Transcripts For CNBC Closing Bell 20151019

Financial trading revenue saw a drop of 15 . Hear what the companys ceo has to say about the results with shares down almost 6 on the session today. Many of its competitors are not down today. All right. We have a brain drain at yahoo evan has been talking about, two more people, high level people, have left the technology giant. We will discuss the impact of yahoos executive exodus coming up. And ibm set to report right after the bell. The companys cfo will join us live before the Conference Call for an exclusive interview, shares down about 1 ahead of that report. Lets start with chinas economy, that has september Oil Prices Lower today, dominic chu has the story for us. So, bill, kelly, we understand right now that the china slow down effect has been anticipated for quite some time. You could argue perhaps priced into the market but still we finally got confirmation of some of the worst levels of Economic Activity that we have seen since the Global Financial crisis back in 2008, 2009. As you talk about the shanghai composite over the last year an index overall thats still up 44 . So, yes, it has slowed down and this righthand side of the chart looks pretty bad. Still on the grander scheme of things we are seeing at least a more robust chinese stock market than some other ones around the world. We are seeing signs of a slow down. If you take a look at where the ripple effects are going, you talk about the oil complex, were seeing a lot of this happen, brent crude, as well as wti, you can see here on an intraday basis down 2. 5 to 3. 5 . We are seeing weakness here. Over the longer term, the last year to date period you can see a little bit of that move over there. Year to date you can see that down trend continues, especially towards the summer months. As we take a look at some other parts, we always refer to copper, this leading perhaps indicator of global Economic Activity, copper so far intraday down 1. 5 as well. You can see here over the course of at least the past year to date and one year periods as well copper has been on a bit of slide ever since we saw what happened in the spring. So commodities, oil, the metals, base ones in particular all feeling the impacts. Kwet becomes whether or not some investors find this as a bottoming process or whether this slow down leads to more bad data on the economic front. There are those out there who say can you even trust the data coming out of chinese markets. Back over to you. Sure. Thats the overaveraging question. Dom, thank you. I read the most amazing stat in the journal today, the chinese economy in total size nearly twice as large today than six years ago. Wow. Try dealing with that one. Now to Morgan Stanleys earnings mist on the street today, Mary Thompson is covering that one for us. Quarter of disappointing Earnings Results from all the big banks, Morgan Stanleys were the most dis appointsing, missed estimates by 20 cents as profits fell 42 . Revenue miss forecast by over a billion dollars in what the firm called an unusually volatile trading environment. The firm citing three challenges including an increase in legal reserves to cover a settlement, volatility in china which designated the value of an asia focused private equity fund and weakness in fixed income commodity and currency vang. Vic tumbled. Ceo james gear man who has shrunk and restructured that business brushed off decisions more radical steps need to be taken saying there will not be a knee clerk jeks reaction to one can quarts performance. The firms Wealth Management and brokerage business posted lower revenue. Retail clients moving to the sidelines. Back to you, bill. All right. Mary thompson, thank you very much. Lets talk about all of this in our Closing Bell Exchange for this monday, joining us today jamie cox from harris financial group, kenny poll carry is with us at the new york come exchange and Rick Santelli in chicago. It could be argued that all stories eventually lead to china. The growth there has kept the fed from raising rates, caused a slow down in Global Demand for commodities, on and on and on. Do you agree . I do agree. As a matter of fact, i agree to the extent that as bad as it is in china im not confident the numbers will give us a reality. They have giving you a reality of a lower glide path. I do think eventually the numbers will get more honest with the economy but i think thats over a very long time of a lower glide path. Just consider the crb index may be a rough gauge of the commodities, it was down 2. 7 today. Thats a big move. There were only two second force slightly positive, one was soft commodities the other livestock. Yes, it was aup encompassing, the dollar index backed into that strength and held on it. Also consider everything is tied in. Global trade, Morgan Stanleys returns, the days of ge when they used to garner so much of the revenue from finance, they divested from that, there is a divesting in the trading back in banks. All this is tied up together and i think that the Global Economy on the way down theres a lot of denial what it means, but it means exactly the opposite of on the way up and i think its going to be a long haul and i wouldnt look for china to give great contribution to the Global Economy, but on the other hand i dont think you are going to wake up any morning and see a dis strous release of data. Jamie, on that note i saw in your notes talking about trends being the move from north to south. I assumed you were going to say with the Global Economy over the last couple of years, but youre talk being one important trend for you being the migration of people in this country from north to south. How are you playing this theme and can it stand up in the face of all these broader concerns . I think it does, kelly. I mean, what were seeing among our client base and just in trends with real estate, people are moving out of the northeast when they retire, getting some tax arbitrage, moving to the south, being able to retire more comfortably and use the money they get from real estate in the northeast and use it for travel and other things like vehicle purchases and having fun and enjoying retirement. We saw it a lot happening from new york, new jersey, but we are starting to see it in West Virginia and maryland which is sort of a an odd transition. We dont normally see that, but its happening a lot, north carolina, South Carolina, florida picking up a lot of those people from those states which are not traditionally states that people move from. I think those trends do continue and it does spell well for people who are looking to whether or buy homes in the southeast. Ive been saying for years baby boomers need to find their retirement property early on because theres going to be a land rush thats only going to pick up pace as years going on. Kenny p. , what about this market . Were coming off of three straight up weeks despite head winds of a slowing economy and mixed picture on earnings and now this story of growth coming out of china right now. The story out of china was like rick said wasnt nearly as bad as they had prepared us for. 6. 9 was better than the expectation and certainly much better than some of the calls that 6. 3 or 6. 4 which i think people would have viewed as disastro disastrous. I also think investors and traders are almost tiring of the china story, almost tiring of the fact that everyone is trying to he will it us that china is going to steer the whole Global Economy right off the edge. People are tiring of that and focusing once again back on earnings in this country and punishing certainly the stocks that dont perform well and taking advantage of the ones that do and so, therefore, you have this own internal reallocation going on in the states. Im not necessarily surprised today the market was off slightly, off 9 points on the dow or 4 points on the s p, nothing for anyone to get nervous about at all after what weve been through. A wonder, jamie, if you do cogive us examples of the Home Builders or other sectors or companies as specifically as you can that you think will be attractive in the medium term here. I think you could look at things like travel, i mean, airlines, i came to san diego last night completely full flights, airlines are paying people to bump them off flights, 800, 1,000 to come from richmond to atlanta. Take the money and drive. Thats right. Thats exactly right. Also hotels are full. I think also in our client base it seems like we buy a vacation a week, people are going on viking river cruises, ive been want to go try one myself, were seeing a lot of our folks spend money on travel, going and using and trying to do those bucket list items that theyve been wanting to do. How do you invest in viking, jamie . I dont know how to be honest with you, i think you look at the airlines, if you want to look at those people who are looking at viking river cruises. Do they wear under armour, fit bits. The viking cruisers . Oh, vikings, i bought you were saying biking. Never mind. They do very active these days. Vikings wear that stuff, too. Kenny, is there a spark you are looking for thats going to move this market one way or the other. Between this week and next week we have a slue of earnings coming out and thats going to be focus, we have macro data and housing data later this week i think the focus is going to be on earnings and what theyre saying and what the guidance is and what people are saying about china. As soon as we want to set that to the guide in the back of everyones mind they want to know what ceos and cfos think about the contribution that the asian economy is going to make. I thought you were saying under armour because you thought sand and a halfians. Our secret is out. She only listened to her questions and i only listened to my questions. Thats what that comes down to here. Rick, we have to go here. Levels in the ten years, anything substantial happen today . No. No. Were still hovering near or slightly above 2 . I think that will continue and just to put a real face on housing and get out of the denial, you know, tomorrow were looking for starts to be around 1. 14 million. In 2006 they peaked at 2. 