purely speculation of more monetary easing. i want to see the ten-year treasury yield move higher to support that this is driven by economic growth. so that's really the key thing i'm watching is that correlation between moves in the 10-year treasury and in the stock market. >> and, gene, would there be a tellta telltale, a signal you would watch that would make you go, well, maybe i better get more cautious than i am? you say the best is yet to come in this supercycle. tell me what might tell you
something different. >> well, i want to watch the transportations here. they are lagging behind industrials, so i like to see that dow theory confirmation where the transports indeed take the lead once again. they've been kind of hopscotching this year. and i think that will happen because i think commodities are going to come up here later in the year and into next year. so that would be one factor that would be a concern if that continued to persist. >> gentlemen, have a good weekend. stay cool. brian jacobsen, gene perrone, appreciate it. go to powerlunch.cnbc.com right now to see why they're not surprised we might see a bit of a pullback soon. kayla. tyler, we're taking a look at the markets right now, which have been lower throughout the morning but took another leg down in just the past ten minutes. the dow hit session lows as did the nasdaq and s&p. oil paired its gains and all of this on the back of that rig count number that brian reported at the top of the show, seventh straight week of adding rigs on a baker hughes count.
so we'll bring more to you when we have it. meanwhile, jc penney and nordstrom capping off a big week of earnings. up next wall street's number one retail analyst stops by with the names he likes at the mall. "power lunch" back in two. equals great rates. it's a fact. kind of like bill splitting equals nitpicking. but i only had a salad. it was a buffalo chicken salad. salad. perfect driving record. until one of you clips a food truck. then your rates go through the roof. perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. and if you do have an accident, our claims centers are available to assist you
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those three young ladies were teaching the whole school about energy efficiency. we actually saved $50,000. and that's just one school, two semesters, three girls. together, we're building a better california. jc penney and nordstrom capping off a big week of retail earnings. let's get a roundup from courtney reagan who has been busy on the retail beat, court.
>> hi, kayla. jc penney capping off a very big retail week with most results surprising to the upside. jc penney still posting a quarterly loss, but it's one-third of the level expected. 50 cents versus 40 loss last year. comparable sales improving just more than 2%, but also just short of consensus, also reiterating guidance. home, sephora, footwear categories reemphasizing strategy of focusing on less weather sensitive categories. after a year of disappointing results nordstrom beats on earnings and comp sales on light revenue but a full year earnings forecast lift. nordstrom slightly later anniversary sale was, quote, even better than recent trends. according to the company. and nordstrom rack, the stronger than regular stories but also nordstrom's main website comps grew more than 9%. and that's notable because 20% of nordstrom's sales are online. macy's set the tone thursday with better than expected results across the board leading
to the strongest one-day share gain in seven years. but expectations for the entire department store sector were pretty low. so it's hard to know if this quarter is a blip or a trend, especially after mixed results from handbag makers that are rethinking their department store strategies. and on wednesday i'm going to be in texas at the jc penney analyst day and sit down exclusively with ceo marvin ellison, so hopefully more incite than what we know today, brian. >> courtney, thank you very much. let's continue this conversation. j.p. morgan just raised price target from 7 to 12 and 16% more seen on top of a stock already up 32% in the past 90 days. matt is with us, and like a boss he is the number one ranked retail analyst by institutional investor, jan rogers niffen. matt, first to you. all we've heard for the last
three or four, six months, whatever it is, is the consumer's dead, they want experiences, they want to travel. they want to eat out. the department store is cooked. all of a sudden sears is up 50%, macy's is booming, nordstrom is booming. what's changed with the stock market perception? >> yeah. so the theme this week from the department stores was less bad. every single department stores on the top line improved roughly 2% to 3% versus the first quarter. you had the warmest winter in history this past fall and winter. followed by an atrocious first quarter where they had excess inventory. so a less bad theme, inventories more in line now heading back to school, and sequentially as the quarter progressed people talked about june better than may and july the best of the quarter. that combination for stocks that were down almost 50% over the last 18 months, i think you had a relief rally, plus macy's kicked off the potential
addressing of the overstored nature of the mall. >> so how much of the expectation in improvement, matt, is already now priced into these stocks? sears is up 50% in 90 days. >> yeah, i mean, look, in terms of our price target change on jc penney, we're now looking at five times ebitda on our '18 numbers. and with macy's we're looking for mid 40s. i think the reality is it all now comes down to the back half. you have much easier compares, again, cycling this warmest winter we had in over a decade. if the department stores continue to show sequential improvement, i think the stocks will follow. >> jan, speaking of the back half, we got retail sales today for july that were flat. they were much worse than expected unless you're selling cars. and i'm wondering if you think that bodes poorly for a lot of these retailers who saw their stocks jump this week because the expectations had been
brought down so low? >> i can only say i really hope that was a blip. because i've been saying for months now first quarter will be the toughest, second quarter wouldn't be good but better than first, third be better than second and fourth would be the best quarter. everything is set up for that to be true from the mac macroenvironment of the economy and the weather to these individual companies being much better positioned going into the back half. until i saw that this morning i was like, yes, yes, you're right on the money. and then i see them report this on july and i'm like if this is not a blip, this could be a problem. so, yes, did it worry me? it does because i don't think that the consumer is that strong. i don't think the economy is that strong. i keep waiting for this gradual improvement. and then every once in a while you get a number like july. maybe it's a blip just like we saw with employment a couple months ago. but if it's not, it's very worrisome. otherwise i'm expecting to go right through the back half improving numbers, macy's should be great, penney should be
great, i'm optimistic. i'm much more optimistic before four hours ago. >> matt, quick question here. are the moves in these stocks because the store themselves are doing something right and have turned it around? if so, what is it? and if so, is it sustainable, or are they moving up for what i just kind of interpreted you saying for reasons of sort of coincidence? it's less bad, the weather got better, the comps were better and they were oversold. >> i think this week's move is more the setup. so more of the less bad with the easy compares on tap. i think what we're watching is this balance of power. we've written about it a couple times this week. and the reality is it comes down to the brands. the brands are pulling some of their distribution from the wholesale channel, but it's to varying degrees. some of the smaller, some of the regional players, more of the
cnd malls, i think those are more of your losers where macy's may be more of a destination. they're all trying to battle with amazon. amazon is only 5% of the u.s. apparel market today. that's going to be a bigger number over time. the other thing brands are doing is pulling back on promotions like friends and family. so everybody's trying to navigate how does this balance of power play out between amazon, the department stores, and the specialty retailers. >> jan, we're going to wrap it with you, but i think what matt's making is a very, very important point. because based on the amount of attention it gets, one would think amazon has 90% of the american shopping market. online retail everything amazon and everybody else is only 8% of american sales. still a lot of room for brick and mortar. >> brian. >> jan. >> walmart was 20 years old, they were 3% of sales and they were 50% of the growth in sales. amazon is 20 years old, it's 3% of sales and it's 50% of the growth in sales. this is a big problem. we're going to see 50% of sales
online, nonbar, nonrestaurant by 2030, 13 and a half years by now -- >> 50% by 2030? if we're still around in 2030, i'll buy you a drink if you're right. >> we'll graph it out from here to there and make the bet along the way. >> all right. matt boss, jan, jan making a bold prediction. you're on the record. we got ya. thank you, guys. >> thanks for having us. up next, the good, the bad and the ugly in this market right now. plus, our list of the three most interesting stocks in the rally, names that have surprised nearly everyone. is your favorite stock on that list? you have to stay tuned to find out. we are working on the prototype to match customers to gear. watson, let's give it a try. say it's mid-june and i'm backpacking in yosemite. of our 353 jackets, i can recommend nine. watson, what if it rains? there is just a 3% chance of rain, so i recommend the breathable stretch fleece fuse form dolomiti jacket. a perfect choice watson.
