>> are you surprised the market reactsed the way they did yesterday? >> i don't think. so i think, you know, let's be clear. the moments right after big news events could be avoided. >> good stuff. we'll see you on a friday. i look forward to. that "power lunch" begins now. >> thank you very much. i'm tyler mathisen. welcome to "power lunch." it may be the biggest deal ever, pfizer and allergan in merger talks. >> china band onning the one child policy. how this could mean to their economic growth. >> and two leading indicators rebounded r they signalling a rally ahead for the market? we're already in a rally. >> we're in rally mode. october has been a rally month.

>> first though, we want to go to courtney reagan with a news alert. >> walmart releasing early holiday season of the still very tight lipped on anything black friday related. the goal is to make holiday shopping as easy as possible. mobile will be a big focus. the retailer rolling back thousands of prices for the season. also adding mobile check in to speed up the pickup in store, adding wish list to the apps. 75%st online traffic will come from mobile this holiday season. up from 70% last year. now chief myrrh chant says wallmart will not beat on price. they will lower prices if and whether necessary. he also says walmart's instock levels are currently at the best point he's seen all year. aisles are getting decluttered. the retailer bought deep into what he anticipates will be popular items. he called out technology as well as license star wars minions and

paw patrol merchandise. pictures with santa at manufacture the stores come december. back to you. >> thank you very much, courtney. now we talk about the blockbuster deal developing in health care. pfizer and allergan confirming they are in merger talks. we've seen reaction. looking at what a deal could mean for both cops, investors and maybe governments, too. >> absolutely. it's been discuss ford a long time. pfizer and allergan confirming they're in friendly discussions about a possible combination. this would be the biggest pharma deal ever at $150 billion. analysts say they expect fiz woehr have to offer $350 to $400 a share goat it done. what would allergan bring to fizer? the ability to invert, moving the corporate headquarters to ire land and lowering the tax rate. second, the option to tap into the overseas cash. pfizer had $30 billion in quaca in qti-2 and it could streng tht

business for the the split of the company in a couple years. it would get the $2 billion a year botox and medicines for alzheimer's and more. this is already remarkable because of the man at the head of allergan. take a look at his career. 2013, ceo of bausch & lomb. he sold the company for $9 billion. later that year he took the helm of forest labs. then he sells forest to activist for $25 billion. then he takes the ceo role and november of last year buys allergan for $66 billion out from under allergan. a deal expected to close in the first quarter. all told, $140 billion in deal activity for brent saunders since 2013. if he sells allergan to pfizer, that brings the total to $250 billion, closer to $300 billion in deals. some analysts suggested he could be next in line for the ceo job

at pfizer. back to you. >> thank you very much. >> big news out of china that could have a major impact on that country's growth after 35 years, the country has abandoned the one child policy. now just for the record, check out shares of meade johnson. they get much of the sales from china. we'll take a look. there it is. it's there somewhere. michelle has been looking into this change of policy. how big a deal is this in terms of economic growth and how soon? >> they instituted this policy in the 70s out of fear they couldn't feed everyone. the reason for the reversal of the policy today is society is aging rapidly. the working age population is getting smaller each year. as a result, china has lost that cheap labor demographic edge which brought them so much

success over the last 30 years. economists i spoke with say this is too little, too late to turn the tide of that punishing trend. pretty obvious, large numbers of chinese couples start having more babies now. it's another 20 years before the kids grow up and become part of the labor force. economists don't think large numbers of chinese couples will have more children. the policy, they say, is no longer the reason couples have only one child. china's become a middle kmk country. raising a child expensive. getting them into the best schools in china incredibly competitive. there have been a number of studies that show if the policy did not exist, the number of children per couple would increase by only .3, going from 1.7 children per couple to 2 per couple. >> so that last number begs the question. if there's a one child per couple policy, why is the number 1.7 children? >> there are exceptions through

the year. rural families if, your first child was a girl, you could have a second. minorities could have more children. tibet, you can have three children. you can apply to have more children. so there are exceptions which is the reason why it's above 1. >> in any event this is going to take years to demographically trickle through the system. >> right. >> it may help the company like meade because they sell the farm la right away. >> it is 1.4 billion people. >> sarah? >> all right. we're zeroing in on a few groups. transports and small caps. they've been rallying lately after being battered over the past few months. are they leading indicators for rebound? dominick chu? >> there's a bull and bear case just like will tl is for everything. let's lay it out. over the past week, what you saw there was at least some performance that showed underperformance by the small caps, the russell 2,000, that's the orange line. now in the last couple days, you saw a rebound.

if you look on a more year to date basis, can you see this gap of performance is what traders are worried b small caps underperforming. they signal more weakness ahead. the bullish case here is that perhaps things are turning, especially for the transportation stocks. yes, they are still languishing, but they're starting to turn higher. the gap is still huge. the bullish case is if they do turn, we can see things moving along and we might see validation overall. can y you can see how much they lagged. the bullish case centers around the u.s. dollar. we talk about the currency impact. the smaller companies in the u.s. have less exposure to foreign currency. maybe that is the bullish case there. they also note that small cap underperformance has been so exacerbated that he was due for a bounce. we'll wait to see what happens the last to months of the year. something to pay attention to. maybe a change in trend.

