Transcripts For CNBC Power Lunch 20171003

Good day, everybody. Welcome to power lunch. Im tyler mathisen. Glad you could join us another daily and more records for the equity markets. The dow, s p, russell, nasdaq, you name it theyre reaching historic highs. The emerging markets rallying two, the etf that tracks them, on pace for its best day since september 11th. The airline pushing the dow transports to new highs as well jet blew, delta, united leading the way there. Lennar up about 3 . The home builder beating earn ares estimates. Now making a bit of a come back as you see theyre up 1. 2 . The electric car maker missing those model three goals more on this ahead. Im melissa lee. The National Retail federation expecting holiday sales to increase between 3. 5 and 4 this year. The u. S. Ordering 15 Cuban Embassy officials to leave. This comes after sonic attacks against american diplomats in cuba. Three nobel prices for scientists after breaking gravitational waves. We begin this hour in puerto rico. The president touching down in the u. S. Territory a short while ago. We expect to see him touring some of the devastation left by Hurricane Maria. Hes already had meetings on the ground there. We will bring that to you live to the extent we get footage out when it happens. Our Contessa Brewer is live in san juan with the very latest. Contessa. Reporter so, tyler, hes in these neighborhoods now where there are low semidetached houses, hes meeting with some of the people who survived Hurricane Maria and now many of them are surviving without running water. Less than half of the island now has running water. Much less electricity. Were still only looking at the most crucial areas on this island connected to the power grid even as utility crews are out and about and now the president getting a chance to hear from some of those people about how dire the circumstances are. Before he got into marine one this morning to leave to come to puerto rico, he said, oh, it was a good thing that Puerto Ricans didnt have more people die, quote like in a real catastrophe like katrina. General henry who was in charge of the military response to katrina is on the ground and has been here on puerto rico and said that what he was seeing was far worse than katrina, 3. 5 Million People on this island and nearly every single one of them feeling the effects of Hurricane Maria. The other thing that is likely to be talked about as the president is visiting the island was this back and forth with the mayor of san juan, the president criticizing her effective leadership in response to the disaster. She met with him today. Got a chance to shake his hand. She said she thought keeping the lines of communication were more important than politics but heres how the president responded in front of the mayor when he was talking about the governor of puerto rico. Right from the beginning this governor did not play politics. He didnt play it at all. He was saying it like it was and he was giving this the highest grades and on behalf of our country, i want to thank you. Reporter the president is also meeting with the governor of puerto rico while hes here, the governor of the Virgin Islands which is struggling to recover power there following irma as well. Hell be talking with some of the armed forces with the marines doing that on a navy ship that has responded to the disaster here. Fema says its already handed out 35 million, 7 million of it to individuals and the other part for the Disaster Relief efforts here and more to come as well. Guys. So is he planning still to go to the Virgin Islands or is just meeting with the governor of the Virgin Islands in puerto rico or is he going to tour the area by air or what or do you know reporter there is nothing on his schedule to indicates a trip to the Virgin Islands. When they released his schedule, they specifically said the reason why the governor of the Virgin Islands was coming here was because logistically it was too difficult to get the president to st. Thomas and especially st. John or st. Croix. Thank you very much. Well be following what is going on there, brian. Tyler, thank you. Now to las vegas. A city still in shock and mourning and still searching for answers and a motive. Jane wells is there and she joins us now with the latest on the ground in vegas . Reporter hi, brian. Its 36 hours since the shooting. This is the venue behind me where it happened. People still havent been able to get in there and collect their belongings. You can see mandalay bay, that is where steven padlock dock paddock, had the perfect view. Nbc news reports Law Enforcement sources say that paddock checked into two rooms on september 28th, thats last thursday, days earlier, he had transferred 100,000 to an account in the philippines where its believed his girlfriend might have family. She had left the country. Supposed to be coming back and he liked to gamble large sums. Paddock reportedly had the highest status as a patron at caesars. Now we checked into mandalay bay yesterday. Heres the photo i snapped but the mood was subdued. Security was increasingly tighter. When my reservation didnt quite match my name i had to produce four pieces of i. D. , get a managers okay. Thats never happened before. And up the street at the wynn a short time ago, our producer went in, they were wanding people with metal detectors and checking bag. Everybody understandably is a little on edge. This was an attack on united states, on las vegas by a seemingly lone deranged individual. Im proud of the people that work for my company and metro. As you might have heard earlier and from others that we are absolutely confident that we saved lives by bringing this to a more swift conclusion than would likely have been the case other places. So i love my town. I know my town. I feel responsible for everything that happens in this town and but i do know that we did everything that we could and we will continue to do everything we can. Reporter every digital sign in the city is expressing condolences. Many are offering free rooms to families and victims. Ufc donating 1 million toward helping victims and families. Same with station casino. Zap poe will match donations. Its now topped 3 million. Its not quite clear who or how that fund is going to be administered. Its just a showing guys of the incredible outpouring here whether its money, food and water to First Responders, theyre lining up again to doe naft blood. It is just amazing. I know you spoke with people there on vacation. Have you spoken with anybody who is leaving early or otherwise changing their plans reporter i have not found people yet but mccarren airport is saying because too many people theyre trying to get their stuff, they just want to get their stuff but the airport is saying if you dont have your i. D. And you want to get out of town because your i. D. Is some where back there, you dont have to have an i. D. To get a boarding pass. Youll have to fill out more paper work or go through a secondary screening but if you want to get out of here and you cant find your drivers license or passport they will help you get out of here. Jane, thank you very much. Very interesting wrinkle little detail. The former equifax ceo in the hot seated to facing angry questions from lawmakers on the hill. The hearing has just wrapped up down in washington and the aditi roy is live on capitol hill. Reporter just moments ago that hearing just wrapped up and former equifax ceo Richard Smith walked out of here. We triefd asking him questions several times but he just remained tight lipped as he walked through this corridor outside. Would not answer any of my questions, a Company Spokesperson told us to refer those questions to the company. He faced a tough grilling this morning from up to two dozen lawmakers on this house subcommittee. He began his remarks with an apology. The ceo, im ultimately responsible and i take full responsibility. Im here today to say to each and every person effected by this breach, im truly and deeply sorry for what happened. Ive talked to many consumers, ive read your letters. And equifax is committed to make it whole for you. Reporter smith also told the subcommittee that the reason it took them 40 days to notify the public about the breach is that at first they didnt understand the scope of what had happened, that it took weeks for them to investigate and understand the true depth and breadth of the breach. The company just announcing yesterday, now a total of 145 million americans were affected, 2 1 2 million more than originally reported. Smith also talked a little bit about why it happened in the first place, he said it was a combination of human error that a person did not rollout that a patch for the Software Vulnerability that ultimately led to this breach and it was a problem with machines and technology that a scan of the companys system did not identify that vulnerability and final little he will also addressed the stock selling of three Company Executives including the company cfo and he maintains that they did not know about the breach when they sold those shares so he did add that the companys general counsel signed off on those stock sales and tomorrow he faces two panels on the senate side. Back to you guys. Another long day for him. Thank you very much. Now to a sector thats been impacted by the hurricanes, autos and their sales in september. Phil lebeau has got the latest live from chicago. Much stronger than expected sales in september. We knew there would be a bounce following the hurricanes in texas and florida but boy did we really see it especially with some of the larger automakers, toyota, gm, ford all reporting substantial increases in sales last month, much berlg than what was expected. Usually you see an increase of 2 or 3 . These guys were up 3, 4, 5 skpard to expectation. Some of this is due to auto sales rebounding in texas and florida following the hurricanes. I have to tell you, that even the analysts were not expecting numbers this strong and thats why when you look at the annual sales rate for the month of september we are looking at the strongest month likely when the numbers come out in the next hour or so, strongest month of the year, could even be 18 million as a sales rate for the month. Theres the annual rate. You see 17. 