Transcripts For CNBC Power Lunch 20160812

Whopperrito is worth your hard earned three bucks. Th tyler, power lunch starts right now. It does indeed. Thank you, brian. Welcome everybody to power lunch. Im tyler mathisen. Heres what else is happening at this hour. Hillary clinton widening her lead over donald trump in some key battleground states. Clinton now up double digits in colorado and virginia, according to a new nbc news the wall street journal marist poll. Parts of louisiana and mississippi under a state of emergency at this hour as torrential downpours trigger flash floods. And team usa continues to dominate at the rio games with 38 total medals, 16 are gold. And a lot of those by the most amazing athlete ive ever seen, michael phelps. Kayla. It has been fun to watch michael phelps. Im Kayla Tausche down at the new york stock exchange. We have three hours left in the trading week. Stocks have been headed lower throughout the morning. Dow down just about a third of 1 . The nasdaq down by about 0. 1 . S p lower as well. Russell 2000, which has been closely watched for a while, is lower as well on the week. The dow is slightly higher, the s p is flat, the nasdaq is very close to break even. It is of course eyeing seven weeks of gains. Dig deeper into todays trading action with bob pisani here at the floor. And its a low volume summer, as it always is, but highs nonetheless. Thats right. And were in a narrow trading range. But the important thing here is to focus on what really matters and that is we are at historic highs and there is tremendous rotation going on. So take a look at where weve been going on and where weve been moving in the last week or so. Q3 leadership weve had notable moves up in tech stocks and recently as oil has stabilized energy has come up. Q3 laggards, all the stuff that we were buying in q1 and q2, the utilities, telecom, consumer staples, dividend players have been lagging. One group still struggling trying to show some leadership are those bank stocks here. Focus on tech stocks. New highs in the big names we keep talking about. Nvidia with their excellent Earnings Report new high overall. Broadcom, amazon, google, these stocks all hitting new highs recently. Another group, industrial stocks, some of this of course on less concerns about brexit but all of them have not reduced their second half earnings. And that has been the key driver for all of these industrial names at 52week highs. Finally, talking about all these old chestnuts we like to talk about not working. A lot of traders say sell in may and go away. That hasnt worked. Weve been up, as goes january, so goes the year, the s p is up 7 . August is the weakest month of the year, were up in august. I think interesting point to hear talk about the president ial election cycle last seven months of the election years have been strong. Only two losing years in 16 elections since 1950. And i think thats very important. And we have seen the influence of the president ial cycles. And thats what the Stock Traders almanac insists on. So well take the year off for all those adages. No sell in may and go away, their point was it doesnt work in a president ial election year. You should not sell in may and go away in a president ial election year. Thanks, bob. Probably shouldnt invest based on a oneword slogan. Thats not a good investing strategy. Lets keep an eye on oil. Bob maybe wants to hit exxon oil am some point in the show, theyre higher right now despite the fact rig counts just crossed and theyre not only up, but theyre up a lot. Drillers are getting back to work. Baker hughes recount indicating 15 oil drillers were added. This again the seventh straight week weve added rigs. Back to 396. Still a very low total overall, but it is up from significantly more than 100 rigs from two months ago. Oil not reacting up about 50 cents a barrel right now. Tyler. 1999, the last time the dow, the s p 500 and nasdaq simultaneously closed at record highs. A trifecta. The question is what happened next back then . Seema mody knows. Hi, seema. Hi, tyler. Thats right. Calling it a market trifecta, dow, nasdaq and s p 500 closing at all time highs at the same time, it doesnt happen often. Thats why investors are now trying to understand how stocks typically perform after a milestone like this is hit. The last time it occurred, as you mentioned, was september of 199, but spoke investments points out one month after the major indices hit alltime highs, the s p 500 fell by 5 . But potentially not a good bullish sign, but some investors out there like Jeremy Siegel making the case that this time is different by looking at market valuations. All right. Stocks could potentially have more room to run. Choke out the pricetoearnings ratios back in 1999 before the dot com crash, the s p 500 traded at around 29 times while the nasdaq 100 traded at 72 times. Of course much higher than what were trading at here in 2016. So valuation wise 1999 versus 2016 a very different story. Another thing i would point out, tyler and brian, is Interest Rates back then around 5 to 6 . Right now here in 2016 we are living in a low rate environment. That is of course seen as another catalyst for equities. Seema, thank you very much. So are these new highs the sign of a market top . Joining us are brian jacobsen, chief portfolio strategist at wells fargo funds and gene perrone, chief Investment Officer of perrone advisors. You heard what seema just said about the history, the History Lesson last time as far as it goes didnt auger well for the s p over the next few weeks. But valuations were really so much higher. Brian, what do you think, is this market too toppy for your taste . Brian . No, actually, its not. I think kind of we have to think about you know, we have to think about the history in a little different way here. The last time that we had this trifecta was in 1999. But think about when was the first time that we had it . It was basically 1984 it happened a couple dozen times all the way until 1999. So instead of comparing ourselves to the end of the series in which we had these trifecta moves, think about it in terms of the beginning of this series, 1984, maybe 1990, happened a couple dozen times every year. So i dont think this is a sign of a market top. We shouldnt be comparing it to the end of that series. But 1984 1984, brian, was much closer to the beginning of a bull market than we are now, right . Well, thats very true. It was. And if you think about it though in terms of where are we in terms of the double dip corrections that we have had over the last year, i think that theres a strong argument to be made that maybe this is more like 1990 or 1991. Not necessarily 1984. My point is that compare this more towards maybe the start of the series as opposed to the end of it. Okay. Gene, over to you. You have a summertime target of about 19,000 for the dow. That would be about another 400 points from here. Year end 19 to 20,000. Thats a fairly big range, but not an implausible move. How do we get to 20,000 this year . Well, this market i think you have to really regard this market as on a threshold of another significant move to the upside. So i do agree with brian you really cant look at the history of 1999. That was near the end of the market. And that was a market cycle toward the end that was being driven by a microtheme, mostly technology. This market is still being driven by many different and diverse sectors, so it is far from a market top. And if we are to take the cue from the previous two market cycles, i believe were in a bull market trilogy, this being the third installment, this market, i think, will not end until theres more acknowledgment of the uptrend, until theres more urgency to buy. So im encouraged after a day we had socalled trifecta that the markets pulling back a little bit. Markets pulling back a little bit. People are taking money out of equity funds and putting them into bond funds. So there isnt just unbridled speculation or enthusiasm for stocks. And you cite, gene, the idea that the market advance has been pretty broad based. That does sound encouraging and important. Its been broad based almost throughout the entire cycle dating back to 2002. This is a really super cycle here. And i dont think weve seen the best of it yet because the previous two cycles did end climactically and were far from that. Valuations would speak to much higher levels. So while i think that the longer term target could be 22,000 with just a few things going somewhat correctly, we could see a much higher finish to this market in the dow other than major averages with many different sectors doing well, not Just Technology or manufacturing or health care. I want to ask both of you, but let me start back with brian, what sign would be a worrisome one for you . What indicator would you look at and go, hey, wait a minute, now maybe its going to get a little tougher . What would you be watching . Well, what im watching is at least on a daily and weekly basis is whether or not the moves up in the stock market are matched with moves up in yields on the 10year treasury. When we have the 10year treasury yield moving down and you have the stock market moving up, to me that doesnt look all that sustainable because then thats just this is just purely speculation of more monetary easing. I want to see the tenyear treasury yield move higher to support that this is driven by economic growth. So thats really the key thing im watching is that correlation between moves in the 10year treasury and in the stock market. And, gene, would there be a tellta telltale, a signal you would watch that would make you go, well, maybe i better get more cautious than i am . You say the best is yet to come in this supercycle. Tell me what might tell you something different. Well, i want to watch the transportations here. They are lagging behind industrials, so i like to see that dow theory confirmation where the transports indeed take the lead once again. Theyve been kind of hopscotching this year. And i think that will happen because i think commodities are going to come up here later in the year and into next year. So that would be one factor that would be a concern if that continued to persist. Gentlemen, have a good weekend. Stay cool. Brian jacobsen, gene perrone, appreciate it. Go to powerlunch. Cnbc. Com right now to see why theyre not surprised we might see a bit of a pullback soon. Kayla. Tyler, were taking a look at the markets right now, which have been lower throughout the morning but took another leg down in just the past ten minutes. The dow hit session lows as did the nasdaq and s p. Oil paired its gains and all of this on the back of that rig count number that brian reported at the top of the show, seventh straight week of adding rigs on a baker hughes count. So well bring more to you when we have it. Meanwhile, jc penney and nordstrom capping off a big week of earnings. Up next wall streets number one retail analyst stops by with the names he likes at the mall. Power lunch back in two. Equals great rates. Its a fact. Kind of like bill splitting equals nitpicking. But i only had a salad. It was a buffalo chicken salad. Salad. Perfect driving record. Until one of you clips a food truck. Then your rates go through the roof. Perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you twentyfour seven. