Transcripts For CNBC Power Lunch 20150914

Rates begin to rise . Four reasons to be bullish still about the American Housing market ahead. And get a load of this one. American airlines actually flew the wrong plane from los angeles to hawaii. It wasnt certified to fly that distance over water. How in the world does Something Like that happen . That is the question were going to try to find answers to. But we do begin ty with the possibility of a rate hike this week, which would be the first fed increase in about a decade. Dominic chu has been taking a closer look at the stocks that are the most sensitive to a rate hike. Arguably by what im going to show you, investors and traders have already been positioning themselves for a possible rate hike from the fed. So you have heard it before, well say it again. Utility stocks are often viewed as one of the big sentiment gauges or proxies for what happens with Interest Rates. The reason why is because when Interest Rates rise or are threatened to rise, utility stocks tend to sell off. What you can see here is over this yeartodate period, just again in 2015, those stocks, utilityings ies st. In the s p 30 . It spans the entire spectrum. Just to give you an idea. It doesnt matter about geographic location or type of utilities. Pg pg e, theyre down 9 . You look at a southern company, down 13 . Ex elon down 19 . Nrg lost a third of its value. Some of the biggest decliners in the utility stocks. Its not just there. Look at the Real Estate Investment trust. This is another part of the market thats viewed as a proxy for income, dividends, Interest Rates. The vanguard reit etf, down 9 . A steady decline. As investors come to grip with the idea that possibly an Interest Rate hike will happen, these Real Estate Investment trusts, utilitieutilities, wille the battleground is. You can see, tyler, a lot of traders have positioned themselves for that possibility of a move. Thank you very much. Lets look at stocks at this hour. They are generally lower. The declines modest coming off equities third biggest weekly gain of the year. You see the dow industrials, the s p app, and the nasdaq all off about one half of 1 . Lets get the trading action now from bob pisani on the floor of the new york Stock Exchange. Hi, bob. Hello, tyler. The markets are not afraid of a fed rate hike. In fact, they seem to be implying they think its very unlikely thats going to happen. Theyre more concerned about the slowdown in china and again thats the story today. Look at the s p 500. We started on the downside and basically weve been on the downside. Were at the lows for the day. Lets not quibble about a couple points. Moderate trading range here b 12 or 13 points. Thats a typical days action. Look at the market this is the middle of the day. China came out with numbers overnight, retail sales were good but the industrial output missed the forecast. Thats where the commodities all come in. We need some volume. We have one of the lighter volume days wee seen weve seen the last several weeks. Industrials on the weak china numbers. All these Big Industrial names, typically down about 1 . The big commodity names. Were seeing copper down today, aluminum, nickel, and zinc, all the base metals down on the weaker china metals. Commodity based stocks like nucor. Finally even here in the united states, were just seeing some general lack of buying interest. The volume is not heavy in Retail Stocks like coach or target or fossil or macys. Not heavy at all. But what you dont have is any real compelling reason and josh brown talked about this, no compelling reason to own them right now, to go after them and i think thats the problems. We have to get a little more conviction. Maybe the fed will help us out this week. Ill pick it up from there. Thank you very much, bob. The shanghai market ending down more than 2. 5 overnight on that week Economic Data bob was talking about. And it really hasnt been an easy ride for a lot of emerging markets over the past one year. So what happens to the ems if the fed begins raising rates . Joining us is david reedle. Good to see you, david. A lot of concern about any potential fed move is related to the currency impact on ems, right . But is there any guarantee just because the fed might start hiking rates that the u. S. Dollar will keep on gaining . Not necessarily. We think some rate hikes are already priced into this big move in the u. S. Dollar youve seen over the last year and a half or so. So we think its a bit of a buy on the rumor, sell on the fact situation where people will allow the dollar to trade flat to down after they start dige digesting the rate hikes. Just back up a second. How many rate hikes are priced into the u. S. Dollars upward move . I think probably two or three, 25 basis point hikes are built into the big move in the dollar. If we do see the usa dollar trade flat to down, what impact will there be on the investment thesis for emerging markets . I think there can be a big sigh of relief because commodities have been badly hit by the strength of the u. S. Dollar. People have been concerned about the impact of the stronger dollar on u. S. Dollar debt that some of the emerging Market Companies and countries have built up over the last year or so. So i think its going to be a sigh of relief. We have to look back to 2004 to 2006 period to see the last series of rate hikes. Emerging markets did great during that twoyear period. The emerging markets doubled during that period in the face of 17 consecutive rate hikes, so i think the emerging markets can do very well if the dollar trades flat to down and people digest start digesting the rate hikes. The emerging markets are often lurched together, but at the same time theyre also different. The are there any that stand out to you. Places like hong kong thats down 20 . Do they look good . I think theres some very Good Companies in hong kong. Its a great way to get china exposure. We would not recommend people going into shanghai and buying those volatile stocks. We have some High Quality Companies listed just in new york that give you good china exposure as well. Wed be buyers of some of the big brand names in tech especially that can benefit from a stronger than expected china. Can i put you on the spot about alibaba in light of the report from barrons suggesting the shares could go a further 50 lower from here . Do you like baba . I do like baba. I dont like the Corporate Governance at baba but i love the strength of their business. Theyre totally ubiquitous in the ecommerce business in china. They totally dominate in that space. I think it could almost double from here so im going to have to take issue with barrons view. What about baidu . Its the going of china. Its very strong. We think its a good company that could go up higher. David, thank you for your thoughts. Shares of apple higher in todays down trade. The tech giant seeing strong preorders for its new iphones. The stock up 5 over the past week and josh lipton is following the story live for us from san francisco. Josh . Well, tyler for apple investors, the big question is whether the tech giant can grow iphone units in the quarters head. Today apple could have provided some color on that question when it told us what demand has been like for that new 6s and 6s plus. Customer response to iphone 6s and iphone 6s plus has been extremely positive, the company saying. In preorders this weekend it was very strong around the world. We are on pace to beat last years 10 million unit first Weekend Record when the new iphones go on sale september 25th. The company went on to say that online demand for the 6s plus was especially strong and exc d exceeded the companys own forecast for that preorder period. Apple stock up strongly over the past five days. Still though down more than 10 from its 52week high, and in part that is because investors are worried about growing iphone units in the face of tough comps and a slowing china. Apple though now saying it could break those same records with these new iphones. The team at rbc agrees saying apple could sell 12 million iphones over that first weekend. Sales start next friday so stay tuned. Guys, back to you. All right, josh, thank you very much. Lets get a check on some other big tech movers at this hour and Courtney Reagan is the person at nasdaq. Good afternoon. Apple does have a Strong Influence on the nasdaq indices but its not enough to push that comp higher. Were at about the lows of the session. Look at yahoo shares down almost 3. 5 . One of the biggest losers on the nasdaq 100 due to its stake in alibaba. You were just speaking about that with a previous guest. Remember that barrons article speculated a lot of negative press and alibaba shares could possibly fall 15 , thats what the article said, im not saying it but as a result yahoo shares are lower because of its stake in the company. And look at go pro. We have a wall street journal article saying its doing much better and its perhaps worth buying at these levels. Thats moved shares higher by 2. 3 . There are many components that go into a go pro. One of them is the trip. Amberella is one of the components doing better on the back of the go pro shares higher. Up almost 4 . They were actually up almost 5 earlier in the session so it look as if were back to a market where not all tides will lift or sink all the boats. Were moving again on news and fundamentals. Back over to you. Okay. Thank you very much Courtney Reagan. Oil is under pressure today partly due to that weak chinese data. Jackie deangelis joins us from the nymex. We are seeing pressure to kick off the week. Concern about china gdp not coming in as expected is definitely one of the factors. Also a little bit of a stronger dollar. We did also get opecs monthly report and what we got in that reading is nonopec supply is likely to come down. Thats good news. At the same time they took their demand forecast for 2016 down as well. So, again, the equation is not going to work out if they both go down. August opec production was 31. 