Transcripts For CNBC Power Lunch 20161026

This hour. Microsoft rolling out 3d capabilities in the latest windows update. Home sales unexpectedly climbing in september, up 3. 1 . Stocks roll off their session lows at this hour, the dow was down triple digits at the open. Nasdaq still in the red, the other two averages have gone green. Melissa . Thanks, michelle. Welcome, im melissa lee. Power lunch coming to you coast to coast today. Brian sullivan is live for us in sunny san diego. Whats on tap . Thank you very much. We got a big two hours for you from one of the biggest investment conferences in the united states. Jeff kline coming up, he says there is one big potential positive for the stock market that nobody is talking about. Well find out what that is. What is the overall mood here. Are people nervous . Bernie clark will join us. Big thinker, novelist, generally smart guy, Malcolm Gladwell, your guest coming up as well. Well talk about the markets, talk about the economy, and well talk about why college is actually so expensive, gladwell has done some really interesting work on this. We got a big couple of hours. David winters of the Winter Green Fund joining us, had a big win on his investment, reynolds america. Big two hours. Ill send it back east to michelle. 12 days, ten hours to go, before the election. New numbers out of florida are giving a fresh jolt to the Trump Campaign. Right to Cnbcs John Harwood with more. Donald Trumps Campaign has been looking for good news wherever they can find it. They have been on a bad run over the last couple of weeks. Today they got some good news. Bloomberg politics with a poll by respected pollster ann selzer came out with numbers showing donald trump ahead by two points in the sunshine state. Thats a critical state for donald trump. He needs it for his path to 270. Now, that result differs from other recent polls, nearly every other poll in the last month has shown donald trump behind in florida. Look at the real clear politics average, shes up by 1. 5 points in that average. Nevertheless, this is something that is welcome news for donald trump as he moves toward the homestretch. In a good mood today when he appeared in washington at his new hotel for Ribbon Cutting on pennsylvania avenue. And he was in such a good mood he was celebrating an Exchange Last night between his one of his top surrogate Newt Gingrich and megyn kelly on fox. Lets look at the original Exchange Last night. You are fascinated with sex and you dont care about public policy. Me, really . Thats what i get out of watching you tonight . You know what, mr. Speaker, im not fascinated by sex, but i am fascinated by the protection of women, and understanding what were getting in the oval office. Now, of course, donald trump himself has tangled with megyn kelly more than once on fox news at the debate that they had kicking off the debate season last year. Donald trump liked what Newt Gingrich did. Here is what he said when newt was in the audience with him at that hotel opening. Congratulations on last night. That was an amazing interview. We dont play games, newt, right . We dont play games. We dont play games. Now, of course, the challenge for donald trump is he significantly is behind with women voters and a lot of women republicans complained after that exchange that Newt Gingrich was out of line, but Newt Gingrich was out today saying i was right, megyn kelly was wrong, and were going to find out in about 12 days whether voters agree with him. 12 days, 10 hours, 55 minutes and 40 seconds. Lets get back to the news that one poll has trump ahead in florida. What is fueling trumps lead there, can he carry the staten election day . It really matters. Lets hear from ben camisar, a reporter from the hill. Good to have you here. It is one poll, but it does mean that donald trump has a fighting chance in florida. And if he has a fighting chance in florida, that means he has a fighting chance at the overall election, right . Florida, if he doesnt win florida, it is hopeless, have i set the table correctly there . Thats about basically what i was saying. You see a lot of polls recently as john said earlier that have shown clinton up by this narrow margin, but, you know, if it is about tied in the state, which it is, there is also the possibility that trump might be up by a narrow margin. Look at margin of error. So this was certainly the what the Trump Campaign wanted to see out of this poll today. That said, it is going to be significant slog in the state. Were seeing early vote numbers of hispanic voters, rising significantly from 2012. Hispanic population has been typically not voting for trump. Even in florida . Even in florida. Youre seeing hispanics that are not as supportive of trump when compared to other demographic groups. The question is going to be can he hold this lead, he has a slim lead in this bloomberg poll among independent voters. Thats probably going to be what decides this state. And like you said, he needs to win florida and then needs to win a couple of other major swing states in order to have a shot at 270. To clarify, even hispanics in florida, they tend to be cuban hispanics and cubans have been far more likely to vote republican than if they were mexican or puerto rican, et cetera, correct . That said, in general, even with cuban even with in florida, the makeup of the hispanic population has still tilted toward clinton. Has to win florida, north carolina, ohio, pennsylvania. How is that looking . So thats the best path for him, those four states right there. Right now hes about tied in florida as we said. About tied in north carolina. Clinton has a slight edge in the real clear politics polls. Ohio is the state where hes slightly leading in the real clear politics poll and pennsylvania which is growing further and further out. Clinton has a healthy single high single digit lead there. So look for trump to really start to, you know, try to hammer home some of his points in philadelphia, in pennsylvania, in order to try and shore that pathway up. If he loses pennsylvania, then he has to string together a whole other group of states, smaller states with smaller electoral votes. In that case, he has to get michigan, the likes of michigan, wisconsin, nevada, new hampshire, and more. What does the early voting in florida suggest . Yes, so were seeing the big increase so far has been among the hispanic vote, the difficulty, you know, we just know who is voting. We dont know what who theyre voting for. It is kind of tough to forecast this, but looks like the early indications out of florida have been positive for clintons, but that said, this election has not hemmed to most conventional rules. So were left a little bit waiting here. What about with younger people, has he been able to improve that gap at all . So there was actually a new poll that came out from Harvard Institute of politics that looked at his vote looked at the Millennial Voters, 18 and 29. Clinton now, in that poll at least, just one poll, but hes shes holding a lead higher than the margin that barack obama had over mitt romney back in 2012, which is certainly, you negotiation not ideal if youre the Trump Campaign. Interesting trends here, you know, you saw trump doing significantly worse among people who voted for mitt romney in 2012, saw clinton doing better with female Millennial Voters than obama did in 2012. So on the whole, the Millennial Vote is seeming to at least be moving toward trump, sorry, moving toward clinton and away from trump. See that in favorability numbers too. Clintons favorability has grown among millennials over the past three months, and trumps unfavorable numbers, which sits around 76 now, hasnt changed over three months. Got it. Ben, thanks so much. Pleasure. Sue herera has the results in todays bond report. There is some demand here, sue. There was, youre right, melissa. The 34 billion of five year notes came off like this. With a yield of 1. 306 . Indirect bids, 59. 7 slightly below the ten year auction average of 60. 7 . And direct bids were at about just under 5 , thats well below the recent average of 12. 7 . Ty, back to you. Thank you very much, sue. Apple shares under pressure after the Company Reported its first annual revenue decline in 15 years. Keep in mind, though, the stock has been on a bit of an upward move, up more than 10 since may. Lets bring in jason ware, apple shareholder and cio of albian financial. What did you think of the report and the Conference Call . Well, i thought the report was kind of it was fine. It wasnt exciting. It wasnt knock the cover off the ball report. We werent expecting that and the street wasnt expectinginging that either. Basically came in beat a little bit on profit. The Conference Call was bullish. They guided up for q1 revenue. In addition, one of the things we noticed in the quarter was that china was down again, one of the stools to the bullish thesis. But tim cook gave a rosier outlook that things could turn around and get better. That is something to be optimistic about. Some were critical they havent capitalized on samsungs problems, but most of samsungs problems came in, what, the last three weeks of the quarter . Right. Right. Yeah. Too early to tell. And i think that, over the balance of the next couple of quarters well see if they can capitalize more effectively on the problems that samsung has been having. But, again, i think iphone 7 is still pretty early on here and early indications of demand pretty strong, a bullish tone in both the quarter and on the Conference Call regarding iphone 7 and we expect it to be a pretty decent cycle looking out over the next three to four quarters. Is apple increasingly becoming not simply or merely an iphone company, but is it overly reliant on that single product . Well, as i talked about in the past on power lunch, it certainly is reliant on iphone and to be sure, i think over the longer term, the answer is yes. It is too reliant on iphone. While were still in this pretty strong smartphone cycle globally, if you look at, you know, the opportunity in india, in china, the opportunity globally to penetrate more of the Smartphone Market is still there for apple, and, again, i think it is