Transcripts For CNBC Power Lunch 20240622

Also good news on the cholesterolfighting front. And has the perct car been finally created . All of those things and lots, lots more today. Tyler is out today once again but Kayla Tausche joins me live at the nyse with bob pisani. Hi there, kayla. Hey, mandy, great to be here. We are watching the markets in rally mode. Mandy ran through just how historic the gains were seeing are. Put this in perspective. Just the fact that the dow has risen, what, 1,000 points in two days . 1,000 points in a day and a half. The s p is 100 points. Youre seeing some numbers youre not going to likely see very, very often. I havent seen them. Ive been here a long time. Look at the s p 500 melting up here chasing stocks here. Weve got to get them because theyre running away from us. Thats what it looks like. Its been a long week. But let me show you the markets today. Were getting strange numbers again. Heavy volume but not as heavy as the last few days. The volatilitys been dropping. Look at this breadth. 91 advancing to declining stocks. The arms index, richard arms one of the most famous technicians out there invented is this years ago to talk about how many stocks go to the up side versus the down side. 0. 29. He said hes seen this once since he invented the index in 1967. It means a ton of stock is going to stocks on the up side. This is a sign of a buying panic trying to get in on the stock market at all costs right now. Everythings up. Ill show you most widely held. We havent talked about most widely held. These are the ones most widely held by the institutions in the United States. Everythings up 2 to 3 . Am, microsoft, jpmorgan, wells fargo. You can go down the line. Johnson johnson. 2 market. Heavily shorted. Forget about it. 9 stuff where the markets been short theyre going aggressively. Century, sears, fossil group, joy global, chesapeake. This is what you call short covering. Here you can really see the efforts to do that. Elsewhere how about some of these heavily shorted etfs . Stocks nobodys had the interest in for a while. Japan is moving heavy volume today. China, the fxi heavy volume. The italian etf. I dont remember the last time i saw that on any list. Is moving thailand. My point is theyre going after stuff heavily, particularly stuff thats been down, been shorted. Especially the fact some investors are starting to dabble again and some of these emerging market exposed areas of the market cause for concern. Im still concerned about the currency situation over there. But what the market is telling us for the last day and a half is there are perceived bargains out there and some people are aggressively going after them. Well get a little more from you later on this hour. Bob pisani here on the floor. Mandy, up to you. Also you and i, kayla are going to be talking later on in the show about whether now is the time to look at and invest in emerging markets. Lets have a close look at todays rally. Here are all ten s p sectors. All are in the green on this monster rally day. In particular, energy enjoying its best day of the year. Wti crude enjoying its best day since june of 2012, up nearly 9 , and thats pushing Energy Shares higher. Keep in mind, energy, that sectors still in bear market territory. What is out of bear market territory now, though, materials. Materials up by nearly 4 there. In helped by one stock i mentioned earlier on this week which was at multiyear lows back then. Today its up about 28 . Guess what it is. Freeport mcmoran. And all of them except well, all of them are moving higher except utilities is the lagging sector there. And thats where i want to start off with jeff kleintop, chief Global Investment strategist at Charles Schwab because jeff, you do not like the utilities. Tell us why. The utilities have been strong performers on this defensive move in the market. Defensives have outperformed cyclicals in the last three months by one of the widest margins weve seen in the last five years. Usually when we get to this point theres a reversal back toward cyclical sectors Like Technology or Consumer Discretionary something, other sectors. Not utilities. It tends to be very defensive and has had quite a strong run. Were going to get back to you, jeff, but weve got a news alert in the bond market to break into. Sevenyear notes are out. Rick santelli. You gave the twoyear auction a cminus. Yesterdays fives a dplus. What is it today . Well, seven. Its the lucky number. We gave it a b for boy. One of the Better Options this week. But the volatility definitely took investor demand toll. Yes, we had 29 million seven years cap and 90 million of supplies two, fives and sevens kind of the middle of the curve toward the front end. The yield at auction 1. 93, which actually was the offer side for most of the last 15 minutes. The high one issued yield was 193 1 2. But it priced tied in that regard. 2. 53 bid to cover meaning a little over 2 1 2 dollars chasing every dollar security available. That was the best since november of 14. A little over 50. 50. 8 on indirects. Kind of roughly an average. 14. 2 on directs. 12 is the tenoption average. That was the best since january of 15. We gave it a b. We did get a little rally. Thats very normal after supply hits. We want to continue to monitor because tenyear notes rupp 50 basis points on the week. Mandy, kayla, the whole gang, back to you. The gangs back together. Lets check in on some of the bonds like the tenyear that rick mentioned. Currently sitting at 2. 18 . We did get up to the 2. 2 mark after we got the gdp number this morning with the economy growing faster than expected in the second quarter. As for the long bond the 30 years yielding 2. 913 . Lets get back to jeff kleintop. You were telling us about how you dont really like the utilities but you do like financials. But how much do we have to see higher rates for you to hold that belief in the sector . One of the keys for financials is seeing loan demand continue to pick up. Its bounced back from where it was a couple of years ago. We still need to see that pickup because sure, it matters what spread banks are making on each loan they make but the more loans they make is even more important. As that continues to improve, as consumers feel more confident in their wealth, in their jobs, begin spo pend a bit more and borrow a bit more that should be a plus for financials. And lastly whats your view on technology . Technology looks pretty good to us. Globally the sector is very attractive and one of the main reasons is this upswing back to cyclical sectors which we think were on the cusp of here. Remember, businesses are starting to spend a bit more than they have in recent years and that is a lot of technology these days. It may not be in the form of the capex were used to watching. A lot of it is in the form of operating expenses now. Now that we dont capitalize as much of our software or hardware expenditures as we used to. Theyre considered operating expense ppz theyre still there and thats beginning to pick up. Thanks for talking to us, jeff kleintop. Kayla, dawn to you. You mentioned the move in the energy sector. A lot of that is based on this huge move weve seen in oil today. Crude is up sharply intraday. Trading well above that key 40 a barrel market. Rose as high as 8 1 2 . On track for its best trading day since june 2012. Some of the big energy names like exxon, bp, conoco, and chevron are all solidly in the green right now, and thats something we havent been able to say for some time for that sector. Check out gold as well. It has seen some choppy action in todays trade. Risk is pretty much off. You can see whats happened to gold today. Its at 1123 an ounce. Down just. 1 of 1 . But we have the miners in rally mode interestingly. Take a look at the gold miners etf, the gdx. That is up 6 in todays trade. Mandy . Thank you, kayla. Getting a fresh read on the Housing Market as well. Diana olick is with us. Hi, diana. Hi, mandy. The headline number on pending home sales in july which are signed contracts, not closings, was basically flat, up half a percent for the mop up 7 from a year ago. Given the volatility in the market this week and bond yield swinging up again i want to talk Interest Rate plays in these numbers. The average rate on 30year fixed shot up in may and june but eased off a bit in july when these buyers were out shopping and signing these contracts. The expectation was for higher sales possibly on those lower rates but we did not see that. We did see more sales when sales were up in may and june. One thing higher rates can do is help to moderate price jumps because sellers know buyers have a lot less purchasing power. Now we see rates shooting up today and that brings up the question will that spook more buyers to get in now or was that particular demand pulled forward . We also heard concern from the realtors today that all this concern in the markets and chinas impact on the u. S. Economy could spook home buyers this fall. Back to you. Thanks so much, diana olick in washington. Meanwhile, the nasdaq pushing higher in todays rally. Its up nearly 2 1 2 . Buy sign has been doubling down on in sbig names there. Thats why you see some of the most actives as apple, microsoft, and then theres the kqqqs etf which is up 2 1 2 . Get to Courtney Reagan who is live at the nasdaq with more on todays action. Hi, kayla. Kind of feels like a quiet rally again here at the nasdaq. Weve been creeping higher, now sitting more or less at session highs. The trend has continually moved higher today. We havent really seen any action to the down side for many of these stocks. We are now positive for the week at least intraday. Well see what happens. We know these final couple hours can change everything. We only have a handful of nasdaq 100 components, though, that are lower on the session. And the tech sector is still positive but its actually ceding that dominant sector position today for the first time in three sessions higher by 2. 