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tv   Power Lunch  CNBC  November 1, 2016 1:00pm-3:01pm EDT

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>> 10% off 52-week lows. you're getting really close to that going into holiday shopping. >> let me quickly hit ten seconds left, chevron, upgrade. call of the day to overweight. >> you just got yesterday goldman sachs moving that over to the conviction buy. a lot of people jumping on this. short-term is the place to be. >> see you tomorrow. all of you as well. "power" starts now. welcome to "power lunch," everybody. we are, america, in the homestretch. finally just one week until the election. we're going to go inside all the latest numbers and why the market might be in for a shock. new developments on the deadly pipeline explosion in alabama that is fueling a big spike in gasoline. we're on the scene. apparently it does pay to have friends. a new study says facebook could be a life saver, literally. "power lunch" starts right now. >> and welcome to "power lunch." i'm melissa lee. three hours left to go in the
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trading session for the first trading session of the month of november. stocks just off session lows, take a look at the declines across the board here, dow down by 85 points. s&p is down by .6%. nasdaq down by .6% as well. health care, as well as telecoms, among the biggest losers here. watching small caps down, down by 1.2%. outpace and declines in the overall market. this is a sector, area of the market seeing twice declines of the overall s&p 500 in the past month. apple, a drag overall, ubs survey indicating demand for the new iphone in china, seeing that stock just off session lows, down by 1.5%. >> thank you very much, melissa. i'm tyler mathisen. welcome. here is what else is happening at this hour. gannett says it is ending a six-month long bid to buy the newspaper publisher trunk. i love that. construction spending falling in september. they were expecting an increase. and the fed picking off a
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two-day policy meeting in washington. we'll have full coverage of the fed's decision on interest rates tomorrow right here on "power lunch." >> right now, it is the final countdown. one week to go until election day. john harwood is here at cnbc headquarters with the latest in the race for the white house. john? >> michelle, ticktock on the clock. we're getting now less than a week, 6 1/2 days until election day starts. and we got a race that is tightening in all respects. first of all, let's start with the national polling numbers. look at real clear politics, average down to 2.5%. it had been over 6. new york times average 4.1%. huffington post, 5.6%. now the name of the game is for donald trump is getting from the 206 electoral votes that mitt romney got up to 270. battleground states across the country, but let's break them down. donald trump has got a good chance to win four states that democrats won in 2012.
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nevada, iowa, ohio, and florida. now, here's the problem. if he carries all those states, he's still only at 265 electoral votes. so what is his next set of targets? you got a series of states across the country, where hillary clinton has working margins, 5.7 in wisconsin, 4 in colorado. 6.7 in michigan. pennsylvania, 6. virginia, 5.2. new hampshire, 5.6. those are steep hills to climb. he needs to climb that hill in some of those states and there are two states that mitt romney carried in 2012 where hillary clinton has got a shot. first of all, north carolina, she has held a steady lead, though small, 2.6 percentage points here. look at arizona. this is a reach for democrats, bill clinton carried it in 1996, that was the first time since harry truman. and she's up by less than a percentage point. so if hillary clinton can carry either one of those two states, the hill gets steeper for donald
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trump to climb. he's making progress now. but he's still got a long way to go. >> john, we're seeing the mexican peso weaker today. you showed the national average polls, real clear politics. tends to be over time. isn't there a poll out today, washington post, abc, that shows trump ahead? >> there is a washington post abc tracking poll that has been an outlier in both directions in the space of a week. a week ago they showed a 12 percentage point lead for clinton. now showing trump ahead by one point. and gary langer, the pollster says, that's not because anybody changed their minds. it is about the effect of the mood and the events of the election on the likelihood of supporters of each candidate to vote. now, other polls don't show that. our nbc survey monkey poll out yesterday had hillary clinton plus six. any poll can be wrong. that's why we look at averages. and any poll can be right as well. it is possible that gary langer is picking up something that others in the washington post and abc news poll that others
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are not. but if you look overall, put them altogether, we still show both nationally and in the key states to get to 270 hillary clinton with a consistent edge. >> got it, thank you, john. john harwood. october is shaping up to be another solid month on the automobile dealership lots. phil lebeau has the numbers. what do you find, phil? >> remember, these are strong numbers when you lock at just this month, but because it is in comparison with october of last year, people are going to say, look, there are negative sales this month. keep in mind, october of last year was one of the best months ever. that's why we look at gm, nissan, toyota, fiat, chrysler, all negative. having said that, this was a solid month. we'll show more about that in a little bit. what about ford? why is it not listed? sales report has been delayed because there is a fire at the headquarters yesterday. that impacted the corporate computers. they plan to release those sales numbers a little later on this week. as for october, for those who have reported sales, trucks and suvs continue to be the flavor of the month.
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not surprising given what we're seeing with low gas prices. by the way, the average transaction price, up to 34,663, that's according to kelly blue book. one last note, guys, look at shares of general motors, morgan stanley out today, raising the price target to $40 from 37. that may not sound like a lot. b but adam jonas, at some point wall street will give credit for what they're doing in terms of the returns they're delivering, six straight quarters, guys, these guys have delivered better than expected earnings and the stock really hasn't gone anywhere. you see the stock getting a higher price target from morgan stanley. back to you. >> phil, thank you very much. let's bring in cnbc contributor bob lutz, former vice chairman of general motors, also held executive positions with ford and chrysler. so i guess one way of saying it, bob, you've been all over the place, been around the block. what do you see happening in the auto business? i assume that you would say that it is pretty dog gone good. >> yeah.
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it is excellent right now. and phil was right to point out that seasonally adjusted rate of 18 million is incredibly strong. it might be a little bit down from last october, but that was an exceptional month. it is strong. and every dealer i talk to reports very, very good business at retail. and it is fair to point out that general motors, for instance, is de-emphasizing fleet sales, and that's a good thing. they're focusing on retails and retails are actually up. retail shares up 1.6 points to 18.1. 1.6 share jump is, you know, a huge jump by any measure. phil's right to point out, the suvs, crossovers, but we shouldn't neglect the ongoing strength of midsized cars and compacts, which is still a huge, huge, huge segment of the
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market. >> bob, why do you think gm does not get any respect from the stock market? >> i think people look at it as an old smokestack industry company. it is not as sexy as tesla, but as i always like to say, the share price of tesla versus general motors should be reversed. and then things would be about in balance. >> what does general motors not communicating to the street then, bob? i think that you would probably make the case that gm has spent a lot of money towards new technologies as much as tesla. >> that's exactly right. >> so what is it that gm is not el telling the street to get that story across? >> i think it is hard to say because they have tried about everything. they're in the lead in electrificati electrification, they're in the lead in new battery technologies. they have the first 240 mile range electric vehicle at an affordable price. they have invested heavily in
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companies -- have actually purchased or partially purchased companies that are in the ride share business, in autonomous technology, general motors has at this point more technology and more knowledgeable than -- >> to melissa's points, it is all out there and nobody gives them credit for it. part of it, does it come down to design, bob? tesla looks like a beautiful car. i'm not sure anybody gets the same kind of feelings about a gm electric hybrid. >> but look at the new impala, which is one of the most perhaps the most beautiful midsized car ever produced. and is selling like crazy. the new cruz is beautiful. the new volt is a beautiful car. the new buick, the big cadillacs are fabulously, gorgeously designed cars. i don't think anybody would say on balance tesla has better design than gm.