7, basically double the level. Even though housing has improved, we all have to acknowledge that there have been setbacks, we are nowhere near overtaking in housing and especially new family formation which has the biggest contribution into the economy. Youve got to get specific. Guys, thank you very much so much this afternoon. Hang this n. There with the cubbies, rick. 50 minutes to go in this session. The dow trying to get back into positive territory, the s p down 3, the nasdaq is in the green by 8 points. Up next, a leading yahoo analyst weighs in on the continuing brain drain at that tech giant adds two more high profile executives jump ship. Ibm posting results after the bell today, we will bring you those numbers the moment they hit the street, plus t companys chief Financial Officer speaks with us include civil before getting on the Conference Call with analysts you dont want to miss it in all about an hours time. That and plus more on viking coming up. My name is mark amann. Im a gas service rep for pg e in san jose. As a gas service rep we are basically the ambassador of the company. We make the most contact with the customers on a daily basis. I work handinhand with crews to make sure our gas pipes are safe. My wife and i are both from san jose. My kids and their friends live in this community. Every time i go to a customers house, their children could be friends with my children so its important to me. One of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. Together, were building a better california. Welcome back. Gopro which by the way is propeller with vikings rising on news that the wearable camera maker is hiring bul mccullough, the Vice President of hbo sports to be gopros new executive producer for team sports and motor sports channels. Those channels are distributed across a number of platforms including youtube and facebook. Brain draining gentlemania hoo continues as they lose two high profile jute tiffs now. Josh lipton has the latest. Marissa meyer continues to lose top butte nants as she struggles to turn around this company. The latest jacquelyn reses leaving to join jack dorseys square. Thats according to kara swisher. She will work at Square Capital which is the companys cash advance business. Yahoo also lost its svp of Marketing Partnerships and platforms, we know there has been a steady stream of executives leaving yahoo including the chief marketing officer last month, Suntrust Bob Peck says 12 key people by his count will vr left this year, thats vers us four last year. Peck says the turn around at yahoo appears challenges and that could be accelerating these departures. Yahoo stock down more than 30 so far this year. We will find out more about how the company is performing when yahoo reports tomorrow. Yahoo declining for comment for this story. Back to you. Josh, thank you very much. So the question is will yahoo continue to bleed talent as Marissa Meyers turn around plans continue to struggle. Scott kessler joins us now. Scott, you just downgraded that stock to buy from strong buy. Why . Well, bill, when you think about yahoo, theres no question that we see a lot of value there. Were still recommending the stock as a buy, we have a 12month target price of 38, but the stock has risen 15 since the end of last month, which is just three weeks hence, and the s p 500 is up just 5 . Were heading into earnings as josh indicated and frankly we dont feel so good about the executive departures and the potential Tax Implications associated with the alibaba spinoff. We see value, but we see risk. That translates to a buy for snus scott, this particular far tour im glad you brought up alibaba might have bearing on that. I guess as executive having a lot to do with handling that spinoff. Does that say anything to you about the prospects for it here . No, not really. When you think about what most people are concerned about visavis yahoo its whether they will have to pay taxes if they spin off the alibaba stake. The irs chose not to indicate that it would not be a taxable transaction and thus we are kind of left wondering if in fact thats going to be something that will hit yahoo and its Balance Sheet and ultimately its value. You know, every time i hear another story about Marissa Meyer that questions her strategies or is critical of what shes doing at the company to try to turn things around theres a voice in me that says its only happening or mainly happening because she is a woman. What do you think . I think honestly that could contribute to some of the attention and scrutiny, but the facts are the facts and the facts are that she hasnt reignited growth at the company, she got people very excited about the new executives that she was going to attract to build a new yahoo and frankly a lot of those feeks have left as was indicated and now i think there is really kind of a broader challenge, which is why wr is yahoo going and how is the morale at the company . Big, Big Questions i think for yahoo at this point. No question there have been some missteps, the alibaba story is a valid criticism as well the way its been handled, but she has had to defend herself from day one. How many executives when they show up on the doorstep the first day have to defend themselves, even before theyve started their new strategy and she has had to do that. Yeah, i think, bill, the way that i think about it is shes just a high profile quarterback type ceo. What i mean by that is she has been a lightning rod. Initially when she joined think about all the enthusiasm and excitement, it really drove the stock higher, but it seems like thats flipped and now people are as negative perhaps as they were positive at that point. Thats kind of both a blessing and curse for being a high profile ceo at this point. Just briefly, scott, again, this alibaba spinoff one of the biggest issues for them. If they had just done this back when alibaba shares were trading much higher they could have done t paid the taxes and still come out ahead relative to where we are today. Has the market gotten too bearish now on either alibaba, on assigning a core value to yahoos business without all of that that thats extremely low and in some cases negative. When we saw the barrons cover story talking about an anticipated additional 50 drop in alibaba share that largely marked the bottom. The stock has gone from mid to high 50s to now mid 70s. We have a strong buy opinion on alibaba. If people want to get involved in alibaba we vugt them do so directly instead of perhaps looking at yahoo as the primary vehicle there. All right. Good to he so you, scott. Thank you. Front page indicator striks again. Thats Scott Kessler there on yahoo. 40 minutes left in the trading session. Wur not seeing a lot of volatility from the major averages, dow down 7, s p down 2, nasdaq up 10 points. Shareholders are waiting on any news of Corporate Governance changes at United Continental after the ceos heart attack last week. We havent oochb heard officially it was a heart attack for the company. Plus price squeezing and bribery investigation right side the latest issues to hit walmart. We will talk to two top retail analyst toss find out how these latest challenges for the number one retailer could impact Walmart Stores and stock still to come. Its more than a network. Its how you stay connected. With centurylink as your trusted technology partner, you get an industry leading Broadband Network and cloud and hosting services. Centurylink. Your link to whats next. Ive got two reasons to take thats why i take meta. Meta is clinically proven to help lower cholesterol. Try meta today. And for a tasty heart healthy snack, try a meta health bar. Welcome back with the s p roughly flat on the session today here is a look at where were seeing the strength and weakness. Consumer discretionary leading the way up almost well,. 4 and and staples number two. Healthcare having a decent session despite valeants high profile troubles as well, tech up, we will hear from ibm after the close. Energy the laggard along with materials as oils down after those chinas chinese gdp gips today. It all makes sense after its happened. Lets check some of those movers. Has bow falling on the back of disappointing revenue, the toy maker blaming the strong dollar plus a fourth consecutive quarterly decline in sales an games and toys for girls as well. Urban outfitters has lost ground today, they downgraded that stock to hold from buy after the firm slashed its price target to po from 49. Citing concerns about the companys ability to keep up with other teen retailers in terms of styles and pricing. Urban outfitters down 3. 4 today. United continental grimg with though move forward following the hospitalization of munoz. We might hear more information this afternoon or certainly by tomorrow from the board of directors with regards to what happens with os after mun munoz. United at the time didnt even confirm he had a heart attack but did confirm he was hospitalized on thursday of last week. This morning the lead director from united issued a statement essentially saying they are the in the process of figuring out what happens next. In the statement henry meyers said the Company Anticipates it will today conclude the Corporate Governance process necessitated by the hospital zas of president and ceo oscar munoz. They expect to release more details tonight or tomorrow. Their thoughts and well wishes are with oscar. If you are an investor you might be saying who is leading this airline right now. In august the cfo left to go to pay pal, in september the former ceo were forced to resign because of that scandal involving flights from new york down to South Carolina and then in in month you have the ceo oscar money nose on the job five weeks he is hospitalized and some questions about whether or not he can return to his office as expected. Will he be incapacitated . More questions than answers and thats why when you take a look at shares of united while they have come back a little today they were hit hard last week as people were saying what exactly is going to happen with oscar munoz and those who were put in positions or people he was going to delegate power to as he tries to move this airline from a rocky period to a smoother period, potentially smoother period. Guys. Certainly we wish oscar money nose well, no one wants to invade privacy this is f. This is a family issue, but he is the head of a Publiclytraded Company and there are a lot more questions than there are answers and everybody is going to start assuming the worst if we dont have answers to those questions anytime soon, right . Its pretty simple. I think thats a fair assumption. And a lot of people have said to me, well, why dont we come out and say what happened to him and how long he will be gone. They say not have that information. Im assuming based on conversations i have had with people at the airline that the board does not have all of the information that it probably would like to have from oscar munozs family. We dont know that for sure but that is likely one factor behind why it has taken them so long to give us clarity. Phil lebeau, thaengs very much. 35,000 syrians have been displaced as air strikes continue near the city of aleppo. Aid organizations say refugees fleeing their homes are living outdoors without food or water. The muslim tina rested for bringing a homemade clock to school is heading to the white house. He will participate in tonights astronomy night, but Officials Say he will not get a oneonone meeting with president obama. A sunken barge is snarling ship traffic in a busy houston port. The u. S. Coast guard says the barge was parked and tied to a towboat when it began taking on water. No injuries have been reported. Uber and at t teaming up to bring riders free football. Select suvs will soon have Live Streaming College Football on tablets mounted to the cars head rest. The Pilot Program with last two months in four cities. Thats it, you are up to date with the news update. See you guys in a hour. Thats a great idea except you never want to get in the car. How long are people in the car i guess if they are going to the airport. You are in for a couple plays and out. If you get stuck in traffic, though it would be nice to have. Truth. Do you know what the cities are, sue . It is detroit, houston, and atlanta to start, thats where they are going to start. One of those teams is doing well this year. I know. Exactly. They should have picked the cities based on kind of the football have it change along with the rankings, exactly. Boston or something. More to come. I guess. Our sue herrera. See you later. 