Transcripts For CNBC Power Lunch 20161012

Here is what is happening at this hour. The Labor Department says there were 5. 4 million jobs open in the month of august. That number a little bit lower than expected. Hurricane nicole gaining strength as it heads towards bermuda. The storm not expected to turn towards the United States. Mercifully. And stocks are slightly higher as the street awaits those fed minutes that brian just mentioned. Right now, the dow is up 40 points after yesterdays big selloff. And speaking of the fed, just one factor in play in todays session. The election. Another as investors turn their attention to those socalled down ballot races. Congressional contests that are coming up in about three weeks time. A little more than three. Were going to hit the story from both sides, eamon javers, lets kick it off with bob pisani on the floor of the new york stock exchange. The market appears to believe that Hillary Clinton will be the winner. The problem is they dont want her to win by too much. There are specifically some concerns that the democrats could get control of the house and the odds seem small, but the market is getting jittery. See this in the three areas where there might be the most regulation under a clinton presidency. Number one, look at big banks. All these banks will be reporting on friday. They had been on quite a roll recently as rates had been moving up. That momentum has been interrupted last couple of days. Modest gains in jpmorgan chase, which recently at a 52week high. The momentum interrupted. I think Rising Interest Rates are going to be the primary mover here, but a little problem there. Big pharma, same situation. Also potentially heavy more regulation under a clinton regime. Pharmaceuticals had been doing very well recently. Earnings picture looks bright for most of the big names. But thats been interrupted the last couple of days. Most of the big names like lilly and pfizer down 2 , 3 , 4 this week. The third group, big energy, oil over 50, big energy names have been major Market Movers in the last couple of weeks. As of yesterday, that reversed here. You see the big energy names to the downside. Election jetters arent the only thing concerning the markets. We have stronger dollar, higher rates and earnings issues overall. We had some warnings in the last couple of days that have impacted the market, but those election jitters playing into the markets. Back to you. Thank you very much, bob pisani. Now turning to eamon javers digging in on the big battle brewing down ballot. Hi, melissa. If democrats are gleeful about the opportunity to retake the house, you have to say not so fast, democrats. There is real mathematical challenges here that they face. That announcement by paul ryan earlier in the week hes going to spend the rest of the election cycle not campaigning with donald trump, but focusing on preserving the republican majority in the house. That has people wondering if the house is in play. But look at the math here and what you see, it is very difficult for democrats to take over the house. This is analysis by the cook political report. They show, remember, there is 435 seats in the house of representatives. You need 218 to get the majority. There are only 17 seats right now that the cook report labels as a tossup that could go either way. So starting on lefthand side of the graphic, look at the democrats, they have got 177 likely solid democratic seats. You build in the likely democratic seats at 5, the lean democratic seats, a little more wobbly, eight seats there, if they sweep all 17 of those tossup seats, they still dont have enough seats to get to 218. They got to start taking some of those lean republican and likely republican seats away from republicans who are campaigning strong right now. That is an uphill battle for democrats, assuming they could sweep all those tossups which is a big assumption to make. It looks like the democrats only hope here is that the bottom really falls out of the republican party. And when you see this open warfare now between donald trump and republican leaders, Establishment Republicans like paul ryan and john mccain taking heat from trump on twitter over the past 24 hours or so, thats at least a possibility. But the math is very tough for democrats to take the house, guys. I want to push back a little bit, not on you, but the polls. There seems to be an assumption if people reject donald trump, theyre going to reject their party altogether. Speaking with members of the gop and conservative voters as im sure you do every single day as well, i dont find that to be true. My thing is people say, you know what, im a conservative, but cant vote for trump, but i sure as heck am going to vote because of the concerns that you just highlighted. The question is whether those conservatives are really disgusted by this whole election cycle. They dont like Hillary Clinton. They dont like donald who isnt disgusted . Do they sit on their hands and stay home . This is not an inspiring election year. Dont have anybody out there with a really gleeful, positive message. So if those conservatives look at this cycle and say, you know what, well sit at home and see you in 2020, thats devastating for the republican party. They need those people to show up. They need the trump voters to show up and elect some of those Establishment Republicans as well. Thats why youve seen these Establishment Republicans really some of them in an awkward straddle. It is an awkward spot for republicans because they need the votes. This is not an inspiring election year, maybe the most understated thing said on this network all year. Eamon javers, thank you very much. We have a news alert in the bond market now. Ten hadyear no tenyear notes are up for auction. Rick santelli is still all cub happy up from the big win in san fran last night. Listen, i learned last year when i opened my big mouth to david faber, the cubs would sweep the mets. Im happy they won. Lets leave it at that. When it comes to the doubleheader of auctions, lets dig down into it. Second auction of the day, 20 billion, 9 year, 10 month. 10 years, but second time reopened the issue. The yield, 1. 793. Priced right about where it was trading in the one issue market. Highest yield at dutch auction since april of this year. I gave it a c minus. A little below average. 2. 53, a little lower than the ten auction average bid to cover. 62. 7 in directs. Little lower than 10 auction average. You guessed it. 6. 6, lower than the 10 , 10 auction average on direct. The primaries take a little bigger chunk at 30. 6 . Indeed, the best way to look at two basically average auctions is yields are at the highest level in a closing basis since early june, and investors still didnt get aggressive stepping up. Hands off actually speaks volumes about what investors think of global sovereigns at the higher yields. Looks like they think they may go higher. Tyler, back to you. Rick, thank you very much. Lets turn back to the election and what you might be doing now with the money. With us, a man who has more than 300 billion under his belt. Steven off at fed rated investment. That must be some belt. Lets talk about what i saw in the note that you would be a buyer of what you said is the coming correction. When . And why . Well, we think the market is poised for a pullback here. Maybe 5 , 10 , maybe more even. A few problems. One is the election. We got to get through that. There are some possible negative outcomes. Not the base case. But you could end up with an all Democratic Congress or trump could make a recovery and both of those extreme measures arent priced in right now in the market. Youve got the european elections right after that in italy that could be negative for the euro. You got the fed in december, getting ready to act. And earnings numbers, i mean, we are in the middle of an earnings season, were going to focus on guidance into next year. Analyst estimates are way too high for 2017. So i think they got to come down about 10 on the s p. Thats a big thats a big change here. What do you think the what do you think the issue is. Why are they so far off and are you suggesting that the economy is going to be much slower than most people do . We have been thinking, you know, around 2 , 2. 5 for next year. We think earnings would be okay. 125. Consensus is 134, almost 20 higher off of this years numbers. The consensus is that Oil Continues to move higher, and you get a big rebound in earnings there. Theyre assuming two or three fed rate hikes, we have seen the financials moving on the back of that big earnings increase in financials on the back of that. And theyre considering the dollar continues to stay relatively weak and thats very good for our exporters, especially for the tech sector. So those were the big increases and the fourth will be health care where theyre expecting pretty buoyant numbers there as well. You question the assumptions basically behind that number. We think we think longterm the market can go a lot higher, but near term we have some things to get over and were trading at 18 times earnings here. So it is not like we dont have a lot of good news priced in. So, stephen, if youre expecting a 5 to 10 correction or maybe more, which sectors in your view are the most vulnerable at this point . We think it is probably the cyclicals, maybe, in the financials, where we had this big run, almost contrary to the assumptions were making. Those are areas that were most suspicious of. We have been defensive all year but were recommending people to really, you know, play defense here, the telecoms what is defense . Defensive names have not necessarily been good to investors in the past quarter. They have been very bad actually. Thats one reason we like them because we already have taken the air out of that balloon. And, you know, large cap pharma, some of those stocks are backed down on trend lines, verizon, telecom space. Some of the more defensive tech plays. This is where we would be right now and look, we dont get the constructio correction, which we may not, these are stocks we like going into next year either way. We think you keep some money on the sidelines, but stay more or less fully invested here. But have some money prepared to buy more if we get a pullback. Talk to me about verizon. They got a lot to digest. Yeah. They do. And earnings estimates are not great there. We think generally, though, theyre kind of growing 3 , 5 a year. If you look at them within the yield space, and were not buyers of this idea that yields are going to the moon. We think yields this cycle will peak around 2 , 2. 