Transcripts For CNBC Power Lunch 20151105

The shares fell for the Third Straight year to the lowest level in 30 years, this all according to the National Association of real tors annual survey. Just 32 of buyers were firsttimers and historically that share is about 40 . Firsttime buyers surveyed said all forms of debt had delayed their saving for a down payment by a median of three years and for those who had the hardest time saving, more than half said it was Student Loan Debt that was the culprit. Another change in buyers, the realtors found 30 of surveys found the primary reason for buying was the simple desire to own and thats up from 24 in last years survey. When you break out firsttime buyers, the jump more significant. 64 said it was that desire to own up from 53 a year ago. The desire for a larger home or a job relocation were a distant second and third reasons for buying. And this comes as the nations Home Ownership rate still sits at the lowest level in half a century. There was no change in the share of Multigenerational Families buying, still at 13 . Even though the Home Builders seem to be focusing on that segment. Also no change in the age of the firsttime buyer, still 31. This realtor funded report was culled from over 6,000 home buyers who purchased between july of 2014 and june of this year. We have lots more from it on cnbc. Com. Back to you guys. Di, thank you very much. Were watching shares of General Motors at this hour. Voting is under way. It is a big vote over the automakers Labor Agreement with the uaw and it could be a very, very close call. Phil lebeau is in chicago monitoring the story for us. Hi, phil. Hi, tyler. Its almost always a close call when it comes to these contract votes. We can tell you yesterday four plants approved the deal with General Motors and the uaw. In terms of where this contract stands, we still have two major plants that need to vote. A total of 52,700 members are impacted. Lordstown and lansing are voting today and tomorrow. The production workers have been approving the contract. The skilled trade workers because of specific language in the contract, they have been rejecting the deal. Whats at stake for General Motors if they cannot reach a ratification by the uaw membership . 26 million in daily operating profit. That would be lost if there is some type of a strike. 243 million in terms of daily revenue, and keep in mind we have a truck and an suv inventory issue at General Motors and really for all of the au automakers. Its limb limited right now. Trucks and suvs, those are the profit drivers for gm. The deal includes 8,000 signing bonus for uaw workers and its a 1. 9 billion in product commitments that gm has made to the uaw as part of this new labor deal if its approved. Take a look at shares of General Motors. Overnight the Company Reported a 15 increase in sales in china in october for the year up 2. 9 and quickly want to look at shares of ford because ford after the gm deal, its the last of the big three that still has yet to work out a contract with the uaw. We know Fiat Chrysler already approved the deal last week. Thats the latest on the contract talks. Back to you. Thank you very much for that, phil lebeau. An important read on the American Labor market. The number of americans filing for first time Unemployment Benefits rising last week by 16,000 to 276,000, and that is the largest increase since late february. The fourweek moving average which evens out weekly ups and downs raising to just over 262,000. Despite that increase, the level remains near the lowest since december of 1973. So what about tomorrows big report. Well, economists are expecting 183,000 jobs to have been created in october. That is up from 142,000 the prior month. The Unemployment Rate is expected to edge lower to 5 even. So the question now is how do stocks trade around a jobs report . Seema mody is here with some answers through the power of kensho. We looked at data over the last five years to kind of get an idea of how markets perform. Whats interesting is that the jobs number affects some assets more than others. In fact, the big stock indexes, not as much as you may think. If the jobs number beats by 25,000, no big change in the major markets. Financials though, the best performing sector, and as expected the tenyear treasury note trades up with an average return of 3 . Here is where it gets interesting though. If the jobs number comes in below expectations, the dow, s p, and nasdaq trade down on average 0. 4 . In those instances where the investors are perhaps getting more defensive, gold outperforms gaining roughly 1 while utilities the best performing sector and financials the worst performing sector while the tenyear note trades down by 2 . Thats how various Asset Classes perform the day of the jobs report but we thought wed look at one week after and regardless of whether its a beat or a miss, stocks gain less than 1 a week after. Materials being the leading indicator followed by financials. So that gives you an idea of how stocks and assets look after the jobs report. Tyler . Thanks very much. One legacy of wall streets multiyear rally is that while markets have thrived, the economy and main street have basically lagged a little bit but could all that change in the new year . Thoughts now from mike santoli. You make the case that actually consumers, main street, has outperformed wall street by which you mean corporate profits i take it and banking and stock prices. So essentially i think about a year ago is when this started. We had a november jobs report last year of 321,000. It was a huge upside surprise. Since that point the stock market is basically flat. Of course, we hit some new highs, obviously had the correction, but really the consumer economy, the household economy, has improved. You have 2. 5. New jobs, lower wage workers actually being more optimistic about their futures than the rest of the workers. It seems these lagging dynamics are working again. One thing you are watching is the Unemployment Rate. We could be below 5 by the end of the year. Basically most definitions of full employment could be hit say at or below 5 . Weve only gotten there a handful of times in the past, 2005, 2006, in the late 90s. When the labor market gets tight, it get better for main street but stock prices on a forward growing basis tend to struggle a little bit. The stock market leads the economy. So is it your thesis then that this sort of main street outperforming wall street will persist into 2016 . And that the real fun part of the markets rise over the past six, eight years is behind it . Thats what the odds seem to be. Essentially youre going to have companies dealing with higher wage pressures and things like that that are good for main street. Does that necessarily mean the end of the bull run or maybe just lower gains . Certainly not. 2005 and 06 you had plenty of time in the bull markets but i feel its not going to be as broad based perhaps a rally. News flash, santoli unwilling to call end to bull market. Not today. Spoofing the markets. The outrageous story of computer driven stories is misleading some of the worlds most active markets. How its happening coming up. Plus one of the most highly anticipated fashion collaborations of the year and courtney reg sentence live in the thick of it. European fashion house balmain and h m have been teasing fashionistas for months. Today shoppers got their chance to buy balmain online. Ill tell you how its going coming up on power lunch. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. Welcome back to power lunch. Im mandy drury. Shares of crocs under pressure with the shoemaker reporting a bigger than expected loss. Revenue also missing the mark. The shares are down by 3 . Molson coors beating estimates thanks to strong growth in europe and other International Markets although results were impacted by the stronger dollar. And shares of valeant continuing to tank down 15 . Meg terrell will have the very latest on this stock in the next hour of power. A commodities trader could go to jail for 25 years after being convicted of spoofing which is essentially manipulating prices. Bob pisani joins us to explain spoofing and the impact this case could have. Hi, bob. Big story, tyler. A new jersey trader became the first person to be convicted on a charge of spoofing. Thats flooding the markets with orders he did not intend to execute. Michael owned Panther Energy trading, a new jersey based firm that traded commodity futures. The prosecution charged over a threemonth period in 2011 he made 1. 4 million by spoofing in several commodity futures markets, corn, soybeans, high grade copper and gold, for example. Here is an example of spoofing and how it might work. A trader mit enter a series of orders to buy a stock or commodity at prices slightly higher than the market so the prices move up. When Market Participants try to interact with the buy order, it vanishes. At the same time the trader would sell contract he or she had already bought at Prices Higher that was available a moment before. This is a very old scheme. Its a variation of the old pump and dump strategy thats been around for hundreds of years. However, computerized trading enables you to do it faster, but its still essentially a scam. His attorneys had argued that the law was vague, it wasnt clear what spoofing was but the jury disagreed. It appears to have come down on the side of the prosecution. They had argued that spoofing occurs if you have an algorithm that is specifically designed to be canceled when anyone tried to interact with it. In other words, the prosecutor successfully argued he had an intent to deceive people. This is very important because spoofing was made illegal specifically by the 2010 dodd frank act. This is the first time theres been a conviction under the law. Now, its not clear if this will encourage prosecutors to bring more market manipulation cases but it provides a clear Legal Framework for prosecution. This is being very closely watched by the other person to be criminally charged with spoofing. A londonbased trader thats also accused of market manipulations. Hes denies these allegations. By the way, several big High Frequency trading firms were witnesses for the government essentially arguing in a sense that wasnt High Frequency trading, that guy is just deceiving people. I think the case will be appealed but its an important first test of the law. Thank you for explaining it, bob. Its one of the most anticipated collaborations of the year, high fashion meets fast fashion. H m unveiling its