Transcripts For CNBC Power Lunch 20151014

Divide at the Federal Reserve. But we do begin with fears about the worlds biggest retailer. Shares of walmart tanking right now after cutting its threeyear outlook. Were currently down by 8. 3 at 61. 16 a share. Walmart executives meeting with analysts at this hour, as we mentioned, and Courtney Reagan has all the details of it. Hi there. Walmart investor meeting, the analyst q a wrapping up, the group asking for more clarify on the warning on longterm guidance but not much more clarity was given. Executives highlighting that the Major Investments they continue to make for the earnings per share impact. Fiscal year 2016. Walmart now expecting sales growth to be flat due to Foreign Exchange impact. Also for 2016, reiterating the earnings per share guidance of 440 to 470 but 2017, thats when the he have yet guidance comes in. Eps down between 6 and 12 from prior year, walmarts guidance given. The impact really lies in the fiscal year 2017. Walmart says its the second year of heavy investment for the company, mainly in ecommerce and wage increases that. Wage investment accounting for 75 of the eps reduction in fiscal year 2017. Moving forward, walmart sees 2018 relatively flat, 2019 eps up 5 to 10 from the prior year so as a result of all that have investment basically walmart cfo holly says walmart expects sales growth of 45 billion to 60 billion over the next three years and a 20 billion Share Buyback. A lot of numbers to go through. A little factoid with you, with the lows of the day walmart lost more than 20 billion in market cap. This is the fourth worst trading day for walmart in 20 years. Dominic chu has been looking at where analysts stand on the retail giant. Dom . As we talk about the 20 billion Share Buyback that courtney just referred to, its amazing to think that 20 billion at its low that has shaved offer the value of walmart overall the, so as you look at intraday, still neither lows and if you look year to date the stock has been on a fairly decent slide and of the yeartodate chart not pretty at all for walmart. Just to put the 21 billion in perspective, if you take 21 billion and take a look at some of the companies that equates to in terms of market value, its pretty interesting. The likes of hershey worth around that amount of money and mike ron worth around that amount of money so its almost like youve lost that company in terms of market value. When it comes to what happened to the analysts here, on average they still say that the target price implied by analysts so far means theres possibly 12 implied upside. There are eight buy ratings, 19 holds and 3 sells. It also, again, just to kind of put a cap on this, mandy, 21 billion in Consumer Product terms. Its the equivalent at average prices on walmart. Com of 600 million boxes of pampers diapers to put in a bit of perspective. Got that perspective very clearly in my mind. Thank you very much, dom. Walmart is the biggest drag on the down as the dow is down as much as 128 earlier and walmart pulling down the Dollar Stores and bob pisani joins us from the floor of the stock exchange. Hey, bob. Getting a modest rally in the middle of the day. Put up the s p 500, 1994 at 11 30 for the european open or close and we moved up rather dramatically. We can show whats going on and were in positive territory and now sitting flat. Energy materials and health with a rally late in the afternoon, late in the morning at this point, right across the board. No particular movement, no particular reason for that but put up energy, materials, health care, technology and Consumer Staples leading the market. A lot of people are saying walmart is the reason the stock market dropped. Thats part of it, but look at s p 500. Walmart announcement came out around 10 30 and we saw a further decline after that but stocks had already been declining going into that. Lack at the department stores, sears, jc penney, dill yards, nordstrom, all to the downside as well as the discount, target, dollar tree, kohls and ross stores but, again, walmart dropping before going into the announcement the ipo market facing its biggest test of the year. Kayla tausche reports on it from the nyse. Hey, it is a big test, and its a turbulent market backdrop. Two debtheavy companies are still on track to price their shares for some 5 billion in stock. Its the biggest week for ipos that weve seen all year. First you will albertson, the Third Largest Grocery Store in the country and its hoping to put its offering between 23 and 26 a share raising about 1. 6 billion at midpoint and up to about 1. 9 billion and payment processor first data that wants to raise its price between 18 and 20 a share and at midpoint of that range it would value it at around 17 billion. Well see after market close whether their advisers decide if those ranges still hold. What they will look at is the vix as a broad index of appetite and thats up slightly but still below the 20 level. They will also look at the closest stocks for albertsons, and theres kroger down 3. 33 and, unfortunately, walmart as we were just discussing. You know the story, walmart down 8. 5 , think first payments or fis, the only name in that bucket that is in the green. If thats Companies Price below the range they wont be alone. Majority of deals that happened since labor day priced below the range and the average deal has traded down 3 . Thats not a great return on your investment so some companies are saying well wait. Neiman marcus is the latest to do so and for each of the last two weeks, guys, 11 companies on the calendar set to ipo in each of the last two weeks and only five happened and two behemoths are going to try to make it through and well learn in a few hours whether they can do it. Federal governor Daniel Tarullo speaking to our Steve Liesman on our power lunch and he made news saying he doesnt think its appropriate to raise Interest Rates this year and fed chief yellen said she expects a rate hike this year so are we seeing the signs of an internal revolt . Too strong a word, divide at fed, Steve Liesman . One analyst stan greenhouse from btit called it mutiny at the fed. Two writers saying they dont think the fed should hike this year this. Comes after fed chair janet yellen saying in late september that she is among those that see the rates being raised in 2015. President ially appointed governors that work right with the chair and heres what tarullo said yesterday. Right now my expectation is given where i think the economy would go you wouldnt expect it would be appropriate to raise rates, but i want to hasten to add that that is an outlook that changes based on developments in the economy and our being forward looking about it. Well talk about that in a second but heres what the fed governor said saying, quote, equilibrium real rates likely to remain for some time and policy options more limited if conditions deteriorate than if they accelerate, Risk Management considerations counsel and waiting to see if the outlooks diminished. Disagreement over the timing 6 liftoff is getting much more heat and personal than i, diane, would expect. Janet yellen spoke ahead of the second jobs report and its entirely possible, folks, that both governors got a green light to make the remarks. Heres the problem. Yellen is likely comfortable taking october a rate hike in october off the table and unlikely uncomfortable taking it off and thinking there has to be a live meeting and the comments may have gone further than yellen wanted appearing the appearance of a couple of doves. What did dubbedly say . In the middle feeling that it could happen. Everybody is pred dating this on the outcome. On the outcome. On the data. On the data. Think about between now and december. Have to leave it there. Lets go to seema mody for a news alert. Hey, tyler, several reports that coke and pepsi are looking at making an investment in chobani and cnbc is learning that cocacola is not actively looking at chobani as an investment and thats according to people familiar with the company. Shares higher than. 07 in terms of trade. To housing and the number of people applying for a mortgage tumbling. Diana olick with whats going on. Reporter all of this is due to the start of new regulations for lenders that went into effect october 3rd and had everyone worried so the big jump to get in before the deadline and then the big drop afterwards, but there is something more here. Break out applications to buy a home, they had surged 27 before the rules but fell 34 after and are now below last years levels for the First Time Since last february which was a very slow month for sales. Quick note though, the tenyear yield which rates followed and Mortgage Rates headed higher. The big stock stories of the year, walmart. Is it a Good Opportunity to buy the stock or should you stay away . Fellow dow member nike meeting with analysts today. Its stork up 30 this year and nikes ceo will join us live. You are watching cnbc, first in business worldwide. Bob dylan. To improve my language skills, ive read all of your lyrics. Youve read all of my lyrics . I can read 800 million pages per second. Thats fast. My Analysis Shows your major themes are that time passes. And love fades. That sounds about right. I have never known love. Maybe we should write a song together. I can sing. You can sing . Do be bop. Be bop do. Do be do be do. Do do do be do. [annouget up to 48 monthsy interestfree financing on tempurpedic. Save 300 on beautyrest and posturepedic. Or choose 300 in free gifts with stearns foster. The triple choice sale ends sunday at sleep train. We figure you probably dont have time to wait on hold. Thats why at xfinity were hard at work, building new apps like this one that lets you choose a time for us to call you. So instead of waiting on hold, well call you when things are just as wonderful. [phone ringing] but a little less crazy. