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tv   Power Lunch  CNBC  November 19, 2018 1:00pm-3:00pm EST

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pete, you go. >> i love these discounters, ross stores. keep an eye. >> doc >> silver etf. >> why >> they were buying april 15 and 17 calls. >> good stuff. >> health care. >> good stuff, thank you all. thanks for watching. "power lunch" starts now. is the record bull run finally coming to an end, why one key group of investors says yes, the changes they're making to protect their portfolio now. fang, the staggering amount these stocks have fallen and what its signaling for the markets. shocking news rocking the auto world, carlos ghosn arrested. what now for him and the three car makers it helps overseas. the latest development straight ahead. "power lunch" starts right now.
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welcome to "power lunch," everyone. i'm tyler mathisen. another day of big losses on wall street. the dow dropping almost 475 points at its low now down 405. nasdaq getting hit the hardest falling further into correction territory down 2.23%. both of those stocks down 4%, sometimes even more. 5% in the case of boeing. bonds on the move, too. the yield and the bench mark ten-year note and the 30 year bond both hitting their lowest levels since october. maybe a little bit of a flight to safety there among investors. bitcoin battered, future prices hitting their lowest levels since inception almost a year ago and melissa mentioned carlos ghosn. shares of nissan on pace for their worst day in almost five
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years. renau renau renault, on their worst day. seema modi is on the floor. >> its one of those days where there are a number of factors behind the selloff, elevated trade and technology under notable pressure led by apple and ongoing leadership concerns at facebook. take a look at the biggest percentage losers on the dow with today's losses. apple now in bear market territory ending a bull run that dates back to may of 2016 and its the apple ecosystem that seems to be falling apart. the broader tech sector, chip suppliers, is due to the big drop we're seeing in bitcoin back below $5,000. taking a step back, traders say these moves suggest that we're seeing this broader rotation out of risk on high beta sectors.
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the stocks that are faring well today are those defensive dividend yielding names, j & j, verizon, coca-cola and mcdonald's. look at the itfs. this momentum unwind is certainly gathering pace. melissa, back to you. >> thank you. tech a major drag on the nasdaq at this hour. beurre that cumus is tracking the big managers there. >> its hard to find any safety at the nasdaq. that is being led by the big tech sector. chip makers are again nearing bear market territory, now down 5% for the year as a group. biotech is down 4% for the year, so that's no safe haven either and facebook has led the momentum trade decline hitting an 18 month low down for the third straight month. nvidia also at a new low on
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strong volume as well. nvidia now down 50% in just two months and apple supplier sky works hitting a new low today, 18% down for the month of november. its sixth straight month of declines. very little bucking the trend as i said, fox is higher as disney went to get its assets in china. tesla, this was in free fall in september with those issues with the doj and musk. and take a look at the risein tesla. its very different, melissa, from anything else you'll see on the nasdaq. >> odd to think of it as a safety stock. bertha, thank you. trade also one of the big fear factors. eamon javers is live at the white house with what went on over the weekend. >> reporter: it was called asia-pacif asia-pacific economic
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cooperation summit. xi jinping was there. twlaent a whole lot of economic cooperation visible on the agenda. the sides failed to agree on a joint communique, that's the first time in a long time they've been unable to agree on a single document coming out of this particular economic event, a whole host of asia-pacific region countries there and world leaders including the vice president who reiterated that the united states stands ready to put tariffs on china, the rest of the goods that have not already been tariffed by this administration if the chinese government doesn't turn things around. here's exactly how vice president pence explained it in papa new guinea over the weekend. >> we've taken decisive action to take our trade imbalance with china. we put tariffs on $250 billion on chinese goods and we could double that number but we hope for better. the united states, though, will not change course until china changes its ways. >> xi jinping was also there, his rhetoric was also seen as
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relatively harsh in terms of the trade war that's going on between the two countries now. a lot of commentary in the media after this weekend. the other countries in the asia-pacific region very worried here that they're being forced to pick sides, ultimately, in what is brewing into a possible economic cold war between the two countries. interestingly, according to one media account, neither the vice president nor xi jinping attended each other's speeches at the events so that gives you some sense of the level of interest and rhetoric on both sides. now looking ahead to the g20 in argentina at the end of this month, that's the date on the calendar which everybody's pointing to as a possible time where there could be some deal making, the president and xi jinping will be meeting face-to-face in argentina. >> it sounds like the way vice president pence was putting it, it sounds like he's making it into a zero sum game unless china changes its ways
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>> reporter: right. there was this letter that came over from the chinese side last week. officials here told me -- didn't have any major concessions in it. if the chinese were to offer something at the g20, what is it that the trump administration would take because there's a lot they're asking for in terms of intellectual property theft, travers, the trade deficit itself. they want fixed here at the trump administration. would they accept something short of that or gestures in that direction and call it a win or would they hold out for a wholesale reimagining of the situation between the two countries which might be more unlikely >> thank you. the s&p is down about 7% in the past two months. the nasdaq in correction territory. is this record breaking bull market run coming to an end? according to a new survey by etrade, wealthy investors think it is. most believe there are headwinds for the economy and they're concerned of the impact with the
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new congress. one area they think offers the best opportunity is health care, up 10% this year. let's get some advice for this choppy market. joining us now alicia levine, chief market strategist with bmy melon and michael laroni which has 2.7 trillion under management. a battle of the trillions. alicia, welcome, good to have you with us. >> thanks for having me. >> a lot of people think the bull market is in trouble, do you think it is? >> i think it is in trouble. we think that there's probably another leg down from here and if it can hold the low levels of 2018 then you could move higher, but right now we just see a very messy and unsatisfactorying market. >> when you look beneath the surface, a lot of stocks are already in bear market territory. >> that's right. the reason you're feeling it so much on the index level is
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because the large cap tech names which drove the market performance and became 25% of the index just in august alone, with those stocks dropping, you need the other 75% to carry it and its -- its a math problem. its very hard to get that kind of performance to move the index up. >> i was never very good at math problems and apparently the market isn't either. michael, what do you think does this market still have some staying power or are you concerned about it or qualifiably so >> the fat lady is certainly not singing just yet to single the end of this bull market, but tyler, if you do listen in the background, you can hear her warming up. investors are pricing in the worst case scenario for u.s./china trade relations, for fiscal policy stimulus wearing off, fed rate hikes and slowing corporate profits particularly among high flying tech stocks. if we get any relief in those four areas, you could see the market rebound with a bit of a
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relief rally headed into next year. >> what's your sense of how much the market has, in fact, priced in you said the market is pricing in, it does look like, with each leg lower it is a process as opposed to something that's already happened, michael, what stage are we at? at what stage do you say, you know what? the market is trading unfair value right now? >> what's happened is earnings per share growth is still going to be very solid. let's just -- going to have 9% earnings per share growth. admittedly nowhere near the levels we're at. that's still a very healthy number with a market multiple of around 15 or maybe more than 15 and all the hubbub around higher rates and greater levels of inflation seems to be just more noise than anything else. rates have been backing down some, rate of inflation seems to be plateauing. the big risk is if the fed continues to go too far too fast that could have problems. we're seeing that, for example,
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in the nhnb number today in terms of housing, construction and some of those numbers. the risk there is that the fed perhaps goes too far too fast. >> alicia, in the survey we cited at the top of the segment, we mentioned that people think health care is a place to go. do you agree with that and what do you think of tech shares? >> so i do agree with the health care piece but i'd break it apart. i like the services, i like the hospitals, the hmos and the medicaid hmos in part because of the election results because with the democratic congress the aca is fine, its not going to be repealed and you're going to have some states that had republican governors flip democrat and they're going to expand medicaid. for that reason i like the services. i don't like biotech or pharmaceuticals right here. i think there's a noise problem and its the price control issue. so you have the administration interested in price control and you have a democratic house -- >> it might well go there. >> there's a deal there.
