Transcripts For CNBC Power Lunch 20160822

And im brian sullivan. Crude oil falling again, and that seems to be hurting your investments today. The dow is down, not a lot, you can see 15 points, crude oil though is down 2. 5 . Many in the market not only watching oil but also looking ahead to Janet Yellens big speech later on this week. And of course were going to let you know everything you need to know about that coming up. Michelle. Hey, brian. Im michelle carusocabrera, heres what else is happening at this hour. Shares of Dunkin Brands up more than 2 tracking their best day since july 14. Automobile driving in the United States hitting a record 1. 5 trillion miles logged in the First Six Months of 2016. Thats up more than 3 from a year ago. Ralph lauren now joining speedo in dropping sponsorship of olympic Gold Medalist ryan lochte after he admitted to lying about being held up at gunpoint in rio. Lot to get through this hour. Going to start with the markets though. Market that no one seems to be trying to beat anymore. Instead, investors rushing into market etfs. Lets get straight to mike santoli at the nyse. Hi, michelle. Actually, this has been a trend thats been rolling for a while. The public has not been that e nam mored. Bank of america estimates more than 900 billion has gone into index funds including etfs since 2009. That compares to about 600 billion coming out of actively managed funds that actually try to beat the market. This obviously is really exacerbated a trend of fuer and fuer managers have new money to go out and seek those fresh ideas. Its creating also a little bit of an argument out there that maybe the tide is about to turn in favor of active management. As we know its been very hard for active managers to beat this market. Fewer than 20 of large cap stock managers beat the market in the latest year. It looks more like 15 in the last ten years. The public seems to basically say why bother paying up for active management when it doesnt seem to work. And you have these other trends of hedge funds being in retreat. So the contrarians out there are trying to argue that this is in fact when basically the tailwind will return to those investors that try to pick stocks individually. There is a counterpoint to this, michelle, and i think its actually very interesting, which is perhaps its the weakest active managers that are being forced to essentially shut down or do less when money flows away. And its only the skilled ones, the ones with the great records, the ones with the Better Process that are staying in the game, plus the indexers, which means the market could theoretically become even harder to beat over time. I will add also one final note, which is its usually in downturns, corrections, bear markets that active management shines. So perhaps its just a cyclical thing where once a bull markets been rolling for a while people say why pay more, ill just ride the index. Mike, thank you very much. So are index funds the way to go for investors as the fed preps the market for a possible rate hike later this year. Janet yellen of course speaking out at the jackson hole conference on friday. Lets bring in tim ang, chief Investment Officer at clearbrook global advisors, and joe tanies, strategist at bessimer trust. Tim, what do you think . Its hard to argue with the success Investment Funds have had in beating active managers. Sure. So shouldnt they be why shouldnt they be the core holding in most peoples portfolios . Well, index funds have been very popular over the past year plus as statistics show. 85 of active managers have not been able to beat the indices on a cost basis. But its been driven by central bank policy. When you have liquidity driving the markets, investors dont differentiate in regards to valuations. What they care about is getting exposure to particular asset class. So because of that youve had higher correlations amongst equities, stocks, Industry Groups within essentially the stock markets. The etfs have been the right way to go. We began, you know, joe, this year as i recall with a lot of chatter about how this was going to be the year that the stock pickers were able to beat the index funds. Because this is a stock pickers market. Youre just not going to be able to ride the indexes anymore. Hasnt turned out that way. And it hasnt turned out that way in some downturns as well. Well, i think you have to ask yourself whats really driven markets over the past year. You know, if you look yeartodate while earnings for the s p 500 outside of energy have been relatively flat, the s p 500s up about 6. 5 , 7 , suggesting this really has been a multiple expansion driven rally. I think in that type of an environment beta certainly serves you well. And i think the proliferation of etfs has made it so much easier for investors to gain access to them. What you have to ask yourself in this environment where we are in the Business Cycle given the expectation for volatility to rise, should you now consider moving a little bit more into active. Tim, i listened to everything you said. Youre an active manager, right . Well, we invest in active management. Right, right. Nothing you said convinced me that i shouldnt do anything but etfs. So active management today as youre starting to see some liquidity coming back, what youre seeing today is correlations breaking down amongst Industry Groups. So the first time, michelle, the past couple years weve actually seen active management, particularly even in large cap, small cap and emerging markets actually outperform over the past six weeks by substantial 400 to 500 basis point ver sis indices. First clue weve seen breakdown in correlations across Industry Groups that finally were seeing the ben fikefits from active management. So now would be the time even though it hasnt worked in the last couple years because of the fed . Yeah, particularly if you have Central Bank Policies varied where the fed is going to issue Interest Rates versus bank of japan, et cetera, yes, youre going to see that. Youre also seeing sector rotation, something we havent seen before. You have a lot of utilities essentially move the markets, become overvalued. Now you see rotations into health care, into technology, information technology. Joe, a lot of big themes here. I just want to know how to make some money. What looks cheap to you . Yeah, well, what looks cheap to us i think when you look at the equity markets broadly speaking, its difficult to find an area that looks cheap. But i will say in this type of an environment considering where we are in the cycle, it makes sense to move a little more towards Quality Companies focusing on the individual companies as opposed to sectors. And of course focusing more on alpha as opposed to beta considering the rally that weve had. Within the u. S. I think we lean a little bit more towards consumptionrelated stocks. If you think about the household sector and how healthy it is, we want to be able to participate and enjoy the benefits of a healthy consumer balance sheet. Tim, quick thought. You like some mlps, tell me which ones and why . We like tortoise. Tortoise has come down. Typically has a low correlation versus oil prices. We went as high as 80 correlation. Typically trades at 30. It also is dominated mostly by storage with a guess. So it should not be correlated to oil prices. And has a yield about 4. 5 . Tortoise sounds exciting, right . Yeah. Its not just a shell company. Oh, you are on. Eight minutes in. Only took eight minutes. Im done for the week. Even quicker than ryan lochte losing hes here all week, folks. Tim, thank you very much. Go to powerlunch. Cnbc right now, do not hesitate to see how joes playing this years president ial election. Biotech bankers certainly not taking the summer off because theres a huge deal in the Pharma Industry today. Pfizer paying 14 billion to grab a fast growing Prostate Cancer drug. Meg tirrell is here with more on the deal of the day, maybe the week. Maybe the summer. Although investors are hoping theres more to come. Pfizer today winning the battle for medivation paying 81. 50 a share in cash for about a total of 14 billion for medivation. Thats a 21 premium to where medivation closed on friday, but of course a lot more than where medivation was trading earlier this year when french Drugmaker Sanofi put it into play with a bid of around 52. 50. So paying quite a bit more than that today for pfizer. They say thats going to add about 5 cents to earnings in the year to come. So for 14 billion what does pfizer get . Whats up . No, finish, i get it. So theres an improved drug approved for Prostate Cancer, its more than 2 billion revenue drug pfizer will split with the japanese drugmaker, also two cancer drugs in the pipeline people are excited about being tested for Breast Cancer and other cancers. And then the second one is an m immunooncology. Do you have any good explanation for why the premium is so much bigger. The French Company comes in several months ago 52. These guys are coming in above 80. Thats huge. Why is pfizer willing to pay so much more . Are those cancer drugs that much more important to them . Well, they are important to them. This is an important area for pfizer. And the other answer i think is it was a competitive process in addition to we know that sanofi was at the table. Its been reported that celljean, gilead and merck were also interested. That could have driven the price up. Pfizer may have been under pressure to get a deal done after trying to buy a couple and showing its doubling down in the Innovative Products area and in cancer. Sanofi could have in theory paid more based on their tax structure, right . Pfizer is here in the United States. Sanofi could have done an inversion, which meant they would have had Financial Synergies which they could have paid even more if they wanted to visa vee u. S. Company, right . Yeah, thats a good question. Trying to accomplish with allergan deal invert does have a lower tax base. Buying a u. S. Asset using u. S. Cash to do that, thats a great question. Questions on the Conference Call of pfizer today said this isnt going to effect 2016 guidance, but whats it going to do to 2017 tax rate . They said theyd update us. Seems medivations board played it pretty well. They sure did. I would be super happy as a shareholder. 