>> pete? >> real quick, i'd just say this. the volatility index of the vix and the oil volatility index were up more significantly than they are now. that's an opportunity to buy protection again, scott. >> right. all right. that does it for us. "power lunch" begins right now. scott wapner enjoying the day over there at liberty national. almost as much as he enjoyed the redskins win yesterday over the eagles. welcome to "power lunch," everybody. along with mandy drury, i'm taylor mathieson. the bulls in charge, the s&p up now for, can you believe it? a fifth day in a row. the three major averages now out of correction territory. >> ge is getting a nice pop today up by over 4%. one of the biggest activist investors on the street taking a stake in the industrial giant, so we have three other mega cap stocks that analysts believe

have room to run from here. >> and ben bernanke, love the beard, ben, love the beard, ben. he was on cnbc with his first tv interview since leaving the federal reserve. why he says there should be no rush right now to raise interest rates. >> i wonder whether he loves your beard, too. >> i'm hoping. >> the mutual beard appropriation society. stocks extending their recent rally wiping out losses for september. with today's gains they are all out of correction territory. at least for today. the dow is currently up by 1.4%. 225 points to the good there, folks. s&p is up by 26% or points or 1. and the nasdaq is up by 47 points. good way to start the week, right, mary? >> it certainly is, mandy. that september swoon we saw in the market seems to be a distant memory today where as you pointed out the s&p is now up for the fifth straight session. art cashin saying we bumped up

to resistance on the s&p at 1979 to 1983. so we've kind of been hanging around these levels. nevertheless, the makts are up across the boards. these are some of the groups leading the markets higher including energy as crude oil is at the $45 a barrel level up at $46. telecom and industrials. dow components, you mentioned general electric along with caterpillar and dupont. let's dig dipper into the news about general electric. activist investor nelson peltz taking a $2.5 billion stake in ge making him one of the company's top ten shareholders even though that means he only owns just about 1% of the stock. one of the reasons they like this, trion funds, his management company has taken prior takes in companies like heinz and wendy's and while they're supportive of the restructuring ge is undergoing, they say at this point peltz's

partner said one of the reason they're coming in here is the market is not recognizing ge's value. >> it's an amazing risk/reward, and i think we bought the best industrial business on the planet, happens to be trading at the cheapest value. >> good cash flow, r & d and good market share. it has been hut by dividend cuts in the past, earnings decline and its performance. total shareholder perform has been less than stellar. they are not seeking a board seat but if they don't see any action from ge or a bigger improvement, they did say all options are on the table. what they want is for ge to borrow money to buy back more shares. ge is now undergoing a restructuring where it says it will return $90 billion to investors. they're looking for $110 billion to $120 billion to be returned

to investors. they also want the company to continue to cut costs and maybe whittle down that ge finance that has been cut so much in the last year and certainly has more cutting to come in the following year. they want them to do a little more with ge finance. right now the market likes the news. tyler, back to you. >> thank you very much. major decision by the supreme court on a high profile insider trading case. kate kelly is here with the fallout. kate, this is a very, very interesting story. >> it really is, tyler. this morning's news is the supreme court will not hear a central aspect of u.s. versus neuman. that was a blow for the justice department which was depending on this opportunity really to maintain a broader definition of what constitutes insider trading. if refusing to review a key tenet the justices left it to a new york appeal court to constitute what defines insider trading. one key element is a success insider trading case must show

those who traded it had a, quote, meaningful personal relationship, unquote, with the provider of the tips and some benefit for the tipper, the provider of information, was also involved. now, that sets the bar higher in some of these cases given that there may not always be explicit evidence of all of that. and, you know, cash or a job offer, things that the provider of the information may want, aren't necessarily evident or existe existent. still on "quack on the street" earli earlier, it was called a win for the market. >> now there's a very specific set of criteria that everyone knows. the u.s. attorney's office, the wall street traders, the defense attorneys, the s.e.c., we're all on the same playing field. everyone knows what the law is now and there's no doubt about it. >> well, naturally, tyler, he considers it a win for wall street and it is, but to be fair, it is true that this has long been a murky area of the law and some people think congress need to provide further clarification. so here is some.

>> what about a case where the tipper doesn't get any quid pro quo at that moment but they have given a tip that has caused somebody else to make a lot of money and then some years down the road, long removed from the initial tip -- >> there's political capital in the bank and they call in a favor. doesn't help the government here. that's a key point, and i think that's a point critics of the decision would point to. i mean, we live in an economy where despite having e-mail and instant messaging and this documentary evidence available to us, a lot of stuff is sort of done for goodwill, for political capital, especially in high finance. you may not be explicit about what you're expecting down the road, but that doesn't mean it isn't a motivational factor. >> kate, thank you very much. mandy, over to you. >> fascinating. today's rally pushing the nasdaq back into positive territory for the year. bertha coombs has been following the movers there. >> the nasdaq now positive, just fractionally for the year. large cap nasdaq 100 is the

laggard on the day when you look at the major indices. apple, while it may be the world's strongest brand, its shares are weak again today. micron though is part of the reason the nasdaq is strong extending gains up to better than expected earnings last week and outlook on very heavy volume today. the best gains today really in the small cap. look at the russell 2000 index up 2%. a small biotech, spark therapeutics. they're surging with positive results on a gene therapy treatment on blindness. gene therapy is something people watch closely. spark shares more than doubling from their ipo price since going public here on january 30th. very much bucking the trend in biotech which is down again today on those continuing concerns about high priced drugs and pushback, not just in the market but also potentially within congress. back to you. >> bertha, thank you. google shares have officially stopped trading as google shares and today they begin trading as shares of alphabet.

they are still trading under that same old ticker symbol g-o-o-g. josh lipton breaking it all down for us. gosh, josh. >> tyler, it's not supposed to be confusing. google co-founder and now alphabet ceo larry page, remember, he says the whole point of this restructuring is to create in his words a cleaner, more accountable company. google stock moving higher in today's trade. it's now up some 25% so far this year. bulls believe that thanks to this restructuring there will be more clarity for investors about the underlying strength of google's core search business which analysts think moves this stock higher. as a reminder, alphabet, a public holding company run by page and sergey brin will include a portfolio of businesses, calico, nest, fiber, the investment arms, google ventures and google capital and google x the research lab that

brings us those moon shots like self-driving cars. it's biggest business will be google inc. alphabet intends to start reporting under this new corporate structure in january, so stay tuned. guys, back to you. >> that's quite the behemoth. thank you for that. it's been a volatile few months in the market. that's not stopping a lot of companies from deciding to jump into the ipo pool. a dozen companies, in fact, set to ipo in the next month. kayla tausche brings us some of the big names we should be watching for. right, kayla? >> that's exactly right, mandy. it is safe to say a lot of companies who are trying to jump into the ipo pool may actually be doing so holding their noses given the type of environment we're in, and there are two clear caution flags. number one, a volatility index that's consistently hovered above 20. that's seen as low risk appetite on behalf of investors and then you have the fact that 60% of this year's ipos are now trading

below their ipo price. that's certainly going to give investors cause. that's why they haven't been willing to rush into knew inew . 75% of the deals that have happened since labor day and every deal that priced last week did so below expectations. compare that to just a quarter of the deals for the rest of the entire year. tomorrow the pure storage, which is a flash memory storage company will test the waters. to woo investigators it will be valued barely above it's last private market valuation. then the following week, albertson's will gauge whether that's appetite. for the rest, there's no harm in putting the paperwork together, starting the communication with the s.e.c. for when the market eventually turns around, and

some of those companies may even get acquired in the meantime. lest you think this is just the ipo market, bond deals for highly rated companies have been pulled. last week was the first week without a high yield bond since 2009. but for stocks and bonds alike, the most important metric is always price. you price something low enough, there will be a buyer for everything. guys, back to you. >> all right, thank you very much kayla. let's go to dominic chu back from the holiday for a market flash. >> if the price is right, like kayla said, people will jump into a lot of different things. micron shares for one. rallying by 11% right now they're the highest levels so far today. the stock is riding high for the second straight after reporting better than expected earnings this past friday. the memory chip maker expects demand to improve throughout the course of next year. this year coming up here, the stock is down 49%. so at least for right now, mandy, there are some investors who feel the price is right in micron. back over to you. >> the price is right. thank you very much, dom. it was the interview of the day.