>> transports more internationally exposed. >> the option is n it is $29 billion of seven year notes. the fwoid cover ratio which is measure of demand was stronger than the average. so it's pretty strong demand for this particular showing at 2.55%. the average for the prior ten options coming in at 2.44%. so we outperformed on the bid to cover ratio. the indirects and directs, indirects bids came in at 62.3%. that is also higher than the average. and the direct bids were 14% versus an 11.5% recent average. so all in all, on almost every measure it was stronger than expected. ty, back to you. >> thank you. new data out showing the u.s. economy cooled in the third quarter. this comes on the fed which heelsst fed meeting which left the door open for a december rate hike.

they spoke pointedly about that idea. since september, the economic data that the gdp, weakening, labor, weakening. >> new home sales. >> new home sales weakening. >> inflation. >> why other than that the fed put a stake in the ground saying we think conditions will be correct to raise rates some time this year, why other than that would they raise rates now? >> i don't know. to me this is cognitive dissidents. you had people who rarely speak on policy say it's too early. you had the stake in the ground at a time when our economic data are weakening. markets have stabilized. >> yes, and china stabilized. >> from a market perspective as does the rest of the world. but if you look at the economic numbers, interesting story yesterday suggesting that chinese steel prices are falling so fast they can't cut production fast enough to stop prices from falling. that tells you there is a glut

of everything. you look at commodities and glut of oil and natural gas, glut of raw materials, it's a cause and effect of economic weakness that we see around the world. so i'm hard pressed to understand why after having passed yesterday that fed would move in december. >> and the rest of the world basically being very -- not that a quarter point hike is not accommodative, but it is moving in the opposite direction. >> it's a quarter off zero. >> they're going to ease further in december. so will the bank of japan. there are eight countries in the world with negative interest rates right now. 80 periodsst world is at zero f you don't want a strong dollar, why you would raise rates? >> yeah. >> because i will the boost the dollar. and exacerbates the emerging market problems we see. >> you write -- make an argument there is a possibility that if the fed does raise rates in

december, that some of the lessons from the 30 aers will begin to come home to roost and then ultimately the fed will have to reverse course and cut. >> i think that's what's going to happen. it's interesting the richmond federal reserve a couple days ago put out a piece talking in depth about the 1930s policy errors where the fed in 1932 and 1937 raised rates prematurely. we're not in a recession. a quarter point rate hike may not have that effect. one thing i noticed recently is credit spreads are widening out in certain sectors of the credit market to an extent that a rate hike from the fed could exacerbate that trend. just what you don't need at this point in the cycle. if manufacturing is teetering, consumers are still doing fine. the rest of the world easing, i think it's a risky proposition to go. we'll wait and see. >> thank you very much. and you can see ron's entire piece on -- at

powerlunch.cnbc.com. >> marco rubio is seen one of the big winners in the presidential debate. so what does governor jeb bush need to do next? mom and pop funding for startups b to become reality. but it comes with a lot of red flags for individual investors. you're watching cnbc, first in bid worldwide.

welcome back to "power lunch." deutsche bank reporting a $6.6 billion loss cutting 35,000 jobs. the bank also planning to suspend its dividend. marathon petroleum slashing the quarterly payout and mgm resorts beating estimates. they're planning on spinning off tens of the properties into real estate investment trust. >> regional banks a focus here because of the fed. also first niagra trading lower. currently down by 2%. according to dow jones industrial average citing sources, key corps is in advance talks to buy first niagra. the deal could be announced tomorrow. fit goes through, it would be one of the biggest bank tieupsst year and would solidify this year as the biggest for bank deals. key corp trading down on the news.

certainly the regional banks are a focus in today's trade. >> thank you very much. the republican presidential candidates squared off in a heated debate last night on cnbc discussing how to solve some of the nation's pressing economic issues. take a listen to what florida senator marco rubio said about the national debt. >> we have a $19 trillion bipartisan debt and it continues to grow as we borrow money from companies that -- from countries that do not like us, to pay for government we cannot afford. the time to act is now. the time to turn the page is now. if we don't act now, we're going to be the first generation in american history that leaves our children worse off than ourselves. >> joining us from capitol hill, republican congressman from texas and jim hims, a democrat from connecticut. they both sit on the house financial services committee. welcome, gentlemen. congressman, a lot of people believe that mr. rubio, senator rubio had the best performance last night. what do you think? >> i think he had a good

performance. i think withere were other membs with a good performance. he laid out an economic plan to bring america back to a nation of prosperity. that is very muted growth. so what we need to hear and did hear from some candidates last night is their ideas about moving america forward, particularly when it came to taxes and spending. >> congressman, do you have a perspective? not your party, obviously. but do you have a perspective on the debate last night? >> i was a little stunned by it. in as much as the two frontrunners, of course mr. trump and dr. carson, you know mr. trump did his usual thing of i'm richer and better and bigger than you are. i'm not sure what dr. carson had to say. the more real candidates were just purveying facts that were wrong. carly fiorina saying 92% of job losses tend of obama's first term were in women. that is an interesting

statistic. women had actually added jobs. i was puzzled by what it was we were doing. >> let's move on to two other top thakz aics that are front a center. paul ryan of wisconsin, generally liked by people in the more conservative sides of the gop and by the moderates. how do you think he will run the hill differently than mr. boehner? >> congratulations to paul. he's going to make a great speaker. he has a background in budget. he's got a background in taxes for being the chairman of the ways and means committee. but also he's liked on both sif sides of the aisle. he understands this is a new start. we need to wipe the slate clean. sow talked more about getting involvement from all of the members and not just a few members. i think that should be a message that would resonate. >> he voted for the budgets deal. you voted against it does that

unearth the fissure between certain factions of your caucus and that is there? >> not really. what we have in america is a spending problem. we're collecting plenty of the american taxpayers hard earned money. we keep spending money that we don't have. i think what a lot of members, including myself are frustrated that we keep kicking the can down the road. this bill we voted for yesterday, busted the spending caps. pushed the debt ceiling vote to another 18 months. and, you know, as long as we keep kicking the can down the road, we're going to keep having the deficits. it's kind of strange that we are celebrating the fact that we're only going to have half a trillion dollar deficit this year. that's down from $1.1 trillion deficit that we're running in the past. i think what you saw the vote yesterday is bipartisan in the sense that people want to move forward. also, a number of people saying we have to stop kicking the can down the road. >> do you see it that way?

do you see it ads kicking the cn down the road or bipartisan agreement that takes the issues off the table in the immediate time frame? >> it is something the american people have been hungry for which is bipartisan cooperation. you drew a strong number of democrats and republicans to actually get something done. by the way, that is the only way things have gotten done in the last five years. this is sort of a message to now speaker ryan. you know, things get done when you're willing to go bipartisan. this was a deal that, look, it took the debt ceiling off the table. the possibility we would go to the brink of threatening default of our debt came off table. that is a good thing. we do have a deficit. we have too much debt. we have to remember here, of course, you know, my republican friends demanding more spending for defense that they didn't want on the nondefense side. the democrats and the president when he vetoed the defense bill said, hey, if we're going to spend a dollar more on defense like you want, we're going to

spend a dollar on our schools, on our bridges and systems of education. look, that's called governing and promise and the way you get thing donz in washington. >> gentlemen, thank you very much. we appreciate it. sarah? >> this could be a game changer for investing. regulators getting ready to unveil new rules that are good for start-ups looking for cash but raising serious questions about whether it's good for the average investor. you'll need to hear this next interview on "power lunch."

