Welcome to power lunch. Weve got the s p and the nasdaq just above the flat line here in the green. The dow is down by. 1 of a percent. Brent crude back above 50 bucks a barrel. Wti crude up close to 11 over the past week. Both are in bull market territory right now. Take a look at oil stock, a fresh 2016 high. Heres what else is happening at this hour. Twitter suspending 235,000 terrorlinked accounts since february. Twitter says daily suspensions are up 80 since last year. Shares are down over 4 right now. Walmart beating expectations last quarter, thanks in part to groceries. Walmart shares also higher at this hour. Team usa continues to lead the medal count to the rio games. 94 in total. And 31 of those gold. Welcome, everybody. Theres a lot to get to today. We begin with the big breaking news on americas jails. The Justice Department planning to stop using private prisons. That is sending stocks lower, down more than 40 . Scott cohn joining us now by phone. Scott, what do you make of this news . Well, to some degree, brian, it was expected. This backlash has been going on for years. Its been going on even before that. But now it is official as far as the Justice Department is concerned. Instructing the prisons not to renew the existing contracts with private prison companies. But lets give it a little bit of context. Cca, the largest private prison operator, which has its stock down sharply, as you can see today. They get 11 of their revenue from the federal bureau of prisons. A much larger percentage comes from state prisons and well have to see whether states follow this lead. They also do private Detention Services for the u. S. Marshals service, which does not seem to be affected, and for the department of homeland securitys immigration Customs Enforcement, their immigration Detention Services. That also is not effective. Geogroup gets about 16 of its revenue from the federal bureau of prisons. Both companies have yet to respond to our request for a comment. So clearly this is a dent, but it is not a death nell for these companies. This is an important point that you made at the top. From an investment perspective, thats what youre looking at. About five minutes ago, a note from Height Securities. They basically just reiterated what you just said. The majority of revenues for corrections corps and geocome on the state level. So even if the doj goes through with this plan, its not as if the entire Business Model is gone, is it . No, its not. Its a substantial amount of revenue here. But the other thing we dont know is whether states will follow. Theres been sustained backlash at the state level, so well have to see what happens there. The other interesting issue, and this is actually pointed out in the Deputy Attorney generals note here to the bureau of prisons is that they are not ending the use of private reentry facilities, like halfway houses. That is a big and growing part of ccas business. So thats a positive for them as well. So theres definitely a knee jerk reaction here. Some of it is probably warranted. But put it into context. This is not the be all and end all for these companies. All right. Thank you very much, scott. Now to Julia Boorstin for a quick news alert. Gawker. Com will be shutting down next week after 14 years of operation. This news comes just hours ahead of a manhattan bankruptcy judge evaluating whether or not to approve univisions 135 million bid for gawker media. There are six other assets as part of gawker media, in addition to gawker. Com, and we are awaiting news of what the plans are for those other websites. Back over to you. Thank you. Taking a look at shares of valeant pharmaceuticals. T. Rowe price has filed a suit against the Canadian Drug maker, alleging it engaged in a fraudulent scheme that cost them billions of dollars. The lawsuit was filed earlier this week in federal court in new jersey, and became publicly available today, and in it, t. Rowe price and allegheny alleged that valeant used mail order pharmacy prices, deceptive reimbursement practices, and x fictitious accounting to shield its drugs from competition. Whats interesting, from a stock perspective about this, is that this follows a couple of upgrades this week. It had been a good week for valeant prior to today. It was up 22 . Now its giving some of that back. But Morgan Stanley went to an overweight. Said its no longer a short move to the sidelines at this point. So this really highlights sort of the unknown in the valeant story. That would be the liability aspect. Theyre accusing them of fraud. I mean, where are we on the actual fraud proceedings on this company and whether or not they are under investigation . They are currently under investigation by federal agencies such as the s. E. C. And the Justice Department. And this type of suit by t. Rowe is not knew. Back in december, tiaa cref, they filled a lawsuit against valeant back in late december of last year, alleging among other things that valeant had fraudulently inflated its stock price. So now we have seen arguably two of the biggest investors, t. Rowe price and tiaa cref, sue valeant alleging fraudulent practices. At the heart of both is the relationship with philador. To me, this is nearly unprecedented. Weve seen this against enron and others. This is a functioning corporation and youve got these lawsuits really unprecedented. Not bothering to wait for what the authorities actually exactly. Were going to go ahead and press. You have to wonder whether or not they will join in on these sorts of suits. Fidelity out there with 4. 4 of shares. Value act with 4. 4 as well. And, of course pershing is on the board. Real revenue generators. Even just today, they won some amendment to their debt covenants, which really bought them some time. That had been seen as sort of the elephant in the room. The legal risk to valeant is when you look at the credit structure, obviously, theyve got a lot of bond outstanding. So the secured creditors will be first in line in suits or anything else. I dont want to take it too much further than that, but you get the idea. The equity players, they tend to get very little. These guys are going after the company itself, saying we want to be made whole from our losses. With t. Rowe, you wonder if and heres the headline risk for valeant investors. Will others follow suit because they want to get in line . Other shareholders . Correct. Other shareholders might join. Lawsuits often beget lawsuits would be a shorter way to say that. Right. All righty, folks. More on valeant as it becomes available to us. A rate hike could come this year. Why that means we could be entering the danger zone for markets. Thats next. And if youve ever wanted poke the fed, now you can on facebook. Were back in two minutes. Pping. Where we explore. Protecting biodiversity. Everywhere we work. Defeating malaria. Improving energy efficiency. Developing more clean burning natural gas. My job . My job at exxonmobil . Turning algae into biofuels. Reducing Energy Poverty in the developing world. Making cars go further with less. Fueling the global economy. And you thought we just made the gas. Energy lives here. At ally bank, no branches equals great rates. Its a fact. Kind of like grandkids equals free tech support. Oh, look at you, so great to see you none of this works. Come on in. Weand sustainability goals asool one of our top priorities. Mental i definitely rely on pg e to be an energy advisor. Anything from rebates, to how can we be more efficient . Pg e has a number of programs, to help schools save on energy. When i see a program that fits them, then i bring it to them. With the help of pg e weve been able to save a tremendous amount of energy and a tremendous amount of money. Were able to take those savings and invest it right back into the classroom. Together, were building a better california. Rejoice, you can now friend the fed on facebook. The Federal Reserve launching its own facebook page. The fed says its designed to make educational content more accessible. This this is a live look at the feds page. Youve got to wonder how many friends it has. Who it has friended. What is on its wall. I am checking right now to see if liesman has already friended them. Hes one of the first guys. Even if he is on vacation. A friend of the fed also. Bill dudley saying the job market is improving. One day after the fed minutes showed the central bank is keeping the door open an a rate hike this year. But how soon, how will the markets react . Many strategists say we are entering a danger zone. Lets bring in charles rinehart. Gentlemen, welcome. Charles, let me begin with you. The danger zone thought is predicated on the idea that a lot of Investment News letter authors, writers are exceedingly bullish right now. Do you believe that theres too much bullish sentiment today . I would prefer to see less bullish sentiment, but historically, when you make a new alltime high as we recently have, if you go back and look at the data since the 1950s, historically it tends to go on another 1. 2 years. Doesnt mean that you necessarily have to be overweight, but its a positive dynamic historically. It means that for a variety of reasons, were now moving into new higher ground. So when you set a high, most of the time the market persists going up for another 1. 2 years, and another 20 , did i hear you right . Correct. That is the median. All right. Dudley had some comments this morning. I mean, he basically said the strong gdp data would help the case for a rate rise. Were not going to get any more of that before september. He thinks the labor market is pretty firm right now. He seems to be making the case for a rate. Sometime this year, if not septemberdecember. I think as everybodys been talking on cnbc all day, the real test comes when janet yellen speaks at jackson hole this week and that will be the definitive word on whether or not theyre getting ready to pull the trigger. But dudley is very close to janet yellen. Hes part of the triumverant. Youve been saying no, right . For a variety of reasons. The fed needs to move as a consequence of 4. 