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tv   Power Lunch  CNBC  July 22, 2014 1:00pm-2:01pm EDT

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energy. i like the financials. goldman sachs is going higher. >> on the exchanges on long ice. that does it for us. watching the markets here. "power lunch" begins now. halftime is over. "power lunch" and the second half of the trading day starts right now. new just breaking that the federal aviation administration has put a suspension for at least 24 hours on all american flights going into the tel aviv airport, this after a rocket landed dangerously close to that airport. and of course less than one week after a rocket took down a commercial airliner over ukraine. sploo meanwhile, stocks have been pushing higher after a flood of earnings, a number of big consumer names like mcdonald's and harley-davidson missing the mark.
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what the latest earnings tell us about a big shift. a major blow this hour to obama care, an appeals court ruling that subsidies given to certain people in certain states under the affordable care act are illegal, out of bounds. what this means now for the health care law and those who have signed up for it. and better than a bubble. apple and microsoft after the bell, with earnings today. a number of major tech players trading at very lofty levels now which tech stocks are worth more now than they were at the height of the dot-com boom. which are more richly priced? we're going to explore that this hour and form more. the knack dab is the biggest
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winner. we start uptown with seema mody. hi, seema. >> good afternoon, sue. a big day for tech. take a look at the top performing tech stocks. the list may surprise you. juniper networks tops the list, of course elliott management has been pushing for change at the company. qualcomm also providing a lift. f-5 net works reporting tomorrow, but reported today -- in terms of some of the best performing tech stocks over the past one month, large-cap tech dominating the list. lastly got to take a look at
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netflix, but it did say third quarter earnings would be impacted by higher that weighing on shares in today's trade. >> sue, thank you very much. we have big news that just broke out of the high frequently trading world. it concerns mr. obrian. >> and concerns this show, too. bill o'brien announced he was leaving that ecchanges. no work on where he's going, nor is there any word or explanation as to why he was departing, however he made news on this very show back in april when he appeared with us with michael lewis of the flash boys author and got into a very heated debay with brad cat yamma. >> my question to bill, if he's watching launching accusations. >> i'm launching accusations? what market do -- >> we use the direct feed and in
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combination. >> not what you use to route, what do you use to price trades in your matching engines? >> we use the direct feeds. >> no. >> yes, we do. you had a 300-page commercial, so let me talk for a few minutes, okay? >> that's mr. o'brien. he issued a correct later on that statement, use the slower sip feeds or securities information processor for the matching engine. the role of president will be assumed by the current ceo. interestingly they didn't say why he was leaving. perhaps it was it was related to this incident. >> you can speculate about that. >> programs he simply decided it was time to move on. at the moment they're all they're changing. >> we would welcome a comment. i know you put a call in, so give us a call or send us an e-mail, and we'll read it on the
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air. >> other we'll talk to you on the phone. >> other we'll talk to you on the phone. ty, up to you. sue, thank you very much. a very busy and perhaps somewhat confusing morning with respect to obama care because of conflicting court rights out today. bertha tell us what happened today. >> essentially if you look at the math, the on you the orange stakes. this is who might be impacted by the ruling that came out of -- >> district court. >> so the srkt there said under the letter of the law that the obama care subsidies that a lot of the people got are illegal, because they can only be given out for state-run exchanges. as we no many states decided to default, so some people
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challenging this law. >> this is the letter of the law. was this the intention of the legislators? >> then you get another district court in virginia, the 4th circuit court there saying no, the spirit of the law is that people should be able to get these subsidies even on the federal exchange. so now you have set up this conflict. this, dan, would suggest this is going to land in the lap of the supreme court very quickly. >> yeah. another step that has gone -- the obama administration within minutes of today's ruling by the d.c. circuit said they would seek an en banc review. if they prevail there and the plaintiffs in the 4th circuit don't get a rue view there, there is a if there is a split among the circuits, it's guaranteed, the same supreme court that just went against the obama administration in the hobby lobby case would hear this major significant challenge to
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the subsidies. >> you were mentioning if i have been receiving a subsidy. if i'm already there, am i safe? >> right now you are, because the ruling that went against the obama administration at this point upholds it for now. it's stayed. they're not going to claw anything back for now. the question is how it goes down the line. part of the reason today we're not seeing insurers get clawed back and go negative is the feeling this is is process. >> dan, bertha, i know you'll be following it the rest of the day. thank you. now to dominic chu tracking some of the health care stocks. tyler, the insurers are for the most part reacting to the two appeal court decisions. for the most part up by 1%, 2%, so you think wellpoint, you think cigna, aetna, all reacting positively, and did so throughout the course of the day. even as traders, investors,
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analysts digest what happened, a possible maybe supreme court ruling sometimes down the line, the odds are the investors are pushing these stocks higher f. a monster day for earnings, mcdonald's, harley-davidson missing their targets. what does that say about the state of the u.s. consumer? sarah i-- sara eisen has the story. >> look as mcdonald's suffering, same-store sales down 1.5% for the quarter 3rks.5 for the month of june alone, which is more about mcdonald's losing touch with its customers. so far that's not working. what goes works? the corp rachelle same-store sales s. on top of a menu price increase. consumers want fresh, less processed food.
