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tv   Power Lunch  CNBC  August 26, 2014 1:00pm-2:01pm EDT

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let's check a check on the s&p right now sitting at 2,002. dow jones industrial average also hitting an all-time high. "power lunch" is next. the dow did hit an all-time intraday high a short time ago. the dow is up 49 points, better than a quarter of a percent on the trading session the nasdaq last trade, up about 10 1/2 points, and the russell 2000 is up about eight points. we're checking the yield right now at 2.389%, but we are
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expecting the results of the two-year auction any second now. the yield on the two-year is pretty much flat on the trading session. as for the transportation transports have been moving today. the gold marked is up. tyler is out today. simon is at the nyse with bob pisani. you can call them the dog days of summer, but this is now the best performance for august that the s&p has had for 14 years. it's have i simple and of course some concerns that this may be the better place to invest. you have new highs across the board. we don't have it today. transports are actually to the down side. this has been a lag guard group, because oil has been down.
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very curious, this was up up now, just neck tiff. there's turkey. these al have 2 hundred, 300% of the daily volume already in the first half. i would pay attempt to that. why the interest in emerging markets? i think the rally is broadening out. i think we're seeing some interest as the rally is broadening out. >> my 401(k) is looking good. sue, over to you. >> i'm glad about that, simon. thanks. with the s&p 500 and dow hitting new intraday highs, we're talking about stocking up for
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september. we have eight stars of investment advice. peter soren tino is manager of huntington real strategies fund and jim is the manager of advisory research mlp and energy infrastructure fund. both heavily invested in energy. nice to have you here, gentlemen. peter, let me start with you. one, do you still remain generally bullish on this market, and two, why do you like the energy sector so much? >> i like energy for the fundamental story. it's basically sort of the renaissance. it's one that is been well spoken of here over the last couple years. we do like the space, we like the futures lo-- fundamentals lg term. so right now we have names we want to buy and actually we are using put options in here collecting some premium, writing
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some puts. i'll get to own more of what i want. >> very interesting strategy. jim, why don't you address some of that as well. tell me why. >> yes, we really like the midstream part of the energy complex. the backdrop is for the last eight years we've seen increase in u.s. oil and natural gas supply. that the increase in supply is creating a need for additional infrastructure. we think that infrastructure is the sweet part of today's market. we're buying investments there offering significant growth and yield and participating in what we think is the middle innings of a build-out. >> hold on, gentlemen, we have to go to some breaking news. rick, how did the two-year note auction go? >> i was going to give this baby a "b" until i had the last piece of the puzzle. the directs came in at 12.1. that's the weakest in about a
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year -- more than a year, june of '13. and that's an important category. 29 billion two-years they priced at 53 basis points, a bit side of -- 348, bid to cover, that's better than ten auction average, close to 40 on indirect better. like i said, the directs are on the weak side, but we give it a c. tomorrow, of course we'll be coming back with 5s and 7s, i would be very surprised if the seven-year doesn't go better, the flattening curve may make investors just a smidge nervous. back to you. peter ubs talk to me about the divergence when you talked about the underlying commodities going down.
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is the bond refugees sort of discovered this yield, and we see them crowding into the market space, especially with interest rates not moving up this year, i think a lot of sort of noncore money has found its way into this group. my fear is that it's all fun and games on the way up, and a nightmare when they decide to punch the button and leave. i'm content to sit back and wait for these things to normalize. impltsds sanderson farms is one of your picks, and it's really getting killed today. are you adding to positions? >> this is one where we have written puts on it. >> jim, you get the final word. if you had to put together a list, give me two other three names you like at this juncture. >> yeah, we still think there's an opportunity in midstream and
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specifically in mlps. yields are still in the mid sing the digits. williams are two that we particularly like. you're getting an investment in over 70,000 miles of pipeline seattle that cross the spectrum. so i that's a great opportunity in our mind. >> appreciate it. >> morgan? >> well, check out mobilelite, weight analysts issued their first coverage notes which were generally bullish since it went public at the beginning of the month. to avoid auto accidents. that's currently trading up.