4 unemployment rating. When does the tenure really start to move . If they raise, does it go down . I think were in a situation. David fisher wrote a book about the great wave about deflationary cycles and how long and how global they tend to be. I think if the fed raises rates, you get a pulldown in long rates, not an increase. You need to see growth accelerate and Inflation Expectations accelerate. People in this environment are misreading it. What should i do with my money . Well, just a couple of quick ideas. First of all, with respect to the equity market, we think we want to be in companies that have very strong fundamentals. So they have earnings growth. They have good profitability. Theyre good stewards of capital. They have a nice opportunity set in front of them for growth. Everything else being equal also paying a dividend. And having a Strong Shareholder yield. And a couple of examples of that might be a name you know, like veriz verizon, or nestle, a global champion. I think five, ten, 15 years from now, people will still be eating their kit cats and washing it down with some perier water. Whats the matter with nestle today . Its down 13 . They had a sales release today. I think its a shortterm dynamic. Good day to buy it. Perhaps, yes. And also, thinking more wholistwhol i holistically, theres good value in the Municipal Bond market. That could help make your portfolio election ready, no matter who wins. Municipal securities will be a very good value. Theyre not priced at break even rates. Late last year, there was a transportation bill that was passed. We think thats a good sector also. One last thing. Over opportunities in Government Bonds. And also true in Investment Grade. When we take a look at your smart beta etfs, agge and t, they use momentum as a factor. And what theyre citing with right now is theyre saying on a risk adjustment basis, opportunities in Investment GradeCorporate Bonds and mortgages im going to jump in. Ive got a question here. You were making the point that the yield curve will steepen because there wont be that growth to support the inflationary deal towards the long run of the yield curve. At the same time, investors have been pouring money into technology, which is cyclical. So how do we have it that investors are so stumped on what to do with financials because theres a lack of belief in economic growth, and yet theyre piling into cyclicals, which have been outperformers in the past. I think thats more of a fiscal policy bet than a monetary fiscal bet. Everybodys expecting japan and the u. S. To ramp up fiscal policy because of the belief that Monetary Policy has hit its limit, at least in the near term, in terms of stimulating the economy. All right, ron, charles, thank you very much. Appreciate it. Oh, by the way, does the fed get a limit of 5,000 friends . Or are they unlimited . They might have a mentions page and then they can have more. Okay. Coming up next, we are live to rio for the late nest the drama surrounding ryan lochte. 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. [dance music playing] [music stops] woman looks like its done. [whistle] [dance music playing] [record scratch] announcer dont let salmonella get funky with your chicken. On average, one in 6 americans will get a foodborne illness this year. You cant see these microbes, but they might be there. So, learn the right temperature to cook each type of meat. Keep your family safe at foodsafety. Gov. Lets give you the latest on your top stock story of the day, the precipitous decline in shares of geocorps. The Washington Post published an article saying the Justice Department will stop using private prisons onboard of prison contracts. Those stocks were down 50 at one point. Now, theres a key here. The stocks are down 36 each. Theyve come back fairly significantly. Still down a lot. But theyve come back significantly, partly because of scott cohn, his reporting at the top of our show, which is to remind people that, a, this is a federal issue. Theres still mini state contracts. And b, even under federal the federal contracts that the post is talking about, theyre only referencing the board of prisons contracts and there are still federal contracts primarily under the marshals service, which reportedly would not be impacted. So, a, its not all the contracts. States are a big deal. And b, even on a federal level, it is a smallish portion of the federal contracts that may be impacted. That reporting by scott cohn, who did a documentary on this, has brought those stocks back up. A dent, not a death nell. We should point out the Short Interest is fairly sizable in corrections corps of america. So part of this could also be short covering, saying 39 . Might want to cover that short. The alleged gunpoint robbery of ryan lochte and other swimmers in rio. Lets get to andrew ross sorkin, who is in rio for the latest. Thanks, michelle. That story now appearing to unravel. We have some new video, as you know. He did allege earlier this week that he had been held at gunpoint and robbed. That someone had impersonated police and pulled over his taxicab late into the evening saturday, early sunday morning. We now have video showing these guys, he and his team members. Two of them were pulled off of an airplane last night to get some testimony. Youre seeing them at a gas station. Well follow you through what happened here. Apparently, they went into a bathroom, may have broken parts of the bathroom, and then were being held, had a conversation with security guards. Youre seeing them sit down. At one point, they do put their hands up. A little unclear what happened. Apparently they then went on to pay the gas station for gave them some money for breaking whatever happened in the bathroom. We dont have images of what took place in the bathroom. So it is all a bit unclear. But, of course, that story appearing to differ from what he told police and what he told billy bush on the today show. I want to show you what he said in his own words. Who were you with . What time of night . Who pulled you over. I was with a couple swimmers. We were going back, and we got pulled over in our taxi. And these guys came out with a badge, a police badge. No lights, no nothing. Just a police badge. They pulled us over. They pulled out their guns. They told the other swimmers to get down on the ground. They had gotten down on the ground. I refused. I was like, we didnt do anything wrong. So im not getting down on the ground. And the guy pulled out his gun, he cocked it, put it to my forehead, he said get down, and i put my hands up, i was like, whatever. He took our money. He took my wallet. And then clearly, the version of events that he talked about on tv not happening in the video that weve seen here. We should also note espn now reporting that two of his teammates have said that the story was fabricated. There would be a press conference here at 3 00 p. M. Locally. We will bring you that news as it happens. But this story taking just another very strange turn, guys. Well, andrew, you heard me yesterday. Given the benefit of the doubt between the brazilians and ryan lochte, i said ryan lochte. The guy is 32 years old. You cant even attribute this to being some kid making a mistake, if this indeed turns out to be a total fabrication. I should say, by the way, on that note, we talked about whether hes a kid or not. This from the spokesman of the ioc saying these kids just tried to have fun, they tried to represent their country to the best of their abilities. Lets give these kids a break. Sometimes you take actions that you later regret. They had fun, they made a mistake. Life goes on. But still, for this city that considered this such a showcase, and then to have the questions come up about security here in rio, it is it has clearly become a headline that nobody from the olympics or the team wanted, and a cloud on the whole thing. But we will continue to bring you the news as we get it. And we should tell you some great competition is happening here as well that were going to bring you as well over the next couple of hours. Talk to you guys soon. I had a mortgage and a kid at 32. Exactly. So if someones going to say youre a kid, you cant use that excuse. Essentially theyre forgiving every other act like this that will happen in the future. The one thing i would say, andrew, is that if youre the brazilian government, every single article thats been written in the last 24 hours has been about how bad the crime is in rio. Right. And there have been other athletes that have been held up. There have been issues. I mean, you know, do you just is it a p. R. Move . You could have let this thing die, right . It would have gone away. Thats clearly the other issue. And youre absolutely right. We should say the Great Britain team coming out with a statement overnight that there was a robbery. Also at gunpoint, that apparently took place overnight also. A memo the guardian got from the british team going to all their athletes, saying stay in the athletes village. Security still a big issue. But on the back of this, more questions than answers at the moment. Well try to bring you those answers when we get them. All right. Well know more when they have the presser there at 2 00. Andrew, thank you. Still ahead, more on trumps big campaign reboot. Power lunch returns in two minutes. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Hi, everybody. Im sue herera. That Massive Wildfire in Southern California just continues to grow. Hot weather, bone dry conditions and breezy winds are fueling the flames. 49 square miles have burned so far. More than 82,000 people have been forced to leave their homes. An estimated 40,000 homes have been damaged by the flooding in louisiana, and now officials fear that state could be looking at a housing crunch as severe as the one following Hurricane Katrina a decade ago. State officials are reportedly urging landlords to allow shortterm leases and are asking people to rent out any empty space. Chicagos Police Superintendent is calling for the firing of seven officers for their response to a colleagues Fatal Shooting of Laquan Mcdonald in 2014. The officer who fired the shots has been charged with murder and is awaiting trial. The incident was caught on dashboard video. The officers can take their case to the citys police board. And as weve been telling you, after 14 years, gawker. Com will end operations next week. The news was posted on the website. The decision comes days after univision successfully bid 135 million for gawkers medias six other websites. Thats the news update at this hour. Back to you, ty. Thank you very much, sue. Markets welloff session lows. Lets take a look at the dow, the nasdaq, and the s p, slightly lower at this hour. The industrials well, two or three are higher now. But just by a little bit. The industrials up by about. 