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chipotle is on trend despite the consumer economic headwinds. coca-cola missing the mark on sales during the quarter, because in north america and many other key parts of the world soda is not growing. diet consumption, we've talked about it, is declining, even juices are starting to get hit. the growth is? sparkling waters, nonartificial sweeteners, which is why there's high hope for coke life to be introduced in the u.s. in the fall, with natural sweetener using stevia. campbell's soup just this week launched 200 new products lie v-8 protein shakes, campbell's branded organic soups, smoothies, fruit tubes, they're hitting all the trends here, healthy organic, eactually getting into greek-style yogurt, so the economic climate is still
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tough. that's why many of the companies are struggling, but also why this big taste shift matters a lot right now, and separates the winners and losers during this earnings season, sue. >> it makes sense, sara. thanks very much. to the markets with the s&p 500 hitting a new intraday all-time high, mixed results t it's also the gee on political risks that are escalating. kenny polcari is with me and mike holland. mike, i'm kind of impressed that the markets can move with the geopolitical situation the way it is around the world. are you impressed or no? >> absolutely, sue. i think a number of my friends who have been since cal or bearish about the market for the last two years continue to be really unhappy that these headlines are more affecting of the markets. i think we have the three things we talked about before, the fed,
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the negative psychologyings which i just referred to, and last thing is valuation. >> you're still finding places to put money to work. which sectors do you like? in the past it's been asia, but also technology. >> china and taiwan are really inexpensive right now. the long proclaimed hard land -- we had some slowing, apple, ibm, exxon mobil, not companies like amazon or netflix, which are priced to move. >> absolutely. >> it is interesting that despite the fact that we have an escalation in the middle east, this market keeps pushing higher. >> it does, but what we saw
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overnight was the escalation in the middle east seems to be -- or at least last night seemed to be coming a bit of control. you saw markets around the world rally, which kind of fed into today, as well as the seven dow stocks. geopolitical issues, is that but then -- created by that emotional reaction, and if you believe in the recovery, then, you know, it's a great place -- >> and the fed. >> it's a great place to be. >> they do very well. a global recovery -- thank you, gentlemen. >> thank you, sue. all right. let's send it over to dominic for a quick market flash. >> let's talk about the industrials. genuine parts company, the stock is moving lower on the second quarter revenue growth, the lightest in fourth quarters.
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auto parts, they're all retailers, you can see them moving toward their lows in the session as well, sue. back over to you. >> thank you, dom. the rocket fired from gaza landing three miles from israel's main international airport today in response. in the u.s., the faa is closing the air route from the u.s. to israel for 24 hours. we'll have more on that in just a moment. plus fighting war on multiple fronts. the israeli army has a special unit just defeated to social media. we'll talk about that next, and only on "power lunch." meet the woman who created it. so we're all set?