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regulators are set to unveil new rules to allow anyone to invest in crowd funding startups. not only accredited individuals. this will have major ramifications. bob pisani on the new york stock exchange floor to explain. >> mom and pop crowd funding for startups. it's about to become a reality. think of it as a kick starter for nonpublic companies. joining us to discuss what this means for you, the ceo of crowdmedic. this sounds exciting. crowd funding for the masses. what it is all about? how do do you this? >> so up until this point, bob, only accredited investors could invest in private companies. in kick start, wount get any equity for it. hopefully tomorrow and the fcc approves title three of the act, every american will be on the

company. >> so it's $200,000 a year in income. you had to have -- and now that's all going away. how do you get into this? how do you invest in these small start-up companies? there's these crowd funding portals, right? >> that's right. so in september of 2013, the sec implemented title two of the jobs act that allowed for companies to advertise their raises. so for two years we had very successful funding portals who have brokered dealers behind them allowing companies to raise their private capital. tomorrow hopefully they'll be expanding that to everybody. >> o so this is like kick start for private companies. but in kick starter, you don't own any equity. now you're actually owning a piece of the company, right? >> that's right. that's right. you can support a company, support the product and then get the upside zbluchlt get some shares. are the shares transferrable? at all? can you actually sell these to somebody else? >> yes. that's the other very interesting thing about title

three of the jobs act f you -- after holding the shares for one year, you'll be able to transfer them without restriction to someone else. so an exchange could be supporting these private funds. >> it has a crowd funding index site. crowd finance. look at all the companies up. wearable browning protection devices, people analyze your golf swing. all sorts of companies. check that site out. whether is this vote going to be? when will it come into effect? when can you invest in the companies? >> 10:00 a.m. tomorrow. the votes supposed to happen. we expect the rules to be implemented by february of 16. >> does the sec have enough protection? >> yes. the broker dealers are behind. this they watched for two years. they already said they haven't seen any instances of fraud. so we expect the best for tomorrow. >> going to be a big vote. 10:00 a.m. thank you very much. we'll let you know as soon as that passes. back to you. >> all right. robert, thank you very much.

>> the official ratings are out for the republican debate on. this cnbc last night. they pulled in an average of 14 million viewers for the third gop debate which makes it cnbc's most watched telecast in network history in all key demographics including $3.9 million adults and 3.4 million in 18 to 49-year-old demographic. this underscores the massive interest in this election cycle. for the first two debates, fox and cnn had ratings of 24 million and 23 millions viewers respectively. last night's debate was up against game two of the world series. viewership last night also jumped dramatically from the debate that cnbc hosted during the last presidential campaign cycle. that one drew just 3.1 million viewers. guys, back to you. >> julia, thank you. want to show what you is happening in the bond market. the day after the fed, day of the disappointing gdp report,

treasury prices are selling off. and yields are higher. red arrows indicate the prices. the ten year treasury yield is trading near a one month high 216. and that is after the federal reserve explicitly, more explicitly than last time put december on the table for potential interest rate hike. that's your bond report in the absence -- >> that's quite a move b 2%. just a hair above it. less than a week or so ago. >> to earnings out today. conocophillips, mastercard among them. there you see it. what the laters numbers are revealing. starbucks comes out after the fwoel day. we'll tell what you investors need to know. and shares of marriott lower on the back of its latest earnings. the company's siceo will join u to talk about his current plans. we'll be right back.

here's your update for this

hour. amateur posted to day shows syrian government helicopters dropping bombs on a damascus suburb causing huge explosions. a man on the video says the bombings killed an entire family but nbc news cannot verify the authenticity of that video. a dynamic international airways plane catching fire while taxiing for departure from ft. lauderdale hollywood international airport. fuel was leaking from the aircraft before the fire started. passengers were evacuated via slides on to the taxiway. a new report suggests black and white women are now being diagnosed with breast cancer at the same rate. black women had dying at a much higher rate. the lead author of the report from the american cancer society calling that a terrible situation for black women. and new york governor andrew cuomo has canceled a $5500 a ticket world series fund-raiser following criticism he was exploiting the pastime to raise

campaign cash from wealthy insiders. the events scheduled at citi field in new york were nicks to make more tickets available for fans. that is the update this hour. back to you. >> the mets have their work cut out for them now. >> they do. >> they're playing a very good kansas city team. all right, folks. big day of earnings to take you through. morgan brennan on conocophillips and mastercard and teva. >> all right. let's talk oil. conocophillips missing expectations posting a wider than expected loss. given the energy market and executives expectations that crude will stay low and volatile for some time, conoco again slashing capital expenditures to $10.2 billion. now that's down from 11.abillion at the start of the year. also, cutting operating costs. however, crude production was more than expected for the quarter. that represents a 4% increase in continuing operations versus a year ago. the ceo, conoco's on track to

deliver seven more projects and exceed 2015 volume targets. the company is remaining committed to their dividend. that's what we heard from other oil majors. they're abandoning projects and reporting losses. but for now they're maintaining in some cases even raising their dividends and payouts. >> a 5% yield is a nice return on capital. my gosh. >> mastercard's earnings beat forecasts once you take out special items. spending $1.1 trillion in the last quarter. that is up 13.4% last year. on the call, the ceo saying that global economy remains uncertain given china's slowing growth. and questions about the timing of u.s. interest rates. both of those, of course, causing uncertainty. they did note that wage and job growth in the u.s. continues though at a slower pace. he said europe is improving. something we heard from ge as well. lastly, commenting on the