5 on the ten year. In the yield space, where there is a craving for investments, the Telecom Stocks and verizon is an example are way cheap relative to the utilities that have gotten really expensive. So we think you just get a 4. 5 yield there for 14. 5 times earnings as opposed to a similar yield for 21 times earnings and the utility space. So we think it will track the yield buyers. Stephen, thank you very much. Always good to have you. Thank you. What do the viewers think is the biggest wild card for stocks now . I asked in a twitter poll today, what is the big wild card, the dollar strength, the fed, the election, oil. The results so far, 38 of respondents say it is the election that is the biggest wild card for stocks. The fed is next at 25 . Followed closely by the dollar and youve got oil lagging at 14 . I guess the surprise to me so far, melissa and tyler, was that it wasnt a bigger skew to the election. I guess maybe if you asked it two weeks ago when the race felt closer, maybe it would have gotten a bigger sort of wild card factor in there. But now the consensus is that secretary clinton has a lead that is going to be very hard for mr. Trump to overcome. How would you have answered the question. I dont know if i would have answered because i think it depends on sectors. I think for health care and banks, those are a Hillary Clinton administration, democratically controlled congress, the biggest overhangs for those sectors because of the threat of increased regulation. For the overall markets, i think it could be rising rates and the dollar, the biggest wild card. I think i would have said the election. I dont think it is over. I think the consensus is that it is, but i dont think its over. I really dont. But just remember, there is whatever side youre on, there is a distinct agenda in saying its over. No matter what side it is, could have been eight years ago whatever it is, if youre in the lead, it is a very great thing to say were the winners already because that sort of psychologically it is very i think it is very difficult for the incumbent party to hold the white house for three straight terms. You go back, the only one who has done it in the last 50 some years is the republicans when reagan handed it off to bush for one term. Right. Otherwise it has been eight years on, eight years off, or four years in the case of jimmy carter. All right. Moving on to samsung, the recall nightmare continues. The Company Expected to take a 2. 3 billion hit from pulling the plug on its flagship product. The question is, how can they win back customers who pull the plug on them . That story straight ahead. Plus, who says americas infrastructure is crumbling . We brought you the bridge that wouldnt implode yesterday. Today, the bridge is making news again. Find out why. 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At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last om generation to generation. Well listen. Well talk. Well plan. Baird. Keeping the power lines clear,my job to protect public safety, while also protecting the environment. The Natural World is a beautiful thing, the work that we do helps us protect it. Public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. We want to keep the power on for our customers. We want to keep our community safe. This is our community, this is where we live. We need to make sure that we have a beautiful place for our children to live. Together, were building a better california. The i hads keep hits keep o samsung. This after pulling the plug permanently on the galaxy. How much damage has been done to the Samsung Brand and what can they do to start rebuilding their image . Insight from jon fortt and eric yukenthaler. Welcome to power lunch. You say the problem is that samsungs brand didnt stand for much in the first place. Thats right. It stood for a lot of things. Stood for equality, performance, stood for leadership. But these are the same things that currently are at question. Okay. John, what is your perception of does that matter anymore . It does matter. I think the fact that this is one phone gives samsung a little wiggle room. It is a big deal for this to happen in q4 with the highest end premium product for a product that has driven so much of the recent popularity on marketing and branding. If they come out with a couple more phones that dont explode and that get as good reviews as the galaxy note 7 did before it had these issues, it was best reviewed phone possibly ever. Even better than apple phones lately. Then theyll be okay. We in the Financial News media are very specific about what phone, which phones have been suspected of exploding or smoking, et cetera. To the average person, it is a Samsung Phone. Not necessarily a galaxy note 7, just the Samsung Smartphone and theyre smoking and theyre exploding, theyre banned from planes. That seemed to me like a huge issue to overcome. Exactly. Youre not talking about a car. Youre talking about the thing that youre using every second, every other minute, holding your phone every other all the time. So this is i dont think the consumer really makes a difference between one Samsung Phone or the other Samsung Phone. The consumer just says, wait a moment, i have a problem. Do they have a short memory, consumers . They have a short memory. Thats why brands come back over time. But for right now, for those consumers who are either holding the phone in their hand or are in the buying cycle in some ways, i think this is serious. Does the brands pain equal another brands gain. We talked about sales. I dont mean more people buying the apple phone. If samsung has woes, does that make google and or apple better. Is it more nastiness for one company . I think it is a big change. Years ago we could have relied on brand loyalty as a very important factor. This day and age, consumers are very fickle. I call them the bumblebees. They switch one day to the other. I think this is really serious. Especially in something that is so like daily life essential. Outstanding question, is this a symptom of a larger corporate problem . We know samsung is in the process of this leadership transition from the older chairman now to the vice chairman. And it hasnt gone that smoothly. So the question is, is the morale within samsung going to hold up under this . Are they going to be able to fix the processes that led this to happen . Somebodys idea to rush this phone out the door. Somebodys idea to set up the Manufacturing Processes that caused this problem. Do they blame the right people . Do they do the right thing in terms of either keeping or firing those people or retooling the way they do the and worse for them is the idea that not only was the original phone defective, the replacement phone was defective. Our friend dean crutchfield said usually you say a brand is on fire, it is a good thing. This brand is on fire and it is a bad, bad thing. Do you criticize the ceo or the american head of samsung for not being more present in addressing consumers here . What you need to think about, in this day and age, what people buy is not just a product. They buy the brand. You buy a car, electric car, you buy also elon musk and tesla, the company. You need to understand this is a company issue. And people vote on the brand brands are so are a way of selfexpression. Exactly. You buy an audi because driving an audi makes you feel smarter, better. I drive a kia, i feel smart about driving my kia. And thats why brands are so important psychographically. We have a different consideration. An iphone has a sort of benefit of selfexpression. Other brands do. In the car business, very clearly. Bmw is very much sporty. But samsung doesnt really have those equities. Samsungs equity lies with performance, quality, and when that is at question, it hurts really badly. The fact they couldnt isolate it and we still supposedly it is the the original battery was made, manufactured by sdi, right . Samsungs subsidiary. And the replacement batteries made by a chinese company. But multiple sources. But that leads to Quality Control issues and then you question, well, if i buy a samsung tv, if i buy a samsung dryer let me follow up on that. To melissas point, how confident are we that the batteries are not in other brands. How do we know the batteries that maybe are the problem are not in other phones . I think it is almost certain that these types of batteries are in something else, but not clear the problem is the battery. Once you put the battery in, there are all sorts of electronics in between the battery and the phone itself, regulating the way the power is used. If you cram too much battery into too small a space, thats an issue. To me, the organizational issue is, once you make a mistake of that magnitude and have a recall, you need to make sure you do everything right from then on out. If you dont, that says something about the health of the organization. And im not clear im talking to a lot of people, technology experts, wall street analysts how are we going to know when samsung has got this right. How are samsung employees going to know when samsung has this right . The culture of the organization is being the absolute best in south korea is really important to it. Thank you. Jon fortt, eric yugenthaler. Up next, there we go, were going to talk laptops. Some of those exploded, right . The laptops, a long time ago. Were going it talk laptops. Were going to talk about botox. Were going to talk about a Health Care Stock in pain. The good, the bad and the ugly in todays trade when power lunch returns. All right, welcome back to power lunch. Time for the good, the bad and the ugly in todays trade. First to the good, best buy. It is one of the best performers of the s p 500. The stock up more than 6 now over the past month. On to the bad, allergan, under pressure again today, adding to a 25 drop this year. And it is an ugly day for humana after the company there we go, received a lower medicare star rating. Shares are down 7. 