Transcripts For CNBC Power Lunch 20160804

Five, the s p basically flat, and nasdaq up five. Lots of stocks moving today. One way or another. Lots of interesting individual stocks stories. And well have them for you. Things are a little bit higher at this hour on the s p and the nasdaq after the bank of englands first rate cut since 2009. The pound, though, falling steeply against the dollar, as you see there now at 1. 3117. Going to london, nice time to go over there. Trading about 1. 5 lower. Biggest drop since the aftermath of that june brexit te. Thank you, tyler. Im melissa lee. Heres what else is happening at this hour. Oil, out of a bear market. The magic number to watch, 41. 33. Any trade below that puts crude back into a bear market. The atlanta fed upping the gdp forecast to 3. 7 , that is up one tenth of a percent and ford is calling 830,000 vehicles in north america to fix a side door latch. You can find a full list of the models impacted on our website. We do start off with a big brexit bazooka from the bank of england. The boe cutting rates to avoid an economic downturn. Steve liesman and dd roy are here with us. Start it off here with steve. Thanks. We call this surprisingly aggressive package of postbrexit stimulus from the bank of england, and its reverberating in currency, bond, and stock markets along with here in the u. S. Heres what they did. They cut rates by 25 base points. That was expected. Its those additional qe purchases, 60 billion pounds of regular qe, and a newfangled qe. 10 billion plus of Corporate Bond purchases. And suggesting further rate cuts ahead. Take a look at what it did to its outlook, even despite this new change here. Cutting 2017 growth down by five ticks there. That 0. 8 . Expecting somewhat higher inflation, or higher unemployment. What it means for the u. S. , it removes the Downside Risk that could have come if the boe had not acted and that could have raised concerns about a much weaker economy in the uk. Its also the reason for the fed not to act as the dollar is already stronger against the pounds and there are limits to i think how far the fed is going to go away from other central banks. Theyre either cutting or they have negative rates. But all this boe news, im going to use the word trump. As in ive got a trump card . It will trump something else. Sandy is screaming to go in the back. But if you pull that back up, guys, 179 on the payrolls after 287 last month. 4. 8 down a tick the unemployment rate. Thats a pretty good number. And its going to cause me to come back on this show tomorrow and say we have another whoa you get the privilege and honor of coming back on this show. If i were to be invited on the show tomorrow thank you. What i would talk about is the difference and the split between the weak gdp numbers and the potentially stronger jobs numbers. Or do we get some consonance between them . Did we see it based on what the bank of england has done . Or is it already priced into i mean, we were talking yesterday about what the market is expecting, and the market is not respecting a rate cut until december. I didnt look just recently, but december is still alive. September is look, they have a lot of talk in jackson hole. There is some data between now and then. If this Second Quarter number gets revised, were a little bit lower for the cnbc rapid update. Again, looking for the bounceback. After what happened in the Second Quarter, how much are you going to bet on that bounceback right now . We were looking for 2. 5, we got 1. 2. We had revisions down to the prior ones. There may be a sense that we tried to overstate and it comes back down to reality. Thank you. Lets now turn to you. How much will this race cut affect investors . Take into consideration this number. Tourists visiting the u. S. From the uk last year spent 4. 6 billion according to the u. S. Government. Visitors from the uk also accounted for the Biggest Group of travelers in the u. S. Outside of canada and mexico. With the sterling weakening against the dollar, there are concerns that the u. S. May be too pricey for uk tourists. Whats the impact on the business here . Its hard to say right now. On one hand, you have Companies Like trip advisor, which in its Second Quarter earnings released today, said theyve seen some softness in june and july, which the company attributes in part to brexit. But on the other hand, hotels are saying while they could see fewer International Travelers in the u. S. , that could be offset by more u. S. Travelers overseas. So whats the best guess for what brexit means for the travel industry in the u. S. . The travel trends index, which gathers data from airlines, hotels and travel sites says International Travel will be muted in the u. S. And slightly down in the next six months. Was it yesterday we had richard fein of Royal Caribbean. He said he had yet to see anything traceable back to brexit. Thats what people are saying. Theres some concern in the backdrop. But not really alarm right now and theyre not releasing hard numbers of people leaving. But boy, with the pound at 1. 31, its a good time to go to london, isnt it . You just came back. I cant complain. It was better than 1. 60. I would argue if youre going to go to london, a couple of differences in the Exchange Rate shouldnt be the difference of whether you choose to go. If things are that tight, dont go. Why is a guy like you buying a nice flat . Thats what i would expect from you. To take advantage. Of all my does posable income. Hes got two houses on ventnor avenue. Does he . A house in the poconos id love to sell. Nice to have you here. Thank you, good to see you. That is the news. Maybe the bigger question, thus, is around this england stuff, what does it mean for you and your money . Lets bring in the chief Market Strategist at boston private wealth, and the president of iht wealth management. Bob, first to you. Do you change how you invest your clients money based on this bank of england news today . No, i dont. But i am at least somewhat more favorable on the banks, because i think with this cut in Interest Rates and the additional bond purchases, its going to help some of these International Banks like jp morgan, like citigroup. So i think there is some favorable impact. But for the u. S. Based stocks, i dont think youre going to see much of an impact. I do think that the market was expecting something. And the market is expecting even more. We see the pound at 1. 31. I think youre going to see it go even a little bit further going forward. Theres been no sector worse than the european banks, especially in italy, but Deutsche Bank at lowes, commerce bank. Are you buying any of those . Do you feel like theyve got a Brighter Future perhaps from an investment perspective because of what the boe and the ecb are doing right now . No. Im not interested in those banks right now. When were looking at Banks Like Bank of america, jp morgan, citigroup, even black rock, lower Interest Rates means positive things for these Companies Going forward. We think that the United States is on track. Probably for an Interest Rate hike in december, and then probably a little bit more as the economy picks up going into 2017. Steve, what are your expectations in terms of rates . Because right now, as bob mentioned, rates arent expected to move at all by the fed. Until december. So does a boe change your view at all . I think were in qe infinity now. Coming up with new ways of qe. We all expected the rate cut in england. It looks like were going to be at zero for a while now. Its hard to see how that helps the banks bottom line. Thats why theyre muddling through the last seven, eight years now. That on top of the fact with the real estate sector being added to the s p 500. A lot of the money thats been in the Financial Sector is coming out of that and will be going into that new real estate sector. Thats only going to hurt from the passive investor standpoint. Its only going to hurt the etfs and the financial stocks, the bottom line on that too for an artificial outside influence. So its hard to see how thats going to help the bank world. Id probably be avoiding them right now, at least for the foreseeable future. Bob, how does this story end . Im not sure how this story ends. I dont think anybody knows how it ends. I dont think yellen knows how it ends. But let me address how it helps the banks bottom lines. Theyre also helping with the m a activity. Theyre also helping issue new bonds for corporations. I think corporations are going to actually buy back some bonds. Buy back their paper and issue new paper. So there goes an Investment Banking fee thats associated with that. I do think its beginning to help. Its not going to help their net interest margin, but i do think it helps in other ways. We pointed out this morning that the ftse 100, britains dow, is the best performing stock index in europe over the past three months. It appears the market has bet on this outcome. Are these all the gains that they see, and maybe that means more money comes here. Ive got to believe that youre going to continue to see like the u. S. Market right now. Its not that were crushing it. Were the best market out there. Theres so much risk thats inherent in it. Its hard to put money into bonds and europe, given that yes, right now, parts are doing okay, but its an unknown game plan. This has never happened before. The unloading of a country from the eu. You cant put a lot of money in the emerging markets. If youre looking for a certain area thats benefiting it. I think thats why were seeing the u. S. Markets are doing better than what a lot of people would have expected at this point in the year. I dont know if you can continue to say that youll see that out of the england, european markets, at least in the foreseeable future. Theyve got major issues they need to work out. Its all going to be coming up in the next few months of what that plan is going to look like. So if im looking somewhere, the u. S. Wins almost kind of by default. I will correct you a little bit and say that europe has had some issues to work out for the last 50 to 100 years. Bob and steve, thank you both very much. Guys, we appreciate it. Lets get a news alert now on facebook. Heres Julia Boorstin in l. A. Facebook is changing its news feed algorithm to show user stories that are more relevant to them and to minimize those that people find misleading or spammy. A team reviewed thousands of headlines to build a system to detect click bait headlines. Facebook saying for articles to make the cut, publishers should avoid headlines that withhold information, required to understand what the content of the article is, and headlines that exaggerate the article to create misleading expectations. Changes could impact publishers who rely on facebook for traffic. In q2, buzz feed received the most facebook referral traffic on desk top. Nearly 200 million visits followed by littlethings. Com, according to similar web as well as globo. 