Transcripts For CNBC Power Lunch 20151106

Now Strong Enough for a december rate hike . A lot of things happening today, but first of all, a very Big Development in the president ial race. Eamon javers joins us in d. C. With more details. Eamon . Mandy, thats right. A blockbuster report here in politico. Com this morning. Politico reporting that ben carsons campaign is admitting that a central piece of his biography was not, in fact, correct as reported by him in his own books. Theyre saying ultimately ben carson was not ever an applicant to west point. In his books ben carson wrote he applied to west point and was offered a full scholarship after meeting with general william westmoreland. Politico reporting that the Carson Campaign is now saying that, no, in fact, he was never offered a full scholarship to west point. In fact, west point is tuitionfree for those offered admission. Theres no such thing as a full scholarship in any case to west point. This follows on a number of controversies for ben carson and his campaign which has been the frontrunner in several National Polls here. A couple of controversies just to bring you up to date on, obviously this west point controversy today will be very damaging to the Carson Campaign but also some questions now about an anecdote in which carson was allegedly involved in a stabbing incident. Some media reports raising questions about whether or not carson was actually involved in that stabbing incident or how it actually occurred. And also questions raised about his involvement with the company manatec. Last week in the cnbc debate, questions raised about that. Carson saying he had no involvement with that company last week. So clearly a troubling period now for the Carson Campaign. Its going to be very important to see how they respond to this story in politico and how that fallout affects the standings of candidates in the republican president ial race, mandy. Were going to be talking about more about the implications for his Campaign Later in the show. Thank you very much for the details. In the meantime, as we mentioned in the headlines, president obama rejecting the controversial keystone xl pipeline saying it was not in the national interest. Transcanada, by the way, is taking a big hit right now down by 5. 5 . Lets get more with Jackie Deangelis with the fallout. Good afternoon to you, mandy. Were looking at the different groups within the Energy Sector in terms of the equities and they certainly are taking a hit today. But oil prices were under pressure after the unemployment report came out. Traders think we may see a december rate hike. That sent the dollar index 99 which sent oil prices 2 lower. And thats where they stayed even when the president rejected the can he stone pipeline. Its a significant piece of discuss to discuss. Transcanada issuing a statement saying it is committed to building this Important Energy Infrastructure Project and it will ex pore options to file a new application. In response to the red wing the president gave this morning for rejecting the pipeline, the propon ents are countering. The 2,000 jobs roughly that could be created by the construction they feel is significant. The 3. 5 billion that could be added to u. S. Gdp also significant. And while domestic gas prices certainly are down, weve been tracking that as oil prices have fell as well, it doesnt mean that they couldnt potentially go lower. If we do have to ship canadian crude via rail and barge, it costs more for the refiners in the gulf coast to refine that product, and so that does support gas prices. It also supports gas prices if we take in more oil from the middle east. So either way the proponents are coming out and saying these reasons are not necessarily as sound as they seem. Back to you. Very interesting, of course. The president s point on that was the pipeline would not have lowered those gas prices. Thank you very much, Jackie Deangelis. A stunningly strong jobs report. The u. S. Economy hiring at its strongest pace this year, 271,000 jobs added last month, and the Unemployment Rate edging lower to 5 even which now folks is the lowest reading since april of 2008. Average Hourly Earnings also rising 0. 4 . All of this coming as fed chair janet yellen says the december fed meeting is a live possibility for a rate hike. Our very own Steve Liesman speaking exclusively with one of the people who will make that decision in december. Steve, over to you. Thanks, mandy. In my interview with chicago fed president charles evans, he was pretty clear he could stomach the december rate hike although its not his first choice. For evans though, he wants the fed to make sure, make it clear to markets that the path of future rate hikes will be gradual and likely shallow. I agree with chair yellen when in the past she sort of said theres a lot of focus on one move, the first move. We need to think about the entire path because thats whats going to dictate how accommodative or restrictive our policy is, and so i think we need to have communications which indicate that a path is going to be gradual. Not everyone is so sure about that. Here are those numbers. 271 blowing out the estimate of just 183. Revisions modest, just 12,000. But that average hourly wage number which mandy talked about earlier, thats the one that really raises questions about future fed policy. Unemployment rate as well falling to 5 . Labor force participation steady at 62. 4 . Jpmorgan writes, it is much too soon to say the fed is behind the curve, but a few more reports like the one we received today would raise doubts about the forecast of a gradual pace of tightening. Theres a market, a debate out there in the path of rates. For now most economists see the strong report as a snapback from the weakness of the past two months. Theyre more inclined to look at the klthreemonth average for t actual trend. For evans the problem is not jobs but his worries about the fed continuing its miss on the inflation target. My continued preference for more delay or a shallower path continues to be my uncertainty over the packfact that inflatio going to get up to 2 within a reasonable period of time. So now barring extreme weakness in november, the fed should be on track for that december rate hike and the new battleground will be the next one and the next one after that, that is the path of future rate hikes. I will tell you, mandy, i know phil lebeau is coming up shortly. Just before he came on he was in a tshirt and jeans so we know what the truth is now out here in the chicago bureau. Theres deep dish pizza strewn all over the bureau and stuff like that so, you know, dont let him fool you. I would never let him fool me. Thank you very much, Steve Liesman. Thank you. So Brian Sullivan now in dallas as promised with a news alert. Hi, brian. Hey, mandy. Thanks very much. Were just getting that weekly rig count number. A big day, jobs data, now the rig count data. We lost six oil rig last week so down six, not a big down move and not enough to move the price of oil up. Oil is still down about 1. 5 to the mid 44 level. Were down 1154 oil rigs from one year ago and yet the price of oil still in the mid 40 range. Thats a huge question as to why were seeing these rigs come off, the price has not come up and that will be part of a big two hours left of the show. We have kelcy warren, knows the business, one of the biggest pipeline operators in the world. Well talk about transcanada, talk about oil and gas. Weve got mark cuban as well coming up plus the ceo of oil firm matador. A big two hours from dallas. Love the big d, by the way. Thank you very much. Were going to get back to you very shortly but stocks are under pressure just a little bit. Not hugely. The nasdaq itself is just ever so slightly higher, but nonetheless investors are now kind of scrambling to revise their bets on a december rate hike. I think were sitting around bets of 72 . Bob pisani joins us from the nyse floor with more. Hey there, bob. Hi, mandy. A titanic jobs report and traders who are active in the markets are a little disappointed at the lack of action. Lets see whats going on here. Its not the brebreadth, its t volume and volatility. We had a blow out number. Traders expected big volume but its not really materializing. They were also expecting big volatility but essentially its not happening either. Take a look at the vix. Not moving, i mean vix at 15, thats not doing too much. Up 1. 5 is not a move given how important this jobs report was. So a little bit of disappointment down here. Certain predictable things did happen. Yields move up across the Interest Rate curve, no surprise here. The Interest Rate sensitive group, utilities, reits, Home Builders on the bottom, theyre getting hit a little bit. We could have predicted that. We could have predicted the banks being up 2 or 3 . No surprise there. Not surprised the dollar index at the highest level since april and since commodities are denominated in the dollar, its expensive to buy these commodities and theres weaker demand. Its predictable we saw the metals getting hit. Freeportmcmoran having a terrible day. Glencore in london, vale, thats predictab predictable. Industrials are holding up. Its curious some of the defense stocks are among the weakest in the Group Overall that youre seeing. My sense here is that while the action is very limited today, investment committees are meeting and not everybody was aligned with this idea of the fed possibly raising in december. I think over the next few days you will see more action and you will see more realignment and reallocation as people move some money around in response to this jobs report and a much more potential fed rate hike. Back to you. Thank you very much, bob. Well check in with you later. Lets get to phil lebeau with a news alert. This comes to us from the department of Homeland Security. We expected them to announce some type of enhancement in security for foreignbound flights or flights from overseas following the downing of a russian airliner. Homeland security is recommending there are precautionary enhancements to Aviation Security with respect to the commercial flights bound to the United States. This is standard language we hear after incidents overseas. They dont like to give a whole lot of details. They say there will be expanded screening applied to items in airports overseas. Russia has suspended flights from egypt and britain has told travelers coming from the sinai, dont check bags, leave nthem i egypt. You can do carryon. When we look at Homeland Security and what changes we might see