Transcripts For CNBC Closing Bell 20151009

A new potential revenue stream for twitter. The Company Announcing a new video ard strategy, looks very similar to you tubes. We will discuss whether this could help turn the struggling social network around coming up. Elon musk has harsh words for apple, calling it the tesla graveyard. Yes, his words. Fourown grades for his company this week, is musz k getting scared of increasing competition . We will discuss. Tough week for tesla and elon musk. Lets start with the big moves. Weve been seeing in oil Jackie Deangelis monitoring the activity at the nymex. Good afternoon. A choppy session for oil by all skts, moving back and forth between positive and negative territory. We did close a little higher on the day, 49. 63 our intraday high 50. 92. So several days now making an assault on that 50 range. When will we close over it . Your guess is as good as mine. Having said that is correct the experts are still pointing to the fundamental story. We did see a decline in rig counts but when will spro durks start to decline in a meaningful way here in the United States. Also next week you can probably expect that we are going to hear about inventory builds. This is seasonal. We are probably also going to hear that refinery run rates stayed the same or maybe declined using less crude to make product at this point in the year. Also Global Growth concerns they still persist within the marketplace. Having said that what took us through that 50 mark a couple times this week concerning about geopolitics, the situation in the middle east right now, sort of power jockeying going on, russias involvement in syria, how about saudi arabia react, is russia aligning itself with iran. A lot of questions. As you know, weve seen this happen in the past when we see headlines like this about conflict that that region it sends Oil Prices Higher, whether rational or not. Back to you. Thank you, jackie. So all that volatility in commodities having big implications for Companies Like zen core, chef ron. Kate kelly has the details. Glencore chief is publicly challenged his competitors in mining to take out production during this slump. Last night shutting down a half million tons of zinc production around the world. That fueled the biggest rally since 1989 jacking it up more than 10 ultimately to over 1,800 per ton on the london metal exchange. Glencore shares showed optimism rising 7 in london. This is their attempt to at a turn around. In the past month it has a nounszed an ambitious debt re duks plan, new equity 2. 5 billion worth and sales that are now underway of a portion of its agra business as well as metal streaming business, Precious Metals they find in some south american mines. Investors have looked on this favorably but still concerned about the companys leverage levels. Meanwhile in the socalled trading business where commodities like oil and metals are bought and sold in physical quantities, separate from what we do on the screens and what many of our viewers do, its hurting other players, too. The u. S. Oil giant chevron reportedly cutting 10 of its Global Supply and trading group, thats according to reuters. Part of its expected 1,500 employee layoffs announced recently. So that report hasnt helped chevron shares, they are down 1 , but they are making an effort to get costs down. Yeah, certainly. Yield of 5 on chevron at this point. We cant own individual stocks but thats one i think about. If i could own an individual stock do i buy chevron with a 5 yield . In this market right now but for how long . Thats the question. Unlike glencore, michelle and bill, they have kept their dividend intact. They have reason made a priority of that so that investors still have something to take home, but they will have to cut costs somewhere. Thanks, kate. So we obviously have a lot to talk about in our Closing Bell Exchange today. Joining us we have doug gordon from russell investments, keith bliss from catone and company and Rick Santelli is in chicago. Keith, and and you were greeting each other says we are just trying to figure things out right now. Its become very complex. Its a quiet day today. Is this the end of the g . Are we glad the fed doesnt look like they are going to raise rates anytime soon rally . Back in september when they came out after the meeting and everybody thought they werent going to raise rates the market sold some pretty drachlt clee. Its amazing how quickly sentiment changes in this market now, especially you could track that all the way back to all 8th when china devalued their currency. I will tell you where were set up. If you look at the major charts and indexes in the u. S. This is now the third attempt we have made since august 24th to get back above that 2011 trend line. You hear me talk about it a lot. If we can get up there and sustain that hold we think we can get the s p back up to the 2035 level. Whats helping a lot is the transports are rallying hard, particularly the airlines, we saw the transports lead the market down, we see volume building into those shares, they will lead us up. Im looking at this s p 500 chart right there. Doug gordon, when i see that year to date chart its kind of hard because were showing it on the small screen but we have taken back half of those very fast declines that we saw in august. Is this selloff over . Are we going back or are we just testing levels that mean we will have to revisit those bottoms again . Im not sure if we revisit the full bottoms, michelle, but its the right question. Given the uncertainty around the f 1 c and whether it moves this year or not i think the market will be challenged to break out of the range that we have been n it certainly puts the emphasis on data as it comes out as the f 1 c has said, we had both fed members dudley and evans talk today a little different with respect to the positions they took, but i clearly think that the center of gravity on the fed still in 2015 but the data has got to be there. Hey, rick, initial has a theory. Yes, im going there. That in the commodities arena when you consider that there is the split up of alcoa, glencore, layoffs at chevron among others that this is the kind of action that usually tip a nice a bottom in a cycle. If possible we could be putting in a bought tomorrow in commodities she asks . We really love the way michelle thinks here in chicago because she is a free market person. Everything she is describing is the markets way to adjust. Its an adjustment. It isnt like 12 or 14 people in a room with degrees as far as the eye can see going, all right, i think they need to mine less copper, they need to hold their inventory here. Its impossible. This is great. And yes, the supply glut overproduction is all coming under control. What it means to me is not necessarily that its going to be the beginning of a great cycle, but its the end of the cycle of oversupply, which in large part, thank you fed, because of overfunding but i think when supply and demand get back on its going to be a lot leaner and meaner and have a much better ability as an industry and a sector to perform better. So, yes, i agree wholeheartedly. And you may think rick is our resident bond expert and he is, but remember, used to trade gold or many years so he knows a lot about kmotdities and commodity trading. Among other things as well. Keith bliss, does it ignore the fact when the fed starts raising rates inevitably the dollar has to go higher you would think and that would not be good for commodities. No, it wouldnt across all the commodity complex that youve seen. Thats part of what weve seen in the rally inside of all the commodities this week, particularly oil. If rates go up thats the natural mechanism that seems to still be in place across all the mechanisms that we have for the last five years. You would think. If rates go up, dollar will come down. To point to ricks statement thats the profound question inside of commodities, will a normal supply and demand equilibrium be able to take place. Are we watching it right now . Oil is up 8 , up 29 from the august lows. Could you almost argue that weve been there if you are a brave enough to step in here when youre looking at 50 bucks again. You could on a short term bases we think the entire Energy Complex is overbought and you are seeing some of the pull back in some the of the larger Oil Integrated names as theyre starting to sell off and they are starting to show weakness. We think the same thing will map hap in the commodity as well. Doug gordon, what do you think about all of this . I think theres two he go emts, the one we talked about with respect to Dollar Strength is certainly not benefitting that, but also that will ripple potentially into emerging markets and certainly that would put pressure on both europe and japan. We think that the reprieve of a later moving fed has benefited those two other equity markets right now and thats where we see great valuation opportunity, but i think that it might be a little challenged to continue when the fed was take Monetary Policy action. Rick, so you are our bond guy and Interest Rate guy. We had two fed heads out today talking. What if anything did they say that if anything moved the yield curve . Well, the more i listen to the fed the more i think lack of confidence is going toned up being a bigger and bigger dynamic in the movement of markets and its lack of confidence in the fed. Going on, what, seven, eight years of the same basic policies, it would be like you walked your kid to kindergarten because you didnt trust him, nows seventh or eighth grader and you are still walking him to class. Here is what i hear, the fed made markets get awfully wild because normalization is something new. The culture has changed in the financial system. Then they failed at the end. Do you know what, many are now hearing, they dont even have enough confidence for a quarter point and even if things gradually worsen throughout the rest of the globe affecting the u. S. A quarter point, 25 do 50. Come on. I think that notion is taking over and i think that was a lot of the dynamics that caused the selloff after the 17th nondecision to normalize. Got it. They are a little old for the training wheel thats for sure. Have a good weekend. See you all later. Heading to the close here with 49 minutes left in the trading session. Today up 9 points on the dow, the s p is a little lower, nasdaq mounting a minor little rally as you hardly call that a rally, though. It does cap on what has been a very strong weak, dow up 3 for the week. This would be six days in a row. If would be the sixth gain in a row, zee twitter look to go amplify its video with a new video ad service. We will discuss if this is enough to push the social giant into a fresh direction. Also, South Carolina republican senator and president ial candidate Lindsey Graham will be with us. He says russia and iran are slapping president obama in the face. He will join us live to explain coming up on closing bell. Stay tuned. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can seek to outperform. Thats the power of active management. You wouldnt order szechuan without checking the spice level. It really opens the passages. Waiter. Water. So why would you invest without checking brokercheck . Check your broker with brokercheck. Some neighbors are Energy Saving superstars. How do you become a superstar . With pg es free Online Home Energy checkup. In just under 5 minutes you can see how you use energy and get quick and easy tips on how to keep your monthly bill down and your Energy Savings up. Dont let your neighbor enjoy all the savings. Take the Free Home Energy checkup. Honey, we need a new refrigerator. Visit pge. Com checkup and get started today. All right. Here are the sectors in the s p 500 index and how theyve performed this week. This is not today. This is this week. Everybody green. This is a highlighting the rally we have had this week. Led higher by energy. A gain of 7. 5 in the Energy Sector and even the laggard is healthcare for the week, healthcare and utilities, classic defenses are up for the week as well, albeit less than those growth industries. This is the biggest weekly gain of 2014 for the s p 500 if it finishes up by more than 3 . So its been a nice one if you are long. If you are long. If you are long, starbucks, you are happy as well because it is trading at an all time high dating back to its ipo, 1992, the company appointing a chief Technology Officer for the first time earlier this week and announcing it will start accepting apple pay next year. Starbucks will do that, chilis, kfc. Apple pay is just starting to gain traction. Starbucks was almost faster than apple when it came to electronic payments. They were so quick about you being able to use the app to pay, et cetera. Pretty impressive. I did the story earlier today elsewhere, but 22 Million People use some form of mobile payment right now. Its up 42 this year. Im just full of all the statistics. Twitter announcing a new way for marketers to push video ads on its platform. The new option allows marketers to automatically place six second pre roll ads in front of the video that you came to see in the first place on your twitter feed. This system helps publishers monetize their content and twitter will take a 30 cut of the revenue that is generated. The stock moving higher on that news, joining us to talk about it is lou bazanese and mat britain ceo and founder of mrc. Lou, this a good move and going to move the stock . I think it may temporarily move the stock. I use stroou as an incremental innovation. If were sitting here talk being ads its never been the problem for twitter, user growth is the problem. I dont see how optimizing the ad experience for advertisers, its going to help publishers not necessarily users. What if it brings in new revenue. Its going to bring in revenue. Thats good. You are taking it the from the same stagnant user base. You have to grow that user base. It could provide a short term pop in revenue, but longterm unless the recycled leadership finds out a way to get people on the network, grandma gets facebook, she has recycled leadership. Wow, you are full of them today. He is. Holy smokes. Hold on. Lets see what matt thinks of what you are saying. You are nodding your head up and down. You like this company, i assume you like this strategy. I mean, twitters problem came from when instagram hit main street pop culture, the Kim Kardashians instead of they have sharing their lives they fled to instagram. Its now instagram. In its departure twitter is a broadcast channel, just like a tv network and thats why theyre going this direction. They want publishers for the ability to monetize their video content in a way that partners both companies. I do agree, its a stagnant user base, unlike other social platforms, you have 99 of the content on twitter being created by 1 of the audience, its going to be a broadcast twitter. Longterm their opportunity is the shift of tv. Twitter could become the next tv network, there could be a real opportunity there. What about bottom line profitability in the meantime. Its going to help. So what does that mean, does it mean eventsly somebody buys them to be an additional revenue stream or give up on their growth . Yes. Lou says yes. Tell me. I would not short twitter because i think there is a big risk. At some point its going to become compelling enough where someone is going to acquire them. The asset is the network of users who wouldnt want 300 million users to add on to who is a likely candidate to buy them . Obvious like apple or google . I think google is the front runner, thats where the consensus is. I think it would be an at t or verizon. Think about tat and d bought directv, verizon bought aol. Do you think jack dorsey views twitter the way you do . Its hard to tell, he is kind of always a couple steps ahead. I think they are bullish internally, but the expectations of investors of the social media stocks are really high. Its not about short term growth its about longterm explosive revenue growth. We have to recycle this photo. Were showing jack dorsey without a beard in this photo. Obviously thats changed. There wepg. Thats the jack dorsey we all know and love right now. Lou, if you were jds what would you do now . What would be the twitter thats going to grow do you think . If i see the value in twitter, Financial News junkies we know its not news feed. Youve got to find out a way to monetize that. Hes making a great step in that direction with moments. Hes got moments and theres talk out there theyre going to expand 140 character window that you could use more, but as i was saying the other day we already have that its called email and texting. And facebook. Right. Would that help as well . That would bring in others who want to have a longer message to tell, right . Look, i think one of the Great Attraction toss twitter is the sound bites, right, the people that can be witty and concise and if you just give people a way to just ad nauseam expound on things you will turn off more people than attract. It will be diarrhea of the mouth. You said it. Its a challenge every time you tweet. Its the opposite direction. Instagram exploded because pictures can speak a thousand words and the main audience is growing like this, why have more content . Consumers want less. They want to consume quicker sound bites. It was a fun conversation but im not sure we solved their problems. The millennials in the control room tell me that he has now shaved. My joke was that he was going to shave when they figured out who was going to be ceo. I think they did and he did, too. Thank you, lou and matt. Thank you. It was a fun discussion. Heading to the close, 39 minutes left in the trading session here with the dow up 8 points. Chaos in the republican ranks on capitol hill. When we come back we will talk to former gop texas senator kay bailey hutch son about the mess in congress and find out who she thinks could be the next speaker and who she is supporting in the 2016 president ial race. And imagine getting your favorite songs from your favorite live concerts its now possible from a new Music Service we will talk to its founder, the longterm rorld press arrow Charles Koppel man, if youre thinking didnt he used to run Martha Stewart . Yes, he d id. The game of Musical Chairs that has become the race for speaker of the house may be a headache for republicans, but its impact on, for example, the debt limit deadline could have everyone looking for aspirin. Our chief washington correspondent john harwood joins us with that part of the story. We are no lows closinger to finding out who is going to be the next speaker. Chaos again as House Republicans met, members are trying to convince paul ryan to take the job as successor to john boehner, john boehner remains on the job until a successor is chosen. Kevin mccarthy remains majority leader. They are still trying to work it out. Here are the looming deadlines, november 5th is the date that treasury secretary jash lew says the u. S. Government expects to hit the debt ceiling. It has to be raised by then or the government could be thrown into default. The second deadline, december 11th, thats when the existing budget agreement runs out, funding for the government to keep the government from shutting down has got to be extended by december 11th. Both of those are now under a cloud because of this leadership fight. I think the smart money remains that john boehner by staying around long enough to wait for a successor will be able and free to do some things that he wouldnt otherwise be free to do if he was worried about keeping his job, that is to say putting a debt limit extension or debt limit increase and a budget extension on the floor to pass with democratic votes and not worry about the hard right of the Republican Party, but none of that is set yet, just like the identity of John Boehners successor is not set yet, we will have to wait over the weekend and early into next week to see what the beginning of a new republican approach might be. John, if youre waking up in new york city, reading the New York Post youre seeing allegation that is mccarthy had to step down possibly because of an affair. If that is the case, is it possible that all this talk about all the craziness until the Republican Party isnt as bad if he had to go because of an affair and not because he wasnt conservative enough for the extreme right wing, that would be good news, wouldnt it . For the Republican Party. For the republicans. Yes, but thats not possible. First of all, the allegations of the affair have been denied by the parties involved, rene ulnar is the female member of congress tweeted out she had been falsely accused. In any case john boehner stepped down for reasons having nothing to do with that. Kevin mccarthys departure is more in line with what john boehner did than anything about Kevin Mccarthys marriage or personal life. It was related to the unfortunate comments he made about the Benghazi