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simon, back to you, morgan, thank you very much. warren buffett often described as the most successful investor ever, helping to make a deal that many would call un-american. we have the details on the burger king deal. robert? >> warren buffett and president obama have long been mutual admirers, buffett has backed the president's calls to raise taxes on the wealthy and bring more fairness to the tax code. given buffett the medal of freedom, he praised the oracle of omaha of being not only an investor, but an ethical role model. take a listen. >> today we know he's not only one of the world's richest men, but also one of the most admired and respected. unmoved by financial fads, he's doggedly sought out value, put his weight behind companies with promise, and demonstrated that integrity isn't just a good trait, it is good for business.
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>> well, right now they appear to be on different sides of this big debate over tax inversions, buffett is, of course, helping to finance burger king's acquisition of tim horton's which will turn burger king into a canadian company. buffett hasn't commented on inversions per say, but clearly has no qualms about exploiting the current loophole in the tax code. president obama has called on companies who do inversions, as he called them, corporate deserters. let's take a listen. >> this is basically taking advantage of tax provisions that are technically legal, but i think most people would say, if you're doing business here, if you're basically still an american company, but you're simply changing your mailing address in order to avoid paying taxes, then you're really not doing good by the country and by the american people. >> buffett has always been careful to make a distinction between what he pays and what he thinks the tax code should be with the solar company, his
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personal taxes, he would say, i take advantage of a lenient tax code, but he also adds that he thinkses had personal taxes should be higher and may say the same thing about inversion, but putting him squarely in the middle this very hot debate. we should point out we're running an online vote on this now. you they've briefing this is not necessarily being done for big tax savings. they're saying the move in the headquarters to canada is more about taking horton worldwide.
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he basically said they won't be getting as much of an advantage as wall street thinks they will get. the stock dropped 3% as a result of those comments. walgreens walked away from it. are they so sure as it would be seen as not a big deal. that would be my question. obviously the judgment is that they're not concerned about it.
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le walgreens situation i think is simply a consumer company and a health care company in addition to that. so i understand that perhaps more, but i think time will tell, i really do. >> more people can vote, we're going to take a quick break. more on that result -- actually we have a market flash from morgan brennan. who knows where we're going, morgan. >> it's an adventure today. check on the vm wares, hosting the annual conference in san francisco, and investors don't seem to be impressed. dow jones reporting that it could be rick sheryl ling was a bit bearish, so that stock is trading down about 3.5% right now. michael luke relyi being arrested on charges related to insider trading. the complaint alleges that he traded on insider information
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that he obtained during his employment. which is an vesselor relations firm. they them and merger related press releases. . simon, down to you. >> sue, best buy taking a dive. mixed results and the outlook worrying investors. how will the retailer survive in the years ahead? plus down on the farm. jane wells in des moines, iowa. jane? >> i am a little further north of there. some rain here today, some hail. rain is good, hail is bad, but there's so much, prices are coming down, farmers are going to cut back spending, except in one area. we'll have that, coming back. how do you know which ones to follow? the equity summary score consolidates the ratings
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before the break we asked you if you thought it was unpatriotic on tax inversions. 45% said yes, the majority, 5% sa -- 55% said no. aiming for the best august performance in 14 years, concernedly trading up about three points. lating the way higher asset management company, oil and gas companies, amazon and diamond
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offshore. the big question, can the s&p close above 2,000 for the first time ever? stay tuned. there's a tease for you. thank, morgan. the shoe retailer dfw easily beating estimates. going the other way, though, movado, plunging today, earns at the watch maker falling welt short of sxekdations, and it reaffirmed full-year forecast. with a buy rating, sake the firm's earnings quality is improving and trading activity has likely bottomed. simon, down to you. a look at best buy, that's certainly shifting, the share taking a hit as the retailer posts mixed results. now, let's be fair, on the bottom line, but shy on the revenue. it's not taking as much cash in as people thought. best buy says the outlook still
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looks soft. how will the -- sw retail advisers. >> you know, best buy is in a tough position. obviously they have underinvested online, so amazon has jumped ahead. only 8% of that site's business is online. their conversion rates are terrible, only about 1% of people are going on the website and actually buying. so that is what they have to work on. conversely the ceo told our report that conversion rates in the stores on lighter foot traffic are higher, because people have already checked on online what they want to buy. >> yes, surprisingly actually conversion rates are maintaining -- traffic of course is way down. about half of people as they're walking through best buy, they're looking online, elsewhere, so their price comparisons, but price matching now is obviously hurting margins. >> is this a buying opportunity? >> i don't think it is. i think they're in a tough position here.