in the United States, weve heard from the department of Homeland Security in terms of whats going to happen for those flights bound to the United States. Certain enhancements at certain airports overseas in that region, but here in the u. S. We shouldnt see any changes at airports. By the way, u. S. Airlines do not fly over the Sinai Peninsula nor do they fly into the airport in question in egypt. This though comes at a time when the tsa is under fire for failing security checks. In fact, there have been reports within the last week that the most recent round of checks that were done at airport screening sites they failed to catch most of the mock items that were sent through. In other words, not noting whether or not there was a potential bomb or a potential weapon that was in a bag that was there simply to test if they were doing all the checks that they should be doing. Take a look at shares of the major airlines. You really havent seen much in response from investors following this incident over in egypt, but, guys, the department of Homeland Security is saying there will be security enhancements for those flights from overseas from certain airports bound to the United States. Lets hope its effective. Thank you very much, phil lebeau. And check out these incredible pictures of flooding in brazil following the collapse of a dam there. At least 15 people are dead and 45 others are missing after that dam burst destroying dozens of homes and sweeping away cars and large trucks. It happened near a mine which is also near the brazilian city of marianna. The neighborhood was suddenly flooded with mining waste of rock and mud. Shares of mining giant bhp getting slam today. Right now down by more than 5 . Lets get back out to brian in dallas. Are you giving us a little sneak peek preview of what is on tap . Give us a bigger one. How about this for a question. You guys talked about transcanada shares being down 6 on this news about keystone getting rejected. Is it possible transcanada is actually happy about that decision . Kind of a counterintuitive thought there, but maybe, just maybe, that is the case. Well find out why coming up after the break. A rare exclusive interview with kelcy williams. Well get his take on oil and gas. Thats coming up on a special edition of power lunch from the American Airlines center right after this. Gas. Welcome back to power lunch. Im mandy drury. Chipotle is under pressure today down by 1. 6 with baird downgrading the chain to neutral from outperform on concerns that the impact of the recent e. Coli outbreak would close several dozen restaurants in the pacific northwest. 40 cases now linked to chipotle. Elsewhere cigna beating profit estimates but revenue at the Health Insurer missing the mark. The shares unchanged. And merck and eli lilly say theyve received an inquiry from the Justice Department about their drug pricing. Both of them moving lower, merck is down by 1. 1 . Those are the headlines. Lets get a big headlines from the big b with mr. Big Brian Sullivan. Over to you in dallas, brian. All right, mandy. Thank you very much. Were here for a very rare and exclusive interview with Kelsey Warren. The ceo of energy transfer. Ete, etp, fxl, and sun. Doesnt do a lot of tv and we appreciate you coming on to cnbc. We had planned to come and talk to you about all these things about natural gas and oil and we will, but you and i were chatting off camera before this and you said you thought theres a chance that transcanada might actually be pleased with this decision because through all the rhetoric the pipeline may not be economic anyway. Explain. I dont believe the pipeline has been economic for a while now. Theres just not the spread. Transcanada, these are bright people, very bright people. For them to go through the permitting process and all this ridiculous process theyve gone through, of course they would like to see the permit received but i dont believe the pipeline gets built, not during these economic times. If somebody said lets reset, start over, transcanada, you have the ability to resubmit your bid for keystone, do you think they would do it . Oh, i think again, theyre very bright people. I think they will wait until the economics suggest that a line should be built, but pipeliners, we rely on something being worth more at one place than it is at another place and we take advantage of that. Thats the basis. And theres no basis. Theres minimal but theres certainly not the economics there to justify the pipeline. Would you build a pipeline today . Were building a pipeline to back can but its based on a different set of economics. Pipeline beats rail every time. Its a nobrainer. The keystone line was built more on a quality of crude being produced from canada and brought down to refineries. The project was outstanding when it was announced but now the thing that happens in the energy business, we ebb and flow with Commodity Prices and today the spreads arent there. Are you shocked with how low natural gas is . I would say yes, yes. Whats happened in the market . The people that are so important to our market are the independent oil and Gas Producers that develop science. They try and tell and then they tweak things and they try and fail and finally get it right. These people have developed so much science, we are glutted for generations with natural gas. Do you believe it will stay low . I do believe it will stay low. People get mad when i say these things but im being truthful. I dont see what turns this around. Now, were going to have regional price increases with the lng facilities coming on on the gulf coast and with petrochemical expansions, with what were exporting, we will be exporting a lot of gas to mexico which is displacing crude, but with those things, with additional demand, youre going to see regional price differentials. I think that theres going to be low pricing in the marcellus and utica for a while but i think as you get closer to the gulf coast, i think you might see an improvement in prices. What about oil . Are you surprised by its price. Youre not an oil producer but youre a pipeline guy but you have a refinery, sunoco. Despite the fact weve lost 1154 rigs yearoveryear. When it was at 100. I dont understand this. I really dont. I do understand why we are today. Where we are today is its a staring contest to see who is going to blink and who is going to be the first one to truly cut production. Everybody talks about rig counts, thats fine. You have got to see production fall or demand increase. Thats not happening. Every game of chicken doesnt have to end with somebody turning. They could collide. Russia keeps pumping, saudi arabia keeps pumping, iraq however many Million Barrels a day, iran is pumping. Theyre pumping at uneconomical rates. How do you compete with countries that pay no attention to economics. They simply got to put more into the system to cover their budgets. Its really unfair because youve got the u. S. Producers that are responsible for this global glut, but we are fixing it. The Silver Lining is we are beginning to see supply reductions, and its the first time weve seen it. So yes or no to end the interview, one year from today, price of oil is higher or lower is higher than it is right now, yes or no . Yes. Much higher . I would say 5 to 10 per barrel higher. But not 100 bucks. Gosh, no. Sell Kelsey Warren of energy transfer. Thank you for spending some time with cnbc. Appreciate that. Interesting comments there. A lot of people have said to us oil should never have been at 100 in the first place. Of course, so much more from dallas to come during this special show. In the meantime, the strongest pace of hiring this year. 271,000 jobs added last month. Exactly where are these jobs being created in america . Were going to tell you coming up next. Welcome book to power lunch. Im mandy drury. On this job friday, we look at a small but growing space in manufacturing with qualified workers are very much needed. Its additives manufacturing. Whats that . Well, we call it 3d printing. Mary thompson joins us with more from Lockheed Martin spice systems in littleton, colorado. Mary . Hey there, mandy. You know, 3d printing has been around since the 60s but it appears to be reaching an inflection point. Why . Companies are using it not only for prototyping but in production of parts like this propellant tamp that Lockheed Martin is testing for use in its satellites. Here is mark cotteleer. The industry as a whole is relatively small measured at less than 10 billion a year but were seeing rapid growth. As fast as 20 to 30 per year. Lockheed martin is looking to hire about 120 people. Its used 3d printed parts in satellite in. You know. Using millions of thin layers of xos sout, some products, especially custom parts can be made more quickly and cheaply than using traditional manufacturing but in building 3d, engineers cant only think in Straight Lines and right angles. Lockheed martins david golbeul bernaut. They look like tree roots, bone structures, stalactites. To build this, Lockheed Martin is streaming inhouse but also partnered with a local university that this fall will offer a fouryear program that focuses on Additive Manufacturing and that school is expecting a big payoff for graduates. You can read more about it on cnbc. Com. We will. Sounds fascinating. Thank you very much, mary thompson. Gold prices are closing right now. Big story today, of course, because theyre sitting at a threemonth low down by 1. 5 at 1,087. On pace for the biggest weekly drop for gold prices since 2013 on the much stronger dollar. Silver, copper, palladium, and platinum all moving lower. All the action is in the yields with Rick Santelli at the cme. Ricky . Absolutely. And the yields that are dropping or rising the most the last several weeks are a bit surprising. Just consider the yield up the most on the week is a fiveyear note up 22. Coming in second place up 19 basis points, the 10 year. Tied for third . The one that everybody thinks is in the lead, 2year notes up 17. 