S p down 1. 1 , and the russell down 1. 05 . Why . One main reason is china. China devaluing its currency. The dollar strengthening significantly. Oil is down big time, look at that, dollar strength, it takes fewer dollars now to buy a gallon of a barrel of oil at 43. 2, down almost 4 . Brent down almost 3 , gold up just a little bit as you see there about a half percent. Mandy is out but sarah eisen who knows a lot about currencies and china is with us today. Thank goodness youre here. I live for days like this, watching the dow and the impact of china spread across the globe. Bob pisani, anything with any china or Commodity Exposure is getting pummeled. Dow up 240 yesterday, down 240 now. Its a wasted week so far. Put them up, Materials Energy and industrials to the downside. Thats the big losers. Some of the obvious names and their impact from china. We always talk about casinos, wynn 70 of revenues in china, and yum brands 50 of its revenue in china down 5 . Those are the easy ones. Lets talk about ones not so obvious, Big Industrial names 10 revenues or more for dow chemical in china, 3m 10 . General electric almost 10 . Johnson controls 6 or 7 . Theyre also moving on this news as well. And sarah, we talked a lot about luxury stocks, oh, theyre not affected. Well he are. Lvmh, louis i have on it and lloyd hennessey, the stock is down 164. 85 and its now being called into question china being the generator. The eem, the emerging market etm is now stitting near a fiveyea low. The problem is china was a Revenue Growth generator for a lot of the countries and this hes being called into question. The companies now have to turn back here. Pressure here and in europe. Emerging markets are the hot spot. Over to the nasdaq, bertha coombs, the nasdaq had been holding up relatively better than the rest. The big reason why is google bucking the trend today after announcing that google inc. Will now become a subsidiary of alphabet. In terms of point impact today, google shares are adding about 12 points of upside but that is more than being wiped out by apples 20 points to the downside. Apple giving up all of yesterdays gains and then some on its stronger volume than we saw in yesterdays move up. The devaluation of the yewian a headwind for iphone sales, concerns about a china slowdown, also weighing on chinese adrs, online retailer jd com com the worst performer turning negative for the year. One bright spot on a down day the airlines. American airlines saw july traffic up 4. 8 from a year ago and tyler, of course, lower jet fuel means better margins. Back to you. Bertha, thank you very much. News order from the bond market, threeyear notes are up for auction, very interesting day taking shape. Rick santelli tracking the action for us at the cme. What is the demand, rick . Really the demand grade was a b minus so definitely above average. It could have been better but it was a b, b minus. Whats interesting today of course is with equities down and all the attention given to china, you dont do these things when things are coming along just great. It has implications which cause the treasuries to rally pushing down yields, maybe too much of a good thing. Lets go through it. 24 billion threeyear notes at the auction, 1. 013. The bid side was 101. 5 offer to 101, price in the middle. 3. 34, a little better than the auction average, indirects 52. 8, this saved the grade, best since december of 08, direct at 8. 2, a bit on the weak side under the ten auction average of 12. It continues to be watching whats going on with the indirects that may give us the most clues in the future, and of course, when you consider what foreign Central Banks are up to, maybe it makes a whole lot of sense. Tyler, back to you. Thanks. Lets go to dominic chu for a quick market flash. Rackspace cuts revenue guidance for the full year. The Web Hosting Company did post a better than expected increase in their total revenues for the quarter. Rackspace also announced a 1 billion Stock Buyback Program in addition to the 200 million in an already bought back already so again those shares still down by 11 . Back over to you. Dom, thank you very much. Stocks near their session lows following chinas move overnight to devalue the yuan, so how is it going to impact the fed . Weve got cnbc contributors ron and michael far with us. Ron just wrote a piece about the fed and a chance of a september rate hike on pow powerlunch. Cnbc. Com. Welcome to you both. I suppose the argument would be that, to the extent that the chinese devalue their currency and their exports become cheaper, that takes one peg out of domestic inflation, and thats what the fed is watching. And this comes after Stanley Fisher yesterday, who was the first to suggest rates were going up this year said that the fed is looking at inflation being too low. I said weve gone from the greenspan put to the fish net, because he just put a floor on the market yesterday suggesting that you know, look, now unemployment is where we want it, looking at inflation and this china story exacerbates any deflationary tendencies in the Global Economy including our own. I have to unwind myself, its probably less than 50 50 they go in september. Michael, what do you think . I think that theyre so determined they still might but according to their argument of data dependency, i think that rons right. I dont think they can do it. Dr. Jenny bryson out of wells fargo he argues that basically less than 1 of u. S. Gdp is involved with trade with china. We had a 2 currency correction. This is not a really big deal in terms of what it means between the u. S. And china. Its a much bigger deal if it starts to affect owl World Markets and slows those markets and begins to slow our foreign trade. So i think overall yes, the fed should probably sit on the side for a while longer, though sooner or later theyve got to do something. Tyler, whats interesting here is the fed and even mr. Fischer remembered to inflation as transitory for six years. Oil crashing, commodities are down anywhere from 30 to 50 . Sugar is down 50 , copper down at a multiyear low. You see commodities falling like this, its hard to suggest that its headline inflation at the very least will accelerate. Its very difficult in the months ahead to see the numbers go higher ron, to your point i think the treasury market is backing that up. Dramatic fall in the treasury yield, Interest Rates are coming down. Nothing in the commodity prices, basic materials or Interest Rates suggest we have any kind of recovering or expanding economy, or any whiff of inflation anywhere. Let me just raise the idea that back when chairman janet yellen yesterday, there was narrowly a concern elsewhere in the world, i. E. , much more focused on u. S. Data, so that runs counter to the idea that what the chinese would do. Lets look at how the u. S. Changed since she spoke. Employment cost index slowest since 198. Commodities collapsed again. Yields have dropped. As mike was saying in the pipeline or the markets, youre not getting any indicators, you get whiffs of deflation so sure, the fed is focused on domestic issues, but we could import deflation as much as we can import chinese goods and thats becoming a risk. For years, a lot of stock investors and u. S. Investors said were going to tap the chinese growth engine, were going to see the Growth Numbers coming from china, demanding from the Multinational Companies driving the world because the u. S. Was so tepid. The u. S. Is not a more than still tepid at 2 gdp growth god willing but that makes us still a very dim light in a dark forest a dark forest getting a little dak rker. China is japan in 1989. Their economy is going down. I dont care whats going on with their stock market. The dow is down 250 points. Ron, michael, thanks very much. Check out rons story on powerlunch. Cnbc. Com. The big surprise from china today devaluing its currency by almost 2 . Its the biggest single day chinese devaluation in 21 years. You can really see the impact on the dollar chart against the chinese currency. Were going to bring in alan ruskin of g10 formal strategies at deutsche bank, knows the market inside out. Is this china sparking a new round of the currency war . If china was really getting into this, this would be a big bazooka but you have a situation chinas devalued by a meager 2 . Keep in mind that the biggest ever. But its real trade weighted index relative to the tenyear average, stronger than any other currency out there. Its doing a small touchup. What about the signal . The signal does suggest they worry that the chinese economy is slowing and they are worried about policy traction, they dont have the instruments other than the exchange right now to give the economy a lift so thats problematic. So this was a oneway bet for a lot of hedge funds, for a lot of folks in the Foreign Exchange market that china market would strengthen and strengthen over time. As far as the Hedge Fund Community is concerned, im not sure about the china trade. There was domestic carry trade people effectively buying the yuan currency buying through the dollar. That i think is going to be squeezed but right now actually the Hedge Fund Community is betting the other way in this direction for a weaker currency. Everyone hates emerging market currencies and commodity currencies. The only currency to buy is the u. S. Dollar. Why isnt it stronger . Why havent we gotten to parity yet . Its keeping a lot of the g3 or g4 currencies on the other side. Lot of people are looking to the u. S. Dollar and looking to the euro to some extent as a potential safety play. Keep in mind europe has a large account surface countries in this environment may do better. Buy the euro, is that your tip . I would still say sell the euro but not right now. Its a little bit sideways right now. Dont like the dollar. Thank you, happy birthday alan ruskin the head of g10 Foreign Exchange at deutsche bank. Much more on todays big s l sello selloff. The dow down 255 points, steepening there. Look at west texas down 4 . The s p down 1. 