third would be ncr. let it play out. final trade buckeye partners. >> we will see what apple delivers after the bell. that is where the anticipation will build for the rest of the day. we will have those numbers as soon as they hit the tape. that does it for us. "power lunch" begins now. >> "halftime" is over. "power lunch" and the second half of the trading day start right now. from big blue to black and blue the mega cap getting hit hard today. it alone is one of the main reasons the dow is struggling as it is. the reason? weak quarterly profits and lower guidance for 2015. david favor had an exclusive interview. you think -- we will have details of that in a bit. you think the california drought isn't impacting you? if you like beer nectar of the gods, think again, today how the industry is reacting to the drought and how it could impact

your drinking. and the head of the fbi. well, he's laying into big tech companies like apple saying the new antisnooping policies cryptography are hurting national security. we want to hear from you on that topic. vote cnbc.com/vote. your chance to be heard starts now. first to sue on another day for stocks. >> the dow lower for the 16th time in some 21 sessions being dragged down by ibm. the dow jones industrial average trading down by about 62 points. the nasdaq is in the green and the s&p 500 is in the green. s&p up by about 6. let's get more on the trading action. hi, bob. >> ibm hurting the dow jones industrial average and not dramatically the rest of the market. we are a lot calmer than a week

ago. two things really matter right now, number one, oil has stabilized from 105 to low 80s in oil. we have been there for the last three days. stability really matters particularly for the big energy names. exploration and production stocks many of them like chesapeake down north of 25%. take a look at big names. last three days they have been bouncing back. not dramatically but have stabilized. the other key headline is ebola. when you have 43 of 48 people on the original watch list in the all clear that was a huge relief for the overall market. you can see the effect on travel stocks, united, delta, norwegian. royal caribbean dropped 18% to almost 20% in the last several weeks. that, too, has started bouncing back not coming back to where it was before but you can see that. that is an enormous relief. you see this in home builders for example.

itb dropped about 10% in the correction that we saw just about a week ago. and now that, too, is essentially back to where it was just prior to that announcement. you can see it in the vix. we went from 15 to 30 over 30 in the vix at the height last week. now we are back to about 20 in that area. that is a sign of relief. back to you. big interview today. david faber sat down with ibm ceo. david is here with the details. a rough report from ibm this morning. >> without a doubt. a significant disappointment, something that she was not shy about admitting to, a quarter in which the company abandoned the long held road map for financial targets, for example, trying to earn $20 a share by 2015. and seeing the stock down by as much as 7% because of weakness across the board. another divestiture, part of a

strategy ibm following namely getting out of low margin businesses as it continues to invest in what it believes will be the transformative technologies of the future, of the present really data, analytics, cloud and things of that nature. back to the quarter says it was a disappointment. >> our third quarter is a disappointment. i should circle back, make no mistake. i don't minimize that. although it is a point in time it is a disappointment to us. woo eare going to take bold action about the quarter and bold actions as we continue to move to the future. >> it seems given the transformation taking place and will take place over time you may have disappointments in the future. do you have confidence that you won't have a repeat of this quarter in the sense of given the causes of it aren't necessarily going to be offset by many of the things you are doing in terms of higher value businesses that will take time. >> i have great confidence not just in the strategy but a

strategy that already has results and a set of actions if i go back fm the beginning of the year that have been bold. we will continue to make those. >> the speed of the market everybody says including yourself has increased. how at ibm with 431,000 employees can you be agile enough? >> there is no doubt that market place speed has increased. the idea that they use three shifts changing technology. technology has always been an industry that changed frequently. with the three different shifts all at once it is converging and causing more rapid. so one way you do it is very clear strategy. that is what i feel we have. we have a clear strategy about how to take this company to the future. more than a strategy, a whole list of bold actions we have taken one after another this year. when you are clear with your workforce and engage them that is how you move them swiftly.

so that is really what we are about is mixing into all of those new initiatives while our core business we continue to innovate in it. >> 2 1/2 years into her tenure this is clearly her ibm, if you will. some would say her predecessor who put out this road map that was very closely followed by the buy side now that she has abandoned that is in the sense that not they are abandoning buybacks but saying we are devesting the businesses we want to get rid of and making bets on growth initiatives because there is part of theover all revenue. >> almost a half a million employees. how do you turn the battleship at the speed of business today? it is tough. >> it is very difficult. bigger than the city of cleveland. >> more people work for ibm. >> thanks very much. sue, over to you.

