Transcripts For CNBC Power Lunch 20161021

Week of losses, sell everything. Im out of there, baby. Much more on microsoft and great interview with former microsoft ceo steve balmer in just a bit. A propitious day for that. To the developing story, surrounding at t and time warner. It seems bigger is better once again. At t down a little bit, by about a dollar. Time warner moving up by 9 at 9076. David faber working the phones and is here with the latest. What are you hearing, david . Developing is the right word and things are developing very quickly. In fact, so quickly that you could see a deal announced as soon as, lets call it shortly. Will it be as soon as monday . Hard to say at this point. But the point is that after what appears to have been actually months of some conversations and certainly work on the part of some advisers, these two companies are close to inking a potential deal that would actually meantime warner would be owned by at t, a dramatic move for at t as it builds on what already was a large deal when it acquired additional distribution opportunities and video with the large acquisition of direct tv. This brings it into the content arena with the acquisition of a studio. Cable net works and perhaps most importantly hbo. It is significant departure for a company that clearly is saying, hey, we dont want to just rely at this point on the broad wireless platform. Where can you go . You can go internationally wireless or you could move to content. Our own Parent Company has gone down that road with Nbc Universal. Comcast in both distribution and content. This used to be the rule rather than the exception. Time warner itself had something called Time Warner Cable that it also included. And we do seem to be going back to that to a certain extent with the possibility of this deal. Where will it get done, if it does and, by the way, we should caution, while the talks are ongoing, there is no assurance theyre going to get to the finish line. Dont know price. But can tell you that people who follow time warner closely seem to be arguing that a price as high as 110 could be a possibility. Why . It ends up being a price that jeff buickous pointed to. It is interesting, i remember back then having reported so heavily on that potential deal that it appeared mr. Buickous was waiting a few more years when there would be other potential buyers for the company. When, by the way, his affiliate agreement and affiliate renewal agreements would be out of the way and for any of a number of other reasons including the earnings power of the company, he thought it would be better to wait a few more years. Here we are, and here he is with potentially a Historic Deal close to hand. Questions, of course, continue to be would any other companies consider coming in. Time warner is a unique asset in the sense it is not controlled, disney, the other noncontrolled media company, but enormous. This, of course, still large, but not as large. Would an apple consider it, would a google consider it. Does verizon feel pressured to move and do something. You talked a lot about this industry over your years. Do you think two part question, do you think the doj would prove a deal like this and if it did, lets say if it happens if it did, would that give our Parent Company comcast perhaps the window of opportunity to go after a phone company of its own . Interesting question, brian. I think it is funny you list the potential acquirers here, you have to include comcast as a possibility. I think their regulatory concerns would weigh heavily given what they went through to buy Nbc Universal and tried to expand the distribution and were shot down when they tried to buy Time Warner Cable that being comcast. As for this deal, i think most people believe it would be approved, although in this environment or whatever environment follows the election, it is always difficult to know and certainly would take a very long time to get done. But when you talk about comcast, and its wishes and whether or not it moves into wireless, certainly been out there, brian roberts, chairman and ceo, has talked about the wireless strategy at the company, i think it remains unclear. This opens up so many other possibilities as well, brian. You know this well having watched for a long time, in terms of content companies feeling they need to move, whether it is viacom and cnbc that m cbs that feel like we got to get together. We are watching the content providers today or content creators rise on the back of the speculation, discovery for one, lions gate all trading higher on the back of the reports. Is this time warner specific or could there be another target in sight . I dont think there is another target in sight that i heard of, melissa. I think some of it is short covering, some of it is the idea that this will force more consolidation or companies i mentioned that do want to get content and believe it is the right strategy may look to other assets to do so. All right. Thanks, david. Okay. We should know time warner shares right now on fire up more than 9 . And at t is down 2. 6 on the news. By the way, if david is right or even in the realm of possibility on the 110 price, he didnt lock it in, but lets just say, just did the bad math, i had to turn my phone side i was because there is so many zeros, that would be an 85 billion deal based on the number of time warner shares. At ts market cap is 227 billion. Petty cash. Petty cash. Joining us now, amir matzaroski. Welcome. If i know you cant comment on the deal, we dont know if there is a deal. However, as somebody who follows at t, a, would you like to see them use their cash and stock in this way, and if they did buy a tv company, how would that change our view of at t as an investment . Totally changes the company from a boring phone company with directv to a media company. Certainly, certainly. They have taken a big step with the directv acquisition in terms of move into the content. If you think about at t today, versus where it was several years ago, theyre the largest distributor of video content nationwide. Not just when it comes to subscrib subscribers, but also take into account all of the wireless customers they have today with respect to the mobile business. You think about how content is being consumed today, more and more millennials are consuming content over tablets, over the smartphones and really when you think about that opportunity set, there is a tremendous opportunity to push content to the subscribers. David hinted at this. Are we moving back to the you got to do it all. You got to be vertically integrated. Pipes, content, should you be both and now moving back to both it seems like. Got to be everything to everybody. Is that because as you talked about when youre if youre running a cable business, for example, there is not much room to grow otherwise, right . You got to do something else. Thats a great point. Think about horizontal integration, well, what else is there to go. If you think, you know, charter with time warner, they kind of locked in their footprint. Comcast has locked in their footprint. But what is interesting is with mobile, the footprint now expands because it is over the air. And so when you start to think about that vertical integration, im selling the pipes and selling access on the pipes, what can i sell across those pipes. Realistic realistically, you think about the amount of content being consumed, a majority of it is now video. And so when youre a pipe owner, youre saying im not getting a piece of that video traversing my pipes. So how do i then get involved in that business . So lets talk about the deal itself, at t has what, about 7 billion of cash on hand, the third lowest Investment Grade rating. This is a Company Always prided itself on strong market access, being able to tap the public markets. Is this something that is worth doing, stretching and potentially challenging its Credit Rating in order to get this deal done . And could the dividend be at risk. Without going into specific structures, the purchasing price would be a big factor in terms of determining that. Lets say 110 bucks a share, what were talking about here. 45 billion. Lets say 80 billion deal. I would say the key considerations for any one of these larger telecom operators, who clearly are dividend plays, are how to continue to focus on that and their ability to they need to keep paying the dividend no matter what, even if they do a big deal. I would say any of the larger telecom operators, Investor Base is very much committed to the dividend, management teams committed and that be with a big factor. Let me ask you the cynical question. Lets assume the deal gets done. How many years before Investment Bankers go back to that company and say, you need to break up and youll be better off separately . Well, as an observer of the industry being on the research side, it is a little difficult to assess when that would happen. I would say what is interesting about the motivation behind a lot of this cross poll nation of different businesses that we have seen is really driven by the consumer appetite and what we have seen in changes in consumer behaviors. The reality is when it comes to pipes, the pipes of today are very different than the pipes of yesterday. So integrating that it is not the bankers. It is the consumers. Thank you very much. The consumers are driving this. You lived through three or four big time warner deals that have not necessarily worked out some worked, some really didnt. By the way, if the deal gets done, we all have friends at cnn, i look forward to all of them looking out of their san antonio bureau where at t is technically headquartered. Thanks. Lets flip over to mcdonalds. Better than expected sales and earnings, the stock up more than 2 today. Down more than 10 over the past three months. Lets go inside the numbers with david palmer, an analyst with rbc capital markets. What did you make of mcdonalds report today. Largely in line. The u. S. Sales were heartening, people were concerned about that. The u. S. Business a little over 40 of the company. But it is a huge swing market for them, clearly thats where the recovery has to come. It was getting going with all day breakfast, but now beginning to lap that coming into the fourth quarter, so the momentum looking at least okay there was good. The earnings are there. The company is starting to get after the overhead costs. But left over is really what are going to be the big drivers