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obviously they have to turn the ship around and go after amazon. amazon offers better information, quicker delivery times, so they have just fallen so far behind you'll have to spend a lot of investment dollars to get there. >> in the commercial break i complimented you on your dress, i think you look great. >> thank you, and you said in return, you are based in london. >> one of the things i've been trying to get through to retail investors is fast fashion is coming your way. you have no idea what it will do to the missy and teen space. >> so a dress from zara $80 u.s. dollars. there's only 45 in the united states. they're all over europe and they have crushed retail. so watch out as top shop and zara and the other roll out, and h & m. >> good to see you. good to see you. simon, shares of sanderson farms getting hit very hard in
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today's trading, the poultry producer missing earnings and revenue forecasts by quite a wide margin. you can see in the corner the stock is up almost 23%, so where can investors make money? jane wells knows, she's live at the biggest farm show in boone, iowa. over to you, janney. >> it's got the new tractor smell. i love it so much. corn growers will make less money this year, so even a great run up, there's so much corn, prices will come down, they're going to cut back spending except in one area -- seeds. >> farms are will always buy seed. they're going to look to maximize yield, as we look as who is insulated from the downturn, it would be the seed companies. >> analysts like monsanto, says 15 to 20% of monsanto's seeds that are replaced every year, and the new seeds cost 20% more,
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even if they're selling less, they'll make at least the same. pioneer is offering farm management tools on top of just seeds. >> it's more than just a bad of seed. it's the service we offer, it's the seed treatment. so it's the total package that we put together for a grower. >> sanderson farms aside. here's one measure. the cow, which is an exchange traded note is up, so meat is good. as for grain, both are down, so finally, how big is this show? you're seeing the egyptian minister of supplies, who has come to iowa to further a multibillion dollar deal to buy secure storage bins from bloomberg grain, egypt is the biggest wheat importer in the world, to figure out how they can have a commodities exchange in cairo. and the real investor out of
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florida got into this secure storage business, and this is back to you. >> wow, jane, thank you very much. meanwhile, ahead, a tale of two struggling cities in this countries. morgan brennan has more. can you guess which cities, one in the midwest and one here in the east coast. both are major metros desperately trying to reinvent themselves. we'll bring you the latest after the break. it's monday,
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takes a look at this picture of a promo bus taken just a few days ago in hoboken, new jersey, in the wake of three casino closures. today officials laying out their plan to move forward. morgan brennan joins me with more details. it's been tough sledding. >> which is part of the reason i think the mayor don guardian did hold a teleconference to discuss plans for the city as revel add showboat get ready to close, followed by trump later next month. more than 6,000 jobs lost, but it's glemting training programs and job fares the city's targeting conference and group business, and also says hotel occupancy rates are up this
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summer, also adding 1300 jobs next year thanks to $475 million worth of new development. the mayor says he expects a.c.'s eight remaining casinos to benefit from less competition. keep in mind this city does have a long way to go. it's already posting a 10% unemployment rate. >> the other story i've been following is detroit. basically after a moratorium, the water shut jobs aoffs start. what happens now? >> those residents who are overdue and haven't signed up for payment plans or some sort of aid will start to see their water turned back off. the city says 25,000 residents have addressed their overdue bills, nearly a 50% increase since the moratorium went into effect last month, but there could be, at least in theory, as many as 50,000 more resident accounts facing shutoff.
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keep in mind folks can still make payments. those numbers are very murky, and many of those accounts are tied to vacant properties and foreclosures. still, these water shutoffs, which started early in the year have sparked international controversy, and they have also in light of that, they also do seem to be working. from march through july, detroit collected 2.6 million. that was a 400% increase from the 503,000 that it collected on late water bills last year. so it's working -- >> but it's a difficult choice for a lot of people. morgan, thank you very much. simon down to you. gold is about to close. we had a break above 1280 today, a lot of this has to do with where you are going with the dplar. don't forget there's been quite a strong rally with the dollars over the last couple weeks. let's check on the bond market. ranked a grate "c" rick, sir?
