fingers that this holds. >> up 284. joe? >> keep your eyes on some financial names, regionals, texas capital, fhn, regents. >> need the financials -- >> i'm with joe, on the financials, but i'm looking at bigger, walls fargo and the big stuff to see how they trade. >> "power lunch" begins now. >> "halftime" is over and "power lunch" and the second half of the trading day starts right now. >> guys, thank you. i'm unruhly bearded tyler mathisen. the rally is on and the big question is how long will it last? long line of market watchers screaming caution. right now the dow is up big tim 2881 point at 16,391, the s&p gaining more than 1.66% at 1953 and nasdaq beating them all there, up 1.86% at 4771 and what the fed said. our senior economics

correspondent steve liesman will go through the recent statements from med members and say what it all adds up to concerning the september 17 decision now just seven trading days away. mandy is live at the new york stock exchange with mary thompson. mandy, i said i'm going to let this thing grow until the market turns around, so it's got about three hours left. >> is that why they turned off the lights so you could come out and big reveal, the big spot light on the hair? >> love it. looks great. >> all right. >> good to see you. >> welcome back. good to see you as well. >> stocks in rally mode just off the highs of the day and nonetheless up by 282 points with tech and health care leading the gains. mary thompson joins me on the new york stock exchange floor. mary, just a moment ago i'm sure you just heard josh brown saying if you're bullish let's hope this rally today holds. >> i think a lot of people are hoping for that because as tyler mentioned at the top of the show, a lot of the notes over weekend are still citing caution and said we could still retest the lows of the s&p 500 so

there's still a little bit of trepidation i think in the markets today but overall we're seeing strong gains and fairly light volume today. this on the heels of gains in china overnight at the end of the session. we saw a big rally there and strength in europe as there and nikkei, japan's thee kay, only outliar that it erased all of the gains for 2015. today industrials, technology materials and health care among the best performing sectors. industrial sectors getting a bump from a couple of acquisitions, dover corporation is expected to add six cents to its bottom line in 2016, its stock up 4.5% and ge finally getting approval from the european commission to buy alston, the french power company. investors like the news, up 3.5%, still pleau its 52-week high and also, today, we want to note that energy has been a group to watch. see a pullback in oil and the energy sector higher today and that's, of course, contributing to today's rally. >> i think the crude low is 4414

so we've come off the low to 45.22, a full update on what's happening with the crude and energy market overall. thanks a lot, mary thompson. ben willis come out of the shadows and step into the light, senior floor trader with princeton securities group. before we had the correction in the market you and i were standing here, ben, and you said we need a correction. i hope we get a correction. it would healthy for market is this a case of be careful what you wish for? >> absolutely, and we've seen a correction in the major indices, if you will. we've seen more than a correction in particularly energy that you were just discussing with marry. >> right. >> so there are opportunities in tho those corrections. you heard warren buffett say the time to buy is when everybody else is selling and i get a kick out of warren buffett telling people they should be buying the s&p etf as opposed to individual stocks where he made his money is buying individual stocks and knowing the value. >> do you think that's the best

strategy now to go over the individual stocks, some which may have been unfairly beaten down as opposed to trying to bet on a whole index? >> most of the viewers out there do fantasy gaming. >> right. >> so your portfolio, you should be doing a fantasy drafted and finding those picks where you're going to see the best names and their performance and that's where i would go looking into the russell 2000 and the names really beaten down inside those groups whether in the energy sector, mlfs or health care industry. take a look at your portfolio from that scheme rather than the overall market and trying to pick the super bowl dinner. >> a couple hours away, three hours away, but call to close here, do you think this rally holds? >> i do, at least for today. i don't think china's cold is over with so china will have more of an impact on the major indices and how we trade today and that's why the vix is staying where it is and why it's

going to take a little time to work out. >> thanks, ben. news alert in the bond market. three-year notes are up for auction and sue herera has the details. hi, sue. >> hi, ty. $24 billion three-year notes going off the board today on the bid-to-cover ratio 3.23. it's a little bit below the average for the last few auctions which was 3.28. the yield coming in at 1.056%. more paper to come. ty, back to you. >> let's take a look for the record at the ten-year note and 30-year bond on back that have auction and take a look at the numbers right now so we can pull them up. come on. there you go. ten-year note at 2.19% on the yield and the 30 at 2.97 it is, and there for good measure. the two-year and the five-year. meantime, let's go over to nasdaq and bertha coombs following the movers there. >> hi, ty, welcome back and love the whiskers and the rally

beard. today it feels like back-to-school on wall street, doesn't it? take a look, nasdaq and the philadelphia semiconductor index, at least the nasdaq is back in the black, back to buying according to traders. could see a test of last month's low following the fed next week. today's rally has nearly half of the nasdaq large caps back in the black for the year and chips have been among the most beaten down of sectors today. they are leading tech higher due to bullish analyst calls out of jpmorgan, r.w. baird and along with microchip boosting the sector, up more than 3.5% and communications also ahead. a lot of talk about the revamp of the apple tv hardware, but apple anticipation seems to be putting pressure on netflix according to traders. shares were up as much as 3% above the open, a big reversal today down for the seventh day in a row on very, very heavy volumes. back to you.

>> all right. thank you very much. it's been, of course, a really wild ride for investors lately, and who better to speak about it than warren buffett, the great one, sitting down with our becky quick earlier today to give us his take on the recent selloff and what you should do about it. take a listen. >> i'm no good on what's going on in markets. i have no idea what will happen tomorrow or next week and sometimes they get very volatile like this and other times they put you to sleep, but the important thing is where they are going to be in five or ten years and i'm confident they will be considerably higher in ten years and i real very no idea where they will be in ten days or ten months. >> some of it may be because of what's happening to the force buying that's taking place, do you know that? >> don't know much about that. doesn't make any difference? if we're buying a stock try to buy a given percentage of the volume that trades that day.

same way for selling though we don't sell very often. down days i like because we buy them cheaper and we don't try to really figure out what's going on in markets and i've never been any good at it. >> have you seen the recent pullback as a reason to be buying? >> well, we're buying because we like what we're buying in relation to its long-term prospects and if we liked the a few weeks ago and it's 95% of "x" now i like it even better and goes to 95% of "x" it's even better. >> when we spoke with you on the phone back on august 10th i think it was you kind of hint thawed might be buying more shares of ibm in the second quarter. those files came out and kind of surprised us that there weren't any additional purchases in the second quarter. >> well, i owe you one on that because i thought i was buying it in that quarter. we had bought it in the first quarter and normally i wouldn't tell you this, but we bought some in the third quarter. i actually thought there were purchases in the second quarter and wouldn't have said that

unless i thought the number would be a little bit higher, but i was wrong, so i have to tell you that we have bought a little of the third quarter and did buy it in the first quarter as well. >> you've been spending a lot of money with precision cast parts. obviously spent billions and billions of dollars. >> yeah. >> but we're getting ready to spend it. >> does that leave you short of cash, see a pullback of 10% or more, does it make you come up money to buy things 10% cheaper than before? >> we know we'll be laying out 32 billion, you know, in the next four or five months, and so i've still got money left to buy. i'll never go below 20 billion of cash. i won't even really go very close to it because i don't want to go blow to and i promised i won't go below it so we might be a little less aggressive in buying things in the open market, but -- but if we're buying and we're spending say 500 million a week, in three or four weeks, that's just a couple

billion dollars so the 32 billion is the big chunk. i haven't held back from doing anything because that have upcoming purchase. >> do you think this fed has a different job? have things really gotten that much more global and kind of out of the fed's control? >> i think you have to think about everything and that's their job and they are looking at a lot of thing and then they get more and better information i'm sure on lots of things so i don't envy their job and to some extent maybe by their commentary they have sort of pushed themself into something where they have to do a little something here and i would not be terribly aggressive if i were not in that position. >> warren buffett. check out oil prices right now because brent crude is rallying, but they have been pretty wild springs in wti crude over the course of today. we have indeed cut our earlier losses, but we're sell down by 1.5% at 45.35 a barrel. jackie deangelis, what's going on? >> hi, mandy. >> wti moving in different directions. >> another day where we're seeing wild swings, session high

was 46.41 and a couple of reasons. traders are skeptical of the rally that we're seeing neck tis, i'll just start with that, but say there's specific oil headlines as well. the ceo from russia saying it won't work with opec to stabilize prices and on the other side jpmorgan came out and raised its forecasts for 2015 and the iranian oil minister saying that it will work with other parties to stabilize prices, but take that with a grain of salt. most people do when it comes to iran. this afternoon we're going to get api data, the private survey on inventories. it's going to set us up for the doe number. traders are looking at these numbers very carefully, but in the mix of the other stuff that's happening in the marketplace, it could be anybody's ball game here. wti trading at 45.38. back to you. >> all right. thank you very much, jackie. big rally on wall street right now. you're watching the numbers move as we do. shaping up to be a september to remember, which ever way you look at it. the fed, of course, gearing up for its big meeting next week.