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Welcome back to power lunch, everybody. Im mandy drury. Well, its been five months since moving into the Corner Office of allianz. 85 million customers and 147,000 employees. They are also the parent to pimco. He joins us now in a power lunch exclusive. A pleasure to have you here. Thanks for having me. Lets address the elephant in the room and thats bill gross their 100 million potentially plus lawsuit against pimco. Does this lawsuit have merit . No, it doesnt. As you can imagine im not allowed to comment in detail on the pending lawsuit that we feel is without any merit and the more important thing it dilutes the fact that pimco has done really, really well last year since hes left, and hes spending all its time on serving clients and thats what we should talk about. But is it possible that perhaps maybe the culture at pimco needs to be revamped. Is there anything that you would change . I think its always different in culture when you have a company when after the compared to the time after the founders left so certainly things will change and if they are becoming more of an institution over time then culture will adapt but i dont think theres anything that has to change at pimco it. Lee involve now that were beyond the time of a founder of that institution and i think they are doing all the right things at moment and thats focusing on client and performance and nothing else. Pimcos performance and its funds have held up, you say its even improved and the company has lost assets, and thats a loss thats affected your Asset Management business. I know ceos dont live in retrospect. Yes. But in retrospect, do you risch that you, allianz an pimco, had been able to work it out so that bill gross could have stayed at company, or did he have to go in. Its always an if, if, if and i was not involved at the time so thats not an evasive answer. I dont want to spend time on history but spend time on framgt future and delivering growth to our company. So let me then turn the conversation this way. Pimco is a big part of your Asset Management operation. Absolutely. The biggest by far, the fourth or fifth largest Asset Management division in the world butates Management Division for the first six months, profits down 20 from where they were. Yes. How much of that decline is directly attributable to the turmoil at pimco . How will you turn it around and p. E. T. Pimco, and will you ever consider selling . So many questions. You can handle it. Absolutely no way would we sell pimco. Get this question all the time from speculators. It has been a fantastic part of allianz over the last ten years. Since we acquired it the company has grown 20 compound both in terms of assets and earnings. Its been a spectacularly positive story for us and it will continue. Actually the outflows and the performance issues started when mr. Bernanke whispered the word taper. That was long before we had the personality issues and that gets often confused in markets. Investors are thinking about how they invest in fixed equities and other Asset Classes and if you imagine a rise in Interest Rates and the sore of the traditional products become less effective thats just a fact we have to deal in. Thats why pimco is focusing on income products and alternatives and they are doing really well so despite outflows we see from the core products, we see inflows in the future growth platforms and thats giving me a lot of confidence that at some point, sooner or later well turn things on flow and earnings. Yes, please. If i may just follow up. Cutting people and cutting costs, we really want to focus the team and the team wanted to focus on Service Clients and really driving performance, and when the time is right well adjust to the different operating environment. A question on acquisitions moving away from all of that. Theres been quite a lot of m a and deal making going on, lots of activity here in the u. S. , Health Insurance sector in particular. Any acquisitions on the horizon for you, allianz in. We always look for investments and if an attractive opportunity arrives well go for us. You can tell us, we wont tell anybody. Of course you wont. Were very disciplined in terms of what were looking at, particularly in the property and casualty industry, and the second thing is we look on to acquisitions that really happen into markets where already we have a strong position, where we have a Strong Management Team that can manage intergrags and we try to make sure to overpaying and some of the tells weve seen recently wouldnt meet the criteria i know you have a question but as a further on my question, geographically is there an area of the world youre interested in. Its an ambidextrous strategy. Looking to grow in the markets and also in europe where theres a lot of room for consolidation and for the last five years weve done many more bold acquisitions and right now were the Market Leader in turkey, a country with as many people as we have in germany. By the way with the same market share in turkey as in germany. Let me get a question in as an observers of the global and germanys economy. Whats been going on at volkswagen, how damaged is that brand and has this trickled over and affected germans . The second question i dont think so. I think that thats an isolated case and i would see it because germany has a great each utation in terms of corporate governance. We have a great reputation for high quality product and have a great reputation to take care of our clients so i would call this an extraordinary event in many ways but also the good sense that i dont think that you have to worry about made in germany at all. Now, obviously we dont like what we see and we hope it gets fixed very, very quickly because people think about us as being part of the community and ill tell you the Business Community didnt like what it was seeing. Okay. Thank you you so much for being with us. Thank you very much. Thank you very much. Naoki meeting with analysts said, its stock up 30 this year. How does the athletic giant plan to just keeping doing it . Nikes ceo will join us in just a little bit. Where. Its been smashed, dropped and driven. Its perceptive enough to detect other vehicles on the road. Its been shaken, rattled and pummeled. Its innovative enough to brake by itself, park itself and help you steer. Its been in the rain. The cold. And dragged through the mud. Introducing the allnew mercedesbenz gle. Its where brains meet brawn. A 401 k is the most sound way to go. Lets talk asset allocation. Sure. You seem knowledgeable, professional. Would you trust me as your Financial Advisor . I would. I would indeed. Well, lets be clear here. Im actually a dj. [ dance music plays ] [laughs] no way i have no Financial Experience at all. That really is you . If theyre not a cfp pro, you just dont know. Find a certified Financial Planner professional whos thoroughly vetted at letsmakeaplan. Org. Cfp work with the highest standard. 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. Welcome back to power lunch, everybody. Im mandy drury. Its now time for the power pitch with two entrepreneurs who have only 60 seconds to try to convince a panel of experts that their business has what it takes to make a big swing for tennis lovers. Lets listen in. Hi. Im lavie. And im sergei feingold. Knowing how many tennis balls you hit wont improve your swing and knowing how many steps you take and were focusing on improvement rather than results. This lets you see swing data on your racket as well as the phone and the challenger is just as versatile as you are, can you take it anywhere and attach it to anything. Weve raised over 100,000 from poem who shared our vision. Ive been a certified coach for seven years and have played all my life and see a need for instant and actionable data. Have it on court and check progress and share and compare data with players everywhere. Were not only a tennis company. Were building an entire ecosystem for courts. You can put it on your bike, snowboard, golf club or even your car. Welcome to todays power pitch. You saw the guys take a swing at pitch and lets meet panel. Joining us is the board member of the new york angels and advises and invests in over ten startups and from the bay area david wu from maveron and the firms portfolio includes ebay and group orrin and in san diego we have former pro tennis player james blake who has won numerous titles and championships and even reached the semifinals of the 2008 beijing olympics. First question goes to you. Youre not first to market so how do you compete against big names like sony who already have similar offerings out there . Is one of the big key differences that we have is the screen, right in the screen gives us instant data and as a coach