acquisition of visa. he said accident see an immediate impact on his firm's global dominance though mastercard's unified position will no longer be unique if that deal goes through. mastercard has been preparing. the people have been working on that because it could, of course, impact specifically their european business. >> mary, thank you very much. >> teva had a beat on the top and bottom lines. of course a lot of questions about what's going to happen with the $40 billion purchase of allergan's generics business given the news about allergan and pfizer today. they say that's going to go forward. so people encouraged by. that second question about future m & a. teva is looking at smaller deals and has capacity of about $5 billion for potential deals in the future. finally, a lot of questions about teva's biggest drug for multiple sclerosis. it is facing generic competition. a lot of encouraging signs about being able to keep patient os o

that drug. >> let's have a look at the earning's scorecard. 60% of the s&p 500 firms reported thus far, 73% are above estimates. 7% hit them right on the number and 20% missed estimates. and that does it for the earnings squad. >> we're going to keep talking about earnings. shares of mate yacht are under pressure despite beating profit estimates. revenue growth was weaker than expected. the hotel owner offering soft guidance. so what is ahead for marriott and the entire industry? simon hobbs with marriott's ceo in an exclusive. >> let's take you away. arnie, good to see you again. >> simon, how are you? >> there you are. how would you sum up the quarter? >> i think it was a solid quarter. i don't think it was a spectacular quarter. i think if folks were looking for this quarter to come out and show the u.s. economy was growing at 4% or 5%, they would

have been disappointed. maybe there is that voice out there. it was a very steady quarter. it showed great unit growth for us. so we feel it confirms the recovery we had. >> in terms of pipelines, you and hilton are up there. the atmosphere, the feeling about the industry has been horrible. i think the own stock dropped 20%. certainly starwood lost a quarter of the stock market value. a lot of people -- you had it on the conference call again this morning. this question as to whether the cycle is turning finally. the stock market is getting ahead of that. you can't totally reassure people, can you? >> well, that's right. to some extent, there is enough anxiety in the market you have to prove it. neighbor is a q-4 example.

i think it's important to keep in mind this. when we started 2015, we knew that the third quarter would be relatively weak. why we had a late labor day. we had the jewish holidays moving from october into september. hurting q-3 at the benefit of q-4. so we warn people of that. even though it was coming in, q-3, you have this anxiety which started in china, moved around the world, caused lots of people to say is the economy slowing? so even though this was predicted, and we think is explained by the calendar and comparison issues, you have this anxiety in the market which is a real thing. we got to work our way through it. >> okay. inevitably we must talk about what is happening with starwood. i'm not sure if you were ever in the game to take that company over. it's been up for sale around six months. how do you feel that hyatt might take it over? the three chinese players might

move in? at least one of them if beijing can choose which one. where is the strategic opportunity for you in that? >> i'm not going to get into this, simon. it shouldn't surprise you. it sort of feels like we're trying to gin up a conversation around starwood again. around six months ago when the ceo left, there was all sorts of speculation and conversation about who would do it? would you be interested? you would not? by and large, nothing happened and that conversation all died down and there's been nothing until this week. maybe it's because starwood reported. maybe it's because it's been great news. i don't know. seems like there is an effort to try to get the story started again. we don't have any particular insight that we can offer. >> i think that's vee yacia the marketing brand and command and control. how is that working for you?

what difference is it making for the business? those guys we can see working away behind you? >> well, we have dramatically stepped up what we're doing in social media and the way we're going about marketing. i think historically the company has used its marriott rewards program as the primary marketing tool. we, of course, have done some advertising. but as we brought in teams of folks who really understand this world and are teaching me and the others that are here, what we're hearing is twofold. we can't force people to watch our content anymore. so we need to have content which is interesting enough so people reach out and grab it from us and say i want to watch that. and that's why we've done two short movies, two bellmen and french kiss, both five to six million views. great little hits. we have a lot of other social media stuff that's going on. some of the pieces like the movies we call hero pieces, others are much smaller than that.

for example, they were tweeting earnings this morning. sounds like sort of odd thing to me. but 8.5 million hits. because they're in this world. we think it gets us into the conversation and gets our brand where -- it's both exciting and fun and pays good returns. >> it's a busy day for you. we appreciate you sparing the time, as always in, the wake of earnings there. an exclusive interview. >> thank you. >> sarah, back to you. >> and you're not so bad your receive, simon. stocks modestly lower after new reading on gdp this morning. showed the economy slowed in the third quarter. but what are earnings actually telling us? and what do they mean for the markets? with me here, senior portfolio manager at morgan stanley. we also have going to talk to andrew. you were on during the september swoon saying it's overdone. you're buying. you've been rewarded with this october rally. what do do you next with all of these earnings and weakish economic reports?

>> i think the overriding story is the economy is in a slow growth environment. so when people get too bearish, i step up and say the funneled. -- fundamentals are not validated. i think we had a very big rally. i think you have to be short term cautious. the story is the fundamentals of the companies haven't validated the weakness. that is important to remember. >> really? we're not seeing much revenue growth. weaker guidance. >> sure. that's why the market is flat this year. it's not up a lot. >> true. >> but it's not -- it was down at one point. it dropped 12%. we just didn't see enough weakness in corporate fundamenta fundamentals. ultimately they regressed. i think that's the message we learned. >> the other overarching theme is the federal reserve. they shift third view on the timing for when the federal reserve is going tookt. increasing the probability of

december. does that change the view on the equity market as well? >> no. i think that the fed is going to do what the fed is going to do. and unfortunately, the fed really doesn't have that much power to do much. i mean they can potentially slow the economy, i suppose, if they raise rates. but they can't do much beyond arm flapping to get the economy moving again. so, you know this whole notion of don't fight the fed was a smart thing to do when the fed had -- was armed with, you know, 14% interest rates and a debt hungry american public. now that interest rates are zero and americans are not really keen to take on debt, monetary policy just doesn't have the oomph it had before. my observation to andrew's comments i think i would agree that balance sheets are very strong. income statements are really weak. and what we're seeing now is companies using their balance sheets to supplement to enhance

their income statements. i don't think that's going to last for very long. >> one place we are seeing strength is deals. gentlemen, thank you very much for talking about the two big themes, earnings and federal reserve. go to our website right now to see why andrew says 2016 will be an even better year for earnings. i guess he would say the market as well on that thesis. >> new fears about luxury spending. are the wealthy pulling back? what might it mean for the economy? plus -- >> the city and today's power house was once named new amsterdam. it was our nation's capital from 1785 to 1790. and 40 million tourists visit every year. can you name that city?