Committee which cast that in a political light, intended to drag down hillary clinton, but this Republican Party internal division exists beyond way beyond kevin mccarty, its what brought john boehner down and it will be a problem for paul ryan if he finally gives into these pleadings and becomes the speaker, he will face a resistance. He pass that had compromise with patty murray that raised budget limits, 62 republicans voted against the paul ryan budget deal. Thats the challenge ahead for the Republican Party. Whatever the reason, there is a vacuum of leadership right now in the house. Thanks, john. Lets bring in kay bailey hutch is son, now senior counsel and cnbc contributor nice to see you, madam senator. Good to be with both of you. What do you make of the mess going on within the Republican Party . Clearly there is upheaval, i think there is a leader and thats john boehner right now, i think his willingness to stay on and try to get through some of the big issues that you have just discussed, like the debt limit, of course, and trying to get a budget deal that might get us through even beyond december 11th, i think that a lot is happening, but i will also say from my contacts that ive talked to today in washington that they are taking a kind of a back step to be thoughtful and not just react or have an immediate election, but think through who would be the best and what would be the best circumstances. Is that paul ryan . Do you blame him for saying no this long . Well, i admire him very much for saying no because he does have small children, however, i also think he is the Perfect Choice because he can carry a message, he has credentials that conservatives respect as well as mainstream republicans. I dont think there are any liberal republicans, but i think the mainstream and then those who are really disaffected right now, i think paul ryan has the capability to bring everyone together with a good message, opportunity, as well as i think he is creative and conservative and senator much like if you could say anything to the Freedom Caucus right now what would it be . Do you have any advice . They havent asked for advice but i would say that it is time for republicans to have a leadership that everyone can rally around, state what your concerns r but then understand that you cant have my way or the highway when there are 435 members elected from different districts. So be more like reagan with the 60 rule. If i get 60 of what i want, i can live to fight another day for the 40. By the way, it is clear no one wants to be speaker of the house, but everybody wants to be president of the United States right now. Do you have a favorite in the republican slate right now . I have several that i think are very good and very strong and would have the right ideas to bring our country back to the leadership in the world that we have lost in the last few years. I think there are probably three or four in the pack that are very, very strong. But you are going to hold the cards close to the vest right now in the meantime . Absolutely. Thank you. Senator hutch son always good to see you, thank you for joining us. Thank you. Maybe she is waiting to see how they perform in the next debate. Dont forget cnbc will host the next Republican Debate, that comes up university of colorado in boulder october the 28th, coverage starts at 5 00 p. M. Eastern time right here, do not miss it. Time for a consumer news update with sue herrera. Hi, michelle. Here is whats happening at this hour. President obama arriving in oregon where he will meet privately with the families and the victims of the Community College shooting last week. The president has been outspoken for greater gun restrictions. The Los Angeles City council passing sweeping rules requiring costly upgrades of thousands of older wood and concrete apartment buildings that would be vulnerable in a major earthquake. City leaders will have to agree on how the 5,000 per unit costs would be split between tenants and landlords. Up to 10 inches of rain with fallen in parts of texas hill country triggering flash flood warnings, up to 60 people have been rescued, some off of the rooftops, no fatalities thank goodness reported yet. Rail service to and from busless was stopped after a Public Workers strike shut down train travel t lasts until 10 00 p. M. Tonight. It was called to protest working conditions. That is the cnbc news update. Bill, michelle, back to you guys. Thank you very much. We tend to an tlo pa more fiez the market but i think this market is tired after the five days of rallying here, the dow is up 31 points as we read to the close the s p up a point, the nasdaq up 18 but big gains overall this week. And holding them, right . Cant go up sharply every day, the fact we are not getting a selloff or losing a large percentage would give bulls some happiness i would think. You can call it a tesla tantrum. Elon musk making less than nice comments about former employees now working at apple. Is musk being mean or does he actually feel threatened by apple . We will explore that coming up next. And some apple apps could be creating Security Issues for your devices but it may not stop at just a handful of programs. We will explain coming up. T thee 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. All the major averages still in positive territory, not by much, but, remember, its been a very strong week for all the major averages, sixday winning streak for the Dow Jones Industrial average. Its been a long time since we have seen that. Gopro shares soaring today, the stock rebounding despite a very bearish note out from oppenheimer out this morning. You can see its higher by a little more than a buck 70 at this point. Bill. We are into this last half hour critical time as we close out what has been a pretty strong week for the market. Joining me on the floor of the New York Stock Exchange is matt chess lock from virtue financial. What are you going to do with it . Strong week. 3 gain for the dow alone, kind of a relief rally, are you part of it or what are you doing with it here . I hate to be part of it now if youve therefore missed this. It seems like a 50 move off the lows, its going to take a pause, we are in the holiday, so we will be respectful of what the market will give us on monday, volatility will probably be high and volume will be low. I dont think you want to get into this weekend with high positions. Keith lease man was identifying 2011 as a resistance level for the s p. We are at 2015 right now. Its a good close but what are we going to see as far as earnings going and how will China Overlook that . Are we going to overlook it because we have already discounted it . These are some of the things we will look at especially from the bank side. Jp morgue nn peculiar claer all the Big Bank Stocks report next week that will be critical to this market. Absolutely. Were forecasting lesser trading revenues from them. Some of the banks maybe some writeoffs and things like that. We will see what they will present. This market will be very careful at least over the next, you know, trading session. And we will be previewing all those Big Bank Stocks the earnings coming out next week a little later from now. Thanks very much. All right, bill. Tesla shares are lower after the stock got its fourth downgrade this week and the pressure may be getting to ceo elon musk. Here is what he told a german newspaper when asked about apple moving into the car business. Musk said, quote, they have hired people weve fired. We always jokingly call apple the tesla graveyard. If you dont make it at did he say la you go work at apple. Im not kidding. Lets talk about this teslas brain drain with analyst bell callow. Do you believe what elon musk said or does he dot protest too much about losing engineers to apple. I think one of the things thats often overlooked about tesla with the elon musk factor is his ability to recruit and retain talent. Its a competitive place out here in the bay area and apple is giving lucrative deals to tesla engineers. I think engineers want to go work for elon and they share the grander vision of tesla and what theyre trying to do. I think he has the edge on the recruiting game but theyre trying very hard to recruit away from tesla. Elon musk is light years smart than i am but im not sure i understand the upside to pick ago public fight with apple on any front. Where y. Is he doing that, do you think . You know, i think that he says what he thinks and i think thats refreshing for people in the demographic that are going to work there. He called toyotas work in fuel cells fool cells. So he is not afraid to say whats on his mind and i think people respect him for that. Still you downgraded the stock this week, you are one of the four who did so. Why . Yeah, so our call was to own into the model x launch and we envisioned that being the fray and the frenzy around the model x getting out on to the road. I dont think that tesla is ready to start delivering at least for a couple of weeks now and i think theres going to be a gap there where the bears control the sentiment around the stock and we wanted to move to the sidelines and want to be buyers at a lower level. Do you think they will hit their target of what it was 50,000 model sales this year, they still have to go Something Like 16,000 sales in the Fourth Quarter to make that number. Yeah, i think its going to be tough and if they do it and i think that theres i think that theres over 50 probability they do t they are going to do it with model s sales, not with the model x sales. We will be in the couple hundreds of the model x in q4. It will be next year before they start ramping it in earnest. Going to keep counting the cars. Okay. Yes, they do. Thanks, ben. Thanks, guys. Senior analyst at robert w baird. We are haergd to the close with 19 minutes left. The dow is up 32 points capping off a positive week. Coming up next a Hedge Fund Manager who says cash is king. Not in the way you think, though. She doesnt mean keep your cash ready to go. Shes talking about cash flow. She will join us with her top picks. Youre watching cnbc first in business worldwide. Excellent looking below the surface, researching a hunch. And making a decision you are type e. Time for a change of menu. Research and invest from any website. With e trades browser trading. E trade. Opportunity is everywhere. The great beauty of owning a property is that you can create wealth through capital appreciation, and this has been denied to many South