Transcripts For CNBC Power Lunch 20141002

It is a tesla mystery. The market d. There it is. The market likes it. The stock is up almost 3 today, but what does d mean . First to sue at the nyse. Hi, sue. Hi, ty. There was another tripledigit loss in the dow earlier. Its trying to fight its way back. Lets get you up to date. The dow right now is down 47 points. But as we said, it was down triple digits. S p is down 7. 5 . Nasdaq is down 13 . The yield on the tenyear note holding at 2. 41 . Ty mentioned oil. It continues to plunge. Brent near a twoyear low. This after saudi arabia cut its official selling price. That is a 1 1 3 loss in brent kud. West texas intermediate down just about a tenth of a percent. It was a very rough close in europe. Germany down 2 . The ftse down 1. 7 . France down almost 3 . Italy down 4 . Spain, 2. 5 . That is the definition of ugly. Lets get the trading action with simon hobbs and bob pisani. They both join me here. Bob, set the stage for us here and then simons going to tell us one of the reasons of the selloff in europe. Europe led us to the downside. Take a look at the s p 500 because things have improved since the european close. Simon will give you all the details on that. But the s p well off of its lows and were heading back up towards positive territory. The big problem with new york is the commodity complex. Sue mentioned oil but its not just oil. The individual Commodity Markets like aluminum and copper, the base metals, nickel and zinc, have been continuing to decline on a daily basis for almost five weeks now. Thats a major problem. Its global commodity deflation that were faced with. As a result, anything in the commodity stock complex, exploration of production stocks particularly have been hard hit. Some of them down 2 to 4 . This has been going on every day for a matter of weeks now. Aluminum stocks have also been weak. Your alcoas of the world are down again here today. Alcoa is down about 3 as you can see. We also have coal stocks. Theyve been having a rough time of it. Theyre weak again today as you can see. Down 2 and 3 . Finally, i just want to note that we have been slowly creeping up on the vix. Its been historically low. But as it sits around now 17, almost 17 here, were sitting at, oh, three, fourmonth high on the volatility. Bob, ill see you again in a little bit. Simon, it really did get ugly right at the close leading into the close in europe. Absolutely, sue. And to be honest about it, it looks as if its all about mario draghi. Yes, the president of the ecb announced that it will start buying bundles of bank loans across the 18 Member States but he failed to give a target. More importantly, markets have already rallied in anticipation of public quantitative easing, bigtime buying of each nations government debt. Not only surprises towards that, draghi appeared to walk back from his earlier target of increasing the size of the ecbs Balance Sheet by 1 trillion euros. An analyst at adm said all he had to offer was an air of irritation, suggesting that germany has now badly split the ecb on further action. The actual impression that mario draghi made, he concludes, was not only that the ecb has run out of road, but that also if the eurozone does not recover, the blame will have to be parked at the doors of politicians and their failure to act. Now, as sue pointed out on europes four biggest stock markets accelerated into the close. Italys market down almost 4 led by the banks which are, of course, big holders of local sovereign debt. Now, in fairness, sue, since the close, we have had some less pessimistic notes coming through from the likes of citi and jpmorgan. You may bounce back tomorrow. But that qe idea is moving further and further away. Thank you. So brian sullivan. Breaking news right now concerning exxon. Yeah, its concerning exxon mobil, sue. Its also concerning ebola. Rick tillerson coming out and saying that the Ebola Outbreak has indeed affected exxon mobils operations in west africa including their future plans to drill off the coast of liberia. Liberia really no oil production, but exxon had had planned to drill offshore. Now, tillerson not quantifying exactly what impact it means, but still, we are seeing concern from exxon mobil about that and some kind of impact on its business in west africa. Tillerson also saying, sue, that they are prohibiting employees from now on to travel to the regions that have been most impacted by ebola. So exxon mobil coming out and saying our employees are simply not going to be going to those parts of west africa until further notice. Back to you. And the stock has moved to the downside since you brought us that news, brian. It was down just about. 10. Were now down better than. 25 . Thank you very much. A busy day, as you can tell, on wall street. Lets stop for a second, take a breath and listen to jim cramer on mad money last night. Corrections, theyre a process. Think of these selloffs as gigantic sales of all sorts of merchandise, and theyre not orchestrated sales. Theyre freeforalls. As i see it, you have two choices here. You can be like Warren Buffett and decide to take the pain, confident that well come back to where we were not that long ago and all will be well because its a great country and the stock market is a good place to invest. Or you could acknowledge that were going to roll back a little more, a decent chunk of our gains for the year. And its time to take some evasive action. I think we first must separate fact from fiction. Which companies are really being hurt by the slowdown . Not just their stocks but the companies, and which are just collateral damage, and which are in a position to benefit from the chaos . Even as almost all stocks go down at the same time, heres the bad news. We havent had the estimate cuts for these companies yet with the exception of ford which spoke at an analysts meeting on monday. That means when these Companies Report earnings, were going to hear about these number cuts for the companies that are in the blast zone. Largely industrials and commodity producers, and they will likely go down even more, just like ford did even though it was already well off its highs. The good news is that its now dawning on many investors that these estimate cuts are coming. Thats what the selloff was about. Many stocks have fallen a great deal in anticipation of it. Others havent fallen enough, though. Its case by case. All right. As jim cramer breaks it down, do you stay the course or get out of the market . This question as the s p 500 is on track for its first fourday losing streak of the year. Joining us right now, carmine, chief investment strategist at Mizuho Securities and craig columbus, ceo of first ail lied asset management. Welcome. Carmine, react to what jim said last night and also the weakness that simon described to us in europe which i think is a very worrisome factor to many people out there. Yes. You could get further correction. You could see something in the order of 6 , maybe 8 . But i dont see the ingredients for a major selloff in the equity market. The km he remains healthy. Interest rates are not rising. And while corporate profits might be a bit disappointing, the reality is that a lot of this damage has already been reflected in the prices and estimates. If you look at the yearoveryear growth rate for the s p 500 net income, its down about two Percentage Points over the last couple of months. But more importantly, if you look at the companies that generate 60 or more of their revenues from overseas, their earnings estimates now imply a 2 growth rate. In the first half we grew at 9 . So theres been a scaling back in expectations. And i think ultimately probably halfway through this earnings cycle, youll see a resumption of the bull market. Craig, i think you might disagree with some of that. And youre a little bit more bearish than the last time we talked to you. Tell me why. Well, i dont want to sugar coat it. I thought mr. Draghis performance this morning was very weak. And incredibly lacking in specifics. And the ukraine has toppled what is a very wobbly european economy. So weve got to keep an eye on that. But i think it makes the chance of an earlier rate hike in the u. S. Almost off the table. Thats a positive. Were coming into a strong seasonal period for u. S. Stocks. Give it a little bit of the benefit of the doubt. And i think ultimately, if the fed doesnt panic, please, no qe 4 here. And i think were in okay shape. But watch europe close. Carmine, would would you put money to work right now given the fact that we have a commodity complex, specifically oil, under so much pressure right now . I mean, that could be helpful to the consumer. It can be helpful to the economy. But how do you play it . Well, im looking to buy into any weakness that occurs in semiconductors and software and pretty much across the board in the technology sector. These companies are going to be generating significant growth, and i think the Capital Spending cycle is beginning to kick in. So i would be a major buyer of tech. I would also continue to buy health care. This is many of these stocks will benefit from obamacare. Theyve been showing some of the positive effects of that. I particularly like the hospital sector. And i do think that you will see further gains. Just keep one thing in mind. Okay. M a activity is soaring. Buybacks are basically up about 20 this year, going to equal about 600 million. Carmine in the vicinity of 6 to 10 . Hold your thought, carmine. Lets go to kate for a market flash and then craig, ill come back to you. Thats right, sue, the argentina merval getting hit hard again today, down more than 9 . Thats on top of an 8 drop yesterday ahead of the resignation of Central Bank Governor juancarlos fabrega. Hes defended the governments intervention into the economy. Hardhit argentinabased stocks which is down more than 6 . Back to you. Thank you very much. Craig columbus, you get the final word. I know you like technology. You did the last time we were with you, but you also like financials. I like financials because weve had the best loan growth and also the 100 largest financial stocks that we follow, 85 of them had declining nonperforming loans. So thats a pretty good backdrop. Thats an area i would look at. Thanks, gentlemen. I really appreciate it. Ty, up to you. Sue, thanks very much. Oil prices continuing to plunge. Brent sitting at twoyear lows. Wti crude 52week lows. Citi out with a note saying oil prices ending the Third Quarter as though they were about to go into freefall. Jack and anthony grizante. Welcome to you both. Anthony, how low do you think oil may go this quarter . Well, weve had a nice little bounceback from the 88 area this morning but i still think this is a dead bounce and we could see 85 closer to thanksgiving and into the christmas season. Anthony says 85. What do you say, jack . I think that we can go down even lower. In fact, you know, this is a perfect storm for oil. Think about it. Between the saudis trying to maintain market share and cutting and slashing prices, between the strong dollar, lets keep in mind that dollar has been rallying. And the fact is that there is huge supply out there, tyler. In my own backyard in the midwest right now, youve got oil thats trading for 70 a barrel because theres nowhere to store it. You know, actually anthony, jump in. Jack, you