balmain collection. Courtney reagan is live at an h m in San Francisco. I believe the website is actually crashing. Thats right, mandy, and not all collaborations are as anticipated as this one. The balmain for h m, at one point the website was already basically crashing because of the volume of shoppers. Many items selling out both online and in the 220 stores around the world where the collection is available. Now, this morning there were about 250 people camped out outside this location. Only 20 of them are let in at a time. They were given wrist bands and they could shop for about 15 minutes at a time. The first shopper that was let in today had been camping out for more than 24 hours. I want to buy dresses, going to buy shoes, jewelry, belt, whatever i can get my hands on. Only for 15 minutes, correct, yes. Now, while h m wont divulge the financial details or even the inventory levels, these types of collaborations arent typically enough to move the financial needle. The value all comes from the buzz and the marketing. Overall we see that it creates a lot of brand awareness. Were also giving back a lot to our customers saying we have something extraordinary. Existing customers, new customers and something to kick off the Holiday Season by really saying we are here, we are relevant, and h m is on the spot. We had asked kulle if he stress tested the website ahead of time and he said yes but only as much as you can. You just never exactly know how much the demand will be and at what levels at what time. As you can see here behind me, they just let in the next group of shoppers for whatever might be left at h and m in San Francisco. I saw a lot of shoppers just grabbing stuff off the racks. They cant be buying it just for themselves. Are they going to resell it, what . So they do have limits to what they can buy. They can only buy two of the same style. So if youre interested in one of the red skirts, for instance, you can only buy two of them and you only get three days to return it. So perhaps theyre buying one for them, one for someone else or perhaps theyre buying two sizes because theyre just not sure. They only have 15 minutes. So they have to come in with a plan. All of them had plans we talked to this morning. They had previewed the collection and knew exactly what they were going after. That is genius marketing. Only 15 minutes. Like the old supermarket sweep. Thank you very much. Check out shares of microsoft this year up 16 . One of the top ten performers in the dow. We havent been able to say that about microsoft in a long time. The tech giant returning to its start up roots out in seattle and kate rogers is there with more. Hey, kate. Hey, tyler, thats right. Microsoft is gearing up for its latest class of startups in Microsoft Ventures. Well tell you what theyll be focusing on this time around coming up next on power lunch. When a moment turns romantic why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. 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I guess they dont want you driving around on three wheels. Smart. New car replacement is just one of the features that come standard with a base Liberty Mutual policy. Learn more by calling switch to Liberty Mutual and you can save up to 509. Call for a free quote today. See Car Insurance in a whole new light. Liberty mutual insurance. Welcome back to power lunch. Move over San Francisco because seattle is making a major play to attract startups with the help of the worlds biggest soft maremaker. Kate rogers is live in seattle with the full story. Hi there, kate. Hi, mandy. Thats right. Well, microsoft, of course, haernt be hasnt been a startup in decades when they famously launched out of a garage in 1975, but the tech giant located in nearby redmond, washington, is getting back to its entrepreneur roots in seattle. Theyre gearing up for their latest cohort of Microsoft Ventures which is their Global Accelerator program. They will be focusing on Machine Learning. We caught up with Microsoft Ventures general manager zach weiselt who said city innovators great and small make for a great entrepreneurial foundation. You have great Enterprise Companies in this area so its a great place for us to do both work with startups on cloud, work with startups on Enterprise Software and were very interested in this class with data scientists and the whole Machine Learning space. Theyre currently taking applications for this class which kicks off in february. Collectively Microsoft Ventures has graduated 410 companies around the globe. They have raised a total of 1. 2 billion. This will be the third time they have a class here in seattle and he says he has high hopes for the citys entrepreneurial ecosystem. In the next five years were probably going to see a couple unicorns coming out of this area. And who knows, maybe one of those unicorns will come out of a Microsoft Ventures program. Well definitely keep an eye out for that. While were talking entrepreneurship and washington, cnbc will be in the other washington, washington, d. C. , next week for the final stop of our iconic tour along with inc. Magazine. I will be there and tyler will be there and we have a great lineup of speakers. Check out more on power lunch. Cnbc. Com. Ill see you there, kate. The ceo of a publicly traded Pharmaceutical Company is quitting under fire. Its been a volatile few days for insys. You can see the stock is up today by almost 7 . Insys sales of its powerful pain killing drug became the focus of investigators and a cnbc investigation. The goal was profits regardless of the effect on patients. Oregon assistant general david hart is talking about insys therapeutics. They sell a highly addictive opiate that should only be used for persistent cancer pain. The company is being investigated in at least six states, california, massachusetts, connecticut, arizona, illinois, and in oregon where the state accused insys of engaging in kickback schemes. Taking doctors out on tequila dates and offlabel marketing in an effort to boost sales. I have been investigating drug cases for about 15 years now and the conduct that we saw in the case is the most unconscionable i have seen. Former Sales Representative Shannon Walsh spoke exclusively to cnbc. She resigned from insys in october after realizing there was an insatiable greed as far as trying to just get as many prescriptions as possible, titrate these patients up to the highest dose possible. Insys has just come out, and i do mean just come out with a statement. Insys takes patients safety very seriously and were committed to working with Health Providers to ensure the proper prescribing and use of our products. Our Compliance Program and the related policies are designed with this in mind. Were cooperating with the governmental inquiries we have disclosed in our public filings and have strived to produce the documents and other information requested in connection with these inquiries. Dena joins us for a little bit more. First, this painkiller is how many times as potent as oxycontin . According to physicians they tell us 100 times more potent than morphine. Fentanyl is also used on the street, isnt it, to cut heroin in some cases . Thats correct. There have been so many headlines recently of people who have died from overdose as a result of that, of fentanyl, not this. But they are related. Absolutely. You were able to find out how much some doctors, some of whom are under investigation, some of whom have been arrested in connection with their relationship and the prescribing of this drug, how much they were paid by insys. How did you do it . There is a website called open payments data. Cms. Gov. Insys is not the only Pharmaceutical Company that pays doctors. Its a great website you can check how much your doctor is being paid by pharmaceutical companies. It gives you a breakdown of when the payment was made, what it was made for, how much it was made for. We noticed a pattern. We would hear that x dock per was arrested or is under investigation and we would go and check and in a few cases it seemed suspect because the payments were made in a very short amount of time and were talking about tens if not hundreds of thousands of dollars going to some physicians. Voop ve this drug fasts how much . Generic fentanyl, 150. How do they charge and get the higher price . It costs between 900 to over 3,000 per package. Theres a Class Action Lawsuit against the company that alleges its prior authorization unit, which means the company interjects itself into the insurance process. It alleges some employees have lied about working for doctors and have also falsely stated other opiates that patients have tried because lets not forget, this opiate is so powerful patients have to prove they have basically tried almost every other opiate on the market and prove that that had not worked for them so they would be able to take this very expensive drug. Generally prescribed for intractable pain related to cancer. Late stage cancer. And automobile accidents. Thank you very much. The business of pain. And it is a big one. The insys story was first reported on dena on nightly Business Report which airs on Public Television and is produced and owned by cnbc. The earnings parade is marching on. Celgene, ralph lauren, and seaworld are out with their latest results. All three are moving big this hour. We go behind the headlines, what investors need to know about their numbers. Plus todays power house is home to six fortune 500 companies. This citys name is also its county. And yelp is headquartered here. Can you name that city . The most advanced iphone yet. Get the new iphone 6s at tmobile. The network thats doubled its lte coverage in the past year. Our new extended range lte signal now reaches twice as far as before. And is four times better in buildings. Get our lowest price on iphone 6s with tradein. Zero upfront and just 5 bucks a month with jump on demand. Get it now at tmobile. Hi, everyone. Im sue herera. Here is your cnbc news update for this hour. Russian rescue teams are wrapping you have their search for any more remains of victims from saturdays plane crash. An official says the 15mile crash site area will be completely checked by today. 