30year bonds up 17. So lets focus on the 5year. Intraday of 5s clearly reveals the response that mandy is talking about. On the 271,000 it was a moon shot on Interest Rates and if you look at the oneweek chart, you can see 22 basis point shift. We settle at 152. Were trading 174. And if we look at a onemonth chart of 5s, what should jimp out at you is how quickly the 5year is catching up. It was the one maturity along with 30s that just seemed to find a whole lot more buyers whether it was spread activity or curve trades, but thats changing fast. Many traders are on the wrong side of that trade which really always goes to the adage that when youre wrong, you seem to move a whole lot faster. Back to you. Wouldnt want to be on the wrong side of a trade. Rick santelli. Dollar intention sitting above 99, 6 1 2 month high. Dominic chu, what have you got, sir, for a market flash . Verizon may be exploring a sale of its business assets, enterprise assets. Could be worth as much as 10 billion according to a reuters report citing sources. The deal could include the sale of its data center ewe sits, land lines for business customers. Off of their worst levels of the day on that bit of news and those headlines crossing. Thank you very much. Bertha coombs out at the nasdaq, what are you following . Weve got the nasdaq just getting positive in terms of the composite and a big reason why are the big cap chip names. Nvidia is up 14 . Blowout quarter, Strong Demand for gaming chips. Semis for automotives as well. Analysts are raising price targets on the stock but thats sending the shares higher as well as the sector. Chip stocks are up 2. 5 . A lot of big gainers. Were seeing strength in the russell 2,000 small cap index. Its been positive for much of the morning and for the week small caps are up 3 at this point. A fnumber of health care names like the Advisory Board and all scripts. It appears investors have been selling out of Large Cap Health Care and rotating into small and midcap because both of those sectors are up more than 3 for the week. And banks are higher as well on the jobs report and the prospect of a fed rate hike. Theyre up quite a bit. About 6 for the week here on the nasdaq. Back to you. Thank you very much. Interesting that outperformers are the small caps this week. Goldman sachs unveiling big plans to keep its most talented staff from leaving. We have all the details. Plus, were getting back out to Brian Sullivan live in dallas. Hes got some more big interviews coming up your way like mark cuban and also Hedge Fund Titan kyle bass, just a few of the names. Lots to talk to them about today. Youre watching power lunch on cnbc, first in business worldwide. Its time for the your business entrepreneur of the week. Gars family saddle shop has been on the same street in Downtown Minneapolis for over a century. Now its part of an innovative Business District marketing effort called museum in the streets to get local shoppers to support their neighborhood businesses. For more watch your business sunday mornings at 7 30 on msnbc. Our cosmetics line was a. The orders were rushing in. I could feel our deadlines racing towards us. We didnt need a loan. We needed shortterm funding fast. Building 18 homes in 4 ½ months . That was a leap. But i knew i could rely on American Express to help me buy those building materials. Amex helped me buy the inventory i needed. Our amex helped us fill the orders. Just like that. Another step on the journey. Will you be ready when growth presents itself . Realize your buying power at open. Com im Sharon Epperson. Ben carsons campaign admitting his story of applying and getting accepted into the u. S. Military academy at west point was made up. Carson has repeatedly said that after meeting general william westmoreland, he was offered a full scholarship to the military academy. But west point said it has no record of carson even applying. Thousands of british tourists are trying to get out of sharm elsheikh. They had been promised flights home but only a minority of flights have managed to take off. Former new york prison worker Joyce Mitchell was back in the courtroom this morning in a deal with prosecutors. She agreed to pay more than 80,000 in restitution for helping two Prison Inmates escape. Shes serving serve years. The Rockefeller Christmas tree is arriving at the plaza on a flat bed truck. The crane lifted the ten ton norway spruce into position. It comes from a home in upstate new york. It will be lit on december 2nd during a ceremony that airs on nbc. And thats cnbcs news update at this hour. Back to you. Thank you so much for that, Sharon Epperson. A strong jobs report, im sure you know that already, but the markets are reacting to the increas increased likelihood of a rate increase in december. Bob pisani joins us from the floor. All thee indices have turned negative. What they wanted was more volatility. I think the street expected stuff to move around. Were seeing some movement but not in a way thats dramatically moving prices and theyre not reaching for protection either. There is a Little Movement so take a look, folk, at etfs in the financial area. Very heavy volume, not surprisingly. Pretty heavy volume there. And then, of course, there is some volatility in Interest Rate sensitive groups. Utilities are having pretty heavy volatility. A number of them are hitting new lows Like Duke Energy. Theres the real estate iyr and some reits are down. All that is on the predictable side. Were also getting a little activity, a little more volatility in emerging market etfs. Emerging markets had outperformed in october as a lot of people felt the fed might be on hold. Thats now changing. Here theyre reacting even though the markets are closed, they trade here. Malaysia, south africa, mexico, brazil. All heavy volume today as well. The bottom line is the street is saying to itself why isnt the volatility up . Why isnt the vix near 20 . Were at 15 right now and essentially, lets not quibble, thats unchanged. Well talk more about the volume and volatility at the top of the hour. Back to you. Thank you very much, bob. Twitter Ceo Jack Dorsey is taking the other company he runs public. Kayla tausche joins us with more on the square ipo. That ipo is slated for the thursday before thanksgiving week but in a filing this morning, the company said its going to raise more money than originally laid out and it will offer a much more conservative valuation to investors than originally expected. At the high end of the current range, which is 13 bucks a share, the company would be valued at 4. 2 billion. Thats a steep discount to the 6 billion the company commanded just a couple months ago in the private market. There are a few reasons why this is happening. First, the ipo market has been unflattering to say the least. Many marquee names we saw could public this year trading far below their offer price. Investors feel once spurned and are shy to buy untested names, not to mention a lot of the same investors will be marketed square stocks who bought twitter a couple years ago which has not performed as well as planned. Then theres squares financials. In the recent quarter losses escalated as Revenue Growth slowed and the Company Still spending a lot to market its product and to recruit employees. The message that square is trying to send with this valuation is the lower the company potentially prices, the higher the potential payoff for investors, mandy, that are willing to take this risk. I also want to ask you before you go about Goldman Sachs changing its policies to prevent employees from leaving. What are they doing . Well, earlier this week we heard Goldman Sachs coo say that the companys recruiting policies need to evolve as the economy evolves and those changes are already laid in place. In a memo send to employees yesterday, there are more changes coming for junior bankers. They are trying to give analysts more challenging and diverse work tasks. Not just printing out power point slides. They will try to limit the robotic work. Theyll also let the analysts become associates after their second year and earn more money sooner also instead of traditionally that would happen after the third year and the third year will become a rotation so analysts can get to know more of goldmans business. Its historic they became Investment Banking analyst for two years and then they left. They ended that program in 13 because most analysts saw it as a hard out. My two years are down and now im done. You have to start somewhere. Kayla, thank you very much for joining us from the floor of the stock exchange. A strong october jobs report. Is the economy headed in the right direction. With me is mark moriel and ron christ christie. Gentlemen, great to have you with us here today. Great to be with you, thank you. We will get on to the jobs because thats a huge topic obviously, but first of all, lets start off with ben carson, mayor. He has been leading in the republican polls so far but now according to politico ben carsons campaign has admitted that he basically fabricated the story about his admission to west point. How much do you think it might hurt his campaign. You have to be disappointed because dr. Carson certainly whether one agrees with him politically or not has conducted himself throughout his life as someone to be trusted, someone whose career as a physician and as a great neurosurgeon can be respected. So i am disappointed and only i think time will tell whether this has an impact on his current standing in the polls. What do you think, ron . Do you think it will have that much of a negative impact . How does he come back from this . Well, i gagree with my good friend, mayor moriel. Hes widely viewed with his trustworthiness. If its knew thtrue that he fab this, i think thats going to hurt him in incalculable ways. Its last thing people want is another dishonest politician. If his entire story has been his trustworthiness, hes in a world of trouble. Dr. Carson has been trying to woo africanamerican voters. Do you think he can resonate with black voters in america, proo perhaps even those who supported obama. I think africanamerican voters and people in general respect ben carsons, if you will, career as a neurosurgeon, as someone who has done extraordinary work to help families, to help children, and hes really unmatched in that field. It is very different to transition to a position of Political Leadership where he has no track record whatsoever. His philosophy and president obamas philosophy are as different as the weather in alaska and hawaii. So the thought that he could attract a significant share of the president s coalition or africanamerican voters, i think hed have to do a lot of work because as of yet hes really not addressed i think in any depth some very important issues like voting rights, like the economy and urban communities and the like. Lets switch back to whats happening in the economy in light of the jobs report. Ron, its easy to pick the holes and see the glass half empty and say maybe its a temporary bounce from soso results on jobs in september. Are you seeing this as a