1 of 1 . The s p basically flat. 2,183 there. Nasdaq up six. The big story in the market today, as its been for a few days now, crude oil rallying right now, back above 48 a barrel. Lets get to seema mody for a market flash. Sticking with the energy theme here, Williams Company shares jumping about 6 in volume spike after reuters reports that enterprise Product Partners lp has approached the company about a possible acquisition. Williams rejected the takeover attempt from enterprise Product Partners. That also according to a report. But, of course, this follows that contentious deal with pipeline giant Equity Transfer partners, and the breakup of that deal. But potentially being pursued by other parties. The Williams Company up about sev in todays trade. John harwood live with us in washington. Hi, tyler. Heres a little clip that went viral yesterday. Its funny, but also significant because it shows how our polarized politics and media encourages some people to believe only what they want to believe. Its an exchange between a cnn anchor and a Donald Trump Campaign surrogate who was having trouble accepting the objective reality about the race between trump and Hillary Clinton. You say its not a shakeup. But you guys are down. Says who . Polls. Most of them. All of them. Says who . Polls. I just told you. I answered your question. Okay. Which polls . All of them. Okay. Brianna keilar was right. The polls can change between now and election day. Right now, they agree, trump is well behind nationally and in battleground states. But that exchange is not surprising, if you remember that donald trump emerged politically by questioning the objective reality that president obama was born in the United States and taking lots of voters along for the ride with him. A few days ago, trump insisted he could only lose the state of pennsylvania if his opponents cheat. Theres no factual basis for that. Polls show him far behind clinton there. But by making a top figure his his campaigns chief executive, donald trump is renewing his commitment to that rhetoric. If trump maintains his current momentum, he writes he will win the presidency in the landslide. No evidence for that either. Next month, he called Sexual Harassment allegations against roger ales of fox news a democratic plot with no merit. Since then, fox news has decided there was enough merit that hes no longer with the company. Why does this matter . George bushs former press secretary explained why. Its a real disservice to trumps supporters to lie to them that polls dont matter. That sets them up to be mad and disappointed after the election. And thats a big problem for those who end up governing the country, guys. So, john, lets talk a little bit about mr. Bannan. One of the things that stood out to me is he has never run a campaign before. Thats right. Nearly has Kelly Ann Conway, the newly named Campaign Manager. But donald trump casts himself as an unconventional candidate and he won the republican primary that way and he seems determined to try to win the general election that way, even though the evidence is that he has been subtracting voters rather than adding them since the convention. When are we going to start seeing trump ads . Were already seeing some in battleground states. Very small buys compared to what the Clinton Campaign has run. Donald trump said the other day in an interview Hillary Clinton spent 100 million. Ive spent ten cents and im fairly close. Hes hoping that going much later than Hillary Clinton can enable him to make up that deficit. Part of getting more people on the team was about having other people who could speak to the media, besides that guy. Kelly ann conway was on cbs this morning. How did she do . Shes fine. Shes experienced in being in the media. Shes an experienced pollster and message strategist. She has been in the media spotlight for years. But she has not run a campaign, and campaigns are a pretty technical enterprise right now. And the question is whos giving donald trump the sort of technical leadership data mining or data targeting of the voters that you need to get out, donald trump has questioned whether he needs that and well find out if he does. What do you think the reaction to mr. Bannans appointment was among the members of congress in the gop . Because he has been known for being very outspoken against the what he might call the entrenched Leadership Structure in the house. He was all in favor of mr. Brat, who took on the former majority leader eric cantor and other instances where hes called out the establishment. The reaction has not been good. The people who do this kind of work for a living, for both Republican House members and republican senators think these are not moves headed in the right direction. One told me this morning the wheels keep coming off the trump train. A senate strategist yesterday said the Trump Campaign is so far off the rails now that i dont know anyone who should argue that we should invest more money in the president ial race as opposed to congressional races, and i think thats the challenges. Do republican donors and strategists begin more actively steering money away from the president ial and toward the congressional races . Thanks, john. Lets bring in robert costa, the National Political reporter for the Washington Post and nbc news political analyst. Robert, good to have you here. What do you think the hiring of bannan and Kelly Ann Conway says about the Donald Trump Campaign at this point . It tells us just about donald trump. In the final 80 days of this campaign, he wants the campaign to be a reflection of him, someone whos extemporaneous in his remarks. Who takes on Hillary Clinton in an aggressive way. This disciplined approach thats been recommended to him by Paul Manafort and others in recent months. Hes ready to shelve it. Hes not shelving manafort. But he wants to move in a more trumpian fashion. Bannan. A lot of people dont like him. Hard right is how hes often described. How do you describe him . I would describe him as a populist nationalist. Ive covered him for about eight years. This is someone whos not a partisan figure. Not really close to the republican party. Doesnt have deep relationships. Hes anticorporate. Hes antiwall street. Hes antireally both political parties. And that forms his political thinking. Thats why trump connects with him, because trump thinks one of his paths to the white house is to not just rouse the republican base, but to get working class voters who are disengaged from the political process excited again and maybe for trump. Do you know who Alfred Landon was . Not michael landon. Alfred landon. Sure, former president ial candidate. So in 1936, the literary digest did an exit poll, or an opinion poll of two and a half million americans about who they were going to vote for in 36. 57 of respondents in a two million person poll said they were going to vote for Alfred Landon over fdr. We know now that fdr not only won that election, but won it in a landslide. Do you believe that trump people are smart to work to discount the polls . Thats clearly what theyre doing, is to kill the messenger. Well, one of the reasons the trump advisers and strategists and allies are often discounted in the polls is because trump gets furious himself about the polls. He follows the polls very closely. Always monitoring where he stands in the National Imagination and national popularity. But what you see from the Trump Campaign right now is not really any kind of shift. Its a campaign that is lacking in relation to the Clinton Campaign and organization and fundraising and organizing, but theyre reemphasizing trump. But it has the whole time. All im saying is that the polls have been universally incorrect. Im not trying to dump on any polls. But dukakis had a 17point lead over bush 1. But theyre reversible. But we keep saying trumps dead because of polls. We dont know that. Im not saying you are. Im just saying if thats our only basis for this election its a great point. Because one of the theories of this election, if trump has any chance, and if you put aside the polls for a second, its because theres a large group in this American Population that does not vote. That is disengaged not only from politics, but from life. If trump in some way could stoke them to get them to come out and vote, maybe thats his coalition. To keeping a guy like manafort with ties to ukraine and russia onboard, getting bannan ties to the ultra conservative right. Thats the way to stoke those americans to actually vote . I mean, thats the way to reignite the base . What does that do to the rest of the republicans running across the country . There are some clashing voices right now within the Trump Campaign. Because youre right. Manafort is someone who has had a shadow over him in some ways because of the controversy about his relationships in eastern europe. Bannan is someone who comes out of this populist, hard edged but whats most interesting is neither of those gentlemen, its Kelly Anne Conway who is the Campaign Manager now. Shes going to be traveling with trump on the campaign. Its a difficult task. Only about 80 days left. We focus on the hard right, etc. It felt like it was more he just needed somebody to sit him down and say stop shooting yourself in the foot. Dont go after the gold star family. Choose a different issue, not that one. What would bannan have said at that point . Like, dont bring them up . What would the advice have been at that point that a lot of people thought was very negative for donald trump. Bannan is someone who has said he wants trump to go with his gut instinct, so that has worried some republican leaders. Last year, when donald trump got into his altercation in public rhetoric with john mccain. He insulted the senator from arizona. Bannan was someone behind the scenes, based on my reporting, he was telling trump to get out in front of that, apologize quickly. Trump resisted doing that. But thats the kind of person bannan is. He lets trump be trump. He wants trump to go with his instincts, but he does have a way of sometimes weighing in bannan wanted him to apologize on the mccain situation . I thought trump was done for after he threw mccain under the bus. Shows you what i know. Every gaffe trump has so far survived and it enabled him to rise through the primary. But a general election audience, the electorate is so different, so much more diverse than the republican primary. More lives than a cat. Robert, thank you. Coming up, three investors are seeking to change up the products, and they go to extreme. Michael phelps is under armours top olympic star, so why is he wearing nike pants on the cover of Sports Illustrated . The latest on phelps photo faux pas, still ahead. How will you keep up with the new demands of todays Digital Economy . The fact is some believe they wont need a Traditional Bank down the road, so at cognizant, were helping banking and Financial ServicesCompanies Think digital, be untraditional, and reimagine what the bank of the future can be. Our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. Welcome back. It is time now, based on the music, you finally figured this out. The good, the bad, and the ugly in todays trade. First to the good. L brands soaring. That stock is up. Well call it 5 . On to the bad. Adulent technologies, down 3. 