make a very good point especially the saudis and cutting prices. You didnt hear them say cutting production which is what youd expect with falling prices. Cutting prices means that theyre really just trying to hold on to market share at this point. And theyre not really worried about the overproduction at this point. And jack is right on, that there is a huge oversupply of oil in this world right now. So what does this mean, jack, for investors who may, for example, own the integrated oil companies, the drillers, the Oil Services Companies . Is this a bad time to be in those areas . Absolutely. I think thats the one sector that i wouldnt want to be in. And im one of the biggest bulls on the stock market youll ever find. I think we could see oil work its way down under 80, maybe 78, 75. On the flip side of that, this is a huge tax cut for the american consumer. This is more money in the hands of the American Economy and the fact that gasoline prices are going to go down. And were going to see all of that really affect the economy over the course of the next six months. Anthony, jack, thanks very much. We appreciate it. I know this will be one well be talking about a lot more. Now to the uprising in hong kong. Tensions mounting between police and prodemocracy demonstrators there. Protesters demanding now the resignation of the citys chief executive. They say theyll occupy government buildings if he doesnt stand down. And youre looking live at pictures from hong kong. He says, by the way, he will not step down but is appointing his second in command to represent the government in negotiations with those protesters. Sue . Ty, planes, trains and now automobiles. Warren buffett buying one of the nations biggest Car Dealerships. What does the oracle of omaha know about the auto business right now that perhaps we do not . Well, the ceo of camping world and host of the cnbc show the profit, Marcus Lemonis is with us. He used to be one of the biggest car salesmen in america. As we head out, its not just oil getting slammed. Quite a few members of the commodities complex trading in bear market territory, off more than 20 from their respective highs this year. Were following that in two minutes time. With the Dow Jones Industrial average now only down 26 points. Were back in two. The cnbc Trend Tracker live data board is brought to you by cme group. Cme group, where the world comes to manage risk. Mr. Daniels. Mr. Daniels. Look at this. Whats this . Clicks are off the charts. Yeah. Yoshi, were back. Yes, sir more shipping more shipping [ beeping ] [ beeping ] know that chasing performance and fewer choices in retirement. Know that proper allocation could help increase returns so you can enjoy that second home sooner. Know the right Financial Planning can help you save for college and retirement. Know where you stand with pnc total insight. A new investing and Banking Experience with personalized guidance and online tools. Visit a branch, call or go online today. In our headlines, nike delaying the launch of its lebron 12 sneaker. The shoe was supposed to be launched yesterday in china and october 11th worldwide. No indication on the new date. The stock is up better tha than. 75 . Netflix announcing an exclusive deal with adam sandler for four new movies. Netflix says his films consistently rank among the most viewed on its streaming service. Thats almost a 2 gain in that stock. And Music Streaming Service pandora getting upgraded to a buy from a hold at topeka capital. The firm maintaining its 30 price target saying the reason drop in that stock is an opportunity. And the stock is responding by moving up almost 3 today, ty. Another Company Whose shares were watching today, sue, is alcoa, the giant unveiling the Worlds Largest aluminum lithium facility, focusing exclusively on the aerospace sector. Morgan brennan is live in lafayette, indiana, with a look at what this move means for alcoa. Hi, morgan. Reporter hi, tyler. Well, take a look at the furnace behind me. This is spewing out 2,000 degrees of heat right now. It is hot. And that is because it is filled with molten aluminum. This is the first step in a manufacturing process that is going to produce plane parts for the likes of airbus, boeing, pratt whitney, gulfstream, also spacex. This is one of several facilities the company is investing in right now. Its part of a big push in aerospace, an expansion that also includes the 2. 8 billion rixon acquisition, also more e titanium and nickel. Theyre doing this because aerospace is a high growth, highmargin business not particularly vulnerable to the weak Aluminum Prices that have hit this company and its competitors so hard in the downturn. Analysts say aluminum in particular represents a longterm opportunity because its lightweight so its good for fuel efficiency. Its strong and also new forging processes are making it more cost efficient. Thats why this facility already has 100 million in revenues booked for 2017. Our expertise lies in both the product and the process. And we very carefully choose where were going to pursue patent protection, typically, sframpl, the metallurgy. We have a patented alloy here. Reporter alcoa says it doesnt always file a patent because that can give important details away. Some things are kept as a trade secret. For you, thats really critical because other companies are looking to expand their own product portfolios as well. Constellium is the other main player. Kaiser makes plates for planes. Also General Electric produces carbon fiber composites, chz a material that directly competes with certain aluminum alloys. Now, as for this facility, this will generate 44 Million Pounds per year of aluminum lithium. And