Glass Half Full or glass half empty report . I still look at it as a glass half he were at this report. Its encouraging we had nearly 300,000 jobs created in the last month. Thats a step in the right direction. What still concerns me is the fact we have 94 million americans who are out of work. We have nearly 8 Million People who have given up looking for work or otherwise doing parttime jobs and you also have the labor workforce Participation Rate the lowest its been since 1977. So, yes, i am very encouraged by what weve seen for the last couple months, but the underlying factor still indicates to me this economic recovery has a long way to go. Glass half empty or Glass Half Full . Its Glass Half Full. Its a good report. Im concerned about wage stagnation, income inequality, pockets of poverty, but 270,000 jobs and if you can pin this economy to lets say the economy of eight years ago, its a world of difference. More work to do but i would say youve got to say that all in all its a good jobs report. Always more work to do. Very quickly, is it Strong Enough to seal the deal for a rate hike and is this an economy thats Strong Enough to be able to support that rate hike . Lets see the december numbers. Theres been a little bit of an up and down in the last three months. Lets see the december numbers. Janet yellen should wait and then at that point be firm and definitive about what theyre going to do. Very quickly, ron, youre on the republican side of things but tonight is a democratic debate. What do you want to hear from the Democratic Candidates . Well, i actually want to hear what marc morial just mentioned. I want to hear what their plans are to combat terrorism. I want to hear what theyre going to do to make america as strong and safe and secure as we can be. We heard a lot of rhetoric and seen Hillary Clinton and Bernie Sanders try to outpace each other to the left. Lets talk rather than broad generalities, lets be specific. We all want to hear something good, dont we . Mar marc, ron, thank you for joining us. Lets head back down south to brian in dallas. What do you have coming up . Well, kyle bass, well known Hedge Fund Manager, one of the first to understand the fallout from the housing collapse, just sat down with us and talked to us about another sector of the Banking System he thinks could be in big trouble. Hes going to reveal what that is right after this break in our exclusive interview. Stick around. Be in big trouble. There are no medals won for earning a living. Its just what you do for family. But its hard to build a future if you cant see past today. Thats why walmart is investing in the most important part of our company our people. Because a raise in pay, raises us all. Welcome back. Im Brian Sullivan in dallas, texas, also the home of kyle bass. We talked about a part of the Banking System he thinks could be lets talk about a relatively new idea you have which is around china and the idea of shorting chinese banks. Tell us your thesis. So its predicated on the chinese Banking System but its not necessarily short chinese banks. The implications that it has for credit growth and banks in the region, call it in nonjapan asia. So what we think about with regard to the chinese Banking System, its too big for its britches to a certain extent. Its 31 trillion in assets today against the gdp in china in dollar terms call it 10. 2 trillion. Its three times their gdp. When you go back to the financial crisis in europe back in call it 2011 when actually back to the Global Financial crisis in 200809, the European Countries that fell first were the countries whose Banking System were so large in relation to their gdp. Iceland and ireland fell first, they had ten times the gdp in their banks. When you have an emerging market, i consider china an emerging market, three, four times gdp in their banks and theyve grown their Banking System 400 in less than a decade, theres going to be a loan loss cycle. Im not saying theres going to be a collapse. The credit fueled growth in asia will take a breather. The headline is not kyle bass says chinese banks are going to collapse. The headline is that you think its just a natural slowdown in a cycle and its going to hurt some of the banks. I think the banks will lose all their equity but i also think china to your point has the ability all their right. We have the capacity to deal with it. They have the Financial Resources and the government committed to recapitalizing their banks. What does that mean . That just means credit growth will not grow at double digits and if credit is not growing in double digits in china its not growing in double digits in the rest of nonjapan asia. There are other Financial Institutions in the rest of asia that trade at two and three times book that i think are at risk. So you are short equity of chinese banks. Im not. How do you structure the trade around this theory . The rest of the Financial Institutions in asia. Nonchina based. The ones that may be exposed to that. Who is that . There are a lot of institutions in asia that lend aggressively into china. You saw last night hsbc was down sorry, standard charder bank was down 7 . Is that a name youre short . Its a name very very interested in. I typically dont talk about which companies were short. Four times a year i hit the edgar database. I think its important to not point fingers at specific companies but all in all i think that the asian banks are going to see severe trouble over the next two years. Its not the end of the world. Look at any big bank that may do a significant amount of lending in china. And or have huge trade with china and other countries. Think about nonjapan asia. China represents 43 of all export trait in asia and trading with asia is 70 . Theres a causal link people must Pay Attention to that right now no one is paying attention to. So there you go. Listen, with all the regulatory rules, bass troubling to get into individual names. Hinted around about standard. We have the second half of our interview with kyle bass coming up in the next hour of power lunch. Hes going to talk to us about his views on oil, also the Federal Reserve, and what it might mean for the macro stock market as well. A lot more to do with kyle bass coming up in the next hour. Looking forward to it. Thank you very much, brian. Theres a big battle brewing over a 60 billion defense contract. Well bring that you story right after this. vo me . I dont just wait for a moment. I watch for the perfect moment. The one nobody else sees. And when i find it i go for it. announcer at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus, powerful mobile apps so youre always connected, wherever you are. Because at scottrade, our passion is to power yours. Welcome back to power lunch. Im jane wells in los angeles with a big war over defense contracts. You may recall boeing challenged northrups Tanker Contract in 2008 and won. Can it now successfully challenge the brand new multibillion that are bomber contract. Boeing and Lockheed Martin said the decision by the pentagon was fundamentally flawed. Theyve challenged it to the government. Northrup which promoted the bomber under a t. A. R. P. During the super bowl says it offered the more affordable option. Its also the company that bill the b2. Work on the new bomber will probably stop as the government has 100 days to decide. Deutsche bank says the 2500 protests filed with the gao last year, 3 were sustained. Also today lockheeds acquisition of sis kor ski, thats a merger the pentagon doesnt like. They think it hurts competition. You have to wonder if thats one reason the Defense Department gave northrup the bomber contract, to keep competition alive in the defense industry. Back to you in dallas. Also maybe the reason why every publicly traded defense contractor is in the d. C. Suburb when they used to be in l. A. Coming up next, we have another big hour for you live. We are in dallas, texas. We have got mark cuban. He owns the team that plays in this building right here. Were going to talk to him about anything he wants to talk about. Should be a wideranging and fun interview with mark cuban. We have the ceo of matador resources as well. Well get into this oil and gas story. Why isnt it rising more given the well counts coming off. A lot to do from dallas, texas, it right after this. Right after. 40 of the streetlights in detroit, at one point, did not work. You had some blocks and you had major thoroughfares and corridors that were just totally pitch black. Those things had to change. We wanted to restore our lighting system in the city. You can have the greatest dreams in the world, but unless you can finance those dreams, it doesnt happen. At the time that the bankruptcy filing was done, the Public Lighting Authority had a hard time of finding a bank. Citi did not run away from the table like some other bankers did. Citi had the strength to help us go to the credit markets and raise the money. Its a brighter day in detroit. People can see better when theyre out doing their tasks, young people are moving back in town, the kids are feeling safer while they walk to school. And folks are making investments and the community is moving forward. 40 of the lights were out, but theyre not out for long. Theyre coming back. Its time for the your business entrepreneur of the week. Ga garys familys saddle shop has been in Downtown Minneapolis for over a century. Now its part of an innovative district marketing effort called museum in the streets to get local shoppers to support their neighborhood businesses. For more watch your business sunday mornings at 7 30 on msnbc. Ht wed be ready. But demand for our cocktail bitters was huge. I could feel our deadlines racing towards us. We didnt need a loan. We needed shortterm funding. Fast. Our amex helped us fill the orders. Just like that. You cant predict it, but you can be ready. Another step on the journey. Will you be ready when growth presents itself. Realize your buying power at open. Com. Welcome back to power lunch. The markets are a little unimpressed today of course by the much better than expected jobs number, but still over the course of the week theyre higher and on track for their sixth straight week of gains. That would be its longest winning streak so far of 2015. Lets flip over the board and show you some other things. For example, we have crude, we have gold. We have the 10year note sitting at 2. 33 . Yields moving up after the jobs report. That is from about 2. 