30 a share or roughly that. Yeah. Exactly. Thanks, meg. Thank you. All right. It has been five years since tim cook took over as ceo of apple. Stocks more than doubled in that time up 100 plus. Should investors be cheering or screaming . Why are so many people negative after the stock is up 100 . Well debate next. Plus, 77 days until the election, Donald Trumps new strategy, is it turning the tide for his gop critics . Not for republican and former congressman christopher, why hes voting for hillary straight ahead. For decades, iestors have used a 60 40 stock and bondodel, with little in alternatives. Yet alternativ can tap opportunities that traditional aets can aneven though theyre called alternatis, theyre tually designed to help meet very aditional goals. Thats why invesco believes people shld look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 500 20. Happy fifth anniversary, tim cook. Five years as ceo of apple. But are investors ready to pop the champagne . Josh lipton is live in San Francisco with a look at cooks performance over the last five years. Josh. Reporter well, michelle, lets start with what traders and investors focus on, the stock. Under cooks watch apple is up more than 100 . Total return to shareholder, so stock appreciation plus dividends clocking in at 121 . As for the top line apple enjoyed Revenue Growth of 113 through its fiscal year ending september 2015. In the three quarters since then though Revenue Growth has dropped an average of 8 on a quarterly basis. Turning to products, cook scored a home run with that iphone 6, which drove big jumps in Revenue Growth from 7 in fiscal year 2014 to 28 in 2015. As for the watch, analysts say it has to be decoupled from the phone to prove a real hit long term. Rbc estimates apple so far has sold 14 million watches, generating 5 billion in sales. Cook does remain confident about the ipad whenever we speak, especially its role in that workplace, though that product does now account for just about 12 of total sales. And finally, beyond devices cook we know has worked hard to expand the Companys Services business, so mobile payments and music and the app store in the past Year Services revenue has jumped to some 23 billion, next year cook says that business will be the size of a fortune 100 company. Of course apple is still dependent for now on that flagship product, the iphone. Some do argue it is in trouble long term. Theyll point to increasingly saturated markets and longer replacement cycles. Others like pipers gene munster are betting cook is going to expand and enrich that device with new Technology Like augmented reality. Guys, back to you. Josh, thank you very much. So, apples stock has basically doubled in the past five years. Not a bad investment. But if youre splitting hairs, and of course we will, apples return is only fractionally better than the overall market, 25 worse than microsoft, and about half the return of google over the same fiveyear period. And did you know that since the apple watch launched, not was announced but launched, thats tim cooks only new product line, apple shares are down 13 . Lets bring in jason weir, apple shareholder and ceo of and steven managing director at ubs. Theres a doubling over five years is a pretty good investment no matter whos running the ship. But compared to the other tech names its underperformed. Are you disappointed in apples performance . I would say the recent history, yes. I mean, i think even cook would probably admit that they overestimated the demand for the recent success. But, look, overall i give him a bplus even though you could argue its probably incomplete. We have yet to see the innovation theyre working in the labs. But hes kept a lot of the Core Principles jobs put in place in terms of a functional organization thats focused on customer experience. The north star of creating the best product possible. And also apple is a very Different Company today obviously than four or five years ago. Hes had to deal with the fbi situation moving into china and india, shareholders, you know, demanding dividends and buybacks, which jobs didnt have to deal with at the time. So i give him a pretty high mark. But the incomplete is for the innovation we have yet to see. Yeah, the innovation, steven, we have yet to see. That was my point about the watch statistic is that really its only tim cooks new product line as a ceo. Obviously he was there and he was involved in a lot of different things. But when you look at what they have created, not what theyre living on but what theyve created, it has been, i think, fair to say underwhelming in the innovation category. I think its been und underwhelming on the hardware sigh, which is of course where they make their temoney. The technology is not there to get the watch away from the phone yet. Where i think theyve done a good job is on the services side, we call it the platform side where apples created a horizontal platform with open operation programming and interfaces that incent third parties. Jobs was initially against the app store at first, and then he was convinced to do it. But theres no doubt that they monetize through hardware. So whether its a car, virtual reality, better watch sales, we need to see that over the next two to three years. So, jason, how do you grade tim cooks first five years . And how concerning to you is the year over year decline in revenues . Or the quartertoquarter decline in revenues . So our grade is about an aminus. You know, if mcdonalds didnt already have the mcdouble, they should name a sandwich after this guy. If you look at earnings, operating cash flow, stock price during his tenure, everything is doubled. R d as a percentage of sales has doubled. So theyre really trying to get that innovation, you know, going again and make sure that they have some Solid Products for the future. But in addition, you know, looking at the products that theyve launched, iphone 6 was a big win, looking at the deal they inked with china mobile post steve jobs, that was a big deal getting into china. Hes looking toward india now, which is going to be big. Looking at the apple watch, you know, theres certainly the jury still out on that, were more optimistic i think than the street on the watch. But hes introduced his first new product category and so far we think its done pretty well. In addition one of the things weve talked about a couple times on the product is the Software Side of the business, the app and software portion becoming a larger portion of revenues. Its up 10x, they eventually might hit the software multiple if we continue down this path. The company would like that. Is that then your view of why youre holding onto it . I see youve got the firm owns roughly 150,000 shares for clients. In theory you could have put that money somewhere else like a google and gotten even better performance. Are you satisfied you kept the money there . And are you keeping it there because you think finally there will be multiple expansion for apple where it has traded cheap to the market for so very long . Thats one of the legs of the stool to our thesis. You know, multiple expansion because it is cheap, because they are growing faster than the market. And there are some quarters like the last couple of quarters where they havent been. And we recognize that. Weve talked about that at nauseam. Apple, they still have the cachet, they still have the products and services and they have everything in place we think they can continue to grow faster than the market at large. And because its cheap there is the multiple expansion story and also call option on new innovation down the road. So, steve, is apple judged by a different standard . I think given the size of the company to some degree it is. Obviously it had to slow. And i think the big change in the last few years and under tim cook is the shift in shareholders, from growth to value. And the value folks may not be quite as concerned about the fact iphones are down this particular quarter, probably more concerned about cash flow, dividend, stock buyback and so forth. So i think thats a big shift. And i think were just finally at the end of that shift in the value hands, which probably augers better for the stock going forward. All right, guys, thank you so much. Great to have you with us. Up next, ships, shoes and energy, the good, the bad and the ugly is next. Jobs disappear . Goaying its what tion debt could do to our economy. If we dont solve debt problem 19 trilln and growing money for programs like ecation will shrink. 19intere on e debts,g will be r Third Largest federal program. Bad formall businesses. E goodews . Theres still time for a solution. Ask the candidates for a plan to secure our future. Oh hey john, im connecng ourras are you ing . So we can share r amazing trading knowledge. Thats a great idea, but why dont you just go tois where you can she stragies, ideas, even actual trade with market professionals and thousands of other trars . Know. Your brain told my brain mmm, beberry fore you told my face. Tap into the knowledge of other traders on thinkorswim. On at td ameritrade. Welcome back to power lunch. Im seema mody. A bold call from blackrocks Investment Team just today upgrading emerging Market Equities to overweight saying stable u. S. Dollar, economic reform momentum and improving corporate fundamentals, specifically earnings, will help drive this asset class. This despite this years 15 run in emerging Market Equities. Blackrock sees further room to run for inflows given reasonable valuations and light investor positioning the team also highlighting the outperformance in chinese equities despite weak economic data. China up about 9 over the past three months. Michelle. All right, seema, thank you. Time now for the good, the bad and the ugly. About 20 , the u. S. Chipmaker close to being bought by a Japanese Electronics firm in a 3 billion deal. Which means we might see that ticker retired, isil, not sure anybody will pick it up any time soon. On to the bad, marathon oil, following a big drop in oil prices today, an ugly day for u. S. Auto parts networks. Shares down about 16 . Company says certain stockholders may sell up to 12 million shares. Tyler. Thank you, michelle. Hes changing his tone, but is he changing the minds of republicans whove turned their backs on him . Well talk to one Top Republican who has always voted with the gop, but not this year. Chris shaz stops by next. Nature . Ouncer] is if or a sales eve . The summer of audi sales event is here. T up to a 5,000 busn select audi dels. For cades, inveors hased 60 4 with little in alternatives. Yet alternates can tap opportunities that traditional assets cant. And en though theyre call alternatives, theyre actually designed to help meet very traditional goals. Thatshy invesco thebelieves pple shoulded to look past convential models and make alternatives a cor. Look pasttranslion . L models odbye 60 40, hello 50 20. Hi everybody. Im sue herera. Heres your cnbc news yaup date for this