Transcripts For CNBC Power Lunch 20171009

Michelle carusocabrera. Stocks are lower but steady. The dow managed to hit record intra day highs earlier columbus day is today. J. G. E. , the worst annual performance in years what investors should do with this the big announcement tesla is down 2 after they said they are derailing the announcement of the new semi truck until December Tyler mathisen is here here is what is happening now. General motors taking a bigger step towards selfdriving cars, buying a sensortech firm called strobe no price tab mentioned marvel drops a planned venture with northrop drum mondmonds. This comes after they attacked the company for potential ties with the defense contractor. Apple looking into why some of its iphone 8 batteries are swelling maybe they need antiinflammatoriries. Brian . Tyler, thank you very much greetings from the janus advisory conference. We have had low Interest Rates for a better part of a decade. A lot of people may have never invested rates are expected to go higher. How do you have to evolve and change your investing strategy for a world we have not seen for the better part of a deck casad. Who better to ask than bill gross. Are we going to see major changes in the mutual fund and etf world because of a rather obscure rule that will impact us a lot to do with the Janus Henderson advisory conference. A lot of real world practical mon fri fr money from out west z it is about as lovely a place there is at this time of year we begin with the white house pushing back on the president s battle with republican senator, bob corker a eamon javers has the details reporter i have been talking with white house officials and they dont believe that the spat that the president had with bob corker is as damaging, particularly when it comes to passing tax reform they think that bob corker was sort of a free agent anyway, because he is not running for reelection. Regardless of whether or not the president is fueding with him, he is going to vote on tax reform on the merits they dont feel like they have necessarily lost a specific vote here i also talked to one Senior Administration official here at the white house today and asked why is it the president seems to be fueding so often with his fellow republicans and not insulting democrats as oven fte i insults republican the answer was that criticism from fellow republicans really bothers and gets under his skin. We have seen this play out again and again tloout throughout thee of the year. Take a look at the republicans up on the hill he has called mitch mckonconnel failed leader and that john mccain represented a slap in the face he said Lisa Murkowski let republicans and country down and called senator flake weak and we are seeing this commentary between the president and corker over the weekend despite these fueds, these individual senators will vote up or down on the merits of the legislation even though things have gotten testy and personal between the president and corker over the weekend lets bring in john harwood lets talk about the merits of the case on tax reform or the tax cuts beyond the battle with members of the party are there doubts that this plan is going to pass on the merits yes, precisely. Thats why even though bob corkers fight with trump may increase his margin. One problem is the assumptions of how much the economy will grow and what will happen too the deficit. It will grow so much this will pay down the debt. Very few people believe that Goldman Sachs has argued that only about 25 of this tax cut will be paid for we have estimates of 1. 5 trillion to 2. 5 trillion added to the deficit thats a political problem the distributional anal sift, w who is going to get this tax cut . It is top loaded towards people at the top there are tax increases going to affluent upper middle class voters between 100 and 300,000 income because of the nature of taking away the state and local tax deduction. A problem for people in illinois and republicans in the house it is also a problem on the east and west coast for republican members of congress. Finally, all the details they have not filled in this is only an outline. They havent talked about what other deductions they are going to take away the reason they havent talked about them, every time you talk about them, you create political problems they are a long way from working out the politics of this apart from any feud with corker. The one thing we can conclude from President Trump getting in these fights with republicans, he is not all that skilled at managing this republican caucus. He needs to be better and his team needs to be better to get this done. How many votes could he afford to lose out of the gop caucus and still carry the day lets assume not a single democrat sides with the administration on this in the senate, you can only lose two votes otherwise, you go down you are not able to get to that tiebreaking vote for mike pence. In the house, they could lose 21 votes. There are a significant number of republicans in highly populated and high tax states. If they decide they are going to resist, thats a big problem lits bri lets bring in ben white and robert costa this battle with corker, meaningful or not when it comes to getting a tax bill passed very meaningful it adds more to the plate, a plate thats already crowded with the budget trying to get Disaster Relief to texas and puerto rico. You see everybody saying it is going to be early 2018 when tax reform really starts moving. The issue with corker, to john mccains votes when it came to Health Care Reform, part of me is very suspicious. He said the reason he didnt vote for it was a, b, and c. You have to wonder if this was partly a way to get back at the president for the way he freeted the s treated the senator. We see with senator corker, he has been clashing with this administration for weeks a lot of senators now are really worried. I have talked to a few of them, about the white houses focus. Are there going to be behavioral clashes in the coming weeks if they dont stay in line with the white house. Thats their main concern . What are you hear sng. The same things he is. Corker has problems with added to the deficit through tax reform it is unhelpful when you can only use two votes in the senate you saw what john mccain did to Health Care Reform corker could do the same to tax reform as harwood pointed out, there are all sorts of problems with the specific of tax reforms that make it hard on the house side, they can get it done. In the senate, they are trying to get Democratic Senators to make it up thats why you see frum going to red states to try to bring that along. The democrats hold firm and lose to republicans, you are dead on tax reform, you have lost health care you have nothing to show for congress lets talk a little bit, robert, if i might, about the sort of tentative moves to negotiate with the democrats on a variety of topics, whether it is immigration, tax reform, health care, the, quote, reaching across the aisle. Do you think that is sincere or is it cynical by which i mean are his overtures to the democrats, schumer and pelosi, to put pressure on the republicans to come over and do a deal or i will go over sincerity doesnt matter when you have democrats pouring cold water on the different moves to the center, the daca deal, kind of falling apart as the white house makes more demands on health care, senate ma north leader has come out and said, even though he had a phone call t doesnt mean that much you see the president fuming these deals are very franlgigilf anything on daca, you have seen them very opposed to all of these demands. On tax reform, you are not going to get a lot of democrats for cutting taxes. I remember how victorious pelosi and schumer were when they thought they had a, quote, unquote, deal with the president. The wall was not in there. They see that the wall is back build that wall that is a central part of Trumps Campaign platform. What we had thought had happened was some type of agreement on increased border fencing that they had softened on a big, impenetrable wall and some middle ground where you could have increased funding at the border to get daca through we are way back and dialed back and far away from a deal democrats are not going to go along with most of the stuff trump has demanded given all this, where would you place the odds of any sort of tax cuts, tax reforms, whatever you want to call it the markets dont think anything has changed. As a reporter, i see a white house and the people close to the president who im talking to they are focused on the culture war, grievance politics and going after the Republican Base after that defeat in the Alabama Senate race. They are not concentrating on tax reform you hear the president articulating where the rates should be. Isnt it up to congress, though ultimately, they write the law they do write the law gary cone and others can give advice about how they want it to look the president isnt singing from the same hymnal. Got it. Ben, robert, thanks so much. Thank you lets go to mort brennan for a marquette flash. G. E. Shares are down they are the biggest drag on the dow. Down more than 3. 