5 Million Barrels per day. That is high. For those expecting to see iranian oil come online as well, that leads to more supply globally. Last weeks factors still having an impact as well. That Goldman Sachs note calling for 20 still leaving a chill in traders blood. Back to you. Now to the latest on those Deadly Wildfires out west. One person has been killed, several firefighters injured. Hundreds of homes now have been destroyed in californias fastmoving valley fire. The brunt of the damage to property is caused by one blaze that broke out saturday near napa valley outside sacramento. Thousands have been evacuated and the 50,000acre fire is moving in multiple directions as fast, some say, as any in decades. About 4,000 firefighters are battling that blaze. The wildfires sweeping across the droughtstricken western u. S. This year could end up being the costliest on record. Terrifying stuff there. Wish them the best. Lets check out shares of alibaba so far this year. Everybody loves their baba, right, mandy . Down 40 . Trading below its ipo price and now fears that chinese ecommerce giant could take another major plunge from here. Morgan brennan is following the story. It was the subject of a bearish cover story in barrons this weekend. Shares down nearly 50 from their november high and still the publication arguing they could fall another 50 so whats behind the plunge . Are shares really going to fall further . Warns you about incoming crosstraffic. Cameras and radar detect dangers you dont. And it can even stop by itself. So in this crash test, one things missing a crash. The 2016 eclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Welcome back to power lunch. Check out whats happening right now with the markets. Here hovering near hour worst levels. The dow is down 90, 91 points. The s p 500, the nasdaq all making these lows here as we get towards the worst points today at least for right now. Among the standouts, at least from the industry side of things, steelmakers trading lower today as growth in chinas investment and factory output missed last month. China is one of the biggest consumers of steel. U. S. Steel, ak steel, nucor, Steel Dynamics all down 3 to 4 . That industry will be a big focus especially around the chinese economy. Back over to you. Thank you very much, dom. Marvel Technology Getting a downgrade to equal weight by morgan stanley. Deutsche Bank Planning to slash a quarter of its workforce, 23,000 jobs, mainly in its technology and back office operations. That stock is down more than 10 in the past two months. And mylan offering a tender offer to acquire perrigo. Perrigo is urging shareholders to take no action pending a board review. Alibaba is down. If y new fears the stock to suffer a major plunge from here. Morgan brennan is covering the play by play. Alibaba is in the spotlight after a barrons story saying shares could fall 50 from current levels. The publication outlining several reasons including increased ecommerce competition, scrutiny surrounding the companys governance and culture, and pressures could come under share when the lock up expires this sunday. In response to barrons assessment, alibaba slamming the story in a letter to the editor saying the report contains factual inaccuracies and selective use of information and the conclusions he, meaning the rorner, draws are misleading. You can see that fourpage response on cnbc. Com. Outlining seven examples of errors including how the price to earnings multiple was calculated. Still, you have a number of factors that have already been weighing on the stock. The lock up expirations. Weve seen disappointing earnings and a china softening economy. Even alibaba recently said the total amount of goods bought on its platforms, its gross merchandise volume for the Current Quarter will be lower than it initially expected. So these factors have already contributed to a steep selloff. Shares of alibaba are currently trading around 62. Thats lower than the ipo price and its already down about 47 , 48 from the november high of 120. So barrons is talking about a 50 drop. From here. Weve already seen an almost 50 drop. Thank you very much. Lets get to Sharon Epperson with breaking news. Mandy, the securities and Exchange Commission has obtained a 30 million settlement from traders who profited on a hacked news release. Were talking about a ukrainian based company and its ceo who have agreed to pay 30 million to settle allegations that they profited from trading on nonpublic Corporate Information hacked from news wire services. You may recall in august the s. E. C. Announced charges against 34 defendants who allegedly took part in a scheme where two defendants hooked in a wire service. This investigation is ongoing, theyre still looking at litigation against the remaining 32 defendants charged in this case but we have a 30 million settlement so far with the ukrainianbased company and its ceo agreeing to pay this settlement in light of the hacked news release charges. Thank you very much for the breaking news. Call up a game of drones. Major u. S. Defense companies positioning themselves to cash in on this booming business. Jane wells is in los angeles. Mandy, fly or die. Defense Companies Need to find new needs and new markets for their uavs and in one case that may be trying to shoot down a manned aircraft program. Well have that after the break. Proud of you, son. Ge a manufacturer. Well thats why i dug this out for you. Its your grandpappys hammer and he would have wanted you to have it. It meant a lot to him. Yes, ge makes powerful machines. But ill be writing the code that will allow those machines to share information with each other. Ill be changing the way the world works. interrupting you cant pick it up, can you . Go ahead. He cant lift the hammer. Its okay though youre going to change the world. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. Defense companies are doing everything they can to adapt to the changing defense environment, including moves into the exploding commercial drone market. Our own jane wells is in los angeles now with how one major player is trying to keep its major Drone Program alive. Jane . Hey, tyler. The northruop grumman global hak has flown 150,000 hours. At any given moment up there circling and watching. To save money they wanted to ground the fleet. They are pushing to have sensors added. The global hawk will soon start test flights with some of the same sensors the u2 has. Since that point this time weve resurrected the system and were now flying more hours in fy 15 and we through in all of fy 13. Now, northrup is trying to figure out how it can exploit the commercial markets, but, you know, i mean, the global hawk is really expensive and complex. It may be a matter of selling nonclassified portions of the technology for things like replacing one pilot on board on longrange flights. I asked why it was taking so long to move from one operator to several at once . Its more of the interface between the machine and the human, making that more intuitive and the ability to respond to real world situations. I believe well have that within the next five years. By the way, Lockheed Martin not giving up on the u2. Says its been doing the job for over half a century and its already paid for. Thank you very much, jane wells. Love the name, nick jaggers. Lets see how the bond market is setting up for this important fed week. Rick santelli is back and hes in action at the cme. Hi, rick. Hi, mandy. Whether investors want to admit it or not, if you look at an intraday of ten, its a pretty compact range and 216, 217 is basically unchanged on the year. So what do treasuries think about thursdays meeting . Well, its anybodys guess, but were not at 18,000 in the dow, were at 16,3000, so definitely that market has taken some notice of what may or may not occur on thursday. And if you want to look at september, month to day charts along the curve on the dollar index, its very enlightening. If you look at a twoyear, we are flirting with a small change. 66 is unchanged on the year. Tenyear about a ten basis point range. By the way, bund yields are a third of our tenyear note yields and theyve had a 15 basis point high to low yield close range for the month of september thus far. 30year bonds about 10 basis points. The only one that is giving you a clue is the dollar index and its weakness speaks volumes about the market not being ready for any type of rate increase. Even if we do get a rate increase, if a quarter to a half a point on the overnight fed funds rate is enough to make the fed stop in their tracks, theres a whole lot more to worry about than what their ultimate decision may be on thursday. Back to you. That is very true, rick. Very true. Okay. Gold prices are getting ready to close as we speak. You might remember on friday they fell to their lowest in about a month. Right now theyre marginally higher at 1,108. Thats gaining nearly 5. Jackie, tell us more about whats going on with the precious metal from the nymex . The Precious Metals are getting hit. Its that stronger dollar and fears of china that are bringing the whole complex down. Gold is able to sti ovay over t 1,100 mark. If we dont get dovish news from the fed, gold will probably go under the 1,100 mark. For now its holding because its not impacted in the same way that the Industrial Metals are. Thank you very much. The man who predicted the housing bubble is now worried about the stock market saying it is overvalued. Is he right . Dominic chu taking a closer look. Dom . Some say yes, some say no, but the reality is everyone has got an opinion on whether or not stocks are overvalued right now. The bears and bulls both have cases. Were going to show you why maybe they could be correct, both sides of the equation. Thats after the break. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. This just in 50 million customers data was not compromised this morning in a Security Breach that didnt happen. Wall street. Not rattled. At all. No. Not at all. Not at all. I mean, look at the day. Sir. Sir. What went right . What went right . Everything. Thank you. With threat intelligence, behavioral analytics, and 6000 experts, ibm security will help keep you out of the news. My dads company wasnt hacked today. Cool. 