Africans for generations. This is an opportunity to right that wrong. The idea was to bring capital into the Affordable Housing space in south africa, with a fund that offers families of modest income safe and good accommodation. Citi got involved very early on and showed an enormous commitment. And that gave other investors confidence. Citis really unique, because they bring deep understanding of whats happening in africa. I really believe we only live once, and so you need to take an idea that you have and go for it. You have the opportunity to say, ive been part of the creation of over 27,000 units of housing, and to replicate this across the entire african continent. Cash is king thats according to one Hedge Fund Manager who says she finds value in companies that have strong cash flow. Its not how much cash is on hand its the cash flow in the company. Joining to us talk about that is neely gilbert, materan capital cofounder. Why is that important right now necessarily, cash flow . The reason that weve been interested in cash flow lately is during august and september when the markets were turning down we were able to continue to add value for our clients at materan by focusing on companies that were generating a good amount of cash flow relative to the overall value of their businesses. Weve been thinking a lot about what strategies for stock picking will be effective for managing money in this volatile stock environment. Right. And whats interesting about focusing on cash flow dwren operation is that its attractive during volatile environments because companies that are generating a lot of cash tend to offer a more stable pattern of returns. So why not just buy dividend pairs . When i think about a stock or company that pays a dividend you have to be incredibly disciplined about your cash flow to make sure you are pay t does that mimic it or is that good enough . Its not quite good enough. Weve done a study where we take a look at first break down the universe of all the invest i believe stocks in the United States and focus on the ones that are Generating Positive cash flow and negative cash flow. Once you get to the companies that are Generating Positive cash flow now take a look and look at the ones that are paying a dividend or not. As it turns out whether you pay a dividend or not is not a big differentiator and if anything the companies that are paying a dividend tend to slidely underperform. Maybe its because investors who are interested in quality tend to focus more on the Dividend Payment and so then within companies that have cash flow dividend pairs become a little bit overvalued. Lets be specific so we can understand that idea. Benchmark electronics is a company that you like for this reason, right . Thats right. Tell us about it. This provides a good example of how cash can act as a defense or even a Strategic Asset during periods when markets are down. Benchmark electronics is a company that is an Electronics Manufacturer and actually they manufacture electronics on behalf of other companies. So computers, networking, that kind of thing. Well, benchmark electronics is a 1. 1 million billion dollar market cap stock that has 400 million of cash on its Balance Sheet and no debt. Wow. Yes. They also have only 400 million in total liabilities and theyve got an additional billion dollars in current assets. So if you look at benchmark, they could actually retire all of their liabilities and still have 1 billion in cash and short term Assets Available for a company that is trading with a market cap of 1. 1 billion. I totally get t it feels like a strategy for a bear market or market that you think is going to be bad for a while. Weve seen the markets get back 50 of the losses from august. Is it still going to work . How long does this strategy work for . Does it have to be a bad market environment for this to be good . So as far this week weve seen investors piling into stocks that did poorly during the downturn. When you look at cash generation as a theme the returns have been basically flat. So we havent given back a lot in that theme. You may think of things like cash generation, dividends as more quality themes and you think to yourself, thats for when the markets are going down. Right. But the truth is that weve seen in the past markets that have been led by more quality stocks when they are going up. Think back to the late 80s, the mid 90s, you had quality large cap stocks like cocacola, pfizer, Phillip Morris all leading the stock market higher. So when the market is rising it doesnt necessarily have to be led by more speculative stocks, although that is what we saw in 2012, 2013 and even the beginning of 2014. Very interesting. Neely, good to see you. Thanks for joining us today. Thanks. Great to be here. Neely Gilbert Joining us at the New York Stock Exchange. Art cashin just signaled 700 million to buy. So a meaningful imbalance to the buy side going into the close. Which suggests we could get six days in a row for the dow. 11 minutes before the closing bell. The Dow Jones Industrial average is higher by 30 minutes, the s p 500 higher by a little more than 2. The days of double dujt returns are over, so says our next guest steve dudash. He will explain why coming up next. Bvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. I just had a horrible nightmare. My companys entire network went down, and i was home in bed, unaware. But that would never happen. Comcast business monitors my Companys Network 24 hours a day and calls and emails me if something, like this scary storm, takes it offline. So i can rest easy. What. You dont have a desk bed . Dont be left in the dark. Get proactive alerts 24 7. Comcast business. Built for business. With the dow up 35 points right now joining us is Iht Wealth Management president steve dudash. Welcome back. Hello. Thanks. What do you think is going on in this market right now . Well, every time the market has dipped 1 , every time we have seen a reduction going on we have been buying n weve been telling our clients if you have cash lets take advantage of it right now, weve been rotating bonds into the markets as well. What are you dying booig . Were buying everything that everyone hates right now, energy and financials. Honestly i think right now youre going to look back it will be one of those moments where you look back and say i cant believe we bought it at that price. Why didnt everyone get in on it. When you look at the Energy Sector in this week it is the best performing sector. Weve been doing it since january. Weve definitely been heavy into it the last month. Every since the china thing happened three weeks ago we have been buying into it. Are you expecting Energy Prices to be appreciably higher. Not appreciably higher. I think a lot of us feel that the markets have overreacted on the down side to the Energy Sector over the last, say, 10 months. China is having a rough time but its not doing 1 , its not going backwards. What kind of dividends yields did you pick up in energy when youre doing that . Thats my favorite. I love the yield story. Honestly then you will hate my answer. I dont care about the dividend yields right now. Why not . Listen, of course i like the dividends yields and its nice and adds an extra boost, were buying because we think theyre dramatically undervalued. Thats the same story because, for example, as she pointed out earlier this hour, chevron is yielding 5 right now. At one point it was 6 . That would suggest its a great yield. That would suggest either they have to cut the dividend or they are undervalued. They might still cut t if oil stays low, Energy Prices stay low they might have to cut it but even if with that cut, even being down like that i think you will get a pop here. You said you were buying bonds . No selling the bounds. And thats corporates, a high yields, treasuries, everything . Across the board on the government side. What for obvious reasons . You could have a 2 yield forever according larry summers. Are you investing for a 2 yield forever . Im not. If you look some of those 2 yields and restate nood financials or energies that are down i think you pick up at least certainly more than 2 in the next ten years. A lot of people are investing not to lose money. Thats a different story. If were talking about ultra conservative and trying to preserve wealth of course youre buying bonds, you shouldnt be listening about stocks, but if youre doing longterm investing for growth, to be honest with you, bonds probably arent the best bet for the next five years. Mr. Dudash, good to have you on. Happy friday. Thanks for being with us here. Five minutes left, we are coming back with the closing count down for this friday. After the bell South Carolina republican senator and president ial candidate Lindsey Graham will join us to talk 2016 and the chaos on capitol hill. Its almost halloween, you have to say it that way. Yes. Bob dylan. To improve my language skills, ive read all of your lyrics. Youve read all of my lyrics . I can read 800 million pages per second. Thats fast. My Analysis Shows your major themes are that time passes. And love fades. That sounds about right. I have never known love. Maybe we should write a song together. I can sing. You can sing . Do be bop. Be bop do. Do be do be do. Do do do be do. When youre not confident your companys data is secure, the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. All right. Heading to the close, Mary Thompson is here with me on the floor. This is what the dow did this week, just a classic stair step higher and for the week a gain of 3. 