Were the two profit drivers in the Second Quarter for General Motors and more importantly for investors, margins were above 10 and for the remainder of this year General Motors expects business to be Even Stronger in part because of pickup trucks in north america. Our pickup share in the Second Quarter was up close to 3 Percentage Points on a year over year basis. So we continue to see a lot of Strong Demand for fullsize pickups, suvs and crossovers. To drive that point home think about this. Year to date General Motors pickup sales, both fullsize and midsize up 25 . Thats one reason why gm is doing so well in north america which we saw in the 2q numbers. Eli lilly beat the street. Meg tirrell, the Company Raised its forecast for the year. The beat on the adjusted earnings was 16 cents. Raise only by 10 cents though. Ceo on squawk box this morning address what went into that question. As we are launching products and bringing drugs through our late stage pipeline that drives certain amount of expense. We want to launch our products well. We want to invest in these pipeline products. All in all, we beat by 16 we think increasing a dime is the prudent thing to do. The company is moving past a big patent clip that weighed on sales the last couple of years. They have a few new products. Two diabetes drugs and an cancer drug they highlighteded this mornings. Yesterday we were down in d. C. At the alzheimers conference, should be a readout early next year or 2017. There is a big cholesterol drug that could read out next year as well. There the stock is moving up just a little bit at this hour. On to caterpillar, it reported a slowdown in sales last quarter. Thats really less the story, mother morgan bren gan. We have a stronger dollar thats denting sales. Company revising its 2015 revenue outlook down by 1 billion. Also another issue us that affecting this company is low Commodity Prices also not helped by the stronger dollar. Thats really denting demand for the companys machinery. This is something that on cnbc earlier today, the ceo talked about it. He said it is not going away any time soon, this issue. We have an oil price cut in half. Commodities are at their lowest for quite a few years at this point in time and Global Growth is slow. All of those things kind of combine for a lot of winds buffetting around right now in front of us. Slow weak Global Growth also an issue. This is particularly true for the company for brazil and china. Now in terms of china specifically, he also said that the big slowdown that weve seen there has actually cut industry for Companies Like caterpillar by half over the past year. You can really call this the three horse men. Dollar, lower Commodity Prices weak demand in china. A tough hand to play. Morgan, thank you. Lets take a look at our earnings scorecard with nearly onethird of the s p having reported so far. 75 of the profit reports have come in above estimates. 8 hit them on button and 17 have come in below estimates. Lets look at how this is all reading into the markets. The dow is off its lows of the day. It was down by 112 points now by 99. The nasdaq is currently down by 15 and the s p 500 is down by 10. This is for the dow and s p the Third Straight day in the red. Lets get to the floor of the exchanges with bob pisani. Greece and china not directly dominating the headlines. Thats the good news. The bad news is earnings are and greece and the slowdown in europe and china arent impacting the earnings headlines. Morgan was talking about whats going on over at caterpillar. The important thing is what they said many other companies are saying in the Global Industrial space. We heard this from caterpillar, United Technologies 3m emerson. Theres the s p 500. We have started briefly in positive territory but drifting lower all throughout the day. I do think this is on Global Growth concerns. Let me put up the issues that again and again these multinationals have said this week. The slowing economy issue. In not just china but latin america. Weakness in the oil and gas business. Overall slowdown in capital spending. Then as an ancillary issue, the dollar strength. Multinationals across the board have been hit on this this month. Not just caterpillar. United technologies is weak. Emerson electric. 3m. All down on these Global Growth slowdown concerns and the stronger dollar. Were seeing number of new lows today in industrial stocks and material stocks. Emerson electric caterpillar, 52week lows. We are getting many Energy Stocks again today at new lows. A few of them conoco exxon, apache. It is hard to find stuff at new highs. Remember the rising Interest Rate story is very prevalent for the second half so a lot of people are hiding in bank stocks. We saw some intraday new 52week highs in bank stocks earlier today. They are down here but they were up earlier at 52week highs. Pnc, citigroup, i guess my point is, a lot of people are hiding in those banks stocks because there is not a lot of stories in the second half that are working very well. If we get no growth at all, no rise in Interest Rates at all, these bank stocks are certainly going to be under pressure but right now theyre one of the few groups that are really outperforming in the first half of the year. Thank you very much bob. U. S. Held Insurer Anthem plans to announce a deal to acquire cigna. The deal is expected to be announced tomorrow. Anthem is set to acquire cigna for 188 a share and the deal will be 55 cash and 45 stock. Both boards are expected to approve the deal. Where this would all follow aetnas 37 billion agreement earlier this month to acquire humana potentially reducing the number of major u. S. Companies from five down to three. Therefore, as you can imagine, attracting antitrust scrutiny. For months and months weve heard about bidding wars for homes and sometimes for homes already off the market. But winds may be changing. Diana olick is live in washington. Reporter yesterday the realtors said june home sales were the highest in eight years but today one major brokerage says that may be about to change. Redfin just released a new demand index that says while home buyer demand is up 13 from a year ago, it took a sharp turn lower in june from may, down 7 . And that was the largest monthly decline since the end of last year. The index tracks millions of visits to redfins listings as well as requests for home tours, customer offers and homes and various price data. That last one though is the kicker. Prices. Redfins ceo told us that there is fatigue and frustration with higher home prices especially as Mortgage Rates move higher. He claims people are packing it in early this season. Redfin predicts sales will be strong in july but will drop off dramatically in august and throughout the rest of this year. Pripss of course usually lag sales. Median price of a home sold in june the highest on record. Others surveys like one monthly read from Credit Suisse noted a growing feeling of sticker shock. Tight supply across the nation is keeping Prices Higher rising far faster than incomes. There is a Tipping Point in Housing Affordability and we may be there. Yesterday, existing home sales reported an increase of over 3 pushing home builder stocks higher. Today many of them seem to be trading to the down sides. On the board in particular d. R. Horton is down by over 2 . Bob, if youre not already in the Home Builders is it too late to get in . Is now a good time to buy . We like the builders a lot right now. We think it is the great time. We are seeing sustained job growth. Strong consumer demand. Favorable pricing commentary. Is job growth more important than the fear over rising rates . In other words is the fear of rising rates for stocks like this overblown . Absolutely. Thats a great objection. The concern about rates in the stocks is weighing on them a little bit. We think it is overplayed. It is an investor concern that should be recognized but it is not crucial for the story. We have tremendous job growth in the u. S. We have strong pentup demand. We have a supply deficit and thats going to be great for builders. Talk about the individual stocks here. Whats the best in class operating . Best in class operator is lennar. Stewart miller has built a world class company. They are doing some Amazing Things in the space. It is not just a home builder. It is also multifamily builder as well. Thats a stock in the 50s. Best assets in the industry. Tremendously competent management. Polte group. They just bought over 250 million in the last quarter of stock. I love a disciplined Management Team with a buyback focus. They are doing the right thing. I dont think it is broadly understood by market. This is a stock with very little downside and very good up side. What about d. R. Horton . We would own this into the print you questionably. Great thing about that story is theyre building the platform to cater to the firsttime home buyer, the person whos locked out of the 250,000 house still needs somewhere to live and theyve built their model to accommodate demand at the bottom end of Housing Market and this is going to drive tremendous volume growth flawless execution. Theyve done a really good job. Lets talk a little bit about the aen ancillary. Are you looking to upgrade u. S. Gypsum at all . Jim met taf is thecalfe is the ceo. This is a Warren Buffett company. Todays results are the most optimistic weve heard since 2007. We think the commercial construction recovery is now starting to hit its stride. Anything in the sector that you would stay away from . No. We would actually one thing i would mention, if you want a longterm holding, mohawks best in class in building products. We love the growth angle of fortune brands. It is the Global Leader in flooring. The dominant global player. Thank you very much for joining us. Good to see you. Fireworks in washington as the Senate Foreign Relations Committee holds a key hearing on the iran deal. Senators grilling formerly one of their own, the current secretary of state john kerry. Thats next. Plus the falling price of oil putting pressure on oil related industries. We drill down on the stocks to watch in choochoo land. Railroads, that is. Th graders ever sat at the cool table. But your jansport backpack is permission to park it wherever you please. Hey. Thats that new gear feeling. Now get a swiss gear backpack for only 10. Office depot officemax. Gear up for school. Gear up for great. Why pause a spontaneous moment to take a pill . Or stop to find a bathroom . Cialis for daily use, is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Welcome back. U. S. Stockmaker bristolmeyers squibb reporting better than expected Second Quarter earnings saying its revenue rose 7 to 4. 