5 after new ceo, john flannery, announced more leadership changes including the retirement of cfo, Jeff Bornstein new ceos bring in their own teams but the departure of bornstein is seen as surprising. What to expect strategy and outlookwise when he updates investors next month that said, g. E. Has missed some key targets in recent quarters, including Free Cash Flow under bornstein, replaced by jamie miller ed garden is taking a seat on the g. E. Board i am told this was flannerys decision as the new chairman, a role he acquired a week ago. This puts the fact that he is focused on cost cutting into perspective. Again, shares of g. E. Are down more than 3. 5 right now fresh 52week low Morgan Brennan, thank you z. Shopping online is easy returning things you buy online, a major hassle well tell you about walmarts plan to get you in and out in 30 seconds. Whats coming up for ten years, since the financial crisis, Interest Rates have been on the way down or low. For eight years, the stock market has been on the way up. In fact, record highs nearly every day. You know that. Do you know how to invest in a rising rate environment . We havent had one in a decade it looks like we are there now we are going to ask legendary investor, bill gross, how to invest and training your strategy coming up at the Janus Henderson advisory people dont invest in stocks and bonds. They dont invest in alternatives or municipal strategies. What people really invest in is what they hope to get out of life. But helping them get there means you cant approach investing from just one point of view. Because its only when you collaborate and crosspollinate many points of view that Something Wonderful can happen. Those people might just get what they want out of life. Or they could get even more. Welcome bam. Im Brian Sullivan at the Janus Henderson advisory the stock market has been on fire for eight years we have seen the bond market come down. Many believe the era of a low rate and rising stock market could be coming to an end. If so, what do we do how do you change your strategy . Lets talk to a guy who has been few a few rate cycles, bill gross, the bond king legendary advisory this is at your event. Good to be here we have 75 degrees and some surfers out there. Im never going home. You started in 71 from that time to now, there have been seven to eight rising Interest Rate environments we have been in a declining to no from rate environment for the better part of a decade. Are we in the middle of perhaps the most fundamental structural shift we have had in over a decade there is the possibly the tenyear at 235. Bottomed around 160. Some could claim we are already moving in that direction in terms of a bear market it depends on how quickly rates move if the tenyear only goes up ten basis points a year, then it basically pays for itself relative to shortterm Interest Rates and there is no damage if it moves up 40 or 50 a year, then you have a bear market and you have certainly damage in bonds in terms of their prices, lower prices you have potential damage in stocks and real estate and other investments too. So it depends on the speed, the potential speed. What would be too quickly for rates to rise to give us a potential rise in the stock market 50 points per year is debatable. By the fed or the tenyear . The tenyear wouldnt move as much but it would probably move 40 for every 50 that the fed moves. I think some central bankers and ben factors indicate that you get a stop here and look around and see whether or not the economy is potentially damaged or not it is simply debatable as to what the perfect Interest Rate is and how high they can go. There is no doubt the fed wants to normalize, meaning get back to where we were before. It means in their ice, 2 fed funds and a 3. 25 tenyear. They need to make sure on the journey upwards that the Housing Market isnt damaged and that equity markets and risk markets are stable as well it is a delicate balance. What i was thinking, if you are 35 years old and you are an adviser here or eamonany manager or a private investor, if you are 35 years old or younger, you have never investnd a rising from rate and somewhat inflationary environment, you have never seen it, how do you change your strategy what do our viewers do what happens in a rising rate environment . Whats the best way to preserve wealth it is almost like driving on the audubon or here in Southern California with the tesla coming off the stop light you compress it. You get up there to 60, 65 and cruise when the market becomes morre risky and the potential reward less, the road so to speak is encumbered with maintenance or stop lights. Bumps in the road and speed bumps, you drive more slowly ultimately, i dont think thats the case now an investor has to learn how to drive in reverse do you go more cash do you go to cashmore . Cash is basically driving in reverse. You stop going 60 and take it down to 50, 40, 30 you see whether or not it is still safe to drive. Ultimately, if the perception is it is not safe, then cash is the ultimate haven, yes. Quickly, last question, fed chairman, we are probably going to get a new one if bill gross picked the fed chair, who would it be and why i would probably stick with yellen she has done a good job. Lets say she is not ava available . I would go for some young blood, different blood, kaskari. Neil kaskari . Yes i would like to see somebody come in with a structural thesis that is a little different i did not expect that from you, bill gross. We appreciate you having us here at the Janus Henderson advisory day. Thank you. I will see you in there in about two hours time michelle, a huge structural shift. Rates have been low forever. I had a lot more hair the last time rates started to rise they might go up again it is his former employee he knows him well. He does know him well well see if that happens. Well be back here with the coceo of Janus Henderson to talk more about the structural changes we are seeing sgchlt will. Walmart is taking on amazon by speeding up the process to return something you bought online is it going to make a difference dove soap is under fire for a contveiaadrorsl d. What were they thinking . Power lunch will be right back for many people, the biggest drawback of Online Shopping is the potential hassle of returning the item now, walmart says you can do it in 30 seconds. It actually involves both walmart and the apps starting next month, walmart is launching mobile express returns for shoppers returning walmart shift Online Purchases to the stores you will use the walmart app to generate a q. R. Coat and scan it at a Walmart Store the retailer says the average return is about five minutes the goal is to shorten it to 30 second just for the items that walmart shipped you from the site, not the marketplace sellers along with fast returns for the instore purchases they want to make shopping easier, save you time and bring you in store, likely to lead to additional purchases according to a ups survey, 70 of shoppers buy something extra when returning online pchs to a physical store compared to about 45 when mailing back the order. Online