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we're not going to be right in new york city proper. we're going to head out to my wife's territory, long island. and with us to day is mickey conlan. let's check out some long island statistics. median sales price $390,000. properties generally on the market for about 93 days. our first listing is at 23 ashley drive. they're asking $898,000. taxes $19,000 a year. four beds, three baths, 3 1/2 bathrooms. 4,000 square feet of living space. this is a big house. st. james is out a ways, isn't it? >> not nearly as far as the hamptons. people are tired of sitting in traffic. this is 50 mile east of new york city. long island has a natural relationship with manhattan, especially when you talk about the luxury market. manhattan an then in -- you have

the hamptons. and in between, you have what? so this is -- when you talk about the long island luxury market, there are tremendous pockets of opportunity. this house in particular at well below a million dollars is on an acre of land. it's a big house. it's been renovated. and though it's not on the water, it is within five minutes drive to the water. >> so it's more on the north shore, right? >> this is north shore. from a real estate perspective, when we look at long island, long island right now is booming. the sleeping giant is awake. the third quarter reports show that sales are better than they've been in over a decade. >> okay. let's move on to the second with that as a background, our second listing is 61 harbor road. $2.8 million. taxes of about 26,0$26,000. seven beds, 4 1/2 beds. this is head of harbor new york, locate me here first, mickey. >> this is st. james is a

hamlet. there are two incorporated village as tachd. one is head of the harbor. and the other is one we'll take a look at in a minute. this house is 5 1/2 acres, on the water, it is spectacular. it looks like it just left out of a design magazine. this is my personal favorite. >> five acres of land. that is a lot. >> $4.28 million waterfront. when you talk about luxury sales on long island, we're bullish on the north shore. >> look at. that i agree with you, by the way, on. that i think the north shore is really, as you say, the sleeping giant. let's move on to number three. the power house of the week weeshgs stepping up here, 468 river road, $4.9 million, taxes are $38,000 annually. four bedrooms, 4 1/2 baths, 6500 square feet of living space. what a beautiful piece of property that looks like. >> it's a great house. it's only seven years old. it was really carefully designed to look like it's been there for 200 years. this property is on 8 acres.

river front. extraordinary value. under $5 million. you couldn't touch something like this out east. >> eight acres? that is a big piece of land. that is a beautiful place. mickey, thank you for taking us on this tour. this is wonderful stuff we're looking at. mickey conlan. >> thank you so much. >> we should go in together on one. >> oh, yeah. >> big jump in home flipping. where investors are seeing demand and opportunity. plus, new fears about luxury spending. where in the world people are spending on luxury and what they're buying when "power lunch" comes back.

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walmart plans to have price roll backs and will reduce price it's necessary to compete. heavy demand for the seven year note sale. pfizer and allergan confirmed they're in talks to merge number official agreement has been reached f the two combine, this will be the biggest pharma deal worth potentially $150 billion. luxury retail has been on fire over past few years. but there say new report out that is raising questions about

the health of high end spending. robe robert? >> swiss watches lows losing a little luster. cars and wine are are still big with the rich. we'll take a look at the changing luxury landscape and why the u.s. may be the new china. that's coming right up. proud of you, son. ge! a manufacturer. well that's why i dug this out for you. it's your grandpappy's hammer and he would have wanted you to have it. it meant a lot to him... yes, ge makes powerful machines. but i'll be writing the code that will allow those machines to share information with each other. i'll be changing the way the world works. (interrupting) you can't pick it up, can you? go ahead. he can't lift the hammer. it's okay though! you're going to change the world.

has a big rule change by china changed the investing game for decades to come? we're going to tell you what the country did and what it means. plus, it has been a tough year for many fund managers. we got a guy whose fund is crushing it. he is here with some of his favorite stocks right now. and, yet, another sign of the housing bubble may be back. is history repeating itself? well, we're not going to do it. we're going to keep it here for another interesting hour straight ahead. we'll talk about home flippers. >> all right, brian. looking forward it to. new report on the health of the luxury market. where people are spending their money and exactly what they're buying. robert frank has the details. rob snert. >> luxury spepding on the whole continue to grow 5% year over year to $1 trillion. that is the slowest growth in years as weakness in china, russia and other markets start

to hit consumers. slow growth is the new normal for luxury and navigating through volatile markets will be the biggest challenge that these companies that serve the wealthy will take. sales of personal luxury goods, that's like watches, handbags, luxury jewelry, that grew only 1% in constant currency terms down from 3% growth last year. asia had the worst performance on record with china down 2%. hong kong down 25%. russia the middle east and latin america falling with brazil down sharply. the u.s. is a bright spot with sales in dollar terms up 18%. chinese tourists continue to spend overseas specially in europe where the lower euro created barringians for the chinese shoppers. what are they buying? cars are the top selling luxury good followed by travel and food and then fine art as number three. the big toys like yachts and private jets that, is stagnant. sales are strong for other personal luxury goods, you have