for the u. S. International seems like it is on good footing, but the u. S. Sustainability is the big question from here. We were talking earlier in the week with a couple of companies that have gone heavily into digital ordering using tablets and smartphones, dominos being one, starbucks being another. Is this an opportunity for mcdonalds, are they ahead, behind, or is it just nonfactor for them . Well, there are limitations as to how much digital can reinforce a drive through experience. And that will always be something that they deal with. The good news is maybe they dont have an amazon type risk to a drive through. They have a great convenient platform there. But digital is a way for scale players to win. And the fact that theyre not there yet is obviously leaving something on the table. Theyre going to start to get after that and finally in 2017 and beyond. That dove tails with loyalty too. So that is part of it. The other big part of it for them is renovating ingredients. And then finding that value platform to help them compete versus sea stores and other value players. It seemed like youre a bit concerned that it was higher prices as opposed to traffic that was really benefiting mcdonalds at the two for five proposition, that was driving the check higher, but traffic wasnt necessarily catching up with that. Why does that matter at the end if the people coming in are spending more money . Well, ultimately, traffic turns into sales, you know. Best advertising is getting people to come into your stores. So that traffic momentum is critical. Beyond that, youre right, the two for five mcpick was something that worked for check more than traffic. From here we think that theyre looking at beverage value as something that will drive that traffic. You see traffic picking up . That could happen next year. Two things that will happen. They have to find new value platforms. They need to renovate the core menu and then beyond that, they need to find other types of new news. The bottom line is the value platforms, the quality upgrades on the core, those are going to be the things that get him out of here, in addition to the fact that the food inflation cycle is negative for them so far. That turns in 17. David, thank you. David palmer, rbc. Oil production just continues to rise. The weekly rig count numbers out and we added a bunch. We added 11 oil rigs in the past week according to baker hughes. This is the 16th time in 17 weeks that we have added rigs. I just tweeted out, good for jobs, probably good for production. Not sure, michelle, good for price. Adding a lot of rigs out there. Wti at 50 70. Shares of microsoft hitting all time highs after big earnings beat. Steve balmer stopped by squawk box with a lot to say. And then there was this. Youve done some math on your hand. Do you see this . I saw that. Put your hand up. Im getting on twitter and elsewhere, what is this math . Ill give you a hint. Has to do with the federal budget. Fits on his hand. The answer next on power lunch. Need two hands. Theres no one road out there. No one surface. No one speed. No one way of driving on each and every road. But there is one car that can conquer them all, the mercedesbenz cclass. Five driving modes let you customize the steering, shift points, and suspension to fit the mood youre in. And the road youre on. The 2016 cclass. Lease the c300 for 369 a month at your local mercedesbenz dealer. This is the new comfort food. And it starts with foster farms simply raised chicken. California grown with no antibiotics ever. Lets get comfortable with our food again. The conference call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Welcome back. To andrew ross sorkin. More on the possible deal between at t and time warner. Andrew . We have been looking into this, multiple sources involved in this transaction, it does appear that we may very well see an announcement, maybe on squawk together on monday when that does come. But i should also tell you, the other piece of this, we talked about it a little bit on squawk box is that now that these reports are true and in fact they are in advanced negotiations, it is putting an enormous amount of pressure on cbs and viacom to merge. There was a view earlier, perhaps within the cbs camp according to people involved in this maybe they would be able to hold out and themselves merge with time warner. With time warner off the table if the deal goes through and it appears the talks are real and very advanced, youre looking at the price on the screen, 89. 55, according to my sources this thing is going to go for way north of 90 a share. By the way, if you remember, the last transaction that was re jekt rejected was at you were talking about the possibility i was blind sided. I throw shade on me. I was 100 wrong. I thought there was i thought it was way early. But i will tell you, having spent the last several hours on the telephone it 100 clear to me we are getting very close to the field goal. Is there a chance because of what you mentioned before that cbs tries to disrupt this or no way given the size, given the size and scale of what is going on and the red stone family is involved which controls both of the entities, there is no way for another deal to happen. There are people, by the way, i should tell you, chasing people like google and facebook and others, but i think it is an ambulance chasing effort at this point to try to get them involved in something over the weekend. I dont that i will happen. But we are getting very close on this deal. You guys teased it. I want to show you a couple of clips from this morning. We talked about different deals, talking about mergers and acquisitions and talked to steve balmer, the former ceo of microsoft, about whether he ever wanted to buy sales force and his answer was fascinating. Im a guy who actually believes in revenue and profit. I really do. And, you know, you can dilute something and get something nothing back. Ill just tell you, i could never make the math work at sales force. Never, ever, ever, ever, never. Throw in a little bit of shade if you will, at marc benioff who runs that company. We also asked him about a company that hes got a small stake in. Twitter. The government only has two problems. Number one, what i call the savings programs do need to come into line. The savings programs themselves Social Security and medicare. Just those two. They lose about 400 billion a year and thats up 28 times since 1980 and, you know, nominal dollars if you will. I think they just showed you unfortunately the wrong clip. That was about what was on his hand. I dont know if we can show you the writing on his hand. He throwed a little shade at twitter. We showed the hand during the tease. People have seen it. Got it. I feel like the tease the shot we showed was not the right shot. I apologize on that front. Anyway amazing it all fit on one hand, the federal budget. Im sure well be talking more today, thanks. Great, thanks, andrew. We got we have to remember there were some reports as early as january that at t could be looking at time warner. So you wonder how long they have been looking at it, and what might have changed. They also got, as i sort of half jokingly we were talking, time warner has a lot of real estate in new york city and supposed to move into the new Hudson Yards Development next year, one wonders if the deal happens, what happens to all that real estate. They got a whole center named after them. Yes, they do. Yes. David faber reported earlier today that in preparation, they have been talking for months and months and months and what has changed unfortunately for time for at t is a time warner stock price has gone up significantly year to date. If they were talking from the beginning of the year, the stock is up 38 , so it just got a lot richer in toward get this deal done. It is moving now on andrews report now, time warner is 8950. If the deal is north of 90 bucks a share, have to keep paying more. This is a 10 stock six years ago. Time warner. Like 10. Winter was coming. Years ago. This kind of stuff never happened. To the point of the stock rallying so much, davids reporting a number of 110 bucks a share, much higher than where it is now. Regardless of where it is trading, if there is value, the thing will trade up sharply. The buyer has to pay up. I guess maybe there is some skepticism still. Only at 90 when david says it could go for 110, not there yet. A lot of my point to david earlier, a lot of antitrust talk and issues around media and phones, right . At t buying directv. I have no insight. Comcast is based in philadelphia. I wonder if comcast, our Parent Company could then, if the doj green lights this, say, hey, why cant we own a phone company . Just my own guess. They may want to. They may want to own a mobile company. Tmobile, sprint. We have been saying it is a doj issue. Could be an fcc issue. Cnn or at t and time warner. I can go on forever. On deck, street talk including one very bullish call on one very beaten up biotech. Plus, youre going to get a first look at the newest good year blimp. This aint your fathers derrigible. Power lunch back in two. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . More of a spokes metaphor. Get organized at voya. Com. Guyhey nicole, happening here . This is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. Doesnt go on your wrist. Technology. The highly advanced audi a4, with classleading horsepower. A little bit of flattening of the curve. We see the twoyear and fiveyear lower with the yield up. 83 for the twoyear and the fiveyear at 1. 25. There is buying of the 30year with the yield at 2. 496 , almost 2. 