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>> the problem with a two-year note auction is there isn't a lot of volatility consideration the scale. but open the chart up. you can see the pop up in rates, there's your flattening yield curve. let's look at the long end. 30-year bond, it did reflect some anxiety, also reflected some of the better data. if you open it up, it is the lowest yield basically since may 21st of last year. this is just for sue -- dollar/yen, 104 handle, haven't seen that since january. sue, back to you. >> well, thank you, ricky. you certainly know what i like to follow in the markets. perfect. thanks a million. it is time for the power rundown. jane wells is back with us, not on a tractor this time, and robert frank is here with us as well. we also have a viewer vote this hour on the right to recline your airline seat. let's get to the first topic
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california becomes the first state to require kill switches in all new smartphones, a device that remote loy locks or deactivates your phone if it's stolen or lost. what do you think, jane? >> well, i'm so glad in sacramento they're dealing with the important issues like forcing phone companies to do something like this. i don't like it, i think it's one more wake for someone to hack my phone, for someone perhaps in government to control my phone, even though it's supposed to be customer initiated. i don't like it. >> i agree, her point about hackers is spot on. very few consumers who own phones will know how to operate this, so it presumes a lot of knowledge on the part of both the thieves who will know this exist and the people who use their phone. i don't think it's going to work. >> all right. new study finds teenagers turning into false, anxious sleep deprived zombies, all because school starts too early. the solution apparently is for us terrible parents to let these tortured teen vampires to sleep
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in. we all are parents. our kids are ago younger than that, but jane, you go first, you've been there. what do you think? >> reporter: you know, our kids are fat not because school starts too early. you these these farm kids in iowa are getting up and sleeping in? no, they get out at aca.m., they went out and won a couple world wards. they needs to get up early and get some exercise. >> i think they need more sleep when they're teens. >> there's this argument about the cicadian rhythms. they would probably do better if they had a two-day school week, but we don't want to do that. >> reporter: yeah, and they would still be miserable, because they're teenagers. united airlines flight forced to divert and two brawling passengers removed, all because of this controversial little gadget call the need defender.
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basically it locks the seat directly in front of from you reclining. should airlines allow the use of it? we should say that many do not, but you can vote on this. go to cnbc.com/vote, and weigh in, and we'll see. robert, what do you think? we all travel a lot. >> i'm opposed to it. i'm going to get one. >> i think that's cheating. >> janney, what do you think? >> reporter: this was even in a economy plus where you get more legroom. i think it's a hilarious idea and a sign of -- if you want forlegroom, pay for first class. don't make the woman in front of you mad because she wants to catch a few zs, by the way, she shouldn't have thrown water in his face. >> let's lock in the votes. should airlines allow the use of the need defenders? 70% of you say no. only 30% of you say yes. interesting.
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let's have a look at where we are on the markets. the s&p is above 2,000, i think 20,0 2,003. since it hit the low in march of 2009. had you been lucky, of course, lucky enough to buy on, what was it, march 13th, 2009, a 200% return. plus also ahead, exposing one of the world's most secretive and powerful families in art. how they're caught up down in a battle that could rock the art world. 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. it's a problem that we can turn around and change. revolution foods is a company we started to provide access to healthy, affordable, kid-inspired, chef-crafted food.
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that's a very large great white shark about 15 feats nearing, the crews spotted it while on a routine patrol. the beaches were closed immediately, as you might expect. they were reopened about two hours later. i'm not sure i would want to be the first one back in the water.