5 . They lowered their annual revenue and profit guidance. It is an ugly day for twitter, which is slumping. Well have more on why and the call that is doing that on street talk coming up. Tyler . Thank you very much. Three thrillseeking investors are teaming up to search for the next gamechanging product, from a threewheel electric bike, to a shark repellent. These adventure capitalists are taking on both physical and financial risk to see if these products hold up against mother nature. Joining us now, craig cooper, one of the three hosts of cnbcs new primetime original series adventure capitalists. It premieres monday night right after the olympics conclude. Welcome. Good to have you with us. Thank you. Thank you. This program merges your interest as a venture capitalist. You raised a lot of money over the years, and your interest in the outdoors. How did it all come together . Well, its a passion of mine, investing. And also being in the outdoors as much as possible. So it was a perfect melding of those two businesses. So its obviously not your typical investment show. Not five people sitting in a boardroom in suits. No disrespect. Were actually out there in the wild you try out these products. 100 . You do all three all three cohosts. Do you all go out and try each one . Absolutely. Were in the field. Were testing the products. We meet the entrepreneurs first. We spend a day testing them. And then we formulate an investment thesis around the businesses and decide whether to invest or not. Whether to invest your money . Absolutely. Your private money. Absolutely. On monday night . Monday night, 10 00 p. M. Were actually going to be in the lakes. Im sorry. I know exactly the episode. Weve mixed all the episodes up. So were testing an electric system for paddle boards. Doesnt that defeat the purpose of a paddle board . Youll have to wait and see what my opinion is. Paddle board is supposed to be exercise. Thats an electric board, not a paddle board. Im 100 in agreement with you. Im not giving away my position on the show. Youre right in alignment. Paddle boards should be for paddling. But theres a business around it. Theres quite a significant business around motorized devices. Gopro, i imagine theres a lot being used to shoot your show. We use a lot of gopros, but we also test the product which is very similar. For a competitor to gopro. We think its complimentary. We think its very disruptive to that industry. A very exciting entrepreneur. Very passionate about the business. Youll see him on monday night. Thats something you can watch for. What do you think of gopro . You are a venture capitalist and see the need for these types of cameras, and yet there are many on the markets these day. For sure, theres a lot of them. Its very saturated. I think the numbers have not been up to their expectations. Stocks halved or something. Im not completely up to date with it. But its a massive market. I think the whole thing was super accelerated in advance of the ipo. Subsequent to that, sales are down. I mean, the action sportswearable market is a big market. Let me ask you a question thats a little bit off the wall. We hear a lot about how regulation in this country is stifling business. Do you hear that . Are they finding they dont want to do something . Because the Regulatory Burden is too great . They dont start a business they start it from the passion of the view of the business. Whether theres a market. Does it kill them as they try to expand the business . I think as they mature, it does. They were worried about regulations. Its on the show. I believe its episode two, its in the forests, and youve got to watch it. And im not going to give it away. Unbelievable entrepreneurs. This was not one of them. Big foot shaving kit. I love that. This is not naked and afraid. Were excited to have you. We appreciate it. Remember, adventure ca capitalists premieres monday at 10 00 p. M. , eastern and pacific. Ryan lochte not the only u. S. Swimmer in hot water. Michael phelps also finding himself at the center of some controversy. Andrew ross sorkin is live in rio with that story. Andrew . Yes. When we come back right here on power lunch were going to talk about sponsors and sponsorships. Boy, are there lots of rules and some rules to break. Well tell you about it in a moment. What if a company that didnt make cars made plastics that make them lighter . The lubricants that improved fuel economy. Even technology to make engines more efficient. What company does all this . Exxonmobil, thats who. Were working on all these things to make cars better and use less fuel. Helping you save money and reduce emissions. And you thought we just made the gas. Energy lives here. It is said that a picture is worth a thousand words, but to sponsors, a picture could be worth millions of dollars. That is why Michael Phelps is back in the water, only this time, apparently, the water is hot. Andrew ross sorkin in rio joining us now. What did he do . Were going to talk about it. Really try to explain to you guys how this whole sponsorship thing works, because you can get in some hot water pretty quick. The olympics may be about athleticism, but its one of the biggest popup businesses in the world. This year, we should note there are 57 suppliers and sponsors in the game. Top official sponsors pay between 100 million to 200 million just to use the Olympic Rings and that number does not include the cost of producing ads or buying air time. But heres how it works. The multiple tiers of sponsorship. If you walk into an olympic park right now, behind me youre going to see the top tier, like mcdonalds, coke, visa, samsung, all of those guys have the exclusive marketing rights to the games. Youre not going to see mastercard here, for example. Now, there are the lower tiers of sponsorship within the ioc, and then within each country, there are each olympic organizations. Gets very confusing quickly. Nike, for instance, outfits team usa, allowing them to display the nike swoosh alongside the Olympic Rings. The players wear that. Other companies have reached specific deals with teams to outfit them during competition. Gymnastics, for example. They, however, cant display the Olympic Rings or even use the word olympics in advertising. Which brings us to Michael Phelps and the story we were just talking about, because when you think about how confusing this all is, Sports Illustrated has a cover now and youre looking at it. Michael phelps, who happens to be an under armour spokesperson, is now pictured on the cover of this magazine wearing nike, which, of course is the first lady apparel maker for team usa to wear on the medal stand. But not helping when it comes to the amount of money that that may be worth. Whether spending all this money is worth it or not is a perennial question. This year, though, theres some renewed questions, because the ioc added a rule. Its called rule 40. Which allows nonsponsors to run ads with olympic athletes, so long as they dont use the rings and run them starting six months prior to the olympics. Theres still a blackout period during the games, so you wont hear about them right now. And this is how important it is. Athletes can be disqualified and even stripped of medals if they and even more importantly their sponsors, if their sponsors by accident on social media violate rule 40, and now red bull, under armo armour, brooks and others trying to take advantage of the rule. But these rules i dont want to say theyre meant to be broken. Because if they are, literally you can be stripped of a medal. Is he in trouble with under armour, phelps . Hes not in trouble, but its clearly not the preference of how these things could go. A lot of times, the players are even putting black tape over certain logos. That clearly was an accident. Its not something that im sure the under armour folks were happy about. Im sure the nike folks are going to put that on a frame somewhere. All right, andrew, thank you. Up next, the double disaster du jour. Jail stocks getting barred. Ha ha ha. More on this developing story. I can do much better than that. Will your business be ready when growth presents itself . Our new cocktail bitters were doing well, but after one tradeshow, we took off. All i could think about was our deadlines racing towards us. A loan would take too long. We needed money, now. My amex card helped me buy the ingredients to fill the orders. Opportunities dont wait around, so you have to be ready for them. Find out how American Express cards and services can help prepare you for growth at open. Com. Perfect driving record. Until one of you clips a food truck. Then your rates go through the roof. Perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you twentyfour seven. Call for a free quote today. Liberty stands with youâ„¢. Liberty mutual insurance. Amazing sleep stays with you all day and all night. Sleep number beds with Sleepiq Technology give you the knowledge to adjust for the best sleep ever. The time is now for the biggest sale of the year, where all beds are on sale save 50 on the labor Day Limited Edition bed. Know better sleep. Only at a sleep number store. 