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 306 horsepower lexus gs. Experience the next vel of performance, and theres no going back. Lease the 2015 gs 350 with complimentary Navigation System for these terms. Im Sharon Epperson and here is your cnbc news update. A white male professor in his 50s has been shot and killed by a shooter at Delta State University in mississippi. No word on the identity of the suspect. The campus remain this is lockdown mode. Democratic president ial hopeful Bernie Sanders taking his message to Liberty University in virginia today. He spoke to a packed auditorium at the Christian School acknowledging the differences his views on social and Economic Issues have with many in the crowd. In a paper published in the journal nature climate change, scientists estimate that the Sierra Nevada snow pack hit a 500year low in 2015. Snow pack is a key factor in californias water supply. Melting snow provides the state with a third of its water. Arnold schwarzenegger is back as the new host of select apprentice. He replaces donald trump when it returns to the network for the 20162017 season. And thats cnbc news update at this hour. Back to you. Okay. Thank you very much, sharon, for the headlines. Markets right now are currently moving to the downside but we are coming off a good week. The dow is currently sitting at 16,343. The nasdaq and the s p are both also down about half a percent. But lets get more on the trading action with bob pisani on the floor of the Stock Exchange and Courtney Reagan joining us in times square at the nasdaq. Bob, kick it off. Our problem is not the federal reserve. The market is not that worried about the fed. Maybe they should be but theyre not. Theyre worried about china, and you can see this in the action in the etfs today. Were having fairly heavy volg in the china etfs but particularly anything having to do with mainland china. All of them are down about 5 . That fxi, thats also down, but they invest in big cap stocks that are primarily hong kongbased. Theyre making a little bit of a distinction. But china is whats worrying things. Overnight we heard from china their industrial output misforecast and all the base metals are on the downside. 2 for copper, zinc and aluminum. Thats affecting all the stocks in the united states. So the weak sectors are material names, industrial names, and even energy names as oil is also down as well. I mentioned the problem is not really with the fed. You can see this in the vix which is the volatility index. You would think it would be spiking up a little bit. This is the last five days but weve been in a trading range between 23 and 25 which is on the very low end of where we have been. We spiked over 50 not long ago. So bottom line is were te telegraphing markets will be fairly smooth in the next few days. Thank you very much. Lets check in on whats happening with the tech stocks with Courtney Reagan. Good afternoon to you. The nasdaq composite sitting right now at the lows of the session, down about 0. 6 . Apple is still having the largest pulling impact on the nasdaq 100 to the Positive Side today. This after the company said sales of its new iphones were on pace to beat the 10 million market it logged last year. Shares are up 1 . Bob talked about china weakness as it remain this is focus. So, too, do shares of baidbaidu. We continue to watch that weakness as the china story and data continues to unfold. Marvell is in a league ever its own. Down about 3. 4 but this is because the chip Sectors Company came out and said its Audit Committee is conducting an investigation into accounting issues. Its gotten several down grades today. Shares down more than 3 . Other chipmakers like kla and xp semi, amt, broadcom, theyre among the nasdaq 100 leaders. Thats why marvell is a little bit of a difference maker in that spice. Court, thank you very much. Robert shiller who predicted the housing bubble making a call on clinton stock market saying its overvalued and creates the risk of a significant bear market. Not the first time he said that. In fact, he was on cnbc on august 21st. Listen up. Valuations are high, quite high by historical standards. Only been a few other episodes in u. S. History when theyve been this high. It could be followed by a series of bigger and bigger moves. I have a general bias toward down because the market is overpriced. So where do we stand in terms of valuations . Lets bring in dominic chu who has been looking at this. Of course, the market is less overvalued than it was back on august 21st. I mean, its interesting whenever we bring up valuation discussions, you have always got to frame it around a time period. You can find a statistic, find a valuation that pretty much tells the story you want to tell. For robert shiller, hes probably looking longer term and saying this is a little overextended. If you look at the s p 500 overall, that 1950 mark, it seems kind of fresh in our memories, right . The 666 intraday low we saw during the financial crisis on the s p 500. We pretty much tripled the stakt sin stock market since then. If you take a look at historical price to earnings ratio and weve done so ever since the year 2000. Thats going to be the key since around the peak of the overall internet of the dotcom double this is the pe ratio the blue line forgive me for tell straighting. By all means. You can see it was closer to 30 back in 2000 before things fell off. Weve seen it drift lower and you can see here near the financial crisis, we traded this is trailing earnings forward. Trailing earns. Not proprojections. This is actually the earnings and the price on top of that. Today were 16. 5. Thats where the s p trades. We were cheap compared to where we were back in 1999, 2000. More expensive than during the financial crisis. On average, thats the red line. On average since 2000, so over the past 15 years were on average. We are on average. Were sitting here just at around the same level we have been on average for price to trailing 12 months earnings we have seen over the last 15 years. Here is where it gets so that undercuts professor s schiller. Perhaps. If you look longer, longer, longer, 50, 75 years, things change. But thats since the millennium. Check this out. Here are a couple sectors. We mentioned that 16, 17 range for the valuation for the index. Right now you can see, energy type companies, those type of companies, trade around 15 times earnings. Health care stocks traded around 20 times earnings. So Energy Related trading perhaps a little bit more of a discount. We know the energy story, sliding oil prices and everything else, and Health Care Stocks trading more than the overall market is worth. So a couple sectors to focus on. Banks always fall into that undervalued category but people always have questions with regard to earnings and whether the earnings are of the same quality, whether they reflect certain onetime when you draw the historical experience back a little further than dom and tyler just did, we have the market overvalued, but overvalued relative to historic trends. When you combine that with waning Earnings Growth and the seventh year of a bull market, its really the combination of those two things that leads us to be suspect of the likely future robust performance of markets. Youre really worried about the e side of the pe. Or the e side. Would you agree or disagree with that, sandy . Well, id agree in part but not in totality. I think one of the things tyler alluded to was the Interest Rate level. And you have to recognize the Interest Rate level reflects inflation. So in periods of low inflation, the valuations are actually right now probably cheaper than you would expect when you look at periods of low inflation. So id actually make the argument that inflation tends to justify a little higher valuation because were not having to chase an inflation bogey and right now were sitting a the a number at around 16plus and relative to low periods of inflation its not uncommon to see the levels at 17. I agree that the market is going to get much more selective in here and you can already see that. Even on your programs constantly talking about companies that miss the revenue number and they get really punished. So the market is starting to discriminate by earnings. Theyre starting to discriminate by revenue growth. To add to scotts point, i think thats going to be an important play over the course of the next year. And already youre being quite discriminating yourself. You have just a couple stocks you like at these levels. Thats right. Were looking at companies, acuity brands, about 9 billion. Really good margin improvement. Really good top line. Kind of explosive earnings underneath it. Now, its not a cheap stock, mandy. The multiple is pretty expensive but on a careful entry point we think an interesting name and tripoint homes, a home builder, a very cheap valuation with cheap low cost land on the books they can unlock the value of at only ten times earnings. You do need to be more selective but theres still good opportunities. I know, scott, with he have to leave it there, but you know you like the energy sector. Scott and sandy, thank you for joining us. You can go to powerlunch. Cnbc. Com and see what they think about the rate hike. American airlines accidentally sent a plane not certified for long haul routes over the water from los angeles to hawaii. How did it happen and what could have happened had something gone wrong in the air . We have that story for you in two minutes. 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. 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. Solara has agreed to be acquired by Vista Equity Partners for 3. 74 billion in cash. Those shares are up 8. 