62 of u. S. Adults get news on social media, according to pew research. Well have to see if this changes what news they get, or just how headlines are written. Guys . Julia, thank you very much. Any impact we see on facebook or its desirability as a platform, its stock, anything . I dont see it. I dont use facebook. Im really out of the game here. I do think theyll become a big rival to what you call mainstream media. They can also do it on twitter. Or wifi router makers. Still to come, nikes breakup with its golf equipment biz. What does this say about tiger woods future and the future of golf . We will grip and rip this debate straight ahead. But first, an earnings extravaganza. Talking everything from tony the tiger to swimming with the fishes. Think about it. Power lunch will be right back. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of at t, and security that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Welcome back. A huge day for earnings, so lets call in the earnings squad. Bob pisani, sara eisen, and morgan brennan. Bob . The earnings picture is slowly getting better. The bad news, its not happening very fast and its a little choppy. Lets look at the scorecard that we have so far. 81 of the s p 500 reporting so far, today, earnings for the Second Quarter down 2. 8 . Thats still not good. But its better than it was on fourth of july when it was down 4. 5 . This has been bouncing around a little all throughout the week. The main thing here is the narrative. We were supposed to bottom in the first quarter. And slowly have some kind of improvement in the Second Quarter. Then in the third quarter, supposed to start turning the corner into positive earnings growth. Its soo0 on q3. So far, that narrative is holding but it can go either way in the next few weeks. We want to hear a little bit more next week and get it from the retailers and see what theyre doing. The Life Insurance companies have been reporting. What a mess. Metlife down 9 . Prudential is down five. They all reported down 4 . Ill make it simple. The low Interest Rate scenario is killing insurance companies. Imagine this. You have these low bond yields. Thats your main source of income. And you have future obligations that are much, much higher than the amount of money youre getting from the yield on the bonds. Thats what theyre facing right now. Met is a good example. They took a 2 billion charge for variable annuities. Theyre buying a future income stream and Life Insurance companies a hard time matching those guarantees. Its a Pretty Simple situation. Mets going to cut expenses by 11 , including job cuts as well. Low Interest Rates hurting a very big part of the Financial Services industry. Im surprised that the financials arent down even more sharply considering these big declines that were seeing in that group. Fortunately, weve known about this for a while. But a 2 billion charge, that was a lot more than anyone anticipated from met. Huge one. Bob, thank you. Lets get straight to sara eisen. Hi, melissa. Investors are certainly cheering higher profits, but dont be fooled here. Its not because of a comeback in cereal. Its deeper cost cutting that is fueling the bottom line for kellogg. For instance, morning foods, which includes fruit loops and other breakfast items, sales there 2 . Snacks declined 3. 8 . But the company says that pringles and rice crispies treats showed growth. It hurts the european, asian, and latin American Business for kellogg. On the plus side, those great cost savings drove the better outlook on earnings and operating margins jumped the previous quarter. The mergers forcing all of the players to cut costs. Kellogg adopted the trendy zerobased budgeting, which is just steeper cost cuts across the industry. What about returning to growth . Kellogg says that cereal is stabilizing and it is investing, trying to make kashi gmofree, for instance. But the company says not to expect much sales growth in the coming quarter. For this one, you guys know the themes, melissa. Its all about costcutting, speculation of mma, and, of course, those safer Consumer Staples and their dividends, which is driving the stocks up in this environment. Kellogg, for instance, sara, has 23 pe at this point. So its amazing that people are willing to pay up for this even though its got a 6. 6 decline in revenue. That certainly is the story. It speaks to two things. Number one, the kind of environment that we are in. Low Interest Rates. Which has driven up sectors like utilities, telecomm, and Consumer Staples. Theyre considered sturdy and they pay out dividends, which has been, of course, the trade on low Interest Rates and the m a speculation has really heated up, especially around kellogg, the potentially three g, which as you know, with Warren Buffett went after kraft, combining it with hineinz, migh be hungry for another deal. Sara, thank you very much. Lets round it out now with morgan brennan, who is watching seaworld. You could get a little seasick from seaworld stock today. If you look at the stock im going to use another pun here. Its drowning. It hit an alltime low. Earnings matched estimates, revenue missed. The theme park operator reported a 7. 6 plunge in attendance. This is a quarter that kicks off seaworlds business season. The company says latin american tourists arent coming to florida. Thats down 40 yeartodate thanks to bad economies at home, especially brazil, and that the terrorist attack at an orlando nightclub also impacted traffic in that market as well. One bright spot, july did see an up tick in visitors and so far we have not seen any impact from zika, or fears of zika. But seaworlds got a slog ahead of it. Scrapping its signature orca breeding and orca shows after years of public backlash. If you take a look at the stock, thats trading more than 50 below its ipo price and almost 70 below its may 2013 alltime high. It has really taken a beating. Is there any word from management on what they expect in terms of attendance after they scrap those shows . Theyve spoken about it a little bit in past earnings, what basically joel, who is ceo, he came onboard about a year ago. What he has said was that the turnaround strategy is on track, despite the fact that they have those really rough numbers this past quarter. He pointed to the fact that in july, attendance was up 4 . I mean, seaworld, they have i believe three namesake parks focused on orcas. But theyve got about a dozen. Trying to move to the universal model. Six flags. Etc. Do not sweat the bad puns. I know you did not do it on porpoi porpoise. Oh. That was the worst one. That was killer. Oh, god. Sham on you. Go to break, please whats happening behind doors to get Trumps Campaign back on track. Power lunch will be back in two. You cant blame a business for trying to cash in on this election season insanity, which is exactly what Yacht Club Bottling Works in providence, rhode island, is trying to do. It has introduced two new sodas. On the left, hillarys liberal limeade. And on a fruit punch, with notes of peach. Theyre calling it the soda pop poll. They will release sales figures of hillary and donald sodas by election day. I predict hillary will win by a landslide, not for political reasons, merely because limede is a superior flavor to raspberry. I agree. The new fox poll showing that Hillary Clinton now has a tenpoint lead on donald trump. This as karl rove comes out with a new oped in the wall street journal titled victory is slipping away for trump. He says trump can still win, but only if he keeps being selfdestructive and chooses discipline. Here to tell us how trump can turn the tide is roy bailey, a man who has the candidates ear on Economic Policy and is the ceo of giuliani decent capital. Good to have you with us. Good afternoon. Great to see you. Well send you some of that punch that we just talked about. Ill be drinking lots of punch. Mr. Trump yesterday said something to the effect of the campaign is united and, in fact, has never been more united. Id like to get your response to that on a day where mr. Trump pointedly declined to endorse paul ryan, the speaker and his running mate pointedly chose to endorse him. How can a campaign be united when you have that kind of discord . Well, tyler, i think its because weve all seen this is the most unorthodox president ial campaign in our lifetimes. I am never going to secondguess donald trump. He is very wise. He chooses his words. There are reasons for what he says. Maybe he goes too far one way or another. But the way i look at it, he is a selfdescribed