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i do think that with the republican senate, whatever comes out won't be as big a bite as it would if congress had flipped totally to the democratic side but there's a deal to be had and the headlines are going to be rough. >> but technology you think is broken and not fixable soon? >> yes. technology is broken. i think the multiples that you had and the price velocity you had were based on this exponential growth and what we learned in this quarter of earnings is that growth really isn't there going forward and as we know, the market anticipates forward earnings and forward growth. its coming back down to earth and i don't think we're done yet. >> thank you. we have a news alert on the white house christmas tree. >> oh. >> oh, there's a little holiday cheer, the tree has arrived. the official white house tree, 1,600 pennsylvania avenue it comes on a horse drawn carriage.
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this year's tree is a 19.5 frazier fir. the tree must be at least 18.5 feet, which is larger than trees available at commercial tree farms, mind you. and there it is. it'll be brought into the white house and decorated over the next few days. >> little holiday cheer. facebook shares taking a mass tumbling, on track for their worst week, worst day i should say in over a month and it is down 40% since facebook's earnings call in july. new details on how mark zuckerberg is dealing with the turmoil as the embattled social giant. carlos ghosn arrested, the very latest on this story rocking the auto industry. and mike bloomberg makes a major donation. could he be signaling an announcement about his political l ture althose stories and more ahead on "power lunch."
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level today since february 2017 on accelerating negative headlines, the latest over the weekend about conflict in facebook's highest ranks. take a look at just how wide ranging these negative headlines are. the last day of july, facebook acknowledged the first coordinated authentic activity ahead of the midterm elections. it removed 32 pages and accounts from facebook and instagram, part of a sophisticated campaign possibly linked to russia. less than a month later, facebook banned the my personality app and informed 34 million people their information may have been misused, they announced a security breach saying it had effected up to 90 million people later saying the number was 30 million people. in october the company removed 559 pages and 251 accounts tied to what it calls coordinated inauthentic behavior and this month facebook responded to criticism of his handling, it
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wasn't doing enough to help our platform from being used to ferment division and off-site violence. and just today, instagram announced its cracking down on fake followers, fake likes and accounts obtained through third-party apps. instagram says this is part of a larger fight against inauthentic activity. >> thank you, julia boorstin. here now to dive deeper into facebook's troubles, nicholas carlson and professor. thank you so much for being with us. >> thank you for having us. >> what do you make of where facebook is at because -- like any company which is gone so big to a certain point where, you know, the management style might have to change because of the sheer size, its also facing unprecedented regulatory executeny like its never faced
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before. how does it get a hold of the situation at this point? >> i think what we need, really, is a culture change. facebook has grown really big with the move fast and break things, ask for forgiveness, don't ask for permission, but right now rather than thinking about managing investor expectations, what facebook really has to focus on is making sure that they don't lose the public trust. this is a company that has government-like power across a range of countries and in a range of domains and if they lose the trust that both regulators and people have in them, then there's not going to be any advertising business model to worry about. >> i would actually say that those two things are the very same thing, that retaining and regaining the public trust is, in fact, retaining and maintaining the trust of shareholders, nicholas isn't that core to the company's platform, that it has users that trust the platform enough to keep engaging in it so then
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advertisers would then advertise on it? >> you think all this is bad news for facebook. i don't think its going to effect user numbers in any way your average person doesn't read "the wall street journal" and look at instagram today. this is a problem for recruiting. if you're coming out of stanford, you're going going to work for a company that looks like its doing evil. that's really the problem for facebook here. its going to be harder for them to attract really bright people. this is a problem across tech. google looks like it has issues doing contracts with the government, amazons getting a lot of flak for doing hq2 in wealthy cities. people are attacking institutions. its going to be hard for all these tech companies to get the right kind of people. >> i want to see if you agree or disagree with that because it sounds like you disagree in that you would see a profound affect
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potentially on consumer engagement with the platform >> absolutely. i both agree and disagree with nicholas and that in the short run we may not see big changes in the user numbers based on what facebook does on the transparency and regulatory front, but what's really critical to facebook's business model is having people trust them to make good decisions with the data that they hold. that's what leads to the profitable business model, that's what leads them to be able to leverage this data, monetize it with advertising. if they lose that trust and says here are a whole bunch of restrictions on what you can and can't do with the data, but you can have all the users you want but you won't be able to monnize them. >> facebook is a marketing machine. if you look at the rise of direct consumer retail businesses, they love facebook and they don't like tv and tv viewership is coming down. its not that facebook's business
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is challenged here. yes, they don't want to get regulated but at the same time i remember a few years ago that is that regulation is great for the big companies. they're the ones that can go afford to hire lobbyists and write the regulations. what facebook is dealing with is a problem of perception, but again, i don't think that, you know, people think i don't trust facebook i'm not going to open instagram today. >> i think it goes a lot deeper than that, because whether or not like user trust is one thing, but not being able to monetize the data because you're shackled with a whole bunch of regulations does hurt facebook in the long run, even if their user numbers keep going. we're at the pivotal moment in the history of tech right now where many tech companies have been born without a clear understanding of just how profound the effects they have on society are. facebook is one of them. sometimes i wish that mark
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zuckerberg had finished the harvard degree, picked up a good liberal arts education, he might be able to wrap his head more around the enormity of the impact that his company is having, but what they really need to do is step back and think about how are we going to be responsible actors in society when we have a scope of responsibility that is greater than any company has had >> can the current management step back and do that? can they be as intro inspective as the company needs them to be and safe the culture >> i wish they would. >> i don't know, actually, because in some ways the question is moot because, you know, mark zuckerberg has 60% of the voting shares -- >> sheryl sandberg doesn't. >> he's going to be running the company whether or not we bring in a new ceo, but i think he really needs to step back and realize that, like, you know, rhetoric of war, talking about -- going on the attack is
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sort of a dangerous path to go down for a company with the scale of influence that facebook has because its not just viewed the way that typically like corporate warfare. over here your adversaries aren't just other companies, they are citizens and they are governments and so he needs to tread with care. >> nicholas, you get the last word. >> i absolutely wish they would take some -- take a few steps back and try to realize the effect they're having on society. i just don't think much of this gets beyond being a boom for business journalists. lots of leaks are going to come out because people are unhappy. i think actually mark zuckerberg, to give him credit, is a very reflective person. he has this big challenge where he wants to get better. so i think facebook's business is in fine shape, but its miserable for some of the people in upper management as they churn through scandal after scandal. thank you, gentlemen.