p Online Purchases are returned 36 more. If it is a return, the retailer pays for it. The nonsale literally costs the retailer amazon, the lack of physical presence for returns although, starting this month, coals will pack and ship your amazon returns at 82 of its stores and eligible amazon returns are now accepted at whole foods stores they are trying to rectify the problem. People buy more. Vicepresident pence walking out of an nfl game after players kneel during the National Anthem critics call it a p. R. Stunt Harvey Weinstein fired by his own company. They are probably going to change their name. Top branding topics and more when power lunch picks up after this believe it or not you actually like what you do. Even love it. And today, you can do things you never could before. Youre working in millions of places at once with iot sensors. Analyzing social data on the cloud to create new designs. And using blockchain to help prevent fraud. So get back to it and do the best work of your life. Hello, everyone. Im sue herera no sign of compromise in the standoff over independence for spains catalonia region they say they plan to declare independence as early as this week on the eve of the parliamentary session, neither spains Prime Minister nor the catala flchn lr showed entering into the talks a container load noed into cargo plane caught fire. It took place before the passengers were in one airport poworker was killed. The participants in the trial of the two women that were accused of killing kim jonguns brother visited the lab. The brother of the man that stabbed people to death at a french train station was arrested in italy. He was suspected of helping his brother and being a member of the terrorist group himself. Richard beyeler winning the nobel prize for economics for his work on behavioral economics. The exciting part is the potential application. Steve liesman here to explain. He has been running a pioneering inis your rex into modern economics for several decades. Now, the 72yearold behavioral economist from the university of chicago has been rewarded the top prize. Not all individual decisions and markets are rational people make choices that are not the optimal one financially. Economics is based on the assumption everybody is super rational, have no selfcontrol and never have a hangover and saves exactly the right amount for retirement and then invests it perfectly the rest of the world, there is nothing like that. We are more like Homer Simpson than we are like stock from star trek his way of looking at how real people make decisions mea mental accounting. People are more averse to taking losses than gains and nudged to make the right decisions depending on how you ask the question financial outcomes will be the same it is extended famously to the nfl. He found the football teams paying too much for the draft choices and undervaluing the lowest choice. The best value is the 27th pick. His role has paid where people must opt out of the right choice rather than being forced to opt asked how he would spend the money, he said as irrationally as possible. It sounds like the montee ball of football he was around before money ball it confirms a lot of what he thought. There were people in baseball making decisions based on chin size and things like that rather than looking at the status if i cans that showed you the real results and returns. Time for the power rundown we have a bunch of stories floating around media and advertising. Here to break it down is mike jackson, principle at 2050 marketing. Welcome. Good to see you a couple of weeks ago at iconic. The hollywood heavyweight, Harvey Weinstein, fired because of mounting Sexual Harassment allegations. Your reaction here my question would be, if this was known for so long, what changed . Why did it take so long . Probably the worst kept secret in hollywood on record, there were six or eight Sexual Harassment lawsuits that were settled and you have this whole history around the casting couch. I have no idea what they learned over the weekend that led them to believe that they needed to move they have Serious Problems at the weinstein company. Do they need to take the name off the company . They are going to take the name off the company. That sounds like a smart move. Thats an easy decision im sure the investors and half the board resigned and those that remained dont want anything to do with it harveys brother, bob. It is amazing they have allowed this to fester so long dove taking a hit over a facebook ad that shows an africanamerican woman removing her top to reveal a white woman undernooe und und underneath they said they missed the mark in representing a woman of color thoughtfully the second frame shows the woman morphing into a latina or an asian appearing woman. That are are a l lot of things m to be getting upset about. Should this be one of them i was almost speechless dove is a brand that has global appeal they have successfully positioned their products to be very aspirational to women it is no the a luxury brand but it is a very wellpositioned brand. This just goes to show you that when these organizations are devoid of people of color or women in key leadership positions, when left to their own devices, they are going to make mistake taco bell and pepsi, shocking but not totally surprising from my perspective there is probably anger there is an unfortunate typical thing they do where they show an africanamerican person who becomes white after using the soap i would assume a lot of people were upset what if they had done the opposite, their whole point was to be inclusive and show many women use their soap the strategy, again, in these cases, the strategy is always well thought through when it comes down to the execution and you leave it to organizations and ad agencies to execute and you dont properly have na kithat kind of cultural relevance voiced in your organization, you are going to make mistakes. The fact that they made mistakes years ago in the category, it brings back a lot of anger this is one that obviously could have been avoided and even doves initial response wasnt one that i expected. It reeks of stupidity it is a lack of judgment even if they are predominantly white inside the department that okayed this ad, that doesnt give them an excuse for being completely insensitive they have acknowledged the huge mistake and frankly significant damage to the brand, because that image is going to conjure in females an people of color every time they see that dove logo i suggest that they take a deep look at their organization and, again, successful brands are going to have to be relevant and reflect the culture of society this issue is not going to go away until it is addressed at the top of these organizations lets move on to another controversy that is still percolating, vicepresident pence rei go flighting the debate i didnt know it had wayned so much over nfl protests during the National Anthem. Former indiana governor left the colts game after about 12 playe players kneeled. Some call it a p. R. Stunt and some criticize the amount of money spent to fly him to indiana for this game. A ceremony regarding Peyton Mannings retirement of his jersey President Trump defending the vicepresident saying the trip to indianapolis was long planned. The cowboys owner, jerry jones, says any player on his team that doesnt stand during the anthem, will not play. Your reaction . You know, wow talk about poor leadership and mismanagement of an entire issue. I frankly look at it from the perspective of the administration as well as the league obviously, the game is with the San Francisco 49ers. Thats Colin Kaepernicks old team for roberter say a ersay and go the nfl office not to head this off and show some leadership and let it get to where it is now without engaging the players in any dialogue is frul mitruly mid blowing. It is going to be a drip, drip, drip it almost reminds me of the United Airlines situation again. Is the league afraid of the players, the Players Union most specially . The players obviously are the league in essence, the two of them cannot work without one another. Frankly, the initial response