1 . Up next, a showdown in coal country, why the keystone state, pennsylvania, is so key in this election. Were going to go live to pennsylvania straight ahead. With only 27 days to go, really 26 plus, where are the smartest minds putting their money right now . Stick around to find out when power lunch returns after this. Whats the value of capital . Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley hi, everybody. Im sue herera. Here is your cnbc news update for this hour. During an Investment Conference in moscow today, Vladimir Putin brushed off accusations that russia is behind a recent Democratic Committee email hacking scandal. Translator certain hackers released certain information about how unseemingly mrs. Clintons headquarters have been behaving during the election campaign. There is nothing there that is in russias interest. Putin also said that he will work with the new u. S. President regardless of who is elected. The worst flooding in 17 years is hitting parts of north carolina. The noose river is expected to hit a record high crest of more than 29 feet this afternoon. Senior Law Enforcement officials tell nbc news they found no indication of terrorism in yesterdays Small Plane Crash in connecticut. The plane was in the middle of a flight lesson with a student pilot at the controls when it suddenly crashed. And soth bees is putting 400 pieces of david bowies Art Collection up for sale. The auction will take place next month in london. Bowie died in january at the age of 69. He was an avid collector. That is the news update this hour. Ill send it back to you. Thank you very much, sue herera. Carving out some gains after being negative, the s p 500 was about ten points lower than where it stands right now. And we have it here, 2141, up by a quarter of a percent. Nike as well as apple leading the way on the dow. Real estate telecom conexhusume discretionary also higher. Within health care, take a look at that is going on in the biotech index, real underperformer, down by 2 on the etf. The ivb. We have been noting how ten year yields touched above 1. 8 in todays session. The dollar index also continuing its streak of gains. It is higher by about. 2 . Might be saying not much of a move, but for the week, we are higher by 1. 25 for the month, up by 2. 8 . To dom chu for a market flash. Talking about slowing momentum, shares of netflix on that steady decline so far today, the company is set to report the Third Quarter earnings, remember, after the market closes on monday. So the big question surrounding that report is that those subscriber numbers will satisfy investors and analysts out there. Note out for Morgan Stanley, warns that netflix will miss subscriber forecast. But the Firm Maintains long term bullish view on the stock based on content competition. You can read about Morgan Stanley call and everything else. Remember, netflix was one of last years standouts but down 12 . Pennsylvanias political showdown, a crucial swing state in this election, and a state deeply divided over coal. And nowhere more so than in green county, pennsylvania. Thats where we find our contessa brewer. There is coal and in those hills back there, but no one is pulling it out of the emerald mine because it shut down last year, laying off nearly 300 workers. Thats a trend were seeing nationally. What were seeing is jobs lost, 30,000 coal jobs nationwide in the last five years. In the same time frame, the amount of electricity generated from coal has declined 14 , down to 31 . Donald trump is taking advantage of the discouragement many places like green county here. The second largest coal producing county in the nation. Donald trump is promising hell bring back coal. In this county, where 50 of the voters are registered democrats, Hillary Clinton has lost support for her embrace of clean energy and her 30 billion proposal to retrain coal workers for other industries. Now, laid off coal minors, some of them work at career center, trying to get their former coworkers to retrain or take other jobs, unemployment in green county, 7. 6 . Much higher than the national average. Youre laid off , youre making six figures, you dont have a job, she says shes going to maybe do away or do away with the trump says ill bring it back. People, you know, arent looking at the full picture. I think a lot of people i think the county will vote trump, absolutely, even though were majority democrat here. In pennsylvanias biggest cities, Hillary Clinton is counting on democrats loyalty and enthusiasm and turnout. If she gets it, she may not need the coal counties to rack up the delegates in this state. The most recent polling shows Hillary Clinton in the lead, 8. 6 points ahead of donald trump. When i asked a registered democrat, a coal miner, working as an electrician, whether he knows any coal miners voting for hillary, he said nope, not a one. Guys . Contessa brewer in pennsylvania, thank you very much. Interesting on the ground stuff there guys. Get a lot of that type of stuff in west virginia, ohio, pennsylvania, states that certainly matter. What are the best and worst Case Scenarios from the election for your investing dollars . Gop sweep . A split . A dem sweep . Joining us, andrew loventhal. Welcome. You got a very interesting view. Why is the worst Case Scenario in your mind a trump win, democrats take the senate, but the gop keeps the house . I saw i thought splits were good. Splits are often very good. And i think that there are a lot of scenarios where they could be. But at the end of the day, i think that were seeing an election where it is not so much republican and democrat, but you have populist versus capitalist. I think the concern is that although neither side would admit it, there is a lot of connection between the way Elizabeth Warren and Bernie Sanders view Economic Issues in many context and the way donald trump does. They agree on trade, they agree on the reseb secentering of ame they agree on glass steagall reform. I think that would be a concern for the Business Community and investing community. That mean youre advising people to split their donations, that they might not necessarily contribute only to republican candidates for instance in order to make this scenario that you laid forth come true . No, not at all. I think that there is a big difference between i think people invest their political dollars as a matter of faith and personal expression. What i am observing, though, if you have a fiduciary responsibility to investors, managing a company, if youre thinking about what is going to happen next year, i think that what im encouraging people to do is to think about a continuation of what effectively is the status quo, most likely a democratic president and some version of a Republican Controlled Congress and that that actually may lead to some good outcomes, like we had when bill clinton had to work with Newt Gingrich in the 90s. Lets talk about the worst Case Scenario from your point of view for businesses. What would it be and why . I think there are two kind of worst Case Scenario, thats like pure Party Control by either party in this environment of all of the two main branches of government. That is, you know, the unfettered ability to project and have disruptive kind of policies that run contrary to where we have been. I am particularly concerned, i think, that Donald Trumps brand of republican economics is something we really never have seen before. And the volatility that comes along with that, and the impact on so many kinds of businesses across so many Different Industries and sectors is really something that i think that from a business perspective, rather than from ones personal political desires, you have to be worried about. When you say his brand of economics, i assume youre talking less about tax than trade. It is not even tax. Hes called very clearly to raise the get rid of the carried interest, quote unquote exemption which is wonderful when you think of hedge funds but they dont take advantage of it. Youre talking about Real Estate Investment trusts and partnerships, oil and natural gas exploration, all things he says he wants to do. Hes talking about spending a lot of money, even in health care. Repealing obamacare is not necessarily accompanied by cuts in Government Spending if we give a lot of money to the states to make sure that everyone has health care through the states and youre going to impose mandates on the Insurance Companies that theyre not going to be able to drop out folks with preexisting conditions or make those Business Decisions which the public has found difficult. All right, fantastic. Andrew, thank you very much. Andrew lohanthal, appreciate your time. Toyota wants this tiny talking robot to keep Drivers Company. The question is, why. We have the answer still ahead. Plus coming up, a startup making it cool to lose weight. Thin ice is the first wearable weight loss technology. It actually uses cold temperatures to achieve this. Will the panel give them the Cold Shoulder . Im worried there is not Much Research to back the claims. The heavier you are, the less cold Therapy Works for you. Does that mean the people who likely want your product the most will be least effective for . Stay tuned to find out. Our entrepreneurs of the week come from remote places. They have traveled here to sell their handmade Home Products to the american market. And they are killing it. What do they know about our marketplace that even many of us who live here dont . Find out their secrets when you watch your business sunday morning at 7 30 on msnbc. [pony neighing] what . Hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. Time for todays power pitch, where one entrepreneur gets 60 seconds to convince a panel of experts to start up as the next big thing. I had ma my name is adam paulen. As a former ncaa athlete and personal trainer, i know how hard it is to fit weight loss into