might even be the interview of the week. former fed chief ben bernanke on cnbc with his first tv interview since leaving the fed. why he's in no rush to raise rates. plus, outrageous atm fees are hitting record highs. how high they will go and which cities -- and in which cities you will be paying the most. and a look at some of the most widely held stocks. you're watching cnbc, first in business worldwide. stay with us.

oppenheimer upgrading auto zone. they're among the best run retailers. toll brothers upgraded saying current values and estimates don't accurately reflect the luxury home builder's potential earnings. and vimpelcom facing a bribery case in the united states and in the netherlands. ben bernanke first television interview since leaving the federal reserve. talking about a host of issues from the economy to current fed policy, and our steve liesman has the highlights. >> it was an hour-long conversation. he wouldn't say outright that the fed should hike rates but made pretty clear his view that

he supports the fed's current easy money policies. >> i would point to the inflation rate. even if the fed had no interest whatsoever in growth and employment, which, of course, it does, but it has a 2% inflation target. it needs to get inflation up to that target, and, you know, easy money is justified by the need to get inflation up to the target. >> to be clear, bernanke never said what he thought fed chair janet yellen ought to do and he said the fed has some, quote, tough calls ahead. his book "the courage act" hits bookshelves today. it's a recounting of the extraordinary and controversial actions by the fed. we asked him if he had disappointed by the results of his policy so long after qe and cutting rates to zero. >> the slow growth is coming from slow productivity growth. output per worker has not been growing quickly. why that's happening is not totally understood. i don't think it has much to do with monetary policy. it has to do with the ways of

innovation. we saw slowing of productivity growth even before the crisis. i think that's part of it. clearly one of the issues is that we've been relying too much on the fed. the fed has been the only game in town doing most of the policy heavy lifting for the last few years. we need to see more action from other policymakers. >> he rejected the criticism that the if he had's low rates are creating financial bubbles. he said rates should be raised to handle financial bubbles only as a last resort if all the other regulatory measures don't work. he acknowledged the fed did fail to see the problems in the financial plumbing that led to the financial crisis. >> as you have skimmed his book was there something that surprised you. because you were reporting -- >> it was a little hard because i had these flashbacks when i was reading it. so the best parts of it to me are not the recounting of it because some of that's been done. it's when he stakes a sttakes a.

it's the way he cascades from one intervention to another and they all make sense but there's clearly not an opportunity to take a step back and think broadly about all the policies that happened. he does a very robust defense of zero interest rates pointing out that we're doing a lot better than europe which was late to the game. and he very definitively says every time you have been in an audience and talked about the financial crisis, it leads to lehman. he points out that they could not have saved lehman and e plains why. >> very interesting. thank you very much. >> the u.s. reaching an agreement on a controversial free trade deal. wh what it means for u.s. businesses. plus, atm fees hitting record highs. what we pay now and why those atm fees keep going up. you'll be outraged. that's all coming up after the break as we have a nice rally here on the street. don't go away. i'm only in my 60's. i've got a nice long life ahead. big plans.

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welcome back to "power lunch," everybody. i'm tyler mathson. the u.s. finally reaching a long sought after agreement on a controversial free trade pact. michelle caruso-cabrera here with what it means for the u.s. and beyond, and there we see in red the signatories to this pact, including tennessee. no, i'm kidding. >> that was funny. it's called the transpacific partnership. this is the pacific ocean and

the 12 countries that border on the pacific ocean. the largest are the united states and japan. china is not included in it. it is the largest free trade agreement in history. it's going to eliminate tariffs and also what we call nor nonta barriers. it covers nearly all goods and services. $727 billion worth of u.s. goods exports. this is video from a big announcement in atlanta earlier today. $828 billion in imports for the united states. it covers 40% of the global economy. what is the direct impact to the united states? it's hard to measure because nobody was sure what the final agreement was going to look like, so over time they've come up with a couple nmenumbers. they think it could add $36 billion to gdp. it's going to hurt manufacturing but it will be offset to a huge boost when it comes to the services sector and there's going to be controversy about it for sure. there's different sectors,

manufacturing always is complaining about free trade agreements because they think it hurts the sector here in the u.s. >> two questions come immediately to mind. number one, the most obvious nonsignatory here is china. >> yeah. >> why? >> that would be super hard to sign some kind of deal with china to deal with the nontariff barriers which are things like they subsidize their state owned enterprises. they do so many things that would prohibit inclusion into this. >> does that deal and i remember the trade authority that was voted earlier today, it pertained directly to this, does this pact have to have senate approval? >> yes, that's the thing. we have to get it through congress. >> both houses or just the senate z senate? >> i believe it's the entire congress. is it going to be up or down. that's the question. we don't even know that. >> trade promotion authority. >> we heard from senator marco rubio, and he's holding it close to the vest.

wants to see the deal. obama is not going to have problems with the republicans, it will be the democrats that will be the issue. >> thank you michelle. >> for a change. morgan brennan, market flash. >> so shares of alcoa are near session highs. announcing a new $1 billion deal with airbus. it's the largest contract ever with the plane manufacturer for alcoa. also initiating coverage of the stock with a buy rating saying the stock's current valuation and with a pending split into two companies, alcoa's upstream assets, basically the mining and smelting pratoperations, can be, quote, for free. alcoa reports later this week. you can take a look at shares up right now more than 8%. mandy. >> >> thank you very much. to the bond market now. rick santelli is watching all the action there at the cme. hi, ricky. >> hi, mandy. it seems to be risk on versus

risk off these days. thank you federal reserve. we know that the employment report, actually back-to-back employment reports were jobs light so let's look at what the markets are saying. if you look at a two-day on the s&p, we rebounded friday and we continue to rebound. that set the stage. 10-year note rates. if you blinked and missed the 1.99 settle under 2%, it was a close call but the two-day chart shows we're building that cushion. it's hard to keep the 10-year at or under or near the 2%. when the euro goes up when it's a risk off trade, it's covering carry trades. it's moving lower so the mirror image of the dollar index moving up. how long will it last? i'm not sure, maybe until the next fed meeting. tyler, back to you. >> thank you very much. they're one of the most annoying and worst kinds of fees for consumers, the dreaded atm fee, and guess what? shocking. they have never been higher. kate rogers looking where you

will be paying the most and the least. kate? >> that is absolutely right. these stats will definitely make you what tonight withdraw cash from your own bank's atm. the average fee from a machine outside of your network is up more than 4% to an average of $2.88. that's according to bank rate.com and what's more, on top of that your own bank will likely charge you $1.64 to withdraw out of network breaking fees to $4.52. over the past five years these have skyrocketed more than 21%. the top spot is atlanta at $5 5 $5.15. followed by new york is he at $5.03 and phoenix at $4.88. miami and milwaukee round out the top five at $4.84 and $4.78 respectively according to the survey. customers won't be hit as hard in san francisco which has the lowest average combined fee of $3.85 230followed by cincinnati