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they have one very good looking car, which the model s. the model x, to me, looks like a big inflated insect. and not very pretty from any angle. plus, according to consumer reports it has disastrous reliability. so i don't think tesla is doing anything any better than any other company that produces electric vehicles and, by the way, at this time next year, we'll have porsche in the game, volkswagen in the game, mercedes, bmw, et cetera, et cetera, et cetera. things will only get tougher. that stock price is going to go nowhere but south. >> teslas, you think? >> yes. >> teslas. big inflated insect. on that note, mr. lutz, thank you, as always. great to be with you. >> okay. >> thank you. we're watching eli lilly shares now, taking a hit after bernie sanders sent a tweet questioning the company's drug prices. meg tirrell is here with the
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details. not just a tweet. a video that was released, a full produced video criticizing the pricing. >> yeah. bernie sanders strikes again. we have been seeing him tweet a lot about drug pricing recently. most recently the company, you see the series of tweets today. he's targeting eli lilly and saying why has the price gone up 700% in 20 years? it is simple, the drug industry's greed. talking about some policy there. insulin is an area where these are pretty old drugs and the price has increased quite a bit. we talked on this program about how there is increasing pressure on the companies that make insulin. novo nor disk getting a lot of pressure, the stock falling as it talked about u.s. insulin prices in the united states. you see that drop there. ariad also under pressure as
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they're looking at the price of the leukemia drug. a lot of people are arguing this is moving the focus into these quote/unquote drug companies. and that's what spooks investors. >> and bernie sanders demonstrates he knows very little about economics because when he wants reimportation of drugs from a country with price controls, that means you import price controls, right? he just doesn't understand that we as americans pay for the r&d of the rest of the world while rich countries get cheap drugs for their people, for what reason, i don't understand that that they think deserve that. >> from canada, it is something a lost people hat of people hav about. >> we have a lot more people here in the united states. they would run out of the drugs that they bought. >> i thought you might be in agreement with bernie on one point, the difference on the price of drugs in the u.s. and overseas. it is an issue -- >> it makes me crazy.
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long time viewers of cnbc would know. it is wrong. >> have we gotten any response from eli lilly or novo. >> countries negotiate the prices of the drugs? >> they do. that's one of the big differences. there is a single payer system. >> selling to a single payer? >> that's correct. so it has been weighing on -- >> the hour in the market place to tell -- >> that's also subsidized by the taxpayer of those nations and so if we reimport from canada to michelle's point, the canadian taxpayer, there are 30 million, would be paying for our drugs of which there are 300 million. not sure canada, a noble country and great friend, would appreciate that. >> and now we're paying for their drugs. >> we're paying for the r & d, for sure. research and development is --
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>> valeant is technically a canadian company. >> that's true. >> based in quebec. >> you say maybe you don't supply drugs to a certain country and when you had conversations with ceos, you say, the country will seize -- they say they have the right to seize our technology and our science and they will produce them cheaply on their own with or without us. they feel compelled to supply. it is a decision made at the point of -- well, let's not use that metaphor. >> as tyler was talking about the single payer system idea, that's one of the biggest fears weighing on biotech investors, the idea that if democrats sweep the presidency and perhaps the house and the senate, they could give the government more power to negotiate drug prices giving them more of a single payer type system. that really has struck a lot of fear into the hearts of biotech investors. >> thank you. >> thank you. >> still ahead, new developments following that deadly pipeline explosion in alabama. we are on the scene. we're going to bring it to you with the latest on when that pipeline may get back to work
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when "power lunch" returns. what are you doing? getting your quarter back. fountains don't earn interest, david. you know i work at ally. i was being romantic. you know what i find romantic? a robust annual percentage yield that's what i find romantic. this is literally throwing your money away. i think it's over there. that way? yeah, a little further up. what year was that quarter? what year is that one? '98 that's the one. you got it! nothing stops us from doing right by our customers. ally. do it right. let's get out of that water.
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one person is dead and five others injured after a gas pipeline exploded in helena, alabama. gabe gutierrez has the latest. >> reporter: several roads remain blocked off as authorities managed to contain this fire but are waiting for it to burn itself out. it all happened around 3:00 yesterday afternoon when colonial pipeline, the company that owns the line, says an excavator smashed into the line,
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it ignited and sent this massive fireball into the air that could be seen for miles. one person was killed. and at least five others were injured. and now this line is shut down. it is the same line that ruptured just a few weeks ago and supplies about 40% of the fuel to the u.s. east coast. back to you. gasoline futures spiked after that explosion. they have come down a bit in the past hour or so on reports that the pipeline may be reopened as early as this saturday. the colonial pipeline explosion not the only big gas story. new jersey's gas tax going into effect today. that jumps prices by 23 cents a gallon overnight. let's get more on both these stories and what they mean to you, even if you don't live on the east coast. tom, this pipeline not only supplies gasoline to much of the northeast, but also directly to seven different airports along the way. i know they say it will be
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reopened on saturday, what is your reaction and what do you see as the near and medium term impact? >> i think we dodged a bullet on this one. first of all, the line that actually moves diesel and jet fuel was restarted last night. and that's a concern because a typical airport may have five days of supply. so you interrupt supply and you can run into problems there. the gasoline line we suspect is going to be restarted on the weekend, possibly as early as saturday. and there may be some kinks. we'll see a little bit higher prices in the southeast and the northeast. but nothing like we saw a couple of months ago when the colonial had the leak. and the line was shut down for 11 days. so it looked like an absolute catastrophe this morning, pricewise. obviously there is human tragedy involved. but my suspicion is that a lot of fixtures were done to move european gasoline to the east coast, and it might actually act
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to temper the price increases in november, between now and the opec meeting. >> you got this 23 cent hike, which i understand is in new jersey story. but i imagine the rest of the country is looking at this and politicians everywhere you need money all the time. we all know you get elected by promising to give things away, not take things back. do you think this gas tax hike in new jersey could be replicated in other states across america? >> i suspect it has to be. because i can't imagine that new jersey is the only one that has problems with road conditions. if you happen to live in a state that hasn't been a battleground state in the last three elections, you haven't noticed a lot of road crews. so my suspicion is a lot of other places will look to raise gasoline prices. and, listen, from the standpoint of the impacting consumers, we think 2016 is going to be a cheap year for gasoline. 2017 as well and probably 2018. there is a good case to be made
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for 50 to $55 a barrel of sweet spot for crude. and that means gas prices that are nowhere near what they were from 2011 to 2014. election day this year will probably pay 5 cents or 10 cents more than last year, but it is a dollar and $1.10 above what we paid when romney was a candidate. >> we appreciate your time, tom. thank you. >> take care. listen to this, strange but true, social media may be good for your health? we explore. that's straight ahead. this car is traveling over 200 miles per hour.
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a couple of things impacting the stock today. ubs out with a survey indicating demand for the latest iphone is soft in china. also, report out from kgi securities which is the korean securities firm, this particular analyst has a following as being one of the most accurate apple analysts out there. he indicates that perhaps the demand for the new mac books not as strong as expected. we're watching this stock very closely. this is session lows in fact. listen up, facebook users. if you got an active online social network, you may live longer. a new study of 12 million facebook users claims that online relationships can increase longevity as long as they are used to improve or
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maintain real life relationships. as opposed to fake ones. >> a threat to my life expectancy. >> because you're not on facebook? >> not on facebook. >> i'm a dead woman there. >> i think to state the obvious, probably -- generally the studies have shown the more social you are, the longer you live. if you have an active social life on the web -- >> you are probably an active facebook user -- >> my own experience, my aunt, who was single and lived until 90, when she got on to a -- i don't know if she was on facebook or not, i don't think she was -- when she got on to the computer and was e-mailing friends, she had a community, she wasn't going out a ton, but stayed in touch, i think that improved her sense of well-being. >> i went to my reunion and they had record turnout. they had said that as facebook grew, they got nervous that fewer people would come because you were talking to your friends on facebook. but they said it was the opposite, that the facebook
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effect was -- oh, i want to see this person. they had a bigger turnout because of facebook. >> you got a billboard, a fan club on physical. >> i have a facebook fan page, go there and check it out. it is great. has like six things on it and all about -- >> can i do that right now? >> i've seen all six. i'm done with it. >> we have a team that can get you on facebook. a whole section. >> perhaps extend your -- >> three of my two friends are on facebook. >> seema mody has a market flash. >> look at shares of weatherford down 12% on the day. the company says it expects to meet all debt covenants at the end of the year. in an effort to reduce fears about excess debt. year to date, we're looking at shares down about 50%. this as s&p 500 is lower by around 16 points on the day. >> seema, thank you. there is one market metric that has accurately predicted
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the election 86% of the time since world war ii. and according to that metric, donald trump will likely be the next president of the united states. that story is straight ahead.