your day. While studying Health Sciences at the university of toronto, i was able to come up with a product to help you lose weight throughout the day without changing your behaveiers. Thin ice is the first wearable weight loss technology. It uses cold temperatures to achieve this, which you can adjust via our bluetooth app. This causes your body to rev up its metabolism to generate heat which keeps you warm, but also produces weight loss effects. This is not only relevant to the 70 billion a year weight loss industry in the u. S. , but also the fast emerging wearable tech industry. We also identified Sales Opportunities with the police stations, and the armies, which are mostly interested in the cooling effects for their personnel. We sold 5 ,000 units through preorder on indy go go which demonstrates the consumer interest on thin ice. Welcome to todays power pitch. You saw adams pitch. Lets meet the panel, matt burgess, alicia sorrret and amir leiberboy. I think your primary challenge is if it works, youll have nike or under armour come in with a multimillion dollar budget. And my question is, how will you defend market space and beat them longterm . We have a patent on the actual heat disoperation methods involved in the ice. Were pumping heat away from the body and we found a way to consistently dissipate that underneath clothing to allow people to wear it throughout the day. It makes a big difference to have that aspect to it and it is protected in. I read the heavier you are, the less cold Therapy Works for you. Does that mean the people who likely want your product the most it will be least effective for . The great part about cold therapy is over time you can actually increase the amount of tissue in your body. So different people from who moved from climates that are warm to cold, they can demonstrate scientifically there is an increase in the active tissue keeping them warm, so as you use the device like if you exercise you gain muscle, in this case, you gain the active tissue and over time youll see more and more results. I imagine the ftc or fda is going to regulate the term weight loss. How does this impact where you launch or how you launch . Up until now, we focussed on the online space, especially crowd funding, regulations are more gray. We have a product not done yet, so the validation is clearly going to be in the future. One of our big steps is to do a Clinical Trial of our own to start to see some results we have seen, literature focused on ice vests over the last 50 years. You brought the vests here. I got to try it on. We got to see what this how this thing feels and how cold it actually gets. Okay. I can adjust the temperature up and down. Why is this more effective than lowering the thermostat . It focuses on parts of the body that has lots of thermoreceptors. You can focus on specific parts of the body and see results without having to be cold all over the place. Right. You sold 5,000 of these through your crowd funding. What is the single most important thing you learned from the early customers . I think the most interesting aspect of crowd funding is you learn the different ways that people plan to use the product. I think that the cooling effects really surprised us in terms of how many people are excited strictly about those. So that really opened up a huge market for us. We got reached out to by Police Forces in different continents and those types of consumers interested in the cooling effects gave us an idea of what we had from that aspect. And i have to say, wearing i can feel myself get cooler. So we heard what adam had to say. We want to know if the panel is in or out. Nat . Crowd funding is interesting, it lets you short cut a lot of the steps that a traditional investor would ask you to take. Having 5,000 people buy it is less interesting than having the Clinical Trials and the independent validation that it really does work for the stated purpose. And for that reason, im out. Alicia . What this company has going for it is there is clearly immense consumer demand. Who doesnt want to lose weight without basically doing anything . But, with that said, i would really need to see direct research for this product specifically to really judge its effectiveness and until i see that, unfortunately, im out. Amir . I think the technology is interesting. And plenty of consumers will buy the product, but im worried there is not enough research to back the claims and as an investor, i want to see more revenue traction. So for that reason, im out. What is your reaction . I think a lot of the feedback was based on the weight loss effects and i think we have a massive secondary market that we can definitely penetrate in the meantime and i hope to demonstrate some traction soon. Okay, our thanks to adam of thin ice and our panelists. That is todays power pitch. You heard what the panel had to say. Are you in or out on thin ice . Follow the conversation on twitter using powerpitch. And for more, visit powerlunch. Cnbc. Com. Were moments away from the fed minutes. Theyre being released at the top of the hour. That is just about 12 minutes time. This is the window into the fed thinking around the last meeting where we had had basically three dissenters wanting to raise rates. These minutes could be a lot more interesting than some of the other minutes than we have had in the last, i dont know, three or four years. Up next, four stocks in focus today. It is your daily dose of street talk and you will take it and you will like it. Plus, yesterday was convenience stores. Today, tossing its hat into yet another ring. One with some very big players already in it, including apple and google, good or bad move . Well tell you what amazon wants to do coming up. Its not just a car. Its your daily retreat. Go ahead, spoil yourself. The es and es hybrid. This is the pursuit of perfection. Delta ceo sets the stage for airline earnings. How will investors ride the all right. Time for street talk. Our daily walk down the wall Street Research that we believe you need to know about. First up, Marvel Technology getting an upgrade to outperform. Price target raised to 1750 even with the 65 move in the stock off of its bottom. The analyst sees the shares as attractively valued. The new Management Team early in the operational turn around and Credit Suisse sees the potential for a major 15 to 20 reduction in operating expenses and upside to fiscal Third Quarter guidance of the top line and gross marriagen. Stocks had a great run in three months. You see highs of 16 bucks a share. It has been quite a web of intrigue from marvel. Not the same not marvel. I know, but so desperate to get that in. Second stock, very unpopular name in many circles. Corrections corp. Of america. Sun trust upgrading the company, moving the rating to a buy with a 20 target. They see the news flow more positive. Even with out of state businesses from california going to zero, however, they believe that dividend payouts of corrections will be double digits. 20 target about 50 upside on a name hotly debated, widely contested and probably widely disliked by a lot of investors. That two many slide is almost that entire year decline. If you dont know what were talking about, private prison company, headlines there will be moves to eliminate certain federal government use of their prisons. Yes. Third stock, shares getting hit after announcing Third Quarter revenue. There does appear to be an easing in security spending with the miss attributed to let urgent buying after last years elevated spend and north american sales execution issues. But management did reiterate the goal of 20 margin by 2020. Wow. Thats amazing to me. All this talk of cybersecurity, every day, eamon javers brings us a cool cybersecurity summit, story, whatever. And the stocks, many of them, cant get out of their own way. Small cap call of the day. Enterprise financial services. Missouri based bank and Trust Company raising two years of estimates and their price target. Likes the recent deal to buy another local bank. Says the deal checks many important boxes for enterprise, and calls the company an organic growth story but likes stuff we talked about. Target up a little bit here. 33, the stock is at 32. 99. Now at 33. Thank you. Why did you bring us this name. Number one, it distiis yom kippd the research pickings are slim. Either way, Enterprise Financial services. Lets talk about helen of troy, shares gaining more than 3 in midday trading, helped along by news of a new honeywell line of purifiers. Helen of troy owns the licensing for that honeywell name on air filters. The stock near session highs on pace for its best day since late may. The shares down 12 year to date. Helen of troy is the Consumer Products Company Behind many brands like braun shavers, oxo kitchen tools, filters, among other things. Thank you very much. Were moments away from finding out what went down behind those closed doors at the feds last meeting. The fed minutes out at the. Of the hour. We will get some insight and well have analysis. Every great startup begins with a simple idea. But with growth comes complexity. Thats why so many innovators are on the ibm cloud. Like refinery 29, with nearly a billion views a year. Or runkeeper, a training app used by over 50 million runners. Or Game Developers whose popularity depends on launching new updates fast. Helping to keep a companys success uncomplicated thats what the ibm cloud is built for. Two minutes until the release of the fomc minutes. We have been holding very steady as we await the minutes. S p 500 right now is just moving up by a quarter of a percent here. Tenyear yield, 1. 79 . We reached 1. 8 earlier. Fourmonth high. Dollar index continues to strengthen at 97. 