heard what mr. buffet had to say about it so have policy-makers made up their minds on whether to begin raising rates or not? we'll take a look at what is saying what, and as we head out some of the most widely held stocks in america, google, apple, microsoft and jpmorgan all up close to 2%. you're watching cnbc, first in business worldwide.

welcome back to "power lunch." shares of alibaba reversing course after weaker consumer trends will weigh on this september's quarter here. the company sees gross merchandise value, gmbs to mid-single digits lower than their initial expectations. the company made these comments at citi's global technology conference and the stock is trading below the ipo price of $68 a share. paba shares one to watch today. >> thanks very much. ge, meantime, one. best per toppers on the dow today up about 2.5%. european regulators approving ge's purchase of alstom's media business, media general buying the company and the combined company will have 84 television stations and yum brandsialyi rag

to an outperform. optimistic about yum's china prospect despite fears of a slowdown in that economy. yum is up about 11% this year so far and is currently up 2.6% today. ty? >> investors getting ready for next week's big fed meeting and so are we. have policy-makers made up their mind on whether to raise rates? our senior economics reporter steve liesman here to shed light. looking at what they said. >> key statements, unprompted, you hit the nail on the head, tyler and the issue is not only what's been said but what's not been said and we'll show you what's not been said. let me start off with a couple of comments from some presidents. these are all voters. john williams over here with the "wall street journal" saying i do worry on both sides of the ledger. we don't want to wait too long. we don't want to wait to undermine -- we don't want to undermine the recovery so he

talks about china and talks about low inflation. really very, very balanced. >> can't draw any conclusion from that, right? >> you read it you think he's for a hike and, no, he's against a hike, and -- >> yeah, yeah, yeah. >> all we did for jaffe lacquer put up a title for the speech last friday. the case against further delay. tells you -- give you all of jeff's reasoning. it's all interesting. he seems to be in favor. let's go over here to stan fisher who strongly hinted that september was on the table in the kind of market-moving game-changing interview he gave us in jackson hole. when the case is overwhelming, if you wait that long until you're totally confident inflation will hit 2%, you will be waiting too long in an oft quoted passage from staff fishy and bill dudley, sort inform response to this comment where he said the decision to begin the normalization process seems less compelling. the next paragraph, more compelling as well, tyler. >> less compelling which would suggest that he who had been in

favor of raising rates. >> on the compelling side. >> now says it's a little less compelling. >> yeah. >> he says if you wait too long you'll be waiting too long. >> right. >> that's a beautiful mind-twister for me. >> that's his idea. >> what has miss yellen said? >> this is the key question, what has she said and not said? >> we have janet yellen the chair of the fed on her own here. we now think the economy cannot only tolerate and needs higher rates. that's the august testimony and we put the data in read. july 15th, a lot has happened since july 15th, china's melted down and markets -- the bottom line is we just don't know where chair yellen comes out on all of this. i have to think it's a calculated way to go into it. on the one and i think that she goes in with an open mind and if the committee, the consensus of the committee is they should be raising rates they will raise rates. on the other hand, it's very hard for me that they would go ahead and raise rates without the chair setting the stage or

some far more definitive signal. >> how unanimous do you have to be on something like this? >> that's a good question. first of all, a momentous decision. they haven't raised rates in nine years, at zero for something like six years. need a lot of folks on you, don't want aall right lost dissents. one is okay, two -- >> how many voteers? >> 12 voters, i've got to check that number. 12 votes. a bunch of the presidents don't vote, rotate in and out, five members of the board of governors all vote. could be the new federal governor could dissent if they want to raise rates. i think she wants the governors with her there and not dissent. bill dudley has a permanent vote as the president of the new york fed. three dissents would be a lot. you would write a story of a divided fomc. would think she would want no more than one or two. >> we'll all find out what's going to happen next week. check out the commodities crush

this year, oil, gold, copper, just those ones and many, many more i could mention and those ones there are plunging by double digits this year so this collapsing price forcing one of the world's biggest commodity trader to take aggressive action and we'll take a look at most active stocks in the nyse. free fort mcmoran is up 4%, but stay tuned to find out more. kid: do you pay him? dad: of course. kid: how much? dad: i don't know exactly. stay tuned to find out more. ort stay tuned to find out more. por stay tuned to find out more.

e billed as one of the biggest

commodity traders and collapsing prices in oil, gold, copper, and other key commodities has forced glencore to scrap its dividends and take other decisive steps. kate kelly is here. what have they have been doing? >> glencore the most beaten down stock in the mining industry surprised the market yesterday with an aggressive plan to stabilize its balance sheet all in a bid to stop its nearly 65% market slide which has made it the worst performer in the london ftse. the plan involves suspending dividend until further notice. at least six months, selling at least $1 billion worth of assets, including certain precious metal and agricultural holdings and raising $1.5 billion as part of a new equity share issuance to be completed by the end of this calendar year. in addition, the company will suspend operations in two african copper mines for 18 months, a move that appears to be rallying the red metal in a bid to reduce glencore debt to

the low 20 billion range. ceo ivan glasenberg has been optimistic overall and initially reluctant to take some of the steps outlined but discussions with investors convinced him to do more to protect the balance sheet. during investor calls when glencorps steps were outlined he was blunt saying we've pitched our balance sheet for armageddon and if that doesn't do the trick glencorps would find itself in a very tough environment. pretty tough environment where people are already in doubt about the miners. >> kate, thanks very much. >> prepare for armageddon and hope for something better. >> i guess so, talk about managing expectations. >> can only get better from there. one of the brightest spots in the u.s. economy car sales. they are on pace for a huge year with luxury sales strong as well so maybe the time is right for rolls-royce to introduce a new ride. phil lebeau behind the wheel.

what's this we hear about a new ride? >> rolls is calling this the sexiest rolls-royce it has ever built. sexy is not usual lay word we use to associate with rolls-royces but check out the new dawn. it's a convertible, a four-seat convertible that rolls-royce will start selling in the second quarter of next year and when it comes out it's likely to have a high amount of interest particularly in california and those are the two large markets. years-to-date sales are up 4.2% and even though you have choppy markets right here in the u.s. and a lot of people might be saying are the wealthy going to step up to pay $350,000 or $400,000 for one of these vehicles the ceo says there's plenty of interest out there. >> it's not that we're completely immune against any ripples in the market, but rest assured we have shown this beauty already to quite an amount of potential customers, particularly in the united states and the pickup is

tremendous. the bank looks good for next year so i'm not worried about that. >> not surprising that there will be heavy interest in north america which is the number one market for rolls-royce, particularly california and florida and a few other places. the middle east is also important because they have been growing their presence there over the last couple of decades, but in china sales are slipping and they are noticing the impact of the uncertainty over the chinese market right now, tyler and the important thing for rolls royce, what they point out is that china relative to their sales not quite as big as it is for some of the other automakers. still they are watching it closely. tyler. >> thanks very much. >> let's take a look at the bond market on the back of the three-year note auction that we talked about at the top of the broadcast, and you'll see the prices are moving lower at this hour, and maybe most especially for the longer year bond and prize moving a little less so as you might expect for the shorter durations there. the yield on the ten-year note notably at 2.19% and on the 30 it is 2.964 and that's, folks,

is your bond report for the 8th of september. mandy? >> apple, one of the best performers on the dow today. the tech giant is gearing up for a big event tomorrow and it kicks off during "power lunch." great reason to tune in. new iphones and updated apple tv device and rumors of a bigger ipad. what would be apple's next big thing. you should be taking a look at the stock today and we'll take a look at whether or not you buy, sell or hole. all that coming up. do not go away.