myself that gives us a big advantage because now you can fix strokes on court. You can kind of build credibility with your players and really gives you a better way to share data. David . I played competitive tennis in high school and remember one of the coolest things was at tournaments Training Camp they actually tracked a few of my matches at at shotbyshot level. Almost all of the actionable insight came from overlaying that shotbyshot choice on top of which points i won and lost. How soon are you going to be able to integrate in context actual data . You hate great shot thats a winner and maybe spin the racket and hit the racket and tap the bott bottom, some nonintrusive way to say thats a winner. At end of the day you say what did i do on my winners technically, what kind of shot was it and what helps you there in. And challenger helps with multiple challenges, playings doubles or singles, two or four on the court and they can all communicate with each other. Can you see what you did and you can see who reacted to it and how your stroke affected their response. James . It this really going to be marked the towards pros or those looking to get to the pro level . Not necessarily trying to go up to pros and say this will take you from number 50 to number 1 but looking at that market of people trying to improve actively no matter what level they are at. One thing to be on the shifls, another thing to have consumers proactively go out and want to find you. How do you spread the word about your product . One thing thats helped us is that theres competition there and they have helped pave the way for people to go and search tennis sensor and tennis tracker and we can kind of rely on that. Coached a few teams in aroundo and if one person knows about it several other people with. If this is 200 playing with this device and it breaks every time it his it ill be reluck tonight buy it again. It cwill be incredibly durable. I think that this is a really cool product and i also love the idea of empowering consumers with data but im really concerned about the competitors in the space, especially big names like sewny that already have Extensive Research and development, a lead into market and lots of marketing spent so i feel like i would need to see more data with them out in the marketplace and for right now im out. David, what about you . I think they are, would go on all the right things but im not sure their v1 product has enough there yet to move the needle so im not ready to invest yet so im out for now. Jaimts james . I think its a cool product works have loved to see it and seen some of my information, how hard im using it and what kind of spin rate but i just dont know if the marketplace is big enough for enough top junior players or top level players that would make this profitable so for right now im out. Whats your reaction, three outs but, you know, interesting feedbacks rback as well . Negative feedback is more positive feedback because it lets us know what we need to improvement well keep working to improve it and get to where we want it and make it useful for players everywhere. Thats a great attitude. Thanks to all and thats todays power pitch. What about you . Do you agree with the panel . Let us know if you are in or out on shot stats. Tweet us using the powerpitch or tweet me and more on power pitch. The Goldman Sachs has been hired to help the company find a buyer according to a bloomberg report. Fairchild semi is in potential discussions with suitors including on semiconductor and infinion technologies this. Follows yesterdays report that the sandisk, another semiconductor player, is exploring athe possibility. Gold trading at levels mott seen say way back on june 30th at 1,179, up 1. 25 . Moving on to silver, copper, palladium and platinum all in the green for a change today. Thats 4 for 4 there with silver up 1. 3 and copper up a percent and palladium up 2 and platinum up 1 2 of 1 . Dominic . With all the metals are included up. Like you said. If you look at some of the names like, all up around the 5 mark in trading, the were iners are winners as part of the gold ticker gdx, up about 4 on the day as well so gold miners following gold prices as they, tyler, typically do. Dom, thanks very much. Economists can be all over the place trying to predict key Economic Data month to month. Well tell you about a more accurate way to forecast Economic Performance in realtime. Plus, while walmart struggles fellow dow member nike just keynes doing it. The stock is up 13 minute. The companys show joins us live right after he finishes. You wouldnt take medicine without checking the side effects. Hey honey. Huh. The good news is my hypertension is gone. So why would you invest without checking brokercheck . Check your broker with brokercheck. Hi, everyone. Im sue marrero, and here is your cnbc news update. Russian foreign minister Sergei Lavrov says the u. S. Refused to meet with the russian delegation to coordinate military actions in syria. He told russian lawmakers in parliament that the u. S. Declined to send a highlevel military delegation to moscow. London and tokyo becoming friendship cities after the leaders signed a cooperation deal. Londons mayor and tokyos Prime Minister agreeing to spend their money on culture and tourism. Kohls is expanding its same Day Delivery Service to six cities. Its teaming up with an uberlike startup that contracts startups for those deliversries. And lawyers for a new york city woman who sued her 12yearold nephew for injuring while excitedly greeting her says connecticut law forced her to go to law over her medical bills. Yesterday a jury rejected jennifer connels lawsuit seeking 127,000. The lawyers say the nephews parents Insurance Company only offered her 1. Thats the news update this hour. Back to you, ty. The story behind the story. Absolutely. Connecticut state law requires that i file suit to seek those funds back. All right, sue. Thank you very much. Is there a better way to do economic forecasting. Bob pisani has a special guest at new york stock exchange. Bob. Thank you, ty. A lot of applied ma schenck and now to Even Economic forecasting. The ceo of nowcast joins us. Gisele, we do pick whats wrong with the way they do this . Theres basically no science. Were using Machine Learning and paying data. Whats the secret sauce . How do you actually go about getting economic forecasts and getting numbers that compete with wall street . Well, we have a very sophisticated algorithm and econometric pattern and were looking at Human Behavior to try to determine their consumption and spending behaviors. People look for inflation, the word inflation when they are concerned and youve turned this into an algorithm to get an estimate. We look at internet searches, ambient web, news, social media, blogs. A couple of forecasts recently. The floor was watching you very carefully on september 0th when you had an estimate for chicago pmi and put up the number, 53. 4 forecast and the forecast you had was 48. 1 and that came in at 48. 7 which got a lot of attention on you. I want to put up the august income number, the consensus was up 0. 4 and yours at 0. 3 and youve had a few hits recently. I guess the question is longer term how does it go. The cpi, an estimate for tomorrow, basically in line with it down 0. 2 . Is it your contention that the way youre doing this is superior to anything else that wall street is doing. Were using signs and big data and theres no way a human being can react fast and if you want more information go to tradertalk. Cnbc. Com and the full article just up on the website. We love tom brady talk. Thank you very much, bob. Lets take a look at whats going on in the markets. We can see the dow is being dragged likely lower by walmart, currently at 17,mark and this is after we got some disappointing news from walmart. Brad, starting with mal mart why do you think their forecasts may actually be spined as good news . Well, i think if you look at way walmart has changed their operations reasonsth recently, one of the big components there is that they are giving people raises. Their hourly workers across the board and they have announced they will pay people more. I dont think they are doing this because they will give them the money and the workers will have more money to spend and since think spend the money that will be a multiplirg fect. Reporter do you think this is good news overall and that maybe people are feeling more comfortable, maybe they have more wages and didnt have one before. They can maybe move a little bit further up the change the good news, if you will, is that a lot. Issues pertaining to walmart is i had sin kratdic and structural and company figure, but there is news relating to the retail sector, the u. S. And thats what weve been depending on, consumer disregulars ry. So the good news, theres bad muss in some of this bodes well for the broader sector. The seams number today not have favorable and this bull market is long in the tooth and has been resting heavily on the consumer in the u. S. For the global economy, much less a domestic economy, and the it remains to be seen if theres enough left. The current earnings season is starting out mod raft. The top line numbers not very favorable. Sounds like weve got to go, rich. Sounds like youre retaining take a look at nike. Its the number one per formerer on the dow. So far up 30 and now management meets with investors to man out how it plans to keep the momentum going. We are live from the nike investor day with nic es ceo. Thats next. Like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens every third tuesday. We have Pattern Recognition Technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. For all the confidence you need. Td ameritrade. You got this. Prge 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. Whyour boss . Ork for . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. You know, its been a volatile year for the stock market and one Company Stands out as the top performer in dow for 2015. Thats nic, up 30 so far this year. Niemi holding its Investor Conference out in oregon today where the company is laying out its plans for growth. Our sara eisen joins us with nikes ceo. Good to see you, tyler, and its good to be back in beaverton. Thanks for having us, mark. Absolutely. Lets start with the news you just made on investor day. 50 billion by 2020. Yeah. Thats an ambitious goal to add 20 billion in sales over the next five years. Absolutely, and were not shy about being am pishs with our goals, whether its product or the business. We feel very confident and our place here in the youths and around the world. Whats going to drive that because it actually took more than ten years. Yeah. To add the last 0 billion in sales. This is some super fast growth youre looking at. Ultimately the consumer votes every day and we need to make sure that its the best it can be. Im the product with have in the pipeline and leading up to the rio olympics is extraordinary, the best weve ever had so i feel confident in the product and i also feel confident in how were connecting to consumers. The brand is resonating around the world and were investing a lot in servicing and really tlk for the consumer, connecting the consumer not only to nic but also to each other. A lot of positive opportunities for us. As you say this, we watch walmart shares plunge. They were down as much as 10 . Is that another dow component, another globally exposed consumer giant . Is that the problem that they are not connectinged with the consumer and you are and is there a bigger takeaway about the health of the Global Consumer right now. The brand is resonating and consumers are voting around the world and we have a great growth story. 50 billion is a doable goal. Thats a number built up looking at every measure. Can you take a look at chart like walmart today and for those who look at it and say maybe the u. S. Consumer isnt in such great shape. Yes, nike is a growth story but what are you seeing in front of the fundamentals of this recovery . Were not seeing it. Were seeing the consumer in the u. S. Responding, you know, much like china. Its been a noteworthy i think is nikes performance in china, how weve done quite well and i think a lot of concern, not within mikey and within the overall market. Not seeing any of the slowdown in the chinese consumer. Were not seeing it. In fact, our brand is accelerating. Chinas interesting because its a massive opportunity in the sense. Its a mobile connections community. The growing middle class in i dont know is extraordinary and theres 30 Revenue Growth you saw last quarter thats. Weve set the marketplace over the last few years so the foundation for growth in china is as strong as its ever been. Emerging markets were a weak spot in the results. I know youre dealing with currency issues there and some slowdowns. When do you see that turning a corner . As we move into rio and beyond we think that things are stabilizing and that things will start to the actually pick up a bit. Even in brazil. Its all relative n. Brazil well start to see the appetite as the market hits reset, much like has happened in china. We think that the opportunity in brazil for nike is exceptionally. I would say over the in the weve seen double digit growth for the emerging markets and thats over the course of the next year. Nor north, nike still growing, what are your projections . Not all 1 is created equal and the growth for north america for america is quite exceptional. We have a strong category of offense in play. We have great relationships with our wholesale partners, our ecommerce business ask doing quite well. Have a new target on ecommerce that you wanted to share. Yeah. We projected today, were sharing with the investment community, that nike expects to grow our ecommerce business to 7 billion by 2020. Its at. A lot of that is coming from mobile . Snowmobile where were at and thats what we plan to do and we want to the connect them all to one access sgloint what else have you been doing digitally . Youve been relatively quiet since no longer working on hardwares and wearables. Theres a lot going on. Digital for us we see as one of the most and enable technologies that help us create new products, from product creation all the way through. I always ask about apple and your relationship with tim cook on the board and you say theres things in the works and tags a good arelationship what. Are you holding out for . We dont have anything to announce today. I know theres expectations today and i will say as we look ahead over the course of the next year, even today, well be announcing new partnerships that will be quite interesting to seem that were very fun its one in which to deliver more innovation and lets talk about you in just a moment. Havent learned from you since we heard phil knight is retiring and are you ready to step up as chairman in. First of all, its not a done deal, so to speak, i feel very appreciative of the confidence in me. Ive been in this role for almost ten years now. I know the company quite well and im very can have comment what im doing and incredibly confident in nike, our position, our Management Team so im ready. All right. Im ready. Thanks very much. Thank for. Nike is holding its investor day in beaverton and well send it back to you in new york. Nike was the only brand that my 12yearold wanted, resonating with 12yearolds. Theres a divide within the fed. Does janet yellen face a leadership crisis . More on that story still ahead and a look at sectors right now. Energy is currently the biggest winner with a gain of 1 and Consumer Staples is the big loser down. 8 . Youre watching power lunch, cnbc, first in business worldwide. Understands the life behind it. For those whove served and the families whove supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. Welcome back to power lunch. Im mandy drury. Here are this hours power points. Walmart shares falling after cutting its outlook. Cnbc has learned they are not looking at chobani as an investor. After this quick break, the next time you order food it may be delivered by uber. We veal that one next. Strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. You ppremium like clockwork. Month after month. Year after year. 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With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. All right. Coming up, the same thing that you just saw last hour on walmart, but with a different take. Were going to ask whether or not the bad news from walmart is actually good news for the economy but maybe not in the way that you think. Its a good debate plus, the great bob lutz on whether Driverless Cars really are the future and some interesting stocks just for you. We dug out smallcap names with bigtime dividends and the beige book and Steve Liesman, how could you miss all that, tyler in. Well not allow it to happen. Uber meantime expanding its sameDay Delivery Service. And kate rogers here with the detail. Reporter after a pilot run in new york city that kicked off in april 2014 unier is getting into the Small Business space with uber rush. The Ondemand Service rolls out in the three areas, new york city including parts of brooklyn and queens, San Francisco and chicago. The platform is entirely managed by the local businesses that can sign up. What can receive orders and set up deliveries on the platform. Customers can track their orders similarly to how things work when you ride with an uber. This are delivery fee wiz can be absorbed by the business or passed on to consumers via delivery charges so the fees are 3 for a base in new york city and sfrits coand 2. 25 in chicago. There are also additional permile fees and the on demand delivery space is crowded. Sameday delivery will be tested in new york city and task rabbit and caviar offer sameday delivery and amazon has same day and its flex program. This can be for restauranteurs, retailers and businesses that wouldnt provide delivery. Lets see what the next step is. They have the whole uber of everything. The basic charge starts at 3. 3 in new york and San Francisco and 2. 