>> yeah, nondisclosure disclosure. the u.s. openly being in recession already. that exists. >> the a well named guy from a very well name fund sent you another very well named person. >> i said fairly prominent. >> everybody has a guy, scott. we all have a guy. >> "power lunch" starts right now. >> scott, thank you very much. welcome, everybody, to "power lunch." earnings today front and center, intel, jp morgan reporting in a few hours. a lot of anxiety this reporting season. the sectors that are expected to outperform, we got them. >> shares of an investment group soaring now. battered this year. it is shutting down a hedge fund. how bad are they hurting in this market? it isn't pretty. >> and no more nude photos in its magazine. i really don't care. oinl read it for the articles. what this big move means for

"playboy" and what happens when brands walk away from their history? >> now it's really nothing but the articles. okay. china fears adding to today's weakness. but earnings as tiyler mentione, front and center. you can see the shares are a little changed right now. intel flat. jp morgan chase slightly lower. intel is down 10% this year. it rallied big over the past one month. j.p. morgan is down more than 1%. josh lipton covering intel. take it away. >> mandy, here's what to watch when intel reports. so, one, what is the state for pc demand? and here investors not expecting much. after all, idc reports that pc shipments dropped 11% in q-3. alex gowna says the chipmaker can't post a number that's a lot worse than the industry. he thinks sales in intel's client computing group which

includes chips for pcs fell 12% in the quarter to $8.1 billion. but investors don't expect much for the pc business, they do want to see strength in the company's other big business. chips for data centers. doug friedman says this business needs to keep the momentum going to help offset declines in the pc market. he thinks it will with sales in that business jumping 16% year over year to $4.3 billion. intel stock as you mentioned down 10% so far this year. but up about 30% from its 52-week low. both say they need to see that data center business stay strong. one final point, the street will be looking for any updates about intel's deal to buy altera for $17 billion. that deal has won the approval for shareholders. they're waiting for clarity about governmental approvals regarding that bid. intel reports after the bell. stay tuned. >> all right. josh. another one that is going to report after the bell, usually it doesn't.

it's j.p. morgan. it has usually reported before. but not this time. we're looking at the big issues facing the big banks. >> it is a double feature by b of a and wells fargo tomorrow and also the fact that the chairman and ceo jamie diamond will be participating in tonight's earnings from the west coast. that's what led j.p. morgan to move up the call to after the bell today. the street is looking for $1.37 per share with revenue of $23.7 billion, representing a drop of 6% from the same time a year ago. even amid slowing sales, expect head count reductions, line by line cost cutting and lower legal xpenexpenses to help that bottom line. performance across the banks business units could be spotty. you have low rates which means even an uptick in lending to consume aerrs and companies cou mean it's less profitable for the bank as they make less on

interest. low oil prices mean that some borrowers and energy patch become more distressed and perhaps unable or less able to service loans. then there's the encertain macroenvironment. increased volatility that is expected to hit trading revenues in equities and fixed incomes. the expectations, they're not particular to j.p. morgan. they also apply to b of a and wells fargo. citigroup and goldman sachs on thursday rounding out the week. so far, the street sees only wells fargo growing its revenues in the third quarter. you can see many people have been buying the banks hoping the macro-conditions will turn around. the expecttation, not yet. >> thank you very much for that. shares of barclay's are under pressure right now. the bank getting ready to name a new ceo. it may be looking to tap a long time j.p. morgan veteran. mary thompson is looking at what this move may mean. >> reportedly the british bank

is set to name 58-year-old jess daily to the post pend ago principle of law. if staley is tapped background suggests he would expand the investment bank. that is contrary to the path that barclay's has taken over the last few years. currently a managing partner at blue mountain capital, staley worked at j.p. morgan for 30 years. he was moved to another role in 2012. he was among the candidates considered back in 2012. jenkins was pushed out this summer amid disappointment he moved too slow to restructure barclay's. they promised a tough 18 months ahead of cost cutting and asset sales. he spoke of building up the investment bank. it was hit by the financial crisis. jp morgan's investment bank

performance was more about revenue and market share gains which is what is needed in the current business and regulatory environment. cnbc's calls to staley were declined and barclay's declined comment. >> all right. miller reaching what they call a pact in principle on the key terms of a deal in which abnbev. it would create the world's biggest brewer. 30% of market share across the globe after divestitures. under the agreement, shares of miller will get $67.60 share in tax. ab would agree to a best efforts commitment to obtain any regulatory clearances before the deal closes. and get this there is a $3 billion payment to sab miller if the transaction fails to close.

>> maybe they shared a shiraz instead. data coming out of china sparking fears in the market all over again. we're well off our lows. between gains and losses right now, the dow is down just a little. it does still manage to close in the black today, that will be the eighth straight day of gains. something that really hasn't happened in -- since i think march of 2013. the s&p 500 is sitting down by .3%. same for the nasdaq. oil, take a look. very small gains there. .7% or 37 cents. let's get more on the trading action at this hour from the new york stock exchange floor. bob pisani? >> let's take a look at the s&p 500. we're drifting a little lower in the middle of the day. we moved into negative territory. you can't really blame oil. it's not energy that is the problem. i think i know what is going on. let me show you the kbe. this is the etf of the banks. this is where everybody goes to

trade the banks. they're drifting steadily lower. that's an issue. the problem is simple. the banks tend to do well going into the few weeks before earnings. as they hit earnings season, the week of, they usually will sell off. so this is a fairly typical pattern. i don't see a lot of news out there on the banks. i'm not surprised to see this moving slightly lower. another problem is the industrial stocks. industrials are going to have a very difficult time. they're having problems with the strong dollar. we've seen reports already about that. and i think that's going to be an issue. united tech, honeywell, ge should be reporting on friday. textron. speaking of the strong dollar, big in brazil. two-thirds of the revenues outside of the united states are down 4%. they sharply lowered the profit expectations. you know the brazilian real appreciated 30%. you know what it's like making non brazil and putting money back into the united states for

dollars? you get killed. that's what's happening to these companies with the strong dollars trying to repatriate money back to the united states. this is a preview of the problems the industrials are going to have. meantime, transports are having a problem. news in some of these rider reduced the 2015 earnings guidance. technical reasons. jetblue was downgraded at jp morgan. and csx, nothing there. they're reporting after the close. again, i think some people just sort of liting up in anticipati -- lightening up in the wake of those. the vix was 25 going into october. it's steady down and up today. 16 or so at the open this morning. a lot calmer the last couple weeks. >> okay. thank you very much bob pisani. let's head to the nasdaq. bertha, what you are watching? >> a calm before the earnings storm. folks sitting on the sidelines waiting for intel this

afternoon. interestingly, we have chips down, biotechs down. we're getting a boost from the big cap tech names today. apple has been positive for much of the day. just barely holding on by a nickel there. parent company of google, also that's what's really holding things up. intel, just now slipping into negative territory. what is interesting is a lot of the beaten down stocks have been moving higher today. maybe we have all the brewing news, the coffee brewer is higher. tesla coming off negative analyst ratings today. the "l.a. times" reporting that small business owners who buy a model x can qualify for a $25,000 tax reduction on top of the $9,000 state and federal tax credits for buying an interest car. media stocks today, also seem to be moving higher. again, not any particular sector winning. but bob mentioned the big losers are the airlines. not just jetblue here. jetblue is one that actually got a downgrade but j.p. morgan says they see lower revenue per

available seat mile. the did it counters really declining hard. back to you. >> thank you very much. let's get to dominick chu. >> shares are nearing the worst levels today, down by 3% now. the lockup period expired for the stock. it ended today. so 50 million shares of etsy are available for sale. the stock lost about a quarter value since the april ipo. etsy was one of those distributor 50 companies over the last couple years. >> thank you. "playboy" covers up. no more nude photos in the magazine. company blames the internet for the move. what this means for "playboy" and what happens when brands walk away from their history? plus, hedge funds getting slammed. inve investments shutting down a big funneled. we have the fallout.