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and one of the drivers of today's sharp selloff is housing. home builder confidence sinking and we will tell you what's fueling the concerns there. plus amazon wrapping up its pharma business. how far along are they and what could it mean for other companies in that world? its been a rough couple of months for this fang favorite, amazon now down more than 20% from its high. the dow down more than 400. nasdaq getting slammed the most in percentage terms, nearly 3%. stay with "power lunch."
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we've got big losses across the board. the dow is down by 443 points. s&p we're just about 34 points off. the nasdaq is down by 204 points. dom chu's tracking the momentum names which are getting crushed. >> this market is all about momentum but when it comes down to is what goes up does come down. first off, you got chips. nvidia down more than 8% today following nearly 50% from its recent highs near the start of october. square, another major momentum name down more than 30% from its recent highs as well. you got adobe also, down more than 8% today after a run-up for much of this year's well and
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you've got sales force.com entering what some traders are calling bear market territory. that stock today hitting its lowest level since may also on pace right now for its worst day since february 2016, the falls have been even harder for some of the bigger momentum names. we'll take a look at those fang stocks later on this hour. >> thank you. major averages extending their losses following new housing data. home builder confidence dropping sharply this month but shares of the big home builder moving higher in today's big selloff. diana olick here with some of the numbers. hi, di. >> reporter: builder sentiment had been the one positive hold out, but now suddenly the builders are feeling it too. builder confidence dropped in november to the lowest reading since august of 2016 and down really dramatically from the
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last high last december. builder stocks tanked briefly on the news but bounced higher, likely a whole lot of short covering at whole prices. it should not come as a surprise. the builders have been weak all year as interest rates started the year higher, tariffs hit builder bottom lines and interest rates moved higher again this fall. rising interest rates are weakening affordability significantly and the nhb are causing demand to stall. the index is three components current sales conditions, sales expectations and the next six months as well as buyer traffic all dropped sizably but it was those sales expectations that really fell the most. more on cnbc.com right now. back to you, guys. >> do you sense any slowdown in building in d.c. it has been really, really hot. >> reporter: not on this street, no. you've seen demand slowdown among buyers.
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housing starts have not been strong overall across the nation and we would expect that starts to be more aggressive given that we had such a steep shortage in existing homes for sale. now we're starting to see more existing homes come on the market. we haven't seen the start numbers pop up. we'll be watching closely. the strength has been in the rental multi-family apartment market. >> thank you very much. shocking news rocking the auto world. chairman carlos ghosn arrested for financial misconduct. shares of nissan on pace for their worst day in five years and he's also the ceo of renault. that stock on track for the worst day in two years. the very latest developments next.
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( ♪ ) and your free wi-fi will start shortly. enjoy your flight mr. jones. world's best inflight entertainment. fly emirates. fly better. welcome back to "power lunch." i'm sue herera. senator ron widen is calling on u.s. intelligence officials to publicly release a summary of their findings on the killing of jamal khashoggi. u.s. spy chiefs should, quote,
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come out and provide the american people and congress with a public assessment of who ordered the killing, end quote. the french banking giant has agreed to pay $1.34 billion to resolve investigations into its handling of u.s. sanctions violations. authorities say the bank processed about $5.6 billion worth of transactions in a apparent violations of cuba, iran and sudan. archeologists have discovered a fresco in the pom pey ruins. after more than 70 years of being a fixture of cleveland baseball, the chief logo has been removed from the indians caps and uniforms. the team will still be able to sell merchandise featuring it through a trademark agreement. back to you, melissa. let's get a check on the
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markets right now. all three major indices trading lower. the dow was down as much as 500 points just moments ago hitting sessions low but we're back now to down 444 or down 1.24%. as i mentioned tech and consumer discretionary, the big losers at this hour. foot locker leading discretionary lower sharply there. ty it is the story that has really rocked the automotive world. nissan chairman carlos ghosn arrested. nissan shares tumbling. he's also ceo of the french carmaker renault. that stock taking a big hit, down almost 8.5%. phil lebeau joins us with the latest. >> reporter: ghosn has been a fixture for nissan and renault
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for 20 years. he was arrested late tonight or this morning u.s. time over in japan. he's accused of underreporting his compensation with the tokyo stock exchange. his misconduct includes the personal use of company money according to reports that its up to $44 million that was underreported. the ceo of nissan held a press conference this morning and guys, this was a surreal press conference. there was no sadness. it was basically an indictment, if you will, of how he felt about what's going on with carlos ghosn. the misconduct went on for a long period of time. take a look at sales for nissan/renault and this asliens. it started back in 1999, look at how the sales have grown. they are essentially number one when you put nissan, renault, there's a russian automaker in there as well. they also took a majority --
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controlling stakeholder position in mitsubishi, more than 10.7 million vehicles sold last year and when you compare nissan versus toyota versus honda, as far as investments go over the last 20 years, nissan is the best performing one. a lot of these haven't done much over the last six months but many of the full line automakers, those stocks haven't done much over the last six months. guys, this is a huge deal not only in japan but for the auto world, because carlos ghosn is one of those giants. he put together these two companies and its been a very fruitful relationship for most of the last 20 years, but at this point it looks like nissan will succeed in removing him as chair of that alliance. there's a board meeting on thursday. that's when it could become official, back to you. >> explain once again what mr. ghosn is being accused of doing. it was failing to report income,
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is that fundamentally a tax evasion kind of charge >> no, no. its not what you and i would consider to be tax evasion. as i understand it, there are forms that are filed with the tokyo stock exchange where shares of nissan are listed. in those reports it was listed that his compensation was at a certain level when it was really at a higher level. this is not a case of him getting more money from the company than the company was aware of. its a case of allegedly the report said that he made x yen, x billion yen versus what he truly was making and that is a violation in japan, though, tyler, we should point out that i've read a number of reports coming out of japan that this is gone on with other companies and other ceos in the past and it hasn't always been prosecuted. in this case, it may be prosecuted and that may say something about the japanese business culture right now. it may also say something that that press conference this morning that we listened to, the ceo of nissan, there was no sadness in terms of him saying
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oh, this is a great man who put these two companies together. it was more a case of, well, look, this is what happens. you have one powerful man calling the shots for a long time. >> did you get a sense from the press conference and granted its through a translator, that the problem is contained, that they know the full extent of this or there are more issues involved with the company's accounting? >> you get no sense from that press conference that it is widespread. in fact, they just said that it was carlos ghosn and another director, a gentleman named dreg kelly who were the master minds behind this alleged crime and, again, this is primarily about what was reported in documents as well as some concerns about expense reports from carlos ghosn. there's no indication from these reports that this is widespread, that you've got an issue with the accounting at nissan. >> all right. phil, thank you. another big stock in focus today, amazon, one of the names leading today's selloff.