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and move only when you hear the seatbelt click that says they're buckled in for the drive. never give up till they buckle up. welcome back everybody to "power lunch." time for the good, the bad and the ugly. and in today's trade let's go first to the good. foot locker moving higher after s -- initiated. on to the bad, twitter saying it will not be shutting down in 2017 after the hash tag, save twitter, began trending. twitter calling that rumor baseless and groundless. and it is an ugly day for the drillers. transocean, ladies and gentlemen, if i get out of the way, worse performer in the s&p 500 right now. diamond offshore also deep in the red. and that is the good, the bad and the ugly for a friday. breaking news now with julia
boorstin. >> hey, tyler, that's right. rupert murdoch naming the senior leadership team and new management structure of fox news saying that effective immediately fox television station ceo jack abernathy and senior executive vice president bill shine will serve as co-presidents of fox news. murdoch saying he is now going to be executive chairman of fox newschannel and business net worth and both will report to rupert murdoch. now, of course this all follows the departure of roger ailes after allegations and various lawsuits by gretchen carlson alleging sexual harassment. and also the temporary role of rupert murdoch as ceo. so now rupert murdoch will be executive chairman, and jack aber nat thi and bill shine will report back to him. >> julia, i have a question. because the paul weiss investigation into the sexual harassment allegations is still ongoing. so it's interesting to see the
leaders named before at least publicly that investigation wraps up. so do you think that this is basically a clearing of both of those executives names in any potential involvement or knowledge of those allegations? >> you know, that's a very good question, kayla. i think in a way it is. what i've heard in terms of these other allegations of sexual harassment that have come up is that there are about 12 of them and that only some of them will require a settlement. so it sounds like they're not done with the process, but i would be surprised if they would have named these two gentlemen as co-ceos if they were implicated in some of those sexual harassment issues simply because on the heels of this roger ailes situation you would think fox would be focusing on making sure they have the right kind of leadership in place. >> julia boorstin with breaking news on fox news. julia, thank you very much. well, the bubble boys are back in droves professing doom
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hi everybody. i'm sue herera and here is your cnbc update for this hour. hillary clinton releasing her 2015 personal tax returns furthering pressuring donald trump to release his. mrs. clinton and her husband paid an effective federal income tax rate of 34% and donated nearly 10% of their gross income to charity. a federal judge has blocked an ohio law that dweiverts publ money from planned parenthood. the law initially set to take effect in may, but court orders suspended it. ohio argued that it gets to choose how to spend the public's money. heavy rains causing dangerous flash flooding conditions in parts of louisiana as search and rescue operations continue throughout the day. some areas got more than 10 inches of rain overnight. there are scattered power outages in the baton rouge area. one of my favorite stories, scientists now calculate the greenland sharks are earth's oldest living animals with backbones. they estimate one was born in
icy arctic waters roughly 400 years ago. and it only passed away a couple of years ago. eight of the 28 dead sharks that they examined were probably 200 years or older. all right. that's the news update this hour. things you never thought you'd get to know. >> very slow swimming shark there. >> i was going to say -- >> you trumped me, tyler. it's the slowest animal in the world in the water. >> is that true? >> it swims at less than a mile an hour. i saw a national geographic special on it. >> excellent. >> i'm looking at that shark thinking that thing is slow. >> man, if you've been around for 400 years, you're not in a hurry. >> why rush? >> it's like comedian steven wright said somebody said is that within walking distance, he said everything is within walking distance if you have the time. >> he also said i once bought some batteries but they weren't included. >> we could go on with this. all right. thank you, sue. we need the greenland shark to read the news. >> he also said he'd kill for a
nobel peace prize. >> and drive on parkways and park on driveways. the 10-year yield staying low at 1.51%. if you're buying a home, that's good news for you. average 30-year mortgage rate still pretty low 3.45%. >> he needs no introduction because he just introduced himself. that would be ron insana. >> that would be me. >> three u.s. stock indexes smashing records this week. dow, s&p 500, the equity trifecta on thursday, each at record levels. a feat not seen since 1999 when bill clinton was then president a in office and dot com bubble ready to pop. folks like carl icahn, bill gross running for the exits or urging you to and fears that another huge tumble may be on the horizon. are they right? or are the bubble boys wildly off base? you wrote a piece for cnbc. >> i did. >> it is a nuanced piece. you say the bubble boys are wrong, but that does not mean
that you are signaling all clear. >> yeah. i'm somewhat ambivalent about where the stock market is right now. net davis research put up a very interesting piece, in fact tweeted it out the other day pointing out that in absolute terms the stock market is as overvalued as we've seen in recent times. if you go back to 2007, the market was selling well in excess of 20 times, we're in excess of 20 times earnings now. in 1999, 2000, the market was selling at 40 times earnings. so in absolute terms you might want to take out a little protection. in relative terms the market's not that overvalued. when rates are this low, inflation as we saw again this morning is actually declining and not going higher, the fed's unlikely to do anything dramatic any time soon. >> so why are presumably smart people -- >> they are smart people. >> bill gross, carl icahn, why are they saying get the hell out? >> i understand, again, from an absolute perspective our
valuations as high as we've seen since 20007 absolutely. is there a lot of public participation in the stock market which typifies a bubble in the classic sense? no, this is largely still a professional affair, as was 1987. you don't have a public participation to have a smash, we had a crash in '87 that was large but really no significance on main street. >> so what do you recommend people do? >> if you're riding big profits and want to take money off the table. >> no lost money ever taking a profit. >> that's correct. and you can wait for stocks to come down in price or you can just continue with a disciplined effort. >> but history also says, ron, let's say the bubble boys turn out to be right. >> yeah. >> and we look back ten years from now, a big bubble. people were calling for a bubble in 1998, they were ultimately correct. >> yes. >> but it played out for another two years. so even if we are in a bubble, it doesn't mean it has to pop tomorrow. >> correct. listen, i mean, you have to be right on timing as well if yur trying to make a trading bet on the market falling
precipitously. if the fed were to raise rates multiple times, would you be much more worried about relative value. >> that would take air out of the bubble. >> that would. or anything to trigger a downdraft whether or not this is a bubble in the classic sense in which it's defined i would argue not. >> all right, ron, thanks. have a good weekend. >> you too. let's turn now to another bubble, this one in silicon valley where housing prices have surged so dramatically residents are being priced out of living there. adidi roy is live in san francisco with that story. >> hi, kayla. just this week we've seen two examples of people with high paying jobs driven out of the bay area because of skyrocketing housing costs. san francisco federal credit union ceo steven stap is taking another job in portland in large part because his rent in san francisco is just too high. keep in mind he's a ceo. he says he pays $5,000 to rent a 1,500 square foot home. >> looking at the cost of the
housing here in san francisco, not only do you find that the prices are very high and ofblg many times you get into bidding wars. we've seen in our industry we've seen many people come in with all cash deals to secure that property. >> according to zillow, the median home price in california is $830,000. in san francisco it's $1.1 million. and in palo alto it's $2.5 million. earlier this week a member of palo alto's planning commission quit her position and is planning a move to santa cruz because she and her family simply can't afford the $6,200 rent of a home they share with another family. and one possible solution that's been talked about is increasing the inventory of homes, but that's also touched off a lot of debate. so no easy solutions here, kayla. >> i'll pick it up, aditi, thank you very much. if you want to have a little fun, once in a while go to zill zillow, trulia, go to palo alto