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. I we worked with pg eof to save energy because wenie. Wanted to help the school. They would put these signs on the door to let the teacher know you didnt cut off the light. The teachers, they would call us the energy patrol. So they would be like, here they come, turn off your lights those three young ladies were teaching the whole school about energy efficiency. We actually saved 50,000. And thats just one school, two semesters, three girls. Together, were building a better california. Jc penney and nordstrom capping off a big week of retail earnings. Lets get a roundup from Courtney Reagan who has been busy on the retail beat, court. Hi, kayla. Jc penney capping off a very big retail week with most results surprising to the upside. Jc penney still posting a quarterly loss, but its onethird of the level expected. 50 cents versus 40 loss last year. Comparable sales improving just more than 2 , but also just short of consensus, also reiterating guidance. Home, sephora, footwear categories reemphasizing strategy of focusing on less weather sensitive categories. After a year of disappointing results nordstrom beats on earnings and comp sales on light revenue but a full year earnings forecast lift. Nordstrom slightly later anniversary sale was, quote, even better than recent trends. According to the company. And nordstrom rack, the stronger than regular stories but also nordstroms main website comps grew more than 9 . And thats notable because 20 of nordstroms sales are online. Macys set the tone thursday with better than expected results across the board leading to the strongest oneday share gain in seven years. But expectations for the entire Department Store sector were pretty low. So its hard to know if this quarter is a blip or a trend, especially after mixed results from handbag makers that are rethinking their Department Store strategies. And on wednesday im going to be in texas at the jc penney analyst day and sit down exclusively with ceo marvin ellison, so hopefully more incite than what we know today, brian. Courtney, thank you very much. Lets continue this conversation. J. P. Morgan just raised price target from 7 to 12 and 16 more seen on top of a stock already up 32 in the past 90 days. Matt is with us, and like a boss he is the number one ranked retail analyst by institutional investor, jan rogers niffen. Matt, first to you. All weve heard for the last three or four, six months, whatever it is, is the consumers dead, they want experiences, they want to travel. They want to eat out. The Department Store is cooked. All of a sudden sears is up 50 , macys is booming, nordstrom is booming. Whats changed with the stock Market Perception . Yeah. So the theme this week from the Department Stores was less bad. Every single Department Stores on the top line improved roughly 2 to 3 versus the First Quarter. You had the warmest winter in history this past fall and winter. Followed by an atrocious First Quarter where they had excess inventory. So a less bad theme, inventories more in line now heading back to school, and sequentially as the quarter progressed people talked about june better than may and july the best of the quarter. That combination for stocks that were down almost 50 over the last 18 months, i think you had a relief rally, plus macys kicked off the potential addressing of the overstored nature of the mall. So how much of the expectation in improvement, matt, is already now priced into these stocks . Sears is up 50 in 90 days. Yeah, i mean, look, in terms of our price target change on jc penney, were now looking at five times ebitda on our 18 numbers. And with macys were looking for mid 40s. I think the reality is it all now comes down to the back half. You have much easier compares, again, cycling this warmest winter we had in over a decade. If the Department Stores continue to show sequential improvement, i think the stocks will follow. Jan, speaking of the back half, we got retail sales today for july that were flat. They were much worse than expected unless youre selling cars. And im wondering if you think that bodes poorly for a lot of these retailers who saw their stocks jump this week because the expectations had been brought down so low . I can only say i really hope that was a blip. Because ive been saying for months now First Quarter will be the toughest, Second Quarter wouldnt be good but better than first, third be better than second and fourth would be the best quarter. Everything is set up for that to be true from the mac macroenvironment of the economy and the weather to these individual companies being much better positioned going into the back half. Until i saw that this morning i was like, yes, yes, youre right on the money. And then i see them report this on july and im like if this is not a blip, this could be a problem. So, yes, did it worry me . It does because i dont think that the consumer is that strong. I dont think the economy is that strong. I keep waiting for this gradual improvement. And then every once in a while you get a number like july. Maybe its a blip just like we saw with employment a couple months ago. But if its not, its very worrisome. Otherwise im expecting to go right through the back half improving numbers, macys should be great, penney should be great, im optimistic. Im much more optimistic before four hours ago. Matt, quick question here. Are the moves in these stocks because the store themselves are doing something right and have turned it around . If so, what is it . And if so, is it sustainable, or are they moving up for what i just kind of interpreted you saying for reasons of sort of coincidence . Its less bad, the weather got better, the comps were better and they were oversold. I think this weeks move is more the setup. So more of the less bad with the easy compares on tap. I think what were watching is this balance of power. Weve written about it a couple times this week. And the reality is it comes down to the brands. The brands are pulling some of their distribution from the wholesale channel, but its to varying degrees. Some of the smaller, some of the regional players, more of the cnd malls, i think those are more of your losers where macys may be more of a destination. Theyre all trying to battle with amazon. Amazon is only 5 of the u. S. Apparel market today. Thats going to be a bigger number over time. The other thing brands are doing is pulling back on promotions like friends and family. So everybodys trying to navigate how does this balance of power play out between amazon, the Department Stores, and the specialty retailers. Jan, were going to wrap it with you, but i think what matts making is a very, very important point. Because based on the amount of attention it gets, one would think amazon has 90 of the american shopping market. Online retail everything amazon and everybody else is only 8 of american sales. Still a lot of room for brick and mortar. Brian. Jan. Walmart was 20 years old, they were 3 of sales and they were 50 of the growth in sales. Amazon is 20 years old, its 3 of sales and its 50 of the growth in sales. This is a big problem. Were going to see 50 of sales online, nonbar, nonrestaurant by 2030, 13 and a half years by now 50 by 2030 . If were still around in 2030, ill buy you a drink if youre right. Well graph it out from here to there and make the bet along the way. All right. Matt boss, jan, jan making a bold prediction. Youre on the record. We got ya. Thank you, guys. Thanks for having us. Up next, the good, the bad and the ugly in this market right now. Plus, our list of the three most interesting stocks in the rally, names that have surprised nearly everyone. Is your favorite stock on that list . You have to stay tuned to find out. We are working on the prototype to match customers to gear. Watson, lets give it a try. Say its midjune and im backpacking in yosemite. Of our 353 jackets, i can recommend nine. Watson, what if it rains . There is just a 3 chance of rain, so i recommend the breathable stretch fleece fuse form dolomiti jacket. A Perfect Choice watson. No wonder our Customer Loyalty numbers keep climbing. I believe we can do even better. I like the way you think. Voiceohigh blood pressure,sk all day can cause neck and back pain i believe we can do even better. It even slows your ability to burn calories and lose weight. Man 1 on camera fortunately, theres a solution inmovement, the affordable, standing desk. 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Transocean, ladies and gentlemen, if i get out of the way, worse performer in the s p 500 right now. Diamond offshore also deep in the red. And that is the good, the bad and the ugly for a friday. Breaking news now with julia boorstin. Hey, tyler, thats right. Rupert murdoch naming the Senior Leadership team and new Management Structure of fox news saying that Effective Immediately Fox Television station ceo Jack Abernathy and Senior Executive Vice President bill shine will serve as copresident s of fox news. Murdoch saying he is now going to be executive chairman of Fox Newschannel and business net worth and both will report to Rupert Murdoch. Now, of course this all follows the departure of roger ailes after allegations and various lawsuits by Gretchen Carlson alleging Sexual Harassment. And also the temporary role of Rupert Murdoch as ceo. So now Rupert Murdoch will be executive chairman, and jack aber nat thi and bill shine will report back to him. Julia, i have a question. Because the paul weiss investigation into the Sexual Harassment allegations is still ongoing. So its interesting to see the leaders named before at least publicly that investigation wraps up. So do you think that this is basically a clearing of both of those executives names in any potential involvement or knowledge of those allegations . You know, thats a very good question, kayla. I think in a way it is. What ive heard in terms of these other allegations of Sexual Harassment that have come up is that there are about 12 of them and that only some of them will require a settlement. So it sounds like theyre not done with the process, but i would be surprised if they would have named these two gentlemen as coceos if they were implicated in some of those Sexual Harassment issues simply because on the heels of this roger ailes situation you would think fox would be focusing on making sure they have the right kind of leadership in place. Julia boorstin with breaking news on fox news. Julia, thank you very much. Well, the bubble boys are back in droves professing doom again. Ron insana is here with why theyre wrong, again. 