3 . Oil sharply getting near those fivemonth lows. China hurting u. S. Stocks today as weve been talking about. Its economy clearly slowing, beijing clearly concerned, so is now a bad time to be building cars to sell in china . Thats what mercedes is doing, building them right here in the u. S. Where is phil lebeau, on the shop floor. Hi, phil. Hi, tyler. They are actually expanding production of vehicles that will be going over to china. These suvs behind me are coming off the old hummer line here and they will be shipped to china. Interesting time to be sending vehicles over to china. Well look at the Business Model that mercedes is employeeing, when power lunch returns. Llo. I am a fully automated Investment Advisory service. I can help you choose investments. Monitor them. And rebalance your portfolio. I can do a lot of what humans can. Except have a real conversation. If youd like that, you can always speak to someone at schwab. They arent algorithms. Try not to hold it against them. Say hello at intelligent. Schwab. Com my name is jamir dixon and im a locafor pg e. Rk fieldman most people in the community recognize the blue trucks as pg e. My truck is something new. Its an 811 truck. When you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you dont hit them when youre digging. 811 is a free service. Im passionate about it because every time i go on the street i think about my own kids. Theyre the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then ill drive it every day of the week. Together, were building a better california. Welcome back to link. We want to call your attention to whats happening with the broader u. S. Stock market. Were very much in the red, negative day to day but the Dow Jones Industrial average sitting near its worst levels today, down by about 250 points. The s p 500 down by about 26 as well. We are at the weakest levels so far today, not helping the cause again. Apple feeling the pain from that ratings cut at jeffries yesterday, the stock to 130 bucks a share from 135, citing uncertain demand for the iphone and a loss of Investor Confidence and companys ability to grow. Nonetheless, sarah, when it comes to the dow, its shading about 36, 37 points off the blue chip index, so far by far the biggest drag on the dow today. Apple shares, sarah back over to you. Thank you. Some other headlines, drugstore chain rite aid will begin accepting mobile payments such as apple pay, Google Wallet and android beginning august 15th. Symantec selling Information Management business to an Investment Group led by Carlisle Group for about 6 billion in cash and amazon samestore sales hitting 30. 1 in july, up from 26 in june, and driven by amazons black friday, otherwise known tyler as prime day. Thank you very much. Sarah, mercedes reopening an old hummer plant in indiana to build trucks and suvs and sell them in china and at that plant is where phil lebeau is right now. China the auto sales there at a one and a half year low. Why now . Phil . Looks like weve lost phil there. Lets while they try to reestablish phil the story is this old plant that used to make hummers now out of business, being used now to build the r class sedan mid range suv to send over there. Markets near their lows of the day, the nasdaq off about 80 points. The s p down about 26 and the dow off about 250. Two big reasons for it, china and oil. Lets look at some of the biggest drags on the dow, companies with exposure to china, apple, caterpillar, chevron and exxon. Much more on the big market day when power lunch returns on cnbc, first in business worldwide kpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. 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General, used to build the hummer here, never went out of business but the hummer went away obviously when gm went to restructuring. Now theyre building another suv out here, they have contracted pi mercedesbenz to build an r class. China auto sales the july numbers came out overnight down 6. 6 , worst sales in a year and a half for three of the last four months we have seen negative sales in china and by the way, yeartodate, sales are only fractionally higher. Still, mercedes is going to be shipping the r class over to china, this is the only market where it is sold. They sell it in china and nowhere else around the world. Its fairly popular over there. Mercedes signed a threeyear contract with a. M. General to have them build it and ship it over there because they believe theyve got to free up their capacity at their main facility in alabama, where they do all of their suvs, by doing this, this allows them to free up some capacity. Were seeing this with a number of automakers, theyre running up against the ceiling in terms of how much wiggle room they have on the assembly line. Look at how production has grown steadily since 2011. Ed to hit a High Water Mark in 2019 of 12. 3 million. As you look at shares of the major automakers, the importance of china could not be overstated, not just for General Motors and for volkswagen, who are number one and two, depending on how you count the vehicles in china, but also for mercedes which does huge business in china, especially in the suv market, thats why theyve contracted with a. M. General to build the r class. It will be interesting to see what happens over the next couple of months, if it sales continue to slow in china. Well watch the stocks for reaction, interesting story. Thank you, phil lebeau. Speaking of china, really sparking some concern here on wall street. The dow is now down about 250 points. Were joined now on the floor by ben willis of kingston securities, energy getting hit the hardest. Lot of other groups are in the red. The only one green is utilities. Utilities and the Real Estate Investment trust, the extra sensitive group, a safe haven trade the same reason the tenyear collapsed or the yield has collapsed on the tenyear. We see levels on the tenyear on oil we havent seen in months. Huge panic and huge overreaction in my opinion based on the china story. We celebrated yesterday china would be forced to do something. Now theyve done that, wait, we didnt want that. We have a crazy overreaction. As a matter of fact, id be looking for the baby in the bath water of the whole trade, energy sector, a lot of that is coming with positions that had to do with the high yield atf bonds. The only thing i would say to you, ben, is that this is the eighth decline for the dow in nine days, these 200point swings especially lower have become more commonplace. Why are you not more concerned about china . I love the whole idea of a correction for the Overall Health of the market but i think weve seen the correction in a great many of the sectors particularly the energy sector. I have always said china is the far more important story. I never thought greece was an important story ever in the history of it. I think china is the real story here. Its a huge overreaction because part of that is the fact we never know whats real and not real from china. Here is a real demonstration of their power that in a currency war we thought everybody signed a peace agreement. Here we go, another round of that. Thank you, ben willis, color from the floor. Hes he a buyer, tyler, on the day. Thank you, sarah and ben. Big day for oil down 4 . It broke below the closing low from back in march and that level to watch as we head into the last hour of oil trading is 43. 46, and look, it is below that now down better than 4 on the day. While oil has been falling 18 in the past month, one oil stock is holden onto games, core labs. It is higher as you see there, coming up on power lunch later today, we will speak exclusively with the ceo of core labs about where he sees crude oil going from here. You want to catch that interview in the 2 00 p. M. Hour, exclusively on cnbc. Sarah . Tyler, i want to check on gold prices closing as we speak. They were up earlier on this whole idea of currency devaluation. You go into safe havens like gold, lost most of their gains. Finishing up a little bit higher and a little above the 1100 mark. Its been a rough few weeks, months, and year for gold, third annual decline. Copper, palladium and platinum are in the red and thats the real story in commodities on the concern about the china slowdown and of course sparked recently overnight by that devaluation, really starting to see metals like copper get hit, oil, of course, tyler, as weve been covering as well. To the bond market we go, isn Rick Santelli tracking the action. Reporter a lot of equity traders on the floor but the fixed income traders say come on, when hailleys comet is mor frequent than a stock correction and considering what china is doing it starts to fit. 24hour charted three years, we had the b minus auction, down nine basis points on the day, hovering 98 base points. 24hour return in the third year, longest maturity. You dont see a lot of volatility around 1 00 eastern when the auction ended but a dramatic drop in yields. Not dramatic enough to take it under where it closed last year, the only maturity still above its find yield of 2014 which is 275, high price of the day only three base points away. How much does this matter to the fed . Well in traders eyes it matters. Look at the midjune start to november, fed fund futures, you see the way its rallying off levels since midjune. The morallies the more traders think maybe theyll not tighten any time soon. Tyler back to you. Thank you very much. Weve heard a lot from donald trump on a lot of topics. That would be an understatement but not so much maybe on the economy. Larry kudlow will join us next on more of mr. Trumps economic ideas. You dont normally see spikes on this chart, china devalues, the dollar sent shooting higher. Which u. S. Companies could be affected the most. Much more when power lunch continues here on cnbc. Hi my name is tom. Im raph. My name is anne. Im one of the real live attorneys you can talk to through legalzoom. Dont let unanswered legal questions hold you up, because were here, were here, and weve got your back. Legalzoom. Legal help is here. Hi everyone, im sue herera. The National Transportation board is blaming a fatigued walmart truck driver for a highway crash that severely injured comedian tracy morgan and killed another passenger. In the hearing the agency said the failure of morgan and the passengers to wear seat belts contributed to the severity of their injuries. The toxic river in colorado has cut off drinking supplies for thousands in two states. An estimated 3 million gallons of mine waste water was accidentally released by the epa last week, closing parts of that river. Republican president ial candidate rick perry has stopped paying his campaign staff. Staffers were informed their pay would be suspended in a Conference Call last night. Most staffers in iowa, though, are still planning to volunteer for perry. A former intern has sued mary kate and Ashley Olsens licensing and manufacturing company, lalani claimed she worked 50 hours a week between may and september 2012 as an unpaid intern. Well see where that goes. Thats the cnbc news update this hour. Back to you, sarah. All right, thanks very much, sue herera. Across the board the dow is down 250 points. The s p 500 down more than 1. 