Nasdaq at 5,120. S p 5002,087 and the russell down almost a full percent. But we begin now with the big deal in health insurance. It is official. An them agreeing to buy cigna for 188 per share in cash and stock. An enterprised are value of 54 billion. Straight to bertha coombs. Combined anthem and sigma would unseat United Health to become the largest u. S. Health insurer with 150 billion in annual revenues. More than 50 million members covering nearly 1 in 5 americans. Anthems ceo joseph swedish aide mitts put admits putting the two big firms together will be challenging but with that scale they can generate operating savings and make them more affordable. It will improper our ability to serve customers across commercial medicaid medicare and International Markets and create greater efficiencies and afford ability for our customers. But the anthem deal taken with aetnas proposed merger with humana would result in the big five insurers becoming the big three. One antitrust lawyer tells me given how that worked out in the Auto Industry it will make for tough regulatory scrutiny. Researchers dont see the deals being blocked. They dont substantially reduce the competitive dynamic in markets, and so what is happening is that youre creating more capable companies but you are not necessarily reducing the competitive situation in a market. Of course it is market by market. The anthem and cigna deal does include a hefty breakup fee. Thank you, bertha coombs. To housing. New home sales fell 6. 8 in june. Diana olick is live in washington with all the doo he tails. I know there was still one region in particular that was still strong but in general has the Housing Market started cooling off . Reporter well, maybe a little bit, mandy. Perspective is everything on this number. The drop was unexpected but we are still up from a year ago and year to date. Heres the most positive item. The needsian price of a newly built home sold in june fell slightly from a year ago. Still near record highs but that helps for your first time buyers. Sales down 6. 8 for the month in june, up 18 for the year. I always like to remind folks that this number is based on signed contracts in june not closings. This is real shoppers out in the open houses in june. Mortgage rates were pretty volatile during the month, mostly moving higher. June Single FamilyHousing Starts were weak. I want to focus regional here. New home sales fell the most in the west and midwest. They were strong in the northeast but that area is actually the smallest share of newly built homes in the nation by far. You want to watch the west and the south which is where the vast majority of u. S. Home construction happens. They both fell in june but they are growing pretty dramatically year to date. The trouble just as is in the existing home market is weak supply. New Home Construction is still well below where it needs to be given demand. On pricing, were starting to see a little bit more lower price product come on and material prices are coming down which could allow builders to come off what had been those record high prices. Back to you. Thank you very much diana. Hillary clinton delivering a speech this our about her vision for the economy. She plans to talk to her proposed changes on Capital Gains taxes and her thoughts on what she calls quarterly capitalism. John harwood joins us live from new york city with more. Hi john. Reporter hi, tyler. Im at nyu where Hillary Clinton is going to continue today to lay out a series of steps that she hopes will both clang the Income Distribution in the United States, raise middle class wages, and also make more of a longterm focus on productive investment. On Capital Gains what shes laying out specifics on today, what she would say is you want to keep the current 20 rate on Capital Gains . Hold your investment for six years or more. If youre holding it shorter period than that, the rates going to be higher. If its up to two years, it is going to be an ordinary income rates for those top tax filers. Thats 39. 6 . Then you see it coming down in four percentage point increments year by year until you get the sixyear mark when you get to 20 . This is an attempt to try to rehadden orient from shortterm profit taking to longterm investment. There are other steps that shes going to discuss, though not detailed to policy specifics, to try to push back against orderly capitalism. They include activist investors, people like carl icahn who is encouraging Corporate Directors to take steps that would produce immediate returns. Also executive compensation. Also share buybacks. Along with Capital Gains, those are part of the range of steps that the administration hopes will reorient the focus on american capitalism to some degree. Not an overnight huge change but some. This comes on a chaotic day when she woke up to headlines about a potential criminal investigation of her email account that was handled on a private server rather than a government server. I can report that a Justice Department official has told me that the referral for a potential investigation is not a criminal investigation. Much different from the tenor of those earlier reports. This is something that Hillary Clinton, of course has dealt with for some time and will continue to deal with while she tries to talk about substantive issues like the economy, guys. Thank you, john harwood. Well get more analysis on the spate later on this hour. Jackie deangelis has a news alert. Good afternoon. Baker hughes out its weekly rig count report. Up 21 rigs. This is taking oil to session lows. 47. 82 is where we stand at the moment down 63 cents. This has been a very rough week for oil. Cracking that 50 mark. A psychological level that investors look at. A key technical level as well. This recount number really not supportive in any way but very bearish here and only adding to the fact that we got from the department of energy an inventory build. We saw total inventories, total crude stocks were up 25 year on year and production is still at peak levels just under 9. 6 million barrels. The fact that were seeing recounts actually go up mandy, very he staggering. Indeed. 47. 81 is where we are sitting. In less than 90 minutes well also get the close on crude for the week. Commodities are continuing to take a beating. The basket of commodities eye balling gfc lows. Absolutely. It is not just oil which is down roughly 6 this week a lot of pressure coming from that stronger dollar which is gaining momentum again today but we are also watching gold prices. 57 5 1 2year lows today. We broke a tenday losing streak yesterday but just barely. Of course gold is losing momentum today as well down 4 on the week 7. 5 on the month. Also in the metals space you have to Pay Attention to whats hamg happening to copper prices down 4. 5 on the week 7. 5 on the month. Everyone looks at copper because of china and the potential for demand there. Also for gold and oil as well. Thats a key factor. The dollar pressuring copper also and people look at it as an indicator of what what may be to come for the Global Economy and potentially stocks as well. Jackie thank you very much. Lets look at whats moving this hour. Amazon sure is sharply higher. Share prices there after the online retailer stunned investors by posting a get this profit. Amazon brought in 19 cents a share in contrast to the 14 cents a share loss that analysts were expecting and the move in the stock vaulting its value above that of walmart. Music streaming Service Pandora beating estimates by 3 cents. Revenue was also above estimates on a jump in both subscribers and ad revenue. Nice 15 more for that one. Tripadvisor, meanwhile, missing estimates by a penny. The travel website operator did see a 25 increase in sales but that was weaker growth than the street had been forecasting. Quite a tanking in the stock there. Take a look at this folks. This is new shocking video coming in from a fast moving brush fire in Northern California. The quickly burned a barn down on wednesday night. This video was taken by some ranchers who live nearby and were getting their own horses to safety. The fire in napa county has now spread to 7,000 acres. It is only 15 contained with 1,300 firefighters battling the blaze. We certainly do hope they have success. Lets get to Mary Thompson for a quick market flash. Housing starts getting hit today after a surprising report this morning that showed new home sales fell 6. 8 in june hitting a sevenmonth low. Look at the Home Builders. Right now all down just about 2 . Building material stocks also down about 2 . There we go. Sorry about that. Building material stocks. Back to you. Malaria kills more than half a Million People globally annually and there are no approved vaccines until today. Glak glaxosmithkline has just made history in the fight against the disease and we have details next. Speaking of Health Care Stocks you might want to buy in the sector straight ahead. Power lunch returns in two minutes. Technology empowers us to achieve more. It pushes us to go further. Special olympics has almost five million athletes in 170 countries. The microsoft cloud allows us to immediately be able to access information, wherever we are. Information for an athletes medical care, or information to track their personal best. With microsoft cloud we save millions of man hours, and thats time that we can invest in our athletes and changing the world. Biogen getting hammered at this hour. The quote there, off 20 . The company beating estimates but revenue came in below forecast. Firm also cutting fullyear guidance. That stock down 78 a share at 306. Spirit airlines moving down about 2 after the Company Posted a profit of 1. 05 a share. That did Beat Estimates by 4 cents. Now remember the stock is down about 23 over the past six months as you see there. American Airlines Reported a profit of 2. 62 per share, 2 cents above estimates. P. A. Aal is down 2. 