or any of those, look at what those homes cost. you will automatically feel better about whatever situation you're in. you realize you can't afford to live there. aditi, thank you. still ahead, perhaps the most greatest american moment outside the olympics, taste burger king's new whopperrito. half burger, half burrito, is it all delicious? we'll find out. ♪ today, we're seeing new technologies make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists
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we make a delicious all natural and organic chicken fingers, chicken meat balls and gluten free chicken nuggets for busy families. we never use fillers and all products are humane. my cofounder has been cheffing for over 25 years making simple food beautifully made. our category is growing. innovating the freezing aisle but offering transparentally source solutions. we're currently sold in over 1,800 stores including whole foods and targets with an experience to over 800% growth last year. our small but mighty staff has veterans from within the natural foods industry and our goal is to provide organic chicken nuggets to every kid in america. welcome to today's power pitch, i'm melissa lee. you just saw the pitch. now let's meet the panel. joining us is start-up advisor lish syrett, she has more than
40 companies in her personal portfolio and serves on the board of the new york angels. also with us nir liberboim, he focuses on early start-ups with several natural food investments in its portfolio. and joining us is chef huda winner of cutthroat chef competition. okay. so we heard what serafina's pitch was. alicia, first question to you. >> so i really love the delivery. and i thought it was really good you talked about competitive differentiation, team background and traction. i'll give you an a for the pitch. you mentioned you're in the frozen food aisle, and of course there's tons of products there. so what else are you doing to make customers aware of your offering? >> the most important thing that we can do is really do in-store promotions and demos. i think one of our key elements to our success is teaching new people to go into the freezer aisle. say taste our product, learn our story, know it's organic, we'll create new consumers into the
category. >> nir. >> i thought your pitch was very well rounded and covered all major points. i would like to report more about financial performance but still give your pitch an a. can you talk about margin structure and how you see it evolving over time? >> our primary focus over the last six months since we've grown so rapidly important from being a small artisan hand made company to one that was scaleable. the way we did that was by diversifying our supply chain. so we've increased margins in the last six months by 20 points. which is only we needed to be a sustainable company with a healthy margin structure in order to get this out to as many people as we want it to be available to. >> chef huda. >> i loved your pitch. i've learned about your family, i've learned about why you're doing it and your product, i definitely give you a b-plus, being there are other products already in the freezer section. what is the nutritional value comparison between that product and your product? >> so we definitely offer lower sodium alternative to what's in the marketplace.
and eating organically with no antibiotics, no hormones, no fillers, no preservatives, we don't use any additional starches in our products. those are healthier for you options than what our competitors are offering. >> okay. so we can't talk about a product that is food without tasting it. you actually brought some samples. let's do the taste test. >> fantastic. today i'm serving you samples of our organic chicken fingers. and our chicken meatballs. there's one for you. >> all right. >> sample for you. >> thank you. and here you go. >> it's really good. >> how much does this cost compared to similar products? >> the antibiotic free line retails at $6.99 and the organic retails at $7.99, which is pretty straight on in terms of competitors. >> these are absolutely delicious. excellent. >> thank you. >> alicia? >> i really like them. they taste better than anything else i've had certainly from the frozen food aisle. one of the descriptives you use for your product is that it was
natural. what does that actually mean for consumers? is it subjective like delicious or objective like non-gmo? >> natural for us means no fillers, no preservatives, antibiotic free chicken, hormone free chicken, real clear attributes. and we're also connecting the dots between our consumers and who the chicken farmer is so that they can really easily understand that we're an authentic product. >> chef huda. >> you've had success with this product. are you thinking about going into other sections in the grocery store? >> we are going to focus on chicken and turkey, poultry for now. we want to keep our focus narrow, so we're introducing four new organic products, organic turkey burgers, organic meatballs and some other organic products. i think it's important not to diversify too broadly while we really build our brand. >> okay. we heard what serafina had to say. now we want to know if the panel is in or out. alicia, what do you say? >> i think this company is spot-on when it comes to
consumer trends especially with respect to transparent sourcing. and their sales show they're onto something. i'm going to go in. >> in. nir, what do you say? >> i like we have a purpose driven company with great tasting products. however the freezer aisle is very challenging and the supply of organic chicken is very limited. net-net i love the brand so i'm in. >> two ins. chef huda, how about you? >> i love the story, the packaging, the product. i'm in. >> wow. clean sweep. three in. what's your reaction? >> oh, i'm just thrilled. your support is phenomenal to me. thank you. >> all right. and our thanks to you, serafina, hip chick farms and to our panelists. and that is today's power pitch. all right. you heard what the panel had to say. now it's time to find out if you are in or out on hip chick farms. follow the conversation on twitter using the #powerpitch. and for more head over to powerlunch.cnbc.com. brian, if that chicken is good
enough for the family, i'm sure it's good for us. >> absolutely, man. i'll eat anything. up next, today's sports trifecta, olympic streaming, a-rod's final game and football returns to los angeles. what you need to know about all three plus the great whopperrito taste test. "power lunch" back in two. we'r. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. she said i should think of my teeth like an apple. my hygienist said the most random thing. it could be great on the outside... ...not so great on the inside. her advice? use a toothpaste...
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sports trifecta now, streaming olympics, a-rod and rams return to los angeles. we have it all covered with julia boorstin, jane wells in l.a., morgan brennan here at cnbc headquarters in jersey. julia, kick us off. the way people are watching the olympics is changing. >> that's right, tyler. digital viewing of the olympics is exploding. as of yesterday 1.28 billion minutes of the olympics have been live streamed. that's more than the total live streamed from london and sochi's olympics combined. on tv nearly one-third of u.s. households are watching. that still lags ratings from the london olympics. but the fact that nbc universal is offering nearly 7,000 hours
live on every possible device is yielding record profits from the rio games for the company. nbcu sports chairman saying the company has sold an additional $30 million worth of ads around the olympics since the games began. now that's in addition to the $1.2 billion worth of tv and digital ads sold before the rio games started. now, this value of streaming sports is also evident in disney's big investment this week spending $1 billion for one-third of streaming tech company bamtech and announcing a new sports app in the works. guys. >> julia, thank you. to morgan brennan we go for story number two, that would be a-rod's last game. morgan, a-rod not the beloved character that derek jeter was or mariano rivera, but immortal player nonetheless. >> most definitely. alex rodriguez earned more than any other player in mlb history
$460 million, but was he worth it? cnbc's big crunch data team looked at a-rod's value to the new york yankees based on statistic call he more than delivered for the first five seasons but over the last eight that trend reversed. bottom line they could have gotten similar performance from a different player for an estimated $9.4 million less. but a-rod draws attention, which helps get fans into seats and watch games on the team-owned tv network. and speaking of tickets, immediately following sunday's retirement announcement the average ticket price for tonight's home game jumped 500% to $457. but that's steadily dropped to as you can see here about $149 today. by comparison the average ticket price for fellow yankee derek jeter's final home game almost $770. tyler. >> all right. morgan, thank you. to jane wells we go live at the l.a. memorial coliseum where her favorite sports team play, and it's not the rams, is it, jane?