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. Hi, everybody. Im brian sullivan. Welcome back to power lunch. Here is what is on your menu to begin the 11 00 a. M. Pacific time hour. Were in the biggest bond bubble in world history. Were going to ask blackrocks top bond guy if he agrees. Does apple have a problem . Target now saying its customers are buying fewer iphones and ipads. A big gain for oil. About a sixweek high for brent crude. Will opec get that production freeze theyve been looking for . The second hour of power lunch begins right now. And im michelle carusocabrera. Two hours to go until the closing bell on wall street. Stocks are mixed across the board. The Dow Jones Industrial average. We want to check on this privately held prison stocks plummeting after the Justice Department said it will stop using private prisons. You see Corrections Court down 40 . The geo group down nearly 40 . Im melissa lee, and the headlines at this hour. Police in rio holding a press conference right now on the situation with ryan lochte and three other swimmers. Police saying the swimmers were in a fight at the gas station and made up the robbery as a cover story. Gawker. Com is shutting down. Their six other websites will continue to operate. Univision bought the company for 135 million. And the u. S. Womens relay team will get another chance. They dropped the baton in qualify, but won an appeal saying Allyson Felix was bumped by another team. Theyll win a solo race and will need to beat chinas qualifying time. That is amazing. Theyll run alone on the track, i suppose, just against the time. All right, lets get back to the big story that michelle just mentioned. And that is the Justice Department will stop using private prisons. Scott cohn, who has reported extensively on private prisons, is on the phone with us now. As you were pointing out earlier, this is just one part of the businesses of a couple of these private companies that operate prisons. That would be affected here. The market seems to be acting as if its half or more of their business. Lets put this into perspective. Particularly as you look at the 40 move in the stock. The federal bureau of prisons is a substantial part of both companies revenues. For cca, it is 11 of revenue. For geogroup, its nearly 16 of revenue. But a couple of things here. First of all, the cca figure for one thing may be overstated to some degree because the company is also involved from reentry facilities. These are halfway houses. Places where inmates go before they reenter into society. Thats a growing part of ccas business, and that part of the Justice Departments contracting will not end. Secondly, its not as if the bureau of prisons is going to get out of this overnight. These are contracts that will not be renewed. Some of them just were renewed. So it will be several years before all of this plays out. But it is a substantial part of the revenue, and the other question is, will states follow . Because states are a bigger part of these Companies Business than the federal government is. And theres been the same sort of backlash against private prisons at the state level. Those populations are already falling. Thats hurt the stocks before this news. So the question is whats the Ripple Effect of all of this and it could be considerable. Where are most of these private prisons and what level of inmates are in them . They are really they really run the gamut. Theyre across the country. Theyre medium security prisons. I believe maximum security prisons. You know, the other part of the business that these companies are in, particularly cca, is immigration detention. That also is not affected. And that is a huge part of ccas business. Its about a quarter of their revenues. Thats not affected here. It is just bureau of prisons facilities. These are prisons, penitentiaries and so on, that the contracts eventually will not be renewed. All right, scott, excellent job, as always, buddy. Thank you for joining us. For more, lets bring in daniel hanson, analyst with Height Securities in washington, d. C. You put out a note on this. Youre certainly not defending any of these companies. Youre simply saying that perhaps the market response is a little bit overdone. Why . Yeah, thats right. The department of justice has put out a plan that would reduce reliance on these prisons without really explaining where all the prisoners are going to go. At the end of the day, the federal prison population is about 20 overcrowded. Within the facilities, the sort of range of prisoners that are serviced by these companies, those prisons are about 54 overcrowded. Per the Inspector Generals own numbers. So when you look at what theyre going to do over time with all these prisoners, the reality is that they have to keep these prisoners in prison in some place, and the facilities just dont exist to put them somewhere away from the for profit providers. So the facilities are actually owned by these companies . Theyre not just managing some federal facility thats been subcontracted out by the federal government. It depends on the contract, but the reality is the bureau of prisons has come under a lot of pressure from congress and from its own Inspector General to really find a way to start containing costs. Corrections corporation of america both house prisoners for about 12 less on average than the federal government has been able to do so. And so when you combine together the overcrowding issue and the cost issue, the question really becomes how do you actually implement the department of justices plan, and i think thats where the language in their statement that says that they want to renegotiate these contracts becomes most material. So they go back to these companies and they say we want you to do a better job of housing these prisoners without actually removing the contracts and removing the number of prisoners who are sitting in their facilities. Was this the primary thesis for the bears out there on the stocks, in terms of losing this contract . Or are there other sort of concerns . I mean, i noticed that cca corrections corps had about a 7 Short Interest. Im just wondering if this removes the primary leg, so we can understand whether theres more downside here. Right. There are two things going on here on the bear side. One is that people are very concerned about the trickle down. Will the states get involved in reducing their for profit populations . What happens to immigration and Customs Enforcement contracts, and so on and so forth. You have the same problems in those facilities, but at a more extreme level than you have at the bureau of prisons. So you already saw places like california, for instance, try to reduce their for profit population. And have state Supreme Court step in and say that the overcrowding issues have been so severe, that it would be illegal for them to take those actions. The other leg of the bear thesis is that there just isnt any growth in this industry. The headwinds from prisoner advocacy groups around the country have made it very difficult to defend increasing the population held at prisoners at for profit facilities. Thats not going away any time soon. But the discussion about the Ripple Effects, whether the states and other federal agencies will move away from these providers, thats where the thesis is overblown, because as i said, those facilities have the same problem that the bureau of prisons have around overcrowding in costs, but on steroids. All right, thanks so much for your time. Appreciate it. Daniel hanson at height. Thank you. Were in the biggest bond bubble in the world, according to paul singers hedge fund, elliot management. Kate kelly joins us now with more. Hi, kate. Hey, tyler. Those are some highlights from paul singers recent investor letter, a copy of which i had a chance to read. In it, elliot management, of which singer is the founder and the president , states that the bond market is broken and we are now in the biggest global bond bubble in history. The firm says in a tongueincheek aside that perhaps there should be a couple safety warning attached to the 12 trillion negative yield portion of the Government Bond market. Hold such instruments at your own risk. Danger of serious injury or death to your capital. For its part, elliot has weathered this period pretty well, though. Year to date, its up more than 6 in line with the s p, though the stock market is in a direct comparison for a fund in many asset classes, and its twice what the average hedge fund is doing at about 3 upside versus elliots six. Contributors to elliots performance, at least as of the end of the Second Quarter, include performing debt and commodities. Elliot also noted the importance of its hedges in general, underscored by events like the brexit in late june. Meanwhile, its seeing opportunities now in both Distressed Energy and is building its gold position in a way that would protect against the fall in the commodities price. It will be good to hear more from singer on the markets and perhaps also on politics at delivering alpha this year thats on september 13th, and its our gathering of whos who really in the hedge fund business. Great event. We look forward to it here at cnbc. Thank you very much, kate. Lets chat more about the socalled global bond bubble. Joining us now is rick reiter, the ceo at black rock. He oversees 1. 