Transcripts For CNBC Power Lunch 20160729

The 100 billion beer deal has been brewing for months is closer now to being a done deal, sabmillers board will recommend that Shareholders Approve a take overby anheuserbusch inbev, boosted initial offer to the postbrexit drop in the british pound. Facebook could you up to an extra billion dollars, a transfer of assets to ireland in 2010 and new york fed is asking the Philippine Central Bank to help recover 81 million stolen by hackers back in february. That 81 million belonged to the bank of bangladesh. Roeuters reports the money was mostly laundered through the casino industry. All right. Tyler, im brian sullivan. Check on your friday, the s p 500 despite that disappointing gdp print briefly hitting yet another new intraday high, it has since pulled back. The magic number to watch for a closing high 2175. In the meantime the nasdaq is trading at a 52week high itself up by big gains in google, amazon, and much more on those names ahead. We are also all over this oil slide. Crude oil back in a bear market. Crude oil popping a little bit right now 0. 3 , opened up lower. It could be a wild next two hours. Lets go or down to three hours, lets go to bob pisani downtown and take us inside the earnings numbers. Oil does seem to be another thing squarely on your radar. Yeah, the important thing here overall is july is shaping up to be a really good month overall. In fact, normally its the best month of the Third Quarter. So far its looking great here. I want to give you a quick recap of whats going on. The important thing is nasdaq tech stocks been doing well. The earnings reports generally holding up with a few exceptions. Small caps are outperforming. Mid caps are outperforming. Oechb the big caps, the s p up 3. 7 but overall still excellent performance. Broad market gains here. Take a look at the sectors here. We got tech, health care, materials, Consumer Staples lagging here. So the group that was a big Market Leader early on, Consumer Staples lagging, others have a problem as brian referenced be up in a month, oil we broke below the 200 Day Moving Average on oil today. We got a very disappointing report overall from exxon and chevr chevron, some big writedowns on major assets they had today here. Another big issue were still dealing with is the dollar. We dont know what direction the dollar is going. The dollar had been rising through much of the month on perceived economic strength in the United States. But in the last few days the dollar has been notably weaker. Overall that weaker dollar has helped most of the big kbhodty names, you can see some of the big commodities freeport freeportmcmoran, but brian, still at historic high despite disappointing gdp and bad oil. Well see where oil goes because we got the weekly rig count numbers, bob. Thank you very much. And yet again were seeing more drilling rigs being put to work. According to baker hughes we gained just three, but we gained three oil drilling rigs. Thats the fifth straight gain, crude oil up 8 cents but not a big move. The dollar playing a role as well. From the rebounding markets to an economy running at just above stall speed, senior economics reporter professor it says here, Steve Liesman here to explain whats holding us back from a robust rebound. Whatever you want to call me, michelle, is just fine. During the day. All you ceos out there wondering why the economy is so weak, dont blame consumers, theyre doing their share. Its your fault, the ceo, why were doing so badly. This is contribution to gdp. All the yellow bars to the right of the blue bar add up to 1. 2 . How did we get there . Surging consumer at 2. 8 , trade its about flat. But then you look at where things like government are down unexpectedly 2 for the quarter, investment down a half a point. And inventories down much more than economists expected. So thats the business side of the equation there. The fixed invest and inventories. After revision to prior quarters announced today we have now just finished a Third Quarter in a row of lackluster growth averaging as michelle said just 1 , half of the weak number we thought we had which was 2 . Barclays says sharp rise in Household Spending should keep the y growth above trend, but Prestige Economics says it confirms our expectations of a coming recession. This makes three consecutive quarters of recession of investment. We have now had those three negative quarters of investment growth and that is before weve seen any potential impact from the u. S. President ial election and the lack of confidence emanating that we could grow worse and the question is can the consumer continue to hold up this economy such as it is . All right, steve, stick around. From the struggling economy to the dog days of summer, were about to start august which over the past ten years has been the third worst trading month of the year. Here to break it down cnbc contributor ron ensan and katie nixon of Northern Trust wealth management. Ron, july has been a very good month for the markets basically. Yep. Maybe it was a relief rally after brexit. Okay. Fine. Yeah, i mean, as far as we know. London is still going through rather serious tremendoas a con. But the wheels didnt come off the cart here. Yes. But now youve got a very weak u. S. Print. Yeah. I think the reason the stock market levitates here because at least from my perspective takes the fed out for this year. Youve had some good earnings from corporations. You have Consumer Spending as steve said stronger than expected. So there are pluses and minuses. Its still very much a mixed bag when you look at the economy. There are pockets of strength, stock market reflects those, pockets of weakness, you see that and then you see it in the bond market where longterm rates remain depressed because they think the fed is in a box. Katie, your Investment Committee has reduced nonu. S. Developed market exposure by a couple of Percentage Points cutting back on high yield as well. Where does that money go . And why that change . So were still very positive on u. S. Equities, tyler. I couldnt agree more with ron though. Youre the first person in my whole life a Key Development here is that the fed is off the table this year. We think its low for long. We think maybe one rate hike in the next 12 months. This gdp print only confirms the fact this is not an economy Strong Enough to withstand a rate hike. And yet, steve, the meeting of the fed on wednesday everybody was talking about how theres a rate hike is back on the table. Everybody was wrong. What can you do . I think they misread it. I think they thought it was way more hawkish than it was. I think if the fed wanted to tell you a hike was coming in september, they have my phone number, they have any number of ways they can say that. I want to create one issue for investors. Economists went into this gdp number here thinking it was going ton to be 2. 5, not because theyre stupid. Because the source data going in, the individual reports still point to a 2 economy. And i think you have a big issue here, do you start thinking on a 1 economy thats weakening or one that with revisions by the way you can go up 1 percentage point easily. Its still a 2 economy. And thats a big difference in how you approach the investment outlook. We think its a 2 economy. So youre not worried about recession . Nothing in this number today suggests that we could go into a downturn, right . You dont get a recession with 4. 7 unemployment. And 2. 8 Consumer Spending growth. And jobless claims of the lowest level since 1973. Yes. On the back of all this stuff, is it possible. Yeah. That the gdp number is misleading . It is. Weve got a lot of research on this. Our Research Shows you plus or minus 1. 3 percentage point on any given quarterly report. So thats one thing. And theyve just sort of substantiated the work that we did looking back 30 years. However, you do have to go, you have that chart just up, its three quarters in a row now. Its something worth noticing. Im not quite sure what to do with it with an economy a lot of economists still has a 2 economy. But its only if ceos spend money could we get to a 3 economy . Absolutely. Nobody thinks this inventory drawdown is going to continue. Thats anomalous in a big way. In a big way. But the other thing this data show is where the deficits exist is exactly where we need the stimulus, infrastructure. Business investment. Capital investment. The consumer is doing fine. And theyre spending on experiences rather than goods. We see this data nonstop. So the consumer is okay. Unemployment is okay. Its good in fact. But, you know, the areas that would really put the economy into overdrive, get us closer to 3 would be as many have suggested how do you see the election play in this . Its a big deal as far as i can tell. The infrastructure component is the biggest to me. Absolutely. I think both candidates have acknowledged that. Ron, to your point, this is nothing the fed can solve. Right. Its a fiscal policy issue. The other way around, this plays into the election. If its really a 1 economy, then i think the opposition has a leg up here. I dont know if 2 is enough to keep the current incumbent in power or the incumbent regime in power, but 1 if peel are feeling that by the way Consumer Confidence not too shabby today. I heard over the last two weeks yeah, you heard a lot. No matter who you get, theyre both reflationary. They both want to spend. Talking people seeing a global move towards fiscal stimulus because Central Banks i wouldnt say theyve run out of bullets because i think that misreads what other feds have at their disposal, but the impact is less but if the election is good for the market. Right, if you think no matter what these two are going to spend money on infrastructure, fiscal stimulus the problem you have is we hear a lot of commentary from some businesses about the republican candidate and the potential change in things for like protectionism. Right. Unclear about the tax regime. So i dont think theres necessarily a negative reaction as much as theyre lets hold back, lets wait and see what happens. That is prima fash negative for the fed. Banks dont have incentive to lend money because theyre not making much money on that money. I wonder if theres thought inside the fed where okay maybe the gdp number doesnt merit the hike, but if we can incent banks a little more to expand credit because theyll make a little more money. A lot of people outside the fed think that. Some people outside the fed think that. Anybody inside the fed . As far as i can tell there is nobody who thinks that changing the rate is one by itself prompt lending. There is no demand for credit either. Thats it. Also more they ought to relax the rules for lending and thats a dodd frank congressional issue. The economy is messed up and there are things that both republicans and democrats know need to be done about it like relaxing dodd frank, and its not done because of gridlock. If