>> i'm sue herera, your cnbc news update for this hour. u.s. district court judge dave bunning ordered kentucky county clerk judge kim davis released and says she cannot interfere with the issuing of any marriage licenses. she was put in jail for issuing licenses because of her religious positions. and three more democrats say they will vote in favor of the

iran deal giving him the three more votes he needs to prevent a resolution if the numbers hold true. at least 14 turkish police officers were killed in a roadside bomb attack by kurdish militants. the attack comes two days after 16 turkish soldiers were killed in twin roadside bomb attacks in southeastern turkey. and three decades after she gave up the crown amid a nude photo scandal vanessa williams is returning to the miss america pageant. she will serve as the head judge for the 2016 competition which will crown the next miss america on sunday. and that is your cnbc news update. ty, back to you. >> all right, sue, thank you very much. let's take a look at gold prices getting ready to close and to do it go down to jackie deangelis at nymex. >> gold actually giving up its gains here at end of the session but still saying over 1130. metals up across the board today because of a weaker dollar and also because of the strength that we saw in equities, the industrial metals, that is, and

i do want to mention a quick note on ilinventress, they are delayed. api comes out after the close and we'll get the eia numbers on thursday instead. tyler, i guess, some of us are stuck in weekend mode. >> yeah, absolutely, jackie, thanks very much. >> and still in summer mode, i'm telling you. let's turn to the ongoing crisis in europe. just seems to get worse and worse by the day. several hundred new migrants and refugees crosseded into hungary from serbia this morning and they are now being held at a camp near the border. the camp is now home to some 500 people, mostly refugees from syria forced to sleep there before being taken to transit camps elsewhere in the area. some have been stuck there for days and hoping eventually to make their way to places like germany and that's where nbc's kelly cobiella is today. she's live at the train station in munich. kelly? >> reporter: tyler, good afternoon. a much quieter scene here at the train station in munich today after more than 20,000 refugees

arrived over the weekend. today those numbers down around 1,000 just o, just over 1,000. that's because a lot of migrants and refugees are not coming here. they are being sent off to other parts of germany. munich simply doesn't have the beds anymore to accommodate them. germany as a whole has said that they expect to take in some 800,000 refugees and migrants by the end of the year. they have said they can handle an additional half million in the years that follow, setting aside $6.5 billion to pay for it all but say neighboring europe cran countries have to step in as well. to that end, the european union president is expected tomorrow to unveil a plan to resettle some 120,000 syrian refugees throughout europe. of course, the question is will member states buy into that plan? a lot of states have varying economies, varying amounts of

money to spend on these kinds of issues so we'll have to wait and see whether or not they will actually buy into it. back to you. >> okay, thank you very much for that report. huge humanitarian and potentially political crisis as well. back to the markets where the dow is holding up by 1.7%, the nasdaq up by about the same and the s&p 500 at 1951 gaining 1.5%. feels like the rally is not holding badly considering the volatility in oil. >> right. >> it's been a very choppy session for oil and even the weakness and the corresponding weakness and some of the energy stocks were seeing, the markets will hold up very well. kind of up about 250 plus and more or less stayed there when it comes to the dow jones industrial average. deals as well as the gains that we saw in the overseas market hoping to drive the markets and this is some of the deals that we're talking about, media general by meredith corporation for over $2 billion. this is a deal to consolidate holdings in the local tv market. the two companies that the deal goes through will control about

30% of the tv market share here in the u.s. strategic hotels being acquired by blackstone for $6 billion and teco energy up 24% on the news, being acquired by a canadian utility for 6 billion as well. i think that number is right on that, apologies if it isn't. those are some. things happening in today's session. and on the deal front that's driving the markets and also the strength that we are seeing on the industrial front, most notbly general electric which did get approval for its deal to buy alstrom. the only of the dow 30 higher last week was intel and we just want to note, of course, that the vix on a day like this has pulled back. it's up just about 7%, but, still, you know, well above its lows that were touched or the

lows from last month or so so you can say there still remains some fear in the markets, although they are coming off those levels, the vix showing a little bit of a pullback there. >> can you see there, the one-month chart up 92% over the past month. >> thank you very much, mary thompson. >> let's get out to the nasdaq up in times square with bertha coombs. >> we're seeing a fairly broad rally here as well. large caps are particularly strong, the nasdaq 100 up 1.6% and nasdaq composite up a little bit more and that deal for meredith, 2.4 billion deal to be bought out by media general, one of the best performers in the russell 2000. small-cap bio names also contributing to the names today but it's the big caps in biotechs getting love from regeneron and amgen. could be a big week so watch

those stocks. beaten down and bouncing back nicely today as are the china stocks. jd.com among the best performers on the nasdaq 500 taking a page from some of its american rivals, buying back $1 billion of its american depository shares. jd.com has been beat down, down about 30% over the year to date so it may be getting its shares at a real discount from what it was trading at earlier this year. back to you. >> thank you very much, bertha coombs. so is today's huge rally an all clear for investors who may be sitting on the sidelines? joining us is hugh johnson and jeff kleintop, chief global investment strategist at charles schwab. >> do you feel that the cat lift for the stock market direction short term at least is a little murky, and by that i mean we seem to be trying to do some guesswork on what the fed is going to do, waiting for the china close to get our cue from what china is doing. feels like there's not a huge

amount of clear catalyst right here at home. >> well, it feels like the market moves haven't been so associated with the economic data that we've gotten which in general has exceeded expectat n expectations according to most numbers that i've seen. look, i think i lot of what we see on the updates is maybe buyback driven and a lot of what we see on the down days is program trading driven. got the boughts versus the buybacks pushing the market in different directions. making too much of this is the wrong thing to do. longer term the bull market isn't over but will be accompanied by a lot more volatility. >> not recommending that investors remain overweight stocks so you are getting defensive, is that right? >> we're recommending an overweight to equities and been neutral and remain in that position and think that investors should remain in line with their long-term strategies and ought to have 35% to 50% of stock allocation in international markets. we've seen good groelt over there?

what about you, what are you doing? you've been around the block a few times, sir. you know what's going on with cycles ups and downs in these markets. how do you read on this? >> you know, when we got together about a month ago, we hit the wall of overvaluation. we talked about the market being overvalued, and i say just what a difference a day make or let's say a month makes and now we've moved to a level which in my judgment as i do the numbers, everybody does them differently, 10% undervalued and along with that you've got really widespread optimism. you don't get that kind of combination very frequently in the market. last time we got it was last october so i think people should really take advantage and investors should take advantage of this and start to buy. obviously there are going to be some concerns, on going concerns about china and concerns that the problems that china are going to transmit it to other countries around the world and really hurt global trade and cause some recessions, but i really think, this is important, is that you rarely get this level of undervaluation combined

with widespread pessimism and that's a good combination. >> how are you feeling about the combination of apple, one year ago tomorrow for the last big apple event and were you recommending apple back then. what do you think of it now? >> i recommend it and bought apple at the mid-90s and bought it at 106 and bought it at 120. at the current level around 110 to 112, i would continue to buy it using very, very conservative assumptions, significantly undervalued so there will be a lot of volatility associated with any ownership of apple but over longer periods of time, and i can't give you the specific times, you're going to see apple move significantly higher. this is really a very well-run company. >> and we're waiting for that