>> as you and david have set out for ibm shares plunging after walking away from the forecast for 2015. was ibm too generous with shareholders? here is analyst in july. >> ibm is a poster child. they literally face the threat not too dissimilar to what kodak and xerox in terms of new technology staring them right in the face. instead of increasing investment to combat the threat they have actually borrowed a lot of money to buy back stock. >> what is the path forward for ibm and the other big cap stocks? let's bring in art hogan, chief market strategist and hue johnson. let me start with ibm. your take on the walk back of their forecast and their buyback. >> well, you know, obviously it

is really disappointing. we are going to have to revise downwards our estimates for what the company is going to do not only this year but in 2015. that kind of changes the valuation metric some. it is no longer trading at say nine times. it is now ten and a half times earnings. that is not dirt cheap. we would like to have it dirt cheap but it is not dirt cheap. quite frankly, sue, i honestly think we are going to have to cut back on our position. we have 3.2% for equity portfolio. we are going to reduce this not while it is low. it is very disappointing. >> there aren't many times i have heard you say that so obviously you are very disappointed in that. art, what about you? >> it is interesting you talk about the pace of change and the speed of transition, ibm unfortunately is saddled with two thirds of the business that is incumbent.

it is difficult to make that pace of change at a pace that investors are happy with. this is going to be a story we are probably talking about for a while. when you think about the fact that ibm has been in the dow jones industrial longer than most chairman of disruptive technology company. it brings up a lot of arguments. best use of cash or dividends or do you need to reinvest and reinvent yourself. >> what about the overall market after the big hiccup that we saw did you add to positions? are you optimistic long term? >> it has been a big change since september. it was 4% when you talked to us. secondly, there was wide spread optimism. now we have had this decline and moved from being 4% overvalued

to 4.5% under valued. that is really good news. there is a lot more pessimism out there. the only thing missing right now, sue, which makes me a little hesitant to add to positions aggressively now is that pessimism is not really wide spread enough. there is still a little bit of denial and complacency out there. i think over the course of the next week or two we might see more pessimism then you will have it all. you will have low valuation for the market generally, wide spread pessimism and that signals we make the change and head to the upside once again. drag your feet while adding to positions at current levels. >> what about that, art? your final thoughts on where you might find opportunity now that we have seen a pullback in this market? >> absolutely, sue. one thing to keep an eye on over the next two weeks the russell 2 led us here and seems to be leading us to the rebound. transportations don't lie and

they are certainly showing us a bigger picture than the broader market. as we work through earnings season there will be good news out there and the multiples look attractive. we are trading at 16 times last year and 14.5 next year's earnings. that is a pretty big value for the s&p. >> we leave it there. to jane wells, a developing story this hour. >> a further sign that legalized marijuana is going through growing pains. the ap reporting that health department of colorado is recommending banning the sale of most forms of edible marijuana. edibles have become incredibly popular especially with first time users but have been serious consequences as people don't know how much they are ingesting and the state has been coming up with new rules trying to come up with them for packaging. the ap said it got an advanced

copy and they want to ban the sale of limiting edibles to lozenges. the final decision will be up to colorado department of revenue. it will take the health department's considerations into consideration. washington has recently started allowing edible sales of legal pot there. we called the colorado department of health to get more information and when we get it we will let you know. back to the markets now. let's bring in our power player. the chief investment officer at j.p. morgan private bank. good to see you back. october so far has proven true to its historical nature which is it has been extremely volatile and very hard for people to trade it. as you look at this market now, how do you view it? >> we are very constructive still on the 12 month outlook. we were chatting before, people have forgotten what a correction feels like.