>> no. >> but the rams are coming to l.a. tomorrow night. >> i know. and they will be playing on a saturday. my first professional football game i ever went to was here in 1970 to see the dreamy roman gabriel. i will be here tomorrow. tickets to tomorrow's preseason game have already sold out. they're adding seats and this place is huge. the move west for the rams is a financial decision long time in the making because the nation's second largest market has been without a pro team for over twenty years. we have video of the rams practicing in irvine this week. they come back to l.a. with a losing record, a top draft pick quarterback who may not be ready for primetime yet playing in an old stadium for probably three years until a new one is built. now, fans who've driven up the average ticket prices on the resale market nearly 100% above where they were in st. louis have high expectations. >> we never seen this many fans at camp, so i'm excited. >> they appreciate the reception. they understand the potential distractions. but there's distractions in every nfl city.
>> you nervous about saturday? >> never. >> now, fisher said on hbo's new season that last record 7-9 is, quote, bs, won't say what his expectations are. and by the way the rams haven't had a winning season in 13 years. as for pressure to produce a product worthy of los angeles, fisher told me, quote, winning games sells tickets. tyler. >> well, jane, i'll pick it up. jane, you and i are both from los angeles. i grew up in downtown l.a. when i was a kid, and that's why my entire life i've been a charger fan. the rams didn't do it for anybody. >> oh, ouch. >> they didn't doi it for anyone the first time around, do you think they will the second time around? >> they would get more fans than charger fans, sorry san diego. even when you come to usc games here on saturdays you have raider nation people show up. there's still a hard core raider fan base here. we'll see if those people transition to the rams. one quick thing, there are two games this season where the
trojans play on saturday here and the rams play on sunday, they're growing the grass longer in the end zone so they can mow it after the trojans game and paint it for sunday, back to you. >> jane, thank you very much. let's talk about this with patrick rish, director of the sports business program at washington university, which just happens to be in st. louis. he joins us from vancouver. first off i want you to, patrick, put aside the professionalism, i want you to finish this sentence for me. okay, ready to play a game? >> i am. >> rams owner stan krunky is blank? >> profit maximizing. >> that's a lot kinder than most people would say. >> kinder than i thought. >> keep in mind, guys -- >> do you think the rams are going to win when they're moving back to a city that their owner left, you know, fled, but do you think they're going to win in l.a.? not win on the field but win the hearts and minds of the public in l.a.? >> i think what's a big boost for them is when this new stadium becomes available in
2019, they're building it right now, it's going to be one of the most palatial sports facilities in all of professional sports. so right now there's a lot of pentup demand. there's a lot of people in southern california and the bordering areas that wanted their rams to return for years and years. and now they've got them. so i do think you're going to see a honeymoon effect in the next few years. when the new stadium comes on to the scene, whether or not the rams win or not financially they are already winners. you're going to see a spike in their franchise value for sure. >> did st. louis make or lose money with the rams in town? the city of st. louis? >> well, that's a great question. a lot of people have talked about after the rams leaving that one of the issues when the rams were there during the fall is the everett jones dome, where they used to play, you couldn't book that for other conferences and conventions. when you're talking about the economic impact of any professional sports team, it's about bringing visitors in from outside of the region. and in a lot of cases, guys, if you're talking about a convention or conference, that brings in more non-local
visitors than say a given sporting event where most of the fans are local. >> all right. patrick, we have to leave it there. thank you very much. patrick rishe, sports business expert at wasu. cashing in on your house, a reverse mortgage a good idea? that story still ahead on "power lunch." mobile trading desk, so i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices. the market's hot. sync your platform on any device with thinkorswim. only at td ameritrade.
good afternoon everybody. welcome. i'm tyler mathisen. here's what's on the "power lunch" menu at this hour. all three major averages started the day at all-time highs. not there anymore. but what should you buy now? we'll get some good advice for you. hillary clinton's taxes, they are out. how much pressure will that if any put on donald trump to release his 1040s? and whopperritos, we will taste test burger king's latest creation the second hour. we're going to grill it right on that grill behind me there. second hour of power begins right now. hey everybody. i'm brian sullivan. welcome back. as tyler mentioned new all-time highs yet again today. stocks are slightly lower at the moment, the dow down 70 points. however, with two hours left in the trading day, there's still time to make even yet more new highs.
we'll see, kayla, if that can happen. >> all right. and i'm kayla tausche. and the headlines this hour hillary clinton releases her tax returns. the clintons made more than $10 million as a couple last year. and we'll have more details on that coming up. another increase in oil rig counts, seventh week in a row 15 more rigs coming online in just the last week. and a sluggish reading for retail sales in july, less eating out, more shopping online thanks at least in part to amazon prime day. speaking of amazon, rbc capital's lead tech analyst just released his new tech review for the year. and he's made some significant changes in his top picks. mark mahaney joins us now. the title is staying long though a little less strong. and i'm wondering if you think that some air's going to come out of these stocks or if the secular winds are going to continue blowing in their favor. >> okay. so, kayla, i think these secular winds they're so well locked in, you know, for the next five, ten years, if only 10% or retail
sales are online, you can probably bank on amazon doing 20% plus retail growth for the next couple of years. where the wind could come out, however, is look, we've had a major rerating in the sector both large and small cap across the internet. and we find valuations now kind of back at par where they were historically the last couple of years. if you look at free cash flow or cash flow multiples. so we think there's less kind of upside here. what were controversial stocks earlier in the year including amazon are now deep consensus longs. there's very few of these that are really sitting there as interesting long trades, long investment opportunities right here. one of those though is netflix. we don't think it's amazon though we remain small buyers of that. >> well, mark, i'm wondering what you think happens to the likes of netflix. because frequently when we've seen the broader market selloff, these stocks have operated like piggy banks or deposit accounts where investors will sort of cash out to be able to preserve their own cash, lock in profits
or to put them in other sectors that are undervalued at the moment. could that potentially happen if we get a selloff? >> it could happen. one interesting thing about netflix, this stock has materially underperformed year-to-date. in part it's due to the fact it's so materially outperformed in '15. but in part they've had a couple execution issues this year and missed estimates. we think estimates are now more reasonable on the stock. we think the story is building up. hard to call any one quarter, but we like the long term play on netflix particularly on the international side which we think is going to start ramping back after this year and next year. in terms of the other stocks, you know what we've seen is real consistency. you won't find in other parts of the market companies with $80 billion revenue run rates, 15 quarters in a row of 20% retail growth, that's amazon. there's stability here at least in terms of the fundamentals. that's why we still like the sector. >> and what about the travel
space? because you are swapping expedia for priceline. why are you doing that? >> yeah. so that's we've been priceline bulls for years. it's generally been a good performing stock. expedia seems more dislocated, it's underperformed year-to-date. in the june quarter a negative sloppy quarter. the room net growth decelerated sharply. we think there are solutions for that that will roll out in the back half of the year. there's potential catalyst with this trivago spin-off. we have a catalyst, we think fundamentals recover in the back half of the year. now trading at reasonable discount to price line whereas in the past more premium. the investment opportunity right now is more interesting in expedia than priceline. >> if you go down to some smaller cap stocks, yelp is a top pick. that's been a controversial and volatile stock in the last couple years trying to sell itself, not going through with it. but you think it's a winner, why?
