tv Power Lunch CNBC October 19, 2017 1:00pm-3:00pm EDT
little more than i'd like to see. you've got to buy it here. >> all right josh brown. >> i'm going to stay with apple. i accept the possibility that it could drift lower, as we get into some more news about the 8. i don't think that's the major story here, and i like it. >> worst day in a month for that stock. you don't see apple down more than 2% all that often "power lunch" right now. >> i'm melissa lee here's what's on the menu. remembering the crash. we'll talk to three wall street veterans about the day that shocked the financial world, including the man dubbed the most photographed trader on the street. learning to catch a fish no, not the animal, but a phishing scam. scamming people out of thousands when they buy a house. and trump meets yellen the president sitting down this afternoon. which is the best for your money? we'll debate that. "power lunch" starts right now
welcome to "power lunch," everybody, and it is a far, far, far cry from where we were 30 years ago on this day. the dow is pulling back today after smashing through 23,000 with a big gain yesterday. but remember 20 years ago, down 23%. today down about 23 points, something like that. apple and goldman sachs leading the dow a little bit lower more on those stocks coming up adobe shares today soaring after reporting strong earnings. better than expected guidance. analysts also liking -- liking the company's artificial intelligence platform. >> thank you as tiler said, the markets lower across the board but not close to what we saw 30 years ago today when the dow jones industrial average fell. a look back on black monday. and i guess, bob, to put it in context, a 508-point drop, which today seems like not much.
the equivalent drop today would be 5,200 points. simply staggering. >> that's right. the dow dropped 508 points, brian, 22.6%, the biggest one-day decline in the history of the stock market. on a perspective basis, a similar drop today would drop the market about 5,000 points, as much as the dow has gained in the last 18 months, one of the great market rallies of all-time so president reagan appointed a commission to look into this the brady commission to investigate the causes of the crash. now, while there are several fundamental causes, including a big stock market run, some currency issues and the use of portfolio insurance, the commission focused on the inability of the trading systems to handle the huge order flow. so many sell orders came through the system that it couldn't handle it. orders became delayed, some people didn't answer their phones any moref and the lack of information created more selling and more panic. so two things came out of the crash. first, system-wide circuit breakers were instituted in 1989, and later expanded to
single stock circuit breakers. and more importantly, the crisis accelerated the move toward electronic trading the brady commission catalyzed a very deep review of the markets that ultimately pushed that market toward more electronic trading. so exchanges expanded their capacity to handle more schovole and electronic trading cut down the time i would point out the only time the system wide circuit breakers came into effect was one time in 1997, and that was during the agian flu crisis we're coming up on the 20th anniversary of that. >> i remember that one thank you. next, we're there for all of the action james paulton, and floor trader peter tuchman at quattro securities peter, i will start it off with you. what was it like that day? >> you know what, i was a clerk, actually, for cowen and company right under the podium and we had these little dot machines that used to spit out paper orders and i was doing
retail business. we were getting nothing over the phone. the phones were ringing, the institutional lines were ringing rather quickly and then might machine just started to spit out orders 100 shares, 1,000 shares, 5 and 50,000 share lots. we would pool the orders, rip them, and we would have these $2 brokers who would come around and we would hand them stacks of orders and you could just see them run into the stocks, and the specialists, market-makers, would just say buyers to the left, sellers to the right and they would just put on big prints of stock down a dollar, two, three, $4 at a time we were trading digital equipment at the time, and i actually have a picture of the machine from that day and it shows that the stock was down $47 >> wow. >> i think at one point. almost 35% but they were basically putting on blocks of stock down 4 or $5 at a clip. it was quite unbelievable. >> did the presence of humans on the floor, and there were a lot more humans on the floor than there are today. did the presence of humans on the floor help the situation
and i'm taking it forward to today. would the lack of humans on the floor make an analogous situation even more seemingly uncontrollable >> i think absolutely it did there was -- you know, there was definitely panic you discussed it in the intro that basically people weren't answering phones and there was panic and that caused a lot of orders coming through and that the market couldn't handle basically, there were 10,000 people on the floor at that time and the fact that there were humans involved and they were able to slow things down, basically, and bring the buyers and sellers together -- even though the stocks were trading down significantly, it was fairly orderly you know, there was some panic and there was anxiety, and people were screaming and yelling. the paper was building up. as you can see in the pictures that you're showing. but definitely, the humans on the floor at the time, as they do today, when we have, you -- we have seen some big selloffs
and the market has kept steady, no matter what. >> you know, on milestones like today, jim, everybody wants to know if it could happen again. i don't know if it -- if all the ingredients would be in place for this exact thing to happen again. but it seems like there could be another set of circumstances that could precipitate some sort of a big selloff, even if it's a technological glitch like we saw with the flash crash >> you know -- >> i think it's possible >> jim wilson. >> oh, i'm sorry i think it's possible. not very likely, melissa but, you know, one of the things is we -- what has come a long way, in some sense, there's a lot more quantitative program trading done today than there ever was back then i know the portfolio insurance that is often considered one of the causes, but today we've got a lot of moneys run quantitatively, and a lot of those are fairly similar in terms of the indicators they use. and you do -- you get a sense that if you get the market down enough one day, they're all going to have the same
recommendation at the same time, bringing a lot of flow to get out of the market. so i think it's possible you know, i think we're going to slow it down, because of the circuit breakers and things of that nature. but i certainly think we'll probably see some more, you know, eye-catching days. maybe not quite the magnitude of what we had in 1987. >> bingo ron, i think jim nailed it, as usual, which is this there are $3 trillion in etf and, quote, passive index funds right now. margin debt is higher than it was pre2007. i understand there are circuit breakers but do you see anything structurally in this market which makes you concerned? >> i think, you know, every time we have product innovation, we have to worry to some extent about market structure jim was just referencing what we called portfolio insurance or delta hedging, where if the s&p fell a certain amount, you would sell futures in order to protect your losses. and if it went down more, you would sell more futures. so selling begot selling, along