this is a good old fashioned traditional made a lot of money, markets ran hard, nothing is cheap. i think the thing that changed for us is what we are seeing in bond markets. bond markets really had been the focus point for us in terms of growth. >> before we come back to bonds i want to get your thoughts on europe. i know you follow it closely. you have been constructive on europe for a good time. many of those countries in correction territory. some in danger of going into recession. what are you doing with europe? >> we have been buying the u.s. over the last week and a half. we pulled back to a neutral position in europe. i think the bigger debate for us is where to go over the next months with regard to growth. do not believe we are going back into recession. >> some countries might. >> we do not believe the eurozone will. the bigger issue for me, the imf meetings in washington a week ago there was a great deal of sensationalism.

the reality is we expect a global growth next year to be higher than global growth this year. bigger issue for europe is 1.5% growth is the magic number for me. that is enough to sustain earnings, top line growth and weaker euro will help. we are running at about 0.7% right now. the big word on the floor at the new york stock exchange has been deflation with oil kind of threatening to crack 80. it hasn't done it yet. are you worried about deflation here in the u.s. or not? >> not at all. disinflation, yes but i think it plays to the positive once we have gone through this. the gap we have seen in energy prices i think caught everyone offguard. the expectation is we would see the saudis pulling back. there are a couple of agendas going on here. shale is something that middle east want to challenge. iraq and iran will bring

tension. demand is less. global growth is growing at 3% and not 4%. >> you have been pulling back from europe and putting money to work in the united states. i know individual security isn't what you talk about. where are you finding the opportunities within the u.s. market? what sectors? >> it's funny. all roads lead to baupds. i will get you to go back there anyway. bonds play into stronger dollar and stronger dollar to mid cap. we have had huge allocations in overweights in the u.s. mid cap. it plays into earnings growth and recovery story and more broadly into valuation dynamics. the sectors we are still procyclical. we like financials and tech. we have been flirting with energy at this point. it looks a lot more interesting than it did a month to a month and a half ago. >> talk to me about japan and asia. you had an exacting call on

japan about a year or so ago. how do you feel about japan now? you lightened up on japan at the right time. so do you like asia? what part of asia do you like? >> japan we went back into in march and early april. positions there were probably still up anywhere from 8% to 10% year to date. critical issues we hedge down at the end. i still believe that fundamentally the yen has to hold marginally weaker to play it out. we play small and mid cap in japan. where you think the u.s. is a higher beta call it is actually a better more sdat call on japanese growth and earnings. the government pension investment fund announced increasing the institutional investments in equity markets in japan. it is still a concern for me but we are still constructive. >> what happened in bonds last week? did it cause you to reduce sort

of your upward bound on where u.s. ten year rates may go? >> the latter first, yes. some of it is also european driven because with slower growth you are not going to watch the anticipation in the fed and the bank of england having to raise rates as aggressively. i have never in my career, tyler, and i'm not that old, seen the movement we have seen in the bond market last year. we traded seven handles. 102 to 109 has been staggering. that was literally the reverse trade to what we saw in markets in the taper tantrum. that scared people into thinking lower for longer forever. people came in this year very short bonds and have been squeezed out. that is healthy. >> that does it, right? good to see you. >> nice to have you back. we send it to domk. >> the stock moving higher at

edison after the energy solutions company pitched. the stock up by about 7%. a couple of different programming notes. ceo will be live on fast money today at 5:00 p.m. eastern. and then david einhorn will be on halftime report tomorrow at noon eastern time here on cnbc. a couple of must-see interviews all involving that solar and alternative energy space. big tech making moves to keep government out of data. the fbi director going as far as saying this will make america less safe. we want to know where you stand. go to cnbc.com/vote. should tech companies put national security over profits? the question should they do that? more "power lunch" in two minutes. ♪

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your link to what's next.

welcome back to "power lunch." we are watching shares of steve madden after the shoe company reported third quarter sales and cut the profit forecast. the stock is down about 9% floating near session lows on the day. it is a big day for apple today.