30 minutes to go to the end of the session. Despite the china gdp miss which is hurting commodities. When we tomorrow exact a top trader will tell us what hes watching as we roll through the final and most important half hour of the trading session. Also coming up, ibms chief Financial Officer smoking with us exclusively after they post results after the bell. Welcome back. Were mentioning how the major averages in the stock market not moving much, but oil is, wti and brent down sharply today. Brent down 3. 5 . The price of oil has been in trading range between 45 and 50 since august and all the volatility at that time. A lot of the growth in china, transportation average, though, even though they have had a lot of volatility there, transports are higher today, up a quarter point, bounce frg that big selloff we saw in transports on friday, kelly. Thats not the only glimmer of positive momentum in this market. Im here with steven guilfoyle. Youre saying youre watching 2035 on the s p 500 for signs of momentum in in market. Sure. Thats the level we challenged earlier today. We sold off a bit, got the bounce almost where we thought we might get t had a tough time around 2028 but had momentum to the upside. If we could challenge 2035 and deep it and top it im feeling good. The chinese gdp figures, certainly commodities are reacting that way we we seem to be shaking that off. They shook off the chinese numbers around the globe. If we got something awful, we probably would have had some crazy rally into that was a lot of letters. Im good at letters. So that didnt happen and now i guess its back to this question of, what, watching the u. S. Macro data . How much fnds on ibm, maybe chipotle after the hour reporting earnings. Ibm, if you are a home gamer, thats the one for you, you can probably play a straddle and maybe get out okay, the others like amazon and chipotle theyre too expensive to play both sides. These markets get a lot of criticism for being too short term focused. Walmart, ge, ibm we have huge billion dollar turn around strategies unfolding before our eyes. This is a tricky time and tricky space. Some people are trying to set up for a santa claus rally but smart people are saying not this year. You have to do your homework and pick your own direction here. Thank you so much. Let you get back to it. Lets talk about walmart. Bribery west coast hitting that company yet again. The wall street journal reporting this morning that the retail giant is facing allegations of bribery in india, this as a threeyear federal probe into walmarts operations in mexico are wrapping up and will likely leave the company face ago far less severe punishment than was initially expected. Lets bring in two respected retail analysts with their review of walmart. Better flickinger and jan niffen. Good to see you both. Bert bert, its almost like, never mind. Doesnt look like much is going to pan out in mexico and now charges in india. Bill, to your point on mexico, walmart spend over 400 million in investigations and compliance and as you referenced it looks like not much is going to be made of that. In india there may be similar im use, does not look like there are going to be charges or foreign corrupt practices act charges against the company. Its tough, though, because in some of these Foreign Countries its a way of doing business. Sometimes the retailer or the supplier thinks the developers handling all the local issues, doesnt work out that way sometimes. The real story here and it was interesting to see the wall street journal basically saying, look, that New York Times story about walmarts bribery in mexico not necessarily as much as meets the eye, i guess, as much as people feared when the stock sold off sharply when the news first broke a couple of years ago. What do you do with walmart . Do you feel reassured by what youre finding out . I feel very reassured by what im finding out. I like walmart for longterm investors. I think walmart has gotten cratered based on its meeting last week, nothing to do with the bribery charges. I think the bribery charges are i dont want to say much adieu about nothing, its usually a local guy, pays money out of his pocket, the senior people dont know and it goes away with a fine or with a slap on the wrist because its never at the senior level of a major publicly traded cooperation. Its always done at the local level. On the bigger front with walm t walmart, this meeting last week, they basically set a new bar and the market set a new bar on the stock. This they can deliver now against that new bar their stock should do well and theyre doing all the right things. Theyre going to be an omni channeled retailer like in order syndromes and macys theyre going to invest in price, theyre pushing all the right buttons, paying their people more, Getting Better cooperation, cleaning up the stores, doing all the right things. The question is can they get paid for that. Let me push back a little bit, jan, and tell you the critics would say to all of that what theyre seeing is higher expenses because they are paying their employees more and add to go their hours at a time when demand is going down, especially from places like china and now we have this reset that they have gone through and theyre playing catch up in ecommerce against amazon which now by the way has a larger market cap has walmart does. So what are you waiting to happen thats going to push that stock price higher . Im waiting for things to move on the walmart front. Im waiting to see higher sales based on these things theyre doing and a better omni channel experience and better sales online. If that happens they will get paid for it. But they are competing with a guy with a zero cost to capital so it is a problem. Burt, how do you like the companys longer term prospects now that we know where theyre investing an focusing their attention and why not. I have been counseling cnbc constitutional and individual investors that walmart is a deep value trap for the last two years, continue to see it that way. Were facing 1,000 day retail ice age starting next year, its going to affect food, drug, dollar and discount stores. Walmart is doing a lot of the right things but they are like the roman empire that had three great centuries and three declining centuries, walmart had three great growth decades, though they are going sideways, not winning in asia, not winning in latin america, got run out of europe, run out of south korea, they have got very good leadership now but there have been problems passed along for 15 years including walmart. Com failing three times during those 15 years. Just to be clear when you say a thousand day retail ice age are you referring to walmarts new guidance or a broader retail theme . Broader retail but walmart is a leading indicator as is urban outfit sneers why an ice age . Demographics, people in the middle class and fixed and limited income are facing higher costs in nine of the ten disposable areas, price is the paramount consideration for them, being smarter shoppers, only buying for need plus the trend of thrifting, people arent buying from mainline Retail Stores as much as they had been, particularly with younger shop sneers a lot of good will shops all over the country, too. Butter fleck i thinker, jan niffen food to see you. The dow moving actually a little lower, off about 16 points while the s p is down 2, the nasdaq up less than 10. Ibm has made big moves into analytics and the cloud, we will talk exclusively to Martin Schroeder and see if those moves will help the earnings release. The housing situation looks clearer today as optimism hits a tenyear high. Here at td ameritrade, they love innovating. And apparently, they also love stickers. Whats up with these things, victor . We decided to give ourselves stickers for each feature we release. We read about 10,000 suggestions a week to create features that as traders wed want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. Who reads all those . He does. For all the confidence you need. Td ameritrade. You got this. [ thats a good thing, eligible for medicare . 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. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. Its my favorite story of the day, Weight Watchers surging more than 100 on news that billionaire Oprah Winfrey is buying a 10 stake in the company l assume a board seat, at the same time she has an option to acquire an additional 5 of the company down the road, but she invested 43 million. At fridays Closing Price of 6. 79, as you can see there the shares are v. More than doubled today trading over the 14 mark gives them a market cap of over 800 plus million signed. She has more than recouped her investment already. She gets a board seat, she can get options, buy another 5 here as well and she will be appearing in ads. Much more to come on this story. A lot of competition. We have finance guru Jillian Michaels giving us her reaction in the next hour of the show. She will join us at post 9. Its a big week for housing with Housing Starts due tomorrow, existing home sales on thursday but home Builder Sentiment out this morning picked off the data parade. Diana olick shares some of the builders optimism right now. It was no question, a solid jump in october to the highest level in a decade, but theres Something Weird in the numbers and i will get to to that in just a second. A 3 point gain in october to 64 on the National Association of Home Builders monthly sentiment index, thats up from a downwardly revised september reading, 50 is the line between positive and negative. A year ago sentiment was at 54. Here is what continues to baffle me, though. Isntment is back to where it was in october of 2005, but Single Family construction in 2005 was at 1. 