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. Hi everybody. Im sue herera and here is your cnbc update for this hour. Hillary clinton releasing her 2015 personal tax returns furthering pressuring donald trump to release his. Mrs. Clinton and her husband paid an effective federal income tax rate of 34 and donated nearly 10 of their gross income to charity. A federal judge has blocked an ohio law that dweiverts publ money from planned parenthood. The law initially set to take effect in may, but court orders suspended it. Ohio argued that it gets to choose how to spend the publics money. Heavy rains causing dangerous flash flooding conditions in parts of louisiana as search and rescue operations continue throughout the day. Some areas got more than 10 inches of rain overnight. There are scattered Power Outages in the baton rouge area. One of my favorite stories, scientists now calculate the greenland sharks are earths oldest living animals with backbones. They estimate one was born in icy arctic waters roughly 400 years ago. And it only passed away a couple of years ago. Eight of the 28 dead sharks that they examined were probably 200 years or older. All right. Thats the news update this hour. Things you never thought youd get to know. Very slow swimming shark there. I was going to say you trumped me, tyler. Its the slowest animal in the world in the water. Is that true . It swims at less than a mile an hour. I saw a National Geographic special on it. Excellent. Im looking at that shark thinking that thing is slow. Man, if youve been around for 400 years, youre not in a hurry. Why rush . Its like comedian Steven Wright said somebody said is that within walking distance, he said everything is within walking distance if you have the time. He also said i once bought some batteries but they werent included. We could go on with this. All right. Thank you, sue. We need the greenland shark to read the news. He also said hed kill for a nobel peace prize. And drive on parkways and park on driveways. The 10year yield staying low at 1. 51 . If youre buying a home, thats good news for you. Average 30year Mortgage Rate still pretty low 3. 45 . He needs no introduction because he just introduced himself. That would be ron insana. That would be me. Three u. S. Stock indexes smashing records this week. Dow, s p 500, the equity trifecta on thursday, each at record levels. A feat not seen since 1999 when bill clinton was then president a in office and dot com bubble ready to pop. Folks like carl icahn, bill gross running for the exits or urging you to and fears that another huge tumble may be on the horizon. Are they right . Or are the bubble boys wildly off base . You wrote a piece for cnbc. I did. It is a nuanced piece. You say the bubble boys are wrong, but that does not mean that you are signaling all clear. Yeah. Im somewhat ambivalent about where the stock market is right now. Net Davis Research put up a very interesting piece, in fact tweeted it out the other day pointing out that in absolute terms the stock market is as overvalued as weve seen in recent times. If you go back to 2007, the market was selling well in excess of 20 times, were in excess of 20 times earnings now. In 1999, 2000, the market was selling at 40 times earnings. So in absolute terms you might want to take out a little protection. In relative terms the markets not that overvalued. When rates are this low, inflation as we saw again this morning is actually declining and not going higher, the feds unlikely to do anything dramatic any time soon. So why are presumably smart people they are smart people. Bill gross, carl icahn, why are they saying get the hell out . I understand, again, from an absolute perspective our valuations as high as weve seen since 20007 absolutely. Is there a lot of Public Participation in the stock market which typifies a bubble in the classic sense . No, this is largely still a professional affair, as was 1987. You dont have a Public Participation to have a smash, we had a crash in 87 that was large but really no significance on main street. So what do you recommend people do . If youre riding big profits and want to take money off the table. No lost money ever taking a profit. Thats correct. And you can wait for stocks to come down in price or you can just continue with a disciplined effort. But history also says, ron, lets say the bubble boys turn out to be right. Yeah. And we look back ten years from now, a big bubble. People were calling for a bubble in 1998, they were ultimately correct. Yes. But it played out for another two years. So even if we are in a bubble, it doesnt mean it has to pop tomorrow. Correct. Listen, i mean, you have to be right on timing as well if yur trying to make a trading bet on the market falling precipitously. If the fed were to raise rates multiple times, would you be much more worried about relative value. That would take air out of the bubble. That would. Or anything to trigger a downdraft whether or not this is a bubble in the classic sense in which its defined i would argue not. All right, ron, thanks. Have a good weekend. You too. Lets turn now to another bubble, this one in Silicon Valley where housing prices have surged so dramatically residents are being priced out of living there. Adidi roy is live in San Francisco with that story. Hi, kayla. Just this week weve seen two examples of people with high paying jobs driven out of the bay area because of skyrocketing housing costs. San francisco federal credit union ceo steven stap is taking another job in portland in large part because his rent in San Francisco is just too high. Keep in mind hes a ceo. He says he pays 5,000 to rent a 1,500 square foot home. Looking at the cost of the housing here in San Francisco, not only do you find that the prices are very high and ofblg many times you get into bidding wars. Weve seen in our industry weve seen many people come in with all cash deals to secure that property. According to zillow, the median home price in california is 830,000. In San Francisco its 1. 1 million. And in palo alto its 2. 5 million. Earlier this week a member of palo altos Planning Commission quit her position and is planning a move to santa cruz because she and her family simply cant afford the 6,200 rent of a home they share with another family. And one possible solution thats been talked about is increasing the inventory of homes, but thats also touched off a lot of debate. So no easy solutions here, kayla. Ill pick it up, aditi, thank you very much. If you want to have a little fun, once in a while go to zill zillow, trulia, go to palo alto or any of those, look at what those homes cost. You will automatically feel better about whatever situation youre in. You realize you cant afford to live there. Aditi, thank you. Still ahead, perhaps the most greatest american moment outside the olympics, taste burger kings new whopperrito. Half burger, half burrito, is it all delicious . Well find out. 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Exxonmobil is a leader in carbon capture. Our team is working to make this technology better, more affordable so it can reduce emissions around the world. Thats what were working on right now. Energy lives here. Time now for the power pitch where entrepreneurs have just 60 seconds to convince a panel of experts their business has what it takes to be the next big thing. Hello. My name is serafina, i am the cofounder and ceo of hip chick farms. Every kid i know loves a chicken nugget, and every parent i know is suspicious of what goes into a chicken nugget. We make a delicious all natural and organic chicken fingers, chicken meat balls and gluten free Chicken Nuggets for busy families. We never use fillers and all products are humane. My cofounder has been cheffing for over 25 years making simple food beautifully made. Our category is growing. Innovating the freezing aisle but offering transparentally source solutions. Were currently sold in over 1,800 Stores Including whole foods and targets with an experience to over 800 growth last year. Our small but mighty staff has veterans from within the Natural Foods industry and our goal is to provide organic Chicken Nuggets to every kid in america. Welcome to todays power pitch, im melissa lee. You just saw the pitch. Now lets meet the panel. Joining us is startup advisor lish syrett, she has more than 40 companies in her personal portfolio and serves on the board of the new york angels. Also with us nir liberboim, he focuses on early startups with several natural Food Investments in its portfolio. And joining us is chef huda winner of cutthroat chef competition. Okay. So we heard what serafinas pitch was. Alicia, first question to you. So i really love the delivery. And i thought it was really good you talked about competitive differentiation, Team Background and traction. Ill give you an a for the pitch. You mentioned youre in the frozen food aisle, and of course theres tons of products there. So what else are you doing to make customers aware of your offering . The most important thing that we can do is really do instore promotions and demos. I think one of our key elements to our success is teaching new people to go into the freezer aisle. Say taste our product, learn our story, know its organic, well create new consumers into the category. Nir. I thought your pitch was very well rounded and covered all major points. I would like to report more about Financial Performance but still give your pitch an a. Can you talk about margin structure and how you see it evolving over time . Our primary focus over the last six months since weve grown so rapidly important from being a small artisan hand made company to one that was scaleable. The way we did that was by diversifying our supply chain. So weve increased margins in the last six months by 20 points. Which is only we needed to be a Sustainable Company with a healthy margin structure in order to get this out to as many people as we want it to be available to. Chef huda. I loved your pitch. Ive learned about your family, ive learned about why youre doing it and your product, i definitely give you a bplus, being there are other products already in the freezer section. What is the nutritional value comparison between that product and your product . So we definitely offer lower sodium alternative to whats in the marketplace. And eating organically with no antibiotics, no hormones, no fillers, no preservatives, we dont use any additional starches in our products. Those are healthier for you options than what our competitors are offering. Okay. So we cant talk about a product that is food without tasting it. You actually brought some samples. Lets do the taste test. Fantastic. Today im serving you samples of our organic chicken fingers. And our chicken meatballs. Theres one for you. All right. Sample for you. Thank you. And here you go. Its really good. How much does this cost compared to similar products . The antibiotic free line retails at 6. 