5 now. H r block downgraded to neutral from buy. A valuation call there. And google named john crafic as the chief executive of its selfdriving car project. He is set to begin his tenure in late september. Airbus begins production of the first a320 to be built at the Companies First and new final assembly blaem plant a plant in the u. S. Reporter a huge day as they open a final assembly plant. This is airbus second plant outside of europe. They have one in china and now theyll have one in alabama. A320s are what theyre building. Almost all of them will be going to north American Airlines though some could be exported. When you look at the models that will be build and add them to what airbus is already building and you can see that record delivery pace the company has been on will likely continue growing over the next couple years. Its costs because of nonunion labor will be competitive initially with europe and eventually could be below what it costs to build a plane in europe. We believe that in a few years we will be in the same ballpark. So it will be a cost Efficient Assembly line probably from 2018 onwards. Take a look at shares of boeing and airbus over the last three years. Airbus actually outperforming boeing. The a320 will be built in this plant, the first one coming out next spring. Full production in 2017. Thats the story from here at airbus plant in mobile. Guys, back to you. Thank you very much. Lets stick with aviation. American airlines admits it flew the wrong plane from los angeles to hawaii last month. The plane was not authorized to fly that distance over water. The mixup happened just days after the airline did start to fly similar planes and airbus 321 on that very same route. Lets bring in michael boyd, aviation expert and chairman of the boyd group. Welcome, good to have you with us, mr. Boyd. Why would some a321s be certified and others like this plane not. Twin engine airlines over water, they get additional certification because if youre flying coast to coast which is really a longer route than going to hawaii, you can land in kansas. You cant land in the ocean very well. But what it is is really just an additional incremental kind of technology at the thut on tthey airplane. It wasnt a question of the plane not being able to cover the distance, number one. It was that particular plane was not equipped the way it should have been should something have happened in midair. Am i understanding that correctly . I suspect what i picked up, if it had ditched, it would have been the same situation either airplane. The etops classification simply makes that airplane more reliable, and in this day and age more reliable on an airbus is a very small margin. So it is a screwup on a americans part. Theyre going to have to answer for that so what do you think happened . Was this a clerical screw up . Somebody just didnt know. Somebody said were starting to fly the 321s over there is theyre all okay . What do you think went wrong . With their sophistication, it has to be some clerical error. This is one of the most sophisticated airlines in the world and to miss Something Like this which is major on paper really says something went wrong in ft. Worth where they have their operation center. Were passengers at risk in any elevated risk in any measurable way, mr. Boyd . No, i dont think so. Today an a321, that brand new airplane, whether its certified etops or not is a marginal issue. They were not at risk at all. T the point is american just didnt do their job right. I can guarantee it will not happen again at American Airlines. Thank you very much, mr. Boyd. I have enjoyed your comments about the united and smizek thing as well. Still ahead, six hot stocks and three cold sectors you may want to take a closer look at and reasons to go bullish on housing. Thats all coming your way. Plus im lizzy whithome at pandora in oakland. Im going to give you a behind the scenes look. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Go to ziprecruiter. Com and post your job to over one hundred of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. And now you can use zip recruiter for free. Go to ziprecruiter. Com. Pandora, love pandora, celebrating its tenyear anniversary. Since the company went public in 2011 its trading higher by 5 . Today we take you inside the company to see what its all about if you work there. Music is everywhere, the free avocados go fast. Its this weeks office envy. Hi, im lizzie whithome Senior Vice President at pandora. Im going to take you on a behindthescree behindthescenes tour. We started very small and were now almost 1,000 employees in this office. We have an open office at pando pandora. Im walking through the strategy team. Over here we have legal. All the floors above us include sales, marketing,p r, engineering, product and our music analyst team. We rely heavily on Conference Rooms but we want to bring the music into the space. Weve been asking people their favorite Conference Rooms. Tupac and too short. This is one of the common rooms where people can bring their lunch, brung their laptop and just have a place to relax. Skittles are a huge favorite. Number one favorite flavor in the kitchen. Im a mom of three boys. Theres a bit of an avocado race around here whereby people try to get in early to get the avocados. We have so much fun hidden art here in the office. This is the dance pad wall. The pop and lock. The twist. The harlem shake. My favorite is for sure the robot. These are the most common words in pop song titles. My favorite is all the way down here, fool. I pity the fool. One of the Fan Favorites in this office is our backstage area. When musicians come to town, we transform this space into a concert venue. I hope you enjoyed the pandora backstage tour. Thumbs up cnbc. Very cool. Nice place. For more on our series and to get inside some of the best workspaces we have found, head over to powerlunch. Cnbc. Com. Lets go to dominic chu for a market flash. Jeev with a cool office here but that one was pretty awesome. Just two stocks hitting new fresh 52week high this is the s p 500 on this particular down day. You got cruise lines, Royal Caribbean, also Data Center Company e quinn nix hitting highs. Im still trying to work out what are they doing with the avocados . Guacamole. Biting into them like an apple . Stocks struggling but off their session lows. Utilities are the best performers. Apple and merck leading the dow. Among the etf movers, xme down 2. 5 and xly, Consumer Discretionary down a percent. Bob pisani pointing out heavy volume in china related etfs because of the data dump that came out last night weaker than expected. If you missed any of the big stories you can visit powerlunch. Cnbc. Com. Tyler . Mark cuban says he would crush, crush trump if he was running against him in this president ial race. And thats not the only thing he said. That story is straight ahead. We are back in two. Theres no one road out there. No one surface. No one speed. No one way of driving on each and every road. But there is one car that can conquer them all. The mercedesbenz cclass. Five driving modes let you customize the steering, shift points, and suspension to fit the mood youre in. And the road youre on. The 2016 cclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. Im watson. And today hundreds of companies are putting me to work. Im teaching watson to help your vet speak dog. Youre a dog, right . Im teaching watson to help you make healthy choices. Im teaching watson to help design a vacation around your personality. Dont judge. Im teaching watson to answer endless questions. How big is infinity . Where do babies come from . Why cant i have chocolate for breakfast . Im watson and im ready to work with you. All right. Welcome back, everybody. Coming up, all hour long weve got more stock picks and investment ideas than you can shake a stick at. Were always looking to help you make money. Forget warm hands, cold heart, what the government just did that may change the way your kids pick a college forever and maybe put all those College Rankings out of business. Truly is a game changer. What it is and why it matters coming up in a couple minutes. I know you dont throw the word gamechanger around i hate that phrase. It must be important. Gamechanger. Mark cuban is not shy about making bold statements and hes just done it again. In an email exchange with cnbc, cuban revealed his thoughts on the president ial race and that if he were in the race, he would crush donald trump. Eamon javers is live in washington with that story. Those are fighting words. Thats absolutely right. Mark cuban says he has no plans to run for office but hes a guy who clearly has been inspired by the donald trump president ial campaign. He likes that donald trump has proven that you dont have to have a squeaky clean past in order to run for president. He likes you can be a billionaire and cuban is and run for office. Here is what he told me in this email exchange over the past week or so. He compared himself to Hillary Clinton and donald trump. He also used the term three comma potus, as in a billion dollars. He said if he have a three comma potus it would not be long before the office humbled him or her. He also said that in comparison with Hillary Clinton and donald trump. He said if i ran as a dem, i know i could beat Hillary Clinton, and if it was me versus trump, i would crush him. Cuban also said that hes got an idea of what his platform would be. He said he doesnt want to run on social issues if he ever were to run. Hed leave that up to the family and the individual. He wants to run on Economic Issues, including most importantly economic inequality, college debt, overly complicated taxes, and two other interesting ones. He also said foremost on his mind are Cyber Security and also broken equity markets. He thinks that the stock markets have been taken over by hackers in his words and hed like to focus on that. A lot here. If mark could get over his selfconfidence issues he could actually become something, right . He said that in his email. He said we billionaires have a lot of confidence bordering on a arrogance. You cant have a shy retiring flower as the leader of the free world. How many more billionaires will we see on the campaign trail in 2020. Has donald trump kicked in the door . Backlash against the career politicians. Thank you very much, eamon. That will do it for the first hour. A powerful second hour coming your way with brian. Thank you very much, guys. Appreciate it. Noon in denver, 2 00 p. M. In maryland. The dow and oil are lower. Happy monday as we continue, yes, to count you down to that huge fed meeting on thursday. Thats when we could, could see the first Interest Rate increase in nine years time. Lets forget about the fed for a second because rate rise on thursday or not, there are always many opportunities out there for you and your money. So lets find some, shall we . Bring in mark keisel from pimco. Welcome back to the program. Here is the obligatory fed question. Will the fed raise rates on thursday . Hi, brian. We think the Economic Data supports a rate rise but we also think that the Risk Management with the global uncertainty and whats happening with china and inflation argue that theyre probably going to wait. So the u. S. Is doing good but globally we think the risks are such that theyll probably delay. Our best case right now is that theyll wait until december to lift off. Got that out of the way. Lets find some opportunity. Why are you so in love with the Housing Market . The reason why we like housing is the fundamentals. First, inventories are basically near 15year lows. Secondly, were forming now thanks to very strong job creation, almost 3 million private sector jobs, were forming 1. 