i thought was a positive one it showed alignment between the owners and the players my resolution would for someone. There has to be some sanity at some level where the owners, the commissioner and a few of these players who have been very articulate in expressing that they are not frying trying to dr the flag they are expressing their opinion to dissent if you are thinking if they met with the president , this might ease it . To me, it looks like it has been a real winner for the president. If you call all these actions of really stoking his base a real winner, i think the percent of the population that is very loyal to mr. Trump and his views, thats not going to change until he is directly speaking to that the nfl is a multibillion dollar enterprise, eamon aa moneymakig enterprise where they all share fairly significantly in the results. There has to be a way, and, again, i would suggest it is going to have to come from the players. These players are very, very smart. They know whats at stake. Whether it is sitting down with President Trump or mr. Pence, something has to happen versus what is happening today. My guess, it will be very interesting to see i dont know what the cowboys have done in the past or whether or not any of their players have kneeled. I dont know what they did yesterday. If the players are threatened that they are not going to play or are not going to be paid, i would think that would buy more and more owners, that that would cause this problem to end. I dont know i just dont see the players backing off under the threat they are going to get to spend it i dont see the administration backing off either that goes to the heart of what michelle is saying here they could all sit down in a room im not sure that the outcome would that there is any indication either side would be willing to change their view to be continued, we will see where it goes here the season is early. The giants are 0 and 5 so it is mike jackson, principal at 2050 market shares for disney are down we will hear from an analyst who is calling the stock a top pick. Lets get back out to brian in california hey, brian hey, mel, thank you very much there is an obscure rule that is going to go in effect in january in europe, this rule, as obscure as it is, may have more of an impact on u. S. Investing and Fund Management than any cas. That we have seen in dede what it is and why you care with the coceo of Janus Henderson right after this welcome back we are joined by dick wild, Janus Henderson coceo i teased this thing, a 550page rule that goes into effect in january. Our clients and your advisers care because it changes the way Fund Managers have to get researched a lot of people worry it will affect the United States as well even though it is an european rule will it . How are you preparing . Yes, it absolutely will affect the markets in the u. S. There is a shortterm effect and a longterm effect in the shortterm, the fact that we are going to have to change the method that we use to pay for research generated by wall street is going to reduce the amount of research that firms buy and change the price it is going to require regulatory change in the United States to make it all work that is really time pressured given be a january 1 implementation if you are a u. S. Guy, you are going to buy research and it is going to impact you incorrectly. Is the s. E. C. Going to come out and say anything about this . People i have talked to say, we dont know how this is going to affect us. People are nervous i think thats right. The s. E. C. Will have to come out and say something. I probably dont have a crystal ball thats good enough to predict exactly what i think you can predict a couple of things. The investment banks are going to pay less money and do Less Research the firms in my business will see increasing costs of paying for more research dprektirectly. You can forecast there will be less coverage in the world for small and Medium Sized Companies will will make the Financial Markets inefficient, which is one of these unintended effects of these regulations and i think the opportunity for Janus Henderson in the medium term, we have outstanding research. Thats the heart of who we are thats why we are not looking forward to this and wouldnt have advocated this rule change. Since it is here, we are going to take advantage of t our research will be comparitively more valuable and less competitively Good Research in the marketplace. Do you think it will result in a new round of analyst layoffs yes there will be layoffs at the banks and research houses. I think thats inevitable. Some of those people will get hired by the larry finks and the Janus Hendersons who will be hiring more researchers to do more internal Research Think about that. People at home may not care. There are 35 companies with the market cap of over 500 million that have zero Analysts Covering them we are highlighting some of them on power lunch over the next couple of weeks. If you are right, there will be hundreds, not Small Companies but companies with 10 billion market caps with zero or one analyst covering that. That seems scary who is minding the score capitalism functions on good information flow the intended consequence of this rule change is, okay, lets make it really transparent in how people pay for research and probably change who pays for it. Thats the intended consequence. The unintended consequence, you are going to radically change the research on wall street and reduce the amount and reduce the coverage for companies trying to get included second der i have tiivative t do they need to get big or go away there are a host of pressures on Asset Managers which drive you to consider getting bigger this is one of them. There is new data regulation coming out of no data regulatiou of europe and there is cost pressure and speed pressure. I think all these things comb e combined and they put a lot of pressures on companies in the Asset Management industry and you should see more mortgagers of acquisitions but it will be limited. The eagles are involved and a lot of these folks are a little hard to get together with. Thats what i force into thank you very much. Here is the topic, we appreciate melissa, it is a walk aoki thing. It is becoming a four letter word and five letters term a lot of people right lane nervous out there. Yeah, thank you, over the last six months, disney and General Electric are the worst performing can Big Name Companies turn it around cnbc live data board is brought to you by the cme group. Cme group, where the worldcoms to manage risks. Sks and capture. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. To err is human. To anticipate is lexus. Experience the lexus rx with advanced safety standard. Experience amazing. And her new mobile wedding business. Tte at first, getting paid was tough. Until she got quickbooks. Now she sends invoices, sees when theyve been viewed andtadahpaid twice as fast for free. Visit quickbooksdotcom. Rbc upgrades, lets bring in our analyst of the upgrade at rbc, thanks for joining us thank you for having me on. In your note you says that disney reached a turning point of espn approaching less than 20 of earnings. Is it getting so small that it did not matter of whats happening with espn . It is part of a theme it certainly matters less. If you read any of the Conference Calls over the last couple of years if you think espn and disney is it is about those three bits, we feel confident that disney is going deliver. Have you gotten enough details when it comes to pricing and whether or not customers will cannibalized . There is no doubt of still some unknowns. There is not too many unknowns anymore. We try to model out what we think directive consumer is looking like for the next few years. Investors warning to this strategic pivot. There is a period where we know how it will impact financials and the way it impacts the stocks is going to be the put disney closer to customers the other realm that we had on of the knock that we made the announcement, theyre going to spend a lot o f many unto do this stuff until you figure out how much it is and how much it is going to be worth