99 and the organic retails at 7. 99, which is pretty straight on in terms of competitors. These are absolutely delicious. Excellent. Thank you. Alicia . I really like them. They taste better than anything else ive had certainly from the frozen food aisle. One of the descriptives you use for your product is that it was natural. What does that actually mean for consumers . Is it subjective like delicious or objective like nongmo . Natural for us means no fillers, no preservatives, antibiotic free chicken, hormone free chicken, real clear attributes. And were also connecting the dots between our consumers and who the chicken farmer is so that they can really easily understand that were an authentic product. Chef huda. Youve had success with this product. Are you thinking about going into other sections in the Grocery Store . We are going to focus on chicken and turkey, poultry for now. We want to keep our focus narrow, so were introducing four new organic products, organic turkey burgers, organic meatballs and some other organic products. I think its important not to diversify too broadly while we really build our brand. Okay. We heard what serafina had to say. Now we want to know if the panel is in or out. Alicia, what do you say . I think this company is spoton when it comes to Consumer Trends especially with respect to transparent sourcing. And their sales show theyre onto something. Im going to go in. In. Nir, what do you say . I like we have a Purpose Driven Company with great tasting products. However the freezer aisle is very challenging and the supply of organic chicken is very limited. Netnet i love the brand so im in. Two ins. Chef huda, how about you . I love the story, the packaging, the product. Im in. Wow. Clean sweep. Three in. Whats your reaction . Oh, im just thrilled. Your support is phenomenal to me. Thank you. All right. And our thanks to you, serafina, hip chick farms and to our panelists. And that is todays power pitch. All right. You heard what the panel had to say. Now its time to find out if you are in or out on hip chick farms. Follow the conversation on twitter using the powerpitch. And for more head over to powerlunch. Cnbc. Com. Brian, if that chicken is good enough for the family, im sure its good for us. Absolutely, man. Ill eat anything. Up next, todays sports trifecta, olympic streaming, arods final game and football returns to los angeles. What you need to know about all three plus the great whopperrito taste test. Power lunch back in two. Wer. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. 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Get an insurance quote and see why 92 of our members plan to stay for life. Sports trifecta now, streaming olympics, arod and rams return to los angeles. We have it all covered with julia boorstin, jane wells in l. A. , Morgan Brennan here at cnbc headquarters in jersey. Julia, kick us off. The way people are watching the olympics is changing. Thats right, tyler. Digital viewing of the olympics is exploding. As of yesterday 1. 28 billion minutes of the olympics have been live streamed. Thats more than the total live streamed from london and sochis olympics combined. On tv nearly onethird of u. S. Households are watching. That still lags ratings from the london olympics. But the fact that Nbc Universal is offering nearly 7,000 hours live on every possible device is yielding record profits from the rio games for the company. Nbcu sports chairman saying the company has sold an additional 30 million worth of ads around the olympics since the games began. Now thats in addition to the 1. 2 billion worth of tv and digital ads sold before the rio games started. Now, this value of streaming sports is also evident in disneys big investment this week spending 1 billion for onethird of streaming tech company bamtech and announcing a new sports app in the works. Guys. Julia, thank you. To Morgan Brennan we go for story number two, that would be arods last game. Morgan, arod not the beloved character that derek jeter was or mariano rivera, but immortal player nonetheless. Most definitely. Alex rodriguez earned more than any other player in mlb history 460 million, but was he worth it . Cnbcs big crunch data team looked at arods value to the new york yankees based on statistic call he more than delivered for the first five seasons but over the last eight that trend reversed. Bottom line they could have gotten similar performance from a different player for an estimated 9. 4 million less. But arod draws attention, which helps get fans into seats and watch games on the teamowned tv network. And speaking of tickets, immediately following sundays retirement announcement the average ticket price for tonights home game jumped 500 to 457. But thats steadily dropped to as you can see here about 149 today. By comparison the average ticket price for fellow yankee derek jeters final home game almost 770. Tyler. All right. Morgan, thank you. To jane wells we go live at the l. A. Memorial coliseum where her Favorite Sports Team play, and its not the rams, is it, jane . No. But the rams are coming to l. A. Tomorrow night. I know. And they will be playing on a saturday. My first professional Football Game i ever went to was here in 1970 to see the dreamy roman gabriel. I will be here tomorrow. Tickets to tomorrows preseason game have already sold out. Theyre adding seats and this place is huge. The move west for the rams is a financial decision long time in the making because the nations second largest market has been without a pro team for over twenty years. We have video of the rams practicing in irvine this week. They come back to l. A. With a losing record, a top draft pick quarterback who may not be ready for primetime yet playing in an old stadium for probably three years until a new one is built. Now, fans whove driven up the average ticket prices on the resale market nearly 100 above where they were in st. Louis have high expectations. We never seen this many fans at camp, so im excited. They appreciate the reception. They understand the potential distractions. But theres distractions in every nfl city. You nervous about saturday . Never. Now, fisher said on hbos new season that last record 79 is, quote, bs, wont say what his expectations are. And by the way the rams havent had a winning season in 13 years. As for pressure to produce a product worthy of los angeles, fisher told me, quote, winning games sells tickets. Tyler. Well, jane, ill pick it up. Jane, you and i are both from los angeles. I grew up in downtown l. A. When i was a kid, and thats why my entire life ive been a charger fan. The rams didnt do it for anybody. Oh, ouch. They didnt doi it for anyone the first time around, do you think they will the Second Time Around . They would get more fans than charger fans, sorry san diego. Even when you come to usc games here on saturdays you have raider nation people show up. Theres still a hard core raider fan base here. Well see if those people transition to the rams. One quick thing, there are two games this season where the trojans play on saturday here and the rams play on sunday, theyre growing the grass longer in the end zone so they can mow it after the trojans game and paint it for sunday, back to you. Jane, thank you very much. Lets talk about this with patrick rish, director of the Sports Business Program at washington university, which just happens to be in st. Louis. He joins us from vancouver. First off i want you to, patrick, put aside the professionalism, i want you to finish this sentence for me. Okay, ready to play a game . I am. Rams owner stan krunky is blank . Profit maximizing. Thats a lot kinder than most people would say. Kinder than i thought. Keep in mind, guys do you think the rams are going to win when theyre moving back to a city that their owner left, you know, fled, but do you think theyre going to win in l. A. . Not win on the field but win the hearts and minds of the public in l. A. . I think whats a big boost for them is when this new stadium becomes available in 2019, theyre building it right now, its going to be one of the most palatial sports facilities in all of professional sports. So right now theres a lot of pentup demand. Theres a lot of people in Southern California and the bordering areas that wanted their rams to return for years and years. And now theyve got them. So i do think youre going to see a honeymoon effect in the next few years. When the new stadium comes on to the scene, whether or not the rams win or not financially they are already winners. Youre going to see a spike in their franchise value for sure. Did st. Louis make or lose money with the rams in town . The city of st. Louis . Well, thats a great question. A lot of people have talked about after the rams leaving that one of the issues when the rams were there during the fall is the Everett Jones dome, where they used to play, you couldnt book that for other conferences and conventions. When youre talking about the Economic Impact of any professional sports team, its about bringing visitors in from outside of the region. And in a lot of cases, guys, if youre talking about a convention or conference, that brings in more nonlocal visitors than say a given sporting event where most of