when you have Companies Like boeing announcing that theyre increasing production, this industry, in general, is only set to take off. Sue and tyler, back to you. Morgan, stay safe down there. Thank you very much. All right. We want to update you on the market because we have come very close to turning positive after being down 131 points earlier this morning. Were now down only 7. And we were hugging the unchanged line just a few moments ago. The s p down less than 3 and the nasdaq is only down about a point on the trading session. So well see now that europes bad close is out of the way, whether this market can muster any momentum to the upside. We told you the commodity complex getting hit in many sectors. The gold market is holding up much better on a percentage basis than the copper, silver and palladium market. The gold market is basically flat. Were back with more market coverage for you in two minutes time on power lunch. Big day . Ah, the usual. Moved some new cars. 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Well, planes, trains and now automobiles. Warren buffett on cnbc earlier today breaking news that Berkshire Hathaway is buying the van toil group, the nations largest privately owned auto dealership chain. Buffett spoke about why hes bullish on the car biz right now. Cars arent going like that. Dealerships are. That means every dealerships going to sell more cars, on average. So the pattern has changed, but the fundamental demand for cars has not gone down. The average dealership will do a lot more business now than 30 or 40 years ago in terms of units. Lets bring in marcus, the ceo of camping world, host of cnbs the profit which returns on october 14th. We look forward to that. Before we get into your rvs, you got into rvs, you were in the car business. What do you make of buffetts move . Is he a little late to the party with car sales at really a postrecession peak right now . Well, i dont think warrens ever late to anything. I think weve got to be honest about that. But we know that the car business continues to be strong. And i think that his play on grabbing what i consider one of the best the group is one of the best operators out there. Great process. They understand the systems. And i think warren picked up on the fact that he knows the automobile business has really turned into a digital play with great execution at the store level. Youre seeing it in auto nation, with sonic, with penske. And van tile to me represents an opportunity for him to get into the car business in a big way. Where do car dealers make their money . A really good car dealer will what we call 100 absorption. And that means that in the fixed Operations Side of the business, the service, the parts and the collision repair, theyre going to be able to pay all of their bills. And so youll find that with a really good car dealership, a lot like a van tile group or an auto nation, if you look at their margins, youre going to see most of their fixed costs being covered by their fixed operations. And then Everything Else is just gravy which is why they performed so well. Why have so many Car Dealerships consolidated over the years . I know when i was growing up, it was a much more sort of fragmented business. And now it seems to be consolidating very rapidly and the Chains Really are dominant. Well, theres a couple things, tyler. First, we saw the elimination of a number of manufacturers, no more buick, no more hummer, et cetera, et cetera. And so i think that was kind of the wave, the first wave. I think secondly, the consumer wants to buy a car in a more professional environment today. And while ind pend auto dealers vil agrit allows for dealers to carry maybe 10 or 15 less inventory when theyre part of a consolidation because they can access stores that are 10, 20, 100 miles away. Theres a lot of systems and process. Now, unlike the rv business, the auto dealers dont get to buy cars for less whether they have 100 stores or 1. And so they really make it up on the used car side, on the service side, and on the internet side. And thats why i think the consolidation plays made a lot of sense. Before we let you go, check out this mysterious tweet there Tesla Ceo Elon musk. Looks like hes suggesting that the electric carmaker may be gearing up for a new product next week. Its called d. Is it a new car . A new feature . About time to unveil the d and something else. What is it . Its kind of unclear. Were going to ask viewers what they think mysterious d stands for. Go to cnbc. Com vote. Marcus, what do you think d could mean for tesla . Look, we know elons one of the smartest guys not only in the car business but in business in general. Hes got to not only have a new product, but i think its also addressing some of the battery issues that have existed. That would be my expectation. If i was a betting man, im not, but if i was, id hope to see a Sport Utility come into the lineup. Thats an interesting thought, marcus. That is an interesting thought. Of course, marcus is the host of cnbcs there are two shows that i look forward to, one is the blacklist, the other is the profit. The new season of the profit, october 14th. Marcus, well be watching. Go ahead. And tyler, dont forget, the business you see behind me, automatch usa, is one of the episodes from our season two. We started with one. Well have ten open by the end of the year. And so we obviously believe in the car business as well, and the profit helped me get there. Thanks very much. Well see you in a little while. To phil lebeau now with more on what teslas mysterious d could be. Phil. Its ginns guess. Take a look at that tweet one more time. When i saw this last night and i sent it