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since 1998 when the s&p closed -- monster beverage. le worst performer, next worst, citigroup is down about 77%. so all in all some pretty remarkable numbers. this could be the best august for 14 years, i think it's a gain of 3%. smells concerns about europe and
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money coming in here. i can understand how people think how long can this go on, but it's not irrattleal to think that our stock market would be doing well in this environment. japan set it over the weekend, kind of a reduction of tensions in the geopolitical world. all of that boats well. they said, look, nobody is here, nobody is trading. there's no need to sell. >> that's exactly right, but next week you'll find out when everybody comes back. >> in the last week of august, beginning of september if. >> after labor day. >> i thought it was like the end of september. the question is, is there enough
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motivati motivation. are people motivated to come in and buy because of what they see? >> i think it's hard to read too much into it, because volumes are just too low, but from the managers i speak to, the u.s. is still seen as the best place to park your cash the u.s. is seen as the best play to allocate capital. the question is, can this rally continue? and i never have -- we're not on venus, traders. if there was a compelling reason, believe me, you would see volume pick up, no matter where anybody was from. >> we may get that starting in september when they start to talk about earnings, which will
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start early october. will they be as strong as last quarter? so that's going to drive it. >> i think you're on vacation now. i'll let you go. i am. >> in the 22% said yes, i'm selling. interesting, simon. we're going to talk about a multimillion dollar painting. >> sounds like the beginning of a novel, right? maybe by dan brown? it's not fiction. robert frank, who we are working to death on "power lunch" today, is back with the details. >> this is the early chapters. it's going to get good, folks, the courtroom super ronald pearlman and larry gugosian is now dragging in one of the art
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world's most powerful and private families. a judge just learned that pearlman and his attorneys can actually depose members of the family. they buy and sell millions of art every year. they are huge market makers. jose mugrabi said he once owned 800 warhols. now, this deposition is scheduled for september. it could shine a light on the inner workings of the very high-end multibillion dollar art market. at the center of the case is this piece. perelman expressed interest, but a week later, the price -- it turned othey sold it to the mugrabis. they often work together in
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deals, including big auction houses, this could expos exactly how they work together and how they may affect prices. no comments from attorneys with mugrabi or gugosi. >> thank you so much, robert. health and human services announcing today that kevin cohanian will move to washington. centers for medicare and medicaid service. he's on "street signs" today to address a lot of questions on that in the 2:00 p.m. eastern hour. "power lunch", it's the i want it now economy. this guy is cashing in on it. we'll have his story after the break. plus t-minus seven days until nfl season. i can't wait, but the games have already begin in madden football world.
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>> it's a competitive time, an emotional time, an annual ritual that causes a man to put his hands on this pretty face. >> madden season is the reason my hand touch your face. ♪ that time of year is finally here ♪ ♪ when i put you in your place >> that's the new promo for the madden video. the rest of that hilarious clip and what the game means for ea sports, coming up next. ♪ when the world moves, futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with paper money to test-drive the market. all on thinkorswim from td ameritrade.
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see your authorized dealer for exceptional offers you just have to win 70% of your points at net. and keep unforced errors under 10%. on the ibm cloud, the us open analyzes 41 million data points from 8 years of competition to uncover key insights. data can help show you how to win, no matter what business you're in. today there's a new way to work. and it's made with ibm. uber recently announcing it's -- uber is joining a long list of companies already testing out markets including google, amazon and walmart, but who are the people fueling the new i want it now economy? well, we went to find out. inch i became a messenger, because the photography world wasn't giving me much love.
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my name is sean, i'm -- i got an order today. i started immediately. first thing i do is look at where i'm going. once i arrive at the store, i go shop, it takes about 15 minutes to shop and i wait online. today they were out of the coffee that the customer wanted. all three companies together, like i can't make someone's life easier, think about someone who is sick at home. you can get whatever you want when you need it. that's a crazy concept. almost a year ago you couldn't do that. >> the principal venture capitalist focusing on commerce innovation, marketplace and local app.s.