3 on the trade today. Malaria. It kills more than half a Million People annually and there are no approved vaccines until today. Glaxosmithkline getting the green light for its malaria vaccine. This is a project the companys been working on for get this 30 years. A lot of drugs take a lot of years but 30 years is a long time in the making. Extreme. It was 1984 when they first started working on the malaria vaccine at glaxosmithkline. When you see the global chairman later today, its been 30 years since that photo was taken. The vaccine received a positive opinion Foreign Policy european regulators today to prevent malaria in Young Children in subsaharan africa. Thats important because the more than half Million Deaths from malaria annually, more than 83 of those are in kids under 5 in that region of the world. The next step is for a recommendation from the World Health Organization which today called the move a major milestone noting though that the vaccine may not be licensed for youth in africa until 2017. Glaxosmithkline says it invested 365 million in the development of the vaccine and plans up to 250 million more before it is done. It will offer it at a not for profit price covering just the cost of manufacturing bus 5 it says it will reinvest in similar programs. Vaccine is not 100 effective but it reduced cases by 27 to 39 . It could be an important new tool against this disease. Well hear from the coinventor himself. Well look forward to that interview. There is something that has been happening in the market that may be making some traders skittish. We will tell you what it is straight ahead. Plus todays crime and punishment. A book making operation so big, its ringleader buried 1 million cash in his own backyard. If you can afford to just bury 1 million and not think about it thats an indicator of what kind of success youre having. That story coming up right here on power lunch. It took Serena Williams years to master the two handed backhand. But only one shot to master the chase mobile app. Technology designed for you. So you can easily master the way you bank. Being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. Hurry, before this opportunity cools off. Share your summer moments in your mercedesbenz with us. By the time Police Arrive on a crime scene they could have little to go on. A vague description. A single piece of evidence. A partial plate number. With an app from ibm officers can now access over a billion police documents to find hidden connections and identify potential suspects. Ibm analytics helps one hundred thousand officers work smarter every day. The three major indexes just hitting new lows for the day. Heres a look at markets right now. As you see, the industrials off 119. It has been a bumpy week for the industrials. Down we need a greek crisis or something to keep the market up. Thats what im saying. Nasdaq composite off. 66 . It all went south when they solved the greek thing, mandy. S p off about. 75 . Be careful what you wish for, ty. In this market anything can happen. Tonight on 10 00 on cnbc american greed. A wine dealer makes millions of dollars selling his cheap basement blends through elite auction houses. But a wine expert is immediately suspicious. Downeys trained eye has discovered what she calls rudy tells. This bottle here is a magnum allegedly, of 1961 chateau patrice. The funny thing is that this label has a lot of things wrong with it. For one thing, the label is a sticker. And that is a telltale side of rudy production. It has been falsely aged. Its not on the right paper stock and more importantly it has a rudy tell that i can only find on rudy made wines and it is something that i can actually again trace back to the templates on his computer and that is that this e has an extended middle line and that is not seen in regular production. Its only seen in this production. He makes a foretuntune before his massive crime is discovered. Tonight at 10 00 p. M. Eastern and pacific on cnbc. Counterfeiting the labels. Thats ingenious. The press officially dubbed him the gentleman gambler. From 2006 to 2012 he ran a book empire but it all came crashing down. Crime and punishment. Investigators say it was one of the biggest Sports Betting operations theyve ever seen. The leader raking in tens of millions. So much in fact that some of that cash was buried in his own backyard. Take a look. If you can afford to just bury a Million Dollars and not think about it thats an indicator of what kind of success youre having. Reporter millions of dollars literally on the heels of investigators who were looking for cash but had no idea just how close they were to hitting pay dirt. Michael dixon, fbi. They found a pvc pipe not two feet from the soil. That triggered a greater search of the property and uncovered about four different sections of pvc pipe which ended up containing 1. 1 million in cash. Reporter the cash secretly hidden here. Investigators say the owner was running a massive book making operation with help from his brother. This assistant u. S. Attorney for the Eastern District of pennsylvania spread throughout the country and outside the country. It relied upon people relied upon internet websites. Reporter the websites were the main hubs for the operation. Bet bettors were given an account number and password where they could logon and place bets on loads of different games. Once the better got to their preset winner they had to pay up to the local agent. The agent would take his prearranged percentage and forward the rest of the funds to joe veto. I would say he was a brilliant person who became dwoes devoted to his business to the point it sort of controlled his life. Reporter controlled his life so much that even after he got busted in 06 and spent two months behind bars he went right back to book making. Perhaps he felt that he the cost of doing business was worth it to him. Reporter Prosecutor Says joe vito made no apologies for who he was and while on probation even wrote this letter to his probation officer. Saying, in part betting is an integral part of my income. By restricting my betting to costa rica and other offshore betting venues where betting is 100 legal, i will be allowed to make a living doing what i do best and love without being in violation of my probation. Thats something he wanted to do. Reporter but it was joe vito falling victim to a crime that finally collapsed his empire. He reported his vehicle stolen. When police recovered it they found a laminated sheet with the names and numbers of other local bookmakers. Some who had recently been prosecuted. Greed played an enormous part in it. Reporter realizing he was still in the game local authorities turned the case over to the feds. Irs special agent paul schnaufer. There were hundreds of bank accounts, hundreds of check transactions, dozens of wires that went overseas. Reporter money flowing to places like sweden portugal malta, antigua. Investigators charged that at its peak the book making operation had over 1,000 bettors and bets coming in annually. He was making money in all kinds of ways and making enormous sums of money illegally. Reporter both men pleaded guilty to book making Money Laundering and a slew of other charges. John got nine months behind bars and vito hit with 20 months in a prison hospital because of his ailing health. Back to you. Thank you, andrea day. Gold prices are closing right now. Yesterday we broke that tenday losing streak but sliding again today by about. 8 to the lowest since early 2010. I think this has been the worst weekly slide for gold in about nine months. Silver copper platinum and palladium all moving down except for palladium which is moving up by just over half a percent. But getting to the bond market. Rick santelli is tracking action at the cme. There was movement early on when there wans an accidental release from the fed. Reporter yeah. Accidental. Thats what it is. Accidental. We never meant to float that balloon. Pop well, it did move the markets. It moved yield curves. Then get letlet the markets speak for themselves. 10s are down 10 and 30s are down 13. Theres a lot of o curve flattening going on but theres also iffy data like todays homes number. Look for yourself 5s and 30s. Volatility is about back to normal on the day. Not on the week. Look at the integral parts to your note yields. 30year bond you can totally see the difference. The big story is not only commodities and crb and china but the herd mentality of how charts an history move markets. If you look at the crb since april 1st, you can definitely see once it traded under 2. 15 everybody was looking at the same thing. If you move it back a while farther to 2003 theres another area that everybodys looking at right around 200. We want to watch that in particular as well. Tyler, back to you and have a good weekend. Same to you, rick. Hillary clinton expected to give another speech on the economy any minute now. She will Ask Companies to focus less on shortterm gains and more on longterm profit making. One way she may propose to do that is to make a big change in Capital Gains taxes. The rates. The durations for shorterterm trades. When she says shorter, she basically means anything a Holding Period under six years. We will bring you the latest on that speech. What it could mean for your money. Got a lot of laps to run there. But its straight ahead on power lunch. Hi my name is tom. Im raph. My name is anne. Im one of the real live attorneys you can talk to through legalzoom. Dont let unanswered legal questions hold you up, because were here were here and weve got your back. Legalzoom. Legal help is here. Here at the Td Ameritrade trader group, they work all the time. Sup jj . Working hard . Working 24 7 on mobile trader, rated 1 trading app in the app store. It lets you trade stocks options, futures. Even advanced orders. And it offers more charts than a lot of the other competitors do in desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivative pricing model, honey . For all the confidence you need. Td ameritrade. You got this. No fifth graders ever sat at the cool table. But your jansport backpack is permission to park it wherever you please. Hey. Thats that new gear feeling. Now get a swiss gear backpack for only 10. Office depot officemax. Gear up for school. Gear up for great. Hi my name is tom. Im raph. My name is anne. Im one of the real live attorneys you can talk to through legalzoom. Dont let unanswered legal questions hold you up, because were here were here and weve got your back. Legalzoom. Legal