140 bodies of the 224 People Killed have been retrieved. The Senate Committee on agricultural, nutrition, and Forestry Holding a hearing on the battle to preserve the nations forests. This years wildfires burned more than 9 million acres, destroyed thousands of homes and businesses and led to the death of 13 firefighters. Homeland security has authorized security for donald trump and ben carson. Those moves though could involve nearly 300 agents. Expect to find more travelers at the airport during the thanksgiving holiday weekend. Airlines for america says more than 25 Million People are expected to fly on u. S. Carriers. Thats a jump of 3 from last year. And thats the cnbc news update. Back to you, mandy. Yeah, all those airports bulging at the seams. Its going to be a long weekend. Thanks a lot, sue. Lets get a check on how stocks are trading right now. Bob pisani joins us from the new york stock exchange. Weve been oscillating between gains and losses. Right now were on the losing side. Were up slightly for the week. Right now advance decline line is about evening. But i like what im seeing on the earnings picture on energy. Generally pretty good numbers, their mon oil, devon energy, good examples. Put up marathon here. The earnings for marathon, a much smaller loss than anticipated but the sales volumes, the Oil Production was higher than expected and the expenses, the money theyre spending, was lower than expected. Theyre learning to do more with less. Devon, they had a sizable beat. Oil production was higher than anybody anticipated. The amount of money theyre spending to get the oil was lower than everybody expected. So for the Capital Expenditures for 2016, theyre talking about lower Capital Expenditures, much lower, and a low single digit production growth. Their capital efficiency, how theyre using money is Getting Better and better. I think its a good sign for the company. Im not calling a bottom just saying theyre learning to do a lot more with less money. Weve been talking a lot about mergers and acquisitions. Oil is going to remain low for some time and they can make money within the new capital restraints. Let me get into e electrolux. They want to buy all of ges appliance business. The department of justice said that he want electrolux to divest its entire business if they go through with the deal. Thats a very aggressive stance by the doj p. Jdoj. You can see electrolux down on that news. Thank you very much, bob. With the recent rally where should investors be putting money . Here or across the atlantic . Thoughts from paul chryst fisto and jeff sort. Both of you, thank you very much for joining us today. Jeff, how high is your caution level at these levels here in the United States . Jeff, can you hear us . Im sorry, im sorry. We called the low on beckys show on august 24th. The model suggested that the period of construction that the period had signaled at the beginning of july was over. Weve had a pretty decent rally. I actually thought the rally was going to pause and stop last week with a pull back into this weeks employment number. Youve got a number of finger to wallet ratios that are telling us the market is overbought. The sentiment is to optimistic. Id be more cautious on a trading basis. Longer term youre in a secular bull market with years left to run. Where were sitting right now, paul, do you think that maybe you might, you know, want to look closer at europe . Especially as you also have the currency tailwind there at the moment . Europe looks a lot to us like the u. S. Did in 20112012. Had a correction, came out of the correction, and continued to grind higher. We think thats likely for europe as erntiarnings continue grow. And we like the dividend story there. Just hold those thoughts for a second, gentlemen. Im going to go to sue with a news alert. Its about the fed here, mandy, and maybe your guests can comment on this. The atlanta feds president lockhart is saying that the u. S. Central bank intended to shift Market Expectations of an Interest Rate liftoff with the last policy statement, and he says they were successful in doing that. He also said that he expects the case for a rate hike will continue to strengthen between now and the feds december meeting. He says that the slack in the labor market is, quote, substantially gone, and he also says that the rate hike remains a close call. It is subject to incoming data but the case can be made that the economy is ready to end its crisis era policies. Be interested to see what your guests think of that. Lets go straight back to them. Jeff, what are your thoughts on this and do you feel the market sin creasingly comfortable with the idea of a hike . My model has always called for a rate hike in november even though theres not an fomc meeting. I think if you get a hot employment number tomorrow, the case for a rate hike in november goes up and goes up noticeably. What about you, paul . And after a hike potentially in december, what would be the trajectory after that and the impact on the market . We think the market is comfortable with the prospect of the fed headaching rates. If the fed were to not hike rates it would signal theyre worried about the Global Growth story and it would have a definitive impact on earnings negatively. We are looking for the fed to lift rates three times in the next 12, 13 months with a lot of caution in between. Okay. So a rate hike would be not only expected but potentially welcomed as you say by the market. Thank you very much to both of you for joining us and you can go to powerlunch. Cnbc. Com to see more market thoughts from our guests. Tyler, to you. Mandy, you know, we say this almost every day this time of year, dont we, morgan . Big day of earnings. The final. Im overcome. This is the final earnings squad of the season. Its the finale. Were covering it all right now. Meg terrell on celgene, Courtney Reagan on ralph lauren, and Morgan Brennan on seaworld. Who should we go to first . Meg, you take it away. Thank you. Were looking at celgene. A bit of a mixed result. There was a miss on the companys biggest drug, that came in light for the quarter, particularly influenced by overseas use of the drug, but the company did increase its guidance for it for the year so analysts saying the growth trajectory for revlimid looking good. Another cancer drug, abraxane was also lower in the quarter. However it was a different for story inflammatory disease. Their psoriasis drug came in ahead of expectations. Theyre going to start a late stage trial of a drug they acquired earlier this year, starting that trial soon. Analysts a little more opt stick there about at least that part of the business. The person here who has the hardest job of all pronouncing those names. Thank you very much. Meg terrell. Courtney now to ralph lauren. Court . Hi, tyler. Shares of ralph lauren are up more than 16 today as the premium retailer beat wall streets expectations for top and bottom line even though both of those numbers were lower year over year. Just recently we know that executive chairman ralph lauren is also now the creative director but no longer the ceo. He spoke on the companys Conference Call, hes still leading the Strategic Vision of the company. Stefan larsson is the ceo telling investors on the call, he just joined this week but he believes in mr. Lauren and his vision. The company gave updates on the global reorganization saying now that their annual expense savings will be 110 million as opposed to 100 million so thats better than expected, but the president of Global Brands Christopher Peterson said on the Conference Call theyre taking a cautious stance because of the soft start to the Second Quarter which is the quarter that they just reported. Tyler . Courtney, thank you very much. Morgan, taking a look at seaworld for us. Taking a look at seaworld. Shares down 7 right now. Missing on the top and bottom lines but its the guidance that really is sinking the stock today. So the theme park operator slashed its fullyear earnings forecast blaming bad weather over the past six weeks and larger costs tied to legal and, quote, reputation initiatives. Those initiatives are as the company tried to revamp the image in the wake of a 2013 documentary that was critical of its treatment of killer whales. That continues to pressure attendance which was down about half a percent thanks to drops in texas and particularly drops in california where, quote, brand challenges have had the biggest impact. Now, investors and analysts are focusing on seaworlds investor day taking place next monday. The ceo is expected to outline his strategic longterm vision for this company but a miss on the top a company under pressure. Morgan, thank you very much. Courtney and meg, thank you very much. And that, ladies and gentlemen, is the final earnings squad of the season. Well see you next quarter. Mandy. Indeed we will. To the bond market and Rick Santelli is watching whats happening there at the cme. Ricky . How are you doing, mandy. A lot of people talking about what sue herera just talked about on the break and that was, of course, mr. Lockhart, telling us that markets should get to have a sayso in the medicine to fix the markets. The more i think about that well, you draw your own conclusions. A 2 day of 10s, theyre all building on top of yesterdays yields but not by very much. Lets stick with 2s. If you look at the chart, basically since the beginning of 2011 we know we havent been up at these levels around 85 basis points on a closing basis since then but you have to go back to april of 2010 to see the next stage up and that jumps all the way up to 117. But to me a macro perspective is always the most enlightening. A 10year chart, everything the 2year has been doing is pretty minuscule in the context of 10 years. Ty, mandy, back to you. All right, rick. Thank you very much. Take a look at this stock, textainer group, lost half its value in the past six months. Is weakness in demand for shipping containers a bad sign for the Global Economy . Its an important question. Plus, the power house. The city in todays power house is home to the famous Golden Gate Bridge. Joe dimaggio and Marilyn Monroe were married here. And the United Nations charter was signed here. Can you name that city . Time now for the power house. One of the hints we gave you as to which city it was going to be was it is home to the Golden Gate Bridge. Now, thats a hint, man. If you dont know that the Golden Gate Bridge is in San Francisco, where have you been . With us today is justin from kleim real estate. I recognize you. Welcome back. Thanks for having me back. Sale price median there, this is the median. Median home price is 1. 2 million. 1. 