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down 4% right now. the online giant's expansion into the pharmacy space may be under way so what could it mean for the players in this space especially pharmacy benefit managers. let's bring in brian tankulet. great to have you with us. >> how you doing >> you cover the pharmacy end of the space. what are you finding that amazon is doing with -- it was a big announcement, we were wondering what eventually would happen with it, what have you found >> over the last few months what we've been doing is just calling pretty much every state pharmacy board to see what amazon's doing to expand pill pack. what we've seen is that just in the last week, pill pack has actually applied for licenses in new mexico, indiana and got a license to ship drugs from the phoenix facility they have all the way to seattle, washington. what we're seeing here is an early move on the part of amazon to start shipping drugs to their own employee base. as you think about what they've done with amazon locker in the past, what they've done with
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cashierless stores, they piloted stuff first with their own employees. we're seeing the first move out of amazon to really go into the retailing prescription drugs. >> let's say it is for their own employees, their own employee base is a pretty big one and i'm sure any company that announces that it had amazon as a customer would be pretty happy. so who can lose? >> so the way i'm looking at it is the first way it will be impacting the retail pharmacies. rite-aid and walgreen's and cvs and eventually this will shift into the mail pharmacy channels, express scripts, cvs and optimum health. those are the companies that have their own mail pharmacies. gradually, especially once amazon rolls out the prescription offering on the app, you're going to see some market share shifting but for now the ones that are most concerned about would be rite-aid, cvs and walgreen's and
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in that ranking. >> who does amazon ultimately want to compete with here? is it the retailers who are selling direct to consumers or is it the pharmacy benefit managers and sometimes they are indistinguishable because the retailers own the pharmacy benefit managers >> it will be the retailers. as we've seen them do in other areas of retail, they are disrupters. what you'll see is, they'll try to shift share where we, you and i can order our drugs while we're ordering other things off amazon's website. the pharmacy benefit manager, that whole area is changing where the insurance companies now own those companies. you've got cigna buying express scripts, aetna and cvs getting together. i don't think that's the space that amazon really wants to play in. they can grow their revenue base by simply dispensing and selling drugs direct to the consumer. i really think this is more of a play going after the retail
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channel. >> targeting bricks and mortar. we'll leave it there. thank you very much. >> thank you. bonds are on the move in today's market selloff. rick santelli is tracking all the action. >> reporter: the treasure's have woken up to the market volatility whether it was the huge correction at the end of last week and even today, deterioration, look at a two year note yield, hovering at the lowest closing yield laeflz since september 13. one week of tens just slightly deteriorating every day. last week was much larger deterioration hovering at the lowest closing yield since the 27th of september. but if you look at a 30 year bond, let's start the turn on the 25th of october, the 26 had a low of 331, they are holding up the best on the long end should it violate 331 in a closing basis, look for acceleration there. you can really see how well the third year is performing. it is now the steepest since
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around the 27th of march and 30s minus ten is the steepest, widest since around march 8th. investors still have some good purchasing power of a good yield on the long end of the market and will continue to monitor should they come in and actually push that final maturity below some of its breakout levels from last month. tyler, back to you. >> thank you so much. straight ahead, we will show you the staggering amounts the biggest blue chips in technology have lost since their most recent highs and there you look, the slide continues today. let's get a look now at the stocks that are moving the dow right now and you see a half dozen or so, seven, are actually positive led by johnson & johnson. pfizer is higher, so is coca-cola, merck is higher. boeing, apple, verizon, microsoft, they are the waits owght now. "per lunch" is back in two minutes.
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another big selloff on wall street, weaker than expected home builder data driving some of the losses. the bank stocks are getting whacked. facebook, netflix, amazon, alphabet down anywhere from 10% to 25% domin dominic chu is looking at how much things have fallen. >> how much market value has been loss? let's run through these big drops. facebook the clear lagger now has fallen by nearly 40% from its recent highs. the records back in late july. that totals $247 billionroughl in market cap loss. amazon, down more than 25%, since its recent record high on
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september 4th. that translates into $245 billion roughly in loss market value there. apple, entering what some traders call bear market territory, down 20% from some of its recent high levels on october 3rd, that translates into $218 billion in lost market cap. google parent company alphabet down more than 19%, that translates into $145 billion in market value loss and will finish it off with netflix, $62 billion worth of losses since june 21st. that's 35% from its highs. now if you take all of those together in total, those five names now have lost over $900 billion in market value since their record highs. in other words, more than apple's current valuation. back over to you, guys. >> thank you very much. let's get the traders take on the selloff and joining from the nyse floor, kenny poll carry of o'neal securities.
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good to have you with us. >> how are you >> how has the mood changed in the past six weeks >> its interesting. the mood to me feels like its changed over the last week, not so much over six weeks. people we're not so sure whether the selloff was going to continue or be an whether the selloff would continue starting last week, my sense was talking to is asset managers the mood is all of a sudden it's starting to change the conversation coming out of the fed and the conversation about maybe we're near neutral, maybe we're not but now cla rita and boston said we're closer to neutral than not i think that might be a way of them positioning kind of giving jay powell some cover if they decide not to raise rates going forward. i think december is baked in 2019 could be in question whether or not -- i thought there would be three in 2019 i'm not sure there's going to be two if the mood stays like this. you can see this rotation out of tech, out of the growth names into the value names
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you just pointed it out. johnson & johnson, procter & gamble, coca-cola. they are value names to see the stocks up on a day when you see the growth names getting pounded gives you the sense that money is moving into defensive plays as people prepare for maybe what's going to be a weaker end to 2018 and maybe not so robust 2019 >> is the hope of a santa claus rally over >> i'm never giving up on santa. it may be tough through the end of november, my sense is, but i'm kind of hoping that in the last couple weeks you get a little bit of a rally. i think the hope that we close up near the highs which is what i kind of thought was going to happen a month ago, that's probably not going to be what happens. but i think i'm always hopeful that into the end of the year we'll see a little bit of a santa claus rally. this year may be more muted than most i'm still hopeful. kenny, thank you
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kenny of o'neal securities former new york city mayor just made the biggest gift ever to higher education. we'll tell you how much and what it could mean for students plus take a look at some of the stocks dragging down the s&p 500. nvidia down by more than 9%. technology, no surprise. we havmoe re on this market sell off straight ahead stay with us
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by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. big on education with the largest donation in history to support financial aid. robert frank is here with all the details. >> it is the biggest gift ever to higher education. michael bloomberg giving $1.8 billion to johns hopkins university for poor and middle income students to better afford tuition. it will make the institution need blind it will be paid for regardless of your family's financing it could help reduce the crip e crippling college loans. ploomberg saying no qualified high school student should be barred spraentrance based on th
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family's bank account. there's an undowment that will grow with this gift. this doesn't change the bigger issue which is soaring costs of college for those who can't afford it. costs more than doubling over the past 20 years and tuition and fees 52,000 a year at hopkins. columbia just under 60,000 bloomberg hasn't ruled out a running for president. this brings his total giving in his lifetime to over $8 billion. he still has about 46 left he'll do okay. >> amazing and generous. when you show the numbers of columbia at $57,000 for tuition and fees that's not the total cost. that's just the tuition. >> that is tuition and fees. it doesn't often include housing and meals and the other stuff
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which brings it way over 60. >> way over 60 >> not impossible to think, the next few years it could be over $100,000 all in. start saving now >> get into hopkins. >> get into harvard or hopkins, note to my son the 2:00 p.m. hour has turned into one of the most volatile hours on wall street. look at all that red in the s&p 500. weekend see big moves. you can't afford to go anywhere. plus health care, an outperformer this year the sector up 10% in 2018. where the returns are coming from second hour of perthow, e witching hour, is next
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see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade
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and then, more jobs robegan to appear.. what started with one job spread all around. because each job in energy creates many more in this town.