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they're higher by 3%. hewlett-packard saying the board approved a buyback program according to an sec filing. and rider systems cutting the current quarter and full year earnings guidance, citing lower than expected used vehicle sales among other factors. the shares currently down by 8%. "playboy" will no longer post nude pictures. what caused the change? welcome to "power lunch." this can't than "playboy" just discovered there are naked photos and more on the internet. why would they even continue to publish this magazine when so much it would seem of the company's value exists totally apart from the magazine? >> i think they're always a

brand about culture and lifestyle. they're trying to shift that equation over to the lifestyle side. >> there are a the love magazines that are lifestyle. what makes them different? what is "playboy" magazine going to be now? >> i think "playboy" for a lot of folks is there is a culture relevance about that brand that goes back a long time. it was about, you know, sort of, you know, it was "playboy." it was about breakish gentlemen and that was their thing which i think is relevant. >> really? you think it's relevant in the same way that it was in 1954 and 1965? >> i think it could be. it has enough relevance that it could be relevant in today's marketplace. >> okay. do you think that -- give me some examples of other brands like "playboy" that have

survived and thrived when they walked away from what made them famous in the first place and in this case, photos in the magazine. . >> i don't agree that's what made them famous. they had the mixture of pornography and the great interviews, the great articles. there was always more to brand than being a skin magazine. more than "penthouse" or "hustler." >> talking about, you know, he was asking you about what other particular brands are able to rebrand if you like. what do you think of tom brady calling out coke coal why and frosted flakes as "poison for kids"? he's a influential figure. is this something that may spark a rebranding for them and how could they do that? >> i think those are both brands that know they have challenges. the food category has challenges to begin with.

there's lots of examples. you know, old spice was brand pa's scent, right? my son who is 14 wears old spice. there are examples. it's not easy. there are examples of brands that can convert. it's hard to get that. "playboy" has it. they have the heritage. they have a very clear authentic position that may be dated. that's a very strong place to start from than just zero. >> yeah. >> i think mr. brady ought to worry more about liz brand than somebody else's brand. that is a little pot-kettle stuff. we appreciate it. >> okay. check out the shares of fortress investment group. they're soaring today. down huge this year. firm is shutting down a big hedge fund. how bad are they hurting in this market? plus, earnings getting to full swing. the sectors expected to outperform. we'll bring them to you. stay with us on "power lunch."

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within the last hour or two as to what was actually happening. after about 12 to 18 hours of a lot of rumors and reports. the cio who has been a frequent guest on our air and in general on the hedge fund speaking circuit is stepping down at the end of the year. he will be taking some equity with him. his shares have been repurchased for $4.50 at a discount to the stock. he's also closing down the fortress macrofund which was a foundational fund for this company. an earlier version of it was born in 2002 under a different name. at their peak, they had $8 billion. recently, it's come to a billion and a half after a series of missteps in the market. they were down 1%. year to date through september though, down 17.5%. now just to put that in perspective, the average hedge fund not doing all that well either. it's down 1.5% roughly year to date according to hfr. the average macrofund is also in the red. but even by that measure, being

down 18% is pretty bad. apparently what killed the most recently after a series of wrong way trades was brazil. on september 23rd when the real hit the all time low, they were on the wrong side of that trade and they also got hurt on a brazilian rates bet. we'll see what happens from here. i think it's interesting. i think it's been very tough sailing. >> how symbolic is this for the hedge fund industry? >> i think it is symbolic. you see the numbers. again, not as bad as fortress. still in the red. this is an interesting strategy. can you trade currencies, commodities, individual stocks. most people trade baskets of stocks and bonds. so you really, the world is your investing oyster. but you have to have conviction. you have to have a thesis. if you're not headed in the right direction, can you get hurt pretty badly on the down side. of course, that's what hedging

should be all about. that's what having a balanced portfolio is all b but it is redemption season for hedge funds. investors have been notified funds in some cases. september 30th is a popular notification date. and then in the coming weeks and months, we may see people selling out of positions. it will be hard to tell what's going on. of course, it's anonymous. if we see further declines and volatility in the markets, it may be getting enhanced by this redemption activity. people need to raise cash. >> something certainly to watch. thank you so much, kate kelly. >> cold prices, they are closing now. let's see how the metals are doing. gold is a dollar higher. there you see it. down about 5% since july 1. silver, copper, there you see the numbers. negative for all three of those but for silver, which is higher by a quarter of .1% or four pennies. >> okay.

let's take a look at what is happening in the bond market this hour. you can see a lot of green. that means both safe haven treasury prices are rising and yields moving lower. this is on the back of some jitters about the trade data we got out of china overnight. imports to china plunging by 20%. and at this stage, think think rate futures are suggesting that traders are anticipating the first-rate hike from the fed around march of next year. that's what we're watching here. earnings front and center today with tech and financials. so which sectors should you be betting on this earnings season? two sectors that are set to outperform and two that are expected to weigh this market down. plus, millionaires losing mojo. something happening with the world that hasn't happened since the financial crisis. we'll explain.

hi, everybody. here is your update for this hour. planned parenthood changed the

policy regarding the use of fetal tissue for research. agency chief sending a letter to the national institutes of health saying the organization will no longer accept any payment to cover the cost of research using aborted fetal tissue. the violence in israel continuing. two men opened fire and stabbed passengers on a bus in jerusalem. one of the attackers was shot and killed. elsewhere, one israeli died and five more injured whether a driver rammed his car into a bus station before getting out and stabbing people. iran reporting the country has successfully test fired an advanced torpedo system and launched a mass production line for it. the torpedo has a 485 pound warhead. and due to an outbreak last year, researchers compared bacterial growth on refrigerated caramel apples with those kept at room temperature. here's what they found. there were 1,000 time more list teara bacteria on the unrefrigerated apples with

wooden sticks. so if you like apples and caramel apples especially, buy them refrigerated and eat them right away. sorry, it's lunch time. that's the cnbc news update this hour. yikes. >> caramel apples for lunch all around. >> refrigerated ones. >> thank you, sue. to russia and president putin speaking before investors saying the peak of the crisis has passed for the russian economy. geoff cutmore speaking at this live event. hey there, geoff. >> yeah. so i asked the president if he could comment on recent remarks we heard from u.s. president obama saying that president putin lacked leadership qualities, particularly over syria and that the russian president was not targeting isil but actually targeting those who opposed president assad. let's just listen in to what he