help is here. Im Morgan Brennan. Heres your cnbc news update for this hour. The Turkish ForeignMinistry Says turkey has agreed to let u. S. Coalition forces use its airbases against isis. It also says turkeys air force will be taking part in the operations. The wall street journal reporting an internal government review found that former secretary of state Hillary Clinton sent at least four emails from her personal account containing classified information. As a result of the findings the Inspector General referred the matter to the Counterintelligence Division of the fbi. Authorities have identified the two women killed in a louisiana Movie Theater shooting. A new study says Cancer Patients should not have to endure chemotherapy if theyre nearing the end of their lives. While cornell medical researchers say the medication did not provide any clinical benefit for patients and worsens their quality of life. Thats a cnbc news update at this hour. Back to you. Lets find out whats happening on the floor of the New York Stock Exchange. Bob, it was this time yesterday that we were talking about session lows in the market and thats exactly what were looking at right now as well. This is just ugly. Let me just show you whats going on for the week. I am not at all happen. Im acting like a crazy person but this is whats gone on all week. Every single day weve been 21 declining to advancing. Not just here but on the nasdaq as well. Im happy google and amazon did well but thats not going to sustain us at all. We need a little more upside momentum. Internals are terrible. 31 declining to advancing stocks. Even on the nasdaq. Same thing. Volume has picked up today. Thats a warning sign here. Particularly on downside. Lot more volume on the downside than up side. New lows are expanding 373 here at the New York Stock Exchange. Theres no new highs, theyre going away completely. All the market internals look pretty bad. Energy materials getting clocked again. Just a horrible week for them. Industrials have had a very ugly time as well. This is a worrisome sign health care is down. It is not just biogen. Dont just say this is biogen. It is a lot of big names on the downside in health care today. Thats another warning sign. No lows here in energy. All the big names. Everything is at 52week lows and has been hitting them all throughout the week. Exxon, eog, occidental apache all at 52week lows. All the material names are at 52week lows. Dow earnings for the week everybody whos had an Earnings Announcement has slid after the day of the announcement. Even ge last week. Its just been an ugly week overall. Wow. Those are major declines there. Far more than the index themselves. It is painful to watch it. Because normally you dont get those kinds of slides in those big names immediately after the earnings reports. It is the guidance thats been a real problem this week. Q3 is not turning out very well. We were supposed to be positive in q3. Now the number has turned negative for q3 on the s p 500. Bertha coombs now latest from the nasdaq. Whats the picture you paint, bertha . A lot of red but take it in perspective. The nasdaq is coming off of a week where it closed at a record high, down nearly 2 for the week. Today it is really biotechs chips that are down and for the week they are off about 3. 5 . The big drag comeing from the small caps and biotechs and the reason is because of biogn. Biogen having slashlded its outlook for its outlook for its multiple sclerosis drug. Thats really bringing things down. On the flip side amazon having its best oneday percentage gain since last april 24th adding a whopping 30 points up side to the nasdaq 100 today but thats just not enough to deliver the big cap index out of the red. Thank you very much bertha coombs. How do you play this kind of market . With me now, Portfolio Manager for bmo Large Company fund at bom, and the cio are Global Financial capital. Er ernesto, yes, we are close to record highs but there are some problems here not to mention a rout in commodities. Are you concerned . Well were not really terribly concerned. I think the fundamentals of the u. S. Market still look good. The strength of the dollar is behind a lot of what were seeing in terms of disappointments in q3 but thats not an economic issue, it is a courtesy issue currency issue. We are looking for companies that are growing faster than their universe and trading a the a better valuation than the benchmark. Were finding plenty of companies of companies such as that so were not terribly concerned at this point. Which companies are you looking at . Particularly if youre going to be able to dodge that strong dollar that you mentioned . For example, edwards lifesciences, ew. They are makers of cardiovascular equipment, transaortic transcat they are aortic valve replacement which essentially is a minimally invasive procedure that allows doctors to replace or repair your aortic valve. Thats a market where they have 60 market share. They just got approved in 2011. Thats a pretty young treatment and it is expected to grow substantially over the next few years. Thats all focused in the United States pretty much for now. Chris, how are you investing at the moment . Well i certainly feel that a good shakeup would help all investors to shake out the weak hands and whatever. Think we want to play the political cycle. We are coming into the final year of a president ial cycle. When both sides of the aisle try and agree on things like maybe sequestration changes, makes a lot of sense. Theyre cheap and their yields are greater than the tenyear. Maybe adjust on the back of potential adjustments for sequestration. But i think you talk about the sausage making tactics. I think again, both sides of the aisle are saying lets get rid of the device tax. Lets play medtronic, boston scientific, st. Jude. Same thing with the highway bill it sort of fumbled around in the last few days. Theyll get it done and probably get a threeyear done on it. In which case floors and aztecs, those make a lot of sense. I think you play the political cycle. Thank you very much to you both for joining us. Go to powerlunch. Cnbc. Com to see more on todays Market Movers and shakers. Boy, are there a lot of them. As we wait on Hillary Clinton to speak, lets bring in our chief washington correspondent john harwood and cnbc contributor larry kudlow. Two coppics on our agenda at this hour mr. Is clintons Capital Gains plan and the highway bill. We start with Capital Gains. John, why dont you just for the record go back and tell us what mrs. Clinton is expected to propose and what the goal of it is. What shes trying to do tyler, is raise the Capital Gains rate for assets held for a shorter term. That is under six years. If you hold the asset for six years or over the rate that is the top rate of now 20 would still apply. But if you hole investd investments for two years, if you are in the top tax rate youll be taxed at the ordinary income rate of 39. 6 . Currently you only pay that top rate if the asset is held for less than one year. So she extentdz that period out and there is a sliding scale down. The idea is to push out investor toward a longer term move away from quick return investing. Her argument is that this will expand the productivity of the economy over the long run. It is worth saying that britain tried this approach some years ago and abandoned it. They had a sliding scale over time as well. Decided it wasnt so effective. Now theyre back to a flat rate. But her argument is it will make some difference. Lets turn to larry kudlow. Something tells me youre not going to like this proposal larry. Well i just want to say one thing. John harwood, well done for bringing up the british example. Thank you for that. I had it in my notes. You beat me to it. Youre the best. Best in the business. Now, i am completely opposed to this. Its antigrowth. Its antiinvestment. It is antijobs. The numbers here are just much worse than you are saying. I mean for a couple years, youd go to 39. 6 . But thats not 39. 6 . Thats 43. 4 . Which obamacare tax. And, remember Capital Gains is double taxed. First as profits, and then as Capital Gains. So you really are talking about a 63 total Capital Gains tax. Cap gains is one of the most important factors in the economy. It affects risk investment which we need desperately. It affects business startups which we need desperately. It affects Business Expansion and jobs which we need desperately. This is a punishment. This is a redistributionist. By the way, it loses money. It loses money. I dont know if you remember a couple of years ago when president obama was interviewed by Charles Gibson of abc news mr. Gibson said every time you raise Capital Gains tax you lose money on that. Mr. Obama says yeah i guess so but its fair. Whats fair about losing jobs . Thats not fair. That just hurts the economy. Larry . Yes, john. Last week at delivering alpha there was an onstage discussion scott wapner led with carl icahn and larry fink arguing this very point, larry fink saying it makes sense to push investment out to a longer term icahn speaking for activist investors saying no we shouldnt be hamstrupg inham hamstrung in that way. Why is larry fink wrong . I have a lot of respect for larry fink. I just think hes wrong. I dont think the government should dictate time horizons. Okay . This doesnt mean i agree with carl icahn on everything. Im not thinking about carl icahn. Im thinking more about the ordinary investor. Look, if i see a Good Business opportunity, if i see a new startup opportunity, why should the government stop me or penalize me from selling now, taking profits off the table, and reinvesting it into a brandnew business which by the way, might create 20,000 new jobs if we hit the Technology Jackpot . I dont want government involved in this. It loses money for the federal budget and it discourages all the animal spirits of economic reform. Can i be honest with you . Larry fink is a sincere guy. Id love to him to talk to him about this long term short term thing. But i do not think ms. Clinton is doing anything here john but playing politics. Shes trying to thread the needle between the Bernie Sanders left wing socialist crowd. At a future time larry, id love to