Rates begin to rise . Four reasons to be bullish still about the American Housing market ahead. And get a load of this one. American airlines actually flew the wrong plane from los angeles to hawaii. It wasnt certified to fly that distance over water. How in the world does Something Like that happen . That is the question were going to try to find answers to. But we do begin ty with the possibility of a rate hike this week, which would be the first fed increase in about a decade. Dominic chu has been taking a closer look at the stocks that are the most sensitive to a rate hike. Arguably by what im going to show you, investors and traders have already been positioning themselves for a possible rate hike from the fed. So you have heard it before, well say it again. Utility stocks are often viewed as one of the big sentiment gauges or proxies for what happens with Interest Rates. The reason why is because when Interest Rates rise or are threatened to rise, utility stocks tend to sell off. What you can see here is over this yeartodate period, just again in 2015, those stocks, utilityings ies st. In the s p 30 . It spans the entire spectrum. Just to give you an idea. It doesnt matter about geographic location or type of utilities. Pg pg e, theyre down 9 . You look at a southern company, down 13 . Ex elon down 19 . Nrg lost a third of its value. Some of the biggest decliners in the utility stocks. Its not just there. Look at the Real Estate Investment trust. This is another part of the market thats viewed as a proxy for income, dividends, Interest Rates. The vanguard reit etf, down 9 . A steady decline. As investors come to grip with the idea that possibly an Interest Rate hike will happen, these Real Estate Investment trusts, utilitieutilities, wille the battleground is. You can see, tyler, a lot of traders have positioned themselves for that possibility of a move. Thank you very much. Lets look at stocks at this hour. They are generally lower. The declines modest coming off equities third biggest weekly gain of the year. You see the dow industrials, the s p app, and the nasdaq all off about one half of 1 . Lets get the trading action now from bob pisani on the floor of the new york Stock Exchange. Hi, bob. Hello, tyler. The markets are not afraid of a fed rate hike. In fact, they seem to be implying they think its very unlikely thats going to happen. Theyre more concerned about the slowdown in china and again thats the story today. Look at the s p 500. We started on the downside and basically weve been on the downside. Were at the lows for the day. Lets not quibble about a couple points. Moderate trading range here b 12 or 13 points. Thats a typical days action. Look at the market this is the middle of the day. China came out with numbers overnight, retail sales were good but the industrial output missed the forecast. Thats where the commodities all come in. We need some volume. We have one of the lighter volume days wee seen weve seen the last several weeks. Industrials on the weak china numbers. All these Big Industrial names, typically down about 1 . The big commodity names. Were seeing copper down today, aluminum, nickel, and zinc, all the base metals down on the weaker china metals. Commodity based stocks like nucor. Finally even here in the united states, were just seeing some general lack of buying interest. The volume is not heavy in Retail Stocks like coach or target or fossil or macys. Not heavy at all. But what you dont have is any real compelling reason and josh brown talked about this, no compelling reason to own them right now, to go after them and i think thats the problems. We have to get a little more conviction. Maybe the fed will help us out this week. Ill pick it up from there. Thank you very much, bob. The shanghai market ending down more than 2. 5 overnight on that week Economic Data bob was talking about. And it really hasnt been an easy ride for a lot of emerging markets over the past one year. So what happens to the ems if the fed begins raising rates . Joining us is david reedle. Good to see you, david. A lot of concern about any potential fed move is related to the currency impact on ems, right . But is there any guarantee just because the fed might start hiking rates that the u. S. Dollar will keep on gaining . Not necessarily. We think some rate hikes are already priced into this big move in the u. S. Dollar youve seen over the last year and a half or so. So we think its a bit of a buy on the rumor, sell on the fact situation where people will allow the dollar to trade flat to down after they start dige digesting the rate hikes. Just back up a second. How many rate hikes are priced into the u. S. Dollars upward move . I think probably two or three, 25 basis point hikes are built into the big move in the dollar. If we do see the usa dollar trade flat to down, what impact will there be on the investment thesis for emerging markets . I think there can be a big sigh of relief because commodities have been badly hit by the strength of the u. S. Dollar. People have been concerned about the impact of the stronger dollar on u. S. Dollar debt that some of the emerging Market Companies and countries have built up over the last year or so. So i think its going to be a sigh of relief. We have to look back to 2004 to 2006 period to see the last series of rate hikes. Emerging markets did great during that twoyear period. The emerging markets doubled during that period in the face of 17 consecutive rate hikes, so i think the emerging markets can do very well if the dollar trades flat to down and people digest start digesting the rate hikes. The emerging markets are often lurched together, but at the same time theyre also different. The are there any that stand out to you. Places like hong kong thats down 20 . Do they look good . I think theres some very Good Companies in hong kong. Its a great way