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i'm courtney reagan. here is your cnbc news update for this hour. usa today publisher gannett walking away from its attempt to take over tronc, owner of the l.a. times and chicago tribune. it rejected at least two bids from gannett since april. the shares plunging nearly 17%. hundreds of civilians continue to flee territory controlled by isis as the iraqi army pushes north toward mosul. the u.n. sayss is is said to io be holding tens of thousands. video released late monday showed rescuers digging into rubble to free a dog covered in dust, but looking unharmed.
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basketball star ray alan announcing his retirement from the nba. the all time leader and three-point baskets made the announcement in an article he wrote. he said he is completely at peace with himself. he's 41. he's had a very nice career. cnbc news update. back over to you. >> all right, thank you very much, courtney. november starting off in the red. the dow down triple digits earlier today. we're still down not quite as much. but how could this month fare with a rate decision tomorrow. don't forget about the fed, and this election thing about a week away. bob pisani is live at the nyse. i know that tomorrow is not a press conference meeting. everyone discounted the idea that the fed will do anything. i can't remember a time where there was less interest going into a fed meeting? i'm selling the show tomorrow, right? >> they think something will happen in december, though, brian. traders hate october and love november and look, this is good reason. november, good for the markets.
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in presidential election years, number one for the dow, number two for the s&p 500. we got problems. let me show you three things i'm worried about. vix is near 20. obvious election jitters that are showing up right now. number two, small cap stocks, russell 2000, take a look, we're down five out of the last six trading sessions, that's concerns about higher interest rates and high yield, that's also been down the last five or six trading sessions, that's also concerns about higher rates. we have concerns about the election and the fed. look at the laggards we have now. real estate investment trust, near the lowest level of the year now, telecom, also near the lowest level since maybe march or so. important thing, interest rate sensitive. retailer, forget it, they have been terrible performers in october, down again today. concerns about people not going out and spending as much on the election jetters. brian is right, this starts the first six months of the year, from the traders almanac, famous metr
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metric. the s&p tends to do really well, up 7.5%. since 1950, the average, may to october, only up 0.4%. that led rise to the famous sell in may and go away, which by the way didn't work this year. however, there is a caveat. sell in may, go away doesn't apply to a presidential election year. what is all this mean? it so confusing. it is no wonder that a lot of traders given uncertainty about the fed and the election have pulled back and you get the sort of bland days until you hear something about the election or about what the fed might be doing. back to you. >> thanks, bob. we're going to add another confusing statistic. the s&p is down more than 2%. sam stovall says this is a bad omen for hillary clinton. going back to world war ii, when the s&p is down during this time frame, the incumbent party usually loses the election. let's bring in nancy tanglet and eric marshall.
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nancy, nice to have you in studio. do you believe any of the statistics, do they weigh into anything anything you do? >> i'm exhausted. i believe the statistics. i believe they are facts, but doesn't change what we're doing. we're looking out three to five years for our clients, many mostly taxable clients. we already positioned ourselves. >> i see you like johnson & johnson and amgen. where we just had bernie sanders going after eli lilly and pricing, you're not worried about the stocks if there is a tilt to the left? >> i think some of that is already priced in. i'm not sure, michelle. we think we have got it right, but i do think i heard the previous segment where stephanie was talking about not wanting to catch a falling knife, i get that. we have been using the volatility, down 17% since the democratic convention. large cap pharma, biotechs about 16. some of that is priced in. i don't think that the price of
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the pressure goes away no matter who gets elected. but i also know and i've talked about this on set and on air that the clinton administration, one, was exceptional for pharmaceutical stocks. >> the last one. >> the last one. >> long time ago. >> long time ago. >> it was. >> different set of clintons. >> i remember. >> what could happen this time around? i want to get to eric. this can demand of the drug industry a fundamental change in the business model, which is not like what happened during the past clinton administration. this time around, if they're going to go after drugs that have been out on the market that have been increased in price, whatever term you want to use, then that's a whole different motto, isn't it? how do you evaluate that potential change? you say you're positioned three to five years, that's when the change in model could happen. >> i'm not discounting that. i agree with you it is a risk. it is a significant risk.
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but the bad actors aside, those are usually one off generics we have seen this ridiculous price increase. we know that innovation lowers the price of health care in the long run. and saves lives. so i don't think some of the companies that are innovating are going to put us in a position that mylan and ariad and some others put us in. i also believe the pricing increase opportunities are muted in the foreseeable future. >> you like small caps, just heard bob talking about how they were getting hit because of rising interest rates. any concerns there? >> generally speaking, all the uncertainty surrounding the election and interest rates have really created negative investor sentiment out there, and at the end of the day, we think what's important is really what happens with earnings and cash flow of companies, and eventually that's going to determine what stock prices are going to do, not who is president -- >> you don't think the election matters at all? not going to hurt earnings or
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consumer confidence? >> i think it could have an effect. i think at the end of the day, there is other forces at play besides just who is president. so i think the market as it digests the uncertainty will -- a lot of that has been discounted. we have seen massive outflows out of domestic equity funds this year. and, you know, we think that now is a good time as everybody has really given up and capitulated on active portfolio management, now is the time to bethere looking for opportunities in individual stocks, which is what we are doing at the hodges fund. >> i was going to say, i take your point and you said the same thing, the market has discounted a lot of what the election seems to be saying to us. it seems to me that what the market discounted is the -- is what it saw as the probability of a clinton win. if there is a surprise result in the market turns out to have been wrong on that, what do you
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expect? >> well, you know, i think there is opportunities out there within individual companies that do things like network security, and infrastructure investing, and there is several areas where we do see earnings holding up and we see very attractive risk rewards out there in the market regardless of which administration is in office. >> name some. >> well, we like infrastructure i mentioned. we like a company called fonterra that went public here, trades about seven times enterprise value to ebitda and make large diameter concrete pipes for water works and so forth. we like companies like ford net that do network security, lar large enterprise customers. we see that as an early stage of a secular growth trend in spending. and we also think you can find opportunities even in consumer
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spending. not an area we are overly excited about right now, but we think things like party city where you have a secular growth opportunity and the amount of money that consumers are spending on parties and costumes and so forth, and they have not only a retail presence, but wholesale presence, which allows them to do well on -- where they're selling products. >> they should sell big concrete pipes, party city. >> synergies. >> it would help diversify their business. >> party in a pipe. >> nancy, thank you. >> thank you. up next, we're talking trump's tax and cyberattacks, but first, rick santelli for the bond report. >> we talked at great length the last several sessions about how normally the equities get spongy, interest rates cooperate, we're seeing a smidge of that. we're aiming towards 190. we eased back a little bit.