hear you talk about why we dont just call income income. Why we make distinctions between whether its Capital Gains income, dividend income. We make distinctions on carried interest. Why not put it all into one pot absolutely. No, no youre deadright. Lets go. Give me 15 to 20 flat tax rate. Get rid of the Corporate Tax. Everything taxed there. Capital gains, dividends. It would be simple. We could do a postcard live happily ever after. Lets get to the highway bill. It is now the subject of lots of politics. Sources indicating that representative ryans proposal may have something in store there. In the senate it seems bogged down with the recurring efforts to repeal obama. John where does it stand . You have a he got a fundamental difference between the house and the senate. House wants to fund a longer term highway bill using money that would be raised from Corporate Tax reform. President obama for two years has pushed this idea himself. Mitch mcconnell in the senate doesnt think tax reform is achieveable achievable. Hes going a separate way to raise money for highways selling oil out of the pret yum rereserve. Well see if Barbara Boxer can get it through and move but right now youve got a longterm kick the can situation that the congress has been engaged in. Not clear whether the house and senate can larry, 30 seconds. Sources close to paul ryan tell me that theyre trying to get an end to the double tax on foreign profits for 5 tax rate. You could repatriate your foreign profits. That would be a very big help. The only problem is in the first year it is going to go into the highway fund so it looks like a tax increase for spending. But it is not. It would actually go to territorial over five six, seven, eight years. It is a good idea. It is a bit complicated. But ryan is trying to get some International Tax reform. I think that would be progrowth if he could do it. Fascinating stuff. Guys, appreciate it as always. Although he softened his stance yesterday in comments to cnbc, bridgewaters ray dallio turning bearish on china telling investors there are now no safe places to invest. Were talking to a senior analyst, ron insana to get his reaction and outlook on china. Plus a new survey on millennials in the workplace. Thats straight ahead on power lunch. O branches equals great rates. Its a fact. Kind of like shopping hungry equals overshopping. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Push your enterprise and you can move the world. But to get from the old way to the new youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. And stay ready for everything that is still to come. vo me . I dont just wait for a moment. I watch for the perfect moment. The one nobody else sees. And when i find it i go for it. announcer at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so youre always connected, wherever you are. Because at scottrade, our passion is to power yours. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Welcome back to power lunch. Dow component visa is up a healthy 4 after better than expected earnings and revenue in the last quarter. Also confirming talks to buy visa europe. Wallets of capital one investors are taking a hit. The stock down over 12 after the credit card issuer missed analyst forecasts for the quarter. Todays move erases all of the stocks gain for this year. Back to you. A new study out saying millennials rate communication and Relationship Building as their strongest leadership skills but plenty of other studies say these perceptions arent share by older generations. So do millennials need an identity check . Founder of a promote yourself and a millennial yourself dan, welcome back. Jean is partner of future workplace and coauthor of the 2020 workplace. Interesting conversation about to ensue here. Jean, are the millennials as prepared to lead as they think they are . No. They are not. I think there is soft Skills Communications gap. I think millennials think theyre prepared. They selfreport theyre prepared. But my clients, the heads of global hr companies, do not think theyre prepared. Are they really different in that sense then from prior generations . Because i remember being a baby boomer come being in to the work force and we thought we were pretty hot you know what. I do. Because im a baby boomer as well. I love you. I think there are very similar to previous generations, and i think what were seeing now is that Millennials Want what we all want in the workplace. Often, though theyre the first to speak up and say what they want. Dan, would you like to push back on that being a millennial thats just been criticized . We worked on a study and we actually found that millennials say their weak parts are their hard skills. Yet in the past we found that older generations view their communication skills as being their weak skills. So its completely different and it doesnt really match up which is really interesting, because millennials use this technology and there is such a Technology Gap in order to commune whaticate what they are thinking and what they want and older generations have yet adjusted to the new realities of the instant messaging world. If im hearing you here the message is not necessarily millennials have a deficit, they have new skills. We dont need some of the older skills anymore in the workplace. Using technology is really important but it is also important to use the technology to facilitate inperson interactions, going to lunches, having to inperson meetings. These are all important trends and millennials are leading inging by using the technology. What trades or attributes skills, what have you, do millennials have jean that are really good that will set them apart and empower them as they evolve in their careers such as we baby boomers dont crush the before . Right. I think networking. Problem solving. I definitely think certainly technology skills. I think understanding how to navigate inside companies. I think the topic of soft skills is very complex. And its much more than just networking and soft skills. Its really influencing problem solving and reaching a consensus on a shared vision. Jean dan, thank you very much. We love the millennials. Mandy and i work with a lot of them. Theyre wonderful, theyre nice theyre lovely. They dont want my job at all. Thats fine. Weve got to show you whats happening with stocks. Theyre really deteriorating here. Its everybody had volume to the downside. The dow is currently down by 141 points. I think just minutes ago it was around the lows of the day, down nearly 160 points. The s p is down by nearly 1 . Again it is just off the lows. Were down by over 1 seconds ago. Were going to keep on watching whats happening in the markets and see whether or not we keep on deteriorating into the close. Do not go away. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. Hurry, before this opportunity cools off. Share your summer moments in your mercedesbenz with us. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Welcome back. Bob pisani on the floor of the New York Stock Exchange. Stocks right now in the s p are drifting toward the lows of the day. Weve been drifting lower all week. This is the lows for the week. Been down four days in a row. The s p 500. Thats an intraday chart you are looking at. The problem is we are seeing continued weakness in sectors that have been a problem for a while and a new sector emerging as a sorts of weakness. We know about the problems of material stocks and energies as the commodity rout continues this week. Industrials have been hit rather badly because of disappointing guidance from Major Industrial companies. Biogen reporting disappointing numbers dragging down many of the biotech names. Industrials on the weak side. Dupont chevron, goldman sachs, even in some of the bank names today, ibm among the bigger ones weaker. More power lunch coming right back. This summer, challenge your preconceptions and experience a cadillac for yourself. Take advantage of our summer offers. Lease select cts models in stock the longest for around 399 per month. Hi. Hi. Hi. Hello. Hi. Hi. Hi. Hi my names josh. Kelly. My name is raph. Steve. My name is anne. Tom. Brian. Krystal. And i am definitely not a robot. Im one of the real live attorneys you can talk to through legalzoom. Whether its for your business or your personal life, dont let unanswered legal questions hold you up. Because were here. Were here were here and weve got your back. Legalzoom. Legal help is here. Over 20 million kids everyday in our country lack access to healthy food. For the first time American Kids are slated to live a shorter life span than their parents. Its a problem that we can turn around and change. Revolution foods is a company we started to provide access to healthy affordable, kidinspired chefcrafted food. We looked at what are the aspects of food that will help set up kids for success . Making sure foods are made with high Quality Ingredients and prepared fresh everyday. Our collaboration with citi has helped us really accelerate the expansion of our business in terms of how many communities we can serve. Working with citi has also helped to fuel our innovation process and the speed at which we can bring new products into the grocery stores. We are employing 1,000 people across 27 urban areas and today, serve over 1 million meals a week. Until every kid has built those lifelong eating habits, well keep working. Everyone loves the picture i posted of you. At t reminds you it can wait. Im melissa lee. Coming up in the second hour of power lunch, much more on the market slide happening with about two hours left in the trading week. Also ahead, the best bets to make in housing right now as new home sales slump to a sevenmonth low. Shocking stats on sweet. Wait until you hear how much money we spend each year on chocolate. All coming up top of the hour. But first back over to mandy and tyler. More on the market slide, ron insana joins us now. Bob pisani points out the s p is down so far 2 on the week but thats not the half of it. When you start to look at individual names despite what google, despite Amazon Energy worst week of the year in that sector. A lot of those names, not to mention the miners db. Looking for 80. Copper which is down to 2. 