the fed were to raise rates, one, two, three times, normalize policy, long rates will go down. The Banking Industry is not going to make money off a fed rate hike because youre going to flatten the yield curve and slow the economy. Even more than its flat already which is really astonishingly flat as we speak today. Youre absolutely right. I think the market would interpret that as a policy mistake if the fed did raise rates. I want to defend brian, there are people out there, smart economists who think that would help the economy. Steve, they have been dead wrong for six years. Then maybe its time to try something new, ron. If they continue to be wrong for six, nine, 12, 30 years, try something new. Thats the point. Yeah, fiscal stimulus, not raising rates. All i heard e from michelles excellent coverage at both conventions was that things are better the democrats especially, things are better than they were five years ago. Heard that over and over again. You heard that from democrats, right. Keep the momentum going. Well, now we got this print. So what story are we supposed to believe . I travel all over the country as im sure we all do, things are not for everybody, but for majority of people things are better in the u. S. Economy than they were five or six years ago. So why are we still in the same fed policy as five or six years ago . Because we have 2 growth. Thats says who . And you have a deflationary world. Says that outdated thats precisely the attitude of esther george. Economy doesnt allow the fed to move the way it would otherwise if we were just Strong Enough on our own. Right. All right, folks, thank you. Katie, ron, steve, appreciate it. Good to have you here. Thank you. Well, your number of the day is 1. 23 trillion, it has nothing to do with the fed. What that rather odd number has to do with some big cap stocks you know and why were talking about it, coming up. Ppening her this is my new alert system for whenever anything happens in the market. But thinkorswim already lets you create custom alerts for all the things that are important to you. I guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. 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. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card. My name is jamir dixon and im a locafor pg e. Rk fieldman most people in the community recognize the blue trucks as pg e. My truck is something new. Its an 811 truck. When you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you dont hit them when youre digging. 811 is a free service. Im passionate about it because every time i go on the street i think about my own kids. Theyre the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then ill drive it every day of the week. Together, were building a better california. About 4. 5 in a rather pickup in momentum in terms of trading volumes overall. This on the heels of headlines coming out of the information saying that possibly private equity firms are pondering a buyout of Hewlett Packard enterprise, goes onto name names like apollo management, possibly sniffing around Hewlett Packard enterprise. That is behind the stock move shares up by nearly 6 . Well keep an eye on this, but for right now, brian, thats your story. Thats a big story, dom chu. Look forward to update on that one. Watch hpe, suddenly a stock to watch. Speaking of tech, it is a tech stock world, and we are all just living in it. Did you know that the combined market capitalization of amazon, alphabet, google, and facebook, is 1. 23 trillion . Okay, thats nice. Well, how big is that . That is nearly twice the size of the entire market cap of the s p small cap 600, and it is closing in on the value of the entire s p mid cap 400, tyler, numbers you never cared to know but im bringing them to you. Three companies are worth nearly as much as the 400 biggest mid size public corporations in the United States. You know, the mantle of being the most valuable company in the world or in the country has not been a comfortable place for those companies kind of my point. Didnt pick it out randomly. I think cisco back in 2000. Thats exactly what i was thinking. 79 a share worth what 600 billion back then. Ge, microsoft, exxon, apple just, you know are you saying its a Sports Illustrated cover curse . Im saying its a bit of a curse. Exxon, the cyclical commodities, probably the one that hugs closest to the top of that, all the time, almost when oils very high. The revenue is unbelievable. And by the way facebook has the same roughly market cap as exxon but onetenth the revenue. Not saying anything. Well, these staggering stats and they are fairly big numbers. A lot of commas and zeros in there, folks, raise a question. Is there somewhat of a bubble at least among big cap tech . Joining us owns apple, alphabet, microsoft and not facebook or amazon. So well stick to the first ones, nancy, im not saying theres a bubble but the numbers are getting pretty big. As someone who owns some of these stocks, does it worry you at all . Well, i certainly think about it, brian. I mean, i was on this show when the day that google passed apple as the largest cap stock. And apple was trading around 89 a share. We thought that was a great opportunity to step in. But were more focused on valuation and what are we paying for future unit of sales is the best way we have found to measure technology. So google is an attractive buy at these levels. Apple is attractive not only on a relative pricetosales ratio basis, but also looking at its yield relative to the market in its past. Which probably pains apple executives to think that they are now being measured as Old School Value stock but indeed thats how we look at it. So were still finding value. Are you still adding to your positions . Or just kind of holding onto what you have . Because there are different measures of optimism and confidence those two things, nancy. No, youre absolutely right. Were at a pretty full position in google. We were accumulating holdings in the 510 range. With apple opportunistically we will look for opportunities to trim back our holdings because weve had a nice run with that stock, and microsoft is actually fairly valued. Its not cheap. So were not adding to our holdings in that space. Where were picking away around the edges is cisco and ibm, some of the really down and out players. And why not amazon or facebook . Does it boil down to that pricetosales metric . It does for us, tyler, i think too, with amazon, you know, this has been a Public Company for 20 years. And the opening paragraph in the wall street journal article today was kind of breathless, three consecutive record quarters, five straight quarters with profit. It looks like they can scale with efficiency. And im not discounting the power of amazon, but i dont know i dont know what im buying except for jeff and his vision. So i want to be in a space where i can measure the valuation and measure the future discounted cash flows and the future earnings power of a company. So same way we looked at exxon when we were adding to holdings at the beginning of the year. All right, nancy, thanks. As always, good to have you with us. Nancy tengler, heartland, financial. Up next, how going nuts paid off big time for two women from portland, oregon. Their incredible recipe for success. That story straight ahead. Of , the earth needed to find a new way to keep up with the data from over 30 billion connected devices. Just 30 billion . A bold group of researchers and computer scientists in silicon valley, had a breakthrough they called. The machine. It changed computing forever. And its been part of every new technology for the last 250 years. Everything . Everything this year, Hewlett Packard enterprise will preview the machine and accelerate the future. See star trek beyond. Your but, during the day, fine when yothey can move em on. In the morning. Noon. Evening. Enough is enough its time to use fixodent plus adhesives. With just one application. They give you superior hold, even at the end of the day. So you can keep enjoying your evenings. Fixodent. Strong more like natural teeth. Fixodent and forget it. In a world held back by compromise, businesses need the agility to do one thing another. Only at t has the network, people, and partners to help companies be. Local global. Open secure. Because no one knows like at t. Portland, oregon, may be known for its quirky community, charm, but the city also has a flourishing Small Business scene including two women who went nuts and are getting paid big bucks for it. Kate rogers is live in beautiful portland with that story. Hi, kate. Reporter hey, tyler. It sure is beautiful here in portland, oregon. Its where erica welsh and keeley got their big idea one day in college after they ran out of Peanut Butter while it was pouring rain. We just used all these ingredients we had in our pantry, we used to love to make trail mix to we used raisins and coconuts and chocolate, and we started giving it out to friends and family and they were immediately hooked. Reporter realizing they were onto something, they decided to drop out of school at the university of oregon in 2011 to pursue their dream full time. Now, it looks like they made the right choice because today wild friends is sold in 12,000 Stores Across the country including whole foods and target. Theyre growing 30 year over year, and theyre on track to do 7 million in sales in 2016 with their unique flavors like vanilla and chocolate coconut. Now, more broadly oregon startups raised 283 million in 2015. That is a fiveyear high. Wild friends has raised 2 million alone. Really proving investors arent shying away from good ideas outside of San Francisco and new york city. Portland has a great Entrepreneurial Community of all types of businesses but especially food. A lot of our friends have food startups, a lot of friends work at food startups, finding employees has been easy compared to other cities because people he here have such a passion for food. Its a fun place to live and work. Reporter and because porlt land is so uniquely focused on health and fitness, its a great place for things like wild friends take off. Today weve seen runners, bikers, rowers, you name it. You can see why a business like theirs would find a great home here in portland. Kate, thank you very much. The conventions may be over, but the real battle for the white house has just begun. Youre looking live at tim kaine, running mate of Hillary Clinton holding a rally in philadelphia. Buckle up, everyone, we got 101 more days to go until the election. What the candidates have to do now to secure the presidency. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. [indistinct conversations] man looking for these . You drive buzzed, it could be one very expensive ride. First you got to make bail. Then pay me to get your car back. Your insurance premiums will go through the roof. And my legal fees just keep adding up. All told, it could end up costing you 10,000. [siren in distance] announcer buzzed, busted, and broke. Because buzzed driving is drunk driving. Its time for the your business entrepreneur of the week. John grew up in his parents grocery store, but with competition from the big chains, they could no longer compete. So now they dont. Now they focus on one thing only, soda. They sell over 750 kinds. For more watch your business sunday mornings at 7 30 on msnbc. Brought to you by American Express open. Visit what a merry, merry month it has been. This is the last trading day of the month obviously. 1 30 p. M. On wall street, heres where we stand. The dow sort of slouching off stage here in the past couple of days. Down about 0. 1 or 18 points, but the other two of the major three big indexes we follow, they are higher on the day. About 3. 5 higher this month would be the dow. Lets look at the sector heat map. There you see the s p 500 up about 0. 5 . Financials, industrials and materials are the laggards right now. Lets send it over to sue herera and see whats happening outside of wall street with a news check. Hi, sue. Lots happening, ty. Heres whats going on this hour, a federal Appeals Court has struck down north carolinas voter identification law ruling it was passed with racially discriminatory intent. The law would have required voters to show photo id when casting their ballots in the november president ial election. A minnesota judge dismissed claims from 28 wouldbe heirs to the estate of the late pop singer prince, this further solidifies the inheritance claim of the performers six surviving siblings. But the judge said the six would have to undergo genetic testing. The Washington Monument has reopened after being closed for nearly a week because of elevator problems. The monument has been closed numerous times over the past year because of that oftenmalfunctioning elevator. And harry potter and the cursed child, the hotly anticipated continuation of j. K. Rowlings franchise is slated to hit shelves sunday. Its already breaking records. Its the top preorder for both amazon and barnes noble. The first seven potter books have sold more than 400 million copies worldwide. And my kids are on the preorder list. Thats the cnbc news update this hour. Michelle, welcome back. Ill send it back to you. Thank you. Book sounds great. Cant wait. Just 101 days until the election. We know youre all excited. The conventions now in the rearview mirror, the candidates are becoming road warriors. First order of business for Hillary Clinton a rally at Temple University in philadelphia right now, then a bus trip through the rust belt, for donald trump its a trip back to colorado where hell be speaking in about half an hour to voters at the university of colorado. Lets bring in ben white, chief correspondent at politico. Lets talk about the swing states. First, are there more swing states this time around . In other words, are there more states that historically were very predictable one way you can rely on them that are no longer predictable this time around . Well, there may be. Donald trump wants you to believe that there are. Hes talked about your new yorks, californias, those are not swing states no matter how much he says they are. But some like pennsylvania which has traditionally been democratic that Hillary Clinton has to be a little worried about given her weakness among down scale white voters, the rust belt states are risky for her. Thats why shes heading there now with her running mate. Thats why she talked about in her speech last night some of the hollowed out parts of the economy. On the flip side i think Hillary Clinton could be more competitive in even places like utah where republicans really dont like donald trump, arizona will be competitive. But most of the landscape is what you would traditionally think of as the swing states, ohio, florida, colorado, virginia, some of those. I will bet you any number of beers that Hillary Clinton will not win utah. I dont think she will either, but you look at the numbers there and the extent to which mormon voters really dislike trump. You look how badly he lost in the primary. Youre probably right that it winds up, you know, safe for trump. But there are certain instances where there are states we might not be looking at now that could come into play later on. Trump wants to expand the map. Im not sure hell be able to lets go back to michelles point. I did some numbers this morning and i sent them around. So if you look theres really ten swing states, potentially, the five big ones plus another five, those ten comprise 130 electoral votes, that is bigger than the margin of president obama in 2012. Of those five were won by five or fewer Percentage Points obama over romney. In your mind is there a state we havent talked about, we know dont say utah. Im not saying utah, but if you see trump competitive in a place like wisconsin then we would be looking at a different kind of election. And, again, you have manufacturing economies there that are not thrilled with the current economy. Look at that 1. 2 gdp figure. Theres reason for Hillary Clinton to be worried in some of those states. I think wisconsin will be blue as it has been lately, but trump would like to make plays in those states. Speaking of blue, what about michigan . Michigan again i think pretty solid democratic. I think shes got pretty solid leads there. I mean, when you run into the numbers in places like detroit that run up big for democrats, same thing for philadelphia and pennsylvania, its tantalizing for republicans i guess the underlying premise so that was my underlying question. When i think of heavily unionized areas that are affected by trade, an issue that has galvanized trump really, i think of detroit. And i think thats why i think michigan could be in play. It could be, but the Auto Industrys been doing pretty well. I know brian can speak to this. Numbers there are not as bad in some other industries that have been hurt by trade. And as you saw the democrats in philadelphia, theyve now become a very hard core antifree trade party too. What about a state like arizona which has traditionally been a republican, a red state, this time is it in play . It is in play. And its in play because of the latino vote and the fact donald trump has historically bad ratings among latino voters. Its one trending away from republicans. Thats just a matter of demographic fact in terms of the makeup of the electorate. Traditionally red state, he could win it. If youre running up 80 of latino vote in place like arizona, you have a shot to win. Lets go back to michigan. As you may know, viewers may know, i own a home in wisconsin, i spend a lot of time in wisconsin, much more time than i would care to on the roads, unfortunately saw a lot of trump stickers, a lot of trump stickers and talked to a lot of people. And in the Upper Peninsula of michigan, grant it thats very far north, you talk to the Union Workers as i have en masse, and what they say is the bosses are going to try to get us to vote for clinton. The union itself will say we support hillary. Some of the workers themselves will say were going to vote for trump because, youre right, the Auto Industry is doing better, however they havent gotten many raises. Thats true. Pay has gone down. Raise is part of it. Paying more for health care as a results of these are all real problems for her throughout the industrial midwest. And thats exactly why theyre there now and why theyre going there. And level of job security that there was. And just recently said theyre going to move some car production to other countries like mexico. Now, theyre going to keep production for trucks but more cars being made in mexico. Talk about being canada, wherever that is. The Upper Peninsula and talking to trump voters up there, thats true, but there arent that many people who live up there. Im one of them. Drive for an hour and not see anybody. Its the same deal every time with republicans in places like michigan and pennsylvania. They feel like they can win because the crowds are big at their rallies and then numbers come in from detroit and philadelphia. Can trump turn that around . Maybe. But its a tough sell. Got to go. Ben, thanks. Ben white with politico. Staying with politics, theres been a new cyber attack on the Democratic Party. Whats with the democrats and emails . Eamon javers is live in washington with the details. Hi, tyler, this one is on the Democratic Congressional campaign committee, thats the arm of the Democratic Party largely that focuses on elections to the house of representatives. They raise money, they do strategy, all that kind of thing. They admitted this morning that they have also been hacked by a similar actor to the one that hacked the d in, c itself. Heres the statement from the d triple c known here in washington, they say the investigation is ongoing based on the information we have to date. Weve been advised by investigators that this is similar to other recent incidents including the dnc breach. Now, ive been talking to some folks at fire eye, the Cyber Security company whove been looking at this. Heres what they say has happened here. They say ultimately the hackers were able to change one of the domains to make it appear as if donors to the dccc were going to the act blue domain that the democrats have registered to y raise money. They redirected to plural domain. They did not steal money. This does not seem to be a criminal element. Seems to be one of the pieces of evidence here that points them to a nation state being behind it most likely russian intelligence. And they say it was active from at least june 19th to june 27th. Fireeye says this was the russian Hacking Group known as the czar team the most likely suspect. And the big unknown behind all of this is what could these hackers if determined really do on election day itself in terms of cyber disruptions inside the United States designed to effect the elections, guys. Eamon javers, thank you very much. You bet. All right. Dominic chu, breaking news on hershey. So what we have now is a settlement between the Attorney Generals Office in the state of pennsylvania with the Hershey Trust company and the Milton Hershey school board of directors there. In this particular settlement as alluded to in prior reports over the last couple of weeks, the Attorney Generals Office agrees now with the trust and the board of the school to at least have three members of the current board resign by the end of this year. Those include James Meade Velma Redman also looking at what else is happening here, those particular two are going to retire at the end of 2017. However, robert cavanaugh, joseph and james nevels must resign at the end of this year. So five will resign between this year and next year opening the door to new governance. This all coming, guys, because there were some allegations of perhaps excessive compensation for Board Members also possible conflicts of interest. This is a big deal especially