rebel. And being a rebel, thats what its going to take to completely turn this country around. He wants to send this country on a completely different path. You say he chooses his words i assume you mean wisely there. Karl rove, a longtime Political Insider thinks the opposite. In other words, that he doesnt have the sort of rhetorical discipline required to run an efficient campaign. You differ strongly there, i guess . Well, i love karl, one of our great political minds, but i just want to say this. Donald trump is a fighter. He is up against the establishment. He is up against the Obama Administration, air force one administration. Hes up against the liberal media. He has to fight. Its got to be unorthodox. And when you fight, you might make a mistake or two. I tell you what, he has a movement. Im hearing that his crowds are huge. Theyre enthusiastic. And this is a movement. And what ive seen in these polls, its showing hillarys a little bit ahead in the polls now. But what im really seeing is a huge amount of undecided voters. And polls can turn sharply. I think they turn in favor of the movement candidate. You look at brexit. All the pollsters thought the vote was going to be to remain. All the bookies the day before had 5 1 odds that the vote was going to be to remain. Trump has a movement. Brexit had a movement. It doesnt necessarily show up in the polls. Roy, heres my question. And dont worry, im going to ask the same question if we get democrats on as well. I keep hearing this stuff from Bernie Sanders people, from the trump people. We need to change the direction of this country. We need a revolution. What is wrong with america . I mean, seriously, i hear that all the time. Weve got problems. But i wonder when people say that kind of stuff if theyve ever traveled outside the United States. Its a pretty damn good place to live. What needs to be flipped around so badly that we need complete change . And i would ask the same question, by the way, of the other side. Well, you need to Ask Donald Trump that. Obviously, its the greatest country on the face of the earth. Greatest country in the history of the world. But its kind of lost its path, from my perspective. Weve become overly politically correct in this country to our detriment. And donald trump is throwing out political correctness. Whos the candidate that is most going to protect us against isis, that wants to kill us, terrorists, unabiding citizens. Who is the candidate that will protect us . Its donald trump. Its not hillary. And who is the candidate that is for the middle class person . Weve had stagnant wages for 15 years in the middle class. Who is the blue collar billionaire that expects the middle class and wants to protect their jobs, wants to see job growth, wants to start with the economy, wants to give corporations lower taxes. So they can stimulate growth. Wants them to compete here in america, have jobs here in america, not send them to foreign countries, protect the worker, and let americans start to thrive again. And let every american have the opportunity to live that American Dream that he has done for himself. Im here in las vegas at a Cyber Security conference. Were trying to partner up with a Cyber Security platform. I saw the glistening trump tower, 60 stories high. I thought to myself, this guy has created so many jobs, the clintons never created a job. He knows exactly how to do that. He is successful. Hell be successful for our country. He will negotiate tough. Thats what we need right now. We need someone looking after america, not trying to see how politically correct they are. Even if it starts a trade war . I didnt say he needs to start a trade war. Well, the reality is, the middle class wages are going down in the United States. You know that. But theyre going down in the United States because theyre going up elsewhere. The rest of the world is getting richer. So we either bring back jobs, which is capital to here, at the expense of someone else, or let them do what theyre doing. Its to stop capital from going overseas. You just answered your own question, from my perspective. Donald trump wants americans to start making more money. Hes in it for americans. Why are we worried about im just saying, are we willing to do that to get what were saying . Yes. Its time. Its time to look after ourselves. And thats what donald trump stands for, first and foremost. Not at the expense of others, but if its american or a foreigner, hes for the american. And you know what . I think thats what the movement is all about. The conventional media has portrayed this week as a very bad one for mr. Trump in terms of performance relative to Hillary Clinton. That may or may not translate into the way voters actually feel about it. But how would you advise him to turn it around and take some of the attention off of himself and turn it back on Hillary Clinton, who has her own obvious weaknesses . He certainly doesnt need my advice. And theres a lot smarter people than me to advise him. But, in a Movement Like he has, with a selfdescribed rebel and what hes trying to do for this country, its not going to be pretty. Its going to be maybe an ugly process. Our country is going through this vitriolic change. Its not going to be pretty. Its going to make a lot of people uncomfortable. Its going to make the establishment uncomfortable. Its beginning to make politicians, republicans a little uncomfortable. Theyve got to get elected. They may have to walk a fine line for themselves, and the media may paint it that theyre not behind them, but at the end of the day, i think theyre going to all be behind him. Roy, thank you very much for being with us. We hope youll come back and join us again. Roy bailey. We appreciate your time, sir. Up next, crash diets and popping pills. The troubling new trend in tech land, when power lunch returns. Tokyostyle ramen noodles. Fresh ingredients, stepbystep recipies, delivered to your door for less than 9 a meal. Get 30 off your first delivery blueapron. Com cook. Hello, everyone. Im sue herera. A North Carolina man has been arrested on a charge of conspireing to provide support to isis. The Justice Department says eric Jamal Hendricks tried to buy an ak47 assault officer from an undercover officer and pledged allegiance to isis on social media. It says he was also trying to recruit people to conduct attacks in the u. S. After a twoyear review, the Justice Department would require the countrys biggest performing rights organizations to offer full licenses for all of the works owned by their members. The Music Publishers say they will challenge that decision in court. In brazil, a Senate Impeachment committee voted to put suspended president Dilma Rousseff on trial in the full chamber for allegedly breaking budget laws. The senate will vote next week whether to accept the charges and begin the impeachment trial. A federal Appeals Court ruling that the nfl may collect a fine imposed by commissioner Roger Goodell in a disciplinary case against Minnesota Vikings running back adrian peterson. It said an nfl arbitrator acted within his authority in upholding that fine. Thats the cnbc news update at this hour. Back to you, melissa. Thank you, sue. Up next, were talking nikes 706 million bogey. Why the swoosh is trunk slamming its golf apparel business. Well be right back. D clinic, watson, lets review the Electronic Medical record of the next patient. No problem. Its a pretty huge file. Done. Sorry for the wait. That was quick. As part of our research, i also compared lab results with notes about prior treatments, then cross referenced it with thousands of medical journals. And i get the benefit of much more data, and a lot more time to plan the best treatments. I stay focused 24 7 and never sleep. You sound like a lot of medical students i know. Announcer theyll test you. Try to break your will. But however loud the loudness gets. However many cheese puffs may fly. Youre the driver. The one in control. Stand firm. Just wait. [click] and move only when you hear the click that says theyre buckled in for the drive. Never give up till they buckle up. Welcome back to power lunch. 24hour chart of tens looks like the 24hour chart of many global sovereigns of that maturity. Mark carney and the bank of england suits most of that activity. It wasnt the data point to my opinion. If you look at a oneweek chart of the pound versus the dollar, this is interesting. The pound is slipping below the range that would make sense. Now, if you open the chart up to prebrexit, something should jump out at you. Even though it is moving outside that range, it is nowhere near challenging the low close from postbrexit with a 129 on the 7th of july. The last chart, mark carney said one thing i love. He doesnt want negative rates. Doesnt like negative rates. But the problem is theres not much separating him from negative rates. Look at the chart of 20 years for their twoyear note in the uk. 11 basis points. Not a lot of insurance. Melissa lee, back to you. Rick santelli, thank you. Lets talk nike. The companys cofounder sitting down exclusively with jim cramer to talk everything from golf to spotting the next mega endorsement deal. Our endorsements, at least at nike, we use a very sharp pencil and we pass on endorsements from time to time. There was a great soccer club in europe that we said is just too much, its not worth it to us. You can read about a lot of money for endorsements, including michael jordan, but hes absolutely worth it, as is lebron james. The company now has its eye on the olympics. Sticking with the swoosh, the golf world still trying to figure out why nike is getting out of the golf equipment business. No more clubs, no more balls, no more beings, and what its going to mean for the competition. Taylor