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still higher on the price on the day. one week chart gives you a better perspective. here is the chart everybody is looking at today. let's look at italian ten-year. you talk about a spacex moon shot, at the highest yields at almost one year from november of last year. dollar index getting hit. how many times have we talked about unchanged on the year, challenged friday, friday's move at 98.63. we closed below it. it is gaining momentum here. you see on the july 1st start, the next stop to pay attention to is that top, right on the left-hand side, third week of july, around 97.5. "power lunch" will be back in a couple of minutes. will your business be ready when growth presents itself? american express open cards can help you take on a new job,
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welcome back to "power lunch." i'm seema mody. the vectors gold minors etf ticker gdx is higher by around 3%. this as gold is rallying to a one-month high, boosted by a weaker dollar and election jitters. some big components like barrett gold, newmont mining and gold corp. up by 2% and 4%. >> a report in the new york times today says donald trump used a little known provision in the tax code to avoid paying hundreds of millions of dollars in taxes. was it legal? robert frank is here with the answer. >> it appears to have been legal, but we don't know whether the irs accepted or rejected this treatment. let's tell you when it is. it is a follow on story, $916 million loss trump used to avoid
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paying taxes for up so 15 years. in the early 90s, his casino empire left him with large debt and large losses. he used the losses to offset potential income taxes. what we didn't know is what he did with that debt. he guaranteed more than $800 million in loans, much forgiven. now here is the thing. forgiven debt counts as income. and you got to pay taxes on that. time says trump was able it avoid the taxes by exchanging equity in his partnership for that debt, even if the equity was worthless. this practice was later band by congress for corporations. trump's own lawyers warning the treatment could be challenged. we do know he was audited for this period, but don't know the result, whether it was allowed or whether trump ended up paying any or all of that tax. the campaign says, quote, there is no news in this story and its criticism not just of mr. trump but of all tax payers who take time and spend the money to comply with the complex tax
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laws, complex being an understatement as we have seen again and again. >> this practice was later banned? >> bans for companies. what wealthy people did was used partnerships instead of companies to get around it and that practice was closed, unofficially, by the irs by saying, we're not going to allow it. it is unclear -- >> change equity for debt. >> unclear when that happened and when trump used this strategy. >> we know if the irs audited him or -- >> we do. >> or made a settlement with him? >> never know that. it is all secret. >> they call it legally dubious. what does that mean? one would presume if it was unclear, tax return of this size, the irs would have done something. >> here is the thing, with complex taxes there is no clear law you either violate or don't. it is all -- at this level, it is a case by case basis. we just don't know whether the irs says this is not correct or this is correct.
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that's why it is legally uncertain. >> we think they made a decision about it at the time with donald trump? >> we assume. we assume -- >> they say it was not right, he wrote a check. >> correct. >> or he didn't. either way, what this did, it bought him time for -- to not pay any income taxes and not pay taxes on that debt for years and years. >> subject to -- >> in which he really needed the cash. he was getting tax free income at a critical time in his empire and that's part of why he came back, in the great come peak story. >> forgiven debt. >> exactly. >> robert? >> thank you, guys. >> whoever ends up winning the presidency will likely face a cybercrisis within 100 days of taking office. that's according to a new report. deirdre bosa has more. >> according to forester,
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cybersecurity will be -- last yar for 2016, they predicted cybersecurity would pay a major role in the u.s. presidential election, which it certainly has. they also said that a breach would likely force the resignation of two ceos. well, we didn't see any notable ceos step down for that reason, hacks did the resignation of dnc chairwoman debbie wasserman schultz and iceland's prime minister. they came out with their predictions for the year ahead. one of them, the next president of the united states will face a cybercrisis within 100 days of taking office. one of the authors told us that the attack could come internally from within the u.s. borders or externally. have a listen. >> you look at where all the things come from and the geopolitical game of cybersecurity, you have to look at and say we have russia, we have north korea, with capabilities, we have the u.s. and china, which seems to have brokered something of a -- i don't want to say a piece but
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agree diplomatically they would cease conducting operations against one another. when you look at all those things, a number of fronts that you can come from. >> he says those first 100 days in office are particularly precarious because that's the president's new initiation period, indication of how the four-year term will unfold. as to who clinton or trump might be better prepared for such a crisis, i spoke with robert cataknack with dorsey and whitney who practices in the area of regulatory litigation which includes cybersecurity, he said it doesn't matter who wins, no one would be completely prepared for such attacks because they're likely to occur many more frequency and in increasingly challenging ways. back over to you. >> thank you. we want to take a market check here. we're sitting at session lows. we have got the dow down by 143 points. nasdaq down by more than 1% at this hour. down 60 points. s&p down 22.
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six of the 11 sectors down by more than 1% at this hour. we have to point out thor in performance of apple, down pretty much at session lows by 2.2%. on deck, that aside, we're always going to find opportunity for you. it is your daily dose of street talk. coming up right after this short break.
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and add phone and tv for only $34.90 more a month. call today. comcast business. built for business. time for street talk. first stock, juniper, morgan stanley downgrading to an underweight. the price target getting cut to 20 bucks a share. that means about 23% downside on current levels. cisco's partnership with ericsson, nokia's acquisition of alcatel changes head winds alone. >> up 13% in three months. they don't think it will continue. stock number two, dense ply sarona, another call for morgan stanley on the other side. they upgrade dense ply to overweight from equal weight, had downgraded the stock back in
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march. they note the big underperformance by the stock recently but note much of the reasons for the downgrade in march have been addressed and the company may be better positioned to benefit from weakness in the dental market. people aren't brushing their feet. easier sales comps, they boost to 69 from 65. that's 18% upside. >> why do you use that voice for dense ply? >> a dental thing. >> third stock, tullio, that recent once hot ipo, initiated at oppenheimer, outperform on the stock. it is a cloud based platform. the stock has been down more than 40% in october. >> when you book -- you go to message the driver. >> they don't have your phone
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number. >> it is a fake phone number generated on both sides. they provide that number. smaller cap call of the day, tegna. virginia based media company, owning tv stations and websites like and career builder. upgrade to outperform ahead of earnings tomorrow. they say the stock is held in check by a cloud of secular concern for the tv group and fears of a weak political ad spin cycle. virginia may be going one way. however, analyst says the political spend has been consistent with expectations. also the story now shifting to spin-offs of and maybe even monetization of career $26 target on a just under $20 stock. decent amount of upside. a mini iac interactive in a way. >> a lot of different -- >> with a lot of b-lo thrown in there. >> ty? >> thanks, guys. garbage trucks some of the dirtiest vehicles on the road. that is changing thanks to tesla
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co-founder ian wright. aditi roy live with that story. >> that's right, tesla co-founder ian wright says that garbage trucks that are next generation like the one behind me could be coming to your neighborhood. his invention addresses a critical problem among trash haulers that garbage trucks are among the dirtiest vehicles on the road because of their heavy payload and starting and stopping every few yards also burns up a lot of fuel and generates heavy emissions. the company writes we just launched a powertrain for trash haulers. the company says it uses 67% less fuel and produces 63% fewer emissions. they do have competition like moti motive. wright says his powertrains have an advantage. >> it is actually cleaner than pure electric. the engine we use for the on
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board generator is a gas turbine and that burns cleaner than the average mix. it is cleaner not to plug it in. >> the powertrains costs $200,000, about half the price as a new garbage truck. customers can save $40,000 a year in fuel and maintenance costs. they have their first customer, the raddo group which provides trash and recycling services here in sonoma county. the first customer. and signed on purchasing 15 powertrains from the company and the company says it is also in talks with mac trucks to form a partnership. >> thanks. still ahead, a major market warning sign what it is and that it is signaling head. stocks hitting session lows, the dow above the 18,000 level. don't move. "power lunch" will be right back.