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good afternoon, everybody. i'm tyler mathisen here is what is on the menu for the second hour. goldman sachs the economy is going to slow to a crawl in 2 9 2019 why and what it could mean for the markets. rotten apple a new report suggests apple is slashing production orders for some iphones what it could mean for shares of apple. earnings come out from
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lowe's, target, tgx, plus four days left until black friday what can we expect and a rising risk for the markets that you may not be paying attention to. "power lunch" starts right now welcome to "power lunch. the red today with the nasdaq falling further into correction territory. the s&p 500 would be the first in three days while the nasdaq would drop for a third time in four days. right now that composite is down by more than 3%. treasuries are also on the move. the two-year, ten-year yields hitting the lowest levels since late october apple, boeing, visa, the worst performers on the dow. verizon and johnson & johnson are leading. facebook the worst performer in faang down nearly 5% and bitcoin falling below 5,000
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before rebounding. it's the lowest level since october of 2016. it cracked 5,000 4920 is your level let's go to the new york stock exchange >> volatility has returned the vix back above 20 and the dow down nearly 2% last week the dow jones industrial lost about 2 %. there's a heated debate on the floor as to whether this is a bull or bear market. and yes, on the individual level, there are a number of stocks in bear market territory. almost 40 % of the s&p 500 you're looking at the big names. the major indexes are nowhere near that level. the s&p 500 8 % below. if we go global for a minute, you'll see emerging market stocks, even china out performed the s&p 500 in the month of november so there are pockets of strength, but in terms of today's action, we are lower
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across the board led by technology, and if you look at a number of the faang stocks are trading well below their average price targets which suggests wall street is bullish on a number of these names. analysts many times get their calls wrong. looking at the technical picture here, netflix forming a death cross formation. that typically isn't a good sign it's when the 50-day moving average crosses under the two-day. facebook and alpha have experienced their own death cross. technical a part of the big story. and bitcoin, one of the reasons why the chip semi conductor stocks are down. bitcoin below 5,000. 4919 >> thank you technology leading the declines bertha is live with the latest >> tyler, it's interesting to note that the nasdaq 100, the largest big cap index, hit an all time high on october 1st
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and look where we've gone since then as a lot of these big cap names have effectively fallen out of bed earnings season was not the positive catalyst at all apple hitting bear market territory. it's having a horrible october when you look at faang momentum names, facebook at another 52 -week low. microsoft which had been among the better performers in these big momentum names that had moved us higher, now is in correction territory down 9% for the quarter. that said, it's not all gloom and doom so far month to date here, and there are a couple of tech names that have outperformed and are up double digits semantic among them. up more than 20 % movant to date starbucks and ulta in retail have been among the standouts so
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far this month and netties, a chinese internet games. a couple of them have started coming back. you're seeing people starting to pick specific stocks it's always the cliche it's a stock picker's market especially now >> bertha, thank you today goldman sachs released the outlook for the economy in 2018 it expects a slowdown. they see t2 .5% growth in the first% but just 1.8 and 1.6 in the third and fourth quarters. how do you position yourself for a potential slowdown let's bring inbear wi barry wit investment barry, would you agree with goldman sacks? are you macratcheting down your expectations for next year >> we are, actually. as we look at it it's like the seasons we're in thanksgiving
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season right now and the economy we're in the fall where we're starting to see auto sales and home sales start to ease off and then heading toward later fall and even winter, and those times you want to be shifting out of stocks more into bonds. at the same time, going for value types of stocks, and large cap stocks >> and michael, you think the selloff in technology, part of this -- the bid today at least we're seeing in days we're in a sell off mode, we see a rotation into some of the names that barry mentioned, the value stocks dividend yields, et cetera you see technology selloff, there might be more to come? >> yeah. i think it illustrates barry's point well these stocks high momentum, high growth go go stocks a lot of money flows going into them the last few years. if investors are repositioning, and i think they are, economic growth, inflation risk, geo political issues
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late cycle in the u.s. growth cycle. anemic global growth all reasons why investors are trying to recalibrate what's going on because of that, they're going to more defensive types of assets like defensive stocks you don't want to get out of the stock market, but you want to get out of some of the momentum names. i think the money flee is reflecting that. >> let me ask you about bonds and how they're performing the rate on the ten-year has come down by about maybe a tenth of a percent over the past few weeks. and there is a growing number of people who are concerned about credit being stretched particularly in the high yield market talk me through my bond positions. >> yeah. you know, the big surprise to me this year has been how well the high yield markets held up i believe it's a matter of time before it starts to fall i think what you want to do, there's been a lot of investors who have been out on the risk
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curve trying to capture yield. you see it in longer durations and leveraged and private debt deals. i think as interest rates gro up, you'll see investors, and maybe they should be doing and if they're not, they should be doing it now moving away from risk and toward more safe lower duration, high quality balance sheets better financial position companies. and in that way you can still make money maybe not as much as you were before, but it says important to protect principle as it is to make brasis points in yield >> all right thank you. barry james and michael kujino facebook selling off again today as the drama surrounding the management there continues to play out. now down about 28% over the last six months on pace for the worst month. what could be next for the stock? let's bring in an internet and
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digital media analyst at sun trust robertson humphrey good to have you with us >> thank you >> is what's been reported in the papers what seems to be going on behind the scenes at facebook a threat to its fundamental business model in other words, basically advertising and consumer engagement >> look, i think they're at a very important point, a point that reminds me of where they were six years ago in 2012 in september to be exact. september in 2012 when everybody thought they missed the boat on mobile, and the stock was up 50%, down to $18 what happened since then was a stock that was a ten bagger. six years later. what's happening right now is existential risk for the company. i think the management team has decided to effectively crush the earnings in a negative way, ie, bring down margins, invest
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aggressively to try to stave this risk. the jury is still out. my take is they should be successful in doing so they have the largest balance sheet. they have one of the best names out there and the will to try to do it. if they don't do it, i don't think it's a facebook problem. i think other internet and digital media companies will have the same problem. >> i take your point about 2012 and what was going on there, but -- and they were able to fix it but they really had in that case, a product fix. here it seems to me that the needle is tougher to thread because there is a trust issue that's at play here. and also a regulatory issue, not just in the united states but also globally and especially in europe, and those may be trickier solves. >> absolutely. and i think if you look at gdpr