7 . What performed the best . These are weird charts but here we go anyway, mary. The best performing sector for the week would be energy. Thats right. Even though soop the S P Energy Index is down, for the week it was higher, followed by materials, industrials, Consumer Staples and oil, Interest Rates and activists. We saw oil go above 50 a barrel, didnt close there, but a big gain there. Interest rates, the dovish tones and the fed comments put the risk on trade again, helped materials a great deal and activists, we had nel ton peltz, he did invest in ge, second best performer in the dow and dupont ceo Ellen Kullman resigning and despite that and a warning dupont is the best performing stock in the dow up over 14 and pelts has a stake in dupont as well. Healthcare the wost performing sector in week and utilities right after that. And telecom all dividend places. Defensive dividend play with the weak link. Very much risk on weak. Exactly. Thanks, mary. We will get you ready for next week, critical week because the bank stocks will be reporting and we will give you a preview what have to watch for on that. All that and more coming up on the second hour of the closing bell. Welcome to the closing bell. Im Michelle Carusocabrera in today for kelly evans. Bill griffeth rejoining us in just a moment. Here is how were finishing the day on wall street. Dow jones industrial average higher by 35 points, s p 500 higher by 175 points, nasdaq higher by a little more than 19. It is six days higher for the dow. Evan knew mark and gay adami. After this very strong week weve gotten back a lot of we are way off the lows of august, we are halfway off the lows of august. Does that mean we are off to the races again or are we going to retest the highs or retest the lows . Not so fast i say, not to fast. Thats the leading question. You cant discount the rally. Last friday at its trough. The s p has rallied 130 handles give or take. One has to ask oneself did this d. That happen . It doesnt matter the reason why. Reasons dont matter, but at a certain point the reasons do matter and i think the reasons were entirely because of what the fed said or what the fed didnt say and this potential belief that not only is the fed on hold, but maybe magically they will do another round of this craziness of qe. With that said the earnings that youve seen so far and im trying to keep my doing ma out of this, but the erngs we have seen so far have not been good. Yum was a disaster, adobe not particularly good, alcoa was ridiculously poor and gap stores werent strong, either. What were seen on the margins have not been good. Dont we have enough cruise ships in the water . I think theres a faction of people thabl that things are lousy enough given that job number that maybe that is in the works. What do you think, evan . This week was another case of nobody knows anything. If you remember the week last week everybody was like, oh, end of the world, you know. It was very bearish. I said on friday im going to do my i have to take a small victory lap. On friday i said that i thought the action in the energy and mining space was very good. Im not a big im not a day trader, i dont believe in day to day action, but in general ive been buying Energy Sector over the last two months, guy and i have talked about it quite a few times and we saw a big move up this week. Im not saying its going to continue, all im saying is oil and the oil stocks were so far down that it was bound to come back. And oil moved higher by 8 snoot energy names did extremely well, the miners did extremely well, glencore was going out of business next day, next day stock up 20, 25 . Michelle is going to open up an investment shop and buy these dividend paying energy stocks. Would you buy those . I just heard you talking to Mary Thompson. The dividend the yield has been going higher for the wrong reasons. Stocks go down, yield goes up. Thats what it comes down to. Do they are one of these guys, one of these Companies Going to have to cut their dividend . My sense is, yes, i dont think thats off the table, either. The energy patch has not straightened itself out magically over a week. I think to evans comments it had a rally at some point, for whatever reason we picked this week to do t obviously theres more geopolitical stuff out there, although thats out there all the time. I think the market took this week to take it into consideration and trade on the back of t if you look at the ovx, the Oil Volatility index thats still around 44, that is still elevated by leaps and bounds in terms of where it should be historically which leads me to believe at least there is another leg down in the energy patch. Lets talk about it. Lets ask the expert, she has been chomping at the bit to talk about it, holy mccraw joining us right now. We sound like we know what were talking about. Everyone says no one knows what theyre talk being. No one does know what theyre talk being. I think its fascinating because you can say its always been with us but this week we had russian cruise miefls in syria. I think the middle east is more volatile. Im not sure thats entirely the reason for the rally. I think there are other considerations. Signs that u. S. Production is actually start to recount is falling. Recount is falling, you had ei out there saying that u. S. Production is starting to roll, now were starting to see t we are not just anticipating it. I think thats a fundamental story. The geopolitics is there. Can you explain something, and Jackie Deangelis brought it up, she thinks its odd, too. But, okay, everybody is concerned about syria, syria used to produce 400,000 Barrels Per Day but they havent pro duals it had for years because they are in chaos. Nobody is worried about losing syrian supply, right . Why would that drive Oil Prices Higher . I just think anytime you have a situation where you have the major the worlds Major Oil Producers doubling down in a con fliblngt everyone is worried, hey, look at the neighboring countries, does it potentially spread over to iraq, do you have a situation where saudi arabia has to spend so much more money . We think the Biggest Issue in terms of syria is everybody has to double down. Its a money pit. None of these countries right now can afford to spend so much money on another armed conflict. But yet, i mean, even boone pigeons was willing to admit this week that he was wrong on his call on oil. He thought we would be at 70 a barrel at the end of this year because of the opec members who are still pumping outright because they need the money. We have seen to be fair saudi was doing 10, 5, they are down to 10,2 so saudi is coming down a bit. The big question is is there going to be some type of deciding that you have to pull back. Best case they dont cut in december. If something turns in one of these done treegs and there are reports of problems in saudi arabia, something could turn quickly. Look at iraq, there was an isis bombing in the south of iraq this week. Which is where all the Oil Production would wr all the oil fields are. They said dont worry they dont get to the south. They got to the south. Guy, oil rising this week, what oil did was what the overall market was going to do, that simple. If we got a turn like shes talk being could that help the overall market or would a High Oil Price or Rising Oil Price once again be negative . It should help. Do you know what else is going to help, if we get decent earnings out of the bank or out of anybody next week. It comes down to this and i think you did 100 people you will get 100 different answers but is the oil move supply based or demand based . My sense it has been demand based. A lot of people think its a supply side thing. Thats what it comes down to. If you look at the numbers that weve seen here, some of the numbers in europe and pmi numbers there what potentially could happen in china next week leads me to believe that maybe demand globally has been waning, thats the real reason why the oil prices have crashed like it effectively has over the last year. I think the interesting thing Going Forward is going to be to touch on what guy is saying, whether or not we are in a phase where the Global Committee instead of decelerating, continuing to slow down is bottoming out right now and whether the oil price is telling you that things may be turning the corner. Now, based on anything you heard from the imf, any economist, anybody out of the fed you would not believe thats the case. What do they know . By the way, im going the other people, did they ever tell you on the basis of everything they said the price of oil should go down well into the 30s, in fact, into the 20s, but these things when things change nobody is ever there waving a flag, going, oh, things are changing. Nobody knows. Oil is up 29 from the bottom. There snug at the same time, you know, they are expecting the dollar to strengthen and oil has gone up even though the dollar has done the same thing. So why does that interrelationship not work right now . Again, usually Dollar Strength is something thats very bearish for oil, but right now its not whats driving this market this week. I think it was a combination of the supply picture, also i was at oil and money there was some discussion of a coordinated opec cut. There were lots of noise out there that was also driving the market this week. Dollar story wasnt as big this week. If they need to spend money like crazy fighting their proxy war in syria, that oent incentivizes them to pump more, not less. Here is the interesting question when i think about saudi arabia, do you really think they say they have 12,5 the question in capacity. Capacity. How much can they really bring on . This becomes the interesting question. Are they maxing out at 105 . Is that the max they could do . Are they in a situation whats the mystery, the quality of the wells. How fast they can bring it on. What is the residual number if we did have an outage, lets say that truck went to bazra and went to an oil facility and one went off and we turned to saudi and said, can you bring on a million extra barrels in 30 days and keep it on for 90 . They question is can they do it . They say they can but thats a concern in the markets. If we talk to u. S. Officials they say we are one supply outage out from having a lot more volatility in the market. Is it too late to get in this market after this rally this week . I think there are things you can look at. Individually names. Facebook has got a real chance to knock the cover off the ball into their earnings release. That stock has traded relatively well since this whole thing started in early august. I also think that Goldman Sachs giving the volatility we have seen since last quarter is going to have a ridiculous quarter. Thats a name that might want to take a look at in earnings as well. They have not traded well, i get t banks in general have not, but i get the feeling that goldman might absolutely knock the cover off the ball when you hear from them i think its next week or week and a half. We will be talking about the Bank Earnings coming out next week, earnings expectations are lousy overall. You know, ceos a Cross America are good at managing expectations down. They have plenty of excuses for this last quarter. They always find another one. They are very good at managing expectations. I dont think actually that earnings are going to be the story over the next few weeks. Really . In terms of what drives the market. What is it. I think its going to be geopolitical stuff and its going to be what is really happening with the Global Economy and china driving things much more than what is going on with the earnings. I would say in terms of the market psychology, i would look to china, the price of oil, the fed, much more than earnings. And so many things the marginal buyer and marginal supplier. Thanks, guys, and lady. Good to see you, and guy, thank you. Bill, tweet out a picture of your drink. I love that on fridays. Put it out there, brother. It will be a little later tonight, but it will be there on twitter. Dont worry. And we will see you and the rest of the fast money team coming up at 5 00 p. M. Eastern time. A top ranked Airline Analyst will explain why the rally is airlines is just getting started. Thats coming up 5 00 eastern time tonight. You are going to mare nate some ice cubes later . I just might. Apple and apple products have a reputation for being secure but thanks to recent malware issues apple is removing some apps from its store that could pose security concerns. Former cyber crime investigate err for apple gives us his take on that news. Plus republican senator Lindsey Graham will be with us today. He says russia and iran are slapping president obama in the face right now. He will join us live to explain. Coming up. Youre watching cnbc, first in business worldwide. 