and whether it is going to work, dont get into the stuff. You know i would disagree with that. I think in the context of disney, you are not talking about it betting the farm, we estimate peak is around a billion dollars. Thats in the context of disney doing 19 billion a year in operating income the ability is relatively straightforward and simple we just think that we can put a higher earning multiples on a company thats delivering its conte content. Can you see a scenario down the road where disney gets out of its distribution, that becomes a separate subsidiary or a spun off some way and disney become as hotel resort and Production Company i have written in the past that spinning off espn along with abc certainly of disney powers and structure in a way that it would be some what straightforward to separate the two. One of the reason that we like the stocks here, i can see an activist and those within the Company Pushing disney to separates things so certainly that optionalty is there. Steven cahall, thank you for joining us facebook ruling of the election continue to be under scrutiny. What does it mean for other advertise advertisers. A must see, that is must see tribute to tom petty, well show it to you coming up on power lunch. Hey. Hi. Hi. You guys going to the Company Picnic this weekend . Picnics are delightful. Oh, wish we could. But were stuck here catching up on claims. But we just compared historical claims to coverages. But we have those new audits. My natural language api can help us score those by noon. Great. See you guys there. We would not miss it. Watson, you gotta learn how to take a hint. I love to learn. Your bbut as you get older,ing. It naturally begins to change, watson, you gotta learn how to take a hint. Causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In Clinical Trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Welcome to the second hour of power lunch, i am Michelle Caruso cabrera here is whats on the menu the power of targeting the man behind the campaign of the 2016 were put on spotlight on facebook. How big of a role did social media played in trumps win. Fighting americas Opioid Epidemic well speak about the change for pain tribute to tom petty, it is amazing. Well show it to you, second hour of power lunch starts right now. All right, lets check the markets right now. The bond market is closed. Stocks are moving. Drifting a little bit between ga gains and losses the nasdaq did hit record day highs earlier. It would be its tenth consecutive add zrand a record. Check out the gainer in the nasdaq of nvidia and micron. Tyler, thank you very much. We are here out west what if i said to you, we are going to get pictures from the guy whos fund over ten years is besting over 275 other funds, well, thats what i am telling you. Alex crooke got an interesting strategy, well get advise and ideas from him coming up here. Facebook continues to be under scrutiny the campaigns director talked about the trump team Julia Boorstin in los angeles with the story brad describes on 60 minutes how he used facebook ads to target voters of messages that they care about. I understood early that facebook is how he won facebook is how he won i think so. And i think donald trump but facebook was the method and the highway that his campaign drove on he had picked facebook employeessupported trump to quote, embed with the campaign. The campaigns did not get to hand pick the people who work with them from facebook and no one from facebook was assigned fulltime to the Trump Campaign or the Clinton Campaigns most campaigns approached things differently and uses different amounts of support this latest development, facebook ads of the election comes in reports that google had uncovered evidence that russia agencies spending tens of thousands of ads across many products of youtubes and surge and gmails. Senator mark warner and ami klobachar is supporting a new bill well have to see how ads and disclosures around them change guys, back over to you julia, thank you very much so does there needs to be more regulations or both joining us is our strategist, white houses Deputy Press Secretary and steve mcman who worked on three president ial campaigns and produced ads for Barack Obamas 2008 president ial run. Good to have you both here i did not see last night but i read closely of the transcripts of it. It feels to me, tony, that i am supposed to think of something sinister going on. Was it sinister or smart i think just smart. I dont think of any question of Trump Campaign does a good job of using the facebook flat form. There is not sinister from that suspect of a campaign using this tool and in fact, i dont think it is anything in particular innovative in what they did as well it is the kind of things that any of us who are involved in communicating digitally and trying to reach a lot of people and trying to argument we use these tools everyday with everything from issues to selling products to political campaigns is fairly straightforward. Mr. Mcman, do you see something sinister here or nearly smart that mr. Pascalne refuted that he and other were working side by side with facebook we were not working in any sense side by side with russian influencers, is this sinister or smart . Well, it could be both. It is smart to get facebook if they were to do this to embed inside campaigns and help you target voters. That was a smart thing to do i wonder corporate contribution which is illegal of something that facebook thought about when they were putting people inside the campaigns. The question becomes if facebook or russian bots are doing same thing on other platforms or other ways to reach the same kinds of voters in a targeted fashion thats paid for by a russians that seems to be more sinister than smart i think it is important to distinguish two Different Things here there is russia and Information Campaign which separates and it is very troubling and something we need to care about. It was not just facebook or any digital social platform. But there is help how campaigns are used in social media to target voters overall very appropriate and into something that we are trying to figure out how we are going it i agree with you, tony, it is smart to use facebook or social media platforms to get voters. How did the russian bots know which kinds of voters to target. It turns out that we know the Trump Campaigns inside the trumps headquarter doing exactly that was any knowledge shared or replicated by everyone you are suggesting based on what you saw on 60 minutes last. Night that gives you evidence of collusion. If thats not what you are saying explicitly, thats what you are suggesting thats what i am suggesting it is what our Senate Intelligence committee is looking into if it walks like a duck and quadratics loo i can guacapocalyp quacks like a duck, maybe it is not a duck the Clinton Campaign says no thank you. But, the difference to put this on facebook, i think is really outrageous, steve. Well see i am not putting it on facebook thats what exactly you are doing. You made two promises. One thing, i want to unfold this, facebook is a client of strategies, i want to make sure thats well understood but i think putting this on facebook, but you did say you thought there was an effort that they were there alongsidethe trump voters helpful in this scheme that maybe of their campaigns. If facebook had staffers inside the trump headquarter embedded in the campaign, thats a corporate contribution the thing i am suggesting is the patterns, if there are patterns that we can establish between what the Trump Campaign is going precisely of facebooks help and what the russian bots are doing. Facebook provides employees to all major advertisers how is that different from facet coming in sitting at our office and telling us how to use their tools or sitting at someone elses offices it is the same. I will tell you how it is different. Well, the way pascaral characterize yesterday, it is different if the facebook people come by and say how are we doing, are we serving you out. If on the other hand, they are being recruited because of political views inside facebook and sitting inside