7 million and the latest analyzed reading for this year is around 700,000, less than half. So i guess for the builders the optimism is all in the future. Future sales expectations were the strongest component of the index jumping 7 points 2075, current Sales Conditions rose 3 points to 70, confidence in buyer traffic was flat at 47 that one still in negative territory. Builders are citing lack of labor and lots as head winds but en investors say easing Credit Conditions could really help going back into 2016. Our guest at the top of the hour said he sees such a strong pattern in people moving from north to south, especially the baby boomers. Is that showing up in the regionally in a strong way in the data . No, actually the biggest jump were seeing it in the west, thats in the confidence and thats where people build most, south comes in second. You are seeing a lot of new jobs coming down south and baby boomers perhaps looking for the warmer climates. What we see more is demand for big cities. Thats what we will talk about tomorrow when we get those Housing Starts in multifamily. Our diana olick watching the housing market. 13 minutes to go and the dow down only about 6 points, the s p down 1, the nasdaq still in positive territory today. Calm down, thea the message from anthony chan, the chief economist at chase. He is sharing with his clients and sharing it with us, tell us all about why we should calm down, up next. We can help guide your investments through good times and bad. For over 75 years, our clients have relied on us to bring our best thinking to their investments so in a variety of market conditions. You can feel confident. In our experience. Call a t. Rowe price retirement specialist or your advisor. To see how we can help make the most of your retirement savings. T. Rowe price. Invest with confidence. All right. Very interesting. Ten minutes to go here. Weve been hearing rumors that the imbalance was to the buy side in a big way, 1. 1, 1. 5 billion. But the averages havent moved. So its entirely possible even at that large imbalance that we are going to see a pairing off as we go to the close here, a lot of people lying in wait or lying in the weeds as one trader said to us ready to sell going into the close. Dow still down about 10 points, not much movement. Anthony chan from chase joins us with words of soothing words telling us to calm down. What are we upset about . I think we need to calm down. We realize that market collection corrections are a way of life, we have had 4 of them since the 1940s and sometimes we retest, 67 of the times that we have corrections we retest which means we move an average of 4. 3 lower, but on average it takes 3. 8 months to get our money back w that as a backdrop, if you have an investment of three to five years we can afford to calm down despite all the volatility. Stocks are taking in stride, certainly the china gdp figure, why do you think it is that the consumer names, discretionary, some staples are starting to outperform. Everybody knows that china is slowing down but also going through that transition. If you break down the chinese real gdp numbers you clearly see that. The Service Sector actually grew a little faster, 8. 4 and of course the Manufacturing Sector growing at 6 . So they are throwing a ton even u. S. Consumer names. Is that because they may have ex poesh tour to china. Is there something more we should read into that . You think here in the United States we know that the economy is going to show some signs of life and of course that means the discretionary sector will do better, lower kmerj price this is year will throw almost 100 billion into the lapse of u. S. Household. All that is going to support u. S. Discretion naers and in fact employment is not doing so bad. Just despite the one money that was a little weaker, we do see good positive trends. We just had a respected retail analyst tell us that he could see a thousand day ice age for the consumer here for the Retail Industry Going Forward. Just, you know, not openly about china, but domestic demand is just not there as well right now. I guess you will disagree with that. I will disagree with that. I believe that there is a lot of momentum there as long as the employment numbers are Getting Better by the way, look at that National Association of Home Builders index, those guys with optimistic, thats not a small ticket purchase. If people are willing to buy houses i will assume theyre willing to buy a tshirt or pair of slacks or dress at the mall. Ibm reporting after the close. Any thoughts on that one . Thats the older technology, we believe that its working really hard to try to reform itself, but im a little more excited about their new technology. All right. Anthony, always good to see you. Thank you for stopping by. Anthony chan. We have a news alert on united airlines. More details now with phil lebeau. Not a whole lot, but a little bit of information. It comes from the family of ceo oscar munoz. They have sent a note, an email essentially to united employees essentially thanking them for their support. They said that they look forward to a healthy recovery. Whats interesting is that when we were first alerted to this and we talked to some people inside united airlines, the interesting thing is oscar munozs family that sent this note. Its unclear in f. Oscar munoz himself has actually sent this. It adds a little bit of some clarity, but also raises some questions as we wait to see exactly what the united board of directors plans to do in terms of leadership at the airlines, but thats the latest, guys, back to you. Phil, was this a press release or a letter or a memo to employees. Not a press release, a letter sent to united employees from the family of oscar munoz. Thats an interesting move. Okay. Thank you so much. Phil lebeau with the latest there. We will take a break, come back with the closing count down. Then after the bell ibm results will be out. We will break thoem down exclusively with the companys cfo Martin Schroeter. Youre watching cnbc, first in business worldwide. 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. Just inside three mens going to the close. We are starting to move a little higher, the dow the selloff on the open this morning, sideways much of the day, not a very volatile day, pretty narrow trading day and here we are up 7 1 2 points as we head into the close. Oil volatile day there, down much of that because of the chinese gdp numbers today. Down 2. 5 on wti back to 46. As i pointed out for the last few months here weve been stuck in a range between 50 on the high skied and 45 on the low side. Guy favorite story of the day, bob pisani, Weight Watchers, one month chart, oprah buys 10 of the company, and its up a cool 106 today. How about that for an investment. 43 million. Oprah saying what else can i buy now . Other traders more to come on that story. Jillian michaels will be with kelly next hour to talk about that is correct among other things. One last one, ibm reporting earnings tonight after the bell. Boy, remember the day when ibm was the bell weather for the market and economy. Ibm since 2012 has been looking like this and the s p. The s p is up 60 since end of 2011, ibm is down 17 . Again, the simple story, its very simple story, the core services, core business and that is Software Business as well as services is declining much faster than they can get the new business and thats of course the big data business and other businesses. All those former giants are scrambling to make this transition to more relevant technology, the cloud and other technology. One other company that will be interesting after the bell, steel dynamics, stlv we already knew. This is one of the biggest steel manufacturers in the United States. Whats important with them, bill, they do a large amount of business in the scrap steel business and they buy strap and they of course make new steel out of it and they are one of the most low cost producers of steel in the United States. They are a very effective competitor to china and they usually have a lot to say about the cheap imports of chinese steel and what the situation is there. So thats one of the things i will be reading, thats also after the bell. Thank you, bob. Ringing the bell the chairman and ceo of consolidated edison, they are celebrating National Cybersecurity Awareness Month at the nasdaq ringing the closing bell. We will get ibms earnings and Jillian Michaels talks about oprahs big investment in Weight Watchers international. Coming up on the second hour of the closing bell with kelly evans and company. See you tomorrow. Thank you, bill. Welcome to the closing bell. Im kelly evans. We did on the close, we had a big buy order. Looks like perhaps that or other factors just enough on the bell to push us into positive territory, the dow going out with a gain of 18 points, the s p adding 1 point, 2033 is the level there, a lot of traders watching 2035 after we held 2020 last week, the nasdaq, theres four decimal places for you, it was up 19 points today. A pretty good. 04 rally. We are waiting on ibm earnings. We will bring that right to you. Joining todays panel we do have cnbc contributor elon moy with sara eisen and guy adami and charlie making a special appearance as well. Welcome. I guess, charlie, let me begin with you, guest first here. What do you make this have market, the fact we rallied despite oil being down significantly again. Consumer names were pretty strong. That was mostly an etf end of the day trade, not much to read with fr it. A lot of people spending a lot of time looking at the earnings coming out this week. We have a lot of head winds, strong dollar, weakness overseas. We are all wondering how bad are these earnings going to be. Are you still cautious on this market overall, charlie . Longer term very positive, short term frankly its going to be a tough quarter here. The eps is affected by the value of the dollars that you earn overseas which just arent as strong. Weve got weakness in asia, weakness some weakness in parts of europe so i think ibm is a perfect example. Were very longterm bullish on it, but i think it will be a choppy quarter. You brought up the dollar. Share ration today the dollar rallied. Just as people are wondering how much weaker it will get a different story when we look at it here. The focus is on the european bank, there is some selling of euros into the ecb, with the idea they might have to do more qe not as soon as this week but the focus and talk is heading into the fall owe pension alley december or next year sell the consumer discretionariy with the big central bank meeting. Its also the commodities story. You have the dollar strengthening, weaker commodities, reasserting themselves, a mixed reaction to the chinese gdp number, 6. 