6 last year. Were not going to hit 17. 6 for this year but we could see a pop in the overall sales rate when those numbers come out in the next couple of hours. And we also got news from tesla. Some people were focused on the model 3 short falls because the production set backs because investors are largely looking through that. Right. You have to figure that most people were going to look through this if you were a tesla investor, youre buying into the longterm vision when it comes to the model three. The Third Quarter number no doubt disappointing if youre looking specifically at the Third Quarter. They said they would build about 1,500 they delivered 220. They didnt even come close to building 1,500. They built 260. They blamed in on production bottle necks. They believed they have solved those issues. As you take a look at shares of tesla, remember, this company has not changed its target in terms of model 3 production for this year or for next year and again, most investors who had bull ir on tesla, those who were long, theyre looking way out into the future in terms of the success that they believe the model 3 will have. Not too many initial targets that tesla has actually met. Phil, thank you. You bet. On deck, the other hearing on capitol hill today, wells fargo ceo getting an earful from senator elizabeth warren. Well talk more about that. Plus the battle over valuation. Warren buffet says the market is barely valued with a caveat but a new study out from bank of america says stocks may be flashing a sale signal. Who is right coming up well debate. Announcer youre watching power lunch. Evaluations make sense with Interest Rates where they are. In the end you measure laying out money for an asset in relation to what youre going to get back and the number one yardstick is bus governments and when you get 230 on the ten year, i think stocks will do considerably better than that. And of course warren buffet earlier today on squawk box with becky quick noting that market valuations to him still seem reasonable. On the flip side bank of america, merrill link saying the market is flashing a major sell signal and could be on the verge of overheating. So whos right lets bring in shannon shakocia thats a lot of vowels, shannon. I know. And steve masokia. Lot of vowels there too. Im going to call you by your first names shannon and steve. Shannon, you get to go first. Where do you come down on this what is your market view why and what would you do about it i think that were concerned about valuations. They do seem a little topee here and i would be i have to acknowledge that. I think on the other hand we look at this from an Economic Perspective and were investing based on the fact that rates are rising were in an reflationry environment and we think theres still room to run in the sectors we like right now. How about you steve i think as long as this worldwide Monetary Policy continues, not only stoksz but assets of all kinds of natures are going to continue to move higher. We recently heard that the fed is going to be reducing their Balance Sheet. By the way, they have the fourth largest Balance Sheet, not the largest but the fourth largest in the world. If you look at what the ec b b oj is doing it far outweighs what the fed is doing. Studies show that the fed will reduce their Balance Sheet over the next 12 months by about 300 billion. The other major Central Banks in the world are adding 300 billion per month not per year, per month. As long as the pedals to the metal i think valuations can go higher. Clearly if you look back if you want to look at historical terms, yes the markets expensive but in this day and age of aggressive Monetary Policy, you can make an argument that stocks are going to go significantly higher from here. Lets be clear that the oracle of only ahawaii was talking about stocks and valuations with the big caveat of Interest Rates being where they are or relatively low. Lets assume its a big assumption i know, lets assume that rates are 1 to 2 higher in five years than they are now. Would equities as these salations still look at attractive no, no way. If youre talking about a 4 , or 5 ten year yield on u. S. Governments, no way, no way. The stocks would be overvalued. My argument is, theres no theres no evidence thats going to happen. I think were in a lower for longer environment. The big problem with monetary policies, its not impacting the economy or inflation. The feds concern is ive got asset prices screaming but on the other hand we saw personal income and spending numbers that were kind of ehhh. So the feds in a bit of quandary here. They would like this asset pricing thing to go away. Their problem is large parts of the economy are not ponding to aggressive monetary weve seen the typical reflationry trades perk up over the last months or so, really huge advances here, where in this trade do you see value at this point i think we still see values in the financial. The other thing were seeing is were seeing some of an response to tax reform and so theres some overlap there with some Smaller Companies here in the u. S. Economy, financials, industrials which would benefit from a lower Corporate Tax rate. What were really looking for is the intersection of that sort of reflationry theme along with Solid Company growth and we see that in certain areas of the energy sector, names like slumber je. We see it in certain financials, industrials, where were not excited obviously, plasz like utilities, telecommunications and we still like technology. Theres a lot of growth there and if you look at valuations, we understand the concerns about technology valuations especially in some of the large social media stocks but we think theres still some growth and some room to run there. We appreciate your time, shannon, steve. Thank you. Wells fargo ceo says the bank is better today than it was during the sales scandal but did he convince a tough crowd of lawmakers. Weve got the latest next. Ronoh really . Gs going on at schwab. Thank you clients . Well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to Wealth Management. I cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise and welcome back to power lunch. The other hearing on capitol hill today, wells fargo, Ceo Tim Sloan testifying before the Banking Committee and having a Fiery Exchange with senator warren. Wilfred frost live in washington with more. Hi. Reporter lets get straight to an example of that Fiery Exchange. Now lets forward to 2016. Two months before the fake account scandal became public. You were then the chief operating officer of wells fargo, an interviewer asked you whether you thought the bank had pushed sales goals and cross selling too far and your answer was quote, no. The fundamental strategy that we have is not going to change. That is july of2016, just before this breaks open. According to wells fargos own investigation by july of 2016, you knew that thousands of employees had been fired for opening fake accounts and other sales violations, you knew aggressive cross selling goals were to blame and still, you publicly said the bank didnt have a problem. Reporter now sloan felt that was taking out of context but ive checked the original from american banker and its not out of context. Sloan was answering the following question. On the topic of cross selling is there any sense that the bank has pushed that strtgy to the limit to which sloan began his answer no and went on to say the rest of the things senator warren said. Either way, the key thing for sloan is the questions in this hearing focused on him and what he failed to do in rolls prior to being ceo before this became public when he was cfo and coo and not on the work he has done to change the Company Since and as a result the stock price is down around about 1 , 1. 