>> yeah. and, you know, the biggest change we've made here we made yelp one of our best upgrades beginning of the year. so is zillow. we've taken zillow out because of appreciation in shares. but we think yelp can continue to rise. we think that comps get easier but there's a confluence of factors here. they have a $50 million brand campaign we think is helping them with both consumers and with merchants. they've done a lot of things to improve sales force efficiencies and we think the market underappreciates the sustainability of the growth. this is not 20% or 30% revenue grower, it's 40%. and you've got margin expansio s expansions. with a stock trading at a reasonably low multiple the stock can still rise. that's why we like it. >> it is up 33% year-to-date, mark. i think my favorite but perhaps the wonkiest part of your report is the gapification of the internet and that being gaap, of course a lot of investors have been frustrated that some of these tech companies feel like they can exclude their compensation as a line item. do you think that that practice
is ending? or are you just focusing on companies that don't necessarily do it? >> i think there's going to be investor pressure to be more careful about that stock base compensation. out here in the valley it's almost given away almost like candy. i'm exaggerating when i say that, but not by much. it's a competitive job environment, but some of these companies have really tried to get investors to not necessarily focus on those. we have to focus on them. there's an economic cost associated with stock comp. if you don't give out stock comp, you have to give out cash. it is a resengs tool, an acquisition tool should be figured into valuations and the p & ls, currently companies saying facebook, amazon, saying we're not going to exclude it. no reason for investors to. i think that's a healthy trend. we think we'll see stock based compensation decline as a percentage of revenue. >> we always hear industrial ceos saying i'd make a lot more money if i didn't have to pay my people or deduct that from my
earnings, we'll see if the internet companies actually do that, mark. we appreciate it. mark mahaney from rbc capital markets. brian. kayla, thank you. with the markets smack in the middle of perhaps the most profitably boring rally in history, a lot of stocks have done well. many we probably expected. others though not so much. so with that in mind i put together a list of three stocks that i consider the most interesting during this remarkable run. here we go. stock number one. caterpillar. this has been a huge whiff by wall street analysts. stock up not only 23% this year, it's the best dow stock this year, this despite average analyst rating of hold and target price 12% below cat's current price, in other words watch for analyst activity on caterpillar likely in the future. stock number two, one in the news today, nvidia. okay. what i call the tech aaa crowd, alpha, apple, amazon, they get much of our and the media's attention. but it is nvidia rocked
investors' world recently. one of the few stocks top performer list over one months, three months, year-to-date and past year. lately everybody rushing to upgrade the stock including rbc in the past 24 hours. but a shout out to jaffry's analyst, he upgraded last september, since then stock up 150%. finally, the third most interesting stock, at least to me during this run has been tyson foods. why is there a chicken company on this list? well, number one, the stock is up 40% this year. number two, it's not really a chicken company anymore. beef had more than a billion more in sales than chicken last quarter, packaged foods also booming. after they bought hillshire brands in 2014. tyler, that has not just been a short term run for tyson. did you know that tyson shares are up nearly 1,000% since the 2008 market bottom? that is hardly chicken feed.
you can read my article with more of the rationale, agree, disagree, whatever you want to do at powerlunch.cnbc.com. tyler, would you disagree with any of my three weird standouts here? >> i think the one that is far and away the most surprising given where it was over the past couple of years is caterpillar. and look at how well it's done. >> supposed to be a dead stock. supposed to be a dead market. commodities were dead. forget about caterpillar. i mean, if it was midling in the dow, i probably would have ignored it. it's the best dow stock this year. everybody pretty much has been wrong, wrong, wrong. >> give it up for caterpillar. thanks for, brian. let's bring in, going to ask you about nvidia which brian just mentioned and i gather it's one of your choices. >> it is. in this challenging market where everything is so top heavy, i would say most people if you poll them they probably are very
hard to answer what nvidia actually does. and so for those people out there i would urge just to go on a youtube video and look at what nvidia does. i think it will totally astound them artificial intelligence has no bounds. nvidia is at the forefront of that. look at standard stocks, say compared to caterpillar, you have to throw out that book. we're not absolutely certain how this market is going to look. all we know is for pretty much certainty this is a growing market, applications of artificial intelligence are also called deep learning euphemistically, very, very appealing in a number of technologies. >> matt, you have several stock picks, but let's talk more broadly about sort of the topic we began the hour -- last hour with, and that is with the market setting three record highs yesterday, how much more room is there for growth from here? the year is already pretty good.
not blowout good, but pretty good. >> yeah, i was on a couple months ago before the brexit vote and thought the market could end the year up 10%, 12%. i standby that but now the market's up 7% or 8% year-to-date. only got 3% or 4% left, doesn't sound all that attractive, but look at the last few months and competition from the bond market and other areas of the globe and say i take that trade. i think it is still a decent investment. earnings are going to improve in the back half of the year or might go mostive. i believe we will go positive in the fourth quarter. this market's held really steady through what's been a declining earning period. imagine what it might do when earnings go in the other direction accelerate the confidence that might bring with the low rates that we have. i'm pretty confident we're going to finish the year higher from here. >> talk to me about a stock that's had its struggles lately and that is disney. earnings out this week were good. they've had a big acquisition or
taken a stake for $1 billion in bamtech. what do you think of disney? >> like a kid you don't want to name a favorite stock but i do like disney right now at these prices, below $100. stock traded over $120. great chance to get a great franchise, great company at real value. we look for great companies and find them at good prices. everyone's talking about the cable business and it's important, but so is their theme park which is growing aggressively at 6% a year. so is their studio which grew 40% year over year. the company grows cash flow over the year 24%. that's a tremendous story. tremendous value. there is going to be cord cutting and changing dynamic with the over the top content, but consumers will pay for content otherwise there won't be any. i have had confidence disney will figure out how to transition into that much like the phone companies from land lines to wireless, i believe disney will figure out this transition and bam's a part of
that. their deal with directv is a part of it as well. >> peter, i want to get your thoughts on jc penney. you must be pleased with what you saw in their results earlier today. i believe it was matthew boss in the last hour raised his price target rather substantially on that stock. and he's a very respected analyst. >> well, it's what i would call a double recovery play. first off, the company itself is doing a tremendous job recoveri recovering. as you know i've been following this stock for many years on its ups and downs. and the second part of the double recovery is the consumer led recovery here in the united states. so i think there's tremendous upside in just becoming average. we look at other retailers to see how they can improve their overall strategy, but jc penney is still on inflection point. if it can just become average, average sales per square foot, its balance sheet is getting better and i do think it has tremendous upside. but it's taken as long -- it's actually taken longer to decide
which way to raise or lower interest rates. this has been a long, long haul, but for those that have been patient you will be rewarded. >> all right. peter, thank you very much. peter andersen and matt roddy, we appreciate your time today. kayla. let's get to seema mody for a market flash. >> kayla, take a look at this stock, acazia communications. shares are skyrocketing up more than 30% after reporting a big earnings beat last night. the maker of optical networking equipment went public earlier this year and nearly tripled since then. the company is citing strong growth in the buildout of metro and intradata center networks as a source of strength in the quarter. one stock to keep an eye on today. >> and a big move at that. thank you, seema. hillary clinton and tim kaine release their tax returns. and up next we'll tell you what's in them and discuss whether it will force donald trump to do the same. that's coming up on "power lunch." there's a lot of places you never want to see "$7.95."