2 . The nasdaq has actually taken the lagging position, it is down 1. 5 and lets get straight to the trading action with bob pisani. Interesting to see the nasdaq coming up the rear. A lot of name with tech exposure to china. The s p 500 certain Big International names have notable volume here. Not just materials and energy and industrials but tech has also in that right now and i just want to show you some of the tech names, significant exposure to china for Texas Instruments, for hewlettpackard, for micron technology, all down notably. Heavy volume also in some of the big global multinationals. I love the cover freeportmcmoran. Alc alcoa, caterpillar. Finally just want to point out that Interest Rate sensitive sector spots with yields down its those sectors doing a little bit better. If you pay a dividend you get bought and thats pretty much it. Less competition from treasuries. Thank you on the volume. Interesting point. More volume on the sell down here, tyler. Thank you, folks. Stocks have been lower from the getgo today following the devaluation of the yuan by china. Which u. S. Stocks have the most china expersoneur. Dominic chu is here with that story. Tyler, the analyst at Goldman Sachs looked at the s p 500, the largest Cap Companies in america and picked out some of the top 20 that have the most exposure. Just to set the stage among s p 500 companies they estimate 8 of total sales in the s p come from the asiapacific region. For those companies that break out the Regional Sales of their particular businesses so 8 there. Among companies that actually explicitly say that china is the source of those sales or revenues, 2 are estimated to come from that area as well, so just to give you an idea of what the numbers are here. Five of the stocks that are in that list of the top 20, check out these names as well. Its interesting here, a number of different Industry Groups are represented here, not just technology, if you take first of all a look at some of these, you got names of the casino ones and everything else, but first of all, skyhorse probably among the most, 83 of their sales come from china. Wynn resorts about 70 of theirs. Yum brands half of theirs, intel 36 and Meade Johnson nutrition, formula, they get 31 of their sales from china. The companies that get a lot of exposure to china, thats five of them. The full story is up right now on cnbc. Com pro for subscribers so sarah, certainly some stocks you want to watch given what china has been doing to its currency. Importantly china was the growth market. Thank you, dominic chu. Todays market drop erased all of yesterdays big gains. Here with me to discuss more what to do, david lebowitz, Global Market strategist at jpmorgan Asset Management and scott wren at wells fargo investment. Scott, you like industrials and theyre some of the worst performers today so state your case. They have and what you have to do in order to buy industrials and be overweight industrials which we are, you have to look out over the next 12 months and say is europe going to be better . I think it is. Is the u. S. Going to be better . I think it is. Is japan going to be better, i think it is. Now, would we love to see china surprised to the upside gdp wise which i think is unlikely . We sure would, but i would say most of the world is doing better and industrials should benefit from that, although as you mentioned, not just today, but certainly over the last six or 12 months industrials have lagged. I think theyll be doing better in the next is it months. Some of the worst performers. David youre sticking domestic. Consumer discretionary financials and health care, looking where businesses generate most of their sales in this country. Exactly, the Consumer Discretionary play is a play on wages eventually picking up here in the u. S. I know thats a little bit like waiting. What evidence do you so he of that . We think wage growth will accelerate into the later half of the year, given the tightness in the labor market and we look at a broad swathe of indicators. He wii think we see some wage pressure, not as much as people expect at this point in the cycle. Financials is a play on rising Interest Rates and health care looking interesting, a lot of good drugs in the pipeline. Youre not changing your mind based on today. You see wage growth and the fed moving on a better u. S. Economy this september . I do. Were still in the september camp. It would take a lot to disrupt the current trajectory from a fed standpoint. Thinking of the rest of the world where the uncertainty lies and whats going to happen with china and europe, whats going to happen with japan. To me those are the things that could throw the fed off course. Well see in anything changes after today. Thank you for the strategy and go to powerlunch. Cnbc. Com to see why scott says the fed probably wont hike Interest Rates in september. We didnt get to that so we have a divergence of opinions here, thats powerlunch. Cnbc. Com. Fed certainly in play, tyler . All right, sarah, as weve been mentions all day, all hour, china devaluing its currency this morning by almost 2 . Theres the yuan dollar board as you see right there showing the yuan dropping like a rock. The u. S. Dollar up about 1. 9 versus is. Larry kudlow is with us now. We have so much to talk about today. Great to see you. Thank you. You recently saw a donald trump yet to be released economic plan. I want to be clear this has not been released as a public document, and the one that you saw may very well change before it is, but as the plan stands now, how would it deal with china on days like this, when that country devalues its currency . Well, the plan is a work in progress, but theres two issues here. Lot of people are worried that donald trump is going to be a raging protectionist, slapping tariffs on china, japan, mexico, and wed have a trade war. Thats one school of thought. Theres another school of thought which im in, how about economic growth. To be competitive around the world, slash or abolish the Corporate Tax rate, keep Capital Gains and dividends down, keep personal income tax rates down. In terms of the 14 point plan, i think its actually pretty good, its basically pretty pro growth. It basically wants to slash Corporate Tax grades, go territorial, immediate cash expensing. I love all that stuff, its got kudlow written all over it. Theres one little paragraph point that could be construed as protectionist, just one little point. Give me a hint of what it says. You wont let me off this week. No. All right, president trump, how about that. President trump. Will modify or cancel any business or trade agreement that hinders American Business development or is shown to create an unfair trading relationship with a foreign entity. All right, thats pretty general, but it does kind of say you know what . Were going to duke it out with you. Again, the best revenge is economic growth. I have no doubt that china is violating trade agreements. I have no doubt. Theres no question about that, theyre in the wto, but i think trump is right to be concerned. Lot of people are concerned. But, but, but, we can win that battle by being totally competitive, as i said, slash these Corporate Tax rates, by the way, have a strong, reliable, solid dollar, capital from all over the world will flock to the United States. No double tax of foreign profits, thats in here, so that means you can bring the money home and then reinvest it here. Wed be in terrific shape. Wed get 4. To 5 growth. Donald trump whom ive known for 20 years and hes a smart guy, i may not agree with everything he does, he has a chance to have a really pro growth program. Theres some rumors its coming out friday, okay. I would hate to see him go in to a smooth protectionist mode. I want him to have flat tax, Corporate Tax reform, kudlowian growth policy. Thats what im looking for. Far be it the political observer you, but we want to go to john harwood in a minute, larry. Seems the best thing mr. Trump could do right now is come out substantively with a program like the one you have been made aware of. Correct. To divert from some of the side show stuff that seems to keep sucking him back in and which some say he is encouraging. Larry let me interrupt. I want to go to john harwood but i want to you stick around and react to what john is about to report. Thanks. John . I just wanted to report two things, tyler, two developments related to the dollar, which is something that larry is keenly interested in. One is the treasury has reacted to chinas decision to devalue by saying it would be a Troubling Development if they back away from the market reforms that theyve committed to. Remember, as part of those market reforms, the United States has been hoping that, in rebalancing their economy toward a more consumer and less exportdependent economy, that china would allow the value of the yuan to rise. The economy is slowing down they cut the value, not taking they werent harshly critical but saying if