important to understand that that is the anchor product for them to be able to sell more software and services and we saw Nice Software and Services Growth rate of 24 on the quarter, and it is something i talked about before on power lunch as well earlier this year, that is going to be becoming increasingly important part of the apple story Going Forward is how much can they sell, what is the content of the ecosystem look like, et cetera, et cetera, the iphone is reliant on that. The product and services are reliant on the iphone. Jason, it is Brian Sullivan out west. Someone referred to apple as a one trick pony, but unfortunately everybody already has a pony. As an owner of the stock, would you agree that it is a one trick pony and if so, do you care . I wouldnt say that it is a one trick pony, if you look at apples history, they have continued to innovate and execute on new product cycles, whether ipod first, and then iphone, we have continued to see them push consumers along into devices that matter and the devices that people really feel like they need to own. In the united states, they certainly saturated the market. I think upside from here will be dependent on how exciting and innovative the new product iterations are. I think next year as we get to the next generation iphone, you know, were pretty excited about what that could look like. Going back to the global perspective, there are a lot of people who dont have iphones in countries that are growing at a fast pace. India is up 50 year over year. There are pricing concerns, the average Indian Consumer is hard pressed to spend up for the iphone. But over time the point is thats the annual income in india. Absolutely. How many people buy iphones spending their whole annual salary on a phone . There are 1. 4 billion people in india. Youre right, the majority of people at present cannot afford that. But there is still some low hanging fruit and some pretty solid rates of growth that we expect out of apple in that market. China is another one. And we think as the economies continue to progress and get more folks in the middle class and if apple has a concerted strategy to address pricing and maybe prices have to come down. But the point to brians point about the one trick pony, youre saying apple continues to put out products so people have to own it. At this point, it is only iphones. The watch hasnt been a must own product, right . On the Conference Call yesterday, there was a point that apple there has been a step up in research and development spending. Are we seeing the fruits or is that going to be so far down the line are we getting any evidence that the money that the company is putting into research and development is actually going to bear fruit in terms of a product that people will have to own beyond the iphone . I think it is probably further down the line, right . They have a lot of cash and putting a lot of cash incash in. Whether thats investment and content, whether thats investment in what theyre doing in automobiles, investment in the next must have product that consumers are going to want from apple, i think theyre doing all of that. Theyre also putting in certainly important investments into areas i think ai, they got to be there. Have to be in vr. Going to be spots that athth are going to be spots that continue to be important for apple. If you follow the money, one can argue that given the execution of the past from apple, given the solid management team, it is not something i want to bet against. I think theyll be where they need to be. Jason, thank you very much. Thank you so much. Yes, thank you. All right. Moving on here, were just Getting Started here on power lunch. Back out to brian in san diego. All right, melissa. A lot going on. Here is one simple question for all you investors out there. A, are stocks going to do well the next couple of years . Or, b, are we going to have another lost decade . Were going to get an answer from our next two guests coming up. Then a little later on, thinker, novelist, author, compelling guy all around Malcolm Gladwell will join us. Well talk about the economy, brexit, why College Costs are too high. Were back. This is the new comfort food. And it starts with foster farms simply raised chicken. California grown with no antibiotics ever. Lets get comfortable with our food again. Welcome back. Steve liesman is here with a rapid update on the economy. Steve . Yes, michelle, better than expected trade data, better housing data causing a very sizable upgrade to the expectations for the Third Quarter. Q3 tracking now running at 3 , a number we havent been able to say very often. I guess three comes after two. We havent had a chance to use that number. Up 0. 4 on the better economic data, the range is now 2 to 3. 6 , a warning that low number, 2 , from the atlanta fed. They did not update their tracking forecast today. Fourth quarter now, 2. 4 . And the Second Quarter actually you see 1. 4. So the Third Quarter, if it comes in as estimated, would be a sizable rebound there. Here is who made changes. Action economics up by nearly a percentage point there. 0. 8. Moody analytics put this together for us. They participate in the survey, up. 6 . And amherst pierpont, up 0. 5 to 3. 6 . There is barclays. The number comes out on friday. The forecast is for 2. 5. It has continuously been a downer in terms of where it is coming relative to expectations. And well see if maybe this time around were setting ourselves up for a potential upside surprise on the economy. Steve, thank you very much. Steve liesman. And now back to brian at the schwab Impact Conference in san diego. Thank you very much. Jeff kline and michael cugino. When steve reported this rapid update, you both were kind of, wow, or hmm, responding to what he was saying, a higher than expected gdp print perhaps for the Third Quarter. Lets scrap what we were planning on. If we get, jeff, this higher gdp number, does that make you more optimistic on equities or still enough to hold us back . It is not just u. S. Gdp, leading indicators back on the rise. Knock looking at booming growth but return of growth that can lead to Earnings Growth, the life blood of the stock market. Would that be good news, though . It is good news for the economy, we want more growth than less, but would that translate into good news for the equity market . Yes, one, possibly better Earnings Growth this and can lead stocks higher. Two, less concern about what the fed might do. Better environment for Interest Rate hikes not having a more negative effect on the economy being in a better basis for rate hikes. Youre a bottom up investor. You take a company, look at their balance sheet, do fundamental accounting, novel concept. Do you look do you care about the macro numbers like that . Big time. We run an Asset Allocation strategy. Were looking at macro factors. Based on the macro factors, drilling down into companies and bottoms up. Thats an interesting number. I think it is higher than expected. Im looking for growth in the second half that wasnt as great as that. High 1s, low 2s. If that does come in that way, in the Fourth Quarter would that be a rising tide that lifts all boats, the boat being the s p 500 . I agree with jeff, if thats the case, you see better than expected Profit Growth and therefore that would hopefully translate down to higher multiples and better stock prices, especially since you have the head winds of the election. There is a built in uncertainty with respect to people, not knowing what is going on, so much drama associated with the elections right now that people are holding back, lets see what the landscape is, lets see what the makeup of congress is, lets see what the real policies are going to be. So, you know, why do you need to do something now . Lets wait a little while, wait until the dust clears. Two picks clearly. Macro, i teased you, a lot of worry that david step, carl icahn, on cnbc lately, nervous about the market. You think there is one factor that people may not be counting that could be good news for the overall market, it is what . It is individual investors coming back as buyers after selling for two years. Once we get past this election, individual investors without the benefit of guidance from the Financial Adviser tends to chase returns, chase the fiveyear return, it has been falling for two years, dropped off 09 and 2010. It just recently dropped off. If history bears out and that turning higher means individual investors come back even seven years into a bull market, people are going to return, jeff . They have been boycotting the stock market for so long. Been so nervous, waiting for the next downturn. A lot of cash out there on the sidelines, waiting to come back to the markets when they feel more confident. Returns are what make them feel more confident. Give us a couple of holiday picks. Williams sonoma and holiday picks, new fields energy and natural resources, coal and oil in the stocking. Less coal, more candy. But they are maybe a good investment. You believe so. New field is in the permian base, big operations there. We see energy as a longterm growth story. We like it for that reason. U. S. Domestic, fantastic, little political risk. Williams sonoma, holiday play, but also a broader retailer. It is cheap right now, compared to where it has been. And we think it will be a decent Holiday Season and we still see a lot of people investing back in their homes, whether it is kitchens, furnishings, whatever, and Williams Sonoma in a sweet spot there. They can cook their christmas plum over the fire. Thank you very much. God bless us everyone. Michelle, back to you. A line there of can i have another . The good, the bad and the ugly in todays trade next. Surprise we heard you got a job as a developer its official, i work for ge what . Wow. Yeah okay. Guys, ill be writing a new language for machines so planes, trains, even hospitals can work better. Oh sorry, i was trying to put it away. Got it on the cake. So youre going to work on a train . Not on a train. On trains youre not gonna develop stuff anymore . No i am. Do you know what ge is . The strikinglydesigned lexus nx turbo and hybrid. Get up to 5,000 customer cash on select 2016 models. See your lexus dealer. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive time for the good, the bad and the ugly. The good, northrup moving higher after the Company Topped estimates upped full year revenue and forecast. That stock up 3. 2 after a couple of other defense beats from boeing and lockheed. On to the bad here, pandora shares down by about 5 after they reported their Third Straight quarterly loss, pointing to a decline in active users. And it is a really ugly day for Edwards Life Sciences after the medical devicemaker reported lower than expected International Sales of its heart valve devices among other factors, even with a 14 decline, by the way, the stock is still up 24 year to date. Keep your hands beat inside. Coming up, were checking in on the theme park economy. The six flags ceo joins us next. Its your tv, take it with you. With directv and at t, watch all your live channels, on your devices, datafree. Switch to directv and lock in your price for 2 years. Offers starting at 50 month. But they demand the best shopping experiences. They may want the latest products and services, theyre your customers. And by blending physical with digital, cognizant is helping 8 of the 10 largest u. S. Retailers meet their demands with more responsive retail models. Ones that transcend channels and locations, anticipate expectations. Creating new ways to engage at every imaginable touchpoint. Its a new day in retail, and together, were building the store of the future. Digital works for retail. Lets talk about how digital works for your business. Hi, everybody. Im sue herera. Here is your cnbc news update for this hour. The worlds on pace to close the gender gap. In 83 years. Thats how long the just out Global Gender Gap report says it could take before men and women reach parity on key issues like health, education, economics and politics. Hundreds of people have poured in as the offensive against isis intensifies. Two weeks out from election day, and nbc news is reporting Hillary Clinton and her allies continue to vastly outspend team trump over the airwaves. The figures put clinton at 245 million, versus trumps 133 million. A car enthusiast in kosovo who wanted a lamborghini but could not afford to buy one has built a replica instead. One piece at a time. He used two secondhand mitts beerbi i mitsubishis and other parts to do it. It is new a real head turner. Good for him. Thats the news update at this hour. Back to you. Sue, thanks so much. Too hot to handle. Six flags blaming adverse weather for its earnings miss. Joining us for a power lunch exclusive is john duffy. Great to have you with us. A lot of analysts trimmed their estimates knowing the weather was very hot over the summer, but you saw a pickup with pass sales through labor day weekend. What gets us through the slower quarters ahead, especially as gas prices are starting to rise . I think as you look at this quarter, you know, weather is something that we have to deal with all the time. And we did see some adverse weather, really in the first half of the Third Quarter, that impacted our attendance. The good news is that in the back half of the quarter, we saw double digit attendance growth. So, you know, we can specifically identify the weather as the cost of that. As we think about Going Forward, you know, we think that our investments that we make in all of our events like fright fest, holiday in the park, best new capital year ever, all of that will continue to bring people to the park. How much are you spending on things like vr. I would think vr might challenge park attendance, if you can have a roller coaster experience without going to the roller coaster. Right, well, you know, we love Virtual Reality, because you can have something that is new and exciting, something that you can aggressively market to bring people into the park with minimal cost. Doesnt cost that much. But what is unique about Virtual Reality at our park is youre doing it on a roller coaster. You cannot find that anywhere else in the world. Are all of your parks year round and what of the ones that arent, what do you do with them between december and early march . You know, not all of our parks are year round. We do have a handful of parks that are open. Most of our operating days are geared around the school calendar. But in the Better Weather climates, so, for example, california parks, in mexico city, we are open dallas, one in dallas . We have one in dallas, we shut down in san antonio. Shut down for a couple of months, january, february. Rising costs of minimum wage, we have seen issues with restaurants. Im wondering if youre seeing it either does it hurt you when it comes to margins and paying employees or hurts you when it comes to attendance . We have seen an impact associated with minimum wage. As we look at the number of states that pass minimum wage laws, where we have parks. That has impacted, you know, but that is something that we deal with, we look at other efficiencies in terms of reducing the cost. Youre absolutely right, the best thing is is that it is putting more money in the pockets of the people that live around our parks and so we think it is helping attendance and theyre spending more in the park. Net net it is helping. You say looking for other efficiencies that sounds like use more technology, so we dont have to employ real people. Well, were always looking at how we can come become much more efficient in anything we do. It might be just moving our employees around a little more efficiency throughout the park and reduce the overall labor hours. What is your favorite ride . My favorite ride . You know what you cant say all of them. It is a tough one. Obviously because we have a number of parks. But i would have to say my favorite ride is here in new jersey, el toro. El toro. The bull. Appropriate on cnbc. Perfect. John, thank you. Great, thank you. John duffy, six flags. Shares of under armour feeling a burn following a weak earnings forecast. The Company Founder and ceo kevin plank stopped by Halftime Report a short while ago. Scott wapner here with the details. One of the big stock stories over the last 24 hours. Todays slide following the stocks worst day in some eight years on tuesday after the company said it wouldnt meet prior growth targets. A handful of firms out downgrading the stock. Kevin plank defending the companys investments in footwear. Retail footprint and international presence. Plank saying earlier he is focused on the future of that company. I think under armour has such an amazing runway in front of us and the track record we have done to establish that, go back to 2012, 100 Million International business, today, 700 million four years later. We were womens was footwear was 200 million something business. Womens the same thing, few hundred million dollars, this year, over a billion dollars. We have established this platform of not being a nice little player but we have highs on number one. Not like it was a bad quarter. Sales were up 22 . It just happens to be the slowest growth it seems that the problem may equally be that the earlier estimates were a little aggressive. Not that the business is floundering. They had so many consecutive quarters of plus 20 or greater revenue growth. And theyre doing it again. It is just, there is little margin for error when you have a high valuation stock and wall street expects your growth targets to meet one level, they expect your margins to be at one level. And if you cant meet those expectations, even by a little they set the goal post very high. I was going, you really think you can do that . It was just aggressive, you know . Competition, nike, adidas, et cetera. I asked him whether he supports donald trump or Hillary Clinton. I love my family. I love under armour. I love america. You know. Like i want america to win. Like, we just were the greatest i spent 250,000 miles on the road last year. Ill probably do more than that this year. And the one thing i see is that america is a very special place. I hate seeing america in this line of us being torn down of i think we are great now. I do think there is opportunity for us to improve. But i definitely want people in america to believe. Hes a believer as you know and his brand, he is as optimistic as they come despite some of the head winds theyre facing and the stock decline hes feeling. Any comment on reports of a deal of any sort . He wouldnt go there. There has been this report that theyre going to outfit Major League Baseball in 2020. They have done a number of deals with colleges lately, whether ucla or cal or wisconsin. But he wasnt ready to go there with an official announcement just yet despite the fact that reports have been out there theyre going to do that. He has to be pleased with the uptick in sneakers. Back to school was gangbusters for ua. Just rolled out a new steph curry commercial. It aired last night during the nba. Opening game . He means everything to their footwear brand as you know. They have a new shoe. 140 bucks. Right there priced with the lebrons and other big sellers and theyre optimistic about that. I know a couple of boys who probably are going to get their daddies to be buying these shoes, dont you . I do too. Scott, thanks. All right, lets check back in with brian in san diego. Brian . Ill just say the new look warriors look like the warriors of ten years ago when they got dusted by the spurs last night. But thats not why were here. Coming up after the break, if you read the tipping point, blink, outliers, chances are you reference our next guest almost on a daily or weekly basis. Big thinker, novelist, Malcolm Gladwell, your guest, on power lunch, right after this. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. 