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in europe, which is the regulatory framework that all the internet companies need to abide by, that wasn't just done to attack facebook or try to regulate facebook. it was to try to regulate the entire industry. that's why i said what i said earlier. now, to the effect or possibility of them being able to succeed at it, i go back to the issue that this is existential for them trust is something that is gained over time in talking to advertisers, they are not going anywhere in talking to or in looking at the user growth and engagement, last quarter they still added 36 million users. they might have lost 1 million in europe because of gdpr, but they're still coming in ahead of where they were three, six, nine months ago in terms of users and engagement i think this is played out way, way in my book, too much in the media, but the numbers are not really reflecting that
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>> you got a $200 year-end 2019 price target >> yep >> i'm curious, what do you think the stock is telling you if you think that advertisers are not going away, are investors just misperceiving the problem entirely twitter shares are up nicely year to date versus facebook are you telling me there's no fallout? >> no. i think there's a fallout, and the fallout has to do with two things one is mismanagement of this whole security issue which speaks to the dent in credibility. and two is the fact that this has been a momentum stock really since the get go so -- >> and it's a corporate governance issue >> yes >> it cannot be fixed and will never be fixed unless mark zuckerberg steps aside >> i don't know if he'll step aside. he's the founder >> exactly so it will exist forever >> he's going to be there for the long haul. the issue is can he change his ways or alter the way the board
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works to a certain degree to make it palatable to us and shareholders in. i think he will because he does not have a choice. >> thank you coming up, health care up more than 10% so far this year look at the names within the sector poised for the biggest gains and losses from here a look at who is reporting what's expected and how they're getting ready for the holidays and corporate debt at a record level with interest rates rising should investors be worried? >> let's look at the numbers the dow is down by almost 20 0 points the nasdaq is down by 3% s&p 500 down by 53 or almost 2 %. "power lunch" is back in two i am a family man.
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welcome back to "power lunch. the health care sector one of the best performing sectors this year i guess it is the best up 10% dom is here with a look at the stocks within the sector that are poised for the biggest gains and losses potentially in the coming months. >> we want to look at the stocks that maybe have had recent down trends that's the top of the list with regard to health care stocks that could have the most up side based on analyst target prices a hand full of the names among them that could have some of the biggest gains are nektar
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therapeutics it could double from here if analysts are right about their target prices. they could revise lower. celgene and align technologies they're behind the dental products up 53% mylan laps up 28%. and henry schein, a dental products company after a nice run higher is net or at the target prices. it's 3% above it unless abnalysts change the target prices, ten ri schein >> potential up side as opposed to how wrong the analysts are? >> that could be and you bring into account the argument that many people have is whether or not the analysts are right most of the time about their predictions. of course, we could have a huge
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debate about that. >> dom, thanks what should we expect from higher tech and health care in the final stretch of 2018? joining us is the analyst at bernstein, ronnie you're one of the analysts -- what do you think happened with these stocks that you didn't see at the beginning of the year when you set your price targets? >> they did worse than we thought across the sector. the drugs essentially came out a favorite part because of the pressure from the government as the trump administration got to be more and more negative around their policies around the drug world. that essentially set as a head wind for the drug sector and the names did not recover as much as we thought and some of the names on the list were names we recommend, and we've been wrong on them to some extent this year. >> with the midterms behind us, has anything changed in terms of your view when it comes to the risk of government interference
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with pricing? >> so that's kind of interesting because like it or not like it in the drug industry, it's almost nonpartisan on one hand the administration and others are very much advocating for a forum as much as the democrats like to argue the drug administration is overearning, a lot of them are industry supporters, folks like pelosi is very much supporting the industry and the industry is based in democratic states when push comes to shove, they'll have a harder time accepting the lower revenue for companies in their area. i would think the next three months are critical in terms of seeing whether the president and congress can work together on policy changes or if it's a matter of arguing against the drug industry and nothing is done >> if the mood or rhetoric doesn't change, won't that act as a wet blanket on the stocks even if nothing seemingly is going to get done, the threat
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would be out there >> yeah. i think that's absolutely right. and at some extent the sector that recovered will be a head wind we were aware of that for such a long time. if nothing appears to get done, my guess is there's probably some up side to the stock. there's some sort of a cap to how far the sector can go before we know what the government will do about drugs in the long term. >> stock specifics in terms of celgene, are we going to hear about reimbursement levels for car tee? >> we will the doctor who runs one of the harvard hospitals came out and said women will not be able to continue to support car tees if there's no code. cms is under a lot of pressure to come up with one. they most certainly would over the next couple of months.
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>> thank you taking a bite out of apple a new report today says the company is cutting back production of iphones. it's the second report to suggest that demand is slowing with the stock near bear market territory, is apple a buying opportunity? and look at the chip stocks hit hard again nvidia, advanced micro, micron more on that ahead
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it's time for trading nation fears over apple's iphone demand sending the stock stocks shares are now 20% below their october record highs shedding more than $220 billion in market cap and putting the stock on track for the worst quarterly performance since 2012 how should you trade apple now let's talk about that. harry, how much damage has been done here to apple from a technical perspective? >> there's been some on a more near term basis.
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the stock is surely succumbing to broadening market weakness. it's below this 194 support level that we've been highlighting i don't think there's a trading call we're recommending for the longer term clients that are bunch marked against the s&p 500 to stick with it i think exposure is still warranted. here's why if you look at the stock relative to the s&p 500 j support levels are intact. it's correcting back into its six-year breakout versus the market dating back to 2012 and still in a relative up trend dating back to 2016. until you get back above 194, perhaps looks like it needs to stabilize more but we think you give it a little extra flexibility we think it's okay for the long-term. >> and stacey, the stock is still up on an absolute basis. where does the sentiment break down bring you in terms of
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deciding where the stock goes next >> sure. if we look at the options market, it really is almost consistent with what ar ri is talking act. we may be approaching a bottom if it's just temporarily here. one of the things to the 194 level within the option space there seems to be that we're not really positioning for a breakout this is interesting. this is contrary to apple two years straight within the options. the positioning was almost always positioning for the up side as the market derisked, we've seen the shift in apple. we may be much more range-bound rather than breaking out to the up side or seeing anymore weakness here. >> all right well, after these setbacks, maybe range bound doesn't sound so bad for more trading nation, head to
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our website or follow us on twitter. coming up, chips getting crushed again. a look at what's leading the losses we're breaking down what to watch and how to trade it. "power lunch" is back in two as that's when volatility tends to be the highest. when volatility picks up, often the spread between the bid and the ask price will increase and that's never a good environment for buying or selling.