2 billion up from 3. 89 billion a year earlier. Shares down by over 1 . Chipmaker qualcomm saying it plans to cut 4,500 jobs and spending, also saying it make break itself up citing rising competition. Shares down by 5 . Casino company Caesars Entertainment corp. May be facing brufts after a federal judge declined to protect the company from creditors seeking 11 billion. The shares though are up by 5 . The nuclear deal with iran coming before the Senate Foreign Relations Committee. It presented a chance for two of the republican president ial candidates to flex their Foreign Policy muscles. Hampton pearson is live for us in washington. Reporter well, right now the big three of the Obama Administration on the nuclear deal secretary of state john kerry, Energy Secretary ernest moniz and treasury secretary jack lew. At times the gloves have come off. Bob corker compared the inspection regime iran will face to athlete selftesting themselves for drugs. But he didnt stop there. I believe youve been fleeced. In the process of being fleeced, what youve really done here is you have turned iran from being a pariah to now Congress Congress being a pariah. The secretary of state, john kerry, reminded lawmakers the u. S. Had five International Partners negotiating this deal and his words, were not dumb. The choice we face is between an agreement that will ensure Irans Nuclear program is limited, rigorously scrutinized, and wholly peaceful. Or no deal at all. Thats the choice. Treasury secretary jack lew offered a Global Economic reality check on the future impact of sanctions. So its unrealist to think that additions sanctions would force iran to totally capitulate and impractical to believe we could marshal a Global Coalition of partners to impose such appreciate shu after turning down a deal our partners believe is a good one. Congress is just beginning its 60 day review of the treat ya. Today in vienna irans oil minister is being looking for Oil Investors in anticipation of those sanctions being lifted. Hampton pearson, live in washington. Thank you. Ferrari accelerating its plans to make its debut on the new york stock exchange. Details of that next. Fedex shares failing to deliver over the past month, down nearly 4 . Fred smith is going to be stopping by live on power lunch exclusively at 2 00 p. M. You do not want to miss it. Stick around. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Are you moving forward fast enough . Everywhere you look, it strategy is now business strategy. And a partnership with hp can help you accelerate down a path created by people, technology and ideas. To move your company from what it is now. To what it needs to become. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. The doddfrank wall street reform has brought about some of the most significant changes to the financial regular story system since the great depression, but did the law do what it was intended to do . Are we safer now than we were five years ago . Heres senior economics reporter steve leisman. Daddy, are we safer now . Yeah. Well, it depends on who you ask. Democrats say yes, republicans say no. Rekt regulators tend to say yes. I broke this down into four pieces to try to understand. Taxpayers, Financial Investors, consumer borrowers, and the entire Financial System. Are they in fact safer . Lets go to the first category. Taxpayers. The ruling here is yes, they are indeed safer because doddfrank should shift the bailout costs to the creditors if it works the way it is designed. And a big umbrella over this whole thing is the banks hold more capital. If they hold more capital, less likely to go to taxpayers here. How about Financial Investors . Well, they should still essentially be in actually more danger because one of the ideas of doddfrank is the too big to fail bailout should be less likely if they go through this and they should rely so investors would bear more of the problems. If its worked in the way it is designed. Theoretically, yes. The regulators should go to the creditors. Depends on where you are on the capital spectrum there. First to equity then to debt. Excellent point, tyler. Then what about consumer borrowers. They should be more safe why . There are more documents and more disclosure. But hang on a second theres also less credit so a huge downside when it comes to the cost and criticism here. Less lending out there because of doddfrank banks have to hold a piece of the mortgages. How about the entire Financial System . Im giving it a yellow. Thats all i can do right now. Were more safe than we were before but still in danger. There is more capital. More regulations. More monitoring. Dont forget the stress test. But there are bigger banks here. Thank goodness its unproven in a crisis. But then wed know. But on balance here i hear you basically saying that the law seems to be working the way it was intended. Heres the thing. As best you can tell. Well i think there are costs. I think there is a legitimate debate about how safe are we at what cost. If i dont get up in the morning and cross the street theres no way i can get hit by a car. But what is the cost of that of not crossing the street . If i dont get on a plane, i can never crash. Theres all that stuff. What is the cost . There are battalions of regulators reams of new documents out there. You have regulators inside the banks. You have battalions of compliance officers. The small, medium and sized banks say there is a cost in lending. I will say there. The cost of new regulation in the tens of billions of dollars. The cost of the financial crisis in the tens of trillions of dollars. Thats how we weigh all this together. Steve leisman, thank you very much. The falling price of oil is putting pressure on oil related industry. Next were going to be drilling down on the stocks to watch in the railroad space. Plus todays powerhouse is home to 18 fortune 500 companies. It is ranked the ninth largest city in the u. S. And it is served by two airports. Can you name that city . Hi. Hi. Hi. Hello. Hi. Hi. Hi. Hi my names josh. Kelly. My name is raph. Steve. My name is anne. Tom. Brian. Krystal. And i am definitely not a robot. Im one of the real live attorneys you can talk to through legalzoom. Whether its for your business or your personal life, dont let unanswered legal questions hold you up. Because were here. Were here were here and weve got your back. Legalzoom. Legal help is here. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . No fifth graders ever sat at the cool table. But your jansport backpack is permission to park it wherever you please. Hey. Thats that new gear feeling. Now get a swiss gear backpack for only 10. Office depot officemax. Gear up for school. Lets get you up to date on whats happening in the stock market. Just in the last few months the dow pushed down to 115 points negative, the low of the day. Were currently down by 109 points. Biggest drag on the dow is 3m after its weaker than expected results. But the nasdaq and s p are also in the red. The s p is down by ten points and apple and microsoft are gaining. Thats certainly not helping there overall. Kate pill caterpillar is one stock were watching. American express falling as well and certainly dragging on the dow. Well go out to chicago and check in with Rick Santelli tracking the fixed income markets. Its been a uen had turn session for treasuries. There was a lot of glee over the it 5255,000 lowest level for initial claims since 73 but thats not enough to keep the market from focusing on the Biggest Issue equities and how they continually keep losing ground. Look at intraday of 10s. 2. 30 . See what happened when you went under 2. 30 . Had some buy stops because moving price up moves the yield down. If we should close under this level, open the chart up from the first week . July, it would be the lowest yield close anything basically under this 2. 28 to 2. 