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welcome back to "power lunch." i'm phil lebeau with a developing story involves u.s. airlines flying to and from the main airport in tel aviv. the faa has issued a notice to all u.s. carriers, banning them from flying to or from ben-gurion international airport for the next 24 hours. that move comes just within the last couple hours of u.s. carriers on their own deciding that they were going to suspend their flights. in fact, we want to show you from flight radar 24, look at the turnaround in a delta flight that was going from jfk to tel aviv. it was over the mediterranean when delta made the decision it was no longer going to fly into that airport. it turned around, went to
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charles de gaulle in paris. the reason why the flights have been stopped is because there was rocket fire within three miles of ben-gurion airport. the faa set we're going to suspend flights for at least the next 24 hours. guys, back to you. >> phil, thank you very much for bringing us up to date. social media has become a weapon. the israeli army has a special unit devoted to just twitter, facebook, youtube, and other kinds of social media. they do it in six languages. they're producing tweets like the one you will see on your screen detailing how hamas is attacking from inside civilian airs. the colonel started the unit as she headed the idf's spokesperson's office. she retired just two months ago. and we welcome you to the program. why did you start the social media unit. and how important and effective is it? a wartime situation as israel
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and gaza are now engaged in. >> well, the social media is actually a war zone for us here in israel. it's actually a way to communicate to a wide variety of audiences worldwide without an editor interfering. here we can have our own campaigns. we can decide on the size of the headline, what that headline will be and exactly which footage to upload. it enables us to reach millions as their sole sort of information. >>. >> yeah, well, we can can see by the increase of the views and the readership of the information that is posted there. we started with only one social platfo platform, actually it was in english. it had something like 20 million
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people. now we are looking at something of many tens of millions of people with a variety of languages all over the world that have this kind of information. for us it's a great opportunity to convey or messages, and more important, the visual -- the visual context of those messages, because people today want to see the visual proof of those messages. this is why we are offering those possibilities. >> some people say that perhaps it also, though, might tip off people, including perhaps the enemy about, say, a move. i would assume you would have to be very careful and restrictive about the content of the message, so as not to tip your hand or enganger the military or civilians. >> yeah, this is correct. we have to make sure that every information that is posted out there has passed the field security. so we do not reveal too many
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secrets. on the enemy's side, since you mentioned this, the biggest challenge for us today, i would say is the amount of falsehoods that is going on online. for example, in this current conflict, we see numerous pictures from syria that are posted as if they were in gaza. this is actually something that we need to expos to the public and explain the source of these pictures. >> yes. what type of people do you recruit for that part of the military? i would assume you tend to go to those who are younger and perhaps more either familiar or comfortable with social media? >> well, there is a big paradox here, because any military in the world is a closed organization, usually has its own specific language, and social media is the opposite. it's open, emotional, it's
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sharing. here we have the best assets, the 18, 19 and 20-year-olds, which recruit under mandatory service. they need to have this creative touch, this thinking outside of the box, and these are the people we are looking for. >> thank you so much for joining us. we really appreciate it, and we hope to take to you soon again. to dom any chu for a market flash. check out what's happening with kimberly-clark, the stock is moving lower after the company cut its outlook citing a tough economic environmental, they are facing new competition from the lights of procter & gamble. shares just off by about 2.5%. tyler, back over to you. herbalife shares on the move. hedge fund titan big ackman laying out his case again the company, yesterday he called it yesterday the most important presentation of his career. herbalife, though, fighting
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back. we've got both angles, and you can see what the stock is doing today. plus tight end engineer michael finley, the $10 million dilemma. he's recovering from injury -- stay and play in the nfl or walk away and cash in on a $10 million insurance policy he has? what would you do? go to cnbc.com/vote and weigh in. tell us what you would do. we'll be right back. a world thg faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.
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welcome back. look at domino's. boosted by strong results overseas. revenue rising nearly 9%. the stock is up nearly about 4%. in a cnbc exclusive, domino's ceo patrick doyle will be jim cramer's guest tonight beginning at 6:00 p.m. eastern time. tune in right here. hope he's bringing the pizza. the big story today, bill ackman laying out his case against the company, ackman calling the presentation this morning in front of security analysts and others, the most important in his career. >> let's get you in the middle
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of this battle by listening first to big ackman earlier today. >> i've been an investor in retail, for better or worse, many times over the course of my career. what i can tell you is retailers don't grow exponentially, in fact their growth slows as they become larger. pyramid schemes grow exponentially. >> that is not obviously what scott wapner was told today by the cfo. let's listen in. >> i'm not worried about the substance of what he has. you know, there's no doubt that he's missing the real analysis, the real research. this is anecdotal, very propaganda base. i'm not even sure that he understands clubs, but we'll listen. what he's missing it that fundamentally we have millions of customer that is enjoy the product, that use the product. that's indisputable.