had to say. >> at the military level, we ask them to give us the information regarding the targets. they believe 100% belonging to terrorists. and what we received as an answer was that they won't do that. then the second question was asked, please tell us which targets should not be attacked by us. no answer received. what should we do then? >> so president putin expressing frustration over what he feels is a lack of cooperation from the white house. i also spoke to the finance ministry and asked him about the sanctions that are still currently imposed on the russian economy. i think as long as there is friction with the united states and other european partners over syria, very unlikely that these sanctions are going to be removed. currently they are imposed as a result of the russian campaign

in the ukraine. so the finance minister not optimistic and president putin apparently unhappy with cooperation with washington. back to you from moscow. >> thank you very much. let's take a look at the sectors here in the u.s. right now. you see just one, dom. materials higher own on the day. everything else in the red. financials one of the biggest losers today, industrials also. so which sectors should we be watching this earnings season? dom is looking into it. >> i'm always going to say financials and technology. let's set you up with what you should expect in terms of the overall earnings season as we head into it. we are still early. it's time to take a look at what the estimates for what earnings growth could be. if every earnings report comes in line, you can expect to see earnings growth or rather a

decline of 5% over the same time last year. not a good bar. it's going to be negative. at least the analysts say so for right now. take a look at the sectors that are the leaders and laggers in terms of earnings growth, retail side, consumer discretionary stocks up 11%. telecom up 11%. telecom is a small part. consumer discretionary again the more important of those two here. then you have materials and energy stocks. materials down 20%. energy down 65%. that is the earnings growth side of things. now let's take a look at the top line. revenue growth will fall by 4%. so not a good story there as well. the sector, you take a look at these as well. telecom and health care, the ones that are going to show, analysts expect to show revenue, sales growth, 14% for telecom. 7% for health care. materials and energy the big laggers in terms of revenue decline. so overall as we talk about what's happening here, guys, you take a look at the overall

picture for sectors, the bar is set low. >> but what if you sweat out energy and materials, those two sectors? you wouldn't be looking at a 5% decline. >> correct. >> it would be although people will say you can't just strip them out. remember back in the day when you look at financials, post financial crisis, if you don't look at the financials, this would be better. this would be better. so we can't strip those out. but for those, it's part of the story. you have to factor in oil prices and what is happening with energy. that is going to be a real lagger. but who knows? the bar is set low. it will be interesting to see how traders and investors react given the low expectations and whether or not that's a reason if they exceed them to give back. >> don't count my losses, i'm undefeated. >> i am undefeated. >> thank you very much. >> we're talking financials. j.p. morgan is reporting after the market. what should investors be looking for this season? we have two guests joining us to talk about this.

great to see you. eric, at the end of this earnings season, will stocks be higher or lower than where they are now? >> i think they'll be modestly higher. we think the bar has been lowered so much on this earnings quarter that the vast majority of companies are going to be able to get above that bar. earnings win, i guess you would describe it as. certainly not bad news. that is enough to get equities up. by the end of this month, we're going to see debate over what congress is going to do. that will be more volatility for the next few weeks. >> okay. same question you to, john. do you think at the end of the earnings seasons stocks will be lower or higher than where they are now? >> can i answer both? i expect a lot of volatility this earnings season. we have a few extra dollars in cash in our portfolio to go shopping. when we see the overreaction that's occurred, it's amazing

how a company can miss expectations by a couple pennies or lower expect tagations by 5 s and you see a 20% whack to the share price. there is lots of opportunity nowadays for long term investors to take advantage of some of the short term dislocations. >> are there any sectors that you're waiting to pick up? >> well, that's the beauty. we follow all stocks in all sectors. so we're always looking. there are names we have our eyes on. i can't tell what you they are right now. i can say that recently we bought a company called stage stores, ssi, which missed expectations. lowered guidance by five cents and fell 40%. now it's at a single digit pe. so there are opportunities out there. you just want to be patient and that's why i think active management makes a lot of sense. >> erik, i see you like health care but not biotech. when do you think biotech will become attractive enough to get

into? >> i think you need to see a little more movement downward on the valuations. we've been underweight biotech all year. we're seeing the market realize the valuations were ridiculously high. in general terms, health care is expected to have a positive revenue number, more positive than the broad market. that makes health care attra attractive to move into. >> you also like financials? >> we do. kind the same story. that may be the revenue story and the earnings story. if you look at those sectors of the market in a world where growth is going to be hard to get, we think companies that are able to generate above average growth sectors that are able to generate above average growth are going to be awarded by the market. we think financials fit solidly into that category. >> thank you for joining us. go to our website to see how john is playing commodities. let's get to phil lebeau with a

news alert. >> this is an interesting story. there is a lot of interest in the tesla giga factory, the giant lithium ion battery factory they're building. apparently a photographer from a local reno paper has been arrested and was charged with assault following an incident where he allegedly was inside trespassing at the giga factory site. he somehow got in. there once he got in there, he was con fronted by security guards from tesla. they say that he was trespassing. when they were trying to get the situation under control, then he apparently drove off and in the process of driving off hit the -- some security guards from tesla. ultimately, he was arrested. the photographer was arrested and has been charged with assault. this is one of the more bizarre stories you're going to hear about. it speaks to the interest in the tesla giga factory.

again that, is being built just outside of reno, nevada. and one photographer from a local reno paper was arrested and charged with assault. by the way, this happened last friday. just now hearing about it. it's an interesting and unusual story to say the least. >> yeah. all right. phil being thank you very much. phil lebeau. >> the first democratic presidential debate takes place tonight down the way from reno in las vegas. john harwood is there with a look at what we can expect to hear. hi, john. >> tyler, you know, it may not be more interesting than what phil just reported from reno, but there is no better authority on debate strategy than somebody who has been there. i talked to former vice-presidential candidate joe lieberman about hillary clinton's predicament tonight. here's what he had to say. >> secretary clinton comes into this debate with her campaign not where she wanted it to be at this point. she has a strong challenge from the left from bernie sanders.

s she also has a couple of wild cards on the stage do. they go after hillary? do they go after bernie to try to cut him away? what does hillary do? the question has been should she go after bernie sanders? i'd be surprised. i think she's going to go after the republicans. she's going to speak on behalf of the middle class. she's going to try to stay up. there is no reason for her to attack bernie. bernie says that he won't attack her. >> do you not think all these issues that have been enflamed by the e-mail controversy, trustworthiness and secrecy and all that, you don't see those as huge impediments to her? >> it will be interesting on the debate tuesday night. i presume that bernie sanders won't bring up benghazi or e-mail. it will be interesting to see if martin o'malley or jim webb or lincoln chafy do. i would assume that cooper would. i'm sure she's ready for it. >> and tyler, from my

conversations here in las vegas, it sound as if joe lieberman is right, hillary clinton is going to try to stay up and lay out her plans for the largest audience she's been able to address in the campaign so far. >> thank you very much. don't forget, folks, cnbc will host the next republican presidential debate. it is in colorado october 28th and that as we like to remind you is the same day as the next fed meeting. stick with cnbc all day long, mandy. >> more excitement than i can handle. what are the issues for small business in this election? we have new data. kate? >> that's right. ahead of the democratic debate, a new survey from the conservative national federation of independent business minds finds many small business owners think the country is on the wrong track. 67% of small business owners rate the current business climate as fair or poor. the top priority in washington should would be a third of the vote to get the federal budget under control. the report finds followed by slowing the rising cost of health insurance with a quarter of the vote. in third place, reforming the

federal tax code. 35% say the tax that's they currently pay are much too high. and with all eyes on the federal reserve, more than a third of respondents say they're very concerned about the fed raising interest rates from their current historical lows. and finally, with so many of the candidates on the campaign trail taking aim at the gig economy including uber which rely on independent contractors, 50% of small businesses strongly oppose the government further restricting the ability of workers to be classified as independent contractors. very interesting issue that keeps popping up. >> we'll keep on popping up time and time again. >> that's right. >> thank you. >> general electric making the biggest transaction yet. it slims down the financial services unit. that news pushing shares of the dow component close to a multiyear high. as we speak, it is currently flat. we're going to have the very latest straight ahead. plus, with home prices in urban areas sky high, are people looking for value in the suburbs know? diana has that story. >> the short answer is no.