30 level, the lowest close since about the 8th of july. Looking at a twoday euro versus dollar trade. A lot of the 8 30 action pushed it up but the fact is weve had eight sessions since the 14th of july where the euro closes under 110 and it stayed there. This could be the first session going in reverse. Could it be that simple . Yes. The dollar index has become a proxy for fed. We all know whats going on with stocks could be a bigger proxy for the fed. Thank you very much Rick Santelli. Domini chu has a quick market flash. Unite rentals is the biggest loser in the s p 500 today. The Equipment Rental company beat earnings per share estimates but missed on revenues and also what happened with regard to analyst expectations. Checking the overall outlook, United Rentals also cut that outlook. The ceo says a drop in oil drilling had a bigger impact on the company than expected. We want to watch those shares down at their worse levels today. Over to Sharon Epperson for a news update. The first news update is about House Speaker john boehner. He says congress will likely result to a shortterm federal spending extension for the start of the new fiscal year on october 1st, blameing senate democrats. The jurors were taking more time than expected in the james holmes case to decide whether prosecutors passed the first legal test for the death sentence. Deliberations resume today. Scientists have found a planet beyond the solar system thats a close match to earth. The planet which is 60 bigger than earth is 1,400 light years away. Michelle obama is teaming up with rapper wale to help teens overcome obstacles and succeed . College. There was a beating the odds summit on making a smooth transition to college. Lets look at gold prices. It has been a bumpy ride for gold lately but today look at that, a gain for gold. A rare one in recent weeks, up 2. 50. Over the past week nonetheless, it is down about 4. 33 . Silver copper palladium and platinum red numbers persist, copper down 1. 7 . Platinum is up 4 and change or. 5 . Back to the markets now. With us rob morgan and brad mcmillan. Great to see you guys. Rob, let me start with you. Whats your read on whats going on in the markets . It feels like were very much focused on domestic issues such as earnings right now as opposed to all the headlines of recent weeks. I think if you step back and take the Bigger Picture view keep in mind we just had an alltime high on nasdaq earlier this week. I tend to like stocks here though. I think the economy is going to continue to grind along, not as fast as wed like but that will drive earnings up. Pe multiples arent out of whack to the high side in my opinion. Technicals look good. Most importantly, the Retail Investor has really not gotten back into the market yet so thats going to give us some cash for this bull market to continue. Can we just back up . When you say the economy is just going to grind along. An economy grinding along. Is that the kind of environment in which a fed can justify a rate hike to the public . I think when they ultimately do raise rates i think it will come this year maybe even more than one hike they really need ammo for the next recession. Thats i think going to be the basis for selling it to the public. What about you, brad . You expect Slower Growth in the next quarter or two. I think we are going to see Slower Growth but i think it is going to continue to be positive. When i talk about smaller growth im not talking about moving to a recession, im talking about growth in the same range weve seen 2 to 2. 5 . The important thing here is thats slower but its sustainable. It means a slower expansion but it means a longer one. I think thats the kind of environment that will support stocks moving up. What sort of stocks . Today weve got a number of earnings disappointments and moving around session lows here on the stock market. I think financials are a good place to look at. Youre going to see rates go up slowly and youre also seeing lending start to pick up. Theyre not only doing more business, theyre making more on each deal. Thats a Good Environment for financials going forward. Other thing i still think is worth a look. Just hold those thoughts for two seconds. I will get back to you. But bob pisani down on the floor of the stock exchange. What are you hearing . I think the important thing is china and greece reare not really moving things, klein china indirectly because of the effect on earnings. Were essentially sitting right near the lows today, weve been bouncing along for the last hour but weve seen weakness throughout the day in transports, for example. This has been a sore point for the past couple of months. Union pacific was somewhat disappointing in some of its commentary. Autos were pretty good for them. A number of transport stocks are weak. Ryder is weak. Some of the airlines that started positive are also on the weak side as well. In terms of sectors today, the usual ones getting beaten up but some materials and industrials have been weak for a while now. But also today were seeing some of the financials weaker. They started stronger with be then they have moved to the downside in the middle of the day. Remember financials have been the Leadership Group overall. Theyre mostly at new highs but that weakened here in the middle of the day. Oil breaking through 49. Jackies been talking about this all throughout the day. We were at 50 and slowly drifting lower at the lows for the day on oil. Thats causing oil stocks which are already at 52week lows to hit new 52week lows right across the board. All the big names, all sitting at 52week lows today. Bob, what was the trigger . What was the turning point in both crude and also the stock market for that leg lower . It started about 10 30, 11 00. We just drifted lower. There was no particular headline that i saw out there. I think the important thing in terms much commodities was oil breaking through 50 and moving to the downside. That brought Energy Stocks even lower throughout the day. So i think the commodity story but overall i think the problem is the slow Global Growth story. Big multinationals. United technologies 3ms, Emerson Electric all throughout the week have been emphasizing no growth over in europe. Flat to down in china. Even latin america comment has been difficult. Throw strong dollar on top of that and these multinationals are all saying the same thing right now. Youve got a lot of people piled into a very small group. Financials number one on the higher rate idea in the first half of the year. And then a small group of health care and Technology Stocks particularly in the biotech area and in some cases the social media and internet space. Small group of leadership. Small group of loved sectors. Thank you very much for that bob. Back to our guests rob and brad i with antant to pick up on something said on commodities. Some people say commodities are setting up to be a generational buy. Others are saying this has got a whole lot further to run to the downside. What would you be doing with the materials sector or commodity related stocks . I think the dollar is going to continue to nudge up and thats not going to be good for commodities overall. As you said there are a lot of people saying gold is going to have a big rebound in 2016. I just dont see it coming. Obviously those commodities are down quite a bit already. But i just dont see a lot of up side in the space. Rob and brad thank you very much for your thoughts. Id like to bring in another guest now. Weve got William Rogers bill rogers professor and chief economist at rutgers university. Good to see you again, bill. Picking up from what our guests just said one of the guests said the economys just going to grind along. The other one side he seize some Slower Growth, albeit still positive. We had jobless claims. Thats what we brought you on to talk about jobless claims today and the 40year the best in 40 years. Nonetheless, is this the overall picture you still see . I think were doing more than okay. When you average over 200,000 jobs per month, in the private sector and you see the Unemployment Rate falling down to 5. 3 in last months jobs report which also signaled again 64, 65 months of consecutive growth, this is an economy thats were not in first queer or second gear probably somewhere around third gear. I feel like we are kind of grinding a bit. Were not seeing the drop in the real Unemployment Rate. Thats it the Unemployment Rate that includes just the official number of employed but also those porking parttime but those who want to work full time and those who stop searching but want a job. If you include those people in youre still above 10 . Weve got a ways to go before we can say this is broadbased prosperity. And you feel it is too early to start raising rates. If not this year will we be that much stronger next year to start hiking . I use history to try to answer your question there. When we looked at the late 1990s, or 1995 to 1999 2000 at that time that was the best economy wed seen since world war ii and we had over 100 months of consecutive job creation, the Unemployment Rates in many places got down to 3 to 4 with minimal, minimal wage growth that would spark inflation. We are clearly not there yet. But if we can continue to have a sustained job creation in the 200 range, id like to see closer to 300. But sort of a steady as you go pace that will be the kind of growth that will then start to spread or move down the job ladder to, lets say younger individuals, youth, teenagers, Young College graduates. More of them like many of my students will be able to get jobs in their trained fields or trained majors. Even if we continue to see the kind of job growth you are talking about, bill, to what degree are you still worried about certain issues that feel like theyre just not going away . Structurally unemployed, those who potentially will never get another job whether because of globalization, technology or you name it and those also that are really stuck in that income\s bracket. Right. Thats where policy matters. Thats where policy matters. There are many politicians or policymakers who will say, well we can just have this great economy, that that rising tide will lift all boats. Ive just done some research in my home state of new jersey where it shows how policy really matters. New jerseys had sort of tepid job creation since 2009 since the beginning of the recovery. And but we saw our childhood