hour. The Justice Department considering its options after a federal judge in texas blocked the obama administrations new transgender rules in school bathrooms. Under the directive students would have been allowed to use locker rooms and bathrooms consistent with their chosen gender identity. The boston area surveying the damage from a rare tornado. The National Weather service confirming it touched down in concord, massachusetts this morning. The twister damaging nearly 40 homes. No injuries though were reported. Now that the games are over, cleanup begins. Crews were working overnight to collect garbage around the olympic venues. The area kind of eerily quiet following 16 days of tourists and parties and big crowds. And krikey, the search is on for three high school students. The prank was caught by security cameras. No word on where the crocodiles came from. That would not be a good way to start your morning walking into that. Thats the news update this hour. Back to you, brian. I got three things to say about that very quickly. Yes. Number one, thats the most australian prank of all time. Number two, apparently nobody in australia wears shirts. And number three, i hope that when they threw the crocodiles in there somebody yelled, hey, what have you done d. Oh, stop it. I dont practice this. I just heard the story for the first time just now. Everything and to have three thoughts like that in succession. Thats actually quite impressive. Actually, thank you, sue. Youre welcome, guys. Actually, sues the only one i like here. Lets get a check on your markets right now if you can. Im flattered. You shouldnt be. Lets get a check on your markets. Not a whole lot going on. The dows 45 points to the downside. Oil down over 2 . Thats probably going to be hurting most things, although apple is the worst performing stock in the dow right now. Chevron down as well. And if youre wondering, and you might be, the single best performing stock in the s p 500 this month is net app, up 30 . I threw that in there just as an added benefit. Whats the best performing stock in the s p this month so far, what do you say . Net app. And then you walk off. Check on bonds. This is your bond report for a monday. And you can take a look at the numbers just as well as i can. Yields coming down just a bit as the price goes up. If Rick Santelli were here, hed regale us with stories about how the yield has stayed in the 150 to 160 range for about 11 years no, not quite that long. Feels like it. Feels like it. Look at that 30year bond. You want to borrow at 30 years at 2. 2 . Thats a good number. Yeah, it is, mortgages. So there you go, bond price higher, yields a little lower. Trumps new Campaign Manager Kellyanne Conway on squawk box this morning. She told cnbc the race for the presidency is far from over. People feel really energized. Theres great momentum. And i think well look back at these last two weeks and people will say those were terrible two weeks of the Trump Campaign. Thats true, we had a rough two weeks. It helps us to be down a little, lights a fire under us, but i think well look back and say why in the world didnt Hillary Clintons campaign totally put us away in those two weeks. They put her in hiding. They made a grievous error by not traveling to deliver speeches to troops, scarcity benefits Hillary Clinton. If you dont see her, you forget shes running too and you think this entire election is a referendum on donald trump. Not everyone is convinced by the new on message donald trump. Lets bring in chris for shays, republican and former congressman for connecticut. Hes penned an oped entitled, why im voting for Hillary Clinton. Sir, good to have you here. Thank you. So donald trump didnt convince you this week with his speeches that a lot of members of the gop thought were better . He lost me a long time ago. You know, the new donald trump isnt any different than the old donald trump. Theres nothing that i would like about him as president. You dont like his plans for the economy versus Hillary Clintons plans . Well, you know, his plans mean nothing because, i mean, he says one thing and does something else. Frin for instance, he thinks everything should be made in the United States, yet im wearing a tie, a donald trump tie made in china. Hes talking about how folks here are going to be sent back home that are undocumented, now hes talking maybe he wont do it. Hes all over the place. I see in your notes the concern he would allow countries to have Nuclear Weapons . He did. He said maybe other countries should be allowed to have them. Maybe we wont be there for japan or some of our other allies. What does that mean . It means if theyre not going to be there for them, then theyre going to have to find their own ability to protect themselves. I guess that one just struck me because critics of Hillary Clinton would say shes part of the reason why it is that iran now weve codified they can have Nuclear Power and many critics believe they will have Nuclear Weapons. That would be stiff to blame her for that. Why . She was secretary of state. It goes back a long ways. It goes back many, many president ial races. It goes back when i was in congress as well. What are we going to do . Are we going to attack iran . What are we going to do . They did something that i wouldnt have recommended. Theyve negotiated an agreement. This president has. I think i still would have the embargo on. But, you know, there are so many issues that were having to deal with. Explain something to me though, congressman, kellyanne brought up this morning, she said after that tough two weeks she was surprised that Hillary Clinton hadnt wiped the floor, that donald trump actually when you look at the numbers she doesnt get much above 41 at all. Well should she have done better . Well, first off, if donald trump is going to continue to stumble, why get in his way . Why not just have people look at him . It was a very bad two weeks for donald trump. But if youre asking me is Hillary Clinton perfect, absolutely not. I dont think donald trump has any moral foundation. And i think hillarys shaky. I think she sometimes pushes things to the edge and gets herself in trouble. I would have loved it if said having the emails on a private server was a mistake, i wish i hadnt done it and lived up to it a long time ago. The stories still keep coming. So, you know, im not one of her strongest advisors, but shes strong, shes tough, she knows world leaders, she knows the white house, she knows congress. And the most important thing to me is that she wants government to work again. Shes willing to work with republicans, democrats, unaffiliates. Yeah. That is the most important thing right now. Congressman, its brian sullivan. Two questions, number one, is that really a trump tie . That is really a trump tie. Did you buy that for this interview . No, i bought it for his last interview. I love this tie. I bought it a long time ago before he was even in the race. But it is made in china. There you go. But you bought it because you liked it. I love it. Its a great tie. Its a nice tie. We all like your tie. Tyler, michelle and yourself probably get the same question all the time, which is how did we get here . How did we end up with these wo candidates . With one you said no moral foundation and the other has a shaky moral foundation. Exactly. I want to be clear, it seems like very qualified men and women all over the country, we meet them every day here on cnbc, ceos, leaders, whatever, they say hell no i would never run for office. Why are we here . Its easy for me to explain. Basically you have the American People are in the center of the political spectrum, the bell curves slightly right. Congress is a u. You have a lot of people on the left, a lot of people on the right. The way weve written our districts, designed our districts, we have very partisan members in congress. You have talk show hosts that have shaped how the republican does its message. I mean, give me a break, anne coulter tells republicans what they should be, hannity tells us what we should be. Its a system that needs an injection of a third party, frankly. Who would you like to have voted for . Ideally. My first choice was john kasich. My second was john kasich. My third was john kasich. But having said that, i think hillary will be a very good president. I really do. What do you worry about with her . What i worry about is that she doesnt have people around her who said were not going to do this, hillary. I used as a member of congress i used what i called my Community Meeting test. If i couldnt explain it in a Community Meeting comfortably, then we didnt do it. I dont understand. Thats what youre most worried about . Youre not worried about her increasing view, her move to the left, her increasing view that government is the answer, that there should be higher taxes, that government creates jobs, that shes now going to get deeply involved in education funding, go even further with health care, none of those things bother you . What many believe is an antigrowth agenda . Well, it is that part would be antigrowth. And i am for growth. Now, ask me if i think shes going to do all those things in an environment where you have compromise, where you have compromise, you dont get the extremes of your positions. And i think republicans will get something, democrats will get something. And i think the result will be a good four years. Do you think are you worried, congressman, as a republican that the republicans may lose congress because of trump . Could they lose the senate . Oh, of course. Could rob portman and a few others who are on the edge go down and flip the senate because of donald trump . Oh, definitely because of donald trump. I mean, this is a man that if you dont say nice things about him lashes out at you. So hell criticize very good republicans just because they havent said donald trump is wonderful. All right, sir, well, november 8th. Keep the faith. I like the tie. Thank you. I bet donald does too. Representative christopher shays. People love the tie, but what they dont like is ben herr the movie. The latest big blockbuster to bomb. What it says about the state of the Summer Box Office, not much. Were back after this. Amazing sleep stays with you l day and all night. Eep number beds with sleep technology give youthe knowo adjust for the st sle eve the tis now for the biggest sale of the year, save 50 on the laboday limited edion bed. Know better sleep. On at a sleep mber sre. Experin streetlegal form lexus rformance get great offers at the lexu ldgeup t 5,000 ctomer shvent. On select 2016 models. Ends september 5th. E your lexus dealer. Ben