$3.86. dallas is at $4.11 and seattle at $4.21. with those cities rounding out the top five lowest for fees. get this, the five largest banks in the country made $283 million in atm fee this is the second quarter of 2015 alone. >> i'm going to go back to using tellers. >> it sounds like a plan. absolutely. >> thanks. >> a real person. it's gouging. thank you very much. shares of ge surging today because one of the biggest activist investors on the street taking a $2.5 billion stake in the industrial giant, so how do you play it? we've got three mega cap stocks that analysts believe have room to run from here. all that's ahead so don't change the channel. stay with us on power lunch. surprise!!!!! we heard you got a job as a developer! its official, i work for ge!! what? wow... yeah! okay...

guys, i'll be writing a new language for machines so planes, trains, even hospitals can work better. oh! sorry, i was trying to put it away... got it on the cake. so you're going to work on a train? not on a train...on "trains"! you're not gonna develop stuff anymore? no i am... do you know what ge is? why pause a spontaneous moment to take a pill? or stop to find a bathroom? cialis for daily use, is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use

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hello, everyone. i'm sue herera. an american airlines pilot died on an overnight flight from phoenix to boston. the plane watis diverted to syracuse and landed safely. american put out a statement saying it was incredibly

saddened by the event and is focusing on caring for the pilot's family and getting passengers to their final destinations. south carolina governor nikki haley says there have been nine weather-related deaths from the historic rains that hit her state. flooding continues to be a major problem. highway 17 in myrtle beach is covered with floodwaters, and a state of emergency has been declird clard in the county. ashton carter arrived in spain and repeated his condolences to dockers without borders. he said the u.s. will conduct an a full investigation. the washington nationals firing matt williams a day after the team finished second in their division. they were the consensus pick to win the world series. he was voted manager of the year just last year. that is the cnbc news update at this hour. back to you, guys. >> thank you very much for that, sue. let's get to kate kelly for a

news alert. kate? >> thanks so much, mandy. that supreme court insider trading matter we were talking about was just finally addressed by u.s. attorney preet bharara whose office is at the center of this request by the justice department for the supreme court to hear the case which the supremes have turned down. in a somewhat tense conversation, bharara said just now he essentially believes we think the decision will create a road map for unscrupulous behavior, ie, perhaps more insider trading, but obviously he says we're going to keep bringing the cases we think are good to bring. he noted that even with today's decision which will affect some of the existing cases by going back to an appeal decision to have a narrower definition of insider trading, he thinks his office will still have a 90-plus percent rate on the more than 100 insider trading cases they have brought. still a good record for them. >> all right, kate. thank you very much. big rally to tell you about on wall street. major averages have now nosed out of correction territory.

the dow industrials almost 250 points higher. mary thory thompson is at the n. >> it seems investors are getting more comfortable with the idea that the federal reserve may not be raising interest rates until next year, in part due to the weak employment data we received on friday. one of the reasons we're seeing the big rally, all three of the major indices out of correction mode including the dow which is 20 points from its session highs. these are the leaders, ge, micron, alcoa, caterpillar. old school rally is what i'm calling it. i think bertha will have a little more on micron later but ge up on the news that nelson peltz is taking a stake in the company. miners are also stronger. they have been under pressure because of the weakness in glencore. health care has turned a little

lower as investors give up some defensive positions. a little weaker in an otherwise up session. s >> thank you very much. hi, bertha. >> chips in particular are leading the way higher on the nasdaq. the sector is up over 14% from those august lows despite some mixed news on where we might be doing with semiconductors. over the last five years the fourth quarter has seen better gains or a bounce back from the third quarter in the chip sector and micron is definitely the stand out today extending gains following its bullish outlook and better than expected earnings last week. sitting out the party have been the apple suppliers. apple was lower. it has turned higher on the day but it's suppliers continue to be done on reports of a possible inventory overhang. today it seems all things jack are rallying. twitter up for the fourth day in five sessions now that its official jack dorsey will be the

permanent ceo. jack henry and even jack-in-the-box higher today. >> back to you. >> where is jack daniels? that's what i want to know. we'll catch up with him later. on the heels of nelson peltz's $2.5 billion investment in ge what are some of the other mega caps with an upside. mega caps that may have been value priced and have some promise. >> it's interesting here only because there are so many of these mega cap stocks, there are around 40 in the s&p 500 at current prices. if you look at a handful, we can't go through all of them, but some of them we can go through. pepsico, i bring it up only because nelson peltz -- >> that's a peltz connection. >> pepsico year-to-date, up about a percent here. another one, older world company if you want to think about it this way besides pepsico is walt disney shares.

his record highs not too long ago and media heltdomeltdown to down but still up 10%. and in terms of the larger cap stocks that have perhaps some promise, merck, drug giant here. down 10%. you can see so far. so let's take a look at what the analysts say what the potential upside could be. at current levels affording to fact set, pepsico could rally boo by 9%. >> this is an average call. >> correct. disney up by 15% and merck by 25%. so even within those realms of large mega, mega cap stocks there could still be value if, of course, you believe what the analysts say about what the potential for the stocks could be. >> dominick, thank you very much. mandy? >> so with the s&p 500 down more than 4% since july, is it time to add some big caps to your portfolio? let's bring in two money managers who are finding value there. ted morganlander and mark

travis. gentlemen, great to see you. which particular mega caps are you looking at? >> we love cisco as well as microsoft. let's go through cisco for for example. they have $40 billion of net cash on the balance sheet. the stock multiple is nine times and our upside potential is roughly $35 a share with a 3% yield or dividend and that dividend will be growing at roughly 10%. also microsoft, for example, same kind of consideration. $55 stock price. it's a company that's going through a little bit of a transition but net cash on the balance sheet, $75 billion. dividend yield 3%. 10% growth rate on the dividend. >> and year-to-date microsoft is pretty much flat. cisco is down about 4% or so. but a lot of mega caps were used as quick cash machines during recent bouts of volatility. mark, i know you're finding value in the mega caps even though normally you talk to us about the joys of going small.

>> well, mandy, we try to go to where there's a disconnect between price and value. we're not index centric, and every so often as i like to say you can reach across the plate and find a large cap security just like your guest mentioned microsoft and cisco. i would confirm that. very nice looking balance sheets, a lot of cash, a dividend better than the 30-year treasury, and i think there's some upsooind in the share prices on a private market value, not that there's anything that's likely to take either one of them over. other companies we like are express scripps, western union is a little smaller. it pays a nice dividend. so i think it's a rarity for us, but it does happen, and we try to take advantage of it when they're available to us. >> and there are a few other names that both of have you got here. for example, oracle, chad, is down about 16% year-to-date but you like it at these levels? >> absolutely. we believe you can get a 20% type of upside return on oracle

over the course of the next 12 to 18 months. also staples. i would look no further than boring dr. pepper and but wise er. >> look at abbott labs, they have been beaten down because the emerging market exposure. we believe that will subside. >> it's interesting you both have cisco and merck soft on your list there. anything else, mark, that we haven't mentioned that you also like within the mega cap space? >> well, i think you taxed me just to find four or five, mandy, so that's really all i have at this point. >> okay. chad and mark, thank you very much for joining us. go to powerlunch.cnbc.com to see what else chad and mark are buying. tyler, over to you. >> all right, mandy. low mortgage rates have been drawing many into the refi market, but a new report out shows what exactly people are doing with that refi money, and it's worrisome.