6 . Its recovered a little bit. All right. Thank you. Well hear from you later on. Coming up. Just two might take over for janet yellen. Kevin warsh the frontrunner right now and willing to shakeup the institution but is the short list growing a little longer. That story straight ahead. Clarif announcer cnbc news update is sponsored by comcast business. Built for business. Hello, everyone. Im sue herera. Heres your cnbc news update for this hour. Law enforcement officials telling nbc news that las vegas shooter steven paddock transferred 100,000 in the act to the philippines last week. His girlfriend is a philippine descent. She is returning to the philippines tomorrow. Paddock was a frequent player with the highest status at caesarss casino. Three u. S. Scientist have one the 2017 noble prize for physics for their pioneering role in the detection of gravitational waves. Announcing the prize to barry bearish and kip thoern. Thousands of people demonstrating in barcelona as labor unions and Pro Independence groups urge workers to held strikes in protest. This is what they say was Police Brutality during a referendum vote on catalonias succession from spain. Spains king is going to address the nation tonight. Rock music icon tom petty died late last night after suffering an pattern haerkt. He rows to fame in the late 1970s with his band tom petty and the heartbreakers. Over his career he sold more than 80 million records. He was 66 years old. That is the news update this hour. Melissa back to you. Thank you very much. Lets take a check on the markets right now. Record highs for some of the indices. All trading at record highs. A rise today with the rise today the dow would be up for a fifth straight session. Disney are the dow leaders today. Sherwin williams and united couldnt ten nal leading the s p 500. Bank stocks on the move as well. Jpmorgan an all time high. Bank of america as a nine year hold and cityi at an eight year high. Companies like discovery are doing whatever they can to stay on top of Digital Content creators including doing a nearly 12 billion deal to buy the rival scripts. Lets head over to Julia Boorstin who is joined with ceo david saturdays lowe. David, thanks for joining us here today. Nice to be here. Were going to be talking later here on stage about the sports business. I want to talk big picture about the scripts deal. Still on track to close . Early next year we think. Its gone well. Very excited. So since you announced the deal, the your stock is still down about 19, 20 . Whats it going to take to convince wall street that this deal makes sense i think for us wall street will get there i think if our strategy is correct. When we look at scripts we dont see just the cable channels that exist here in the u. S. And the international business. They do have terrific channels, hgtv, food, travel, cooking, diy. Together with discovery in the traditional cable space well have over 20 of the viewership and will have when you put those channels together with tlc and id thats number one for women for u. S. And own which is number one for africanamerican just a very big play for women in the u. S. But for us we see scripts differently. Were all about owning i. P. Different than any other media company, we own all of our content at discovery. Were way long. We dont just own it for analog. So whether its discovery, own or tlc we own all that content on all platforms everywhere in the world. When we look at scripts they own all their content and they havent taken it around the world yet and the key for us is taking all of our i. P. , because well be the Largest Global i. P. Company in the world and moving on to mobile. Whats about this report, a number of reports that youre working on a sportsfree bundle. Bundling together your content, script content from entertainment nonsports content to take direct to consumer. What can you tell us about that app thats in the works . Okay. Well, first, when we close on scripts which we hope will happen early next year, well take their channels together with ours diplomatically and take those channels around the world. Well be a very compelling piece of the existing infrastructure here in the u. S. But here in the u. S. Right now in order to get cable people need to buy in most cases the Regional Sports next works, the sports next works, retransfer all of the broadcast, were looking at together with a number of other players of doing a skinny bundle. Everywhere else in the world, you dont have to pay for sports in order to get entry to cable. How much do you see your skinny bundle costing and would it be live or just on the demand content . It would be both and it wouldnt be just mine. Together with scripts we have a hung amount of Quality Content but if you put it together way few others, anywhere between 8 or 9 to 20. Everywhere else in the world you can get an entry level of cable or content for between 10 in brazil its only 7 or 8. Generally between 10 and 20. The u. S. Is the only country where you have to buy through all the sports and its the only country where theres retransmission consent. The cost of cable here is very high. Its one of the reasons why theres some decline in the u. S. And the cable universe. Speaking of that decline, we just saw disney teased having these rough negotiations. Rul concerned that your prices that you get the amount of fees that you get from the Cable Companies are going to go down as you go through your next rounds of negotiations weve been able to get significant increases because we represent at discovery about 12 or 13 of the viewership but we only get about 5 of the money and scripts has a similar situation so when you put us together well be more than 20 of the viewership but less than 8 of the money. So we think theres actually an opportunity to get more economics but the way to get it would be not just by getting higher prices from the cable distributors and satellite distributors but also to be able to do different kinds of bundling and also to be able to take our content direct to consumer which is something were aggressively pushing since we own all of our content were able to take it direct to consumer. In europe with sports, you are taking it direct to consumer. It sounds similar to what espn wants to do here in the u. S. What have you learned in europe with that product and can you imagine doing something similar here i think number one is were very i. P. Long. So we own all of our sports content on euro sport. So we have the flexibility, we have three sports channels in every country in europe and we can take some of that i. P. And put it on the linear channel and select certain i. P. And go only direct to consumer or we can carry for instance, for the u. S. Open. In many markets we had if you want to see the u. S. Open the first week you could only see it on our euro sport player which is a sports netflix and were making a lot of progress. As you work on this flet flix of sport how big of a threat is espn as they go into this as well as amazon and facebook as they bid more on sports right . Espn is really just in the u. S. So we actually look at espn as an opportunity. There are sometimes things that we could look at together because were all of europe which is about 750 Million People and we have were the dominant player in sports there and theyre the dominant player in sports here in the u. S. And so theres more opportunity there. Amazon right now is a partner of ours. Theyre in germany, were going direct to consumer and amazon is actually retailing our product in germany and in the uk, we bid together on some content. So amazon is definitely testing the waters and for now for us its been a big advantage because theyve been able to help us scale up by driving our subviber base. Do you see them driving up the cost of sports rights as well on the one hand, using their platform which is so strong across europe to sell our product has been quite successful for us and i think well lean into that more. To the extent that they become another bidder, it could have an impact but were the only ones in europe that can bid on all of europe. Our big advantage is were the only pan european player in europe for sport. Fascinating. Certainly interesting tiemgz for sports as well as the cable content business. Thanks so much for joining us. Thank you. Great to see. Back over to you. Up next why there could be a hammer coming to the fed. The latest on the race to be the next fed chief and why it could have major ramifications for policy and the u. S. Economy. But first to Rick Santelli for the report. Pretty much says it all, an inside day were contained with yesterdays wide range if you look in the 24 hour. The last four friday closes from the oldest to last friday, 205, 220, 235, 233. You get the picture. Just scaling up a bit. We settle at 244 at the end of 2016. Lets look at two day boons. Also kind of tight. Still cant do a close above 48 to 50. Thats the key. Two day dollar index, see how it looks different. A more firm look towards it and if you look at early july on the dollar index, you could see why 94 seems so important to many technicians. Heres something important, dont touch that dial. The bond report returns after the break. Directv has been rated 1 in Customer Satisfaction over cable for 17 years running. But some people still like cable. Just like some people like banging their head on a low ceiling. Drinking spoiled milk. Camping in poison ivy. Getting a papercut. And having their arm trapped in a vending machine. But for everyone else, theres directv. For 1 rated Customer Satisfaction over cable switch to directv. Call 1800directv. Kevin warsh et frontrunner where we in the race and what would warsh mean for rate hikes ahead. Steve liesman joins us with the latest. Kevin warsh a former ned governor is now a top candidate for the job of fed chair along by the way with current fed governor jay powell. Warsh has made no secret. He is not happy with current fed policy. Changes are in order in how the fed organizes itself, conducts its business, deliberates policy choices and makes its decisions. The existing governance structure reinforces a group think. It places the fed at considerable institutional risk when the next crisis strikes and it makes the next crisis more likely to be harmful. Digging into his record here, heres just some of thing its called it warsh versus the fed. He thinks the fed should have exited low rates and focuses too much on decimal points and not whole numbers when it comes to things like inflation targets. Moves too much by the latest Economic Data and too concerned with market reactions. Warsh is fond of blasting the fed in how it would with alter or fix current