2 million. Inventory of three months so they say. Properties lost on the market for an average of, get this, 22 days. That is fast. Lets go to our first place, 252 9th street, unit 203 listed for 799,000. Taxes just about 10,000, two beds, one bath and 715 feet of living space. Tell me about this one. S in this is a brand new development. Prime location south of market within a couple blocks of twitter, square, and uber. Perfect for a starter home for a young tech executive. Love that p. Thats beautifully staged. And views as well. Lets move on and well priced. Yes. That is well below as we said the median there and taxes just about 10,000. Absolutely. Makes me sick because of mine. Second listing, 338 spear street, unit 39a listed for nearly 3 million. Now were stepping it up. Tacks of 37 grand. Two beds, two baths, 1300 square feet of living space. That tells you how tight the per square foot price is or how high it is, justin. Yeah. 100 . This is one of the premiere luxury buildings in the city calledinfinity tower. Its a doorman building, full service building. South of market as well. And a lot of our asian buyers, buyers from overseas tend to like new development and full service doormen building. Its going to be a pretty quick sale. Look at that. That is gorgeous. Wow. And now stepping it up once again, power house of the week, it is a two unit building, 2374 and 76 gre 6 greenwich street. 5. 5 million. Four beds, 4. 5 baths and 4200 square feet of living space. This, justin, is a big place. It is. And its a perfect example of why San Francisco is really not slowing real estatewise. This home my clients purchased a year ago for just under 5 million. We listed at 5. 5 million and we ratified within a couple days well over asking price. If a place is in a great location, turn key, and fully remodeled theyre still selling like hot cakes. Thank you very much. Well have you back soon. Thanks for having me. Mandy . Nothing can climb forever though, right, ty . No. Shares of valeant are taking another big hit. Senators investigating drug pricing reports of strongly worded email from bill ackman to the companys ceo. Plus robert frank with an update on the big art auction. Robert . Well, these were the top two sellers at last nights sale at sot south sotterbys. Well tell you whats ahead for the art market coming up. Here at td ameritrade, theyre always working. Yup, were constantly making thinkorswim better. Like a custom screener on your desktop, that updates to all your devices. And you can share it with one click. Wow. How do you find the time to do all this . Easy. We combined every birthday and holiday into one celebration. different holidays being shouted back to work, guys i love this times of year. For all the confidence you need. Td ameritrade. You got this. There are no medals won for earning a living. Its just what you do for family. But its hard to build a future if you cant see past today. Thats why walmart is investing in the most important part of our company our people. Because a raise in pay, raises us all. These are your power points for this hour. Welcome back to power lunch, everybody. Im tyler mathisen. Lets take a look. The atlanta fed president dennis lockhart, theyre talking all the time. He says he expects the case for a rate hike to continue to strengthen between now and the feds december meeting, and, of course, the chair spoke yesterday about that same thing calling it a live possibility. Stocks under pressure this hour, financial, Consumer Discretionary and industrials are the best performers. Ralph lauren, auto desk, Martin Marietta materials the best performing stocks in the s p 500. If you missed any, any of the big stories this past hour, go visit our site at powerlunch. Cnbc. Com. Mandy . We repeat any. Last week on power lunch we spotlighted what was setting up to be the most expensive Art Collection ever sold. As much as 500 million worth of beautiful stuff. The results are in and weve got our wealth editor robert frank with the numbers. How did the auction go . It was a little mixed and we just have some of the numbers right now. Last night was the first sale from the taubman collection at sothebys. Brought in 377 million. That was a record for a single sale from a single collection but it barely made the low estimate of 375 million and it raised questions about sothebys 500 million guarantee. The top lot was this modiglianm. A colorful william de koem de k went. And rothko went for 20 and number six went for 17. 6. Both were estimated to go for between 20 and 25, but buyers right now getting very choosey. A degas called nude woman combing her hair failed to sell. Tad smith had the auction house will earn back most of its 500 million guarantee. It sold more taubman art today. Bringing the total to 412 million. Theyre creeping toward the 500 million. Theres still nor art to sell from the collection and 1. 5 billion in art to sell over the coming wekts. When you say choosey, a little like the high end Property Market maybe just cooling off a little. Exactly. Take a look at this chart. In the past month hershey stock is down 8 and at the same time cocoa futures rising more than 5 . See the connection there . Will the trend continue and how could you make some money off it . Plus a very big power lunch tomorrow. Brian sullivan is live in dallas. Hes on a plane right now heading down there. Among his guests kelsey warren, kyle bass, and mark cuban, Dallas Mavericks owner and a nice guy. All those things coming up on the show tomorrow. Well be back after the break. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can seek to outperform. Thats the power of active management. Every insurance policy has a number. But not every Insurance Company understands the life behind it. For those whove served and the families whove supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. At ally bank no branches equals great rates. Its a fact. Kind of like ordering wine equals pretending to know wine. Pinot noir, which means peanut of the night. Its time for the your business entrepreneur of the week. Garys family saddle shop has been on the same street in Downtown Minneapolis for over a century. Now its part of an innovative Business District marketing effort called museum in the streets to get local shoppers to support their neighborhood businesses. For more, watch your business sunday mornings at 7 30 on msnbc. Brought to you by American Express open. Visit open forum. Com for ideas to help you grow your business. We thought wed be ready. But demand for our cocktail bitters was huge. I could feel our deadlines racing towards us. We didnt need a loan. We needed shortterm funding. Fast. Our amex helped us fill the orders. Just like that. You cant predict it, but you can be ready. Another step on the journey. Will you be ready when growth presents itself. Realize your buying power at open. Com. Im melissa lee. Coming up, the valeant snack down continues. The stock is down by just about 15 . So whats behind todays slide . Were digging in ahead. Also ahead, a big bet on burgers. One top analyst tells us which fast food names hes sinking his teeth into. Later, the one thing happening on the high seas that could signal rough waters ahead for the economy. Thats coming up at the top of the hour. Ill see you soon. We will see each other very, very soon. Talking of sinking your teeth into something yummy, the newer, bigger hershey kisses are available today. Weve been talking about how commodities are being crushed but did you know cocoa is soaring, its up 12 yeartodate. How do you play it as we head into the Holiday Season where we will be eating a lot of things that include cocoa. Lets bring in allen, chief Market Strategist with bullseye options. It seems as if cocoa has been on a fairly longterm uptrend. Where does it head from here and where does it peak out . I dont think i want to fight the trend here. Its been almost straight up since 2000 when they were down 1,000 per ton and now were at 3,300. Theres inherent strength. As more countries have become developed, theres demand for treats like chocolate. Another contractor is the last five years, the strength of the dollar. Cocoa is priced in europe and thats been supportive for the price because of the Dollar Strength and the euro and pound weakness. Right here i think were at an important level. 3,000 per ton is a pivot price and its held as support in august and october and look for that to change and look for this uptrend to continue. Of course, this uptrend has been hurting the margins of chocolate names like hershey. What would you be doing with hershey . Is that a sell . Well, from a price standpoint here, from a risk reward level, i think hershey is coming down in support. Its been trading between 88 and 96 for the last five months. The latest bit of news and said their china operations are they gave some guidance they were down 12 as far as chocolate consumption out of china, i think that may be kind of the last blast to the downside. Id rather be a buyer of hersheys here than a seller. How important is china in terms of chocolate demand and how much that drives the cocoa trade . Well, thats always the Million Dollar question. China demand, what does it mean . Is it psychological . Is it real . What does the data mean . Good news came out of europe. Europe was up 2 as far as their demand goes. I dont think people forget or forgive about chocolate. People still want the small pleasures. Cocoa and chocolate is always going to be in demand, and to put it in historical context, were not that far off the highs in 2011 at 3,700 per ton. The alltime highs in the 1970s at 4,500, if you adjust that for inflation over all those years, wed have to be at 15,000. So theres still a lot more upside potential. Just because were at a high price doesnt mean it cant go a lot higher. Thank you for spelling it out. I wish i had one of the big hersheys kisses for the little gentleman down here. I am leaving, brian is on a plane. Id like you to meet your new anchor. This is mac mathieson. He wears the shades most of the time because the lights are so bright on him. Either that or he works for the secret service. This is your guy for the next hour. Awesome. Mac, you and me . Yeah, sure. Good. Thats it for first hour. Well see you tomorrow, ty. Fantastic. Melissa, over to you. A matching suit tie combo. Wow. Theres a market for that. Im melissa lee. Stocks holding in the red right now quiet ahead of the jobs report out tomorrow. The dow hugging the flat line. The s p 500 down by just about a half a point and the nasdaq there is down by a quarter of a percent. Meantime, we are focusing on shares of valeant because those shares are getting clobbered, down by more than 15 and we should note on heavy volume. This is the first time the stock is below 80 in more than two