that story still ahead.

doing with that refi money, and can it make a dentist appointment when my teeth are ready? ♪ can it tell the doctor how long you have to wear this thing? ♪

can it tell the flight attendant to please not wake me this time? ♪ the answer is yes, it can. so, the question your customers are really asking is, can your business deliver? welcome back to "power lunch." fireeye being downgraded by piper jaffray to neutral from overweight citing increasing competition among other factors. the stock is down by 4%. tesla reporting deliveries of 11,580 vehicles during the third quarter. that's 49% more than a year earlier and gives tesla sales of just over 33,000 vehicles for the first nine months of the year. the year-end goal is 50,000 to 55,000 vehicles. and deere shares moving higher by nearly 6%. that after the united autoworkers union approved a new six-year labor agreement that covers workers in three states.

ty? >> thanks very much, mandy. two tech titans dominate a new ranking of the world's top 100 most valuable brands. apple and google clinched the number one and number two spots for a third year in a row. coca-cola, microsoft, ibm, toyota, samsung, ge, mcdonald's, and amazon, a newcomer, round out the top ten. here is josh feldmuth. welcome. >> thanks. >> let's get clear what you are ranking and how you do it. this is not as simple as looking at a company's market value. >> no, actually it's different than that. it's a financial analysis and it has three components. first we look at the actual economic profit that the company is generating in the current period. then we calculate what we call role of brand which is an assessment of how much influence the brand has on generating those profits and then -- >> how do you do that? is that a squishy -- is that subjective or objective?

>> we use math to do that. >> math. >> that's right. and then third we calculate brand strength which is an assessment of forward going risk to understand how secure these earnings are going to be in the future. >> let's look at some of the newcomers in here. amazon in the top ten for the first time. obviously this is a global ranking. what did they do right that catapulted them so much higher? >> amazon is amazing because they are building an ecosystem. if you do business with amazon, you have all of this opportunity to be served with value. in fact, they now have a vertically integrated content system. they're creating content, delivered in the stores and on the device. they have everything you need for everything you want to buy. it's a tightly integrated play. >> i want to jump in because i think it's a sign of the times. i note lenovo is the second only chinese brand to enter the brand.

now you have lenovo as well. >> it's an amazing story. what they've been able to do is they've effectuated a transfer of that equity from the think pad from ibm into a significant global brand. to go from where they were to the top 100 in a few short years is nothing short of a miracle. it's quite impressive. >> facebook, hermes, pay pal, lego. >> these are great brands. i'll make a connection that might not be obvious. they're both doing something very similar. lego said we're going to focus on the core and get back to the brick and build a deep system around it. hermes focused on the scarf and the quality. their results compared to the other luxury brands on our list shows that it's paying dividends. they're focused on the core and they're delighting their

customers. >> i am struck as mandy just pointed out, only two chinese brands break in the top 100. why do you think s thathat is? >> it's because the criteria is a global list. so over 30% of your revenues have to come outside of your home market. so as chinese businesses capture share around the world, you're going to see more chinese brands join our list like lenovo has done. >> very quickly, automakers, toyota, bmw, mercedes, volkswagen, hyundai, audi, would you expect volkswagen to fall next year? >> we're tracking that on a daily basis. we updated or ranking last week to capture what's going on. ford and toyota have had challenges in the past and by addressing them with transparen transparency, being clear and responsive, they've turned the

corner and are growing top products. >> where does the street stand? dominic chu has been waiting in the wings and he's back with that story. it's about quality, not luxury. >> that's interesting. let's take a look at what wall street analysts think about these stocks. coca-cola, google, and apple were the top three on that list. coca-cola, analysts say 14 have buys, 8 holds, 3 sells. and they think there's a 9% implied upside given where the average analyst price target is. that's coca-cola. google shares or alphabet shares, i got to get used to that, are also in that same kind of category. 45 buys, 4 holds, 0 sells. 17% implied upside. and apple, 40 buys, 9 holds, 2

sells. 33% upside from current levels. if you look at year-to-date charts, you can see the momentum has been with alphabet so far this year-to-date. that's the orange line right here. but you could see whether or not google/alphabet and apple and coca-cola see some movement. >> thank you so much. dominic chu. >> tyler. >> folks, take a look at this mystery chart. it's not a stock. it's a commodity and it has been running out of steam over the past two months. down 10%. we need brian sullivan. he always gets these right. the answer still ahead on "power lunch." plus -- >> hi, i'm ben hinman, co-founder and ceo of splash. coming up i'll explain why i'm getting a haircut in my office on a tuesday. here at td ameritrade, they work hard.

wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.

welcome back to "power lunch." here are power points. at big rally on the street. the nasdaq is positive for the year. energy, materials, and telecom among the leaders. health care in the red. among the individual names that are higher right now, micron and consol energy up.

ty? >> a massive protest at the headquarters of air france today and it turned violent. protesters stormed the building, disrupted a meeting to discuss job cuts for 2,800 employees. look at this. the protesters focused on two managers, including the head of human resources, and assaulted them, chasing them from the building, tearing their clothes off. the managers ultimately had to scale a fence to get to police protection. the job cuts were announced friday after the company failed to reach a deal with their pilots. from a hostile office environment to a much more harmonious one, today's startup offices are marked by ping-pong tables, scooters, but one new york-based company is taking it to the next level by bringing in a weekly deejay and a barber once a month. we went inside a marketing software company for this week's "office envy."

>> i'm ben hindman, the co-founder and ceo of splash. we have an awesome headquarters in new york. today i get to show you around it so follow me. we power the events for some of the biggest vents in the world. we have a lot of event elements in this entrance including a receptionist sized working boom box. beautiful office manager sits behind it every single day and wction people with a smile. our company creedo is in the back, experience is everything. welcome to the deep end. the deep end is where we have meetings. we talk, we make a splash in the middle in the deep end. oh. >> whoo! >> when we make a sale, the lights turn green. we cut holes in the wall in the shapes of triangles for a deliberate reason. we wanted our departments to speak and talk to each other and no boundaries in between that.

about once a week we have a guest deejay comes in. she's rocking out on the ones and twos. this is our favorite conference room for a lot of reasons, it turns into an operational bar. crazy company perks. one of our favorites is our monthly visit from tony. hot towels. he cuts hair and it's not just for the guys. we have a doggy goor for our resident dog max. he's the chief hospitality, hale, ahal health and wellessness officer. we call him chew. head over to powerlunch.cnbc.com. send us any innovative workspaces you know about.

mandy? >> billionaire ken griffin and his wife are in court today battling over the couple's fortunes. robert frank has the latest. >> mandy, it could be the most expensive divorce of the year. he says $50 million is enough. the battle over kids, prenups, jets, and vacation homes and why ken's personal driver may be called as a witness. coming right up. ? (patrick 2) pretty great. (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone. who better to be the boss of you... (patrick 1)than me. i mean, you...us. (vo) go national. go like a pro.

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. here is what's ahead. apparently somebody forgot to tell mini hedge funds they need to hedge. why so much of the smart money is looking pretty dumb this year. plus, could we be in for a housing crisis 2.0. a specter from 2006 beginning to raise its ugly head. we know the third quarter stunk for the market but did you know that might mean a very good fourth quarter. it's not our opinion. it's what history says. we'll give you the data on that ahead. >> history has a habit of repeating itself. you're looking at a live picture of the courthouse where billionaire ken griffin and his wife will be battling it out with their prenuptial agreement. robert frank is here with the very latest. a bit of a tongue twister there.