one more thing. thank you very much, hugh and jeff. good to see with you and go to powerlunch.cnbc.com to see why hugh is bullish on biotech. tyler, over to you at the mothership. >> thank you, mandy, as we emerge from the summer slowdown and the school year gets under way. did for my son this morning. the s&p retail sector has soared, soared 15% this year, so are consumers hitting the stores in force or laying low and being cautious about their spending? now we've got a fall retail roundup from piper jaffrey's retail analyst. good to have you here. the surprise in this in my notes from you is that denim is hot. >> denim is hot and that's exactly what this industry needs. we need a trend to get people off their so ars and converting in stores. we saw it this weekend. denim was being sold right and left. we're really encouraged by this

category working. >> so interesting the mathisen focus group of one, my wife had my 9-year-old and bought some stretch denim at abercrombie & fitch that he absolutely love and not been a jeans lover but these didn't feel like jeans. >> that's exactly what they have done. taken a note out of the yoga pants over the last five years and said we've got to make this category a little bit more comfortable. a year ago that denim was 40% off. this year, you pay nearly full price. that's the really good news. these guys are going to be making money on this trend this year. >> they weren't discounting the denim but other things, cotton tops and so on and so forth so you were getting closer to full price on that. abercrombie seems to be moving nicely. who else are the winners here? >> which like express, another

great example of a retailer just winning at the fashion denim trend and you saw it in the second quarter earnings report. that stock was up massively, mainly because the expectations were a lot lower than what the reality is. the trend is working, and toys taking everyone by surprise. express is a great place to play this denim cycle. >> you mentioned earlier that -- that one of the things that you look at is who and which companies are being forced to discount less or don't have to discount as much. who is still having to discount a lot? >> unfortunately, we continue to see an increase in promotional activity at the gap so the gap would be a very large call place for denim to actually be working but right now they seem to be needing to get their house in order, whether it's the leadership or also on the product side and meanwhile there are other people out there taking their share. >> yeah. i love that stretch denim. i have some, too, and it makes me feel so much thinner, you now, because you -- you can go down a waist size and get that

stretch, makes you feel good, right? >> everyone's going to wear it at thanksgiving this year. >> neely, thank you very much. always great to see you. >> take a look at vix which tracks market volatility. >> thank you. >> as mandy mentioned, up more than 80% in the last month. some say it's starting to look allotted like 2008. others say not so fast. we'll debate that ahead as we can see there. that vix has come off its highs rather significantly in the past couple of weeks. still though 90% above where it was a moment ago. markets still squarely in the green and all ten s&p sectors are up and tech leading the way. you're watching cnbc, first in business worldwide. here at the td ameritrade trader group, they work all the time.

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available cash balance. nice to be able to do that. digs any shares up today for increasing on demand access for its films by expanding the service to amazon.com and microsoft customers. mandy it is. >> okay. a deeper dive on the markets and a couple of stocks catching jim iuorio's eyes. welcome back to "power lunch." good to see you. looking at s&p, sitting at 1955, 20 points away from a level that would make you start to feel like we have a bit more momentum to the upside for you to get more bullish. >> well, there's no question about it. it feels to me like the correction has some more things that it has to accomplish. it has to chase some of the weaker hands out of the market. i don't think that this is anything more sinister than a correction, nor do i think it's over. like you said, i think it's over if it can settle above 1977, it will look like the settlement period is done. look at rates. rates have stayed relatively

high despite the fact that we've gone through this correction and we know it's probably because china's selling tenure is at the same time this is happening. people is not making buying for dividends to happen. >> this is not going to be a 2008, is it? >> so funny that you mentioned that, too. everybody of our generation, every time the market starts to correct, everything that happens in their head flashes back to 2008. that's not the way things normally are. >> so scarred by, it jim, unless you're really lucky enough to buy at the lows, a lot of people still bear the scars. >> wakes me up in the middle and we have to remember that what happened in 2001 and 2008 were caused by credit crease ease and people leveraging up to their eyeballs to buy their home or tech stocks. i don't see mom and pop leveraged up on any one particular asset right now that's going to cause these weak-handed margin calls and that's why i think it's a run of the mill correction. >> how do you use this run of the mill correction to your

advantage by picking individual stocks? which ones are you looking at in the. >> somebody just talked apple, and i'm long apple. if it trades 118 i think it's a spot to buy again. i know apple pays a dividend but people aren't rushing to put apple in the portfolio to get the dividend. tesla, too, a little bit correlated to crude, at least was. it's weathered the crude pummeling rather well. if crude starts to trade higher again that makes that technology more valuable, at least that's what the market thinks and if tesla trades 262 or 263 i may add to that long as well. >> jim ire yaio, thank you. back over to you, tyler. >> apple shares moving higher ahead of tomorrow's big apple event. anything but a big apple event? interesting thing happens to apple stock around iphone news. we'll tell you what it is just ahead when "power lunch" returns in just two minutes. end has rea.

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we've got power points for this hour. stocks soaring right now. the dow, nasdaq and the s&p wiping away friday's losses. the better part of 1.5, 1.66, 1.75% gain for the industrials.

industrials, materials and technology sectors, they are the ones leading the way. in terms of individual names, general electric, walmart and boeing, three companies you might have heard of had been leading the do you and teco energy leading the s&p 500 up 24% this hour. among the major etf movers this hour, the xly, consumer discretionary up more than 1.5% and the oih, the market verdicter overdict -- the market vectors and go visit our website at powerlunch.cnbc.com, mandy. >> stocks can see here back above 300 points to the good and trying to recover after the second worst week of the year so today's yahoo! power poll asks are you buying? 44% say yes, buying on is dips and 39% say no, stocks are still going lower and 6% say i am moving into cash.

thank you very much, everybody, for responding, the market are bouncing back today, so is the worst behind us or is a september swoon still possible? cholesterol price wars. how much is too much for a drug that actually works? all that and more coming up. you've watching cnbc's "power lunch," first in business worldwide.

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hello, world. here's what's ahead on cnbc. if you think stocks are going crazy because people are worried about the economy, we've got a quest for you. he lays out the reason you should not be worried, at least not about the economy and the one thing that most aren't talking about that could be a big risk for stocks that we will talk about and what to expect from apple's big event. will tim cook surprise everybody tomorrow? that's all ahead but right now get back down to mandy at the nyc. >> i'm ready to be surprised. >> let's take a look at the markets going back up again and the high for the dow today was 337 and currently sitting at 312. nasdaq and s&p doing very nicely gaining by nearly 2% at this stage and let's bring in kenny polcari just back from the cape and a lovely tan to boot.

>> thank you. >> the stocks really used as cash machines used on the way down? >> that's true in times of angst and nervousness investors and portfolio asset managers go to where they can make sales and make cash and some of the big names, tyler said it earlier, ge and boeing and some that were used in that way that when the market turns around like that, those are the first ones people get back into because they are liquid and easy to trade and can get in and out of them and were beaten up. >> you don't think we'll retest the lows. really choppy. up-down, up-down in range. >> i think we're stuck in this 190, 1917 range, i don't think we'll test 165 again unless china pulls another devaluation out of their hat and barring that i think we're stuck in this range until after we get through next week where the fed is going to make this announcement you. >> don't think that announcement is going to be a hike though, do you? >> i don't think it's coming yet. i think it's coming in november and december, don't think it's coming in september.