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donald trump in one of the swing states today, eerie, pennsylvania. he's expected to take the stage any moment now. meantime, hillary clinton just released her taxes. the question now is will donald trump do the same? john harwood joins us now. mr. trump has been holding off saying his taxes were being audited. >> exactly right, tyler. we show you that live picture of donald trump's event in pennsylvania because he is the object of what hillary clinton
is doing today with these tax returns released by herself and her running mate. let's go over the top lines. hillary clinton and bill clinton had adjusted gross income of around $10.5 million. they paid an effective federal tax rate of about 34.2%. that's fairly high, by the standards of wealthy people. they gave a 9.8% of their income to charity. almost all of that was a $1 million donation to the clinton family foundation. now look at sources of income. bill clinton in 2015 made a little over $5 million from giving speeches. $1.6 million in consulting, you had hillary clinton making $3 million as a book author, another $1.4 million as a paid speaker. of course that work went away when she entered the presidential race. now look at tim kaine. he's one of the least wealthy people in the united states senate. 2015 income of around $313,000.
effective tax rate of around 20.3 and in his 10-year returns the campaign says his average charitable donations have been 7.5%. how does that apply to donald trump? well, donald trump says that he's worth $10 billion. more than $10 billion actually. he is also, we know from court filings of various kinds, government record filings that he did not have federal income tax liability in 1978, 1979 and 1984. so the question is, how much does he make? how much is he paying taxes? how much does he give to charity? all of those are things that the clinton campaign is trying to force donald trump to reveal. as you said, tyler, he has indicated he will not reveal them because of audits even though some years are passed audit, he says they're all linked together. we'll see whether that stance changes. but one thing we know about donald trump, he likes the way he's been campaigning so far so i wouldn't expect him to change.
>> hey, john, it's brian. just a couple things, with trump though i would imagine he did pay income tax, simply got more back in deductions probably because of losses carried forward or whatever it was -- >> he had no liability in those years because of losses that which in real estate you can claim. >> which offset income. >> i am surprised by the clintons' effective tax rate. because 39.6% is the highest real rate. they donated a lot to charity, which is a deduction. 34% seems almost impossible. >> that's high. >> because you don't pay 39.6. you pay zero up to 15,000, how is that possible? >> most of their income -- >> well, they've got a heck of a lot of income over the threshold for 39.6. >> yes. >> it's also the case if you're bill or hillary clinton and concerned about political viability and have been for a very long time, they are not the kind of people who would make the maximum effort to reduce their effective tax rate.
>> yeah, i mean, my guess is, john, maybe you could do some more digging in this. i'm guessing on this. they probably didn't deduct those charitable donations. which you don't have to do. >> no, they did. they deducted charitable donations and their mortgage interest and that sort of thing. but there are many ways in which people who make an awful lot of money can get their effective tax rate down. and for reasons of politics if nothing else the clintons have quite a strong incentive not to do that. >> one of the ways obviously is to claim a lot of capital gains income or other kinds of income that is more lightly taxed. and it would appear that they do not have that kind of income. it is straight fee for service or royalty income in the term of her authorship, right, john? >> yes. but again, on the effective tax rate, 39.6 kicks in, i believe
at $400,000. >> for married couple, yeah, 457 or 357 or something. >> right. if you have adjusted gross income of $10.5 million. >> most is taxed at 39. >> most is taxed below 39%. >> but i would be willing to say as someone who's done my own taxes for years, the only way to get that kind of effective tax rate is to basically say we want a high effective tax rate because we know it's going to be scrutinized. >> yes. that's right. >> yeah, they probably did not claim some deductions that they could have. >> maybe some accountants could call in. i mean 34%. either get a new -- or if you want a high effective -- >> didn't deduct agent fees. >> here's an experiment, brian, try it on your next tax return, see how high you can get that rate up? >> no. >> all right, john, thanks a lot. >> both my parents do taxes for a living. they might disown me if i did that just out of principle. just call him the commander in chief of music.
president obama revealing his annual list of favorite summertime songs, each one hand picked curateed if you will by the president including classic '66 track from the beach boys, "good vibrations." also he's got some really interesting jams, everything from prince to chance the rapper and common to greats like charles mingus and nino simone. >> spotify, you can share it on spotify. potus's play list. >> i like that. back to the markets, oil closing in on $45 a barrel yet again. but there's a big sort of opec/no-pec meeting happening next month. can we expect oil to rise after that rk or will nothing get done again? plus, the great whopperrito taste test. they're bringing it in. we're putting it down. we'll let you know what we
it's a golden opportunity to experience breath-taking lexus performance in street-legal form. for a limited time get great offers on our complete line of f sport performance vehicles. at the lexus golden opportunity sales event. welcome back to "power lunch." i'm seema mody. shares of planet fitness are pumped up today. the stock hitting an all-time high earlier this morning and accelerating higher as trading continues.
the stock is now just off of its highs. the company reported better than expected same-store sales and an increase in its full year outlook last night. take a look at where those shares are trading right now. the stock is up more than 40% for the year. tyler. >> all right. thank you very much, seema. oil up 2% today, and we will go live to the nymex, live it says there twice, for the closing trades, when "power lunch" continues live on cnbc. ♪ [announcer] is it a force of nature? or a sales event? the summer of audi sales event is here. get up to a $5,000 bonus on select audi models.