3 but right about in the middle of the pack when it comes to the other groups. Chips, though, again above the leaders. Weve seen this trend most of the week compared to other sectors. If you look at this market vertical semi etf you can see this move up especially on the last two days. On pace for the best week since february in this etf and among the Top Performing components, inhavingo, broadcom. All of those names topping the nasdaq 100. And of course theyre part of thain detection too. Thank you so much, Courtney Reagan. Consumer reports thinks its found the perfect car. A perfect 100 out of 100 on its Rating System. Yep. Tesla. And you can see tesla stock is currently up by 8 1 2 . Lets get to phil lebeau live in chicago. I didnt think a perfect car was even possible, phil. Im not going to get too caught in the weeds here. They are careful to say continuous a perfect car. But it is the only car they have ever given a 100 to. In fact, it broke their Rating System when they were doing the test for. This is the tesla model s p85d. That is the highperformance version of the model s. Because it has dual motors it can do so much more. It got the highest score ever according to Consumer Reports. Greater performance because of those dual motors. And extremely efficient. Heres jake fisher with Consumer Reports talking about why this car is so special. Lets be frank. This car is 130,000. This is not a vehicle that a lot of people are going to be able to buy. But what this is is this is a glimpse into the future of the automotive industry, a future where cars are going to be extremely Energy Efficient and extremely fast and extremely comfortable and roomy and give you all the features and safety features and electronic features you want. In short, Consumer Reports was blown way when they were testing this car. We had a chance to drive the p85d last winter. The reason we drove it in the winter time is with the dual motors and allwheel drive the performance is Something Else, especially in snow which a lot of people dont associate tweslas. It is thain sane mode that gets attention because you have better acceleration and better handling. By the way, remember tesla is expected to sell about 50,000 vehicles this year. Thats a little lower than initially forecast. Well see if they make that later this year as they ramp up production of the model x. You might be saying to yourself, wait a second, what other vehicles come close to a rating of 100 in Consumer Reports, 80 years of reviewing cars you . See the two model ss there another the top and then youve got the bmw 235i, mercedes s550 and the porsche 911 carrera s. Those are the only vehicles that have gotten 95 or better. And the model s p85d getting a perfect score of 100. Shares of tesla like the rest of the market a big day today, up 8 1 2 . A lot of people were wondering when it got down to 210, mandy, boy, is this the time to buy tesla . This is one of those momentum stocks. It really moves all over the place, and this week has been no exception. Thank you very much for that, phil. Talk of the rest of the market. For the dow currently up 371 points. This is a session high. And we seem to be continuing to build here, folks. If you look at the last two days it is the biggest twoday point gain, not percentage but points gain in history. So far. Well keep watching and see whether or not the momentum keeps building in the indices as well. How are you playing this rally . We have 1 trillion worth of Investment Advice coming your way. And also ahead the one chart that could be a big sell signal for biotech. Later on as well well tell but the big war brewing in the ballot of the bulge. Keep it right here. Youre watching cnbc, first in business worldwide. Tlights in detroit, at one point, did not work. You had some blocks and you had major thoroughfares and corridors that were just totally pitch black. Those things had to change. We wanted to restore our lighting system in the city. You can have the greatest dreams in the world, but unless you can finance those dreams, it doesnt happen. At the time that the bankruptcy filing was done, the Public Lighting Authority had a hard time of finding a bank. Citi did not run away from the table like some other bankers did. Citi had the strength to help us go to the credit markets and raise the money. Its a brighter day in detroit. People can see better when theyre out doing their tasks, young people are moving back in town, the kids are feeling safer while they walk to school. And folks are making investments and the community is moving forward. 40 of the lights were out, but theyre not out for long. Theyre coming back. Freeportmcmorans huge 26 gain. Of course its been sliding aum year. The sector is the best performing one just behind energy still down about 2 for the week. Still one of the most beaten down sectors, mandy, so far catching a pretty nice bid in todays trade. Back over to you. Thank you very much, dom. Stocks are bouncing around session highs. Can we hold these gains . Can we build on them . And how do you play all of these moves . Thoughts from david lafferty, chief Market Strategist at Natixis Global Asset Management with about 1 trillion under management. Welcome to power lunch, david. Good to see you again. Even if you think the most recent selloff was overdone and too aggressive is it too early to say phew, were out of it . No, i think its probably too early to do a victory lap but weve certainly seen valuations improve pretty dramatically just in the last couple of weeks. So the s p was probably close to 18 times forward earnings. Now were at 16 1 2, maybe 17. I dont think the market is dirt cheap but Global Quantitative easing over the last three or four years has made everything pretty expensive. So the selloff has actually helped quite a bit in terms of trying to get investors off the sidelines and back into the market. Valuations are looking better but the s p is certainly not what youd call dirt cheap. But where would you find the best value as where were standing right now after the last two days of gains, where would you be standing looking maybe to bottom fish if you want to use that word . Yeah, i dont know that wed say bottom fish. Were probably a little bit longer in our outlook. Our views across the sectors havent changed much across many of our asset managers, and two of the places we found good value are in financials, in particular banks. I know your previous guests had talked a little bit about the earnings power as loan demand picks up and thats certainly true but we also think valuation will be pressured. Theres a view that banks will never get out from under this additional valuation. We think thats a bad way to think about what banks are doing. Theyre actually getting pretty used to living in this environment. You know, the Big Money Center banks probably traded just over ten times earn npthz long run maybe that ought to be 12 or 13, closer to a market multiple. We think banks are pretty cheap. We still think there are some good plays in technology as well, old tech and new tech. David, one chart thats giving investors pause, though, is that of the vix because even as weve seen the Broader Market make up for the losses that it saw this week, the vix is still in relatively elevated levels. The s p may not be in the 30s anymore but its still sitting at 25. What do you think that portends for the market . Its a great question. I think what it really means is the scare weve had from china is not completely gone. Given the spike in vix from probably below 13 to up north of 40 at one point a couple of days ago, it really put fear into the market clearly. As its come back down the fear has come out but the worries about china in the long run have certainly not gone away. Again, weve been relatively optimistic on the equity markets generally speaking, but we dont think its a runaway bull market. If you think about how china plays into this, if china is slowing from 7 to maybe 5 1 2 or 6 , then we can still make money in the Global Equity markets. If its in the 3 or 4 then investors should get used to these higher volatility levels because were going to struggle if china is slowing that quickly. That isnt our view but thats something were keeping an eye on. Talking of china, what is your view, david, of investing in emerging market currency bonds or equities . Very dicey right now obviously. I think were probably not let me start by saying first what really matters is the clients risk tolerance. So when you move to emerging markets were already talking about a different game. If they have the risk tolerance to move into emerging markets at least for some part of their portfolio were seeing a lot better values. Thats certainly the case as i mentioned earlier but we still have a real wild card with the fed in terms of how quickly the fed is going to raise rates and will that mean Additional Capital outflows across emerging markets . If you want to bottom fish and you want to look for some values, emerging markets are starting to get interesting. The real open question is how long will you have to leave your money there and how much pain will you have to take before improved valuation is found in your portfolio . Excellent questions. Thank you very much. David lafferty joining us there. Down to you, kayla. Thanks, mandy. Up next we will show you that one chart that says now might actually be the time to bail on biotech. But first the final gold trades are crossing for the sex. Were heading to the nymex for the close coming up next. Legalzm 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. Diis critical for brain health . N brain food, hmmm. Ensure has b vitamins that help support brain health now thats smart nutrition. 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Welcome back to power lunch. Rick santelli here live on one of the few trading floors that has people, the cme. And of course we just ended 90 billion in supply way sevenyear. Pretty good auction. Look at the intraday, see the yields drop pretty much along the entire curve post supply, having a good oldfashioned post supply rally. Lets look at the long end of the curve but look at it since october 14. The reason, 275 to 285, that area were at basically now, its been important the whole time. Not only is it unchanged, kind of what we call a transversal. Slices lots of buying and selling action. Lets bring it down to a twoyear chart of 30s. We see the auction brings us down into yesterdays range although all yields right now ray little bit lower than yesterday, up big on the week. Lets look at another important twoday chart, the dollar index. Unlike the 30s or the 10s it continues to trade above yesterdays highs. The dollar index is having a good week. One of the reasons, rates are having a good week to the up side. Mandy, back to you. They are indeed. Thank you very much, ricky. Biotech stocks the big winner on the day. With the nasdaq biotech etf. The ibb up more than 2 . But over the past month the ibb has taken a big hit. Different story. And could there be more pain on the way . Lets get to dominic chu. Ibb the big etf that tracks biotechs but were looking at Something Else here. The market vectors biotech etf. Bdh. Earlier we got a commentary from john kozar at as areberry research about more pain ahead for some of these biotech stocks near their highs. The longerterm trend line going all the way back to april got busted through by this particular etf and he says, kosar, does that we could see more pain ahead. He says a couple of Different Reasons why. First of all, hes targeting around the 120 area. Watch in that area very closely on these charts. He says these biotech stocks have been leading indicators for the overall market. He also says theyre very correlated right now. If you do see more pain ahead for these biotech stocks it could be foretelling Something Else to come. Watch that level, 120 and of course some of these are the longterm trends for the biotech