9 looked a little better, but then it was below 7 , some were worried, what kind of signal does that send. That will be a question mark. In all sort of reverberations from it. Each today electiones in canada, that economy struggling, theres economies about australia, the smaller once as well. Again it comes down to can the u. S. Continue to carry the water for everyone else. I was surprised there wasnt more reaction to chinese gdp number today. To the extent you are expect to go see any type of clarity especially coming out of the fed i dont think we will get it in october. Why not . I think you are hearing out of the committee is stark disagreement between where some of the doves fall and where some of the hawks fall. That was the purpose of the some of the comments we heard last week from governors brainer and travulo showing the full level of discourse and debate going on within the fed. December is not a guarantee. What remains the feds best case. Its unclear where the consensus is going to come from. The october meeting there is still a lot of uncertainty. I think you will see that reflected in the statement. Guy, this market again showing bifurcation, those consumer names doing better but real weakness in energy, real weakness in materials. What do you buy here . The energy and the banks especially, jp morgan, Morgan Stanley and Goldman Sachs report, i know goldman bounced after, but none of those three were really any good in terms of reports and i still think there is another leg lower in the energy field. The ovx, oil volunteering tilt index continues to stay above 40, that is heightened in terms of where its been historically. What do you buy here . Well, i think you pick and choose. Weve been talking about facebook, intra earnings on this show for quite some time. I each like goldman intra earnings. I was right for the wrong reasons. The stock about rally but it was a terrible quarter. I will say this, this ibm quarter we will take a big deal of it, but ibm is about to say is ibm specific. Ibm looks like its beating the estimate of 3. 30 for its earnings. By 4 cents, reporting earnings of about 3. 34 a share. We will have more on this in just a moment. Before that, though, charlie, guy brought up the financials and lets show you whats happening as ibm shares quality. Morgan stanley was also hit today significantly. You have a lot of financials exposure, charlie. What did you make that have report . It was a lousy quarter for the fixed income commodities and currencies business. If you think about an investment bank, they tend to own a lot of corporates and short governments to hedge it. When you get widening spreads, a Morgan Stanley is going to have losses. They also lost, theyve got private Equity Investments in asia where they had to give back some of the carried interest. The bottom line is that Morgan Stanley is trading just a hair above tangible book and its a Better Company than that. It should be trading at 1. 5, 1. 7 times booked and yet its right about at the liquidation value of the company. Lets get back to ibm. Shares under pressure after showers on its earnings result. It did beat the revenue number, though, is light by about 300, 400 million chlt josh lipton has the details. A little light on the top, just looking quickly through the release those Strategic Imperatives, so what ibm refers torques thats cloud, kelly, analytics, security that was up 17 as reported. It looks like cloud revenue they are saying, kelly, was up more than 45 as reported and just looking through the Major Business lines here, in addition to those Strategic Imperatives, services, global tech services, revenue down about 10 , Software Revenues from the Software Segment ibm saying also down about 10 . Hardware, revenues down it looks like about nearly 40 year to year. On this call we know ibm undergoing this big transition like a lot of traditional i. T. Vendors, that call starting at 5 00 p. M. Eastern and we will be on t back to you. Thank you. Guy, whats your early response here as the shares are weaker on these results . Should be weaker. I think they lowered their guidance, im going through this now as well, but you have to ask yourself, this is not the first time this has happened. This is now two and a half years of similar reports and whats the right multiple . I asked, whats the right multiple for a company with declining revenue, declining growth in in type of environment . I would submit anywhere from 8 to 9 so lets call it 8 1 2. They are going to earn 16 a share unless they ratchet that had down, you have 139 stock and thats where it should be trading. Guy, they did revise their full year 2015 eps guidance to 1475 to the low end of 1575. They are a dollar lower, the top end 75 cents lower reflect whag they saw at the end of the Third Quarter they are saying of course this company has said they never thought the transformation would be a straight line. Listen, guy, it is a different story with a company seeing some declines but not doing anything about t in this case theyre certainly trying. Yes, kelly. Im not trying to ive been negative on ibm for a long time now, the people that fast fast money and this show know that ive been talking this stock lower for quite some time because it is a declining company with decelerating revenues. They took that number down from 16. 07, i think, even if you take the midpoint thats 15. 25 and, again, whats the right multiple for that . Even if you gave them a 9 multiple this is a sub 140 stock. At a certain point its fish or cut bait. Everybody runs in because warren buffet is low on the stock i get that, but his time parameters are much different than yours and mine. We also have charlie who is a shareholder. Are you satisfied with the results . Yeah, im going to have to go through t i do think they are not declining as fast on a Constant Currency bases. A lot of those declines look worse than they are because of currencies. They also have a big emerging market market, rick business, those businesses have been soft. Lastly, there are divestitures, the organic numbers arent adds bad as what numbers you just read. Clearly not good, but in a transition period and were getting close to that inflection point. I actually have the breakdown geographically. It was interesting to see interested to see the consumer discretionariy impact. For the brick countries charlie that you mentioned revenues down 30 but if you take out the currency impact only down 7 . Still underlying weakness but obviously this is a company thats getting slammed by the strong dollar. Joefr all Third Quarter revenue hit by currency to the tune of 1. 9 billion. The full year expected to be hit by a billion dollars. Make you feel more comfortable, charlie or look at the stronger dollar and know this could exist. I think were going to start lapping the stronger dollar. I dont think its going to keep appreciate yagt at the rate it has and i dont think that these emerging Market Countries are going to be in as bad shape a year from now. Ibm is well positioned in things like big data. In the cloud, in software. Their margins have gone from 35 to almost 50. Things are turning but its been a tough couple years. On that point about margins which are up not only on the quarter but over the past decade, 50 call it from 40 . At what point, charlie, is a shareholder i know theyve tried maybe to get activists involved, some of the shareholders have in the past. Would it benefit ibm to see its growing business with better Profit Margins spun off or increase the focus on it some other way while the rest of the business is shrunk . Look, theyve done a lot of that right now. This is you know how when you make an acquisition its always in these Interest Rate environments, the opposite happening for ibm. Theyve been selling off businesses with slow growth and bad ma jins and thats going to be healthy longer term but any divestiture you do in a 0 Interest Rate environment is going to be die lieu testify to earnings and thats what theyre seeing. Im going to push back on that nine times pe. With modest low single digit growth like the staples, the food staples, this is trade at 13, 14 times, no 9. Guy, want to respond to that . Good luck with that. This dollar story is not a one quarter story. This has been going on the last nine months to a year. Something has got to give. You cant say the currency affected our earnings when you have people that are supposed to be hedging your currency risk. So somebody is doing something wrong and if 9 is not the multiple in in environment, this is two years now where theyre trying to dig themselves out this have hole. I think 9 is the right multiple. 13 is the right multiple, there you go, there inn lies the rub. I think this thing goes below 140. North american revenues were down as well. If it was just the strong dollar that would not be the case. Ibm down almost 3. 5 after hours. Charlie, a pleasure, thank you, sir, from aerial investment, guy, always appreciate it assel. Much more coming on with fast with guy and the gang. The latest headlines from ibms Conference Call and analysts reaction as well. Much more here on the earnings, we will dig deeper into the results in just a little bit with the companys cfo, chief Financial Officer, Martin Schroeter in just a moment. Valeants earnings beat and strong guidance not enough to overcome the drug makers pricing controversy. Shares down almost 8 today. We will look at whats next for the Pharma Company when we come back. Re earning enough cash back from bank of america to take their act to the next level. Before earning 1 cash back everywhere, every time. 2 back at the grocery store. And 3 back on gas. Vince of the flying branzinos got a bankamericard cash rewards credit card, because he may earn his living jumping through hoops, but hed rather not earn cash back that way. Thats the spectacle of rewarding connections. Apply online or at a bank of america near you. Im a gas service rep for pg e in san jose. As a gas service rep we are basically the ambassador of the company. We make the most contact with the customers on a daily basis. I work handinhand with crews to make sure our gas pipes are safe. My wife and i are both from san jose. My kids and their friends live in this community. Every time i go to a customers house, their children could be friends with my children so its important to me. One of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. Together, were building a better california. Welcome back. We start with an earnings alert. Our dominic chu joins us. Kelly, what were watching are shares of flex tron knicks, you can see here on your screen after the company reported, of 27 cents a share that is correct beats the average analyst estimate of 25 cents a share. Also revenues coming in better as well. 6. 