with index arbitrage or what we used to call program trading and there were some fundamental factors behind the selloff, as well it was a perfect storm yeah, there are any number of things where you could have -- again, nobody can predict a 23% drop in a single day, still the largest percentage decline we'll have more of these if you go back to the history, the very beginning of the new york stock exchange was born of a panic and a crisis and then it formalized the operations of the exchange back in 1792. these are periodic events. we have seen it certainly in recent years >> everything is the whole market now, ron. >> yeah, exactly. >> jim's point is -- >> everybody owes the same thing. >> what if the computers and -- >> the market -- >> no, but if you buy the spy, or the qqq or these big market -- >> in the rise of the etfs have contributed more to people owning the same things. >> you're not selling ibm. you're serving everything, flushing everything at the same time. >> yes, absolutely but listen, on october 19th, 1987, we flushed everything at the same time, as was heard
earlier. peter, ibm was indicated to open, i believe it was about $40 lower the morning of the 19th. cbs, $40 lower in fact, there's a video of me interviewing a cboe market maker in cbs options these guys were absolutely shell shocked. and these big 4 or $5 chunks opening down 40 points, two hours late it was a unique experience not that we can't see something else like it and this time, it might be etfs, might be some other vehicle that precipitates and exacerbates the selling. >> peter, what is the thing that concerns you most in terms of the potential catalyst for the next crash >> you know what, look, we've had a lot of opportunities over the last year. anxiety around the world, whether it's korea, whether it's the administration in washington or any number of -- or the hurricanes, the disasters that could make this market anxious i think that there is a lot of money in the sidelines, people have been waiting for this
market to break for the last nine months. and given all that potential anxiety, this market has hit record highs so i'm not fearful of it at this point. you know, we saw brexit, we saw the market after trump's election that could have been -- that was protected to be down 1,000. it was down overnight 900. we ended up opening up so i'm confident that the market has strong foundation, and just feels like it's going to edge higher >> real quick, two of the biggest preciptants that led to the crash, a rapid rise in interest rates and a crash in the value of the dollar. those are things you need to keep an eye on. >> all right peter, the most photographed trader on the floor, peter tuchman, thanks a lot. thanks as well to jim paulsen and ron en sanaa. on deck, the story everybody today is talking about how a former ceo used a spare jet -- that's right, not one, but two -- as a backup ahead. plus, president trump set to meet with janet yellen could she end up staying on for another term and if not her, then who
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president trump interviewing janet yellen this afternoon about staying on as fed chair after her term ends in february. in addition to chair yellen, trump has interviewed kevin wore shall, jay powell. and here to debate and break down who might be best for your money, the markets and who may be in the lead for this position, let's bring in steve
liesman, michelle girard, u.s. economist. steve. >> i think it's worth while to talk about, before we start making picks around here, take a look at the wall real quick. on either end, you've got yellen and powell and they're the status quo candidates and then you get in the middle gary cohn is the most unknown. whereas kevin warsh criticized the federal reserve. and he's much more rules-based whereas yellen and powell would be more the status quo candidate. my pick? i don't have one i've got to cover these guys it would be sort of stupid for me to pick maybe we should ask michelle girard michelle >> you know, steve, i still think kevin warsh is the front-runner he brings a lot of things to the table that trump probably likes. first of all, i think he is someone that the president probably feels very comfortable
with there is sort of a family connection there he's got the -- he's got fed experience, but, of course, he's got business experience, as well and i think, you know, while he's expressed views about monetary policy that are more hawkish than the current fed chair, i honestly think warsh sees the world as his economic advisers do, in the sense there are supply, free market individuals. i think there is a lot ideacally that aligns well >> but, michelle, he's a guy that criticized low rates and argued that it's led to lack of capital investment you would think the logical conclusion from that would be higher rates. >> here's the thing.
i don't think it's so much, as i keep saying to people -- economic fundamentals would suggest. and that ultimately, that creates risk for the markets or creates potentially imbalances in sectors that could come back with consequences. and so i have to say, i think even candidates like jay powell may have very much those sort of same concerns, and that's why i think whoever comes in, i think is going to move to a more formulaic approach, trying to move to a more disciplined approach to policy. >> let's bring in sessan gar manny. we've got your signal up who is your thought here among the i call them the big six there. big five candidates that the president has apparently
interviewed? >> yeah, hi. i -- we think the front runners are -- first of all, thank you for having me on good to be on with michelle, as well good friend of mine of many years. we think front runners are actually powell and john taylor. our understanding is that the president likes all the candidates he has said that publicly. we think he actually does like janet yellen, who we would be delighted if she got reappointed. but after the president met with john taylor, what we heard, what the word was, was that president trump really, really liked -- two reallies really, really liked john taylor so i'll take the two reallies over the one really. and i think jay powell, you know, the white house has been circling around him for some time he's an extremely strong candidate, and he's more of a continuity candidate. >> michelle, you know our viewers. they like to make money.
they don't like to lose money. so forget about who you want or who you think. who would be, out of that group, or somebody else, the best fed chair for making money >> well, i have to say, i think that you -- a couple of things first of all, the knee jerk market reaction, of course, might need to be faded in the sense of if there is someone like a john taylor that the markets react initially with much consternation because of the fear of higher rates, i think that to some extent, you have to remember, no one is going to come in and radically change on day one or even in the first couple of months, the outlook for policy i really don't think any of these candidates are going to result in a different interest rate outlook over the next probably 6 to 12 months than what the current fed has been signalling so i think that's a very important thing to keep in mind. and i think these new candidates -- new members that are being talked about, whether it's taylor or warsh,
ultimately, i do think a more disciplined approach to policy will serve investors better, you know, than what we have seen in the longer run, i do worry that these -- the fact that rates have been kept as low as they are does create -- does create financial stability risks. and so that is to me a concern so this new change in approach i think could be positive. >> better results than what we have seen. i'll take that because the results have been dog gone good over the past five years and certainly over the past year. michelle, thank you very much. sassan, thank you. sorry we got to you late steve, as always, good to have you here. >> thank you. here's a question. does a ceo really need to take two planes on a business trip, a spare in case of a problem with the first one? that's what former ceo jeff immelt reportedly did. we have much more onhis or tsty coming up on "power lunch. building a website in under an hour is easy with gocentral...