35 a pound. The entire commodities complex has effective live crashed over the last year. What do you think is the main culprit . Stronger dollar . I think it is global growth. Think china is far weaker than people realize. I think our market is deteriorating to the extent that i think is correction may be in the cards. Stocks making new 52week lows on the New York Stock Exchange well over 300 today. Thats a type of technical divergence you dont like to see. A point bob made just a few minutes ago, the number of new 52week lows versus the highs. 31 negative. You mentioned china. We were going to talk about it but it sort of got trumped. I dont want to go there. You dont want to go there. China has now become the worry of the weak and it has become a much more let me put it this way global worry than greece ever was. The notion that only 7 of chinese are exposed to stocks when you look at the active population in the economy, it is around 400 Million People. They have 800 Million People living on 1 to 2 a day on the farms. When you put the 90 million against 400 million, you are talking about 22. 5 thats exposed to the stock market over leverred. They have a property bubble going on. I think it is a real worry. I also think when you look at bond yields here at home going down on the likelihood of the fed raising rates, a flattening yield curve is not what you want to see if the markets forecasting strong err growther growth down the road. Maybe a few amber flags or red ones. So much for a slow summer. Thank you very much ron insana. That will do it for the first hour. Guys melissa, over to you. Thanks so much guys. Hi, everybody. Im melissa lee. Stocks in the red right now down tripledigits. Kayla tausche is with us. We are watching the markets right now, two hours left in the tradesing week. Right now the dow is down 135 points down. 75 . Oil continues its decline. Of course we got a surprise rise in rig counts in the most recent week and of course weve had a selloff in the entire commodity complex. Not only oil, also gold bob pisani. On track on its 5 1 2year low. What is it that were seeing thats responsible for the slide we just saw . A couple problems. Ron hit it on the head commodity implosion continues. Thats affecting material and energy names. But it is a little bit more than that. Materials arent materializing even in the other sectors. Remember what we promised in the Second Quarter, we were told that earnings would improve because there were transitory factors thats the feds word that were affect being the economy. They were lower oil, they were the stronger dollar it was the port strike it was the cold weather. The port strike and cold weather went away but the other transitory factors havent. Theres still a strong dollar impacting, low Oil Prices Still impacting things. So a lot of these transitory factors havent gone away. Global slow growth problems in china. Still no Revenue Growth overall, thats starting to move into a number of other sectors. This week it affected the industrials. Guidance very poor on Companies LikeUnited Technology and some of the other ones out there be with including some big tech names. What happened to this idea that twothirds of the names that are reporting are doing better than expected . They are but the numbers have come down dramatically and the guidance for the Third Quarter is a big issue. A lot of people have piled into a small group of names. The three sectors that matter right now are banks, number one essentially a small group of tech stocks in the nasdaq 100. There is a lot of money hiding in these three groups right now. They are down for the week. Biotech is notably weak today and that supports what was happening earlier with some of the earnings reports and biogen. But here today you see thats a little bit of a concern when you get the biotech dropping 2. 8 . Lot of money in that. The bank group has held up very well. I wouldnt be that worried about that but watch if these kinds of groups start to crack today. I want to point out in the biotechs biotech is bringing down a lot of big names today. Gilead celgen. I wonder also if there are more concerns about china as we move on. We had disappointing china data over overnight, disappointing results from freeport mcmoran. Also when you comb through a lot of the earnings reports you are seeing data points that indicate at least the industrial sector is seeing weaker erer than expected results out of china. Orders for otis elevators were down 10 in china alone. Thats right. I want to point out that it is not just china. Youre right, melissa. But latin america. You mentioned United Technologies. We saw whirlpool. Caterpillar. Also specifically mentioned the weakness in latin america. If you look at brazil this week the ewz is the major etf for brazil. Thats been sliding all throughout the week. Also on concerns about Slower Growth in that particular country. Youre right on china but i also want to point out latin america is a big problem as well. The slower global growth. The commodity implosion and the simple lack of any kind of real Earnings Growth. Third quarter earnings are now negative. We were supposed to be positive in the Third Quarter and a real rebound in the Fourth Quarter. Now theyre starting to take down numbers there. This is all feeding in to sort of the negative sentiment that weve seen throughout the week. Kenny polcari also joins us on the floor. It is easy to say we got some negative data but it is 2 00 on a friday. Right. Toward the end of the week toward the end of the month. This is generally the pattern that we see. Especially in the summer. Because it is typically lighter volume. It is still lighter volume. You can sense if there is any sense what we should say, there is not that sense of nervousness where people are jumping oupt the window. There is not that at all. The market is kind of backing off. Certainly money thats under pressure in the commodity market people say let me raise cash somewhere else so theyre taking it out of the equity market. Were still much closer to the highs than we were. Than weve been. Therefore it makes sense to take some money out of an area where they can take it out relatively quickly. Theres not a sense. Whats really important. Theres no the a sense of panic at all in the market. It seems to be just an apathetic selloff. I would expect well find are you guys worried the reversal were seeing in health care today, you touched on it in terms of the notion of atm stocks and atm sectors. Is this one of those cases . Yeah. I think that is one of the cases. I think if you talk about just investors looking at the complete picture of all of the Asset Classes and they need to raise some cash and they dont want to do it anymore in the commodity space because actually the commodity space may be getting overdone. They look to raise it in other Asset Classes. That makes sense but its not happening hooer erhere with any vengeance. How much is facebook up in the last month . Stupid amount in the last 20 months. 15. Its crazy how much its gone up. Amazon fulfilled the expectations. Google fulfilled the expectations. I like the pun there. I think it is terrific. Regeneron has halted trade. Were not sure why. The last trade on this stock, 542. 01, down 2. 6 halted for trade at this hour. As soon as regeneron resumes trading well bring you any news that might follow. My point here is you want to watch the leadership groups. Banks, biotech and whats going on elsewhere particularly in the Energy Sector for any signs that theyre sliding right now. Thats why i think a lot will ride on facebook next week. Theyre the leadership group. The big four. Apple disappointed a little bit. Google did okay. By and large, google did fine. Amazon did fine. Now weve got to see facebook. It is not that buyyebyeuy biogen that they disappointed. Once the momentum gets broken you know how easy it is to lose it particularly when you had the huge runups but the Biotech Sector is up 40 prior to today. Thats my point. Exactly right. Theyre using that as a source of cash. Slightest little bit of disappointment they are he a using it as a source of cash. Zp we have the busiest weak for s p earnings next week. 153 names reporting, facebook among them. Well have a lot to work with. Amazon is now worth more than walmart. The retailer reporting a surprise profit for the last quarter along with upbeat guidance for the current quarter. Jeff bayezos net worth, 227 billion. Bob, great to see you again. We are tracking the Conference Call together last night on fast money. You raise your price target to 550. Thats not too far from where we are right now which would imply that amazon at these levels is essentially dead money. It was one of those great aplus type quarters where top line seller had 27 growth with gross margin expansion. They also had operating margins expand as well. Having said that the reason were not recommending stock is it now trades around 50 times or so Free Cash Flow or two times sales. We just dont think it is a great opportunity for investors to put fresh money in here. But it could be attractive if you get some sort of pullback. The profit we saw in the latest quarter, do you think that was a teaser . You make the point in your note today that there is a harvest versus an investment phase and amazon harvested and is now going to be investing. Yeah. Its a great point. If you look back over history with amazon it will show margin expansion, hence harvesting the past investments its made. Then it will go back into investing mode. That will suppress margins. The graph we have in our note shows that pretty clearly. Right now we are in the Third Quarter of what typically is a Fourth Quarter expansion. We may be getting towards the peak here. Margins could go back down as they invest against larger opportunities india, mexico cloud, et cetera. We overlaid on our chart, the stock either sits sideways or can decline as well. The next of growth would take substantial increase in margins from here an we just dont see that happening particularly this late in the investment harvesting cycle. There is also the case for up side which is you have prime day which happened in the third calendar quarter. Thats included in