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welcome back. second hour of "power lunch." i'm tyler mathisen. here is what is on the "power lunch" menu this hour. one week to go until the election. our new survey will reveal who wall street's incrowd thinks will win. and the major market sells
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signal that has cropped up. we'll tell you about it. and open enrollment on obama care. the two things that need to be fixed for it to survive. second hour of "power" begins right now. talk about sell signal. we're seeing selling now. i'm melissa lee. let's get a check on the markets. two hours until the closing bell. november is kicking off with some losses. the dow down 140 points. nasdaq down by more than a percent at this hour, down 1.1%. and the s&p 500 down 21 points, more than 1% loss as well. today, marking the sixth decline in a row for the s&p 500. its longest losing streak of the year. the sector is feeling the most pain today, real estate and utilities and telecom the worst performing sectors as stocks, apple weighing on the nasdaq and the s&p 500. >> you got your music played, melissa. your choice of music. who are some of the more interesting stock stories out
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there now? number one, clothing and handbag maker coach. that stock rallying after topping profit estimates. sales did miss the mark, the market likes the fact that coach cutting back on promotions. stock number two, archer daniels midland, a mixed quarter for the company, but shares surging. the company saying after a challenging period, its markets are now improving. and yum china, that is up as well. this is the kfc pizza hut taco bell spin-off. new china based operation, that stock is up more than 2 bucks per share. >> of course, we're in the final stretch. just a week away from the election. what does wall street think about who will win and who is better for the stock market? steve liesman has answers in our exclusive cnbc fed survey. >> thank you very much. 39 respondents to our survey with some interesting responses about who they think is best for the economy. first of all, i want to show you this, 63% think the whole campaign is negative for the
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economic outlook. 32% say it is having no effect, down from our prior survey. now on to this question, who is most likely to win the election? this came, by the way, we did this over the weekend, it started on thursday, went through saturday. 82% say clinton will win the election and that's up from the prior survey quite a bit. and the chance for donald trump are down. i did check, the news on the e-mails gro s broke on friday a 1:00. those responses that came in after were not a whole lot different from that. now, maybe as the seriousness came in, but we had about a quarter of our responses after 1:00 on friday. and they're not a whole lot different, who they think will win the election. we'll update this next week. let's look at the stock market versus the economy. 62% say clinton is best for the stock market. that's up from 53 in the prior survey. i will tell you, i asked some people about why they chose that. and the reason is the stability. they believe it is represented by clinton versus donald trump.
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let's look at the other aspect, who is best for the economy. here, donald trump wins 46% to 38%. clinton has closed the gap, but donald trump has enjoyed about the same level of support on the economy. the entire time we have been asking this question. and when we ask why, people say, well, because of tax cuts and because of reducing regulation. those things that donald trump has promised to do. but, again, if you take this wide view, this interesting split that usually what is best for the stock market is best for the economy and vice versa, not true in this case according to our respondents. 62% say clinton is best for the stock market. 46% say donald trump is best for the economy. >> steve, thank you very much. t minus seven days and counting as fresh polls show the race tightening slightly in some key states. let's hear now from democratic strategist emily tisch us isman with the se
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. and larry kudlow. how do you explain that dichotomy that steve illustrated for us, trump seems to be ahead on who would be better for the economy, clinton better for the market. >> i can't explain it. >> okay. thank you very much, larry kudlow, for being with us today. >> if you tell me that higher taxes and regulations and nationalized health care is good for the economy, and the stock, and/or the stock market, i'm going to tell you you're wrong. trillion and a half tax spike, trillion and a half spending, the size of government will be increased, the private sector will be drained of the resources. i understand, i think there is a fear factor with mr. trump, an uncertainty factor and i also understand a protectionist factor. i happen to think it is protectionism that is more bark than bite, no. more bark than bite, right. i don't think it will go the way the people are thinking it is going to go. that's the single biggest
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obstacle. the rest, come on, 4% to 5% growth and his business tax cuts alone are going to be healthy for the -- >> you think 4% to 5% growth? >> i do. i was one of the authors of that suggestion, which he eventually took, like jfk, like ronald reagan, like bill clinton, we lower key taxes on investment and business, this economy soars. >> how do you describe or explain that dichotomy that larry just said he couldn't explain? >> well, i think it really is it go it what larry is indicating, you just don't know. you don't know what policies trump believes in, you don't know what he's committed to. you don't know -- i mean, it seems like his attention span is that of a nat. if you like one idea one day your don't know if he'll like it the next day. that does -- people are nervous about the volatility in the market. and also particularly with defaulting on the debt. he doesn't seem to have a great concept of what that means for the national debt, and if you have policies that would say he
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would -- >> that's not right. look, i know on cnbc he said about making a deal on the debt. he was confusing corporate with treasuries. >> that's a problem, right? it is a problem -- >> he walked away from it seven times. a lot of criticism you can make will be fair. i'm not here to debate on every one. he's gotten away from that. he has. give him some credit. >> that is a problem. it is a problem that we don't know which one of his proposals to take seriously, we don't know which -- when he'll walk away from it, when he'll commit to it. talk about protectionist. it is isolationist. >> and do we know what she wants to do? >> that was going to be my question. do we really know -- there is a lot of sound and fury on the campaign trail. do we really know, number one, what mrs. clinton would do if she has the opportunity to serve in the office and what she will really go to the mat about, and then, second, what would she really be able to drive through
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what is probably going to be still a republican house according to most polls and potentially a republican senate with a small majority gop? >> no question, it will be difficult. they have started to indicate that she'll be leading with both infrastructure and immigration. those are two issues that are very important to build a solid ground on which to govern, and she looks -- she needs to govern for the entire country, even the people that don't vote for her. infrastructure is something that will create a lot of jobs, investment and everybody feels it. everybody feels it in the airports, in the roads, everybody does. >> i think on that point, first of all, i don't think we have such a big infrastructure deficit. that's another segment. look, i think that it is hard for me to understand how her tax and regulatory and health care programs are going to be good for this economy or the stock market. >> can i ask about the polls.
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>> one more quick on this -- i don't know how this is going to turn out, none of us do. this latest e-mail round is extremely serious. scream l extremely serious. people are asking democrats and republicans if she wins, how is she going to be able to govern. could be the grand jury is already empowered. she's going to be under all kinds of testimonies and disputes, they have to reinterview people to look at what went on last summer, which i thought was highly flawed. she is going to be called to investigative committees in the house. in other words, i don't know how she's going to govern. this thing will be over her head for a long time. i think that's a very serious issue in the waning days. >> emily? >> it is something that people should be thinking about. here we are. we have a choice between two candidates. and there is a very strong contrast between them. and it doesn't seem like anything that came out with the -- seems like it is a lot of
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smoke. everything that has come out is a lot of smoke. the more people get into it, there is no fire, nothing there. i do hope it gets -- >> we don't know that. we really don't know that. this new cache of e-mails, we don't know -- we don't know what's in there. >> you're talking -- >> nobody knows what is in them. hoping to wrap it up quickly. >> you won't. you won't get it by election day. they can't get it by election day. in disclosure. a grand jury is looking into this now. and the investigation -- they have to reinterview a lot of people to go back. that's going to be -- >> the general reports are now looking at the clinton foundation as well. so that gets buried deep. paragraph six mentions, by the way, there is an internal feed about -- >> on top of that, you have an internet -- between the justice department and the fbi. and inside the fbi you have an internet -- >> it looks like politicized justice, a horrific place. >> the rule of law, we should think about this, the rule of law is essential to democracy, freedom and the economy. i'm just telling you.