the campaign, working fulltime and targeting voters, there is a line thats crossed. Maybe it was not crossed here. I am not putting on facebook and all i am suggesting that i have done a lot of Campaign Work and no corporations at any time that put people in headquarter to help us target voters. Tony. I have been involved in a lot of campaigns and i have seen as technology evolved, there is a lot of opportunities to work with vendors, i can think of going backtoback to the days that we are coming up with magnetic mail lists trying to target seen snior citizens or veterans or who ever you are trying to reach. Thats not unusual and technology has changed and the ability to target more closely and more finitely has changed but thats all the reason he could pick people who supporting trump or likeminded because they already have divisions set up that way can you give us any insights if thats how the internal structure works at this point . No, i would have to direct that question to facebook and how specifically they do that. Thats not for me to answer. The question here is when we are talking about the rules around Election Campaign for candidates or campaigns, the transparency, the need to identify themselves, those are fairly legitimate. They are legitimate question some of the ithings that facebok put in transparency will be helpful going forward. You have to have these kinds of questions whether starting with radio and going to tv and cable. There are literally decades of the structure of law pending how you operate of those environments facebook is 12 earlier and you know the way it is being used and it is very, very new trying to determine, whats the best way to apply or understanding the law relating to campaigns to this new technology is important than we are going to sort it out lets have you guys back because we did not get to the question of federal regulation or state by state regulation of the content, not the content but the disclosure question. Like when you see a Television Ad where it says this ad is brought to you booy the so and committee and i authorize it there is regulations going back to the fcc and so on gentlemen, thank you very much, i am sorry to leave it there this is a rich topic and i have a feeling that well be revisiting it many times down the road tony and steve, thank you very much thank you what does it all mean for facebook stocks lets bring in our analyst at at wedbush, michael pachter. Thank you advertisers very much care of advertising. I mean if you sell viagra, you dont care about reaching adolescence girls, you care about reaching men over 50 with erectile dysfunction micro targeting for facebook to cut down the number and charge a greater rate per thousand views. I think advertisers appreciate it and facebook shareholders appreciate it. What about the rising threat of some diekinds of regulations it is going to come to some form of fashion when it comes to election advertising this is a company that seems both sides of the isle want to hate right now is there any threat to their revenue because of more regulations . I think regulations is a certainty. We already have it with product advertising and truth in advertising and fcc regulating and i think the nature political ads is problematic because candidates puff and they tend to exaggerate everything and only i can fix it commentary. We know it is not true i think there has to be some leeway it is a certainty that congress will regulate in some way, political advertising. The problem is we cannot make it facebooks responsibility to verify why does facebook shareholders does not chair that legislation is in the pipeline i dont think it will impact the number of ads or the rates charged for those ads. Could it impact facebook spending on human being thatll need to traffic or ai or algorithm of where these ads are coming from and etc. I guess thats the right question if ads are required to be truth full than facebook can go ahead with conference and publish any ads. If the regulation imposes upon facebook, the obligation verifying everything single ad embedded will cost some money. I am not sure if congressman actually will pull it off. A campaign can create a blatantly false ad mueller will have to figure it out. Thank you very much. Americas Opioid Crisis rages on fe first, lets get back to brian at the janus. Coming up, well ask the question whos fund is the number one of its category where is the best place to invest your money in the world right now . The answer of that is coming up from power lunch shortly i was having a good round, and then my friend, sheila, right as i was stepping into the tee box mentioned a tip a pro gave her. No. Yep. Did it help . It completely ruined my game. Well, the truth is, that advice was never meant for you. I like you. You want to show me your swing . Its too soon. Get advice thats right for you. Investment Management Services from td ameritrade. Welcome back, i am Brian Sullivan out here in california. We are joined by alex struck with a total return, alex, of 170 yes about that you could not have done better than number one well, good work lets get some real world investing ideas. When i look at across the world, the u. S. Markets, greece is up 29 , many of these crazy markets have done a lot better than us the entire world is up yep why thats the whole point. We are all seeing this year of a synchronized activities going on thats beginning of this year to fuel investors enthusiasm and credits back into there. Is there a way to quantify the quantitative easing from our central bank is done and the ecb is doing it. How much is just because of that i think it is sort of half, i mean if you can pull the number out, it is roughly half. We have not seen ratios or evaluations, an element of that appreciation is coming out so i have owned our fund and i am up 170 for ten years and half of it is qe and qe is going away, does that mean we are dropping by half no, i dont think so. Qe is there to support markets once the growth is established, you were talking bill earlier, Interest Rates maybe moving forward. Growth is coming back. The markets are growing and i think therefore, theyre easein back here is a trillion dollar question now is the uk and u. S. Strong enough to mitigate the pulling back of qe here and when the event does it there early days in europe, we still need some help and we are seeing bad credits growing to 2 or 3 . It is growing but not enough to support the market the u. S. Though you are seeing good credit growth from the back thats whats happening with Investment Decisions picking up. Its to break. What is the best place to invest in the world right now the answer is i think european banks. You got values so we are trading across and not expensive investment spending picks up thats what we are after it is funny too, where you live in your market, the uk has been in the market, i think about 6 or 7 lagging yep is your single Biggest Country position right now sligtly above the u. S. Why are you waiting . What you need to remember is the uk market is global, it is 17 of earnings is international. We got vp and shell. What you are seeing of the negatives, the comment there is appreciating and actually those internationa international lanes are done much better. Alex crooke, thank you very much european banks, guys, the best place in the world to invest right now. The heart maybe broken gators fans are not letting them drag them down the hometown crowd saying goodbye to tom petty. You will have to hear this incredible story, next on power lunch. Nnected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Thats more than 90,000 Florida Gators fans honoring tom petty. It was a heartbreaker. The florida lost to asu. 176 deaths of opioid abuse continue to sore in the United States one Pharmaceutical Company is eat ng waves of a new way to trpain the ceo will join us, next most etfs only track a benchmark. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. So what else is new . Humm. Shes doing good. She needs more care though. She wants to stay in her house. I dont know even where to start with that. First, lets take a look at your Financial Plan and see what we can do. Ok, so weve got. Well listen. Well talk. Well plan. Baird. Hello everyone, i am sue herrera, here is your update at this hour. Wild fires sweeping through Northern California today. Governor jerry brown declared a state of emergency in napa and sonoma and yuma county the fire wiped out 1500 structures and thousands more have been threatened pakistans Prime Minister failed to appear in court today where hes indicted on charges the vehicle carrying sharif daughter and relatives are in the court compound thousands gathered in pyongyang to celebrate the 20th anniversary of the leader. Hes the father of the current leader of kim jongun. A lighter note there, take a look at the big guy, the heaviest pumpkin in europe during the annual pumpkin festival weighing in at more than 2200 pounds at one point, that pumpkin was gaining 65 pounds a day. Little things you would never thought you get to know. How do you do that . Amazing you got to feed it well a lot of seeds. A lot of water sue, thank you. You got it. Sue herrera lets get to Morgan Brennan lets take a look at amazon maybe taking a deeper dive into a competitor against googles youtube, full details of that report, check out cnbc. Com shares of google pairing those gains that we have seen on so many industries. Everyday we have seen to talk about new one, thank you morgan. Jackie deangelis good morning afternoon to you the sessions lows was 39. There is a couple of things considering to the downside here well be look for it at the eia report on wednesday of less than 50,000 barrels away from the peak the second piece is the opec part of the story. Production numbers were up 10,000 barrels a day we are talking about seasonalty here demands tend to drop off. We do see pressures on prices. A lot of traders telling me we have seen support, well see the next light soon. Opioid death continues to rise pathologist is seeing so many opioid deaths that hes quitting his job. Just the way of explaining there is going to be a shortage of medical examiners because there is so much of this to deal with we know the number of opioid epic are staggering. 64,000 deaths from drug over doses of 22 the vast majority of those deaths are due to opioid of prescriptions and illegals like heroine. Now, that coalition made a series recommendation over the summer asking the president to declare the epidemic national emergency. The president in early august says he will do that but nothing officials have been followed at the commissioner, Scott Gottlieb calling this the highest. Recently the focus is turning onto the role of Health Insurers how they incentivize for pain drugs. Cigna saying theyll limit certain opioid prescriptions the magnitude is huge, guys. Joining usfor power lunch is doctor mike clemmon, thank you for joining us can you explain this how it works and why it is not as dekt activi addictive. Heroine is a non addictive class and nothing to do with opioid, they have been around for 60 years we believe it is an important advance and thats to incapsulate and providing high magnitude pain relief. One thing thats interesting in the opioid so this is very, very commonly done in this population, i think it is a reflection of the fact that many patients getting to the point of having pain refrack to and out of frustration, theyll request anything that may help and the community is trying to do it best and many patients ending up on opioid. We are not going to solve the Opioid Crisis bwith zilretta. Theyre using other treem treatments to deliver other mechanisms so the drugs stay at the joint for twelve weeks and you think it can apply for this technology for other big joint pain yeah. Our initial indication is in knee pain is the largest number of patients injected with opioid and steroids and theyre over 5 million patients a year injected to their knees for knee pain 4 million of those receiving steroids they belieleave the joints rapiy and they can cause to create the recipe forgiving the drugs its best chance to work vocally and consistently you mentioned the overwhelming majority of people suffering from this infliction getting some kind of prescriptions for opioid, are they the largest users of opioid, are there other ways do apply this to other areas where people tend to use or get prescribed opioids yeah, i think the use of opioids is so broad and so many indications. For example, ovac pain is very common for opioids we are not indicating for low back pain. It is something that in Clinical Trials and we suggest no one use it for back pain until it is properly studied we like the idea that we a advancing in opioid for a Large Population thats exposed to op opioid now so just sustaining that thats right. There is a lot of question of the future of flexion from a stand alone company. How do you look at the future . In all seriousness, we dont spend our time think of what other Companies May or may not do we have been fortunate to attract Outstanding Group of professionals who are committed to seeing flexion growing into a great company. Thats the vision that we had and we have been fortunate to raise the kinds of resources to allow us how are you going to approach we would never comment as a matter of corporate policies of rue fomo rumors we are getting am medicine that matters. Doctor clayman. Thank you. Lets get back to brian in california coming up after the break, well askadvisers, how do you invest in a rising Interest Rate environment and what is the biggest risks thats incredible and ground breaking, stock market rally and real world answering those questions coming up of advisory day here in awful point of california. Well be back right after this excuse me, are you aware of whats happening right now . Were facing 20 billion security events every day. Ddos campaigns, ransomware, malware attacks. Actually, we just handled all the priority threats. You did that . We did that. Really. We analyzed millions of articles and reports. We can identify threats 50 faster. You can do that . We can do that. Then do that. Can we do that . We can do that. Can we do that . I cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise lets wrap things up here by getting some advise, thats what advisers do. We are joined by ken thompson, gentlemen, both thank you. Thank you i cannot emphasize this enough i said who here in the audienc and theyre all Financial Advisers got into the business after 2004 20 or 30 of the people raised their hands. You never advise clients in a rising rate environment, what do we do . It is a decade swing right we have a lot of clients requiring a certain withdrawal rate we need to beat that you cannot do that in the intermeet term bonds we are going to multi asset income strategies. The pipelines and convertible shares and preferred shares and we are happy to take on risks. At least we are taking on individual asset class risks and we can get the yield that we need to help people retire and also accumulate the dividends. Are you worried of the stock market we are record highs everywhere you look is there any part of that makes you nervous at all bottom line, earnsinings are high we think this has longer to run. But, really markets up because of earnings. The fundamentals are there more people are making more money than ever before thats translating into a fairly Strong Economy you run up the team work. I am sure you heard of this floated ideas thats going to eliminate the federal deductions for state and local taxes. I call it the blue state pay back, high tax states of where we are right now i think it depends on each individual investors and how much it is going to affect them. I would imagine with your clients a lot. You pay a lot of state and local taxes, you cannot deduct it and your tax bills does this. It does go up there is no doubt about it i am not sure that i am going to really affect all of the states. Well have to wait what the legislation has. When you get a bill and they finally pass a bill then you are able to with some certainty play around it. Trying to chase around your tail we want to wait until we see the actual legislation and help people minimize that impact overtime kent, why do