made, callaway, ping, and more. Is this move all about tiger, or more about nike trying to stick with what it does best, and that is apparel, clothes, shoes. Folks, welcome, good to have you here. Does this suggest that nike is making a big turn away from equipment and back to its roots in apparel . In other words, would you be surprised to see them stop making footballs and baseball gloves and basketballs . I guess that would surprise me. But i think frankly, this story begins and this story ends with tiger woods, period. The only reason they got into the golf equipment business was because they had tiger woods. The only reason theyre getting out of the golf equipment business is because tiger woods is no longer playing like the tiger woods we all know. Hes no longer playing. It begins and ends there. They werent in the business until they had tiger. Will he wasnt even playing nike clubs in the beginning. They made the clubs to go with him. Now hes not playing near the level that were all accustomed to and hasnt for years, so theyre bailing. Theres no way anybody could convince me that if he was still near the top of his game, that this announcement would happen. No way. Let me ask you this. If tiger comes back, they wont be making nike clubs anymore. Will he still play nike clubs, will he go somewhere else . Are there other pros who use nike clubs . I assume mcilroy is a nike endorser. I know he wears nike apparel. Tell me about that. First off, i spoke with his agent on the phone and he confirmed moving forward, tigers apparel and footwear will both remain with nike, but theres going to be a change in terms of the equipment and the clubs that tiger plays whenever he makes his return to competition. Were all still waiting. Its been about a ar since he played. In terms of other stars, rory mcilroy signed a huge reportedly deal. Hes the highest profile nike spokesman. Besides tiger woods. We have other pros on the pga tour under the swoosh. Tony finau and Jhonattan Vegas both won pga tour events this year using nike clubs. You know scotts point. They didnt even make anything until he got into it. Based on your conversations, and i understand the agent is going to be bullish on this. Honestly, youre a golf channel guy. You know this. Do you really see tiger woods ever coming back . Oh, yeah. I think tiger woods is going to come back at some point. Why . Why . Because hes tiger woods, and i dont think hes ready to hang it up just yet. I think he has one more shot at making a comeback. If you look at the nike numbers, their sales peaked in 2013 in terms of golf with nearly 800 million in revenue. That was tigers last best year, where he had five wins, won the players. So there is some correlation, not only when nike got into the space, but when they peaked was tiger woods at his best. So, how big an opportunity is this for other golf makers, including the one public one i know, which is callaway . Why dont we throw up that ticker . You can see the reaction today. Its marked. Callaways shares got as high as 10 , 11 one point during the day early on in trading. Its up about maybe 4 to 6 during the midday trade, but its on very heavy volume. On an average day, these guys trade 900,000 shares a day. They were at 1. 2 million just about an hour or so after a new high. Callaway, to be fair here, is the pure play that were talking about. Taylor made is a dominant player in this space and theyre owned by adidas group. And they reported earnings today. Ironically enough, this is the same taylor made adidas golf group that adidas is trying to find a buyer for. They want to get out of it. Just like nike. The interesting part about this is, i was text messaging last night with both the ceo, chip brewer of callaway golf. Also bob fillion, and they were both echoing the same types of statements. They both said these are opportunities. Chip brewer said we have the utmost respect for underarmo ar. Meanwhile, we and cobra and everybody else, we want to focus on whats happening with the 360 degree. Private equity out of south korea. And they have already filed paper work earlier this year to possibly go public. So that would be holdings. Fila, the shoes and sportswear, theyre also a big owner there as well. It speaks to the economies of scale in golf. Right now, the pot isnt growing that fast. Will mentioned the other golfers that nike has. Theyre fine players, with respect to brooks, kepka, tony finau and others. Even rory. They dont sell clubs. Nike didnt sell nearly as many clubs as they wanted to, even probably with tiger, but none of these other athletes. You want it to look like tiger on the golf course. It was the closest thing to the sort of i want to be like mike kind of a transcendent athlete across race. All sorts of age groups, Everything Else. I play nike irons. Im a complete hack. But youre drawn to that whole aura of a guy who was able to sell product. Theres not another guy like that. This was an excuse for nike to get out. Because tigers not nearly what he was, even if he comes back. Who is the beneficiary here . Is there a winner in this that you see . Is it callaway . Do they have the most to gain . Is it taylor made . I think callaway is certainly one that could gain. The company i have my eye on would be pxg. I think theyre in a position to really make a big splash. They signed a lot of highprofile golfers, including zach johnson. This is a chance to maybe get a couple of those highprofile youve got guys doing can we just ask the bigger question, if anybodys golfing anymore . I will tell you this. I got the golf data tech numbers. This is a Research Firm that tracks a number of rounds played. So far, just in june, year over year, golf rounds played are up 5. 5 . The same dudes all the time. That means the revenue pie is there. Based on how ive been playing lately, i may quit. I golfed a ton. After six holes, golf is youre out. Six holes is the perfect number, right, will . Yeah. Listen, guys, im all for the sixhole round, but i will point out, National Golf Foundation Study last year. 2. 2 Million People tried golf for the first time, most in a single year since tiger came on the scene. Thanks very much. So time consuming. Im not kidding about the sixround golf. Up next, popping pills in silicon valley. Youve got to hear this story. The troubling new trend in tech land, literally people not eating, popping pills, all kinds of weird stuff happening. Wait until you hear this. Stick around. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back. Blackberry may have just lost its biggest supporter. Kim kardashian just broke her latest blackberry bold device and shes not taking it well. She took to twitter asking if she should try a new blackberry, or finally try a different phone like samsung. Samsung obviously responded to the reality tv star, suggesting she try one of their phones. Im sure they could make one available to her. By the way, shares of blackberry are up 15 . She used to buy them on ebay. Apparently there were none left. She ran through her stockpile of old phones. She works them hard, im sure. Oh, yeah. Selfie action. Tech workers are turning to a new trend to keep their competitive edge. Theyre now hacking their own brains and bodies. Lets get to josh lipton with more on the story. When theyre looking for an edge, many in tech turn to socalled nupropics, supplements that claim to boost stamina, memory, and mood. I caught up with a product designer who takes one such supplement called rise. It includes herbs that supposedly help with memory. He says rise helps him focus. After being on rise for a while, i found i could read without fatigue a lot more easily, so i can basically finish a lot more of the book without getting distracted by doing something else. He isnt alone. Vcs also see opportunities. 17 startups focused on targeting the brain with different products and solutions. Not everybody is a fan. There are no randomized trials in human beings that show that these nutropics have any benefits above and beyond what we would see if someone were to follow a healthy diet and maintained regular exercise. It doesnt end there, though, as they try and improve cognitive and physical performance, techies also telling me that they fast sometimes up to 60 hours at a stretch. Others take real drugs like provigil, which they say helps them stay alert. Have you tried any of these, josh . There is a startup here in San Francisco called nutrobox. These are chewable coffee. Theyre what theyre billed as. Starting tomorrow, at 7elevens, youre going to be able to pop these. One gummy cube equals, im told, about half a cup. Thats it . Delicious. Well, a full cup, pop two. Why cant you drink half a cup of coffee . Why not do both . I guess the idea is, maybe its billed as, according to the company, this is going to give me a lift of coffee, right. But supposedly, its not going to leave me with any jitters. Thats the idea. Brian. Thats what you need. Make sure you floss, okay . Josh did that story on squawk box this morning. I feel you, brother. Were running on fumes, man. Not if you have those cubes. Or a car nap. Up next, a couple trifecta. Were going to check in on hotels. A jampacked second hour of power on tap after this quick one. Guyhey nicole, happening here . This is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. Heres whats on the menu this hour. The mgm lays out his growth plan. The state of trump. What the latest poll numbers are revealing, and the new normal for restaurants. The three big challenges facing the industry right now. A second hour of power begins. Welcome, if youre just joining us here. Lets get a check on your money. Two hours now until the closing bell. And the trend we have seen of flat markets continue. You can see the dow is down a whopping 15 points. Oil is rallying a bit today. Crude oil is up about 2. 