and that's why the barrigains a growing out in the burbs. we'll tell you how much you can get coming up next on "power lunch."

good. very good. you see something moving off the shelves and your first thought is to investigate the company. you are type e*. shorten the distance between intuition and action. e*trade. welcome back, everybody. fmc announcing plans that up to 850 jobs and lowering the full year profit forecast. the chemical maker pointed to weakness in the agriculture solutions unit and the drop in the value of the brazilian real. boeing says it expects to sell 150 more of its ch-47-f helicopters to european, middle east and african countries and take place between now and 2022. pepsi and coca-cola are said to be in talks to buy a steak in

the greek yogurt maker chobani. it could have yields as high as $3 billion. let's go to dom chu for a market plash. >> you have toll brothers selfing an upgrade to overweight from equal weight at morgan stanley. they're making that call. pulte group downgraded to an underweight. the firm says the market doesn't appreciate the potential toll brothers while it's overvaluing pulte group's deferred tax assets. the stocks are near the worst levels today. so home builders a focus during this rally we've seen now perhaps a focus again for the other reasons. back to you. >> staying with the same sector, dom, with real estate prices and major urban areas like new york and san francisco pushing new highs every year, many homeowners are looking for value in the suburbs. but they may not be looking far enough for the best values. we have that story live from washington. how far out do you have to go? into the woods? >> it depends on how far you're

willing to go. the price differential between close in suburban homes and those farther out from the city has never been greater. and that is due to new social trends coinciding with our recovery from the worst national housing crash in history. if you're willing to drive, and gas is cheap, check out the bargains. take chicago. home prices in closer in deerfield are 15% bow lelow the peak. but go down the interstate and prices are 30% below peak. the same is true in l.a. glendale is already 2% above peak. but farther out, calmdale, 37% below. and right here in d.c., home prices in the close in suburb of arlington, virginia are almost 8% above that last peak. but head out to ashburn or winchester, you see prices are nowhere nieclose to recovering. demands from two very large generations, millennials and active babyboomers.

fewer young people have drifrlgss to day. they're sharing cars. and even though many more tell he commute, they do not want to live far out. now realtors used to use this measure of $1,000 in savings for every mile that you go out from a city. but it's actually much bigger than that now which could mean as the millennials age into parenthood, there is a lot more room for prices to grow in the far out suburbs. could be a better investment. >> led for the hills. >> thank you very much. google, amazon, netflix being represented by the internet association which is meeting to discuss issues facing the group. we're there live. take it away, julia. >> thank you, mandy. michael, thank you for joining us here today. you represent the 36 biggest internet companies in washington. and all around the country when it comes to the regulatory issues. what is the number one thing you're most focused on? >> one, we want to focus on

educating policymakers and regulators around the u.s. and around the world about the great benefits the companies bring. not just here but creating jobs around the world and around the country. we want to make sure that policymakers recognize that and to foster innovation and have the next generation of companies we don't know about today come about. >> reid hoffman said he is very concerned about the eu's recent ruling on safe harbor and what that's going to mean in terms of a fragmentation of the global internet economy. how are you addressing this issue and also these concerns that there's sort of global risk associated when it comes to u.s. companies and privacy of data? >> we certainly need a safe harbor agreement in place. it raises concerns for the medium and smaller companies with free flow data across borders. >> how you would address privacy concerns? >> privacy issues, internet companies are the most self aware of importance of that. trust of the user is everything. there is incredible competition

online, one click away. and our companies are the leaders in protecting privacy. >> you represent uber and air b & b. we see the growth, there are a lot of questions about whether there needs to be a new classification of worker. contractors and employees. what you are doing to figure out the regulation of this space? >> the thing that regulators recognize is there is incredible flexibility here. there is nothing new with uber or lift. this has been going on for a long time. you had in the yellow pages, you could call a driver and it's an independent contractor. people want to work for themselves and that's what they're doing. >> at which timer is one of the many companies that you represent today. they announced an 8% cut in the workforce. as they restructure the company. there's been so much talk here in silicon valley whether or not there is a bubble and private public market valuations. what do you think? >> this industry is growing and creating value in so many different areas. it's not just about the employees. you have to think about the small businesses that are able to benefit because they're using

twitter and individuals that are able to use air b & b and uber. >> great. michael, thank you so much for joining us. we'll let you get back to your interrogatory conversations in there. thanks so much. mandy, back over to you. >> thank you very much. >> thank you very much, folks. twitter and snapchat announcing layoffs. is this a sign that social media has peaked? we want to hear from you. get ready to vote on our website. that is ahead in the second hour. meantime, we'll be back in two minutes. tlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done,

the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town, the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back.

welcome become to "power lunch." stocks trading at a narrow range today. materials are leading the way. financials are lagging. united health, goldman sachs and disney leading the dow and former fed chief ben bernanke says ballooning student loans do not pose the same threat to the financial system as housing loans do. interesting words there. over to you. >> all right. millionaires lost their mojo? that's a question for robert frank. >> the power play lags of millionaires has fallen for the first time since the crisis. we'll tell which you countries

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peaked? layoffs coming at two companies and we want to hear from you. plus, if tv is dead, why are so many companies getting into tv? we're going to answer that and find out who the next great media mogul may be. and forget that tax credit for buying an electric car. a new tesla tax credit popped up that may make your head spin plus a rare exclusive interview with daniel tarullo. all that coming up. back to you. >> wonderful. look forward to it. that's a lot to cram in. let's turn our attention to the rich. why not? the group of millionaires around the world is actually getting smaller. robert frank is here with that story. >> haven't heard this in a while. >> the rich don't always get richer, at least when you talk about u.s. dollar terms. number of millionaires worldwide fell by 2.4 million in the year ending in june. that's the first decline since the financial crisis according to credit suisse. they're now at $33 33.7 million

people around the world worth a million dollars or more. weakness in emerging markets and the volatile stock markets, that has hurt millionaire growth. total global wealth fell by $12.4 trillion to $250 trillion. but even the super rich saw declines. the number of those people worth 50 million or more that, fell by 800 to 123,800. the u.s., we're still the mailon air capital of the world. nearly half of the world's millionaires are here in the u.s. with 15.6 million millionaires. the uk is second, japan, germany, then france. inequality is still growing. the top 1% controls half of the world's wealth. that's a level that credit suisse says ez has not been seen for over a century. the gap is mainly being driven by financial assets which are the main source of wealth creation for the wealthy. >> i'm surprised china didn't crack that top four or five in