stocks, specifically the bbh. Mandy, back over to you. Thank you very much for that, dom. If people are interested in this subject they can find out more about biotechs on our website, which is powerlunch. Cnbc. Com. Kayla. Stocks in rally mode. Just off session highs. But take a look at the dow. Nasdaq up 2 1 3 . S p 500 is leading the days gains. But all major averages are still down 6 for august. So is this rally for real or is it time to cut and run . One fivestar fund manager will tell us what hes doing with his money. Thats ahead on power lunch. Youre watching cnbc, first in business worldwide. I needed work done around my house at a fair price. F sure can. So i could get a faulty light switch fixed . Yup or make a backyard pizza oven . Oh yeah. I can almost taste it now. Tastes like victory. And pepperoni. Hello, everyone. Im sue herera and heres your cnbc news update for this hour. The white house says saudi Arabias King Salman will meet with president obama in washington on september 4th. The two leaders will discuss yemen, syria, and steps to counter irans destabilizing activities in that region. Archbishop desmond tutus daughter says the 83yearold Nobel Peace Prize laureate could be discharged from the hospital by the end of the week. She says hes been responding well to two weeks of treatment for an inflammation. The fourth in the popular millennium book series went on sale today in 25 countries but not without controversy. The new writer of the girl with the spiders web was commissioned by the late Stieg Larssons father, who happens to be the executor of his estate. And some say that is akin to grave robbing. Larsson wrote the popular girl with the Dragon Tattoo just before he died. A new government report says College Students will most likely experiment with drugs during november, december, and april, which correlates to exam times. June is the time marijuana use and underaged drinking tends to rise. Keep your eye on those kids at those times. Thats the cnbc news update at this hour. Lets get to Jackie Deangelis with the metals close p. Hi, jackie. Good afternoon, sue. Metals closing just moments ago. What was interesting, the entire complex rallying today. The Industrial Metals along with the stock market. But you had gold prices slightly lower on the day. What is happening with the gold trade . Theres some dovishness that got tuesday to that 150 mark. But traders confuse bd what exactly the fed will or will not do in the september. But also no safe haven buying in the gold trade even though we saw a few days of market turmoil here. Investors clearly wanting to put their money back in different asset classes. Also weve got a bit of a dollar rebound today hurting the gold trade as well. This is certainly one to watch but holding over 1100 closing over today 1120, still about a 2 pop in the last month. Kayla, back to you. All right. Thanks so much, Jackie Deangelis. As she mentioned, the safe haven trade not happening. A lot of that money is coming instead into stocks. The dow up 2 1 4 . S p close to being up 2 1 2 . Nasdaq up about 2 1 2 . Even the russell is up about 2 1 4 . Lets get back to bob pisani here. Courtney reagan is over at the nasdaq. Bob, lets talk to you first because you were telling me about some names that are seeing an especially large amount of volume going into them right now. Theyre going after anything that was beaten up. The whole market is up but particularly beaten up names. Lets take a look at the s p 500. We are holding the highs of the day and its been essentially straight up here. I want to review again the markets today because we have some very unusual numbers again. The volume is heavy but not as heavy as its been in prior days. The volatility still up there but its dropping rather notably. The vix has got a 2 handle in front of it. The breadth, this is really whats strange. 91 in the middle of the day advancing to dlieng stocks. You dont see that very often. I told you about the arms index invented by legendary technician richard arms back in the 1960s. Measures the advancing the amount of volume going to stocks that are advancing versus stocks declining. When its 0. 29 he said hes seen this once since he invented the index in 1967. It means that theres three times more volume going to stocks on the up side. In other words, theres a buying panic. Theyre buying into any kind of winner especially aggressively. Let me show you the most widely held names that are out there that all have pretty good volume today. Youve got your apples and microsoft and jpmorgans and pfizer and wells fargo. You see what i tell. You it doesnt matter showing you sectors. The whole market is up 2 to 3 essentially. We have big movers in the etf land. We havent seen 5 moves in any of these energy etfs in a long time. Look at that. Thats the oil service. Oih is the symbol. Up 7 . Energy and materials. Heavy volume. And theres the eem on the bottom, up 4 . Thats the emerging market etf. Bob, thanks so much. Bob pisani here on the floor. As we just showed you, some of the most widely held and biggest mover names are in the tech sector. Lets get to Courtney Reagan at the nasdaq. Court . Hi, kayla. I want to stick with a check on the nasdaq composite. We can really see how far weve gone this week. Its amazing what a couple days can do to change things. Along with the dow, the nasdaq actually is on track for the biggest weekly gains in six weeks. Nasdaq log the best twoday gain since march of 2009. I wouldnt have believed it if youd told me that were going to see this on monday. Chinese internet stocks again moving up the leader board for the nasdaq 100. Jd. Com up nearly 9 for the week. So much of this week the rising tide has lifted all boats, or the opposite, sunk them all, whatever the opposite euphemism might be for that. But today we do have some stocks moving for more fundamental reasons. Phil lebeau has told us but it bears repeating that Consumer Reports has named teslas new p85d version of the model s the bestperforming car ever tested. Investors are being rewarded today for that. Look at that. Tesla shares up more than 7 1 2 . Actually wiping out the weeks losses in that big name. Kayla, back to you. All right. Thanks so much, Courtney Reagan at the nasdaq. What a wild ride its been this week. Now lets get to dominic chu for a market flash. Another wild ride for semiconductor stocks. The Market Semiconductor etf up 3 on the day, 2 for this week. On pace for its best week since early in february. Leading the way higher ahavingo technologies up 9 or so on strong earnings. Also micron, amd and broadcom not far behind between 4 and 9 to the up side. But remember for many of these names, many of them, this was all, mandy, about a big, big downturn for some of these stocks. So perhaps just a bit of a bounce in an otherwise down trend. Well see if it turns. Back to you. Thank you very much, dom. Lets now turn to the great fall. Yeah, not the great wall but the great fall of china. Its been an awful for anyone invested in chinese stocks. Last night the volatility continued with shanghai and shenzhen composite finishing 5 1 2 and 3 1 2 higher respectively. But both indexes still down a shocking 24 plus in the last month alone. Lets take a look at the ishares large cap china etf. That is listed as fxi. It is up more than 3 1 2 today. However, it is down 7 1 2 over the past month. You can see a bit of a minefield. Lets bring in matthew roddy. And kate warren, investment strategist at edmond jones. Matthew, starting with you, china has proven to be somewhat of a mine field. I think we kind of knew, that right . And certainly the recent days and months have proven it. But are there any emerging markets in particular that would be worth allocating a small part of your portfolio to as our last guest said absolutely, so long as youve got a very patient time frame . I do think you can dip into the emerging markets. Im not one to pick the countries. We typically will outsource that to a thirdparty manager that is very successful in the emerging markets. But when you look at china, it has taken a dramatic pullback on what is expected to be about a 1 dip in gdp over there. I dont think thats a major surprise to anyone. We know theyre trying to rebalance their economy. Its going to be a longterm plan to rebillion away from exports. It got a little slow on the consumer side. Now theyre trying to reinvigorate going back to the old ways of using exforts by lowering the yuan and the reserve rates and Interest Rates. I think there is some value in china but im not here to recommend a single country. By think the emerging markets overall with the way they performed relative to the domestic theres definitely some value there. Lets bring up another board of the dow to keep everyone updated on how were doing here because pointwise were looking at biggest twoday point gain in history for the dow. Were currently up by 337. So off the absolute highs of the day but nonetheless with a gain of just over 2 were looking good. Kate, whats your reading on whats been happening over the past week and where do we go from here . What are you telling your clients . Certainly over the last week weve seen a lot of volatility with everyone worrying about how much chinas slowing down, worrying about whether the fed actually will pause and not raise Interest Rates in september or in the fall. And i think this is really a reminder to investors that we never know which way stocks will move short term. But we do think the fundamentals are positive and this dip is a buying opportunity. Our message has been put money to work in Quality Companies that have good outlooks and take advantage of the lower prices, but its Quality Investments you should be looking for, not some of the high flyers that arent high quality. You like visa, lowes, and comcast. Thank you very much. Parent of this network of course. Thank you very much to both of you for joining us today. Kayla. We are keeping one eye on the markets. As you mentioned, still on pace for a record twoday point gain in the dow, but were also watching the latest in the cholesterol drug wars after rejenneron and san fooe got fda approval for their cholesterol drug last week. Today it is amgens turn. What it means for that stock, currently up. 75 . And for drug prices. And as we head out to break, take a look at the most active stocks here at the nyse. Bank of america, Freeport Mcmoran on those cost cuts, up 31 . Petrobras up 12 . Ge up more than 3 1 2 . Keep it here. Well get you all the action in the markets here. Were back in two minutes. Youre watching cnbc, first in business worldwide. 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. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Aa chance to try somethinglook. Different. This summer, challenge your preconceptions and experience a cadillac for yourself. Take advantage of our summer offers. Get this low mileage lease on select ats models, in stock the longest, for around 269 per month. Welcome back to power lunch. One Silver Lining from the recent market selloff is the Regional Bank sector, which more than held its ground over the past week. Take a look at the spdr s p Regional Bank sector. You can see that is up just 2 1 2 today. Power shares Regional Banking etf is up nearly 2 . Certainly big moves for the Banking Sector with all eyes on what the fed will do. A power lunch exclusive now with darryl byrd, ceo of louisianabased iberia bank. Darryl, its great to have you. Thank you very much. And glad to be here. The two biggest wild cards for your industry are the price of oil and what happens with Interest Rates. Lets talk about oil first because i know especially when investors think about getting involved in the stock of a gulf region bank this is a very top of mind concern. How are you looking at the overall oil market . What is your exposure . You know, we have actually a fairly limited exposure. Weve been very careful with our concentrations, and we have a very broad Geographic Diversification at our company. So you know, we have were in all five of the top major markets in the south. You know, dallas, houston, atlanta, miami, tampa. And we have a very diversified portfolio. Were not particularly exposed to oil and gas in some ways some other Companies Might be. We feel pretty good about our area of exposure. At the end of the quarter we had about 16 of our portfolio was in oil and gas. And the majority of that was the midstream side which we feel really good about. Thats certainly a good thing to hear given what weve heard from other ceos that operate in this space. Lets talk about Interest Rates now because we got a monster gdp revision for the second quarter. 3. 7. Thats leading more people to say perhaps the fed should go ahead and get this rate hike over with. Obviously, that would be great for your business, but what do you think is the right thing to do for the economy . I think for our country its about time that we move rates. For our business were very asset sensitive. Wed love to see rates go up and the sooner the better. But i think weve been at low Interest Rates, zero Interest Rates for so many years that its time to begin to get some movement. And i think our economy, we have a wonderful economy in the u. S. And i think well do quite nicely. How will the overall value of your earnings change with a 25 to 100 basispoint rate hike . Itll be pretty significant. We measure that our earnings could go up anywhere between, say, five basis points to, say, 20something basis points with that kind of increase in Interest Rates. So its very meaningful. More broadly, what is the Economic Health of the southeastern region . You mentioned all of the cities and all of the states that you operate in. Is it a patchwork recovery . Is it fragile . Or are you seeing more signs of strength . Were seeing more signs of strength. Were seeing markets like atlanta and tampa, miami, orlando doing quite well. Birmingham, memphis. The one thing we like in our company is we have very uncorrelated markets and very diverse markets. But they seem to all be doing very well and coming back from recent lows. Darryl, we have to ask you as you are in the business of rebuilding and were all reflecting on ten years since hurricane katrina. As a louisianabased business, how have you seen the recovery progress . What has been your perspective on the ground of the progress that the gulf region has made . I think weve made huge progress. Its interesting. You have to have a certain amount of respect for the devastation of katrina, the 1,800 lives lost. The Million People displaced, many for months at a time. And but weve come back better. Were different but were better. We have a new kind of entrepreneurial spirit certainly in the city of new orleans, and i think very exciting time for us. Well, darryl, we appreciate you joining us. We appreciate your thoughts today. Thank you very much. Glad to be here. Darryl bird is the ceo of iberia bank. Mandy . Such a beautiful city. Thank you very much, kayla. Lets take a look at the russell 2000. Its up about 2 . So are small caps a good place for your money right now . That is coming up next. Plus heres a look at what is moving on the nasdaq right now. Were going to leave you with that. With power lunch back in two. Dont go away. Welcome back to power lunch. Lets get a quick check on whats happening with the Dow Jones Industrial average. Were up about 335 points, thereabouts, just near our best levels so far today. We were up about 380plus points at our highest point. One component of the dow, caterpillar, is coming off of those best levels today. The company did, however, announce it was going to plan to cut 475 more jobs due to declining sales. Those shares are down about 17 so far this year. So not especially good news on the jobs front. However, caterpillar staging for what could be its second day in a row of gains, kayla, with the overall market. Back over to you. Dom, thanks. Lets home in on retail. With a slew of earnings out today. Tiffany reporting an earnings miss. Profit continuing to decline. The luxury brand is still struggling with the strong dollar, which is weighing down its sales. Its also sharply cutting its fullyear outlook. Tiffany shares down 2 1 2 today. Dollar general beating estimates by one cent with quarterly profit of 95 cents per share. Though revenue was slightly below forecast. Thats why youre seeing the stock down about 4 . Dollar general said both customer traffic and average purchases did grow during the quarter. And crafts retailer michaels came in with 17 cents per share. Revenue there was slightly above forecast. Michaels up 5 1 2 . Mandy. Thank you. Time for this hours power points. Number one, this might have seemed just impossible a few days ago but the dow is currently enjoying its biggest twopoint day gain im sorry twoday point gain in history. Its also having the biggest twoday percentage gain since december of 2008. Second, National Average gas prices falling another two cents overnight to 2. 53 a gallon. And that means prices are down 18 cents a gallon from a month ago. And down 90 cents from a year ago. This is actually pretty rare going into labor day. Also finally, wti crude tracking for its biggest daily gain since june 29th, 2012. Energy is also the best performiperform ing s p sector today. If you missed any stories in the past hour you can go visit our site at powerlunch. Cnbc. Com. Kayla . All right. Thank you, mandy. Take a look at the vix. The etf that tracks volatility. Its up more than 30 in one week. And volatility, as you heard from one of our earlier guests, might be here to stay. So how do you play it . Well tell you, next. Youre watching cnbc, first in business worldwide. 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. Never confuse the daytoday action in the stock market with the state of the real economy. They often vary drastically. Now, my number one concern is not instant profit. Its being able to put money to work buying the stocks of companies you like at prices you like. Welcome back to fast money. Our welcome back to power lunch, rather. The Retail Stocks holding on strong. The retail etf xrt is up 2 . Tracking for the second straight day of gains. Some of the leaders sears, Signet Jewelers and burlington all up between 12 and 16 , kayla. Some huge gains overall for some of these smaller retail names in the business. Some stocks to watch for sure, kayla. Back over to you. Thanks, dom. Indeed we have more retail headlines for you. Apparel maker guess reporting quarterly profit of 21 cents a share. That is 6 cents above estimates. Revenue also coming in above forecast. That stock up nearly 5 . Walmart announcing it will start its holiday layaway plan tomorrow. And if that feels early its because it is. Its two weeks earlier than the retailer did it last year. About 40,000 items will be available under the payment plan. Walmart along with the Broader Market up nearly 2 . And gap is ending oncall shifts at its stores and improving its scheduling policies. This is part of an agreement announced by the office of new York State Attorney general eric schneiderman. And mandy, its just one of a number of retailers that has recently come under fire for this practice. Target, abercrombie, victorias secret. Gap is the latest to end it. Thank you very much, kayla. So what is the best way to play this market volatility . What theme should investors be keeping a close eye on . Lou penderdosi of eaton vance joins us now. Every Single Person we speak to says get used to volatility, make it your friend because its here to stay for some time. How are you making it your friend . Yeah, i agree with that assessment. Its been a while since weve had a decent correction of any magnitude that weve seen. You know, we tend to, as longterm investors, we want to use the volatility to our advantage. And the bottom line is if you want to buy low and sell high, obviously. You get those opportunities. When volatility presents itself you have to seize upon it and try to find the best companies you can find that are growing, that will continue to grow throughout the macro environment that move on stocks for specific reasons and take advantage of that weakness. What did you buy, then, when we had the most recent market dip, lew . I think theres a lot of big mega trends that are in place in the market today, and in our focus Growth Opportunities fund some of the trends that we are embracing as longterm investors include a Seismic Shift to digital advertising. That will include Companies Like facebook and google and twitter to some extent. Also new drug discoveries in biotech. We Like Health Care because i think health care has both offensive and defensive characteristics in some of our favorite names within that space include gilead and celgene. And then also kind of connectivity everywhere he. Weve had connected devices growing exponentially. And the simple way to play that is through apple. It has long tentacles, and connectivity doesnt just include mobility and cell phones, it also includes connectivity of the home, connectivity of automobiles, connectivity of industrial equipment. And the best way to play that is through semiconductors and two of our favorite names are avago and nxp. Can i ask you . This is going to take back two weeks ago. Were you expecting a late summer correction like we got . Were there any particular indicators that suggested to you this was coming . No. You can never expect something that swift and violent that weve seen. But what weve seen is what weve been expecting for the last 9 to 12 months. Weve had the call that china and the emerging markets are slowing, that the u. S. Will continue to plug along at a kind of 2 to 3plus percent, gdp growth rate and that europe would trudge along at a 0 to 1, 1 1 2 gdp growth rate. Given that environment weve positioned our portfolio we think appropriately, much more documents, much more growth oriented because in that kind of environment growth is very scarce. So if you can find growth those are the companies you want to gravitate towards. Thank you so much for joining us today. Lew piantedosi. Melissa, you want to get over to you because talking of volatility here i remember being about four, five weeks ago down on the floor of the stocks and chatting with bob pisani. We were below 20 on the vix. And bob was saying until we get above 20 im really not even going to blink. We were in such a long period of low volatility and even complacency, werent we, and suddenly on monday remember when the vix spiked to 50 and i think were sitting around 26 right now, but like i was saying, just with lew, every Single Person around here says get used to it. I know. Were in a new environment. Volatility is the new normal. It is amazing. Its really jolted investors, manned quloirks had got zone complacent to believe that every single dip is a buying opportunity. Theres been tremendous damage made here in terms of investor psyche. If you had the foresight or the luck to buy on mondays dips, bespoke crunched the numbers on the nasdaq 100. Some of the biggest gainers, baidu up 50 since monday. Netflix is up 37 since monday. Starbucks 32 . Still all these stocks are not above where they close on thursday. Its amazing. It really is amazing. It just proves that even if were not at the bottom history always shows that if you use dips wisely and to your advantage over the long term it does prove to be a good strategy. Right . Exactly. Here on the nasdaq, mandy, were up by 2. 