the tech giant reporting earnings after the bell just launching apple pay moments ago. josh lipton has the details on that for us. >> reporter: well, sue, if you find yourself at whole foods maybe shopping for groceries and you have an iphone 6 or 6 plus then you can leave your credit cards at home. that is apple's hope as it launches apple pay, its new mobile payment service. here is how this will work. at 220,000 locations across the country, whole foods, macy's mcdonalds and many more users can get in the checkout line and hold up the 6 or 6 plus to the special reader and with a tap of the finger the transaction is complete. if you look at the mobile payments market it is growing fast expected to quadruple by 2017 according to forester research apple wants to capitalize on that growth. some consumers may have concerns

about whether apple is going to store, collect and sell information about them or their shopping habits to advertisers but apple's executives tell me the company has no intention of doing that. >> going to expect everyone to use their phone to pay we thought it is really critical that apple or noone else really know what you are buy or how much you are paying. we wanted privacy to be a key component of that. >> reporter: so saying this is going to be an easier, faster and more secure way to make these transactions. apple is not saying how specifically the company will make money off the service but saying he thinks the service will be popular enough to motivate more people to buy iphones. >> apple and other big tech companies, are they putting their profits and the personal security of their clients ahead of national security interests? according to the fbi's director

they are. the question for you, should they? we have voting underway. go join us at cnbc.com/vote. there you see the running tally. live in washington and while he reports you vote. >> reporter: that's right. fbi director making waves with a speech at the end of last week in which he went after apple and google and said that we are at a point where mistrust of government has gotten so far we might be letting bad guys get away. what has him so upset is that apple and google say they are going to make encryption part of the default service and that means those companies will not necessarily be able to respond to a legal warrant to fbi or law enforcement if law enforcement wants access to a particular customer's phone. what he is saying is this is dangerous for national security and for law enforcement. he doesn't want these companies to do it and went so far as to say the companies might have to be required by the u.s. congress to make a little less profit in

the name of law enforcement security. take a listen. >> to a place where the u.s. through its congress says we need to force this on american companies. maybe they will take a hit. someone says we sell a phone that people can get into but that we as a society are willing to have american companies take that hit. >> we talked to former federal prosecutor and asked her about this and how it really impacts law enforcement and day to day operations. she said the drug dealers and other criminals can be surprisingly boastful with the information on their phone. take a listen. >> they can have photos with their co-conspirators or with piles of money. that can be useful. the contacts that this guy works with and for will be on his phone. instant messages where he is maybe working out with another

co-conspirator where they do a pickup or meet. >> civil liberty groups not buying what he is selling. we talked to a number of them. we will have some of the responses from those groups in the next hour. you can be reassured that civil liberties groups say it is not necessary from law enforcement and companies should be able to do whatever they want and sell encryption products. >> we have the response of the viewers and 32% of you say tech companies should prioritize national security over their profits. 68% of you say no. as you know apple pay is up and running. the mobile payment market growing so will you stop using your credit cards? go to cnbc.com/vote to weigh in. ibm disappointing investors with third quarter results. it is not the only big tech company facing challenges. dominic chu will look at what is ahead. >> large cap technologies certainly in focus for a lot of

investors because they are so massive in market value some are still way off their highs from the bubble peaks in early 2000. we will take a look at some of the stocks and how far away they are and where analysts think the stock is headed up next on "power lunch." so keep it right here. the cnbc trend tracker live data board is brought to you by the cme group. she inspires you. no question about that.