5 million housing household formations and were only adding 1. 2 million starts. So basically demand is soaking up supply, and importantly theres pent up demand on the sidelines. So youve basically got a third of the 18 to 34yearolds living with their parents and then most important for firsttime buyers, youre now creating basically 700,000 jobs in the 25 to 34yearold cohort. Thats the strongest its been in 15 years. So basically very tight supply and overwhelming demand coming online. But there seems to be this theme, mark, that millennials, they dont want to own a home. They want to rent forever. Its the sharing economy. I assume you are discounting that. We are discounting it, and, in fact, if you look at the breakdown of the starts data, what you will see is more starts occurred in multifamily. So apartments have been very strong. You have seen that in rents. Bu peop but people absolutely want to own a house. Credit availability had been very tight. If you look at the recent bank loan data from the big four banks, they are starting to extend credit. Mortgage origination growth was up double digits year over year. What you will see is people who are renting gradually start to buy over time so we are confident that trend will change. But, mark, does the pent up demands or willingness to expend credit does that get impacted by all the reasons you said the fed might not raise in september, namely emerging markets concerns when it comes to growth in china and brazil . I mean, arent these factors as well or you see that there is willingness to extend credit and the pentup demand no matter what happens with the fed and no matter what happens with emerging markets . Sure. Melissa, basically we see a fed thats going to lift off and raise rates, but importantly the pace of their rate hikes is going to be very slow. We dont see longer term Interest Rates going up that much. The curving will likely flatten and, yes, we see the fed getting to, say, 75, 100 basis points by the end of next year. Importantly, Mortgage Rates are very low. At 4 today they actually could go up 2 which were not expecting just to return to longterm average affordability. The reality is that you have 3 million private sector jobs. That could overwhelm a modest rise in Interest Rates. I guess the question, mark, didnt really have to do with Interest Rates per se, but the fact that you say the fed is concerned or could postpone liftoff because of concerns about emerging market growth. Could those kerns gconcerns get point where bank starts to rein in risk and not extend credit or corporations decide not to hire as windchill therefore impeding job growth which enables that pent up demand to buy a house . Sure. Ultimately the international factors are going to be relatively minor when you look at Bank Balance Sheets and lending and if you look at corporate profits, theyre likely going to slow somewhat, but the reality is that wages are actually picking up. So this is the first time were going to see probably in a decade where labor finally gets higher wages, and that is ultimately whats going to support housing. Whats the big variable, mark . What could be the thing that makes you wrong . What would make us wrong is if inflations surprises too much on the upside. That would cause the fed to have to hike rates higher and you could see then rates go up violently and any violent increase in Mortgage Rates would slow housing, but, again, thats not our base case. We think inflation is only picking up gradually. Mark keisel, it was a pleasure. Thank you. Lets get another check on the markets. The dow is in the red off the session lows here. That is the same for all major averages. Gold is trading higher. Wti and the oil market is where the action is. Wti is down by 1. 33 . Lets get more on todays action. Bob pisani is on the floor of the new york Stock Exchange. Rick santelli is in chicago. The important thing is we are off of the lows. Happened about 40 minutes ago. No particular sector moving to the upside. Energy and materials have been under pressure all day on the weak china data. As i mentioned, chinas data weighing on commodities and industrials. The breadth has been 2 to 1. We need some volume. Were on the light side whether its because of the jewish holidays or not, we definitely need more volume. China has been weak here and all throughout the day any china etfs that have got volume, they are on the weak side here. All of those big china etfs are down about 4 . Some of the mainland stocks in hong kong down 2 or 3 . Commodity evidentfs have had a problem throughout the day. Metals, oil, stocks have been weak as oil has been on the downside. Back to you. Bob, thank you very much. Lets now go west to chicago and get to rick santelli. How is the demand for bonds these days . You know, the demand seems to be fine, but what really seems to be perking up a bit is a little bit of anxiety. We all know whats coming up on thursday. Do we have clues . Look at an intraday of twoyear note yields. Theyve climbed back to the higher yields weve seen, 72, 73 basis points. Nothing has really changed. Two day of 10s, 10s are back close to 220. Twoday chart puts it in best perspective. Lets go all the way back to january of 2011 on 10year note rates. Notice that 3 line. Since mid2011 theres only been one settlement above 3 . Maybe the reason rates arent moving higher is the 20year chart shanghai composite shows you the disappointment there. We want to take mention that the 30year bond yields are getting close to their 3 level, 296 high yields of the day. All because traders are just unsure what janet yellen and company may do on thursday. Perspective is its midseptember and the cubs would be in the playoffs if they werent in the division that theyre in. Thats perspective. A onegame playoff between some of the best records in baseball. The wildcard, whole setup has to be redone, buddy. Go get me a goat, rick santelli. Thank you very much. Mark keisel laid out interesting ideas in housing and mortgages. Now lets focus on stocks, specifically sectors you might want to invest in through mutual funds or etfs. Bruce biddles is joining us. Bruce, one thing thats interesting about what you like and more importantly dont like is weve had a lot of guests on who said the oil stocks, theyve been slaughtered, theyre good bargains, good values, were buyers. You are not. How come . Typically after a hard smash and particularly at this time of year when you have to consider that tax law selling is just ahead, we think oil prices are lately to remain low and i think these Oil Companies are going to continue to find profitability difficult to come by. So at least for the rest of the year were going to avoid Energy Stocks in most cases. So youre not in this theyre good values just because theyre 50 off of what they were last year camp. No, because i think the volatility in these oil markets, were not sure that oil actually has hit a low. Now, it certainly looks like it has just under 44 so recently, but it could still go lower if the Global Economy continues to slow. Low oil prices usually mean low gas prices which means more money in peoples pockets. Im not in exact favor of that just basic thesis, but do you like the Consumer Discretionary stocks in part because of that . Yes, i do. I know theres been some disappointment that the consumer has yet to really open their wallets even though gasoline prices have dropped this year, but i drove in from tampa last night late, and i passed a couple of gas stations where regular gas was 1. 