poverty rate rise over this period from 2009 2013 2014. Why did it rise . It rose because the governor governor christie cut the earned income tax credit at the state level for about a half million of our filers. And this demanded about 117 120 a year. For you and i, thats an evening out. But for a family thats sort of earning between 20,000 to 40,000, 50,000, that represents a weeks worth of grocery, being able to pay a variety of bills. There are still a lot of concerns out there. But thank you very much bill. Oil prices as they fall railroads are moving a lot less oil so they need more tanker cars. Thats not good for the company that makes those cars. Morgan brennan is following that story. So Lower Energy Prices have been cutting into railroad earnings. We saw this this morning. Union pacific which reported big drops in volumes of coal crude and Industrial Products including drilling materials, now were also starting to see this affect rail car manufacturers. Weve got a new report from the Railway Supply institute, thats the industrys trade association, showing Second Quarter orders for tank cars plunged 29 from the First Quarter and 70 versus a year ago. This decline coming after a 20 fall in Petroleum Shipments in the last year and a lot of the cars that are being bought are being used to replace existing cars as the railroads have upgraded their fleets to meet new safety standards. So keep in mind theres still a backlog of 46,000 tank cars but analysts think that most of those will be replacement. Whos impacted . Greenbriar companies. American railcar industries. Freightcar america. Also Trinity Industries which reports after the bell today. All of these stocks are in the red, theyve been lower for the year. Gatx is a company that buys and leases rail cars that stock is down more than 4 after a big earnings midst. Citing regular story uncertainty for tank cars. It all speaks to just how bad things have been for u. S. Railroads. Union pacific, Norfolk Southern Kansas City Southern and csx, all of those seeing a lot of Energy Related weakness and theyre all down again today. Thanks very much morgan brennan. Thank you. Fiat chrysler announcing it will spin off luxury carmaker ferrari and list shares of the new company on the new york stock exchange. Phil lebeau live in chicago. This could be exciting. Its going to be very exciting for people especially ferrari fans because they want a chunk of this company. What the price is remains to be seen. Exactly how many shares a specific number remains to be seen as well. But what we know about the ipo, its been planned for some time. We know now it is likely to happen in early 2016. Paperwork was filed early this morning. It will be listed on the new york stock exchange. Just 10 of ferrari shares are going to be auctioned off in this ipo. It is expected to raise 5 billion. Money that Fiat Chrysler needs to pay down a lot of the debt that ss goingit is going to be racking up over the next several years as it plans to expand its production worldwide. A lot of the shares will go to chrysler shareholders. P pichlt dont be surprised if we ultimately see that monetized in some fashion in the future. Shares of Fiat Chrysler this is a company that has a lot of debt and it is going to wrack up a lot of debt. One of the last big china bulls, bridgewater founder ray dallio making waves this week saying bridgewater is reversing its stance and that there are no safe places to invest in china. Well talk to two Money Managers who remain bullish on the company and well find out where they see opportunity there, and why. Plus announcer the city in todays powerhouse is home to 23 of the richest americans. Meatloaf, the musician was born here. And 7eleven is headquartered here. Can you name that city . So youre a Small Business expert from at t . 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Lets go to our first listing. 2240 lawndale drive, 299,000. This looks like a new starter home. It is a great starter home. It is a charming charming cottage. It was originally built in 1941 as several of the homes in north oak cliff were. It is completely renovated, Hardwood Floors throughout. Granite countertops, rememberry Wood Cabinetry and glass fronts on the uppers. Its got stainless gas range and a refrigerateorrefrigerator. A swimming tool. Detached onecar garage. Nice. It shows a lot nicer on the inside than it appears from the outside, though that back view is awfully nice. To our second lirsing. 1113 canterbury court. 799,000. 7,000 taxes. Three beds 2 1 2 baths. 3,300 square feet of living space. A dutch colonial. It is really southern charm, i think. It has a very inviting front porch with a wraparound veranda and it overlooks some of the topography of the north oak cliff area that make it very charming and famous. It is renovated completely. But they maintained quite a bit of that 1936 charm from when it was built. It still has two fireplaces. Hardwood flooring. Black granite countertops. Lots of Kitchen Cabinets too. Man i like that. Look at all that porch space. My wife would love that and the pool too. Powerhouse of the week. 3,000 square foot of living space. 1,175,000. I see what makes this one pricier than the last one with roughly the same amount of square footage. Yes. This one, kessler park is famous for the mid century modern homes. This is a newer home but it takes on that same design. It has it backs to a fiveacre nature center. It has very scenic views from looking outside. Kind of brings the outdoors in throughout the home. Walls of windows. Clean lines and state of the art appliances inside. Its a very beautiful home. Its got some fountains and just the things that make the very serene and calming things walk around naked in that house. Maybe the burglars will leave. Theyd leave if they saw me. Laura, thanks very much. Ive got a visual now. That is a beautiful house. Okay. Terrifying video just coming dm into the newsroom. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. We live in a world of mobile technology, but it is not the device that is mobile, it is you. Real madrid have about 450 million fans. Were trying to give them all the feeling of being at the stadium. The microsoft cloud gives us the scalability to communicate exactly the content that people want to see. It will help people connect to their passion of living real madrid. A school in Southern India invaded by a leopard. School immediately evacuated, forest officials called in. One officer injured after that leopard pounced on him. Here are this hours power points. Redfin ceo tells cnbc that a dropoff in home prices could come as soon as august and last throughout the rest of the year. United rentals is the biggest loser on the s p. While a beat on estimates, they cut the full revenue outlook. The company says a drop in oil drilling had a bigger impact than expected. Ferrari is heading to the big board. Fiat chrysler planning to spin off the luxury carmakers and list the company by early 2016 on the new york stock exchange. Dominic chu has a quick market flash on utilities. The worst performing sector in the s p 500 today be with down by 1. 5. Among the performing stocks in the group, exelon first Energy Public Service Enterprise group, and entergy. The fbi speaking out about a growing danger to u. S. Companies, the threat of corporate espionage from china. Just in case you are skeptical, theyd have a video for you to see. Power lunch returns in two minutes. But to get from the old way to the new youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. And stay ready for everything that is still to come. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. Hurry, before this opportunity cools off. Share your summer moments in your mercedesbenz with us. Hi my name is tom. Im raph. My name is anne. Im one of the real live attorneys you can talk to through legalzoom. Dont let unanswered legal questions hold you up, because were here were here and weve got your back. Legalzoom. Legal help is here. It took Tim Morehouse years to master the perfect lunge. But only one attempt to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. Im Brian Sullivan. Coming up at the top of the hour, our exclusive interview with the ceo of fedex. Fred smith is here. Well talk energy china, and the state of the u. S. Consumer. Also ahead, counting down to the oil close. Enough tough day. Where are prices really headed from here . Were teeing you up for another big round of earnings. Thats at the top of the hour. But first back to tyler and mandy. The fbi is raising the alarm about the dangers of chinese corporate espionage to americas businesses and theyve even got the video to prove it. Our own eamon javers is in washington with the latest. Hi there, eamon. Reporter hi, plandy. Im standing outside fbi headquarters, just came from a briefing with the fbis counterintelligence division. What theyve said there, theyve seen a 53 increase in the caseload of corporate espionage just over the past 12 months. They say the bulk of the threat to American Companies is coming from china. They also released this video to us. Take a look as we play this Surveillance Video from the fbi showing chinese agents executives of a chinese firm meeting with an american they thought would lend them or give them access to trade stretsecrets of an american company. As they are holding that meeting in a midwestern hotel room the fbi bursts into the room and arrests the chinese that were in that room. That Surveillance Video underscoring the fact that this is really going on. The fbi also said today theyre going to release now a new training video that they have produced documenting exactly how this occurs. Weve