25. And theres a mile fee. And a minimum of 5 or 6, not too pricey. Not at all. Lets take a very quick look at what the markets are doing because if we do actually finish down for the s p and nasdaq the dow i believe it would be the first backtoback losses october, asglagz that will do it for the first time. Lets send it over to Brian Sullivan. Hi, everybody. Nearly 2 00 on constitution avenue in washington, d. C. Federal reserve set to unveil its late big read on the economy. Half. On pearson is also in d. C. With the see headlines. Half. On . Reporter brian, from the 12 Federal Reserve districts and the beige report, if you will, looking nationwide at the economy in august to october they see moderate expngs continuing and there are concerns about manufacturing. They special click say its weak and noted are adverse effects due to the Energy Problem and the strong dollar restraining Manufacturing Activity in a number of districts. Consumer spending described as moderate. Auto sales very strong and nonauto spending growing at a moderate rate. Housing and commercial real estate improving and prices and sales volume up in almost all regions. Commercial real estate stronger in all 12 districts. Banking and finance described as positive, lending activity and loan quality improving. Labor markets tightening with wage growth remaining subdued. In at least three of the fed districts, four, new york, philadelphia atlanta and kansas city there was actually a decline n. Cleveland, chicago and San Francisco weak demand for steel due to the strong dollar and competition from china weighed in on the manufacturing there, a little more xampt on the wage picture. San francisco actually had a headline that says this is prirl due to the increase in the minimum wage over the last year raising the wages for unskilled workers as well. Price pressures described as contained and still climbing, primarily because of the discounts, if you recall, because of energy. Better hohampton, thank you. Lets bring in Steve Liesman. They did highlight auto sales and retail sales being okay. Isnt it by nature auto sales are good . Auto sales are more than okay. They are good, but rest of ret retailers are okay but they go together. If people are buying cars, probably not buying jeans. Yeah. I mean, weve talked about over the years. My take on the beige book its in line with and maybe just slightly stronger than some of the tenor of the data thats been out recently. What we eve seen, you know, some palpable concern and you heard about the economy going into recession and todays retail sales number coming in lower thanks pectations. These are all anecdotes for the 12 districts and seems a touch stronger than what we hear and we know the dollar has hurt parts of the economy and like tushism in new york and those are areas being impacted by the stronger dollar and i want to talk about something thats not been discusses on our air after that. Several economists have been waiting that the number has been quite stronger than indicated by the top line number which as you know is a nominal new. Its not inflation adjust the. What do you think, brian, is happening because of the stronger do theary to things like Retail Import prices and other prices in the economy right now . They are going down, so what happens when you put the negative inflation number in there to will nominal sales, they go up. Wall street Companies Like jpmorgan saying, you know what, we may be on a track of a 3. 5 Third Quarter Consumer Spending which is quite strong. You point it out. Youre missing the forest here. What you pointed out here is so important and its one of the reasons that you and i have sort of discussed why i believe this sort of crazy fixation by the fed on inflation or at least a tenth of a point from 1. 9 to the 2. 0 their target is ridiculous because theres all these other measures which are impacting inflation, not just the idea, that yeah, Health Care Costs are up and flat panel tv prices are down. I see your point but ill tell you what the fed thinks about what youre saying and maybe ill say Brian Sullivan said this next time i get to talk to them. And they will say who, who . No, no. Heres the thing. They see what youre seeing and thats the reason why yellen calls it transitory. Its the very reason why she thinks that these issues of the stronger dollar are going to work through the system. The trouble they have is that they want to wait and see and make sure there isnt a gathering momentum to the downside of inflation but they do concur with that forecast that these impulses going through the inflation, through the economy right now are going to work about. Think about the stronger dollar and think about this Time Next Year the effects will be compared to the new numbers. The best brady bunch is when they wanted to buy a row boat and found these tickets and the girls goes on one side and the boys on another and now the it out with a card game or something, right like the fed is right now, starting to fracture more and more. The opinions seem to be getting stronger. Degree. And were starting to seat bradys come to blows. Three girls and three boils in the brady bunch. And the girls won because there are five governors and seven president s. Not a gender thing. Just a brady bunch analogy. This is like brady bunch times two. The brady hawks and brady doves because they are all fed pigeons. And some feds have pigtails and some dont. Theres an interesting eruption here in public and we dont know how to characterize it and we talked about this idea, dan greenhouse calls it mutiny at the fed and others say things are getting personal out there. Pretty interesting this development. Dan tarullo, two doves on the committee. Thats the point i was trying to make with my bad brady analogy the fractures seem to be getting louder, seem to be having a little and maybe thats a focus of the idea that the they are about to get in the station waggen o take a strip. And thats when you expect the agreements to become more in public. Dont wear the tiki, man. Dan greenhouse is coming up in a few minutes. Yeah, the tiki one i thought was the best episode personally. Walmart having its worst day in 15 years after announcing sales for fiscal 2016 will come in flat. Lets bring in oliver chen who reiterated a market perform rating on the stock. Great to have you with us. Great to be here. How much of this can be read through to other retailers especially given that management said positive traffic and momentum traffic in the u. S. Will likely continue. Thats a nice positive for the consumer, traffic is a hard metric to get and i would there is a Retail Revolution with the transformation and the big headline is walmart guide their guidance down 6 to 12 and the power is really shifting to the customer and walmart has to offer allotted more convenience and doing that costs money so thats the story for why the stock is so weak. Why did you stick with your price target here . Mean, you reiterated your market rate on the stock, but the 727 price target remains whichism place 25 upside from approximately where the stock is trading right now. Given they lowered their growth forecast and their eps forecast, how can the price target possibly stay the same . Well, we still have a lot of caution on the stock, melissa, and what i would say is walmart, really think in the longterm these are good decisions, they will really leverage bricks and clicks, over 4,500 stores as well as 260 million customers and think about the dividend yield, an excessive 3 and think about repurchases, too. I do acknowledge the caution and would advocate names like coast coand Limited Brands in terms of stories we like better right now. Wheres the consumers going to instead of walmart . The consumer does have extra money but the consumer is thinking about paying down debt, buying a car, could be investing in their house and thinking about experiences, too, but honestly walmart really understands that and they are also price investing so 75 of the eps cut was due to a really better sense. The balance is partly due to ecom and partly due to price investing meaning walmart will try to give consumers the Everyday Low Price strategy. Oliver, well leave it there. Thanks for joining us. Oliver chen of cowan. Brian. What we want to know is what think. Heres the poverty day. Do you think walmarts weak guisance is a walmart problem or consomer problem. To weigh in realistic well see the meantime the lets bring in nbc contributors and ive got a piece up on cnbc. Com where i said is the walmart news actually good news . I listed four reasons why it might be. Am i an idiot, or do you agree with any of it . I actually agree with you. Its good news for the u. S. Consumer and not bad news for the u. S. Economy. I think that walmart is raising wages. Thats got to be good. Biggest private employer in america getting a raise. Talking about operating costs going up. They will be spending a lot of money with a lot of vendors. And one thing we havent said much about, not only are they paying more to people, they are bringing in more people to make this buy online pickup in store work and work better so they are actually investing in head count, not just in wages. Thats also a good thing. Yeah. But they are trying to make the business work a lot more efficiently. They are trying to own grocery. They want to own grocery as far as buy online picketup and store and really want to own the whole concept. Right now we have tour, in order strams and macys and walmart haents to be that good at it the. One of your four points might on something and when i sent you my piece its point four is the only one that matters. With respect to the announcement theres a lot of people in the consumer area and not as much as people expect but a lot of the weakness has to do with investment and not some sort of deck lar decline in Consumer