policy. Hes been blasted summers called an article in the the wall street journal, quote the single most confusing analysis of policy i have ever read this year, guys. A sting. Summers is not alone in criticizing that aspect. I might point out wrote that piece with a Nobel Prize Winner for economics. He was not in bad company when he wrote that piece. The big story in what larry points out and i wrote a story critical of that at all lacking evidence. He did not do the Statistical Analysis to back himself. We got larry here. Welcome. Thank you, thank you. Before we get into the nuts and bolts, youve met kevin warsh. I worked with him closely as a reporter. What can you tell us just about the guy . What kind of a guy he is ridiculous smart, off the chart smart. He was a good lieutenant to bernacki an an important lieutenant in the crisis. He broke with bernanke and the conventional wisdom free thinker, very elquantity. I just have a hard time tying the knot on his thinking. I wish that he would come forward what do you mean by that . Thats a plus. Thats a plus. This is good. When he comes forward and says this is whats wrong with the fed. Why are you bellyaching about, what data point dont you like kevin warsh is a very good friend of mine make no bones about it. I dont understand. What kevin did he came up with a very interesting thesis. When you look at the data, my look at it is contradicts what kevin said and what larry said. This is the worst recovery in Capital Spending ever. Causation correlation is not cause lation. You know that. Perhaps yes, perhaps no. The criticism is he made a big mistake in roping housing into his analysis. He never did the study. He never did the Statistical Analysis. Its an interesting idea. It just hangs out there look, may i warsh understands this is the key point. With all respect, youll have Data Analysis and this and that. Warsh is not a high rate guy and hes not a low rate guy. Takes very important point i want to make. Its not true. Warsh makes a different point. Its a reformers point. Basically saying the Federal Reserve has a preelection down through the years to assume all style phillips curb that significant Economic Growth and wage hikes cause inflation and, by the way, ms. Yellen in her most recent speech said for the past 20 years those correlations between inflation and labor markets have broken down and milley criticism of what yellen said should be 40 years. Dont blame kevin warsh. A lot of people are saying that. Thats the key point. That is fine and i agree with your analysis. I agree with what you said. Tie the knot now, what replaces it whats its replacement he doesnt tell us that. He spells it out almost too much, okay in his op ed pieces. Hes written several important op ed pieces that have spelled out okay means what we cant continue this. We got to cut through the weeds here. I understand that and i hate to make it so sim plisistic, just because hes not a high rate guy or low rate guy, if he has a higher rate guy than janet yellen the markets will have a problem with that . I dont know that, melissa. You dont know. You dont know that larry. No one knows that. The point is the point is let me make this point, please, please, please. Warchl has laid out a very important strategically notion. Its not about high or low rates. He is saying that fiscal policy is going to change. Were going to have better tax policy and better regulatory policy and that will lead in his judgment to better Economic Growth and higher productivity and to close the loop, that does not necessarily mean higher inflation and Interest Rates. In fact, it could be the reverse as it was in the lets switch. We had a good discussion here. Good discussion, very high level. But im going to pull balloon back down a little bit. Steve, if you look at that wall. We got jerome john tailer, gary cohn, the aforementioned warsh and janet yellen. If you had to look at those five individuals and say which one would be better for the average investor in the stock market, is there one you would pick wow. Ill ask the same question. Can i just were not going to hold you to it. Being good for the stock market its not good for the feds. Thats probably what most of our audience cares about. Ultimately the continuation of janet yellen would be the best thing for the stock market. Fair enough. The stock market doesnt like change and while kevin warsh has a lot of interesting ideas, it would represent an uncertainty and throw the models out. We always talk about uncertainty when we change fed chairman. Warsh is a reformer. I have recommended warsh to the administration. Thats not a secret. Lot of fine people, very good people. Including ms. Yellen, i might add. Warsh wants a different fed. He wants them to change their models, he wants them to pay much closer attention to what he calls nonlabor vashl wills because they he dont impact inflation. He would like to see including commodities and the Dollar Exchange rate as forward looking inflation indicators, i think thats terrific. I praeched that for i dont know how much years. It does not it could mean lower rates in the 1990s hang on. I believe so. Hell allow growth hell allow growth and not assume you have to jack up rates. Thats the point im trying to make. Growth doesnt mean you have to raise rates. Growth is actually the normal part of the u. S. Economy. He also wants the fed to get out of the day trading business. Dont day trade the data. Dont be data dependent. He says it confuses everybody and he also by the buy the Federal Reserve should really be more attuned to congressional oversight which i think is true. The fed is not the super Central Planning agency that runs the u. S. Or the rest of the world. You got other people up there, i just want to say something, gary cohn, real smart guy. I dont even know if he wants the job. Hes doing a great job on tax reform. John taylor, a mentor and dear friend of mine. I dont think its going to bounce his way. I think jay powell is a smart guy. I dont really know jay very well but i dont think hes got the reform credentials that kevin wafrm has and i think President Trump im just guessing here but i think trump would like to see some reform at the Federal Reserve. I think he sees that as part of the washington swamp, if you will, and i agree with him it needs changing. The models need changing, the approach needs changing. I want to say i agree with a lot of what kevin warsh has said about criticizing the fed, his motion the fed should be more humble. Right. And needs to fix its growth models that havent been work i ing. The difference with kevin warsh and john taylor is taylor comes forward with a rule that he would follow with a prescription of what he thinks is wrong i would like to hear more from former fed governor warsh about how he would fix it. Thats one two is i know is jay powell reasonably well. He strikes me as an interesting bridge. Smart guy, a smart guy. An interesting bridge between the existing conventional wisdom and new thinking add the fed because jay has been a person whos been very reform oriented. How about this one . Last word. When paul volcker was chairman, and he was perhaps the best chairman of our time, he liked to keep them guessing. In his testimony and his speeches and to steves point what warsh will precisely exactly do, i would like to keep him guessing warsh lays out an analytic strategic framework of reform thats just about as far as we can go theyre Like Supreme Court justices, melissa, i appeal to you on this. So much respect for you. Weve got to go. Transparency thanks, guys. Had to get that in. Federal reserve policy 101. Had to get that in. Four calls you need to hear about including one stock that could fall more than 30 following the deadly shooting in las vegas. Street talk is next. Hey, you every talk to anybody about your money . Yeah, i got some Financial Guidance a while ago. Howd that go . He kept spelling my name with an i but its bryan with a y. yeah, since birth. That drives me crazy. Yes. Its on all your email. Yes. They should know this . Yeah. The guy was my brotherinlaw. Thats ridiculous. Well, i happen to know some people. Do they listen . What . Theyre amazing listeners. Nice. Guidance from professionals who take their time to get to know you. Anything worth pursuing hard work and a plan. At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. Time for street talk analyst expectations on the stocks you need to know about. And to quote tom petty on a day like today i need to know one of his first songs analysts says on averastockn fall 8 to 36 in reaction to such a tragedy because of this, susquehanna thinks mgm could be impacted it is cautious. The second stock is phillips 66 Goldman Sachs upgrading the refiner and boosting the target to take it from buy to hold. They took it from 109 to 88. So about 12 more upside, three real reasons, number one, improved global oil markets, two, phillips 66 continues to slow its Capital Spending and, three, margins should drive upside to estimates on a macro level about a 20 gain in their coverage over the past 90 days and the same call they downgrade Marathon Petroleum to neutral. Third stock, urban out fitters. Deutsche bank downgrading this one to a sell saying the valuation on thissing to is youll like this one more stretch than their skenny jeinns been there. They believe the rally is already overdone price target at 19. Your final stock is Manhattan Associates theyre not based in manhattan, its an atlantabased supply chain and Inventory Management Software Company run the trust upgraded them a buy. The stock was down 20 until this morning the analyst notice the risk reward is now more favorable given the analyst optimism around one of manhattan products called active omni, like omni channel. This will help customers evolve more to the Digital Commerce business target goes from 55 to 44. So even with todays jump, a good amount of upside seen on manh Warren Buffett getting ready to speak with becky quick live if you caught this morning, it was awesome. This is a different conversation so this is new you havent heard this one before plus, cord cutting, streaming wars and the battle over content thats just Andrew Ross Sorkins friday night hell speak with the ceo of hbo all coming up in the second hour of power lunch next. Im only in my 60s. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i got a Medicare Supplement Insurance Plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement Insurance Plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement Insurance Plans, it could save you in outofpocket medical costs. Call now to request your free decision guide. Ive been with my doctor for 12 years. Now i know ill be able to stick with him. [ male announcer ] youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. See why millions of people have already enrolled in the only Medicare Supplement Insurance Plans endorsed by aarp. Dont wait. Call now. Welcome to the second hour of power lunch, im melissa lee. Heres whats on the menu. Warren buffett sits down with becky quick about breaking the cycle of poverty in america. Top tech bets a fund manager whos up 33 to capture the next tech boom and apple isnt one of them. An entertainment juggernaut, from game of thrones to west world to curb your enthusiasm hbo is behind the shows that people cant stop talking about. The ceo joins us to talk about whats ahead power lunch starts right now im brian sullivan, lets get a check on your markets and your money right now get what its another record day for your money, the dow, the s p 500, the rull 2000, the nasdaq, the transports, you name it, its probably at or near an all time high Airline Stocks also higher delta, united, american, Alaska Airlines among the top performers emerging markets are doing well, a global reflation trade in fact, the eem, which is a massive global etf, mostly asiabased on pace for its best day since september 11 and defense stocks hit all time highs. General dynamics, honeywell, Lockheed Martin and Northrop Grumman out there as well. Now lets get back to jane with the latest on the deadly shooting. Hey, melissa. 1 00 p. M. Local were about to get more of an update. Why would a seeminglyree no wase large amounts check into two rooms, bring in 23 guns and then sunday decide to break out to windows with a sledgehammer to commit the largest mass shooting in u. S. History. The sheriff did describe the final encounter up there on the 32nd floor when stephen paddock, which happened more than 70 minutes after the first 911 call. There was a team of six officers that approached security they went up the elevators at discussing the situation with security and obtaining intelligence and they checked each floor by floor until they located where they believed to be the room. Subsequently they approached the room, received gunfire, they backed off and s. W. A. T. Responded. Nothing so far suggested paddock owned any guns illegally but his brother was stunned. Its like i said, i dont know what else to say. I just its his fault that he did this but id like to know where he found the machine gun becaus thats not something thats easy to come by, i assume reporter machine guns are legal in nevada, although you have to go through a long federal process to background check, its expensive, extensive, they have to be older than 1986. But we are seeing increased security today in fact, down at the wynn, they were using a metal detector and with and checking bags but we are also today learning some of the names of the victims they come from all over the country and all walks of life. A male nurse who died protecting his wife, a veteran of the war in afghanistan who survived that and died here and an employee who works at disneys california adventure and just a short time ago we talked to mr. Las vegas himself, wayne newton, heres what he had to say. This is truly one of the safest cities in the world and people other cities send their Police People here to study with our police and our firemen and our First Responders because we are so heavily secure so maybe this would have happened sooner had we not been so secure. He does expect some changes will come about to add more security and as i said, guys, we are starting to see that here. Jane, i was going to ask you about the security your producer getting and withed as well as some other bag checks, et cetera. Is there any sense as to how long that will keep up no, but i think this is part of the new normal, at least until they come up with more processes, even at mandalay bay last night where we were staying there was a little inconsistency. Usually they have guards at the elevator banks, think had none, then two they had three when i was walking down so i think they were trying to show a strong showing right now. At least to make the public feel secure and install practices as we go forward but as newton alluded to, there are more cameras in town than probably any city in the world for security purposes. What they need to do beyond that we dont know yet. Jane, thank you jane wells in las vegas. Now lets get to beck ky quc in omaha, nebraska, discussing his efforts to combatorty. Hes working with other billionaires building purposebuilt communities. We should give it a try in an idea that we should go like Johnny Appleseed to cities around the country and i was skeptical but you never want to underestimate tom cousins. So we he took the idea first new orleans and he did manager to do this really amazing transformation giving kids a chance to really have something that was like equality of opportunity which they never would have had a chance for. He revitalized he resurrected neighborhoods and he created a model now which i think is up to 18 and its gained enormous momentum as it went along so tom proved me wrong a couple times he proved me wrong on east lake and the fact that the idea would travel and theres nobody i admire more than him and i think, you know, his monument is testament, is purpose built communities. Im delighted to participate with him and i should say that Julian Robertson also participates as well so theres a julian feels the same way about tom and what hes accomplished. Its very interesting because the idea is one thats very similar to what you talk about, about trying to make sure everybody has an qualm opportunity. Why with purpose built communities . What is it you think about this idea that is able to translate. Its an empty promise, equality of opportunity. If you live in a place thats crime ridden and all you know from the moment you grow up is basically survival and you have the wrong models around you and east lake, 13 of the people were employed not unemployed but 13 employed there hadnt been a Building Permit issued in 30 years fifth in graders, 5 were reading at grade level. It was just a it was a disaster and in a period of not too many years he faced resistance as people always do when they come along with a great idea but he is has changed totally revitalized, theres full employment, theres a mixture of incomes, theres a mixture of races the School Scores in the top 10 in that area normally if you look around the country youll see where theres lots of Free School Lunches or partially free the scholastic achievement is poor theres a correlation. Not true in east lake so ive watched this basically ive seen a Community Created and the question is can you do it elsewhere and were working on it right now in omaha, the real test is new orleans. It doesnt work if you go in and try and do it all for them you have to get local leaders involved but the truth is its succeeding and its spreading and there will be kids that would otherwise not have a chance when you get right down to it. Virtually not have a chance and theyre going to get a good education and see good role models around them and theyre going to have the kind of life that essentially my kids did. I was having some conversations at the lunch table ant what the essential ingredients might be for why these things work. For anybody who doesnt know this and most of the people in this room do, but for anybody watching elsewhere youre talking about starting with a clean slate. Yeah. You cant build the typical low Income Housing no, we tried housing authorities in this country. The one were the purpose built operation were building here in omaha is on old Housing Authority property. That was raised yeah, the we saw clear in fact that happens seven or eight years ago, it was just a failure. No that model did not work and this model works and when you get a model that works you want to pound the hell out of it. [ laughter what is it that works about the model . Is it that you are dealing with people of every income level so its not a segregated situation . Absolutely. Absolutely youre living with people that theres a diversity of race, a diversity of income, subsidized housing, market rate housing its first class, though it doesnt get stigmatized into something where you start getting the wrong sort of kind of selfdestructive behavior going on it takes a holistic solution to it and tom warned us, he didnt go back and study social science or something and get a degree, he just went out