2 trillion in assets. Do you think theres a bond bubble . I think theres a legitimate point about where rates are relative to what is fundamental value. The Central Banks are pushing much of the world moved to rates. The riskfree rate is very aggressive. One of the things you have to think about, what blows up bubbles, is when you have more supply than demand. The thing that is extraordinary is that demand still outstrips supply. So while some of these valuations are high, its a question that can go on for a long time. The demand particularly, the u. S. Interest rate market is still pretty attractive. And we hear pension funds. We hear a lot of longterm inve v investors complain. You say that investors have to contend with the fact that rates are going to go much lower for longer. So that would suggest that you dont necessarily think the bubble is going to pop any time soon, because if it does, thats when we would see Interest Rates rise, correct . One of the things we would continue to say is you should diversify your portfolio. U. S. Income rates, particularly treasuries, are the u. S. Is going to be the first to raise rates, whereas other parts of the world we think are going to keep rates lower for a longer period of time. That being said, i think were going to be in a low rate dynamic for a while. We learned that from the speech earlier this week. Were going to be in a low rate dynamic in the u. S. , but more so in the extra to the u. S. For a long time. Im glad you understood those minutes. It sounds like you reluctantly want to agree with the thesis that there is some sort of a bubble within this bond market. A bubble, though, would imply that on the other side of it, that theres an irrational or a disorderly exit, not an orderly exit. So what is that catalyst that spurs the disorderly exit . So there are a few things. If you thought that you would see inflation move significantly higher faster, that would create it. And we do think this fed is willing to let inflation run a bit hotter. That being said, we dont think theres so many governors on inflation, particularly where Global Growth is. That is one. If you start to see which we do think youre going to get more of a Fiscal Initiative faster. That could start to move people into other assets, away from Interest Rate product. And then if there was some shift in the world. Like i said, all of these things will play out over time. Or if Central Banks were going to start moving. Can the feds still go 25 this year . Yes. Is it going to be a significant move . No. The rest of the world is going to be easy for a long time. When you say investors should diversify, does that mean you go out on the credit quality horizon . Does it mean that you go into other sovereign bonds in emerging markets . What do you do . Exactly the right point. Youre seeing in the equity market by the way, i think theres some equities that make sense. I think money will flow in in the equity market. Like you say, with fixed income, high yield, we still think it will do its job. But emerging markets, if you think about where real rates are in the world, youre still getting paid substantially positive real rates in places like brazil or argentina or mexico or indonesia. I do think youll see more of the shift. Were seeing it play out now, of people going into emerging markets. As long as the dollar stays reasonably contained. As long as growth is moderate but growing, i think emerging markets will do well. Good to see you. Rick reider with black rock. Rick santelli is tracking the bond market for us at the cme. Hi, tyler. Hes a sharp guy. Watch them slide. But heres something i find fascinating. Theres been 14 trading days in august. Todays the 14th. Every single one of those trading days, a tenyear note yield was closed with a yield of 1. 5 to substitute the next digit. All 14 are right there, as you can see on this chart that starts on august 1st. It certainly doesnt look to me as though any investors here need to go get their nails done, because they havent been biting them off thinking the fed is going to deliver. Just not in the charts. If you look at one week of the dollar index, even more compelling. The dollar doesnt seem worried. As a matter of fact, its starting to pick up downside momentum. If you look at the last time it was truly volatility in the world, the day after the vote on brexit, you could see how developed this down pattern is starting to get for the dollar index. If it takes out the left side of that chart, my guess is market logistics will take hold and make it move a little bit faster. Melissa lee, back to you. Thank you, rick. Target says its customers not buying as many apple products as they used to. Does apple have a problem . Weve got that story next on power lunch. When a moment spontaneously turns romantic, why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card. Welcome back to power lunch. Im melissa lee. Target pointing its finger at apple after a 20 drop in iphone sales last quarter. This isnt only a target problem, its actually an apple problem. Always great to see you. And you set me back when i emailed you about this excerpt from the conference call. Its an excerpt from brian cornell, who says it was a significant drag. Our guests come looking for newness and the innovation, were putting together plans with apple and our mercedesi meg teams to make sure were ready for it in the back half. Are they going to be able to . This is the concern. Apple tends to release their phones on a tick tock cycle. What well have is the upcoming iphone 7 likely announced on september 7th is going to be another iteration, the same factor as the current phones that are out there right now. And thats a source of concern in a growing market. A slowing marketplace. If we dont see an uptick in sales because the newness and innovation arent there i mean, people know this about what apple is going to be releasing in september, correct . So if theres no uptick, does apple risk losing shelf space . At a retailer like target . And they also risk losing their status as a fashion icon. If you think about what company in tech is as close to a fashion status symbol, its apple. Theres a couple other disturbing points. Particularly out of china, where apples market share slipped to fifth. You know, i understand the refresh is coming up, but in june quarter a year ago, they were in third place. So the domestic competition is continuing to ratchet up. The chairman has stated that he expects orders to decline. Theyre the company that assembles the iphones. So theres some data points out there that are collecting that show this iphone 7 may not resonate with consumers the Way Investors are hoping it will. What about on the ipad side . Literally last night, colin, having dinner with some friends, they were talking about getting their 10yearold daughter her first tablet as a gift. The dad was saying lets just go with the Amazon Kindle fire, its so much less expensive. 64 gigabyte version about the same size as the ipad, 200 less. A lot of people are just living on the web with a couple of apps these days. Do you believe that apple is finally going to have a pricing and thus gross margin problem . I do. In fact, we have a lot of fire tablets in our house. Its a 49 price point. Its hard to beat that. Especially for the functionality that you get. You know, youve seen tablet declines, right . Before the june quarter, we had nine quarters of tablet declines. And so you look at what happened to the pc market, how long thats been stagnant. The same thing can happen to the smart phone market as well. You know, its not likely that growth is going to continue forever. Its very easy that this market can stall out. So clearly, colin, apple is meaningful to target. How meaningful is target to apple . Just a blip. Right . Its a tiny data point across the global landscape. All right. Colin gillis, bgc financial. Thank you. Thank you. Check out whats happening to the euro. Session highs against the dollar. Levels not seen since june. It will cost you 1. 35. Last year, it was like 1. 14. Well talk more about that throughout the show. Coming up, well go live to california for a report on the Massive Wildfires that are burning out there in the los angeles area, broadly speaking. Power lunch returns after this. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. Theres only one place where real and amazing live. Book a seaworld vacation package and eat free. Wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong insurance company. With Liberty Mutual new car replacementâ„¢, you wont have to worry about replacing your car because youll get the full value back including depreciation. And if you have more than one Liberty Mutual policy, you qualify for a multipolicy discount, saving you money on your car and home coverage. Call for a free quote today. Liberty stands with youâ„¢. Liberty mutual insurance. Amazing sleep stays with you all day and all night. Sleep number beds with Sleepiq Technology give you the knowledge to adjust for the best sleep ever. The time is now for the biggest sale of the year, where all beds are on sale save 50 on the labor Day Limited Edition bed. Know better sleep. Only at a sleep number store. Announcer are your children in the right car seat for their age and size . Is the seat supposed to be forwardfacing or rearfacing . Did they move to a booster seat too soon . It may be too late to check when youre on the road. [blaring car horn and skidding] fortunately, youre on the couch. The euro is at 1. 13, not 1. 35. I dont know, maybe i was channelling the pound. The euro moving up. A Massive Wildfire still burning in california. Steve patterson is live in oak hills, california. Steve . Reporter we join you from the blue cut fire. This is in San Bernardino county, california. Its been burning now for 48 hours. Only 4 contained. And when you talk about the magnitude, the size of this thing, its hard to get your head around. 32,000 acres. Thats 49 square miles. Thats bigger than the size of the city of San Francisco in a fire in this region. So youve got residents dealing with it, homeowners, and firefighters who are trying to battle back. Weve been watching an aerial battle. Firefighters using planes to dump flame retardant out into the fire, trying to pare it back a little bit. Theyve been working 48 hours straight, but it hit so hard and so fast that fire crews will admit theyve never seen anything like this before, and theyre a little bit behind. Meanwhile, you can see what the devastation has brought. Were standing in the middle of what used to be the summit inn, a historic diner for six decades. Opened in 1932. Gone in an instant. Now just standing in ruins. Fire crews going to check houses along the interstate, which has opened back up. That is some good news. They are paring this down a little bit, but they hope to find more people who are discovering their homes in place. Theyre not sure what the widespread damage is just yet. But thats the next check that theyre going to have today. Back to you. All right, steve. Steve patterson reporting from california. Thank you. Oil with a nice pop today. Talks of a production freeze. But when hasnt there been talk of a production freeze the last couple of years . Could this time it actually happen . Were going to take you live to the nymex when power lunch returns. On june 27th, this customers who love the company were now given the chance to own part of it. Find out if the owner raised the money they need. For more, watch your business sunday mornings at 7 30 on msnbc. Hi, everyone. Im sue herera. Here is your cnbc news update at this hour. Russia says it supports a 48hour weekly ceasefire in aleppo. The u. N. Has suspended its humanitarian mission there due to the intensified fighting. The u. S. Says they are in touch with parties on the ground. And is calling on them to allow unimpeded and impartial humanitarian access. The Justice Department is ending its use of private prisons. The Department Says the facilities are less safe, and compare poorly with governmentrun institutions. There are some 13 privately run facilities in the bureau of prison system. All the contracts reportedly would come up for renewal over the next five years. And weve just learned that gawker. Com will end its operations a week from today. The gossip website has been around for about 14 years. Earlier this week, univision successfully bid 135 million for gawkers six other websites. And the u. S. Womens olympic relay team will get another chance at their 400 heat tonight in rio. A bid earlier today, they dropped the baton during the heat and came in last. But they filed an appeal based on interference, and theyve been granted a solo run tonight. They will have to run it in under 42. 