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can you start tomorrow? yes sir. alright. let's share the news tomorrow. today we failrly busy. tomorrow we're booked solid. we close on the house tomorrow. i want one of these opened up. because tomorow we go live... it's a day full of promise. and often, that day arrives by train. big day today? even bigger one tomorrow. when csx trains move forward, so does the rest of the economy. csx. how tomorrow moves.

welcome back to "power lunch." if you look at the dow and strip away ibm the dow would be in positive territory. big blue accounting for 85 points worth of losses. the dow is down about 20 points. leading the dow on the upside are nike, disney, home depot and wal-mart. nike shares up by almost 1.5%. the overall blue chip index trying to gain ground. >> thank you. aig upgraded to buy from hold at deutsche bank saying the insurance giant is on pace to return $25 billion to shareholders. solid earnings from hasbro. sap shares in the red today in a big way. the german software giant cutting the forecast, customer shifting faster than expected to

products using the cloud. let's take a look at the metals markets which are closing now. gold is trading on the upside by a fraction of a percent about $6 on the trading day. in terms of other metals fixed performance with copper to the negative side on today's trading session. the bond market now, rick santelli tracking the action, cme. >> it isn't an aggressive monday. we have had a tight range, 216 to 221 in ten year note yields. the chart you can see we are fit real nice in the upperward part of friday's range. 219 is unchanged and the stock market is close, striking distance on change so relationship is in tact today. let's look for clues as to next moves and see if anything is changing. if we look at august 1 start you

can see it is at 1.33. high water mark close to 1.60. 1998 you can see we weren't at the levels since 1999. the term might effect interest rates. one month chart on dollar index shows it is close to one month low. definitely a little give back. >> thank you very much. microsoft shares up almost 20% since ceo took over on february 20. our john ford scored the first tv interview and his big plans to take microsoft into the cloud. plus, apple pay debuts today. we want to hear from you. with mobile payments growing, will you stop using your credit card? go vote. there you see cnbc.com/vote.

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ibm has been weighing on the dow disappointing investors with latest earnings. other big tech companies are facing challenges of their own.

dom is back with where the street stands on some other stocks. >> before we told you about large cap names. let's go through them to give you a sense of where the experts think. let's take a look at big blue, ibm. since hitting a high of $215.90 back on march 15 of 2013 we are down 21% from record highs. we are not that far off. analysts have five buy ratings on the stock. there are 19 holds. so the predominant number of analysts have hold ratings. target price is about $194. then you go through and you see what happens with apple. apple 4% below its all-time highs back in september. so there are 39 buys on this stock, ten holds and just two sells. $111 per share. then you have yahoo all time highs of $125 back in january of

2000. we are 70% below that level. 14 buys, 14 holds but no sells here, maybe 12% upside if the analysts are right with their target price. microsoft an all time high of near $60 back in december of '99. we are 27% below that level. 16 buys, 18 holds, three sells. target price $48 and change. maybe 11% upside. the large cap tech at least right now have some challenges but the predominant number of analysts think there is upside to come. >> thank you very much. microsoft holding a major cloud event today. its new ceo speaking with our john fortt. shares of the company rising nearly 20% since he was named chief executive. john joins us more with that interview. >> this was his first tv interview as ceo wanting to set the stage on the cloud because that is the thrust of his strategy here. he was in charge of cloud and

server and tools before he got the promotion to ceo at microsoft and he set the stage for who he thinks is big enough to play with microsoft in this infrastructure and cloud space. >> i think if you are not already spending a lot of capital in the order of $4 or $5 billion each year to just grow your cloud probably it is too late to enter the market. i mean, that's the entry barriers. there are a few of us who are on that mega scale of cloud. >> that is the cost of entry. if you are not prepared to spend forget it? >> that is the rate at which. if you are a network operator today you have to be in that business. if you are mega scale cloud provider you are with the capital. there are two other players like that, amazon and google in particular. we are one of the three in that category. china is a great example.