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hello everyone. i'm sue herera. here is your cnbc news update at this hour. the voyage data recorder from the doomed el faro cargo ship is on its way to washington, d.c. the uss apache brought the voice data recorder from the recovery ship to port in florida this morning. it was recovered three miles below the surface. toyota recalling 337,000 older model vehicles for a third time. it involves the rav 4 from the 2006 to 2011 model years as well as the 2010 lexus hs 250 h and other models, the car suspension system is in doubt. one person killed after an
suv hit a fuel tanker causing a massive fire. the flames from that tanker eventually spread to a nearby convenience store. no one else was injured. and the annual perseids meteor shower this morning, a trail in the comet's wake flash when they enter the atmosphere at about 132 miles per hour. the last perseids happened in 2009. couldn't see it because we had thunderstorms. we have 90 minutes to the closing bell. right now the markets have taken a pause after all three major averages closed at record levels yesterday. we did see oil in pos pif territory. the s&p and nasdaq briefly went positive but currently are all sitting lower. let's get to jackie d at the nymex. >> good afternoon to you, kayla. big pop in oil prices to finish the week here. 44.5 is about where we're going to settle on the day. the saudi opec freeze talk
potentially at this meeting on the sidelines of that energy conference in september, that's been supportive of prices and really been responsible for the bump we've seen. there's two schools of thought on this and i really want to explain them to you. the saudis of course in the past had said they would cooperate, but we didn't see anything at doha, we didn't see anything at the last opec meeting. the reasoning was they couldn't come to agreement with the iranians. the saudis and iranians have been fighting for market share for some time right now it's a little bit of a game of chicken and that's why they didn't agree to a freeze. on the other hand, i'll give you a $2 trillion reason that the saudis might, just might, have more incentive to do it this time. that's because the deputy crown prince has invested a lot in the aramco ipo, we're talking 2017, maybe 2018 for that deal to fund the sovereign wealth fund which is very important to the kingdom. so maybe now is the time to start to cooperate. it could be in their best interests. but think about production right now because that's really the key to this. when you look at the non-opec production stats, you can see
that we've fallen slightly year over year. the u.s. is responsible for most of that with a 1 million barrel reduction per day that we've seen since june of 2015. opec supply is up year on year 32 million barrels in 2015 to 33 million barrels a day now. so you can see that there are record production levels. if they actually did agree to a freeze right now, it wouldn't be very harmful. so this is why for the saudis at this point it could be a win-win. back to you. >> all right. thank you very much, jackie, d. so what exactly should we expect for the saudis at the next opec meeting? let's bring in rbc capital's global head of commodity strategy helema kroft, it's this thing in algeria next -- it's kind of like the -- >> the informal meeting, yes. >> that we schlep over to or that he was not that powerful that the deputy crown prince was the boss, is it going to be more
of the same this time? >> if you think about the vienna meeting we were both at in december, the difference between doha and vienna, i think they wanted to play nicer in the sand box. the saudis actually did float the proposal to reinstate the collective ceiling. now, the iranians said who cares about collective ceiling, everyone cheats, bring back individual country quotas. but the saudis are making a bigger effort to say, look, we want higher prices, everyone wants higher prices, we're not out here to trash the market. the saudi rhetoric did change by the tame they got to vienna in december. i expect them to continue conciliatory stance, may not cut but a freeze is on the table because they're at historically high levels. doesn't hurt to freeze now. >> do you think there's going to be any talk with the rig counts going up again that they're realizing u.s. output may not either if not fall but actually go up and say if the americans are going to pump more, we're going to pump more because we want to make sure we can get every dollar we can. >> well, here's the thing, the question is can the saudis
really pump more? i think the saudis are pretty close to being maxed out a this point. in fact i think almost everybody is pretty close to being maxed out. maybe the iranians can add a couple hundred thousand barrels more, but the question is if you can get higher prices by potentially freezing at the level that you can't do more, what's the harm in that? if they had millions more in the tank, maybe bring that on. but i don't think they have that much more to bring on. >> do you get the sense that the u.s. producers are spooked at all by recent price movements? it's almost like we got to 50 -- or close to 50 and then they started bringing rigs back online, adding new production, you know, then you got a three handle and they kept doing it? >> yeah, i mean, i think from the standpoint when you go to houston, you have people saying, look, even if we bring rigs back on, we're not going to jump back up in terms of production. but they can certainly change market sentiment by bringing those rigs back to work. i certainly think if you're a houston producer, you have to be a little bit, you know, concerned that when you bring the rigs on look what you do in
terms of changing sentiment about the market. the market has been caught in a bear trap for the last couple weeks. >> halima, how close is the market to a balance of supply and demand? and was does that imply for prices? >> this is really important. we went from a situation of being oversupplied on a daily basis, almost a million barrels, to now being almost even. but the bigger issue everyone's concerned about right now as they're looking at record high inventory levels and saying even if we're almost flat in terms of supply and demand, we have these record high inventory levels that we have to work off first before we can move substantially higher. but again, the market has really moved from a daily basis into almost a near balanced situation. >> we'll leave it there and get you get started on your weekend. always value your incite. thank you very much. >> thank you for having me. coming up, could a reverse mortgage be right for you? they are controversial products. we'll look at the benefits, the drawbacks and more coming up on "power lunch." your insurance company
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our senior personal finance correspondent sharon epperson joins us now. these are controversial products. >> they are very controversial. >> new regulations according to some have made them more desirable. >> exactly, tyler. we're talking about these new rules that made it tougher to get a reverse mortgage actually, but still the commercials selling retirees on their benefits continue. including this one featuring tom selleck. before taking out one of these loans though you need to understand how they work. so we're going to start with the basics. to qualify you need to be 62 or older, use the home as a primary residence and have paid off some or most of your original mortgage. now, once approved you can take the money in a lump sum, a monthly payment or as a line of credit. and you don't have to make payments while living in the house. it sounds like a great deal, right? well, you also have to consider the fact that you're still on the hook for maintaining the home and for paying taxes and insurance. and also unlike a traditional mortgage that gets smaller over time as you make those payments, a reverse mortgage actually gets bigger. and here's why. first you get the money from the
bank, then you live in the house making no payments while interest is tacked on every month increasing the loan balance. finally, once you decide to sell the home or you pass away, the reverse mortgage must be paid off including principle and interest. now, unless you have a pile of money to do that, you'll have to use the proceeds from selling your house, and that means that your estate only gets what's leftover, which could be very little. and, tyler, we have a lot more of this on cnbc.com/retirewell, brian. >> what kind of a retiree, sharon, would be a good candidate for a reverse mortgage? >> well, you have to keep in mind a couple things. one, you have to ideally you've paid off your mortgage already, but you still need some income. you love living in your home, you plan to stay in your home and you're healthy enough to stay in your home. those are people that may want to consider this. >> one of the problems in the past was the idea that one party in a married couple would take out this loan, that party dies and then the loan was due.
>> right. >> so the remaining party had to sell the house to pay off the loan. >> exactly. >> have they cleared that up? >> well, here's the issue a lot of folks want to look at and one of the tougher regulations is looking at the fact that you have the capacity and willingness to pay if you have to. so they're going to make sure you have a little more funds available. you never want to use this to pay all of your expenses. that's why a lot of the financial advisors we talk to -- >> do you need an advisor before you jump into this? >> you need to talk to a federally approved housing counselor, a financial advisor who knows about reverse mortgages, but look at all sides of the coin and think about getting a line of credit instead of taking that lump sum so you can use it when you need it. >> i'm eligible for this in about three weeks, okay? >> no. >> just sayin. guys, thanks. sharon, good to see you. >> sure. up next, i don't know where you are, there you are, ultimate taste test, burger king's new whopperrito. you're not looking at me. you're looking at the
whopperrito. it's ready to be consumed. i'm going over there now. ing th. where we explore. protecting biodiversity. everywhere we work. defeating malaria. improving energy efficiency. developing more clean burning natural gas. my job? my job at exxonmobil? turning algae into biofuels. reducing energy poverty in the developing world. making cars go further with less. fueling the global economy. and you thought we just made the gas. ♪ energy lives here.
literally on wall street. let's get to the calls on wall street that matter. first up, underarmour, foot locker, dick's, positive on all but most positive on under armour, employing about 28% more upside they call it, kayla, number one pick for long-term growth investors. recognize the stock is, quote, not cheap, but they say you get what you pay for. they call under armour a stellar brand and a company long way from maturity. >> i was going to say it's still a teenager, but i guess it did turn 20 this years. maybe a way to go to maturity. second stock today blackberry getting upgrade to outperform from market perform at raymond james on the fact bill griffith still has one. no, i'm kidding. the firm says investors should focus on the software side of the business, not the hardware. ray ja increasing price target on black we aberrylackberry. >> bill rules so whatever he does must be the future trend.