theyre backing away from marketoriented reforms that would be troubling and harmful. Secondly, john kerry repeated an argument that president obama made in his iran deal speech last week which is that if the United States attempts to maintain sanctions and the other major powers of the world do not, because they want to do business with iran, that would jeopardize the United States standing as the worlds reserve currency. If u. S. Financial institutions decide were not going to allow people to do business with iran, people will take their money away from us. John, stick around. Sarah eisen will join and larry kudlow also. I want to get larry your initial reaction here. Lets take first the china part of what john just reported. As i understood it, what china said rhetorically at the very least was in doing what they were doing, they were allowing the yuan to move to what was closer to a market fixing for it, so is that letting the market play or is that just a figure leaf for a devaluation . I think its a market play, because my understanding look, i dont know everything there is to know about china but ive made a whole bunch of phone calls. Theyve been shadowing the dollar. The dollar has gone up 20 in the last year. Chinas economy is weak. They cant afford this appreciation, so theyll let Market Forces fix it, and the original fix was the drop of about 2 . I dont have a problem with that. The chinas yuan has gone up in market and real terms in recent years. The China Economy is weak. Thats one of the reasons for the selloff and by the way, the u. S. Federal reserve ought to take a look at this, because guess what . Commodities all around the world are slumping. The fed ought to watch that. I dont think its a great time for them to start raising rates. Stick around, larry, sarah eisen jump in. We have to see the Ripple Effects of this move. Yes, chinas move 2 in the scheme of what we have seen with its currency appreciate so much isnt that much but if it does spark a whole nother round of other emerging markets, Central Banks having to cut rates or intervene in the currency markets to get their currency weak we talk about a competitive devaluation, thats some of the concern especially if you look at the sharp drops in currencies around the world today, all of that could lead to trade tensions. This is something the treasury and administration would want to talk about. Just may 8th president obama in portland, oregon at the nike headquarters said there used to be a problem with chinas currency market manipulation which at present had stopped and it is true, the question is this a step backward . China has shadowed the dollar. What theyre saying now because their economy is weakening and our economy is at least stable, i dont know how strong it is, they can no longer shadow the dollar. I think thats what theyre saying. The move against the euro is very, very small. The move against the yen is very, very small, but what you do have is a worldwide drop in commodity prices, which i think is being led by the federal reserves rhetoric about raising Interest Rates. And i say again, be careful what you wish for here. Usually, usually you raise rates when currencies are rising and commodities are rising, and so forth. Id be pretty concerned about that. As ive said before, the fed policy, the speed at which they raise rates should be about an injured snail, okay . Thats all they should do, maybe one and done and get out. On that metaphor we leave it, sarah, john, larry, always great to see you. Interesting conversation. Well be right back. We. Now our weeklong look at whats being taught at the nations top Business Schools, and here now eric brinielsen of Mits Sloan School of management and nyus stearns connor brennan. Well could both of you. How are todays students at mit sloan different from five or ten years ago in terms of the classes theyre taking and their postschool aspirations . Were seeing a surge of interest in tech and entrepreneurship. As you know its changing the world, and these students want to be part of that revolution. So my cast on the economics information is oversubscribed. We created a new course on analytics, we work with Companies Like amazon, thats oversubscribed and the graduates are going into more hightech companies than they did before. Connor, what are you seeing thats different from five to ten years ago . Same . Different . The same. I think weve seen Business Analytics building for a couple of years. The big jumps for us global classes, facultyled classes taking our students to milan, china, so that students can get a handson experience in the countries, see the culture and historical significance and perspectives of the country and bring those back into the companies that are multinational in scope. We had one of the deans of harvard yesterday, eric, he said the same thing, that it is critical for to you leave Business School with an understanding of globalism and particularly maybe emerging markets. Agree . Absolutely. Were seeing more and more students go out into the field. We have something called a Global Entrepreneurship lab where students go to teams work in teams all over the country and our Analytics Lab has people all over the world as well so its part of this move towards handson work that i think were seeing in Business Schools across the country. Connor, theres a lot of talk how the millenials want something more out of their work, and out of their lives, and indeed out of their investments than just a paycheck. Are you seeing that . Are they more purposedriven, if you will . No question about it. Some of the students that were letting in to stern have a high eq plus iq. Those are great starting points for some of our students today. Were looking at during the summer social ebt prenuurship and more straight up entrepreneurship and we have experiential learning programs that subsidize the programs for when students want to go into the programs and really build it from the ground up. Its a very busy news day, gentlemen. We have to leave it there. I hope youll both come back soon and chat with us more, eric of mit sloan thank you and Connor Grennan at nyu stern. Much more on the market sello selloff. Power lunch will be right back. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Welcome back ta power lunch. Shares of alibaba set to report earns before the open tomorrow. It will report earnings of 58 cents a share off 3. 4 billion in revenue for the quarter and daniel zhang will be on squawk on the street 9 00 a. M. Eastern time. Lets bring you up to speed whats happening with the markets. The dow jones off by about 237 points, you can see the nasdaq down by 79, the s p down by 25. The nasdaq the big loser so far today. More on power lunch when we come back in just two minutes. Seven out of ten Power Outages in the us are caused by weather. But utilities can now predict where the power will go out, within a few city blocks. Working with ibm, theyre combining micro weather forecasts with detailed data from local sensors. To predict where outages are likely to occur. And send crews exactly where theyre needed, when theyre needed. Ibm analytics from the internet of things is making energy smarter every day. Shares of conformis down today. Meg is live with the ceo. Dr. Lang, thank you for joining us. I understand you guys do customizable personalized joint replacement. Can you tell us what that technology is . So basically offtheshelf devices implants come in a limited number of sizes, six, seven, sometimes up to ten or sometimes occasionally more sizes than that, but they can never really exactly fit the patient. We are taking a scale of exactly fitting that to the patient, recreating the unique shape that the patient had prior to developing arthritis and through that the basic premise is that the Clinical Results should be bet per while your stock is up quite a bit since your ipo it is down quite a bit today. Are you Getting Communications from investors disappointed in something in the quarter . No, we had a terrific second quarter, we just released our earnings, so First Quarter we grew 41 year over year. Second quarter with we grew 50 year over year and provided Financial Guidance for the second half of the year, strong with revenues for the full year between 74 million and 74 million. So again i think very Strong Financial performance, all driven on the premise of our Clinical Data. You also have for the second half of the year a new Clinical Data release that indicates that the functional outcomes are much better example. Patients walk significantly faster if they receive one of our implants and thats a powerful message for a surgeon to give to a patient. You can walk faster if you receive this implant. I want to ask you about that. Analysts called you potentially disruptive to the 15 billion joint Replacement Market but there are four big players that control 90 of it. How do you compete with those big guys and are you a takeover target for one of them . The compete with them on the basis of data, we have a better solution our Clinical Results clearly indicate that patients for example can walk significantly faster. We also have the potential to provide significant savings to hospitals, so theres a reduction in rates reported on patients, they have shorter hospital stays and those things matter so not only the patient and surgeon but they matter to the hospital. If you can actually save hospitals significant amounts of money in addition to being clinically better you can really take share and i think thats what we see reflected in the market with our positive and aggressive growth. Dr. Lang, many nor questions for you. Hope youll come back. Thank you for joining us. Thank you. Back over to you guys. Thank you very much meg and sarah, thank you for this first hour. Its going to be a very busy next hour to take you through it, heres Brian Sullivan along with melissa leahy. Thank you very much. 2 00 on wall street, 1 00 in dallas. The dow down nearly 250 points, the nasdaq down 1. 