to an area interestingly enough, east lake is was bobby jones home course so it had this history. So he proved that in the toughest situations we can do it elsewhere. We dont have tom cousins elsewhere. He said its the idea, not me. Its him to a big degree but its caught on in the last couple years. That was Warren Buffett with our becky quick. If you want to see more of this, it is streaming live on cnbc. Com Warren Buffett also sat down with becky this morning on squawk box to discuss the markets, tax reform, wells fargo and much more. Valuationsmake sense with Interest Rates where they are. In the end you measure laying out money for an asset in relation to what youre going to get back and then the number one yardstick is u. S. Governments. If you make it very easy to take back money from jurisdictions in which you pay very low rates thats going to encourage even more investment over there on a personal basis and for Berkshire Hathaway shareholders, i hope they do change it up. It would be good for a million shareholders of berkshire in terms of their net return bus i think the arguments i think people may find their nose growing after they make them the truth was that 99 of the people were perfectly decent people, they were just like the people working at goldman or some other place and somebody had gone haywire and other people didnt report it. Bank of america has done a sensational job under Brian Moynihan brian had all kinds of problems when he came in, they were not of his own doing well be holders of b of a stock for a long, long, long time. Buffett discussing the markets. Whats important to take away from that first soundbite, melissa, is he made it very clear valuations look good, relative to Interest Rates, thats a big calve yot. He did say Interest Rates would remain low up to 5 so theres quite a bit of leeway. And that gives you the perspective he has because for anybody in this day in age to call 5 a low Interest Rate may be showing their age a bit because he remembers when people were paying 14 for a mortgage. Right. Now 5 would be considered offthecharts high. Interesting. Two ceos in the hot seat today. Equifax and wells fargo, chiefs and exchiefs grilled on the hill well ask one senator if he will call for more investigation into either and a top fund manager will tell you the stocks to buy for the next tech boom get this, apple is not on his list well show you who is. And the head of hbo will join us to talk about life after game of thrones. All that and more when power lunch returns both wells fargo and kwaex equifax on the hot seat today. Tomorrow former equifax ceo Richard Smith will be questioned about the massive data breach. John tester, democratic senator fromth in mt. , looking for answers. Lets go wells fargo then equifax and maybe on to other topics were you satisfied with what you heard from wells fargo today the words were good, the words were right i dont know the actions that wells fargo has done over the last few months have matched up with the words now let me give you an example forced arbitration they were using forced arbitration on fake accounts that were created by people not doing anything wrong they were saying well, wells is set up these fake accounts and they were using the forced arbitration clause of the real accounts that wsh there that people signed up for to take away peoples rights to get proper restitution i asked the ceo questions about it, he said they hadnt been used forced arbitration and didnt intend to use it Going Forward. Those are the right words then i find out about an hour ago in utah they requested a case be thrown out of court so they could use forced arbitration to take away the rights of the people who were done wrong by wells fargo. So i think tim sloane is trying to do the right thing, the ceo of wells fargo but im going to continue to fight not only for montanans but customers around the country who have insurance policies given out at no request of the clients to make sure they get done right by wells fargo. They screwed up and need to fix this culture that has gone on in their banking system. Equifax similar in some ways. Largest data breach in history might have seen hundreds of millions of numbers of Social Security numbers be put out on the black market do you believe criminal proceedings should be brought against equifax and its current and former executives . We need more information. I look forward to mr. Smith being in front of the Banking Committee tomorrow twothirds of montanas adults could have been impacted by the breach we need to figure out what they did, when they knew about it if stocks were sold. If in fact it is apparent criminal proceedings should be brought. In the meantime, we need to gather information from mr. Smith and what happened why it happened the way it happened it took six weeks to change this breach, when changed ceos it took them a day. I dont get it well hopefully get good solid answers. Do you think the Business Model should change . Right now their customers, not the consumer whose data has been breach can this Business Model exist when their incentive is to serve bankers and lenders and not me and you the consumers they need to be held accountab accountable. This was an equifax screwup and the other two corporations i guess you would call them that do this didnt have a problem. This is a problem with not taking security and hacking seriously. That is my opinion but well get more information tomorrow. Lets move on and talk about las vegas, senator, if we can, because you are a democrat you are prosecond amendment democrat, would that be a fair way too categorize your views, sir . Yes. We heard john thune from your neighboring state of south dakota say that even as a republican maybe we need to look at making illegal socalled after market add ones that could turn a rifle into basically a machine gun. Would you support a bill that would do that . Look, i think we need to get the facts. Truthfully we dont have the fact on what happened and we know that it was a horrible situation. We dont even know if bump stock was used we need to get the information and we need to pay special attention to the victims i cant imagine what i hope was feeling it would be to have somebody shooting at me and didnt know where the shots were coming from and people dropping around you, you potentially getting injured or shot. The mental trauma along with the physical trauma is incredible. So i would say this lets get the information. Lets get the facts, lets use common sense and move forward respecting the constitution. Weve seen the guns so lets move away from the gun side, this is a gentleman who i believe well find out had obvious Mental Illness issues. But what about something in the middle, perhaps a cap on the amount of ammunition somebody could buy or possess well, look, i mean, i will tell you that i cant tell you how many rounds of ammunition ive got in my house weve got an issue here and background checks is something weve debate a few years ago, we need to bring it back up to make sure we keep the guns out of the hands of criminals, court adjudicated mentally ill, terrorists im not sure it would have helped in this situation and so then we go to the situation of maelt and try to destag ma ties that so people feel like they can get help when they need it its important moving forward. The bottom line is this lets get the facts, lets find Common Ground and in a bipartisan lets move forward that will help situations so this never happens again but keep in mind, if the information is out there so far comes to be true, there were no signs that this guy would lose it and when you see 500 people injured and 59 people dead, this is a big deal and it bears time to find out what the facts are. Senator tester of montana, it was a pleasure to have you on punch. Thank you coming up, we know people should not cheat but people are still buying Manhattan Apartments en masse. Is it time to climb on board with the aught maker stocks . Can General Motors and ford haul your portfolio higr . He well talk about it. Stick around [ male announcer ] eligible for medicare . Thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement Insurance Plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement Insurance Plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement Insurance Plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. President trump from puerto rico being briefed on the Recovery Efforts and meeting with victims of Hurricane Maria. Contessa brewer is live in san juan for us. Contessa President Trump came here this morning and he was meeting with officials, he got a briefing not only from the governor of puerto rico and the governor of the u. S. Virgin islands but also from the mayor of san juan as well with whom he had that now infamous twitter battle he then went to a small city just outside of san juan where were told he drove through these neighborhoods and got a chance to talk to people on the ground and took pictures with families and these are folks who lived through the storm and are living in many instances without running water, electricity, without easy access to gasoline and food and water so its likely the president is getting another picture there on the ground with the families who are surviving this kind of daytoday existence at this moment the president is up on a helicopter tour looking down on the damage and from driving the island, ill tell you what hes likely to see is vast expanses of stripped foliage, no longer a lush green Tropical Island but broken wood and trees everywhere and then he asked about the death toll let me play that for you. Everyday death is a horror. But if you look at a real catastrophe like katrina and you look at the hundreds and hundreds and hundreds of people that died and you look at what happened here with really a storm that was just totally overpowering, nobodys ever seen like this, what is your death count as of this moment, 17 . 