herr bombed at the box office this weekend. Another failure in a litany of disappointing sequels and remakes this summer. What exactly is going on at the box office . Julia boorstin is joining us from l. A. How big of a bust was ben herr . It was a very big bust grossed 11 million at the box office which means huge loss for paramount and mgm which spent 100 million on production and tens of millions of dollars more on marketing. Now, this is more bad news for viacoms paramount after teenage mutant Ninja Turtles as well as zoolander, calling paramounts problems truly shocking. He predicts the studio could lose 350 million this year. This is a year with the biggest gap between studio leaders and laggards this century. Paramount and sony both have just 7 share of the box office. Thats compared to disneys 27 . Now, disappointments from paramount and sony are dragging down the Summer Box Office below last years while the yeartodate box office is actually up 5 . So whats going on here . Well, blockbusters are less concentrated in the summer than they used to be with star wars the force awakens and foxs dead pool outperforming this winter and Warner Brothers releasing bat man v. Superman in march. Theres also sequel fatigue with 17 this summer compared to 11 sequels and remakes last year and 13 the year before. With more original content available to stream from home, the bar is of course higher than ever to get people to a theater. Talk of a bad movie spreads like wildfire thanks to social media. Guys. Julia, thank you very much. Stick around as we continue to discuss whats wrong at the box office. Joining us now is daniel lorea, managing editor at boxoffice. Com. Daniel, whats been happening in movies, or not happening . Well, its been a tough year definitely seasonally, right . But what were seeing as we just heard is its not a seasonal business anymore. Were talking about a year round release schedule when big movies can come out in february, like dead pool, or in march like batman v. Superman. Well, didnt work for ben herr in august. Definitely. Were also seeing the importance at this stage of how the big tent high budget movie you need to have a studio strategy at the boardroom level youre solid. Thats something disney has and you see that through acquisitions in the last couple of years. Lucas, marvel, pixar, see that with Warner Brothers in 2013 the first thing he did was able to get batman and Harry Potter Series back on track. On that note when julia says paramount can lose 350 million even these days that is not chump change. The boardroom could be a bit distracted. How much is the factor theyre owned by viacom, which is in the middle of this drama . Well, i think thats what youre having. You have the volatile boardroom that you dont have the big budget leadership there that maybe bob iger has been able to have having acquisitions with disney or kevin has had with Warner Brothers setting the dc movie universe back on track. And that harry potter universe back on track after they ended. What it seems like is that theres so many remakes and redos, even of movies that arent that old. Theyre remaking movies out originally 15 years ago. You wonder julia, jump in. You live in the thick of this stuff. I know your husbands a producer. Is it just a lack of ideas . Or is it that the executives are so scared theyre under their desks thinking were afraid to green light anything new. Just redo that turtle movie. Look, heres the thing, the idea of a remake or a sequel, thats very valuable because it can help break through the clutter. Right now theres so much clutter. Theres so much content out there not just in Movie Theaters but also at home. You have new original content launching from netflix and amazon all the time. So its very viable either to have a movie star or to have a big familiar brand to help break through the clutter. But what were seeing this year is just having the star or just having the brand is really not enough. The films have to be really good, they have to get great word of mouth and good critical response. Because now you cant just buy a big Opening Weekend anymore. Years ago studios could market so much they could guarantee themselves a big Opening Weekend because you could get two or three days of the box office before bad word of mouth really started to spread. Now thats not the case anymore. The original ben hur was, what . Charlton heston, so this was another remake . Yes, tyler. How much of this did they just it feels like theyre not very nimble. Im watching the olympics and theyre already teasing the star wars movie thats coming out in ten months. I mean, are they so stuck in their regimented delivery they they cant that might be a big risk, right . Right now a movie doesnt have to be a film a hit by itself. It has to be a hit for the next three or four years sustaining narrative universe of three titles. Thats the risk were taking right now. Lions gate for example how much of this i know you, brian, watch a lot of tv. You download stuff and watch it. Well, im on a plane half the day. Yeah, but you watch stuff on netflix at home. Exactly. Bloodlines. How much of it is that people arent motivated to get up off the couch and spend 25 or whatever it is to take a date or a family to the movies because theres so much good stuff on netflix . Well, when it comes to dollars and cents, thee yat ri kal have been flat, but were seeing record year at box office. Why . The theaterical going through the airline or sports stadiums went through 10, 15 years ago, diversifying that price point. If you go on airplane you choose how much you want to pay for what type of seat. Same thing happening in the Movie Theaters now. If you want premium seating, cinema dining, there are different ways to enjoy a movie. The industry has done a very good job in finding a way to offer a movie going experience. Well, thats the theater industry. Thats not the producers. Thats not the. Even the big names arent immune, right . Julia. Scorcese had a flop yes, even the biggest names can have flops. But i think that there is something to this idea that the theatrical experience is getting more diversified and fancier, the reason why the Movie Theater companies have been able to earn more per visitor this year than they have in the past is because theyre selling a higher end concessions, getting people to pay more for fancier seats. I think people do like to go to the movies. The reason why the Overall Box Office is up this year from last year is because people do like to have an occasion to get out of the house and have a trip to the movies and have that communal experience. But it really has to be worth it. Either with a great experience Movie Theater or really awesome movie you want to talk about with all your friends. I just think the bar is much higher. All right. Thanks, daniel. Thanks for joining us. Julia, while we have you here, the rio olympics just finishing up. Take us inside the numbers, ratings, streaming, profits for our Parent Company Nbc Universal. Okay. Well, in terms of the viewership numbers, this is the first time theres been Live Streaming of this many hours of content. And theres a total of 27. 5 Million Viewers. Now, this is coming in at second place. Its second behind london, which had 30. 3 million. This time there was a lot more streamed online. In fact, the total stream was 3. 3 billion minutes, but Live Streaming is 2. 71 billion minutes. Thats the most for any event ever. If you want to put this in context, all prior olympics combined had 1. 48 billion live stream minutes. This is 2. 7. So just a massive amount of streaming online. Now, the thing though is we have to keep in mind that 27. 5 Million Viewers, that includes all the Live Streaming and it is down just because fewer people were watching though doesnt mean its not the most profitable for Nbc Universal. Nbc universal said this is going to be the most profitable olympics. They sold about 1. 2 billion worth of ads before the games began. Then in the first week or so after the games started they sold another 30 million in advertising. Were expecting to get some more ad numbers out pretty soon. But they shouldnt be taking home more than 120 million in profits. Im confused. Explain to me how they arrive at that 27 Million Viewers. And what does that count . Is that just the total number of viewers who are watching nbc network, or what . No, so that is that is broadcast cable. And i believe thats the average in terms of average its an average of 27. 5 Million Viewers for the 15 competition nights. So thats the average viewership on any of those 15 nights. And that includes broadcast, cable and digital. And of course theres more availability of this years games than ever. Okay. So thats the average daily or nightly viewership across all of the platforms that Nbc Universal provided. Exactly. And its less than what we had in london. Got it. Thank you, julia. Most expensive car auctioned just wrapped up in pebble beach. Did collectors spend as they used to . Robert frank was there. Robert. Michelle, they didnt. The broader classic car market is losing speed, but the top end is still going strong. Were going to show you the most expensive american car ever sold and a Ferrari Supercar with a 1. 6 million paint job coming up after the break. Hi everybody. Welcome back to power lunch. The Worlds Largest and biggest dollar car auction just wrapped up in pebble beach. Some 1,200 high end cars were on the auction block. Millions of dollars were made, but should that be considered good news . Robert frank was there, now hes here thanks to the miracle of air travel. Robert, youre saying as big as the numbers were yeah. They tell a bit of a sad story. Not a sad story, just a slight disappointment. And if you look at the numbers those auctions heading up to the concord they were slightly weaker than expected. And this is the tough part, nearly half the cars that were up for auction actually didnt sell. 719 cars sold for a total of 345 million. Thats down from last years 396 million. And this is whats important marks the second year in a row of declining totals there at pebble in monterey. Only 56 of the cars up for auction sold, though many could sell in postauction private deals. Now, sales at the very top of the market, those super rare top quality masterpieces, they remain strong with seven cars selling for 10 million or more. Lets get to the real cars here, the most expensive car sold that was a 1955 jaguar ttype roadster sold by sothebys for 21. 8 million. Close behind that was a 1939 alpha rameo also sold by sothebys. Ferraris as always dominated the high end with this 1959 ferrari 250 gt for 18. 