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. Anything worth pursuing hard work and a plan. At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. Time for the your business entrepreneurs of the week. It may look like a scene from a reality tv show, but this group of recent College Grads are actually venture for america fellows, sharing a house and incubating businesses that will eventually open in cities like detroit that are in serious need of revitalization. For more, watch your business sunday mornings at 7 30 on msnbc. And welcome back to power lunch. Schwab Impact Conference in san diego. Very, very cool guest, malcolm glad well, staff writer at the new yorker. New york times bestselling author, big thinker, tipping point, blink, outliers. Delighted to be on the show. Are you an investor . I have a schwab account. And i do make small investments, but mostly i have other much smarter people make those decisions for me. Because it is interesting, i think that people would consider you one of the smart ones. Your books sort of come at things from the side, and present new ideas and people look at you and say, there is a big thinker. Can do you feel like you, malcolm glad well, could beat the market if you tried . No. Not even remotely. Why not . Well, first of all, im dubious of any claim by anyone that they can consistently beat the market. But also i have no expertise in that area. Im a writer. I talk to interesting people, that does not you know, it would be as if you talked to an investor and said, do you think you could write an article for the new yorker . Why not . Youre an interesting, thoughtful person, write an article. They might say yes. I think people tend to think things are a lot easier than they think they are. The one thing i my father taught me this lesson, my father was the kind of person who he would meet someone, size them up, and instant he thought that they knew even 1 more than him in a given area, he would defer. So if he met you and he realized you knew more about, you know, home construction, than he did, if you said it, he would listen. I have the same thing. I have enormous respect for expertise, which means i will never try to be an active investor. Of all of the ideas youve come up, a tipping point, 10,000 hours and think without thinking and blink and all this, what is the one thing that generated most heat, the most controversy, where people said i love you but i cant agree with what . There has been so much of that. I feel like i tracked controversy like flies. But, you know, legitimate controversy, or people 10,000 hours generated a lot of controversy, but it was people misunderstood what i was saying. So thats one category. But i think in some of my podcasts, this last year, a lot of the stuff on education, generated legitimate controversy. Like people in a way i was grateful for. I wanted to start an argument about about higher ed in this country. Well get to this in a second. My colleague, tyler mathisen, who went it a very fine learning institution as well. Tyler . It pains me to say that. And all due respect to our friends at Virginia Tech as well, malcolm, this is the kind of you studied, but bear with me if you would, you studied the behavior of crowds and how people move in crowds. I want to get your thoughts on how that informs your view of the political process in this country, and how you feel about political polling in light of th that. This is a question outside of my areas of expertise. I guess i would say the record of American History is that crowds, most western democracies, have made some really good decisions over the last couple hundred years. I mean, we tend to get very, very focused on the decision right in front of us and the mistakes we made in the last five muinutes, but take the lon view, i mean, think who was in place in 1939, when war with germany breaks out. You have fdr and america and Winston Churchill in england. Those are good choices. Think who you had in place other crucial moments in American History. Lincoln at a crucial moment. I mean, so there are i feel like the crowd rises to the occasion. When there is something of significance. Even in brexit . Well, brexit is not over. I have enormous respect for the ability of the political system to drag that one out for a long time. I dont think it will happen. What do you think . Yeah, i think theyll find a way to i mean, brexit is an exercise now in facesaving. Right . There needs to be a way to back away without people who voted for brexit, to feel that they have been had. And once that people figure out a way to handle that gracefully, i think there will be a solution. If you were going to write a book about this president ial election, what would the title be . Wow. Im canadian. The title would be you can say whatever you want. Im heading home. Thats the title. Is it that bad . It has been it is bad when you are not from here and you hear what, you know, i get a daily dose of what canadians think about what is going on. Thats a different a little bit appalled. There is no the canadian debates dont resemble the american debates. Gloi wh you know what i mean. This has been a harsh one. In the political process now, Hillary Clinton is one of her policy goals to provide free Public Education. In your podcast, you do an excellent piece, and i urge everybody to listen to it, two private schools, and basically they compete for the same students, cost about the same the same academic profile, vasser is struggling because theyre spending money on financial aid. Bohdan is booming because theyre spending money on food and dorms. Rich kids who dont need financial aid. The two schools are going in very, very different directions. Do you think that free Public Education for Public Schools is possible given the demand driven nature of colleges these days where kids want to be, like, i want a twobedroom suite and steak dinner every night. I dont think it is possible. If you look at, you know, it is well known that the two areas of the american economy, where costs have increased faster than rate of inflation over the last generation, health care and education. You cannot offer the the government cant offer to write a blank check for education, if education costs continue to rise at the level they have been rising. That is a recipe for disaster. Efg we know about, massive government subsidies, a driver of costs, not fiscal discipline. If colleges are behaving irresponsibly now when it comes to holding down the cost of tuition, how will it behave if the government walks in and says well start funding thank you, Malcolm Gladwell. Michelle carusocabrera in studio. We talk about this, whether it is the subsidies talked about so much which is supposed to make college affordable, actually over time is what makes it much, much more expensive. We have seen that with healthcare. What is driving what is one of the main drivers of health care in this country. It is the isolation of the user and the payer. You cant talk to a college about cutting costs. It doesnt seem to be in their lexic lexicon. It is amazing. Part of it has to do with parents have got to go back to the notion that we had in this country when we built the state School System in the wake of the the University System in the wake of the second world war, the function of education is to have interesting and productive encounters with intelligent professors and great late night conversations with your peers. Thats it. That can take place in a barn if it has to. Youve been to Virginia Tech. Im not going to dis your alma mater. You can no, there are barns there, but it has come up. I think we had an interesting and productive discussion in a beautiful Convention Center with Malcolm Gladwell. I appreciate it. Thank you very much. Thank you. If you havent read his books, check them out. To dom chu for a market flash. Watching shares of dr. Pepper, snapple group, up a percent. They spiked higher in the midday trade amid a report that says dr. Pepper, snapple, according to sources familiar may be looking to buy privately held buy drinks, may know those energy kind of nutritional type drinks you see in the grocery stores. It could value the company as much as 1. 5 billion, but reuters reporting that story and that is sending shares of dr. Pep, per, snapple higher. Dom, thank you. Dom chu. Cheap seats, burrito bowls and soda. Power rundown earnings edition straight ahead. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. When you travel, you want your needs to be understood no matter where you go. You want an experience that feels highly personalized. With watson on the ibm cloud, travel Companies Like wayblazer can apply cognitive analytics to social data to understand what a destination is really like. And who exactly, it will appeal to. Today watson is helping businesses create experiences that revolve around you. Because thats what the ibm cloud is built for. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back. Time for the power rundown. Earnings edition with dominic chu. Stock number one please. Stock number one, first of all, chipotle. The Third Quarter profits plunged 95 , continues to struggle to recover from that series of foodborne illnesses last year that changed the same store sales by 22 , worse than expected. But forecast sales to rise in 2017. So maybe it is the bottomish. Really . Every time you think there is a bottom, there is another bottom. Look at it is interesting, because bill ackman stepped in not too long ago with his new cash to deploy with a higher higher growth area and here he is down 10 today. On the whole e. Coli thing, have burritos peaked, going out of fashion . Did people figure out there is a thousand calorie in that healthy burrito . I think a Credit Suisse note said all of a sudden chipotle is the nonconventional chic restaurant to being a conventional restaurant, having a look at all the same metrics, prepare food differently, go through the perhaps safer sourcing and not just organic and not just whatever local from wherever you can find it and that kind of thing. It could be something where you stock number two. Stock number two, southwest, posting mixed Third Quarter results, the airline benefited from lower fuel prices and record traffic, but shares are under pressure because of lower than expected growth in the key metric of passenger revenue per available seat miles. Something they all prasm. Your final . The final one here is cocacola posting better than expected quarterly results. The beveragemaker said it had 4 organic sales growth this year, seeing margins expand more than half a percent as well. Cocacola, i should note, though, showing some weakness now, just drifting about. 