3 and technology is certainly one of the sectors helping to lead the market comeback. On the cnbc news line is dan niles, Founding Partner with alpha one capital partners. Dan, we spoke a couple weeks ago out in San Francisco and you said the market was due for a correction. Well, we got it. What are you expecting next . Well, i mean, we did get the correction. We used that to go ahead and actually cover most of our shorts earlier in the week starting friday. And weve started adding names on the long side thankfully before this latest runup over the last couple of days. Our belief is that the market has probably a few more Percentage Points to run here. But at the end of the day fundamentals always win. It may take a while but they always win. And right now or feeling is that earnings season coming up when these companies all have to start preannouncing and reporting in early october is going to be pretty ugly. I dont think weve seen the lows yet for the year. Well have to wait and see. But this is a bounce that youd expect which is why we were covering shorts and buying stocks earlier in the week. And we theyll it will run a little bit but then you have to be cautious and think about what you own and why you own it. The rapidity of the decline was staggering. The rapidity of the ascent is also staggering. At what point will you get the signal and what will give you the signal its time to get back into some of the shorts you were in before . And what are the areas youll be looking to short again . I think quite honestly its just the way the market moves up. It comes down to you were talking about the rapidity of the move. It only seems rapid because we havent had these types of moves for four years. When we talked a couple of weeks ago i mentioned we hadnt had a 10 correction since october of 2011. So that builds a lot of bad habits where people think the market can only go one way and you dont really need to worry about fundamentals because it will just go up anyway. So i think for us it gets down to a time function, which is september is the most back end loaded quarter of the year, and i think with the damage youve seen done in stock markets around the globe its going to be very hard for consumers to feel really wealthy. And i dont think septembers going to necessarily fill in as well as people think. And thats going to lead to a rough earnings season when you have to report. Just quickly, dan, we have your liengtz screen. Avg technologies is one thats a Security Company, and ring. Just walk me through why you think these are more defensive. Year to date wean with the decline these two stocks are up doubledigit percent. What youre trying to do in this market is youre trying to find defensive offense as i call it. So if you look at avg, its a Security Company but it trades at a 12 times calendar p e. Its growth is accelerating from negative in 2014 to 15 this year to 20 next year and theres a lot of security in knowing that they dont have any exposure to china and youve got people paying monthly security bills and theyre not going to turn off security. Same thing with ring central. If you look at that company theyre growing revenues at over 30 a year. Theyve got 70 gross margins. And people arent going to turn off the communication services. Theyre not going to turn off teleconferencing, phone services, et cetera. Theyre paying their monthly bills but youre able to get this name at a four times ev to sales multiple where other Software Service companies with this type of 70 margin, 30 growth, its trading at seven to eight times. Were trying to find those types of names where theres some defense, no exposure to emerging markets, good growth but at a reasonable valuation that you can own even if the market does correct farther after the recent move runs its course. Sedan, great dan, great to s. Noonkz your time. Appreciate it. Dan niles, founder of alphaone capital. Mike yishakami of destination Wealth Management joins us now. And congratulations, sir, because you were just named among barrons top 100 independent Financial Advisers for the seventh consecutive year. And michael, you and i have known each other for a very long time. I remember back in the mid 2000s you were on my show back on cnbc asia telling people to buy quality stocks like apple. But what are you telling your clients to buy now . Buy quality stocks like apple, mandy. The market has sold off. And i still think theres opportunity in the market as was just said. Certainly were going to have more volatility coming in the future. But there are companies that have sold off really for no good reason. China is certainly a problem. I was in discussions with representatives of the Chinese Government earlier this week here in Silicon Valley and they are all very cautious in terms of whats happening in china. But excuse me. If you look at u. S. Companies, Companies Like apple, for example, this is a company that while it does sell product into china still has a huge, huge opportunity to capture Additional Market share in the wireless space. Companies that are good quality brands, even a company like disney that have sold off lately because of the about repricing of media companies, we think these are the companies to own. What else . What else . I think you also want to take a look at some of the Energy Companies. I know thats not very fashionable to say. But if you look at the diversified Oil Companies, look at chevron, for example. Chevron is a stock that has fallen dramatically obviously with the fall in oil prices. We think the dividend is safe in chevron, that theyll actually have asset sales if they have to actually continue to pay the dividend with low oil prices. And you like their stocks like chevron and exxon even if youre not completely confident that the bottom is in for the underlying crude price, michael . I do. Because i think most of the bottom is on the crude price. Could it go to 25, 30 as some are calling it . It could. But if it does chevron will go down a bit but you have a huge dividend and i dont think oils going to stay at 25 or 30 a barrel forever. I think its going to be 50, 60 a barrel in the next two years, everyones going to say gee, i had this Incredible Opportunity to buy chevron but i was afraid. Afraid of what . If you have a company that can sell assets and still pay dividends i dont see what the down side is in this name. Okay. Michael, good to talk to you once again. Its been a while, my friend. Thanks, mandy. Very quickly look at the markets. The dow is currently up by 347 points. Were holding in rally mode here even though were not at the absolute highs of the day. The high was 381 for the dow. But nonetheless, lets see whether or not, melissa, we can keep on rallying over the course of the afternoon. Back to you. Amid all the wild market swings over the past week there have also been some technical problems with trading and pricing. Bob pisani joins us now from the floor of the nyse and eamon javers joins us from washington. Bob, kick it off. I think the important thing is weve had some real interesting moves in the etf business as well as the mutual fund area where theres been some technical problems. We had some unusual etf pricing issues on monday where a number of etfs had trouble opening because the underlying stocks werent allowed to open. But when they did open they were way below net asset value. Also some Technology Glitches in the past couple of days. Bmy mellons had some Technology Glitches helping price net asset values of mutual funds. Just half an hour ago we learned big broker itg is shutting down their dark pool closet temporarily because of the airconditioning center at their data center in weehawken is not operating. This is how the worlds going to end. Airconditionings going to break down. I understand thats also having some problems. Eamon, its been a tough week for the technology and trading business. Its tough on computers when the airconditioning goes out but its tough on human beings too. Maybe they didnt save themselves anything there. One of the things people are doing right now is sifting through this mountain of data we got in terms of Market Structure itself, how markets performed in this huge up and down week weve had this week. I was talking to a Market Structure expert who raised one interesting question for me, which is what about rule 48 . Thats the rule the nyse put in place several days this past week at the open because of high volatility in the previous day. Expected now for the coming day. The question with rule 48, this person said, is does it create sm something of a selffulfilling prophecy in if you send a signal to the market that regulators think theres going to be high volatility does that in tern create high volatility and because the decision to put rule 48 in place depends on the previous days volatility then youve got to go ahead and put it in place the next day and it becomes a bit of a feedback loop. Thats something this expert said hes going to want to look at and theres going to be a lot of those as people sift through this data. Bob, im just curious, rule 48 has it ever been implemented when the volatility is to the up side . Its a relatively new rule and its almost never been invoked. The thing about rule 48 very quickly is it was created to alout specialists to open their stocks quickly because otherwise when theres big moves onts day they have to provide indications and that creates delays in the poepg. They