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if the rule of law is not used properly here, we have to have a comeback here, got to resurrect -- i'm not saying it is a big deal. i'll ask my friends and co-hosts here, which is are we talking that people are going to -- who were previously clinton voters are going to now say -- i better vote for trump or simply not vote? >> i think larry was asking -- >> who switches their vote because of this. >> if she wins, how does she govern? >> back to my point, do we think the people are going to switch their vote -- >> yes. >> really? >> yes, the polls are showing that. >> no, those are polls of likely voter. if you have people who say, i'm now not likely to vote, wouldn't that change the -- >> overnights are showing with clarity that the race is narrowing and that there is some switching, and that independents on the fence are moving back. you can lean hillary and lean trump, the leaners are what you're going for.
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the leaners are leaning to trump. that's now. that could change by thursday. >> brian's point there is it -- does it matter to people who have either leaned one way or have committed in their mind one way or another? >> i think it would not make a very big difference for a lot of voters. i don't think this is anything new. the reason that scandals are things that come out about candidates stick and when they change the mind of voters and when they build to something that candidates already think about the voters, 47% stuck with romney, thought he was an elitist, people already thought he abused power and that he was disrespectful to women. they know there is something about e-mails and the clintons, she's apologized for it, they know that it is in the criminal. and that is not partisan. that is not politicized, that is from across the aisle. >> i would say drain the swamp is an effective phrase now. the producers are yelling at me. i can't go through my numbers. i want to tell you, trump still, he still has a very narrow path.
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very narrow. >> a lot of needles to thread. >> may come down to places like colorado and north carolina. i would love to go through this, maybe our next whack at the ball. i tried hard. i try hard, but i'm being realistic. he's not going to win, pennsylvania, i'm sorry. he's not going to win virginia, i'm sorry. i got to get out. >> larry knows this game so well. >> i have clinton 263, trump 265. colorado up in the air. nine votes. if you can't get it, you go to the house. >> all right. >> thank you. >> folks, thank you very much. >> thank you for having me. the dow down triple digits right now. a potentially big warning sign for the markets. what it is and what it might mean for your money.
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more on the pipeline explosion in alabama. ah, beth. so the elevator is stuck again. with directv and at&t you can stream your favorite shows without using your data. that makes you more powerful than being stuck in an elevator with a guy with overactive sweat glands. sorry, rode my bike today. cool. it's your tv, take it with you. watch all your live channels, on your devices, data-free.
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welcome back. we're watching key technical levels on the s&p 500. the index fell below a key support level of 2119 to 2114. currently hovering right around that level of 2100. meanwhile, as election uncertainty rises, take a look at the vix, the volatility index
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topping 19. high of now 20. highest level since september 12th. if this trend continues, it will be the sixth straight session the vix has showed gains. volatility will continue to be in focus ahead of the fomc decision tomorrow. we have bank of england on thursday and that presidential election next week. brian, back to you. >> seema, thank you very much. that is a perfect segue to our next segment, canary, meet coal mine. there is something happening that may signal a downturn ahead, larry mcdonald, head of global macro strategy at acg analytics. it is this weird -- it is a little wonky, you're a smart man, keep it to the layman's side, that this move in the vix tells us what? >> we put a note out yesterday to our clients globally, we talked about this elephants leave footprints.
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so when large asset managers around the world, when they're concerned about a big drop in the market, they will pay up, they will pay up for that front month vix future contract. and what we have seen over the last two or three days, especially today, is the money is piling into that front month, people are paying up and that iing they're paying up heavy, the speed and the acceleration of this is a very, very dark warning sign. we haven't seen anything like this since the brexit. >> what does it mean, though? >> we're going lower very likely over the next two or three weeks. as you remember, the brexit vote was political. we went down about 8% in a couple of days in the s&p. and then rallied back. but the bottom line is the market is not positioned for trump. market is pricing in hillary clinton for the last six weeks. >> you can take a look back and say the brexit lows, that was a time to buy. is that the bottom line from
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identifying this warning sign that sometime in the next however many days, this is a buying opportunity because if you look five months out, it will be higher. >> it won't be as swift to turn around as the brexit, but it will -- the bottom line is if trump is elected, you have this vicious uncertainty, nobody was expecting it, every journalist in america is telling us he can't win. the market is not ready for that. if he does get elected, he's going to have a house and senate he can work with and talking about potentially a $600 billion stimulus. >> in terms of today's market decline what we're seeing coincide with today's market decline is the sell-off globally or specifically in european as well as u.s. bonds. what is your take on what is going on today? >> terms of bonds, we have had a risk off going on for months. acceleration of inflation. here is the most important thing. donald trump and the leaders in japan, if trump's elected, we
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could see this transformation from monetary policy to fiscal policy, deficit spending, and that creates demand for the economy, also creates inflation for first time in maybe a decade. so bonds are starting to price in that type of transformation from monetary policy to fiscal policy globally. >> larry, going to leave it there, thank you. >> thank you, brian. thanks, melissa. market sell-off with the dow down 190 points. more on what is driving this market. bob pisani is on the floor. >> we're at the lowest level since early july. the market has two problems. you heard what the election is doing with the vix. larry was talking about that. i want to talk about the fed. we're seeing some movement in the market related to the fed as well. look at the russell 2000, down five of the last trading sessions, but down more than the s&p has been down and that clearly is concerns about higher rates, small cap stocks more impacted by higher rates. look at the hyg, this is the high yield etf.
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that's been down five of the last six sessions, down 3%. that also clearly impacted by higher rates. look at interest rate sensitive stocks recently. look at reits, near the lowest levels of the year, telecom stocks near the lowest level since march or so. utilities also weak. again, clearly interest rates, these were the losers that we go back to october. finally, separate note, look at retailers, the xrt is the retail etf. horrible october, down 5%. down another 2% today, that's 7% in the last five weeks and there is clearly election concerns there as well. number of analysts talking about that in addition to potentially slow sales over at christmas. i'll be glad when this election is over. it is impacting a lot of things, bear in mind, the fed is also a major factor from what we're seeing going on here. back to you. >> robert, thank you very much. coming up in the good, the bad and the ugly, corn, mail, and lingerie. not necessarily in that order. dropping pumpkins from the fifth floor in the name of science.
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so, why are we playing music by the smashing pumpkins except for the fact that they were pretty amazing? at chico state university in california, they smashed pumpkins, dropped them five stories. they say they were teaching students about physics and the laws of gravity. one would think gravity would be a known entity by the time you reached college. that said, we think they just want an excuse to smash stuff and i whole heartedly support that. >> i do too. time for the good, the bad and the ugly. first to the good, adm, archer daniels-midland, shares by 7.5% beating estimates even though it missed en revenue. the company is off the mystic s optimistic. to the bad, l brands, down by 8.6%. shares seeing a slowing sales of victoria's secret, to blame for that decline. expected profits on the low end of the previous guidance.
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forget about ugly, disastrous day for pitney bowes, that stock is down 18.6%, missing estimates once again, citing falling licensing revenue. shares hitting a three-year low in today's session. a tweet from bernie sanders sends shares of eli lilly lower. we'll explain why and ask an analyst if this is a long-term issue for the stock. we're not just counting down to the i'll close. today we have seen a big move in gasoline futures. we explain why as the closing trades are next on "power lunch."