out, i immediately got bombarded with ideas. People saying well, heres what i think it is. And the most common idea thats out there and lets be honest, this is all conjecture at this point the most common one youll find is that the d stands for allwheel drive because theyll have dual models on the model s because right now its only rearwheel drive. A lot of people said it would be wonderful if you could increase the torque by making it dual motor and then allwheel drive. We should also point out that after he sent out that tweet, elon musk then sent out a following tweet because he was reading what everybody was saying on the internet in terms of their ideas. And he wrote, i love the internet. Comments had me literally rolling on the floor laughing. No, it wasnt intentional. Glad i didnt mention the other letter. Obviously playing off some people thinking it should have a dirty connotation. Not just the d. At the end of the day, tyler, its anyones guess what well see on october 9th. Most people are of the belief that the d stands for dual motor. Therefore, they will see an allwheel drive version of the model s. Interesting, phil. And if i learn nothing else, i learned what rofl means from you today. Lets lock in the vote, folks. What do you think d stands to are . 19 say a dualmotor allwheel drive. 40 say driver assistance. And 41 of you say it means a new model. Sue . All right, ty, the nasdaq has moved into positive territory. And the dow is challenging that as well. So lets take a look at the markets. Were down less than a full point. Well, we were down less than a full point. The dows clawed its way almost all the way back. Its down 1. 3 . The s p is down 1. 3 points i should say. The s p down a little over 1 point. Theres the positive, the green arrow at the nasdaq, which is up 4. 5 points on the trading session. So whats that doing to Interest Rates . Lets go to the bond market, Rick Santelli tracking not only the bond market but there was a lot of action in europe today. Currency action. And rickys going to wrap it all up for us. Hey, rick. Absolutely. It really is about europe. Its like stereo. We have the weakness in japan on one side. The weakness in europe on the other. And even though were doing pretty well, the effects of those negative vibrations is going to take a toll. Now, if we look at the twoday chart of tens, it really says it all. Yeah, were up a couple basis points, but look at it in the context of year and yesterday and the previous several days. Part of the driving force had had been weak equities. It will be interesting how this turnaround may affect Interest Rates. Hoping to chart up to february of this year. You can clearly see why it stopped where it did. Whether its the left side or the right side coming from the bottom, it was the Perfect Place to have the reversal technically. The next two charts, sue was talking about europe. Look at the dax intraday. Look at the cac intraday. Not pretty pictures. And on the dollar intraday, its actually up off its twoyear lows against the greenback. Tyler. Actually, ill toss to sue. Sue. Absolutely. Were going to take it because the major indices, well, they were flirting with four Straight Days of losses, but well see whether or not the dow we just went positive by two points. The dows fighting back. What traders are saying about the days and the weeks ahead. Plus todays power house is home to four fortune 500 companies. The birthplace of former microsoft ceo steve ballmer. And it was the first to hold the countrys state fair. Can you name that city . We asked people a question, how much money do you think youll need when you retire . Then we gave each person a ribbon to show how many years that amount might last. I was trying to, like, pull it a little further. [ woman ] got me to 70 years old. Im going to have to rethink this thing. Its hard to imagine how much well need for a retirement that could last 30 years or more. So maybe we need to approach things differently, if we want to be ready for a longer retirement. If we want to be ready for a longer retirement. Narrator these are the skater kid whoa narrator that got torture tested by teenagers and cried out for help. From the surprised designers. Who came to the rescue with a brilliant fix male designer i love it narrator which created thousands of new customers for the tennis shoes that got torture tested by teenagers. The internet of everything is changing manufacturing. Is your Network Ready . Welcome back to power lunch. Jpmorgan is pushing back against a New York Times report that it is dealing with a second hacking attempt to access its computer servers. Jpmorgan giving a statement to cnbc just within the past couple of minutes saying the story is false. We are not aware of a gnawnew attack. This despite that jpmorgan uncovered a Second Attack linked to hackers based in italy. Jpmorgan, however, saying that story simply not true. And sue, all the information we have right now is based on this jpmorgan statement to us. And that is the full extent of what theyre saying right now. The story is false. We are not aware of a new attack, sue. All right. Eamon, thank you very much. Sorry i stepped on you there at the top. I know youll continue to follow that story for us. Now to the stock market where we had briefly moved into positive territory for the Dow Jones Industrial average. The s p had turned positive as well. Right now were only down about 10 points on the dow. The s p is down under 2, and the nasdaq is actually up 4. 