the guidance. Company already gave us which is better than the street was expecting. Then the Fourth Quarter is the Holiday Quarter which is generally very favorable for amazon. It is usually after the holiday that the stock trades off. Is it dangerous to take this type of position going into the back half of the year . Yeah. The amazon prime day is now baked in and analysts actually took their numbers up a week or so ago after that event. As you look forwards 4q typically this stock is strong going into the 4q number but after that it tends to trade off, in particular if you go back into this investment phase, thats where you could get hit. Thanks bob. As we were talking about earlier in the show china clearly hitting a rough spot. The shanghai index down 10 in the last month. Look at the etf that follows chinas large caps it is down 14 in the last month. Morgan brennan now joins us with the u. S. Stocks most in jeopardy of falling as we look closer at the china picture. Morgan. Hey, kayla. So blame china seems to be the refrain this earnings season so far. Even though china reported 7 growth gdp growth for its most recent quarter, that doesnt seem to be helping American Companies doing business there. Take caterpillar which slashed fullyear revenue guidance yesterday. The ceo telling cnbc that the mining and Construction Equipment industry in china has been cut in half over the last year and that thats weakness thats not expected to go away any time soon. Weve seen caterpillar trading at multiyear lows on the heels of that. Industrial giant United Technologies cut being its 2015 earnings outlook for continuing operations. Thats thanks largely to chinas cooling property market. New records for utx is otis elevators, fell 10 . New chinese orders for the companys Climate Controls and security segment plunged 15 . Techs also feeling the china crunch. Ibm saw a 40 drop in sales in china last quarter. One reason they reported disappointing results this week. China was also a big focus when apple reported on tuesday. Despite an 87 iphone growth for the quarter, ceo tim cook noting turmoil in china could create some speed bumps in the near term though. To be fair, he did also say he expects klein to become apples largest market at some point in the future. Also, to be fair there are some companies that are still seeing china as a bright spot so starbucks is a great example of this. When the Company Reported earnings after the bell yesterday it said it saw an 11 jump in samestore sales in china. Theres a whole wide variety of Companies Across many different sectors that have been talking about the china effect. If you want more information, and some of the names on this go to cnbc. Com. For higher returns you may be better off investing in chinas neighbor japan. The etf tracking companies in china is flat for the year compared to the etf for japan, up 14 . John, you make the point that japans actually behind the u. S. In the Economic Cycle so therefore the best opportunities are within the next two to three years. Why is that . Not just the Economic Cycle. Just theyre benefiting from the trends that youve been talking about on the show. As Commodity Prices come down crash in other areas, japan is a huge importer of commodities. In fact theyre probably the most developed nation that imports the most commodities. Theyre winning from that angle. Theyre winning from currency. Their currency has been softening mao for two years but its certainly a bearish trend. It is helping their export competitiveness. They like europe. Their qe program is ongoing. They have ultra low interest rates. So as you said their Profit Margins are about half or little less than half of the u. S. but theyre trending up. Whereas the u. S. Profit margins in the last year or so have flattened out. Thats why we think over the next sorry, john. Youre invested in japan through two etfs. 20 and the veu in japan is a top holding there. Sounds like youre bullish the japan story. Are you on the precipice of deciding im going to put money specifically into japan, maybe through a japanspecific etf or into japanese stocks that trade here in the u. S. . Yes. We certainly are. Were watching it carefully. When we were talking about there is a lot of potential in japan but as you well know japan has been a serial disappointer over the last 20 years. Sometimes you have to say prove it to me. Were taking one step at a time with japan. We want to watch the investments weve made recently and if they continue this governance reform which i think is the key to japans future as far as fulfilling this promise that then we will definitely invest more. You made it a point about commodities in japan benefiting from lower Commodity Prices. Imports almost all of the fuel that it uses in the country. So which sectors when you think about this which sectors, which kinds of companies would you be most interested in, would you be watching most carefully . Is it those kinds of companies who seem like they might be industrials or consumer facing companies or ones that are exporters . Well japan has world class manufacturers. They have some of the best Robotics Companies in the world. Their manufacturing is cutting edge. A lot of it is done in japan, a lot of it is done around the rest of the world. When you look back at japans history and look at where they are today, that would have to be the Number One Group that youd favor, anything to do with manufacturing and particularly higher earned mafgnufacturing. John merrill of tanglewood. Thank you. Copper prices are sliding. Much more on that straight ahead. For higher returns though actually weve already done that story. Were going to talk about what else is coming up on the program, kayla. There is news pending stock was halted about ten minutes ago on redgeneron. The dow negative for the month, negative for the year. On track for its worst week since the end of january. S p and nasdaq on track for their week since the end of march. We will get you more on whats moving inside the markets when power lunch returns. Are you moving forward fast enough . Everywhere you look, it strategy is now business strategy. And a partnership with hp can help you accelerate down a path created by people, technology and ideas. To move your company from what it is now. To what it needs to become. My name is kieran griffin. I work here at five star auto care in rocklin california. A lot of thought was put into the change to solar and we couldnt have done it without pg e. Pg e is very committed to clean energy. Working with five star auto care we looked at how we could make their business more Energy Efficient and save them money in the long run. With solar we have saved about 85 on our energy cost. With this extreme drought were using the savings from our solar system to save every last drop of water. If you are looking for ways to save energy your first step is to call pg e. Together, were building a better california. Welcome back to power lunch. Weve seen a commodity crush this week in copper prices no exception. Theyve been sliding to a 60year low on worries about chinese demand after disappointing factory data from china that was released today. Sorry about that it is friday. Freeport mcmoran feeling the pinch, shares dropping more than 8 today actually 9 at this point. It is down 21 though for the week. Really tough week for commodity related stocks. Melissa, back to you. We are seeing that translate into the sectors that are weakest in todays markets. Materials for one. The xlb down 2. 66 . Energy within the commodity patch. Those stocks are down 2 right now. Weve got disappointing news on the housing front. New home sales for june falling 6. 8 , much worse than expected. Lets get insight from the chief economist with moodys analytics. Mark, it sounds like you think these new home Sales Numbers were sort of flukey and that actually the Housing Market overall is fairly healthy. Yeah. Exactly right. New home sales data are notoriously volatile. They jump around from month to month and they get revised a lot so i think it is much better to look at the last three, six months. That shows that sales rate thats over 500,000 on an annualized basis. Thats about as good as its been since the housing bust. Direction in the Housing Market is upward. When we think about housing spending with be often times we do think about new home sales and the amount money people outlay for that when we were during the peak of the housing cycle with are we in a place where theres going to be renovating to those homes built during the peak . Yeah sure. I think we are starting to see remodeling and renovation kicking into a higher gear as well. The level of activity is still quite low relative to where we were prerecession like everything related to housing but i do think everything is coming together for better remodeling and renovation. We have more jobs. Incomes are improving. Credits flowing a little bit better. Home Equity Lending is improving. All the things are coming together for a better remodeling market yes. In terms of housing being a key source of growth in terms of the economy, what source of gdp should we be looking for from the housing sector . Its big. I prefer to do it in terms of jobs. Every increase in Housing Starts. One increase in Housing Starts creates roughly two jobs over a period of a year. And by my calculation, well see Housing Starts increase by 500,000, 600,000 over the next couple, three years. Thats over a million jobs that will be created. Manufacturing, transportation, everything that goes flu a homeinto a home. We will see a lot of jobs. Improvements in the Housing Markets is one of the key reasons well be in all likelihood back to full employment by this Time Next Year largely because housing will do a lot better. Quite a multiplier. Mark thanks. We have breaking news on regeneron which has been halted. We were waiting today for the fda to approve their cholesterol drug. Just coming over the drug has been approved. We were looking through the release to see how broadly it was going to be recommended. Seems to be in line for expectations. Not just for a genetically defined form of cholesterol drug but for patients who are at high risk for heart attack or stroke. There is a lot off questions about where the drug will be priced. Any surprises on that could move the stock in either direction. Folks expect 10,000 per year per patient for this drug. But positive fda decision here. I think trade is still halted. Prior to todays pullback we did see regeneron ramp up ahead of its cholesterol news. Seems like the market was pricing in broad application of this drug. Even though there was a bit of a conservative fda panel last month, i think most people expected a broader approval than the panel even recommended. This is probably pretty priced in. Now the variability goes into where this drug is actually priced. Any surprises on that could surprise the market. When will that decision be made for investors who are watching that . Any second now we should be expecting that coming up from the company. Thank you. Again regeneron halted down 2. 