>> it's a lot of money involved. ken griffin and ann dias expected to make an appearance at the courthouse today or tomorrow. at stake is a portion of ken's $7 billion focue fortune. dias says the prenup should be tossed out. ken griffin saying it's valid and binding and she already received her 40 million bucks. ann is seeking sole custody of the children. she wants to move to new york and she's asked for $1 million a month in child support. ken says that's excessive since it includes 24/7 use of a private jet, $500,000 vacations, and $60,000 a month for personal staf staff. we will hear a lot more about their spending around earning in the days ahead. griffin earned $100 million a month last year. dais-griffin will take aim at his character by calling his

personal pilot, driver, and over staff as witnesses. the question is how much will he pay to keep that out of the press. >> she's looking for $1 million a month in addition to all the other stuff. >> $1 million in child support plus a share of assets. >> i don't feel so bad. that will do it for the first hour as i think about this. >> ponder that one for a minute. over to you, brian. >> thank you all very much. 2:00 on wall street, 1:00 in ken griffin's hometown of chicago. the dow is surging, oil firming up just a bit. hi, everybody, and happy 3407mo, i'm brian sullivan. all hour we're talking hedge fund performance, tesla, and some new concerns about the housing market but we begin with ge. billionaire investor nelson peltz shocking everybody by taking a $2.5 billion stake in the massive company. he is hoping that investment, excuse me, brings some good

things to life. investors hoping the same thing because seven years ago ge was a $26 stock and today it is a $26 stock. let's bring in damon of barglo and john inch with a hold rating on the stock. >> ge pays a dividend. they've been stable if you want to compliment them at all but it's not been a good investment for longer term holders. why do you think that will change? >> well, good afternoon, first of all, brian. at rockland trust we got very interested in ge back in april. the stock is a core holding at the bank now, and the reason really is that we saw the divestiture of the finance business as a real seminal event, and you're right. it had been a stable stock but stable in 2009 meant it was underperforming, and we think

that now they're getting a streamlined industrial structure, they're talking about returning substantial capital back to shareholders and they've got a fairly powerful backlog as well, we think they're poised to have a departure and begin to get some real growth, and we're very pleased with the ak which sis -- acquisition of 1%. >> they got rid of ge capital and now they're talking more about into oil and gas. what is ge today? >> well, it's one of the most complicated companies still even though -- >> that's it, john, right? that's part of the problem is it not? >> it's a big problem. and, look, the company has over 10 billion shares today. we like the fact they're finally buying their stock and getting a little bit of religion on that front, but the fact is they're

still going to have an enormous amount of track, and it's such a big needle to move. you need a lot more over time than fine tuning a portfolio. it's still going to be extremely complicated and relatively less streamlined than other companies. >> specifically with the pelts investment, he has been an investor in dupont and hasn't had that much luck there. it sounds like what he wants to do essentially is sort of prod ge along. he's not tacalling for any majo structural changes. we're entering a period where the wall street is essentially down on industrials overall in the third quarter. industrials have underperformed the s&p 500 by about 15%. >> but, look, ge is more defensive. son that basis the industrial manufacturing economy in the united states is entering a period of challenge, and it could possibly get worse. ge is more defensive, it could outperform.

the peltz announcement seems to be an announcement they had made an investment, not an announcement inciting change at the company. this seems to be a bit of a red herring it you put it in the broader context. >> day momon, you have heard so critiques so respond. >> i would agree ge has a complicated structure, but where i would disagree is i think that maintaining a dividend, we're talking about $30 billion, and a share repurchase of up to $55 billion over the next couple years, that's a very substantial reduction in shareholder value, and i also think the fact is that the company is complicated, it is a little bit bloated, and, frankly, the fact that there does not need to be any huge

changes within the industrial business other than some recognition of some efficiencies i think makes it more compelling frankly, and that the opportunities for margin improvement, both at the sgna level and the gross margin level are there, and immelt just needs to execute. >> damon, john, a good debate about a big company. thank you both very much. >> thank you. >> ge investors not the only ones suffering lately. despite charging millions in fees, many of the top hedge funds are performing like stock market novices. let's bring in kate kelly. >> well, it's been a rough few months for the hedge fund industry. through late august and i'm sorry to say that's the most recent composite we have, they are down nearly 2%. judging from the september numbers we've seen so far, not looking a heck of a lot better. so far a few examples we know

of, green light capital down 16.9% year-to-date through september. pershing square capital, bill ackman, they were one of the huge performers of the 2014, down 12.6% through september. and third point offshore, that's dan loeb, considered a real outperformer, a maven of the markets down 4.4% through september. to be fair the s&p itself not doing a whole lot better and given the big decline this is certain sectors and names we've seen in the last few months, the short strategies are actually working better than the long ones. indeed,h fr data and this is through late august, not september, show a 5% upturn for short biased strategies. >>er to date. but when you look at some of the worst performers you can see what's going on there. there's been a lot of pain in commodities and as we talk about all the time and macrostrategies. you know, fortress had a rough couple years but merchant was

one of the best performers of 2014. on the upside, names like passport capital. they have a special opportunities fund that's he can cli eclectic in its mix. short mine glencore. >> let's bring in herb greenbe g greenberg. hedge funds seems to talk about both sides of their mouth. when of the market does well, they say our job is not to go long the market, we have to be prudent. now you have the market down, aren't they supposed to be more stable and safer and actually hedge against market declines? >> well, brian, what you don't know when you look at some of these funds that are down is how many would have been down a lot more had they not been hedging,

had they not been short stocks. i look at some of the names that are out there, some of the funds that are out there, and i assume some of them have fairly big short books that actually help their performance and what i mean pie help their performance, help them from looking as bad as they might have. now, i say that knowing when we launched this research business close to a year ago, when we went out say seven months ago trying to sell it because we're short bias, people would look at us from some of the larger funds sand say honestly, we're shorting through etfs, we want shorts that are just going to lag the market. we are afraid of anything that's going to blow us up because this has been such a huge bull market. i think a lot of people were afraid. that said, we have customers and we know those customers are shorting stocks and some of those stocks have really come undone, so there are plenty of people out there from the short perspective. remember, that's only one way to hedge. >> well said, herb. here is the thing and a lot of

our listeners are cruising along listen to sirius xm 112 saying i don't give a rats patootie about hedge funds. they should because a lot of pension funds used by states and insurance companies invest in these funds. don't they have an obligation, i don't want to say duty, i don't want to get legal, but don't they have an obligation to exhibit a little bit more of a safe strategy. >> you say safe. it depends what you consider safe. if it fund doesn't feel it's adept at the shorting part of hedging, i want to be careful here, maybe they were better off not doing it because over the past few years i talk to fund. there's one fund i know. he rubs tns the short book at of the funds. he's like i'm the short guy here. it used to be there were stabs of people and in this bull market there were a lot of analysts who came into the market who work at a lot of these funds who are good at

plugging numbers in whether it's expensive or cheap but might not be as good at the deeper analysis required. maybe that's changing now. >> hey, kate, are we entering a period where hedge funds have such underperformance there could be a shake out in fees? >> there's been a pressure on fees for a number of years and you have seen son-in-lme of the guys reduce the 2% and 20% model to something short of that, no pun intended. i think there's a growing frustration. we have seen isolated cases of pension funds pulling out of their hedge fund strategies. there are other examples, too. i think to brian's point these mention funds that are invested in hedge funds are starting to take notice. the problem is the allocation process of their capital is just so slow and they're looking at years of sort of returns that may not be relevant today.