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often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock. general electric's former ceo jeff immelt under fire for word that he used to take a backup jet on company trips. morgan is looking into this story. >> this comes less than 24 hours before we get general electric earnings tomorrow. and the company is under a mike scope with this one after the "wall street journal" reported the use of a second empty business jet on jeff immelt's trips around the world, a plane used as a spare in case his own had mechanical problems. that had at least originally been a ge-owned jet but that did change in 2014 when, according
to sources familiar, immelt scaled back that long-standing practice to instead hire locally sourced planes, kept on stand-by in certain areas for certain trips. to this, ge saying, quote, two planes were used on limited occasions for business, critical or security purposes but all of this gets to the bigger dynamic at play, at ge right now. cost-cutting new ceo john flannery has made it clear there are no sacred cows, doing away with company cars, thousands of jobs and even that fleet of ge-owned jets. so that's in focus, because shares are down 26% this year. and the street is concerned about the dividend, even though ge does say it's safe. so more is expected at flannery's at big update ahead of that, as i mentioned, tomorrow we have earnings. and meantime, shares are higher. they're up more than 1% today. >> morgan, thank you very much. let's talk more about this big story brad stuart is chairman and ceo of exo jets,
and robert strang. robert, is there any situation that you have ever encountered in your career where a ceo or corporate officer would need a backup jet >> well, brian, believe it or not, there are places in the world, and in africa and middle east, certain areas in south america, where i do recommend -- [ inaudible it's rare. it really depends on the intelligence and the threat against a ceo at that particular time but -- [ inaudible for 28 years -- >> yeah. >> there are instances -- >> robert, our signal is a little weak. do me a favor, take three steps to your left or right. you'll probably hook in. we'll get your signal back up here >> can you hear me now >> there you go. hey, brad, are you there morgan got into it a little bit here honestly, for our viewers, i'm asking for our friends not used to traveling on g-5s around the world. what does it cost? if i wanted to go from
teterboro, new jersey, to london, how much would that cost i want to bring my friends, melissa and tyler. >> yeah, so there's a lot of variables that go into it, the type of plane. >> g-5, baby >> we're looking at 8.500 to 9500 per hour for round-trip pricing. >> hold on, brad per hour $9,000 per hour? >> correct and so we're looking at somewhere between 150 to $175,000 for the round-trip. correct. >> have you ever sent planes with people chartered to go to places like africa where there might be a security threat have you been to any locations, in other words, where there would have to be a backup jet waiting in the wings, so to speak? >> absolutely. so we're looking at actually two different questions. and i think a real critical analysis here is to unpack what is time and efficiency and schedule from what is safety and so what a backup airplane is mostly used for is to provide redundancy in the event of a
mechanical on that aircraft. security issues are also very important among the board of becker and associates, a large security firm. and security protocols don't necessarily require a backup airplane, but they do require various redundancies, protocols, that tend not to interfere. >> let's get to the bottom line. a lot of that rumping of mr. immelt's use of a jet. one he hired to be onsite or nearby in case there was a security problem i am hearing you say, just as i heard our other guest say in his broken up signal, that this does not really shock you to hear that on limited occasions, there was a second jet ready to go if something happened with the first one or there was a security threat that needed to be addressed i've got you right >> i'm going to be very clear. i think this is a board and a ceo discussion about his or her
schedule and if there are events, whether they're a merger, acquisition, a speech, a client meeting, that requires no risk atall, then the prudent thing to do would be to have backup travel. and if you happen to be in a location where commercial travel either -- either isn't available or is not deemed to be safe, you know, per the guidelines of the board, then obviously the right thing to do would be to have backup options >> you know, robert -- sorry, go ahead. you know, robert, i was thinking, listen, here's the thing. it's -- i understand what brad is saying about security i get that now, you could make the argument, could you not, that most ceos are unrecognizable to the general public is it that big of a risk or a hardship i know what the boards say, you've got to go private if, god forbid, the g-5 has got a flat tire, i'm going to have to hop on a united in first place. is that the -- is that that big of a security risk, for pete's sakes? >> well, brian, it depends on the country. there are certain areas that are
crucial. they know that the ceo is going to be entering that country. and it's imperative to have that kind of security i mean, and you're right are there backup plans that are secondary? can you have other aircraft available? all those things are possible. you don't always need a follow plane. but there are certain circumstances in certain parts of the world where it would be recommended. but it's rare. >> and in those instances, would a ceo of a dow company even be going to an area that risky? >> good point. intelligence first, right? so many times, we talk the ceo out of going to those countries, and they don't even -- when you need a second plane, you have to think twice about the trip . >> but, at the same time, there might be occasions where a ceo needed to go to pakistan or to nigeria or to any number of countries in central or latin america, where there would be -- where there could be security threats, right i mean, it's not all that
unheard of that you would go to risky areas. >> that's true and in those countries, you know, we have partners that have, you know, private airplanes and private airports, almost, that can actually transport in an emergency. there's always a backup plan but remember, you weigh the intelligence, you make those decisions depending on the country, what's happening in the country at that time and then you follow through. but it's rare that any ceo would have two airplanes on any given trip >> but not unheard of. rare but not unheard of? >> rare but not unheard of we have done it. >> okay. >> brad and robert, guys, a really good discussion and a story definitely getting a lot of attention we appreciate both of your insights today i'm going to the airport after the show >> get your jet -- >> driving my jeep wrangler. >> your backup car >> we'll have a jeep follow you. >> just in case. thank you. all right. and definitely won't want to miss this interview. new ge ceo john flannery on
"squawk on the street. this is an executive, his first since becoming chairman and ceo. big tech under fire from washington three senators proposing rules for online advertising is this the first step toward regulating facebook and google and are some people really refuse to go watch the nfl because of the anthem controversy? new numbers might back that up we'll tell you what they are when "power lunch" comes right back stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and.