wanted to open the stocks quickly so they said lets let everybody forget about the indications. The problem and eamon brought it up is when you dont provide indications people dont know where the stocks are going to open. This is a side problem. And it was a problem for the etfs because the stocks werent open and they couldnt use the indications to get where the stocks were to price the etfs. Everything you do creates some ripple effect. It highlights how interdependent all this technology really is. Melissa, one thing people said to me this week that actually probably did work was the elimination of stub quotes. Thats something we saw in past years as a big problem. We didnt see that on monday. That kept a lot of stocks from going down to a penny or Something Like that. Thank you. Bob pisani, eamon javers joining us from d. C. Last week frequent cnbc guest brian belski said whats happening in the market is very normal and a healthy process. In a strategy report monday he called the recent drop a bottom and he maintains his yearend target of 2250 on the s p 500. Brian belski is chief investment strategist with bmo capital markets. Great you have to with us. 2250 still seems pretty ambitious, particularly after the pullback. At what point do you say you know, what maybe its time to pull that back . No change in numbers. No change in rating. We believe that investors actually love this drama and fear, theyve almost become too accustomed to it following 2008, 2009. And we believe that fundamentals drive stocks longer term. We have been high quality brand name u. S. Investors for the last six years. Theres no real reason to change that. There is going to be continued high volatility. That has been our call all along when weve put out our year ahead piece in november of last year we called for this. And so at the end of the day how do you fight volatility . You buy highquality fundamental names. We think those names are in america. I want to go back, though, to the premise that fundamentals really havent changed. In the past month weve seen a lot of things happen, brian. Weve seen china devalue its currency. Beef seen a market meltdown filip weve seen the continued meltdown in emerging market currencies, a flight from emerging market bonds, a crush in emerging market equities. How does this not impact whatsoever u. S. Companies here and therefore the u. S. Stock market . Well, melissa, heres our retortd. All of that is macro. Right . And you will of that and much of what you just talked about macro doesnt matter . It was the prior trend. Now, whats happened since 2000 is that investors have focused too much on macro, not enough on the micro. If we think were heading into an 80s and 90s environment where its the warren buffett, peter lynch era of investing where you buy stocks, you buy good Quality Companies, i believe you will continue to outperform, and those Portfolio Managers that are using those strategies are outperforming this year. This is not the rally of china and bonds. Its the rally of north American Growth led by u. S. Stocks. Was it the meltdown, though, of a fear of a china slowdown and the impact it would have on Multinational Companies that are banking on china as their engine of Revenue Growth . They shouldnt be banking their effects on china. And oh, by the way, the chinese stock market in a yearlong decline of commodities should have already told you that. Thats why i said in the beginning of this piece that investors are feeding off the fear and the drama. Theyre using whats happening in china to make excuses to sell. I think the bottoms in place. You dont have days like monday every day of the year, or more than once in a severalyear period. That marks a Major Behavior change. And i think this whole notion of wall street being so negative, theyre afraid to be right and theyre afraid to create wealth for clients. And so all we want to say is the loans arent in place. I mean, that to me is not america. Americas about being optimistic and about having faith and having great companies. And i think weve forgotten about that. What are you optimistic about . Specifically i want to ask you about the energy patch because we are seeing a wti trade. Its up 10 today, brian. Does that make you more optimistic about getting into energy . Well, were underweight and its been the right call. Weve been underweight both here in canada and the United States now for all of this year. A bounce is not a trend. The problem with wti and the problem with Energy Companies is they have not employed a strong structural change like lets say financials and technologies have done after their bubbles. Energy has not done that yet. And what i mean by that is they have to dramatically decrease their cost structure. They have to look at what forecasts are. They have to drop those. They have to learn how to operate a company, melissa, within a trading range. Whether or not that trading range is 20 to 30 or 30 to 40. Wti forecasts for 16 and 15 are still higher than they are today. So that number has to come down. Thats common sense. That is analysis. And what are your top sector picks, bri . Well, we remain overweight financials, the most feared sector in the world, industrials, the most misunderstood sector in the world, because most people have been buying international growth. Its really about domestic growth. And we Love Technology stocks. In fact, names like apple over the last week or so have been used as redemption tools to pare back on portfolios. We think apple we put out a list of stocks on tuesday. That kind of high quality brand name American Company you must own. Brian, great to speak with you. Thank you. Thanks for having us. Brian belski. Again, as we mentioned, crude oil is up 10 right now. Thats a trade on wti. The dow is higher right now by about 334 points. Thats good for a gain of more than 2 . As for the nasdaq, off the session highs. We are at 4799. That is a gain of 100 points right now. 2. 1 . And on the s p 500 were looking at a gain of 2 1 4 . What a difference a couple days make. We also want to show you what is going on in bonds. And were watching of course the tenyear yield very closely. 2. 166 right now. Steve liesman is live at the big fed summit in jackson hole, wyoming. Hey, steve. Hey, melissa, thanks. Should the fed hike . Should they hold . Thats the big question. Here in jackson hole. We have two guys who used to be in the room not too long ago making that call. Former fed governor randy crossner, former fed president charley plosser. Plus are get this. Protests here at jackson hole. Ordinary folks out there demonstrating, holding up placards and saying and urging the fed to hold on Interest Rate. It is getting hot here in jackson hole. The suns coming out. The mountains are coming out. Come back to power lunch right after this. My name is peter tran. Im a gas service representative. Ive been with pg e nine years. As an employee of pg e you always put your best foot forward to provide reliable and safe service and be able to help the community. We always have the safety of our customers and the community in mind. My family is in oakland, my wifes family is in oakland so this is home to us. Being able to work in the community that i grew up in, customers feel like friends, neighbors and it makes it a little bit more special. Together, were building a better california. Welcome back to power lunch. Im Steve Liesman here in jackson hole, wyoming. Markets are near their highs. I think we had 381 just a little bit ago. Just a little bit ago here in jackson hole about 50 or 60 protesters gathered and assembled and urged the Federal Reserve not to raise Interest Rates. They asked the question whose recovery is this . They want wages to grow. Theyre protesting inequality in the economy. Among the speakers was a gentleman who just came out of school or college and said he has a degree making only 10 an hour. And also, nobel prize economist Joseph Stieglitz also joining the bandwagon urging the fed not to hike. Heres what they said. We are not data on spreadsheets. Were not algorithms in your computer. [ applause ] were real people with real bills and real responsibilities. And raising the Interest Rate, its hard for me to make it right now. If youre going to raise the Interest Rate, raise my wages. I dont see this as a hard call. And what is interesting is that the widespread support among people who are not of the mindset of the fed, not involved in the financial markets, people who are really concerned about the real economy, theres a broad consensus. This is not the time to be raising Interest Rates. Joining me now are two guys that used to be in the room making the call about Interest Rates. Former fed governor randy crossner and former Philadelphia Fed president charles prosser. Thanks for joining me. Lets talk about these protests very quickly. Randy, this is a sort of new thing. To me its emblematic of the polarization of the fed and what kind of pressure do policy makers feel from this kind of assembly do you think . They take the issue very seriously. Everybody wants more growth. Janet yellen and everyone at the fed wants more growth. The question is whats the most effective way to get there . And people have different views on that. Joe stieglitz says dont aim for 2 , aim for 4 . Thats not a crazy idea. Chief economist from the imf has also advocated a higher inflation rate. He also says theres no danger here. Were running 1 1 2 inflation. What is to be gained from raising Interest Rates right now . I think there are lots of issues there. I think randys exactly right. Wed all like to see more growth. But whether lower Interest Rates right now are going to contribute to that is a real question. We had zero Interest Rates for 6 1 2 years. Why do we think that keeping the Interest Rates lower, at zero, for another six years is going to make that much difference to the kind of issues that these protesters are complaining about . Wages, employment. So i think its very important that we look beyond whats happening now and look to the long run about what the state of Monetary Policy ought to be in the environment that we have. And so its calibrating the right monetary policies. Let me push back a little bit. How would a higher Interest Rate help . A higher Interest Rate would help in a number of ways. One is there are a lot of people that are very concerned about volatility, about unintended consequences of 6 1 2 years of zero Interest Rates, the distortion in the financial markets, the distortions in other areas of the economy. And i think we have to be cognizant of the fact that were in an extraordinary period of time, we have had Monetary Policy that is more accommodative and more generous, if you will, than at the height of the recession. In history. For 6 1 2 years. Because of the size of the Balance Sheet and the low Interest Rates. I want you to help us be in the room a little bit with policy makers here. Given the last several days. Youve sort of