70 seconds to make it into the final. The american women are the defending gold medalists in that event. And we wish them good luck. Thats the news update this hour. Back to you, michelle. Thank you, sue. Speaking of the olympics, brazilian authorities expected to hold a News Conference any moment now on ryan lochte and those other members of the u. S. Mens swimming team. You can see reporters gathering for this much anticipated event. Just crossing on the associated press, theyre quoting Brazil Police officials saying that two security guards pointed guns at u. S. Olympic swimmers during a gas station confrontation. So were getting drip by drip from various news sources about what might or might not have happened that night. And as we know more, well bring it to you. The team is monitoring this. So what we know is that we dont really know. It went from lochte was robbed to lochte was lying to maybe the truth was in the middle. Somebody may have held a gun. They got spooked. Wild speculation on my part about young attractive people at olympic games. After theyre done competing. The oil market is closing for the day. Lets go to jackie deangelis. At the nymex. Good afternoon to you, brian. Oil prices getting another leg up today. Closing well over 48 a barrel. Its a move of about 1. 40, just off session highs here at the close. What are the reasons . The first one traders are telling me, the dollar today. That drop under is most of this rally right now. But still, a lot of it has to do with the opec buzz. This feeling that this time in september, things will be different and that saudi arabia has incentive to actually act. Some traders are saying look, this could be classic. By in any case, thats whats happening in the market here, certainly buying on these rumors. Finally, some traders feel we are working through that supply. The department of inventory report yesterday seemed to be a positive step in that direction. For right now, it looks like were headed higher. But sometimes just when we hit those technical peaks, thats when you see some selling pressure. So it never goes all in a Straight Line in one way. Thank you very much. Jackie deangelis. So when is a death not a death . Our partner at nbc new york found that medical companies classifying thousands of patients fatalities as injuries. Thats what theyre doing. The fda says thats okay. Theyre referring to death by another name. But critics say it could mask real health problems. Nbcs Chris Glorioso has the story. You know, were still in shock. Its a never ending nightmare. Ill never forget this. The lady says, nana, my momma has died. She is a mother convinced this medical device played a role in her daughters death. Its called the nerve stimulator. Shelly thought it was the cure for her epileptic seizures. The device is designed to generate small electric shocks, but her family said she started feeling abnormally painful shocks. With vns, youre not supposed to feel anything. She called me and said that it shocked her really bad and it almost dropped her to her knees. She planned to call the doctor on monday, but she never made it to monday. She died on sunday. On sunday. Her daughter found her dead on the bathroom floor. Her cause of death, cardiac arrest brought on by a suspected seizure. I dont think ill ever get over it. Shelly willhete wasnt the only one complaining about the nerve stimulator. By the time she died, the food and Drug Administration had received thousands of reports of problems with the device, and some of those reports had a startling discrepancy. I absolutely had to do a double take. There are a lot of reports in there that really made me question the integrity of the reporters. Madris is a former fda consultant who now runs a company which offers a simplified way to go through data. She scoured safety reports going back to 1996 and found 38 patient deaths reported as injuries or malfunctions. They include five patients who developed fatal pneumonia, but the deaths were labeled as four injuries and one malfunction. In another example, a vns battery depleted with zero years remaining. The patient died, but the event was called an injury. When you saw a report that mentions a patients death, but was categorized as an injury, what did you think . I was very alarmed. Did you find that deceptive . Yes. Medical device makers are supposed to report any event that reasonably suggests a device may have caused or contributed to a death or serious injury. Checking the death box is not an admission of fault. Despite that, she says companies sometimes downgrade patient deaths, arguing the fatalities are unrelated to to product. She says that can throw regulators off the trail of health hazards. The way that the fda reviews the reports is in order of importance by the classification thats checked on the form. And so if its an injury or malfunction, it could take them weeks to months to get to reading them. Cyberonics, the company that makes the nerve stimulator, says three of the pneumonia deaths were properly reported, but the others were human errors. But the company also conducted an internal review, finding a total of 108 misclassified deaths, some going back to 2005. They told us it never purposely manipulated safety data and those errors comprise less than 1 of the companys safety reports, concluding there have not been any significant misclassifications. But the vegas nerve stimulator is only one. We looked at five years of fda safety reports and found more than 4,000 patient fatalities all listed as injuries or simple malfunctions. A knee injection patient developed a septic infection and died, but the event was listed as an injury. Another patient fell from a safety bed and died on the floor. That was called a simple malfunction. A stent was implanted damaged and stretched. A few hours later, the patient died, but again, listed as a malfunction. We asked the fda about all of those reports and more. A spokesperson said, the reports were likely classified character. The fda says this is not a problem. What do you say . I think that when you have a lot of patients being injured and a lot of deaths occurring, that its always a problem. The fda responded by saying companies are allowed to classify a patient fatality as an injury if theres sufficient information to establish the device did not cause or contribute to the death, and the agency also said it has analytical tools to spot deaths even if theyre not labeled as deaths. It also said it does not prioritize safety reports solely on the basis of death, injury, or malfunction. But the labels do matter here. In 2010, an Inspector General report found only 10 of malfunction reports are even assigned to be read. The family of shelly willhite sued cyberonics. But that company has effective immunity from liability suits because the nerve stimulator was approved through the fdas most strin jegent process. That really is salt in the wound for some patients who dont believe the fda is watching out for them. They also cant necessarily go to the courts to find out what is really going on with this device. So who gets to decide, chris, whether the device was responsible for the individuals death or not . As i understood you explain it, in some of those instances where it was described as a malfunction or an injury, there would have been some dispute over whether the malfunction was actually the cause of death. And that really is the point. There are some that are very concerned that theres an inherent conflict of interest here. When you have the Device Manufacturers and the doctors that prescribe and implant the devices, essentially the ones who do get to decide whether or not the device caused a serious injury, whether or not it was just a malfunction, or whether or not it was a death, you can imagine there are financial incentives in some cases not to classify patient deaths as deaths when there may have also been an injury. All right. Thank you very much, we appreciate it. It seems like every day, we hear about a redhot housing market, or homes selling for record prices but five years into the housing recovery, some homeowners are still in the red on their mortgages. How can this be . Well break down the numbers. Power lunch is back in two. 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. An Alarming Number of homeowners still owe more on their mortgages than the home is worth, even though home prices have been rising. Reporter its hard to believe that five years after the housing recovery began with home prices reaching new peaks in some markets, that 5. 