when it comes to a possible mondelez bid for hershey company. More big news there. Busy friday, dom, thank you. Remember this, the time 1988. The movie working girl with melanie griffith, the setting, wall street. The story line, women trying to make it in the world of finance. Fast forward nearly three decades, a new movie hitting theaters today, the story line, not all that different. Well speak to the producers in one of the most powerful women in finance who invested in the movie. Its all about equity, coming up. I am not going to sit here and tell you that i only do what i do to take care of other people. Because it is okay to do it for ourselves. For how it makes us feel. Secure, yeah. Powerful, absolutely. I am so glad that its finally acceptable for women to talk about ambition openly, but dont let money be a dirty word. We can like that too. That was a scene from the eagerly anticipated movie equity, which hits theaters today. Its a corporate thriller set on wall street about written, produced, acted, invested in by women. Lets meet producers and actors alicia ryner and megan thomas hi. Have either of you been intimately involved intimately maybe we had some boyfriends. Its all about the boyfriends. Have you been interested in wall street investing a lot, or not . You know, i had a couple friends who either straight from college went to wall street and left or still are on wall street. And that was part of the inspiration for the idea actually. Did you do a lot of your own research . We did so much research. Hang out on trading floors . What did you see . Its very male dominated. Oh, yeah . Yeah. Completely. I dont know if you read the article in the New York Times the other week about bro talk and its so true. Its very similar to our industry in that way. Very masculine dominated. I was deeply fascinated by social media and how that effects the markets. You guys had producer credits here. You were involved in taking this concept, this project on the road. You did like a wall street roadshow. Yeah, we did a road show with our investors. One of our executive producers, candy straight, used to work on wall street. And she threw all these parties where we came in with a sizzle reel and we actually showed some clips from working girl and said this is what our movie isnt. And people like kathrine keating who is here today stepped up and said im investing in these women. And i think the reason they really invested wasnt the trailer, but it was we showed a power point presentation and we showed were not two ditsy actresses, were Business People as well. I think it was important for them to see we cared about making their money back. Yeah. What do you think about the Glass Ceiling that was just shattered in philadelphia . Its so amazing. Were over the moon. And one of our dreams from the beginning when we were First Talking about this was, oh, my god, what if we could make this movie, get it distributed and it would be right when the first woman is running. And its happening. Its beyond a dream come true. Give me a quick sort of plot synopsis here. Whats the nub of the story . Very nice review in the times this morning. Congratulations to you both. Thank you. Thank you. Its really about a woman on wall street played by anna gunn. Who is brilliant. Who is brilliant. Taking a social media public, a la facebook, and struggles with a rumor comes out that may compromise the deal. So theres an interesting sort of thread of movies about wall street, wolf of wall street a couple years ago, billions the televisions show, the one out last year, the Michael Lewis book im drawing a blank on. Big short. How is this different from those . Well, theres women in it. I think actually, and thats a big point. With wall street its greed is good. We do have something of a female perspective, which is about worth and about money and a much more complex and realistic view of wall street that we really havent seen before. And i think one thing i really want to point out is men love this movie just as much as women. I think its going to be fascinating. Do you play a prosecutor . I do. You play a prosecutor busting in or investigating. I wear the white hat as they say. All right. Good. We look forward to seeing it. Congratulations. Thank you. Thank you. Thanks very much. Our pleasure. Michelle. We have one of the investors in the movie, tyler, kathrine keating, one of the films lead investor and also ceo of the common fund recently ranked as one of the most powerful women in banking and finance. Good to have you here. Good to be here. Thank you. Why did you invest in this film . Two reasons. Head and heart. So head im an investor by career so i would approach this as we would any other investment, we make investments every day at common fund, the first is you want to invest in good management. So i met sarah and aalicia, great management team, backed up by terrific writer, trirverrifi stars, the first was management. The second was whats the Business Case . Why should this be successful . And i thought about it and i thought there have been movies about wall street, a few of them, wolf of wall street, theyve always been successful. Theres movies about women who work, the devil wears prada, legally blond, theyre successful. Theres never been a movie about both. So i thought it ought to be successful. I read the story, it was a great story, that was my head. But my heart was i wanted to invest in these women that were taking on diversity in two industries that could be more diverse, film and finance. Your money, personal money or the common fund . My personal money. You want to tell us how much . No. But i will tell you it has proven to be a good investment. Did you watch clips or read absolutely. Say, guys, this is not how it goes. Absolutely. We all contributed not just our financial backing but our experience. And i gave them tips and hints all along the way. So when i think about stocks, you know, different Revenue Streams and assign different multiples to different Revenue Streams because youre not certain some Revenue Streams are worth more in terms of multiple. When i think about a movie investment, i want to say one. You can have a great writer, great script, Everything Else and it can fail. Thats right. Movie industry is in a sense like venture capital. Very few big successes and a lot that dont make it commercially along the way. Alyssa brought it up, i was going to bring it up, the clip that i saw, this smells and sounds to me like a female positive version of greed is good. Its okay for a woman to like money, to want money, to make money. Is that the message you were hoping for . Me, i like im right there with you if thats what it is. If i wanted a great movie about women, i wanted women and girls to be able to see that you can have careers on wall street in finance. And of course money is a part of that. So i think its a movie about being comfortable with ambition and hard work and complexity. And i think those are all great messages. In 1965, i think it was 3 of mba students were female. Thats obviously changed dramatically. Youve been on wall street for a while. It has. Weve seen many positive changes. Youre going to change one more thing, job one would be what . The one more thing is actually something that i think this movie can help with, which is the pipeline of more women coming into finance. Yes, there are a lot more women in mba school today, but still fewer youre hitting an issue close to my heart. My wife left a 21year career his wife left, he didnt. Babies. We had another child. Babies. And when you look at child care options and the cost and the hassle and were in a position where we can afford more than most, i think, but she ended up we decided to quit. And if we look at child care, why doesnt not just wall street, why doesnt industry do a better job helping working moms, or working dads, with the child care side of things . Thats the number one reason i hear from my friends who its either them or their wives have left work. No, i agree with you. I think its a challenge for working people across industries. Im sure its a challenge in your own. So i think its something the country has to work on. But we see progress all the time. And what i really see today is a Younger Generation of both moms and dads that are committed to being great parents. And i think thats whats going to help lead us to the future. We wish the movie great success. Thank you. So do we. Thanks for being here. Ceo of the common fund. What happened to our lights here . I dont know. I like it. Its like theater. Speaking of wall street, ahead on monday, wilfred frost has an exclusive interview with j. P. Morgan chairman and ceo jammie dimon. Still to come, is there a doctor in the house . Not literally, but we need one for the stock market because the biotech stock down 70 . It is your disaster du jour. Well tell you who and why coming up. Americans are buying more and more of everything online. And so many businesses rely on the United States Postal Service to get it there. Because when you ship with us, your business becomes our business. Thats why we make more ecommerce deliveries to homes than anyone else in the country. The United States Postal Service. Priority you eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Yeah, time now for your disaster du jour. This is one of the biggest ones we have seen in a long time. Look at shares of seres therapeutics. They are tanking. Its not hyperbole, stock is down 70 . Meg tirrell joining us now. What happened . So it was a big disappointment and a big surprising disappointment. So theyre working in this area known as the microboim essentially trying to fix an imbalance in bacteria in our guts that causes an infection. Essentially delivering healthy bacteria to clear these infections. In phase 2 trial this did not pan out. No significant benefits seen. Because wed seen positive earlier results there was a lot of expectation this was going to be positive. I think even put their expectation of it working at 80 . So thats when this didnt pan out today, the stock is sinking. Quickly, do you think its more of a reflection of the company and their trial or the future of microbiome medicine . Thats the argument going on right now. Essentially people are saying theyve got to figure out wlast going on with this trial a lot of people have confidence this technology will still work. Okay. Another scary story, if we needed more now, zika, florida, whats the latest . Thats right. Weve got how many grown zika here in the United States now. The cdc and Florida Department of health confirming four cases of zika seen in florida all signs point to the fact these folks were infected by mosquitos here in the United States. These are the first cases of local mosquito born transmission in u. S. States. Of course puerto rico has been dealing with this. So we have this in u. S. Territories, but now this is in a very small coupleblock radius just north of miami theyve seen these four cases. So to be clear, and if youre watching and see the banner says local u. S. Zika, what were saying is there have been people gotten or had zika here in the United States, but primarily we believe theyd brought it in from somewhere else. Weve had a lot of cases of folk who is have traveled from zika effected areas and come to the United States. But we havent seen those people then get bitten by a mosquito here and somebody else who hasnt traveled get infected from that mosquito bite. And that is what we are now seeing. So the warnings from the cdc are people in those areas, this is in miami right now, should protect themselves with bug spray. Meg tirrell, thank you. Thanks. Oil down nearly 17 over the past month. If oil is declining, does that mean that a down move for your money and the overall market is far behind . Thats coming up. Stick around. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Good afternoon everybody. Im tyler mathisen. Two hours left in the trading week and the month, and here is what is on tap. A tough time in the oil patch. Crude mauled by the bears lately. Exxon badly missing profit estimates. So is that stock still worth owning . The battle for your living room, is apples heavy handed tv strategy in dealing with the tv distributors backfiring on it . Well debate that. And brian is ready to rage against the airlines over the debasement of frequent flier miles. Its all ahead the second hour of power lunch starts right now. Yes, it does. Welcome to the second hour of power lunch. Im michelle carusocabrera. Heres whats happening on wall street, shares of h. P. Enterprises taking off on report of group of equity firms including kkr, apollo are amauling a buyout. Stocks mixed in the last trading day of the month. S p 500 up more than 3 in july, thats the fifth consecutive month of gains. The dow up 3 this month. On track for its sixth straight month of gains. The nasdaq is on track for a 52week high and it is up more than 6 this month. Alphabet, used to know as google, priceline, amazon, regeneron, tesla. Lets turn to oil, its not a big move today, but its been a very difficult few weeks for oil and oil stock investors. Crude oil down 17 over just the past month and with that many oil stocks going in the same direction. Look at these moves. Folks, these are just july moves. Hess down 13 , exxon down 6 , marathon down 12 , chevron down 4 , conoco phillips, those are some of the big boys. Some of the smaller players getting hit, but Oasis Petroleum down 25 . If youre not invested in any of these companies, you probably think you dont care, but you should. Heres why. Look at this chart of the s p 500 against the xle energy etf, and ill move, over the past six months. You can see, yeah, its a little rough, but they largely track. Peaks and valleys the same. Heres the worry, and im going to sort of dive in here and break the cnbc rules of getting too close to the wall. This is what you need to worry about. The white line here at the end, this is oil. The s p kind of flattening out. The risk seems to be that if they do begin to correlate strongly again, as they have for much of the last few years, and Oil Continues to turn down, could we see the s p 500, your money, your 401 k , your pension turn down again also because of oil . Its a good question, tyler. You probably have some answers. Im going to ask for some right now for more on the crude oil slide and where we may go from here, lets bring in john la forge, head of real asset strategy with wells fargo investment institute. John, welcome. Good to have you with us. Hi, tyler. Are we closer to the end of this oil crisis . Probably closer to the end. Theres no question oil is stuck in long term bear market. When it fell from 100 down to 26, bounced to 52 and now its kind of languishing around, thats very much to be expected when you get these oversupplies of oil. I fully expect maybe a test of 38, but by the end of the year probably another retest to 50. What drives that . What drives it down . And what drives it back up . Well, first and foremost a little odd to be talking about this, but theres this overwhelming influence that covers all of commodities. And commodities tend to run in these long price cycles where they tend to go up every year. Thats a bull market. Or down over multiple years. The down over multiple years, the bear markets, the bear super cycles for commodities last on average 20 years. 2016 is year number five were in of potentially a 20year bear market. What you get at this point in the cycle is a lot of sideways price action where oils trying to find whats the right level. That levels probably 30 to 60, and surprisingly you might be looking at 30 to 60 for the next decade. Its just going to keep bouncing back and forth. You anticipated my next question, which was, you know, it wasnt that long ago that we were at 140 about . I forget what it was. Yeah. What the peak was. You say were in a 20year super cycle bear market here. Yeah. Will it ever get back to the 140 level any time soon . Not any time soon. What history says is, yes, you will go over 140. But history also says youre probablyi inlooking at at least decade before you see that again. You have to work off the excesses of the bull market. And were still working that off. You can see it. What bull markets are a part of is price goes up so far so fast, invites all kinds of competition, all kinds of substitution, and then what do you have . You have oil in north dakota as an example. Youre the second highest producing state right now. Thats what happens towards the end of a bull market. It brings in all this competition, all substitution, but it takes on average about 20 years to work off all that excess that was developed during the bull. You know, we started to see some Companies Really struggle, some went out of business in the last when oil went down into the 20s. Do you see this second sucker punch to the price of oil resulting in more distress, more bankruptcies, more defaults . Yeah, great question. History says yes. And if you look back at the only other time that the u. S. Has been involved in a truly oversupplied situation with oil, that was around 1985, 1986. The price of oil went from 30 to roughly 10. When that happened your bankruptcies went up tremendously, of the companies that were public at that time it got up to 27 of the public enp companies, the guys that pull oil out of the ground, went bankrupt. Were now at about 21 . A lot of them you dont see. A lot of the viewers dont see but there have been a lot of Small Companies that have gone under. So were close to the peak in bankruptcies. But what happened after 1986 all the way into the mid 90s is you continue to see bankruptcies. Youre probably going to have multiple years of more bankruptcies still. All right. On that cherry note, john, we leave it. Thanks. Thanks, tyler. So predictions about the price of oil talking about the tumbling of the price, the 6 drop in exxon this month as a result. What should investors be doing with oil stocks right now . Lets bring in senior oil and gas analyst with Wolf Research and sam oil analyst with cowen and company. Lets start with exxon because you dont agree, paul say underperform, sam, you think its outperform. Paul, why the lower rating . What would you buy instead . We prefer chevron. Chevron also reported pretty weak results today. But we think from here the outlook is more positive for chevron in terms of volume, in terms of leverage to oil prices relative to less refining, which exxon is going to start suffering from. And we also think that chevrons asset base is fundamentally deeper given its actually smaller in size in terms of production than exxon. So weve got some significant issues. Exxon, i think, has outperformed based on its position indexes and as i said some fairly robust defensive earnings that we saw as oil prices fell, gas prices lagged and refining held up. But from here we think chevron is clearly a better play. Sam, what do you think . You have them both rated outperform. I agree with paul, i prefer chevron, but say this in defense of exxon. I think, you know, part of the performance yeartodate has been this broader push towards yield by investors. But also theres a sense that, you know, exxon is going to be using this period of weakness to strengthen themselves for the long term. I think a lot of investors expect some kind of an acquisition, exxon made a small one earlier this month, small for their size about 2. 5 billion with gas field in pawu w pau new guinea. All the while, the yield appears sustainable. That was my question. Lets talk about yield. Because i think youre right. Absolutely, sam, a lot of people are into these stocks for the yield play. I remember talking for days about chevron pushing up against 6 . Boy, that would have been great. But weve been talking now for a long time about how a lot of these Major Oil Companies are bringing in less revenue and less profitability than what theyre actually paying out in dividends. And the dividends could be at risk. Is there under what scenario, paul, do we have to worry about the dividend from exxon and or chevron . Less than 50 a barrel. Theyre not even close to covering their dividend in this quarterly result. I think theyre both saying approximately that they need 50plus to get back to what they call, you know, dividend sustainability cash balance, which is that the cash flows cover their cap x and dividend. Today you saw barely half of the dividend was covered and both companies have rapidly rising debt. Its very worrying. Theres a scenario where demand fails. If we get weak demand, we could easily be below 50 for several years. Were contingent on demand exceeding a Million Barrels a day of growth. Sam, you still same concerns about whether or not that dividend is maintainable for both companies . I think demand is the key point. And the scenario where oil is enough for so long that the Balance Sheet strain becomes untenable, the demand environment probably reflects a scenario broadly thats really bad for everybody, not just exxon and chevron. So its connected to Everything Else. I mean, outperform ratings are just that. I think a lot of worse things have to happen before these dividends get cut or at least even communicated. Got it. I know both companies are very committed to them, but then time goes on and Oil Prices Stay low. There could be issues. Guys, thanks so much. Paul sankey, sam margolin. Thanks so much. Heres whats on the menu for the rest of this hour of power, housing having a big impact on todays awful gdp data. What that could signal. And outrage over airline miles. When did frequent flier miles become so worthless . Brian has a lot to say about this one. And the battle for the living room, is apples tv strategy backfiring . That and more ahead on power lunch. Youve wished upon it all year, and now its finally here. The mercedesbenz summer event is back, with incredible offers on the mercedesbenz youve always longed for. But hurry, these shooting stars fly by fast. Lease the gle350 for 579 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Welcome back to power lunch. Rick santelli here live on the floor of the cme group. And about three hours from the euro stress test. And thats something 5 00 eastern, 4 00 central you want to be paying attention to those headlines. Lets look at a oneweek of tens. I know its supposed to be 10. 