third stock, brixmor property trust. citi group upgrading it to a buy from neutral. they say that blackstone group's ownership stake and planned exit have long been an overhang, but now blackstone is out of the stock citi analyst is more optimistic says it removes a psychological barrier to buying this stock on your own, not having to wait until the next deal, et cetera. also see some potential deleveraging. his target on brixmor boosted. 13% upside. another call from raymond james, this time the firm upgrading alibaba from strong buy to outperform. analyst aaron kesler expected online and mobile company to remain china's cloud leader rivaling what we see amazon doing here. >> and your final stock call, always smaller cap under the radar call of the day, avexis, an illinois gene based therapy company. the stock down 10% over the last month so jefferies out
defending, they upgraded from a buy to hold. like the release of recent test data. analyst says he got positive feedback from a dinner with some experts as well on what this company is doing. his target on the stock ticker is avxs by the way 42, 20% upside. there's five analysts who cover the name and their average target is $50 a share. so pretty much everybody bullish on avexis, having a big day today. >> yep. >> thank you. the nasdaq, dow and s&p all trading just off record levels. is there still though a case for buying in to this bullish market? we're joined by bk asset management and steve grasso. we were e-mailing about this earlier today, boris, and you said actually buying markets at highs counterintuitively can often be a very smart idea, how come? >> it is because markets are basically telling you something positive is going on. i know it's kind of hard to chase because as investors we're psychologically averse to chasing price. but generally when we break fresh new highs that signals
there's something going on underlying and there's continuation and you want to join that move. >> all right. steve, what do you think? do you agree with this sort of like buy it highs because the wind is at your sails, the wind is at your back, whatever you want to metaphor you want to use. >> i do like boris' premise. basically pointing towards momentum. i do like the momentum idea. but this market's been overextended for so long now. but the last time we had the three indices make these tops, brian, we also sold off 80% in the nasdaq, 50% in the s&p and about 40% in the dow. so risk/reward a little toppier, i get it. it's the only game in town. people are looking for those risk assets. i do understand the momentum element to this. but if you've been waiting on the sidelines, i think you're going to get a better price. i know that people have said that for months now, but i think that if you hold back here this seems a little bit too toppy. >> yeah, because this is, boris, this is a tough time for a lot of people. a, if you own stocks, you're
like i made some money, should i take a little profit? it can't hurt. if you don't own stocks, these rallies are starting to appear on, you know, your local paper or nonfinancial news and people are going to be like, oh, the stock market's rallying, i should get in. >> i should get in. >> if you own stocks for the long term, it doesn't matter. >> exactly. buy stocks all the time. whatever. >> right. if you're looking the kind of trade this, a compromise is to sell puts on this situation. in this case, if the stocks continue to run, you still make a little bit of money. if it does come in, at least you have gotten yourself a better average price and bought the retrace. about the only thing you can do. >> brian, one more thing, the nasdaq the last time it made the high in 1999 it popped another 26% and we know how it ended but ultimately you did get that 26% pop to full on people. >> we're the only two people old enough to remember that high. >> and then some. >> i was at the nasdaq on tv the day it hit that high and i was
there. i was like, well, shares of cmgi are rallying. >> wearing diapers. >> i wore a lot of makeup. i'm older than you think i am. guys, thank you very much. appreciate it. boris, steve, thank you. for more "trading nation," head to trading nations website. remember it? >> safeguard scientific. >> i have a picture at home with yahoo at 240 a share. ebay. commerce share. i'm standing at the nasdaq. one of the first days it opened. i had just a terrible -- >> all over. >> terrible hair cut. >> having dinner a chinese restaurant in ash borough, north carolina. >> not asheville? >> ashboro near high point and the waiter said, what do you think of cmgi? i knew it was all over. >> that's when you said see you later. >> see you mgi. >> america's greatest moment. maybe this year.
check please. >> all right. you can forget the burger wars. this is an all-out brawl over burritos and burger king fired a huge shot. jane wells in l.a. with a look at how the whopperrito is made. >> here's the pass to you, jane. >> okay ft it's even donald trump says he likes mexican food and some argue it's about as mexican as donald trump. burger king wanted to get in the game for a listening time. it's important, it rolls out nationally monday. fast food sales slowing or drop
because eating at home is so much cheaper so is this the answer? watch. this is a mess already. would you ever have a whopper in an or the tortilla. >> can i try it? >> reporter: first time of taco sauce on a pickle. i'm not sure that works. >> it's good. >> reporter: i like it better than a whopper. but it's not a burrito. no. it's sort of like a burger wrap. now, we unboxed one, you know, no holding the pickle or the lettuce but instead of condiments, you have the meats in a cheesy tex-mex sauce kind of. not easy to drive with one because it's a messy at this point. guys, eat them while you can. may only be a temporary product. this is big right now. try things temporarily.
like burger king's mac n chitas which i loved! i hope that comes back. >> we'll try it here. >> what do you think? >> kayla will try, also. >> i made the mistake of picking it up and i said it feels like a dirty diaper but that's just me. >> we'll see. >> i have a 2-year-old at home. i changed a couple of those this morning. >> you know what i'm talking about. okay. here we go. >> weighs less than a chipotle burrit burrito. >> the soft taco is very good. >> now, what's the calorie count? if you're like no carb -- >> 570. >> is this better for you than having the bun? >> it is about the same. i think one of the reasons to do this is portability. i think they need to work on that a little bit. it is more calories than a taco bell burrito and not much and much less than a chipotle burrito. >> i agree with you, jane. you are in the car eating
capital of america. >> yeah. you need to do this. >> can't get the burger. you shouldn't be eating and driving and texting and driving. everybody's doing it. >> the price of this? >> how much is it? >> $3.99. i paid $3.99 yesterday. >> $2.99. >> we have representatives. >> here $3.99. >> i would say $4 of ingredie ingredients. a little slime my. >> it's a burrito with pickles! >> it is -- it's good. >> it is good. it's appropriately messy. i would suggest to our friends from burger king -- >> trying not to show up with lettuce and tomato on my face. it is a sizable burrito. >> i can have what i want on it, right? they're nodding yes, affirmative. if i could get little pepper, hot peppers if you have them in the stores. and ask for them. >> on the matheson burrito
scale, 1 to 10, 10 being heaven, 1 being hell -- >> pretty good. i think it's right up there. very good. i wouldn't choose to have pickles on it. >> yeah. >> but it's -- >> i agree with you. >> it's a hamburger. >> that's not way off crazy. >> think of it as a hamburger in a tortilla it's easier to handle. >> kayla will hate it. she's from chik-fil-a. >> i need it on a biscuit and then identify with it. >> right now. we want to say good-bye to our intern shelley from the university of missouri. we thank you for being with us all year. never eaten a burrito before. would you like it? >> sure. >> give it a try. >> it is not a burrito. >> no. she is our intern. you don't know shelley? >> yes. but i mean, i never asked her to do anything. >> what do you think? pretty good. students would never eat anything like this. >> living off this stuff in
columbia. >> by the way, guys, i would join you and eat this one but it's 24 years old. >> i liked it and asked the burger king folks if the king has a corner office or a throne. they didn't have an answer. >> she ran away. shelley ran away. i scared her. >> if i was in college, i would want to get back, too. >> we have to go. thank you for watching. thank you, kayla, for being with us. >> "closing bell" starts now. welcome to the "closing bell." i'm sara eisen in for kelly e rans at the new york stock exchange. >> it's friday. >> it is friday. >> tgif. >> matching like prom dates again. >> i forgot the boot near or whatever i give you. stocks pulling back a bit today after the record breaking close for all three of the major averages. last time all three closed at a record high on the same day