5 . Oil breaking sixyear lows. The question is, will it close there and establish a new sixyear low . Im Brian Sullivan. Melissa is at the nasdaq today. Well take a closer look at tech and get some investment ideas that our guests call safety stocks, in a bit. But we have to start at the Stock Exchange today where the dow is giving back all of what it gained yesterday. Bob pisani, you and i talked about it on air yesterday, too, about how it was kind of a low quality rally. Maybe you exposed that even more today. 6 points up in the s p yesterday, 26 points down. Take a look at the s p, brian, its been a frustrating couple of days for traders. You cant really get anything going. Cut up the sectors. We talked about the weak innocence energy and materials and industrials on the china story, weaker commodities, slower global growth. I want to note technology is also weak today because there are Many Companies in the tech group that gets significant exposure to china. Look at the companies right now, broad com, qualcomm, micron tech, Texas Instruments and hewlettpackard down because they have significant exposure to china. Broadcom, 50 , qualcomm 62 , micron 17 , so thats an important factor in the weakness weve seen today. Another strange thing the bifurcated transportation market. American airlines and united up because of lower fuel costs but the rail roads are getting clocked today because of lower commodity, potential for lower commodity shipments and potential Slower Growth in china. Real strange move going on in the transports. Dont see that often. Finally theres a lot of frustration about the narrow trading range, all year weve been essentially 80point trading range on the s p between 2050 to 2130, only 80 points, a 4 range throughout the year. I know thats frustrating for people up 1 but maybe thats the way it should be. Lot of people not sure where were going in the u. S. Or overseas and maybe this sawtooth pattern as frustrating as it is, is the right way to trade for the rest of the year. Back to you. It might be, bob, and please, dont go anywhere. I have a question for you. I understand china getting the headlines as it should, its a massive global story. Oil is a big story as well today, oil below 43 bucks a barrel, exactly at that level right now, and its hard to mistake, bob, the correlation between oil and the stock market, lately theyve been joined at the broken hip. This is a sixmonth chart going back you got oil in blue, weve got the Dow Jones Industrial average in orange. Bob, when you chart it, and im not saying that correlation is causation, but at the same point it does seem hard to not look at oil and say, well whatever it is Global Demand, Global Supply that oil is at least trading with stocks, if not leading it. How much is oil part of the conversation down there on the floor of the new york Stock Exchange . Its very big. We tend to look at oil and it affects the stock market in energy. Thats not the case at all. Price of oil is a proxy for other commodities in Global Demand so it affects material names, taken also affects industrial names, and we can see talking all day about the impact of the slower china story and the Lower Oil Prices on some of the big Global Industrial names and that is a very significant part of the s p 500. Ryan . Bob pisani, thank you very much. The socalled magic number, if you will, to watch in oil is that number right there, 43. 46. That is the closing low back on march 17th. That was a sixyear low. So if we close below 43. 46, that will establish a new sixyear low for oil. Then the socalled magic number becomes 42. 03. 42. 03 is the intraday low we hit back on that same day, so 43. 46, a level we are below now so weve also got a statistic on the price of oil that is promising to make your head turn, or maybe make you think that Something Else is way too expen expensive. Lets get insight into the drop in cued oil from a man who leads oil services for a cnbc exclusive, david dempshire, welcome back. Its a tough market out there. We appreciate you coming on. The last time you were on you said oil will be at 70 by the end of the year. You are not alone in that view, but are you sticking by it . Ryan, thanks for having us back on power lunch and we are sticking with that prognosticati prognostication. We look at longer term trends and already we see manifested in u. S. Oil production, we project that by the end of the year its going to be down 500,000 barrels from about 9. 5 Million Barrels a day, which we were producing in april, owing to large natural decline curve rates out of the shale plays that are being developed around the u. S. , that being the eagleford, the bachen and plays in the midland and delaware basins. Youre bringing up an important but slightly wonky point. Lets dig deeper, pun intended. Tell us what that means. We drill a new well using the fracking technology, the oil comes out faster which means the reserves that are there are drained quicker. I drink your milkshake faster than i did a couple of years ago so to speak. The idea being if im hearing you right, david, yes, we may stay steady with production for now but those fracked wells are going to drain a lot faster. Very good, brian. If you look at a balkan well that is drilled today that produces 1,000 barrels a day, on this day next year, it will only be producing 300 barrels a day. Two years out, it will only be producing 180 barrels a day. Three years out it will only be producing 136 barrels a day. So you can see that these very sharp natural decline curve rates of the oil that weve added to our Production Base over the last five years here in the United States will have a significant effect. Last year in the second half in the u. S. , we completed about 19,000 wells. This year, were going to complete about 9,000 wells. So you can see just the sheer drop in the amount of drilling will have a Significant Impact on the amount of production coming out of the u. S. David, does it not matter what china is doing, because the way the market is reacting, the way oil prices are reacting, it does matter. Tell us what you think. Yes, melissa, some great numbers out this morning on china. If we look at july imports, they were at 7. 2 Million Barrels a day. Theyre the second largest oil buyer in the world behind the u. S. That was up 29 year over year and 11 yeartodate. So if we compare the amount of crude oil being used in china, in 2015, it is up some 12 compared to 9 last year, compared to only 4 the year before. So when we look at china, weve got an economy that went from bicycles to automobiles, so we might be seeing some weakness in china, but certainly on the demand for crude oil and gasoline and refined products, its never been higher. All right, david of core labs exclusively with us we appreciate sticking by your 70 call and a good lesson in drilling as well. David, thank you. Well see you again. Okay guys, thanks for having us on. Take care. Dom chu has a market flash for you. Sully on this down day Airline Stocks in the green, a couple of tailwinds of note American Airlines and southwest reported fuller planes in july compared to the same time last year. Also Lower Oil Prices helping to boost the entire sector, united, delta and jetblue all up by 1. 5 to 2 on the day. Thank you. Stocks meantime broader markets tradinger in session lows. The headline china devaluing its currency sending Ripple Effects throughout the markets. Look at the emerging markets etf hitting a new low in todays session, anything commodity related is getting clobbered today so take a look at the australian u. S. Dollar cross and that is also trading lower down 1. 7 , a major move in a commodity currency. The dax a major trade partner with china got clobbered in todays session down 2. 7 . Of course the result of all this, a flight to safety admits a selloff across asset classes. The tlt, treasury etf is trading higher 1. 6 . Lets bring in bill smead of Smead Value Fund and jonathan broadsky, managing director with Advisory Research and manager of the Advisory Research small cap fund. Bill, what does this do, does this change your outlook as to what the u. S. Markets should do for the remainder of the year . No, it really doesnt. Year ago our Research Director kind of did a deep dive into what percentage of the s p 500s earnings come from outside the United States, and we concluded it was somewhere around 45 , and then if you looked at the sectors that were most heavily tied to revenue outside the United States, its been a pretty clear path on what you should have avoided, and in disagreement with your prior guest within the industry, if youd been around 35 years like i have, you get a bottom in an industry when the bankers admit there are bad loans and as kevin oleary said on cnbc about a month ago, grown men cry. That did not sound like a grown man crying to me. So you think that the bottom hasnt been put into oil stocks. Jonathan, turning to you, prior to coming into this segment, we ran through the Ripple Effects, what they are. Its not just what percentage of sales or profits are exposed to china. Theres a whole other value chain in terms of the Ripple Effect and also u. S. Companies, Multinational Companies exposure to europe, lets say, which is also feeling the impact from china. How do you think through what the actual impact on u. S. Markets will be . I look at whats happened today as it relates to the 2 decline in the renminbi and we look out and see the currency has been appreciating pretty significantly against the basket of foreign currencies. The renminbi is up almost 14 this year. Chinese economy has a head wind as it relates to the currency. So for us todays move was as much a response to the imf sending some signals to the Chinese Government about loosening the way they manage their currency as much as it is a signal about whats happening to the economy. I think overall the economy is slowing down. Weve seen that over the last year. Its not new news, but todays activities clearly sent a Ripple Effect across the world. Jonathan this is an important conversation for our viewers and listeners that have investments out there. One two of things will happen, china will slow but still be okay in the Global Economy will be okay, or china will rapidly decline, which could cause a global shock wave which could then impact our equity markets. Which of the two is it . Obviously its hard at this point to say which direction its going to go, but i dont think the 2 decline in the currency that happened overnight is indicative of a sharp slowcounsslow down in the chinese economy. The chinese economy is slowing and the Chinese Government is trying to recalibrate its economy away from a polluting exportoriented economy to a productive economy, focused on the environment, and internal consumption. This has been signaled and this is something that the market should be expecting. Are you surprised could i add to that . Finish up your point. I want to bottom line this. The bottom line is in the United States of america and other freeflowing capitalist countries, those transition that jonathan is talking about happen through depressions and deep recessions. And by pegging their currency to the United States, what they did was they did not allow their currency to appreciate, that their boom would have called for. Now they get their bust, the lower currency is no ally to them. So the yuan peg was a blessing in 08, 09 and 10 but now is a curse. You both sound like youre willing to look through this and on a day the s p 500 is 1. 