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>> scott and herb are with us, kate kelly, who was with us at the presentition also joins us remotely. what just happened, scott? >> bill ackman spoke for, what, 2 1/2 hours? he's still taking questions in midtown manhattan. >> but the market is not listens, he said this was the most important presentation of his life, was going to significantly impact herbalife, is maybe having a different impact thus far. he'll make the argument don't look at the stock price. he certainty doesn't want to look at it today. that was his words, the company was going to collapse. >> and we spoke to another investor, robert chapman out on the west coast, who was buying the stock yesterday, thus you have the move you're seeing on your screen right now.
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he went through just for an hour going through piece by piece, but remember what we're talking about. very complicated, very different to untangle. the company can come back and say here's where you got it wrong, and i keep saying in the end it's up to the regulators. >> i have to agree with herb. i thought there was pretty damning anecdotal -- but there's this sort of training program. he talks about when people are in training, they have so many attendances, have to make a shake 100 times before they can sell it professionally.
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that i think is concerning, other than the unless you're an herbalife expert, it's hard to find the fact check in all of this. the problem is all people have had to do to look at the move is that's a stock that's been moving. >> except that it's a one-day reaction stock. >> it was up a lot last year. >> we're looking at a stock price, whatever the federal trade commission, they won't be looking at stock price.
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>> the market is saying that's all you've got? you told us this was going to be the greatest presentation, and the market right now is saying that's it? >> not so fast. >> there might be a strategic flaw in all of that, right? and then ackman's -- >> we're getting a wrap, but i don't want to leave -- you can go on and find it. do you believe that most of the reported saling are -- or are they in-house sales? >> they do not close this information. until you actually see that, and get through the muddyness, you don't know, we don't know. >> let me add importantly.
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i have my hands on the rules of a study that, granted they commissioned that just came out, where they spoke to an economist and a former ftc adviser, who did an analysis i'm just -- >> that includes distributors. >> this is out today, commissioned by -- leave it at that. >> thank you very much. a special documentary, "selling the american dream" investigations inc., herb takes you inside the world and it is americay. shows how quickly people can find themselves in -- investors are encouraged to maybe turning into unmanagerial debt. >> let's check in on interest rates. rick is tracking the action at
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the cme. >> hi, sue. it says it all. we ticked up, the long and short of it is just a couple ticks away from challenging some of the lowest yields on a closing bait in 13 months. it's starting to accelerate, which is having the following effect. we're ready to break out and truly 'tis some of the levels we haven't seen prior to february. are some of these stocks a good deal for investors? do they hold value? morgan brennan has that story. >> what one analyst deems the end of the smartphone era.
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there are some names that should not be overlooked. we have that list, when "power lunch" returns. e financial noise financial noise financial noise financial noise virtually all your important legal matters in just minutes. now it's quicker and easier for you to start your business, protect your family, and launch your dreams. at legalzoom.com we put the law on your side.
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with millions of reviews, hairs of harley-davidson, the weakest performer. citing weaker than expected sales and delay in getting the newest spikes. you can see down towards polaris posting better than expected profits and raised its full-year estimates. you can see polaris up nearly 10% on the trade. back over to you. >> dom, thank you very much. the telecom index lagging behind the broader market so far this year. are some of these stocks actually a good deal for investors. >> morgan brennan, who last we saw was hanging from a rope outside, today demonstrating her
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versatility, taking a look at telecom. >> i'm really sore from that, tyler, par clays analyst says the sector is trading at the largest valuation discount to the broader market in over a decade. keep in mind that telecom, there's only five company in it, but verizon's earlier with two trends that analysts say could push the sector higher in the second half. the other trend, return of wire line revenue. >> but analysts thing we could also start to see this happen with at&t which reporters tomorrow and frontier communication.
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as they companies move away from, quote/unquote plain old television service. that should continue, sprint other still focused on building its network. and american power. cell towers could benefit from increased demand actually hitting an all-time high just earlier today, tyler. jennifer, thank you for joining us. >> thanks for having me. >> i knowic do a blank state whether there's value still but what are your favor names?