to get china exposure. We would not recommend people going into shanghai and buying those volatile stocks. We have some High Quality Companies listed just in new york that give you good china exposure as well. Wed be buyers of some of the big brand names in tech especially that can benefit from a stronger than expected china. Can i put you on the spot about alibaba in light of the report from barrons suggesting the shares could go a further 50 lower from here . Do you like baba . I do like baba. I dont like the Corporate Governance at baba but i love the strength of their business. Theyre totally ubiquitous in the ecommerce business in china. They totally dominate in that space. I think it could almost double from here so im going to have to take issue with barrons view. What about baidu . Its the going of china. Its very strong. We think its a good company that could go up higher. David, thank you for your thoughts. Shares of apple higher in todays down trade. The tech giant seeing strong preorders for its new iphones. The stock up 5 over the past week and josh lipton is following the story live for us from san francisco. Josh . Well, tyler for apple investors, the big question is whether the tech giant can grow iphone units in the quarters head. Today apple could have provided some color on that question when it told us what demand has been like for that new 6s and 6s plus. Customer response to iphone 6s and iphone 6s plus has been extremely positive, the company saying. In preorders this weekend it was very strong around the world. We are on pace to beat last years 10 million unit first Weekend Record when the new iphones go on sale september 25th. The company went on to say that online demand for the 6s plus was especially strong and exc d exceeded the companys own forecast for that preorder period. Apple stock up strongly over the past five days. Still though down more than 10 from its 52week high, and in part that is because investors are worried about growing iphone units in the face of tough comps and a slowing china. Apple though now saying it could break those same records with these new iphones. The team at rbc agrees saying apple could sell 12 million iphones over that first weekend. Sales start next friday so stay tuned. Guys, back to you. All right, josh, thank you very much. Lets get a check on some other big tech movers at this hour and Courtney Reagan is the person at nasdaq. Good afternoon. Apple does have a Strong Influence on the nasdaq indices but its not enough to push that comp higher. Were at about the lows of the session. Look at yahoo shares down almost 3. 5 . One of the biggest losers on the nasdaq 100 due to its stake in alibaba. You were just speaking about that with a previous guest. Remember that barrons article speculated a lot of negative press and alibaba shares could possibly fall 15 , thats what the article said, im not saying it but as a result yahoo shares are lower because of its stake in the company. And look at go pro. We have a wall street journal article saying its doing much better and its perhaps worth buying at these levels. Thats moved shares higher by 2. 3 . There are many components that go into a go pro. One of them is the trip. Amberella is one of the components doing better on the back of the go pro shares higher. Up almost 4 . They were actually up almost 5 earlier in the session so it look as if were back to a market where not all tides will lift or sink all the boats. Were moving again on news and fundamentals. Back over to you. Okay. Thank you very much Courtney Reagan. Oil is under pressure today partly due to that weak chinese data. Jackie deangelis joins us from the nymex. We are seeing pressure to kick off the week. Concern about china gdp not coming in as expected is definitely one of the factors. Also a little bit of a stronger dollar. We did also get opecs monthly report and what we got in that reading is nonopec supply is likely to come down. Thats good news. At the same time they took their demand forecast for 2016 down as well. So, again, the equation is not going to work out if they both go down. August opec production was 31. 5 Million Barrels per day. That is high. For those expecting to see iranian oil come online as well, that leads to more supply globally. Last weeks factors still having an impact as well. That Goldman Sachs note calling for 20 still leaving a chill in traders blood. Back to you. Now to the latest on those Deadly Wildfires out west. One person has been killed, several firefighters injured. Hundreds of homes now have been destroyed in californias fastmoving valley fire. The brunt of the damage to property is caused by one blaze that broke out saturday near napa valley outside sacramento. Thousands have been evacuated and the 50,000acre fire is moving in multiple directions as fast, some say, as any in decades. About 4,000 firefighters are battling that blaze. The wildfires sweeping across the droughtstricken western u. S. This year could end up being the costliest on record. Terrifying stuff there. Wish them the best. Lets check out shares of alibaba so far this year. Everybody loves their baba, right, mandy . Down 40 . Trading below its ipo price and now fears that chinese ecommerce giant could take another major plunge from here. Morgan brennan is following the story. It was the subject of a bearish cover story in barrons this weekend. Shares down nearly 50 from their november high and still the publication arguing they could fall another 50 so whats behind the plunge . Are shares really going to fall further . Warns you about incoming crosstraffic. Cameras and radar detect dangers you dont. And it can even stop by itself. So in this crash test, one things missing a crash. The 2016 eclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Welcome back to power lunch. Check out whats happening right now with the markets. Here