>> how will the market react if that big banner comes out and says no hike? >> no hike. >> i think the market is prepared for no hike. >> no change. >> i think the market is pricing in no hike at the moment and that's not going to be much of a reaction. >> what if it's hike? >> if they hike a little bit, 25 basis points is not a big deal. i think will find stability down at the 1920 level because it's actually expecting at some point the hike to come and i think for the most part investors are okay with the 25 basis points. i don't think they believe that it's happening next week. >> only 25 basis points, high potentially off zero. >> why it's so ridiculous to keep talking about this in terms of the impact it's going to have because we're basically at zero and we'll still be at artificially low rates even after they hike it 25 points. i think the fed missed their opportunity early in the year and to do it now in the middle of september turmoil doesn't make a lot of sense to me. >> must have read bill gross when he said they missed their opportunity at the beginning of the year.

thank you very much for joining us. good to see you. tyler, over to you. >> that will do it pretty much for this hour with a powerful rally under way on wall street. we're going to say good-bye. >> yeah. >> and hand it over to brian. >> hi, bri. not a bad way to start the week. 2:00 on wall street and 11:00 a.m. in omaha -- 1:00 in omaha, dow well up into the triple digits, more than 300 point to the upside. hi, everybody, we're brian an melissa. joining us, the dow up 315 pain. gold slightly higher and oil slightly lower. welcome everybody. all right. despite today's rally though, your next guest says that all is not well in stockville. in fact, there's something happening behind the market curtain that you need to be aware of and that guest is waiting in the wings. come in here. head of u.s. society and he is joining us and we're going to pull a john madden and actually telestrate some stuff and before we do that why are corporate balance sheets one of your key flash points now? >> for six years we've get

interest rates zero at the fed and corporate america has taken on more and more and more debt, and that's not a problem. >> don't be afraid. >> i'm not going to bite hard. >> sure not a problem if equity prices are rising but when they roll over you're left with lower equity market capitalization. >> yes. >> and high debt. >> we have two charts and we'll got to telestrator, john grade ebb style, not john madden style. this is 2008. this is the global financial collapse. this is the drop in market capitalization. effectively the value of companies going down the drain, correct, and what worries you is this which is the last, what, three months, six months? >> it's three versus three. 9 trillion of equity market cap loss here globally and then here we have 12. >> how do we read it though? >> this is 9 and 12. this is bad, this is worse and how bad is this? >> it's particularly bad relative to the debt levels. back in 2008 we had a lot of

debt on the bank balance sheets and a lot of debt on global corporate balance sheets and global sovereign and emerging markets so because the global balance sheets are very, very debt heavy, and we have to blame the fed and the rest of the central banks for keeping rates so low so long, and because of that it's just as troubling as in '01 or more so today. >> we know this. equities have been wiped out. let's go to the next chart. this is the big one that you are worried about, okay? this is a little bit tough to see folks zoom in and i'll try to get my big paws out of the way. this is what? that's earnings, and it's starting to roll over. >> yeah. it's the truest value of earnings. ebitda is a good look at earnings. >> normally when things go up, we like it, right? stock prices go up, wealth goes up. that's total debt. >> net debt. >> and you're talking about trillions of dollars of new debt that's come in versus equity profits that are -- that are flat. >> i know this. melissa is jumping in.

this growing divergence is what worries you. >> is trouble and what we saw to some extent in 2008 and much more driven by the banks. today it's much more driven by the corporations. >> we're hearing again and again that the balance sheets are stronger than ever and doesn't make that the bigger percentage of market capitalization is in cash? >> if you look here, the cash is also down here so the spread between cash. >> this is the green line. >> the spread between cash and debt is also much lower. >> this is what you're worried about. >> and in the press the reason why globally, all listen in the media, the banks have delevered and households have de-leveraged and net-net this is actually levered. >> to be clear this is global, correct? >> we'll talk about the u.s. in just one moment. this is the global concern that worries you. >> it's global, but it's very much a big part in the u.s. that's a problem. >> larry mcdonald giving us

something to watch, colored lines, appreciate it. thank you very much. >> yeah. >> even if global concerns are returning to the markets, some big-money players are still doubling down. listen to some of the commentary made earlier today on this very fine network. >> pullback in the market creates lots of yummies. >> we're recently fully invested and the path is still upward. >> down days i like because we buy them cheaper and we don't really try to figure out what's going on in markets. >> that's bring in the director of regional economics at the milken institute and he's here to let you know ostensibly why you should not confuse things. one of the man traz for this hour, the stock market is not a reflection of the economy. what are you seeing that makes you bullish?

>> had consistent job growth and a weaker number than expecteded in august, up 173,000 but that will be revised up. we're starting to see more wage gains and more prices flat and starting to see real income gains and consumer confidence has come back and also you've seen household balance sheet and consumer debt servicing values have come down and consumption growing at a 3% annual rate and also the housing market is recovering now with housing starts at the highest levels since late in 2007 and a lot of forward momentum in the u.s. economy and i think it's enough to withstand the pressures coming from china and abroad. >> what you said is not only, a, important but plays well off of what we talked about. larry highlighted some of the concerns globally, earnings going down, debt going up and household, mom and pop, our balance sheets are getting better. i would assume that given that mom and pop are generally bigger

than the s&p 500 overall, that that may be a better factor than some concern about corporate balance sheets. >> i agree. the household balance sheet is an improvement and keep in mind gas lean prices have come down substantially, and we're just now starting to seat consumer realize that they have additional discretionary income and they are eating out more often, more leisure activity so the consumer and the service sector and also look at the auto sector, autos in the month of august at an annual rate of 17.7, the highest since before their crisis. >> that's awesome and we've talked about that. the only thing i will say is this. you and i have been both saying that for a while, some of the loans eight and nine years, lines of credit from the housing market starting to go up again. is there any inkling or data point that you're looking at that leads you to believe that as good as things are we're

starting to get -- >> high-yield bonds have risen dramatically and part due to the shale oil exploration and a lot of that was financed with high-yield debt but you look at the auto loans, for example, and can you clearly see there's some subprime lending occurring there and maybe some people that shouldn't be getting auto loans are receiving them but it's nowhere close to where it was pre-financial crisis, but certainly we've got to be looking at those areas and also another area of concern on consumer sector is college education debt. >> yeah. that's growing, a $1 trillion problem and doesn't look like it's getting better any time soon but that's a different segment. thanks, ross, appreciate it. >> thank you, brian. enjoyed it. >> billionaire investor talking markets to rising rates and even the donald earlier on cnbc. let's bring in becky quick with more of her one-on-one with warren buffett. becky. >> hey, melissa, good afternoon, everybody.

you know, one of the things we got the opportunity to talk about with warn buffet today is the market volatility that we've been seeing over the last few weeks. you all just showed a clip from lee cooperman about how he's been vying and fully invested and also admit that the massive moves that we've seen, some of the big down moves, unnerved even a seasoned investor like him and talked to buffet about that today and he said he's a fan of the big down days because it gives him an opportunity to buy more of what he likes anyway. if you can get that at a 10% discount, all the better. what does he like these days? one of those is ibm. prion may remember this, but just about a month ago on "squawk box" we had a chance to talk to warren buffett about what he liked at that moment and while he didn't say it he hinted he had been buying shares of ibm in the quarter. fast forward about a week after that when we got some of the filings, the s.e.c. filings, turned out he had not been buying ibm and left some of us scratching our head. today he cleared up the mystery. >> well, i owe you one on that

because i thought i was buying it in that quarter, and we bought it in the first quarter and normally i wouldn't tell you this, and we bought some in the third quarter. i actually thought there were purchases in the second quarter. i wouldn't have said that unless i thought the number would be a little bit higher but i was wrong and i have to tell you we've bought some in the third quarter and did buy it in the third quarter at well. >> also had the chance to talk to mr. buffet today about what he thinks about were the economy and certainly the numbers we've been getting, economic numbers over the past week have been incredibly strong number, look at the strong jobs report with the unemployment rate down to 5.1% and start thinking about what we've seen with some of the automobile sales at record levels once again and asked them what he thought about the economy. despite some of those recent numbers he thinks that the economy is really still chugging along at that same 2% to 2.5% that we've seen over the last five to six years. a little less impressed than some of the more recent numbers and he said on a week-by-week or