i do think that that's a factor and the fact is hedge funds need to be nimble and their results change all the time. >> are those returns you highlighted net of fees? >> yes. >> so the returns are worse. so if you're a pension fund with $100 million in fund a you're also paying them $2 million in fees so you're actually down more than the down. because then you have to throw the $2 million on top of what you've already lost. >> you're paying 2% in fees and then no performance fee if there's downside. >> but 2% every year no matter how they do. kate kelly, good stuff. herb, thank you. >> let's look at shares of tesla. they're at session highs up by.75%. reporting a 50% year on year jump in car deliveries in the third quarter. it could also signal a rough road ahead for tesla. let's get to phil lebeau with the story. >> we've talked about it for some time. the fourth quarter is the biggest quarter of the year for

tesla. it's all about the drive for 50,000 deliveries through the year and so far they've got a long ways to go if you look at where they are through the third quarter. they announced on friday afternoon they have delivered just under 11,600 vehicles in the third quarter. the guidance is for at least 50,000 vehicles this year. so they need to deliver 16,883 vehicles in the fourth quarter to meet that goal of 50,000. a lot of the vehicles in the fourth quarter will be the model s but many will be the new model x. this is the electric suv. they delivered the first ones last week in california. they have reser vagus for at least 20,000. there's demand there. the question is will they be able to ramp up production. elon musk talked about the biggest risk being the production and whether or not key parts are there. in fact, last week he told us production of the car, meaning the modelx, will move as fast as the unluckiest supplier.

and then he went on to say, 90% of the parts we need, they're there on a regular basis. but there's 1% that are excruciating, that they want to be sure they have the right elements there for when the car is being built. as you take a look, this is all about excuse he caexecution in quarter. >> phil, thanks a lot. riddle time. what do glencore, the u.s. dollar, emerging markets, and the volkswagen emissions scandal all have in common? one of our favorite market strategists says they all matter to your money. we'll find out why he says that. plus, why a dismal third quarter could be a big buying signal. exclusive stats just for you. and can you name today's mystery chart. it's not a stock. it's a commodity that's been fastly running out of steam over the past two months. tweet us your guesses. we'll see you on the other side

of this short break.

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give it to cnbc so this was a pretty big deal. a big part of his book is about taking on critics of the fed from those who argue zero rates would cause hyperinflation. ben bernanke also concedes there are mistakes he made, things he would have done differently. among them was a poor understanding throughout the fed of the inner workings of the financial system before it blew up. >> we knew house prices were really high, we new the subprime mortgages were a problem, but we didn't see the extent to which the financial system was in danger and driven into panic by that problem. subprime mortgages were a relative small asset class but what happened was they created distrust by investors in all the securitized -- in all different kinds of securitized assets and caused a panic that caused money being drawn out of all different kinds of assets. and that panic is what really created the crisis. >> the fed, of course, wasn't alone in not understanding how

wall street worked. critics appear throughout the book, especially the republicans he singles out. rick santelli, jim crime ecramer in the book. i asked if there was a better way for the fed to handle its detractors. >> i did my best to make may case. that's really all i can do. i think the one thing that as i go back and think about what we did during the crisis, we were so engaged in trying to deal with the weekend emergencies and the chaos in the markets and the economy, i don't think we did as much as we could have. >> what's clear from bernanke's recount is that many of the momentous decisions were made on the fly under the constant pressure of an immediate global meltdown if something wasn't done over a weekend. in that context the fed's response seems, how shall i say this, not too shabby for government work.

>> what struck me more than what he said was how he said it. he spoke rapidly. his cadence is much faster -- >> totally different. >> it was from the heart. it was passionate versus the bernanke i remember in the fed meetings, the press conferences, the u.s. labor department -- you know, it shows you the fed is watching its words, every word so carefully. >> maybe -- >> he's animated. >> maybe this is a personal note i shouldn't say. i had opportunities to meet on background with bernanke throughout the crisis. the bernanke you saw on television today is the bernanke i knew that i never saw in public and to my mind the fed would have benefited a lot had that bernanke appeared. >> greenspan was on "squawk box" is month or two ago. i listened to the interview and it was fascinating because i actually understood what he said. versus the greenspan that ran the fed. >> these are great observations,

brian. communication is so critical for the federal reserve. how does it do it? if you say something the wrong way, it costs you 500 points on the dow. it puts a nix on policy. he goes through the whole taper tantrum and acknowledges he screwed that up. came back and did it again in december. >> if we see a fed governor get up and do the whip nae nae we'll know things are good. earlier we asked you what do these things all have in common? they may impact your money because of the fed. larry, do you agree with my point? bernanke, i mean this as a compliment, actually sounded like a human being in that interview. >> well, yeah. >> he was passionate, emotional. >> he's going to sell a lot of books. he's on the tour, he's making -- doing very well on the speaking tour. >> but you would disagree

everything they did was the right thing. you think there's still a hangover to come from that punch bowl? >> we were -- i was on the program in july, and we made a very profound case for the rising chances of recession and special shut out to andrew and our entire seem at socgen. we had some critics and even critics that called into the show, but our point was that the fed has kept interest rates at zero for six years. the credit risk -- the d deterioration we saw in july only happens at that speed right around or before rerecessions. if you look at the major credit indices whether it be a high yield bonds, investment grade bonds, emerging market bonds, the speed of the deterioration of credit in 2007, that speed vetoed the fed. the fed was on a rate hiking path. they were vetoed and you had jim cramer come out and the fed changed course. and the point that we made in

july is that you could have that same veto come from the credit markets and impact the fed policy path going forward. >> so, larry, let's fast forward and get to what do they have in common because the way i look at it here is glencore and vw, if you believe that the ecb has to continue easing -- or ramp up easing because of these two events, then in the fed let's say stays on hold, that's a de facto tightening of financial conditions here, is it not? >> if the fed is -- >> should we be concerned about that? >> if the fed is on hold and the ecd is easing, but in the short term it won't be because everybody is expecting the fed to hike. if you look at the size of glencore, vex wagolkswagen, theo many credits that are deteriorating so fast and if you add into it the dollar strength is behind all of this, i really feel that if the fed has to

contain the dollar to put out this global fire because the dollar has made a 27% move in 19 months and it's really behind a lot of this credit risk. >> so how does the fed do that, larry? it's supposed to raise interest rates. it's not doing to help the dollar. >> well, the reason the dollar is surging is because the fed -- the whole world, 80% of analyst strategists a year ago said the fed would hike in june or september. the whole world has been waiting for the rate hike. that's why the dollar surged close to 30%. if the fed pushes out the rate hike, they could calm down some of these credit risks because the dollar will probably move back to the 80 and 85 range. >> okay. larry, we're going to leave it there. thanks for your time. >> thank you. >> coming up next, we will try to make sense of google's new alphabet soup and let's look at your mystery chart. it is a commodity and it's been

sucking wind over the past two months. we have the answer coming up and another look at stocks on the move on this monday. stocks are we should note at session highs. we'll have much more on the market rally when "power lunch" comes right back.

♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

don't look now or look now if you want because we're on television. we're near our highs on the session and we're very close to being up 300 points to start the week. the dow is up 290 to 16,763. the nasdaq also up. the russell 2000, the big winner up 2.2%. inside the s&p 500 your top stock is micron. obviously very beaten up lately but barrons positive on the company over the weekend and micron is up just under 11%. the worst performing stock is endp which is odd on friday because texas pacific group came out and said they own more than 7%. it's not helping today. >> spark therapeutics soaring after reporting positive late stage clinical trial result for an eye disease treatment. it's a huge deal for spark which is one step closer to creating

the first gene therapy treatment approved here in the united states. let's bring in meg terrell with the story. hi, meg. >> so the idea that this could be the first gene therapy approved in the united states is exciting. essentially what it does, it aims to treat or even cure a disease with one single administration of a therapy. it would do that by delivering a healthy copy of a gene to replace one that's not functions or causing disease. spark is working in inherited forms of rare blindness and they showed in a study to improve functional vision and light sensitivity with no drug related side effects. they say they're going to apply for approval of this drug next year. now, this also bringing a boost not just to spark but other gene therapy stocks from blue bird to avalanche to regenex bio. back over to you guys.