terms of millionaires. >> china has relative to the u.s., they have 4% of the world's millionaires compared to our half. so they stack up to the u.s. in term of billionaires, which is strange. but millionaires, they're way down at the bottom. >> that's fascinating stuff. thank you. >> you bet. >> that is it, folks, for the first hour. brian, take it away. >> all right. thank you all very much. now 2:00 on wall street. lunch time in denver. the dow is down just a bit. oil stays put at $47 and change per barrel. hi, everybody. i'm brian sullivan. melissa lee is at the nasdaq. so much to do today including a very interesting question for you coming up later on in the show in social media and whether or not you think social media has indeed peaked. we have a live poll coming up. we have to start with the smart money. not looking so smart to dament fortress investmen group saying they'll shut down the biggest hedge fund. that fund kind of seemed to be shutting down on its own already, losing nearly 18% just

this year. and the guy that ran that fund, michael novagratz will leave the company. he'll be a very rich guy. begs the questions, what happened and number two, if the smart money can't win in this market, who can? kate kelly joining us with more on the story that surprised wall street a bit, kate. >> yes and no, brian. i think that the way in which this move was telegraphed, the fact we had leaks yesterday and nothing publicly from the company until the middle of the trading day. the stock had to be halted. the fact that a very early senior executive in the company who as you said owned a lot of stock is stepping down in what i'm nrtsing to be a tense situation and negative performance at the u. m went from $8 billion prefinancial cross-ice toisis t change. that is striking a cord. we're in the end of a year in a very volatile year. still waiting for a fed rate hike. dealing with volume tide

commodities and unpredictable stock market. it looks tame compared to the other asset classes. that is striking a cord with people. but as you said, it's notable that mike novagratz is leaving and he's had a series of wrong way calls. i should say earlier, i think i misspoke when i said he was taking a lot of stock with him. rather, the company is buying him out. he is taking some stock with him. the company is buying him out at $4.50 a share. that come to a fair amount of money. he had a series of wrong calls. most recently, he was wrong on the brazilian real and the interest rates there. >> i met the guy once or twice, i think. always seemed reasonably nice. my source told me that he is viewed as, this had his word, the lucky roommate.

kind of maybe -- >> lucky roommate because he's leaving with a fair amount of money? >> that the implication of the text message is not the greatest investor. that kind of maybe hit it big. >> so right place, right time with the right friends. >> yes. i can't tell you everything that the source said h to do with his wardrobe and investment decisions and blah, blah, blah. there was a little frustration on the part of the performance. here the reality. i understand a lot of hedge fund managers do great and make a lot of money for it. but when you're down 18% in a year and if you would have just bought the s&p 500, you'd be down a couple percent. you can't blame audience for thinking that is ridiculous. >> sure. i mean this is the issue that dogs hedge funds all the time. they're charging 2% for a

performance fee that is 20% of upside. they get it wrong on a frequent basis. they still enjoy favorable tax treatment and a lot of other advantages, a lot less scrutiny than a mutual fund. i don't know if someone inside of fortress should be complaining since they're part of the business overall. but that's a separate issue. i know we're saying that -- it is kind of the breakup here of a band of brothers though. you had three founding partners. you then had mark novagratz who were pollies in the past. they came onboard and starting the hedge fund strategy. they had a really good run for a long period of time. but the company went public right before the financial crisis. similar to blackstone group. the stock has done nothing for people over the longer term.

>> are there broader implications? it is a terrible environment for mack crow funds and they'macrof. could this actually be the first of a series of funds in this particular strategy that will close its doors? >> to be clear, they're doing a lot worse than the competitors. the average macro strategy was up in september. a time when his fund lost 5%. it is slightly down. this is the average fund in macro. slightly down year to date. whereas novagratz is down 18%. however, if you look anecdotally at the bottom performers, you'll see a lot of commodity funds, other macro funds. there is chatter on the streets about other funds having setbacks and redemption in the macro space. you can play in any asset class you want as a macro ininvestor. it's a highly volatile space.

you have to have conviction about where you're investing. >> kate kelly, we'll let you get back to the business that is in d.c. thank you so much. safe travels. >> let's had in herb greenberg to this conversation. i'm sure you're listening and your view is very simple. now is the time for investors to get back to the basics. know what you own. and is there some sort of an implicit understanding that maybe, just maybe in specific times there isn't anything good to invest in? isn't that possible? maybe they're trying to figure it out and beat the globe whether in reality sometimes everything just sticks. >> i don't quite agree with that, brian. sometime it's depends what you own and knowing what you own. i can tell you i hear you talk about the hedge funds.

the hedge funds are my end market. i know when i talk to them about names that we're involved with that we've done research on or when we're trying to sell our service, the level of research they do, once we've done the research is enormous. so there is a tremendous amount of work that goes on there. you pick your number for time. you can have the best knowledge but it will go against you while something else is going for you. you need to know what you own and then what not to own. that's an important part of the equation. ternl certainly what we do is alert people to risk. that has always been the case. in a bull market, brian in, a bull market, nobody cared about that level of risk. if they were short stocks, they would go straight out of business. >> i can probably find ten guys,

100 guys, 1,000 guys, women right now sitting at home on their computer semiretired who have probably beat, who have outperformed many of these biggest hedge funds for about five years just by buying the spy, s&p 500 etf or some other broad based etf. >> in a bull market, that's easy. >> if i may interject myself in this conversation, when you talk about macrofunds in particular, the elephant in the room here is the fed and what central bankers are doing. we're in an unprecedented period of monetary easing around the world. that is throwing a wrench into a lot of the trades. a lot of the normal correlation that's we'll see that macro-tramacro macro-traders would trade. >> that's a good point. you're spot on. there are 32 central banks around the world engaged in

liquidity issue, whatever it is. but that's you get paid millions of dollars at the funds to see what's going to happen or to assume or kind of guess what's going to happen and make the right strategic investments. >> you fall on your sword if you're a hedge fund investor. if you're not doing well, redemption. doesn't it even out? >> no one is a genius all the time. but in the end, it's really a question -- the reality is, you know, people are -- there are serious people doing serious work. if you're at home doing work, it's easy to sit in front of the computer and maybe do better with ab index. guess what? in challenging times, you better know what you own and you better know what not to own. look at the stocks. i look at my swing every day and see 10%, 12%, 15% swings. it's nuts. >> i can run a company whose stock goes nowhere and loses 18% and do it more than $255 million

which is what he's being paid to leave. >> let me tell you something else. people can sit at home and think how smart they were investing in the index. let me tell you, pal, when that index goes down, as that index has, a lot of people said, whoa. what just happened to me? i thought i oenld the index. guess what, the index goes up and down, too. it goes down the way it went up. a lot of people learn that lesson in each cycle the same way. >> it's the same reason 85% of people say they are better than average drivers. right? herb? thank you. >> if you say so. >> melissa, thank you. all right. that fat tesla tax credit that you got to hear to believe. we got that coming up as well. plus wlosh plus, who is the next great media giant? we may name names. a live interview from a federal reserve governor. when does he see a rate hike coming? daniel tarullo will join steve liesman in an interview you