32 billion. Analysts were looking for on average 6. 17 billion. They also have forecast numbers. Current earnings per share between 28 and 34 cents a share. Also Current Quarter revenues somewhere between 6. 2 to 6. 8 billion. Thats just about in the wheelhouse, 6. 61 billion was the average analyst estimate there. Again, this company flex tronics an earnings beat an sales beat, forecast seems slightly better than analysts were looking for, a stock up 7 in the after hours session. Valeant pharmaceuticals one of the big losers on wall street. The stock down more than 30 over the past month on concerns about the companys drug pricing stralt gee. Me go terrell has more on the fallout. That beaten race for the third kwart for vaul yant not enough to offset the concerns about the business model. The ceo addressing some of those drug pricing concerns saying that taking all of this environment into context they are pricing in more modest price increases for their drugs over the next year. They also say they are going to pursue fewer if any transactions what have they call mispriced products, presumably meaning drugs where they acquire them and think they can rise the price on them. They are considering the sale of their neurology business but which some analysts are saying is a business where they actually get most of their growth from raising the prices of their drugs. Potentially spinning that out an focusing on products where they have to ro invest in r d folks not seem to go like that strategy and still worried about the government where they are getting invested by the government. They are considering a potential buy back of their stock. They dont think theres any acquisition which would add more value than them buying back their sales. I thought this was interesting interesting to read the sell side on val yan. A lot of people saying its completely over done. The average selling price for valeant products only increased 13 . How did it become this poster child for higher prices there were several drugs where they raised the price by astronomical amounts, 500 . That happened to hit hospitals like the Cleveland Clinic which came out on this program saying it cost them 8 million more than they expected. That kind of thing is really fascinating. Even the more analysts on the call calling out management saying you are reacting in this way and saying you are not going to raise prices by as much next year, arent you saying that all of this criticism was justified . Those are an interesting question. The mic pearson saying weve got to a dpt to the current current environment. We have to talk about flu shot season as well. I was trying to figure out if i should pop in and get mine. Did you get your flu shots . I havent yet. I knew the question was going to come up. The question, okay, 150 million americans expected to get vaccinated. Thats right. Why do we have to do this every year . The flu is a tricky virus, it has ways knew dating. Last year we didnt get it quite right and the voon wasnt as effective in preventing flu. This year they say it is tracking pretty well. The holy grail in flu vaccine is a universal vaccine. We talked to researchers at the nih. Where they are working on a universal vaccine, they estimate were five to ten years away. But were only five to ten years away, this is great news. Lets roll the clip. Roll the clip. Roll the sound. I think were making extraordinary progress and we can sort of see the light at the end of the tunnel of getting towards an influenza vaccine. So that is great news. Companies from glaxosmithkline are all focusing on this. Its interesting because you think a product that takes away the annual business of a flu shot might not be one they want to pursue if you only get one time revenue boost from a universal vaccine but fwlaks owe smithkline tells me the first person or company that comes out to develop that gets a huge pose piece of market. I thought was story was so fascinating that there are multiple types of flu vaccine covering different numbers of strains. What are medical companies and doctors required to tell you both about the options available to you for a flu shot and how much they will cost you. In terms of how much they will cost you under the Affordable Care act if you have insurance Preventive Care is covered to your flu shot should be covered without any outofpocket costs to you. Some of these new vaccines that cover four strains might be more expensive. Might be more expensive to your insurer. Its interesting folks dont know that there are different types of vaccines out there and might not necessarily tell you depending on which one is in the office. You can always ask. Folks do go in and they know that there is a nasal pray, flu mist versus a shot but they dont necessarily know there are certain vaccines that cover four, certain that cover three and for holder folks there is a higher dose vaccine that is more effective for them. I think ive already gotten the flu this season. Could i get it again. You would know if you have the flu. You would be like completely hit by a truck. Would you know. Im still getting the shot. We should all go right after the program. Up next, an exclusive interview with the cfo of ibm. That stock falling after hours after the company cut its fouryear guidance. Find out when investors will see the payoff from the move to the cloud. Mike huckabee joins us to make his tax plan pitch and explains how he is staying in the race despite serious fundraising problems. Stay tuned. Make healthcare more personal with patientcentric, digital innovations; from selfmonitoring devices that can interpret personal data and enable targeted care, to Cloud Platforms that invite providers to collaborate with the patients they serve. Thats why over 90 of the top 25 Global Pharmaceutical Companies are turning to cognizant. Our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way Clinical Research sites collaborate with pharmaceutical companies, and enhancing Patient Engagement with innovative platforms and solutions. Our populations growing healthcare needs present growing opportunities for our clients to advance the future of medicine with digital, and improve the quality of lives. Or the freedom to choose what doctor you want to see. 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Ibm just out with its results, the stock lower by about 3 after hours as the company missed on revenue and gave weak four year earnings guidance. Joining us is ibms cfo Martin Schroeter. Welcome to the program. Thank you, kelly. Lets begin with your shares moving lower. Looks like partly because of your revenue miss and relatedly because of the lower guidance that you see here. Whats going on . Why the big miss . Sure. A few things to note, i think, kelly. First, within the revenue we report we obviously have a pretty substantial currency head wind that we continue to deal w as we transform our business we continue to move out of areas where we dont see longterm value. So across that across our revenue base thats about 13 points of impact. Excluding those two in the Third Quarter we reported a down about 1 revenue. Now, within that 1 we had very good performance, again, where we are investing our money which is our Strategic Imperatives, thats a shorthand for our cloud business, Analytics Business, security and mobile businesses. Very good performance again across the Strategic Imperatives, very good performance again in our mainframe and power business. We continue to see price pressure in our storage business and we continue to see price pressure in our Global Business services business. So when we put all that together with a weaker transactional business than we expected we put all that together and see its prudent for us to recognize as we go into our largest transactional quarter that the transaction slow was a bit slower than we would have liked, we from a transition in our gbs business and we want to continue to invest because it is the right course for us. If you exclude currency and divestitures the group that you are eye lighting is up more than 30 on the period. All the same the backlog of services that people are also watching as a barometer here, 122 billion shy i guess of the 140 billion number that weve seen in the past. What are you seeing in terms of customer demand . What regions of the world for you are weakened . Is china is big factor each as north america looks like its a bit of a challenge as well. Well, the backlog is a result of has an impact of currency as well. If you take out the currency impact from the backlog or backlog finished Third Quarter up 1 year to year. I think what that reflects is probably the most contemporary Global Service Delivery Organization and a set of offerings now that are moving our clients into the areas they want to be. So moving them into the cloud, moving them into mobile. If you were if you were to look at the relationship we recently signed with etti hot airways, within that multimillion dollar transaction is a substantial amount of cloud opportunity and a substantial amount of opportunity to get them into a more mobile world. Now, we see those opportunities across every industry, europe, in fact, has been particularly active over the last few quarters, we had a substantial will you have tan is a transaction recently and also signed a deal with a Company Called he have ri which will allow us to build out that same contemporary i. T. System for their enterprises. Specifically on china, we had the gdp figures last night. We read that you guys are opening up some of your code to satisfy the chinese regulators. What trends are you seeing on china . How is china doing for ibm . Well, a few things, first all on the code issue its not new news. Were doing things the way theyve been done which is we allow Many Organizations to look at the code to make sure that it doesnt have any back doors. This is the way