16. 16 people certified. The governor says to put that into perspective, that number is likely to go up because theyre now at the job of going back to hospitals and the morgue and finding out a clearer picture of the death toll here. Guys contessa brunner puerto rico. Contessa, thank you very much coming up, a top fund manager tells us what to buy in technology and guess what . Apple not on the list for the future plus, hbo bringing back curb your enthusiasm adding to its already Popular Library of buzz worthy shows up ahead, the ceo will join us for what else is in the pipeline after gagame of tonhres. Will john and denyrs ever get together its time for our fall sale on the only bed that adjusts on both sides to your ideal comfort your sleep number setting. Does your bed do that . And right now queen sleep number beds start at just 699. Save 200 during our fall sale. Ends soon. Im sue herera, heres your cnbc update at this hour house gop leaders expressing their condolences for the victims. Paul ryan focusing on a legislation on Mental Health being implemented . I think one of the things weve learned from these shootings is that often underneath this is a diagnosis of Mental Illness. This is why we spent years working on Mental Illness reform congressman murphys bill and thats why the Congress Passed Mental Health reform a year ago for than three and a half million plates and bowls from playtex have been recalled from children the clear plastic layer of the designs can peel or bubble from the surface and playtex has received more than 370 reports of incidents legendary nascar team owner robert yates has died. Yates was selected to the nascar hall of fame in may. He was 74 years old. Youre up to date. Melissa, back to you. Thank you, sue herera now lets get to the New York Stock Exchange for more on the markets. Bob . Reflation, good reports out of General Motors, good reports from the builders. First off look what delta is doing. A quarter guidance from them, General Motors had good september numbers. They were 35 a month ago. Nay got an upgrade from a buy to neutral at bank of America Merrill lynch. Thats a one month home builders. Lennar, dr 40 horton at 52 week highs. Then you see the yields moving up, banks are at new highs this is a rarity that you see all the big banks, every one of them, all four, at new 52week highs today. Then you have of course, that reflation trade the global reflation trade and the industrials are doing better, honeywell has been on the new high list for a while, illinois tool and of course all of the defense stocks, Lockheed Martin, northr northrop, all high our next guest is going to help you pick stocks that could power the next Technology Boom apple not one of those stocks. Lets bring in brad slingerlan the manager of the Janice Henderson Global Tech Fund theyre outperforming all of their peers. Congratulations on your performance. Im sure your shareholders and clients are happy, we appreciate you joining us in your view is apple a stock of the past and not the future. Thank you and thank you for having me on we think that although apple has a large and healthy ecosystem in the u. S. And European Union that theyre incrementally losing fairly significant market share around the world to android and other operating systems in china and if we look at the innovation out of apple, its been very incremental particularly since the ipad its very evolutionary as opposed to revolutionary so we would worry they are spending too much buying back their stock and paying dividends and not enough investing in r d, new products to drive the future of the company. Had you been invested in apple but got out at some point . We still have a small investment in apple but we invest relative to the Global Technology index and were about a thousand basis points, ten points underweight apple so its our most negative position that we have relative to the benchma benchmark. Cloud is another major theme in your portfolio. You like amazon, microsoft, google, and alibaba. Are you concerned about a cloud war . It seems like whenever theres competition increasing prices go lower and theres a price war that ensues. Were seeing an insastiably demand for Cloud Computing thats driven by Artificial Intelligence and the idea that were connecting devices out of the network not just phones, but drones and cars and all kinds of sensors and objects out there that are being lechery phied into the cloud we see much more demand acceleration oming. A lot of discussion about what phone stock to buy. At t, tmobile, sprint, verizon, 5g, should we just buy American Tower which will probably make cell phone towers for anyway as a great hedge against no matter who wins yeah, that will really power Artificial Intelligence and devices that will explode over the next few years so American Tower is well positioned for that market. We believe that there are several Semiconductor Companies that are well positioned for connectivity i would point to examples of that being broad comm semiconductor. Brad slingerlend, it was a pleasure to have you on the program, thank you very much, brad. Thank you with more streaming Companies Investing in billions of dollars in original content, how are Legacy Networks changing their strategy to stay competitive lets send it to Andrew Ross Sorkin who is with hbo chairman and ceo richard plepler. The hbo and time warner deal looks like its about to be completed. Tell us what life looks like afterwards. I think it looks similar. We are in the business of curating Quality Content thats what weve been doing the competition is greater than anything weve ever been we are in the business of making sure we built optionality for consumers by creating an ott business with hbo now in addition to our cable and satellite businesses were growing in all dimensions of our company and well create great content. What at t bought creates excellence very well and theyll continue to push us to do that and encourage us to do that and continue to expand as we go forward. Are you going to have more money to spend on programming . I interviewed netflix just about an hour ago. He said hes going to spend up to 7 billion next year on programming. Youre spending two and a half right now. Were going to spend what we need to spend to continue to make sure we are creating outstanding program. Curating in a way that our brand continues to stand for excellen excellence there is a surfeit of content out there. Some is good, some is mediocre, some is not so good. I think what our brand reflects and has reflected is that when you come inside hbo you will see something that stands for quality. Whether thats late night programming like john oliver or bill maher, sports programming real sports with bryant gumbel, thats what well continue to o do now our revenue growth, well take that and continue to invest it in the kind of content that has made hbo the brand it is so i think if you look at the last five years the proof is in the pudding. You have apple coming into the business, you have facebook coming into the business. Andruw, dont get overwhelmed with more being the definition of excellence. More is not better, only better is better. It is very hard to create outstanding contend and we think we have a good record of doing that very, very well were not trying to create the most, were trying to create excellence across our categories. That becomes the question and we have more than the resources necessary to continue to do that. But youve watched the cost of these programs go up in the bidding wars for them so even when you want something remarkably excellent, its going to cost you more. No question about that. We are willing to make that investment we never want to say no to what we want to say yes to, but what we decide to say yes to isnt everything its what we believe elevates the brand of hbo and if you look at our record, in this hypercompetitive environment, youll see that were executing on that promise and i have every expectation we will continue to execute. Doesnt mean it isnt challenging. Doesnt mean there are not more people at the trough trying to get good content but as you know because youre a student of our business, talent loves to work at hbo we have created a very unusual culture for writers, directors and actors to work and this is very much you cannot fake that you cant make it up it has to be the case. And that is exactly the culture we have built over the last years and that we will continue to endorse. Brian has a question back at hg wh hq what are the implications of disney getting into the business. Disney is a superb brand. They have wonderful programmers. They will be a formidable competitor in the ott space. Theyll take their movies back as i understand it from netflix and put them on to their streaming service so yet again more content so the way we define success for our brand is to make sure when you come to hbo youre going to see excellent work in addition to four Hollywood Studios which remains 79 of viewing on our Linear Network and over 73 of viewing across all our platforms. A big piece of our offering. Brian im only jumping in here because i have a question for richard that you probably wouldnt ask him and you are probably contractually