5 . Thats todays bond report. Massive cyberattack shutting down access to parts of the internet. How does that happen . We ask the woman in charge of technology for the entire country, our interview with u. S. Chief Technology Officer megan smith next. Images, videos, social updates. We call it dark data. 80 is invisible to most businesses. The ibm cloud has tools that can help see dark data and put it to work. Hello, my name is watson. Working with watson in the ibm cloud, we can help an Energy Company predict pipeline corrosion. And help a startup to use social data to predict market trends. Now businesses can get more out of their data. Thats what the ibm cloud is built for. Hi, everybody. Im sue herera. Here is your cnbc news update at this hour. Fighting between isis and Kurdish Forces continuing in the northern iraqi city of kirkuk. Todays attacks come as the Iraqi Government is making a major push to drive isis militants from the city of mosul. The former deputy chief of staff to new Jersey Governor Chris Christie is expected to testify in the bridge gate trial today. Bridget ann kelly to take the witness stand in her defense. Kellys Attorney Says his client was just following orders and was not behind the 2013 closure of the access lanes to the George Washington bridge. A major Chemical Spill reported at a Grain Factory in kansas. There have been no serious reports of injuries, but at least 18 people are being treated for some respiratory discomfort. Authorities say evacuated residents can now return to their homes. And a Florida Gun Store is turning heads with a political display involving president obama and Hillary Clinton. It has put up life sized cardboard cutout displays with the two with the sign that reads, get your guns now before we do. The store owner says his Second Amendment rights are in jeopardy. Thats the news update this hour. Ill send it back to you guys. Brian . Sue, thank you very much. Take a look at these images. Long gone are the days when blimps looked like this. So enter wing foot two, good years newest blimp, the first redesign in nearly 70 years. That thing is 246 feet long, 50 feet longer than the previous blimp, also faster with a top speed of a stunning for a blimp 73 miles an hour. Thats blimp fast. We know the guy who is going to fly it, captain bill bayless. We know him because we featured him on power lunch for our i get paid for this series a while back. Can head over to powerlunch. Cnbc. Com to see him in action. Takes a crew of 15 people to land and launch a blimp, wing foot two being christened later today by savanna james, the wife of lebron james. Makes all the sense in the world. It is more squatty. Side by side of the old and the new so you can appreciate the re design. Does that mean blimpy has to redesign the subs. Probably. Blimp news here only on power lunch, developing story watching at this how a cyberattack knocking out major parts of the internet today. Eamon javers has the latest from washington. Thats right. A Law Enforcement official just confirmed to me a few minutes ago that a second major cyberattack is under way right now throughout the day. It has been affecting internet traffic up and down the east coast in particular, take a look at this list of companies that have been affected so far today. The earlier attack began at 7 00 a. M. East coast time. Amazon Cloud Services netflix, twitter and spotify all reporting that they were having difficulty with internet access. Today, the company that is being attacked is called dyn providing Domain Name Services and they say the original attack this morning was mitigated in Customer Service was restored. They said just a few minutes ago, were currently mitigating a Second Attack. We also have a statement from the department of Homeland Security, which says were aware and investigating all potential causes. So no information at this point, guys, exactly who is behind this massive denial of Service Attack on Internet Service up and down the east coast of the united states. But clearly a targeted effort beginning with a pulse in the morning and now a pulse here in the midafternoon, well see what happens throughout the rest of the day today. Back over to you. Seem to be testing exercises as much as anything. Yeah, thats speculation, tyler, but it is probably smart speculation that somebody who might be interested in doing something more significant would want to probe systems before moving on with anything that would be more damaging. But we dont know right now who is behind this or why theyre doing it. Lots of speculation out there as to who it might be. But for right now, officials staying mum, saying theyre investigating. We expect to hear something from them as soon as they have some ideas. Can we read anything into the targets, social media, music . Not saying they arent important, but you get my gist, im sure . I think more than the targets, the social media and Music Companies that youre seeing that have been targeted have been affected. Look at this company which provides the underlying domain name service. It is more of a web Infrastructure Company that is being hit here. Theyre the ones that are struggling with this. The others are companies that sort of sit on top of that in terms of benefiting from the services that it provides. So theyre the companies that are experiencing the widespread outages now. The attack is focused on this firm, dyn, which says it is experiencing the Second Attack of the day. That would indicate that whoever is doing this is fairly savvy about how theworks and get at the web infrastructure itself and that has broader implications than the Technology Companies we spotlighted that have been affected so far today. Got it, thank you. Speaking of security, good day to have on the following guests. The u. S. Cto, the chief Technology Officer of the entire united states. Megan smith. Shes a former google executive appointed by president obama in 2014 to oversee the most Critical Technology issues facing the nation. She is with Julia Boorstin at the site of the big womens conference in houston. Take it away, julia. Thanks so much. And megan, thanks so much for joining us here. I want to talk about the issues of women and technology, but first i want to hear your reaction to what our reporter eamon javers was just talking about. A massive hack attack, yet another one, denial of service. What should we take from this . Do we not have the proper tech talent in place . We look at tech and innovation, not necessarily cyberspecific. You heard the department of Homeland Security who leads on this with others reantreacting and theyre monitoring the situation. It is interesting to be her at the conference. We have 15,000 women in Computer Science here. An extraordinary amount of work on driving us on cyberreadiness with this various attack and making sure were upping our game with the things that my colleagues in government are doing as well as making sure all of the american talent that we feel the whole team, a president ial memorandum to National Security teams about the diversity of the American People and how do we make sure whether it is professionals today getting them into tech, you know, things like tech hire, boot camps, other ways, high things, fund jobs, that really have great impact on the country. So more talent in. When you look at the amount of talent we have now, the type and variety of talent, are we falling behind . As we see the risz e of international cyberhackers. Were keeping pace and we have extraordinary talent in this country and in the government, so thats continuing, just that this is a huge challenge of our time. And so we have to be incredibly diligent, constantly upping our game as the game moves up and thats whats happening. What do you think the number one most important thing is that the next administration focuses on in light of the rise of the cyberattacks . We dont talk so much about the next groups of the elections, but really, you know, they are very focused on this and we see congressional support, support from the center as we move forward on how we continue to advance our skills here. There is a range of issues over the last two years that are really accelerating our capabilities and in addition to this incredible work of pulling more americans in, including Computer Science for all, which is a program, talked about the state of the union, we now have whole states, rhode island, hawaii, arkansas, cities like new york and boston, others just in chicago, training teachers and bringing Computer Science k12 into the universities and bringing data science, Artificial Intelligence we came out with the most recent ai report. Were really hustling on all the issues. In the last two minutes of the fourth quarter, running as hard as we can and well hand the batons and im confident of how it continues. Speaking of the fourth quarter, there is a lot of talk about how some of the Voting Machines are very, very old. Running on very old software. Are you concerned about the election being hacked . All of that is run at a state and local level, those teams are incredible. And so there has been a lot of work there. The department of Homeland Security also, the center point of much of our work here is also available and consulting as needed. Shifting gears to what is happening here. It is remarkable if you look at the percentage of women who are in Computer Science majors and also the percentage of women who make up the tech jobs. Both of those percentages have declined dramatically over the past 20 and 30 years. Why are those numbers declining and how can we turn it around . We were talking with the new film coming out, there were women in fact, africanamerican women, celebrated in that film, who are a big part of taking us to space. Catherine johnson did the calculations for apollo, for john glenn, all of those early mercury gemini politicians. Thats been true. We dont tell the stories. So media is actually part of solving this. We see with hollywood, they dont mean to, but it is 151 boy programmers to girl programmers who they depict, who they cast, who they animate. Were working with them on that and seeing new imagery there. It is hard to be what you cant see. Cant just be an issue of media responsibility for such a dramatic decline. In the 80s, we just kind of thought they were for our boys. We marketed them that way, and even where they cracked the coast, 11 Million People saved, two thirds women were part of the math teams there. It is 25 to 1 boy versus girl. It is a cultural problem in who we think does this. Were out of time. I hope we can change that culture and bring it back to a more equal ratio. Thank you so much. This is the place to do it. Absolutely. Thank you very much for joining us. Thank you so much, Julia Boorstin. Back to the cyberattack that affected all of us today. I found my computer just wasnt working right. Wasnt going quickly enough. I restarted it. Still didnt really get me where i wanted to go. Same for you, brian. What hasnt happened is we havent grown accustomed to the possibility. We assume i need to turn it off and on again. Who is dyn . Theyre a manchester, new hampshirebased corporation. My home state. The internet infrastructure corporation, they help Companies Manage their web domains, theyre tweeting out, were working on