1 to the downside. Got it, thank you, dom. Tesla out with earnings after the bell. What are investors hoping for and will musk be able to deliver . We discuss next. Im melissa lee. Gearing up for tesla, earnings out after the bell today. A bold call on mylan. Amazon set to overtake macys in apparel sales. What does that mean for them and the retail landscape. The second hour of power lunch begins right now. You cant go wrong welcome back, everybody. Im tyler mathisen. In the headlines at this hour, economists boosting their Third Quarter gdp forecasts on the back of the latest u. S. Trade data, tracking at 3 growth rate. Much better than it has been lately. About 200 companies in the s p 500 have reported their earnings so far. 74 of those have topped eps estimates. 18 have come up short. And an up and down session for the dow turning negative again. It was down more than 100 points earlier today. Right now. Small losses. Michelle. Im michelle carusocabrera. Lets head back to brian at the schwab Impact Conference in san diego. What do you have coming up . All right, we got more big interviews. Thank you very much. Here is a question, how many Financial Advisers out there believe that janet yellen is dong a good job or is doing a capable job as head of the fed. A shockingly small amount, were going to find out, they have done research on that, thats coming up also. How many advisers are bullish on the stock market . Well find that out as well. One of the great Value Investors out there, david winters, just making a mint for his investors in his shares of reynolds american, which got bought, he will join us exclusively, what stocks is he betting on for the next five or ten years, well find out. Couple of big interviews still yet to come in san diego. Well see you in a couple of minutes. Look forward to that. Tesla reporting earnings after the market close. Can the automaker deliver and what are the things to look for . Lets bring in phil lebeau and colin rush. Phil, ill start with you. Were close to session lows on tesla. Have we taken some surprises out of the quarter since recently tesla gave the good Third Quarter delivery numbers and reiterated the forecast . No. We have not taken some of the surprise out because the main question that a lot of people have is, a, where is your liquidity now, what is your expectations for the Fourth Quarter, and that ultimately brings up the question, what might happen or might not happen when it comes to raising capital. We got mixed messages from tesla over the last several weeks involving whether or not there would be a Capital Raise in the Fourth Quarter or even in the First Quarter or do we look at so Something Like that further out next year. Thats one of the key questions people will be focused on today. I thought elon musk was clear there wouldnt be a Capital Raise. Thats what his last tweet said. I think that really goes back to the question of what are they spending on . They go through a programmatic capex spend for each of their models. The big concern is if we see a delay in capex spending, is there a delay in actual ramp of the model three production. I think the other number that snuck out yesterday in s. E. C. Filing that solar city put out on the acquisition was the production number, which is 25,185, a healthy number. That is about in line or a little bit ahead of expectations. Your job is about to get more complicated, picking up coverage effectively of a solar company, something out of your wheel house. Right. We have the remember, we have the investors voting on that merger coming up on november 17th. You got a couple of events before then, so were going to see a lot more discussion regarding tesla and solar city at least over the next several weeks if not the next couple of months. Is there some question if tesla meets a forecast . It failed to meet more than 20 targets over the past five years. I think with the production numbers where theyre at for the quarter, and the push that they made in terms of delivering cars in the Third Quarter we feel pretty comfortable theyll come very, very close to that 80,000 vehicle number for 2016. The big question i think still is the model three. We keep coming back to this as the product that is going to drive an awful lot of cash flow for this company and is really where you start to see the return on capital come. We need to see that ramp come back to, you know, to focus here for folks after all the distraction around the solar city acquisition. Just yesterday i think Consumer Reports came out saying that tesla was close to the bottom in terms of reliability and that fell squarely on the model x, the doors. Will we see more cost not cost but emphasizing on improving the reliability of that feature of the x . Im sure theyre working on improving that reliability. We should point out that Consumer Reports went to Great Lengths to say, look, the model s, the second year of the reliability ratings on the model s, that reliability improved. And theyre fairly optimistic that tesla will have halfway decent reliability on the model 3 because it wont be as complex or the expectation is that it wont be as complex as the model x. Therefore if all goes as planned, we know, you know, you bring a new vehicle in, nothing goes completely as planned, but if it is not as complex and there are not as many technological features in it, theoretically, it should not have as many launch problems as you see with the model x. Colin, last question to you, what do you need to hear . You got a perform rating on tesla, middle of the road on the stock. What is your number one question for elon musk . Number one question, the list of 12. I think what we really want to get to the heart of is what the solar city platform looks like as it gets integrated in, what the real cash flow plans are and what the return on capital is for those plans and do they have the supply chain lined up and executing to deliver all those model 3 vehicles, again goes back to the timing question that we were talking about earlier. Colin, thanks. Our thanks to phil lebeau. The epipen will have new competition sooner than expected. The ovicu can stop a severe allergic reaction, was off the market for the past year due to manufacturing problems. Shares of mylan trading lower, 37. 69, decline of 2. 5 . Mizuhu just initiated yesterday. Reading through your note, i see you did expect teva to have a generic in 2018. This is now a 2017 generic coming on for epipen. Does that change your mind about mylan . Actually, so mylan has its own generic that it is launching in 2017, as far as i understand it, the ovicu is not a generic, it is a brand, and will be sold at branded pricing. And so therefore the epipen will be available to consumers as a generic at a generic copay, so should be less expensive than the ovicu and thats why im not too worried about it this year. So the ceo of caleo says the auto injector will come out at a very, very low cost. Does that worry you . How does that compare to what we know about the generic pricing of the epipen. They still have to get it on form larry with payers. They have to pay rebates and theyre going to have to distribute the product and im not aware of the size of the sales force of caleo, but i think, you know, consumers really have known the epipen for years and they trust it and it is the go too product. So if you can have a product like this for your 10, 20 generic copay, even a low price brand cant compete with that. So bottom line, you dont change your position as a buy on the stock . No, not because of the ovicu, no. Why do you like the stock . It has come in a lot since the epipen crisis in the Third Quarter. The congressional testimony, et cetera, really had a negative impact here. And i just dont think that the Financial Impact to the company is going to be as great as people fear. I still view this as a go to product. I think the negative publicity could be positive because now everyone is aware of the name of the brand and what to ask for. There is a whole number of patients that are not getting epipens still, 14 million patients that are, you know, at risk for anaphylaxis. And the market can only go bigger from here. On top of that, i dont think theyre going to be paying that much to the supply chain on their generic as they have with the brand. So i think theyre going to be able to hang in there and do okay. And once they provide additional visibility around that, it wont be, you know, as concerning to investors. For mylan, what is your estimate of the average selling price of an epipen . In other words, their revenue net today and what will that be in 2017 when they undercut their own branded product with their own Generic Product . What the company told us is that the branded product sells for a net price of about 274 after they discounted it to the trade and the generic will sell for 200 after all discounts. Were a little higher, but just because we think that there is some wiggle room here. Also on pricing and discounting and well see how it all shakes out, but the other piece is that the company spends quite a bit on promoting the drug and once they take out a piece of that cost, and that expense when the drug goes generic, they can save more on the bottom line, selling the epipen. Why do they need to promote a drug if they had a monopoly on it . People still doctors still need to be reminded of it. Still couponing, awareness raising, societies, professional societies, medical societies, all kinds of stuff has to still happen. But you can do a bit less, you know, direct to consumer advertising, dont have to create television ads. Youre a generic now, youre broadly available to anyone and everyone knows your name, youre essentially the xerox of the anaphylaxis world. Everybody knows the name, thats for sure. Sure. Thank you very much. Thank you. To dominic chu for a market flash. The dow is losing some steam now. We did start off low earlier in the day, got back to positive territory. Were now drifting back down to break even after bouncing of that nearly 107 point deficit this morning. You got big names dragging down the index today. Apple, also merck. Again, United