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i'm courtney reagan. here is your cnbc news update at this hour. donald trump campaigning in philadelphia, crucial to his hopes of winning the key battleground state of pennsylvania. he said if he becomes president, he would immediately try to get rid of president obama's affordable care act. >> i will ask congress to convene a special session so we can repeal and replace obamacare has to be replaced. and we will do it and we will do it very, very quickly. it is a catastrophe. >> -- getting a head start on the busy holiday season,
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launching black friday store deals. offering tens of thousands of deals with new ones coming on as often as every five minutes. a baby rhino's birth bath is taking the internet by storm. the baby and its mother getting a hose down from park officials. the baby rolling through the water during the bath. that's your cnbc news update at this hour. back over to you. we need a little bit of that to cheer us up. we got a week until the election. thank you very much, courtney. >> look how cute that is. >> who doesn't need a good -- >> washing. >> a good wash. >> 90 minutes from the closing bell. stocks are in sell-off mode right there. you see session lows, the dow down about 135 points at the lows off just a bit of that trough now. s&p down 19, about 1%. nasdaq composite down 1.06%. this is the longest streak of
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losses for the nasdaq, longest since april. wall street so-called fear index is up. and big by 14% on the day at 19.49. oil is closing for the day, and there you see west texas crude back below $47 a barrel at $46.66. big story in the energy markets, trading in gasoline futures after an explosion and fire at a pipeline in alabama. jackie deangelis joins us now with more. hi, jackie. >> good afternoon. the knee jerk reaction to the news about the explosion in alabama, colonial pipelines explosion that is yesterday was to send gasoline futures up just about 10%. but we saw some of those gains coming back down, though we still ended in positive territory after the company provided an update saying that its line two is up and running and it expects to have line one going back saturday afternoon. so that was a lot sooner than most people were expecting. remember, after september, there
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was a leak in line one, line two was used as a bypass and still roughly was down for about ten days. that caused a problem in the south in terms of getting gasoline around and there were shortages. we saw spikes in some southern states of 20 to 30 cents. people were not only concerned that we can see that again, but that it could spread all the way up to the east coast. as of right now, it appears the market has calmed down a little bit. if the company, colonial pipeline, can stay on the timeline and get that line one up and running by saturday, we won't see a massive disruption. there could be a spike, maybe five cents or so, but also a lot of gasoline demand out there as well. we'll be watching this. it is a fluid situation. >> jackie deangelis, thank you. shares of eli lilly down a percent and a half now, this after a tweet from vermont senator bernie sanders questioning the price of the insulin drug. the senator tweeting, why is the price gone up 700% in 20 years? it is simple, the drug industry is greedy.
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let's bring in senior research analyst with credit suisse. great to have you with us. >> thank you for having me. >> is there a reasonable explanation for such a price increase? >> i think it is a very complicated situation, drug prices. in the public eye over the last year. heading in the election next week. the prices that are referenced in that tweet are the list prices for the drugs. that's not the net price that eli lilly receives for thebates behind the channels. nothing near what we're seeing, but it is certainly a hop on issues, a lot of press and a lot of public support around doing something. it gets a lot of attention. >> you're saying the net price increase is low single digits year on year. what is interesting is that perhaps senator sanders took a look at the most recent earnings report for eli lilly is that it
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was a weak spot because there is volatility in pricing because more of the product was passed through government channels, medicaid and medicare. how important is it to eli lilly? >> it is still a very important product, that whole insulin franchise is important. they have new products in diabetes that are also important that are orals and other injectables. that's one thing with the company like eli lilly to keep in mind, they invest a lot of the money that they make back into r&d for new innovation. not like they have one product be and they're jacking the price up on. they are trying to provide new innovation and i think that's something that gets lost in the rhetoric. >> a lot of investors come on and they say, you know, we think that a lot of this whole drug pricing controversy has been priced into the sector. i get that argument. at the same time, when we hear about a bernie sanders tweet, there you are, the stock is down 1.5%, 2% in one go. there was a certain amount of discounting not priced in.
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sitting where you are sitting today, did you see this coming -- did you think it could be the target of a bernie sanders tweet? did you think that 24 hours ago, 48 hours ago? i'm trying to get a sense of how much of this is actually discounted. >> yeah, no, i think no, i don't think humalog is one i would have picked because insulin pricing has been a challenge offer the last few years. there is many, many other products that are much, much more expensive than i think people could raise. i would not say insulin is -- >> you're tell meg ting me the s really unknowable in the sector. you're an analyst who covers the sector closely and you couldn't have picked it out. >> yeah, i think it is a general risk across the entire sector, all of drugs that have some degree of this, which drug is pulled out next or which class, that is unknown. >> thank you for joining us.
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we appreciate it. more on the health care sector, open enrollment for obamacare plans kicks off today. higher premiums and fewer choices. whoever becomes the next president will have a problem on his or her hands. bertha cooms has a look at what might happen to obamacare beyond 2017. >> even though it is the beginning of open enrollment, michelle, the insurers are looking well beyond 2017. they're thinking about the end of this decade. and as their customers are shopping for plans today, they are -- they're saying that really the clock is ticking. if we get divided government again with the democratic white house and republican congress, they need to come together to find the fixes to shore up the obamacare plan. three major fixes that need to happen, they say, to undo some of the problems in the health reform act. one, making sure they can charge a little more for people who are
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sicker and older. also, allowing them more flexibility to offer skinnier plans to younger people, not just those under 30. and then the risk adjustment program. that's sort of the funding that helps offset major losses for insurers, something part of medicare. on the other hand, if you get a republican sweep, and donald trump and the republicans say they will indeed repeal and replace quickly, number of analysts say they really need to slow things down a bit, and really think longer term. >> any sensible repeal and replace strategy includes some sort of transition period. you don't want to just shut it down, try start something from whole cloth. we saw that even with an implementation period, health was hardly a smooth start. >> so the timing here is going to be critical, depending on what combination we have after
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next week. coming up on closing bell, we'll take a look at a startup company who thinks this is just the right time to jump into the obamacare markets. >> bertha, thank you very much. when we come back, what could happen in the emerging markets if a trump presidency happens? and a look at jack dorsey's other company, square. the payment firm reporting results this afternoon. all this and more coming up on "power lunch." tokyo-style ramen noodles.
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the dow was down almost 200 points. now down 132 points. show you when's going on with the ten-year yield. buying there, stocks sold off. the yield at 1.82%. emerging markets also lower. had a very nice run this year. up double digits. higher by 14% year to date. now a warning about what could happen to ems if donald trump wins. seema mody has that story. >> a tremendous rally this year. emerging markets up about 29% from the most recent lows, but that trend could all change. citigroup saying the emerging market index could fall by 10% if donald trump wins due in part
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to weakness in emerging market currencies against the dollar and trump's trade policies. mexico would be hurt by trump's plan to renegotiate nafta and implement tariffs. and, remember, a tariff on mexico could be a backhanded tax on some american companies that do business there. a study shows that 40% of u.s. imports from mexico are of u.s. origin, which would hurt companies like ford, which have manufacturing facilities in mexico. now when it comes to china, a 45% tariff on chinese goods would result or potentially result in a nearly 90% decline in chinese exports to the united states, which would reduce china's gdp by 4.8% over time. that according to diywa capital market. one could benefit from a trump presidency, india. if you look at the rhetoric from donald trump, negative on mexico, negative on china, but positive when it comes to india. applauding the prime minister
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narendra mody. he has five ongoing deals in india right now, trump does. >> thank you. the s&p 500 may be sliding today. over the past month. guess what, small cap stocks are doing even worse. how come? let's find out with trading nation team. over the past, i don't noknow k month or so, we have seen the dow down a scant 1.3%, a four times worse performance. to what do you attribute the weakness of the mighty mights? >> i think there is just some nervousness heading into the election. remember, if we back up, really since most of in year, small caps have been doing quite well, and within a pretty placid market over the past -- over the past few months. about in late august we saw over 400 stocks in the s&p 500 were above their 200 day moving average.