this, but i think one of these the fallouts of these types of stories is not just oh, i cant access twitter or spotify, Companies Like dyn pay more attention. Who are the companies that are like utilities, theyre running key parts of the internet, not Just Companies that you almost never talk about, a private corporation, not a public stock, we dont hit it. But now you realize how important some of the who knew the entire east coast, the internet was run out of manchester, new hampshire. Cybersecurity is always only as strong as its weakest link. Thats what they always say. Or people. Or people. It could be applied for many things. In particular, cybersecurity. Thats why we are going to Pay Attention to dyn more. A quick check on the cybersecurity stocks. Not a lot of reaction. Some earnings coming up next week from fire eye. Blowout earnings in the seconder, which has been a little bit more rare, barracuda had a beat, palo alto had had a miss. It is all over the map. Theyre not benefiting from the rise of attacks. We just listened to the interview that julia did about women and technology, but it struck me she doesnt have much of a portfolio on what are some of the big issues. When it comes to cybersecurity, she couldnt talk about it. Not in her portfolio at all. Right. Exactly. Thats Homeland Security. Shes, i guess, a kind of visionary type. Looking out over the entire tech infrastructure. But i dont think she runs anything. Not clear to me what exactly a lot of beautiful trees out right now in the fall. Maybe with the internet partially down, we take a moment to embrace our loved ones and walk outside. Feel the mist on your forehead. Enjoy natures bounty and beauty and just have a National Group hug. And everything will be okay. Yeah. I rolled my eyes in case you missed it. I know you rolled your eyes before you actually rolled your eyes. I know you do. I still rolled them. Read the prompter. The four stocks on our radar today, including one analyst call that sees a doubling of a beat and a biotech. Your daily dose of street talk and hugs as melissa rolls her eyes yet again straight ahead. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Welcome back to power lunch. Credit Rating Agency dbrs just reiterated its triple b rating with a stable outlook on portugal. If dbrs downgraded portugal, it would have been no longer eligible for the European Central banks qe program, which would have had threatened the countrys Financial Stability and one of the reasons bonds in portugal, the yields are much higher than other parts of the eurozone. The tenyear yielding 3. 18 . Seema mody, thank you. Time for street talk. We kick it off with maxim integrated. Raymond james, higher, 43 from 40. There were concerns about the quarter because of the recall of the galaxy note 7. And there was a setback in design wing for its Power Management system. But the analyst says maxim has a capable product set seeing penetrations into new customers. Not a whole lot of companies in the Semiconductor Space of the size that are independent. Other than that, theyre kind of all coming together. All right, stock number two, ariad pharma. Sun trust out with a big bullish call on this beat. Sun trust starting coverage of a buy and 22 target. The 1073 stock, this is really a double. Now, be careful, it was slammed because of a congressional interest in price hikes surrounding the drug. But sun trust says the company is a highly innovative pipeline, calls it a premiere oncology company, viewing the weakness as a buy. Those calls where you cant say enough about the risk, because we dont know that congress is going to do. Specifically a target of a Bernie Sanders tweet, two times. So thats where the concern was. It does, though, to the analyst point, have a product for fda approval, sometime in the First Quarter of 2017. So not like this is the only drug in their pipeline here. Third stock, chesapeake energy, lots of bullishness after its analysts say bank of america and nomura upgrading the stock. Chesapeake talked about setting a new record for fracking by pumping more than 25,000 tons of sand down a louisiana gas well, which improved output from the well by over 70 from traditional techniques. Listen, it is not helping today, but probably more than any other oil and gas company, chesapeake folks, it really still a Balance Sheet story. They were overleveraged, they deleveraged wildly, they may start making some acquisitions according to people i talked to recently. So chesapeake is a balanced sheet story. Finally, your Small Company call of the day is avexx. Bank of america, merrill lynch, buy and 64 target. Company working on an orphan drug to cure the horrible genetic. The analyst notes that phase one data showed improvement in patients and say if things keep going well, if they do, peak sales could be nearly 5 billion. Thats 8 years out. A long way to look out. Dont know how they do it. Bank of america, merrill lynch, bullish on the company. 40 upside on the target, but, again, a company in very early stage trials. I had to look at that chart twice. 157 this year. Phase one. You got a bunch more before this drug can even come on the market. Absolutely. There is a battle brewing in the world of beer. Bottoms up. Power lunch will tell you about it in two minutes. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Now that fedex has helped us we could focus on bigger issues, like our passive aggressive environment. Were not passive aggressive. Hey, hey, hey, there are no bad suggestions here. No matter how lame they are. Well said, ann. Ive always admired how you just say whats in your head, without thinking. Very brave. Good point ted. Youre living proof that looks arent everything. Thank you. Welcome. So, fedex helped simplify our ecommerce business and this is not a passive aggressive environment. I just wanted to say, you guys are doing a great job. Whats that supposed to mean . Fedex. Helping Small Business simplify ecommerce. Recengrand prix race carsbenz made history when it sold for a record price of just under 30 million. And now, another mercedesbenz makes history selling at just over 30,000. And to think this one actually has a surroundsound stereo. The 2016 cla. Lease the cla250 for 299 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Woman how do we protect them from 4 billion in new cuts to california schools . Man vote yes on proposition 55. Woman prop 55 doesnt raise taxes on anyone. Man not on working californians, not Small Businesses. No one. Woman instead, prop 55 simply maintains the current tax rate on the wealthiest californians. Man so those who can most afford it continue paying their fair share. Woman . To prevent new education cuts. Man . And keep improving californias schools. Woman vote yes on prop 55 to help our children thrive. Woman vote yes on prop 55 did you know your business doesnt have to suffer from slow internet . Comcast business now offers blazing fast internet speeds up to 250 mbps. Over 6 times faster than dsl. Get internet for as low as 59. 95 a month. Call today. Comcast business. Built for business. Did you know sharing wifi with your customers could leave your business exposed . Only comcast business offers wifi pro. Two separate networks one thats private for you, and one thats public for your customers. Upgrade to wifi pro for only 19. 95 a month. Call today. Comcast business. Built for business. Check out shares of boston beer. Shares were down, but rebounding at this hour, up by 4 . The sam adams owner cutting its outlook. The stock is down about 35 this year. What is brewing at this Beer Brewing Company . Lets bring in caroline levy with an underperform rating on boston beer. Great to have you with us. Is it just that the trends are working against this beer company . People arent drinking beer as much. No, people are drinking lots of beer. People want to drink what is new what is local. Being a National Craft brand is not a significant advantage right now. I think, you know, thats what sam is struggling with when you see revenues down 14 in the quarter. Is it fractionalization in the craft beer market or is the craft beer market itself compressing a little . The craft beer market in the last four weeks in measured channel data is down half a percent in volume. Thats a new trend. Sams share losses far longer than that. The growth a few years ago was really being driven by new products like Angry Orchard cid cider. Beer business has been under pressure for some time. Fragmentation within craft and for the first time, a sign that craft might have actually peaked in the supermarkets might start to rethink giving more space to the category, which has been so hot for so many years. It is amazing you walk into the supermarket it the beer aisle, which i dont do very often but i do occasionally that you see so many not enough. Eye roll. Sam adams has the unfortunate position of being one of the First National or being the First National beer company, but not perceived as a Craft Beer Company because there are so many real craft options that are really local. There is a little bit of that. I think less than craft is just that it is old. And millennials in particular want to try whats new and local. If you ask any bartender the number of taps they have has gone up dramatically for craft beer. And yet sams businesses under pressure and going down because of all of the startups. There will be a shakeup. We see some Strategic Value in sam. It could be either a takeover or maybe they start to go international which they have never done. There are some opportunities. So, you know, it is not like the stock is i wonder, we always focus on the retail side. Melissa going down the beer aisle once a year. However, we had tillman on the show earlier this week, the biggest Restaurant Owner in america. He said that Restaurant Trends are down. How much of sams business is at the restaurant or the bar and maybe this broader trend of people simply not going out reflects more of a macro problem than a sam problem . Youre correct. On premise, business is down. A handful of Beer Companies where that is not true. Corona, part of Constellation Brands and modellia, some growth. In general, youre right. People are staying home more. And i think the problem is multifaceted as you point out. But, again, probably the biggest challenge for them is that they have been around a long time, and they need to renovate their brands in order to drive growth again. If thats even possible. I love the phrase fragmentation of desire. Face that every day. I dont know why. Im going to save that. Caroline, can i ask you at one last question, and this is away from the beer business, you cover a lot of Consumer Goods Companies as well, procter gamble, Kimberly Clark, these names had a shift in consumers in investor sentiment. Procter gamble and Kimberly Clark in particular are down more than 10 from the 52week highs. What is your outlook here in a rising rate sort of environment . Definitely think the trend away from earning high yielding stocks could continue with rising rates. I think the job of analysts is to help you pick the best in class and i think, for example, in household products we would rather earn cold gate over procter. Procter trying so hard to turn the business around but not getting very far. Saving money but not growing the top line. I do think it will be a challenge for household products in particular. We prefer beer stocks, so anheuserbusch, i think, is doing a great job of growing internationally and buying up small craft beers, doing a good job of that. Beer over toilet paper. Beer over soft drinks, over toilet paper, beer over most things. Wow. Here here. Good slogan. Caroline, thank you. Thank you very much. You buy chardonnay, dont you . I buy scotch. Oh. Okay. I knew that. Biotech stock, biotech stock is up 30 today. Well tell you why and what company were talking about. Dont move. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. First hour of power lunch is in the books. Here is what is still to come. Microsoft, hitting an all time high, kind of. The question now is is microsoft still a good investment for your hard earned cash. Plus, former microsoft ceo steve balmer telling cnbc this morning they wanted to buy facebook for 24 billion. Why did facebook turn down such a deal . Cofounder Dustin Moskovitz will join us. Power lunch has delivered to you some great guests this week. We will recap the most interesting things they all said, as the second half of the show kicks off right now. Im michelle contrary. L stocks are mixed at this hour. Dow is lower by 20 points. The s p is just generally flat and the nasdaq higher by 12. 5 points. A lot of that because of microsoft doing so well. Dow would be even lower if not for mcdonalds and microsoft. Both of them moving higher on earnings. Tyler . Michelle, Tyler Mathisen here, welcome. The headlines at this hour, the white house confirming a u. S. Navy warship conducted a freedom of navigation operation in the south china sea. In other words, it went near some islands, claimed by china. Just because it can. Wall street journal offering buyouts to news employees hoping that substantial number will accept. And Donald Trumps lawyers are asking a judge to not allow trumps comments on the campaign trail to be included in an upcoming lawsuit over trump university. Shares of microsoft hitting all time highs earlier today following a big earnings beat. Were all still above the previous record, which was 5956. Lets bring in edmond lee, and kirk matern. He has a buy rating of 67 price target. Kirk, ill kick it off with you. Bears on microsoft at these at all time high prices, well say, the Cloud Business, a commodity business, going to face pricing pressures in the future. How does microsoft turn up the profitability on the Cloud Business . I think what you saw last night was not only really strong commercial cloud growth from a revenue perspective, but you also saw commercial cloud growth margins move up 7 subsequentially. You think about the lowest margin aspect of the Cloud Computing business, thats a massive move from a gross margin perspective. For those people waiting for microsofts earnings to start turning, this is a really good starting point. We think were really at the cusp of a multiyear earnings and cash flow growth cycle with microsoft. They have been setting up and making investments in the cloud over the last three years. I think what you saw last night in terms of the commercial cloud gross margin move is a great indication that youre going to start seeing more payback on the investments over the next 12 to 24 months. How much more gross margin improvement can we expect and how does linkedin fit into that, if at all . Linkedin to Gross Margins once it is baked into the numbers from a microsoft perspective. I think longer term what you see and what i think you saw last night from the business is for Gross Margins to move at that level, it means microsoft is not just competing at the commodity level of cloud in terms of infrastructure and service, it means theyre selling more platforms as a service offering, thats going to really be what drives growth margins. I think it is set up on a quarter by quarter basis, can move around a little bit, i think this is really the inflexion point youll see Gross Margins steadily move up toward from the 49 level into the 50s and maybe even 60 range. I dont want to take anything away from the story, microsofts 1999 high would be about 90 in todays inflation adjusted buck. So that said, at an all time high. A lot of good stuff going on at microsoft. Surface tablets selling off the shelves, outpacing the ipad by a lot. Why . They make hardware. Still sort of they still have a consumer business. I think this what youre seeing here, the fruits of they pivot for the company, really turning into an enterprise business, Enterprise Company, that part of the business is growing, becoming a bigger part of the Top Line Sales as well as operating margins. It is smart on his end. Were seeing the fruits of that for sure. Theyre going to have to take on amazon, aws and thats going to be its challenge for the next year or two or three. Linkedin will take a lot for that to really integrate, they have to prove out the value to its customers in terms of what that could mean for them. But overtime, it could mean something. Pretty embarrassing what happened with the nfl, right . But since it is not such a huge part of the revenue, is it just a reputational black eye . A little bit. I dont think they take such a hit on that. I think it is more, you know, again, like it is the narrative of the company is as it is turning more toward enterprise, turning more toward Services Business and that reoccurring revenue is going to be key for them. Going to leave it there. Thank you. The numbers are not leaning in Donald Trumps favor. Predicted, the website that lets participants bet on outcomes gives Hillary Clinton an 83 chance of winning the presidency, compared to just 19 for mr. Trump. That makes 102 . Remember how this works. You spend 83 cents and if youre right, you win a dollar. And theoretically you spend 19 cents you get a independent bets. We interviewed this guy a couple of times. I got the impression they have to add up to 100. Percent. Youre making individual bets. Technically one is against the other. The brexit vote, the morning of, 86 chance it would not happen. 86 on predicted. Sometimes the wisdom of crowds fails. Forget what we were talking about . That and the microsoft all time lets not bog down. So glad i it is not really material to what were going to talk about right now. Ron insana and bill stone who is the chief of something, the chief investment strategist at pnc. The chief of something. Chief stone. Chief stone. Just call me chief. Ill call you chief. The market seems to be pricing in the probability of a clinton victory. Is the Market Pricing in in any way the possibility of a democratic sweep of the senate . So i think the market is pricing in the likelihood of a clinton victory. I think a ill say a slight victory in the senate and obviously the high likelihood the republicans keep the house. I think the market, we all know, historically, the market likes it when you have a split government because, you know, either party cant do too much. And upset the apple cart. The election is a known known. It is going to happen. It is a binary result. One way or the other. So we think. So we think. There are a lot of talking about the user experience. A lot of other unknowns looming for the market from what the fed does to what the economy does, to what how earnings perform. What should be we be watching beyond the election . I think just to get through the election first, seems like financials and pharma have already deeply discounted not only a clinton victory, but possibly a change in the senate. And maybe some loss of republican seats in the house. The dollar strengthening rather radically and thats been depressant on the market today and may affect fed policy. Does the fed tight finance conditions are already tightening and the Economic Data softens from here. That december tightening is no longer necessarily a sure thing. Even the election. What do i do with my money right now . I think ron had a great point which is dont just focus on the election, the fact is it has been really interesting, so since august 8th, maybe three months before the election, well, financials and energies have outperformed. If you thought some sort of a democratic sweep, those would be the two last ones probably on your list. So i think, you know, focus on what you think is actually likely to play out in terms of the economy. We think the economy, you know, probably grew around 2. 