Spending, and i think if you wanted to make the argument that this was about the consumer or more importantly the economy they didnt provide too much fodder and its walmart trying to wage itself and that didnt tell us anything too much that we didnt already know about the consumer. Dan, do you believe this is a bad or a good sign for the u. S. Consumer or just a walmart sign that has nothing to do with anything else . I dont really know how i feel just yet. I mean, listen, i think the issue for the consumer has been for several years now one that theres no wage growth and ultimately declines in gas like prices while hopeful are not always spent to the degree of what well call a permanent increase in wages might actually be spent, and i think thats really the biggest problem that the consumer has been dealing with and even as the lash market has improved, wage growth hasnt picked up. Its not surprising that in that type of environment the consumer is not going gangbusters. Again, the piece that i wrote is up on cnbc. Com or my facebook page. Read it an see if you agree or whatever, blah, blah, blah. Live poll, 56 say its a walmart problem. Jan, is there also an element of trading up here . A lot of people love walmart but some think im doing a little bit bert. Maybe ill check out a kohls or target or maybe ill move up. That does happen. You look at Dollar General news and wonder the same thing. I dont think thats whats happening. Walmart didnt say anything was wrong with sales. They did say sales wont be quite as good as originally and that was all because of currency and thats because we think were going to do 3 per year Going Forward, thats the best number they have said in a long time and that says they think they have a healthy consumer that they will be able to put more money to the bottom line Going Forward by make all these things and growing the top line, so walmarts putting really hard push on, and they believe its going to result in higher sales. They wouldnt believe that if they thought there was something wrong with the u. S. Consumer. The and if i could just add real quick. Lets not forget walmart has 500 billion in sails annually. That is a very large number that is probably never again going to grow 5 , 6 , 7 so the low to midsingle digits with a company that large with sales that have magnitude is one anybody should reasonably expect. When walmart says well do a lot more sales and will pay for a it by reducing our gross margin, in other words, investing, somebody is going to lose a lot of sales, and somebody is going to lose a lot of gross margin. No wonder other retailers have reacted negatively. Sure. I dont think its because the world thinks sales are going to be tougher for everybody from the point of view of the economy. I think they just heard walmart say were going to make the world tougher for everybody. All right, guys. Well leave it there. Thanks for your time, dan and jan. Time now to lock into our vote and the we asked you guys to vote realtime and whats behind walmarts weak forecast, a walmart specific problem or u. S. Consumer specific problem . 52 of you said it was, in fact, a walmart specific problem and only 48 blamed the u. S. Consumer. Bri. Kind of split. Melissa, thank you. News is nice but we try to make this show about actions so lets give you some actionable advice around the walmart news. According to our data partners since 2005 theres been 25 occasions when walmart stock fell 5 or drop in a week. Of the 25 times shares of costco gets hurt as well falling 12 during the same time as walmart and they werent the biggest decliners. Other reat the same timers, that, according to history doesnt mean that wont happen again and when walmart gets whacked and the company that gets hit the most is junesco, Parent Company of brands like murphys and dockers. Not necessarily a direct retailer and they fall an average of 7 and getting head when walmart does, costco, down 4 . Nordstrom, macys and kohls all falling in sympathy with walmart so if indeed this is a walmart problem to and not an overall problem, one wonders if this selloff is overdone. All right. Up next, were hating the road to talk the future of selfdriving cars with gm vice chairman and former vice chairman bob lutz and well get his take on the growing vw diesel sandal. Also, the democrats declaring war on wall street during last nights debate well do a little factcheck on exactly what was said. Later on some small caps with big dividends. One wall street pro says it pays to own these three names and those three names are you know what. Well doe it when power lunch returns. [announcer] through sunday at sleep train, get up to 48 months interestfree financing on tempurpedic. Save 300 on beautyrest and posturepedic. Or choose 300 in free gifts with stearns foster. The triple choice sale ends sunday at sleep train. Are selfdriving cars closer than we think . A few days ago Tesla Ceo Elon musk says the version 7 software with autopilot goes to wide release on thursday, end quote. The former vice chairman of gm, former Vice President of chrysler and cnbc contributor. Bob, welcome. Still in the testing stage. I want you to pick a year, if you can. Throw it out there when well be able to go out to a lot, buy an Autonomous Car and have it drive us home. When does that happen . Thats probably seven to eight years away but whats much closer is what icality super crews and thats the official gm news for it. That we can expect next year really from a lot of the highend manufacturers, and thats merely a slight extension of todays radar operated crews where you dont have to work the brake and throttle pedal and you do have to steer so the next logical step is to take your lane departure inputs and put them into the electric grid of power steering and basically once youre on the freeway starting next year and cadillacs and other cars, possibly tesla on the freeway, you can hit the super cruise button and the car will stare and break automatically. In a Straight Line on limit the roads. Has limited functionality. Not a Straight Line. It will follow the freeway. Thats what i mean. Youre going to be on 75 going through gaylord, michigan. Thats exactly right. Led next step which is the car that comes to your house and picks you up and drives you to the freeway and takes you on to the free way and then it goes to the final destination and goes away and parks it investment thats probably five or six years away, General Motors has announced and has a whole fleet of Autonomous Cars basically operating day and night at the gm tech sector and theres a lot of cars, rail rod crossings and curbs and see if it works out. Theretos really no reason these cars cant be on the market at five years in the sglast being in a selfdriving car is a Pretty Amazing experience and had a chance at carnegiemellon and that was unbelievable and cant imagine what the technology is now. We tend to leap at end and where the car will pick you up and drop yourself off and it will go to a slow creep and there will be an additional feature, additional feature and then were at selfdriving car stage. Do you think that insurers, for instance, have dealt with this idea of that slow creep of technology which is part of the march towards selfdriving vehicles and not quite there . They will have to deal with it and they will because the selfdriving car is inevitable. Electronics will make startstop decisions and find realizing the light is green. Electronics will realize that about five times faster than the average human driver, so traffic clowe is going to be and its inevitable that it has to come. Lawmakers and Insurance Companies will deal with it and so far it turns out that all of the accidents have been driving with selfdriving cars have not been caused by the selfdriving cars. Bob, im sorry this is sort of the legal stuff coming out. Lets say im on my bicycle eating an Ice Cream Cone and get hit by a selfdriving car because the software went nuts, screwed up and i get hit and break both my legs. Who is sflibl do i sue google . First of all, im not convinced that thats going to happen because the selfdriving car has the sensors and sees the cyclists. If its a Software Error i suppose if its an individuallyowned car i would imagine it goes to that owners insurance but, again, i dont see why any insurer would be reluctant to also insure selfdriving cars which already have a better have a Better Safety record than human drivers. Will there be accidents but probably 0 of what we have today . Yeah. Listen, a good discussion and lawyers are going to get involved. Former vice chairman. Appreciated it, buddy. Always do it, lawyer you. What do you think of the selfdriving car. Seriously. I thought no, not at all. Youre talking to somebody who doesnt drive herself anywhere so being always in a selfdriving car. Not too much of a difference. Coming up next, three small stocks that pay mighty big dividends and those names ahead. Heading tout break, a lot of red on that board. Youre watching power lunch on cnbc, first in business worldwide. All right, america. Tonight be sure to catch an all new episode of jay lenos garage and tonight jay kicks the tires on some vintage japanese sports cars. Take a look. The interesting thing is these cars really with the exception of the dassun were not that popular. That then and this is now. The