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that has gradually slid down. we have seen the leadership become narrower and narrower each week since then. now it is less than 300 stocks. and that's what i think we're seeing a shift in risk assessment, and i think traders are particularly concerned about the fed meeting tomorrow and also the election coming up. i think that's what we're watching. >> and might have understated it now because we're getting to a point where almost historic lack of volatility on january 1st, 2015, nearly two years ago, the dow was at the exact number it is at right now. in almost two years, no movement. let's focus on the small cap stocks. you look at the charts. looks like that dow chart, boring, flat. do you see any breakout anywhere for the russell 2000 either way in. >> with the underperformance by small caps is telling us is you want to own large cap stocks. and the chart i brought is a very big picture, long-term
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chart, going back to the early '80s. shows the relative relationship between the s&p 500 relative to the russell 2000 overlayed with the s&p 500 and i think what you want to consider is that after 15 years of small cap outperformance, that's the falling line over the last 15 years, we are now seeing signs of a secular rotation, we think, into large cap stocks. but what that type of rotation is consistent with the secular bull market we saw in stocks in the 1980s and 1990s. through the 18-year period, 1982 to the year 2000, the s&p average an annualized gain of 2.6% of outperformance versus the russell 2000. i think it is actually very consistent with the secular bull market thesis we have been talking about. >> all right. there we go. secular bull market nice is overall. ari wald, eddie, thank you very much.
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. news alert from meg tirrell here. eli lilly out with a statement in response to bernie sanders' tweet. >> responding to the tweets about the price of insulin, which sanders citing a washington post story says has gone up 700% over 20 years, lilly saying high deductible insurance plans make many challenges for certain patients. saying the answer itself isn't simple. while the list price for humalog has gone up, lilly actually receives a lower average net price now than in 2009. and also citing in the quarterly earnings that it was one of the weakest points, seeing a 24% decline in that price. >> sounds very similar to what we heard from mylan, doesn't it? that once the rebates happen, the net that actually goes to the company isn't as much tass lo as it looks like there. a big chunk of the money is going back to supply chain, the
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health -- tgetting the health insurance companies to pay more for that drug, right? >> that's right. the focus on the middle man, the wholesalers, all of this coming more into light. i spoke with ian reed today after their earnings. he says he expects to see a lot more scrutiny on pharmacy benefits, managers and rebates over the next year, potentially even on a congressional level. >> to be clear, we should get somebody on from the retail world, my wife worked in this world for 20 years, this is not just the pharmaceutical industry that does this. >> always marked up. >> the supplier sells -- i sell to caruso-cabrera corp. but you'll kick me back to 20%. it is how you want to manage your promotions, strategies and income. >> the dollar amounts are more eye popping and these are things that are necessary to survive in many cases. >> thank you, counselor. >> as opposed to, you know, shampoo. >> that wasn't my point. i was making the point this is not -- not just a pharmaceutical
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thing. >> no. i think we should underline this isn't about the consumer paying more. when this whole structure happens, it is about the insurance companies paying more and because some consumers aren't part of the process. >> we're all paying more after the insurance companies. >> absolutely. >> meg tirrell, thank you for that update. "power lunch" is back in two. for an entry into an upside breakout, some traders use buy stop limit orders placed above a resistance level. unlike regular buy stops, buy stop limits, if a stock closes below the stop price one day, then opens far above the limit price, the trader will not buy the stock.
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welcome back to power lunch. more chinese companies getting into hollywood including a deal between alibaba pictures. julia boorstin has more. >> reporter: i was just there earlier and just weeks ago
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chinese internet giant alibaba bought a stake in amblin. today the company is talking about why they are teaming up to co produce and co-finance films with china's box office poised to surpass that of north america in the next year. >> we have a partner in china that has amazing reach, amazing knowledge of the chinese consumer and can guide us there. they can be our merchandising partner. we plan to explore chinese co productions together. really everything. >> and that partner alibaba pictures is publically traded in hong kong. its largest shareholder is alibaba group. amblin looking to tap into online ticketing and merchandise. >> we believe in building a
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platform where we can build partnerships and allow people to create content and reach audience on our platform. since we skbed the company we really reinvented our company in a way to leverage data and technology. >> amblin plans to make six films a year under dreamworks brand and aim to make as many of them as possible chinese co productions for better access to the chinese market. >> thanks very much. i'm always suspicious about whenever there is a fresh round of money from some part of the world going into hollywood where the accounting is so mysterious. to me it is a very bad sign. >> you are not suggesting that money is being laundered? >> no. it's like the last heave of a market or segment where -- >> if they want mysterious accounting just go to the
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pharmaceutical industry. >> more of a market sign for china. square reporting third quarter results after the close. the stock is down 16% year to date. still bullish on the stock with overrating with $15 price target. good to have you here. >> thanks for having me. >> the report after the bell, why are you so bullish when i read a lot of notes who think they have no path to profitability like ever? >> you know, it's a very good question. this is a company that first of all has an extremely large addressable market. that is really important not to forget. here is a company that we believe has about a trillion dollars in spend. no other payment companies have done a good job capturing. we are talking key acquirers and networks visa and master krd love square which is basically going after those mom and pop
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shops, the ice cream trucks. >> the reason people think there is no profitability is because the transactions are so small square covers the bill of like the 20 cents per transaction. if they only make 14 cents based on the percentage they're net losing money on a lot of transactions. that is why they are so worried about profitability. >> the reality is they are making quite a bit of money already. huge operating leverage. if you keep going a couple more years they will be pretty profitable even if margins are over 15% by 2020 we have margins well over 25%. so really just the run rate of 25%, 30% revenue growth that is an amazing growth rate for any company in any industry. given the addressable market we see that being sustainable. they are profitable now.
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it is that they are spending to invest in other areas. >> we'll see after the call. thank you. good to have you on. check please is next. tesla's elon musk is set for a big announcement. we will talk about that and more when we return. or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound) mobility is very important to me. that's why i use e*trade mobile. it's on all my mobile devices, so it suits my mobile lifestyle and it keeps my investments fully mobile... even when i'm on the move. sign up at and get up to six hundred dollars.
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check please. >> what i'm watching besides the market sell off shares of tesla and solarcity under pressure in today's session.
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elon musk holding a conference call today starts at 5:00 p.m. eastern time answering questions about the deal. the deal will come up for vote on december 17 met with much skepticism on wall street. questions about all or not this is a bailout given how much they spend in relationship to how much they take in. so that should be a very interesting conference call today at 5:00 on fast money. we will be all over that call. >> your check please was teasing your own show. tune into power lunch tomorrow 1:00 p.m. eastern. i think i know the attention is focussed on e-mail. i believe the obama care price hikes may explain more part of the recent swing towards trump or narrowing the polls and then e-mails. e-mails get a lot of attention but i think the obama care stuff which has gotten glossed over by e-mails i think, i'm guessing i think has a bigger role than
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others are acknowledging. >> we have seen one poll that shows trump in the lead. that is an explanation for why the mexican peso is weak by 2%. this is the one pure play where if you want to see what traders thing chances are of a trump win they think donald trump is on the upswing. >> the phone is ringing. >> someone has a rotary phone land line. >> that is actually a bell. let's look at the markets if we might and look at how far down the dow is about 140 points. it was down 190. nasdaq on track for a sixth straight day of losses. this is a 1% slide here. there is a bit of repricing going on. this would be the longest losing streak since the end of april. the vix is very much up 14% here. there is a repricing going on as we are six days away from the election. maybe some of the assumptions
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and presumptions are getting recalibrated. thank you very much for watching power lunch. >> "closing bell" starts right now. hi everybody. welcome to "closing bell." i'm kelly evans at the new york stock exchange. >> it's been a while. >> it has. >> wonderful to be back together again. stocks moving lower. some traders saying concerns about new presidential poll numbers and a potential trump victory is weighing on the broader market. the gang on power lunch just talking about that. if the s&p were to close lower today this would be the sixth consecutive decline for the s&p. it would be the longest losing strike this year for the major average dplmpt sw one of the bigger moves we have seen


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