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welcome back to "power lunch," everybody. let's get to steve liesman and his interview. >> thank you very much. i'm live from the federal reserve building in washington with fed governor dan tarullo who is a member of the market committee and permanent voter and top federal reserve official whether it comes to bank supervision. right now, dan, i want to ask you, reading ben bernanke's

recent vote, talks about an exchange he had with jamie dimont from j.p. morgan. has anybody counted the regulations on the economy? it was more than four years ago today. my question to you is do we know yet what the economic impact is, the cumulative infect effect? >> i think one thing we know is we have the safer financial system now than we did seven, eight, nine years ago. the second thing i think we know is that it is difficult to disentangle the impact of regulation from on the one hand overall performance of the economy, the adequacy of adequate demand and of aggregate demand and secondly, to be sure about what baseline we're using. if people use 2005 as a baseline, that's really not the right way to look at things. having said that, i think that we do have a pretty good sense

that financial institutions are able to operate in a sensible and profitable fashion. we're look at the effects of regulation, particularly on smaller institutions to see if there are change that's can be made that will allow with more efficient and safe interimmediate issues. >> i have to come back to the question. we do this with taxes and other regulations. do we need to step back and say here's the total cost of banking analyst mike mayor said that lending right now loan growth is one-third the normal expansion right now. is that not part of the cost from regulation? >> again, as i said a moment ago, if one has to try to disentangle whatever impact from regulation there is with from the overall performance from the economy, which as you know has been growing barely above trend for some time now. i will say that in a number of sectors lending does seem to be

healthy. it seems to be in autos and in credit cards and in cni lending. it seems to be about where one would expect given the growth of the economy. >> the number of new acronyms in the banking business would fill a new dictionary. there are leverage ratios and some other ratios. there is high quality lending or something like that. did i get that right? >> yes. >> hqlas. thank you very much. >> is it the policy of the federal reserve to force lanch ba large banks to be smaller? it's not the policy to force they will to be smaller. but it is the policy the bank regulatory system as embodied in congressional legislation to make sure that large institutions, systemic importance do internalize the potential risks to the broader economy from their size and

interconnectedness. so in essence, a firm has a choice which is that it can either maintain substantially higher capital levels. there are some form of business or certain size of that business may not be worth the higher capital charge that takes account of those negative extra things. it is up to the institution to make that evaluation. >> let me pivot into monetary policy. we had people from both sides of the spectrum speaking. we had the governor saying it makes sense to wait and see. and then this morning jim bullard from st. louis says things are good u.n. we're at a normal place with the fed. should be hiking rates. where do you put yourself on that spectrum? >> the best thing is to explain how i am looking at the economy. and to do that, let me check off

a few factors. one, where have we been? basically been in a moderate, elongated recovery in which growth has never gotten too far above trend. secondly l secondly, there's no question we made a lot of progress in the labor market. i don't think anybody knows how much more progress could be made in a noninflationary fashion. unemployment is already down at or below where just a few years ago many people thought the natural rate was. and there's a good case to be made from the proposition that at least temporarily the natural rate may be somewhat lower. on inflation, for most of the time since the crisis and the recession, we have been running below the fomc stated 2% target. and we're currently in a globally disinflationary

environment with the impact of the stronger dollar also and lower energy crisis playing their part. third factor i think, steve, is that there is a good bit of uncertainty right now, as you know, will is the debate betwwhr we've got xenlded cyclical effect or whether there is secular things going on in the economy that are changing growth potential and changing opt mall policy. i don't think the fomc is going to be able to disentangle that when -- before we have to make decisions. i do think it's probably wise not to be counting so much on past correlations, things like the philips curve which haven't been operating effectively for ten years now. and instead to really look for some tangible evidence of, for example, hiccups in wages or inflation that allow us to make informed decisions based on the evidence. >> given what's been happening

with lower commodity prices and lower oil prices, the stronger dollar, it could mb months before you see that evidence. >> sure. and there is a case to be made for the proposition that one should look through things like the dollar and energy prices. i just point out though,en that may well prove right. i would point out that as i said a moment ago, it's been some years now since inflation has approached the fomc's target. there have been a series of factors which for some period of time have kept inflation down. that allows one to develop that confidence that inflation will return to target. >> you would put yourself in the camp of one expecting a rate hike this year? >> i would -- you know, i do want to orient towards how i think about the economy. based on what i just said and

based also on what one might call a risk management approach of being concerned that a premature rise might be harder to deal with than waiting a little bit longer, right now my expectation is given where i think the economy would go i wouldn't expect it would be appropriate to raise rates. but i want to has hasten to add that is an outlook that changes based on developments in the economy and our being forward looking about it. i think there's been too much focus on a particular meeting and a particular date and not enough on the overall conditions of the economy. >> dan, that's all the time we have. thank you for joining us. >> thank you, steve. >> back to you. >> all right. steve liesman in d.c. great stuff. thank you, buddy. you know an analyst likes a stock when he titles his research note, "even more sugar in the sweet spot." on deck, the stock that note is about and the upgrade that came with it. as we head to break, let's get a

look at your markets on this tuesday. the dow, down a whopping .1%. oil kind of flat lining as well. what are you waiting for, america? we're back right after this.

welcome back. general electric making the biggest transaction yet as it further slims down the financial services upt. let's get to mary thompson with the details. >> general electric is now more than half way to the goal of shutting $200 billion in assets from the financial unit. the sale of $30 billion in commercial lending and leasing businesses to wells fargo means it sold $126 billion of assets targeted for sale in april. the news pushing shares of the dow component earlier today close to a multiyear high as it means ge is also on track to ask to be removed from the federal reserve oversight. it is planning to do so in the first quarter are of neechlt next year. they're one of three nonbank firms being important by federal regulators. this after it survived a financial crisis. the formerly massive finance unit brought down the conglomerate. this april it did the unthinkable, embarking on a plan to shrink the unit that accounted for half of the

profits. the ceo of the finance unit told cnbc it's unclear when they'll decide whether to dedesignate ge. it is the first company to request this and ge expects it may take a couple reit ragss and several months to get the final answer. ge finance will focus og shedding $6 o billion in assets including the finance business. some real estate remainder of the u.s. leverage lending business. overseas, assets on the block include the european commercial lending and leasing businesses check and polish banks and a french consumer business. when it's all said and done, the plan is 90% of ge's profits will come from the industrial businesses with the finance unit supporting the businesses accounting for the rest. melissa, back to you. >> mary thompson, thank you. big bank earnings kick off in 90 minutes from now. jp morgan is the first to report. bank of america, wells fargo, n pnc out with earnings tomorrow. let's bring in the banking analyst from s & p capital iq.

jp morgan essentially started the year exactly where it is now stock wise, right? it started the year at $62. it's around $61 and change now. it is all about seeing when the fed is going to start hiking and the trajectory of the rate hikes at this point? >> that's true. the banks have been trading in a range for the last year and a half. especially the largest banks. they're waiting for the federal reserve to raise interest rates. the regional banks and smaller banks are more sensitive to the long ones. so the larger banks need the federal reserve to raise interest rates fairly soon. and it's also the volker rule and how that affects trading. so two major effects. >> what are you going to be looking for in term of jp morgan's earnings to night and what will the read through to be the other banks you cover? >> j.p. morgan chase is not always a great read through to

the other banks. the first thing we look at is the net interest margin. how is it holding up in the low interest rate environment? we'll be looking for some fairly strong long growth coming from credit cards, auto and commercial lending. and weaker long growth from residential mortgages. we're cautiously expecting the marge continue to stay stable. it actually went up a little bit in q-2. overall, we're expecting revenues to fall 4% from a year ago. en that is mainly driven due to trading and some of the other line items in fee income. i think the trading will be down about 5%. and that's in line with what the company preannounced a few weeks ago. >> right. from your notes, previewing the earnings report, it sounds like you're concerned about reserves. we'll have to decide for legal requirements, the legal reserves right now is about $10 billion.