4 but its 103. But heres some stories, these markets really, really found some low yields. Lets look at a monthtodate of italian paper, spanish paper, french paper, gilts in the uk. See how rates are moving down . Also notice the bank in italy, j. P. Morgan and others are putting a plan together it seems like all this is happening fast and furious. Markets will probably be pretty aggressive sunday night when they digest it, but right now that seems to be some pretty big news that has moved a lot of markets this week. Tyler, back to you. Rick, thank you. To the American Economy and housing playing a big part in this mornings miserable gdp report. Diana olick here to explain. Hi, di. Hi, ty. A drop in Housing Starts in q2 especially multifamily contributed to that weak gdp number. We saw a boom in new construction of luxury rental buildings like this one, and that peaked last year. Okay, so, now we have luxury oversupply. Construction is dropping, but we still have high demand for affordable rentals, which Developers Say they cant afford to build and still profit. High rents are one of the main reasons Home Ownership continues to fall. The u. S. Home ownership rate in q2 matched the lowest level ever recorded back in 1965, which was when the census first started tracking Home Ownership. The average cost of a house back then was around 14,000. Today its about 15 times that, but the Home Ownership rate is the same, 62. 9 in q2 of this year, just as it was in 1965. And thats down from 69. 2 the record high in 2004. Of course a lot has changed in the last decade. Not just anyone can get a mortgage. And the youngest home buying cohort, that is the millennials are delaying marriage and parenthood and those are the main drivers of Home Ownership. One more note of mathematical note, formation is growing which is on the rental side makes the owner smaller hence lower ownership rate. Diana, am i forgetting something or remembering something not precisely correctly, and that was in some other data within the past couple of weeks, or some commentary there was some suggestion that was millennials or the firsttime home buyers were coming back into the market a little bit more . In a very little way, and thats into the Single Family home market. The trouble is theyre not finding enough Affordable Homes because the builders dont build on the entry level, for the most part. And investors scooped up all those cheap homes from the foreclosure crisis. So theyre having trouble getting back in. There was a slight bump up in the share, but that may have been because the higher end homes were slowing down. All right. Diana, thank you very much. Diana olick. Fireworks lit up the sky over rio de janeiros maracana stadium last night, part of rehearsal for the olympics opening ceremony, which is, can you believe it, one week from today . Details of the ceremony still secret, but one volunteer said preparations are going well. You can catch all of the olympic action on the nbc family of networks starting next week. All right. On deck, are airlines quietly pulling one over on us and making frequent flier miles nearly worthless . Put your seat back in the upright position, fly away with us because were going to be debating that just ahead. And welcome back to power lunch. Im brian sullivan. Thanks for joining us on this friday. Lets talk airlines. From a few different perspectives, shall we . First, shares of Spirit Airlines doing pretty well right now. Stock up about 1. 5 after earnings per share beat and said its planes were more than 86 full. In the meantime, michelle, good story for you, jetblue says its first regularly scheduled flights to cuba will begin next month with fares beginning at 99 each way. Jetblue will initially operate three flights a week before going to Daily Service on october 1st. Youve been there a number of times. Its going to be so much cheaper. Thats a god send going through cancun or montreal . No, you could fly direct but always had a middleman. So there have been dozens of flights every day, but theyre always through a private company, very complicated. This is going to be a game changer, i think. Very interesting. Did you go through miami . Ive always flown from miami to havana direct every time. Whose plane do you get on . Its a charter it could be. Occasionally its delta, occasionally its Sun Country Airlines minneapolis sun country, minneapolis based, say it proud. Now to the other angle. Have frequent flier miles quietly become worth a whole lot less than they used to be . Everywhere you go you see the ads for credit cards, earn 30,000 miles by signing up today. Sounds like a lot, 30,000 miles. I think it used to be, but now Many Airlines are charging more than that just to go oneway coach. I was just looking at some examples, right now, not picking one airline, august 11th flig 0 flight, 12 05 p. M. , Delta Atlanta to seattle 32,500 miles each way, coach, american wants 30,000 miles for a level two any time coach fare whatever that means. United wants a 50,000 mile coach round trip from newark to l. A. X. And thats the starting point. You can get up to 100,000, 200,000 miles. Lets get into this, ticks a lot of people off including this guy. Youre ticked off. It was my segment because ive been trying to book a flight and i got so ticked off about it i said lets do a segment on it. Phil lebeau joining us now as well. Seth, is it literally, to quote the temptations, just my imagination, or have miles become worthless . Well, not worthless, but theyve become worth a whole lot less. This is just a predictable outcome of having an industry less competitive than it once was. Still a competitive industry, but whereas, you know, at one point you had a Dozen Airlines sometimes chasing the same business in this country. Highly fragmented industry. It was great for consumers. Drove the airlines of course into bankruptcy, then they did all the things weve known over the past bunch of years of course consolidated, charged extra fees and part of it is they dont have to bribe us, you know, quite as much to fly them anymore. You know, delta doesnt have to bribe us to fly delta instead of northwest because delta and northwest are the same airline. Michelle made an excellent point in our sort of morning meeting about how they can print their own money, so to speak, seth. Are they luring us in with promises of more miles but then jacking up the mileage requirements everywhere you go so that the miles they so gleefully give you with every credit card you sign up for actually dont get you anywhere . Well, to a point, yes. But the same thing, brian, is actually kind of the good news for consumers that to appoint this polices itself. And ill tell you why, those programs, the loyalty programs, began really as a cost center 35 years ago american started as a way to keep people on the airline. They turned into massive Profit Centers in their own right. And the reason for that is that all those miles you get from the credit cards or from staying in a hotel, sending flowers, whatever, those companies are buying those miles. And im talking billions of dollars worth of miles to give to you. So airlines although they dont need to be as generous as they once were to get you to fly them because the industrys less competitive, they cant have you think the programs worthless. If you cut up that credit card, or if you stop caring about accumulating miles in other ways, thats millions of revenue at risk. So it kind of takes care of itself to a point. Phil, to the extent that i follow this, my sense is that you now get miles less based on distance flown and more based on money spent, am i right about that . Yes. Generally speaking almost all the airlines have transitioned to that model. Uhhuh. And what does that mean . Are you suggesting thats the bad model . No, im not suggesting anything. Oh, by the way, these miles to me are not an entitlement. I mean, you know, i happen to like them. But theyre not an entitlement to me. Look, this is but weve come to think of them as if they were. Right. And thats absurd. I mean, i hear this all the time from friends and neighbors saying i wanted to go somewhere and its too many miles. Well, you werent guaranteed that you were going to have a seat waiting for you. The airlines are in the business to make money. And that means they dont want to give away too many seats for frequent fliers. Thats just the reality of it. Theyre in the money, in the business to sell the seat, not to give it away. I want to be clear, phil, im not suggesting that they should give them away. And im certainly not suggesting these are entitlements. All im trying to do with this segment, and maybe seth can jump in here, is just sort of, hey, put our audience on notice that maybe some of these, quote, great offers theyre trying to be given, arent as great as they seem. The currency has been devalued. Exactly. As usual dare say it, mathisen. But most people do a lot of flying, and i fly a lot, when i talk to other travelers, business travelers, almost all of them say the same thing, which is i understand that i am not going to have as many points or as many miles racked up and to be able to use. It costs more. But get back to that point, seth, you were making earlier. And that is about the concentration of the airline business. I read something last week i think 80 of the Airline Seats in this country are controlled by four airlines. That has a lot to do with this. Well, it does. All that it has become is more like other industries. The old system was unsustainable yet it was great for consumers when you could fly on below cost Airline Tickets and get upgraded all the time and those kinds of things. But it drove most of the airlines in this country into bankruptcy. So there had to be some kind of equilibrium where they could pay their bills, you know, pay their employees and all the other things they need to do and return to shareholders but still have a decent proposition for the consumer. And on balance, yeah, you got four Major Airlines chasing 80 of business just like most of us have three or four, you know, cable or satellite tv providers to choose from. Three or four supermarkets. Its just more like other industries now. Its not hypercompetitive. Heres the final thing, dont try to get a free ticket. Just use for upgrades. So buy an Economy Class ticket and then you use some and then you can fly business class. Im not worried about that thanks, guys. Im saying our audience is getting hoodwinked. Heres point ifs you spend two grand well go after the Hotel Industry next. Good to see you, suttonfeld, thank you. No, you have to spend money early on in a credit card. Im not complaining, just call some attention to the issue. Theyll be writing you. My card just got cut off. Your card just got canceled, man. Clinton, the rise of trump and the president ial race, author j. D. Vance out with a new book about the plight of the working class, his take on why so Many Americans are so angry and they feel left behind. Plus, oil battered this week yet again. But today pulling itself out ever so slightly of bear market territory, meaning a 20 drop from recent high. Prices getting ready to close. Were live at the nymex in 1 56. Mobility is very important to me. Thats why i use e trade mobile. Its on all my mobile devices, so it suits my mobile lifestyle. And it keeps my investments fully mobile. Even when im on the move. Sign up at etrade. Com and get up to six hundred dollars. 