2 , the wti down almost 5 you both are saying you know what . You stick with it. Our view on the u. S. Markets have not changed and i am sticking to my stock picks. Is that correct bill, jonathan . I think the litmus test really is if you see a continual decline in the reference rate for the renminbi. Today is a 2 move. If you see it continually happening over the next week, two weeks, et cetera, that sends a signal the government is moving back towards export oriented perspective and you probably have some additional concerns. If you want to build more houses in the United States, is it good for copper to be down . Is it good for oil to be down . Is it good forum willb lumber t down. The input prices show how crippling chinas boom was to us when the commodities were relick duce in 08 and 11. Bill and jonathan thank you for your thoughts, appreciate it. Lumber was limit down, down ten bucks a unit today. Still ahead we are sorting out the pst and the qs of googles new alphabet soup. Is it a brilliant move or bizarre one . Also ahead a mind blowing stat on oil that youre only going to get here on power lunch and we are all over this tuesday tumble on wall street. Youre looking at all ten sectors, all the stocks, mostly in the red, could you see there are a few stocks in the green. Were going to give you more advice, were watching oil, watching the market, we are the worldwide leader in business news, after all so dont you go anywhere. My name is jamir dixon and im a locate and Mark Fieldman for pg e. Most people in the community recognize the blue trucks as pg e. My truck is something new. Its an 811 truck. When you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you dont hit them when youre digging. 811 is a free service. Im passionate about it because every time i go on the street i think about my own kids. Theyre the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then ill drive it every day of the week. Together, were building a better california. This could very well be the biggest corporate story of the year so far. In a shocked move foogle will change the name of its Parent Company to alphabet and it will put google the Search Company under the l fa bet umbrella. If youre confused dont worry youre not alone. The move is designed to show off goingle is far more than just search and some compare the new structure to a setup of Warren Buffetts berkshire hath away. Is the berkshire comparison a fair or accurate one, josh . Well, you know, brian, google itself is making that comparison, but i think youre right to ask whether its a fair comparison. Listen, we know googles founders are very much longterm admirers of the oracle of omaha. In the companys s1 in 2000, larry page and sergei said theyd write annual letters to shareholders and that the decision was inspired by Warren Buffetts essays in his annual reports. Google is radically restructuring itself in ways that it says resemble berkshire hath away, specifically the Company Creating a Public Holding Company Called alphabet which includes a portfolio of separately run businesses, so calico, nest, fiber, google x and the companys investment arms. Its similar to berkshire in that respect, a Holding Company with a wide array of different businesses, but theres also some really important differences and most obviously berkshire is truly diversified so its everything from Insurance Companies to railroads, but google, remember, is first and foremost an online ad company. Thats where it makes all its money and many of its other businesses sore called moon shots, those longterm bets on futuristic ideas like selfdriving cars. Its easy to see why larry page wants us to think of alphabet like berkshire hath away. Warren buffetts track record speaks for itself, through 2014 berkshire averaged annual returns of 20 , more than double the s p 500. Josh lipton out of mountain view, california, some are calling alphabet city, josh lipton thank you very much. Up next, the new face of insider trading. We dales on details on how b dangerous online is a threat to the market. We are minutes away from the oil close. Weak week so far and plus the mindblowing stat on oil that underscores how inexpensive it is or just how expensive Something Else is. Nine minutes and counting. Were back in two. Stick around. It took Joel Silverman years to become a master dog trainer. But only a few commands to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. There are indicators that are so much more indepth, so many things i can to. I have a twominute chart and i realized that this is what i want to do for the rest of my life. No sixth graders ever sat with the eighth grade girls. But your jansport backpack is permission to park it wherever you please. Hey. Thats that new gear feeling. This week, filler paper and folders just one cent. Office depot officemax. Gear up for school. Gear up for great. The feds bust an insider training ring linked to ukraine hackers that gained release to certain deals and shared that information with traders who used it to bank millions in illegaits. L prof is anything online on your phone or in the cloud safe anymore . Is everything up for grabs . Insight now from lookout ceo jen herring, he makes his living rooting out hackers. Great to see you. Great to see you, too. If i were a hacker i would go after a soft target as opposed to a bank because its a lot easier i manage to penetrate say a pr agency or a news agency as opposed to a financial institution. Walk through how a hacker might think about how they might obtain this sort of information that would be valuable. Were seeing this very interesting trend where you know, although hackers are financially motivated, theyre not just going directly at the money, but theyre going at other sources of money so in this example they were going at data that they could trade against to actually gain financial edge as Stock Movement occurred. Weve also seen examples of people actually hacking companies and then short selling against stock positions as well which is really interesting. In this case what they did is target a company that had access to early press releases, where information would cause the stock to move. They stole that information, they sold it to the highest bidder and then the people who ended up buying that information traded against that, in this case very illegally. Give me a sense of how easy it is for a hacker to find an audience, to find a customer for his or her skills. Is it easy to say i can obtain x, y and z sorts of press releases who is willing to pay for it . Whats really interesting in the security world we talk a lot about two types of companies. Those who have been hacked and know it and those who have been hacked and dont. Banks and targets that are under attack more constantly are used to this. But sources of information have not taken security as seriously because they didnt think they were as much of a target. This is a perfect example how valuable a target places with information about publicly Held Companies are, and in this case it was a relatively trivial hack. These hackers were not as sophisticated as you might imagine. Thats probably why they are caught. John, we have to go. Thanks for joining us. John herring, ceo of lookout. Thanks. Get another check on the markets, 90 minutes left in the trading session. If youre just joining us, the dow down 245 points, overnight china revaluing, devaluing its currency. Coming up a bit of a safety trade, six stocks that you might want to consider owning even if you are concerned about our or the Global Economy, and of course we are keeping a close eye on energy, it looks like we are going to post a new sixyear closing low for oil, were about 50 cents away from that mark. We have a couple minutes left. Well find out, stick around, well bring you that live close coming up. Moment to take a pill . Or stop to find a bathroom . Cialis for daily use, is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Hello everyone. Im sue herera with your cnbc news update. Secretary of state john kerry says if the u. S. Walks away from the Iran Nuclear Deal and demands its allies comply with sanctions the dollar may soon cease to be the worlds currency. It would be impossible for iran to create a secret program for developing atomic fuel without the u. S. Detecting it. A u. S. F16 fighter jet crashed in an unpopulated area in southern germany. The pilot was able to eject safely. The plane was carrying only training munitions. No live bombs on board. The cause of the crash is under investigation. I italys former Prime Minister Silvio Berlusconi is selling his Vacation Home to the saudi royal family, price tag about 553 million. They speculate it is saudi arabia leader king solomon. Jets coach todd bowles say smith was sucker punched in the locker room this morning. Smith will undergo surgery and impali has been released from the team, perhaps no surprise on that. Thats the cnbc news update. Back to you, guys. You wonder if they might make a call to somebody else, sucker punching is a totally different thing an fighting on the field. The oil close right now we make a new sixyear closing low for oil, at 43. 