Health care, dupont, a lot of the names here moving here, dragging things down. But still, tyler, volatile session for stocks overall. Dom, thank you. Donald trump estimates his brand is worth 3 billion. It may be worth a lot less after this election. We will discuss that when we come back and we get back to brian out in san diego. What do you got coming up . What ive got coming up, tyler, is how many Financial Advisers believe that janet yellen is dong a good job in her stewardship of the federal reserve. They just did a survey of that, were going to find out. Plus, what percentage of Financial Advisers over a thousand of them here in san diego are bullish on the stock market. These are things you care about. And these are things were going to get to with bernie clark of schwab coming up in a few minutes. Enjoy your phone you too. inner monologue all right, be cool. You got the amazing new iphone 7 on the house by switching to at t. What . . Aand you got unlimited data because you have directv . . Okay, just a few more steps. Door its cool get the iphone 7 on us and unlimited data when you switch to at t and have directv. Welcome back. San diego, california, joined by bernie clark at charles schwab. Lets get to the meat of what our viewers care about. Are my investments going to go up in the next couple of years . You have done a bunch of surveys and there is something a little troubling, which is only about half of the respondents to your survey believe the s p 500 is in for a good stretch, why do you think that is . You can hear the Energy Around the advisers and how theyre growing at four tames the rate of what is normal for the traditional industry. And theyre exceeding that. When we talk to them, they talk about can i meet my clients objectives. And that has a lot to did with performance. Over 50 said it will be harder. It is the lowest rate since 2008 we have seen in confidence. Is it fair to say, then, that the men and women that are here, the advisers, more than a thousand of them are the least bullish or the most bearish they have been in eight years . That was the last time we saw a reporting of this. We saw the opportunity to help their clients find the way, whether to retirement, uck succession of their assets, taking care of their children and family members. Deep into the planning aspect of it. I would tell you one thing that is an interesting thing, they have even started to move away from reporting to benchmark and now reporting much more to goal on the achievements. What does that mean . Planning plotting in their reporting the movement against the opportunities their clients want to have in the future. Should we be nervous about that . Nervous about the fact we have seen a market that has a fed that has been reasonably inactive. They tell us also that janet yellen is not a favorite. That was the other thing. 44 , we had in in a graphic, 44 have faith in yellen as head of the fed. Theyre seeing a dovish fed. They would like certainty. It talks to the performance issue. Talks to the environment orient and, of course, hard to have a conversation these days without the election. I will remind them that janet yellen did something bernanke did not do, raise rates. We forget. They did raise rates about a year ago. Got a meeting coming up next week. Here is the interesting thing about this industry. Which is forget about december quarter point. There is probably 25 to 35 or 40 of all the people here, theyre young. They have never managed client assets or advised clients in a rising rate environment. We have never had one in the last eight or nine years. How do you think theyre going to handle that . Kind of scary . It is different. And their clients have never seen a raising rate environment, many of them, because theyre younger. If youre a 31, 32yearold investor, have a little bit of money, career is getting going, thinking about your family planning, you never have done it in a rising rate environment. And, you know, i would point out one thing, they have great mentors in the founders, right . Go back nine years, and what they were dealing with the client base that had never seen a zero Interest Rate environment and they coached and counseled them through that and got their life plans on target. So really they could maybe we should call millennials the helicopter money generation. How would you what is the one piece, lets leave it at this, what is the one piece of advice you would give, over a thousand Investment Advisers here, lets say a couple hundred of them are in that younger skew. What would be your advice, single best piece of advice to them . They need to start leaning into the next generation, need to bring forward with them, goal planning, maybe as opposed to benchmark planning and need to understand how they set their clients, new clients up for having children. Not how they succeed the assets to the children. There is a whole shift. Sell all bonds and gold. I wouldnt make an investment recommendation as advisers, really, if you think about them, probably only about a third of the value they add in the relationship is about the portfolio now. It is much more about career planning, life planning, working on that planning, states, those types of things. Thats where the value is coming from. Great Mentorship Group in helping them get to the next level. As you see the universities around here, a whole generation wanting to enter into the space in a different kind of way. Thank you for joining us. Thank you for having us. Cnbc. Melissa, you know, what is the last thing that we have seen, a, a cubs world series, b, a Cleveland Indians world series, or, krrc, a significant rate hi cycle by the fed . Well get one of them. Coming up, why employers are looking for english majors. And what was robert frank doing on the steve harvey show . Hell tell us all about it coming up on power lunch. Important than your health. 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Not breaking news, though, is it . 60 have an unfavorable view of him according to recent polls. Most people buy stuff too because he slaps his name on it, every product, his hotels, his ties, et cetera, the president ial run, is it hurting his Business Empire . Which is based on his name . Robert frank joins us looking into that story. Today is a big day for the trump name, you open that brandnew hotel in washington, d. C. And he highlighted the value of the trump name and the trump brand. Very proud of our company. We built one of the great Real Estate Companies of the world but it seems very insignificant compared to what were doing now. New data from brand keys, the value of his brand is in decline. The premium for the trump brand or the added value of his name last october was 43 in all tv and entertainment, 40 for golf courses, and 30 in real estate. All of those numbers have fallen this month. That premium is down to 18 in tv. Down 10 in golf clubs and down 10 in real estate. More than 300 residents have signed a petition asking for the name to be removed from the buildings that we should say is a small share of the 1300 people who live there. His name was already taken off a Golf Development in dubai. The developer, the trump tower in toronto is trying to strip the name from that building and the mayor of vancouver pressuring to rename the new trump hotel in that city, which is scheduled to open up in about a month or so. The Trump Organization itself is diversifying from the name, it is launching a new brand of hotel that will be called scion, rather than trump, and, you know, well see what happens. Can i understand that first graphic that you put up, in other words, trump a building with a trump name versus not having a trump name used to be worth 43 more and now it is worth only 20 more because of that added name. Still worth 20 more than a nonbranded trump name, so there still is a trump premium, it is just smaller. Got it. I wonder, after this is all said and done, what the receptivity of big businesses that have professional meetings will be to going and holding those meetings at a trump property. Yeah. We dont know. We have no idea. But doral does a lot of business that way. Thats right. Well see. The move to scion, did that happen before his run for president or during . It happened after. It was announced late this summer. And what theyre saying is it is a lower price brand, so they didnt want to use the trump name, which is five star, they wanted to go to a lower tear brand. Tell us about steve harvey. You were on his show. Why . What was he like . What did you do . Do we have a clip . We have a clip . 15,000, 4,000. 125. Should we tell them . 250,000, yeah, tell them. 800,000. Is it worth it or ridiculous . Who says worth it . All dudes. Two women, the rest of them dudes, yeah, ill take it. Everything i do is ridiculous, you know. No. But what i love he invited us on. He loves secret lives of the super rich, our show. And what i love about steve harvey is he believes that we all have the power to improve our lives, and that it is okay to dream about Financial Success. It is okay to want a bigger house, a better car, and thats it is good to dream. It is good to dream big. Hallelujah, because right now it feels like anybody who is very aspirational is looked down upon by some parts. It is not fashionable to like Financial Success right now. And steve is all about earn success, it is a great thing. Celebrate it. All right. Thank you. Great stuff, robert. Last hour we spoke to the ceo of six flags. Todays oil chart could be a design for a new roller coaster at one of his parks. Going way up. And now bumping on down. Well explain that Straight Line up and big down move when we return. But, first, back to brian in san diego. They should name that the crude coaster. What else . Thank you very much. Coming up after the break, one of arguably the great Value Investors of our generation, david winters, years ago, brought this forgotten Tobacco Company called reynolds america, just got bought making his investors a lot of money. Where is he seeing value now . David winters will be your guest exclusively when the schwab Impact Conference. Go arizona state. Just like that, a moment turns romantic. So why pause to take a pill . And when youre having fun why stop to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. 