6 . As soon as that stock reopens for trade, well bring you that. Pimcos mark kiesel joins us. Oils moving lower as the final trades cross for the day. Crude close is cloming up when power lunch comes right back. No branches equals great rates. Its a fact. Kind of like shopping hungry equals overshopping. Ah aflac . Aflac i thought you said this guy was the best . Oh, hes a horrible stylist. Gah . But hes the best at paying claims fast really. Mmhmm. Paid mine in just one day. One day . Yea. Aaaflaaaac in just one day, we approve and pay. One day pay, only from aflac. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Check on your headlines at this hour shares of Johnson Controls today down 12 in a month the Company Matching expectations. Johnson also saying it will spin off its automotive business. Shares of xerox meantime up 1. 7 , down 20 in six months. The Company Reported lower revenue and profits blaming currency issues and a costly expansion in the Cloud Computing business. Also look at shares of stancorp. Financial shoot being higher 48 after a major yap knees life insurer announced a plan to buy the can. For 5 billion. Again shares are trading higher by almost 50 . Housing remains one of pimcos highest conviction in investments. Here now global credit cio mark kiesel. Welcome back to power lunch. Hi melissa. There are all sorts of different ways to play the housing sector. Builders . Retailers . Suppliers . Components . Weve been overweight banks and also Home Builders. That was the first wave of the housing cycle but the second wave is really going to be Home Improvement as well as Building Materials as people remodel the house. So Companies Like usg, like massco. We think Sales Volumes should also favor Title InsuranceCompanies LikeFirst AmericanFidelity National title. Thats basically the second wave of housing and where we are positioned. What are the fundamentals underpinning this renovation cycle . Is this that the inventories are so tight that people are choosing to stay put and put money into the homes that they already own . Yeah. I think it is just rising confidence. Basically the Housing Stock is aging and people are doing better. The u. S. Consumer is 68 of the economy. The labor markets healthy. Wages are picking up. People are feeling a lot more confident. Also these homes which have been rising in price now for three or four years are no longer under water. People actually feel like putting money into their house is not a bad investment. So yes, there will be more remodel activity we think going forward. We are just at the beginning of stable growth in the jobs market, mark. How long does the cycle continue for . I think the housing cycle will continue for another two or three years. Whats happening is you got several things going on. You got very low inventories. Were just not building enough given demographics and longterm demand. Secondly, the young generation theres huge pentup demand. Basically 31 of the 18 to 34yearold cohort is living with their parents. Thats huge pentup demand. Whats important is the labor market, if you look at that 25 to 34yearold cohort the firsttime buyer cohort job growth there is as strong as its been in 15 years. In general the labor market is now improving much faster than even the fed would have thought. Thats rising household formation and then last week finally, the banks finally reported and Mortgage Origination is up 32 to 74 . So banks are starting to make loans again. All this is tailwinds for the Housing Market. Interesting ideas. Mark kiesel thank you. Oil closing right now. Lets get straight to jackie deangelis. Were actually coming off of session lows when we got the rig count numbers. Baker hughes reporting we arded 21 oil rigs last week. We did get down to 47. 72. That was the session low. Bouncing up about 30 cents at this point. We are closing over 48 a barrel but under that key mark of 50 for the week. Thats what traders are focusing on here. It was about a 5 decline on the week and about 20 decline this month. Three things to focus on this week that crude investors and traders will be watching the dollar, china and also the supply glut here in the United States. Now to Morgan Brennan with the news headlines. Heres your cnbc news update at this hour. President obama arriving in kenya for a twonation tour of an ka. He will also visit ethiopia and also expanding economic and security partnerships with african nations. The president will also spend some time with family. A cook county judge ruling at an overhaul to chicago Pension Funds is unconstitutional if upheld taxpayers could end up paying millions of dollars into the two retirement funds. The matter could end up before the states high court. A 29yearold former spanish soldier accused of distributing trop propaganda and recruiting isis was arrested earlier in the week with the cooperation of moroccan authorities. A steam ship that sank more than 100 years ago has been discovered in lake michigan. The vessel sank in 1899 during a sailing from milwaukee disappearing after ice punched a hole in the hull. The ship is among one of the best preserved vessels that has been discovered. Thats a cnbc news update at this hour. We do have breaking news here. The fcc has approved the at t directv deal but with conditions. We are seeing both of those stocks higher today. At t up by 2. 6 . Dtv is also higher by more than 2 . Again the fcc approving this tieup but with conditions. We are working to get more details on that at t deal. Well bring them to you. Were of course keeping a close eye on the markets just off session lows right now. Stick with us. More power lunch straight ahead. It took Tim Morehouse years to master the perfect lunge. But only one attempt to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. Here at Td Ameritrade, they work hard. Wow, that was random. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens every third tuesday. We have Pattern Recognition Technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. For all the confidence you need. Td ameritrade. You got this. You focus on making great burgers, or building the best houses in town. Or becoming the next highlyunlikely dotcom superstar. And us, well be right there with you helping with the questions you need answered to get your brand new business started. Were legalzoom and weve already partnered with over a million new Business Owners to do just that. Check us out today to see how you can become one of them. Legalzoom. Legal help is here. A big update now on a story we brought you earlier this week on a jeep that was hacked. Phil lebeau joins us now with the details. Reporter numbers here are staggering. Keep in mind this recall is really formalizing what fiatchrysler announced on wednesday in terms of a soft wear update for 1. 4 million vehicles. Thats how many have been formally recalled. 2015 or 2013 to 2015 models. We wont run down every single one but it is a whole bunch of them in those years. Software update to prevent hacking with the uconnect system in those vehicles. The owners of those vehicles will not need to visit the dealerships in order to have it fixed. Theyll get a usb device sent to them and theyll be able to update the software in their vehicles. All of this started earlier this week when there was a media report about a Jeep Cherokee that had been hacked remotely. This was a planned hacking. Thats important to point out ear. They knew that they were going to hack this vehicle. The driver of the vehicle knew that they were going to take control and they found a flaw in the uconnect infotainment system. The other day one of the hackers pointed out just how hard it is to hack an automobile. Charlie and i have spent the last three years of our life doing this research and a year on jeep alone so it is not easy to do. Im more afraid of someone texting and driving and running into me than someone Severe Weather hacking my car, if that will tell you anything. Is there shares of fiatchrysler moving lower today. Im not sure it is because of this announcement because we knew theyd be doing this Software Update a couple of days ago. We should point out, fiatchrysler is adamant in pointing out, there are no known cases of vehicles being hacked remotely aside from this one which was again a planned hacking. It was a demonstration, melissa, to show that there is a flaw in the software system. That flaw is now being corrected by fiatchrysler. Phil lebeau, thanks so much. Moments ago we told you that the fcc has approved the deal between at t and direct dv but with conditions. Hampton pearson has more details. Im going to go over the two most important conditions to that approval. This is from the fcc release saying that at t and directv will be required to expand its deployment of highspeed fiberoptic Broadband Internet access to 12. 5 million customer locations as well as erate eligible schools and libraries. Other principle condition, at t and directv are prohibited from using discriminatory practices to disadvantage Online Video Distribution Services and will submit its connection plan to the commission at a future day. Those are two of the primary and most important conditions attached to the fcc approval of the at t directv merger. Hampton pearson, thanks for those details. A lot of Big Companies have already reported earnings. How are the results looking so far . Lets ask the trading nation. Gina sanchez, kathleen lien. Gina, on the whole, does this change your stance when it comes to the s p 500 . No this doesnt change our stance. Right now we have seen a number of companies that have already reported and they have been surprising on the up side. That really has a lot to do with expectation setting but if you look at the actual numbers, in fact the actual Growth Numbers currently are trending at about 2. 