88. It would have to be a doozy for the fed funds futures to move off of that notion of a december hike. Well, you know, it is fascinating you ask that. Lets look at a chart starting midjune of the aforementioned december fed fund futures. Forget percentages, look at trends. This meeting was september 21st. The high price on the chart or the lowest probability for a tightening was june 27th. The low point on the chart, or high probability of a tightening was on august 26th. Almost a month, almost a month before the meeting. So even though we feel as though it has moved to its own, we have to contemplate a possible tightening, the reality is the market is unsure. And exactly how they parse what they talked about to put in the minutes, i cant tell you, but theyre trading a lot of options behind me. Certainly are. Bob, we have seen the move in terms of the stock market away from the yield, the bond proxy. And toward the banks. And, art cashin likes to say the fed never moves unless there is a 77 chance. We already have seen tenyear yields move 20 basis points in the last few weeks. I wonder how much disruption there will be when they pull the trigger. Were expecting some kind of earthquake, but, remember, dudley this morning said the glide path will be really shallow for a long time. He reiterated that, so im just wondering, i think it is high time they go ahead and do something. And maybe, maybe just maybe the markets are already prepared for it. Like news happening now. I wonder if the mark set moving ahead of that. We talked about the bond vigilantes being back. Either way, Hampton Pearson with the fed minutes now. It was a close call at the september 2 16r9 meeting when it came to raising interest rates, thats what the fed minutes tell us. We know there were three dissenters who wanted to raise rates by 25 basis points. A reasonable argument could be made for an increase. Many expressed the concern that slack remains in the labor market, that was a principle reason for holding off. Proceeding cautiously, the minutes say, with reducing Monetary Policy accommodation could promote further labor market improvement. But there were strong arguments on the other side, dissenters warning waiting too long to raise rates could pose the risk to the continuing of the economic expansion. Dissenters said without gradual increases, the labor market could tighten. They also said that the delay also implied a further divergence from fed policy and dissenters warning the delay risked eroding fed credibility if the next step in the gradual removal of accommodation was further postponed. Many members said they expect inflation to remain low in the near term. No hints in the minutes as to whether a rate hike is coming in november or december. Back to you. Hampton pearson, thank you. Lets get instant analysis and reaction, joining us, cnbc contributor ron insana, bespoken investment group. Lindsey joining us remotely. Here is the quote. They dissented because they preferred to increase the range by 25 basis points at this meeting. And mrs. George judged with the Unemployment Rate inflation at or near long run levels, removing some accommodation was warranted and would be consistent with several frameworks for assessing the appropriate stance of Monetary Policy. Do you believe that george is saying were getting yes. She is. Shes saying that we are behind the curve. The fed is behind the curve and i happen to think shes right. But way, way hint. The risks have gone up appreciably. Im not so sure dudley would have been as hawkish as he was this morning had the jolt come out before he had to speak. What we were all looking for was a mention of december, some kind of an indication that that calendar could be go time and they didnt. Here is the risk. Eric noted that im paraphrasing if they didnt raise rates now, they have to raise rates a lot faster in the future to contain runaway inflation. Paraphrasing. Maybe. And we certainly just his view, though. And danielle and i probably agree a little on this score. Inflation expectations are not running away. And, brian, you talk about the bond vigilantes. Theyre driving rates up. Financial conditions are tightening as the dollar firms, commodities are coming down a bit. Im not sure there is any rush. Im getting to the point where i dont care if they raise rates a quarter of a point. It is getting old. The minutes are old. Even me, you know, even i, for somebody saying theyre not going to and shouldnt, at this juncture, get it on the way. They will need help from fiscal policy if the fed normalizes rates. What is interesting, it seems the main argument to raise rates is centered around the feds credibility. They raise in december, so they have to continue with that. Or this notion of time frame. Since when does the calendar drive Monetary Policy. It is the doves that have the argument with the data behind them. Slow growth, nonexistent inflation, the consumer under pressure with declining income, negative Business Investment, really no incentive looking at the data, so if the fed is data dependent, there is no sense of immediacy to raise rates right now. And certainly they may have to raise rates faster if we turn the corner to 2017 or beyond. The risk of raising rates too fast, more than offsets the risk of raising them too slow. I think the doves have it. I think if anything the minutes really reinforce the idea there is no sense of urgency to raise rates at november or the december meeting. Waiting too long risks the expansion. That is what i heard hampton say. Back to this, if you look at the decision, if they dont go in december, where will the dofz ha doves have pressure . Little pressure to hike rates Going Forward. The people replacing them are to the dovish of them. If there is not a sense now, not a sense of urgency now what is the risk to the expansion in waiting longer . In waiting longer, you have an issue if you wait longer, you have inflation issues, will inflation pick up. But what were thats the doves argument, there is slag in the jobs market. More ammo today, but there is seasonal adjustments to that. Seasonal issues with that. It is interesting that they use the word credibility in minutes. That was amazing. And i think that that kind of speaks to Eric Rosengren and his stance that the cost of waiting too long is going to be another burst of financial instability and that is where he had his focus. Flip side, were getting split messages from the bond and stock markets. It looked like the stock market would worry about a democratic sweep and what it means in washington is potentially higher taxes and even stiffer regulations, that would slow the economy. Yesterdays selloff because of politics . I think part of it, yeah. And the rising dollar, or rising rates, wasnt no, no, i think that is the part is the fact that rates were going up. For no apparent reason. Lets say the data keep doing what the data have been doing, slow growth, moderate job growth, and so on and so forth. But the stock and bond markets react violently to whatever the election result is. Does the fed do anything in december . I would say no. They wont move a hair in december if there is disruption. It is not the why are we discounting november . A lame duck meeting. Why . If they want every meeting to be live, they need to call a press conference. Lindsey, is there any chance november is on the table, if anything, just to prove a point that they are apolitical . Certainly has said that every meeting is a live meeting, but it is all about the data. Not about politics. It is not about the election being six days later. It is not about the outcome of the election or the markets reaction to the election. It is about how the u. S. Economy is evolving. We are seeing subpar growth, declining income, declining gains in employment, declining gains in manufacturing, inflation is still sluggishly low. If were just focused on the data and the fed is apolitical, not focused on politics, focused on the data, there is no reason to raise to november and december. So it doesnt matter about the outcome of the election. The fed cannot justify a rate increase based on their concerns about credibility. Some donated to political campaigns. Some still have obama stickers on their cars. The data that has come out if they werent hiking in september, the data between now and september isnt really, you know, fortifying the case we need to hike rates now. But the fact is that it is where were at now is where we were six weeks ago. The atlanta fed gdp, thats their own data, thats opinibee ticking down, down, down. Earnings are not that high. Speaking of which, thank you, danielle, thank you, lindsey, ron and paul are going to stick around because we want to talk about earnings and it has been a rough start to earnings season, so youve been crunching the numbers. So far, what you seeing . Alcoa had a bad day yesterday when they reported earnings. But, first of all, alcoa is not the bellwether that people like to focus on. But earnings warnings we have been the earnings warnings coming into this earnings season have been less than we have seen in prior quarters heading into the Third Quarter earnings reporting period. Sure we had high profile names, but you see some high pronames giving an earnings warning. Some will warn every year and they make the headlines. So if you go back every year, one of the lower numbers of we love alcoa. Doesnt matter anymore. Honeywell matters. Honeywell rarely warns and thats what and then you have that backed up by the likes of an alcoa, by dover, by the likes of fastenal, by the likes of ppg. But those are all industrials. Yeah, but it is a read on the Global Economy. 75 of the economy here is consumer. I wonder, what do you think . The industrial sector has shown has been an area of weak earnings since middle of 2015. Technology is a sector where were seeing strong earnings growth, expected to show the strongest growth this earnings season. Analysts most positive on the sector. From a contrarian perspective, the technology is maybe an area to avoid heading into we have seen the outperformance in the Third Quarter already. And it is possible that earnings could be troughing because we have much easier year over year comparisons than we had in a while. Where is the growth in revenue coming from right now when no one is growing any faster than 1. 