95. Now, thats eventually going to put a lot of extra dollars in the consumer pockets, but on top of that, the improvement in the labor markets and the potential for wage increases going forward, those two items together, a tax cut and improving wages i think spells a lot of potential for the Consumer Discretionary sector. All that said, bruce though, your risk reward on the s p 500 looks slanted to the risk side because you see the s p 500 potentially testing and consolidating about 100 points lower from where we are with the upside being 40 points from where we are. How do you trade that market . Does that mean youre overall view of the market is sort of cautious . Well, our overview of the market has been cautious ever since april. We are not market forecasters. We like to consider ourselves risk managers, and our weight of the evidence approach showed that the market had turned neutral in your opinion back in april, and then turned negative in midaugust with the tape breaking down. At that point less than 50 of the Industry Groups within the s p 500 were in up trends. That told us the majority of sectors had turned down. So that turned our technical light from yellow to red. Then the market plunged in late august and Early September and typically when a market suffers a harsh correction, you go through at least a bottoming phase that includes several tests of the lows. Now, they dont have to go all the way back down to 1865, but i would think something under 1900 could be expected on the s p before we get the allclear sign. Now, our forecast or our outlook for 1865 to 1990 is a shortterm outlook. If we break through 1990 on the upside and the breadth of the market improves, we could turn more optimistic for a yearend rally which i think is most likely. End of year rally, not a buyer of oil and Energy Stocks. Bruce, thank you. Appreciate it. Thank you. Much more to do on power lunch. On deck, the one chart that says now could be the best time to invest in one small part of the market. What that is ahead. Also, six hot stocks and three very cold sectors. And its monday. Why not bring back a mystery chart. Can you guess the mystery chart today in this stock is the best performer in the s p over the last 90 days that has not been bought out. Here is a hint. Miami. The answer, coming up. At ally bank no branches equals great rates. Its a fact. Kind of like shopping hungry equals overshopping. Announcer babies who are talked to from the time theyre born. Are more likely to have a successful future. Talking and reading to children in their first years has a huge impact on what they do with the rest of their lives. The fewer words they hear, the greater their chances of dropping out of school and getting into trouble. Talk. Read. Sing. Your words have the power to shape their world. Learn more at first5california. Com parents im a gas service my nrepresentative. N. Ive been with pg e nine years. As an employee of pg e you always put your best foot forward to provide reliable and safe service and be able to help the community. We always have the safety of our customers and the community in mind. My family is in oakland, my wifes family is in oakland so this is home to us. Being able to work in the community that i grew up in, customers feel like friends, neighbors and it makes it a little bit more special. Together, were building a better california. Welcome back to power lunch. Apple says it is on pace to top 10 million preorders in the first weekend of sales for the new iphone. Apple shares are up more than 1 . Deutsche bank is reportedly planning to cut a quarter of its staff, 23,000 jobs. The cuts will come primarily in layoffs in tech and a spin off of the post bank division. And a few stocks are touching new 52week lows including helmerich payne. If youre a believer in the little guy and you want to invest on america because these are all domestic companies, some of these beaten down names might be for you. Dom chu is here to tell us why. Some experts like to look at some indicators, leading indicators for where the overall market, the economy, may be heading and small capitalization stocks may be part of that story. Tom lee earlier this morning on squawk talked a little bit about why hes watching small capsclosely. Some things you look for to say a bottom is in are usually small caps outperforming. They almost always turn up one day to two weeks before the actual bottom is in. Is that happening . Small caps bottomed versus the s p on the 24th of august. All right. So the 24th of august, thats why hes watching it. Thats right around here near the lows with he saw during the recent turmoil. If you take a look at the performance of the russell 2,000 small cap paired with the s p 500 you can kind of see what hes going for or what hes looking at right here. These guys have now started to outperform. The orange line is the russell 2000 index. You can start to see here ever so slightly its starting to lead its way out at least over the large cap s p 500 on a relative basis. Here is the interesting part. Theres going to be one part of the market in the russell 2000 Small Cap Stock universe that will get a lot of attention because its been the hottest Industry Group in the market over the last two to three years. If you take a look at all the top performers sips we saw that low back around the 25th of august the top 20 performers since that low, half of those stocks are in this one Industry Group, health care biotech. That makes up for a lot of outperformers. So certainly traders are paying attention to whats happening in the health care side of the business. Thank you very much. Down 5. 17 . When it comes to buying small caps, your next guest says the cheaper the stock, the more he likes it. Lets bring in small cap manager bill hench. Welcome to power lunch. We just talked about this with bruce. Cheap is in the eye of the beholder. Some stocks are cheap for a reason. Their business is slowing, earnings arent growing, whatever. What are the key metrics you look at to separate the good and the underpriced from just the bad and the ugly . Theres two things we do. One is valuation so we like things that are cheap on our metrics of price to book and price to sales and then just as importantly is the reason why that cheap stock is going to get more appreciation. Its going to turn itself around or get noticed by investors. Those are the two things you look at. As far as cheapness, youre at a great time. Not only the charts that dominic showed, but if you break that down further and look at the value part of the russell 2000, you will see its dramatically underperformed. There are terrific bargains. Whole sectors havent participated, and that concentration in biotech has really left a lot of names that are very, very good values. You know, its interesting because we just talked about housing and Home Construction a bit with mark keisel of pimco. I dont know if you heard that video. Hes very bullish. Some of your picks have to do with construction, probably more on the commercial side. Commercial metals. Is this again part of that were going to Start Building more stuff theme . We really are. And its not just in the major cities, its in all the tertiary markets. You had a big delay in a lot of things being maintained or new builds, not just in residential but in nonresidential and youre seeing it now. So its not something thats over the horizon or something were going to get in the next six or nine months. Youre seeing the building now and its reflected in the earnings and the stock prices. Much more so in the nonresidential though. The other two picks, general cable and microsemi. So commercial metals. We do have to leave it there. Well see you soon, bill. Thank you. Thank you. Moving on here on power lunch, coming up, the five big cap stock calls that need to be on your radar right now. Its called street talk. We do it every day. Later on, well tell you about one of the biggest winners in the crude collapse. Yes, winners. Were about to set sail again with our mystery chart. Three of you smart people in the twitter verse have already gotten it. There it is, up 22 in three months. I want you to think captain stubing. Stick around. It took Joel Silverman years to become a master dog trainer. But only a few commands to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. vo wit runs on optimism. Un on . Its what sparks ideas. Moves the world forward. Invest with those who see the world as unstoppable. Who have the curiosity to look beyond the expected and the conviction to be in it for the long term. Oppenheimerfunds believes thats the right way to invest. In this big, bold, beautiful world. It is time now for straet talk. Analysts recommend dags and the stocks you need to know about every day. Are you ready to go . Always ready, brian. Lets do this. H r block. The stock has done great, up 18 over 90 days, but btig said the run is done. They dont hate the company they just said the shares hit their target price and are fully valued. No catalyst until next tax season unless a lot of people out there are like me and they got extension and havent filed yet. Moving on to the second stock, mattress firm, tough month after disappointing numbers. Raymond james sticks with its outperform rating but slashes the price target to 60 bucks from 73. The firms view has not changed. High inventory turn and positive cash flows but here is something to watch. In the latest quarter comps in oilaffected markets were positive but then decelerated. There might be a lagging time when the oil prices are hitting. This is what we tried to talk about for months. Theres more money in peoples pockets but if youre on oil worker and you lose youre job, youre not moving to the man camp, up dont need a mattress. Stock three, ingredion. Citigroup raising the target ten bucks to 100 per share. 20 upside from here. They say supply issues for corn sweetener are likely to raise the pricing. The average target is 90. Citi a little more bullish than most. Im said you said it was formally known as corn products. I was scratching my head. Its a transformer villain also. Exactly. More than meets the eye, brian. Next stop here silver wheaton hitting a new low. The rating goes from a market perform. Theres a tax dispute with the canadian government. Thats unresolved. Theres also uncertainty surrounding development of a project thats 13. 5 of the net value. Theres greater exposure to silver which has underperformed gold. You know how much it underperformed gold . Its been very dramatic. Its hard to believe this time four years ago it was at 41 bucks. Its at 14 now. We need the burl ives trade, silver and gold. Today foundation medication, its a biotech working on cancer cures. The company is the leading in profiling. The stock is it down big in the past three months because of earnings misses but the analyst says these are, quote, bumps in the road. 30 target on the stock. Its about in line with the average target of the analysts that target the name. Watch this action tomorrow because theres an analyst day meeting so it could move the stock as well. Thats it for street talk on a monday. The final oil trades crossing for the sessions. Lets get to jackie. Were trading at 44. 