8 is higher than last quarters numbers. If anything stays on track, as it looks like it is going to happen, then that number should show a modest improvement. Now that said i always harp on sales. Sales continue to be disappointing and even though weve had positive surprises on the earnings side 6 out of the 10 sectors have shown disappointments on the sales side. Some of those sectors are really being dragged down by energy. Energy is showing terrible Sales Numbers. Not surprising. We are seeing some sectors that are showing some support in sales but i still say we have to keep an eye on that. We dont expect that this is going to be a strong growth cycle yet. Kathy, whats notable about what gina pointed out is that a lot of second are tos like energy for instance really being stung by the stronger u. S. Dollar. Very much so. I think ginas spoton in terms of the impact not only are we seeing energy but also the impact that were seeing from Multinational Companies being vulnerable to the dollar. She said she doesnt necessarily think that the cycle of strength is really something that were seeing on broad scale in the longer term. I think thats just right. Because while we do have a lot of up side surprises in earnings, weve seen a lot of companies also attribute some of their weakness to the stronger dollar. The trend we are seeing in the markets is the trend is up 8 year to date and there is a chance we will a he see another 8 rally by the end of the next year as the fed begins to tighten. All of that will create head wints for multinational u. S. Companies. This will create headwinds going forward. Thank you, both. Still ahead more on the deal of the day between cigna and anthem. Plus the best bets to make right now in health care. Stick with us. Much more power lunch after this. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. No fifth graders ever sat at the cool table. But your jansport backpack is permission to park it wherever you please. Hey. Thats that new gear feeling. Now get a swiss gear backpack for only 10. Office depot officemax. Gear up for school. Gear up for great. If you are just tuning in the markets vp turned lower. The nasdaq 100 heat map, take a look. Not too many in the green but certainly leading the nasdaq gains, amazon which is still higher by 12 of o the back of its better than expected results. Dow is off the low of the day but not by much. The dow right now is down by just under 1 . 17,568. The s p 500 though is worth noting. It is just one point away from the session lows. Of course the entire markets really filing the pressure of a combination of things a stronger dollar disappointing data out overnight from china. Thats certainly dragging Energy Stocks down as well as the material stocks down. Meantime, look at shares of cigna and anthem both insurers are trading lower as anthem announced it is buying cigna for 188 a share. For more insight on the deal sara james, a Health Care Equity analyst with webb bush securities. Thanks for being with us. The way stocks are trading, cigna, tells me the deal wont go through. What are your thoughts . Absolutely. There is more of an arbitrage spread than ive seen in the past 15 years covering this sector. You have some of the second and Third Largest players combining. You consider the fact there is a combination of not only anthem plus cigna but potentially layering in the whole Blue Cross Blue Shield network. This is the one deal we see as having the most challenges. That said we believe that the management teams have done a significant amount of Due Diligence and they wouldnt have brought the deal to this point if they thought divestitures were going to derail any of the estimates. Who could benefit from these divestitures . Are there other assets other companies could pick up and bep benefit from . Absolutely. We think about the overlap of anthem cigna and Blue Cross Blue Shield you could see someone like a united benefiting from this but it will really come down to the regulators and whether or not they include the entire Blue Cross Blue Shield network in the market share calculations. United is one of your top picks. You like the fundamental story. Say it doesnt pick up any assets or do any deals. You still like where it stands in the sector as everybody else around it gets acquired or gets merged. Exactly. We think that the arbitrage and merger play is going to drive sentiment more than the fundamentals. So our top picks in the sector right now are united on the large cap side and molina on the Small Company side as names that are completely separate with strong core fundamental growth. United has one of the largest medicaid and medicare plans to the heighten growth cycle but their pbm, they just bout catamaran, theyre getting some synergies off of that as well as their i. T. And consulting bigss where they have a new strategy to increase and enhance the size of their external clients. We think thats whats going to drive above pure average Earnings Growth for the company and leaves it one of our top picks. Sara james, thank you. One of the hottest areas in housing right now. Well tell you what it is and how you can play it. Thats next. Akable thrill. And the incredible rush of the mercedesbenz youve always wanted. But you better get here fast. Yay, daddys here here you go, honey. Thank you. Because a good thing like this wont last forever. 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We have just seen another push lower on the s p 500 as we enter the final minutes of trading for the week. S p 500 down to 2077. 50. We are seeing a commesurate advice on the vix popping to intraday highs now up by 16. 5 . Lets get to street talk time. First up solar city getting a pop and upgrade from bear. 71. The firm says its an excellent buying opportunity. The stock most levered to the roof top solar market. Cost reduction will strengthen solar citys position. Stock holding on inging on to its gains. Second stock, visa. Piper jaffray upping its price target to 85 from 80 following a strong beat on top and bottom lines. Big bump for investors came when the ceo acknowledged ongoing talks with visa europe about a combination. This is a intraday record high for visa. Pacific crest pounding the table ahead of earnings monday for baidu. The core search business should surprise to the up side. Yeartodate best stock down 9 . Gilead science says some pressure on the back of earnings this morning. Piper jaffray defending the stock saying there is plenty of opportunity. The analyst acknowledges it needs new growth drivers. Analysts will be looking for clues about m a. Home builder stocks have been on a tear. This is one way to play it. Looking at the spdr home builder etf up 10 over the past six months. Dont be fooled by its name. Home depot and restoration hardware, not pure Home Builders. Lets bring in diana olick with more. Home remodeling is taking off. Maybe its that new home equity or jump in overall home sales. More than 2 3 of home renovation firms in q2 reported 2015 yeartodate revenues and profits to be at or above prerecession levels. 15 reported revenues and profits are way up this year. Future also looks bright. House says bids and appointments with proposals for remodeling professionals jumped dramatically. They point to recent uptick in home Sales Activity saying recent home buyers typically spend 1 3 more on Home Improvements than nonmovers. It should translate to stronger improvement spending gains. The Home Builders are feeling better. A Sentiment Survey of remodelers jumped in q2. It is now solidly in positive territory. The only complaint which goes across all builders and remodelers is that lack of skilled labor. What project saw the most growth . The Great Outdoors back yards and landscaping specialists saw the most growth. Not surprising after such a cold winter. I still believe in the astroturf. Its low maintenance. In terms of the renovation cycle, when do things start breaking down. When do things start breaking down in relationship to the peak in housing we saw. And when do we see the need in replacements . We saw the peak in Home Building in 2004 and 2005. You are probably going to start things like hvac heating systems, they have a 10 to 15year life. Bigger projects depends on style and how your bathrooms and kitchens are changing. If we start to see a bigger boost in home sales and more investors getting into flipping properties that could boost renovation and remodeling more in 2016. Thank you. Lets get back down to the nyse. Kayla tausche. I feel like its deju vu all over again. Another friday sliding into the close. It seems like deju vu. Weve seen this every friday every last day of the month since november. Dow is down 153 points. All major averages lurking near the lows of the session. Dow, s p and nasdaq on track for a fourday losing streak. Russell down 1. 5 . Well keep our eye on this as we head into the last hour of trade. Amazing to look at the carnage in sectors like materials, energy. Freeportmcmoran down another 10 in the session. Regeneron halted for trade. The fda approved its cholesterol drug. Soon as that stock reopens for trade, well bring you that here on cnbc. Tonight on fast money at 5 00 i interviewed an astronaut in space. In space. How did that work . Youll see at 5 00. Thanks for having me. Ill tune in. That will do it for us on power lunch. Closing bell starts right now. Welcome to closing bell. Im Michelle Caruso cabrera in for kelly evans. Im Tyler Mathisen in for bill griffeth. Stocks are falling. Dow looking to close out the week down nearly 3 . Its been tough. Weaker than expected earnings weighing on stocks. Well tell what you to expect for next week. Of. Amazon surging today. Reported an unexpected profit. It was a small one. Why is wall street acting so