we are the only public cloud company from north america that operates in china. both office 365 and aser. it is doing well for us. it makes global infrastructure available for every chinese company and every multinational that needs to operate in china. that's the kind of investment learning progress. >> mentioned he gave important especially in light of what we have seen happen today. telling david faber that the majority of the business in china was hardware business as they are spinning off the x 86 business. a lot of that is coming down. microsoft trying to position itself as a major player in platforms and infrastructure going forward trying to pick up a lot of the margin in the enterprise during the transition to the cloud. >> thank you very much. time for our power run down. our special guest today is the venture capitalist at mu drona

venture. welcome back. . mr. nadella wants microsoft to be a bigger part of the cloud. you heard him talk about it. he says he are one of the big three players here. is his plan going to work? >> i think that the team are positioned well at microsoft. they are trying to actually across the entire spectrum from sta startups into enterprise. there is amazon web services. microsoft has to play catchup. the enterprise is a battle ground that is not won at all. i would much rather be a safety wear company that understands how to turn infrastructure into software than a hardware company having to turn hardware into software as a service. >> let's bring in one of the companies that is partly a hardware company. that is ibm. when we think of old tech and new tech, microsoft and ibm kind of historically joined at the hip. can those two hold back and beat

out the two companies that mr. nadella just mentioned with respect to the cloud and that you just mentioned? >> i think ibm has two challenges. one is the massive pace of technological change. jenny spoke to you about that earlier in the day. the other challenge is the business model challenge. and that's where i think microsoft has more assets to work with than ibm because they have so many applications and related software as a service applications that can pull them through. things like office 365, their new enterprise mobility suite that allows you to manage applications and work loads wherever they are. ibm doesn't have that yet. they are pushing in the right direction. they bought soft layer. they have a lot of work ahead and have to focus on the enterprise because that is where the strongest suit is. microsoft has a broader place to play. >> you lead me to my next

question. if you were sitting there with mr. nadella and going to tell him the one thing you think microsoft needs above all else to get right with respect to the cloud what would it be sth. >> i think it is getting the ecosystem right which means not just be soing so microsoft cent about applications. i think you will see today with further announcements is that they are embracing the technologies including open source technologies in not being so microsoft centric in top of their own infrastructure as a service. >> that is an interesting insight. i guess there is an announcement later today that we will be watching very closely. another big piece of news today mobile payments, apple pay apparently making a debut today. will you stop using your credit cards? we asked our viewers whether they will. who will win in this? i think the credit card

companies win either way because the payment systems are one way or another linked through your credit card, right? >> the credit card companies do win either way. i think the challenge is are they going to have pressure on the interchange fees and things that are in the guts of how credit cards work because somebody between them and the end user customer like an apple or amazon. think how easy it is to buy with amazon prime and making it that easy on devices in the future. on the one hand we are providing customer convenience. on the other hand you are providing a lot of data whether apple gets that data or microsoft or amazon or the credit card companies, that data within its own constraints can be a very powerful tool. i know where that person is. i know what they bought. what can i do with that information hopefully to provide for the good, more convenience in the future? >> do you use your phone to m b

mobile pay? >> only at starbucks. using their app. spl of the new offerings, i got my new iphone 6 i am expecting to give it a try. >> i used one of the devices yesterday and it worked very nicely. now i have told the world so they can get my numbers. thank you very much. great to see you. let's lock in the vote. you see it with mobile payments growing will you stop using your credit cards? americans stopping using credit cards? 53% say you will. 47% say no. sue, how about you? >> i am not sure yet. i will let it play out a little bit before i decide. >> the national average for the price of gasoline now at $3.10. how low will prices go? you can weigh in. do lower gas prices change your spending habits? go to cnbc.com/vote to join the

conversation. "power lunch" is back in two with the dow down 23 points. it's monday. a brand new start. your chance to rise and shine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions, your business is more reliable - secure - agile. and with responsive, dedicated support, we help you shine every day of the week. centurylink your link to what's next.