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Were seeing oil close down for the Third Straight day, continuing concerns about whether opec is going to be able to seal the deal on a production curb when it meets next month in venezuela. We had wti nymex crude coming well off the lows. 49 a barrel. We got a much better than expected eia inventory report. Crude stocks according to the government fell 553,000 barrels. That was a real contrast to the expectation, and real contrast to what the industry had reported overnight on tuesday. Also, big, big draw had it came to gasoline. Down 2 million barrels, more than expected. What we saw last week was a record amount of oil exports. He thinks a lot of it is likely going to latin america, mexico, refining issues, their capacity is at 50 . Venezuela, we know there are a lot of issues with production as they had so much political disruption in that country. Back to you. Thank you very much, bertha cooms. Now to sue herera with the news headlines. Thank you. Here is the news update at this hour, everybody. Another earthquake in italy to tell you about. The magnitude 5. 4 quake struck in the markey and umbria regions. Pictures just in from the Italian Coast Guard show the dramatic rescue of 600 migrants in waters off the coast of libya. The coast guard says it happened earlier this week and the migrants can be seen there clinging to a sinking dinghy. The u. S. Is racing to repair an old air base in Northern Iraq after isis booby trapped that facility. Once complete, it will be a main staging area for u. S. And Coalition Troops liberating mosul. And this is an amazing story. It is a happy 4 month birthday to a very special baby girl from texas. She was taken out of her mothers womb at 23 weeks, given surgery to remove a tumor, and placed back in again to complete her gestation. Mom and baby doing very well. The doctors are elated. Thats the news update this hour. Now to brian in beautiful san diego, california. You know, you know whats beautiful, is medical technology. A lot of pain in america now. People are sniping at each other, the political environment, but when we look at what medical science is capable of, i got to say we live in a pretty dog gone great country. It is really it is a miracle story there. They are calling her the baby born twice. And shes a beautiful little girl. Happy ending. Amazing. Gives me chills. Sue herera, thank you very much. Joined by david winter, ceo of winter green, it also gives me chills. Im sure youve given your clients some chills because years ago you bought reynolds american, you also own British American tobacco. Last week, earlier this week, my brain is a little off, British American bought refolds. How big of a windfall is that for you . We made 20 in reynolds this week, our largest position. We think putting the family together will make the combined bat worth more over time. Youre not going to celibate because theyre buying reynolds . No, we love it. We think theyre smart people, pricing power, and they have really good management. And theyre also very reasonable with their management comp, so as from a shareholder perspective, it is a great place to be. You went after cocacola a few years ago. You didnt just own reynolds america, the single biggest holding. What did you see . First of all, you had this pricing power, you had they merged in lorillard, but had management, and people matter. And you had this company with the ability to be the gift that keeps giving, whatever happens in the economy, and we like that. We want to sleep well at night. Heineken. Heineken. Why heineken . Another big holding for you. I assume youve been holding the dutch shares. Newer position for us. But, you know, people love beer. And yes, they do. There has to be more. There is more to it. It is global, it is very well run. The disclosure is honest. The compensation is reasonable. And the family is the biggest shareholder. You get to participate with the family that over time has made everybody a lot of deals in that space as well. In bev, everything is coming together, molson. Do you think heineken is a takeover candidate . The family is there for another 150 years. Been around for 400, 500 years. Youre owning it for the business. We own it because we love the business and we love the way they operate it. We went to vietnam, privileged enough to have a look at how they run that business in vietnam. Started from a little investment, become a big business. And theyre very longterm, and theyre very thoughtful, and i think as an investor today, you got to find these companies because we think one of the biggest issues is hidden costs. Which i love to talk to you a bit about now. You sat down, you said, brian, how are you doing . Thank you, im doing well. We have been talking for over a decade now. I want to talk about hidden fees and etfs. We have done a lot about why etfs are so cheap. We have seen the Movement Toward etf. Why do you think there is hidden fees in etf . What etf and index funds talk about are the management fee. They dont talk about what is the underlying fee that you dont see, which is the delusion from executive comp and buyback plans have used to support it. We did the calculation for the s p, brian, it is 4. 1 . And part of this exists because when index fees were created 40 years ago, it wasnt as much as a factor. But in a low return world, index fees the index funds are expensive. Thats how they sell themselves, diversify, pay us half a percent a year and forget about it. If you look through it, we have an analysis called the iceberg. Just a tip of what they disclose. And the thing that is interesting is because the returns have come from ten stocks, fang plus friends, there is a lot of risk in index funds and exttfs. We think this bubble, it is a double bubble, you got all these people buying index funds and so many of them now, but theyre a lot more expensive than investors realize. So different angle, we havent heard a lot about it, coming to the defense of the active manager. David winters making a mint on reynolds american, holding British American tobacco, and a relatively new position to heineken, holding that for the long term. Great to see you. Thank you very much. Ill send it back to new jersey. Thank you, brian. Just 12 days, nine hours before the election. Our next guest believes the race is tightening just a bit. Especially in the wake of the florida numbers that we have seen. Donald trump is consolidating his message. Here now, glen thrush. Welcome to power lunch. Good to see you. Why do you think the race is tightening . I think there is a couple of reasons. Oh. I was dying to know too. Were going to work on that. Get his shot back. One thing well talk about is, again, like we talked about in the first hour, one poll in florida shows trump slightly ahead. And very hard to see a path if trump cant win florida. Even if he controls ohio, gets lucky in pennsylvania, he really needs florida. And thats why today you think maybe he does have potentially a shot. Well talk with glen hopefully right after this break as we work on the technical obvious technical issue. Dont move. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. 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So where we left off was you think the race is tightening, tell me why. Well, first of all, didnt you just kind of get the feeling there were too many chips on one side of the table and that, you know, the table was bound to get balanced out . I think what is really happening here is a reaction to the fact that Hillary Clinton has been already dubbed the presumed winner of this race. And i think a lot of core Republican Voters arent really happy with that. And that sort of galvanized them. Youre seeing a consolidation in places like florida, you mention the poll, we also have a new monmouth poll out of new hampshire, showing Hillary Clintons lead going from 9 down to 4 . Clinton people have been saying they would they thought they would see some tightening and i think were seeing it right now. In new york city, they think the election is over. You walk around here and it is a done deal as far as theyre concerned. They think she has won completely. So i think also depends what area of the country you live in, right . Thats a great point. I was in brooklyn a couple of days ago, there is a real sense of by brooklyn, i dont necessarily mean Hillary Clintons campaign headquarters. Im out in topeka, kansas, out in nevada, and the feeling is much, much different. There is a there is a real sense among people, particularly conservatives now, of being sort of torn in half, because dont necessarily love trump, but a sense of a Clinton Presidency i think is pulling a lot of people who dont like trump back into the ball game. Do i think it is also that were getting further and further away from the debate, the debates in general where he hurts himself he hasnt had an unforced error in a week. Exactly. Give him time. That is an absolutely great point. Because when trump falls in the forest and no one is around, does anyone see him fall . Having a face plant in front of 80 Million People is something. I think that point you make is spot on. That about the wikileaks stuff . Are we it is something new every day, and yet it is all kind of the same stuff. Right, im not. Im getting killed on it. But, i mean, the i think youve got a point there. The fact that it is not cure rated, the fact it is not presented in a way that really constructs a narrative and the Trump Campaign honestly has been terrible at weaving this stuff together and making an anticlinton case out of it, there is any number of reasons to sort of sue them for campaign malpractice, but this might be the biggest one. I think the drip, drip, drip hasnt helped. And the other thing about it is so far it is just basically showing Hillary Clinton is exactly who you thought she was, a calculating politician, surrounded by, you know, a bunch of squabbling machiavellian operatives. I dont think so far with the exception of the release of the Goldman Sachs speeches, there really