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. We have a news alert on an ipo filing that seema mody has for us right now. Thats right, bill. Interactive data has filed for an ipo, it does not specify the deal size or sail price but Morgan Stanley as well as deutsch bank are going seen as some of the underwriters. Interactive data will trade on the nasdaq or New York Stock Exchange under idc. This is for the Financial Services industry. You can see Interactive Data Ticker Symbol idc. We should point out valuation wise reuters had a story back in june valuing the company at around 5 billion. How many bankers do you need to pedal your stock when you go public. Price some ridiculous valuation as many as you can get. The bigger the syndicate the better. Apple is pulling add blocking apps from their apple store. They say it essentially allows the app creators to view user web traffic and sensitive financial information. Apple has not indicated anything malicious has actually happened so far but does this throw a wrench in the companys overall Security System . Joining us to talk about that is joe lumas the ceo of cyber team 6. He was a cyber crime investigator for apple. There was a time when apple was a fortress against hackers and malware and now all these things have been cropping up lately. What happened . What with weve got going on, bill, is the fact that weve got malicious apps working their way back on to the store. We have to be careful of the fact that the security measures taking place by apple to check these apps. We dont understand the volume of apps submitted to apple to understand to reverse engineer these apps to see what they do. Its only when they actually make it to the market someone finds that the app might be doing something malicious, does apple actually do something about t there needs to be r to start to be a proactive approach. Joe, there are people who are suspicious that theyre doing this because the very same issue malware is also the thing that allows ad blocking, right . And maybe apple doesnt want ad blockers within those apps because thats where a lot of the revenue comes from. But think about it from the malicious the bad guy perspective, whats the best way to get your app out on the market . Give the consumer something everybody wants. Everybody wants ad blocking, right . So its the perfect vehicle or mechanism and delivery model for malicious activity to take place. Ive put on the air many times about a company like blue box that they encrypt these apps so this stuff cant happen. I dont understand why theres so much resistance to embracing the technology that these startups have. Because people dont want ads. Right. Its that simple. I dont want ads. Let me on that question of the ads, everybody who uses the internet is incredibly irritated by all the pop up ads, pop up video ads, for example snoot pre videos. I hate those things. Roughly speaking do you know what percentage of the revenues of most of these applications that are what percentage comes from the ads . Is it a lot or is it a little . Do we have any idea . Well, we really dont know what kind of revenue actually comes from it because most of these ad blockers are really free, right . Theyre not really targeted to build these apps to actually make revenue. Theyre actually looking to get to your mobile device so they can take your credit card information when you are logging on to apple pay or your wells fargo account or chase account because we all use our mobile devices to check balances to make statements whatever it might be. So thats the end game here is can i get to your address book, can i get to your email and if the best way to do it is im going to give you a free ad block for do it. Are you saying, joe, dont download any ad blocker app . I wouldnt download any ad blocker app that hasnt been validated as legitimate. Theres, for example, there is ad block out there thats relatively the leader in the space that just was recently acquired. Those are the type of organizations that i trust as i really look at the organizations that have a name, a brand, a reputation and credibility of history. Who do i know behind that . Can i go to their website. The validation issue, some of these have been in the app the Apple App Store anyway, that would suggest validation right there but yet you can still be hacked if you download those two, right . Exactly right. Thats an assumed validation, thats assuming that apple and other organizations are really testing these products and these applications that they dont do anything malicious, but unfortunately because of the volume its often its a difficult thing to accomplish. If you are a getting a million applications uploaded over the next month, how are you going to test all those apps and reverse engineer them . Its a difficult issue. Thank you, joe. Good to have you on. Joe lumas. I love when i go to cnbc. Com and watch those ads that bring us revenue. Niles. Nice. I see what youre doing there. We have a news alert on google. Seema mody has the details. A Service Disruption in google docs and some of googles clouds services have been cited. Its been going on for roughly an hour and a half. Google saying its continuing to work on it and hope to provide more information in about 50 minutes time from now. Google is investigating the outage, the Service Disruption that is halting google docs and some of the google cloud services. Once we get any other further announcements we will bring them to you. Michelle. Thanks, seem machlt i always worry about keeping those documents on the cloud, right, because when you need them what if Something Like this happens . I still buy cds. Thats how pa thet i can i am. Bill is with me. Ive got nothing on the cloud. Bill is with me the hold older you are the more paranoid snur i agree. Too many problems around the block. The story next week banks large and small will be reporting earnings next week and jpmorgan is going to report after the market close right here on closing bell. We have details on all of that coming up next. Stay tuned. But it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. 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Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. The big Bank Earnings are next week, kayla tauschy has its Companies Reporting the key metrics to watch for. Next week is packed to the gills with Financial Sector earnings kicking off on tuesday afternoon, monday being a holiday for many companies. Jpmorgan chase will report after the bell on excuse, followed wednesday by bank of america and wells fargo. Thursday citi group and goldman. It led to a host of sell side upgrades to the sector but the fundamental earnings for the Third Quarter dont look all that great. The street consensus sees eps only rising meaningfully at bank of america and only because they had a 17 billionalcharge. The street sees revenue rising only at wells fargo. In separate analyst notes today jpmorgan upgrading wells fargo and down grading earnings estimates for the rest of the banking sector. Tepid loan growth, what it calls a sharp decline to common Investment Banking revenues and a modest decline in trading activity. There is also more money having to be set aside for energy loans that could possibly go sour and also increasing pressure on margins from a press key flattening yield curve. That last bit could hurt the banks the most, it is the crux of their Business Model as lenders. The ten year fell and banks were positioning for a rise in rates. That doesnt bode well going into the Fourth Quarter number, either. We will have to wait and see how bad it is for the banks for that Net Interest Margin and profits this quarter. The Net Interest Margin i get, the trading i dont get. We had incredible volatility in the Third Quarter in the markets. Why wouldnt their Trading Volume or trading revenue be a bright spot in the quarter necessarily . For a couple specific reasons, bill. First, so much of this trading happens automatically now, its not done through a human being, meaning that the fee that the banks get for executing the trade is smaller than it maybe was in the past. Even though the activity might be stable the money that the banks would make on a specific trade would go down. Second a lot of what the banks trade are securities that they originate themselves, new mortgages, new leverage loans, new bonds and a lot of that issuance fell off in september, specifically so they will have actually less stuff to trade around with their clients. Thats one of the great ironies that these banks are the ones that really need Interest Rates to go up. Yeah. Its counter inn u testify. They need the yield curve to steepen. Absolutely. Every time they talk about the fed raising rates at the short end you almost see the yield curve flatten. Thats the big problem. Kayla is talking 20 basis points like thats a big move. In this world. When you have a ten year at 2 its a big move but years ago we wouldnt even be talking about 20 basis points ten years ago, it would be a joke. The 20 basis move intra quarter we think about its the biggest since, smallest since, its the biggest move only since december of last year. So we are seeing these wide swings and its becoming increasingly hard for them to predict exactly what their Business Model is going to look like. To evans point you called it a wide swing. In the new normal it is. Crazy. We were talking about old photographs during the commercial break here. I saw a screen capture on cnbc from ten years ago, the yield on the ten year on the screen capture 4. 