got the trailer for that fbi training video. Take a look at that. I was hoping that we could discuss the position thats opening up. You will be seriously considered. If you manufacture in china, you save on transportation and labor costs. Obviously a dramatized version of the reallife events that we saw in that Surveillance Video just earlier but the fbi making the case today and releasing these oreo cookies, giving these out to reporters at the briefing saying that the white in the filling of these oreo cookies, the dye for that is one of the processes that chinese agents have tried to steal in the United States. So their point is that the chinese are after all kinds of intellectual property even stuff as obscure as the dye inside an or yoeo cookie. Thank you very much. It is now 2 00 on wall street 1 00 in memphis, tennessee. The dow and oil are both down again. Hi, everybody. I am Brian Sullivan with melissa lee, as always. Welcome to the program. We have much to do on stocks much to do on oil, but we have to begin with the worlds Biggest Hedge Fund making a big turn on china. In a letter to clients, Bridgewater Associates founder ray dallio said our views on china have changed and there are now no safe places to invest. This follows the steep and sudden selloff weve seen in chinas stock market the last couple of weeks. Shanghai composite losing 10 of its value in 60 days. But as smart and successful as ray dallio is not everyone agrees with him. Jim, karen, youre both bullish on china. Karen, your thoughts on ray dallios comments. I think china is a huge place. Theres over 600 cities in china, 14 alone with more than 8 pll people. So tay that there is no opportunity in china i think is a broad statement. There definitely is opportunity in china. A lot of investors are predicating their decisions on fear or being spooked about whats going on in the market. But theres a lot of turnt in china and i think theyre being premature on that. Sure, there is a lack of transparency in china. We know that. We dont know that theyre growing at 7 . They say they are. We know theyre slowing down but thats not to say theres not some opportunity there. Emerging markets are volatile. It is rough comparison of the s p 500. We know that theyre volatile. What we need to emphasize to our viewers, there are many chinas. Theres the shanghai composite which i cant buy unless you are chinese. The shenzhen and the hong kong hang seng which is sort of the multinatural corporation. That index is up 7 year to date even with all the brouhaha around china. Are you buying clinz inging chinese equities right now . We think look. Whether we look at these things wed much rather buy when the rest of the world is negative and not loving china. We think that in any given time period theres usually some opportunities and the more pes mick pessimistic everyone else is the more opportunity there is to find values. There are some really interesting opportunities. Think of things like ecommerce environmental protection, health care and a growing mass of consumers that are finally coming into the world of being able to have serious spending power. We think there is lots of opportunities. Yes, we are certainly cognizant of the transparency issues and certainly ray has a great track record in terms of overall macro. But like at the individual individuals and i think thats where it is at. All those opportunities you named are predicated on the notion that the Chinese Consumer Economic Activity will continue at a certain pace that we are forecasting, that we know will come at some point. The point in re dallios letter which ive read is that it is not just the people who are investing in the stock market because on a percentage basis, as you know the percentage of wealth percentage of households actually investing in the stock market, very small but it is much bigger because hes not just looking at a stock market bubble but also a debt bubble that could be bursting and combined this will have a depressant effect on Economic Activity. Jim, are you concerned at all about the things you dont know about . We dont know how this is going to play out, do we . No we never know. Thats the nature of investing in emerging markets. Periodically you get those shocks that create stock market declines. Look at the end of the day i think youre probably more likely than not to see stimulative programs. If you think about the leaderships ability to keep power, to keep order it is driven somewhat by having a slower but still steady growth rate over a long period of time. I think youll probably see the government come in with some stimulative programs. Theyve got the Balance Sheet to do it. They are peanot like the u. S. There is some degree of a back stop and it wont be a linear path. It is going to be volatile. Dallio does mention the efforts of the Chinese Government and the notion that yeah, they can step in and that is to be seen part of this whole thing. Theres an interesting part though in this letter about Economic Impact of both the stock market and a debt market bubble bursting. His point is that he has taken a look. Theres been 28 instances in the past 100 years in Major Economies of a stock and a debt bubble bursting. What hes found is that it is a 1. 8 depressant effect on real gdp growth in the three years following that bubble bursting. In the worst case scenarios, karyn, it is a 4 depressant effect. You ablg you acknowledge that the chinese economy is already slowing. Say 3 depressant effect. How does that change the outlook . I dont think that the Chinese Government is going to let that happen. They have a lot of firepower behind them so theyre trying to thread that needle to move from an e port driven economy to a consumer driven economy. Theyre opening up their markets. Theyre doing a lot of reforms that are good long term. I dont really see that happening. I see the Chinese Government has a lot to do to combat that. I dont really see that coming true. But even so, china is the secondlargest economy in the world so obviously it will have an effect. Not everything is wonderful but i think it is a waitandsee. But to just write off china as i want to stay away from it because it is that potential, i dont really see that potential coming true. Jim and karyn, it was a good discussion. We got to leave it there. We appreciate it well talk to you soon. All right. Thanks. Speaking of global investing, here is a rather dull but i hope interesting investment quiz. If three years ago you had the choice to invest in either a, the Confederate Flag of a country growing at well above 7 a year or b, the etf of a country barely able to get out of its own way a and grow a meager 1 per year which one would you choose . You thinking . My guess is you would buy the country growing faster right . The 7 hare so to speak. Thats the country we just talked about. Thats china. If youd bought china, youd have done okay. The ishares fxi is up about 28 in three years. Not bad. But, if you bought the boring slow to no growth tortoise country known as gentlemanjapan, youd have done even better. Ewj is up 43 in the same threeyear period. The nikkei 225 is soaring. The investing lesson perhaps here is this growth doesnt always equal gains, in part because that slow to no growth has pushed japan to engage in record stimulus helping to push down their currency the yen, and push up asset prices. The tortoise defeats the hare once again. Hayes miller its been surprising i was bullish on japan a couple years ago. Three years ago i said japan would be the best performing market in the world. Inguess a Blind Squirrel can find a nut every once in a while but whats been the bull case around japan . That was a great way to introducing the idea of japan. First of all, when abe was elected and we looked at his platform and we looked at the political stars and the governmental machinery and saw what the plan was, we took the view that this was perhaps a very longterm structural buy opportunity. This could have been a decade or maybe two decade Investment Decision because wed saw it in the 70s and 80s we saw the opposite sign of that in the 90s and 00s. The change in abe nomnomics is pretty astounding. Getting the ldp to super majority in the diet then pushing forward various fiscal reform package. Lets get more to the investing side hayes. Basically whats happening is theyve got this giant qe program sort of going in a different way than we had it but sort of a similar idea. Right . Lets stimulate, hope that asset prices go up which then stimulates consumer spending. Are you buying japan merely because theyre sort of doing what our fed did . Or is there a real structural fundamental change to a country thats suffered through five recessions in the last 20 years . So the structural change now that we have to be concerned about involves Corporate Governance and we know that theyve passed both the stewardship code and Corporate Governance code which makes Companies Much more attentive to shareholders. The amount of reform in terms of directorships and the kind of attention that theyre paying towards their r. Oe. Efforts theyve undersustain to put the pension fund in japan into equities away from jd klbs has been pretty breathtaking and the roe for japan has risen from 7 to about 9 and it is on its way to probably western territory which would be double digits. Thats real change. Bottom line youre still buying japanese stocks. Absolutely yeah. Were still overweight but instead of being a 10year view i think we have to curtail it because some of the reforms regarding immigration and demographic change are probably going to flounder over the next couple of years. Couple years to go still. Hayes miller appreciate it. Speaking of japan, japanese media giant nikkei is buying the Financial Times for 1. 