the fans are local. All right. Patrick, we have to leave it there. Thank you very much. Patrick rishe, sports Business Expert at wasu. Cashing in on your house, a reverse mortgage a good idea . That story still ahead on power lunch. Mobile trading desk, so i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices. The markets hot. Sync your platform on any device with thinkorswim. Only at td ameritrade. Good afternoon everybody. Welcome. Im tyler mathisen. Heres whats on the power lunch menu at this hour. All three major averages started the day at alltime highs. Not there anymore. But what should you buy now . Well get some good advice for you. Hillary clintons taxes, they are out. How much pressure will that if any put on donald trump to release his 1040s . And whopperritos, we will taste test burger kings latest creation the second hour. Were going to grill it right on that grill behind me there. Second hour of power begins right now. Hey everybody. Im brian sullivan. Welcome back. As tyler mentioned new alltime highs yet again today. Stocks are slightly lower at the moment, the dow down 70 points. However, with two hours left in the trading day, theres still time to make even yet more new highs. Well see, kayla, if that can happen. All right. And im Kayla Tausche. And the headlines this hour Hillary Clinton releases her tax returns. The clintons made more than 10 million as a couple last year. And well have more details on that coming up. Another increase in oil rig counts, seventh week in a row 15 more rigs coming online in just the last week. And a sluggish reading for retail sales in july, less eating out, more shopping online thanks at least in part to amazon prime day. Speaking of amazon, rbc capitals lead tech analyst just released his new tech review for the year. And hes made some significant changes in his top picks. Mark mahaney joins us now. The title is staying long though a little less strong. And im wondering if you think that some airs going to come out of these stocks or if the secular winds are going to continue blowing in their favor. Okay. So, kayla, i think these secular winds theyre so well locked in, you know, for the next five, ten years, if only 10 or retail sales are online, you can probably bank on amazon doing 20 plus retail growth for the next couple of years. Where the wind could come out, however, is look, weve had a major rerating in the sector both large and small cap across the internet. And we find valuations now kind of back at par where they were historically the last couple of years. If you look at Free Cash Flow or cash flow multiples. So we think theres less kind of upside here. What were controversial stocks earlier in the year including amazon are now deep consensus longs. Theres very few of these that are really sitting there as interesting long trades, Long Investment opportunities right here. One of those though is netflix. We dont think its amazon though we remain small buyers of that. Well, mark, im wondering what you think happens to the likes of netflix. Because frequently when weve seen the Broader Market selloff, these stocks have operated like piggy banks or deposit accounts where investors will sort of cash out to be able to preserve their own cash, lock in profits or to put them in other sectors that are undervalued at the moment. Could that potentially happen if we get a selloff . It could happen. One interesting thing about netflix, this stock has materially underperformed yeartodate. In part its due to the fact its so materially outperformed in 15. But in part theyve had a couple execution issues this year and missed estimates. We think estimates are now more reasonable on the stock. We think the story is building up. Hard to call any one quarter, but we like the long term play on netflix particularly on the International Side which we think is going to start ramping back after this year and next year. In terms of the other stocks, you know what weve seen is real consistency. You wont find in other parts of the Market Companies with 80 billion revenue run rates, 15 quarters in a row of 20 retail growth, thats amazon. Theres stability here at least in terms of the fundamentals. Thats why we still like the sector. And what about the travel space . Because you are swapping expedia for priceline. Why are you doing that . Yeah. So thats weve been priceline bulls for years. Its generally been a good performing stock. Expedia seems more dislocated, its underperformed yeartodate. In the june quarter a negative sloppy quarter. The room net growth decelerated sharply. We think there are solutions for that that will roll out in the back half of the year. Theres potential catalyst with this trivago spinoff. We have a catalyst, we think fundamentals recover in the back half of the year. Now trading at reasonable discount to price line whereas in the past more premium. The Investment Opportunity right now is more interesting in expedia than priceline. If you go down to some smaller cap stocks, yelp is a top pick. Thats been a controversial and volatile stock in the last couple years trying to sell itself, not going through with it. But you think its a winner, why . Yeah. And, you know, the biggest change weve made here we made yelp one of our best upgrades beginning of the year. So is zillow. Weve taken zillow out because of appreciation in shares. But we think yelp can continue to rise. We think that comps get easier but theres a confluence of factors here. They have a 50 Million Brand Campaign we think is helping them with both consumers and with merchants. Theyve done a lot of things to improve sales force efficiencies and we think the market underappreciates the sustainability of the growth. This is not 20 or 30 revenue grower, its 40 . And youve got margin expansio s expansions. With a stock trading at a reasonably low multiple the stock can still rise. Thats why we like it. It is up 33 yeartodate, mark. I think my favorite but perhaps the wonkiest part of your report is the gapification of the internet and that being gaap, of course a lot of investors have been frustrated that some of these Tech Companies feel like they can exclude their compensation as a line item. Do you think that that practice is ending . Or are you just focusing on companies that dont necessarily do it . I think theres going to be investor pressure to be more careful about that stock base compensation. Out here in the valley its almost given away almost like candy. Im exaggerating when i say that, but not by much. Its a competitive job environment, but some of these companies have really tried to get investors to not necessarily focus on those. We have to focus on them. Theres an Economic Cost associated with stock comp. If you dont give out stock comp, you have to give out cash. It is a resengs tool, an acquisition tool should be figured into valuations and the p ls, currently companies saying facebook, amazon, saying were not going to exclude it. No reason for investors to. I think thats a healthy trend. We think well see stock based compensation decline as a percentage of revenue. We always hear industrial ceos saying id make a lot more money if i didnt have to pay my people or deduct that from my earnings, well see if the Internet Companies actually do that, mark. We appreciate it. Mark mahaney from rbc capital markets. Brian. Kayla, thank you. With the markets smack in the middle of perhaps the most profitably boring rally in history, a lot of stocks have done well. Many we probably expected. Others though not so much. So with that in mind i put together a list of three stocks that i consider the most interesting during this remarkable run. Here we go. Stock number one. Caterpillar. This has been a huge whiff by wall street analysts. Stock up not only 23 this year, its the best dow stock this year, this despite average analyst rating of hold and target price 12 below cats current price, in other words watch for analyst activity on caterpillar likely in the future. Stock number two, one in the news today, nvidia. Okay. What i call the tech aaa crowd, alpha, apple, amazon, they get much of our and the medias attention. But it is nvidia rocked investors world recently. One of the few stocks top performer list over one months, three months, yeartodate and past year. Lately everybody rushing to upgrade the stock including rbc in the past 24 hours. But a shout out to jaffrys analyst, he upgraded last september, since then stock up 150 . Finally, the third most interesting stock, at least to me during this run has been tyson foods. Why is there a Chicken Company on this list . Well, number one, the stock is up 40 this year. Number two, its not really a Chicken Company anymore. Beef had more than a billion more in sales than chicken last quarter, packaged foods also booming. After they bought hillshire brands in 2014. Tyler, that has not just been a short term run for tyson. Did you know that tyson shares are up nearly 1,000 since the 2008 market bottom . That is hardly chicken feed. You can read my article with more of the rationale, agree, disagree, whatever you want to do at powerlunch. Cnbc. Com. Tyler, would you disagree with any of my three weird standouts here . I think the one that is far and away the most surprising given where it was over the past couple of years is caterpillar. And look at how well its done. Supposed to be a dead stock. Supposed to be a dead market. Commodities were dead. Forget about caterpillar. I mean, if it was midling in the dow, i probably would have ignored it. Its the best dow stock this year. Everybody pretty much has been wrong, wrong, wrong. Give it up for caterpillar. Thanks for, brian. Lets bring in, going to ask you about nvidia which brian just mentioned and i gather its one of your choices. It is. In this Challenging Market where everything is so top heavy, i would say most people if you poll them they probably are very hard to answer what nvidia actually does. And so for those people out there i would urge just to go on a Youtube Video and look at what nvidia does. I think it will totally astound them Artificial Intelligence has no bounds. Nvidia is at the forefront of that. Look at standard stocks, say compared to caterpillar, you have to throw out that book. Were not absolutely certain how this market is going to look. All we know is for pretty much certainty this is a growing market, applications of Artificial Intelligence are also called deep learning euphemistically, very, very appealing in a number of technologies. Matt, you have several stock picks, but lets talk