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you don't have to go it alone. e*trade gives you the support and guidance to make informed decisions. are you type e*? you can call it a tough day for ncr, the company which makes point of sale devices cited weakness in the retail industry and cut guidance for the year. as a result the stock is down by more than one-fifth of its value so 22% over session lows. you know the average price of gas in the united states now stands at about $3.10. where do we go from here? we want to know what you think? do lower gas prices change your spending habits? you can go to cnbc.com/vote to weigh in. tom is with gas buddy.com, the chief oil analyst there. welcome. do you think that a drop like we

have seen -- i know prices usually go down in the fall, but the type of drop we have seen, does it change spending habits? >> a little bit maybe for october and not so much for november. we are paying less for gasoline than in june. that is an interesting amount. a lot of people try to cheer lead and say that goes through the market. so it is a benefit. the problem is we are coming up on a bad comp. in november prices last year were about $2.17. it is not going to look as good as it looks now. we are about 26 cents below last year, 26 cents below september. if we keep dropping like this we are going to just be paying taxes on gas line by like next spring. we know that is not going to happen. the savings in terms of the drop of oil is probably quite significant. we have seen west texas

intermediate crude threatening to break the 80 market. >> it costs probably $75. in cushing that is above 80. we are seeing lower prices. the benefit comes on diesel fuel and jet fuel. if you heat your home in the northeast you might have paid something like $3,700 or $4,000 last year. you are iic looking at saving $. >> do you think it could help the holiday spending season if people feel like instead of going online shopping maybe they take the trip to the mall whereas when gas was higher they might not have? >> i think it benefits a little bit. when we get into november it will be about $80 million per day savings. people can be cranky in november or december regardless of what happens with gasoline.

if we get below three in a lot of markets. >> california is always one of the highest states. >> they go higher next year because they have some cap and trade things. it can create a warm glow for the holidays. >> we will leave it on that optimistic note. let's lock in the vote. do lower gas prices change your spending? 77% say no it doesn't. if you think you're not directly impacted by the western drought think again if you drink beer. earlier this hour she reported on edible pot and now on beer. our intoxicants correspondent jane wells joins us now. >> a sobering story. the number one ingredient in beer and some brewerys in order to get more access to water. that when we come back. e

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economy, beer. jane wells in los angeles with the details and a big bud light can. >> going old school. beer needs water and a lot of it. what does it mean for california's fast growing craft brew industry? it is a problem. gloev dale california has seen great sales growth but ceo says it takes seven gallons of beer to make one gallon -- excuse me, seven gallons of water to make one gallon of beer. they cut that in half. he thought it would be okay to apply for permits to double capacity. >> the city said slow down we do not have the resources to supply you with that. that resource being water. >> so the problem is clover dale depends on the russian river. not a lot of water there.

residents cut usage so paid nearly a half million dollars ahead of time for this to give clover dale cash to drill two new wells. >> so we were able to actually drill these wells last october before the third year of the drought began and became quite severe. >> now the brewery can do expansion. but then other craft brewers are expanding to the east coast to new markets where there is more water. next hour it is not just craft brewers. we are going to talk to bud. back to you. >> look forward to that very much, jane. three big winners in today's trading and we will back with more in two minutes time. when change is in the air you see things in a whole new way. it's in this spirit that ing u.s. is becoming a new kind of company.

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the dow jones industrial average is an ibm story today. >> if you look at the dow. >> it absolutely is. the dow is the only major index to the down side. the dow is down 23. s&p is up almost 10. the russell is positive. everybody is keeping a close eye on that. yield on the ten year note. 2.18% and three winners in the market? >> should we go to three winners qep resources up 4.7%. i know you are a transports kind of girl. i thought earlier today when art hogan said the transports don't lie, they are moving up again today by about half percent. >> they are in the green and that is important for those of you who follow dow theory because transports are supposed to confirm move to the upside or down side in the dow jones industrial average. >> west texas crude basically

fat. brent up a little bit. natural gas lower by about 2%. that will do it for this edition of "power lunch." >> "street signs" begins right now. have a great afternoon everybody. ibm losing more than $13 billion in value right now. microsoft ceo promises change. apple earnings out in two hours and we ask, is the dow a flawed index that should be dumped? we will dig into them all. something really surprised me. the dow has gone more than a month without a two-day gain. let's hit the refresh button. new week, new trading day. s&p 500 and nasdaq up for a third straight day. >> apple reporting earnings in just about two hours. it launches the new apple pay payment system. ibm posting