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welcome to both of you. this is getting to be not a crowded space, but we have seen more and more money flowing into this particular time of commerce. >> i think we're actually just at the beginning. there's been a tremendous amount of capital invested into this particular segment of the market. with the on demand economy. the amazons of the world, now the wall martz of the world. which companies do you think stand to really dominate in this
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particular space? ivities i think whoever is willing to lose the most is going to be who is left standing. this is an incredibly expensive value proposition. it usually costs, you know, at least $20, as the delivery man just said, to fund this an hour, and consumers just aren't willing to pay that much. >> do you agree with that, ellie, or no? what's different today is that, you know, a lot of these companies aren't having to build their own warehouses. they're really connecting the dots and using a freelance work force in order to do so. the former iteration of these back in the late 1990s people have in-housework forces and
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also had warehouses and a physical infrastructure. >> it seems as though there might be certain cities or areas of the country that this would work best in, you know, a city versus the suburbs. is that the case or not if but the truth is, this is where it comes down to. how many people have a problem with getting their snickers bars, because that's where, you know, i do question whether the market needs this particular absolute. >> ellie, do you want to comment on that? >> certainly you can make the snickers bar analogy, but i think it's bigger than that. you know, you've got players like amazon, who obviously have
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been innovators in this locating distribution centers as close as you can in order to get closer and closer to on-demand delivery. when you have services like this in place in urban areas, you know, the exists e-commerce players, are going to be able to deliver better service to consumers in addition to it being kind of a direct to consumer service. >> ladies, thank you very much. very interesting discussion. for more of an in-depth look and the players that are racing to win, go to cnbc.com. simon, down to you. that was fascinating, sue. nfl football season kicks off next week, but the video gamemaker ea sports has its head in the game already. ♪ i get inside that cranium ♪ live there all night long ♪ i way you up ♪ at the crack of dawn
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♪ it's madden season ♪ don't ask why ♪ time to man up ♪ not to cry. it hits stories today. our julia boorstin with a look at what's become a -- >> a big budget and big laugh. i'll tell you how many millions of times that's been viewed and what the buzz means for the franchise. that's coming up after the break.
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welcome back. an overall strong day for energy stocks. simon, back to you. thank you very much. shares of alcoa moving higher. boosted by strong demand for aircraft. shares of kite farmer are flying higher after following an experimental cancer vaccine study. and a new study will have a collaboration for lung cancer.
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stock's down a little bit today, but the latest game is basically out in stores today, but the buzz is already out there online. julia boorstin is in l.a. with that part of the story. >> reporter: that promisa you just aired, over 21 million, that's how many times it's been aired -- viewed in the new promo for madden nfl '15. starring kiffin hart and dave franco, the 21 million views are since it was released just a week ago friday. the 3 1/2 minute spot has been shared four times more than last year's commercial. the video game vine hopes the long-running franchise will benefit not just from buzz about this video, but from the next generation console. last year's sales dropped dam tick ahead of new console launches. it's projected about $275
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million in sales will be of the game itself, and then additional retch from digital content. how ea is building on the console game. a mcqueary reports that retch grew a whopping 350% and should help build the company's position in mobile, which is a key and fast-growing area. as digital becomes a bigger piece, the 26-year-old franchise could become even more important for the bottom line. we'll now have to see how all that online buzz about that promo translates to sales over the course of a fall football and holiday shopping season. sue, back over to you. >> julia, thank you very much. we want to show you pictures of the developing stories, a warehouse fire in south houston. that's all we know about it now. as you can see, it's really quite a large fire, and we will continue to monitor that
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situation, find out more, if we can, about what is stored in that warehouse, who owns that warehouse, but a developing story live from south houston. let's see what's coming up on "street signs" with mandy drury. >> very dramatic photos there. obamacare has a new ceo, actually its first ceo. we are going to have him on the show. we're going to talk to him. we also asked you over twitter what other restaurant matchups would work. we read your answers and we'll read them on air as well, so it should be a good segment. now it's back to "power lunch" in the meantime. i had 3 different 401(k)s. e*trade offers rollover options and a retirement planning calculator. now i know "when" i'm going to retire. not "if." with centurylink visionary cloud a brinfrastructure, and custom communications solutions, your business is more reliable, secure, and agile.
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we'ral all-time highs, and the s&p is off its earlier highs. we were up about 2003, but still very comfortably above that level, and three winners right now affiliated managers, which i think was -- neighborses industries and diamond offshores, in a market that continues to trend higher and higher, albeit on low summer
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volume. >> this is a much bigger shot in south houston, a major fire engulfing basically a warehouse, and you can see the smoke. we're told from miles and miles away. we'll continue to monitor it. that's it for "power lunch." "street signs" begins now. how does a 200% gain sound to you in my guess is not bad. details on that ahead. plus are you still looking to get into stocks? we're going to make sure you are not buying at the highs. the real deal behind warren buffett's burger king push. are you working from home right now? watch out, yew boss may be watching you. >> that was awfully long and awkward piece of music. yes, i would like a 200% return on my money. that is exactly what the

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