that you supply with export regulations here in the u. S. So thats not really new news. The demand patterns in china continue to be for us, for us to move to the Higher Value Services such as cloud and such as our mobile engagements so were seeing those demand patterns in china, no different really than the rest of the world. They want the most contemporary and globally enabled platforms so the mainframe continues to do well, weve added new mainframe customers again around the world, but also in china and the Power Platform there continues to be continues to be quite quite relevant in the marketplace. You know, were almost out of time, martin. Two quick questions. I want to smoke in here. The first obviously is as we see all of the watson ads that blanket television in this country, is watson going to be are we going to see watson on the Weather Channel . Whats going on there . Watson is as you know our view of how the Analytics Business will evolve. So today we have a pretty substantial Analytics Business, it was about 17 billion last year and thats a very powerful set of tools that help our clients make the most of their information, but the next evolution of the Analytics Business is really around cognitive and the simple way to think about that is that you cant Program Computers anymore to understand all the relationships, you need a system that can ingest both structured and unstructured data so that you can make sense of whats going on in the world and watson helps you do that. So watson is amicable not only in Financial Services and not only in healthcare where weve built our healthcare business, but it will be changing industries as more and more Industries Learn how to build smarter systems that learn as they go and can ingest massive amounts of data in order to find the relationships that they are looking for. Well, i can see weather being an asset for you guys. I will leave that issue for the time being. Finally just ask you if you have this Services Strategic imperatives area thats growing and doing nicely, at one point would it make sense for you financially to spin it off, draw more attention to how its doing . Is there a structure that you think could unlock more value for shareholders Going Forward . Keep in mind that the Strategic Imperatives are a shorthand, they are a distinct businesses but they are a set of businesses that our clients are moving to. So when we think about our business, while we tend to shorthand it to Strategic Imperatives we think will b. How to help our clients move to a hybrid cloud, how do we help our clients build the most contemporary Analytics Platforms and also have Large Businesses helping our clients deliver productivity. Our clients are operating in an environment where theyre trying to drive productivity in their i. T. Environments and want to reinvest. While its a shorthand it is really it is not a set of businesses you can group together necessarily and think about and think about as a single piece. Well, we thank you for joining us. I know you have a call to get torques martin. Thank you for your time this afternoon. That is Martin Schroeter, the cfo at ibm. Lets send it out to dominic chu for a market flash. A couple different Semiconductor Related stories. We will lead with possible deal news, shares of sandisk, you can see they are up about 7. 5 , relatively heavy volume, 117,000 shares are traded this happening on bloomberg headlines that san dis sex said to be in advanced talks to sell itself possibly to Western Digital which is another hard drive or computer storage device maker. The story goes on to say this is, again, according to people familiar, so, again, sources at bloomberg saying this an agreement between the two could come as soon as this week although the caveats typically apply, a deal has not been inked and so still fall apart. Watching those in the after hours. Also sharing of ram bus are down by 10 on an earnings report. Rambus sharing down on relatively light volume, 19,000 shares. Reporting earnings of 14 cents a share. Revenues a bit light, 74 million, analysts were looking for 76 million . They also have a Current Quarter revenue outlook that fell below analyst estimates, they also made comments saying achieving revenues in their stated range will require that the company sign new customer agreements for patent and solutions licensing among other matters. The forecast perhaps dragging things down. Rambus down 10 albeit on volume. Dominic chu there with earnings. Time for a cnbc news done date. Lets get over to sue herrera. The campaigns for republican president ial candidates donald trump and dr. Ben carson are asking for secret service protection. A department of Homeland Security official confirm to go nbc news the agency is reviewing the request but that a final decision has not been made. Online fantasy football site draft kings said an independent investigation by a law firm hired by the company has found no evidence of wrongdoing by one of its employees. The report released today says the employee did not use inside information to win 350,000 on competing fantasy sites. U. S. High School Graduation rates are rising. 36 states saw an increase in graduates during the 2013 to 2014 school year. The department of education numbers also show black and hispanic students saw the most substantial increases. And where did dogs come from . Well, Cornell University researchers went digging for some answers using the dna of 550 dogs from 38 countries. Their conclusion is mans best friend first originated what is now near now nepal and mongolia. Thats the cnbc update. Theres a debate whether it was europe, egypt, asia. Sounds like the debate over humans, still. Absolutely. Youre right. Our sue herrera. That last dog was so cute. As gop president ial candidate Mike Huckabee facing a cash crunch . He will tell us himself when we come right back. 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. Starts at 6 30 a. M. On the vo rush hounose. Und here but for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. My here at c. K. Mondavi. On, the Vice President of operations to make this fine wine it takes a lot of energy. Pg e is the energy expert. We reached out to pg e to become more efficient. My job is basically to help them achieve their goals around sustainability and really to keep their overhead low. Solar and Energy Efficiency are all core values of pg e. Theyve given us the tools that we need to become more efficient and bottom line save more money. Together, were building a better california. Its gotten squarer. Over the years. Brighter. Bigger. Its gotten thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. Welcome back, lets begin with a news alert on humana, dominic chu whats happening. A blockbuster deal gets its approval from humana. They have approved the pending 37 billion acquisition of their company by a fellow Health Insurance giant aetna. Earlier today aetna shareholders approved that deal. Both shareholders is slats had near unanimous decisions often approving the deal. Aetna humana, we will bring you more details. Entitlements a hot button issue in the race for the 2016 white house. Rand paul sat down with john harwood to talk about his take on Social Security. There is john harwood with more. What did he say . Kelly, rand paul is the leading libertarian politician in the country, but a problem for his movement is that they are on the other side of some of the more popular large government programs, the Libertarian Party platform calls for phasing out Social Security, but rand paul says thats not going to stop the movement and not stop him in the 2016 race. The Libertarian Party platform reaffirmed last year calls for phasing out Social Security. A know you dont call for that, but if a movement is identified with that goal, thats on the wrong side of the publish, isnt it . Not every libertarian is the same. On Social Security ideally there would be a private system. We now have a government system and have had it for six years, seven years. I think the publish is not ready to wipe out Social Security, but i think the public would be interested Rachel Dolezal to see can we have a private account. You think youre still very much in it th . Absolutely. I think eventually people will reconsider the race. My prediction is by the nd of january when we get to the first close voting i think you will see a reevaluate the leader lp 15 , many people in the low double digits and many people single digits. Senator, thanks for doing this. Thank you. And rand paul is going to have another chance to make his case in our cnbc debate on october 28 and you can bet that one of the candidates on that stage with him, your guest, Mike Huckabee, is going to take him on on the issue of Social Security, kelly. Thats exactly right, john. Thank you so much. Our john harwood with the latest details on that debate coming up the end of the month. Our next guest is also one of johns speak easy subjects lately. Former arkansas governor an republican president ial hopeful Mike Huckabee joins us now. Welcome back. Thank you, kelly. Great to be back on the show. Good to see you and, listen, we saw the numbers, they werent great for the Third Quarter. How much longer can you stay in this race . I can stay in until i get the nomination. You know, people look at these numbers and they forget that its not how much you raise, its what you do with it. And i had a dime to the dollar of my opponents eight years ago and beat everybody but john mccain. Beat mitt romney when he outspent knee ten to one, Fred Thompson outspent knee, Rudy Guiliani raised 60 million, beat him. We keep a low overhead, run the Campaign Like most people wish the federal government would be run, very frully. This is not about just the money. The soup pac set up to help me was over 5 million. Its not like im sucking air. We are a long way from running out of the funds. Governor, one of your former aids, ed rollins said that it will take 75 million to make it through iowa, new hampshire, South Carolina. Right now your campaign only has about 9 million and including that super pac money. How do you get to that goal when you still have such a long way to go . Well, i would just remind ed because he was a part of that campaign eight years ago the fact is i think at this point we had probably raised 2 million sooipd. So we are four times above what we were. There is a lot of candidates and i think sometimes people forget that in iowa, i dont care what kind of money you have, if you dont mr. A ground game and organization you are not going to win. Weve built the largest ground game and organization in iowa, same thing in South Carolina. Thats how you win