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>> i would agree with a lot of what morgan said. we also liked sprint. >> verizon did have pretty good margins, but they were a bit below the street. >> not at all. what you are looking at is a very balanced approach. and there's normally an inverse relationship, so still the post wireless margins is very impressive. we see at&t going after the directvs of the world there's not a lot left to consolidate, but certainly it was mentioned earlier, sprint and t mobile were very much of the opinion they would give it a shot.
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>> jennifer, thank you very much for joining us. >> thank you. let's get the trading action here. i love to report the inker sol rands. they up the full-year guidance, united tech, though, is down. they raised the low end of their guidance. i was surprised despite the adverse ruling on obama care. traders i talked to said supreme court will decide on it. we do have breakouts, sue. we have a new high, 18-month high. traders abandoned that in april and may, and also big caps, the
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oef -- the s&p 100, is at a new high. it has dramically underperformed and right now they're dumping big money into it. >> thank you, bob. ty, up to you. thank you, the tech sector with a fresh 14-year high today, also the third -- josh lipton is all about apple and dom chu breaking down other big tech stock winners. first to josh in cupertino. >> well, tyler, apple stock has raced higher, up about 25% since the last earnings report in april. what are traders, investors, analysts looking for when apple reports today after the bell? we're going to have that story for you. dom chu, what are you watching? >> josh, well, apple is just one of 120 other some stocks in the
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s&p 500 tech sector trading as highs even higher than the dot-com bubble. we'll have other names and notable earnings just after the break. keep it right here on "power lunch." [bell rings]
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apple shares have been popular. the tech giant is set to report the results, which is traditional the weakest quarter of the year. will that trend continue or not? . josh lipton is at cupertino, california. hi, josh. >> reporter: hi, sue. today after the bell, investors will have a better sense of how apple is performing. the streets want tows a buck 23. that would mean year-over-year growth of about 8%. one question, the consumers put off buying an iphone, because they're waiting for the new device. switching to you i up and down,
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the striae themes -- business and education, two key markets for the ipad. they also want to know how the markets are holding up. analysts think they moved about 4 million macs, still make up about 13% of the top line. investors will also be looking through that earnings report for clues about the product pipeline, which ceo tim cook has told me he is very excited to share with consumers. guys, back to you. >> thank you very much, josh lipton. >> big tech earnings out after the bill, some make tech players are trading at total values not seen since early 200, the height of the bubble. dominic chu with a look at tech stocks that are worth more than they were at the height of the dot-com boom and some nipping at that level. >> some that are close, but there are about 50 stocks in the current s&p 500 sector that were still around. 23 of them were actually better than they were back then. a few of them here, first of
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all, you have a big name, flir systems. if you haven't heard of them, these are the folks that do infrared sensors, thermal imaging, now it's up to there 34 a share. that's a 2500% increase. the growth has been driven in part by the contract with the u.s. army, and flir systems' average target price by analysts is 38, so maybe we could see another is 1% up side. then the big one, apple, the average price target is about $102. it's up 2007% from where it was back in march of 2000. this company went through a huge transformation, it's pretty much everything mobile and wireless that you can possibly think of, maybe even a watch down the line sometime. this is a stock that's just so close, 11% away from where it was with the all-time highs back in say march of 2000.
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this is a stock that could see some up side. one or two earnings reports, microsoft could be right up there again. we're going to end with oracle shares, it's just a stone's throw away, a 2% day in this stock could be worth more than it was at the height of the dot-com era. so the target price currently around $24, so another 8% upside, so some interesting names all in big-cam tech. from dot-com to dot-com. >> there you go. this man has sparked a big discussion within the nfl. free agent and former green bay packer engineer michael fi jermichael is waiting for an offer to pay him for the injury he suffered last season. he has to decide, and he's been cleared to pay, should he stay and play or walk away? go to cnbc.com/vote and weigh in.