years. Meg terrell is with us now, and, meg, this drop seems really interesting because the only thing that was really out today was this wall street journal article detailing bill ackmans sort of behindthescenes correspondence with the company. You think it cant get worse and you see another 15 drop in the stock. This wall street journal article raised the idea that ackman has some doubts about the ceo of valeants ability to stay in his job. Bmo putting out a note saying thats what the drop is attributable to. People worried when a ceo leaves, thats never good for a company, but, two, mike pearson is really credited with building valeant, building its Business Model, building it up to where it was, and bmo at least saying if he leaves thats not good for valeant Going Forward and he would be the one to bring the company out of this but people are wondering how far does this whole crisis stretch and does it take mike pearson with it . I reached out to valeant and they got back to 34e quime quic. They reiterated the board has full support for mike pearson. He continues to focus on running the business. Even though theres so much volatility with the stock, they feel good about where theyre positioned for growth. It seems theres a lot of questions swirling still. Its interesting because i would have thought perhaps with this notion that perhaps the ceo could be out that the stock would actually rally because valeant has to basically abandon the Business Model mike pearson built anyway, low spending on r d, raising drug prices of legacy drugs. All those things are relics of the past. So why do you need the same ceo when there are questions about the ethics of the company . One thing im hear something that it might be hard to find anybody who wants to take this job. Really . And so some names have been batted around. Who knows how serious they are or if theyre even being considered. If the board is fully supporting mike pearson, this is a moot point, but that could be a tough question for the company, who wants to step into this job . At the same time on top of the change of Business Strategy for valeant, there are these investigations that seem to be really reaching i dont want to say a fever pitch but yesterday the senate announcing a bipartisan investigation. Its coming from all directions, the senate, the house, and your interview last night with those two senators i thought was interesting. Here is one clip we should really listen to. Chairman collins insists and i certainly agree that were not interested in a sensational witch hunt here. We want to go slowly and th methodically and understand the facts but theres something thats not right by merely acquiring a drug and changing a label, one that doesnt have a lot of competition in the market, that Companies May think they could get away with exorbitant, i mean thousands of percent increase in prices just when they change the label. That i think is something we need to understand, why this is happening and is this a thoughtful price hike or is this someone thinking no one is looking and they can just get away with it . I thought that comment got at the point they are pretty narrowly focused. Theyre focused on the companies that take these big price increases a ever acquiring drugs and they want to understand what goes into those decisions. I think the biotech industry at least to some extent was reassured by that because it doesnt look like they are casting this net really wide. Theyre not going after innovative companies. Theyre going after specifically what they see as bad actors here. And there arent too Many Companies right now that really make the bulk of the revenues from hiking up the prices of legacy drugs. It is mostly valeant and then retrophin which is the other Company Martin had run before that had also received for information from senate. There are other companies who have been created in valeants image that do a lot of acquisitions and raise the prices but it is relatively limbed. Thats not really the biotech industry. The valeant story continues. Meg terrell, thank you. Mandy, over to you. Thank you very much. Were getting a fresh sign that there could be some rough waters ahead for the Global Economy. The worlds biggest shippers are sending out some sos signals just as we head into the holidays. Morgan brennan is live here with me in the studio with a developing story, isnt it, morgan . It really is. And another day we get another headline so we really could call this the shipping slump. So its the busiest time of the year, that makes it more worrisome and marry of courersk latest. It comes after a surprise profit warning last month and the worlds biggest operator isnt alone. We have many company, neptune, mitt sui have reported disappointing ru8esults in the last week. Why are we seeing this . Too much supply. A over capacity crisis while mega ships come online. Couple that with slowing growth and shipping rates have plunged. Still not everybody is down beat about the situation. C span which owns and leases out the ships in longterm contracts Still Believes this is a shortterm rough patch. We are very confident in long term prospects of the industry. The stray hindustry has gotten sophisticated. They know how to navigate through the ups and downs. The demand has been weak for certain trades but north american trade is very, very strong. North american trade will be the thing to watch. The peak season when they ship all the retailer goods in containers never really came. It could be an indicator the holidays might not be as strong as anticipated. Thank you so much for that. Lets stay with this topic because the shipping slowdown is just one of the worries out there for the Global Economy. Lets get to seema mody with a look at some of the other global pain points. Thats right. Slowing growth concerns around the world has been a big concern for multinationals that have been reporting this earnings season. Lets just highlight some of the major pain points. If we start with russia, which is still in recession due in part to the drop in energy prices, sanctions are limiting Business Activity plus the recent escalation in geopolitics is causing distress given russias recent involvement in syria. The stock market there down 18 over the past 6 months. But lets move to brazil crippled by Lower Energy Prices and corruption. Fitch last week downgraded brazils Credit Rating to one notch above junk citing political risks. Its market down 18 over the past 6 months. Lastly we got to highlight canada. Another commodity dependent economy in recession, losing jobs at a fast pace and dealing with a depreciating currency which is making the cost of business more expensive. The stock market down 7 over the past six months. Well have to keep an eye on these three economies. Chinese stocks rallying overnight gaining number 2 . The index is up 20 since late august. It is the year of the goat and since the start of the Chinese New Year back in midfebruary, the shanghai composite is higher by 8 . But it has been a rocky year for chinese stocks. Wilford, welcome to the nasdaq. Back in june you wrote this piece saying steer clear of china and that proved to be a very, very good piece of advice. Do you stick by that at this point . It was lucky in terms of timing but i stick by it for longterm equity investors. Ill just put this recent rally in perspective. In june when we hit the 7 1 2 year high for the shanghai comp, up almost 150 over 12 months. We then fell just over 40 to get to the august low. So, yes, that 20 raise since then is significant but its in perspective considering that. Now, why did we get that rally . A bit of stimulus a pickup in Property Market. Can that continue from here . I think it probably can in the short term but its quite a lot resting on stimulus. Monetary stimulus is slight lly priced in. The wildcard would be more fiscal stimulus or that might unwind its shift from investment led to consumer led. If we did get that, it might surprise the market and lead to a further short term rally. Long term caution remains for me because i think this transition from investment led to consumer led its a huge, huge challenge. Im not sure we can see a transition from 6. 5 to 6 each time because of the corporate sector. I think theres profitability issues where it might be transitioning slowly for gdp growth but for companies that becomes binary. Either they continue or they go bust. I think theres a lot of mpls still to come out. You know, for us here in the media, its nice to look at the shanghai composite and see that as a barometer of the economy but really its not in china. Its not a very good one at all. And at the same time were hearing reports while the markets are in again a bull market and this is Something Like the third bull market of the year for china, its that volatile, were hearing reports that capital flight out of china has been tremendous ever since the selloff. Goldman sachs has a estimate of 200 billion coming out of china since the august valuation. Absolutely. How do we reconcile whats going on where we probably see the richest folks in china moving their money out. And i think the currencies are a very good point. Its one of the types of monetary things they have done. It helps the exporters. But it hurts companies and it hurts what the Balance Sheet is of the country because so Many Companies over the last 20 years have borrowed in either u. S. Dollars or hong kong dollars which is essentially the same thing because of the peg to get those low rates. As we start to move to a devaluation thats going to be accentuated by the capital flows, those Companies Face more tricky Interest Payments and it comes back to the point of how many mpls are there building up in the banks we dont know about. The capital flight highlighting what Foreign Investors or the very rich domestic investors are thinking and thats going to probably come out to play at some point. I would caveat all of this that this point is really relating to relative expectations for the economy. Thats what the market reacts to. In absolute terms i think the powerful growing middle class of china is going to very much help to shape businesses for many years to come but its probably a cyclical downturn to come first and the market is not ready for that. Wilford, great to have you with us. Thank you. The one thing thats really been fueling the markets recent run. Plus some sizzling returns for your portfolio. Were talking a burger boom. And later on the one Airline Stock thats flying high right now on the back of a big buy call. Lets go to breaking