hasnt been anything that i would describe as a bombshell. Did breitbart add that hat to you . I do. It is sitting off camera. He needs to run the table on those five big states. Florida, north carolina, nevada, ohio im repeating myself because im not wearing the hat, but the i think he really needs to run the table. Hillary clinton structurally in this race enters the game, regardless of who the democratic nominee would be, with between 230 and 246 electoral votes, path for democrat is much, much easier. Trump is sufficient a sulfuric presence doesnt help him at all. Got it. Glen, thank you for joining us. Great talking to you. Well, years after its jeopardy victory, watson is used by thousands of companies and at least 20 industries. Ibm betting big on the supercomputer to prove it is relevant in the modern business world. Deirdre boson has more. There are thousands of businesses here at the world of watson. And theyre showcasing the ways in which theyre already using Artificial Intelligence or plan to. One of those businesses you may have heard of, Silicon Valley unicorn. Were here with the ceo and founder, stewart butterfield. Thank you for being with us. Tell me about why youre here and the use of Artificial Intelligence. Im wondering, do Technology Companies need to be working with Artificial Intelligence now or risk being left behind. Called the future battleground in computing. So to answer the second question first, i do think so. I just got off stage with david watson, general manager, david the gm, well take it. And talking about ibm and the partnership to bring some of the capabilities to third party developers, and for slacks own internal. A simple example is slackbot, taking advantage of watsons capabilities to learn over time and people ask more questions and improve. And at the other end of the spectrum, making watsons capabilities available to make those more intelligent. And are you doing this to sort of give yourselves a better value proposition, worried about any competition in this space . Startup legends, 4 million users and 4 years, are you worried about microsoft, facebook and others . This is not a move to gird ourselves against competition. It is an interesting time for us, at right now, we dont have any competition. Which is great. But it is also a bit of a challenge. People dont understand what it is for. If you ask our customers what did you use before slack, 80 say nothing. We have a lot of education to do and competition would help with that. But, yeah, there is a huge amount of value that is latent in the conversations that people have on slack. There is millions and millions of messages a day, billions a month, and all of those have a lot of information which is critical to those businesses, but really hard to retrieve. Okay. And the last thing i want to ask you, how are the Public Markets looking to right now and what do you think would need to happen for slack to sort of look at ipoing. Public markets seem friendly, again, to cloud based businesses like ours. And we have been trying to run the business with the discipline that would be required to be a public company. But it will be a while for us, just because were growing too quickly. One thing high growth is great and we like it, want to keep it, but it does make it harder to predict where well be a year out because of a small change in that inflexion makes a big difference. It will be years for us. Wont be in 2017, at least later than that. And since i think we have the time, let me ask you one more question. Slack has been called the email cavalier. People have been calling for the death of email for a long time, but still around, we still use it a lot. Do you think there will be a point where we see email be killed off and applications like slack take its place . I get asked this a lot. And this might sound crazy, but i think email will be around for another, like, 10,000 years. It is a great way to cross organizational boundaries, how we set up this conversation. I think it is a terrible choice for internal communication. The advantages of email, lowest common denominator, it is an open system, anyone has access to are disadvantages inside of a company. And when you move conversations to slack, in channels that are accessible to everyone, there is a huge increase in internal transparency. Across teams. Marketing team can see what the sales team is up, engineering and design. Thats a huge value for all of our customers. And the other thing is you build this archive increased in v edd overtime. You can start on your first day with an empty inbox, no access, cut off to the whole history of communication. And with slack, you have access to all of that. Stewart, thank you so much for being with us. And, with that, well hand it back to you and later on we will be speaking to ibms ceo, ginny rometty. That happens on fast money. Whose show is that . Yours. Yes. Amazon could soon sell more clothes than any other retailer in america. What the changing trends mean for Retail Stocks when power lunch returns. It seems theres just no stopping amazon these days. According to a new report from cowen company, amazon will overtake macys in apparel in the next year. We have our two reporters. Mr. Chen, go ahead and explain the thesis here. What are the numbers saying . The numbers are really saying amazon will be number one by 2017. There is a Retail Revolution happening, and amazon is getting so much traffic. Whats happening here, the mall traffic is declining and consumers are basically skipping the trip. So there is a lot of problems in stores right now and a lot of problems which we think retailers can solve, our survey work does say that consumers dont love browsing on amazon and they like shopping, still. So there is a lot of controversy, a lot of interesting things on the horizon, and its up to retailers and bricks and mortar to really respond in this situation as well. What are they buying most predominantly on amazon . What are consumers buying . I bought jeans on amazon, but i cant think of anything else i bought apparelwise. That is a great question, tyler. The real opportunity here is to get the latest and greatest at physical stores. So consumers are looking for trendsetting stuff in physical stores, and i think the lesser known brands, as well as replenishable items, those are more popular on amazon. So there is a big story here as brands evolve, and curation matters. Scores can really take the advantage as they consider curation shopping. Are people going to the bricks and Mortar Stores and looking for the same thing on amazon and buying at amazon at the end of the day . Reporter in some cases, maybe. Especially if youre looking at brand aparrel like underarmour or nike. But they find it a little clunkie than walking into a store and seeing it with your eyes. They search for it on line so they can go into the store and do that final touch, feel, tryon touch, and then they buy it there. But amazon is becoming a Search Engine to engine for shoppers. Thats why theyre going on line now. This will really drive margins. Amazon is focused on so many good opportunities, whether it be apparel, consumableconsumabl grocery, and were seeing momentum under the stores that i cover. Consumers do use amazon, like kourtn courtney said, as a pricechecki pricechecking. Amazon needs to be a lot more fun. A lot more fun. How does macys fight back here assuming they go from number one in that area to number two . This is a really tough one. One area ive always wondered whether or not macys would be interested in exploring keep in mind macys has a lot of their privately labeled brands than the national brands, so things you can only buy at macys. Maybe it would be an interesting testing ground to try to sell those on amazon. I think it will be very hard, though, to do that with a national brand. You can buy nike shoes in a macys and you dont necessarily need to go only to a macys for nike shoes, and thats where i think the struggle is going to be. And, of course, macys has the ability to offer you a store. If something doesnt fit, if it doesnt work, if you need immediate gratification, you can go to a store. Thats one challenge amazon needs to fight, but we all know amazon has fought a lot of challenges before and theyve made a way to do it. Thank you, all. Thank you. Check, please is next. I got it, dad. Ow we love to keep them safe. So we made the Nest Protect Smoke and Carbon Monoxide alarm. 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That way. Girl you better get on tmobile why pay more for data limits . Introducing tmobile one, unlimited data for everyone. Get four lines just 35 a month. Check, please all right, guys, time for check, please. My final thoughts. Malcolm always said one of the geniuses of his father was to follow his expertise and then follow his lead. If we end up with a rate hike environment, some craziness around the election, whatever it is, we may have to defer to expertise of our men and women around here. This idea of a thirdparty payer, the minute youre disconnected from something youre getting, drives costs up, and college, for example, is so subsidized, it actually makes college more and more expensive. Somebody has a chapter in her book about this very topic. Exactly. Amazon. Com. Its hard to measure quality, thats the thing. You dont know what youre getting in both cases. Robert frank on with steve harvey. I have a new idea for robert, a new show for cnbc. Robert was so gifted here. It is called the really big price is right. Well have luxury items. That is amazing. That is fantastic, tyler. Robert the host. How about this for the title of that show . If you have to ask, you cant afford it. Thats even better. Thanks for watching power lunch. Closing bell starts right now. Welcome to the closing bell, everybody. Im kelly evans at the new york stock exchange. The dow coming back from a 100point drop earlier today, currently up 38. But apple still under some pressure. The stock down nearly 3 after yesterdays earnings and the outlook failed to impress investors. Apple hoping the mac event will change the narrative. Julian robertson. Hear how hes so concerned about a democratic win on election day