25. So lets get to the trading action. Bob pisani here with me at post 9 along with art cashin with ubs financial services. Art, you know there are so many rumors out there today. Geopolitical risk is high, but the bulls and europe is really a mess right now, but the bulls are fighting the good fight today. Yeah, ill give a little piece of circumstantial evidence here. What we saw was when europe closed, the selling began to dry up, but more importantly, and the real evidence was, the run rate, the volume fell off a cliff. So that tells you that the early selling was not just influenced by europe. Some of it actually came from europe. Came from europe, yeah. Draghi gave a very downbeat assessment of the overall state of europe. And i have to say, good for him. Draghi has been saying for a year now that the european leadership needs to get more aggressive about restructuring the economy. He said ive done nveverything can to keep Interest Rates low and said the european leadership have done nothing to restructure your economies. Youve done nothing to improve the tax situation, freer movement of people across your borders. And hes right. Theyve done nothing. And he had a little bit of a tell ter tmper tantrum today, i. How important is our market to europe . I talked to an increasing number of analysts on here at post 9 who say its on the verge of recession again. And whats the impact to us if that happens . Well, thats a real difficulty because not only is europe on the verge of dipping back into a recession, but theres several misfires going on in tokyo. Right. You know, as rick was saying before, we were caught in kind of a stereo problem here. And that could be a real difficulty. A good deal of the income of the income coming in from the s p comes from international sales. So that could be a problem. Important to watch how we close today. Do they worry about europe overnight. Take a look at, you know, those percentage losses that we just showed you on european is very worrisome. Its very worrisome. What would you ideally, for the bull camp, like to see on the close today, art . I would like to see at least relative firmness in the final hour. I dont want to see them say uhoh, less than 24 hours from now, im going to wake up and find out that europe is a mess all over again. Right. So they need to show a little bit of courage going out. Were still dealing with the implications of the ebola virus. We dont know, it might be contained here in the united states, the cdc says they can contain it, but when i was at the traders conference yesterday, the big issue was can you contain it from a global pandemic. Look at africa. We cant model for that easily. And the whole democracy thing in hong kong is another little known unknown thats descended on the markets that we had to deal with. Absolutely. Thank you so much, gentlemen. Appreciate it. To kate rogers for a market flash. Tmobile is spiking right now on a report that francis ilead will bid for a bigger stake. He intends to offer 33 for the larger stake according to the report. Tmobile up more than 1. 5 on that news. Back to you guys. Tyler . All right, kate. Most football fans already emotionally invested in their Favorite Team or player. One company is taking it to the next level, turning athletes into stocks. Securities, you can invest your money in. But would you . Go to cnbc. Com vote and let us know. Plus todays power house is the birthplace of filmmaker Francis Ford Coppola and has the countrys most registered bowlers, and its home to the first automatic coffee maker. Can you name that city . Today could be the day. The day we give you hope. Relief. A cure. Today, we believe every life deserves worldclass care. As one of the top four hospitals in the nation, over 100,000 people from around the world come to Cleveland Clinic for care each year. And were ready for you with a Second Opinion or a sameday appointment today today today and everyday. Call today, for an appointment today. Really big comeback for the Dow Jones Industrial average. We were down at the low of the day, 131 points. That was just a couple of hours ago. We went into positive territory after the market digested the bad closes that we got in various european forces. Now we are down about 20 points on the Dow Jones Industrial average. And theres some big winners out there in todays trading session as well. Home depot is one of them, moving up on the trading session. So were going to keep track of all of this, ty, and keep you up to date as the bulls try and battle the bears down here on the floor of the nyse. Over to you. Its been a very interesting couple of weeks, sue. Lets go to a power house. Birthplace of filmmaker Francis Ford Coppola. Can you name the city . It is detroit. Jenny lynn esterreicher is a realtor with century 21 town country. Heres a snapshot. The median sale price, 167,000. Inventory, about 19,000 properties. The local mls service says properties are on the market for an average of 40 days. Now, were going to go a little bit north to the suburb of rochester hills, specifically Oakland Township. Some of the nicest suburbs in the country are in this area of michigan. About 45 minutes from downtown detroit. Our first listing, jenny lynn, 4122 norwich court, 472,000. Taxes, just 4,500. 5 beds, 4 1 2 baths, 3200 square feet of living space. Man, you couldnt come close to that kind of space, jenny lynn, around new york. Yeah, thats right. Its a beautiful area of Oakland Township. This is a 2004 built. Its got a threecar garage, finished walkout, five bedrooms. The fifth bedroom is actually in the basement with a full bath. And its got almost a half an acre. Its just a beautiful home. And for that price, its unbelievable. Wonderful combination of price, space and low taxes. Talking to a jersey guy, that is perhaps best of all. Second listing, lets move to 2261 North Rochester road. Its 679,000. Taxes, 6200. 