23 yesterday. Crude is down by nearly 2 which means a loss of 4 over the course of the week. And talking of oil, thats a good place to start because we have another really big hour of power coming up from none other than dallas and mr. Brian sullivan. Over to you. All right, mandy. Youre sticking around as well. It is 2 00 on wall street, 1 00 here in dallas, texas, and were live on a special texassized edition of power lunch. We wanted to dig further into the oil and gas story but theres a lot of other stuff to talk about as well because as we have said the texas economy is certainly not just oil and gas, although its a big part of that. Were seeing oil move down despite six oil rigs coming off earlier in the day. The Federal Reserve back in play as that jobs number coming in stronger than expected. Gold is getting crushed. Oil is down. The stock market is doing exactly squat. But there is a lot more to talk about. In fact, we have mark cuban who is outspoken on a lot of issues. Hes going to come down and join us. Well talk to him about some of the new tv ventures, shark tank deals he made. Then we have matador resources, one of the few oil and Gas Companies whose stock has done well recently. Are they going to use that as ammunition and money to buy other oil and Gas Companies . Well find out and see if oil will move up meaningfully. I saw they played the dallas tv show theme music at the end of the last break. Yeah. People here remember the bust of 86 and theyre hoping it doesnt happen again. Exactly. Squat brian, you used a technical term for what the markets are doing right now. Lets look at the numbers. Slightly higher for the dow and the nasdaq. S p is slightly lower. Lets get to bob pisani on the floor of the new york stock exchange. Its all about the bits and increasing bits for that rate hike in december. Theres some surprise theres not more volatility because not everybody was on the side the fed is going to hike in december. There was considerable debate and the camp theyre not going to hike gained ground in october. Lets take a look at the markets in the middle of the day. I think were getting a muted reaction. There are some winners and losers 2 to 1 declining to advancing. Volume borderline heavy. The volatility is the big surprise. Were not finding people reaching for protection. There are certain predictable things happening. There are volatility in some groups. Interest rate sensitive stocks. Utilities are having a volatile day. Some are hitting new lows Like Duke Energy and the reits, emerging markets, telecom, Home Builders are having some Movement Across the board but particularly emerging markets and reits. Thats understandable given the Interest Rate moves weve seen. And the banks are moving up. They had been underperforming in october. Most are up today. Bank of america, keycorp, all the banks are on the upside. Theres the dollar index as you can see moving up rather aggressively and thats causing a lot of the metal stocks to move to the downside today. Guys, back to you. King dollar back in play. Treasury yields are spiking on the back of a stronger than expected jobs report. Lets get more with Rick Santelli in chicago. Hey, ricky. Hi again. If we look at the biggest mover on the week and day, its 5year note. Theres an intraday, mid170s. A twoyear of 10s gives you perspective. A 24hour chart of the dollar index. Whatt an explosive move there. If you open the chart to mid april of this year, that 98 level, we talked about it a lot, sometimes technicals are easy. The breakout was horse powered in an aggressive fashion. We want to continue to monitor the dollar index because fed fund futures are lower on the week. That means the possibility of a tightening in the markets eyes is higher. If that proves to be correct as many believe it will be, the dollar index probably only has one spot to go and that is higher. Mandy, back to you. The only way is up, ricky. Thank you very much. Lets get to meg terrell for a market flash. Meg . Were checking out shares of incyte, they are developing a cancer drug reported some data that analysts are saying are looking a little worse in melanoma than expected. Thats sending shares down 12 . Also effecting shares of newlink genetics down 15 . Theyre developing a drug in the same class. Folks just feeling maybe a little bit more pessimistic about those right now although analysts are coming out and defending for the most part. Thank you very much for that. Big drops. Lets get back to moving rates. We were talking about surging yields. Theyre not just a number. They could have a big impact on you and your mortgage. Lets get to diana olick with that side of the story. What kind of rates are we looking at . Mortgage rates loosely follow the tenyear yield and they were already rising. The average rate on the popular 30year fixed mortgage was at 3. 83 on october 27 just before the last fed meeting when the word from that meeting was that december could be back on the table for a rate hike. Mortgage rates began moving up. They edged up slightly, then took a bigger move when janet yellen told lawmakers on the hill december was a live possibility. Now the employment report today pushed the odds considerably higher. What does it mean if youre buying a house . Your money will buy you less house or you will qualify for less on a mortgage. How much less . Without going through ugly math, on the average house and the average buyer, its around 3 less than a week ago as rates move higher. Affordability will be hurt more, especially since home prices are rising. One more sector getting hit is reits. They are a low Interest Rate play and some big names are taking big losses today. Mandy . Thank you very much. We have to hand it over to brian. All right, mandy. Thank you very much. Lets talk more broader about the markets and whats going on. We have the Federal Reserve back in play, everybody, and i hope by the way, everybody is putting a dollar in the fed jar even into my absence when we talk about it. I owe 2 bucks just from that. Bob brown and chris wolf are joining us. Hello from dallas. Bob, is the Federal Reserve back in play in december and a lot of people are saying its not a certainty but its a lot closer than it was, does that change how you invest . No, no one should be surprised that the fed is now back in play after that number. But we dont think you should be overreacting to a 271 number like no one should be overreacting to the weak numbers. The economy is producing 185,000 jobs a month. We think thats good enough to justify a fed move, but we still expect the fed to be truthful to what theyve been saying all along, that any hike will be part of a policy that still remains very accommodative. The trajectory will be slow and shallow and that will be good for the Capital Markets for some time to come. All right. So, chris, how about you . Does what we saw today, this morning with the jobs number and the fed, change how you think or invest . I agree with bob that you dont want to extrapolate a trend from one print. It does suggest the labor market is bouncing around a trend of 200 or so on a monthly basis on average. I think what it does though is it adds confidence to the story in 2016 particularly around the job data and importantly the wage data. Wage growth up 2 and change percent, 2. 5. So the consumer story really for 2016 may be setting up stronger. It does really argue for the fed coming into play in december and setting the pace for modest increases through 2016. You know, whats going to happen now, bob, because we interviewed kyle bass the first hour of power lunch. We have the second half of the interview thats going to air and i will give a little tease to it. He talks about the fed and he doesnt see the fed being that aggressive once they start to raise. If we get a raise in december, do we get another one in march or is that just it . Is it going to be sort of a nominal raise, a perfunctory raise . We think theyll raise and then theyre going to pause and watch the market. Its clear this is the Federal Reserve thats very concerned about Market Reaction and a wide range of variables relative to previous fomcs. But, again, we dont think the fed is a threat to the strong market and our positive view on that market. We just dont see the fed raising rates to the point where Interest Rate policy is going to be a negative for the market. So the market may very well overreact if they finally move in december. They may start projecting a move in march. Were hard pressed to think of spending too much time or energy about hikes going beyond 50 basis points. Yeah. Bob and chris, thank you very much. I apologize. Got to cut you off because we have breaking news with phil lebeau. Brian, ford has announced that it has reached a tentative agreement with united autoworkers on a new labor kshth. This covers 52,000 workers. This is just a tentative agreement. It still has to be voted on by the rank and file. If it is approved now that we have chrysler which approved the deal last week, the rank and file did, and the gm workers are finishing up their vote this week, it looks like it will be approved by gms rank and file. If ford can do the same thing, then the big three will have all locked up new labor contracts with the uaw. Again, ford announcing it has reached a tentative agreement with the united autoworkers. Guys, back to you. All right. Phil lebeau, big headlines from ford. A lot of big stuff still to come from the big d. Bill oil hit 60 or 70 by the end of the year . Many have called it, some right in this town. Well ask the ceo of matador resources what he thinks. We have mark cuban coming down and the second half of our interview from kyle bass. I see one flag. I need to find five more. Were back right after this. Mens warehouse slogan is your going to look good, i guarantee it. The stock is not looking good. That is not is misprount. Its down 42 . Joseph a. Bank, the brand they bought i believe it was last year or two years ago, their comparable sales down 15 . The market hates the numbers and were seeing mens wear house as our disaster du jour. Its time where we dive into Analyst Research every day to find the five stock calls we think are the most interesting. Its called street talk. Mandy, are you ready . Im ready. As ready as ill ever be. Im going to have to read it off my phone since i have no prom prompter. J. D. Com, this is the biggest direct retailer in china and Goldman Sachs starting coverage with a buy rating and a 37 target, just under 30 total return potential. They call this, quote, more than just a jumbo distributor. They think it will benefit from the secular growth of online and offline markets. The stock is currently up by just over 1 . The second stock here, brian, is called westrock. Paper and packaging solutions. It formed in this year in july after the merger and got an upgrade to buy from neutral from b. A. Davidson. The target has also been up. Not a huge amount. 