more broadly about sort of the topic we began the hour last hour with, and that is with the market setting three record highs yesterday, how much more room is there for growth from here . The year is already pretty good. Not blowout good, but pretty good. Yeah, i was on a couple months ago before the brexit vote and thought the market could end the year up 10 , 12 . I standby that but now the markets up 7 or 8 yeartodate. Only got 3 or 4 left, doesnt sound all that attractive, but look at the last few months and competition from the bond market and other areas of the globe and say i take that trade. I think it is still a decent investment. Earnings are going to improve in the back half of the year or might go mostive. I believe we will go positive in the fourth quarter. This markets held really steady through whats been a declining earning period. Imagine what it might do when earnings go in the other direction accelerate the confidence that might bring with the low rates that we have. Im pretty confident were going to finish the year higher from here. Talk to me about a stock thats had its struggles lately and that is disney. Earnings out this week were good. Theyve had a big acquisition or taken a stake for 1 billion in bamtech. What do you think of disney . Like a kid you dont want to name a favorite stock but i do like disney right now at these prices, below 100. Stock traded over 120. Great chance to get a great franchise, Great Company at real value. We look for Great Companies and find them at good prices. Everyones talking about the cable business and its important, but so is their theme park which is growing aggressively at 6 a year. So is their studio which grew 40 year over year. The Company Grows cash flow over the year 24 . Thats a tremendous story. Tremendous value. There is going to be cord cutting and changing dynamic with the over the top content, but consumers will pay for content otherwise there wont be any. I have had confidence disney will figure out how to transition into that much like the phone companies from land lines to wireless, i believe disney will figure out this transition and bams a part of that. Their deal with directv is a part of it as well. Peter, i want to get your thoughts on jc penney. You must be pleased with what you saw in their results earlier today. I believe it was matthew boss in the last hour raised his price target rather substantially on that stock. And hes a very respected analyst. Well, its what i would call a double recovery play. First off, the company itself is doing a tremendous job recoveri recovering. As you know ive been following this stock for many years on its ups and downs. And the second part of the double recovery is the consumer led recovery here in the United States. So i think theres tremendous upside in just becoming average. We look at other retailers to see how they can improve their overall strategy, but jc penney is still on inflection point. If it can just become average, average sales per square foot, its Balance Sheet is Getting Better and i do think it has tremendous upside. But its taken as long its actually taken longer to decide which way to raise or lower Interest Rates. This has been a long, long haul, but for those that have been patient you will be rewarded. All right. Peter, thank you very much. Peter andersen and matt roddy, we appreciate your time today. Kayla. Lets get to seema mody for a market flash. Kayla, take a look at this stock, acazia communications. Shares are skyrocketing up more than 30 after reporting a big earnings beat last night. The maker of Optical Networking equipment went public earlier this year and nearly tripled since then. The company is citing strong growth in the buildout of metro and intradata Center Networks as a source of strength in the quarter. One stock to keep an eye on today. And a big move at that. Thank you, seema. Hillary clinton and tim kaine release their tax returns. And up next well tell you whats in them and discuss whether it will force donald trump to do the same. Thats coming up on power lunch. 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. Donald trump in one of the swing states today, eerie, pennsylvania. Hes expected to take the stage any moment now. Meantime, Hillary Clinton just released her taxes. The question now is will donald trump do the same . John harwood joins us now. Mr. Trump has been holding off saying his taxes were being audited. Exactly right, tyler. We show you that live picture of Donald Trumps event in pennsylvania because he is the object of what Hillary Clinton is doing today with these tax returns released by herself and her running mate. Lets go over the top lines. Hillary clinton and bill clinton had adjusted gross income of around 10. 5 million. They paid an effective federal tax rate of about 34. 2 . Thats fairly high, by the standards of wealthy people. They gave a 9. 8 of their income to charity. Almost all of that was a 1 million donation to the Clinton Family foundation. Now look at sources of income. Bill clinton in 2015 made a little over 5 million from giving speeches. 1. 6 million in consulting, you had Hillary Clinton making 3 million as a book author, another 1. 4 million as a paid speaker. Of course that work went away when she entered the president ial race. Now look at tim kaine. Hes one of the least wealthy people in the United States senate. 2015 income of around 313,000. Effective tax rate of around 20. 3 and in his 10year returns the Campaign Says his average charitable donations have been 7. 5 . How does that apply to donald trump . Well, donald trump says that hes worth 10 billion. More than 10 billion actually. He is also, we know from Court Filings of various kinds, government record filings that he did not have federal income Tax Liability in 1978, 1979 and 1984. So the question is, how much does he make . How much is he paying taxes . How much does he give to charity . All of those are things that the Clinton Campaign is trying to force donald trump to reveal. As you said, tyler, he has indicated he will not reveal them because of audits even though some years are passed audit, he says theyre all linked together. Well see whether that stance changes. But one thing we know about donald trump, he likes the way hes been campaigning so far so i wouldnt expect him to change. Hey, john, its brian. Just a couple things, with trump though i would imagine he did pay income tax, simply got more back in deductions probably because of losses carried forward or whatever it was he had no liability in those years because of losses that which in real estate you can claim. Which offset income. I am surprised by the clintons effective tax rate. Because 39. 6 is the highest real rate. They donated a lot to charity, which is a deduction. 34 seems almost impossible. Thats high. Because you dont pay 39. 6. You pay zero up to 15,000, how is that possible . Most of their income well, theyve got a heck of a lot of income over the threshold for 39. 6. Yes. Its also the case if youre bill or Hillary Clinton and concerned about political viability and have been for a very long time, they are not the kind of people who would make the maximum effort to reduce their effective tax rate. Yeah, i mean, my guess is, john, maybe you could do some more digging in this. Im guessing on this. They probably didnt deduct those charitable donations. Which you dont have to do. No, they did. They deducted charitable donations and their mortgage interest and that sort of thing. But there are many ways in which people who make an awful lot of money can get their effective tax rate down. And for reasons of politics if nothing else the clintons have quite a strong incentive not to do that. One of the ways obviously is to claim a lot of Capital Gains income or other kinds of income that is more lightly taxed. And it would appear that they do not have that kind of income. It is straight fee for service or Royalty Income in the term of her authorship, right, john . Yes. But again, on the effective tax rate, 39. 6 kicks in, i believe at 400,000. For married couple, yeah, 457 or 357 or something. Right. If you have adjusted gross income of 10. 5 million. Most is taxed at 39. Most is taxed below 39 . But i would be willing to say as someone whos done my own taxes for years, the only way to get that kind of effective tax rate is to basically say we want a high effective tax rate because we know its going to be scrutinized. Yes. Thats right. Yeah, they probably did not claim some deductions that they could have. Maybe some accountants could call in. I mean 34 . Either get a new or if you want a high effective didnt deduct agent fees. Heres an experiment, brian, try it on your next tax return, see how high you can get that rate up . No. All right, john, thanks a lot. Both my parents do taxes for a living. They might disown me if i did that just out of principle. Just call him the commander in chief of music. President obama revealing his annual list of favorite summertime songs, each one hand picked curateed if you will by the president including classic 66 track from the beach boys, good vibrations. Also hes got some really interesting jams, everything from prince to chance the rapper and common to greats like Charles Mingus and nino simone. Spotify, you can share it on spotify. Potuss play list. I like that. Back to the markets, oil closing in on 45 a barrel yet again. But theres a big sort of opec nopec meeting happening next month. Can we expect oil to rise after that rk or will nothing get done again . Plus, the great whopperrito taste test. Theyre bringing it in. Were putting it down. Well let you know what we think. Its a golden opportunity to experience breathtaking lexus performance in streetlegal form. For a limited time get great offers on our complete line of f sport performance vehicles. At the lexus golden opportunity sales event. Welcome back to power lunch. Im seema mody. Shares of Planet Fitness are pumped up today. The stock hitting an alltime high earlier this morning and accelerating higher as trading continues. The stock is now just off of its highs. The Company Reported better than expected samestore sales and an increase in its full year outlook last night. Take a look at where those shares are trading right now. The stock is up more than 40 for the year. Tyler. All right. Thank you very much, seema. Oil up 2 today, and we will go live to the nymex, live it says there twice, for the closing trades, when power lunch continues live on cnbc. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Hello everyone. Im sue herera. Here is your cnbc news update at this hour. The voyage data recorder from the doomed el faro cargo ship is on its way to washington, d. C. The uss apache brought the voice data recorder from the recovery ship to port in florida this morning. It was recovered three miles below the surface. Toyota recalling 337,000 older model vehicles for a third time. It involves the rav 4 from the 2006 to 2011 model years as well as the 2010 lexus hs 250 h and other models, the car Suspension System is in doubt. One person killed after an suv hit a fuel tanker causing a massive fire. The flames from that tanker eventually spread to a nearby convenience store. No one else was injured. And the annual perseids meteor shower this morning, a trail in the comets wake flash when they enter the atmosphere at about 132 miles per hour. The last perseids happened in 2009. Couldnt see it because we had thunderstorms. We have 90 minutes to the closing bell. Right now the markets have taken a pause after all three major averages closed at record levels yesterday. We did see oil in pos pif territory. The s p and nasdaq briefly went positive but currently are all sitting lower. Lets get to jackie d at the nymex. Good afternoon to you, kayla. Big pop in oil prices to finish the week here. 44. 5 is about where were going to settle on the day. The saudi opec freeze talk potentially at this meeting on the sidelines of that Energy Conference in september, thats been supportive of prices and really been responsible for the bump weve seen. Theres two schools of thought on this and i really want to explain them to you. The saudis of course in the past had said they would cooperate, but we didnt see anything at doha, we didnt see anything at the last opec meeting. The reasoning was they couldnt come to agreement with the iranians. The saudis and iranians have been fighting for market share for some time right now its a little bit of a game of chicken and thats why they didnt agree to a freeze. On the other hand, ill give you a 2 trillion reason that the saudis might, just might, have more incentive to do it this time. Thats because the deputy crown prince has invested a lot in the aramco ipo, were talking 2017, maybe 2018 for that deal to fund the Sovereign Wealth Fund which is very important to the kingdom. So maybe now is the time to start to cooperate. It could be in their best interests. But think about production right now because thats really the key to this. When you look at the nonopec production stats, you can see that weve fallen slightly year over year. The u. S. Is responsible for most of that with a 1 million barrel reduction per day that weve seen since june of 2015. Opec supply is up year on year 32 Million Barrels in 2015 to 33 Million Barrels a day now. So you can see that there are record production levels. If they actually did agree to a freeze right now, it wouldnt be very harmful. So this is why for the saudis at this point it could be a winwin. Back to you. All right. Thank you very much, jackie, d. So what exactly should we expect for the saudis at the next opec meeting . Lets bring in rbc capitals global head of commodity strategy helema kroft, its this thing in algeria next its kind of like the the informal meeting, yes. That we schlep over to or that he was not that powerful that the deputy crown prince was the boss, is it going to be more of the same this time . If you think about the vienna meeting we were both at in december, the difference between doha and vienna, i think they wanted to play nicer in the sand box. The saudis actually did float the proposal to reinstate the collective ceiling. Now, the iranians said who cares about collective ceiling, everyone cheats, bring back individual country quotas. But the saudis are making a bigger effort to say, look, we want higher prices, Everyone Wants higher prices, were not out here to trash the market. The saudi rhetoric did change by the tame they got to vienna in december. I expect them to continue conciliatory stance, may not cut but a freeze is on the table because theyre at historically high levels. Doesnt hurt to freeze now. Do you think theres going to be any talk with the rig counts going up again that theyre realizing u. S. Output may not either if not fall but actually go up and say if the americans are going to pump more, were going to pump more because we want to make sure we can get every dollar we can. Well, heres the thing, the question is can the saudis really pump more . I think the saudis are pretty close to being maxed out a this point. In fact i think almost everybody is pretty close to being maxed out. Maybe the iranians can add a couple hundred thousand barrels more, but the question is if you can get higher prices by potentially freezing at the level that you cant do more, whats the harm in that . If they had millions more in the tank, maybe bring that on. But i dont think they have that much more to bring on. Do you get the sense that the u. S. Producers are spooked at all by recent price movements . Its almost like we got to 50 or close to 50 and then they started bringing rigs back online, adding new production, you know, then you got a three handle and they kept doing it . Yeah, i mean, i think from the standpoint when you go to houston, you have people saying, look, even if we bring rigs back on, were not going to jump back up in terms of production. But they can certainly change Market Sentiment by bringing those rigs back to work. I certainly think if youre a houston producer, you have to be a little bit, you know, concerned that when you bring the rigs on look what you do in terms of changing sentiment about the market. The market has been caught in a bear trap for the last couple weeks. Halima, how close is the market to a balance of supply and demand . And was does that imply for prices . This is really important. We went from a situation of being oversupplied on a daily basis, almost a Million Barrels, to now being almost even. But the bigger issue everyones concerned about right now as theyre looking at record high inventory levels and saying even if were almost flat in terms of supply and demand, we have these record high inventory levels that we have to work off first before we can move substantially higher. But again, the market has really moved from a daily basis into almost a near balanced situation. Well leave it there and get you get started on your weekend. Always value your incite. Thank you very much. Thank you for having me. Coming up, could a reverse mortgage be right for you . They are controversial products. Well look at the benefits, the drawbacks and more coming up on power lunch. Your Insurance Company wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. And if you have more than one Liberty Mutual policy, you qualify for a multipolicy discount, saving you money on your car and home coverage. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Mpblt you have probably seen ads for reverse mortgages, maybe right here on cnbc, you get cash, keep your house. But these products are not for everyone. Now that new rules regulating them are in effect, is a reverse mortgage right for you . Our Senior Personal finance correspondent Sharon Epperson joins us now. These are controversial products. They are very controversial. New regulations according to some have made them more desirable. Exactly, tyler. Were talking about these new rules that made it tougher to get a reverse mortgage actually, but still the commercials selling retirees on their benefits continue. Including this one featuring tom selleck. Before taking out one of these loans though you need to understand how they work. So were going to start with the basics. To qualify you need to be 62 or older, use the home as a primary residence and have paid off some or most of your original mortgage. Now, once approved you can take the money in a lump sum, a Monthly Payment or as a line of credit. And you dont have to make payments while living in the house. It sounds like a great deal, right . Well, you also have to consider the fact that youre still on the hook for maintaining the home and for paying taxes and insurance. And also unlike a traditional mortgage that gets smaller over time as you make those payments, a reverse mortgage actually gets bigger. And heres why. First you get the money from the bank, then you live in the house making no payments while interest is tacked on every month increasing the loan balance. Finally, once you decide to sell the home or you pass away, the reverse mortgage must be paid off including principle and interest. Now, unless you have a pile of money to do that, youll have to use the proceeds from selling your house, and that means that your estate only gets whats leftover, which could be very little. And, tyler, we have a lot more of this on cnbc. Com retirewell, brian. What kind of a retiree, sharon, would be a good candidate for a reverse mortgage . Well, you have to keep in mind a couple things. One, you have to ideally youve paid off your mortgage already, but you still need some income. You love living in your home, you plan to stay in your home and youre healthy enough to stay in your home. Those are people that may want to consider this. One of the problems in the past was the idea that one party in a married couple would take out this loan, that party dies and then the loan was due. Right. So the remaining party had to sell the house to pay off the loan. Exactly. Have they cleared that up . Well, heres the issue a lot of folks want to look at and one of the tougher regulations is looking at the fact that you have the capacity and willingness to pay if you have to. So theyre going to make sure you have a little more funds available. You never want to use this to pay all of your expenses. Thats why a lot of the Financial Advisors we talk to do you need an advisor before you jump into this . You need to talk to a federally approved housing counselor, a Financial Advisor who knows about reverse mortgages, but look at all sides of the coin and think about getting a line of credit instead of taking that lump sum so you can use it when you need it. Im eligible for this in about three weeks, okay . No. Just sayin. Guys, thanks. Sharon, good to see you. Sure. Up next, i dont know where you are, there you are, ultimate taste test, burger kings new whopperrito. Youre not looking at me. Youre looking at the whopperrito. Its ready to be consumed. Im going over there now. Ing th. Where we explore. Protecting biodiversity. Everywhere