4 beds, 3 1 2 baths. 4500 square feet of living space. Tell us about it. Now, this is magnificent. This is almost five acres. Wow and it has a pond. Its almost like a park setting. This is absolutely a gorgeous piece of property. In Oakland Township. Its got a finished walkout basement as well. And it has a fourcar garage. Actually, the fourth car is in the back with your own private workshop. Its a beautiful piece of property. And at almost five acres. Its unbelievable with the price. That is big. No wonder, 679,000, thats for five acres. 2888 addison circle south, just recently sold, 1. 1 million. That is below the list of 1. 195. Annual taxes here, a very modest 7600. Im getting ill just seeing that. 4 bedrooms, 5 1 2 baths, nearly 5,000 square feet of living space. What makes this one special . Now, this is a 2013 custombuilt home. Its got vintage beams in the kitchen, gourmet kitchen, with subzero refrigerator, granite countertops. It also has a finished walkout basement with bar. It even has a really cute little craft room in the basement. And its got all todays fixtures and this is almost on a half an acre as well. And in an area of Oakland Township, which is just surrounded by luxury home estate homes. That is very nice. Jenny lynn, thank you very much for taking us on a tour there of Oakland Township today where there are some nice places. No problem. Sue. Ty, weve got another power house to show you. Check out 602 north roxbury drive in beverly hills, california. I love spanish architecture. It is the former residence of lucille ball and desi arnaz. It is listed by the agency at 6. 9 million. It is a classic 1920s spanish style home. It has an oversized private yard, extensive twolevel decks, a guest house. In total there are 7 bedrooms, 6 1 2 bathrooms. It is a gorgeous, gorgeous home. Big sigh. All right. Turning Football Players into stocks. Whats that, you say . Well, thats exactly what one company is doing. Well talk to the man behind that idea coming up next. Plus, we want to know, would you invest in a Football Player . Yes or no . Go to vote at cnbc. Com vote. Power lunch is back in two with the dow down 18 points. Location. Location. shouting location. Heres the location that matters the most. Here. Or here. Or here. Its wherever this is. To get customers to come here and stay here, youre going to need an app that connects to all your systems. So they can bank, shop, do what they need to do, and you gotta do it fast. Before the competition does. Its tough out here; you better be on the right cloud. Today theres a new way to work. And its made with ibm. A day after tumbling ebola fears, Raymond James upgrading the stock from market perform from under perform. Shares of Constellation Brands lower after missing Second Quarter sales estimates. Despite my efforts. Shares of directv rising. The Digital Entertainment provider striking a 12 billion deal to continue showing nfl games on sunday. Sue . Speaking of the nfl, the vikings play by packers tonight. Go, pack. If youre a big football fan like i am, you are probably already invested emotionally in the sport, or in your team, or in your favorite player, perhaps. But theres one company that takes that a step further by turning athletes into stocks that you can invest your money in. Buck french is the cofounder and ceo of fantechs. He joins me here at post 9. We want to know what you think. Would you invest in a Football Player . Go to cnbc. Com vote and weigh in. Buck, its great to have you here. Welcome to post 9. Tell me how basically this works. It sounds a lot like a tracking stock. It is a tracking stock. We acquire the future cash flow streams both from onfield and offfield performance thats associated with a professional athlete, oneday entertainer. We acquire, in the case of, say, vernon davis, we bought 10 of that future cash flow stream for 43 4 million. So you give him the 4 million and you get 10 of his future cash flow. Correct. It sounds good, but there are risks in every investment. Sure. Footballs a very tough, violent sport sometimes. Youve got the injury risk, and youve also got, as we know recently, offfield risk as well. Sure. I mean, as you pointed out, every investment has risks associated with it, and it really comes down to the riskadjusted return youre expecting out of that cash flow stream. For example, on the fantechs vernon davis offering, weve already paid out a 70 cent per share dividend within the first four months of the offering. So if you bought in the ipo price, that would be a 7 yield off the 10 ipo share. How do you determine the valuation . You know, were always talking down here, when they bring an ipo to market, the valuation of the company, where to determine the share price. How do you do that with an athlete . You know, its basic discounted cash flow analysis. Its actually, at least from my perspective, simpler than what you all do here. I dont think so, but anyway. Its all done at gross. You know, really you have to understand, estimate out how long you believe a player has the opportunity to play in whatever sport theyre playing. And then you can forecast out based on comparable analysis what the potential future contracts that that player could ultimately sign. What about liquidity. Say i buy into aaron rodgers. Who incidentally, for those of you who dont know, packer, and, you know, i hold my shares for a certain amount of time, and then i want to liquidate my shares or sell my shares. How liquid is the market . Well, this is a new marketplace, so its not that liquid right now. The floats are also very are small relative to what you all deal with on the new york stock exchange. So liquidity, we believe has more and more issuance that the liquidity will increase. Lets bring in jack brewer, our resident athlete turned financial analyst. What do you think . Do you think its a good one for athletes to do . From the athlete perspective, its a great opportunity. Given the fact that in the nfl, average careers are 3. 