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hello, everyone. here's your news update. christopher watts receiving three consecutive life sentences without the chance at patrol this comes nearly two weeks after he pleaded guilty to five counts of first degree murder for the killing of his wife and two daufrs the judge called it the most inhumane and vicious crime he'd seen
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saudi arabia's king called on the international community today to halt iran's nuclear and ballistic missile program. he also reiterated the kingdom's support for the united nations efforts to end the war in yemen. these were his first public comments since the murder of the ju journalist, jamal khashoggi. jbsausa has recalled nearly 100,000 pounds of ground beef. they were produced on october 24th luckily so far no illnesses have been reported. and take a look at this. several of the world's top big wave surfers stayed in portugal after the world surf league event to ride the giant waves on sunday the wsl big wave tour held the challenge friday and was won by south african grant baker. waves at this particular
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location easily 50 feet high which is -- oh, that is not pretty, but he's okay. that's the news update at this hour ty, back to you. >> that's serious courage. thank you. pg&e under fire today. we are in san francisco with the latest >> pg&e shares are down about 6 .5% after the utility reported a second power outage near the campfire to regulators after the close on friday. investigators are looking into whether pg&e was responsible for the campfire which has killed 77 people so far. scorched 150,000 acres, and destroyed more than 10,000 homes. pg&e reported a power outage in the area before the fire started and now the utility has reported
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a second outage in the area shortly after the first reports of the fire. that was eight days after the blaze began. rms has estimated the ib sured loss for the fire will be between 7.5 to $10 billion over the weekend president trump visited wildfire sites in both northern and southern california pledging to help wildfire victims. he was joined by california governor jerry brown and incoming governor gavin newsom also over the weekend, the number of missing in the campfire shot up it's now a little under 1,000. back to you guys >> are they doing anything about air quality? we'll get to that at some other point. a check on the markets now stocks losing ground the dow is down by 478 points. or 1.9 off the session lows. the nasdaq is off by 219 leadin
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the dow lower. coke coca holding onto gains finally getting a check on the pot stocks, notable moves to the downside >> all right the oil market closing for the day. and jackie is all over it at the commodity desk >> oil prices getting a bid today. about 1.25%. difficult to move higher than this with the pressure we're seeing on stocks oil was just hit so hard there needs to be another negative catalyst to push it past the mark. the stock losses continue, that could be a factor. opec not taking any action to balance the market typically holiday weeks could see light volume, especially as parts of the oil trade have been unwound over the last few weeks. closing today a little over 57 >> thank you, jackie
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time for the run down retail edition. a big week >> huge. we're trying to crush ourselves this week. a huge day tomorrow for retail earnings tomorrow. this year we have an early thanksgiving and black friday jammed together. with two days before the door buster deals start, the focus will be on expectations for the holiday quarter. and specifically that first really big weekend that we're up against now on tuesday look for earnings results from best buy, kohl's, lowe's, tjx, barnes & noble they are expecting a really strong holiday quarter investors want to hear that on the call tomorrow and also want to see a strong third quarter to support going into this strong fourth quarter >> we know what you'll be doing tomorrow >> right i think you do >> haven't some retailers been cautious in their guidance
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>> some. but the ceo commentary has been pretty strong. so i think that's kind of interesting when you've got the ceo saying we're in a better position than we've ever been. we think we'll be strong going into the quarter and the numbers are a little skeconservative outbrands, out with earnings tonight. >>s in a tricky one. l brands, victoria secret and bath and body works. comparable sales up 4% the company reports the numbers monthly. they also just guided earlier in the month to $0.15 a share that's what we're expecting after the bell it's been a difficult road for victoria's secret. the comps are expected to fall 2.5% in the holiday season the ceo resigning after two years and l brands outspoken chief marketing officer made comments to vogue stirring controversy. he said in 2000, victoria's secret tried to do a tv special
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for plus size and nobody had a interest in it we're nobody's third love. in reaction the startup's ceo saying i was appalled and to let women decide on what's sexy. that was a tricky one. >> topic number three here the holiday retail rush is starting target announcing week-long sales. black friday is already here >> why wait. right? you got stores all the time. so many retailers already did some black friday early sales, early access others are having access now or extending deals after monday here's a quick rundown target out with cyber week deals. key deep discounts on some items. amazon running black friday week deals that started friday running through friday kohl's black friday deals started today. macy's cyber week runs there sunday through next wednesday
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and best buy offering best buy access to members. >> does all this mean that black friday means less now than it did five years ago and will mean still less five years hence? >> i'll give you it might mean less now than years ago, but it's still retail's biggest day and expected to be the biggest day of the shopping weekend when you look at altogether both by spend and the number of people that shop. when you look at those big door buster deals, a lot of that has been pulled into thursday. but that becomes folks really kind of targeting their shopping they know they want this one tv or play station. they go. they get that. then they go home, chill out, come back to the stores on friday and shop more lee suisur. >> a lot of work >> i will never go to anything called a door buster >> it's actually a lot of fun. >> it is >> it is
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it's tradition i used to do it with my family years before i was a retail reporter it was part of what i did with my aunts >> nice. we're 35 days away from christmas. a few days away from black friday we know what kourtney will be on black friday and tomorrow. which retailers will come out on top? let's ask steve, a former chairman and ceo of sac's. does the black friday mean as much >> it's when everybody gets in the mood for shopping. actually the sunday before christmas is as big as black friday so if you look at the mastercard spending post forecast for the season, that sunday, it's early. it's late. there are ten big shopping days that are bunched together. every saturday is important. >> christmas is a tuesday. that's sunday -- >> thatsunday is important >> that's when i'll begin my shopping in. >> there will be a lot of good deals for you then
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>> there's lots of important days the deals started early. the consumer is healthy. you have a business forecast in the 5% range in terms of growth. if you look at the data through october, the consumer's holding up well. the retailers have to hit it now. >> the consumer is holding up well, but aren't we conditioned to wait until you get the 50 % off sale aren't we conditioned to wait for the deals to set in? black friday may not be the biggest deal >> i think you're finding the deals are there all the time you're seeing deals, the ones kourtney described have started. the consumer understands absent some specific item, they may get a bigger deal, but they can get deals during the entire period the reality is shop early, shop late you got to do this mind set that now is the time for the shopping >> you never know what the price is nothing seems to have a full retail price ever.