7 this quarter, continues some decent strength, so i think it makes some sense to tilt a little bit more cyclical in terms of what youre looking at. In terms of health care, though, ron made the point that the sectors probably discounting a win. Youre saying, though, that it look Like Congress would be split with a Hillary Clinton victory. So does that mean that it is a buying opportunity right now, with sentiment so, so negative and it actually looks like government might be split, which would be in effect, i would think, good for the pharma industry. To be honest, were not overweight health care at the moment. Not recommending one. I think the hard part about it is we know one way or another, no matter who wins, probably something probably something has to be done about the Current Situation and obamacare. It is hard to know exactly which way it goes. Almost a more buy neinary kind outcome. I think you can feel safer about oil because it seems to be tilted or determined a little bit more by what oil prices do because they have gotten so low, so maybe it doesnt matter so much what goes on in politics. Is it a loselose sector, ron . Probably. If Hillary Clinton were to win and the senate were to go democratic, i mean, i think the ability to pass some kind of price cap on pharmaceutical products would be increased. And then with respect to how the aca readjusted, it is going to go through no matter who wins some forms of alteration. Some winners and losers. Hard to identify which specific sectors would do better because we dont know exactly what the changes are supposed to be. What do we focus on. The election will be over. What will be the next big thing to watch . I dont think you can take your eye off the election now. It is still not a done deal. And 18 days left or whatever the number is, and anything could still happen, barring a bombshell announcement, this thing looks like it will go in a particular direction. The dollar is important, the fed to me is up in the air and as bill dudley said, depends who you listen to, but people you should listen to versus people you shouldnt listen to at the fed. We should have to track who should i listen to . Janet yellen, Stanley Fisher and bill dudley. We have a november meeting. Wednesday before the tuesday of the election. Unlikely to raise. But they could. Im not in the prove the point camp where the dollar is firming and financial conditions are tightening. We leave it there. Ron, have a great weekend. Chief stone, thank you very much. Bill stone with pnc asset management. So many big name guests on power lunch this week. Probably didnt get to see them all. Well recap the best sound from all of them. Coming up on power lunch. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Im in vests and as a vested investor in vests i invest with e trade, where investors can investigate and invest in vests. Or not in vests. Sign up at etrade. Com and get up to six hundred dollars. A big week on power lunch. So many big name guests joined us all through the week. We want to go around the table and talk about the ones that stood out most to us. Im going to play a little sound bite from Sir Richard Branson and doing this solely in the interest of fact checking, ladies and gentlemen. I listened to what he had to say, and i think what hes had to say is dangerous and hurtful and, you know, hes not a good listener. Hes not something i think could get a great team of people around him to run this country. And, you know, hes hes had hes had a lot of disaster with his companies. Been bankrupt i think three times despite being given a lot of money from his father in a silver spoon. I just want to fact check here. It is not three times. It is six bankruptcies. Thats all i want to say. Set the record straight. Six bankruptcies. Sir richard, you stand corrected. We hear a lot about the silver spoon, et cetera. This is not about defending donald trump, but i will say it is quite possible to destroy the business that your father created, right. I mean, to maintain it took a lot of so he worked, all his children work. People dump that comes up all the time, but how many businesses have we watched destroyed, you know, the market cap disappears so, you know, hes gone bankrupt a lot. A lot. You need to have, like, three or four years of real business experience to go to an mb a program. But not to enter any level of politics. To go in you dont any real business experience, you can be there is senators and Congress People who have been in office for since we were children, i mean. All they have ever done. All they have ever done and i wonder, should there be you need to have remember ken bone with the red how could you forget ken bone . Ken asked the question what do you admire about the other person . What i would have said about donald trump is i admire the idea of a businessman walking away from his business to go into public service. I wish more would. I wish more would. We all know him and talk to him, they say, theyre not going into politics. They dont want to. Lebron james will make more money per game this coming year than the president will make in a year. Oh. Per game. Sure. Maybe hes worth more. This next comment goes to the conversation we just basically had on beer and sam adams problems. We talked about the problems in the business. It is funny because the whole country is soft right now on the restaurant industry. I hate to say this, but i think the people could be staying home and theyre Binge Watching and call and order something out and it is more casual or pick something up at the grocery store. Im not happy now because people are not eating i wonder, netflix shares are up 25 this week. Thats why it all came up. The day of the netflix shares. Boston beer, dominos sales are up. I wonder if it is an election thing, people are nesting. I dont know. Are people going out to eat less. Heard about it over and over again. There is tremendous food deflation. So now it really makes economic sense to go buy your food and make it yourself. We heard this again and again, particularly from the sort of not quick not the quick serve, like mcdonalds, but in between chain. Restaurants now in new york city that decided they were abandoning the restaurant part, going to do only carry out. Saw something the other day that i had never seen before. Panera to go. Have you heard maybe it is a Widespread National thing, small, couple of seats, there you go, a little tiny footprint. Were talking about health care with the chief and ron insana, health care having a target on its back. So do the banks and financial industry, particularly we talk about strengthening dodd frank. Goldman sachs Ceo Lloyd Blankfein had an interesting take on regulation and what many say is becoming overregulation. There are cycles and sometimes they take so long, you think, gosh, these things are permanent but helps to step away and look back. We had a great depression, a lot of regulation. Now its with a long time ago, but we had time for we had time for people for memories to dim, for regulation to get adjusted. For it to go too far in the wrong direction, and recover and get into a much more severe direction and those cycles have taken place. If you ask me, is this the end of all cycles and is this moment frozen, no. Zen sort of take on regulation from blankfein. This too shall pass. Exactly. Pendulum. Sarah Jessica Parker was on, she explained why she doesnt use twitter anymore. I dont have the constitution for twitter. Im not of im not made, it turns out, of the im not tough enough, frankly. And i like different kinds of colors in my conversation. I thought it was interesting because we had on milo banned from twitter for being too mean. He thinks it is for other reasons because hes a conservative. But, again, this battle about what kind of platform should twitter be. Shes leaving because it is tough. And yet he argues that thats where the most interesting stuff happens and you shouldnt be pushing mean people off. I had somebody tweet me the other day, the entire tweet was, youre ugly. Which, by the way, is subjective. But youre thick skinned. But, like, literally, im going to start randomly calling people at their job, this is bob, you suck. It is a tough platform. It is a tough platform. Youre a star. Take the good with the bad. Beauty is subjective. Cigarettes, shoes and the cloud. Coming up, the good, the bad and the ugly, which is not subjective. Were talking about a stock price after this. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at td ameritrade. Ebecause the ultimate expression of power is control. Get up to 5,000 customer cash on select 2016 models. See your lexus dealer. All right, a snazzy graphic says, time for the good, the bad and the ugly in todays trade. First, the good. Reknoynolds american soaring. An offer to buy the 60 or so of the company that it does not already own. On to the bad, tarullo, the company sharing another 7 million shares of stock, pricing that offering at 40 a share. Who is tarullo. It runs the connection between the customer and the driver for Companies Like uber. They had a nice run. The stock down over 30 in the past month. Downright ugly, youre ugly, ugly day for sketchers. Shoemaker missed on earnings and revenue, blames a weak retail environment and a shorter back to school season. Citigroup downgrading the stock, not sure why shorter back to school should impact shoe sales. If you need shoes, buy some shoes. Buy some shoes. Thank you. Reports of cyberattacks causing internet outages. We have been talking about that during todays session. We also have gotten to read a lot of emails we never should have seen because of a hack. But even scarier potentially medical devices also now vulnerable. And landon dowdy looking at how Health Care Companies are protecting themselves and patients. Scary thing to think could someone hack your pacemaker. That is front and center for all medical devicemakers now. Especially st. Jude medical after a report in august from a short seller claiming that judes cardiac devices are vulnerable to cyberattacks during a crash attack that causes the device to malfunction and drain the battery, potentially exposing patients to injury or death. St. Jude fighting back with a lawsuit against muddy waters and new medical Advisory Board focusing on cybersecurity. But the firms founder isnt backing down on the original claims. Take a listen. Definitely planning to fight it. It is not entirely unanticipated. It was generally before going public on a company, well think internally is this low, medium or high risk litigation. Because of the impending sale to abbott it was high litigation risk. Because it really strikes at the heart of the business. The stock dropping 8 on the initial findings and even after strong earnings this week, the stock has not fully recovered from the loss. But the firms finding raised the question for other Health Care Company devices. Johnson johnson telling patients it learned of a cybersecurity bug in an insulin pump. Carson block telling cnbc he thinks j j took the right approach by alerting consumers. Patients and investors will have to consider whether or not these devices are hackable. Frightening. Feels like the plot of a black list episode. It does. And reddington has to figure it out. Arizona was once a solid red state. Now it is up for grabs. Thats causing tempers to rise. A live report ahead. Donald trump and Hillary Clinton tried to make nice at a dinner last night. Didnt try that hard. Power lunch will be right back. Will your business be ready when growth presents itself . American expre open cards can help you take on a new j, or fill a big order or expand your office and take on whatever comes