neighbors love that. Wow. Loud, brash and pink. Doesnt get any more japanese than that. Be sure to catch it at 10 00. Ill definitely watch it. A quick personal note. The datsun was a bre standing for brock racing enterprises. My dad, i dont know if hes watching, but my dad pro rallied that datsun built by pete brock back in the oat 70s. Two sullivans watching tonight. Morgan brennan is live in washington state. Morgan, thats a long way. Reporter yeah, hey, brian, thats right. Check this out. This is a brand new just delivered from the factory tank car, a d. O. T. 120 and mart of a much bigger push by one Energy Company into crude buy rail and expanding that kind of infrastructure. Well get all the detames on that when power lunch returns. Stay tuned. Technology empowers us to achieve more. It pushes us to go further. Special olympics has almost five million athletes in 170 countries. The microsoft cloud allows us to immediately be able to access information, wherever we are. Information for an athletes medical care, or information to track their personal best. With microsoft cloud, we save millions of man hours, and thats time that we can invest in our athletes and changing the world. Hi, everyone. Im sue herera. Cnn says last nights democratic debate drew over 15 Million Viewers easily making it the highest rated democratic debate ever, but it was lower than both Republican Debates. The previous democratic debate record was set in 2008 when Hillary Clinton and barack obama squared off on abc. That debate drew 10. 7 Million Viewers. The first lawsuit in the el faro cargo ship tragedy was filed in florida. Lawyers for the family of Lonnie Jordan filing a 100 million suit against tote services, the owner and operator of the ship that sank in the Atlantic Ocean during hurricane joaquin. A group of chilean miners who spent more than two months trapped underground in 2010 visiting with pope francis at the vatican today, and they showed the pope a framed picture of the piece of the underground wall where they all signed their names. All three restaurants in danny myers Union Square Hospitality group will eliminate tipping saying he hopes to be able to raise pay for kitchen workers without hurting servers compensation. No changes were planned at shake shack which was spun off from the restaurant group. Thats your nbc news update this hour. Brian, back to you. Not as a journalist or as a consumer do you like that move . I think hes trying to equality disparity between the front front of the house and the back of the house. Because the chefs and people the in the back of the house have not been making as much money as those in the front of the house. Cant have service go downhill. Going to be an interesting experiment. You and i, youre on. Check it out. Have a manhattan together. And expensive, too, sue. Thank you. Time now to talk oil and lets go down to jackie d. , of course, youre invited as well for an imaginary dinner. Ill see you at the dinner. Oil prices coming off the session lows. They finished at 46 and change so slightly lower on the day. Most traders waiting for the api numbers tonight and also the department of energy numbers tomorrow morning. They are delayed because of the columbus day holiday. The expectation is to see a 2 million barrel build, seen numbers higher than that and well see what we get. Having said that do a quick check on gas prices. 2. 30 is the National Average according to aaa. Only down three cents from a month ago. Remember, were looking at 2 by months end and if oil prices dont go the down substantially not sure if well get there. Thank you very much. Try to keep it actionable. Any bigcap Oil Companies worth your money. Lets bring in stuart glickman. We did a thing two months ago where 500 billion, billion in, market cap had been wiped off these bigcap stocks in just the last 12 months. Are they finally getting to a point where they are just too cheap to ignore . There are some selections within the energy patch that are worth investment. The Larger Companies should fare better. We prefer more a defensive position. I would argue exxon mobil which we have as a fourstar ranking is worthwhile. Looks to generate extremely strong and Free Cash Flow even in this kind of environment with crude prices walloped compared to a year ago. My comparesson chevron, we only have a hold opinion or three star rankings. Whats the difference between chevron and exxon . So, to us chevron is a bit of a riskier player with a lot of balls in the air right now. They are trying to grow their production about 20 by 2017. They are trying to support a fairly hefty dividend, and they are trying to manage some supply chain reorg at the same time. Not impossible to accomplish all of those, but we think its a riskier play relative to exxon, and chevron looks to be pretty water on Free Cash Flow next year. Anybody else on your horizon that you think is worth our viewers and listeners money, stuart . Moving over to the oil services side, schlumberger, the behemoth, we think is a great longterm play and i think, that you know, north america certainly has had its share of difficulties over the last month month, especially in oil services because al of the upstream customers are tightening the purse trainings and schlumberger has a Stronger International orientation and i think they will do well in the long haul. Schlumberger, exxon and a hold on chevron. Stuart glickman of capital iq. The refiners arent the only group benefiting from the crude oil slide and now the company is making a big bet outwest. Morgan brennan is live in the port of vancouver with the story. Hey, morgan. Hey, melissa, thats right. Even with crude, u. S. Crude stuck below 50 a barrel tesoro is doubling down on what it proved will be one of the big rail by facilities. The refiner is looking to build a 210 million oil terminal here at the port of vancouver, so this will receive up to 360,000 bafrlts of crude per day, much of that come from the bakken and will be taken off trains and loaded off tanker ships and headed to the west coast refineries. Its incredibly important to the west coast because we dont have pipeline access. We have no other transportation means, so when you look at where the crude oil through the Shale Oil Revolution is actually coming from, we dont on the west coast have the logistics capabilities to get it the to our refinery centers. So the Oil Production in alaska has dropped to about 500,000 Barrels Per Day for more than 2 Million Barrels at its peak. West coast refineries have had to turn to imports from the middle east and elsewhere to make up that decline, so by decreasing crude by royal capacity it could cut imports by 30 plus and supply refineries with a light sweet crude thats easier to process and better on the environment and basically creating anotherarket and boosting demand for domestic crowd ill. Back over to you. Morgan brennan, thanks very much. Cool stuff. Just a reminder stocks are at session low is down 180 points. Keep in mind its a tough day but kind of a fakeout day because somme so much of what youre seeing in terms of the markets drop on the dow is walmart. Remember, its a priceweighted index and when the stock goes down theres movement. A lot of dow stocks are up. Still, were down 180. Time now for trading nation because traders do trade Better Together and today lets talk about the bank stocks falling today. Jpmorgans did i appointing issues and andrew. Hey, brian, i would cat glaze the earnings broadly speaking okay. Analysts have been taking their numbers down pretty aggressively over the past couple of months as rate expectations have been pushed out. We got the ebb and flow of the banks and the financials over the last couple of years where rates start to creep down and expectations start to fall and the banks start to underperform, you know, the tenyear is back below 2 and there may be more pressure and we think were probably a little closer to the floor in terms of bank relative performance so overall i think the group will be okay, underlying lending activity, especially for the regional banks, should be okay. We know trading revenue is pretty tough for the big banks, but i expect some pretty tough results. How do the charts look . I would disagree with andrew. Take a look at the tenyear interest rate, does act as a leading indicator for where financials are going and the tenyear yield has dropped into summer lows bloat 2 and when you lay that on the xlf, weve not yet broken nat summer 2015 rates and lets fast forward, goldman is testing a 175 level. If that exists and we were to break through. I would say financials are heeding the warnings given. Andrew, todd, thank you. For more trading nation go to our website. Regulating wall street, certainly a topic at the democratic debate and what the candidates said about it. The stock market nears session lows. Youre looking at dow. Intel, due pond the, merck, pfizer, ibm and coke and now nike are all higher. Its actually walmarts fault. Theres an investing strategy called the dow theory that says the transportation stocks can either denier or confirm a market trend but its be sure not to rely on the same strategy when making an investing decision. Hillary clinton trying to walk a fine line last night in the president ial debate talking about new rules for wall street and the financial