>> all right, meg. thank you very much. let's get now to jackie deangelis at the nymex to talk what else, oil. how is it looking today. >> good afternoon. oil actually coming off of session highs. we got pretty close to $47 which really is the upside of that range that we've been watching closely, but now $46 and change looks like we're going to close here today. the dollar, of course, is a little stronger bucking the trend so you have equities and oil moving higher together. also some reports out that russia is talking about meeting with other nonopec and opec producers. they're ready to come to the table to talk about oil prices and they are planning a separate meeting with saudi arabia at the end of october. also, the decline in rig counts, traders still talking about that because we saw five straight weeks of u.s. rig counts going down. that really is significant. back to you. >> 26 down last week. the biggest number i have seen in a long time. thank you very much. well, a huge oil deal might be brewing up north in the canadian oil sands.

suncore is launching a deal. if it goes through, shares of canadian oil sands has been under pressure as oil prices continue to drop. all right, now it's time to reveal the mystery chart. it has been down 10% over the past two months. it's not a stock. it is a commodity many of you have gotten it. it's not copper, it is not gold, it is natural gas. and today tudor pickering and holt throwing in the towel kind of. they cut next year's target price from 4 to 3 per unit on nat gas. a few reasons, absolute volumes have surprised to the upside. the drop in coal side in the industrial side demand has been weaker as well. also the etf, the ung, down nearly 15% in the past two months. i guess the good news is the cost of power probably will go down as well. just a reminder on this monday, stocks are at session highs. we're going to have more on this rally when "power lunch" returns. important than your health.

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i'm sue herera. here is your cnbc news updait at

this hour. a magnitude 6.0 earthquake striking in the pacific off the coast of central chile. the quake was centered 32 miles southwest of coquimbo. an intense fire is burning in a metal clad commercial building near downtown los angeles sending up giant plumes of dark smoke. the blaze broke out in huntington park this morning south of l.a. no reports of injuries. syrian activists say isis militants have destroyed a nearly 2,000-year-old arch in the ancient city of palmyra. t it's the latest victim in the group's campaign to destroy historic sites across the territory in controls in syria and iraq. and injuries from zipline accidents have soared along with the popularity of that activity which hurtles riders through the air sometimes at dizzying heights. most of the nearly 17,000 injuries occurring in the last four years of a 15-year study.

not for me. that is the cnbc news update at this hour. back to you, melissa. >> i love ziplining. my mom tried it and she loved it. >> just mom tried it? >> if she can do it, i guess i can do it. i'm a chicken. >> give it a whirl. the dow is up more than 300 points. there's a new name trading at the nasdaq today. it's by no means an ipo. josh lipton is here with more on this. >> you talk to financial anal t analysts who cover the internet giant and there's four things they want to see from this company. one consistent revenue growth. marg margin stabilization, greater disclosure and cash return to shareholders. nest, fiber, calico as well as funding arms google ventures and google capital. the company will be run by larry

page and sergey brin. google core will be search, display, youtube, maps, and android. now, the strategy behind this big restructuring, encourage more focused management, a more nimble business structure. the bet on the street is improved segment disclosure should be a positive for google stock in the same way that segment dislow suclosure was a positive for amazon and netflix at different times. alphabet scheduled to report when the company reports its fourth quarter results. >> josh, thank you. over to you. >> we have breaking news with mary thompson. mary? >> the news concerns symphony, this app that has been called a bloomberg killer -- a company that's been called a blam beoom killer. it was developed in goldman and

a number of banks made an investment. it recently unveiled its instant messaging service at the beginning of september. we have google investing in symphony. but again google taking a stake in symphony joining the likes of bank of america and goldman sachs and holding an investment in this instant messaging system that a number of people have dubbed the bloomberg killer. >> if you sign up, will it automatically enroll you in google plus? let's hope not. interesting wall street news. time for "trading nation" and today let us trade energy. we have neil azus and ari wald of oppenheimer. neil, one day, today, energy is the best performing group. it certainly has not been. do you believe one day a trend will make? are we near a real reversal? >> i do and i believe a remember

vae reversal has already been made. if we look at the different aspects that go into analyzing energy and boil it down to keeping it simple, there are enough indicators that suggest the time has come. number one, we have oil. if you look at the price of it on august 1st. it was around $45. on october 1st it's the $45. we have 60 days of stabilization. number two, if you look at the energy sector, two things have happened. we call it the 40/40 club and the 60/60 club. on an absolute basis and on a relative basis to the s&p 500 the large cap energy sector dropped 40% and the small cap energy sector and the russell 2000 dropped 60%. you have to go back a long time in history. and the rig count. the most important thing to take away is that the degree of the rig count pullback which is around 60% now has surpassed the last three cycles. if you use that old adage be

simple, dummy, we've got enough simple indicators that are suggesting a turn has finally come. >> all right. there you go. you're making a strong fundamental case. ari wald, do the charts back that up? >> well, the simple rule to follow on the charts is don't fight the trend, and for energy i think we can make the case for a low but not necessarily the low. we have had looking at the spdr ticker slr a base. however, this is a counter trend move. it is going against an established down trend. this down trend can be indicated by the sector's falling 200-day moving average. as a general rule, stocks and securities and etfs with a falling 200-day moving average, the trade is to sell strength. for energy i see resistance at the 70 to $72 range.

i'd be looking to sell it there. >> ari wald and neil, we appreciate your views. a little different fundamentally and technically but that's why we do both ways on "trading nation." for more go to trading nation.cnbc.com. are we repeating one of the biggest mistakes we made leading up to the housing crisis? what's going on that has some eyebrows starting to raise? as we go to break, let's look at the dow. up more than 300 points right now and here are some of the most widely held stocks out there, google now known as alphabet. alphabet class a, up 2.2%. we're back right after this.

alphabet class a, up 2.2%.

not a bad way to start the week if you are long stocks. the dow is up 300 points and look at the s&p 500 heat map.

if you're just listening on the radio, imagine a giant screen filled with green squares because only 35 of the s&p 500 are down. so melissa, i'm bad at math, whatever 500 minus 35 is, those are up. >> check out the yield on the 10-year treasury note. relatively low rates have been drawing those into the refinance market and they're taking cash out again. >> melissa, we are seeing a huge jump in borrowing doing cash out refis up 68% from a year ago. higher home prices have given borrowers a collective trillion dollars in additional home equity in just the past year and they are tapping it to the tune of an average $65,000 per refi. what are they spending it on? the evidence is anecdotal but we've seen a jump in automobile sales and home remodeling.

i know of several contractors who tell me they are booked up well into next year. for one, when you feel better about your home's value, you are more inclined to invest in it. for another, tight supply of homes for sale is keeping a lot of potential buyers in place. if they can't move at the a better kitchen, they just build a better kitchen. are we back to home as a new atm? not quite. new mortgage rules went into effect designed to protect borrowers further. black knight found even and the cash out refi, the average loan to value is 68% as in borrowers still have 32% equity in their homes if i did the math right. the red flag would be if home prices were to stop their big gains or if they were to flatten out and we did see additional refis but a lot of regulations in place and we're nowhere near where we were during the housing boom. still down 80% from then.