5 or 2 . It is hard to see what the Global Economy where it is now with japan, europe, russia, china and the u. S. And brazil, all very slow that were really generating a lot of upside momentum for earnings. Youre not going to get a pe expansion based on a sudden explosion in earnings. So given that context, put that aside for now, if you think about the fed raising rates into this sort of earnings cycle where growth is not terrific i think were going to start seeing earnings growth. Earnings growth is going to start picking up. Lets go back to im sorry to cut you off. But time. Industrials to technology, i wonder if you talk to ceos, i wonder if theyll say, you know what, im not going to build a factory, but i need a software upgrade. I got to build a new data center. Do you see technology being a longterm earnings winner . I think so. It seems in our personal experience were having to upgrade software every year. Supposed to last for several years. Youre always looking we upgrade once every decade here. Exactly. Whether we need it or not. The Capital Stock in the United States is at its oldest on record at 22. 5 years. There should be massive upgrading of systems, hardware, infrastructure, and it is just not happening because businesses are still concerned about end user demand. Until we clear that hurdle, fix Business Investment is not necessarily going to be a driver for corporate earnings. Nor for gdp for that matter. I think theyre holding back. They dont know what to expect, number one. Number two, theyre very cost averse. Im extending my uncertain if i into the first half of 2017. I have kids rapidly departing my home. Were in the process of going down. I thought we might put a button on it with the election, but that doesntlike likely now. What is the surprise sector . Energy sector has done well. Analysts, thats one of the revisions in the earnings estimates for the energy sector, one of the most negative of all of the sectors where as oil is at a 52week high. Price is high, price is over 50 a barrel. The sector could do well and show good results, especially compared to where they were last yar. Guys, thank you. Can i get one of those the cooling vest . No, the i need to bring the weight down. You dont need it, ron. That was very nice, but untrue. No dissenters. Trump has tweeted that the shackles are off. At times it seems like hes fighting the republicans as hard as he has been fighting the democrats. How gop civil war could influence the socalled down ballot, the congressional races, house and senate. Transports hitting the brakes, why Railroad Stocks may be in for a rocky ride straight ahead. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of 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 . Why invest in average . Welcome back to power lunch. Early voting begins today in arizona, in indiana, and ohio, and the race is on to turn all of those rally speeches and ads into votes now. Real votes. John harwood with a look at how the campaigns are getting their voters to the polls. A Major Development in florida today over its registration deadline, now extended, right . Thats right. You had a judge extending that registration deadline, which is something democrats had requested. And governor rick scott, who is a republican, had initially said, no, so that is good news for democrats who have a more aggressive and sophisticated Voter Registration operation than the republicans do. But it is a real question about what turnout is going to be like this year. Tremendous interest in the campaign, we saw record viewership for the very first president ial debate between Hillary Clinton and donald trump, but is this going to translate into votes . A lot of people are disgusted by the state of this race and that could depress some turnout. Lets look at what we have seen historically, first of all, in the era of polarization, as parties have gotten more sophisticated about knowing and finding their members and turning them out, we have seen turnout rise. It was down as low as 50 in 1996, but in the last couple of elections, 2004, got to 60 of the eligible electorate, got higher in 2008 with still high though short of 60 in 2012. Now, what corresponds to that high level of turnout . Well, look at election interest. Thats one thing that pollsters use. We have to use this date from our wall street journal poll. 2012, the year that it went down a little bit, we saw election interest was down to 70 , the highest level of interest expected or expressed by likely voters. And this year it is even lower than four years ago, interestingly enough, despite all of the attention to donald trump and Hillary Clinton, so we dont yet know exactly how heavy that turnout is going to be. Is it going to reach the 58 level that it was four years ago . Not sure. Hillary clinton has been thought to have the bigger problem because of diminished enthusiasm within her base, compared to Donald Trumps base. But the crazier the last few weeks of the election gets, democrats are hoping that their base gets as riled up as donald Trump Supporters are. Why do you think interest is lower given the fact that the debate viewership has been so high . I think because there are a lot of voters out there who are dismayed by the tone of the campaign, the nature of the exchanges, we have two unpopular candidates, so, you know, hate draws people out, but love also draws people out. And there is not so much love in either party for their nominee. Hillary clinton is popular, she has high favorable ratings with democrats, but there is a shortage of enthusiasm for her. Donald trump arouses high enthusiasm from a slice of the republican party, those noncollege educated white voters, but other republicans dont care for him very much at all. And so that it has the potential to depress turnout on both sides. Saying i dont like either one of them. John, thank you very much. House Speaker Paul Ryan appears to be shifting his focus to congressional races when he told House Republicans he would no longer defend or campaign with donald trump. Joining us with a look ats they down ballot battles is david wasserman, house editor of the cook political report. Welcome, good to have you with us. Thank you for having me. This is an interesting tactic on the part of mr. Ryan. When you look at the house, there are really very few districts that are contested, correct . Correct. We only rate 37 out of 435 districts as competitive right now. Thats less than 9 of the house of representatives. That gives you an idea of just how narrow a trading range there is for movement in the house of representatives. Especially after the last round of redistricting, but also because we just have a more stark urban versus rural divide than we had. You have to go out of your way to draw competitive house districts. We still have a number of Competitive Senate seats and thats why democrats still have a good chance of picking up the senate. Lets go to those senate seats. It looks like a very long shot for the democrats to pick up the what 30 seats or so they need to flip the house. Take us through a couple of the close contested senate seats and which way you think they may lean. Well, were looking at a narrow trading range that will decide control. Democrats are the favorites to pick up illinois and wisconsin. We have them in our lean democratic column at the cook political report. They need to get from 46 to 50. Those two states would get them halfway there, assuming democrats win the presidency and tim kaine can break a tie. That means the control of the senate will really come down to nevada, indiana, north carolina, pennsylvania, and New Hampshire. And each of those races is very, very close today. I think you said illinois, but did you mean indiana where mr. Bayh is running to return to the senate . Right, we think that illinois and wisconsin are democrats best opportunities for a pickup. The races that will really decide control are the five states of nevada, indiana, pennsylvania and New Hampshire and north carolina. All right, and where do you see pennsylvania, for example, leading with the incumbent republican is pat toomey . Look, if Hillary Clinton wins pennsylvania by more than 5 points, it is going to be very, very difficult for pat toomey to survive. But if the margin is closer or donald trump even breaks through in pennsylvania, then you can bet that pat toomey will probably breakthrough. Where republican incumbents have really had problems is where they have twisted themselves into a pretzel on donald trump. For example, kelly ayotte in New Hampshire said originally she would support the republican nominee, but that she wouldnt endorse trump. Then she called him, you know, worthy of being a role model in a debate or she said that absolutely she would consider him a role model. I think she tripped herself up in that statement before rescinding her endorsement. So democrats have really pounced on that in that race, and there are only a few other House Republicans who have since distanced themselves from trump. So democrats are going to try and play the flipflop card where it works. Are tre democrat seats that are at risk to being flipped to the republicans . Well, in the senate, nevada is the only democratic held seat, thats harry reids seat, that could flip to republicans. There are a few isolated house races where democrats are on defense. For example, in minnesotas eighth congressional district, the iron range of minnesota, you have an area that is uniquely good for donald trump and a competitive race and a democratic seat. But when you add it all up, the margin in the house is really going to matter in addition to who holds the majority in the senate. If paul ryans majority in the house gets cut in half, by 15 seats, democrats need 30 for majority, that really lowers his margin for error in the house. It even could potentially make him think twice about running for speaker again, particularly if clinton wins, if democrats control the senate, he would be forced to break the rule to do things as simple as keeping the government open and he could be blamed for a trump loss by an element of his own party. A difficult predicament for paul ryan. David, thank you very much. Thanks so much. Coming up, yesterday we showed you this video on power lunch. Who says americas infrastructure is crumbling . This bridge, solid as a rock. Well, we have got a big update on that bridge that wouldnt fall down. That is straight ahead. Miles per hour. Eling ov0 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. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i looked at my options. Then i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, it helps pick up some of what medicare doesnt pay. And could save you in outofpocket medical costs. To me, relationships matter. Ive been with my doctor for 12 years. 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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. And boom goes the dynamite. You may have seen this footage yesterday of the broadway bridge in little rock, arkansas. Exploding but not falling down because after a series of explosive charges went off, the bridge, tough and old, refused to budge. Boom. Bridge stands. Well, we have an update. After five hours, using cables, a barge, deep therapy, the bridge finally came down. Arkansas transportation Officials Say they dont know why the explosion didnt trigger a planned controlled collapse, aka, just the bridge was tougher than you. The new 98. 4 million broadway bridge expected to be completed early next year. So kind of feel sad for the bridge, guys. Tough. I thought once you try to blow something up and it stands, just let it be. A bridge to somewhere. Now it is to nowhere. Easy pat conroy. What is this . Amazon talking tossing its hat into the streaming music ring. Is there room for another 800 pound gorilla in a market with players like apple, pandora and spotify . Power lunch is back in two. Nothing stops us from doing right by our customers. Whos with me . Im in. Im in. Im in. Im in. One, two, wait, wait. Wait wheres tina . Doing the hand thing . Yep we are all in for our customers. Ally. Do it right. We a[ clock titime. ] customers. You only have so much. Thats why we wanna make sure you wont have to wait on hold. And you wont have to guess when well turn up. Because after all. We should fit into your life. [ laughing ] not the other way around. [ clock ticking ] hi, everyone. Im sue herera. Here is your cnbc news update. A u. S. Navy ship was the target of a failed missile attack for the second time this week. Two u. S. Military officials tell nbc news rebels fired two missiles at the uss mason. A similar incidentd on monday. Two atlanta construction workers were shocked after a crane at their site hit power lines sending jolts of electricity to the ground where they were standing. No word yet on their condition. Winter isnt here yet, but it certainly has arrived in croatia. Heavy snowstorms covered the Mountain Region with up to 12 inches of snow. And cuteness alert. Arent they cute . Look at the tiger cubs. Thrilling visitors at a zoo in east china. The zoo cokeepers say they hed three pounds of chicken and four pounds of beef each day. One, two, three, everybody go aw. Aw. Thank you. Thats a lot of meat for a little cub. For a little cub. A growing cub. Seven pounds. I know. Prices are coming down. Thats like an average lunch in america now. I know, but arent they cute . Theyre going to grow into those ears. Theyre going to grow into those ears and hence the seven pounds of meat per day. So cute. Sue, thanks. Got it. Oil market closing for the day. Jackie deangelis fears no tigers. Hi, brian. Crude prices were down for the session, but closing over 50, even though we dropped under that mark for one point early on. Not surprising that the market is still hopeful about this opec deal. But how many times has opec spoken before, only to disappoint. So there is certainly some skepticism out there. And after reaching a oneyear high, it is not surprising that there is some profit taking in crude. The dollar index getting near 98 today. Certainly part of the trade, putting pressure on oil, but commodities in general. U. S. Crude inventory delayed until tomorrow. Well hear from the department of energy and the api this afternoon to set us up. Remember, the eia is changing how the reporting the inventories, removing lease stocks from the total numbers. What well find tomorrow is a slash of about 30 Million Barrels of crude and well continue to see the numbers remove as we go forward. Now, the market is anticipating this, the news has been out for quite some time. But analysts are telling me theyre not exactly sure how crude will trade around that number tomorrow. Watch at 11 00 tomorrow. Back over to you. Jackie, thank you very much. To earnings, csx trading lower. The company teeing off what is expected to be another bumpy earnings season for the transports. And Morgan Brennan is here now with more. So for csx, wall street is forecasting a 14 drop in profit, a 9 lower revenue. That earnings weakness is expected to again play out for much of the sector as the widespread slump in Industrial Production weighs on freight demand. So the focus will be on volumes and pricing, rail stocks, csx, union pacific, Norfolk Southern and kansas city southern, all of those up double digit percentages for the year as investors bet the worst volume declines have already happened for the railroads. But earnings will be telling. Donald bratton warning that prices could be weaker than dlefed and that that could result in a significant contraction in valuation multiples. A rough ride for trucking. Too many trucks, not enough demand, thats pressuring spot rates and it is denting earnings for truck load carriers including warnier enterprises, night transportation and covenant transportation. Likely bright spot, u. P. S. And fedex, with ecommerce activity. That could benefit Freight Forwarders like xpl logistics and ch robinson. Other to be topics sure to aris Earnings Call at many rail and truck carriers. Early commentary on the impact of hurricane matthew. Csx already reported that we have seen some flooding, some washouts, some power disruptions along parts of the network from that storm last week. How do we think about the impact of the bankruptcy, it is being shipped in other ways so it is good for other modes of transportation . I think there is a few ways to think about this. The first is that for air freight and Freight Forwarders, logistics companies, theyre going to see a tailwind from this, all of the freight needs to find other i was to the end point. But you look at the port numbers and import numbers, those are down since this bankruptcy first started to unfold in the last couple of weeks. And thats going to have effect on some of the care dwlaerz arie supposed to be picking up the cargo. Joining us david vernon who covers transports at stanford bernstein. Great to have you with us. What are you looking at most closely from csx for read through to the rest of the sector . I think for read through, what youre looking for is how theyre doing managing their cost structure in this period of weaker volumes. Volumes have been coming down, but were looking at lower rates of volume decline and people are expecting next years volumes to be a little higher. If you can get that volume growth at a point where youre reducing the rees source spasou youre getting good leverage. Youre seeing positive signs on the bulk commodities and nat coal. Those prices have recovered quite a bit. I think what were looking for is continued execution on the cost side, and whatever we think we can hear from them about what that demand environment will be looking like next year. I think investors are expecting positive earnings leverage as volumes go from continued negative through most of this year to positive for the first half of next year. Unp is your top pick. What is it about unp specifically. I think a little bit of both. You think about a railroad, you think about not only what theyre moving but how far theyre moving it. Longer haul franchise gives them a little bit of more profitable business of hauling goods that would be competitive with trucks and intermodal. Some of the coal they move in particular is also going to benefit from demand up turn with Natural Gas Prices in the 3, 350 range. I think from a perspective of what they haul, what they move, where they go and the return they get, i think theyre just a little bit better priced in this market. Ksu has been a top performer year to date. Im curious if you think that it should be discounted because of the Political Risk given half of the story is essentially mexico. I think that would be one way to be one thing to be concerned about. I think it is also a little bit of a tail risk issue. I think the reality of the trade outlook Going Forward is we move away from interregional trade and more towards intraregional trade. That is going to benefit some of the cross border flight throughs through mexico. Union pacific has over a billion dollars of revenue per year on that cross border trade. I think that the political situation will work itself out. But the realities of the evolution, youre going to see a lot of cross border trade in the next ten years. David, thank you. David vernon with bernstein. We should note we have a big interview on the closing bell. Michael ward will join us to talk earnings. You can catch that interview 4 00 p. M. Eastern time here on cnbc. Did you ever get a little lonely on a long car ride . Toyota might have you covered. Forget about your family or kids. Dont talk to them anymore. There is a robot now riding shotgun, plus a robot for the elderly, a little small thing, not as cute as sues tigers, but were going to show you the new robot coming up. Welcome back. Do you ever get lonely when youre driving by yourself . Toyota may have an answer for this. It is a tiny talking robot travel buddy. I want you to immediate curoba mini. Take the banner down. There you go. It comes equipped with a camera, microphone and bluetooth. This robot, it is tiny, look a toy poodle, can engage in a conversation, move its head and its hands, has the ability to respond to facial expressions. Can also link up to cars and gadgets in the home. Toyota says it hopes to it will keep Drivers Company and, quote, contribute to making life and society more abundant. Whatever that means. It is available for sale at toyota dealerships in japan next year. It costs about 400. It talks to you. It might have some english translations. I dont know. It will. Why cant people just be alone in their thoughts. Listen to music . A book on tape. Just be pensive. I like being the Second Generation of robot will be trained. In the United States. It is retirement communities that are relying on robots to stay connected, aditi roy is at the aging 2. 