5 . Were going to bring you the closing crude numbers when they close. This hour. Halfhour. On the half. Welcome, everybody. In the headlines right now, donald trump is campaigning in portland, maine. We will have the latest headlines, if they are headline worthy for us. Facebook announcing a major shakeup to its news feed to limit socalled click bait headlines. And two business groups, including the u. S. Chamber of commerce suing the Obama Administration over a crackdown on tax inversion. Melissa . Tyler, mgm higher after posting better than expected Second Quarter results. Six cents above consensus at 29 cents a share. Weakness from asia persists. Lets welcome ceo jim muran. Great to have you with us, as always. Thank you, melissa. I do want to get your read on mccow. Many people focused on that. For you, its about 10 of your ibida. Do you think weve seen the worst . Thank goodness we have. I do believe mckcau has bottome. I think youll see gradual improvement in the marketplace. And i think a lot of excitement once wynn resorts opens its properties. I think the market is going to start to grow again. With the opening of cotai, that more than doubles your presence there. A lot of analysts are saying because of the proximity to other properties, such as wind palace, that that will actually help. How do you work that out when you have so many rooms clustered on the market at the same time . Well, theres a really Good Relationship with properties. We see that at the peninsula. For example, wynn and mgm are right next to each other on the peninsula at our existing resorts and we really complement one another very well there. The same thing is going to happen in cotai and it gives the customers an opportunity to go to one or two properties fairly easily with a short distance, and weve seen it happen here in las vegas. I think its going to happen in cotai, having those properties clustered together, it will help. I see that youre about to open maybe you have already opened a large property at national harbor, south of washington, d. C. Its an interesting area. Im vaguely familiar with it because i grew up in that neck of the woods. Do you think that that can be a Destination Resort . I assume you do. I do. Im betting 1. 4 billion on the fact that it will. It will open. It opens in december. Its really spectacular. Well have a tremendous amount of entertainment. World class restaurants. Tremendous amount of retail space. I think its going to be the most profitable casino in the United States outside of las vegas. Most profitable commercial casino, and think about it. Virginia doesnt have gaming. The district has never had a bad day. In terms of economic activity. We have three airports in short distance. Great International Tourism to our nations capital. Were on the banks of the potomac, 12 miles from the washington monument. Is that casino the nail in the coffin of Atlantic City . Its not going to help the underperforming properties, thats for sure. We just acquired borgata, which is obviously the Market Leader there. What were seeing happen is many of the dealers and employees are applying to work at national harbor. Well probably have 60,000 applications for the 4,000 new jobs that were adding in maryland at national harbor. I think the quality wins, even Atlantic City. I do believe the market is going to contract even further. But borgada and a handful of other properties i think will do well in a shrinking market. But thats not the longterm solution. It used to be Atlantic City or vegas. Now youve got casinos. Is there any hope for Atlantic City at all . I think yes. The answer is yes. It requires collaboration to literally redraw the map in Atlantic City. To blade a lot of the lousy properties on the boardwalk. To create femacompliant housing so people can enjoy the very beach that they remembered in the 50s and 60s. Get rid of the urban blight and require all resorts, not just borgada, but all resorts to reinvest significant dollars to expand the market. Borgada makes a lot of money with 6,000 employees because its a quality property, one of the few left there. I want to talk about vegas. What are you seeing there . It is a time that analysts point out where youre facing tougher comps going forward. How are traffic levels . How is the consumer, from what youre seeing . We had a very good Second Quarter. One question would be, why is that the case . A lot of domestic travelers are coming to vegas. Driving traffic is up. They like the Value Proposition and they like the entertainment. But were also seeing more International Travelers. I think whats going on in the world certainly plays into the psyche of the international tourists. Theyre coming to las vegas and were seeing great growth in that business. And thats why i think the third and were seeing strong Convention Business as well. So were outperforming the hotel industry. Our rep is going to be up 7 in the quarter that were in. Theres no Hotel Company that is producing that kind of growth. I think its because of the entertainment. Our new arena, which you see behind me. Our convention space. The fact that tourists want to travel. They want to find a Value Proposition. And theyre finding las vegas very appealing relative to other destinations. You talk about the psyche of the International Traveler. Inside the psyche of the american traveler. One of the things i suspect is inside the psyche is fear of terror. How are you addressing it . Are you seeing any of it show up in your numbers . Apparently not, because you have a great july. As a follow on, is the president ial election a factor in your business at all . So, first on Law Enforcement and how we protect our community. I dont think theres a community that has a stronger relationship between the federal government, local Law Enforcement, and our agencies to work toward securing this as a safe environment. Were good at large scale events. So we are we feel like were doing everything we can and certainly our customers feel very safe and secure here. But as it relates to the president ial race, setting aside the candidates, what mgm stands for, what i stand for is an individual, i stand for the fact that diversity is very important to me. 66 of my employees are from a diverse background. Im a supporter of free trade. Im a supporter of alternative energy. Im a supporter of diversity and inclusion. And i believe in stability as well, as a guy that was on wall street for 14 years. So youve got to get a sense of what i think would be in the best interest, just as what i believe. As it relates to las vegas, las vegas is doing so well. We have i think the debate in october. Im glad its not at one of my properties. It will be a tremendous fiasco of people. Its certainly a spectacle. I believe that its great, that its here. Its going to draw attention to areas that i care about as a v nevadan. Great to have you, thank you. Thank you very much. 20 years ago, you had two option. Vegas and Atlantic City. 48 states now, except for utah and hawaii. 48 states have a casino in them. And virginia does or doesnt . Yeah, small casinos all over the place. So you look at that and you think, whats Atlantic Citys future . I think that was exactly the right followup question there. The only place with the golden nikt that has anybody in it. Its a shame. The bank of england cutting rates and the uks ftse 100 rising 1. 5 . Europes best stock index, even with that big drop in late june. Not just england. A positive session for stocks around the world. Investors cheering the bank of englands decision to cut rates, expand qe, and most importantly, introducing those measures to support lending to uk companies. You were just pointing out the ftse 100 ending 1. 5 higher. Some of the big uk names that do business overseas. A positive session for other european indexes as well. France and germany up more than half a percent. The big move, though, in the pound. Mark carney putting pressure on the british currency, seeing its sharpest decline since the brexit vote. Traders saying there were a lot of short positions being built ahead of the bank of englands announcement. Jp Asset Management seize esees pound falling even further. Weaker currency widely seen as good news for those uk companies that do business internationally. Thats one of the reasons uk stocks have been outperforming their european peers. Since brexit, the uks ftse 100 up 6 , while germany and france are still down. Germany down about half a percent and france down 3 since that uk referendum vote. The big question, investors and economists are now facing is whether the Central Bank Stimulus will actually generate economic growth. Some skeptics say the policies in europe and japan have yet to yield real results. Thank you very much. Donald trump taking a big hit in the polls, but hes been counted out before. Summer polls have a way of not sticking. Well ask one panelist whether trump can recover from here. It has been the consumer who has been supporting the u. S. Economy. The recent signs from retail and restaurants show the consumer may be starting to crack. Power lunch will be back. Welcome back to power lunch. Im melissa lee. Its been a rough few days with the Trump Campaign and now it seems to be hurting him in the polls. John harwoods got the numbers. Thats exactly the point. Weve been talking about mistakes by donald trump. But now weve got evidence of how badly its really hurting him and scaring his party. In this national poll, tenpoint lead for Hillary Clinton over donald trump. 