brian? >> all right. well, that's some good news. thank you very much. let's bring in greg mcbride. greg, i understand the points diana made and we're not saying it's the same as it was back then, but when we hear the cashing out refis are up, you can't blame us for being a little nervous. i mean, come on. >> the mere term makes people squ squeamish, but the big difference now versus then is the borrower still has skin in the game. right now there's zero appetite on the part of lenders to lend and let borrowers take out every last nickel of equity they have in the home as was the case ten years ago. now they're looking for borrowers to retain on average about a 20% equity stake. there are some that will let borrowers borrow a little more than that but again the underwriting today radically different than what it was ten years ago. so the surge you're seeing in cash out refis now is more a furntion function of home prices that

have increased and interest rates that have not. >> if you take cash out of a refi and build an extra room or add value to your home, you're just kind of using debt to inflate the equity of your home. we know ten years ago people were taking out $1,000,0100000$ gold motorcycles. are we smarter now? >> i don't know if we're smarting or forced to be smarter in the sense that because there are limits on how much you can borrow, you have to retain some skin in the game. you know, the other thing is ten years ago a lot of people were taking out equity to go buy cars. today there's a lot of car loans at 2.5% or less. so i don't see people taking out home equity at a higher interest rate to buy a car when they can get car loans as low as they are. to your point, we're not taking these proceeds and putting them to depreciating assets as was the case ten yearsing a as much as it's to do things like enhance the value of the home or put it into higher returning investments. >> greg mcbride, we'll leave it there.

i like your optoptimism. i hope you are right. we don't want to make the same mistakes again. thank you. up next, the third quarter was bad for stocks but does that mean the fourth quarter will be bad also? the surprising stat about what history says about just that as the dow is up 300 points. stick around. your car insurance premium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again. why pay for insurance if you have to pay even more for using it? if you have liberty mutual deductible fund™, you could pay no deductible at all. sign up to immediately lower your deductible by $100. and keep lowering it $100 annually, until it's gone. then continue to earn that $100 every year. there's no limit to how much you can earn and this savings applies to every vehicle on your policy.

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the dow just about 20 points off of the session highs. here is a technical bright spot t crossed above it's 50 day moving average today for the first time since july 2 1rs. the bad news, brian, is that the 50 day moving average has been downward sloping since july of 2015 as well. >> nel is a, thank you very much. we all know the third quarter was awful, the s&p 500 fell 7%, one of the worst quarters in years, but you smart viewer knew that, but did you know that means we will probably have a good fourth quarter. our data partner ken show went back and looked at every instance since 1980 when the s&p 500 lost more than 5% in the third quarter. believe it or not, that has happened ten different times. of those ten times since 1980

when the s&p dropped more than 5%, nine of them the dow surged in the fourth quarter n fact, posted a.m. average gain of 10.5%. if you're wondering the one time the dow did not rally after an awful third quarter, that would be 2008, the beginning of course of the financial collapse. >> neat history but does it matter. then bring in brine and david. brian, you have been one of the few guys not to slice your year rend forecast. i would imagine you like to hear these statistics. does it matter or is it just neat stuff? >> partially it's stuff, brian. we remain stuck in this market environment, quite frankly, where most investors pms and frankly some of our strategist competitors remain more reactive than positive. clearly we know seasonality is not great in the third quarter. we also knew coming into this year that it was going to be

volatile, that the dollar was going to have its impact and china was slowing and then most importantly the fed was going to add volatility. we think most of these down grades to the market but also what's happening with ourp earnings forecast have already happened and people are playing defense, they are managing their portfolios in terms of our institutional manage thaers we have talk to but also market observers are acting more like what was instead of what is and what is we still think a an attractively priced asset hand that's u.s. stocks. >> david, your job is to find a couple of those stocks that you really love, your fund holds 120 to 30 names. what are some of your best ideas right now? >> right now one of our top ideas is o'reilly automotive. they are one of three leading national oem and after parts distributors in the united states. o'reilly has grown from a modest store base, 10 or 15 years ago, to be at over 4,000 locations

across the country and we think o'reilly can actually be quite a bit larger over the next five to seven years. they have a superb management team, they continue to take costs out of the model and they've grown earnings that are better than 20% clip for the last eight years. >> brian, i know you are not a micro guy you can a macro guy, big picture what would be the threat to your target? what would be the risk of not a turn around. >> i think part of the problem with strategists the last 15 years is they become either or, they're either macro or very kwunt fate testify. i am a child of the 60s and i'm old school. we look at stocks from a bottoms up. i think the issue right now and what could be a threat really is third quarter earnings and we're banking on earnings to be better than expected. if you take out energy we are going to see a positive number for the third quarter an nobody is believing that. most of our clients think we are

in an earnings recession. we think most investors are displaced. we think domestic growth is going to outpace what we have been losing in terms of international growth. >> how concerned are you with b. what has been going on internationally and specifically in the emerging markets as a concerns, american tower, 15% of its revenues come from international markets. are you worried that deployment of new technologies will be slower because of the slow down that we're seeing? >> no, actually we're seeing internationally at american tower, whether brazil or mexico, india or even south africa is that the national wireless carriers in those countries are aggressively rolling out 3 g and just now beginning to roll out 4g or lte services. data demand in the u.s. is growing by about 100% each year right now and we would expect that that ramp curve which is good for all tower companies should start to accelerate quite

nicely, quite rapidly in international markets in the next few years. >> brian and david, we are going to leave it there, guys. we do appreciate your time. brian, thank you -- and you've stuck by your guns, we're watching you, buddy. we have our eyes on. >> you i appreciate it. cing up next, we are setting you up for the final ur. we do have a nice rally on our hands. let's take a look at how some of the big caps are trading at the nasdaq. these used to be called the bang stocks but now with google's alphabet do we switch it? "power lunch" will be right back. ve? that allowed families to keep more of their money; letting them use any atm nationwide for free. and, because every dollar matters, didn't nickel-and-dime its members with monthly fees. saving them more than three-hundred forty-five million dollars in one year. that would be a different kind of bank. that would be usaa bank. go online to find out more about our free usaa secure checking account today.

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oil that's something we follow very closely on "power lunch." it is rallying today, tonight at "fast money" if oil is nearing a bottom, which are the equities you should invest in right now because equities will probably outperform faster than the underlying commodities. tonight at 5:00 your top oil picks for a bottom. >> that's a big if, though. >> well, yeah. >> if it's -- you just sounded very canadian just now. >> oh, yeah. >> oh, yeah, don't you know? let's go get a hot dish after the show. check out the ten s&p sectors, only one of them is in the red, healthcare, nine of the ten are up. most of the other names are up, actually a couple big names that are down. >> it's bite owe tech. ebb which is the biotech it is down 1%.

that's a quarter of healthcare overall that's what's impacting that sector right now. >> big market way to start the week. should be a great "fast money" tonight. >> see you then. >> melissa, thank you very much. thank you all for watching "power lunch," the "closing bell" on a big monday starts right now. big monday, big rally, welcome to the "closing bell" i'm sara eisen in for kelly evans. >> i'm bill griffeth. a crazy market day. general electric helping to power this market higher, it is the biggest gainer inside the dow right now on news that the stock has become an activist investor target. david faber will join us with details on the type of changes, if any, that we could see coming at ge. >> a friendly activist story they are calling it. >> so far. >> pharma is under fire, though. it's actually a laggard in this