02 right now. So the question is whether were going to break under 44 at the close. But several factors impacting us to the downside. Fresh news thats been out from the opec monthly bulletin and some rumors crossing the trading floor. Were going to have the Closing Price for you. Well talk about whats impacting oil and where it could go from here. Stay with power lunch. Without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. Im Sharon Epperson and here is your cnbc news update. The head of Irans Nuclear agency says tehran is ready for International Cooperation regarding the nuclear program. He spoke at the annual General Assembly in vienna. Mexicos foreign minister calling for a swift investigation into the deaths of two mexican nationals in egypt after Security Forces mistakenly fired on a group of mexican tourists. Six survivors say they were bombed by helicopters and an aircraft. European airplane maker airbus formally opening its first u. S. Plant in mobile, alabama. The plant will build the a320 jet for north American Airlines with the first two planes going to jetblue and american. Two men on a motorcycle narrowly escaping death when they were attacked by an elephant. The elephant walked onto the highway from a nearby forest. Most people waited for it to go back into the forest but when the motorcycle riders tried to ride past it, they were attacked. They received minor injuries but their bike was trampled. And thats cnbc news update this hour. Back to you. Nature one, human engineering zero. Thank you very much. Appreciate it. The oil market closing for the day. Lets get to Jackie Deangelis at the nymex. There may be some bulls. I dont know if theres elephants walking through the nighex. Probably not today. Oil prices closing 44 on the nose. We saw downside pressure, about 60 cents because of whats happening in china. You had the opec bulletin out this month for their monthly bulletin talking about seeing nonopec producer having their supply go down. At the same time o pec is saying they think 2016 demand is going to go down. The products are falling out of bed. Thats a demand issue and this is a rumor circulating across trading floors, the potential theyre saying for an emergency opec meeting. The last we heard from saudi arabia they said theres no need for opec to meet in an emergency situation. Interesting rumor. Thank you very much. Appreciate it. Well, many stocks hitting new lows today but bp is hitting a new fiveyear low. The Company Formerly known as British Petroleum not only at a fiveyear low but if you bring up a 20year chart of the stock, which, of course, we can, with the exception of the mccondo Oil Rig Disaster in 2008 along with the financial crisis where the stock briefly fell below these levels, you are almost at a 20year low for bp. A fiveyear low, but with the exception of that brief blip, really have to go back 20 years to see price this is low. Just trust us on that one. This is kind of a radio segment on tv. There have been winners and losers in the crude price collapse. While a lot of focus has been on two is getting hurt, one group could be poised for more gains. Morgan brennan has more. Yes. In the first half of 2015, rates for very large crude carriers that carry up to 2 Million Barrels of oil peaked at 20,000 barrels a day. But by august rates had plunged 70 as demand slowed down ahead of refinery machines season. Now, even now the industry gauged the baltic dirty tanker index is down 26 for the year. Analysts say with crude below 50 again this sector could experience its best Fourth Quarter since 2008 as china builds up crude reserves despite a slowing economy to take advantage of higher refining margins. Chris weatherby at citigroup says rates are already rebounding up 50 from the august low with low fuel costs, the tail wands for earnings and a limited number of new ships coming on line. It could bode well for stocks like euronav, nordic american tanker, small cap names but ones that represent pure plays. T Teekay Tankers and tsakos could benefit. If iranian sanctions are lifted, that would push prices lower and further boost demand for crude transport. Back over to you. Morgan, thank you. Apple shares are higher today. This after the company said sales of the new iphone 6s will likely break records but will the device get the stock rallying again . Lets ask the trading nation team. Alex covered apple for jmp, zach care bell. Alex, 150 price target. Are you happy with the news and the momentum . Very much so, brian. And we expected it coming in. The worlds best smartphone just got better with the surefresh. Were seeing the longest lead times here on the higher average selling price 6s plus. This is another good news cycle for apple. Share gains in north america, even more massively penetrating the china market right now. We think they are going to go on to another record december quarterback, perhaps 80 million or more in unit sales. We think thats a reason to buy the stock. Whats the risk . Well, i would say the risk is that we do get macroeconomic slowing as a repercussion to whats happened in china and maybe the numbers arent quite as good. But even if that does happen to be the case, jmp would argue this is one of the safest ports in the storm. Its trading at a discount to the market multiple. Dividends are rich and incriesing the company has a fort res balance sheet. Its hard to see anyone who is not on an android or iphone. The two of them have the markets locked up. Is that enough to make you like apple as an investment given that growth is slowing . Look, i have known apple personally and the fact is almost anyone who has invested in anything if theyre in an index fund owns apple personally. To some degree apple is a bellwether of the new economy. And whats interesting about that is there was the alibaba story in barrons. The negative case is the consumer in china and apple depends for a lot of forward growth on the consumer not just in china but throughout the emerging world. If that story is fundamentally broken, there may be a problem unless, of course, you treat the smartphone as a utility. Meaning the world could fall apart and people will still need to spend whatever marginal income they have and maybe income they dont have on these devices. So in that sense apple is driving whatever is driving the Global Economy forward, apple and its like are. So thats a reason to be in these names and the fact is none of us have a choice but to be in apple because if youre in any index fund, youre in it anyway. Can i ask a totally random question . No. I will anyway. Im going to do it. We never talk about india. The indian population is almost the same as china. Their economy is growing. We never talk about the iphone in india. Theres other parts of the world that can pick up the slack is my point. And that is an incredkrecrey important point. India has been resistant to foreign goods. They like if when stores show up there. Thats going to change. Theres a voracious indian middle class thats not apple exposed. You have this vast market we havent factored in. I guess it wasnt such a random question. Not at all. Thank you very much. For more trading nation, head to our website, tradingnation. Cnbc. Com. Lets look at todays mystery chart. This is the top performer in the s p 500 over the past three months yet its Strong Performance is not tied to any deal news. Your next hint, this stocks growth can be tied to the benefit of lower gas prices. Figure it out yet . If not, well reveal the answer straight ahead. Plus, six hot stocks and three cold sectors. Were naming names when power lunch returns. Months yet its strong were naming names when power months yet its strong were naming names when power i could get used to this. Now you can, with the luxuriously transformed 2016 lexus es and es hybrid. 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. Earlier on the show we promised you six hot stocks in three of the coldest sectors. First up, the materials sector. Down 13 over the last 90 days but martin mare yeti and Vulcan Materials have done great. Hopefully some infrastructure build coming out. Next, the energy sector, down 21 over three months but Cameron International and retine ri tesoro have done well. And finally the industrials. That group down 8 over the summer, but its not all bad. M s masco up 11 and Lockheed Martin up 8 . Alibaba falling today, down 40 since the start of the year. According to barrons there could be more tough times ahead. Theyre saying baba could fall another 50 . Lets bring in Scott Kessler from s p capital iq and rob sanderson. Great to have you with us. I know both of you dont particularly care for this barrons piece. Scott, you said theyre late to the game. Its easy to come out with an article after the stock is down 50 . Rob, you said this is not a high quality piece of journalism. I dont want to indict the article but i want to go to some of the points. One of them is just the whole notion that chinas growth is slowing and that somehow you guys with buy ratings think alibabas growth can continue at the same pace. At the beginning when you first took on this name, was chinas ecommerce growth and chinas growing economy a part of a thesis for alibaba. Did not matter if chinas growth was going to slow 6 versus 7 . Theres no question, melissa, that chinas economy and growth in ecommerce was a factor, and it continues to be a consideration. The way we look at it is the economy is still growing there at a healthy clip, obviously not as much as it was, but whats important is the secular growth in terms of the internet, in terms of internet users, in terms of broadband, and in terms of ecommerce we think is strong and intact. If you look at alibabas growth in the june quarter on an adjusted basis, we saw revenues increase 36 . Rob, what sort of adjustments do investors need to make out there when it comes to ecommerce projections for china if the gdp prints below 7 . With each passing data point it does seem to indicate chinas gdp will be slower than even previously expected and that was already slow growth. I think the key considerations here have to be the growth in wages and disposable income, which is a derivative of gdp but still as scott mentioned i still think a rosy story. One thing that may not be getting as much attention as it probably should is the valuation of the currency because dont forget, the profits