i'm morgan brennan here is your cnbc news update for this hour. russian president, vladimir putin, out with a message for the u.s. if america quits the intermediate range nuclear forces treaty. putin says moscow is ready to develop both nuclear and nonnuclear weapons systems in response to other countries doing the same secretary of state rex tillerson will embark on a week-long trip beginning tomorrow, visiting saudi arabia, qatar, pakistan, india and switzerland. in the mid east, tillerson will discuss the conflict with yemen,
iran and the ongoing dispute with qatar the british film institute removed its highest honor from harvey weinstein he has been accused of sexual harassment by dozens of women. weinstein was awarded the fellowship in 2002 for his contribution to british cinema. and jcpenney betting on smart watches this holiday season the retailer announcing it will have brands like samsung and lg beginning october 30th before halloween holidays start earlier and earlier. that's the cnbc news update. >> earlier and earlier morgan, thank you. three senators announcing a new plan to regulate online advertising. kayla tausche now joining us with the details at kayla. >> what the honest ads act would do is expand existing legislation around political ad spending to include social media companies that have been excluded traditionally, this just touched traditional broadcast and newspaper spending but obviously, the world of
media has changed. and that's exactly what senators klobuchar and warner said today when they announced this bill. it also has the backing of senator john mccain, the lone republican sponsor of this bill. senate aides say there is outreach to get more but that it is a positive sign they have members from the intelligence committee. the elections committeeand the armed services committee that have thrown their weight behind this bill. senator amy klobuchar of minnesota said that they want to see this as a start to potentially put more legislation on the table, and that they want to put this act in any legislative vehicle that could move to try and thwart any potential influence in the elections that are still to come senator mark warner was asked about the influence of facebook specifically, and his committee's ongoing investigation of that. here's what he said. . >> they used what was relatively cheap, and while we made note of the fact that, for example, in the facebook area, it's 100 to
$150,000, i still believe that may be the tip of the iceberg. again, remember, these were the ads that were paid for in rubles, and we've not been able to sort through whether, you know, some of these same accounts may have been smart enough to actually use dollars, euros or pounds. >> they will say they will not seek to regulate any spending on these platforms in currencies other than the u.s. dollar, which is certainly an interesting development, given how international in scope all of these platforms have become the senator said that they are looking to get more information from these companies, that they are not in support of the legislation just yet, but that there is a process going on to actually figure out how this could move forward and how they could get their cooperation. senator warner saying they'll get a lot of answers on november 1st when executives from these companies testify on the hill. guys, back to you. >> kayla, thank you very much. for more on what this might mean for the companies involved, how likely it is to pass and how it would be implemented, let's bring in sarah fisher, media and
advertising reporter with actiony owes, and director of the social media program at the university of florida. sarah, do you think there is any chance this bill will pass >> it's tough to say right now i mean, it's definitely a game-changer that senator mccain threw his support behind, because as you had mentioned prior to his support, there was no support from republicans. disclosure as for many years been something that republicans haven't wanted to bring up in fact, this is one of the reasons that we see this being pursued in congress. the federal election commission, which is a six-person commission, has three republicans on it who have been staunchly opposed to doing any sort of disclosure updates and so we'll see what happens. but it could face some backlash from other republicans when it comes to a vote. >> let's say it did pass, sara let's say they put it up for a vote i'm just a bill. and it makes it all the way through and gets hugged. who would implement it what federal agency would do this job the fcc? the ftc? the doj? >> unclear right now
so you just named three agencies that have a part in regulating things online. but we don't have any sort of federal agency that manages internet, advertising or internet regulation at large the ftc can only regulate something if it leads to false commercialization. so something that is like a diet pill or some sort of scam. the fcc has jurisdiction to regulate broadcast, radio and newspapers but under their jurisdiction, they can't do anything with the internet and, of course, we know the doj is responsible for antitrust so it's unclear as of now, if this bill were to pass, who would even be enforcing it. >> so who enforces the regulations that govern political advertising now to the extent that it's governed at all, sara? >> the fcc is responsible for that sort of regulation. when it comes to online, there is no governing body that's responsible for regulating it. that's why it's been left to the companies themselves and what we're find something that they have no real incentive
to be monitoring this, which is why we had foreign governments spending money on their platforms. >> andrew, in terms of the lobbying efforts on the part of silicon valley, i imagine they're in full force now. what's their argument here i would imagine this would be a slippery slope once you start saying there should be some sort of rules on a facebook or a larger platform, that will expand all the way down the food chain online >> and that's i think the big thing they're going to be looking at is the fact that they know kind of like with other industries, once any regulation happens, more regulation is going to happen. and the people in silicon valley and some of the most richest people in the world at this point know that they've made their money based on the fact that they have been in this sort of unregulated wild west and any regulation is going to just create a level of bureaucracy that's going to eat into their profits so they're going to be pretty heavy into trying to convince congress to let them continue to kind of essentially regulate themselves >> i mean, you know, when banks
face increased regulation after the financial crisis, andrew, they hired scores of people. they have enormous compliance departments now totaling hundreds of thousands of people, in some cases. what do you see here i would think it would make a lot of entrepreneurs really think twice if they were going into or launching a social media company. >> well, i mean, i think they're still understanding there is a lot of money to be made in social media again, if you look at the top ten richest people in the world, zuckerberg is in there and he made it on social media. i don't think people would be too nervous about getting into the area, but i think they'll take a look at it's going to be a lot more difficult with more regulationors any regulations in place, and that this is going to maybe make them a little bit more hesitant. but considering the money that's there, i think they'll still have plenty of people who are going to hop in. >> sara, andrew, i have a feeling that this discussion is not over but it is over right now, today. but it will continue in days and weeks and months ahead, i'm sure thank you both very much >> thank you. >> thank you well, is the controversy
over nfl anthem hurting tv ratings? we look at football viewership compared to baseball and basketball julia, what do the numbers say >> well, tyler, the nfl's nightmare ratings continue according to nielsen in the first six weeks of the season, ratings are down 7.5%, down almost 19% from 2015 the nfl points out that the numbers aren't apples to apples. they say the decline from last year is more like 6%, and also there's a huge impact from hurricanes in week one they also note that since the start of the season, every single week an nfl game has been the number one program on tv but the nfl's declines come as basketball and baseball ratings so far this season have been soaring. the ratings of espn's nba season opener double header last night were up 14%, matching espn's second-highest rated opening nba game ever. and the league's opening night on tnt saw ratings nearly double from last year as for the mlb, the first three
games of the nlcs saw ratings grow 73% of last year, bolstered by bigger market teams now we'll have to see how the mlb and nba hold up over the course of their seasons, but the nfl does have a unique struggle in the anthem controversy and the criticism coming from president trump. guys, back to you. >> thank you very much. speaking of sports, do not miss tomorrow. i mean, they shouldn't miss the show ever. but, i mean, put two tvs on. because tomorrow we've got a show from houston with that guy, nba's newest owner, the billion-dollar buyer himself, tilman fertitta, live in houston. great other guests, as well. >> i'll put my backup tv on. to the bond market, rick santelli >> hi, melissa lee if you look at a 24-hour chart, you can see several factors you should pay attention to. at that 3:30 a.m. eastern move, maybe sparked by the chinese that affected pretty much every market tenures haven't gotten back up
to that yield yet, down three or four basis points and have been in this range for a while. the euro versus the dollar the euro went down first and turned around in a rather big fashion. so the mere image of that, the dollar index is the exact opposite and, of course, strengthen at first, and nothing but weakening since. but big story might be high yield. we always talk about that, somewhat of a barometer on general equity activity and feelings with regard to nervousness at market heights and especially on a down day, you should see maybe more action. but we aren't. whether you look at the lqdetf, the hygt, the high-yield charts. a one month and one year the spreads continue to narrow that's usually a sign of maybe less volatility ahead and less worry ahead. and that really is something to pay close attention to, tyler. back to you. >> rick, thank you very much. imagine buying a new home, clicking send on the payment and finding out you just sent hundreds of thousands of dollars to a scammer it has happened, and the fbi says it is a growing problem
we will show you the devious tactics that smamers use now to get your money, when "power lunch" returns anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird.