prevented from asking so ill ask him for you. Go ahead. Go ahead. One serious, one semiserious. Number one is seriously, do you care how your viewers watch . If i watch on an ipad or computer or apple tv app or straight cable, do you care . Number two, are you going to bid on the next season of billions and do you regret passing if it was offered to you im a billions fan i watch it, i have nothing but good things to say about billions and its creator. The truth of the matter is we dont care we want to make our programming available for viewers to watch however, wherever, when ever they want. If they want to watch on the train andrew said he was watching people watch game of thrones on their iphones. If thats how they choose to watch it, fine i think its a better experience on a 60inch flat screen but they can watch however they want were getting 25 to 30 of our viewing on different platforms thats why we built hbo go originally hbo now affords you the opportunity to watch on your Television Set as does hbo go or on whatever platform you want. We want our consumers to have options and we want them to have options that give them flexibility and thats why we built the streaming services we did. Before we let you go. Personal question. Sure. Talk about the personal reaction to this hacking attack. What does it mean when you happened and what is the state of play currently . When you find out the company has been hacked its disorienting because you dont know what the hacker has and the first thing we thought about was our employees. The first thing we thought about is has he breached the email system so our tech team was absolutely pagive in sent in walking the cat back quickly we were certain they did not breach the email system they took insecure and ballers and put them up on some site we took them down, they put them back up again. The same was true with a couple episodes of game of thrones. Ballers up 41 this year over last year. Insecure up 42 in ratings over last year as you know from your response to curb your enthusiasm, nothing spoiled our party. So we worked through it, nobody likes to be hacked itsobviously not a pleasant experience but our folks were fantastic, we isolated it and we live to fight another day. Dont encourage the hackers, but congratulations. Appreciate it. Pleasure to be here. Brian, back to you. All right, andrew and richard plepler, interesting discussion there. Melissa . Apartment sales in the big apple going higher and higher rensone area is raising al well drill down on the latest numbers. Thats next. Well, its earnings season once again. Yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Manhattan apartment sales picking up to the highest level in two ears. The top end still struggling robert frank joins us with the latest robert the good news is if youre a buyer manhattan real estate has become more affordable in the Third Quarter. The average apartment will cost you just 2 million down 8 . The flip side, sales are soaring. Inventory is dropping and most price cuts are happening at the very top of the Market Real Estate sales in manhattan hitting the highest level in two years, up 13 over the last year, thats according to a new report now inventory is down to only a fivemonth supply. Thats very low for manhattan. Brokers saying the rise in sales is the result of sellers dropping prices to more realistic levels after those very high levels in 2014 and the high end is actually seeing the greatest pricing pressures average sales prices falling 13 in the luxury end and new development, that skews really toward the rich. Saw prices fall by 27 now, talk about price cuts, the most expensive sale in the quarter was the penthouse of the pierre hotel at midtown. As you can see in these photos taken by mike tauber, its three stories, 12,000 square feet, 24foot ceilings it was listed in 2013 f 2013 fo0 million, sold in july for 44 million. That tells you whats happening at the for the apartments at around 2 million or so, is there a rush to sell these apartments before the tax reform or tax cuts, whatever you want to call it. You mean the might go away, the state and local tax is. I think its a lot of people in manhattan, those apartments dont stay on the market thats the low end. Thats manhattan. Who are these amazing so many people can afford that much so many people with so much money. For the weekend. Once in a while. Exactly all right. In the past month, shares of tesla down a couple percent. However, General Motors stock has been soaring so what automakers can really make you money Going Forward well find out when trading nation is up next 9 out of 10 couples prefer a different mattress firmness, so we created the only bed that adjusts on both sides to your ideal comfort, your sleep number setting. You can even see how well youre sleeping and make adjustments. Does your bed do that . The most amazing part is they start at 699. Thats 200 off our queen c2 mattress during our fall sale. Ends soon. Visit sleepnumber. Com for a store near you. And i am a senior Public Safety my namspecialist for pg e. My job is to help educate our First Responders on how to deal with natural gas and electric emergencies. Everyday when we go to work we want everyone to work safely and come home safely. I live right here in auburn, i absolutely love this community. Once i moved here i didnt want to live anywhere else. I love that people in this community are willing to come together to make a difference for other peoples lives. Together, were building a better california. All right its time for trading nation, what car stocks if any might be good for you. Matt, first to you, gm had a very not nice run. Tesla has looked weak. Do you like any of those or maybe a different name no, like General Motors import for a longerbasis. However, on a shortterm basis, we need to be careful. Had great runs ford up. Gm up 23 in six weeks theyre getting very overbought. Look at their rsi charts, relative strength index. General motors at 87 highest its ever been four of the highest, most overbought its been since 2013. So they might take a little bit of a breather here kind of reminds me of the Virginia Tech Football Team which had a nice run, had some great potential, but may need to take a little breather like the hokies did against clemson there. Matt ma, that was good for yr final appearance on trading nation ever clemson plays big boy football were getting there. No one is going to beat them mark, are you an owner of General Motors im not gm certainly cheap, forward p e under seven whereas tesla is pretty expensive were intrigued by them. Some of the recent jump in auto prices has to do with the hurricanes you know, the ism just went above 60 for the First Time Since five following hurricane kari karina what this is valely a story about is consumer strength consumer Balance Sheets continue to improve Household Net Worth continues to go up. You got debt to incomes at near historic lows. And, you know, consumers are in their plans to buy houses and cars are now at tenyear highs so, a lot of this consumer strength is flowing through to auto purchases thats why were seeing a lot of good stuff coming from the Auto Industry right now yeah. Maybe, you know, its going to trickle down, lot of salesmen selling more cars, mechanic, all good stuff matt, mark, thank you very much. Matt, despite the dig, we appreciate your views. Thank you very much. For your trading nation, go to our website, tradingnation. Cnbc. Com the website is as good as the football clemson team, melissa, which means great. Obviously check please is next and now the latest from tradingnation. Cnbc. Com and word from our sponsor. In a losing trade, avoid letting your emotions get the best of you. Too often, traders want to add to a losing position yo fstosisaytraders will s urir ls your best loss in other words, take a small loss and move on before it becomes too big. 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With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. All right. Time now for check please. Big interviewing comes up tonight which well talk about we heard from richard plepler, many others lately how content is king. Weve heard that for a decade. Finally appears were at that era where content really is what matters. Right, the key to the kingdom. You got the content, it will find a Distribution Platform at this point its the race to frus that content that costs the most money. Thats what people are really focused on. They own all their own con tent, that is rare, if not unique, in the industry. Yeah, definitely. Tonight on fast money, speaking of content is king, we got the disney ceo bob iger. Weve also got the outspoken mark cuban of course, hes a great investor also the owner of the dallas mavericks. He recently said that he is considering seriously a run for president. So well get his take on that. Should be a couple great interviews tonight at 5 00 on fast money. Should be fantastic thank you very much. Look forward to that thank you, all, for watching power lunch. Closing bell starts right now. Hi, everybody, welcome to the closing bell, im kelly evans at the New York Stock Exchange. Im Bill Griffeth Warren Buffetts latest market bests with stocks. Record highs right now the oracle of omaha has been telling cnbc his Investment Strategy some of the highlights coming up in a few minutes here. Always interesting. Auto sales rebound september numbers are come in strong so far. Well have the final monthly tally for you coming up. Look at shares of gm, we talked about yesterday theyre at a new recent high. 7 up 3 today. Ford