49 to 39. When you get to the battleground states, you see it as bad or worse. First of all in new hampshire, 15 percentage point lead for Hillary Clinton. That is a target state for both parties. Then you go to the state of pennsylvania. You go to michigan, hes down nine in michigan. Florida, quintessential swing state. One saving grace for republicans in that florida poll is that marco rubio is still in the senate race. But if you go to new hampshire, kelly ayotte, very important young senator for the republican party, down by ten points. That shows the drag of Donald Trumps decline. In pennsylvania, pat toomey, another republican hoping to win reelection, down by one point. So ultimately, these politicians make decisions on whats best for them and the longer donald trump stays down in the polls, its still soon after the conventions. Things could settle out by labor day, but the longer that deficit persists, the longer people will be hesitant to stick with him. Hundreds of people waiting for donald trump in a Campaign Rally in maine, right now. 347 electoral votes going to hillary and 191 to trump. That is according to larry sabato. That was the number that you project projected on march 31. Some of the states have changed in terms of their strength of commitment but the number hasnt changed. Why do you think it hasnt . Youve got it exactly right. We have a very different method than some other websites that i think overrely on polling. Hillary clinton was way biep, and now shes gone further ahead. Biep so what do we do . Yes, we look at polls and polling averages in particular. But we also look at demographic changes. We look at the structure of the campaign. We look at things like president ial job approval, which is absolutely critical, and amazingly, president obama is now well above 50 , which is crucial to Hillary Clintons attempt to gain a third consecutive term in the white house for the democratic party. And apparently at the highest level, his approval at the highest level of his second term. I was looking at one electoral map, and it showed there was a path to the white house for donald trump. Albeit a very narrow one. It basically went this way, larry. If the election goes exactly as voters did in 2012, in other words, the romney voters, Romney States stay Romney States. The obama states become hillary states. Mr. Trump has to win three states. Ohio, pennsylvania, and florida. If he loses any one of them, hes finished. Yes, and that also means he has to carry states like North Carolina and arizona, which have become very competitive. Those two states carried by romney in 2012. In fact, the latest survey has clinton defeating trump in arizona. We have not put them in clintons camp. We may eventually. I play those games two. Theyre a lot of fun. But real politics doesnt work that way. There are a couple of ways for trump to become president. In 2008 at this moment, nobody projected the collapse of the economy that occurred at the end of september. So you never know. And terrific would be another way. Plus, theres a rust belt strategy that trump could pursue that is carrying ohio, pennsylvania, michigan, and wisconsin, while maintaining all the Romney States, including North Carolina and arizona and georgia and others. Very tough to do. Possible . Hey, weve got an extra five weeks this year of the campaign. Thats a big point. Nixon and carter had massive leads in 68 and 76. They did go on to win, but it was really close. And humphrey, looking way back, or dukakis had a massive lead and ended up losing the election. How much can change in the next i dont know, what is it, 90 days . Well, it can, but lets take that dukakis race. Dukakis was an unknown. And those early polls were not reflective of the fundamentals, which included a popular president , ronald reagan. Economic prosperity. And peace abroad. Youre going to probably elect your partys candidate when you have those three variables. Well, we certainly dont have peace. I dont see how you could say that. The economy isnt in nearly as good of shape, but you do have a popular president. Quick question. How many voters today, larry, are really uncommitted . Number one. And number two, does the election really hinge on the uncommitted voters or on turnout of the voters who are committed . Much more the tter. If you were to believe a lot of the polls that we see that swing wildly from one candidate to one party over the other, you would think that a third of the electorate was undecided. In fact, we have rarely, if ever, had two candidates who were not incumbents who were already almost completely defined in terms of both their virtues and vices in the electorate. So the truth is the vast majority of people already know where theyre leaning. It might be to the libertarian or the green candidate, too. But they know where theyre leading. But who turns out . The Enthusiasm Gap can be important here. Good to see you, larry sabato, uva center for politics. President obama commuting the sentence of 214 federal prisoners. It is the biggest oneday commu commutation in history. Well have more on these big numbers. Plus, well tell you what caused a massive sinkhole in one familys backyard. Look at that video. Thats fairly defined as a massive sinkhole. I screwed something up. Theres 46 states with a casino, not 48. No gaming. Atlantic city is in big trouble. Theres gambling everywhere. Were back right after this. You may think you can put off checking out your Medicare Options until youre sixtyfive, but now is a good time to get the ball rolling. Keep in mind, medicare only covers about eighty percent of part b medical costs. The rest is up to you. Thats where aarp Medicare Supplement insurance plans insured by Unitedhealthcare Insurance Company come in. Like all standardized Medicare Supplement insurance plans, they could help pay some of what medicare doesnt, saving you in outofpocket medical costs. Youve learned that taking informed steps along the way really makes a difference later. Thats what it means to go long™. Call now and request this free decision guide. Its full of information on medicare and the range of aarp Medicare Supplement plans to choose from based on your needs and budget. All plans like these let you choose any doctor or hospital that accepts medicare patients, and there are no network restrictions. Unitedhealthcare Insurance Company has over thirty Years Experience and the commitment to roll along with you, keeping you on course. So call now and discover how an aarp Medicare Supplement plan could go long™ for you. These are the only Medicare Supplement insurance plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. Remember, medicare doesnt cover everything. The rest is up to you. Call now, request your free decision guide and start gathering the information you need to help you keep rolling with confidence. Go long™. 214 federal inmates. 67 of whom were serving life sentences, are set to go. The president commuting their sentences in what the white house says is the largest oneday action of its kind in more than 100 years. The administration has been aggressively releasing nonviolent offenders as part of a push for prison reform, with both parties saying they want it. Scott coen investigating the nations prison system, and he rejoins us now for a followup. Scott . Hi, brian. In our documentary billions behind bars, we pointed out that the u. S. Had more prisoners than china and russia combined. Five years and a whole lot of debate later, and the u. S. Still has more prisoners than any nation on the planet. 2. 2 Million People compared to 1. 6 million in china and about 650,000 in russia. But, things are slowly starting to change. And not just because the Obama Administration is releasing prisoners at a record pace. States as diverse as california and texas are clearing out nonviolent offenders. And take a look at the longterm trend. This from the bureau of justice statistics. This is the overall people in the system, so it includes people on probation. But the people behind bars are a similar trend. The population is leveling off. So, what does this mean to the companies that operate private prisons . Five years ago, we reported on Corrections Corporation of america, the nations largest prison operator. Today, cca is still going strong, though a little bit of a hiccup the last couple of days. Just yesterday, the company beat wall street expectations, both on earnings and revenue. The stock is down about 6. 5 today. The company said it lost a contract in new mexico. And its renegotiating some terms with the bureau of customs enforcement. Nonetheless, the stock is doing really well. But there is a change there, too. Cca has said it is changing its focus. Its growth area is not just immigration detention, which was a big area, and of course, prisons in general. But its also boosting its reentry facilities. Its buying a whole bunch of beds in a number of states as people get back into the system. So, in essence, the company is going with a trend here. People getting out of prison and getting back into society. Guys . All right, scott, thank you. Well let you go answer your phone. Scott cohn. This earnings season, weve heard concerns from several big retailers. Oil rebounding again today. Well go live to the nymex for the closing trades when power lunch returns. [rock music playing] [music stops] [whistle] [rock music playing] [record scratch] announcer dont let e. Coli mosh with your food. An estimated 3,000 americans die from a foodborne illness each year. You cant see these microbes, but they might be there. So, always separate raw meat from vegetables. Keep your family safe at foodsafety. Gov. Welcome back. About an hour and a half to go until the closing bell. Perhaps this is the calm before the storm, the storm being the jobs report tomorrow. Weve got the markets with little change right thousand, but take a look at that dow heat map. We are seeing some gains here for visa, up almost a percent at this point. Microsoft and intel rounding out the top three. As for the dow components, disney, home depot, as well as chevron. Speaking of oil, the oil market is closing right now. Jackie deangelis is at the nymex. Crude oil prices getting a bounce, closing just under 42. The session high was 42. 