the possible remaining liabilities could range from 8 to $16 billion. is that an overhang? >> the 8 to 16 is really more of a theoretical. it's like a five year window of what the company could possibly see. so i'm not really concerned in the next few quarters about that. i expect that -- i really don't expect any bad news in term of the legal front. they obviously had a lot of payments in the last three years. so it should be all quiet on that front in q-3. >> all right. so long growth and interest margin. thank you for joining us. we appreciate it. brian? >> let's get down to jackie at the nymex. it's been a wild series of days for oil. today is not one of those days. >> yeah. it's not one of those days. we did see interesting action, brian. we were up for most of the session. selling pressure right here going into the close. we're going to close under $47 a barrel. part of that is because of the

iaea report that came out this morning. it was a bearish report. saying, yes, we are going see demand go up next year but not that much. they actually took their forecasts down a little bit. and also that nonopec production, the iea is expecting it to fall. not as quickly as opec is. and actually, they're saying they do expect the supply glut to continue through 2016. opec's version of the monthly outlook very rosie. having said that, on deck this afternoon, api inventory report. tomorrow we hear from the doe. that could influence the prices as well. back to you. >> all right. thank you very much. on deck, a story of a lawsuit that, well, you got to hear to believe. and you can decide if after you hear it you want to laugh or cry. plus, five stock calls that need to be on your radar when "power lunch" rolls on.

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hello, everyone. here is your cnbc news update this hour. pretrial motions are under way in a baltimore courtroom for the six officers charged in connection with the death of freddy grey. they appeared before a judge who is trying to determine whether statements made to investigators will be allowed at that trial. thousands mif grants

arriving in austria this morning from hungary. they had to face freezing temperatures overnight. red cross workers are tend together migrants who were forced to wait in the cold for hours on buses that will shuttle them to temporary shelters. gop presidential hopeful jeb bush campaigning in new hampshire. unveiling his plans to repeal and replace obama care. the basis of the policy focuses on promoting innovation, lowering costs and returning power to the states. and a new york woman is suing her 12-year-old nephew for $127,000 for injuries she said she suffered from his exuberant greeting at his birthday party four years ago. jennifer o'connell says the greeting caused her to fall and break letter wrist. she is asking a connecticut superior court jury to find her nephew libel. that is the cnbc news update this hour. brian, i know that's one of your favorite stories of the day. >> you know, yeah, favorite loosely defined, sue. when you go through the numbers,

there are more than 15 million lawsuits or civil cases in america every year. 80% of the world's lawyers live in the united states. and i'm not making judgment on this case wlchlt you go through the numbers and see this kind of thing and you're thinking -- america. >> listen, the kid was 8 years old, happy to see his aunlt. what are you going to do? >> there is a lesson here. never be happy to see your relatives. >> oh, look. mom is on line one. dad is on line two. thanks, brian. >> thank you, sue. i think. wow. all right. it is now time for trading nation. traders trade better together. today, let's trade this rally that we've got going. why it may be nice but low quality. harry walden and stacy gilbert on the "trading nation" team. you notice something interesting about the bounce we've seen and the quality of the names. >> it's been led by these very beaten up stocks. what we did with the s&p 500, we separated the index into five

sections based on performance through september. through the first three quarters of the year. what we found is that the 100 worst performing stocks through september have been the best performers month to date in october when this rally has really started in earnest. so, you know, the question is, is this a short covering rally or, you know, something a little bit more meaningful in the very stable broken down names? well, we know this. looking at the s&p 500, we think this mean reverting rally does continue. we're keen on the indices that's around 2060. we think we can get there. a lot of the surveys are pessimistic. seasonals are strong as well. we think slow and steady wins the race. we would rather buy stocks that maybe haven't bounced as sharply but have held trend better over the past few months. rather than going bottom fishing and laggered land.

>> stacy, based on that, does the fact that lower quality names, beaten up stocks are leading the rally have you less convicted about the little run or more concerned about the quality of it? >> overall, the market is clearly priced in less risk. it's really suggesting that there is less risk in the marketplace across the broader market. i would say to ari's point, of the sectors that are leading this bounce here, there are four sectors that the market continues to suggest that there is increased risk on a relative basis. first and foremost, is energy. obviously that, is one of the most volatile ones. that makes up a fairly high percentage of those -- that bottom group that he is referring to. materials is another one. continues to price in excess risk. continues to have a number of names in that bottom quinntile. semiconductors is making up a decent percentage of that as well. and, of course, hk. those four sectors i would argue the market still sees a substantial amount of risk on a relative basis.

overall, the market seems to have taken a breath here and saying things are settling in and they're a bit more comfortable. we're not pricing in significant decreases here and kind of interestingly to the upside, we're really suggesting maybe somewhere around 18% probability that by year end we can get back to the high that's we saw. so, you know, as they joke around, you're saying there is a chance. the market really settled in here with the four sectors continuing to price in increased risk. >> stacy and ari, thank you. for more "trading nation," head to our website. take a look at the social media etf. ticker, socl. social up slightly over the past year. down more than 10% from the 52-week high. and now we're starting to see layoffs from twitter and snap chat. so our question you to coming up. we've got a live poll. do you think social media, which we hear a lot about, has actually peaked? we want to hear from you go. to cnbc.com/vote. it's going to open up shortly. plus, three media titans debate

their industry. you don't want to miss. that

. every single day we go through analyst calls to find you five interesting stock ideas. we call it street talk. let us get to it. general electric. william blare upgrading it to an outperform. it is called a different kind of industrial company. kind of sounds like the new tv ads. investors are not appreciating ge's trance formation in the world's biggest infrastructure company. they think ge enhanced the growth prospect. the target, $32. 14% upside. i'm sure you know $32 on ge hasn't been seen since 2008. >> that would be quite a level. there is such hope that it is multiple will come in more in line with other industrials out there. in fact, take a look at the etf

that tracks the industrials. the forward pe is 30. ge's forward pe is 21. so there is a great disparity between how it trades and how others in its group trade. second stock, melco crown. it is higher today. that's the xli. 3%. credit suisse is getting bullish on the sector as a whole. it goes to bullish from positive. it's upgrading a few names cleg melco crown. on melco specifically, they see a potential 33% upside citing stabilizing vip trends which is really just not the sector down. lt relaxes visa rules and the uniqueness of the studio city property. >> have you seen shares of wynne lately? up 35% this quarter. >> half of that last week. >> there you go. all right. third stock, toll brothers. morgan stanley upgrading it to an overweight. they say the market