congac down, the spirit segment is down. chinese luxury spending is outside of china. so this report highlights what they call the borderless consumer. you never know where your consumer is going to be fine. >> is the wine and spirit category by collectors or people to consume? >> the wine is strong. but the spirit segment was down. that is largely the chinese. that was a big congac market. it is a bifurcated spirits movement. people are still drinking but mostly wine. >> this is all driven by currencies, right? this is benefit of a stronger dollar. buying luxury goods from europe. >> all right. thank you very much. appreciate it. and that, folks, will do it for the first hour. always great to be with you. >> thanks for having me. >> they let us stand next to one another. brian, take it away. >> all right. thank you very much. it is almost 2:00 on wall street. about noon now n. ain albuquerq

new mexico. we may have one of the biggest pharmaceutical deals of all time on our hands. melissa lee is back at the nasdaq. we'll have more on farm yashgs mo -- pharma and starbucks and a gold mining ceo on the way. we have a sea change in china. that country set to end the more than 35-year-old one child per family rule. that means millions more babies and billions more in stuff being sold to growing families. we have a look at the stock reaction to this story. >> investors are seeing this move by chinese policymakers as a positive for companies of specialized and baby food and products. take danon, for example, one of the largest manufacturers of baby food and formula milk. early life nutrition division makes up 20% of its revenues. other names that are higher on this news including kimberly clark, procter & gamble, meade nutrition and abbott labs. china representing about 10% of

the global nutrition sales. stocks are higher by 2% to 4%. china's plan to band on the one child policy though shouldn't come as a big surprise given the demographic challenges facing the country which includes an aging population and a slowing per fertility rate. experts say this policy should have been scrapped much earlier. others like those at jp morgan saying it's going to take a while to see the economic impact to have day's announcement and which part of the population may grow, i.e. versus urban or low income brackets, nonetheless, all in all, seen as a step in the right direction. >> thank you. certainly this move could have a huge long term impact on china. let's talk about what that is and what it may mean for your money. joel wells, long time bull on the chinese market. joel, i was -- when this news came out this morning, i'm thinking, wow, not just diapers and baby food and lumber and

building materials. is this a real sea change for the country? >> i think what the previous segment highlighted is a real move you're going to see in china short term. the other short term movements are really small at this time. >> babies have yet to be born. >> the babies have yet to be born. so, yes, the immediate impact is going to be on. but what is happening? how is consumption going to change just for that one segment of demographics? we're concerned about the consumption story that could have an impact going on 10, 20 years from now. >> tell us what that is. >> the impact is the consumer and what china is trying to do is diversify from an investment driven economy. they had hit or misses along the way. we think they are clearly on the right path. but whether or not they get there today, tomorrow, the market doesn't know. that's something that has caused uncertainty. >> are you still actively investing in china? >> we are. i think for a number of reasons that go beyond just what

happened with the -- with was whapg on the one child policy. >> this med line wheadline was you. it's not bade thing? >> no, it's another data point that goes into the overall analysis for a long term investment horizon. we think what they're doing on the fiscal side are far more interesting and make a much more -- a better investment case. >> basically yushgs saying that longer term you that i china is allowing a new generation of consumers to be born and then created. i'm also curious because the chinese family as you know spends a great deal of their savings per child on education. we're seeing stocks like new education oriental up in today's session. their english speaking schools. they teach english to the masses. how are you looking at how consumption will be parsed, whether it be on nike shoes or education? >> you're going to see consumption broadly impacted by.

this even though the one child policy is not an immediate game changer, you're going to see anywhere in the vicinity of 6 million to 7 million more babies born in the next year or two. and with that, you're going to see consumption across the spectrum being impacted. >> joel, we're going to leave it. there we appreciate your view on china. certainly an interesting headline. >> thank you. >> yesterday the federal reserve told us that unless things really stall, a rate hike in december is a real possibility. so does today's print of just 1.5% third quarter gdp growth give us that stall that could change the fed's thinking? senior economic's reporter steve liesman joining us now. what say you? >> i don't think so. i think the fed is going to look through this. take a look at the details of the gdp and what you find is that, yeah, that number, 1.5%, was a step down from the 3.9% we did in the second quarter. but it was all inventories tachlt a look at the consumer or

what they call final domestic demand. 2.9%. that is including the consumer, equipment investment spending and housing investment. those are good numbers there. you see the inventory drag. that is percentage taken off. how are we doing? i don't think we'll have a 1.4% drag next quarter. we're looking at a 2% thing. i want you to do a little math with me here. let's look at all three quarters we have so far this year. first one was the lame 06 in the first quarter. second one, the big bounce back in the second quarter. third quarter, 1.a. what do you get? a 2% economy. i think that's what the fed is more or less looking for, brian, for rate hike in december. >> how long has inventory been an issue? we talked about inventories much of the year? >> we talked about inventories a lot. but not everybody paid attention. it's an issue this year because there have been swings in it. you had this historic second

quarter, first quarter rise in inventories. it was a lot because of the ports. >> see, that's exactly what i'm trying to get at. i have friends and contacts that run retail stores, et cetera. we had the port strike. we didn't have a bunch of stuff. everybody ordered then a bunch of stuff. so they get shipped all this stuff at one time. i just wonder -- inventory drag could be a real problem. i do wonder if there's some huge lag from that that is maybe artificially skewing the numbers down because of that port strike. >> i think we have that big inventory build and then big inventory draw down. here's the thing, brian. it is something that you want to watch. it's probably the least sexy thing about business we can say on television is the word inventory. but folks at home, the inventories are often what cause recessions. when too much stuff gets on the shelf, then the retailers have to sell them off. stops products way up the line.