home buyers, beware. there is a new nonline phishing scam, targeting you, asking you to reroute payments. and some people have fallen for it, spending hundreds of thousands of dollars to a fake account. diana olick has more >> now that so much of the mortgage and closing process is online, hackers are tapping in force. it's phishing, with a ph, posing as a title or real estate agent, the hackers divert the down payments one california buyer almost fell for it brett thought everything was going according to plan. he was about to close on his half million dollar southern
california dream home. but it almost wasn't two days before the closing, there was a change or at least he thought there was. >> it was the monday prior to the wednesday that the funds were going to be sent that i got an e-mail from my real estate agent, or so i thought at the time, that new updated wiring instructions would be coming -- forthcoming. and i didn't think anything about it. >> the e-mail was a scam and nearly cost him his $100,000 deposit. thankfully, he called his escrow officer just to say that the change might cause a delay, and the officer said, what change? that's how they caught the hack, just in time >> i did not know that the e mail was a scam. i was more frustrated with having to send the money to a new bank, and that my credit union likely wouldn't have been able to make our deadline. so i didn't lose it. it was a very frightening experience to think it came very close to losing that >> now, the fbi, ftc and national association of realtors
have issued warnings saying verify everything with your agents, either on the phone, or better yet, in person. be suspicious of any changes secure your e-mails and use a secure payment method. and if anything, i mean, anything, seems even slightly off, check it out. one buyer here in d.c. lost over $1 million of course, they didn't want to talk about it. back to you guys. >> oh, my goodness diana, thank you very much. so what should you do if you get sent a phishing e-mail how would you even know what is a fraudulent e-mail and what isn't? we're going to get a phishing lesson from the ceo and could you founder of phish me that specializes in identifying phishing threats roy, glad to have you here am i more vulnerable to a phishing assault at my company, or at my home? where do most of the phishing -- spear fishing things go? >> it's a little bit of both
your company probably has a lot of security controls in place. but that can lead to a false sense of security, as well, soig, as well, the i.t. guys have it taken care of. unfortunately, we have to be vigilant in both areas home and at work >> so let's talk about how most of these phishing assaults begin. how do they start? >> there's a lot of online research that hackers perform. they attempt to look at your facebook profiles, your tweets, your linkedin profiles, so they can understand your interests, your connections, where you work, where you went to school so when they do craft up an e-mail, it's quite contextually appropriate. and makes it really hard to decipher. >> and often, these e-mails come, do they not, either burying a name of somebody you may know, or burying an identification from a company of someone that you're doing business with. right? isn't that part of -- >> it is. >> -- the cover? >> it is it takes a little extra
technical skill to, for example, have to hover over a hyper link in an e-mail to say, where is it really taking me is it taking me to cnbc.com? >> so show me. you've set up a kind of fake phishing expedition here >> correct. >> take us through it, and show us very particularly where the problems can tell us where the problem can prop up. how can i tell >> this is the simulation of realistic attack if you take a look at it and it looks legitimate and you think about well, michelle is the recipient and does it send me e-mail specifically. >> in other words, right there where it says "hi there, michelle." if you are not accustom to that kind of greeting >> exactly >> they're trying to phishing me and started with the headline.
>> i am sure you are dearly, whatever >> i would hope so >> take me to other details. >> you can rely on them and you will notice there is some grammatical errors here, let me know you receive this message. >> receive instead of received >> yes >> those are tangibles, i can make those mistakes. >> pick up the phone and call this person. did you send this e-mail and did you mean for me to wire the money? >> lets say you were to respond to this reese campbell and i hit reply. >> correct >> is that sufficient or do i want to look and see whether the send address or the reply matches that, is that another thing you can do >> absolutely. >> the address that appears
there is not necessary arizona that'll go elsewhere you can see a different e-mail address here >> look at that. >> we are down in the signature line where it is a different e-mail address of the one that's up there at the top, reese campbell premium isp >> this is the one that they actually own when you hit on reply, it goes back to security banking group.com. >> i have this same experience three weeks ago ac, a dear frie of mine have been hacked click on this. richard, i will not give his last name, richard, i want you to reply to this and if i do that, what should i do do i go to my it department immediately or what? >> you want to let them know
immediately. you really want to do that because it is helping the community, i don't want nibbles to get hit by it >> anybody getting an e-mail from rohyt belani today. >> all right, thank you. >> strt lks nt.eeta iupex on once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.
burlington has 20% upside. they love the off price model producing a solid cash flow. tjx is slightly less upside 18%. >> by the way, in the same call, they slap a neutral rating on roth score, la ase >> coming up, we'll talk to a mayor in a town in georgia who's willing to sell everything but his soul to win amazon's new headquarters shares of apple is driving the market down. how serious should we take on the iphone 8 when "power lunch" returns. that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan."
and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and. welcome back to "power lunch. i am brian sullivan, we'll lay it out and you decide. which city had the upper hand for the race for amazon's new second headquarters and with politicians prescribing the pub tchlt cou , could it be a good deal f
for taxpayers? we'll dig in we'll take you inside of the incredible home "power lunch" starts right now oh, bet i got your attention, brian >> stocks are in the red today well off session lows. right now 22 points, nasdaq is down by 34 apple is the biggest drop on the dow. shares are lower and reports for demand for the iphone 8. united airlines on the flip side s & p following the week verizon is moving higher as earnings beating its smart phone rates as it continues to stay low. the dow jones fell more than 22% on october 1987 and that took many investors by surprise.
>> we want to show you once again before the new york stock exchange after a record day of record losses of 509 points. about 25% of a value of the stock market, the greatest single day loss in the history of the new york stock exchange 30 years ago today however, the actions of the market just before the fall indicate a more dangerous environment than many realized, maybe they should not be surprised. mike is here with a look before the crash. i remember there were several such cracks in the week of proceeding >> absolutely. the week and the months before that, tyler. >> as flukish, it was a build of before that, it takes the market before it can break in that crash day. just to be specific about it
the market was up 40%, year to date and late august then proceeding to decline, 17.5% up until the weekend before the crash that week before the crash that you mentioned, tyler the dow is down 9.5% traders were busy and they thought that was something that was unprecedented pace of decline. what was going on in the background was treasury were shooting higher. you had the dollar collapsing and volatility level and concerning of over heating economy. it was not the market blind sighted out of the state of calm it was to build up a lot of stresses and important to mention, you are not seeing anything similar right now it is a common environment but for now a lot more steadiness.