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 saving 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 liberty stands with you™. Liberty mutual insurance. Welcome back everybody to power lunch. Im tyler mathisen. Heres whats happening at this hour. Dow lower, but the s p 500 record intraday high, folks. Nasdaq poised for a 52week closing high. What a month its been. Health officials in florida reporting the first cases of the zika virus being locally transmitted in the u. S. And the oil market closing for the day. Jackie deangelis at nymex with our closing trades. Jackie. Hey, good afternoon to you, tyler. A lot of people wondering what was behind the reversal today when we started with steep losses this morning after the Energy Majors reported. It really came down to the dollar index. We saw a slide down in the dollar index of more than 1 . Today that supported oil prices. And got us a little bit back higher over that hump. But were still in territory right now if the dollar starts to stabilize a little bit more where we could see prices go down from here if we take out those key technical levels, you are talking about the 30s. Back to you. Jackie, thank you very much. Lets go to sue herera now for your cnbc news headlines. Hi, ty. Heres whats happening at this hour. Six state of michigan employees have been charged with misconduct and other crimes related to the flint water crisis. Michigans attorney general making the announcement. Many things went tragically wrong in flint. Some people failed to act. Others minimized harm done and arrogantly chose to ignore data. Some intentionally altered figures and covered up and covered up Significant Health risks. Hundreds of people protested against the u. S. On thursday near a joint turkishu. S. Air base in southern turkey. The group referred to the americans as villains and implied they were involved in the failed coup attempt in turkey two weeks ago. The italian navy releasing video showing some of the 683 migrants being rescued off the coast of libya this morning. The International Organization for migration says more than 3,000 people have died trying to cross the mediterranean this year. That is a 60 increase from 2015. And dozens of catholic worshippers paying tribute to the elderly priest killed in a terrorist attack in his own church last week. Many locals were very eager to pray in his memory. The priest will be buried on tuesday. That is the news update this hour. Youre uptodate. Michelle, back to you. Thanks very much, sue. A new memoir about growing up poor in the rust belt getting a lot of attention in political circles right now partly because its a cultural commentary that may shed new light on a key portion of Donald Trumps voter base. Here to discuss his book, hi hillbillyilogy. Thanks, michelle. J. D. , thank you for joining us today. New york times columnist who is a big fan of your book essentially wrote this week in a column the disappointment and disenchantment voters feel in this country goes far beyond what gdp can explain. Would you agree . Yeah. I absolutely agree. So if you think about these problems on the one hand you have an industrial rust belt economy thats really e really struggled in a lot of fundamental ways. On the other hand what you have is an economy excuse me, a culture and social crisis thats come along with that economy. So you have folks who are increasingly likely to die of heroin, folks who are dying of other natural causes, and when you combine these two things together, i think what you have is a group of people who are very frustrated, who are very angry and who are thinking very seriously about the future and what that means in a lot of different ways. J. D. , youre a hillbilly, right . I am. Absolutely. You know, its the sort of term that folks i think dont appreciate outsiders using, but my grandmother was very, very fond of the term. She said were hill people. Were hillbillies, dont let anyone else call you that, but you can call yourself that. What is a hillbilly . Well, i think its primarily somebody who grew up primarily in the Appalachian Region of the country. Not necessarily within appalachian but maybe you have some connection to the area. What people dont realize is that, one, its huge, it stretches from southern alabama to northern new york. But it also includes, i think, theres a large appalachian despore ra so theres a large number of folks from Eastern Kentucky, eastern tennessee into the regional economies of michigan, pennsylvania and so forth. And so theres a lot of real, i think, cultural similarity between the working class whites who grew up in these areas and whether they call themselves hillbillies like i do, i think they share a lot of similarities with the people that i think of as my so what connects those hillbillies from appalachia with a billionaire who lives in a gilded palace in manhattan. A couple things, one, he fundamentally speaks to the concern, i mentioned these communities are really struggling and really hurting. And for 20 or 30 years theyve heard not a whole lot from political elites, not a whether or not he will lot from people who have power about how to actually address their concerns. So at the end of the day whats happened is that donald trump is really taken advantage of the fact that the rest of the elites havent talked about these problems a lot. The other thing is that, you know, hes really just relatable and i think a fundamental way that people from back home will recognize. Hes not afraid of offending people. Hes not afraid of talking about problems in a very up front way. And frankly thats how people talk about problems around the Kitchen Table. Thats my thats why they relate to him. Thats what i was going to say. Ive heard lots of people including you say he speaks to. But the other thing and theres an important distinction here, you may not have the twang of the hillbilly, but he talks like people talk, right . Absolutely. And if you contrast it to president obama and secretary clinton, theyre so clean, theyre so neutral. They never say anything that would offend anybody. Donald trump just talks like a more relatable person. And ipg we miss something if we dont recognize that part of his appeal. Its certainly something that attracts people from back home. J. D. , youve done a lot of interesting things including writing this book, you were in the marine corps, worked as a lawyer, now work as a venture capitalist for peter theil in silicon valley, outspoken supporter of donald trump, headliner at the rnc last week. Youre not a supporter of donald trump although you are politically conservative in many ways. Is there a water cooler conversation going on between you and your boss . And whats it like . Well, no, not really. I think at the outset its important to note that while its natural to draw political inferences i think from the book and from my experiences, it is primarily a cultural and a personal story. And so i want people to recognize that. You know, ive been there for a few months, its a great teemamf people and were passionate about it. Ive got to be honest we dont talk about the 2016 campaign much. No politics at the office. J. J. D. Elegy suggests youre sad. Proud but sad . Absolutely am. Im sad because i think people are disenchanted. When you grow up in an environment like this, what happens is you dont think your choices matter. And so youre sad about your future, you assume you cant control it. And i think we have to recognize that. And we have to change that as people on the ground in these communities. Can i ask where youre from . Wheres your family from originally . I grew up in middletown, ohio. Thats southwestern ohio. But spend many, many months each year in Eastern Kentucky because i lived with my grandparents who grew up in Eastern Kentucky. My dad born Kitchen Table in chatham hill, virginia. Yeah, i know where that is. Southwest virginia, right . Yeah. I get it, brother. I get it. Thank you. I appreciate it. Thanks for being with us. The reviews have been fabulous. Got to read that. Apple trying to make a big play for your living room, but its heavy 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 looked at my options. Then 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. 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Remember, all Medicare Supplement insurance plans help cover what medicare doesnt pay. And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i k kw how important that is. Welcome back to power lunch. Im tyler mathisen. Lets talk about the battle for your living room, the big screen in your living room. For years apple has been making a push with its apple tv product. But so far the results have been mixed. Not a blockbuster, pretty good, but not huge. And as the wall street journal reports, the apple way may be to blame. Lets bring in our friend ed lee, managing editor at recode. Ed, welcome. Youve read the wall street journal. The basic thrust here is that in trying to cut deals with Cable Television providers, with Companies Like disney or cbs that apple has overplayed its hand. You think thats a fair shot . Yeah, absolutely. You know, i think the article did a good job of painting a picture of just apples approach and of course the response from the tv guys. The thing though this isnt really new. Apple has been taking this tact for years now. Started back with steve jobs when he was running the company. What he wanted to do really was to unbundle television, which he just wanted to sell, you know, tv channels by themselves a la carte, the way you do with music where you buy a track instead of an album. Of course that went nowhere. But apple has some success at going in and facing off against industries, the prime players of whom will say you just dont understand how we do business. Im sure thats what the music guys said. Right. Thats exactly what the music guys said, but the difference here is that the music guys they were under a lot of pressure from online piracy. So people were just ripping off music left and right thanks to, you