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i don't care whether it's the middle of june or the middle of december >> that's why apps are important. mobile effects everything. you know who the deals are >> who do you like >> i think a lot of the retailers playing in the om omnichannel space, the walmarts of the world buyonline, pick up in store. target, kohl's partners with amazon anybody innovating is doing well i think macy's is reinventing themselves >> a couple years ago you thought walmart. >> they've done a remarkable culture transformation they've changed to who the company is there are a lot of winners coming out >> for a time we were looking at the retail stocks and they were doing well until recently. do you use the stocks and how
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the stock market is pricing retailers to see the health of the retailers? >> the health of the retail business is very good. the consumers, two-thirds of the economy is shopping. you're seeing 5% growth and the forecast for continued 5% growth i think the consumer is healthy. the stock market is backing off. it probably wasn't as bad as it was when they were dreepressed a year and a half ago. you're starting to see concerns whether it's labor, inflation, tariffs. these are things out there that are weighing on the retail stocks because they are affected when the consumer psychology gets concerned i am a little worried. >> they are having their costs -- they're going to go up. they're going to have to pay more for labor and goods depending on what happens with the tariffs? >> yeah, but right now they're in a position. their inventories are in line. margins are tracking well. most of them are coming in pretty good on the earnings side you have good earnings last week
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from some of the people like the macy's and the nordstroms. >> let me tell you we've been talking about the traditional retailers, the store people how about amazon i want to get your specific -- my wife saw over the weekend in the lobby of a chase bank, an amazon locker. they deliver packages if you don't want them delivered to your door. >> absolutely. >> i mean, that's kind of genius >> i think what you have right now is a convergence in retail all the brick and mortar retailers are understanding the importance of the web. all the web players are understanding the importance of a physical presence. it could be a locker or internet retail makeup opening stores you have both of them moving toward the middle. i think the walmart coming from one direction and the amazon the other, they both win >> steve, thanks happy thanksgiving >> you too >> you'll be in d.c. >> i'll be in d.c. doing some
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shopping, monitoring the stores? >> happy black friday. >> thank you appreciate it. coming up the growing concern over corporate debt. one economist calling it the most severe threat to the economy and financial system as we head to break let's look at the faang stocks. facebook the worst performer % lledy azow bamon down 18% much more on power lunch straight ahead
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welcome back to "power lunch. there is a record level of corporate debt that built up this cycle and it is coming under scrutiny as the fed continues to raise rates ubs estimating 3 trillion outstanding of low quality debt. is this a rising risk that investors need to start paying attention to let's bring in a cnbc ris contributor?
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>> thank you >> people will day rising rates have been telegraphs for so long any corporation not prepared for the environment of rising rates is stupid. why are we concerned about this? why is this a sflob. >> well, i agree every ceo and cfo in quarterly conference calls are asking about terms out their debt. small companies has floating rate debt. i'm sure a lot of them are trying to swap to fixed to try to limit that, but overall, even if you do that and get into fixed, fixed rates are rising. for smaller companies, it's tough to term out into the capital markets their maturities they're -- >> 40% of russell 2000 companies have floating rate debt? >> yes >> how much is it in terms of high yield investment index? >> the leverage loan universes
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over a trillion. high yield is slightly less than that but above a trillion. the triple b is half the investment grade 2 .5 trillion. then the triple b credits, who is going to fall into the high yield land with ge being -- >> the falling financials? >> who is exposed to the risk here is it the banks? is it the mutual funds, the insurance companies? who is holding these loans and debts? >> that's a great question the capital markets have been tapped a lot over the past ten years to create the debt it's the clos that have exploded in size. collateralized loan. a lot of investors are holding onto that paper. >> sounds like cmos. >> well, it's a packaged security that basically -- >> i remember those. >> the question is high debt levels don't matter until they do they begin to matter when you
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have rising interest rates and worries about corporate cash flows. >> a slowing economy >> it's now the worries about corporate cash flows in addition to the rising cost of capital and it's the combination that now all of a sudden people are beginning to care. >> okay. let's recap. 40% of the it may fall because of deteriorating fundamentals or maybe even which is facing declines in oil. >> exactly and they say i want to be out because all of this will fall into junk. imagine being in judge that gets overwhelmed by credits that fall and you see spreads and it will damage more the existing junk credits. >> they will get pushed down and yields will get pushed higher. >> exactly >> is it a concern for you when you take a look at how this etfs
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vab great way in investing in the bond market? it is something that's in a lot of peoples portfolios. >> and it is a leveraged loan atf. you can trade it and it settles in two days. it could take much longer to settle there will be a dis -- >> and i just thought that >> so what happens when there's a major disconnect between the settlement of the bonds? >> you could have it be much less >> minor problem >> yes >> peter, thank you. >> thank you >> weekly advisory group the biggest declines frm we'll take a look at what's driving that sector. that's coming up next.
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welcome back for more on the chip wreck let's go to josh in san francisco. >> the worst performer
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talking about a crypto hang over other holdings include micron and intel. they are referring to massive evidence by memory chip makers and they included micron there they sate includes trade tensions with china. the journal just reporting apple slash reporting and pressure in memory chip pricing. t.j. rogers was on cnbc this morning reminding investors that the two biggest products they own, their phones and cars, the processors in the future but that long-term view is not finding many buyers in today's
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trade. back to you. >> all right thank you very much. we appreciate it let's take a look at the dow the dow is down 399 points right now. you can see they are largely drug stocks and what we would call coffin sumer durables more on the market selloff when we return. we are accountable to our clients everyday. we have the freedom to build a plan. a porfolio based specifically on their needs. we're fiduciaries, stewards of our clients' money. entrusted to do what's right. it's a mission. a guiding principle our firm lives by. charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com
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>> the dow is down 400 coca-cola hitting the highest level since the ipo in 1990. this along with dividend paying stocks have been paid. if you take a look every single metric in fact including priced earnings, price to book. you take the five year average and right now coke is trading higher an every single metric. investors have to think about what they should want to be paying for safety. >> yeah. on the other hand, all of the fangs have fallen out. it is call add bare market facebook down 39%. amazon down 25%. netflix down 35% alphabet down 20%.
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we call alphabet g in there. it is really google. we should point out all of the stocks are now also in bare market territory down 20% from the most recent highs. there you see the s&p below 2,700. >> thank you for watching power lunch. >> the closing bell starts right now. stocks down across the board. tech in particular getting slammed. we'll speak to one investor who says this is a buying opportunity. apple getting hit hard we'll debate whether it is a good time to jump in and buy the dip. facebook shares are down nearly 40% from the july high. the stock is getting crushed again today. a shareholder tells us why she thinks major changes need to come from the top.

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