08. This was a big bounce today, and not unexpected, because the weakness that weve seen did seem to hold up here. But i do have traders saying when we have so much Bear Sentiment in the market, they dont want to be on that side of the trade. This close under 42, its a move greater than 2 today, so that is significant. Interesting will be to see how we close tomorrow heading into the weekend. Were out of that bear market territory for crude. Jackie, thank you. Now lets get to sue herera with your cnbc headlines at this hour. Heres whats happening. We begin with republican Vice President ial nominee mike pence holding a town hall in raleigh, North Carolina, this morning. When an 11yearold boy asked him if hes fully onboard with president ial running mate Donald Trumps views. I couldnt be more proud to stand with donald trump, and we are shoulder to shoulder in this campaign. Youll learn it when youre governor of North Carolina. Im not kidding about that. Sometimes things dont always come out like you mean, right . Demonstrators laid down on the ground in protest outside the vermont Public Services boards hearing on eminent domain. Inside the board hear testimony from vermont gas representatives about the specifics of that easement. Sasha obama is learning how the other half lives this summer. The first daughter is working the takeout window at nancys, a Seafood Restaurant on marthas vineyard. She was accompanied to her summer job by a contingent of Six Secret Service agents who sat outside the restaurant. We wish her good luck. Thats the news update at this hour. Ill send it back to you, brian. I used to work right around the corner from nancys. It was a summer job. I just drove my old Toyota Pickup truck, lived there for three months. Good experience. Shares of kate spade rebounding slightly today. But down more than 20 this week after a big earnings miss. This on top of recent weakness from Department Stores such as nordstrom, which is down 15 over the past three months. Is this a warning of what is to come as retailers get ready for backtoschool, the holidays, and Everything Else . Tell us what is going on in retail. Some numbers, which arent terrible. Then you get other numbers which seemed like no one shopping ever again. Where exactly are we in retail right now . I think overall, theres a bifurcation in retail. I think consumers are in a pretty good place, but theyre spending on other things, whether its restaurants, experiences. We have price deflation and apparel. And that is allowing people to get goods at cheaper prices. Tourism has also been weak, and Everyone Wants to have clean inventories. I think as we go into back to school, we really need product innovation. Regards to kate spade, there was companyspecific issues and there were macro issues. But overall, what were seeing out there, if you sell to a Department Store, your inventory levels are coming down because those Department Stores want to keep clean inventory and vendors have to look for other distribution panels. Yesterday when kate spade was trading down so sharply, i immediately looked over at coach and it wasnt really getting hit. Weve got the earnings coming out for next week. Is it really that the turnaround plan, is that firmly in place at this point . Sure. One thing to keep in mind, at the end of the day, there was a headline miss on the same store sales number. Total sales beat the street. The north american kate spade business grew 17 . Its not a company thats shrinking. Theres a lot of noise within there. I agree with danas point about the Department Stores and anyone selling into that channel. As it relates to coach, you do have some companyspecific stories as well, and you have a turnaround thats very firmly entrenched. So when you think about the group, theres no question that anyone is going to feel that inventory pinch and some companies have reset that bar. You mentioned coach. Michael coors did it. Ralph lauren recently did it. This idea of resizing to stabilize and find out where the next lever of growth should come from seems to be very much along both of the investors, but as well as the corporates minds. What do you need to see from kate to believe that it will do the same thing as coors and coach and lauren have done . I think theres a couple different factors. Kate is not as exposed to the Department Store channel as what you have at coors. Number three, it continues to come from the novelty product that kates able to put in place in order to drive more traffic. I think kate is not as large as what coach and coors are. I think its in a different place. Theres some execution issues that occurred that i think as they get back on track, the stock will get back on track. Let me turn away from some of these choices that were talking about because they dont really play in backtoschool retailing. But what are you seeing in terms of backtoschool retailing and how important is it going to be to Companies Like maybe a staples or a target or a walmart . From our area of the world, what i would say as it relates to back to school, as it relates to holiday, the days and the catalysts that we used to have are stretched out. Whether thats because of ecommerce allowing anyone to price shop any time. We obviously just had prime day, so were shifting where those main days come from. The importance of that backtoschool holiday, people are going back to school. Theres obviously a catalyst. But in terms of what it used to be, i think its never going to be the same thing. We need to understand that theres this new normal. And at the same time, today thats point about deflation, being able to price compare on your phone allows for a furthering of the price power leading to the consumer. What i have a feeling is not going to be our last discussion about the woes of retail, especially given the experiencedriven culture. Thank you very much. Its not just retail stores. We will talk to the head of uncle jacks steakhouse about what hes seeing at his location. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i looked at my options. 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We love to travel and theres so much more to see. So we found a plan that can travel with us. Anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Remember, all Medicare Supplement insurance plans help cover what medicare doesnt pay. And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i know how important that is. Weve got a tale of two burger chains. Jack in the box stock rising today. They beat earnings estimates by 20 cents a share. On the other side, the once redhot habit burger. Its earnings came in a penny shy of what analysts were looking for. The biggest headwind for sales is the weak consumer. So, is a weaker consumer the new normal for the Restaurant Industry . Susan lee looking at the numbers. I call it a new reality in the restaurant business. Were looking at sales, rates, and it might be here for a while. You would think that against a backdrop of cheaper gasoline prices, more value promotions like two for 5, or two for 4, americans would be enticed to go out to eat. Not the case. Sales growth stalling in march, according to the npd group, which tracks restaurant receipts. Its really across all segments, including fast casual, which have been growing at an average of 6 to 7 the last few years. Sales are slowing down more than fastfood. And thats even when you strip out chipotle, which we know is going through some individual issues right now. So whats holding back diners . Some factors may be living costs wa rising faster than wages, and millennials not having a whole lot of disposable cash to spend. People are also choosing to cook and eat at home, which mcdonalds Ceo Steve Easterbrook pointed out during the Earnings Call as well. Theres a number of factors. You see that in the Second Quarter sales for a lot of these restaurants. Thank you very much. Our next guest is a 20year veteran of the Restaurant Industry with a string of new york steakhouses, burger joints, a line of Barbecue Sauces and big plans to take his company nationwide. Everybody knows him from restaurant steakout, which i used to watch. Fascinating. Whats going on with the consumer at this point . What do you see in your steakhouses . Is it mostly corporate business . I see a change in peoples eating habits. Fast casual is becoming more trendy. Its the whole movement of people. Nightclubs are going out of business. People are on their phones. Theyre electronically engaged. Theyre more selfish than ever before. They go out. Theyre not interacting like we did when we were younger. So people dont spend as much time in the restaurants. Theyre very busy that way. The labor costs here in new york are through the roof. The regulations. Sounds like a terrible business story. Weve been under attack. Were the number one employer in the country, right . When people hear that, governments, cities, states, they smell money. So they come to it and look at it more, scrutiny it more. Its tougher today, but if youre good at what you do and youre adapting and opening up multiunits, so you have to have today, you have to be versatile. You have to have something for everybody. So you have this steak sandwich shop. Its a oneoff simple operation, small, limited labor. You do one, two, three items, you make a lot of money that way. Then you have the jack shack, ten to 15, more organic, healthier. People are definitely eating healthier. Theyre smarter. Theyre more educated. They want to know where that product comes from. They want to know who the owner is. They want to know its not this big company. Theyre changing their ways. Theyre going for the mom and pop again. The little towns and strip malls. You know, taking away from the bigger malls. Let me ask you two questions. Brian had a very interesting question the other day when we had the head of Royal Caribbean on. He said, how big can cruise ships ultimately get . How much ultimately do you think you can charge for a piece of beef . I see a 58 new york strip and i go, what . I was going to ask that same question. We do like a 35 to 45day dry age chop. We get 55 for that. That food cost on that item was 50 for me. So i cant go much more. Then you look at your labor cost. Meat is a huge commodity. Youre looking at the prime market. Then youre dry aging. So its tough. Its very tough. The porter house for two feeds two. Thats 55 a person. Some people charge 125. These casinos, theyre getting it. They have a plan. Im blowing ten grand, i dont care. You said peoples eating habits are changing. How much bread are you putting on tables now . I pulled away from the bread basket. My bread basket was causing me like 3. 