1 million. And they ccheck this out. This just became the most expensive american car ever sold. Its the first shelby cobra ever made by carol shelby, went for 13. 5 million. Now, sales of younger cars, those are from the 1990s and later, those were especially weak though the first ferraris ever to sell at auction they did pretty well, red one selling for 3. 6 million. And the black one only difference here is color, sold for 5. 2 million. Thats still more than three times the original sale price just two years ago. When you did the story about muscle cars being weak. Yeah. Part of that was the downturn in oil. Yeah. The rough necks not being able to buy cars. Do we have any similar kind of explanation for the slight weakness here . Well, a lot sort of the very top did well and carried the bottom. The really weak part was the muscle cars and the folks that the oil patch got it. The corvettes are their favorite car and some of the model corvettes were the weakest this time. So we really saw weakness from the oil patch. Got it, thank you, robert. Thank you. Tax free holiday shopping, is it doing more harm than good for retailers . There you are. Plus, dyis are doing okay. How you can cash in on the Home Improvement boom still ahead. Theres no one road out there. No one surface. No one speed. No one w of driving on each and every road. But there is one car that can conquer them all. The mercedesbenz cass. Fi driving modes let you customize the steering, shift pointsand suenon toit the mood you in. And throad youre on. Toth2016 class. Ou in. Lease 00 for 369 a month at your local meedesbenz dealer. Announcer when they test you, stand firm and move only when you ar the seatbelt click hat says theyre buckled in for the ive. Never give up till they buckle up. Welcome to power lunch. Im michelle carusocabrera. Heres whats on the power lunch menu this hour. Nba legend kobe bryant getting into the vc game. Is this a sign of a top for Venture Capital. Tax free holiday shopping, does it do more harm than good for retailers . And Home Remodeling hitting new highs. And the stocks that are riding that boom. Second hour of power lunch begins right now. Welcome everyone. Thanks for joining us. Im tyler mathisen. Lets get a check on the markets with two hours left until the closing bell, stocks lower, but just by a little. Theyre roughly steady right now. Nasdaq trying to avoid its first backtoback daily losses in nearly two months. There you see the numbers. A slight gain now for nasdaq. The industrials and s p off very, very fractionally. Nat gas surging more than 3 pacing for its best day since july 28, brian. All right, tyler, also in the headlines this hour sin general ta shares up 10 . The u. S. National Security Panel okaying che okaying chem china 43 billion takeover clearing the way for the biggest foreign acquisition ever by a chinese firm. Also today, shares of facebook higher, over the weekend barrons opining facebook shares could rise another 20 from year. And are Retail Investors finally getting bullish on the stock market . According to bank of america, merrill lynch, asset flows data last two weeks have seen the highest level of inflows into equity funds this year. Melissa, lets hope its not a buy high, sell low situation. We will see. Im melissa lee. For more on the stock market today, lets get to bob pisani at the new york stock exchange. Hello, melissa, choppy, indeterminate action. Let me show you the s p 500 today. We opened down 10 points, but within an hour we moved suddenly very quickly up 10 points. And an hour later we moved down 10 points. You see those arrows . If youre not sure whats going on here, thats called air pockets. What happens is you get very light volume and you get some modest buy or sell programs that go through the market and theres not enough on the other side, and, boom, you get an air pocket. The market drops or suddenly the market goes up. Dont worry about it. Focus on the fundamentals and the fundamentals are in oil, oil down several Percentage Points affecting some of the big names out there, drillers like transocean, Service Companies like halliburton, production Companies Like pioneer. And the big guys, but notice exxon one of the only Big Companies not to the downside, often happens that way. Exxon doesnt even muf necessarily in relation to oil. Sectors, bit of a reversal of the trend weve been seeing, defensive names like utilities and health care doing a bit better. And Technology Names generally to the downside, Consumer Staples another defensive name also fractionally to the upside. Focus on the longer term trends. Weve seen rotation going on. Youve seen this for the quarter, tech dominant. Banks started strong, moved sideways and now recently getting better. Materials and industrials. These are all cyclical plays. At the same time of course weve been seeing those defensive names. Your telecom, Consumer Staples, utilities moving to the downside. Thats been the trend so far for the Second Quarter. Todays action notwithstanding. Tyler, back to you. Bob, thank you very much. Crudes march to 50 seems to be stalling. Analysts say china is ramping up exports and that could be part of the problem today. Whats next for oil . Kyle cooper has some thoughts. Hes with ion energy group. Kyle, has oil gotten a little bit ahead of itself in your view . Yeah, i certainly think so. The problem being is for the last seven weeks total u. S. Petroleum inventories have actually built. Thats not the same pace they last year, record bearish inventory type year and more importantly theyve actually increased the surplus of the fiveyear average. Look, im with the camp that eventually this is going to tighten up, but over the last month it simply hasnt. Whats going to cause it to tighten up . Can it tighten up in a big meaningful way . Not to suggest its been a bad year for oil. Its been a good year. Up 20 , 46 in the last six months. To go much more meaningfully higher, does there have to be some production agreement out of opec . I think so. And i think thats just going to be unlikely. I just dont think that the saudis while they might have some indicated some shift in sentiment, i just think theyre going to be very, very reluctant to give up market share to iran. Iran is still, you know, really exceeded a lot of expectation in their ability to increase output. And i think theyre looking to regain share. So, you know, i think its been a good talk game last week, but i think the real production cuts going to be hard to come by. So if its moved up to bumped up against a ceiling the oil price in recent weeks, where do you think the floor is later this year . And how soon do we get there . Certainly if we dont see a change in this total u. S. Inventory trend, i think mid 30s is likely again. I think 26 was way too low. That clearly put the kibosh down. Weve seen the rig count tick up, but i think if you got back down to 26, that would just collapse again. And your downward trend would really accelerate again. I think were in a choppy market mid 30s to 50 until you really see demand kick in. Maybe as late as 17 or even into 18. Kyle, thanks very much. Kyle cooper, we appreciate your time. All right. After criticism for not going, now president obama is heading to louisiana, tomorrow to survey the wreckage from the massive flooding there. 13 People Killed and tens of thousands of homes damaged. Morgan brennan joins us now with more on the toll of whats happening there. Yeah, its still early days but looking at really steep losses. This is now being called the great flood of 2016 after historic flooding submerged neighborhoods in the baton rouge and lafayette areas just over a week ago. At least 13 deaths with tens of thousands more displaced. The relief effort alone according to the red cross will likely top 30 million in whats already being called the worst Natural Disaster since Superstorm Sandy in 2012. Some areas still under water. There are even report servicing that alligators have infested some of the flood sites, so it will take weeks at least to fully assess the impact here. Still already a preliminary report suggesting economic damage could exceed 1. 5 billion. And so far we know roughly 60,700 homes sustained some form of damage from this. Fema says 106,000 people have filed for federal assistance. But in terms of Flood Insurance, which is almost entirely underwritten by fema, only about 25,500 claims have been filed. Thats because many homes were not in high risk zones and therefore Flood Insurance was not mandatory. So while 42 of louisiana homes have supplemental policymaking it the Third Largest market in the u. S. Its less than 13 of those affected by this disaster had coverage. So for many the next disaster you could say is more financial in nature is really just beginning to unfold. And i hate to say this, but weve got more rain in the forecast for the gulf states including louisiana and we are in the thick of hurricane season. Not a good situation. Very tough. Morgan, thank you. More on the impact of the floods with donna wolf, former president of the Greater Baton Rouge Association of realtors. Donna, thanks so much for joining us. Morgan was showing us some really stunning pictures of the damage thats going on. Im not sure many people are thinking necessarily about the health of the housing market. But you make the parallel to katrina and say the damage could be felt for years from now. Yes, absolutely it could be. Were not seeing the rush like katrina, and i dont want to compare it with a katrina episode. You know, this is its own event and were just starting to recover from it. And i think the numbers will be the numbers will start to climb. So we wont really know whats happening until it will be definitely a couple more weeks out. Talk us through the sort of dynamics in the market in a market like this. You say according to the Baton Rouge Chamber of commerce that 110,000 homes are actually gone. Thats inventory off the market. But do people want to think about baton rouge . You know, the event happened in baton rouge. It happened there are about nine parishes in our area that were affected by it. You know, we were all ready in a sellers market at the time. Our rental inventory was not large even before this happened. I dont know that people are going to all of a sudden decide im not going back into my home, im not going to, you know, fix my home and live in it. So i dont know that we will you know the 110,000 homes that were affected by the flood, theyre not a total loss. You know, i think people are going to were recovering. Theyve gutted them and theyre starting to look to rebuild and replace and go back home. Yeah, how