66 to frfrom 65. 30 upside from a here. Today its up 4 but its down 16 , brian, from august. Yes. Its a 14 billion company nobody had ever heard of because it was two other names and now its has this new name of westrock. Its a huge company. Signet jewels, stlers, 20 upsi. It represents a lair global multiyear midteens Earnings Growth story. Did you follow that . Things are good for signet. Theyre one of the leaders of the midmarket of the jewelry business a very fragmented business. Jpm not the only ones bullish. You had Goldman Sachs adding them to the conviction buy list last week. I know you cant see that chart there and also for those listening on the radio they cant see it either. Its currently down by 1 for signet jewelers. This is nvidia. Think interactive graphics on your laptop or mobile device, brian, since youre looking at it right now and the stock is surging today. How much is it surging . By 14 . They got an upgrade from neutral at mk m partners and they note better than expected q3 results, conservative guidance, and abated licensing concerns. Its sitting at 31 and change and the stock is up more than 50 this year. A lot of that as you can see on the year chart has been really just in the past few months. So quite a good story there recently for nvidia. Nvidia has had a big run. Heck of a story. As we know, the last stock is always the under the radar smaller cap name and today that name is Click Technologies and click is klik which is also the ticker. Its a pennsylvaniapabased company. You take a bunch of data, you can look at stuff, thats what they do. Fbr Capital Markets upgrading the market. The target 38, 28 upside. The stock down 20 the last three months. But upgraded to an outperform on the back of some strong business although the last three months have not been a great data to visualize for klik technologies. Thats the under the radar name. Thats totally under the radar. I had to do a double take. A catchy name there qlik. Gold is doing something it has never done before. Well tell what you that is ahead. Welcome back to power lunch live in dallas. Lets talk about what else, oil and gas. That is one of the reasons we are here in texas today, folks. Its maergz whamazing when you investors, who is one of the smartest guys in the business. They point to this guy, joe boran from matador. We were talking to Kelcey Warren and he actually had a question for you. And he said at what point do prices get low enough that we company wells, stop current production. Do you see a risk of that happening . I really dont because the producers still need the cash flow even if its a little less. Now, come producers believe theyre not completing wells but thats different than shutting down a wall altogether. Youre not hearing of any wells being shut down, are you . Except maybe your strippers what does that mean . Ten barrels or less that are not economic, but nothing of the recent vintage. You know, we look at our production, its up yearoveryear but down in the last couple months. Tell us about your production trends. Are you slowing down . Were really not slowing down. A lot of that is just the timing of bringing on wells whether theyre reported at the end of the september, the first of october. Yearoveryear weve doubled oil reserves and weve doubled our gas production. So the trend is up but were watching prices before putting on a fourth rig. I think you just got to the heart of the biggest question i get from viewers, which is if oil is down 50 from the high of last year, why are we Still Producing more than 9 Million Barrels of oil a day in america . Well, theres still demand. Oil production for the last two years has been up 15 to 18 . This year its actually been reduced about 400,000 barrels a day for the last three or four months. So you have seen it start to level out. Demand is there. Worldwide demand is about 98 Million Barrels, so thats a big oil field every day is used up. So why arent we seeing then prices recover, if we are down 400,000 barrels from a couple months ago and demand is okay . You know, thats a great question. Most people seem to think that the marginal producer, nigeria, venezuela, are having to keep the cash flow going and discounting their barrels because in the United States weve increased our barrels 5 million so were no longer buying from the marginal producers, and theyre out there having to sell to asia for much less just to get some sales. Is it an overstatement, joe, to call this supply war . I dont think i think thats more accurate to say that than its demand destruction. Its much more about supply that will be corrected over time with just usage. What do you do running an oil company . How do you manage your stock has done well. How are you managing through this . Well, first, you begin with a strong balance sheet. If you have a strong balance sheet, you have options. Second, its the staff. Were an innovative industry and our staff has done a great job reducing drilling times 50 , improving the fracs. So were continuing to make better wells, less money. A lot of Balance Sheets dont look very strong. Do you think we will see if prices stay at this level a wave of bankruptcies . Its hard to say. You will have some bankruptcies but most times the producers have been able to work out things prior to bankruptcy. I have never been in bankruptcy, but certainly life would get complicated by trying to work through a bankruptcy. One year from today where do you see oil . Thats another really good question, brian. Very simple one. It is a very question. The answer is not easy. I think its going to be up there in that 60 to 70 range. Its hard to predict the shortterm outlook for prices. Longer term youre still any emerging country will simply increase the demand for oil and u89 matly it will move higher. Joe foran, it was a real pleasure. Appreciate you coming on power lunch in dallas. Its been a pleasure. We have a lot more to do. The show is not over and, mandy, we have mark cuban just rolled in and he looks like he just rolled in from mavericks practice. You got to tune in just for marks outfit. How is that for a tease . Were back after this. We decided to give ourselves stickers for each feature we release. We read about 10,000 suggestions a week to create features that as traders wed want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. Who reads all those . He does. For all the confidence you need. Td ameritrade. You got this. Cto everything from surfers welcomingto seals. Ul home attracting visitors from around the world, around the year. Along the coast, protected areas are set aside to preserve a Fragile Community of animals and plants. To protect these natural wonders, heres what to know before you go. Stay at least 300 feet away from seals. This is their home. Dont touch marine life in tide pools. Take away your trash and your happy memories. Always enjoy and protect our marine habitats. Im Sharon Epperson and here is your cnbc news update at this hour. Russia is considering air operations in syria. Jets are shown taking off on combat flights. They began air strikes in support of president assad in september. The Israeli Military says a Palestinian Woman who intentionally drove her car toward Israeli Soldiers was shot and taken to a hospital. Palestinians continue to clash with israeli troops throwing rocks at 10e8ders who responded with tear gas and rubber bullets. Two people were killed, four injured, and 15 missing after two dams burst at an iron mine in southeastern brazil. The rupture unleashed a mix of water and mining residue on a village four miles downhill destroying 95 of the houses in the area. A walmart heir john walton who died ten years was thought to have given the bulk of his he is tate to his wife but he gave half of his fortune to a trust and a third to their only child luke. His wife got the rest. Its worth 5 billion as opposed to 32 billion previously thought. Lets get to dominic chu for a market flash. Shares of Intercontinental Hotel coming off the highs of the day. Off 4 or 5 now flat after the company said in a statement it is not exploring a sale or merger of the company as earlier reports had stated. Intercontinental hotels, the board ever directors saying they are not putting themselves up for sale, so thats shares coming off sharply in midday trading p. Trading. Time for trading nation because traders do trade better together. Lets bring in rich ross and gina sanchez. Lets talk financials. That fed rate hike and i owe another dollar to my own fed jar, back on the table. What do you think about the financials . Obviously that would be great news for the financials and we saw tremendous amount of inflows last week expecting this. I think the general consensus is moving back to a rate hike. One of the things i would point out is the xlf also has reits in it and theyre very sensitive and theyve been selling off. Theres another and they have been selling off, so know what you own. Very good points. Rich ross, your mission is clear. The xlf, chart it for us, buddy. How does it look . With twoyear yield at a 5 1 2year high and the dollar on pace for a 12year weekly closing high, you can do a lot worse than the financials. In fact, its hard to do much better in this environment, brian. With those fed rate hike expectations up over 70 for december. Lets bring up the chart of the xlf. Ill shoal you how to trade it. What you like is the Double Bottom base of support and the decisive base breakout above the 200day moving average on the back of that strong nonfarm payrolls number. When we zoom out the chart gets really interesting. Look, we know the group has been under loved, under owned, and over regulated. Youre well below prior highs here. I think that set you up for a nice relative value trade here. I think you want to be a buyer of the xlf and the financials more broadly speaking. Under loved and over regulated but a buyer nonetheless. Rich ross, thank you. Gina sanchez, thank you. Check out the other two segments we do on trading nation every day at tradingnation. Cnbc. Com. All right. Well, Jackie Deangelis at the nymex, despite the fact we lost six more oil rigs, oil cant get out of its own way. It really cant. Thats exactly right. We saw 2 drop in oil prices today. Hanging out just over 44. Session low was 44. 