50 to put down. I had seven different type of gourmet rolls. I want to make sure theres 12 cranberries, 18 nuts in the roll, so it costs you more money. I pulled that away and said ill charge 5 for it and i wont raise my prices because of the labor increase of 50 . They got mad. People want the read. They want to be in the industry for some reason. But joe bastianich, hes been on this program. Hes Mario Batalis partner. He said something pointed. Restaurants are more about the Balance Sheet than the menu. And youve got a lot of great cooks and a lot of great hosts and a lot of great entertainers. If you cant do basic math, youre dead. Its harder than any other business. Im not college educated. I came from the streets. A lot of our buyers are thinking about investing in, or opening a restaurant. Whats your best piece of advice . Bottom line is you have to make money. Its show biz every day, lunch and dinner. You have to price yourself right. You have to know who your consumer is. What your location is. Whos coming in . Whats youre check average . Right . Whos selling what . So i always say, what, where, and why. Why does someone buy a coors light at uncle jacks and pay 8, when down the block, some guy sells it for 4 . That customer coming to my restaurant, he wants the service, the amambiance. I hug him, i kiss him. You get your fourth coors light free . Okay, ill be over. So thats figured in the price. But if youre not lowering your price, you cant do the same thing. So my customers are already programmed to get that basket. Once i took that bread away, they got mad. So we have to say, i made a boo boo. If youre not making money, youre making belief. You going to go public . Im looking to go public. Revenues, were at, like, 20 million. Two Stores Opening this year. Ill hopefully get us to 30 million with the meat houses. Theyre like, hip and cool, industrial looking. Drop the price, you can have a burger or steak sandwich, or a high end steak. No table cloth. So theyre saving money that way. Then the jack shack, then the tavern. So in my next two years, i want to get another seven locations besides these two open, and then ill have revenues at 15 million. Im selffunding. And then im going to look to go public. All right. Well watch. Willy, thank you. Ceo of uncle jacks steakhouse. Meantime, the biotech index, the big etf, down slightly today. But it is closed slightly for six of the past trade sessions. Should you buy this biotech bounce . Well dig in, coming up. 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Again announcer when they test you, stand firm and move only when you hear the seatbelt click that says theyre buckled in for the drive. Never give up till they buckle up. Olympics 2016, let me get you on my level. So you never miss a moment, miss a minute, miss a medal. Why settle when you can have it all . Soccer to wrestling. Track and field to basketball. Fencing to cycling. Diving to balance beam. All you have to sa is, show me, and boom its on the screen from the bottom of the mat, to the couch where you at . Show me the latest medal count xfinitys where its at. Welcome to it all. Comcast nbcuniversal is proud to bring you coverage of the rio olympic games. Many of the bio techs stocks seen a powerful bounce over a couple of weeks. That Group Overall hitting the highest levels since january. Lets talk about the health of the bio techs with our team. David seeberg, chad morganlander. Chad, first to you, youre a value guy. Are there any bio techs which you would consider a good deal value stock right now . Without a doubt. Look no further as amgen. 13 times forward looking pe. Our price target is 200. It is a dividend grower. 2. 3 and the growth rate of that dividends between 15 and 20 . We believe you see consistent Revenue Growth and an improvement within operating margins over three to five years. In a world where theres no value, this one certainly i would serve up as a value play. Okay. David, you guys follow a lot of this stuff. Daytoday. How did the bio techs look coming into today . Look. Given the run we have had over the past month, they look incredible. A month ago we had a thermometer and a sentiment gauge for the sector here and it couldnt have been more bear ir. We talked about it being so bearish i made the point its the bottom of the market here. Of the bio tech tape. You look at it and say we are seeing Something Different occurring on the desk here. We are seeing people versus selling every rally or shorting every rally coming in and buying every dip. Were seeing a big sentiment shift in general, people getting very comfortable and mainly right after a lot of big cap names reported. Again, you look at the market overall and say, this is the value in my opinion over the overall market. Theyre performing very well and room to run to the upside. If the deal isnt done, can ibb go higher . The deal, theres an example. M and an is in the space. Right . Theres been speculation about, you know, is it merck coming in . A price talk of 135. Any deal i should say. Celgene okay. I cant imagine they sell for that cheap valuation anyway but does a deal have to get done . I think a deal will get done. They need to bolt on a franchise and have to and make an acquisition. Theres going to be big m a and keeping a bid to the space for a long. And theyre sitting on hordes of cash. They have to bolt on franchises to basically offset franchises that are really have lost momentum or are going to the wayside essentially. All right, guys. Good discussion. Bio techs in focus. David, chad, thank you. For more trading nation, go to tradingnation. Cnbc. Com. Were back after this. Hey gary, what are you doing . Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. We promised. Here it is. Imagine looking out the window and seeing this sinkhole in your backyard. Thats what happened to a couple in australia. The sinkhole not mandy. It grew to about 50 feet wide and it turns out several hundred feet deep and caused by an abandoned mine shaft. That no one seemed to know was there. And get this. The couple that owns that property lost all of their possessions in a flood five years ago. Lightning striking twice. Very sad. Very sad. Talk about what stood out to us in the segment of check please at the end of the broadcast. Mgm ceo talking about expanding into the washington, d. C. Market. He certainly obliquely said it hurts Atlantic City badly they opened this casino there and they have a long way to go and he did say that the washington, d. C. Market is perfect because washington, d. C. Never has a bullish session. And the implication being that government will not get smaller. Thats why the population almost doubled in 15 years, incredible. Winchester where i went to high school is nearly a suburb of d. C. We didnt get to street talk today. Sorry about this. Yeah. But can i throw a name out . Sure. Under the radar, okay, chemicals company, get a name in here, scroll up and get to the meat of the matter. Raised the rating to a buy from a neutral on this company after they announced a deal of huntsmans personal care business in europe. So they like innospec. Yep. And im watching the insurers and goes to what has been a problem for a lot of the financials out there and lower for longer in terms of Interest Rates, specifically the variable Annuity Business a problem for metlife and taking down the others that dabble in this business. These low Interest Rates arent helping, certainly. And confirms that because its a large charge, 2 billion charge, perhaps this kind of business is very opaque, very complex and with the lower rates its a difficult to predict. One of my friends runs fixed income for a big Insurance Company that you would know and its about making sure you get your money. They cant make sure they get their money. Scary time. Absolutely. Watch those heading into the closing bell. Thank you for watching power lunch. Check out fast money. Thank you, brian. See you then. Closing bell starts right now. Hi, everybody. Welcome to the closing bell. Im kelly evans at new york stock exchange. Im mike santoli in for bill griffeth. Bank of england cut Interest Rates for the first time in seven years and hovered around the flat line and down a little bit right now entering the final hour of trading. Coming up, well look at what the rate cut means for the markets and the financials specifically. Especially. Hillary clinton opening up a doubledigit lead in the polls over donald trump as a republican president ial candidate keeps stirring up controversy. Coming