news with scott wapner. Thank you so much. Just a few moments ago we heard from valeant defending the Ceo Michael Pearson in a board statement that meg terrell was talking about. I just got an email that bill ackman has sent to mike pearson personally. It says the following. Dear mike, in light of recent press reports, i thought it would be helpful for me to communicate my thoughts on your leadership of valeant. We share the boards confidence in you and your leadership. While i have strong views on valeants communication strategy and would have taken a different approach, you and the board should not interpret this as a negative reflection on my view of you as the ceo of the company. I understand that the companys counsel and the board may have different views on what can be communicated in light of regulatory scrutiny. This is, indeed, a judgment call and i respect the 3w50rdboards decision in this regard. You are one of the most shareholder oriented ceos i know. You have assured me that you and the rest of the world are considering all alternatives that would benefit shareholders. That is very comforting to us. Sincerely bill. From bill ackman to mike pearson just after 2 00 in the afternoon Eastern Standard Time as bill ackman, like the board of valeant has just done within the last half hour, pledging his own continued support behind the ceo, mike pearson. We share the boards confidence in you and your leadership he sa says. Shares have been extraordinarily active today and theyre picking up certain steam here. It does follow that wall street journal story that was in the paper this morning. An activist plays defense. That was the headline detailing a blow by blow or play by play that mr. Ackman had with val aept and mr. Pearson about how it was dealing with this strategy. Some took apparently this story today by virtue of the way that the stock has traded that it was down 16 as mr. Ackman perhaps questioning mr. Pearsons leadership, but he says in fact in ang email he sent directly to mike pearson personally three minutes after 2 00 this afternoon that he shares the boards confidence in mr. Pearson, his leadership in the company, and that is the latest we have. So the board defending mr. Pearson and now mr. Ackman, one of the largest shareholders of valeant, appear to be doing the same. I know you read the same article we all read in the wall street journal and one of the quotes sh this that pearson may to leave. It sounds like ackman is basically backing away from that article and backing away from what he might have conveyed to the company through these correspondences. Look, i think the situation is so fluid. There literally could be another story at any moment. I think its a keeping our options open kind of matter of fact. Saying, look, if the situation spirals out of control, who knows whats going to happen and what the future of mr. Pearson ultimately will be. We simply dont know because we dont know where the news flow is going to take this story next, if anywhere, but the fact of the matter is at least for now even with the stock continuing to sell off, breaking 80 a share for first time in two years, the board is still backing mr. Pearson and one of the largest shareholders continues to as well. Interesting stuff. The stock is still down. Its down about 13 right now. Well continue to monitor this story as we have more developments. Meantime, power lunch will be right back. You totaled your brand new car. Nobodys hurt, but there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do, drive threequarters of a car . Now if you had Liberty Mutual new car replacement, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. New car replacement is just one of the features that come standard with a base Liberty Mutual policy. Learn more by calling switch to Liberty Mutual and you can save up to 509. Call for a free quote today. See Car Insurance in a whole new light. Liberty mutual insurance. [announcer] during mattress price wars at sleep train, save up to 400 on beautyrest and posturepedic. Get interestfree financing until 2018 on tempurpedic. Plus, helpful advice from the sleep experts. But mattress price wars is ending soon. Welcome back to power lunch. Stocks are slightly lower right now but its been a pretty solid month. The dow is up more than 6 over the past 30 days. Art cashin joins us now. You put out a note saying this hasnt been a fed driven market but an oil driven market. What do you mean by that . As a matter of fact, even as we speak now, melissa, the crude oil, west texas intermediate, is retesting this mornings lows. When it hit those lows this morning it crossed the opening rally in stocks and took the dow down to minus 50 or so. They recovered when oil stabilized and now that theyre back retesting the morning lows, were going to find out. If they break the morning lows conclusively, you will see added pressure on stocks. Its back to that relationship about the economy in general and oil stocks and energy stocks. Okay. Oil is very important, art, but tomorrow wegate jobs report. How do you think the market will react if its a hotter report or a weaker report . Are we still in that sort of bad news is good news mentality for the markets . Well, i think you may. I think if the news looks weaker than expected, then, first of all, the guys down here, most of them doubt the fed is going to raise in december anyway. If theyre data dependent, we think the data will be weak enough it will dissuade them. So if you do get a lower number tomorrow, that will probably hint that maybe theyre not going to hit in december and you might get a little bit of a bounce out of that. Art, thanks for your thoughts. Appreciate it. Just to underscore in ten minutes time well get the oil close. Coming up next, one analyst is betting big on burgers. The names hes gobbling up ahead. And were minutes away from the oil close. Were headed live to the nymex when power lunch runs. Eturns. Welcome back to power lunch. Im mandy drury. Shares of chipotle are down 15 . The company doing some major damage control following an e. Coli outbreak at some of its restaurant in washington and oregon. Lets bring in t. M. Love. How damaging is this outbreak to the brand of cmg . Well, clearly its not a good thing, but, you know, you have to have confidence in a company like chipotle who really prides itself on its ingredients and its sourcing to really do the right thing. Them closing all the stores and trying to get ahead of it the best they can is a really wise choice on their part, but you are seeing the stock fall and to be honest with you, as it falls i think everybody should get more and more bullish on buying it. How easily does Something Like this happen to restaurants though, tim . Well, you know, the thing about e. Coli is most people think of it as being a problem with beef. It generally gets associated with that. But quite frankly in my speculation, i think the problem will turn out to be some sort of vegetable. In the United States we regulate our Meat Processing so heavily yet with produce you can go down the street and buy it from whoever you want. And so what were finding is these foodborne illness breakouts tend to come from vegetables. You hear about spinach and tomatoes. And it doesnt get washed properly. Everybody thinks in their minds that vegetables are always very, very safe. Not that im trying to cause anybody to be scared here, but the one thing thats not regulated in the United States is vegetables. Thats a really interesting point. Maybe we need further regulation of that. How would you rate the response of chipotles management to this outbreak, tim . You know, i think theyre doing a great job. You know, when you get a crisis on your hands like this, the first thing you need to do is how do we take care of the guests . I think theyre responding the best they can. I have been to the cultivate festivals they do and they do a great job of trying to relate to their guests and what they do and what they want and show them what great ingredients are. What youre seeing happen here is the one thing chipotle probably doesnt want, they boast how great they source their ingredients and right now their problem is the ingredients. Thank you for your expert knowledge on the subject. Thanks for weighing in. Melissa. Sticking with restaurants, shake shack reports earnings after the bell. The stock is down nearly 30 in three months. Lets bring in barclays analyst jeffrey bernstein. Great to have you with us. Shake shack is one of the stocks priced for high, high growth. Do you think they will deliver on the growth metric this is evening to support the valuation . Right now forward pe is somewhere around 190. Right. They are reporting after the close. You know, shake shack is a tremendous brand, probably wouldnt opine specifically on what theyre going to say after the close but its been a roller coaster from their ipo, 20 up to 100 and now back down closer to 50. Definitely valuation concern for some, but again a tremendous business. Taat the same time yucouve mcdonalds whose stock has performed better and that forward pe is 23. When you talk to investors about the space, what sort of sense are you getting from them in terms of how theyre looking at fast casual . Is it the value stocks like a mcdonalds which is, you know, obviously leveraging this turn around theyre in the midst of or is it these high growth stories like a shake shack that theyre interested in . It seems like lately theres a caution over the entire group. In fact, we previewed earnings a couple weeks ago and the title was dazed and confused with no place to hide. I mean, just over the past month or so, sales have slowed for the broader industry and while commodity costs are coming down, labor costs are going up, so labor will end up overshadowing the commodity benefit and to your point the valuations are not inexpensive so it seems like its been a selling the news for most of our restaurants through earnings. Okay. Is there a top pick in your space, jeffrey . Yes. So we have three subsegments of our group. Within the traditional fast food we like mcdonalds. Within traditional casual dining we highlighted texas road house and within that fast casual higher growth space were big fans of the turnaround going on at panera. Great to get your thoughts. Thank you. Thank you. Mandy . Now my stomach is grumbling. Lets you can go to Jackie Deangelis at the nymex for the oil close. Good afternoon to you. Just a few minutes away from the oil close and were setting new session lows here. What is moving the market lower is a story out from reuters yesterday talking about a draft report of a opecs longterm strategy saying the cartel thinks that Global Demand for its crude is going to remain under pressure for the next few years. Actually opec coming out with a statement rebutting this report saying that it was disappointed in the story that the document is from an unofficial source and one that is still under process. But traders are reading that statement not really to discount what is necessarily being cited potentially in this report. In fact, the supply demand equation has not been equal in some time. Right now trading over 45 a barrel. Back to you. Thank you very much. Coming up next, everyone has talked about facebooks big quarter today, but there is another tech stock hitting new highs as well today that actually no one is talking about. Except us. Thats next. Hi, everybody. Im sue herera. Here is your cnbc news update this hour. White house spokesman josh earnest says the u. S. Has not made its own determination on what caused the downing of a russian plane in egypt. He added u. S. Officials have not eliminated the possible terrorist involvement in that crash which killed all 224 people on board. The post service expects to deliver 15. 