many what percentage roughly, do you have any idea, of the houses that have been affected there are going to be reinhabited or are inhabitable . You know, once we get im so glad president obamas coming. You know, we look were always happy when someone comes and shines the National Spotlight on it. There are people that need the assistance right now. You know, as you said earlier there were a lot of people they werent in a flood zone, they werent required to carry Flood Insurance. So these people, you know, the houses are now being gutted and ready for to rebuild. And these people really need that federal aid in their hand. They need it today so that they can start rebuilding and get their homes ready to be inhabited again. Youre assuming federal aid even if they dont have Flood Insurance . Is that the point . If you dont have Flood Insurance, maybe you dont have the money to move back and youre forced to make a choice where you walk away. Right. And i really hope that doesnt happen. I think there is federal aid for these people that they can get the help to get back into their homes. Because, you know, a lot of people cant afford to pay their mortgage and rent and refurbish their house. So i think hopefully we will get the aid that they need and they can get their homes back up and move back into their homes. Donna, this has been this is brian sullivan. Its been a very difficult decade for the state of louisiana. It has. Not only obviously with katrina thats the worst of the worst, you have this now, we had flooding a few years ago where they had to open up the spillway for the First Time Since 1937. Were sort of lurching from these disasters to disasters. Is anybody talking about longterm solutions here . Because i just dont see where the state has the money, unfortunately. Correct. And the corps of engineers had just redid our flood maps recently. So this was but, you know, heres the other side. You take 30 inches of rain in twoday period and you drop it anywhere in the United States, youre going to have an event. So i dont know that it was louisianaspecific that it happened, it just, you know, 30 inches of rain in two days and it happened. And it just happened and happened in louisiana. I dont know what the longterm solution is. You know, we are but i will tell you with all the gut wrenching stories, and i promise they are overwhelming and there are many, the culture of louisiana is alive and well. There are strangers helping strangers. Everyone has a Family Living with them. You know, theyre out and theyre at costco and theyre buying and delivering, so the culture is alive and well in louisiana. And were trying to rebuild and recover together. All right. Well, thats a silver lining. Donna, thank you. Donna wolff. Thank you for having me. I appreciate it. Now to kate kelly with a news alert. Thanks, melissa. Following up on the corvex company we reported on, we had the active manager saying he was going to nominate a new slate of ten directors for williams co board, those employees from his own team at vorvex, a group he regards as place holder while he seeks new independent directors because he believes the companys been intransigent in finding them. Heres what the company says, given the events of the last year it is unfortunate that corvex intends to launch a distracting and costly proxy contest while williams is moving forward with its plan to identify new highly qualified and independent directors. They think thats a step in the right direction, theyre taking other steps that have seen the stock react positively in recent months. And they think that the corvex moves are unnecessarily distracting and unfortunate, melissa. Looks like weve got the brewings of a big proxy battle here indeed. Sounds like everybodys digging their heels in at this point, kate. Thank you very much, kate kelly. Thank you. Lets get a market flash now with seema mody. Look at shares of hormel foods upgraded to outperform from neutral at credit suisse. Analysts noting the company has a clear path toward volume growth over the next 12 months. They also see plenty of room for positive earnings revisions, that stock up higher than 2 . Melissa. Thank you very much, seema mody. Basketball legend kobe bryant beginning his next chapter unveiling a 100 million Venture Capital fund. And he came on cnbc today to talk about it. Adidi roy has more on this from San Francisco. Reporter thats right. Kobes been investing in companies with entrepreneur and former ceo jeff stiebl for four years now. The fivetime mvp rang the opening bell this morning. [ bell ringing ] bring i cant stibel as the new firm is called will target tech, media and data companies. Stibel will focus on financials while bryant work on story telling and saying hed rather be known for achievements as investor than victories on the court. Playing basketball, you know, the focus is always on winning. Winning championships, winning championships, winning championships. Now, championships come and go. Theres going to be another team that wins another championship, another player that wins another mvp award, but if you really want to create something that lasts generations, you have to hech help inspire the next generation. They create something great and that generation will inspire the one behind them. Thats when you create something forever. Among the companies theyre investing in scopely, legalzoom which provides Online Legal Services and house canary, a datadriven online real estate platform. As for who he sees as a role model in the business world, bryant said nike Ceo Mark Parker has been a mentor helping him as he launches his second career. Guys, back to you. Thank you so much, aditi. It was interesting to hear kobe talk about the relationship with mark parker, the ceo of nike. He said sometimes he would text mark and right away mark is going to come back with a text with a very detailed answer really applying what hes learned on the court to vc in business. I think a lot of people though. Uhhuh. Just by habit theyll see somebody like kobe bryant announcing hes into Venture Capital and hes ringing the bell today and theyre thinking, ding, ding, ding, ding, thats the top of vc. We talked about the top of the vc for so long now. Look at the valuations with uber. Sure. He got in when . Four years ago actually, like right at the moment when theres a lot of money in vc now and chasing not a lot of return. Right. Weve had you know how many ipos weve had in Silicon Valley in the past nine months . One, twilio, thats it. The idea of Venture Capital is you invest and get the exit. Without the exit with no off ramp interesting he did not say that his role model in business was magic johnson. Because magic has had a very successful blazing the trail. I think theres a little rivalry there. There might be. Although i will say one of the greatest vc investors of alltime was is ashton kutcher. So celebrities can do well. Hes been at it for like to a point for more than a decade, i think, right . Since that 70s show. But not the 70s. Exactly. From Venture Capital to adVenture Capitalists, premiering tonight. Does Donald Trumps new Campaign Team need to take away his twitter account . Well tell you about the latest tweet from the donald. Trust me, you got to hear this one to believe it. Plus, the other president ial candidate youre not hearing much from, gary johnson, still thinks he can win. Hell explain why next on power lunch. To buy t ncht all the talk is about donald trump and Hillary Clinton, but theres another candidate who hopes to make a surge in the polls. John harwoods latest speak easy is with the libertarian candidate for president gary johnson, john. Tyler, gary johnson, the libertarian nominee, cuts a distinctive profile. Former republican governor, draws votes on the left by advocating the legalization of marijuana, he gets votes on the right from people who cant stomach donald trump. But he breaks from most republicans in saying that manmade Climate Change is real and can be dealt with by among all things a tax. One of the proposals that i think is a very libertarian proposal, and im just open to this, is taxing carbon emission that may have the result of being selfregulating. So you agree with the people who say the answer is to put a price on carbon and then the market will take care of it . The market will take care of it. I mean, when you look at it from the standpoint of better results, and actually less money to achieve those results, thats what is being professed by a carbon tax. Now, the key for gary johnson to make an impact on the race is getting to the 15 level in the polls he needs to make the debate stage. He says hes got a shot with a little help from pollsters. I do think theres a better than 50 chance that well be in the president ial dee baits. If were not in the president ial debates, hey, no chance of winning. No chance. Do you accept that the 15 thresholds going to hold . I dont have an issue with 15 . But shouldnt the polls include my name on the top line . And shouldnt it be reported top line . Thats my only issue. 