telegraphed you that want a hike in september if the data cooperate. The fact the data has cooperated has been pretty strong. And yet you have 600point swings in the dow. 500 when were therd sort of bored today because its only up 350. How do those market swings play in the fomc boardroom . I think its really important to sort of step back and cut through the noise. Markets go up and down quite a bit. You cant have the fed policy responding to every bum. And wiggle coming out of the markets. What you have to do is look at whats driving the markets, what are the fundamentals behind it. What are the fundamentals in china . What are the fundamentals in the u. S. . Now, certainly those market moves should give people pause to sort of say is there a change in the fundamentals . Maybe, maybe not. Whats your take on that . I think there are fundamental changes in the way people are perceiving china and i think that is obviously leading to a lot of volatility in a lot of markets around the world. Should those developments prompt the fed not to hike . They need to look into it more. Just because the markets have gone up and down is not the reason for fed policy to change. I want to understand whats going on with china better before i make a would you be comfortable raising rates despite the market volatility . You have to look through the volatility, why is it there. Weve known that china was slowing down for a long time. The fed should not be responding to bumps and wiggles in the economy. They need to be focusing on the longer term. If we focus policy on our mandate, on the mandate of the fed, which is price stability and growth, it doesnt seem the pictures changed very much. Was an issue apparently with the thompson data center. The important thing is these are fairly cosmetic. Im checking around here. Ive been talking to sxhft traders. There doesnt seem to be any problem at all with the trading itself. So the orders come in as normal. Nothing seems to be disrupted in any way other than these displays here which thompson controls. Lets check with thompson and see what was going on there and get back to you with anything further on that. But from what i can see there was no trading disruption at all. Melissa . Everything as normal. Okay, bob, keep us posted. Lets get to dom chu for a market flash now. Dom. Melissa, one of those nyse traded stocks, fitbit, shares hitting session lows so far. Down almost 10 . After reports saying that apple is possibly within striking distance of fitbit in terms of wearable devices in that market in terms of units shipped. That according to Market Research firm idc. Fitbit is still, though, well above its ipo price. That was 20 bucks a share, remember, but still a very noticeable down move for a hot recent ipo in technology and wearables, mandy. Back over to you. Right now the markets do seem to be losing a little momentum in afternoon trade. We were up at a high of 381 points for the dow. Now were below the 300 mark. Well keep watching whether or not we can lose some steam. But nonetheless, s p have gained since tuesdays close a whopping 1 trillion plus in market cap. Were going to bring you the close for oil prices. After the break. They were up a high of 10 just minutes ago. Know were up about 9. Well be right back with the oil close. 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. Welcome back to power lunch. Im Jackie Deangelis reporting from the nymex. Crude closing over 42 a barrel. Looks like we have a near 4 day, a pop of 10 for wti, even on the back of a strong dollar. Couldnt keep crude down today. Now, the theory is as equities are going to rebound here, crude probably will continue to do so as well. The decline that we saw in inventories yesterday also supportive. Back to this talk of have we bottomed here and are we working things out to the up side . We could see some more strength if the market does continue to recover. As we close up more than 9. 4 today, and i think we did just about 10 , its the best day that weve seen for wti since march 12th, 2009. Courtney reagan, over to you at the nasdaq. Thank you very much, jackie. I wanted to say were steady as she goes but actually as i look over at the nasdaq composite weve halved our gains. We were steady for a while and then trending higher but now down right about the lows, maybe just off the lows of the session. But when it comes to the subsectors and you drill down further into what is working, the semiconductors, again doing well today. Up still 2. 3 there. As you look at that S P Semiconductor index. Its still better than the broader nasdaq composite. No matter whether its a Semiconductor Equipment makers or the chips themselves. The whole Group Feeling pretty good again today. Look at micron up almost 8 . This was a high flyer. Remember we see it flying its wing in the last couple days. Still off 57 from its most recent high. Avago again leading the nasdaq moving up toward the top. Bespoke says its one of the biggest turnarounds this week. Avago shares are up 26 since the monday lows. Melissa . All right, courtney, thanks so much. Lets focus in on biotech. After regeneron and sanofi got fda approval, meg terrill is here with the details. Repathia. In the same class as the one that got approval from sanofi and regeneron. The fda is expected to approve this drug. Approval is widely expected and priced into amgen stocks. The key questions are going to be how broad is that approval . Is it going to match at profl for regeneron and sanofis drug or will it be narrower or broader and also wheres the Company Going to price this drug . Regeneron. Sanofi priced theirs about 14,600 per year. So the question is does amgen try to undercut that in order to get more doctors to prescribe their drug or will they price it about at parity and then will the competition come in from the pharmacy benefits managers like cvs and express scripts . Thats the expectation on the payer side theres going to be a lot of pressure for these drugs because they look very, very similar in lowering cholesterol. And the expectation in terms of this class of drugs very big according to analysts but some are making the point theres another class of drugs that are going to hit the market that could actually give these drugs a run for their money. Thats true. Theres a couple actually. So another stock that get tossed around is a smaller one, susperion working on another drug behind these and its taken orally as opposed to being injected. Some people might think he folks would prefer to take that drug p. Its a little further back in development. Then theres another class called c tab inhibitors from merck and lilly. Thats had a troubled Development History but folks think these might have a big chance and if they are successful they could pose a risk to this other class known as pcsk 9 inhibitors. When we get the amgen news what should we be looking for . Anytime today. And were looking for price and how broad the label is. Meg tirrell. Now lets get to sue herera in the cnbc newsroom with our headlines. Sue. Hi, melissa. Heres your update this hour. Hillary clinton campaigning in ohio for the First Time Since announcing her candidacy in april. She visited Case Western University in cleveland, where she talked about the need for gun control programs and also Womens Health care. She also criticized republican frontrunner donald trump. A Swedish Coast Guard ship rescued over 400 migrants from a wooden boat off the libyan coast yesterday. They also discovered the bodies of 51 people who they believe suffocated under the deck. Massive wildfires continue to rage through siberia. 51 individual fires have spread across tens of thousands of acres of land near lake baikal which is a popular Recreational Area during the summer. Triple crown winner American Pharoah was back on the track this morning prepping for this weekends travers stake. Hes a big favorite right now listing at 15 odds. The race will be covered on nbc on saturday beginning at 4 00 p. M. Eastern time. Good luck. Thats the cnbc news update this hour. Back to you, mandy. What a horse. Sue herera. What a big day on wall street. Take a look at the numbers for the dow. Still moving nicely higher but certainly nowhere near where it was. 232 to the up side. Gain of 1. 4 . But to retain the title of the biggest twoday point gain in history for the dow, it would have to close up more than 272 points. The nasdaq is still higher by about 1. 6 , as is the s p 500. Right after the break were talking about the financials. More power lunch. 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. Starts at 6 30 a. M. On the vo rush hounose. Und here but for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. Welcome back to power lunch. Im eamon javers in washington where the National Labor Relations Board has issued a longawaited ruling in a labor case. Its a 32 split decision siding in favor of unions and labor in this case by party line here. National Labor Relations board ruling in a case on Browning Ferris industries that has broad implications for the definition of what an employer is in this country. This all stemmed from an incident in which the teamsters wanted to organize the employees of a subcontractor of this recycling Company Called Browning Ferris industries. They wanted to negotiate, however, with the parent company. That led to this Labor Relations board case and now they have decided 32 on the side of unions and labor in this case. Thats going to be significant implications, melissa, now for companies that have a lot of subcontractors and also a lot of franchisees. Back to you. It will be interesting to see what the impact is. Eamon, thanks so much. Want to take a check of the markets. Off the session highs with the dow looking at session gains of 270 points. Every single name in the Financial Sector is up. Where do you go in financials from here . Lets ask the trading nation. Larry mcdonald, societe general. Larry, what do you make of financials . Its interesting because i feel like a lot of the rise in financials we saw until the past few days was predicated on the notion of a steepening yield curve and now that the yield curve doesnt look so steep theyre still higher and analysts are coming out upgrading the stocks. Youve got a substantial relief rally from an oversold level earlier this week but when you look at the financials over the last five to ten years you have to look at global risk. Sought epicenter of global risk in 2008 was the United States. 2012 was europe. 