3 . Makes you weep. Its totally crazy. I go back to migrate mortgage i got in 1991 during the middle of a huge recession, it was 8 . I was like thrilled. You were so happy. What a deal. Thanks, kayla, we are all old, thats the problem. Big week next week. Thanks. Time for a cnbc news update with sue herrera. Sue. You and i remember like the 14 Interest Rates, bill. Thanks. Here is whats happening this hour, an Iranian Revolutionary guard general has been killed near syria where he was advising syrian troops in their battle against isis. General almedi was killed late wednesday. 261 to 159 vote the house was approved a bill to lift a 40 year u. S. Ban on crude oil exports. Its not enough to override an expected white house veto. The white house called the measure unnecessary and argues a decision to end the ban should be made by the commerce secretary. Dow jones disclosing hackers gained unauthorized entry to its systems in order to send fraudulent solicitations. As part of the breach payment card and Contact Information for about 3,500 individuals was potentially accessed. A major heat wave in los angeles. Temperatures in the valley hitting triple digits as a High Pressure system moved into that area. Officials are warning of increased fire danger, the system is expected to move out by sunday. Thats the cnbc news update. A heat wave in our old hometown and that makes the news. Its the drought. Its the drought. That doesnt help thats for sure. Thank you, sue. Streaming services have revolutionized the Music Industry. As artists fight to get bad for their work record executive Charles Koppelman is working on a new service that returns money to artists while fans hold on to a live performance. Oh, are we in for some fun in a moment. First lets look at whald on wall street today. Quiet day but capping off a very strong day week for the bulls the dow today up 33 points, the s p up a point 1 2 the nasdaq gaining 18 points, crude oil modest gains. We did see a reduction in rig count but you didnt see the rally you would expect there because crude oil still not able to get above 50 a barrel which it touched pies twoois this week. So that fun. The Music Industry has dramatically changed with the switch to digital streaming. There is a new app trying to capitalize on the digital revolution by giving users to chance to relive their live concert music experiences. Its called stereo cast it allows consumers to purchase songs recorded from live concerts that they have attended and with us now to talk more about this platform is its chairman and a very very much legendary player new Music Industry, Charles Koppelman, the former ceo of emi. You were chairman of Martha Stewart media, i dont know how that happened, but he had a cubical next to carol king. Absolutely. Come on. Which was right around the corner on broadway. Well, it was not around the corner. It was on broadway. Thats correct, it was here. Stereo cast, lets talk about that first. Its a live purchase music app that enables you to go to a concert, lets assume you were lucky enough to go to taylor swifts last concert and mick jagger shows up, if youre part of stereo cast you can download that app, when you leave the concert you will have for yourself forever that version of mick jagger and taylor swift. Taylor swift and mick jagger have to agree or her production company, november sign up for this. The venue is going to make money, artists make money, publishers make money and the fan, which is the best part of it, will have that experience they can take home. What if i didnt see taylor swift but i heard mick jagger was still there, can i download that . You have to be there and you can download it for 24 hours. We may offer that Service Weeks down the load. Will it last longer than 24 . You will build a library down loading that music. I dont understand why i couldnt do it if i wasnt there . Because our Business Model is one in which it rewards the fan live at the concert to take that experience home with them. I find this absolutely fascinating because fund whats so interesting, you have been in the music friday for quite a few years. Sure have. Im younger than you, probably not as young as many would think, but younger than you and when you went to a concert, when you were a teenager it was a special experience. Absolutely. You bought the concert tshirt at the end or the jersey, remember when they were jerseys and now i watch my kids and other kids they film the whole son cert and im thinking nobody is enjoying the concert theyre busy filming it. Thats the beauty of stereo cast. You dont have to do any of that, we do it for you. You can enjoy the concert and when something exciting happens, and theres always something fresh and knew when you are at a concert, you can have that for the rest of your days. How many people actually go home and after they videotape it actually watch or share it with people . I dont know how many will videotape it but a lot of people would be interesting in relistening and listening over and over again as they do with their regular u sick. If its a unique experience. Thats the point. That is taylor swift bought in. We havent announced the artists that have signed up yet. Yesterday i was at a performance to test it all to make sure its fabulous and it is fabulous. Fascinating. When are we going to figure out how artists can be paid equitably so that taylor swift will go back to spotify, for example . Whats interesting is as you all know music is bigger than its ever been on a global basis, wherever you go people are loving music, listening to music, going to concerts and experiencing music. Its one of our largest single exports. So at the end of the day a couple of years from now that will all be sorted out. Everyone is going toned up making money from it. It is the case now i get sirius radio in the car and i listen to pearl jam station and east street radio and a lot of people are very good live, they kind of already do this, dont they . They already merchandise their Live Performances over sirius and a lot of the better live performers already do this, dont they . A lot of them do that but its not at the moment as i explained with the taylor swift example. Youre not going to have the opportunity to hear mick jagger with taylor swift other than at that concert. Now you leave the concert and how great would it be if you can add that to our library. Are you putting up why you were personal money in this . Yes. Whats the exit strategy . Look, i think the exit strategy is a long way off. I think we have a lot to do, i think theres great technology, im very comfortable with the way that it works so i know it works, artists, managers, venues, this is an opportunity for them all to get a little more of the piece of the pie. I will tell you what i would buy a live thing of. Charles koppelman talking about sitting next to carol king in the bril building humming tunes shes writing down. That was the commercial break. That was a great experience along with barry mann and cynthia wild. There was a team of great song writers during that those, not myself unfortunately. Better back rack. They werent hurt of our music which i was. Those are great days. Love that stuff. Good to see you, charles. Thanks for coming down. Stereo cast is the new service he is talking about. Halloween is creeping up, thanksgiving wont be far behind and while there may be enough pumpkins for carving jack owe lanterns, your pumpkin pie may nb jeopardy. We have a live report on that coming up. First, though, South Carolina republican senator Lindsey Graham joins us to talk about the conflict in syria and republican miss on capitol hill. We are first in business worldwide. Good. Very good. You see something moving off the shelves and your first thought is to investigate the company. You are type e. Yes, Investment Opportunities can be anywhere. Or not. But you know the difference. E trades bar code scanner. Shorten the distance between intuition and action. E trade opportunity is everywhere. Lets send you over to seema mody, shes got a quick market flash. Emc spiking in after hours frayed on continued reports about a potential deal with dell. David faber reporting earlier that dells offer for emc is believed to be worth at least 30 a share which does include vm ware tracking stock. We are seeing emc shares move higher by 3. 5 in after hours trade. Just underneath that 30 level as well. Thanks, seema. Our next guest has called president obama weak for not standing up to Russias Vladimir Putin and not nor putting troops on the ground to fight isis in the middle east. He also says the president ial race which he is in the middle of, feels like a reality show. We welcome to the closing bell white house hopeful and the reap senator from South Carolina Lindsey Graham. Good to have you here, senator. Thank you. Probably more like a car wreck than a reality show. In the last few days thats for sure. Let me ask you this, i think a lot of americans right now see russia getting into syria, thinking, wow, russia may be doing an afghanistan 1891980 all over again and maybe their quagmire and if they really want to go in there, good luck, have at it. What do you say to the American People that are thinking that right now . You would be wrong. Russia is making a smart play to double down on assad. Russia has dismembered the ukraine. What theyre trying to do is prop up assad who is friendly to russia and iran and they are going to try to destroy the opposition to assad so he stays in power and they will have a foot hold in syria and reemerge in the middle east. This is not a quagmire for russia, its a nightmare for america. How would you handle Vladimir Putin differently from the president . I mean, you are calling obama weak for the way he is handling this situation, but it goes counter to the strategy we have had where we were supporting the rebels, now we are pulling back on that. What would you do different with Vladimir Putin here . Well, number one, youve got two problems in syria, assad and isil, isil is a direct