0 conference in San Francisco with the story. Well, these robots that were going to be talking about are more utilitarian, maybe not as cute, but the 50 plus crowd in the u. S. Accounts for 7. 6 trillion of annual Economic Activity in the u. S. And thats a huge market potential that a lot of the companies here are trying to tap into. One of those companies is home care assistance, it provides in home care for clients and Just Announced it will start using robots to help care for seniors. We got a sneak peek at one bay area Senior Living community. The robots created by a startup called olney labs can be operated remotely by family members who want to check in on their loved ones. Theyre powered by batteries that can lost up to five hours, always on so family members or caregivers can use it like a two way platform to chat anytime and move the robot around. The company will have 20 to 30 robots in circulation to start, the hope is the gadgets will help seniors battle loneliness. It take a walk together, can cook together, can watch tv together. These are the things we want to enable the shared experience that are very fun and engaging and also spontaneous. I think it would be wonderful to have, especially if you dont have a mate. And with the senior population expected to grow 50 over the next 15 years, according to the u. S. Census, the folks at olney labs are hoping the robots will some day become common household devices. Back to you. Aditi roy, thank you very much. What a sweet week for apple. Now on pace for the seventh straight day of gains. That is the longest stock winning streak. Get this, in nearly two years. More gains ahead. Time for trading nation with real human beings. Here to talk about it are craig johnson, are you bleeding . Craig johnson of Piper Jaffray and stacy gilbert. I know them to be real and alive. Seven Straight Days of gains, thats nice. What are you seeing the Options Market about where apple may be headed Going Forward . Overall, the Options Market continues to have what i would say is a positive to bullish sentiment. What i think is really important with the options are telling us is that the risk with apple shares has come in considerably. Were looking at this bit measure of how expensive are options. For example, if we look at the at the money options, this is the one that the strike is right where the stock is trading. The call and puts cost around 3. 8 of the current spot of apple. Thats around 4. 40 if were looking out two months. Thats in the bottom quartile of what we have seen over the past five years. So what i would say is for anyone who feels like they missed this recent 12 rally, the options are offeri inin ini attive reward. Protection really is not expensive on historical basis. If anything, the sentiment is continue to be bullish, but the risk seems to have come out of this stock. Craig johnson, has the risk come out of the stock technically and or fundamentally in your view . Well, brian, when you take a look at the longer term chart we put up, there is a couple of technical things we see. The downtrend reversal off the may 15 highs, really good solid support around 90. Now, last time were on the show, we talked about apple, and how if it got above 110, it was going to be a breakout, probably move up toward 120. 117, you think there is probably three more dollars to the upside. I would look for profit taking to come in at that point and time, look for the drift back. But looking out 6 to 12 months, i see a retest of the highs you see back there in may of 15, that would take stock back up to 130. Shortterm, little profit take toward 120. Longer term, 120, very achievable number. Craig, thank you very much. Appreciate that. For more trading nation, can always go trading nation. Cnbc. Com, but only if you have internet access. Amazon looking to do the streaming music mark wheat it has done to retail and what that means for apple and spotify and you the consumer. Thats ahead on power lunch. And now the latest from trading nation. Cnbc. Com and a word from our sponsor. Periods of elevated volatility can dramatically affect trading strategies, stock prices and pricing forecasts. The volatile markets can also serve as an opportunity for traders to reassess their risk tolerance, review their trading plan, and evaluate their overall investing methodology. Welcome back to power lunch. Yesterday we told you how amazon has plans to open convenience stores. Today they are upping their bet on streaming music. What wont they do next . Live in San Francisco with the details. Hi, diedre. Hey, tyler, good question. Its infiltrating our lives and its yet another push into our homes by amazon. The big difference between the services of amazon unlimited, as its called, they are cutting the 10 a month barrier. Prime members get access for just 8 and thats two dollars less than apple music and sp spotify. And the echo version is only 4. It did not find a way to get music labels to cut their prices. Amazon is simply subsidizing this service in an effort to sign up more prime members, basically infiltrate your home. You probably already have a music streaming subscription. There is reason to believe there are many out there who dont yet. Apple music set up 17 million subscribers in the last year. Amazon is hoping there are millions more they will sign up to its new service with the added bonus it will work on the amazon home echo system. Pandora showed off a new rebrand and launched a plus service to all its servers. Thank you very much. We go to recode Senior Editor del ray. What do you make of what amazon is doing . I think its typical amazon with the undercutting 8 version, which is basically your margin is our opportunity. I think they probably realize that unlike video where someone might subscribe to hulu, netflix and maybe amazon prime video, its probably not like that in music. So you need a Real Advantage if you want to be the goto spot. And a 2 discount for someone who doesnt yet have streaming Service Subscription i think will be enough for a lot of prime members to sign up. So thats their edge, because it seems to me that an awful lot of the streaming services, and i use a couple of them as many people do, they do Different Things better than the other guy. Fundamentally theyre kind of comodotized. Unless youre a real super music nerd, i think the average consumer looks at them and sees basically the same thing. Again, at a discount, i think thats pretty interesting. I dont know how many people are going to switch from one of those services to amazon for 2 a month, but i think for someone you would imagine amazon thinks there are millions of people in the u. S. Who havent signed up to one yet. I think 2 off is a no brainer. The 4 version only available on echo devices, i think thats interesting, and i think its, you know, smart to build an exclusive to echo, but the 8 one really seems like the sweet spot. Jason, im one of those music nerds. I use them all. Theyre all very different but very similar. Spotify is great if you want to listen to whole entire albums. Pandora is great to just have music in the background. Amazon prime has the best playlist. What are you doing . Im cooking dinner and i want some jazz. Theyve got some really nice cu curated playlists. Do you think their strategy is to make the price so little got to be a winner or loser, yet the money is so insignificant that people are just going to sign up for all of it . I dont know thats how it has plays out so far. You mentioned you subscribe to multiple ones. Im on the opposite end. I just subscribed to spotify six months ago, and ill switch over because, you know, why not save 2 . Switch over from spotify to amazon . Yeah. I dont have a ton of songs ive downloaded. If you create a playlist on spotify, and users know what im talking about, you aint never going to leave because you spent so much time on it. I have the echo. I love it. The speaker is not as good on the echo as a sony speaker is, as a bose speaker s i dont think. But the sony speaker and the bose speaker cost more. Me well be right back when power lunch returns. Sttegies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at td ameritrade. Experience the thrill of the lexus is f sport. Because the ultimate expression of power, is control. This is the pursuit of perfection. Amazons new service, i feel like the movie and tv industry and now the Music Industry is becoming the food industry. Writs just how much can i consume for the lowest price . I mean this sincerely, the tv stars, musicians need to get paid. I feel like its a race to the lottery. Weve all gotten accustomed since the record album got broken up and you stopped paying 15. 99 and you started paying 99 cents. Everybody got accustomed to getting it free or getting it for almost nothing. Im watching apple, were all watching apples winning streak continues. Apple is hazing for its first 7day win since 2015, so there you have it, outperforming todays markets which are relatively flat after the release of the echo mc minutes. Your thought about that, getting more for less or nothing, i think the only way samsung comes back and gets back in the cell phone battle is theyre going to have to dramatically cut the prices of their phones. Dramatically. So much cheaper you cant resist. And that will hurt. Thank you for watching power lunch. Closing bell starts right now. Hi, everybody. Welcome to the closing bell. Im Kelly Edwards from the new york stock exchange. And im bill griffeth. Taking a hit on concerns over a potential sweep on election day. Were going to tell you what it would mean or what it would take for democrats to flip the house. That will be coming up here. Russian president Vladimir Putin speaking to cnbc about claims the country is behind a Hacking Campaign to influence elections. Well take you to russia for his latest response. Plus steve