13, the previous sixyear low 43. 46 on st. Patricks day march 17th. You have the china news and concerns about Global Demand and you have far too much oil being pulled out of the ground all over the world than we need and this is pretty insane. We crunched some numbers and we realized that since one barrel of oil is equivalent to 42 gallons, one gallon of oil then is about 1. 03 based on the price we did this to 30 minutes ago. According to the International Bottled Water association, who even knew there was one, a wholesale gallon of water is 1. 21, meaning that oil is cheaper than water. Bob pisani at the new york Stock Exchange, 10 for a big bucket and if it rains its cheaper than that. Thats a great stat and indication how much oil prices have collapsed, or how expensive water is and its crazy that expensive. S p 500 we are just off the lows of the day. The volumes are strong in certain sectors but not strong in others. I want to show you the sectors because weve been talking about materials and energy and industrials. Notice energy is doing a little bit better in the middle of the day. I want to focus on sec notechno. Many big names, broadcom, qualcomm, micron, Texas Instruments and hewlettpackard. Broadcom is 50 of its exposure to china, qualcomm about 50 as well. Finally put up the heavy socks, freeportmcmoran heavy volume, alcoa and caterpillar as well today. One Reason Energy has been improving is the refiners, oil is down 4 , brian. Gasoline is flat today. That means more money for the refiners and here is one of the few areas of green that youre going to see all throughout the day. Holly, valero, tesoro to the upside. Great stats, back at you buddy, thank you very much. Semiconductors are one of the worst performing Industry Groups this year. Obviously china a big part of the story. Is it time for your money to invest in a turnaround in the semis . We bring in the trading nation team, erin gibbs and stacey gilbert. Stacey, you look at the Options Market. What is the Options Market saying about the prospects for a turnaround in semiconductors . I would argue that both the options and the etfs are arguing its more cautiously wait and see. So why i say cautious . If you look over the last five days when the semietfs, about 65 million outflows. We compare this over the last two years pretty much inline with what the fiveday total looked like. Little bit where the cautious tone came from, certainly bearish and not bullish. The risk being priced into the Semiconductor Index relative to the broader tech market is in line with what weve seen over the last two years, some of the high risk we saw at the end of 2014 and as we came into earnings right here in july of 2015. If we look at individual names in the options, if i look at lanier technology the sticker lltc which we cover at susquehanna with a neutral rates, weve seen more increased bullish, sorry, bearish protective put buying. Its not bearish like pound the table you need to short this stock, its protective, given the strikes theyre buying and weve seen that post Earnings Report. Thats an interesting takeaway after the Earnings Report is out there, investors are still protecting lltc shares and i could point to a couple other names, thats the cautious part. The wait and see is theres not a lot of other flow out there. I argue its a wait and see what happens in the semis here. Erin gibbs from the fundamental perspective. Is there any chance of a stock or earnings turnaround in that group . Yes, there is. One thing thats been interesting is for the past six months, the valuations really bottom out at about 19. 5 forward earnings and thats just where they bounced off of again, thats sort of been their sixmonth base. And were also seeing some revisions downwards for this year, were seeing some really good growth for 2016. Now that were in the second half and starting to look at the second half of 20152016 earnings, right now we see 44 eps growth for the s p 500 Semiconductor Industry for 2016. Its one of the highest industries in 2016. Now, admittedly, theres pretty much nothing for this year, were looking at basically 1 , pretty flat, but as were looking farther ahead, we are seeing some really good growth and valuations actually look pretty decent going farther ahead. Pretty decent, as long as the e the denominate in pe ratio holds up. Erin and stacey, thank you. For more trading nation go to tradingnation. Cnbc. Com. Melissa im sure you visit there every day. Every day, like clock work. Alibaba set to report earnings tomorrow, the stock trading lower by just about 5 at this hour. Guy, great to have you with us. R. J. , lets start off with you. With the chinese devaluation seeming to underscore the weakness that is actually taking place in china, are you more concerned about the alibaba story . On the surface i am. I think this raises some concern about the overall pace of Consumer Spending but you do have some offsets of that, too. You have the ongoing shift to mobile and ecommerce which i think will help alibaba take share from traditional retailers. The other thing if you look at the Household Incomes of chinese consumers, there isnt a lot of exposure to equity markets in that regard, so that sense i think that the company should be fairly well protected and that being said if it is going to impact and create caution among chinese consumers it could be a near term head wind. I get that fundamentally all these things could be true but mark, im curious because the stock has been trading as much on sentiment, probably more so than on fundamentals at this point. The tock is down sharply, caught up in this convergence of the chinese stock market being down and correcting, also concerns about eye chinese slowdown. At one point do you think the stock starts trading and what you see as a bullish case longterm. As a trade right now its been a painful one. Yes, it is a lot of negative sentiment out there. Theres a lot of consternation about whats going on in china globally. I think one of the biggest problems is a focus on the quantity of growth as opposed to the quality of growth. I think chinas doing a great job transitioning from fixed Asset Investment to consumption. I think the growth in the mobile component of ecommerce over the next decade is supposed to compound it 56 . So do you that 1. 56 to the tenth power, thats a 65 times increase in the size of that market. So we think theres really huge potential longterm for ecommerce and for mobile ecommerce in Companies Like alibaba. What are you worried about, mark . We are worried a little bit about just the sentiment as melissa said, and whats going on with people shooting first and asking questions later, selling first and asking questions later. People tend to do two things really well, human beings tend to buy what they wish they would have bought so there were a lot of buyers when alibaba was 120 and had gone up a lot and tend to sell what theyre about to need. Lot of people thinking they need to sell here. So kind of like the semiconductors you were just talking about, after they go down thats when people want to sell and i say all the time that investing is the only thing i know when things go on sale, everyone runs out of the store. That certainly seems to be whats happening here with alibaba. Thanks so much, r. J. And mark. We appreciate your time. Weve got a big interview tomorrow, 9 00 eastern time, first on cnbc interview with alibabas ceo daniel zhang. You do not want to miss that. Take a look at this twoday chart of the eem, the biggest emerging markets etf, one of the biggest et frvegss in the world. Although its 2. 5 less than big yesterday, if you invest in this, 50 of investing in the eem is china, taiwan or korea, so you are heavily exposed to those markets. Keep that in mind. All right, changing gears, red robin gourmet burger deep in the red after reporting earnings, talking with an analyst who has red robin as his number one pick and find out why restaurants arent benefiting as much from lower gas prices and were hovering around the lows of the day with oil, we close at a sixyear low there. The dow is down 230 points right now, youre watching power lunch. 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And provided by Unitedhealthcare Insurance Company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. Have you touched the stuff . Its evil. And ladders. Sfx [screams] they have all those warnings on em. Might as well say. youre gonna die, jeff. you hired someone to clean the gutters. Not just someone. Angies list helped me find a highly rated Service Provider to do the work at a fair price. Everyone can shop, but members get more with reviews, live customer support, and better pricing. Visit angieslist. Com today. Shares of Red Robin Gourmet Burgers down 12 . Second quarter met estimates, revenue weaker than expected. Bob, i know assuming is a dangerous thing to do. Im going to assume since this was your topic as of last night it is 12 cheaper than it was last night. It must be even more of your top pick or did you hear or read something from the can. That makes you change your views . No, thats fair, brian. Unfortunately they picked a tough day in the market to report earnings, and while they got to the earnings number, they did it a little bit differently than what we in the street expected. The revs were light, the earnings per share were on, store level performance, the margins were better than expected, so ironically, i suspect by the end of the year, theyre going to be at least in line with their own guidance, and ultimately our projections, just taking a little bit different path than what we originally projected. The stock is still up 21 over 12 