15 not an issue. Lets say you get to 15 and youre in the debates. You could win. Now, gary johnson does have a backup plan in case he doesnt win the election. He says if hes not in the white house hes going to ski 120 days next year and enter a 3,000mile bike race, guys. That would explain why hes dressed the way he was. John, we also exactly right. We also wanted to ask you about the Trump Campaign because this morning his new Campaign Manager Kellyanne Conway was on squawk box saying she wanted him to stop fighting with everyone. I feel like people expect donald trump to take it on the chin all these criticisms and hes never able to respond in kind. He rarely draws first blood. This is a tennis match, okay . Its just you keep lobbing, lobbing, lobbing, doing aces her way, you dont pick a fight with the ref, you dont boo the crowd, lob, lob, lob, its so obvious who your opponent is. As she was saying that though about the same time trump was tweeting about our colleagues at msnbc. Some day when things calm down ill tell you the real story of joe and his very insecure longtime girlfrien girlfriend morningmika. Two clowns, he says. John, that doesnt sound like someone whos focused exclusively on attacking Hillary Clinton. Michelle, that was a breathtaking juxtaposition. And it just shows that Kellyanne Conway, just like paul manafort, cannot control donald trump. People talk about a pivot or a reset or whatever. There is no pivot, okay. You have a candidate who is 70 years old and has got a set of characteristics and a set of instincts and a personality type. Hes going to show that whatever somebody does in a particular moment whether he so the two speeches you dont think those represent a pivot . You would totally discount those . That represents something that he did. Does it change the core of his candidacy . What hes appealing, the nature of his appeal to voters . No, it does not. What if that guy shows up every day until november 8th . Well, if that guy shows up every day until november 8th, that will be different a different presentation. I do think that at this point in the campaign American Voters have drawn fairly solid conclusions about who Hillary Clinton is, who donald trump is. Im glad you brought that up because at this point in the campaign Kellyanne Conway said she doesnt get much above 41 . She hasnt broken through either, necessarily, do you give any credence to her argument either that what was a horrific two weeks for donald trump should have been her moment and maybe she should have capitalized on it . Well, its not right to say shes not above 41 . I think her average in the various polling measures is around 45, maybe a little bit over 45. But that doesnt defut the spirit of my question. No, im agreeing with your question, generally speaking shes not over 50 in the polls, thats an important threshold. She is in some of the battleground states, but, yes, Hillary Clinton is a flawed candidate. Shes got a substantial number of americans, majority of americans who say they cant trust her. But by any measure, and when you look at this nationally as well as in battleground states, Donald Trumps problems are bigger. Can he remediate those problems between now and election day . I think its hard. I think its doubtful. You cant say anythings impossible. In a different presentation might benefit him in some way, but still we kind of have a pretty clear picture of who donald trump is. And i dont think Kellyanne Conway can change who he is. All right, john, thanks so much. John harwood in washington. Several states are giving sales tax holidays for back to school shoppers. We know its good for the shoppers, but does it help retailers as well . We got that story coming up on power lunch. Plays throughout the first stock index was created over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Hi everyone. Im sue herera. Heres your cnbc news update this hour. Investigators releasing the final report today into the deadly alligator attack at walt disney world. An alligator pulling 2yearold lane graves into the water at disneys grand floridian resort in june. The medical examiner ruling it as an accident. But based on the information gathered in the report, officials are now looking into alligator feeding in the area. Bill clinton giving more clarity into how his foundation would change if Hillary Clinton is elected to the white house. In an open letter out today, president clinton said he would step down from the board and no longer raise funds for it. Plus, the International Work would be transitioned to other organizations. Louisiana getting ready for president obamas visit to the flood ravaged areas where at least 13 people have died. The states democratic governor, john bell edwards, defending the president s decision to delay the trip until tomorrow. President obama was on a Summer Vacation and had been waiting until the Recovery Efforts began to visit baton rouge. And ralph lauren announcing it will not renew ryan lochtes deal. Who admitted to fabricating details about being robbed in rio. Speedo also announcing they will no longer sponsor him. Thats the news update this hour, michelle. Back to you. Thank you, sue. Oil market falling 3 . Lets get to Jackie Deangelis at the nymex for why. Thats right, big move down in oil prices. But remember after being up 20 in the last two weeks, its not surprising to see some profit taking here. Now, another big piece of this is the dollar index. Remember, after the fed it came down close to 94, today its rebounding a little bit and that will send crude prices a little lower. Meantime, september contract thats going off the board at the close today, october is now in focus, our rbob gas down, the anticipation of a little bit more summer before those cooler temperatures come. And the heat turns on. So were Ready Thinking about the fall when it comes to nat gas prices. Back over to you. Thank you, Jackie Deangelis. Its back to School Shopping season. Many states are offering tax free holidays, but do they really help the states . Do they help the retailers . Courtney reagan is live at a Shopping Center in stamford, connecticut. Hi, court. Reporter hi, melissa. So it is tax free week here in connecticut on back to school items under 100. It sounds like a really good deal for consumers and potentially for retailers, but it can be a controversial political issue that some argue does more harm than good. Various data points from both retailers and nonpartisan Economic Research groups say that the timing of these holidays more or less just shifts purchasing timing for when shoppers make those back to school purchases. It doesnt necessarily mean that consumers buy more because of the tax savings. Though many retailers may up their promotions in line with the timing of the holidays hoping to entice more traffic or to up that transaction size. Report from the institute of taxation and Economic Policy says the tax free holidays d disproportionately help those with higher incomes, those who can choose to when theyre going to buy for back to school if theyre not living paycheck to paycheck, and also because they typically spend more, the tax free holiday can benefit them more. And consider also if consumers arent paying tax, that means states arent collecting tax revenue. Massachusetts in fact has decided to do away with its tax free back to school holiday. It estimates that it costs the state more than 25 million last year in lost tax revenue. And the institute for taxation and Economic Policy says all 17 states combined that offer these holidays lose 300 million in tax revenue. Tyler. Thank you very much, courtney. Home remodeling hitting new highs. How you can cash in on the boom. Thats next. What if a company that didnt make cars made plastics that make them lighter . The lubricants that improved fuel economy. 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Home remodeling this year going to top records set even during the housing boom. So if youre looking to invest around this trend, obviously big names like home depots, lowes come to mind. But there are many other Smaller Companies who might benefit from a remodeling boom. Lets highlight a few where in your home they may be found and how they have done. These are obviously not all the names, but there are many. Right up top you got beacon roofing, right . The name says it all up 13 this year. The windows, where is it . There we go, over there. The back deck, fake wood in that light blue theyre up 58 this year. To get in you got to use the door from masonite. How did that look . The floors theyre made by armstrong worldwide, drywall sold by Continental Building products, ji bralter industries, they are more than happy to sell you a mailbox or rain gutter, by the way. Even solar mounting tools. That stock, guys, up 45 this year. You can see just parts of your homes that youre not going to necessarily see at the store but whose stocks have already benefitted. Clearly big gains all around. Lets talk more about this and bring in analyst with rbc capital markets, weve also got Vice President of john burns real estate consulting. His firm put out that bullish forecast on remodeling. Bob, very simple question to you. Were seeing these big returns here, but has the money then already been made in the stocks of these companies because smart investors bought ahead of the boom . Brian, weve been on the show before, one key theme we want to emphasize, the recovery is stronger for longer. And this is great for Companies Like masco, mohawk, fortune brands, which is so well positioned to capitalize on increased consumer spending, low unemployment, theyre the beneficiaries of every healthy economy. We love the visibility on earnings. Why have the names done so well . Because this is a long, steady vibrant theme thats going to remain on a very stable track forward. So we have visibility. We understand whats going on. This is not something which is where were going to go off the tracks. Theres still room to run and the stocks we still see a lot of upside, especially names like masonite or bmch. Todd, when we see a boom in renovation activity, do we necessarily see a slower market in new construction . Does it matter where the demand is coming from . Yeah, thats a great point. We definitely do. So for the past three years we probably saw 10 growth for new Construction Revenue for source of business, maybe 5 growth for remodeling and depending on what Building Product companies exposure was some place in between the two. We think for the next three years through 2019 were going to see 26 growth in remodeling and 4 growth for new construction. So huge differences. Thats a complete reversal. So is this trend going to be reliant on continued low Interest Rates . Yeah, affordability definitely plays a role. Home price appreciation is super important. One differentiator between this recovery that we have right now versus others for remodeling is were seeing a lot more higher ticket spend, trade up in projects, maybe fewer remodels per household but worth more at the end. You know, bob, when you said you were going to run off the tracks, i thought you said run off the trex. You didnt. Watch yourself. Im learning from you. Watch yourself. My question was so todd just said he saw maybe 25 revenue increase in remodeling expenditur expenditures. Smaller number. Is that the more profitable part of their business . The psycho into todds comment is right, we see a shift up with consumers feeling better about the universe. Theyre not going for that entry level product. Theyre going to pay more to get luxury in the household. What is the business mix on some of these companies here . In other words at 26 growth rate on a smaller part of the business might not be as meaningful as a smaller increase in the growth rate on something that is the massive part. So number one you always want to be repair and remodel because Home Builders are going to drive a tough bargain. Number two, majority of the companies were talking about drive 75 of their revenues from repair and remodel. So theyre in the sweet spot of high profitability and strong growth with good visibility. This storys working. Todd, what do people do . Whats the order of remodeling . Whats the most common thing that they do . Kitchens and baths, i guess, but what else . What other parts of the market should we be looking at . So it depends on which segments growing. We just put out a piece that brought out with the slowdown in existing home sales, fewer homes for sale means fewer potentially existing home sales. Movers spend differently than stayers. If you stay in your home youre going to spend on siding, thats positive. Youre not going to spend on decking. We know people spend on decking movers spend 90 more than nonmovers, for siding its the opposite closer to 20 plus, the other thing i mention people who stay in their home spend at a higher price point. And they usually hire pros. Depending on which channel youre looking at, you should see people who do the pro shopping better they should outperform. So if your neighbor puts a deck on, theyre probably going to move. Theyre moving. Theyre out of there. My neighbors just redid their deck. Thats a Great Cocktail Party number 90 . Yeah. My neighbor just redid their deck. Movers are deckers. Bob, thank you. Gentlemen, thank you. Appreciate it. By the way, thanks to our team. That was a spectacular graphic. Good job everybody. Cdc issuing a warning on zika. How concerned should pregnant women in america really be . Were going to talk to a doctor on the front line of zika in miami. 