we work. Defeating malaria. Improving energy efficiency. Developing more clean burning natural gas. My job . My job at exxonmobil . Turning algae into biofuels. Reducing Energy Poverty in the developing world. Making cars go further with less. Fueling the global economy. And you thought we just made the gas. Energy lives here. And programmers i teach them to talk. Es, so yeah, ge is digital and industrial. So its indigital. Digidustrial. Indigenous. Shhhh. Lets go with digital industrial. For now. Digidustrial. Yeah. Or, digital industrial. It is a special two street talk today. Im in jersey, kayla is literally on wall street. Lets get to the calls on wall street that matter. First up, underarmour, foot locker, dicks, positive on all but most positive on under armour, employing about 28 more upside they call it, kayla, number one pick for longterm growth investors. Recognize the stock is, quote, not cheap, but they say you get what you pay for. They call under armour a stellar brand and a company long way from maturity. I was going to say its still a teenager, but i guess it did turn 20 this years. Maybe a way to go to maturity. Second stock today blackberry getting upgrade to outperform from market perform at Raymond James on the fact Bill Griffith still has one. No, im kidding. The firm says investors should focus on the Software Side of the business, not the hardware. Ray ja increasing price target on black we aberrylackberry. Bill rules so whatever he does must be the future trend. Third stock, Brixmor Property trust. Citi group upgrading it to a buy from neutral. They say that blackstone groups ownership stake and planned exit have long been an overhang, but now blackstone is out of the stock citi analyst is more optimistic says it removes a psychological barrier to buying this stock on your own, not having to wait until the next deal, et cetera. Also see some potential deleveraging. His target on brixmor boosted. 13 upside. Another call from Raymond James, this time the firm upgrading alibaba from strong buy to outperform. Analyst aaron kesler expected online and mobile company to remain chinas cloud leader rivaling what we see amazon doing here. And your final stock call, always smaller cap under the radar call of the day, avexis, an illinois gene based therapy company. The stock down 10 over the last month so jefferies out defending, they upgraded from a buy to hold. Like the release of recent test data. Analyst says he got positive feedback from a dinner with some experts as well on what this company is doing. His target on the stock ticker is avxs by the way 42, 20 upside. Theres five analysts who cover the name and their average target is 50 a share. So pretty much everybody bullish on avexis, having a big day today. Yep. Thank you. The nasdaq, dow and s p all trading just off record levels. Is there still though a case for buying in to this bullish market . Were joined by bk Asset Management and steve grasso. We were emailing about this earlier today, boris, and you said actually buying markets at highs counterintuitively can often be a very smart idea, how come . It is because markets are basically telling you something positive is going on. I know its kind of hard to chase because as investors were psychologically averse to chasing price. But generally when we break fresh new highs that signals theres something going on underlying and theres continuation and you want to join that move. All right. Steve, what do you think . Do you agree with this sort of like buy it highs because the wind is at your sails, the wind is at your back, whatever you want to metaphor you want to use. I do like boris premise. Basically pointing towards momentum. I do like the momentum idea. But this markets been overextended for so long now. But the last time we had the three indices make these tops, brian, we also sold off 80 in the nasdaq, 50 in the s p and about 40 in the dow. So risk reward a little toppier, i get it. Its the only game in town. People are looking for those risk assets. I do understand the momentum element to this. But if youve been waiting on the sidelines, i think youre going to get a better price. I know that people have said that for months now, but i think that if you hold back here this seems a little bit too toppy. Yeah, because this is, boris, this is a tough time for a lot of people. A, if you own stocks, youre like i made some money, should i take a little profit . It cant hurt. If you dont own stocks, these rallies are starting to appear on, you know, your local paper or nonfinancial news and people are going to be like, oh, the stock markets rallying, i should get in. I should get in. If you own stocks for the long term, it doesnt matter. Exactly. Buy stocks all the time. Whatever. Right. If youre looking the kind of trade this, a compromise is to sell puts on this situation. In this case, if the stocks continue to run, you still make a little bit of money. If it does come in, at least you have gotten yourself a better average price and bought the retrace. About the only thing you can do. Brian, one more thing, the nasdaq the last time it made the high in 1999 it popped another 26 and we know how it ended but ultimately you did get that 26 pop to full on people. Were the only two people old enough to remember that high. And then some. I was at the nasdaq on tv the day it hit that high and i was there. I was like, well, shares of cmgi are rallying. Wearing diapers. I wore a lot of makeup. Im older than you think i am. Guys, thank you very much. Appreciate it. Boris, steve, thank you. For more trading nation, head to trading nations website. Remember it . Safeguard scientific. I have a picture at home with yahoo at 240 a share. Ebay. Commerce share. Im standing at the nasdaq. One of the first days it opened. I had just a terrible all over. Terrible hair cut. Having dinner a Chinese Restaurant in ash borough, north carolina. Not asheville . Ashboro near high point and the waiter said, what do you think of cmgi . I knew it was all over. Thats when you said see you later. See you mgi. Americas greatest moment. Maybe this year. Well taste test. Tyler said hes going to eat owl of those. Who else better than jane wells to join in on this . Are you excited . Im so excited football starts this weekend. Time for tailgating. Burger king hopes to add a fiesta to your festivities. With the whopper whato . Check please. All right. You can forget the burger wars. This is an allout brawl over burritos and burger king fired a huge shot. Jane wells in l. A. With a look at how the whopperrito is made. Heres the pass to you, jane. Okay ft its even donald trump says he likes mexican food and some argue its about as mexican as donald trump. Burger king wanted to get in the game for a listening time. Its important, it rolls out nationally monday. Fast food sales slowing or drop because eating at home is so much cheaper so is this the answer . Watch. This is a mess already. Would you ever have a whopper in an or the tortilla. Can i try it . Reporter first time of taco sauce on a pickle. Im not sure that works. Its good. Reporter i like it better than a whopper. But its not a burrito. No. Its sort of like a burger wrap. Now, we unboxed one, you know, no holding the pickle or the lettuce but instead of condiments, you have the meats in a cheesy texmex sauce kind of. Not easy to drive with one because its a messy at this point. Guys, eat them while you can. May only be a temporary product. This is big right now. Try things temporarily. Like burger kings mac n chitas which i loved i hope that comes back. Well try it here. What do you think . Kayla will try, also. I made the mistake of picking it up and i said it feels like a dirty diaper but thats just me. Well see. I have a 2yearold at home. I changed a couple of those this morning. You know what im talking about. Okay. Here we go. Weighs less than a chipotle burrit burrito. The soft taco is very good. Now, whats the calorie count . If youre like no carb 570. Is this better for you than having the bun . It is about the same. I think one of the reasons to do this is portability. I think they need to work on that a little bit. It is more calories than a taco bell burrito and not much and much less than a chipotle burrito. I agree with you, jane. You are in the car eating capital of america. Yeah. You need to do this. Cant get the burger. You shouldnt be eating and driving and texting and driving. Everybodys doing it. The price of this . How much is it . 3. 99. I paid 3. 99 yesterday. 2. 99. We have representatives. Here 3. 99. I would say 4 of ingredie ingredients. A little slime my. Its a burrito with pickles it is its good. It is good. Its appropriately messy. I would suggest to our friends from burger king trying not to show up with lettuce and tomato on my face. It is a sizable burrito. I can have what i want on it, right . Theyre nodding yes, affirmative. If i could get little pepper, hot peppers if you have them in the stores. And ask for them. On the matheson burrito scale, 1 to 10, 10 being heaven, 1 being hell pretty good. I think its right up there. Very good. I wouldnt choose to have pickles on it. Yeah. But its i agree with you. Its a hamburger. Thats not way off crazy. Think of it as a hamburger in a tortilla its easier to handle. Kayla will hate it. Shes from chikfila. I need it on a biscuit and then identify with it. Right now. We want to say goodbye to our intern shelley from the university of missouri. We thank you for being with us all year. Never eaten a burrito before. Would you like it . Sure. Give it a try. It is not a burrito. No. She is our intern. You dont know shelley . Yes. But i mean, i never asked her to do anything. What do you think . Pretty good. Students would never eat anything like this. Living off this stuff in columbia. By the way, guys, i would join you and eat this one but its 24 years old. I liked it and asked the burger king folks if the king has a Corner Office or a throne. They didnt have an answer. She ran away. Shelley ran away. I scared her. If i was in college, i would want to get back, too. We have to go. Thank you for watching. Thank you, kayla, for being with us. Closing bell starts now. Welcome to the closing bell. Im sara eisen in for kelly e rans at the new york stock exchange. Its friday. It is friday. Tgif. Matching like prom dates again. I forgot the boot near or whatever i give you. Stocks pulling back a bit today after the record breaking close for all three of the major averages. Last time all three closed at a record high on the same day