2 years. And if you look at a case like vernon davis or e. J. Manuel, these players got pretty good pretty fair valuations for their talent levels. I mean, right now e. J. Manuel wont be starting this week, so im sure his stock value has pulled back some, but i think hes one of the better young quarterbacks in the National Football league. I think that still has potential to run. From an athletes perspective, i think its more of an insurance policy more than anything, really. Yeah. Jack, from your perspective of the athletes that you know so well out there might be considered for this type of ipo . Definitely. I mean, theres some great athletes. Can you imagine getting a megatron and be having the opportunity to buy into 10 of his future earnings . Some of these athletes that are playing in the league now, if they stay healthy, which can also be insured, by the way, if they stay healthy, their earnings potential is huge. From an athletes side, i think its an opportunity to hedge yourself. Now youre not taking on all the risk. Youre passing on 10 of your future earnings risk on to investors, and i think its incredible platform. Who do you have, buck, on your list next . So were currently in the road show offering period for the fantechs Muhammed Sanu offering which is a wide receiver for the cincinnati bengals, former rutgers grad. And then we also tifiled the s1 for the Alshon Jeffery offering. Alshon jeffery for the chicago bears. Are you going to do other sports . Tennis comes to mind, perhaps. No, absolutely. Our goal is to sign athletes across the world of sports. And as i mentioned, actually go into the entertainment sector. Best of luck. Thank you. Really interesting. Appreciate it. Jack, always good to see you. Thanks for joining us. You, too, sue. Thank you. Lets lock in the vote. Would you invest in a Football Player . Lets take a look at the percentages. Sorry about this, buck. 70 say no. 30 say yes. Im an optimist. That means 30 will. Thats right. Thats right. And as you say, its an emerging market. And thats what makes a market. Indeed. Thank you so much. All right. Whats coming up on street signs, you ask . Lots. Theyre up at 2 00, right, bri . Thats right, sue. Thanks very much. Warren buffett says the Federal Reserve Means Nothing to him when he picks stocks. So guess what . Were going to try to find stocks that could be good bets even without the fed. Including one an analyst says could double from here. Why we strapped a brain wave monitor to julia boorstins noggin. And a guy who says gold is going to move 45 soon. But which way . Youve got to tune into street signs to find out. Meantime, power lunch is back after the break. Arian foster, get well. Youre killing my fantasy team we needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. At a special site for tv viewers; in the hall of the Mountain King [beeping on the computer] peter come take a look at this. [beeping sounds are more rapid] [beeping sounds are even faster] mr. Daniels . Mr. Daniels . Look at this. Whats this . The numbers they keep getting bigger and bigger. The clicks are off the charts. Yeah the clicks are off the charts. Yoshi, its walt. Were back. Yes sir hi. [spoken in japanese] lets go lets go lets go [spoken in japanese english] i need more trucking. More shipping more shipping i need more trees more trees . Ill get you more trees. Hey take a look at wood pulp. Whoa. Everything you got on wood pulp. Right now yeah he really loves that thing. All right. After being off triple didnts earlier this morning, the market clawed its way back into positive territory on all three of the major indices. The dow, the s p and the nasdaq. Its dipped a little bit. The dows now down 17 points. The s p is down just a little bit more than 0. 10 . The nasdaq remains in the green, not by much, but its good enough for the bulls looking for a recovery in the nasdaq. Transports are up about 0. 5 . Thats pleasing some who follow the dow theory which means when the transports go up, the Dow Jones Industrial average gets support. The tenyear note, the yield is Still Holding at 2. 41 on the trading session. A lot of parts of the market did get hit very hard because of oil this morning. Theres the russell. It has turned positive and actually of the major indices, it is leading the way. It is up almost a full percent on the trading session. The oil market going in the opposite direction with both brent and west texas intermediate kind of mixed on the day. West texas just moved positive, ty, but we still have brent down on the day. And we still have that jobs report coming out tomorrow. Thats right. Zl it will be interesting to see how stocks react over the next two hours because that will be the last chance to position ahead of that report. That does it for power lunch. Here come street signs. See you tomorrow. Warren buffett says buy the dip. He did and it may be helping because stocks are doing okay despite worries over, lets see, ebola, hong kong, european weakness and even isis. Mandy, of that litany of problems we walked through, what seems to be worry number one down there . Growth. You know, i was doing quite a bit of talking with traders. A lot of them were pointing to the fears about what is going on with growth. Remember from the ecb, you had draghi making those comments this morning that its possible that the recovery will not be as strong as expte