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hock heed martin's stock is moving higher after that they
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raised its 2014 profit forecasts. it reported a 13% rise in sales at the aeronaughtic business due to a larger number of production contracts. you can see the stock currently up toward session highs. the stock is up some 44% overall over the course of the past year. tyler, back over to you. dominic, thank you very much. here's a very interesting story. jermichael finley has not played since a bruising injury to his back. he has a tax-free insurance policy. should he stay and play? can he make more? or should he walk away? that's our question today, and also to jack brewer, who played with the vikings, giants and cardinals before getting his mba and starting an investment management firm, where he advises pro athletes on this very topic.
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and our jon najarian, they guys goo into against? and the rest is history. and sue, who is not only a big football fan, but a packer fan too bot. >> absolutely. >> jack, tell me about how these policies work. as i understand it, he bought this policy, judgment ermichael did. if he doesn't go back and play, even though he wants to, he collects $10 million, no questions asked bakley if. >> it's not that clear for a time, lloyds of london is a big provider of these policies, but you have to have a catastrophic, a major injury that really affects your ability to play later on in your career. in michael's case, first off he's a good friend, but he had a very substantial injury. in his situation, it would be very hard not to compensate him. >> what do you think about that,
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jon? he's basically said it's a waiting game, to see where the packers bid for him or whether or not some of the other teams will bit for him. if you're a team, though, looking at this gentleman, and he's had that kind of an injury, would you bet on him? or would you advise him to take the insurance policy? >> well, since, as you already said, this policy would pay him $so million tax free versus basically only getting about, say, 50% of that money, sue, when you figure in state and local tax as well as federal. in other words, i'm sure he is, and jack would probably advise him as well to not only look after his health and his future, but how many year contract could he get? how much of it is guaranteed? those will figure into the calculus as to whether or not he comes back to play. >> how much do they policies cost? >> it's about 2% of the actual contract value, so typically,
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you know, it can vary depending on your age. you tail a gik in college that may be 19 or 20, you know, his premiums are much lower than someone in their 30s who's looking to cover themselves. normally a million dollar policy, you can cover that with between $10,000 and $15,000 per million. >> what would you advise him? >> i wouldn't play. i know michael, he's a great friend. i was terrified when i saw him laying on that stretcher. for me, as a friend, knowing how good of a guy he is, he is a player that can do other things off the football field. he's very intelligent. i want to see him play with his kids. whenever you experience a situation like that, i think you walk on. in a situation when you get $10 million tax free, you have to make $20 million in the national football league to actually bring hoff $20 million. >> he's been cleared to play, jon. let's talk very quickly about
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college players like jameis winston, the guy from florida state. >> the ncaa has a program whereby -- and again jack is a gentleman who not only supports these guys when they come out, but also sells some of these policy, as he said through lloyds of london. the ncaa used to provide a 1.5 over prime or something like that. >> yes, or even if you're a middle or low round pick, they provide some financing, which is how they policies get paid for. most of these kids don't have that, like you say, the 10 to 15,000 per million. >> you can borrow to pay the premium if you're one of the highly regarded college ball players. let's lock in the vote. 33% of you say stay and play. 67% there with jack brewer. >> take the money. >> what would you do?
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>> take the money. that injury was a devastating spinal injury. >> two out of three say take the money. what's coming up on "street signs"? >> it is topsy-turvy tuesday. ackman took the state again herbalife. the stock has its best day in nearly six years. what gives? also mcd's and chipotle doing different things, and the food scene? philly a lot hotter than you think. join us at the top of the hour. powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and e-trade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. call or click to open your fidelity account today.
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boosted in large part by a big increase in sales. the stock is up toward session highs. back over to you. >> let's check the markets. we still have a gain in the dow jones industrial average, new highs in the s&p intraday, and transports. so let's look at the industrials. the s&p 500 is up 11, about a half% game. the nasdaq on a percentage basis is posting the biggest gain of about 34 points, but the
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transports, if you want to look at the answer vary, they're going gang busters today. >> very interesting today, sue. lots of news moving on the international front, that will do it for this edition of "power lunch." >> "street signs" begins now. >> welcome to bizarro tuesday. the fundamental aa banning flight, and ackman's herbalife snafu. this has got to be one of the most interesting days in a long time. plus the bad news headline that may be good news for housing, mandy, what might be the single hottest restaurant city? its not your beloved new york, not san fran, not l.a., it is a tease. >> you have to tune in for find out.

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