hovering near hour worst levels. The dow is down 90, 91 points. The s p 500, the nasdaq all making these lows here as we get towards the worst points today at least for right now. Among the standouts, at least from the industry side of things, steelmakers trading lower today as growth in chinas investment and factory output missed last month. China is one of the biggest consumers of steel. U. S. Steel, ak steel, nucor, Steel Dynamics all down 3 to 4 . That industry will be a big focus especially around the chinese economy. Back over to you. Thank you very much, dom. Marvel Technology Getting a downgrade to equal weight by morgan stanley. Deutsche Bank Planning to slash a quarter of its workforce, 23,000 jobs, mainly in its technology and back office operations. That stock is down more than 10 in the past two months. And mylan offering a tender offer to acquire perrigo. Perrigo is urging shareholders to take no action pending a board review. Alibaba is down. If y new fears the stock to suffer a major plunge from here. Morgan brennan is covering the play by play. Alibaba is in the spotlight after a barrons story saying shares could fall 50 from current levels. The publication outlining several reasons including increased ecommerce competition, scrutiny surrounding the companys governance and culture, and pressures could come under share when the lock up expires this sunday. In response to barrons assessment, alibaba slamming the story in a letter to the editor saying the report contains factual inaccuracies and selective use of information and the conclusions he, meaning the rorner, draws are misleading. You can see that fourpage response on cnbc. Com. Outlining seven examples of errors including how the price to earnings multiple was calculated. Still, you have a number of factors that have already been weighing on the stock. The lock up expirations. Weve seen disappointing earnings and a china softening economy. Even alibaba recently said the total amount of goods bought on its platforms, its gross merchandise volume for the Current Quarter will be lower than it initially expected. So these factors have already contributed to a steep selloff. Shares of alibaba are currently trading around 62. Thats lower than the ipo price and its already down about 47 , 48 from the november high of 120. So barrons is talking about a 50 drop. From here. Weve already seen an almost 50 drop. Thank you very much. Lets get to Sharon Epperson with breaking news. Mandy, the securities and Exchange Commission has obtained a 30 million settlement from traders who profited on a hacked news release. Were talking about a ukrainian based company and its ceo who have agreed to pay 30 million to settle allegations that they profited from trading on nonpublic Corporate Information hacked from news wire services. You may recall in august the s. E. C. Announced charges against 34 defendants who allegedly took part in a scheme where two defendants hooked in a wire service. This investigation is ongoing, theyre still looking at litigation against the remaining 32 defendants charged in this case but we have a 30 million settlement so far with the ukrainianbased company and its ceo agreeing to pay this settlement in light of the hacked news release charges. Thank you very much for the breaking news. Call up a game of drones. Major u. S. Defense companies positioning themselves to cash in on this booming business. Jane wells is in los angeles. Mandy, fly or die. Defense Companies Need to find new needs and new markets for their uavs and in one case that may be trying to shoot down a manned aircraft program. Well have that after the break. Proud of you, son. Ge a manufacturer. Well thats why i dug this out for you. Its your grandpappys hammer and he would have wanted you to have it. It meant a lot to him. Yes, ge makes powerful machines. But ill be writing the code that will allow those machines to share information with each other. Ill be changing the way the world works. interrupting you cant pick it up, can you . Go ahead. He cant lift the hammer. Its okay though youre going to change the world. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. Defense companies are doing everything they can to adapt to the changing defense environment, including moves into the exploding commercial drone market. Our own jane wells is in los angeles now with how one major player is trying to keep its major Drone Program alive. Jane . Hey, tyler. The northruop grumman global hak has flown 150,000 hours. At any given moment up there circling and watching. To save money they wanted to ground the fleet. They are pushing to have sensors added. The global hawk will soon start test flights with some of the same sensors the u2 has. Since that point this time weve resurrected the system and were now flying more hours in fy 15 and we through in all of fy 13. Now, northrup is trying to figure out how it can exploit the commercial markets, but, you know, i mean, the global hawk is really expensive and complex. It may be a matter of selling nonclassified portions of the technology for things like replacing one pilot on board on longrange flights. I asked why it was taking so long to move from one operator to several at once . Its more of the interface between the machine and the human, making that more intuitive and the ability to respond to real world situations. I believe well have that within the next five years. By the way, Lockheed Martin not giving up on the u2. Says its been doing the job for over half a century and its already paid for. Thank you very much, jane wells. Love the name, nick jaggers. Lets see how the bond market is setting up for this important fed week. Rick santelli is back and hes in action at the cme. Hi, rick. Hi, mandy. Whether investors want to admit it or not, if you look at an intraday of ten, its a pretty compact range and 216, 217