getting inventories out of whack is a lot of the reason why we -- >> inventories can lead to deflation, can they not? >> exactly. if they're too high. then what's going on in china? are things being ordered there or not? so just not to belabor the point, but a lot of what happened is inventory swing. i believe the federal reserve will look to that to the final domestic demand figure i gave you. things are not sing, brian. it's 3% economy. i would be happier if that were the case. it seems clear that 2% is that -- i say advisedly, magic number. >> i wonder if the fed has an inventory drag of its own? too many words are floating out. there either way, are you surprise now that the markets are -- because these are things that wall street likes to bet on and place odds on, predicting about a 52% chance of a rate hike in december? >> i think that's exact lit number the federal reserve wants. if you remember, brian, on this show during this week and last week, we started talking about this idea that there could be this hawkish part of the

statement that the fed would use to cling back or get back or claw back the flexibility to go in december. it's not a done deal. i believe the debate right now, brian, should be about what the fed needs in these numbers. i think 2% growth number, stable inflation, and that job gain number of 150,000, that's probably double what is needed to lower the unemployment rate. and then you don't want that kind of volatility we've had in the global economy. so when i take a look at what it would take for the fed now, there's a lot of debate in this. there are people that say more or less we have richard bernstein on this morning on "squawk box" saying the fed is not going to hike into a profits recession which we're having now. i think that's a valid point. but that's where the debate needs to be. what kind of job numbers? what kind of economy does the fed need? then i think there is this other idea we want to layer in there, is the fed's fault position now to hike? i think it may well be. >> you have too much stuff in the store room. >> too much stuff on the shelves.

>> thank you, steve. >> so much more to do this hour including the real story on oil supplies, what you need to know right now. plus, starbucks reports after the bell. is this hot stock still worth your money? and one of america's top rated fund managers is here with the stocks he loves right now. stick around. [female announcer] during mattress price wars at sleep train,

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above estimates. half the company's revenue originates outside the u.s. the results were hurt by a strong u.s. dollar. that stock is down 2%. and buffalo wild wings, 18% after missing on the top and bottom line. the restaurant chain warning of single digit earnings growth for the full year compared to a consensus estimate of 13% growth. that stock down 19%. mid cap 400 index is down fractionally this year. but the hennessy corner stone mid cap 30 mutual fund is one of the top performing funds in the class. it is up a couple percent. weeb happy to welcome in the co-fund manager. you have done well this year. congratulations. you made smart investing decisions. is there one stock that yurt most proud of buying recently? >> you know what? the stocks that we held, we tried to hold at least a year. so all of the positions that we have have been in there for some time. but i really have always liked jetblue. i continue to like jetblue.

i think that recent pullback was a great buying opportunity. and that's a stock that we would be looking to hold on to. >> as of the last filing, on your website i looked and i notice you also had a big stake in skechers. they had a big drob tp the othe day. it's not a name you brought to us today to talk about. have you sold your skechers position? >> it's a little expensive. we use a price to sales metric. it has to be below 1.5. it still a little rich in our valuation. so that is a stock that we're waiting for an additional pullback to look at. >> athletic footwear theme. i want to talk about foot locker. recently the stock has had some trouble. you take a look at nike shares. that stock has been on fire. theoretically, what is happening in nike should benefit foot locker. is there a concern that as nike and some of the other brands engage more in direct consumer marketing, encouraging consumers to buy from them, they could be

losing out on traffic? >> well, foot locker gets a small portion of the business from the direct to consumer. i think that the foot locker should trade kind of in line what w. what nike does. they get 75% of the apparel from nike. and, you know, i think that it basically fell in line, you know, with skechers and some other underarmor and stuff like. that i think footlocker is a great company. going forward, i look for it to continue to do really well in the same-store sales and i think right here is a great value opportunity considering how well nike is doing. >> i don't think any stock of this size is occupied more real estate on financial news over the last two years than jcpenney. it has coverage because of the apple connection are ron johnson. he's out, the stock tanked then it soared and tanked again. you own it. you like it. make the case for jcpenney. >> okay. coming into fourth quarter weeshgs looking for an increase in consumer discretionary

spending. christmas season is going to be probably a pretty decent one. look at who consumers go to for value kind of oriented goods, for jewelry, for sephora and perfume. i think jcpenney is a winner. people are waiting for the other shoe to drop and think this is the jcpenney of years ago. it's not. it will take time to build that brand back to where it was. but i think they're doing a great job doing it and the stock should continue to do well. >> i don't know if you use the phrase shoe to drop because you talked about footlocker or skechers. brian peery, thank you very much. do pr do appreciate it. >> pfizer and allergan could be forming one of the biggest drug makers in the world. is even more consolidation in health care on the way? if so, how do you make money off it? we're talking about just that with a health care fund manager next on cnbc.

allergan and fiz rer in talks to merge and create the world's largest pharma company. connor brown is with thornburgh. he sees better valuation, more deals ahead in the health care sector in part driven by the

election cycle. connor, great to you have on "power lunch." welcome. >> thanks. >> what does the election psych will have to do with what's going on in the drug industry in term of mergers? >> we've seen not so much after last night which was a republican debate but more around the democrats and their messages. we've seen lots of negative sent. on pricing for drugs and biotechnology products. that's created some pressure in the space. lower valuations. we think that that can help lead to some transactions. >> you think just because the prices are depressed that, therefore, that will spur m & a? >> yeah. i think in particular when, you know, we think that most management companies in the space think that actual legislation on drug pricing is pretty unlikely and it's a hard thing to do. when you get times where sentiment is driven by headlines, we think we'll hear a lot out of the hillary camp over drug prices. that can create valuation

pressure. i think that can start to spur the m & a transaction that's we've been expecting. >> does that assume there won't be any action about drug pricing from the legislative side? if we're saying that there's a discount in valuations, there's a pressure on valuation as opposed to the stocks should be trading at a discount because wlaf could be happening with drug pricing, those are two devern scenarios kreshgt? >> yes. we think mostly it's noise. we don't think there is real fire so far. we think it's really, really hard to accomplish legislation. we think the only way that you change the way drugs are priced in the united states is through meaningful legislation through congress. that's tough to do. wean 60 votes in the senate, a democratic house and democratic president through the passage of the aca, that was too tough a nut to crack. >> do you think they're beaten up unfairly because you don't think anything will happen with drug pricing? >> there are a lot of stocks in the space that fit that characteristic today.