month-by-month or quarter basis sometimes you get distortions, looks at things more on a year over year basis and that's why it doesn't look as impressive. he did say when it came to the federal reserve, the mums we've seen recently will make their job tough every next week. >> i don't know, and like i say, if our rates got substantially higher than europe's, you know, i would in the think that that would necessarily be good for exports and economics you can never just do one thing, and then there's the always and what and the then and what tries to keep them very low and going to get some consequences down the low. >> those consequences are something that buffet is concerned about and many of the big investors who we talked about. lee cooperman this morning and another pointing out that one of

the huge unknowns and the real wild card for the fed has to be the stronger dollar. look at the economy maybe it would be worth raising but with the stronger dollar it definitely puts the united states at a different advantage in terms of its exports you. >> know, beck, a couple things, awesome stuff as always, but i'm really glad that you brought up the ibm stuff because i was filling in on "squawk box" that day and when you asked them about ibm, i love it, i love it. he's buying and then that 13 f came out and he's not buying and we were both shaking our heads about that and maybe i'm not losing my touch. a lot better to know that he just got confused. >> thanks. awesome stuff as always. >> let's get more insight on warren buffett from somebody who follows him closely. rob miles is a berkshire hathaway shareholder and is also of the warren buffett ceo. there's your cover, and welcome

into "power lunch." robert, thank you very much. and this is the weird thing you teach, this is the weird thing i have trouble getting my head around. is that buffet and a couple others like him have been preaching forever, than when things are bad, have a long time frame that's when you should be buying and data, data and data shows over and over again that when things get bad the retail investor sells into the bad news. how do we learn from warren buffett more than we are? >> that's the classic professor benjamin graham, his professor taught him that there's a mr. market whose virtual partner in the stock market and he's often time for the retail investor their master as well as the servant as he is for buffet and 95% of the par tips pants in the stock market are selling when mr. market is depressed and 5% like buffet are buying when he's depressed and the opposite when he's manic.

>> that runs counter to the way we react in our everyday lives. go to store and buy cars when there's 0% financing and discounts and smart people look for deals with the exception of the stock market often. >> buffet would argue he likes to buy stocks at 50% off and likes to buy his stocks at 50% off and he's just like a retail buyer looking for a sale and just that most people don't know how to value a business and don't know when it's trading on sale. >> there's a difference between values in the market and market traps and i want to ask you about ibm specifically since that's one becky pulled out of him. adding to his position in the third quarter. >> this stock is down 23% over the past 12 months and its high was 215 back in march of 2015 and the stock has never looked back. at this point use his principles perhaps, how do you know when you're going -- when you're going to cut your losses because

in the time frame you could have put the money in lots of other places and he has and made a profit so far on the investments? >> in fact, ibm is the largest cost basis of all his stocks. he's bought $1 billion more of ibm than he has wells fargo, for example, one of the top four holdings representing 61% of his portfolio. can you bet against buffet and look at the 15-year financials and you see consistency which he likes to look at and sees a high return on equity and growing revenue and growing earnings and buying back their stock and he likes to buy stocks that are buying back their own stocks as was coca-cola when they first accumulate that had. >> robert. we'll leave it there. good insight into the man that everybody wants to model themselves out there from a stock and business perspective and we appreciate your view today. thank you. >> good to be with you. >> let's get a market flash with

dom chu. >> we're watching shares of mattress maker tempur seely. the company has named former dollar thrifty automotive chief scott thompson as the new ceo and chairman and the stock is tracking for its best day since february helped along by headlines and a management change there and the stock is rising. the stock is also up big, 41% just year to date. back over to you. >> thank you very much. we are just getting started. here is what is ahead. the countdown is on to tomorrow's big apple event and we've got exclusive data on what happens to apple's stock when there's iphone news and five stocks. analysts say you should be opening or buying right now those names ahead and we're going inside the big-time best. one small hedge fund making on government bonds and it's a bit weird. stocks up more than 300% on the dow to 16,414. you're watching cnbc, first in

business worldwide. xçó0

welcome back to "power lunch" where the markets are clearly in rally mode, a picture of the nasdaq 100 heat map. the underperformers, netflix, a sharp one. it's the biggest loser on the 100. the stock is down by almost 4% right now. all right. apple shares moving higher ahead of tomorrow's big apple event and let's get to josh lipton with a preview.

josh? >> the biggest question for apple investors is this. can the tech giant grow iphone units in the december quarter and next year? tomorrow they could have a better sense, so apple expected to introduce the iphone 6s, faster processor and improved camera and pressure sensitive display. there are concerns about whether units will really grow including tougher comps and slowing chinese economy and that mature smartphone mar. one reason why apple's stock has now slipped down 125% from that 52-week high. bulls though insist that apple continues to take share from rivals like samsung and there's to that say the iphone users are weighing to upgrade. in addition to new iphones, a new 13-inch ipad is on the way and that tablet has been a sore spot for apple. sales disappointing wall street but ceo tim cook remains bullish on the ipad, especially for its use in the workplace. finally there's anticipation

that a revamped apple tv will be announced complete with speedier processor and motion sensitive remote control. that would, of course, make apple tv a potentially attractive gaming machine meaning ale could be ready to take on sony, microsoft and nintendo in the video game wars. a lot on the line here for apple. that stock on track for its worst quarter in years. tomorrow we're going to find out if apple's executives can still excite investors and consumers with this range of new products. brian, back to you. >> all right, josh, big day tomorrow, certainly. thank you. news is nice, but if you'rele investor i suspect you want to know what's going to happen to apple's stock price around these events. luckily dom chu knows and joins us with the answer. >> i do, brian. >> and the reason why is we're taking a look at history. not that many occurrences where apple has released a new first generation product but in this case here we're going to focus on every generation of iphone that's been released because the iphone is important. josh points out here it's a huge

contributor to both the sales and profits over at apple so our data partners over at ken show take a look eight times we've had the iphone release going back to the january 2007 original iphone release and here's what they found out. eight announcements during that time. on average, this is interesting here, apple stock has traded lower in six of the last eight times they have released a new iphone, so perhaps not great in terms of the overall picture. the average gain is nearly flat, .2 of 1% to the upside and what's driven a lot of the marginal outperformance to the upside is a big 8% pop back on january 9th, 2007, when the original iphone was first announced. do those gains carry over a few days later. on average we looked at five trading days past when that iphone announcement for whatever generation first came out. a little bit better, positive four out of eight times, 50%, average gain slightly better,

double, half a percent there and the biggest gain, the most impact came on the first ever iphone release back on january 2007, up 11% after five days. remember, this is a mixed picture overall and why for longer-term investors who have been in the stock, remember to take a look at the longer term for this stock. since that first release came out we've seen apple stock go up over 8% and you can see 815% since the day before the first generation iphone was announced and, again, the longer term story, very bullish and we'll see if that plays out as apple is near the top levels here. back over to you. >> dom, you know that it's really the run-up, the apple is a sell the news sort of event and the real measure is the performance of the stock in the weeks or months prior to the actual launch. >> correct. for everyone but the first one, right, because you didn't really know exactly what that first one was going to be and that's kind of the point here. the first anointment, when the first iphone came out that's what drove a lot of these

average gains you're talking about. an 8% pop that day, fairly mixed and negative since then. five days later when you start to look at some of the trends as well, like you said, a buy the rumor sell the news type of event here. you do know that apple shares haven't been exactly going gangbusters in the past couple of events and melissa and brian, interesting to see whether this is the catalyst that some of the guys have been looking for. >> unless they come out with a brand new product that has massive market share, hard to move the needle. 2007, they created not just the iphone, they created the smartphone. i was using a motorola star tack or something like that in 2006 and all of a sudden everybody is on their smartphones. i don't think you look at a 07 because that was a sea change. became a different company. >> traded a category. >> they did. >> thanks, dom. >> the five stocks analysts say you should be looking at right here, right now. "strees talk" is on deck.

stay with us. i was out for a bike ride. i didn't think i'd have a heart attack. but i did. i'm mike, and i'm very much alive. now my doctor recommends a bayer aspirin regimen to help prevent another heart attack. be sure to talk to your doctor before you begin an aspirin regimen.