9 million borrows still owe more on their mortgages than their homes are worth. The socalled negative equity rate in the u. S. Is at 12 of all mortgage homeowners, according to zillow. It is down to 30 and it does fall every quarter, but the numbers are so high and equally spread across both urban and suburban communities. Markets in the west like San Francisco, portland, denver, and even in dallas have the least borrowers in negative equity positions, that is due to strong employment and competitive housing markets. But others like cleveland and detroit, they have more bifurcated markets. In fact, detroits urban rate is twice that of its suburban rate. Chicago and las vegas, unfortunately, share the dubious honor of carrying the highest number of borrowers owing more than their homes are worth. Negative equity ironically is one of the driving factors of home prices going higher. Homeowners in this position are unlikely to sell at a loss, so they stay, which in turn lowers the number of homes available for sale. Fewer listings means more competition. Which again drives home prices ever higher. Thank you very much. Lets get to seema mody for a market flash. The u. S. Food and Drug Administration has reportedly approved the medication for two transcatheter heart valves that are manufactured by edwards life sciences, that again, according to reports, helping shares of the Pharmaceutical Company move higher here in todays session. Up about 2. 8 as session highs here. All right, seema, thank you. Will recent gains in the price of crude oil mean more gains to come for the oil stocks . Its a good question. The trading nation team will have answers. Plus, a bold analyst call on twitter. If youre long, its not the kind of call you want to hear about. That and more coming up in street talk. This is me, using a wrench to build a jet engine. Well we thought ge programmed machines to talk. Ge is an Industrial Company that actually builds worldchanging machines. Machines that can talk to each other digitally. Hello . They dont talk to each other like that, ricky. Shhhh, youll anger it. He looks a little ticked off now. Time for street talk, our daily dive into the key wall street calls of the day. Number one is a biggie. Twitter, ever corps downgrades twitter from a sell to a hold. Cuts his target to 17. He says competition mostly from snapchat is going to cut into twitter. He notes that broadcasters like us are starting to win influence with twitter users on other social platforms. He says, compared to twitter, similarly scaled social media competitors are exhibiting accelerating snapchat or steady instagram unique visitor growth. Unsurprisingly, investors who are in twitter, on twitter today are not happy. The stock has really picked up since the may, june timeframe. Still a dog and one wonders whether or not the m a hope is still out there. If it hasnt happened yet, is it ever going to happen . Thats called flipping a coin. Yeah. Essentially. Shopify getting reinstated. And a 46 price target. Shop had a secondary offering, which the analyst says provides the company with increased flexibility. Its a premium valuation, says the analyst, but for premium growth, a large total of market and scarcity value. Not too many players are there. And you made a lot of money on it, depending on when you bought it. Third stock. And this is a big stock story today. Net app. On the back of their earnings, the stock is soaring. A lot of analyst commentary, but lets focus on one. Susquehanna Research Upgrades it from a positive to a neutral. One reason, the analysts believe the company can deliver revenue growth, increasingly into fiscal 2018. Thinks the company will control cost better. That should provide upside to future earnings. Target on net app. Melissa and i do these before the market opens. The target is 36, which this morning looked great. The stocks at 33. 5, now on a 17 gain. Really about another 7 . But still, 7 on top of the stock. Jp morgan also upgraded to a neutral. Which is kind of a wahwah. Better than a sell. That would be a bad call today. 16 . Really. Fourth stock here. L brand. A lot of analysts out on limited brands. Mkm standing by its neutral rating, 60 price target. The analyst sees greater headwinds for victorias secret in the Third Quarter with the absence of swim and apparel having larger negative impacts than in the Second Quarter, and the drag is a lack of couponing. Also, there were several major changes, including the departure of the ceo, and the merchandise manager as well as the removal of the aforementioned coupons. Have you noticed . I didnt actually notice that until i read it. No more no more catalogs . Save the trees. Im big into front gate but i cant afford it. Under the radar name, cyrus 1. This is a texasbased data center company. Barclay upgrades from an equal weight saying following the pullback, they think its a time to look at the stock. A number of reasons listed in the note. Too many to go into now and thinks the mergers are unlikely to slow down materially in the near term and could be a player on either side. Boost the target from 50. Thats about 10 upside from here and the average target of the 13 analysts that cover it. 59. 80 a share. They have a little weaker lately. Yeah. And on a buying spree and mentioned maybe a buyer. Maybe thats a buyer, a seller. Theres the under the radar name. They should buy a Company Called mil miley. Are more gains ahead for Energy Stocks . Lets ask the team. Split. Boris shlag. Tim seymour. So, tim hey, brian. Well, hi. How are you . Great. Melissa says hi. Hi, melissa. Tim says hi. Do you believe theres more gains for Energy Stocks or sell out of them . Depends on the time horizon. I believe by mid2017 the markets are in balance. Big integrated names because of dip yields and the earnings terrible in the Second Quarter are expensive. Prefer to be in the refineries. Beaten up is more of a stock that can be defensive in this environment even if we get a small pullback on a 20 runup in crude. Better numbers in california youre not worried by the higher price of crude oil for the refiners . No. Its all relative. Its an attractive stock seeing oil at 80 bucks, too. I think the refiners also are placed where its a crowded trade and then people reach out to get the names and go back to tesoro. Far be it for me to handicap oil because the product seems to trade on whether the dollar goes up or down. But having said this, i think 50s going to be a cap here. I think the saudis flood the market and the frackers will flood the market. I dont see too much upside. Having said this, the oil majors not suffering much further than they have. I dont see a huge move further to the upside but probably a relatively decent stablization at this point and like tim says, i dont oil goes up to the lows or the levels we have here. Well, companies are learning to adjust with the new crude reality. Guys, hey, thanks. Thank you. For more go to tradingnation. Cnbc. Com. Our final thoughts coming up. We call it check please. It is coming up next. What i love most about tempurpedic mattresses is that they contour to your body. It keeps us comfortable and asleep at night. Change your sleep, change your life, change to tempurpedic. Learn how you can change your sleep by requesting a free sample of tempur material. Call or click today. Welcome back to power lunch, everybody. Brazil i cant be authorities sitting down for a News Conference beginning any moment and will be in portuguese. One assumes. Talk about ryan lochte and what happened and what may not have happened on sunday morning early after the guys high spirited young men, i assume, had been out at a party and they told a story about being pulled over by police. That story has been altered in subsequent conversations with nbc newss matt lauer. Bringing you the details as we learn more. Time for check please, folks. Mcdonalds pulling the step it activity trackers from the happy meals. Making the decision over concerns of skin irritations that may happen from wearing the band. No word on how many customers may have been affected. But one parent complained on facebook last week that her child was burned by the happy meal toy after playing it for eight minutes. Thats not such a happy meal, is it . Weirdly similar to remember the fitbit situation to recall some because they were getting a reaction to the rubber band. Anything mass produced on that scale for a nickel is probably not probably not going to be the greatest most product. Tested safety approved yeah. Fair point. What is your check please . You ever watch brady brunch . Florence. I like alice. I knew you were going to say her. With why . She wasnt a brady. Just lived there. The character. Mine was jan and not only fetching when i was young but a real estate genius. Hold on. Eve plum playing jan brady apparently in lassie before and made money as a child actor before and bought a house in malibu on the water in 1969 for 55,000. When she was 11 years old. 11yearold probably parents bought it. With her money. Buys a house. Just sold it for 3. 9 million. Excellent. Pretty good return. The house only looks like a trailer. 850 square feet on the beach in malibu. Real estate goddess. Fetching and a real estate goddess. Mama always said dont play ball in the house. Keeping watch on valaent. Now down by 3. 1 which really massive decline of the day because initially this morning it had some news saying that it reneshted some of the debt kof nance and a lifeline out there and the stock higher by 5 and now is down by 3 . The news here that brought the stock down, t. Rowe is suzing saying it wa involved in a fraudulent scheme. The question now is, what will the liability if there is any be on valaent and will others come forth and share this sort why are you laughing . Next thing says phelps in tub. Related to the cover of sported illustrated wearing nike pants and sponsored by underarmour. He constantly has issues with the sponsorship stuff. The last olympics in london, he broke rules because of this photo when shot by annie leibovitz. Hes not supposed to have other nonsponsored advertisements. This is what youve been raving about . Looks better now, youre right. Doesnt look as good there. Come on, melissa all right, all right, all right. Nice shot. Thank you for watching. Closing bell starts right now. Welcome to the closing bell, everybody. Im kelly evans at the new york stock exchange. Im bill griffeth. Trading in an extremely tight range again with so much uncertainty about the future fed hike if thats what the market is trading on and walmart is rallying after did report better than expected earnings and coming up well hear from one analyst who is hiking his price target on walmart stock and well find out what walmart is doing right now but rivals like target are struggling with at the moment. Yeah. For su t