>> mike santoli. thank you. our next guests, trade in the treasury's future complex, lets bring both of them back in and professor seagal, you were teaching them and teaching now, how did that impact the way you teach finance? wel we >> well, i never bought the idea that markets are efficient i was worried about portfolio insurance that people thought they had protection against the market, that was sold to many institutional investors and michael is right, that soaring bond yield from 7% to over 10%, it seems like the market ignored it and everyone thought oh, i am protected and i have protection on that was really a falsehood.
they did not have protection on. it was based on selling in the future's market and when that selling came through it was a freight train ran everyone down. >> the people that you teach though today were not born then, right? >> yes, i pointed that out i taught today and spent part of today's lecture going back, none of you were born that was the biggest one day drop in history. that was double the next high t highest. there was nothing like it before or since that day. i am sure it is craziness but it seems like years that end i in sevens have a remarkablety to bring in the market. now, we are in 2017 and even to that, it is just crazy
>> yeah, what's really amazing is that, a huge percentage of crashes occurred in the month of october. you know we even go back to the 1929 crash which was the granddaddy before the one i in '87 that was also in october this was in an october day and many of them do occur in october. hey, we are half done with october. so, we are passing through the dangers zone >> right >> that's also because why october is seemingly the worst month. >> scott, you wrote the book on crashes literally. >> it is called history of the united states in five crashes so what was that catalyst then that -- professor siegal and mike santoli mentioned, and could you see of a catalyst of the next that concerns you
>> great question. all of the crashes are alike but each one has a catalyst that sponsors it. often it had nothing to do with finance. in 1987 on friday, the iranian military attack using missiles, attack the number oil tankers. when you woke up monday on october 19th, you were certainly worrying about stocks. you were certain that we were finally at war with iran if you were worried of what had happened before. what's the first thing you are going to do? you are going to sell whatever stocks you have left people forgot it was a catalyst in 1987. >> in terms of catalyst of the horizon at this point, scott >> melissa, where do we begin? >> there are almost too many to mention and north korea is at
the very top of the list >> despite the interest rate d anans and the crash and the dollar, you need the cocktail, correct >> the other thing and professor siegle mentioned this, many people only worry about portfolio insurance, the monday before the crash, journal about the promise and the fear that we all had because of portfolio insurance and certainly there are many things you can point to that maybe the catalyst for the next >> we got to leave it there. thank you so much for your time. the company is moving higher of a new form of cancer therapy
meg is joining us more on this >> this whole wave is picking um stream the second approval and new class of drugs this one is from gilead, i remember they acquired them in august for $12 billion >> this therapy is called yescarta and it treats hodgkin's lymphoma there are a few patients of 2600 and 2500 estimated of each year of the united states and gilead -- we knthe price point s really interesting here. this is designed to be a one time therapy
novaris is at the price of $475,000 they have a sort of money back guarantee in the drug does not work after one month gilead does not have that kind of guarantees. it will be interesting to see how this launch goes >> here is what's coming up on "power lunch" we'll bring you the analysis of the model three of tesla >> today bids are due looking to bring in second head quarter and a lot of jobs of amazon to their own town target rolls out a multi billion dollar plan to update the way it does business, is it working and all that and more next on "power lunch. want a snack?
welcome back everybody united airline, what went wrong and why? >> listen to him and how he assesses where united is relative to their competitors. i think the last few years dug itself a hole competitively. for us to dig out of the hole, we have to take a lot of risks regarding to where we grow and
the type of investments that we have not made for a long time. it is a deep hole that we have to dig out of. we are doing right things for r the long-term. >> any time you have a ceo says they have to dig themselves out of a hole, it had animalysts saying how deep is that hole and how long will it take and how much patience do you have in this company turning things around in the relatively the near future >> what's the essence as a whole? >> their operations have improved and performances is much better than it used to be you compare the profit margins of delta they lag dramatically. they're trying to close the gap but they are a long way of doing that eventually, a lot of institutional investors may look at this and saying, how long can we have patience of united airlines >> autoreliability study is out. there are all kinds of different
reliability studies. this is consumer reports >> this is based on the response of 640,000 people. essentially, it is the same thing that we haeeard before. these are riddle with bugs these multi speed transmissions that are rolling into new models no surprises of toyota lexus at the top. bottom three are all big three brands including cadillac which plunges to the bottom of the lowest rank. >> olets move onto consumer report is also doing something unusual here that's to make a projection on the reliability of tesla's mode three. >> explain >> they have enough information based on the model s and x when they look at model three, they believe it will have
average reliablreliability. they are saying it is going to be good on the part. they are calling the prediction absurd you have not looked at it or talked to people who owned it. tesla is saying look, these guys have a history of inaccurate when it comes to tesla we reach out to consumer reports, they don't want to respond that tesla had to say. >> phil, thank you very much, phil lebeau. >> you bet this along with headlines from the wall street journal that some apple watch and customers in china cannot connect to an lte network. what does it mean for the software rolling forward >> joining us, walter, it is great to have you with us. >> this is a report in taipei's economic news that they cut production order linked to the
eight by as much as 60%. there are other reports saying consumers are increasingly upgrading to the 7th and not the 8th. where do you stand on this >> a lot of this is new news on the demand side. and we talk about operators and themselves, we'll be pulling back for the promotion of the iphone 8 there is some anticipation for the iphone 10 that's yet to come it is a record low upgrade rate. what those management teams are saying is people are waiting for the 10, they're not sure how much they're going to promote at this point whether they have a promotion or not there should be a lot of excitement for the product >> you cover verizon and you noted yourself on twitter that smart phones sold were down on a
lower upgrade. you think that means people are going to get the 10 as opposed to waiting to see the 10 and possibly upgrading to the 7 at the end of the day the numbers are everyone worst for at&t their smart phone sales have down 20% the third quarter is challenging because of the lack of iphone 8 sales. when you go to the 10, there is the double positives, asp, people are going to get the high end version of that phone. the price point is $1,150. the asp for apple is $600. you are going to have the double benefit of going into the second quarter. investors should hold off a little bit for the panic mode where iphone 8 sales are >> based on the data points that you are getting from at&t and verizon on people not upgrading yet and maybe waiting for fourth
quarter, iphone 10, are you optimistic of the process and for apple and fourth quarter verses a month ago you would think nothing of it and you will still have normal concerns that you have since upgrades have declined on a sequential basis and down so much compared to last year that does tend to be an indicator that there could be some hold back and purchase decisions until the 10 hits the market you are right, if anything, it is more of a sign of better anticipation of the december quarter than if they report a normal upgrade during this quarter. >> thank you for your time appreciate it. >> super model gigi have made millions of dollars. it is straight ahead we are going to give you an incredible look inside the house of hadid's and a look into a
two of the world's toppe models robert frank is here to take a look at the lives of the super rich >> they grew up in 48,000 square feet developed by their dad muhammad hadid it can be all years for a nearly 85 million bucks >> hadid lived in this pad for about a decade along with the famous family. >> was this the house that bella and gigi grew up in? >> the real fun is found under ground >> the mansion's lowest level here you can raise a glass in the massive wine cellar. if that's not enough entertainment for you, feel free to boogie down with nothing you