11. This really all had to do with the jobs report this morning sending that dollar index over 99. The strengthening dollar is bearish for crude oil prices. Remember, were still staying in the trading range, the low 40s. We went up to 50 but couldnt hold there. Really when you look at the action, todays action adding to the losses about 5 on the week but were again holding stuck in the middle of the rake. What will be the catalyst to break out . It wasnt the decision on the keystone pipeline. Transcanada saying its committed to that project. Its going to review its options and see if it will file a new application. Its not to say keystone is completely off the table but a lot of issues to think about when you look at roil prices, bria i dont know if you heard our interview last hour with Kelcey Warren he said basically transcanada might be quietly happy about this because its probably an uneconomic project at this point anyway and perhaps this gives them cover for not Going Forward with the project. Well see. One mans view. We will see. Thank you very much. Yeah. Pleased to be joined by mark cuban who has so many things going on if i introduced all them it would take the rest of the show. I will say hes a entrepreneur in a full mavs what is that. Its called representing. Its just a sweatsuit. You dont dress like this ever . I wear the mavs tie. I would rather drape myself in velvet. Comfort. Thanks for having us at your house. A beautiful place. A lot to talk about but first were here, talking about the economy, the jobs number was strong this morning. Listen, you are a consumer ceo as well, not just a basketball and technology guy. How do you read the u. S. Economy and the kobz right now . Every region is different, but here in dallas and texas, i mean, things are going well. I mean, we could see the mavs season tickets, in product sales, the economy seems to be strong. I see it in hiring. I have to pay more than i did last year. So im very positive about whats going on here locally. Weve talked about for about a year since oil went like this, whats going to be the impact on dallas. I know youre not a dallas guy originally but you have lived here long enough. Im here by choice. Great city, by the way. Do you see it impacting anything . The price of oil . Yeah. Of course. Theres people who have investments and their mood goes up and down with the price of oil. I have investments in mlps as a lot of people do. I think people understand that its on the margin. Its going to vary and its going to go up and down. As long as the intrinsic economy continues to grow, i dont think were an oilbased economy like we used to be. So i think its more generally based. Thats what you hear all the time. 86, the saudis turn on the tan, oil goes down, houston was obliterated, people were giving homes away. You dont think thats going to happen here. No, no, no. Every time i come here theres new buildings. And theres cranes everywhere. Thats the beauty of dallas. Were such an northwesterentrep based city, whether its medical technology, communications technology, oil will always have a place here but i think were smart. We adapt and continue to grow. Okay. Enough love for dallas. You can never have enough love for dallas. Its a big city, a lot of love to give. Lets talk about a lot of other things. When we look at these markets and everybody is talking about the Federal Reserve now and whats it going to mean, youre a guy thats been outspoken on the stock market. Do you have a few on equities . Theres two elements to equities and thats its you unfortunate part. The companies youre looking to invest in and Market Structure. The challenge is what he is the impact of the problems with Market Structure and how will they impact performance of stocks. When we see on august 24th just nose dive that was a terrifying open. It was terrifying. Down 1100 points. Its not the only time its happened. Going back to the flash crash and october 15th, the treasury crash. Theres so many Market Structure issues that no matter what you think in terms of the market, youve always got to be hedged, and so to me thats terrifying. I mean, literally, were having conversations about lack of liquidity in treasuries. I mean, how is that even possibility . If theres lack of liquidity, what happens if theres a flash crash in treasuries and it doesnt bounce right back an hour or a day later . One of our favorite guests on the show is bethany mclean, a well known author. She comes on and is into the market issues. You retweeted out something very wrote saying does the s. E. C. , the securities and he can chaex commission, inflate its enforcement numbers and i thought why is mark retweeting this . Im not a fan of the s. E. C. And the way they do business. Youre not . Particularly in terms of insider trading. Whats the purpose of the stock market and the s. E. C. . If the purpose the stock market is to enable capital formation, the s. E. C. Should be making sure people trust it and corporations can go to the market and do it. The number of endorsement actions is not related to any of that. Right . If you want to survey, you know, investors and say do you trust the stock market more today than you did five years ago theyd say no. Of course. That means the s. E. C. Is not doing their job. Were talking about square going t public and their pricing at less than the next several thats the next block. Next block. What are the total of Public Companies right now compared to 20 years ago. Used to be 20 years ago there were 8,000plus Public Companies now theres 4,000. We talk about a couple hundred. More etfs, more mutual funds. Fewer companies more ways to invest. Lets take a short break. Sure. You know how the tv game works. You have done a little tv. A little bit. A lot more to do with mark cuban. Well talk about the mavericks. Cool. Im good for that. Talk about on power lunch from dallas right after this. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Hi, were back on Live Television now. Thank you very much. You all know mark cuban, host of shark tank, owner of the dallas mavericks. Thanks for being here. Thanks for inviting us to your house outside the American Airlines center. You mentioned square, the technology companys ipo looks like it will price low end of the range. Youre a tech investor, too. Whats your view on Technology Valuation . Well, theres public and private, right . I think public valuations are fine. The market speaks for itself. Im an investor, i own stock in facebook, netflix, and im congrats. Theyve done really good. I like catch a cold stocks. Then nowitzki is going to be like, boss, i need a raise. Trust me he makes enough and he never spends a nickel. I think public tech valuations are fine. On the private size i like to play the arbitrage where i invest in companies outside of Silicon Valley and try to sell them inside Silicon Valley. Inside Silicon Valley theyre very insulated and i think they are going through a bubble. You do . Without question. 50 billion valuation for uber overdone . I think that might be the fairest of all the valuations because they do dominate an industry. I think the bigger challenges are Everything Else underneath it because its very difficult because you dont have an outlet. So if theyre going to grow their company, 20 years ago when we did broadcast. Com, our intention was to go public. Now what are they going to do . Unless they get to an uber size and dominate, the outlets are tough. When going public is a down round, then you know the valuations are out of whack. Or maybe you shouldnt go public. I think you should go public because i think its better and its safer and Higher Quality access to capital. But the problem is all the overhang, all the regulation introduced by my buddies at the s. E. C. Every time the s. E. C. Screws up, theres more regulation. You talk about facebook and netflix. We never get you on the record. What else do you like . What have you been buying . Not a lot. I went heavy those are my two biggest positions. I have traded in and out of twitter. I took a flyer on go pro and lost. Where are you now on twitter . I sold it this morning. My guess is it wasnt a good trade. It wasnt a good trade. I broke about even. I didnt buy it that long ago. When they brought in jack dorsey i thought its going to get a little bit of a bounce and theyll do moments and it should help it. Theyre bringing in other things, that should help it trade up. Whats the problem with twitter . They cant gain traction. No, its just if they were in a vacuum and there was no facebook, wed be thinking this company is amazing. The problem is we compare them to instagram which is part of facebook and facebook is eating the world, and so its not so much what twitter is doing wrong. Its just that relatively speaking its a tough market. I think facebook is the internet now. It is. A billion people a day logging on. Youre holding on to facebook and netflix. Youre also a tv investor. And you invest in netflix but you also have a tv gig. So it sounds like are you betting on all different types of content . Is content going to be okay . Content and distribution are going to be okay. I think people are cutting the cord, theyre saving the cord, avoiding the cord in some respects, but people are going to want content however they want to get it. And so certain demographics want netflix, certain demographics want traditional tv and theres room for both. We talk about cord cutters, there are a lot of people for whom the only cord theyve ever had is umbilical cord. Not that many. Not as many as you think. While it seems that way, theres still 98 Million Television homes, right . Its not like its shrinking dramatically. If you look at the net ads, between cable and telco and satellite, still about flat. I think whats happening is those Traditional Companies in distribution have got to respond. If we dont you might see an acceleration in cutting the cord. Until then my biggest guess on netflix is you will see them try to sell content on traditional distribution and compete with hbo and hbos home turf. Were starting to maybe were going to charge more and thats why net netflix had to do it anyway. But thats expensive. Thats the hard part. Thats the game, right, whether its movies or anything else. If net politics netflix is creating so much original content, why wouldnt they go to time warner and say you sell it for 25, well keep 12, you keep 1250 and well both be happy. It kind of starts the path to make destabilize whath bo and others are doing. Sit tight. A lot 34more to do with mark cuban. After the break the