take a look at stocks as we are at session highs. all three indices are up on the dow jones industrial average. we're looking at a 337-point gain, a gain of 2% on the

session so far. jd.com announcing plans to buy back after $1 billion worth of its american depository shares over two years, they have lost a third of its market value since mid-june. amazon is working on a $50 tablet that will be available ahead of the holidays and teco energy hitting multi-year highs in deal news. amera plans to buy teco for $6.5 billion, teco shares trading at its highest levels since 2002. >> stocks at session highs and we're all over this real. the dow jones industrial average is up 336 points and gains in china overnight hand they keep throwing money at their problem. that's been a boost to the stock market. crude oil though, can't really figure out its way. it's down one penny right now but we have the final oil trade set to cross. let's get down to jackie deangelis to set us up for that close. >> 2:30 out of the close and we're vacillating around the flat line today and just around $46 a barrel. very key level.

we're going to talk to you about what you need to watch for crude oil prices and we'll see how this finishes out. stay with "power lunch."

hello, everyone. i'm sue herera. here is your cnbc news update at this hour. republican presidential candidate john kasich says that if he were president he would keep a close eye on iran if the nuclear deal becomes law. he said he would pay particular attention to all the side deals that he says were made. kasich who said he would have voted against that agreement spoke to reporters after touring a maine shipyard. sand storms are raging across parts of the middle east teed. in lebanon residents wore face masks as the blowing sands engulfed the area and people have been told to stay indoors. japanese prime minister shinzo abe was re-elected at president of the ruling liberal party. he ran uncontested. frightening moments at the delmar racetrack in california yesterday. jockey corey nakatani and his horse were coming around the final turn when the horse actually did trip. fell on to the track, as you can see there.

nakatani was thrown from his mount and he was taken to a hospital for a shoulder examination but tragically the horse had to be euthanized. always such an information situation there. beautiful animals, brian, but they are also delicate to a certain extent as well. >> their ankles are just a couple inches in diameter, the way they have been bred. thank you very much. >> after a few crazy weeks oil sort of acting strangely rational today and let's get back down to jackie deangelis at the nymex. a rare quiet day for you, jacky. >> a $2.50 range for oil and while we ended just lightly lower, 45.14 is where we settled, still volatility in the session, but what was interesting was that crude oil did not track with the positive session that we saw neck tis today. things that you need to watch, dollar. weakness today and probably supportive of prices and also what the big producers are saying about possible cooperation, russia saying it won't get involved and iran is saying that it will do everything that it can so you've

got these conflicting messages in the marketplace, but, again, we're going to look to that inven try data on thursday from the doe to get a real sense. back to you. >> all right, jackie, thank you very much. >> two oil guests joining right now, one trades the actual commodity and the other an energy stock analyst, and todd, let's start with you. do you think there's a chance oil could fall back innot into e 30s but the $20 range? >> i think there's a lot of speculation where oil is going. we have to get back to that 30 handle like we saw a few weeks ago and oil volatility has been on the rise. wide price ranges are anticipated. let's face it, oil will trade like everything else. they will follow the central banks and right now the central banks really don't know what they are doing or real don't know what the next step is and oil prices like you said earlier, you should be seeing wider spread and should be seeing bigger moves and today was just kind of a nonchalant day.

>> when you look at charts and the fundamentals and everything, what's the bias on oil, up or down? >> i think the risk-takers right here are long oil, so you're going to see a bias and if we do see it leak lower there will be an exodus trade that will come and push us down to that 20 handle as you may have red in baron's this weekend but i don't think that trade is close until the fed decides had a to do. >> just want to be clear on the thesis here which is this. most people are betting on higher oil prices and maybe they are levered and have margins and so if oil weakens you could see a mass sell and that would bring the price down further. >> you could sell, and you've got to remember, brian, who is in these positions. some of these longs can hold it through say a break below 37.75 that we saw. they can hold it down to the low 30s. really what's going to happen with the retail sectors. those are not participating right now the investors and hedge funds and money centers, those are ones who are long oil here at the lower levels. i think they have the stomach to

hold it and if things start to go south oil prices start lower and that's why you see the capitulation trade below 32, my level in the sand r sand and that's 2008. have to go back quite a ways to see that price. >> i know 400,000 people who hope you're wrong. appreciate you coming on the program. >> oil stocks with raymond james, pavel, great to have you with us. in your model what do you have for the big oil price? and where do you see oil in future quarters? >> yeah, we're looking at $45 wti in q4, ramping gradually into 55 as an app and at the end of 2016 we think oil will be, you know, well into the 60s. the timetable and trajectory to get there is obviously going to be choppy. >> does that incorporate the iran deal, the notion that iran will put more oil on to the

market? >> it does. >> okay. >> and in fact if the inspections, you know, take longer and it gets delayed, you know, that would be upside to oil prices. >> you bring a couple stocks, occidental and marathon, and they are both underperforming in today's oil rally, pavel, and marathon more specifically has been underperforming the group as a whole for the past 12 months. why do you like them, and why do you think they have been underperformers? >> occi has done quite well beating the index and mro has lagged. both of these companies are an excellent i.d. market and dividends are tangible, they can be dependable, not in all cases, but i think in these cases they are dependable. occi is just about the own emp company that can fully cover its capital program at current year's oil prices.

and next year they can cover the full capital program and full dividend without any borrowing whatsoever. that is really hard to find in the industry. >> pavel, thanks for bringing those picks along. appreciate it. >> warn buffet discussed one of his favorite energy names this morning on cnbc. why don't you take a listen. >> philip 66 is not a pure refiner, they have a mid-stream business, so it's not -- we're not buying it as a refiner and certainly not as an integrated oil company. buying it because we like the company and we like the management. >> so lets us ask our trading nation team what they think about phillips 66 and warren buffet's latest pick. boris, do you dare go against the great warren buffett? is there any reason to doubt him? >> really smart trade in my opinion because i think that's exactly what he said. going from mid-stream, not

looking for refiners. phillips 66 is basically making investments in pipelines, railways and processing stations and he's basically looking to collect tolls. if you look at warren buffett's modium operandi, he gets paid to wait so a very smart trade, very little to do with the price of oil and much more to do with the movement of the oil collection across the complex. >> collecting a toll, well said. do the charts back up buffet's fundamental thesis? >> on a relative basis, like phillips 66 as a relative idea rather than an absolute one. within the energy sector that we continue to dislike and telling our clients to stay away from, for those who want exposure phillips 66 would be one that meets the screen. looking at the absolute chart, not much it's done for us, in a wide trading range tweef $75 and $15 on the upside over the last month and the chart we like is

phillips versus the energy sector as a whole. outperforming and nice steady uptrend and recently made a new relative high from. a trading basis looking at the next one to three months you want to buy phillips 66, short the xle energy spdr against it and that's how you get your returns looking out the next couple of quarters. >> there you go, the fundamental and technical view of phillips 66. guys, thanks very much. for more trading nation head to our website, do a couple extra segments every sickle day for you just because we care. tradi tradingnation.cnbc.com. >> meantime, another leg up on the markets, just joining us, maybe you live in guam, i don't know if the sun is going up or down, dow up 361 points, a new high. market volatility continues. speaking of markets, time now for street talk, time for big-time analyst calls you need to hear b.melissa, are you ready? >> always reddy. >> are you set. >> let's if. >> first stock, regeneron pharma, ubs upgrading it from a sell to a buy.