5 billion pieces of mail during the 2015 Holiday Season. Its projecting 600 million packages will be delivered as well. Thats an increase of more than 10 from last year. Florida senator marco rubio filing for new hampshires president ial primary. He was greeted by about 100 supporters lining the hallway as he made his entrance into the secretary of States Office at the state capitol. And three new inductees into the National Toy Hall of fame this year. And they are all true classics. Beginning with the timeless puppet. Then the game twister and the super soaker also making the cut. 27 million super soakers were sold in the first three years of production. The toys are celebrating year round at the Strong Museum which is located in rochester, new york. All right. Thats the cnbc news update this hour. Back to you guys, melissa. Thank you vemp. I wasnt allowed to have any of those toys. Not even twister . No, not twister. My gosh. I had plenty of other things though. Thats sad. Thanks, sue. Everyone obsesses about facebook passing the 300 billion market cap mark. Another tech giant has been doing the same thing and that would be amazon. The stock made a new high, now up more than 110 on the year giving it a market cap of 306 billion. So is there more room to run . Lets ged to the trading nation. Craig and david. Dave, lets start with you. Were entering what should be a strong time of year for amazon. Very strong time of year. Look, this has been a nice move for them and ill tell you, melissa, we talk about it on your show all the time on fast money, this is a name thats going to continue to work and continue to move a lot higher. They are crushing it on the retail side. Look at the consumable business. Theyre taking massive market share away from target and from walmart. We saw that over the past several months. You know, weve done a lot of deep survey work thats indicating that thats going to continue in a pretty massive way. Theyre obviously winning in the cloud. Its been a tremendous success for them. The stock isnt expensive. Its probably got a lot more room to go on the upside. If you ask me and say gun to head what would you rather own for the next six months facebook or amazon . Id much rather own amazon from a price appreciation perspective, period. Craig, i put that question to you, which looks better . How does amazon chart look for one and does it look better than the facebook chart . Well, we certainly would favor amazon over facebook and when you look at the chart of amazon, you can clearly see that within a secular bull market you want to be buying these stocks that are making new alltime highs thats exactly what amazon has been doing, and, yes, the stock has doubled yeartodate which gives some people a reason to pause, but for us id rather see any sort of 5 , 10 pullback in the stock, i think thats going to give a great opportunity to buy the shares. In fact, amazon has been a very nice stock for us over the year because its given us three other opportunities where it has pulled back and then made another move higher. I suspect we may do that again. So any pull backs in here, longer term trend is zil up. We want to be buying stock like this making alltime new highs in secular bull markets. Thanks so much craig and dave. Weve been talking about facebook and amazon hitting new highs. Look at alphabet shares. Those are also at new highs. For more trading nation head to tradingnation. Cnbc. Com. Every day we hear about a massive cyber attack. But if Cyber Security is so important, why has Cyber Security firms like fireeye fallen so much today . That is straight ahead. Plus my name is lisa and i get paid for this. What it takes to make jelly belly jelly beans coming up on power lunch. Belly jelly beans coming up on you pay your Car Insurance premium like clockwork. Month after month. Year after year. Then one night, you hydroplane into a ditch. Yeah. Surprise. Your Insurance Company tells you to pay up again. Why pay for insurance if you have to pay even more for using it . If you have Liberty Mutual deductible fund™, you could pay no deductible at all. Sign up to immediately lower your deductible by 100. And keep lowering it 100 annually, until its gone. Then continue to earn that 100 every year. Theres no limit to how much you can earn and this savings applies to every vehicle on your policy. Call to learn more. Switch to Liberty Mutual and you could save up to 509. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. patrick 2 pretty great. Ke to be the boss of you . patrick 1 how about a 10 raise . patrick 2 how about 20 . patrick 1 how about done . patrick 2 thats the kind of control i like. And thats what they give me at national car rental. I can choose any car in the aisle i want without having to ask anyone. Who better to be the boss of you. patrick 1 than me. I mean, you. Us. vo go national. Go like a pro. Welcome back to power lunch. Im mandy drury. Despite the recent nuclear deal between the u. S. And iran, tensions may be rising on the battlefield of cyber warfare. U. S. Officials have seen a surge in Cyber Attacks originating from the iranian government. An unusual number of attacks have been carried out in the past month coinciding with the arrest last month of a dual american iranian citizen in tehran. Fireeye is down big today after posting earnings that fell short of analysts expectations. Joel covers fireeye and he joins us now. The thing about this print is there were low expectations going into the quarter and fireeye missed big time. Its taking down the entire sector pretty much in indiscriminately whether you look at palo alto or proofpoint. Is this a fireeye specific problem though . We think so. Fireeye, as you said, put up fairly bad results last night. Definitely not meeting consensus expectations. The problem is that the areas that people were spending with fireeye people are spending security areas outside of that and were seeing it show up in the numbers such as palo alto and imperva and others. We think its specifically with fireeye. Some of the commentary said theres going to be more normalized spending than threat spending. Are Companies Spending more on the threats s aspect . Theyre focused on the Incident Response or after the attack happens. What were seeing is a major shift to people protecting the assets themselves and the identities of those accessing the information. Where fireeye has been after the attack, after sony and walmart, they come in and they remediate after that happens. Very important, but a lot less spending is done its much more lumpy. Whereas the guys like palo alto and imperva protecting the applications and access to the applications are seeing the majority of the spend. We dont think there is a spending bubble or an overspend. We think just more of the money is going to different kareas. Why given that and some of your competitors also writing that given their own checks, palo alto seems to be a winner out of this according to an october survey. Im wondering where you think you should put your money if you want to invest in Cyber Security. Well, the four names that were have buy ratings on, palo alto networks, we like proofpoint, we like imperva networks andracuda networks. Those are the four names that we think will get the majority of the spend Going Forward. Great to speak with you. Thanks for your time. And you wont want to miss jim cramers interview with david dewalt on mad money tonight at 6 00 p. M. Eastern time. Dave has a lot of questions to answer. He sure does. Thanks a lot. Time now for our series where we feature people with really, really cool jobs, and today meet a woman who gets paid to indulge her sweet tooth pretty much all day. My name is lisa and i get paid to make jelly belly jelly beans. Coming up with new jelly belly flavors is super, super fun. We take the real product, if its a pare, if its buttered popcorn, whatever that may be, and we try that flavor and we taste it and then we move forward with our food scientists here and they work with our ingredient suppliers. They will make some test runs and then they will bring them to a small group of people here in the offices and we have the wonderful job of tasting those beans. Sometimes its a wonderful job and sometimes its kind of a scary job if it happens to be a bean boozeled flavor. We created some new more crazy flavors and we put them together in a game called bean boozled. When i spin the spinner and pick out a white bean, is that going to be coconut or baby wipes . Is that black bean going to be licorice or struking spray or t brown one could be choger chocolate pudding or it could be canned dog food. Theres a lot of interaction around that, a lot of fun. When people find out what i do for a living they laugh, they smile, and they say give me some hands up for a job in the tasting room. The jelly Belly Company cranks out more than 20,000 beans a minute. And if youre wondering how lisa and her team develop some of those wacky flavors, head to our website, powerlunch. Cnbc. Com. Would you like a skunk flavor, melissa . No, cotton candy, mandy. Its my favorite. Yesterday we put an under the radar stock on your radar and today it is popping. More on that name when power lunch returns. Romantic moments can happen spontaneously, so why pause to take a pill . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. 