next. Find out how American Express cards and services can help prepare you for growth at open. Com. Find out how American Express cards and services theno one surface. Out there. No one speed. No one way of driving on each and every road. But there is one car that can conquer them all, the mercedesbenz cclass. Five driving modes let you customize the steering, shift points, and suspension to fit the mood youre in. And the road youre on. The 2016 cclass. Lease the c300 for 369 a month at your local mercedesbenz dealer. When youre on hold, your business is on hold. Thats why comcast business doesnt leave you there. When you call, a Small Business expert will answer you in about 30 seconds. No annoying hold music. Just a real person, real fast. Whenever you need them. Great, thats what i said. So your business can get back to business. Sounds like my rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. Hi, everybody. Im sue herera. Here is your cnbc news update at this hour. Bridget kelly beginning her long awaited testimony in the gw bridge gate trial. She said she told governor christie about a plan to condition duct a traffic study on the day she wrote the, quote, time for some traffic problems email that caused gridlock on the George Washington bridge in 2013. She said christie didnt react, but said, okay, and asked her when it would be scheduled. The wall street journal offering all of its news employees worldwide the option to take buyouts. Thats according to reuters. Earlier this week a dow jones executive announced a threeyear plan to cut costs at the paper in face of declining adverti advertising. A bird strike forced a fedex plane to make an Emergency Landing this morning. It happened right after takeoff. There were no reports of damage to the plane or luckily in he injuries either. And the u. N. Announcing a new honorary ambassador for the empowerment of women and girls. Wonder woman, d. C. Entertainment president diane nelson accepting the designation on behalf of the comic book, tv and film character. Today marks the 75th anniversary of the characters debut. Thats the news update this hour. Back to you guys. Thank you, sue herera. Just about 90 minutes from the closing bell. Check on the markets, not too much action, a fairly good week for the nasdaq in particular. On track to seal a. 75 gain for the week. Take a check on the Consumer Discretionary stocks. This is the best performing sector today. A lot of the gains made on the back of media stocks with at t reportedly going to make a bid for time warner. Were seeing shares of time warner up with discovery, lions gate, all of these in this particular sector. For the first time in history, the Arizona Republic newspaper endorsed a democrat for president. Many of its readers were not happy, some called the paper or emailed threats to reporters. What better place to talk politics than a state fair and thats where Contessa Brewer joins us. Shes live at the Arizona State fair in phoenix. 125 years in business and the Arizona Republic had never endorsed a democrat for president. So when the Editorial Board threw its support to Hillary Clinton it made history. And enemies. Threats came in, death threats, the end of the newspaper they predicted. The Arizona Republic publisher had to make a passionate argument for the importance of a free press and a democracy and for civility and political disagreement and, of course, there is a lot of disagreement here, the Arizona Republics pool this week shows Hillary Clinton beats donald trump with 39 support to his 34 . In a state, you guys, where the last two republican nominees have carried arizona by almost ten points each. This has been a red state for almost 70 years. The only blip in 96 when bill clinton managed to grab the states 11 electoral votes. I would say when i see the tide numbers, thats astonishing to me were that close, but we are. And then it comes down to who do we get out to vote. Republicans out to vote more, thats my goal. Okay, so arizonas political experts say the only reason the state is even in play this year is because donald trump is the partys nominee and hes managed to offend mormons, native americans, latinos, women, groups that make up a very large percentage of voters in this state. Trump actually held a rally here at the fair grounds this past summer. He might want to schedule a return trip. Guys . Contessa, thank you. What is the risk to other battleground states. Donald trumps speech in new york last night is any indication, hes not toning it down. Hillary is so corrupt, she got kicked off the watergate commission. How corrupt do you have to be to get kicked off the watergate commission. Pretty corrupt. Bring in cnbc contributor ben white and sarah fagan. How bad are the numbers for donald trump . Are some of these within the statistical differences that can occur or really is it really as bad for him . I think arizona is very close. Here is the bottom line. When were having a conversation three weeks out from election about states like arizona and utah and some polling in texas that shows the race closer, thats a bad sign for republicans. The race youre doing a segment on arizona not on ohio now. Thats a very problematic thing for donald trump. What does this mean for the down ballot risk . A nightmare for republicans now. And, tyler, i was on the show not too long ago and you laughed at me i was going to say that. I remember saying brazenly, confidently, no. Here we are. It is interesting. Arizona, one of the reasons it is close, there is a high mormon population in arizona. Mormons look at donald trump and look at the way that he has conducted his business, his life, his affairs and theyre really offended by it. More than many others. And he hasnt been able to bridge that gap, which is to say Hillary Clinton is also has a lot of problems that if youre a very moral person, maybe you cant vote for her either. I think it is a fair point. Shes not winning any polls on honest and trustworthy for a very good reason. But for some voters, they look at moral issues and personality and the way one conducts him or herself and thats an issue. Here is my question to both of you. Sincere question. I get what youre saying, i agree with it. I wonder, this down ballot thing, if you dont like trump, fine. But i dont does that mean somebody who is a republican is going to just go down the ballot . Either going to not vote at all or check the other box. A couple of points on that. We have people voting more straight ticket now. You vote democratic at the top, tend to vote the same lower down on the ballot. That happens more than it used to happen. But the fact of the matter is the generic ballot is democrats plus about four in the house. Thats not enough to create a giant wave, give them the 30 seats they need to take back the house. The nat is a differesenate is a. Democrats are in good shape to get that. Theyll pick up seats in wisconsin, pick up one in illinois, could win a number of states, florida, new hampshire, pennsylvania, where trump is doing terribly on the ride over here, i heard an ad, a republican democrats running an ad playing donald trump sound and saying this guy supports donald trump, dont vote for him. Down ballot what you want to watch for in the house are all the suburban districts that are lean republican or likely republican. If you start to see close races in them, youre going to know that the White College educated women are not only fleeing donald trump, fleeing the entire Republican Party. Is there a number hes got to get x percent of the vote and then therefore the house or the senate is safe or how do we think about the Bigger Picture how it filters down . If you look at the polling down, trump is down 5 to 6 points. If he starts to lose by 7, 8, 10 points, he loses the white house by 8 or 10 points, i think the house is very much in play. I put the magic number at around 40. If hes in the high 30s, youre looking at a wave, the senate is done, it is democratic. The house could flip too. If hes like 42, 43, usual bad republican range, losing republican range, then there is no big wave. If there is a tsunami, at 37, 38 , it is gone. Hes only broken 40 in about five polls this entire cycle. There are some fundamentals here that look very problematic. I think it will be closer than people think. It is all because of brexit. A theory there are two or three Million People not showing up in the polls and will storm the ballot box. There is no evidence. If you look at early voting and absentee requests now, no evidence that is happening. There are one or two polls that show the race closer with it being three or four percent for Hillary Clinton. Lets not say every poll shows a tenpoint lead. It is moving her way. Ill buy you a beer if you both appreciate it. Thanks. Ben white and sarah fagan. T minus 17 days until the election thing that we just talked about. Here is some breaking news. People are interested in it. Google says the election searches are at an all time high. Up 250 compared to october of 2012. Also a brandnew set of search tools available to find the candidates, issues, top to bottom, nationwide and state by state. Love to know exactly what people are searching for. Cant be searching for election. And how that information is curated. I hate that word. Chosen. Up there with millennial. It is viral. Well explain what is driving the stock up by about 28 or so. And coach could merge with burberry, but that story was shot down. More on that. You both have a perfect driving record. Until one of you clips a food truck. Then your rates go through the roof. Perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you twentyfour seven. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Shares soaring on positive news for a drug to treat depression. Meg tirrell has more. A big move for the shares told after a phase three trial out yesterday for the experimental drug for depression being tested in patients who tried other therapies, not getting enough benefit. Seeing positive results in this study. That did come after two phase three trials failed in january. Sending the stock down at the beginning of the year. They were trying to climb thr way back, not quite getting there. The we for alkermes, will this collection of data be enough for fda approval. The company says it plans to meet with the fda to discuss the path forward. Some questioning whether one positive study at least in phase three, the latest stages of trials, will be enough to push this through. People saying this has potential blockbuster billion dollar potential here in revenue if it is successful. At first two failed phase three studies, people were basically throwing in the towel on this particular compound. Still has to generally the fda needs two positive phase three trials, correct . In an indication as big of this, they want two. The company says that some of the earlier studies contribute to the strength of the data, they say they saw signs of positive ty in some other studies. Theyre hoping that will push this through. Questions if they have to run more trials, know. New data on drug pricing. Were talking about the political risk, Bernie Sanders targeting ariad and campaigning for prop 61, mandating zre inin discounts. Data from ssr health foreshad hes who might be to come. Here we have inflammation drugs, some of the biggest selling drugs in the world. Their net price going up since 2008, 15,000 to almost 30,000 this year. But if you look at the discounts theyre giving to payers and pharmacy benefits managers, those havent grown so much. Only reaching 20 . Same thing for multiple sclerosis, big drugs from biogen and others. Net price going up quite a bit. The discounts really havent risen so much. Where the data may be foreshadowing things to come are in insulin drugs. You can see the average net price per year of insulin drugs have risen a lot. And so have the discounts. Theyre saying this might happen to the other classes as well now. Is there a reason why there is a focus on these particular areas . Yeah, because not only are they some of the largest drugs in the world selling billions and billions of dollars, but also because their prices have been rising so much in the last few years. Meg, thank you. Meg tirrell. Another biotech, lets bring in the trading nation team. Today, stacy gilbert, at susquehanna, eddie elfenbyne, the crossing wall street blog. Lets start with you. Biotechs, specific view on the macro, on the micro. What do you got . It has been a really difficult year for the biotechs. The ibb still this is over a year later and still a third off its high from 2015. And clearly there is a lot of political risk. People are worried about what will happen with the clinton victory. Twice in less than a year, comments from Hillary Clinton flattened biotech stocks. And obviously it is the pricing issue that people are worried about. I think in the near term, until the election, there is still going to be a cloud over biotech. However, once we get past that, i think things look pretty good. For one, actually attacking the issue of pricing is much it is a popular bumper sticker, but actually attacking the issue is much more complicated. Also, some of the valuations are looking pretty good. I like the ibb after election day. It looks pretty good. Stacy, you look at the options market, do you think it looks pretty good for biotech . Yeah, i think eddie is slaughtly corre absolutely correct here. If we think about what the market seems to be most concerned about, it is really a dem sweep now. If you look at how the Biotech Sector has been under pressure for the last month, youve also seen the probability that the dems could sweep increase. These two i put hand and hand, they are related. If we look at the ibb options, lets think about what the market is anticipating for moves around the election. I would argue a dem sweep is the most negative rhetoric for the biotech space, low probability event of happening, but if it were to happen, you can see another 9 to 11 pullback in the biotech space on that news alone. If we look at any other combination, even a clinton win, but where you have Congress Actually producing a gridlock here, now you can see a move of relief rally of 3 to 5 . There is still a lot of volatility out in the space now. But it would say the probability that gridlock is out there is the higher probability, so you could see a rally out of the election. The biotech bulls are happy with you both. Stacy and eddie, thank you very much. Two additional segments, trading nation. Cnbc. Com every single day. All right. Next, Dustin Moskovitz talks about the election, silicon valley, hacking, a lot to talk about straight ahead. And now the latest from tradingnation. Cnbc. Com and a word from our sponsor. A strong dollar is often viewed as a net negative to the economy. Thats not always true. While export driven companies will often struggle under a strong dollar because their products are less competitively priced abroad, consumers will benefit because imported products will be cheaper. Because the u. S. Imports more than it exports, a strong dollar is an overall positive. Whoa. Whats going on here . Oh hey allison. Im val, the orange money retirement squirrel from voya. Val from voya . Yeah, val from voya. Quick question, what are voya retirement squirrels doing in my house . Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . No, im more like a metaphor. Okay, a spokesmetaphor. No, im. Youre a spokesmetaphor. Yeah. Ok. See how voya can help you get organized at voya. Com. The conference call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Our next guest did not have much experience when Mark Zuckerburg needed help on a project called the facebook. Com. He bought a programming for dummies book and got the social network up and running. Several hundred billion dollars later in market value. He is using the skills that he learned to change the way we work and make us more efficient with your startup. I want to start by asking about an issue today. Im not sure if you heard of the attacks that brought down sites like amazon, spotify, twitter. How big a concern is security for you guys . I will start by saying security is a huge concern like any Enterprise Company it is important that their data is safe and that the site is available. So we have a really accomplished Security Team that protects our customers data. I havent been in this morning so im not sure how we i have been here at the conference. But my main understanding of the issue is that it really effects pockets of Internet Users rather than Core Companies for the most part unable to get certain parts of the internet. Do you think we will see that companies are vulnerable . There has been an escalation in terms of the types of attacks and the capabilities just this attack was u. S. Attack and basically the size of the network of bauts that attack sites just get bigger and bigger and those get harder to defend. Now, lets talk a little bit about your other life after facebook. You have big philanthropy. You said you want to give away the wealth you made from facebook in your lifetime. A huge part of that has many different endeavors but you recently pledged 20 million to democratic groups and followed up with more contributions a few weeks ago. What motivated this decision . I have a post that explains the full thinking. I think it is apparent to every american that this is very special election and stakes are extremely high. As we were watching things play out the Republican Party chose their nominee and the rhetoric they are using we felt compelled to sort of get off the sidelines and help ensure that the democrats were able to win the election. Our colleague has a question for you. Just the last few minutes the wall street journal is reporting that employees within facebook had wanted to mark some of Donald Trumps posts, remove them because they felt the content was offensive. It went to the top to your former room mate who decided they have to stay and to allow the conversation to continue. What do you think about that decision . Was that a good one in. First i want to make it clear that im not a spokesperson for facebook. I think that they have a lot of difficult situations like this in terms of what kinds of speech they protect and just in the realm of hate speech or inciting violence. It is really difficult, i think. Im not sure which post in particular being discussed but i imagine that they are probably in the gray area. You have really interesting twitter post sent out a few days ago saying trump reveals the best and worst parts of society. I think that doesnt get enough attention. You said our democracy if it survives will be stronger. Can you explain it a bit more . I was linking to the great article about how they are responding to the threats that they were getting for having endorsed hillary. So what i meant by bringing out the best in us is really just that post is very eloquent but just seeing sort of newspapers and people take a stand often not just bipartisan but opposite the normal views. It is just happening in this way right now. Thank you very much for being with us today. Guys, back over to you. Facebook cofounder. Tune in to closing bell for an exclusive interview with marc benioff at 3 15 eastern time. A sort of strange post debate bump happened to someone. This is a little bit of a hit. Why Janet Jackson is trending. Stick around. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. 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Visit your local infiniti retailer today. Infiniti. Empower the drive. Check please. Janet jackson getting post debate bump. Jackson song nasty saw a spike in spotify streams following the trump insult at the debate where he called Hillary Clinton a nasty woman. It was a bad moment but we are trying to make light of it. We may have different views but we are all part of the rhythm nation. Wall street journal offering all of its news employees world wide the option to take buy outs. The media landscape is changing. They can get more done with fewer people. Or they have to. They have to get things done. What if they dont accept it . I was an intern there twice and i learned a lot about journalism reporting. Two times as an intern. Finally. Taking me years to do that. I will refrain from commenting. Media on the report that at t may make a bid for time warner. We are seeing content makers rising. The notion that there could be some consolidation. Ballmers handwriting. He writes on his hand. I do, too. I was really pleased to see that Steve Ballmer does the same thing. Thanks for watching power lunch. Closing bell starts right now. Hello and welcome to closing bell. Im kelly evans at the new york stock exchange. Im bill griffith. Producer said we are at session highs. We are up 0. 96 points. Major averages near the highs of the session. Strong earnings by microsoft. We have mcdonalds. We have a lot to talk about. How about