months so it has been one of the better performing restaurant names out there, bob. When the company said they wanted half their growth to come from the ticket, how much people are spending each time they go and half from new people going, they werent even close to that mix. What happened . You know, thats fair, brian, and if you look at the trends in the industry, clearly weve seen a slowdown in traffic trends, and thats measured across a couple different key industry metrics, however whats interesting is if you look at the companys performance relative to its peers in this quarter, it was at least as good as it was last quarter. The nominal number wasnt as good. The traffic trend was on a broad basis. But i hear what youre saying. Its all about the details. You know we keep hearing this thesis, bob, that lower gas prices are going to help no group more than the restaurants. You might not go out and buy a house because of gas prices but you might get an extra dessert. Im looking at the 40 or so restaurant stocks that i follow here and most of them or at least half are down over the past three months, bob. What is the problem with the seeming disconnect in that story . You know, i think its a couple different things, brian. One, if it you look at the performance last year, right about now is when we saw a big downtick, downdraft in energy prices, gasoline prices begin to benefit restaurant samestore sales. Those sales trends lifted as gas prices fell. As we cycle through that, we will likely see potentially lower gas prices than what we saw last year. We just may not see as much of an incremental lift partly due to the fact that consumers factor in and build in those lower prices into their budget. So while we may get some benefit to restaurant sales, it wont be as much as it was 12 months ago most likely. Bob darington we appreciate your insight. Thanks. Well hear from the burgers mouth coming up later on cnbc, exclusive interview with the ceo of red robin gourmet bigger, steve carley in the 4 00 p. M. Hour. Im sure theyll ask him about gasoline. Ive had red robin when we interviewed red robins ceo on fast money and a red robin milkshake. Big down day across the board if youre looking to are some safety plays, stay tuned, we have them for you in two minutes. This is cnbc, first in business worldwide. Mornings. Wonderful, crazy mornings. We figure you probably dont have time to wait on hold. Thats why at xfinity were hard at work, building new apps like this one that lets you choose a time for us to call you. So instead of waiting on hold, well call you when things are just as wonderful. [phone rings] but a little less crazy. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Broad are markets stocks are falling an the unexpected devaluation of the yuan by the peoples bank of china, good for a 1. 3 drop. S p 500 down by 1. 1 , the nasdaq feeling the most pain down by 1. 6 . The russell small caps down by 1. 25 . Recent volatility has investors looking for a safer harbor for their money. We bring in Michael Binger, senior Portfolio Manager with Michael Binger and john with peoples United Wealth management. Great to have you with us. Whats interesting, both of you are reaching for traditional bond proxy i like you like the. Why do you want to stick with the reits here. Sure. Weve thought they would see good growth in their ffo, the fund from operations. We also dont believe were going to see the fed dramatically increase rates too much this year or even into next year. That will probably allow the tenyear treasury, which is a good benchmark for reits to stay fairly stable. We dont think theyll have the Interest Rate head wind i think a lot of other firms are looking for. I think you could see 8 growth in cash flow. Michael, you like the Omega Health Care reit as and celgen. Why do you see celgene is safe. Celgene would be odd in the book. You think of Interest Rates going up, currency, none of those things affect celgene right now. They have a huge blockbuster drug that treats cancer. Its a therapy for cancer. They have a nice pipeline coming out. And on top of that they just had a great quarter. They have a lot of runway for growth. Its not overvalued and universally, the Analyst Community is raising their price target, its up around 200 or so. Thats a long way away from 130. Its a good, safe play thats not affected by any of the factors that are plaguing the market right now. John, i know you dont like china or emerging markets, are you focused more domestically one youre talking about tj maxx or unh, that most sales are within our borders . They are. Both of those countries are showing good Revenue Growth and sales growth. We believe the market will pay up for sales growth. Those companies that are in control of their own destiny. You know, as you just heard, we like United Health because it is exposed to an area of the economy thats growing, health care is growing. And tj maxx as employment increases, as wages slowly increase, those valuebased retailers should do very well. Domestic and growth, those are the keys. Michael, how long are you going to stick with the safety plays . Im wondering if theres something in the market to say to yourself, you know what, this is going to signal a higher growth rate out of safety mode . Theres a lot of issues plaguing the market we talked about a little bit. Theres a playbook that says if the fed is going to raise Interest Rates, we have to sell everything in yield and income. Youre going to get a great yield. In a choppy market, i like yield and income and i think theyre very attractive right now. As we look out and get out into 2016, were going to start to anniversary some of these things plaguing the market. I think you want to get more growthoriented when oil prices we were not when the strong dollar is behind us. Still some time off. Thanks to for your time. Appreciate it. Michael binger of Gradient Investments and john traynor. Oil did close low, weaker and in fact oil closing at a new sixyear low. Check out freeport mcmoran. Fcx is down 13 today. They exposed almost every commodity thats been weak, oil, gas, gold has not been well, you name it, its been down. That commodity decimation has decimated a huge amount of value in fcx. The stock has lost 30 billion in market value in a year. It is now worth 12 billion. It was worth 42 billion one year ago. The stock is down 81 over five years. So it went from 58 it lost 58 billion in market cap in just four years. A lot of investors getting whack by fcx. Take a look at some of the big blue chip names dragging down the dow, apple, chevron, caterpillar, china, oil, what about buying opportunities . What about selling opportunities . A lot to talk about. Stick around. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . No sixth graders ever sat with but your jansport backpack is permission to park it wherever you please. Hey. Thats that new gear feeling. This week, filler paper and folders just one cent. Office depot officemax. Gear up for school. Gear up for great. Want bladder leak underwear that try always discreet underwear and wiggle, giggle, swerve and curve. With soft dual leak guard barriers and a discreet fit that hugs your curves. So bladder leaks can feel like no big deal. Get your free pair and valuable coupons at always discreet. Com pubut to get from theand yoold way to the new,d. Youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. And stay ready for everything that is still to come. Welcome back to power lunch. Shares of Take Two Interactive down about a percent. Earnings missed but revenues did beat. Expenses soared by 30 . The video gamemaker issued Current Quarter guidance, fullyear guidance was weak. Its now moving to the red side. Lets get down to street talk analyst recommendations. First stock, xl group, Goldman Sachs upgrading this irelandbased Insurance Company to a buy, adding it to the conviction buy list. They raise the tarring fret 44 from 40. Pays a 2 dividend. Goldman sachs likes it. That deal brian was to buy an entertainment insurer, think amusement parks and carnivals. The stock, new 52week high. Wen wendys going from neutral to underperformed based on valuation. Sales number are disappointing but valuation and the transition to a predominantly franchise business will put a floor under the stock. 10 price target on this one. The only restaurant stocks to have done worse than wendys, noodles and company, dell frisco and another restaurant. Ltx, the newly named defense d ammunition company. The recent trends in defense spending about become, quote, supportive including a proposed 51 billion in incremental spending by the government for what they call overseas contingency operations. Use your imagination on that one. We have a 95 target on this name. Fourth stock, alibaba, mkm saying buy the stock ahead of earnings. The analyst believes they have passed theest part of the mobile transition. One interesting point analyst makes, babas portfolio gets no credit which includes ali pay. Now for todays under the radar name, shenandoah intercom, based in edinboro, virginia, yesterday they bought intellus holding. This gives them more than a million telecom subscribers. Upgrading it to an outperform to market perform. I guarantee on fast money youve never talked about shenandoah telecom. We will take a look at the markets right now, off the session lows. We have the secret sign that selling might be over. Thats tonight at 5 00 on fast money. Out there in the field you work for your meals, me lis mel lee, thank you very much. Closing bell is coming up next on this market close sellout day. Take care. Ley and welcome to the closing bell, every. Im kelli evans here at the new york Stock Exchange. Im Bill Griffeth on cnbc. This is an important day for a lot of the markets. We had a selloff on wall street, the dow nearly erasing all of yesterdays gains after china made that surprise move overnight to devalue its currency in a big way, kelly. Commodities taking a big hit on the back of this news, especially oil falling below 43 intraday, down about 4 . Well break down the longterm impact of