back in early july they said sell and look elsewhere and now with the pullback they like the stock again and think the numbers for its cholesterol drug could come in better than expected, target of 165 is basically retracing that whole gain from here. bonus that analysts will talk more about this later hon in this fine program. >> part of this call, brian, was an upgrade of amgen and about the upgrade of new class of drugs. we'll ask them about that as well as the pricing because these drugs are pretty expensive. second stock here, mike ron technology upgrading to a buy, price target up to 23 bucks and the analyst said it's undervalued, trade pleau book value and remember this, they said they developed a new chip back in july and mpm says that could be a $5 billion market plus. >> weak over the medium to long time and mike ron quietly up 11%, not bad. third stock, aetna, rbc

upgrading it to an outperform. the analysts say the firm is comfortable with the likelihood of humana deal closing and even without the deal 162 up three bucks from 11 and stock down from its all-time high. >> remember this, group is really under pressure to cut costs and there's been a wave of consolidation since this $34 billion deal and this stock will help the medicare business. fitby the, morgan stanley raising this to an overweight and the analyst is more positive on brand and market position going into the all-important holiday season. fitby the by the way up 13% from its ipo and remember that huge stumble after its q2. did beat consensus but there were issues around gross margins. >> 58 bucks very bullish. average price of the analysts 53 so we're talking literally like a 75% gain from here. analysts have work to do. >> finally today's under the radar name, cott corporation,

ticker cot, a mauga, ontario-based beverage cop. rbc upgrading it an outperform to a sector perform, boosted to a 60% upside. stock up nearly 50% year to date. canadian beverage companies, melissa, don't say we don't do our homework. >> that's true, that's true, and this is an under-the-radar stock in an under-the-radar town, mauga, ontario. >> like the third biggest suburb. >> i have family there. >> i've been there. >> you have family in mauga. >> are they big rush fands? >> i don't think so. >> they are from saint catharines. >> i was going to say that the stock doing pretty well, only 6% off of its 52-week high. >> w07bder what denchlgs they drink up they drink in canada, mr. pipp. >> i don't know. i don't live there. >> little known hedge fun is the treasury's best customer. and why is this fund buying

billions of dollars in bonds? going to try to get to the bottom of the mystery and we've got a real on our hands, folks. just turning on the raid yore or television or hi. . a m. radio, u p over 2% and the s&p also doing well.

. as we let you know, we are smack dab in the middle of a stock market rally. dow is soaring up more than 100 point and the s&p up as well. last week we had a big wall where everything was red except for a couple of stocks in the green. today the opposite. look at, that guys, pull back a little bit. there's the names, but i want to give the viewers a magnitude of how big and extension think of rally is. 500 or so names in the s&p 500, generally not 100 because of deals, et cetera, look at that. only eight stocks are in the red

right now. gave you some. newspapers. netflix, melissa, is the biggest loser, and by the way, melissa. >> brian. >> i thought it was fascinating that we learned today we both have canadian family roots. you're east coast, sort are, ontario and i'm west coast, abbottsford, british columbia. >> is this like a rivalry. >> shout-out to my brother if he's watching. >> obscure hedge fund buys billions of dollars of u.s. treasuries and the fund is element capital and the man behind it is jeffrey talberg. hopefully we can figure out this mystery. jeff, you used to trade bonds, so what do you think the strategy would be here? >> melissa, this is fascinating to see a small player like this really step up and buy a lot. just had a $24 billion treasury auction. we don't know exactly what he bought but he's been buying nearly 10% of these auctions, very characteristic of a big bank, so i think as you know, melissa, a lot of these large

hedge funds like element, this is a multi-leg strategy and they are finding inefficiencies and it's hard to believe that inefficiencies are in the treasury market and by it, it melissa, melissa, since dodd/frank, a lot have had to pull back and this could be one opportunity where element is found in the inefficiencies specifically to the treasury auction. >> and specifically to this they are talking about the so-called bond auction strategies, and i guess you probably are more familiar with this than i am. basically you're shorting issued bonds and buying them at auction and using the new bonds to cover the shore. not holding on to it so we can't interpret this trade as an armageddon trade that he thinks the world is coming to an end and he has to load up on bonds. >> you're absolutely right. no armageddon trade, another side of this. coming at it from a different angle so a very short term trade, but as you know the treasury auctions are very ill liquid at the moment it happens. sometimes they are able to pick up an edge. here they are always looking for

an edge and something he's exploited but the fact that we're talking about it and it's in the newspaper this opportunity may be coming to an end. >> thanks a lot for shedding some light on this strategy. markets here at session highs bouncing back after a lousy start to the month, as you know. so is the worst behind us or is a september swoon still possible? we're digging into the data? and how much is too much for a drug that actually works. debate over pricey cholesterol drugs. that's coming up when "power lunch" returns. here's to breaking more glass ceilings in golf and everywhere else. kpmg. continuing our commitment to the next generation of women leaders.

look at the dow. it's up 372 points, but the one thing about stocks in september is that you never know what's going to happen in stocks in september. deirdre bosa knows what might happen based on history and joins us from the great nation of canada. >> well put. historically september is a tough month to for stocks. will history repeat itself? based on historical data and soft start to the month we've seen, it could be a particularly bad september swoon. we look at analysis to look what happened in the past when stocks have fallen 1% or more in the first week of trade in september. there have only been eight

instances that happened since 1990. the worst income 2001. after that the s&p continued to fall and end the month in negative territory seven out of eight instances. all but one losing 5% on average. last time we saw the s&p fall significantly was september 2011. small cap russell 2000 index fared worse on the month taking more than 11%. s&p 500 did lose 2.5% in the first four days of trade. we are seeing a big rebound today that are cutting the losses in the first five days significantly. stocks are likely toned this first week of september nearly 1% lower. according to the stats, that does not bode well for the rest of this already-tricky month. back to you. >> deirdre, thanks so much. >> the biotech index up more than 3.5%. now there is a new debate about

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hi mi'm raph. tom. my name is anne. i'm one of the real live attorneys you can talk to through legalzoom. don't let unanswered legal questions hold you up, because we're here, we're here, and we've got your back. legalzoom. legal help is here. we told you about the upgrade on regeneron. a "new york times" op-ed is pointing out a debate of the cost of their new cholesterol drugs. with us is the analyst behind those upgrades. great to have you with us. the thrust of both upgrades is the optimism surrounding this

new class of cholesterol-lowering drugs. and the survey you did. what did you find when it comes to u.s. and eu doctors and willingness to use this drug? >> so great. thanks for having me on. we surveyed 50 doctors in the u.s. this is really a class of drugs for the patients who really have no other options. >> in terms of how it drops down to eps, when does it drop down to eps and what are you anticipating? it's hard to search a brand

preference. it doesn't pull out a brand preference between the two. we start to see the leverage in the model. as soon as next year for amgen we are have 15% eps growth next year. >> this "new york times" op-ed raises a good issue about prices. the price of the drug for years more than $14,000. for the hep-c, you would be cured. for these drugs it is a continuous treatment you take the rest of your life. would this be a head wind? we did see that with gilead when congress starting pushing back that was a stumbling block for gilead stock. >> sure. we've seen that the stocks are subject to headline risks because it relates to stakeholders stepping in and

making noise about the need to control prices and costs. cvs and express scripps made comments about the need to manage this category. we model this to be a $10 million segment globally. what we are talking about is a really good drug for patients with no other options. the part of this equation that a lot of people don't think about is we are on the hook for these costs anyway. if you have who already had a heart attack and they are high risk. >> there is no proof these will prevent heart episodes? >> that's true. >> thank you for coming by.

great to have you. fascinating stuff. i'm sure we'll talk about this a lot. the cost of drugs is a huge issue for a lot of people. >> regeneron stock up 2,000% in five years. >> tonight on "fast" apple doing something ahead of product launch it's never done before. tonight at 5:00. >> thank you. "closing bell" picks up our market coverage now. ♪ back to life ♪ back to reality >> welcome to "closing bell." i'm kelly evans at the new york stock exchange. welcome back. >> i'm bill griffeth in for simon hobbs. >> back to school, back to business. >> you see all the pictures on facebook of the kids going back to school. i thought about putting a picture of mine on there. i'm going back to school as well today. let me point out, when i left here to go on vacation august 21, look this up, the dow closed at 1659