underappreciates tol toll brothers profit potential. luxury home exposure is the key. the target goes up from $39 to $44. so 18% upside. not the only upgrade recently. us susquehanna upgraded them. >> luxury homes is the core. they're doubling down on the apartment rental unit. they actually doubled it to $300 million in terms of investment. that is an acknowledgement of the hot rental market. hass brea hasbro, they're going to be reporting on monday. the analyst saying that a lot is priced into the stock. the third quarter should see a benefit from star wars. research indicates that impact will be modest in the third quarter. bigger impact will be fourth quarter. competition is getting tough. lego, mattel, spin master, all fighting for the dollars out there. a lot is priced in. and frozen, brian that, is such -- that was such a huge catalyst for toys, not likely to be released until 2020. >> investors holding on to hope of. that they have to just "let it

go". >> today's under the radar name is rspp. it is a $2.5 million market cap. stock price all considering held up reasonably well this year for an oil company. roth capital partners, john white, raising the price target to $31. reiterating the buy rating. the note is titled even more sugar in the sweet spot. they recently bought the premium for $137 million in cash. 22 anlives cover the name. average target, $29.80. >> the stock action is, that's pretty impressive for this year. >> not bad. they have $700 million in debt. something to note on the balance sheet. all right. that's it for "street talk" on a wednesday. coming up, a big tax credit for tesla owners, plus, who might just be the next big media giant? stick around.

all these devices and we've sold our content to a lot of these devices and a lot of these

players for and created business models that don't work and so we have the leverage -- selling to netflix or giving -- we have the best butters. >> don't work for who? >> doesn't work for the content owners and in the long run -- >> all sorts of double dipping. >> i disagree with you only that dealing with netflix, amazon, hulu -- >> they are making a fortune. >> we have made over $2 billion in four years from those services. >> huge media powerful earlier today on squawk box talking about the future of television and kind of here is what's funny about our industry, all the new media people are calling for the death of tv even as all the new media people keep rolling out new video and tv products. who will be -- barry illers, barton crockett. everybody wants to be in video.

who do you see next year, five years, ten years out winning this battle? >> well, i think it's a tough call. i wouldn't predict that traditional tv so fast, however, what we're seeing is a massive structural realignment of the content and distribution food chain, we're also seeing a major shift in the patterns of media consumption which is basically the consumer doesn't care where the content is delivered. all of this means that in a world of platform agnostic delivery there is going to be a major shakeup over the next several years in no small measure due to the proliferation of over the top video. >> barton, is there somebody out there that's going to be the next espn, next cbs, next universal that's small that you cover that you think, wow, the possibilities with limitless. >> i'm not going to point to anyone small. i think netflix is there. i can they have done an

incredible job, their subscriber uptake globally, dommist clee, ability to raise rates, ability to get viewership that puts them on barp with the ratdings of the big prod r broadcast networks in the united states. they have been a powerhouse. everyone else is small compared to them. they are the leader in entertainment. sports i think is different. i think netflix will have a part-time getting into that and espn is the next espn and the nfl reins supreme across broadcast. in the entertainment part you have some trouble. there's a lot of questions among investors about the durability of the traditional tv network stock given the reliance of audiences that are watching netflix for entertainment. >> why don't you walk us through how you view the landscape and the winners. is it all about who owns the content or could cbs be a winner as well.

>> the winners are going to include the major content companies that will likely remain at the top of the food chain. you heard the phrase content is king. we actually have a buy recommendation a lot of the premiere content companies for that reason, we think that there is a risk for term mediation of some of the traditional paid tv providers. we are seeing some fraying. bundle. this is a systematic process that he we expect to continue over the next several years. you see a lot of these paid tv providers trying to insulate themselves through a launch of packages, slimmed down offerings. so i think inevitably the shakeout will result in fewer players and more consolidated marketplace and more nimbleness that will determine which companies will rule the era and i think netflix is a good one to bet on at this stage. >> tv is dead, long live tv. tuna and barton, thank you both

very much. let's turn from traditional media to social media. twitter announcing layoffs today but they are not the only social media company doing that. snap chat reportedly having second thoughts on its new snap channel feature and laying off the small team behind it. so we want to know what you think and here is our live poll of the day. has social media peaked? go to cnbc.com/vote to weigh in. social media is going to take over the world, right? we want to hear what you think. you can track the live results of that poll on the screen right here. let's bring in victor anthony. he covers the internet media space for a skpchlt iom capital management. no one is saying social media is going to go away, every day we read a story about problems or issues or whamplt how does it shake out? are we in the 1920s with railroads where there's hundreds of players and in ten years there's going to be ten? >> well, i don't think it's that

specific. social media still evolving and still a growing platform. intense competition within the space. so you have a few leaders like facebook who continues to dominate. every single data point that i look at tells me that people are spending a lot more time on social media every single month. whether it be new visitor growth or time spent, that's on facebook, that's on twitter, other platforms like snap chat that you just talked b toying my kids on sporting games, people are on social media, i'm on the bus ride home people are using social media. everywhere i go i see more and more people use social media. i think there is ample room to grow not just in the u.s., outside of the u.s. as well. >> a couple points. if you are at your kid's sporting event watch your kid play sports. >> true. >> on a more serious note, my guess is 80% of those people are on facebook. that's kind of the point we were trying to make in our morning meeting, we were talking about

this, brought up the idea, i thought ex facebook who is winning? >> facebook is dominating the field as far as social media is concerned. at which timer is more of a nichy platform, they are struggling but trying. they more than likely will succeed is the bet i'm placing on twitter stock. a lot of different products out there launching i think will drive up engagement on the platform. >> do you think twitter stock -- listen, they have had some issues with growth and users, people dropping off, lurkers, if you will, i can't understand it or has no value for me. >> twitter has a tremendous amount of issues but i turned positive on the stock last week. i think the project lightning i think is what they call t i think that stands a chance of at least keeping users on the platform, driving retention. i don't think it necessarily drives user growth right now, i think you have to wait for the google integration into the platform, you have to look for the marketing campaign to come out.

those are things i'm looking at, new product launches, i think that the ultimately come out, getting more people on to the platform. twitter has had a rough go at it, i think things are look much better for them in the future. >> victor anthony thank you very much. follow me on friendster. now to lock in the question for our question of the day, has social media piqued? 55% said, yes t has. 45% no. melissa, it's interesting. we are in the media, we literally broadcast, use this because we have a mega phone, i get t we're different. when you look at it you think everybody i know expresses frustration at social media. i hate t but then they use it all day long. >> it's also the results are ironic because you would think that there would be a certain degree of self selection, people who like social media would go on and vote and say, no it's not peaked and yet it's a yes vote. >> put that question out on social media, is social media dead? he wrote on twitter.

>> exactly. sort of the same thing, right? okay. tonight at 5:00 on "fast money," a big show, brian. we have two earnings conference calls from two major dell weather companies at 5:00, intel and jpmorgan tonight on "fast money." >> i know how you love your earnings season, melissa. >> i do. i do. >> "closing bell" starts right now. hi, welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> and im bill griffeth. we love earnings season, too. >> we do. >> it hams on our watch and three biggies are kicking off earnings season coming up. we're about to get numbers, for example, from intel, from csx and from jpmorgan. yes, jpmorgan is reporting after the bell this quarter, not per tradition. we will get you ready for those numbers coming up in the next hour. >> i don't care why they are doing it, just keep doing it,