threat from the homeland you wont destroy them from the air. The region, turkey and all the arab states surrounding syria have the same groels we do, we nebraska want to destroy isil, they want assad gone because he is a puppet of iran so what i would do is form a Regional Force and go in on the ground and destroy isil before they hit us here at home and i would push assad out and tell the rufrgs russians if you want to fight youre welcome to, but assad cannot stay because that means the war never ends. The syria people wont accept them as their leader. Thats what i would do, use a regional approach. Can we move on to the chaos on capitol hill . Whats your assessment of whats going on there and can they get it together . Slightly better than syria. Slightly better. Slightly better than syria. Yeah, well eventually get together, but the freedom kau sus has shot their last bullet here. I hope its paul ryan or someone like him that can handle the pass and increase the debt limit because we need to, and fund the government and we dont need to have a government shut down. Im somewhat optimistic that we will get our bearings in the house and move forward. Senator graham i want to go back to i think what michelle is driving at a little earlier, which is can you explain to your average american citizen if such a thing exists why the u. S. Needs to be a forceful and strong role in the middle east, and particular if you look at sort of the left, and you look at the right, there is a lot of isolationist tendency out there and its hard to articulate the pro case. Can you do that for us . Yeah. Why does it matter who governs syria . Why should we be involved in afghanistan, syria and iraq . Number one, radicular islam, isil, is even beyond al qaeda, i worry about another 9 11. They say they want to do three things, attack infidels like us, i think isil is already here in america, they want to rearrange the faith, they want to destroy everybody in the faith thats different than them, all of our allies and they want to destroy israel. They are religious nazis, they need to be stopped. Most people are not buying what theyre selling, but it is in our National Security interest to stop the slauter in syria and destroy isil before we get hit back here at home. And what does that do to our relationship with saudi arabia especially now that they have a new leader there and lets not forget and they are not forgetting were becoming more selffulfilling with our own Energy Production here in the United States. We dont need them as much as we used to. Well, we are going to needle lies as long as the world exists the way it does today. So saudi arabia, jordan, egypt and turkey would love to have an american president that could rally the region to destroy isil which is a threat to the kingdom and also deal with assad because he is a puppet of iran. So i think saudi arabia is probably scratching their head wondering what obama is up to because his strategy regarding isil is not working. They are now in afghanistan and i fear they are going to come here and when it comes to assad being in power in syria, no arab or country is going to accept that construct because youre giving part of syria to iran. Senator, always good to have you on. Thank you so much. Appreciate it. Senator Lindsey Graham joining us. Thank you. All right. Its your money, your vote. Cnbc will host the next Republican Debate from Colorado University in october 28th, coverage starts at 5 00 p. M. Dont miss it. Meantime, forget about your round pumpkins this year. Theyre so last year. I guess. So ten years ago. Jane wells has gails on the latest halloween trend. What would that be, jane . Check this out, guys. This pumpkin like a frankenstein head, looks fake, no, its a real pumpkin. Its pump ken stein, never carve again. We will have the story when we come back. Annabelle, your birthday is tomorrow. Im turning seven. What did you ask for . A princess. And a pony. You like things that begin with p. I like pink frosting too. Will you have a cake . Yeah. I was too sick to have one last year. The data your doctor shared shows you are healthy. Are you a doctor . No. I help doctors identify cancer treatments. I want to be a doctor someday. I can help with that too. Watson, i like you. Sup jj . Working hard . Here at the Td Ameritrade trader group, they work all the time. Working 24 7 on mobile trader, rated 1 trading app in the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of the other competitors do in desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivative pricing model, honey . For all the confidence you need. Td ameritrade. You got this. To save; but also helped that them to save . Sk members that allowed families to keep more of their money; letting them use any atm nationwide for free. And, because every dollar matters, didnt nickelanddime its members with monthly fees. Saving them more than threehundred fortyfive Million Dollars in one year. That would be a different kind of bank. That would be usaa bank. Go online to find out more about our free usaa secure Checking Account today. The best story of the day. Were three weeks away from halloween and you dont have so settle tor some stinky round jackolantern if you are a sacks club shopper. Jane wells has the story. Jane . Reporter guys, there are pumpkins and then pumpkinsteins. This is one mans seat to a Great Pumpkin idea and we met him, watch, a year ago. This is my creation. This is molded fruit. Tony said it took him four years, probably a couple hundred grand and 20 some varies to grow them into molds. He did with it watermelons. Back then he was selling them for 100 a piece. Sams club came knocking and he had to lower the price to under 30. A lower price but a larger volume. A lot more. Last year we did a little over 5,000. How many do you want to grow this year . We have orders for probably close to 90,000. But this is risky business. He will lose up to 40 of a crop to a lot of things like what happens when we have the heat wave. Heat is our enemy. It was over 100 degrees out here last week and we probably last 20 of our molds. What happened . They just blow up. They literally explode. I have to say, some of the exploded pumpkinsteins were cool. They are looked like zombies and he may be able to market them. Back to you. Did i tell you this was the coolest story of the day. This is better than anything on shark tank. This is real American Ingenuity here. Persistence. Can he he get from 9,000 to 90,000 in a year. Is it the molds . It is getting the land. He had begged and borrowed from and all of his friends and this is why it is such a great idea. Through sams club he can use their farmers and they lease his molds. So they get 11 a pumpkin and he wholesales it for 25 and all he did was give them the molds. And he makes revenue off of that. But he took the risk. He took four years to come up with the frankenstein mold. This could be better than the driverless car. How does he feel about selling it to individuals and homeowners. Would that add to the revenue stream, what do you think . He has so many things he want to do, michelle, he cannot figure out next week. He has kale croutons and growing white pumpkins in the shape of skulls. I love that. Yes. And hes finding a green house so he can grow heartshaped watermelons edible for valentines day. Classical entrepreneur. Good job. Please tell me there was video of the exploding pumpkin molds too. I should have brought one of the exploded one that survived and it is like a melted it is like walking dead meets frankenstein. I would buy that. This was an accident, by the way. This was only half of the mold that stayed on. Half fell off. People love this. They are liking these better than the regular pumpkin stein. I love that. I love this story. Did he trademark the story the name. I dont know. But they worked hard with the packaging at sams club because if you saw this in sams club, you would think this is plastic. They say they are real, real, real. It doesnt look real until you open it up and we cut it open, it is real. It is real. Thank you jane. That is a classic jane wells story. Thanks, jane. Well be backing on it next year. From pumpkins to potatoes and jet blues foray and farming. Speaking of farming. Up next. Crazy story. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Comcast business. The kids went to nanas house. For the whole weekend. Zzzquil. The nonhabit forming sleep aid that helps you sleep easily, and wake refreshed. Because sleep is a beautiful thing. The republican president ial debate, wednesday, october 28th on cnbc. What do farms and airports have in common . Not much you might think until now. This is another jane wells story. But without jane wells this time. Jet blues terminal at new yorks jfk recently added a potato farm to the roof. There it is. It is it is a 24,000 squarefeet farm equipped with 2,000 plastic crates growing blue potatoes. Why, you ask . They are used to make the signalure blue chips served on all jet blue flights. They make their own potato chips. It is to show crew and customers where the food comes from. So it is farm to table. That is farm or franken potato and god forbid they use the water from jamaica bay to water those. They will be franken potato chips if they use the water from jamaica bay. This is more of theent present url entreprene entrepreneurialsh entrepreneurialship. Im going to skip those potatoes. Are you okay with that. I understand what you are saying. I rarely fly jet blue so. So the potato chips are not a big draw for you. Not the frequent flier miles. 20 seconds what are you looking at next week. Oil you think earnings will be done. No, it will be okay. And people will be like oh, you know. And it is not good because of the oil companies. They are going to be down. And as we said, they have plenty of excuses this time around. Got to look forward a little more. Like at china and oil. Thank you, kevin. Thank you. Always fun. Kelly is back on monday. We look forward to that as well. Thanks for joining us on closing bell. Have a good weekend. Fast money is next. Thanks guys. Fast money starts right now. Live from the Nasdaq Market overlooking a rainy time square. Dan, dave, steve and guy on the panel today. Are other companies having the same type of pricing powers. The picks that could lead to big profits. And plus oil had the third best year since 2009 so why didnt the airlines take off. The answer could lead to a mile high trade. And everything went up this week except for apple. Why