have seen like before of intricate moldings and wood work like nothing you have seen before there is no part that muhammad loves more than this refuge. the sub terrain room this one is as authentic as it is extravagant >> the moroccan room houses to luxurious baths. >> the ballroom is for 250 of your closest friends my favorite part of the house is muhammad's closet. just his shoe rack had over a thousand pairs of shoes. this guy is the most styling guy of all california. >> why is he selling
>> um, he has -- three or four other houses that he's building. he's a builder and designer. the rich around the world paid him to design homes. >> i do not know him and i never met him and never seen pictures of him >> i do not. i am going to make a prediction and maybe you know he drives among others as many cars, of a gold color bentley convertible. >> i believe his cars are black or silver. i believe he has many cars >> he as a backup car. >> backup jet and backup cars and houses, too. >> robert frank. >> check out cnbc for a new episode of "super rich." >> speaking of billionaires, be sure to tune in tomorrow as you always do. we'll be back down in houston to
see a couple of things how the city is recovering after harv harvey we'll be spending a lot of time with that guy, the billion dollar buyer himself, tilma tilman fertitta, he invited us down there we got a couple of interesting guests lined up. should be good >> looking forward to it >> straight ahead, bids that are due today for cities that want to be in the amazon business what are the pros and cons if e en amazon comes to down with thnew headquarter. we'll bring you that story and more
prince's criminal was arrested in delaware. the national rice association is getting fierce criticisms from gun control a advocates. >> and ready for halloween >> this item is raising what's being called the biggest pumpkin in state history, 1400 pounds, it will be dropped at an annual pumpkin event. that's the latest for the update at this hour >> i wonder how high they have to drop it in order to make the crash. >> morgan, thank you charlie brown -- >> lets take a check on the mark, shall we >> apple, it is a big drag on the dow today. hitting new record highs the dow is down by 20 points and
s & p is down by three as we mentioned apple is really the drag here. its worse one day drop of almost 3% right now >> wti crude is down by 1.5% >> we talk a lot of cities offering billions of dollars tax break to woo amazon's headquarter. but, what about the cities that do not want amazon coming into town deirdre bosa >> reporter: here is a few examples san antonio's mayor says they do not meet san jose says canadian officials have not in the business of offering bribes. a lot of the backlash had to do with amazon's request for quote,
"business friendly environment and tax structure. it is interesting when you consider it has not received any incentives from the state of washington or the city of seattle. of course, its first hometown of the impact of its growth have been enormous. we are standing right now by downtown seattle amazon owns and occupied to the left of me it opens in 2018 behind me is a massive development site that amazon is developing as well its growth haves come with a lot of benefits in terms of jobs and investments for the city we spoke to seattle members and they have seen another side of this >> we were lucky enough to purchase just as the market was picking backup we certainly have friends who have struggled >> i know a lot of people are struggling to find an affordable
place to live in which is unfortunate. >> go to another city and get on out of here, that's what i have to say about it. >> reporter: guys, for all the people who have reservation, there are ton of people who are excited about it as we stand there, we are seeing two representatives from alaska delivering their mission in person i would not be surprised if we see more folks coming through here by the end of the day >> you don't think of that as a hub, should cities bid for the mew amazon headquarter >> joining us now is steve gregg leroy, guys, it is great to have you with us. more amazon, why are they delusional in your view? you don't think it is a good thing for cities >> i don't think many place have a serious chance of competing in the enormous talent required for
this deal. it could be serious contenders amazon is going to use all other competing bits to get the tax break. >> in terms of the impact of the city on face value, it looks like it will be a great deal for the city and all of saudden, you have one of the biggest companies coming to your world and bringing 50,000 jobs and $5 million ininvestments how could this be backfired in yoir vi your view? >> and then the other problem is the city and the metro area and the state did not over spend the deal and make everybody else paying for r tthe growth those are going to create an enormous sector cause and infrastructure safety. if amazon is not paying the fair share, everybody else is going
to get stuck with the bill >> james, sounds like a bunch of good points. >> this is really something different. cities across america are trying to become tech hubs so they are partnering with local colleges and building tech incubators it is usually kind of a weird one off thing. you got to get lucky you have to be lucky like seattle than bill gates and moving from albuquerque than seattle. >> this is one of those one off special events that can turn in a city into a tech hub u you have to look at it from a m a dynamic basis. it does not come along very often. this is what i would seize >> albuquerque is the birthplace
of jeff bezos. however, he was raised where >> houston, texas. he's a texan, he's the biggest landowner in texas >> yes, yes >> jeff bezos climbed on top of a wind turbine and open amazon's biggest giant farm would you put your money in austin or houston? do you think texas will ultimately win >> austin is my number one pick. austin makes a lot of sense because it is also a red state i think there is a lot of good reasons to pick austin, texas. >> tyler -- i did not and i am always on northern virginia. >> do not pick anreage
>> all right, lets talk to the mayor ochlt for instan may mayor. >> birmingham, alabama sent them a giant package. a georgia city has bound to rename its amazon. jason larry, welcome, mr. mayor, it is good to have you with us >> so you would be willing to name the newly founded city of stone crest, you would rename it amazon and giving its own post officer. >> and creating a new city of amazon we'll retain something >> you are willing to carve out this plot of land and giving them their own name and who would be the mayor of this new
citizen? >> jeff bezos can be the mayor and ceo or whatever they want to call it. he will be the first person who'll have the corporate person he will be the first individual, they have their own post office. the biggest piece of the thing is that they don't have any internal brand they don't have a brand forever but amazon, georgia. >> now, you are apart of dekalb county, radioigight >> did i pronounce it right? >> dekalb county >> that's right. >> how much does it cost for your city and dekalb engineering? >> what i mean by that is we provide the land from them of 345 acres of three or five times of what they are asking for. it is worth doing in every corner of the place. >> mr. mayor, what kind of
incentives do you offer amazon to relocate or open a headquarter in amazon georgia. the cost for infrastructure is going to be tremendous a potential of 50,000 people >> well, what we have here in town is the best university that they asked for georgia tech and au center >> public schools for children >> these guys have family. >> exactly >> you have an area that's opened and land that we had and it is over 3,500 acres and we just call it 345 we have the infrastate structure. everything they asked about, we are ready to access transportation and we have and ready to put in place for it
>> there would be some costs attached to this for you, you would have to bill some roads i assume and some schools and some water and waste facilities and so forth. >> i hope you will get it. there's costs, right >> we have the infrastructure already in place >> you are thinking about everyone coming to stone crest or amazon, georgia >> we are already have a lot of diversities. we were with the mayor of atlanta a couple of weeks ago associated, he and you and business friendly mayor, he's done very well there causing the livi living lower in many areas and parts of the country
we wish you luck, mayor. >> if you have a $200 billion sport facility is coming up. >> we have 35 piles of walking or hieting trails. >> just about anything that you can think of >> to draw amazon here, most of us, they'll have an internal branch forever with amazon, georgia. >> you are getting them seating to them. would you save a few angers for brian and ma lishl sh-- melissa >> larry, thank you very much. >> he proposed and called it amazon >> they call it amazing >> target rolled out a
$7 billion fine to overall hits entire business from brick and more to. >> we are going to dig in, i need to take off and tune in tomorrow >> looof course, you have -- the billionaire john arnold. before he made an interview trading, john is going to join us, i can want to meet him really interesting guy and did a lot of comparative work and his wife is an antrophy. >> i am actually leaving >> we'll go to break energy is changing fast and we're changing with it.