3 billion. This was reported a long time ago, brian. Finally coming true here. What do you think . I think, obviously pearson, the current owner still of the Financial Times, maybe a little sad for the uk to see that go away. We just talked about the asset Price Inflation in japan. When youve got stuff thats worth more stocks bonds, whatever it is you spend it. Thats generally whats happening. I think i just hope it stays the same. The ft is one of the most quality publications in the world. Agreed. Gm posted stronger than expected earnings. Operating margins in both china and the u. S. Exceeding 10 . Senior equityable list is this going to get gm to bust out of its trading range . I hope so. We have a strong buy on the opinion and we think there is a good story here. North america is the strongest point. Theyre benefiting there from a shift to pickup trucks and suvs which are higher profit and better for General Motors market share. Theyre also doing pretty well in china a market thats been slowing. And if you take away their bad news that they have south america, there is potential for future growth with europe coming back and further gains in north america. I think were pretty cheap at 6. 3 times our forecast for 2016 earnings. How confident are you about china and the china story . Theoretically, if there is any sort of Economic Impact Consumer Impact from what weve seen going on in the smasht we would probably not have seen it in the quarter General Motors reported. Wed have seen it in the Current Quarter or the next quarter. You would seen a part of it in june. That did impact sales volume there. But theyve done surprisingly well. That is the risk thats probably the biggest concern that any investor has on General Motors. But they have an advantage that the market theyre one of the chips thats moving toward the suvs and crossover utility vehicles and so theyre poised to take advantage of that outside big cities. Thanks very much for are joining us. The late great immediate yen mitch hechltdberg said his lucky number was 4 billion. Our number of the day here is 119 billion mr. Thats how much money the big eight, u. S. And British Oil Companies have lost in market value in three months. Lets put that another way. Big oil has lost nearly an entire worth of equity in 90 days this as Oil Continues to fall. I know you want to talk about a big gas find. Well get to that in a minute. But were seeing oil down again. I looked up a bunch of oil Company Bonds this morning. Theyre getting whacked along with the equities here. You said we need a sacrificial lime lamb. Do you expect a significant bankruptcy by somebody some time soon . I dont know if it is some time soon. The markets certainly trending that way. Some of these smaller cap names have been decimated, down 95 or so. Theyre as good as bankrupt. Theyre kind of the zombies at this point. Its just equities are one thing but again some of these bonds, im not going to name names because i dont want to spark anything. These bonds that are due in a couple years are down 30 and 40 . Youre there in houston, mike. Is there a sense of surprise that oil had reversed course after hitting 60 and come back down so steeply . Yeah a little bit. Here in houston i think everybodys die yased aes biased to think that oil has up side. It is very unpopular at cocktail parties to talk about 50 being the price for a longer period of time. You can see that these guys that had their Balance Sheets get in such bad shape, they didnt do equity when they should have when oil was at 100 a year ago. That was just the mindset that we were going to be at those elevated levels for a much longer period. Oil and gas are down but theyre not out. Theyre not going away. There are investing opportunities out there. A lot of these equities may go away but all will not. So lets talk about something positive. Big publicity i guess for a well in the utica shale and gas. Who is going to benefit . Yeah. So thankfully its something actually to cheer about here. This morning eqt comes out on their Conference Call and talks about a 73 million cubic feet a day utica well thats put that in perspective. Thats really two lyly 2x the size of the second best shale gas well on a per lateral basis thats ever drilled. Isnt there too much gas out there already, mike . There certainly is. But for guys that have exposure to this play its a great thing. For those that are levered to maybe haynesville or rockys gas i dont get that mike. Can you explain that . If theres more gas out there and that gas prices are really low already, why is it even good to get one drop of gas on to the market . Why is it good for these guys . Is it just that it is a lower cost gas play for them . Yeah. Thats it, melissa. If these wells become the norm you can take gas down to 1. 50 and youre still making money with this type of well. This is unprecedented. This is massive. Were in the early stages of it. The guys right around them rice, range resources, southwestern, gulfport, those are the names that really have great exposure. Mike kelly, global hunter securities, great stuff and a little optimism there at the back half. We appreciate it. With crude oil slipping below 49 a barrel now, should america still focus on Oil Independence . Big question. Joining us now exclusively on power lunch, fred smith, chairman and ceo of fedex, hes also cochairman of the Energy Leadership security council, a group working to secure Americas Future Energy known as s. A. F. E. Fred smith will join us. Were getting him patched in. Oil, folks, down again nearly 1 a barrel the dow is down. Well take a short break and be back with a very wide ranging conversation with a vered smith, fedex. Stick around. No fifth graders ever sat at the cool table. But your jansport backpack is permission to park it wherever you please. Hey. Thats that new gear feeling. Now get a swiss gear backpack for only 10. Office depot officemax. Gear up for school. Gear up for great. I take prilosec otc each morning for my frequent heartburn. Because it gives me. Zero heartburn prilosec otc. The number 1 doctorrecommended frequent heartburn medicine for 9 straight years. One pill each morning. 24 hours. Zero heartburn. Welcome back to c new york stock exchange. A lot to talk about with fedex ceo can fred smith. How good or bad is the price of oil today for fedex . It is good for fedex. We dont try to speculate on oil. We have an oil or petroleum surcharge but Lower Oil Prices has a lot to do with the elasticity of demand for the services that we provide and our Energy Intensive air express operation is particularly benefited by it. Youve got Something Like 48,000 motorized vehicles atnd over 600 planes. You are the cochairman of the organization for s. A. F. E. Which is awarding a prize next week. We talk about u. S. Energy oil and gas, really independence is 49 a barrel bad for u. S. Energy independence . Well i think at the end of the day the entrepreneurs who have developed this incredible Fracking Technology have shown time and time again that theyre able to improve the productivity in relation to the price. A year ago i think most people would have told you they cant make any money at these levels but u. S. Crude production this year will be 9. 4 Million Barrels a day. Thats up from 5 Million Barrels a day in the height of the 2008 meltdown. So in the short run, its probably not good for them reduced Capital Investment and so forth. But this technology is just unbelievable. Its changed the world. By the way, brian, we have in all our operating companies over 90,000 vehicles. Fred im curious, in s. A. F. E. What role do alternative Energy Sources play in is solar as important as the shale story and nat gas story here in the United States . Well our focus is obviously on fossil liquid fuel and sew tar, except to the extent that it powers battery recharging for transportation is only indirectly related to the issue. About 92 of all transportation is powered by petroleum. About 70 of all of the oil uses in the United States which is 19. 4 Million Barrels a day goes for transportation. So our Energy Security Leadership Council has been working for almost a decade to really pub the u lyly push the United States to do three things. One, maximize north american oil and Gas Production which of course were doing splendidly. Second, to useless of it. And third, to develop alternatives including electric and hybrid electric transportation, natural gas, heavy vehicles like for Waste Management services and overtheroad heavy trucks. And we Just Announced the other day where were taking 3 million gallons of biojet fuel trying to push that Industry Forward as well. You sound a little bit like our friend boone pickens. You talk about natural gas and ig engines. I know youve already converted a lot from diesel to nat gas. Is that going to continue . Will some day your entire fleet be natural gas. Boone pickens is a friend and he a he really been out there well in front of this issue i think giving very sound advice to the u. S. I think natural gas will become increasing fuel in heavy trucks particularly those that are centrally fueled like garbage trucks and buses and things of that nature. Some over the road transportation will also convert to natural gas and as i mentioned a moment ago, i think youll see a significant amount of coalfired electricity replaced with natural gas and Battery Powered and hybrid Battery Powered vehicles will provide the end transportationcesportation at the small and medium vehicle level. I want to swish gears and talk about the economy in general. Do you think the Federal Reserve we lost him there. Can you hear me sir . Fred can you hear me . Fred i dont think freds out there anymore. Well take a quick break and hopefully be back with fred smith. If not, we got a lot of other cool stuff. Stick around. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . [dad]i wear a dozen different hats doing small gigs,side gigs. Gig gigs. Quickbooks selfemployed helps me get ready for tax time. To separate expenses,i just swipe. Its one hat i dont mind wearing. [passenger] i work for me. And so does quickbooks. It estimates my taxes,so i know how much stays in my pocket. And thats how i own it. [announcer]stay in the flow with quickbooks selfemployed. Start your free,thirtyday trial today at joinselfemployeddotcom. No fifth graders ever sat at the cool table. But your jansport backpack is permission to park it wherever you please. Hey. Thats that new gear feeling. Now get a swiss gear backpack for only 10. Office depot officemax. Gear up for school. Gear up for great. Im Sharon Epperson. Heres your cnbc news update at this hour. Secretary of state john kerry is challenging critics of the Iran Nuclear Deal calling it fantasy, plain and simple to think the u. S. Failed to hold out to a better agreement. He made comments before the Senate Foreign Relations Committee. A Nuclear Power plant in Central Missouri was shut down for the second time in eight months after a nonemergency leak was found. It is unclear when the plant would be restarted. More than 70,000 strollers are being recalled due to a choking hazard. The bumper bar poses a choking hazard when a child bites it and removes a piece of the foam covering. Today is National Hot Dog. Or is it . While some retailers are cutting prices to celebrate the occasion, aoccasion the president of the National Hot Dog council said the actual day was yesterday. She said the actual event was held on july 23rd one year and everyone now thinks thats the official date. Back to you, brian. The final oil trades are crossing for the day. Lets get right now to Jackie Deangelis at the nymex for another down day. Thats right, brian. Just ahead of the settle here were trading well under 49 a barrel. Thats after we started kind of strong this morning. Right now trading down 72 cents. Session lows today, 48. 21. Dollar is taking a breather but most traders are still worried about a stronger dollar pressuring crude oil and also the supply demand situation. No updates or changes there. We are still in a situation of oversupply. Now that weve broken through some these Technical Levels Downside Pressure remains. Not too many people ive spoken to are bullish on crude right now. Jackie deangelis, thank you. 48. 47. Wow. Back now to fred smith, chairman and ceo of fedex. We got blanked there just a little bit fred but thank you very much for sticking around. We appreciate it. I want going to ask you about the fed. You are super economically sensitive. Do you believe the fed should raise rates this year . Yes. How come . You know employment is increasing. The economy is in a better place than it was before and i think there are a lot of unfortunate side effects of essentially free money. So were in favor of the fed increasing the Interest Rates. Fred you answered that so quickly and so affirmatively. Do you think the fed is late in the game he should have raised rates earlier . Well im not that close to the situation and ill defer not Federal Reserve board. But we do think that the Federal Reserve should gradually increase Interest Rates because of these side effects that come from, in essence, free money. Fred talk to us about where youre seeing strength around the world. How does china look for instance . There are so many reports of concerns about the chinese economy, the impact on the Chinese Consumer essentially of the stock market bubble bursting. What are you seeing on ground . Weve been in china a long time. 30 years. Weve been through many cycles in china. I think the important thing to focus on in china is that the Xi Administration is trying very very hard to move china to move of a marketbased system less cronyism less corruption less regulatory interference in the marketplace, and theyve been very open and direct including to those of us in the sector were in this china. So the market is certainly reflecting an overheated situation. But if the Xi Administration is successful in moving china more towards a consumer based society, just the shear magnitude of that economy will make things turn out reasonably well. Lets talk about another administration, which is iran. Iran is as bigging a california texas and florida combined. It is a huge populous company. If it turns out fedex could do business there, would you . If it is per misted under u. S. Law of course we would. We serve every country and territory in the world except those that are specifically prohibited by u. S. Law. So the decision has been made to establish this new nuclear treaty. If the sanctions are eliminated and iran is in the approved countries for us to serve, our middle east region which is headquartered in dubai, well set up service there very quickly, im sure. Would that be meaningful . Would it be material to fedex adding a country that size . Well you know fedex is already so big and our Intercontinental Network is already so pervasive, i think it would not be something astounding, but obviously an economy potentially as big as iran would be something we could pay a lot of attention to. You know what else is getting a lot of attention right now . A mr. Donald trump. I know youre big into conservative causes. What do you think of donald trump around the Republican Party right now . Well im not really heavily involved in the president ial race at the moment. I know most of the candidates. Like all of them that i know and so ill let you referee the politics as we get a little further down the pike. Like the answer. Fred smith of fedex, a real pleasure to have you on cnbc again, sir. Thank you. Have a great day. Thank you. By the way, power lunch will be in Charleston South Carolina on friday july 31st, as s. A. F. E. Securing Americas Future Energy announces this years prize winner. It is the earn. With the best idea on making america more energy efficient. A very cool contest. You can go to cnbc. Com safe for more information and to vote on the plan that you, america, think is best. Were going to take a short break, back right after this. Its a fact. Kind of like shopping hungry equals overshopping. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. No fifth graders ever sat at the cool table. But your jansport backpack is permission to park it wherever you please. Hey. Thats that new gear feeling. Now get a swiss gear backpack for only 10. Office depot officemax. Gear up for school. Gear up for great. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Time now for trading nation because traders trade better together. Today we are trading what else . Oil. Crude oil falling yet again touching the 48 range today. How low might it go . Weve got craig john sore of piper err jaffray and bill varuk. Is there any support in sight . Lets look at this chart on crude oil. What weve seen here with crude oil is one of gigantic relief off those march lows. The stock rallied back up to its declining 200day moving arch failed gapped lower. Now were starting to take out key levels of support. 50 was a pretty important support level. The charts have suggested you go back and retest those march lows near 40. When you look at some other forms of Technical Analysis two suggest we could actually undercut those march lows. Again we think theres probably 20 downside from here still on crude oil. It is a sector were underweight and weve been underweight since 2011. We think the cycle is well under way for lower oil. Maybe 20 more lower prices to come in crude oil. This is a supply demand story. Today the world bank lowered their forecast for 2015 2016 further hammering the slowing in demand. Saudi arabia producing at record levels. U. S. Holding on to 40year levels of production. This is not going away. They be iran. The real underestimate people are underestimating what iran can do when they come back online. This really this could be a month, two or fourmonth type thing. Well see 40 before we see 60. All right bill and craig, both very bearish on crude oil, guys. Thank you. Reminder for more trading nation. Go to the website, tradingnation. Cnbc. Com. Forget carjacking. Were talking car hacking. Just how safe are our cars . A Massive Wildfire sweeping through wine country. Fiery details when power lunch returns. Are you moving forward fast enough . Everywhere you look, it strategy is now business strategy. And a partnership with hp can help you accelerate down a path created by people, technology and ideas. To move your company from what it is now. To what it needs to become. It took Serena Williams years to master the two handed backhand. But only one shot to master the chase mobile app. Technology designed for you. So you can easily master the way you bank. You are looking at two airplane fuel gauges. Can you spot the difference . No . You cant see that . Alright, lets take a look. The one on the right just used 1 less fuel than the one on the left. Now, to an airline a 1 difference could save enough fuel to power hundreds of flights around the world. Hey, look at that. Pyramids. So you see, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. Welcome back to power lunch. Freeport shares down swinging to a Second Quarter loss due in part to an additional 2 billion in writedowns related to its oil and gas properties. Freeport mcmoran reported a less of 3. 