that are booked in china have to be converted back to u. S. Dollars for this u. S. Denominated stock price and i think the currency peg is really one of the larger risks outside of the consumption growth in china. Rob, how do you get to 105 . Whats interesting is both of you are positive on the stock but the price targets vary widely. Scott, you had gotten 83 prior target. Rob, you have 105. Rob, for you what is the most important driver to the 105 price . Its growth. Growth in what . Its a pe to growth multiple. Under 1 still so healthy multiple but below what internet large caps have traded at. Its the consumption pattern, growth, and take rate. Scott, for you whats the key driver for 83 . The way we look at it is a pe and a pe to growth ratio and i think its important to mention that the barrons article highlighted ebay has the most appropriate comp. Were looking at growth for ebay at roughly 5 whereas were looking at 25 for alibaba. So a 5x comparison there whereas the multiple is really just a third higher than what would you use as a comp, scott . Well, i think the most appropriate comps frankly are the chinabased companies that are really more diversified, conglomerate type companies, baidu and ten cent. Those companies are trading between 20 and 30 times forward earnings. Alibaba is in that kind of range. We think it deserves a higher multiple than its trading at now. Rob, whats the most important comp to you . That group that scott mentioned as well as as a benchmark look at the high growing internet stocks in the domestic market and apply some discount to those multiples. Guys, great to speak with you. Thank you. Rob and scott. Brian . Im not one to use the term gamechanger. In fact, i hardly ever use it because i hate it. Its overused and watered down. That said, up next, we have a gamechanger for everyone looking for college. vo rush hour around here starts at 6 30 a. M. On the nose. 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. I take prilosec otc each morning for my frequent heartburn. Because it gives me. Zero heartburn prilosec otc. The number 1 doctorrecommended frequent heartburn medicine for 9 straight years. One pill each morning. 24 hours. Zero heartburn. Hey hi our cloud its a platform based on awesomeization really . Can it keep our data where it needs to be no matter what country were in . Integrate with our systems to help keep transactions secure . Combine Customer Data with likes, tweets, the weather, to predict trends . That would be awesome. Tote . Now theres a cloud that understands business. Now theres the ibm cloud. 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. Tomorrow to cnbc. Robert shil sr on sidewalk box 8 00 eastern time and he says the stock market is overvalued. He will make that case plus capital managements kyle bass joining sidewalk on the street for an exclusive interview. 10 30 a. M. Smiler and bass both interesting, smart, successful guys tomorrow on cnbc. Right now when you choose a college you have a couple things, where did your parents go, what schools to you like our use some of those allusive rankings. But the federal government has rolled out something over the weekend which i think and i hate to use this term really, really could be a game changer for how you select a college. Cnbcs Sharon Epperson joining us now. This is a College Score card, i was scrolling through t its awesome. It is awesome and i will agree with you it is a game changer. It is the administrations attempt to help students and their families make better, more informed decisions when it comes to College Costs and affordability to avoid financial difficulty, the website is called College Score card. Ed. Gov is designed to determine the cost of college, potential debt and what kids will have to pay for and pay out later. You can compare schools the average koths cost of attendance and salary after graduation. For example, if you want to search for a four year public or private college or university with an average under cost under 15,000, a Graduation Rate higher than 75 and average al sees after graduation more than 60,000 per year, four schools will pop up, princeton universi university, Georgia Institute of technology, university of King Abdullah berkley and harvard university. Now, private universe on the list, princeton and harvard have the highest salaries after graduation, but princeton also has the lowest annual cost in the group. At least over 8,400 a year. Attending princeton is cheaper than harvard and the two Public Institutions on this list. These are average costs, depending on the fetd ral, state or institutional aid thats available students may pay more or less but the tool is a great start to help families gather the data and numbers and experts i talked to applaud the College Score card for providing dat that that was not previously available and its expected to lead time improvement in information provided on many College Search sites. I love you threw the harvard in there, you and melissa should hang out together. Number two, people look at that and say 8,000 to go to princeton, are you nuts . Its because thats the aid, right . Thats the aid. Princeton gives people free tuition if they cant afford it. The average get that people have for princeton is under 7,000. They give it to you for free because they are sitting on 16 million in an endowment. The other thing, too, i love this by the way, the other caveat is that the salary data is only of those students who took annual aid. Exactly. If you borrowed zero you are not going to appear on that chart. The government is saying this is pretty representative of whats out there, what youre likely going to make, it is based on students that receive aid that does skew it a bit. One of the experts i talked to said is missing is the debt service to income ratio. Sure. Theres holes, yes. But you can kind of figure that out yourself because you can figure out what the total debt is based on the particular school, you can also look at your familys income range and how much you are actually going to pay as opposed to someone it will evolve, its awesome. I love it. Its the go to guide. It really is. Sharon epperson, thank you. Where did you go to school . Melissa, where did you go to school . Brian, i feel like youre insecure about where you went to school. I went to large land grant public university. Hey, we had cows on campus at virginia tech. You are a lucky guy. I like cows. We have a great vet their school. Final look at todays mystery chart. Full steam ahead. Wednesday up next. Everyone loves the picture i posted of you. At t reminds you it can wait. Lets reveal its mystery chart. Up 22 over the past 23 months best in the s p. A lot of you got t Royal Caribbean cruise lines, they are sitting at an all time high, no doubt a low fuel cost beneficiary, melissa. With us doug sandler and steve mosoko joins us now. Steve, im going to start off with you. Theres Something Interesting that popped out at me when i was reading the notes. You said the fed raises rates and say theyre data dependent that would be a disaster. Why would that be . Well, i think that would create uncertainty. Uncertainty as to whats happening next, when the next rate increase is coming, how big the next rate increase will be and market hates uncertainty. I think the market would clearly trade down on that. As ive said in the note, one of two things happens, either they dont raise rates or if they do raise rates they give more detailed answer as to what comes next. Doug, steve laid out something that could royal the markets a bit if they open the door and left the door open to uncertainty. In your view does it make a difference what the fed does and says in september when you say you like banks and Home Builders . Well, first id say with the fed lets i think he makes a good point. What they do and what they say need to be consistent. Our view is if they raise rates, whether its september, october or the december meeting, its probably a good thing. Its a lot like waiting for a spanking. The longer it takes before you get it the more you are worried, when it actually happens it isnt so bad. I think the market is going to feel like that. We actually end up look gts at stocks and as long as rates dont go up to a point where they start to be taking the bunch bowl away, in our view 3, 64, 5, 6 . The multiples will go up. Maybe not the day the fed does it but in the next six to eight months. I like a fed rate hike. I think its what the market wants. From the Home Builders and banks i think ultimately fed raises rates because they think the economy is recovering. Right. When that happens banks and Home Builders are late Cycle Companies and tend to do well when consumers feel good. Just like theyre taking cruises on Royal Caribbean, buying homes and borrowing money from the bank. Steve, what sector or area do you like the markets regardless of what the fed does . Does that exist for you . Well, it does and i think there are a lot of stocks that have reeked extremely negatively for fears of a fed rate hike, i particularly like a lot of areas of reets, mortgage reets. Guys, great discussion. Thank you for your time, doug and steve. Whats on fast money tonight . Well, brian, i dont know if you have seen gopros chart lately. In the past month it is down 44 . So tonight why now could be the time to buy gopro and why a company out there might be looking to buy gopro as in acquisition. Will you be wearing a gopro on your head . Possibly. You will have to tune in at 5 00 to see. We want to see what youre seeing, that angle. Well tune n melissa, thank you. Closing bell starts right now. Hell loerks welcome to the closing bell, im kelly evans at the new york city stocking exchange and im bill griffeth. Oil prices dpaulg on the back of weak chinese data over the weekend and opec now saying these low price right side hurting u. S. Oil production. We will take you live to the nymex. The price of crude continues lower and with it goes gasoline too. And with it goes the stock market as art was pointing out today, the dow is down 72 points at the moment. Apple doing all right. Its saying this