these early primaries, because you cant buy enough of the tv and radio towers to make it all work. The money often follows the polls and in this case one issue, governor, where you are in stark difference to a lot of your party on Social Security and medicare. So we often hear from the gop candidates what theyre going to do to fix these which continue to crowd out the rest of our government spending, it will be more of an issue for the deficit an debt Going Forward. I read your tweets, watch you on the stump and explain your position to people and i hear nothing except you think these programs need to be saved at all cost. They have to be. Its not had a they need to be but they have to be because america has a promise and the promise is if we take money out of your paycheck for all your working years then that money is going to be there. I think people have to remember that Social Security is not an entitlement, it isnt welfare, its not a government give me, its not a freebie. People had that money taken out of their checks and i dont know about your check, but it was taken out of mine involuntarily all the time of my working years which continue to this day. The fact is if the government steals from us and then lies to us, i just dont think that bodies well. You have 60 Million People on Social Security, 70 million total depend on the which by the way we just found out there isnt going to be one for the 70 million americans who are on it. Here is what we do know, congress is going to get a pay raise. Now, how is that for really sucking is i mean, socking it to the american public. A freudian slip there. Governor, thank you for joining us to talk about whats at stake. We will see you next tuesday. Gosh, its coming out out there in boulder for the gop debate. Thanks for joining us this afternoon. Thanks, kelly. Next Republican Debate will take place right here on consumer october 28. You can expect a lot more questions about entitlements, coverage starts at 5 00 p. M. Eastern time. Dont miss it. Iconic luxury car brand ferrari gearing up for its ipo this week. Many fans embrace the auto maker as a lifestyle brand and now they are going to have to embrace a new charge. Later we will be joined by Jillian Michael to talk about her new show and her quest to find the next hot workout friend. Riend. Iend. End. Tend. Rend. Kid hey dad, who was that man . Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. 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. Welcome back. The ferrari ipo set to price tomorrow as vintage ferraris have been soaring in value the company hasnt been able to cash in until now. Robert frank joins us at post 9 in the details. The starting price for the new ferrari 488 is 275,000 but the big price right side in the vintage cars. As parts of its ipo ferrari is hoping to capture more of that value. Prices for collectible ferraris have more than doubled over the past two years and tripled over the past five. The most expensive is a gfo that went for 38 million. A 1956 ferrari being sold at soth bees in december could fetch over 30 million. In the past ferrari didnt make any money off these deals since all the profits went to buyers, sellers, auctioneers and restorers, in their latest sec filing ferrari highlights a program which charges ferrari owners to restore and certify their vintage ferraris. The Company Charges anywhere from a few dhouds to hundreds of thousands of dollars that each car they certify. One owner paid just over a Million Dollars for his ferrari certification. They are now down 400 of these a year. That could become a big source of revenue and growth when they go public. Many long time clegters complaining that the program is like a high priced toll p booth. Ferrari says the official ferrari certificate means a higher value and resale price. I will have to read more online. Certification for a million bucks . Thank you for joining us. Robert frank on ferrari there she has a biggest reputation as americas toughest trainer n her new show sweat inc. She is set to be americas toughest judge. Jillian michaels making her way over to join us live at post 9 when we come right back. Its official, i work for ge what . Wow. Yeah okay. Guys, ill be writing a new language for machines so planes, trains, even hospitals can work better. Oh sorry, i was trying to put it away. Got it on the cake. So youre going to work on a train . Not on a train. On trains youre not gonna develop stuff anymore . No i am. Do you know what ge is . Big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. Its more than its multilayered security and flexibility. With centurylink you get advanced technology solutions. Including cloud and hosting services all from a trusted it partner. Centurylink. Your link to whats next. Welcome back. Look at shares of Weight Watchers today. This is not a misprint. They were up 105 from fridays close. Why in Oprah Winfrey. She exposed a 10 stake in the company and get a seat on the board of directors and you will see her in ad campaigns. Stock finishing just short of 14, doubling in price today. Sticking with the weight loss and fitness theme, were joined by Julian Michaels host of the new sweat inc. Think about it as shark tank for exercises. Welcome. Thank you so much, i appreciate it. Are people pitching work out equipment or gyms or what is going on. It is both. We are looking for the next fitness phenom nam to the next bow flex, to anything else. Randy hat trick is a former navy s. E. A. L. And he started trx, which is what were looking for a 50 plus a Million Dollars a year business. And crx has those people who are stuck in hotel rooms and able to stay fit. Are these programs still relevant today. It is a great question. Im invested in curves and they are partners with jenny craig and they have seen huge growth in the last year. So it depends on the generation. Millennials, probably no. Baby boomers and later gen x, and yes. And oprah has the golden touch, right. And as youve seen today, the stock went up 100 or something insane. People were shorting it. But i wonder what the value is, when you can do it for free. Get a fitbit or do my fitness pal app and track your calorie intake and track your exercise. With that said, in all fairness, a lot of the gadgets arent totally accurate. And you have to appreciate with Weight Watchers there is a community. There is meetings. So you said doityourself, but there is a lot to be said, when we are looking on the show, it is a sense of belonging and community and Weight Watchers and jenny craig have that. Im curious about pricing. I find so many new boutique studios charge it is crazy. It is insane. 45 a class here in new york. So what is the ceiling that you are seeing for pricing and what are you telling people on the show as they try to figure out how do we enter this mark place. You have to appreciate your model. So in boutique fitness, ive yet to see a ceiling. And in personal training ive yet to see a ceiling, because those businesses are more highend. And the psychology is the more expensive it is, the better it is. Now when it comes to big box jams, retro frit involved in the gym or crunch or 24hour, the lower you make the membership, the easier it is fors and then you get into certification like zumba and that is where affordability is key. It depends on the model and that is what determines the pricing, so to speak. We have to go. But im wondering what the most youve charged somebody for personal training . By the time i was able to charge crazy money, it was too late so i just it is crazy money. Like a thousand, 5,000 . Yeah. But i sold at charity actions and the most expensive was 10,000. Because it is important. Maybe not that much. Thank you for joining us. Good luck for the show. Thank you so much. It debuts tomorrow on spike at 10 00 p. M. This past weekend, some think it is a hit but some think it is a miss and well go beyond the Box Office Numbers for you next. Rswim better. Like a custom screener on your desktop, that updates to all your devices. And you can share it with one click. Wow. How do you find the time to do all this . Easy. We combined every birthday and holiday into one celebration. different holidays being shouted back to work, guys i love this times of year. For all the confidence you need. Td ameritrade. You got this. Sometimes they just drop in. Always obvious. 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. 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. Netflix may be the monster of the little screen but it is no beast of the big screen. The first feature film called beast of no nation opened to a 50,000 and 699 box office and that is an average of 35 per theater. And netflix is not releasing numbers on how many saw the film in their living room. Guys what, do you make of it . I think this is a way for netflix to speak not necessarily to the audience who is actually viewing the movie but maybe to hollywood stars to show them this is an alternative to you. If you are not getting the treatment you want from the big theaters, that you can turn to netflix. It doesnt matter how they did in the box office. They had to release it simultaneously for the oscar nod. The losers here are the theater operators. They are not making money off of it. And we should check on shares. And we had citron come out and said they covered the short on netflix as the stock struggle as people are concerned about the cost of content and how unique service this is. They were up 3 today. So maybe that is because of what happened over the weekend, with this movie or maybe again that the fact that citron now closing at short on the bolstering sentiment. So neither of you saw it. No. I was watching aladdin. I was just checking, netflix is up more than 100 this year. Best performing on the s p. And weight watcher did it in one day. Show show coming up in moments. What is on tap. One trader made a 2 million bet that microsoft will hit a 15 year high by the end of the month. Well tell but that trade. That sounds like daily fantasy. Im kidding. And the ibm call to get to. Fast money starts right now. Overlooking time square, im melissa lee, your traders are tim, steve, karen and guy. Tonight on fast, a smack down of Epic Proportions from the cal government hitting back at steve wynns criticism over policy sending shares tanking. Well tell you whether the billionaire ceo should be worried. Plus big pharma play. Valeant away from what attracted shareholders to the stock. And what it could mean for shareholders in the long run. And opec hosting a special meeting and Dennis Gartman is taking notice. Find out how he is playing ole ahead of the headlines. But first the story this hour,