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Concrete and pointed to the companys Pricing Power and their positioning in the nonresidential construction recovery as evidence for potential of growth. It looks like he was right on the money. Posting Third Quarter earnings of 1. 6 million. The stock is up 9 on the day. Up 107 yeartodate. What a great call. Mandy . Definitely. Wow. Shares of facebook are up nearly 5 as we speak. The social media giant reporting earnings after the bell yesterday and beating analyst expectations on both the top and bottom lines. Joining apple, google, microsoft, and amazon in the group of elite Tech Companies a market value of greater than 300 billion. And i think zach is the eighth richest man in the world. Lucky guy. Young and rich. Good for him. Good combination. Lets get to large cap stock picks right now one of which happens to be facebook. Lets bring in michael, Portfolio Manager of the four star morningstar rated ridge worth large cap growth stock fund. Great to have you with us. Facebook was about 4 of your portfolio. Lets start right there. You like to invest in sort of disrupters and so im wondering as facebook is gaining momentum, particularly in its core advertising, who is it disrupting in your view . Well, its disrupting a host of competitors, television, print media, disrupting radio. If youre a small Medium Business a large enterprise and you want to reach your customers directly, you got to get in front of them on their cell phone, and its important that you have a cell phone and a mobile presence that gets their attention and you can charge for it. And facebook has done a fantastic job of really getting in front of other companies in the same space, getting those advertising dollars, and making that entire ad market change. M does your like of facebook, so to speak, does that mean that you dont like, for instance, the traditional broadcasters, the cbss of the world or dis niece of the world. We dont own any of them right now, they dont meet our criteria of growth as a condition of key metrics, we want to own that companies positioned to make market share from them. Even at new highs on facebook you are not trimming your position at all . I never talk about what were doing with the position size on tv but we are equally confident as we were before they announced this quarter they have a lot of growth ahead of them. Thats the thing people miss on facebook. This company has been public for three years, its still growing its total user base, Monthly Average users, daily average users all still growing. Its ability to monetize some of its smaller Properties Like instagram and whats up the chat you really havent seen those yet. Weve got runway, its not going to be to the sky, but we have runway with the stock. Google another top holding of yours is at a new high. Is it that ad spending on mobile and digital at that thats strong and, therefore, thats good for google or is it that facebook is taking share from other property and thats bad for google. I think google is doing just fine as well. They have done a better job lately talking more about their reorganization around alphabet and that has us excited. We wanted to see color and clarity on what the dollar profitability can be from some of their more experimental programs. Right now it seems like facebook and google are both being successful in that ad space, particularly in mobile. We know facebook is the leader but google can continue to take some market share and its really from the other players i think at this point. Switching gears you also are in various stocks that would indicate that youre bullish on some sort of a housing recovery or construction koefrs, Vulcan Materials is one. Why vulcan . Were looking for these places for growth that are not always in secular names and the key metrics at any reason is when you can sell more at higher prices than people built into the models and expectations youre set. Weve seen nonresidential construction do a good job of growing beyond what people had sort of expected. Vulcan is growing their organic growth is 7 , their acquisition growth about 10, they are also getting about 8 pricing. So we can see aggregates, you know, you wouldnt think aggregate sand and rock would be a growth city but right right now. They can double their earnings in the next few years, were not sure investors fully appreciate that yet. Michael thanks for your time. Mandy, back over to you. It is game on after the bell when video game maker too interactive reports its earnings. Sharing already up about 18 this year, is there more room to grow . We will debate that when power lunch returns. Our cosmetics line was a hit. The orders were rushing in. I could feel our deadlines racing towards us. We didnt need a loan. We needed shortterm funding fast. Building 18 homes in 4 ½ months . That was a leap. But i knew i could rely on American Express to help me buy those building materials. Amex helped me buy the inventory i needed. Our amex helped us fill the orders. Just like that. Another step on the journey. Will you be ready when growth presents itself . Realize your buying power at open. Com yup, were constantly making thinkorswim better. Here at td ameritrade, theyre always working. Like a custom screener on your desktop, that updates to all your devices. And you can share it with one click. Wow. How do you find the time to do all this . Easy. We combined every birthday and holiday into one celebration. different holidays being shouted back to work, guys i love this times of year. For all the confidence you need. Td ameritrade. You got this. Youve heard the saying everything is bigger in texas and that includes tomorrows power lunch. Brian sullivan will be live in dallas with exclusive interviews with Oil Billionaire kelsey warn, kyle bass and Dallas Mavericks owner mark cuban. A great lineup, its going to be a great show. Do not miss it. Melissa, we will be there. Of course. Its game on after the bell when Take Two Interactive reports earnings, the street is looking for 15 cents a share on 318 million . Revenue. Eric, i will start off with you, what do you like about take two . It seems like the cash build and potential return of capital to shareholders is a really attractive point for you. I would definitely agree. This is one of our top ideas as a result of that. Youve got a company that is sitting on nearly 10. 50 of cash, over 50 of its market cap. 75 of that cash we believe is on shore so its cash thats accessible and we think theres a big opportunity to shrink the equity base there. In addition you have a company thats got a solid slate of games in its portfolio thats monetizing quite well. Scott, you are a little bit less bullish on take two, you have a hold rating on the stock, you say theres strong competition even though they have this slate of games that eric is talking about. Yeah, look, melissa, there is no question that take two has done well over the years, largely due frankly to the success of one particular franchise and thats grand theft auto and even though grand theft auto amazingly is the top name when it comes to video games according to meta critic meaning its the most like video game out there released this year the reality is that the reliance on that particular franchise and continuing transitions to digital and mobile we think introduces some, lets say, risk to the operating story over the next couple of quarters, especially since we dont see a blockbuster new game coming anytime soon. Irk a, does that concern you that it may be a one trick pony and the transition to mobile may be difficult . You talked about the cash in light and on the heels of the Activision King deal do you see that cash being used potentially for an acquisition . Acquisitions are always potential but a lot of times in the space valuation are high so it makes deals tough. You look at what the company is going to report this quarter its upside from nba 2 k which shipped in over 4 Million Units in the quarter, most people were looking for 3 Million Units. Its the dominant nba franchise. They also have gta online, made the transition to digital there, contributes over 200 million a year in that business at a high margin. You look at the rest of their portfolio, border lands, red dead redemption, you know, theyve got several other big titles that sell north of 5 Million Units. The problem that i a lot of people have is the consistency of the earnings, meaning its tough to predict what theyre going to do year in, year out, but theyre very profitable, they have improved their margins from cycle to cycle and as a result we think theres a lot of value in the shares. Its trading at on a three year average pe about 14 times, activation while we like those names they are trading at north of 20 times pe. We think theres a Good Opportunity for appreciation in the shares. If not take two which name in the space to you like the most . Right now we have holds on the three major Video Game Companies that are publicly traded that we cover. What i would take is honestly at this point when youre thinking about gaming as an opportunity, we frankly like facebook in that context and weve been recommending that stock for some time. The problem we have with the Video Game Companies, each the larger more diversified ones is they are very, very hit driven which contributes volatility to the operations and the stock prices. All right. Guys, were going to leave it there. Thanks so much for your thoughts on take two, eric and scott. We will be taking a look at take two earnings tonight on fast money at 5 00 but also of course mandy as you know disney will be in the spotlight, it caused a whole media sector to go down in the last quarter based on the Conference Call comments so thats going to be key and the Conference Call of course happening during the 5 00 hour. Okay. That wraps it up for power lunch for today. We will head over to closing bell right now. And welcome to the closing bell, everybody, im kelly evans here at the new york stock exchange. Im bill griffeth. We have both been standing here waiting for hours for the show to start. Ages, ages. Long, long time. What a day its been for facebook shares, soaring, last i saw 5 , still is. Company pushing the markets share market share, the market cap past 300 billion thanks to strong Digital Advertising sales that they reported last night. Coming up we will tell you where facebook now ranks on the most valuable Companies List and whether those good times can last. Speaking of earnings, we have another wave of them heading your way after the bell toy