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Call now and request this free decision guide to help you better understand medicare. And which aarp Medicare Supplement plan might be best for you. Theres a wide range to choose from. 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. The cdc warning all pregnant women and their partners to avoid travel to miamidade county. What about women living in the area . Exposure to zikacarrying mosquitos is an everyday risk. Lets bring in a doctor at the ground zero for zika in the u. S. Joining us right now dr. Christine curry with the university of miami. So far shes treated over a dozen pregnant women infected with zika. Doctor, good to have you here. Thank you so much for having me. Tell me about the dilemma these women face when they come in. Theyre pregnant, theyre positive for zika and theres no cure for that. What choices do they face . It really depends on how far along they are in their pregnancy. In the first and second trimester its a conversation about if they want to stay pregnant with all of the uncertainties that come with this diagnosis. In the third trimester its really about preparation, data gathering and helping them to learn what to expect once their baby is born. What is that, potentially . So we know that a certain proportion of these kids are going to be born with Something Like microcephaly, calcificat n calcifications of the brain and other birth defects we dont understand yet. We prepare them for unknowns. Dr. Curry, you know miamis incredibly reliant on tourism. And im sure that many people across the country are thinking why would i go if im female, if im male, maybe i want to get pregnant, maybe i dont, but why take the risk of getting sick at this point . Should people be thinking that way about miami . So i think the cdc has issued some pretty clear guidance all along. When this was something outside of the u. S. They were very clear that if someone was pregnant or considering pregnancy that nonessential travel should be limited. And theyve been really clear with their guidance about these two particular areas of miamidade that if someone is pregnant or considering pregnancy, nonessential travel should be delayed. Three quick questions. Do we know about the percentages of birthrelated problems with women who have zika . Thats number one. Number two, do you have to be sympt sympt symptomatics with the vivirus, d how long does zika stay in your system once youve been infected by it even if you dont have the symptoms . All right. Let me see if i can keep track of all those questions. So the first question, you know, what are the risks or percentages of the baby. So we dont have really clear data. Different studies using different methods have given us ranges from 1 up to 30 . And i think its very motherspecific. And its a little more specific to the trimester theyre infected in. No trimester appears to be safe. Question two, are you safe if youre not symptomatic . We know majority of patients are not going to have symptoms. And some of the patients weve found didnt have any symptoms. So, no, youre not safe necessarily if you feel fine. And, third, how long does the virus stay in your system whether youre symptomatic or not so then youre safe to get pregnant . Uhhuh. So for women who are not pregnant were finding the virus in their blood for about two weeks after the initialinfection. For men the virus is staying in their blood similarly about two weeks. The caveat in men is that there have been some studies showing between two months and six months of the virus still being detectable in the semen. And in pregnant women theres increasing data that virus may stay longer than for longer than the twoweek interval. Wow. Its a tough situation as we watch this unfold. Well have to have you back, doctor, as we see more cases and figure out what happens here. Dr. Curry joining us from miami. Thank you so much. Dont move because street talk is next. Weve just been hearing so much about how youre a digital company, yet here you are building a jet engine. Well, ge is digital and industrial. Like Peanut Butter and jelly. Yeah. Ham and cheese. Cops and robbers. Yeah. Nachos and karate. Ahh. Not that one so much. The rest were really good. Socks and shoes. Ok, ricky. They said a bottle was just a bottle. That no one would ever notice me. But i knew i could be more. That one day, i would make people smile. [woman speaking indistinctly] 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. All right. It is time for street talk. Stop high energy. Recommendations on stocks you need to know about. Victor victorias secret a buy if a neutral. The analyst says Second Quarter results have erased concerns about their new promotional impact on the business. She thinks a bottom is in for productivity. A be the toms is in to Victor Victorias secret. The stock already been on fire. 25 gain in the past three months. Thats some support. We had l brands last week. No more catalogs. Second stock here, garmin. Downgrades it to market perform because the stock had a 43 run here to date. Analyst sees the apple watch launch a sentiment head wind. Wow. The stock to if they were smart, they would license blind face cant find my way home as a stock song. Oil and gas research firm, loves it. They start coverage with it on the focus list of their firm. They said they check the boxes of qualities investors should want with small cap oil companies. Efficient growth. 15 fair value. Not a lot of upside on a 14 stock but ways to add two bucks to this with certain fields to give it about 17 or about 20 upside. Amalco crown. Upgraded to a buy rating. Wynn palace. The mass market stabilize in the region and should help as vip accounts for a smaller piece of the business and mgm china with an upgrade as part of this call. Leaving it there. Could not find a small cap. I failed america. Thats okay, brian. Thanks, melissa. The ibb up nearly 2 today. Some of that no doubt from pfizers 14 billion buyout. Check this out. I had to do a double take. 81. 50 per share buyout. This is a 28 stock in february of this year. Are good times ahead . I mean, i honestly believe, chad, i dont know in doing this nearly 20 years to remember a stock that was a 28 stock bought 7 months later for 81. 50. What if anything does that tell you about the group . It tells you that there is some actual strategic opportunities for large cap Mega Health Care stocks. Look. The bio Tech Industry we believe overall is cheap. We also like the large cap bio tech Companies Like amgen. Theyre consistently growing and profitable. Not a lot of debt. For amgen, the price there was a tremendous amount of head lean risk going into the election. After the election we believe thats going to subside and going to see this whole industry start to rally again. You dont hear i bought a bio tech stock and owns amgen. Thank you. From a technical perspective, how does the chart look on bio techs overall . Yeah. We agree here. First you have to remember that bio techs one of the top five performing group and one of the worst five over the last year so we think the catchup trade happening over two months is probably set to continue and if we pull up the chart, well show you why here. So we can the ibb etf seasons the last the highs of last year, we saw a 40 correction into the february lows. From february until late july, ibb spent six months kind of building a base of 240 on the downside, 290 on the upside and then late in july it broke out above this base. That projects up to 340 on the ibb and whats important we saw it retest the breakout point an what was resistance now is support. As long as its above 290, i think you have to be a buyer here. Positive chart there and comments on amgen. Thank you both very much. 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See your lexus dealer. Check please time for the final thoughts. After a big deal of pfizer you think whos next . People are watching the parp inhibitors, companies that make those and other cancer treatments an theyre rising on the back of that deal. The thinking that they could be future takeout targets and people wondering about the entire space here. I found the olympics compelling television. I didnt expect to get hooked on it. I did. Wanted to clarify on the ratings point, our expert on ratings here at cnbc said that the 27. 2 Million Viewers was the average amount of viewers watching the average minute of olympics coverage on nbc, nbc sports and nbc digital during the time. Thats 27. 2 million. Prime time. During prime time. Down from there is no average viewer. Theyre all exceptional. Oh yeah. Certainly watching nbc content. Yes, exactly. I enjoyed the discussion about dynamic pricing in theaters. We know airplanes, Everybody Knows theres dynamic pricing an stadiums and now slowly but surely Movie Theaters to maximize revenues. A viewer said armstrong makes the floors and arm world view makes the wall. Thank you, viewer. Thank you for watching. See you tonight for fast. Closing bell starts right yesterday. Back there. Hi, everybody. Welcome to the closing bell. Im kelly evans. Im mike santoli. Welcome. Market yoyog. A steady climb higher over a few weeks. Look at whether crude short rally is already over. Merger monday. A boost on the 14 deal of medivation. Well look at whether other name