you think we have not seen a negative impact to the market, stocks primarily to the dc drama and dysfunction. The Political Risk seems to be there but the mark does net o care i think theyre focused on the things thats important. Right now as people look at their statements and looking at their network, it is an all time high it feels pretty good. Corporate balance, sheets are good and some of it and the eu wants to get thats why the tax bill gets done the Banks Reserve is looking good and the great recession, all Global Economy major is growing. It is a big deal let me be more blunt. I dont know whats going on and the president is tweeting and hes arguing with the senator and north korea and lets sell everything no. I dont when we do, we need to talk about when theyre going to need the money and if they need to money, we need to talk about that in time the money is there is when theyll need it and it is not in a tavarrisky position we basically walk the clients. Have you gotten similar calls to that. What we try to do is walk people to the fundamentals and when you break it down and you look at the economy and walk them through the fundamentals, the clients do what i think is the best adviser could have is when they go, okay, now i get it how much of your conversation with kleiclients are about earns or whatever the politics, who cares, how much do they bring up the drive . They bring up politics. But when you talk to them, they understand fundamentals. Decisions are made around fun fundamentals in the end, what people are going to retire off of are earnings and fundamentals and dividends and thats what ken, i can go through and make everyone i can make the opposite arguments many levels of record highs or near record highs. We had an eight or nine years market run the fed is going to start del e delivering Balance Sheet how do you account that . Lets go to internationals they have not had the runs the market is peaked out no, we are growing higher things are good fundamental shape. I think opportunities are over seas as far as appreciation. Particularly where . Europe and asia. Growth rate in asia is looking good asia is in good shape and i think the way we are playing is dividends. We go back to dividends and we invest in dividends economic income strategy. A lot of consumers of these emerging markets theyre becoming consumers yeah, they are. They are buying things. Kent and dryden, a real pleasure, thank you very much for joining us the theme that we heard a lot today. America is a great country but maybe there is better values over seas, particularly in europe i think you talked about that a couple of times. Yeah, a couple times. Thank you. General motors, it wont be bragging about it. Well talk about trars oden where stocks are going right here, on trading nation, thats straight ahead on power lunch. Ge shares diving 4 today as investors react to a thurm numb executive departures underperforming the dow by its widest margin in decades is there a case for buying ge now . Lets bring in trading nation. Team ari, chad. Chad, ill start off with you. You say investors who have ge, hold on. Investors looking non ining in would you saw to buy is. I anticipate youll see due in fact due to tax selling, concern about the dividend perhaps being reduced. We believe they have a tremendous amount of properties in General Electric and over the course of three to five years, they could make a turnaround perhaps they do it in a way like honeywell where they start to separate the company but overall, this company has a tremendous amount of debt of over 100 billion. The oil and gas sector we believe which is a major contributor to revenues as well as earnings, we believe is going to have a difficult time in the next 18 months, hence the real why as a value investor, were continuing to shy away from the investment. You mentioned the underperformance versus the Dow Jones Industrial average what are you seeing in the charts charts indicate to stay away from this one, melissa, and to put the weak rness into perspective. If you look at the relative performance versus the s p 500, ge at its lowest relative value since 1981 so we see this as a 17year trend of underperformance and we dont think its run its course yet, either. Here are the levels you have to watch. First off, ge, deeply oversold, coming into important support at 2,350. Ber rolow here, support at 2,150 whether you get the oversold bounce now or later, we think this is a stock you want to sell on strength, rather than buy on weakness were staying away. All right so if ge shares do see a buounc by some sort of miracle, youre saying ignore that bounce because theres more downside ahead. Thats correct. Better opportunity to sell. Doctor yeah thank you. Ari and chad for more trading nation head to our website, tradingnation. Cnbc. Com. Our final thoughts of the day will materialize, check please is next. And now your trading nation stat of the day and a word from our sponsor. When markets get volatile, dont be afraid to admit you dont know where things are headed when youre uncertain what to do, sitting on the sidelines is not a bad idea sometimes the best trade to make is no trade at all in other words, dont do something. Just sit there check please. All right, guys, welcome back time for check please. My check please is is this, dont underestimate the power of Interest Rates underneath it all, rates are rising really for the first time in more than a decade. Thats one of the reasons were here because Interest Rates can mean so much to so many different Asset Classes at record highs were really seeing potentially a longterm sea change that we havent had in more than a decade you know, speaking of sea changes, brian, i wonder if part of the conversation out there has to do with the prevalence today of etfs versus actively managed funds. Janice was always one of the real powerhouses in active management and its changed its changed the spin in the economics of the business a lot. Reporter it has. And we have talked about it. The coceo and i chatted about it a little offline. Its a big change and theres concern out there, guys, about what kind of impact that everybody in etfs is going to have if and when we see some kind of a market disruption. Is there the liquidity to meet all the etfs its kind of a scary thought theres conversation about it. Everybody owns the same stuff. Yeah, everybody owns the same stuff. 18 of the Global Market equity market cap out there is in etfs. And the fun Companies Make less. Reporter i was feeling good, tyler. I was feeling good, tyler, until you said that. Keep feeling good. Dont you feel like we have this afrconversation upon the re of future rumutual funds. Got to know what you own. Im paying attention to the turkish lier which is getting hammered today. You would. Its getting hammered theres a dispute going on between the United States and turkey its byzantine politics literally. Well put that aside but theyve got a current account deficit, borrowed ton in dollars, both their banks, sovereign, the corporations. So they have a big run on the currency if this move continues, they could be in trouble. Turkey could be systemic to the world 858 billion for their gdp. Well watch it. Tur, the etf that tracks turkish stock down 5 . Im watching walmart, best performing dow stock courtney did a story about making returns of dotcom purchases that much easier basically theyre saying its easier to buy, we got to make it just as easy to return i think a lot more retailers are going to take a look at this as some sort of model for the future all right. Thanks for watching power lunch. Closing bell starts right now, so dont move hi, everybody. Happy monday welcome to the closing bell. Im kelly evans at the new york stock exchange. Happy columbus day. Thats right. Bond market closed. Thats right. Just the stocks. Then the banks but with who notices . Is very funny im bill griffeth. Return of single stock trading move over etfs, we have details on a new report that shows trading in individual companies could be making a comeback very interesting. Here are individual names that are getting hit heaard tote movie theaters in th