2015 is asia. Youre looking at the financials. Weve broken down technically. First of all, on the charts. But the asian emerging Market Countries, the cost of credit default protection in asia, of asian banks and emerging Market Countries has risen substantially. That needs to come down before you can get comfortably long the u. S. Financials. It looks like there are i dont want to add to the pile here but there are some concerns also about energy exposure. And with crude oil prices not seeming to find any stabilization that continues to be a concern. So i actually was in the financials. I really like the banks. And i actually think a lot of the concerns about the china contagion are overblown because china is such a closed banking economy. And one of the things i really like about the banks is though we do expect lower net interest margins, lower revenues from that because we expect an Interest Rate hike the Earnings Growth is one of the highest in this sector. Were looking at about 15 Earnings Growth for 2016 versus 8 for the financials. Youve really got a nice sweet spot. You look at the potential up side. Analysts have been upgrading. We have an average up side of 18 for analyst target prices. Really one of the sweet spots that are looking a little oversold and very good growth going into the next year. Two different opinions. You can get more on tradingnation. Cnbc. Com. Lets take a look at the russell 2000 right now. It is lagging the performance of the overall markets and take a look at the s p 500. But it is up by 1. 6 . We asked the question are small caps a good place for your money right now . Well talk to a fivestar Small Cap Fund manager but i feel like those big names, heres a look at how some of the most widely held stocks are trading today. Cisco is up there more than 1. 5 . And wells fargo along with the financials a nice gain there, 2. 8 . Power lunch will be right back. Stay tuned. Now the latest from tradingnation. Cnbc. Com and a word from our sponsor. During bull markets many traders find themselves attracted to small cap stocks because they have a tendency to be higher beta, which means they generally move up faster than the Broader Market. But make sure you dont own too many small caps because this could be risky. If the market should experience a downturn, youll probably find that these stocks also move down faster than the Broader Market. A one, a two, a three percent cash back next. Theres gotta be a better way to find the right card. Creditcards. Com lets you compare hundreds of cards to find the one thats right for you. Just search, compare, and apply at creditcards. Com. In case youre just tuning in wed reported there was a problem with the pricing displays at the nyse, although trading is going on as normal. Bob, whats the latest at this point . Let me show you these panels are very famous because we use them to show what the prices of the stocks are here. Normally these are filled with indications and prices of the stocks. You can see theres nothing here. And apparently, Thompson Reuters put out a statement. They were on the panels. That theyre having some tech issues. We did speak to them. As an explanation. They said they would get back to us. What i dont know, melissa, is whether theres any connection with this and the problems were seeing at a very Big Data Center in weehawken, new jersey. This controls a lot of important messaging traffic for Financial Firms in the area. We know itg, for example, one of the big Brokerage Firms shutting down its dark pool posit because the airconditioning is necessary to run these servers. You have to keep it cool at a certain temperature or the servers overheat. We also understand that batson exchange may be affected. We have called them and asked for an explanation. This data center as i understand it is owned by savis a subsidiary of century link. We have called them and asked if they can provide some information for us. I put up the s p intraday. The other thing i dont know is whether theres any connection in the slight little move to the down side that we saw, very small as this news came out today. Im going to get to the bottom of this. It just goes to show you weve talked about this several times, you and me, melissa, about the interconnectedness of everything and a little glitch like an airconditioning problem creates data center issues and creates problems with interconnectivity of financial information. Bob, you mentioned this also handles a lot of the messaging between Financial Firms. Have you seen any sort of a dropoff or impact on Trading Volume . No. And i want to emphasize the panels here do not affect the trading itself. I walked around on the floor. And nobody has said any problems are existing in terms of trading and messaging thats going back and forth. I want to call around to some other firms and make sure everything is operating normally, but down here everything seems to be working fine. Bob pisani, thanks for the update. Keep us posted. Mandy. Okay. Thank you, melissa. Is now a good time to invest in small caps . Lets bring in eric marshall, he is cofounder of the fivestar morningstar rated hodges Small Cap Fund. Good to see you once again, eric. Your fund year to date is down by 5. 7 . We just played a little snippet from a guest earlier. And he was saying, you know, in a downturn these small caps do tend to move faster than some of the other stocks in the market. So whats your view on where we go from here . Well, at the hodges funds we really see the kind of pullback that weve seen over the past couple of weeks as a normal and healthy part of a bull market because it helps recalibrate expectations out there and the way people view risk. And as active managers this is really a time to accentuate on the really High Conviction ideas and the portfolios. So were focusing on the things that we think are the best buys on this pullback. One would be capstone paper and package. This is a Small Cap Company in an industry thats gone through a lost structural changes. They basically make cardboard and other corrugated packaging products. But trades at about ten times earnings. Stocks had about a 10 pullback off of its high earlier last year. And we think thats a great opportunity. We like American Eagle outfitters, which we see as really a standout in a very difficult business right now. The companys seen a nice earnings recovery, has a couple of dollars of cash, paying a nice dividend and really like the valuation on that stock. We also like u. S. Concrete. Eric, ill stop you right there. But yes, you do like u. S. Concrete. And the last one on your list is legacy texas financial group. Were just about to go to a break. So i just want to mention that the russell, by the way, the Small Cap Index is also off its highs along with the other indices. Thank you very much for joining us today, eric marshall. Indeed the Broader Markets are holding in i guess you could call it rally mode but again, were not at the heights that we were earlier on in the day. Let me show you also the solar etf, the Ticker Symbol pan. It has had a very volatile week. What do you think about investing in solar . Were going to ask a top analyst coming up next. Check on the dow. This will be an interesting close. We were at our highs higher by 381 points. Right now our gain is down to under 200, 196. Still up 1. 2 . Lets talk solar stocks. Surging today. Solar city upgrade to overweight by Morgan Stanley. Trading 6 higher today. Great to have you with us. A long with decline in oil because solar is trading in tandem in oil. There are concerns about this group. You had a note out on solar city end of july. Since then the stock is down 14 . Are you still convinced there are no issues with financing the cost of capital for solar city given the additional stock decline . There are are no issues at all. This company does not raise equity for its core business. It is project level financing. They just did a securitization two weeks ago at less than 5 . This is one of the leaders in solar financing. With the lowest cost to capital in the business. It has nothing to do with the price of oil. Youre confident your price target is 75 which would imply 65 up side from where we are now. You still stick with that . Thats quite a big return. It is. The stock was at 75 a year ago. The retained value, the asset base here doubled in the past year. The stock went from 75 to less than 50. That is classic multiple compression. Some of that, because of this bizarre trade with oil you alluded to. Tonight on fast money we have the Morgan Stanley analyst who upgraded solar city to overweight and says buy the dip. Next up, the worlds cheapest emerging market. Is this a market you should inves invest in . Im here at the Td Ameritrade trader offices. Ahh. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place that lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim . For all the confidence you need. Td ameritrade. You got this. Whehe trusts onlyon duracell quantum because it lasts longer in 99 of devices. We are tracking this market carefully. The Dow Jones Industrial average under a 1 gain on the day. 149 points is what we are up. We had been higher by 381. It does look like we are losing steam by the second. Russia proves to be the least expensive market on an absolute forward pe ratio basis closely followed by egypt and china. Is now the time to invest in russia . Lets bring in tim seymour and Catherine Rooney vieira. You say fundamental on a long basis russia is a no touch. Why . If you are going to look somewhere, dont look at russia. We have an economy that is still in recession. Oil prices have come down severely. This is a heavy handed government. Its very unpredictable government that weighs on what is infamous to be an insufficient and unproductive corporate sector. I would say there are better pockets of value than russia. For traders, ridiculously cheap. Oil is a big thing. You find opportunities in individual names. I would say russias politics are bad but they are russias politics and they work for russia. They dont have external financing needs. The weaker ruble ultimately has been an amazing cushion for this economy. Probably more flexibility. Pl the Russian Oil Companies at a time when global Oil Companies are cutting yields, these guys didnt make money at 120 oil. They are almost as profitable now and will make dividend payments. Your point is there is a strong consumer culture in russia. Thats the theme. Russia as an emerging market has a stronger consumption story. Gdp will contract, but not as much as people expected. Its an easy target. Everybody knows how bad russia is when the cheapness of it is not what attracts me. Russia is always cheap. There is a real culture there. Thank you. We want to take a check on the markets. We are losing steam as we enter the final hour of trade here. Dow jones higher by just 0. 7 . Quite a distance in todays session. Currently sitting around the lows of the day. Earlier today we were saying was the best twoday point gain in history. That is not the case now. Lets hand it off to the closing bell. Hi, welcome to the closing bell. Im kelly evans. Im simon hobbs in for bill griffeth. Yesterday stocks staged a mega rally late day. The day before they staged a huge selloff. Well see which direction we go today. The dow is only up 133 points. Within that, it is energy that powered the market higher for much of the session. Oil surging on track to have its best day sin