know, things like nap stste and a bunch of other file sharing services. And power of distribution. Right. It was much harder. So that didnt really happen. The tv guys had the ability to push back and say we dont want to sell you like that. Yeah, i was going to bring up thats the one piece of leverage that steve jobs had, right . If everybody could get the music for free anyway, the Music Industry had to cave. But you cant just do that with television, or at least not yet. Are they ever going to solve this . Are we ever going to see some kind of apple tv product . Can they get over this hurdle . You know, they missed a big window, which is, you know, before there were a lot of guys looking at trying to Sell Television online via internet connection. And interestingly enough, dish, the satellite company, they were the first to market. What they did was create this product called sling which was a skinny bundle of channels includininining espn. They set the standard for what tv over the internet looked like and it was basically another bundle. Once you go to market like that, its hard tore break that, right . When another product comes out theyve sort of set a standard in a way and its harder. Ed, thank you. As always, great to be with you. Sure. Ed lee of recode, brian. One retailer getting a big upgrade today, that and four other big calls in street talk. Last trading day for whats been a good month for the market, s p 500 hitting record intraday high, nasdaq on pace for a new 52week high. Power lunch back in two. Day, W Technologies make healthcare more personal with patientcentric, digital innovations; from selfmonitoring devices that can interpret personal data and enable targeted care, to Cloud Platforms that invite providers to collaborate with the patients they serve. Thats why over 90 of the top 25 Global Pharmaceutical Companies are turning to cognizant. Our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way Clinical Research sites collaborate with pharmaceutical companies, and enhancing Patient Engagement with innovative platforms and solutions. Our populations growing healthcare needs present growing opportunities for our clients to advance the future of medicine with digital, and improve the quality of lives. With usaa is awesome. Homeowners insurance Life Insurance automobile insurance i spent 20 years active duty they still refer to me as Gunnery Sergeant when i call being a usaa member because of my service in the military to pass that on to my kids something that makes me happy my name is roger zapata and im a usaa member for life. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. All right. Time now for street talk, our daily dive into the Analyst Recommendations on stocks that we think you need to know about. Stock number one, target, miller tabac starting with a buy and 87 on target. Sentiment overall and retail underperformance but that is one reason for the upgrade shares trading 6. 6 times next years earnings estimates. Thats very low historically. Also note some highlighting, some operational improvements at target. By the way, target just ended its 27year indy car sponsorship. An 87 price target which implies 815 never said target more times. Second stock, harley davidson, rbc capital downgrading symbol to underperform. Analyst notes four reasons for the bearish call worried about weak dmantd particularly in areas where Oil Production has taken a hit. Theres also concern the companys aggressively shift to dealers and maybe not going to be able to sell as many as theyve shipped. Plus, delinquencies from customer who is have bought on credit. Analysts say estimates are too high for 2017. Rbc keeping its target at 43. Right now its at 53. That would suggest a pretty steep decline. Big decline. If youre buying borrowing goes to the cost of some of these bikes if youre taking out big loans to buy them. All right. Third stock, western digital, the hard drive maker, rw baird upgrading from neutral to outperform basically an Analyst Coverage change, as well. They boost the price target to 65 from 50 so you see upside. Strengthening flash memory, supply side demands and solid state to hard disk drives and rebound of pc demand. I dont think we have seen rebound and pc demand in about five years. Nope. All right. Fourth stock is grub hub. Downgrading the Food Delivery Service to hold from buy following a very big move in the share price. The Company Reported impressive Second Quarter results and post strong operating results despite new competition of amazon ant ubers uber eats and analysts say they may have had more people ordering food and that could help grub hub. However, they think the share price right now 38 bucks accurately reflects the firms favorable view of the company. Thats another way to say its all priced in. Moneys been made. All right. Stock number five, small cap under the radar call of the day, b g foods. Package food company, they had brands you probably know. Green giant, ortega and others. After blowout earnings, davidson upgrades to a buy. They say the package food service benefiting all around. Lower costs with favorable Foreign Exchange conversions particularly the mexican peso. And green giant with skus. Fancy terms for products. They have a 52 target. Over the next 12 months. Upside and also a 67 fiveyear target. Stocks up 32 . I had no idea that green giant was in new jersey. Did you . No. I do love dom. You do . Ho ho ho. Get this, we have not moved more than 1 for nearly three weeks. One of the longest such stretches in decades. What does this tell us . Nick and eddie. Nick, first to you, its been a distinct period of lack of volatility. Maybe because of the conventions or something else. Does it mean anything . Are we like a spring ready to get sprung . You know, certainly has been a low volatile time and the precedent is 1990 not a great time to be in stocks and same time i think you would get the catalyst to push us higher and we see gdp today and kind of a disappointing number means the dollar weakens and rates come down, thats helpful and seeing the jobs report data next week and maybe confirms it. Weak gdp number is good thing for equities . Yeah. Back to bad news is good news and rates underpin valuations here and bad news economically, then rates come down and stocks the end to go up. The final piece is oil. Our desk is looking at 40 a barrel oil. If it breaks that to the downside, then the volatility is downside, as well. Thats the correlation shaping up right now and looking at. You know, eddie, only thing ive learned around this business as an outside viewer is things get quiet, thats when people tend to get nervous. Are you . No. Not just yet. But there are reasons to be this is pretty remarkable market experienced for a few days. Remarkably unremarkable. Yes. Thats right. Its gone ill give you an example. Over the last 12 days, the spread between the high and the low and 12day period is. 99 . We surpass that every single day except for one through that first five weeks of the year. So the entire volatility of the last 12 days is not as much as every single day getting at the beginning of the year. And over the last 11 days, its gone up down, up down, up down. One of the longest alternating streaks in history. But getting back to what nick was talking about, basically except for brexit, over the last, you know, several months, basically things have been coming in according to expectations. Not hugely falling away from what people expect. Now, there are some things there. The unknown unknowns that could happen. Geopolitical risks or something in the commodity market and at the top of the investors minds is if the Federal Reserve moves too early. We havent done much. Eddie and nick, thank you very much. Were waiting for 1 . For more trading nation, head to trading. Cnbc. Com. Were back right after this. Welcome to opportunitys knocking, where selfproclaimed financial superstars pitch you investment opportunities. Ive got a fantastic deal for you gold with the right pool of investors, theres a lot of money to be made. But first, investors must ask the right questions and use the smartcheck challenge to make the right decisions. Youre not even registered; im done with you i can. I can. Savvy investors check their financial pros background by visiting smartcheck. Gov youve wished upon it all year, and now its finally here. The mercedesbenz summer event is back, with incredible offers on the mercedesbenz youve always longed for. But hurry, these shooting stars fly by fast. Lease the cla250 for 299 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Lets wrap it up for the week. Welcome back. Our road warrior michelle is back after weeks in cleveland and philadelphia. The dnc, the rnc. Its all over now. So many more similarities than differences. Two candidates with huge hurdles to overcome. Two divided parties. Two very divided parties. We could see it from the ted cruz and the never trump people at the rnc. Last night, the Bernie Sanders people until the bitter end were still fighting. The difference it seemed to me as a viewer, tell us yes or no. Republican national convention, the people in the party ticked off didnt come. They didnt show up. You were tweeting out a picture last night where somebody probably of sanders supporters with a picture of liar. Retweeted thousands of times. You can see, everybody handed the hillary signs. Professionally made signs. Turns out they brought in the right through paint and painted over the letters in a way supposed to say hillary. It said liar. We only saw three of these but theres antihillary signs among the Bernie Sanders supporters wearing neon tshirts. Didnt see it at rnc. The it have ri yoel. Except for ted cruz. They had a protest vote . Trying to undo it. At the rnc, there was actually a movement to try to unseat still donald trump. Bernie sanders people were trying to do the same thing. Yeah. Coloradoans. Absolutely. Im not sure that either candidate achieved that, you know, theyre trying to hit that escape velocity . Enough of their party to get them over the interesting fall. I think it boils down to calculations of risk. Ill explain more. Were out of time. We have a tease. Got it. Yes. A new trading month next week. Power lunch kicking off august with a big exclusive. Sitting down with jamie dimon. Thats a big one. Yeah. Be very interesting to see what he has to say. Monday on power. Thanks for watching. Closing bell starts right now. Hi, everybody. Welcome to the closing bell. Ill kelly evans at the new york stock exchange. Happy friday. Im bill griffeth. Mixed picture today. Big gains in july overall the is s p trying to close in record territory, as a matter of fact. Coming up, well discuss whether this rally can continue and the possible roadblocks that are ahead. Meanwhile, how about oil . This is the story today. It was struggling all month. It did bounce back from bear market territory briefly. Low oil prices hurting exxonmobil with the worst quart