85 billion. Revenues decreased by 23 to 4. 25 billion. Picked a rough time to go into the oil and gas business. The 30year bond yield is now below 3 . First time thats happened in a couple of weeks. Buyers coming in yields going down. Fire crews in napa county california battling a wildfire in the heart ever wine country. The flames have spread to roughly 5,000 acres. Part of the difficulty of battling this fire is the terrain of napa county. Between the redhot car market hacking jeep computers and oils big drop there is no shortage of topics for an auto interview. Lets get to it. Earl hesterberg ceo of Group One Automotive reported record earnings today, the stock at an alltime record high. Earl, welcome to the program. How hot is the car market . And also take the other side of the script. Whats not selling . Well its strong. Its been strong for quite a while. The car side of the market is a bit soft. With the low gasoline prices have created a mix shift to suvs and trucks. Some of the cars need to be push a little bit. But overall the market is probably about as good as its ever been. What cars need to be pushed a little bit . I know you guys represent a lot. We always talk about whats selling. Whats not selling . It is more the traditional sedans. Everybody has a competitive offering now. Camries, accords, infusions and passats and those fourdoor sedans arent quite in favor like they were a few years ago. It is all about the truck and suv again. Thats correct. Im sure you saw that video of the jeep hack where hackers took control of a jeep and drove it into a ditch and turned the engine off. We had one of theftof the guys that did it on the program yesterday. Do people have a reason to be afraid when they buy some of these new cars that are so electronically attached, earl . No i really dont. I get it though thats a sear serious issue. Of course theres hacking in every realm of the computer business in the world today. But i know auto manufacturers have been sensitive and paranoid about this for a decade. You may remember when we started with the toyota congressional heerns hearings, they contended signals were coming into the computers and causing sudden acceleration and they asked nasa to get involved. And that wasnt the case. Im sure this is being looked at today by every auto manufacturer and theyre double checking and triple checking but i wouldnt freak out about this. So you like oil going down i presume, because people cheaper gas, it means they may buy a bigger car. But what about your hometown of houston . Have you noticed any downturn in sales on your home turf . We were very very concerned about that. But, fortunately, thats not proven to be the case. The houston economy turns out to be quite diverse and powerful so were up double digits this year in houston. Were also the biggest auto retailer in oklahoma. Weve been hit a little bit there. I dont believe that economy is quite as diverse. Were down about 2 . Theres a couple other local energy driven markets like beaumont texas where were down a bit. But weve done extremely well in houston and it is great to see the is diverse its of the houston economy. Record results, record stock price. Thank you. A big shakeup at bank of america. Power lunch will be right back. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Big Management Changes at bank of america. The firms cfo stepping down. Kate kelly joins us more with this shakeup. Melissa, surprise news last night that it the longtime cfo of bank of America Bruce thompson is leaving in a week. He was chief financial and risk officer for the bank for the last 5 1 2 years will be replaced on august 1 praised thompson for his grit and success of the architect of the banks Balance Sheet. The loss of an executive seen as a future banking and markets head or perhaps ceo candidate left some at the bank scratching their heads. There were other moves. David darnell is retiring later this year to be succeeded by moynihan allied Terry Laughlin who worked recently on 0 the stress test submission to the Federal Reserve which failed in various ways multiple times in recent years. Human resources chief andrea smith is promoted to chief administrative officer. The slight down turn has mostly been in line with other financial stocks the departure is maybe indicative of lingering cultural and Management Issues of purchases of smaller banks, including Merrill Lynch during the financial crisis. The fact that the banks never fully integrated those cultures. The mid quarter timing reminded me of jpmorgan House Cleaning after the london whale crisis the House Cleaning. The surprise announcement they made rallied shares 3 . Just an interesting comparison. Indicative of Management Issues. There hasnt been an issue with the stock. Bank of america shares are up 157 over just three years. Up next the earnings parade marches on. Amazon set to report their numbers after the bell. As kevin bacon said in a parade, all is well, remain calm. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. You focus on making great burgers, or building the best houses in town. Or becoming the next highlyunlikely dotcom superstar. And us, well be right there with you helping with the questions you need answered to get your brand new business started. Were legalzoom and weve already partnered with over a million new Business Owners to do just that. Check us out today to see how you can become one of them. Legalzoom. Legal help is here. It is time for street talk. Analyst recommendation on stocks you need to know about. Melissa was complaining about my socks. Emc seeing improved profit next year. Price target range moved up 3 about 20 up side. Take a look at the chart. Its been a rough ride. Compare that to vm wear. That has been the winner of the pair. Second stock here abbott labs. Raymond james getting more bullish. Abbott reporting a solid two q, Strong Performance from the diagnostics business. The analyst expecting deals going forward. An incredible run. The stock has doubled. They spun off. One Company Becomes three and they kick butt. National fuel gas. Jeffries upgrading from buy to hold. Target is 68 a share. About 28 to the up side. The upgrade was based on the overall value proposition. We criticize analysts. He made a good call back in january. He downgraded it 70 a share. Its now 14 below that. He is reupgrading it. The question for all these names, you can have a good value proposition. Balance sheets can look great but you ultimately need a hire commodity trade for these things to work. Next up f5 networks. Reiterating outperform. Price target 140. Software set for growth. Its got strengthening position in security. Look at that pop today. 7 . A lot of analysts calls on the name today. It could use help. Do we have a fiveyear chart . Its not been an easy ride. Its been the same price stock four years now. Something has got to give. Todays under the radar name av gtechnologies. A netherlands based software company. Jpmorgan starting coverage with a buy and 33 target. Stock at 28. 60. Not a huge amount of up side. This should appeal to investors looking for high cash flow generation. They say this company is moving more into mobile. Antivirus, what a hot sector especially in todays investigation. Barracuda, palo alto cyber eye, all of them up. Street talk officially over. Amazon stock down about 2 . Im mean to paper. Amazon down about 2 today ahead of earnings after the bell. The Fastest Growing components are your highest margin categories. You have the aws. The Cloud Service has been talked about time and again. I think a lot of the new initiatives are not being fully appreciated Like International in india, prime and their new categories like apparel. As far as tonight is concerned, i think the big thing, top line will be okay. Its that continued cost discipline and able to continue to expand the margin. Where is that going q2 . I think that will continue to support the positive sentiment going forward. Do you expect we are going to get any color on prime day . Im not expecting them to break any records like black friday last year. I think well see how important it is to the business and investment there the most important metric for me on earnings will be from operating margin or income per se and how much better it is relative to expectations and perhaps their overall guidance. What is the magic number on Amazon Web Services . Im hearing as james mentioned, 55 year on year . I think it grew around 49 , 50 in 1q. If they do 55, that would be wonderful. Im not sure it will do that great. Guys well leave it there. Earnings are coming at you. You probably want to be at your desk. It is the busiest day of earnings season. Youll have a busy night tonight. Not only amazon and that will be huge. Starbucks, pandora, at t visa. They are all after the bell. Watch us 5 00 on fast money. Well have our hands full. Would you like to see my socks again . No. We were having this debate what he should be doing. I was doing this. She was moaning about my socks. Never mind. Thanks for watching. Its a busy night. Closing bell starts right now. Welcome to closing bell. Im sara eisen in today for kelly evans. Im simon hobbs in for bill griffeth. Weak reports from caterpillar and 3m dragging on the industrials. In less than an hour to go, the earnings parade will be in full force yet again this afternoon. Amazon starbucks and visa releasing their latest numbers. Well bring them live soon as they hit the tape. Shares of starbucks competitor Dunkin Donuts falling today. Weak sales for packaged coffee weighing on the stock. Ceo will join us live in
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