second half of our interwith kyle bass. Were live in dallas, texas, American Airlines center. Home of the what . Theres a Basketball Team that plays here. The mavs. D forward. Inve 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. Its time for the your business entrepreneur of the week. Garys family saddle shop has been on the same street in Downtown Minneapolis for over a century. Now its part of an innovative Business District marketing effort called museum in the streets to get local shoppers to support their neighborhood businesses. For more, watch your business sunday mornings at 7 30 on msnbc. Our cosmetics line was a hit. The orders were rushing in. I could feel our deadlines racing towards us. We didnt need a loan. We needed shortterm funding fast. Building 18 homes in 4 ½ months . That was a leap. But i knew i could rely on American Express to help me buy those building materials. Amex helped me buy the inventory i needed. Our amex helped us fill the orders. Just like that. Another step on the journey. Will you be ready when growth presents itself . Realize your buying power at open. Com its gotten squarer. Over the years. Brighter. Bigger. Thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. Welcome back to power lunch live in dallas, texas. Much more with mark cuban in one second but earlier today we also have the privilege of interviewing kyle bass, well known Hedge Fund Manager based in dallas. You saw the first part of the interview in the first part of power lunch. In the second half we talked about his fight about some drug Company Patents he thinks should be invalid and the markets and the Federal Reserve. Here is what he had to say. Patents. Drug companies. Yeah. Didnt go well with the court of therapeutics. Youre going to continue that strategy. Let me rephrase your statement, it hasnt gone well yet. We believe weve been held to a higher standard at the u. S. Patent office. We immediately refiled on the two they rejected on Different Properties grounds and the other two. Accorda has 95 of revenue in one drug. They have five patents. One rolls off in 2018, the other four are long dated. We have challenged all four of the long dated patents and well hear in the next four months whether they will be heard. There are some bad patents in the United States and the Patent Office is the one that enables Drug Companies to charge whatever prices they want to charge giving them almost a governmentbacked monopoly. Thats what a patent is. There are so many bad patents. One of the patents filed on wit called the risk mitigate patent, but it laymans terms the intellectual property is the pharmacist asking the potential description owner are you pregnant. Thats the novelty of a patent. Are you kidding me . Thats the unique ability that you say gives them the patent to patent. Its an actual patent. So the strategy of shorting shares of companies that you view have weak or patents that should have never been patented in the first place still there. Correct. Youre not going to go specifically names but other companies that youre looking at . For sure. Weve filed more than 30 challenges and weve heard back weve had eight uptaken so far and we have a number of them in the pipeline and we have a number of them that have yet to be filed. Youre going to see, too, from us that actually arent going to be filed on Public Companies. My partner and i are going to file a couple pro bow know to give to the world. It is going to perfectly illustrate the ridiculousness of some patents. You are going to love the two we are about to file on. More to come. Yes. You will let cnbc know when you do that. I will call. You and the government. Once we file them i will be happy to discuss them with you because you wont believe the novelty of some of these patents. When can we expect this . Im supposed to be doing two or three weeks. Two for three weeks. Yeah. I will look forward to that. You are not an oil guy, this is dallas, man. Oil people everywhere. There are. Whats your view on oil . Its simple. I think that with Global Supply and demand i think that the supply side, you know, u. S. Rig counts dropped from 1,600 to 600 roughly. Weve cut our rigs down a thousand rigs in less than a year. Production is record highs. Production was like over 9 million hit 9. 6 and its 9. 2 or 9. 1. We are down 400 or 500,000 barrels a day. The shale production in the u. S. Has such an aggressive decline curve when you bring these wells on and i know you are going to see kelsey later and he will be the one to talk about this. My own view is simple. I think by the end of next year the u. S. Will be down a Million Barrels a day in production, so the world better hope that iran can pump an extra Million Barrels a day, i dont think they can, but with Global Demand 95, 96 Million Barrels a day and you think about saudi, what saudi has done to get the production where it is theyve increased their rig count i 00 in two years and their production is up 12 . I think they are pumping every barrel they can pump. And may be drying things up. You are bullish on the price of oil. A year or two from now oil will be 70. Overall i know you are a Pacific Story guy, do you have a view of the overall u. S. Equity market . Yes. I think that you have a fed thats probably now going to raise rates in december. I think the fed is going to be able to raise rates maybe 50, maybe 100 basis points in the cycle and then they will realize they cant raise them anymore. I think were stuck. So were stuck here for a while. I think we will see higher rates, a rate hiking cycle but i dont think it will go more than 100 basis points. Will it hurt u. S. Equities longterm. Briefly. Briefly. All right, mark, you got to listen to kyle you know you know him, talked about drug price, the fed, oil. Any thoughts. I love what hes doing with patents. The patent system in the United States is messed up, i dont know the bio Pharma Industry as well but in technology its a mess. Quick story. My partner and i todd wagner came up with a new way to distribute online content video and we didnt patent it, somebody else did and then sued me for it. You created it. I created it with todd and we got sued for it. I mean, its just ridiculous. Whether we get rid of Software Patents or just reduce the amount of time that they are valid, something has got to change dramatically. Another quick break, wrap up the show, big last block. Maybe do a lightning round. Its your world, im just living in it, brian. Im going to patent that. Were back right after this. Surprise we heard you got a job as a developer its official, i work for ge what . Wow. Yeah okay. Guys, ill be writing a new language for machines so planes, trains, even hospitals can work better. Oh sorry, i was trying to put it away. Got it on the cake. So youre going to work on a train . Not on a train. On trains youre not gonna develop stuff anymore . No i am. Do you know what ge is . Start looking for a house . Oh did you see that listing on zillow i sent you. You see that bathroom . Did we just decide to buy house . I think so. Yay find your way home. Zillow. Every insurance policy has a number. But not every Insurance Company 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 the special dallas edition of power lunch. Its time for our thought for the week. My stock find is shake shack, it is down today but it is up 10 this week after beating both its earnings and revenue estimates but boy its been on a roller coaster since its january ipo, the ipo price was 21 bucks, it scaled all the way up to 96 in may, look at it now sitting just below brian. Doesnt change the fact i still love their burgers. There you go. My mine is a food name but not food related, blackberry. Blackberry has had a heck of a week, launching a new phone and that stock is doing well, up 20 over the past 30 days. Blackberry their market share had done this but the stock lately last 30 days has done that. Blackberry congratulations you are my canadian stock of the week. Mark cuban still with us here. Any views on do you own blackberry stock . I dont own it. Any hope for the company. Theres always hope. All it takes is one great idea and everybody changes. I havent used the products recently so i couldnt tell. You lets do a lightning round. Are you ready . Fire away. Mandy, jump in with a question. I was going to say i was going to say as a followup to the priz the new android powered phone by blackberry people are saying will this save their hand set business. I dont know whether mark thinks whether or not thats something that could help blackberry out at least in that division. I think the thing that could make or break blackberry is their keyboard. Thats why people continue to use it because its hard to touch type. Whats created a platform for them is people love to touch if they were bringing back the side kick i would use the side kick because i could touch time 50 words a minute there. I never liked the blackberry keyboard. We will see what happened. You could use the side trick to upset your friendster profile. A couple questions off of twitter. The home market, housing market, renter or buyer. Im a renter. I own a house now but if i was Getting Started i would rent. When you get a job these days you are a free agent and looking to go from job to job to job rather than stay in one place forever. Having that flexibility adds dollars to your income. One year from today is the job market better or worse in america than it is right now . Better. Is everything good with steve baumer . I like steve. Everything good with you and the clippers. I hate them but i want every team not named the mavericks to lose every game. Thats aller good with the baumer thing they put you on the kiss cam the other night not together do you know what, fortunately we werent sitting next to each other. One of my Shark Tank Companies taking a segment from airbnb. If youre going to a Football Game on the road, want to go to notre dame or indiana web rather than try to find a spot go to rent like a champion. A good idea for shark tank or power pitch is power lunch designed full body sweats. Thanks for watching, everybody. Closing bell starts right now. Hi, and welcome to the closing bell, everybody, im kelly evans down here at the new york stock exchange. And im Bill Griffeth here at cnbc headquarters today where i will be doing nightly Business Report on pbs tonight with Sharon Epperson. Looking forward to that very much. Hope you can join us later this evening. Stocks modestly lower right now after that blow out october jobs report this morning increased