system. Eamon javers with more on this. Hi. Hi. Last night the democrats and wall street was the target of a lot of democratic criticism and the most Heated Exchange was probably this one between Bernie Sanders and hill hi. Take a hissen. In my view, secretary clinton, you do not, congress does not regulate wall street, wall street regulates congress, and we have got to break off that fact. Going and saying please do the right thing. No, thats not i think dodd frank was a very good start, and i think that we have to implement it and prevent the republicans from ripping it apart. We have to safety Consumer Financial protection board which is finck finally beginning to act to protect consumers. The nuance here is that Hillary Clinton is the most pro wall street candidate of these democrats who are running last night who were among the major candidates here, but she has to appear antiwall street because of the antiwall street feeling among the Democratic Party base since the 2008 financial crisis and couldnt go as far as Bernie Sanders has done saying she wants to break up the big banks and couldnt call for a reinstatement of glass steagall which omalley did but was able to get some antiwall street sounding rhetoric while not moving off his positions and thats the look ahead to the next couple 6 weeks. John harwood and carl quintanilla, october 28th, Republican Debate and meg now with a news alert. Hey, you may remember controversial drug company, well, it still hasnt made any visible move to lower the price of a 622yearold drug after a dramatic increase that sparked outrage in washington and around the country. That company is turing farm southeast calls and purchased an old drug called daraprim. Led ceo said he would lower the price and they are still reporting the price at or above the number that caused such controversy of 750 a tablet and now the company is out with this press release announcing when it calls improvements in daraprim saying those reason medicaid already get the drug for 1 a bottle and they also referred to patient savings programs and for many the outofpocket costs will be less than 10. The statement says the companys goal is to provide ready and available access to anybody who needs it and theres no statement on the actual price of the drug. Were calling to see if the price is remaining the same. Turing has not yet responded to our questions. Thanks so much, meg. This company sort of touched off a firestorm that ensighed when Hillary Clinton sent out that tweet that roiled the biotech sector. The biotech etf as well as a health care etf in anticipation of the ibb and one Pharmaceutical Company in the crosshairs and still being sienaed to get more information about drug rallying after yesterday, up 6 so far. A lot of people are using clips or photographs from our interview of martin shkreli. Shoutout to meg for getting that interview. I know youre unhooked over there but good job. A retail stock thats fallen 10 in october alone is this your chance to buy or take a loss . That and four or stocks. We do it every sickle day. Power lunch returns. Important than your health. Or the freedom to choose what doctor you want to see. So if you have medicare parts a and b, consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare Insurance Company. Like all standardized Medicare Supplement insurance plans, these let you choose any doctor who accepts medicare patients. Youre not stuck in a network, because there arent any. 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Time now for street talk. Every day, we comb through Analyst Research so you dont have to. Stock number one, oracle. Downgrading it to a market underperformed. And has a 31 target on it. So about 15 downside. Pressure from services. Amazon web services is talking about these new products. Thats a concern. This analyst also downgraded just yesterday on pretty much the same concerns about competition from aws. Stock number two here, Dollar General. We talked about layoffs. Since then, Dollar General has underperformed by about 10 . But the outlook is robust as ever. Its got strong Free Cash Flow and a reasonable valuation. Not directly related to Dollar General, does anybody remember six months ago when pretty much everybody else in the media was saying that all Retail Stores were going to soar because of low gas prices . Whatever happened to that . Not yet. Nothing so far. Not at all. Third stock. Paypal. Jeffries adding it to its franchise list. It implies about 30 upside. The same call removes systems from its franchise pick. Epam systems. Havent heard of that one. Spinoff from ebay in july. The stock is lower from that price which it spun off. Next up, Analog Devices upgrading the stock to an outperform. Theres been some concern as Analog Devices have become increasingly dependent on the consumer. Increasingly competent. In other words, Consumer Products, more pricing pressure. Im looking at my screens here. Analog device is kind of a quiet winner. Gets no attention and love from the media except for you. Hmm. Thank you. Last stock. Empire district. I had never heard of it. You know why . I dont live in missouri. It is a joplin, missouri, based utility. Upgrade to a buy. They love the valuation of the name. They nudge their price target up a little bit. So not a lot of upside. About 10 seen by the analyst. But the company does pay 4. 6 dividend yield. Its down 22 for the year. Supposed to be safe utilities. Not that safe in this world. You know better than that. Russell 2,000 lower. Coming up, names that could bring some big returns. 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. So wi got a job ews . Ill be programming at ge. Oh i got a job too, at zazzies. friends gasp the app where you put fruit hats on animals . I love that guys, ill be writing code that helps machines communicate. interrupting i just zazzied you. phone vibrates look at it friends giggle i can do dogs, hamsters, guinea pigs. You name it. Im going to transform the way the world works. proudly i programmed that hat. And i can do casaba melons. Ill be helping turbines power cities. I put a turbine on a cat. friends ooh and ahh i can make hospitals run more efficiently. This isnt a competition almost a whole hour has gone by and we havent even talked about netflix out with earnings tonight. Were going to be seeing if netflix can hit that magical 3. 55 Million Subscriber number and trade that stock tonight. A fast money at 5 00. Russell 2000 is lower, but there could be some small cap stocks with big returns. Small cap value. Total return fund joins us now. Great to have you with us. I want to go right into your stock picks, but i want to start with dsw. Its down 33 year to date. And it seems to be part of the shoe complex. May not see as many dollars to it. Its mostly fashion. Theyve had some athletics. It sells at 13 times earnings. Has a 3 yield. It hasnt had a multiple this low for a while. There hasnt really been a fashion cycle in womens shoes for a bit. That will happen one of these days. The weather is pretty warm. No ones buying boots yet. But the weather will change, too. More importantly, theyve made some Big Investments in omni channel and in planning allocation systems. Once we start to cycle through that, theres great opportunity for margin improvement. The stock can go higher, i think. The chairman just bought half a million shares, so its a great idea. Does this benefit from the holiday seasonality factor . It will. Its not the biggest gift giving idea. When you need a pair of shoes, you need a pair of shoes. But christmas definitely counts. Lets talk about brocade communications. 4 billion. Is it facing tough competition from cisco . It is. The biggest business theyre the leader in a mature business. People think its going to die. Its very slow. Its mature. It generates enormous cash flow. Theyre using that to invest in the business. They do compete against cisco. But theyre holding their own. They have some very fastgrowing new software businesses. Theyve committed to return 60 of their Free Cash Flow back to their investors. You have about a 1. 5 dividend yield and a 1 billion Buyback Program on a 4 billion market cap. So thats kind of interesting. So maybe you get a floor for the stock there. Nyr group. Its an electronic contractor, so what do they make and for whom, jay . Well, actually, they are helping a repair deal. Big businesses. They do the electrical for warehouse and things like that. A very solid domestic business. Interesting picks. Thank you for your time. Well see you at 5 00 on fast money. Got netflix earnings. A fakeout as ill call it. Walmart dragging everybody down. Ten stocks are actually higher. Were going to leave you with some good news. Thanks for watching. The closing bell starts now. Welcome to the closing bell, everybody. Im kelly evans. Im bill griffeth. It is a jungle out there. How cool is this . Cool and the gang will be joining us here at the new york stock exchange. They are ringing the closing bell today, celebrating their 50th anniversary together. Excha. They are ringing the closing bell today, celebrating their 50th anniversary together. And kool himself will be with us to ring the bell. First, we have a ton of market news to bring you. Lets start with walmart. It is dragging down the dow right now. The entire brickandmortar retail space, the