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they are expecting some 40,000 plus people to walk by the location everyday. yes, it is largely tourists and communitier centers. >> when you walk inside, you will see a lot of new york centric and apierl not only to target but there is also to that location. >> you got to go down to the bottom floor and down there you will find ccs and small lek traditional. >> that's about 43,000 square feet one of three four floor matt stores this week, one of twelve doors targeted opening across the nation this week >> they're still, really, really building up as part of that strategy >> they outline lined chblfebruy
>> the strategy is driving results and our traffic is up and our sales are improving. he was talking about the first and second quarters. >> he said because of that we are moving faster and greatest rchs than we were a few months ago. you will see us accelerating ou pace kornell also said if you look at the remottle d stores, so far they have done about 100 of those done by the holiday season those stores are seeing a 2.4% sales lit. >> kourtney reagan >> thank you >> will these by target be enough to live up to the stock lets bring in oliver ken >> all of this is part of a $7 billion in versment plan. >> as an investment i hear sp ,
pertine pertine pertine spend. these stores are very important because customers want to convenience more than anything else wh we have a mark of performed rating on a target we think a get is making huge trooifs. i am wearing good fellows. one of thee new brands >> this is tbd, there is a lot of actions are in action >> what is on your body or your person is from that new line >> it is good kpacompany. i bought a shirt too but i am not wearing a target shirt, i hope you like it
>> what makes you -- it sounds like they're taking all the right steps? >> 82% of tar let sopor shops at amazon >> there is a war going on between amazon and target. there is a lot of price investment and it is very competitive. the gross margins line is difficult in traffic, getting poo em toll come to the store and come online. it is a battle people do not want to go to physical stores as much as they used to. ta heart attack as to make the experience a lot for convenience. a lot of it is for a you new brand. >> joy lab from rush run cs to bunching >> did you say off market
perform in it? >> that would suggest what kind of price in a year >> we are looking at expected return of 15% or lower >> so i like the jacket, oliver i think the only thing it lacks is a little target insignia right there on the breast pocket a little target. >> i'll have to get one. that's a good idea. >> like one of the coldwell banker things, whatever they used to have action news 7. all right, oliver. >> thank you oliver chen. >> thanks. all right. general electric, the worst performing dow stock ahead, one trader who says ge is a strong buy lots more "power lunch" ahead and this comes ahead of ge's earnings tomorrow. how'd that go? he kept spelling my name with an 'i' but it's bryan with a 'y.' yeah, since birth. that drives me crazy. yes. it's on all your email. yes.
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welcome back to "power lunch. shares of general electric rising more than 2% today ahead of tomorrow's earnings report. it's the worst performing dow stock so far this year craig johnson with piper jaffray, larry mcdonald. larry, you're calling the stock a strong buy into earnings do you think there's going to be a major reset of expectations here
>> well, we have a model that measures capitulation. and it really scientifically, we look back over the last decade and the level of selling, how much expectation's been taken down, the street's taken down the target dramatically. right now the stock's trading close to 20% below the street's target and you have two things. you've got earnings coming up where you've got activists behind the scenes that are increasing their position in recent months, and putting pressure on the company. i think a positive way and then you're going to have investor day in early november so those two events, i think the stock bottom here and runs i think substantially toward those events. >> i get the model, i get those two things quickly, larry, are you concerned they're going to cut the dividend, that might precipitate some more selling here >> yeah, that's been out there in the -- that's part of why we've seen this capitulation i mean, the analysts on the street because of dodd/frank, the analysts tend to be
extremely crowded and when you have an opinion that's pretty loud, it gets priced into the stock. >> all right. >> fairly quickly. >> craig, what do you see on the charts is. >> well, you look at this chart, and it's so bad that it might just be good you've seen this stock down about 23% this year. you got the dow up 17% you're coming back and retesting key support at about $23, which is the lows you've seen back many '15 i'll also just point out if you look at a correlation with the dow making all-time new highs and compare that to ge which is the longest standing member of the dow jones industrial index, there's only been two other times going back to the '70s that the correlation has been this low under the context it's so bad, it's so good, this is a chi support level. i'm going to wait for that evidence, wait for that blouns befo bounce before i step up and buy it at these levels >> all right, guys, thanks. >> thanks, melissa.
>> for more, head to tradingnation.cnbc.com. coming up, c"check please," is next. >> now the latest from tradingnation.cnbc.com and word from our sponsor. >> wedge patterns as catalysts for stocks a bullish wedge occurs within an uptrend and consists of two converging trend lines slanted downward a break of the upper trend line is considered a bullish signal conversely, a bearish wedge occurs within a down trend and consists of two converging lines pointed upwards. a break of the lower tndre line is considered a bearish signal
earlier fed chair janet yellen met with the president at the white house. not many details released about their planned meeting, of course, it was part of the interviewing process to see whether she will get another term we did, however, someone did, manage to get a shot of her leaving. there she goes she's in the purple jacket, white hair there she goes leaving. i think, even though the gop had generally been critical of chair yellen, certainly people in congress had been, the president calls himself a low interest rate kind of guy he likes the way the economy is going. on the other hand, i tink hink likes to make his own choices and put in anybody who was not put in by the obama administration i think there will be a change. >> i agree with you in terms of the push/pull. >> i'm not sure who he'll go --
>> interesting pick. >> a long shot for her to stay on. all right. going to talk about phil lebeau's report on consumer reports projecting the reliability of the model 3 without actually having driven it i don't know that seems a little bit bizarre to me to project the reliability of a car without actually touching the car, feeling the car, seeing if the car breaks down >> i'd like a tesla. i'd like one. >> you can test it out. >> i'll test it out. >> "closing bell" is up next hello, welcome to "the closing bell," everybody, i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth in case you hadn't heard yet, today is the anniversary of black monday, a day when the dow fell by 22.6%, 30 years ago today. 3022.6% decline meant 508 points on the dow. >> on the dow. >> today a 22.6% would be a 5,000 po