we like gilead sciences. we've own gilead sciences since 2002. we think they have a really exciting pipeline of things to come in hiv and hepc and liver disease. generating a lot of cash. seattle genetics is earlier stage name for us, emerging franchise in theolo oncology, t current product they have on the market. they have 11 products we expect to be in the clinic over the next 18 months. lots of shots on goal. lots of ways to win with that one. >> health care is a winning sector, has been winning sector so far this year. do you think that perhaps it reached a fair valuation and then plus the political headwin headwinds? why go in now? >> not just this year, we've had a multiyear run that has been really good for health care investors, really good for biotech and pharma investors. that is something we worry b we

worry a lot about that. but as we do our individual bottom up analysis on companies, we're finding really exciting opportunities and great valuations especially after the pullback since the pricing tweet from hillary clinton. so that's where we've got to base our work is looking at the fundamentals. >> thank you for your time. connor brown at thornburgh. >> last night donald trump sat in our debate that he is glad about the four bankruptcies vong his atlantic city casino operations add manage other ka seen yos have done the same and smart use of the law. let's fact check that. scott has more on that story. >> we went through literally thousands of documents in the four trump bankruptcies, of course 1991, 1992, 2004 and 2009. in fact, many of the documents we had to have shipped in from a national archive house from month movement what we found tells us a lot about donald trump's business and management style. he repeated his claim that he

was just making smart use of the law. >> i've used that to my advantage as a businessman. from my family, myself. i never filed for bankruptcy. but many, many people did. >> well, of course donald trump never filed a personal bankruptcy but if he's trying to distance himself from the corporate filings, that is a stretch. three of the four are in his name as the sole board member or majority shareholder. the signature is all over the filings in the 1992 bankruptcy of the trump plaza. but what about the claim that this was all good business? now there he actually may have a point depending on how you look at it. remember, the bankruptcy laws are designed to let a company or business or an individual restructure their debts and get a fresh start n 2009, yeert trump entertainment resorts filed chapter 11, some 15,000 other businesses did the same. trump welcome certainly didn't plan it this way whether he first bet on atlantic city but he was able to use each of the

bankruptcies to get himself out from a very bad bet transferring more and more of his personal risk to lenders, investors and eventually contractors and employees and there are a lot of pitched battles in the bankruptcies particularly between note holders and shareholders that you can see. but he wasn't entirely heartless about it. n. that 1992 bankruptcy, for example, he moved to protect the local trade creditors arguing in a court feeling that they were vital to atlantic city's well-being. he could only do so much at the end. thousands of workers were laid off and thousands of creditors took losses while donald trump remains rich. >> hundreds of companies i've opened. i've used it three times, maybe four times. came out great. i guess i'm supposed to come out great. that's what i can do for the country. >> but trump hasn't explained how that will work. the bankruptcy laws maybe useful for the president but the company but they're not an option for the president of the united states. we have lots more from our

debate fact patrol at cnbc.com. not just trump but all the others. i hope you check it out. >> thank you. we'll do. thank you. we are just a few minutes away from the final oil trades. oil not following through on yesterday's big rally because it seem like every day we get conflicting numbers on oil supply, oil demand. but don't worey. we got the real story on supply, demand, and oil all coming up for you. stick around.

hi, everybody. here's your cnbc news update at this hour. the white house says president obama is hopeful he can work with new house speaker paul ryan who was voted about it house this morning. the president called ryan to wish him well on the new leadership position and the white house is adding that obama expects a -- respects ryan despite the significant policy differences. the former mayor of toronto said they discovered a new tumor on his brother's tumor. his brother is in excruciating pain and doctors haven't said whether the new tumor is related to the abdominal cancer was diagnosed with last year. macy's will open the doors on

thanks giving day at 6:00 p.m. game stop and staples will be closed on turkey day. macy's had the first thanks giving day opening two years ago. walmart says they launched a new mobile application to reduce instore pickup times for online orders during the holiday season. they will give them an advantage over online rivals like amazon. and that is your cnbc news update at this hour. >> let's goet to jackie deange s deangelos. a calm day for oil today. i'm very disappointed in you. >> it was an interesting session. i don't control these things, brian. it does look like we're going to finnish positive territory. just over $46 a barrel which is interesting. the rest of commodities got hammered. oil traders not believing they're going to hike in december. they don't think we'll see something until later next year. so for right now that is going to offer a little support to these oil prices. that said, gold traders, they look at it the opposite way.

of course you and i are going to talk more oil when the numbers come out. >> it's friday already tomorrow. 1:00 recount. looking forward to it. drilling rigs are way down from last year. the bulls and bears battle it out over oil, what is the real supply-demand situation? let's bring in kyle cooper. a guy who, and i mean this as a huge compliment, kyle, you're an inventory nerd on this stuff which is fantastic. i mean that with all love and sinceri sincerity. you track this stuff on daily basis. where do we actually stand on supply and demand? >> well this week actually for the first time in -- for the second time in 12 weeks, we actually had to draw on petroleum inventories. that is not just the headlines of crude, gasoline and

distolates. for the second time in 12 weeks, we fell this week. that is a little bit of a rarety. it was primarily on a drop in crude imports which i don't think is going to persist. but it was also on very solid demand. demand jumped back to 20 million barrels the first time in a while. while it is way below the peak of '06 and '07 tshgsz, it's a d number. >> is it bullish? bear ish? >> it actually did. the trend is incredibly bearish, especially when you consider the inventory levels against the five-year average. they served -- they searched to roughly 900 barrels a week ago. they still are just below two billion barrels when you count the sbr. that's a lot of crude. we have a long way to go. this is the first week that it actually showed a little improvement. >> do you see anything that's going to change the still big supply-demand imbalance we have? >> amazingly, u.s. oil

production ticked up this week. the third quarter report we have seen thus far show an amazing ability. >> why? if any other -- >> to get more with less. i know. >> if i was -- if i was a gm -- >> if this is what they do. >> if i was a clothing store and had 100 pairs of unsold jeans on the shelves, woini wouldn't ord more. why does the oil industry keep pumping oil when they're not buying it? >> they are buying it. actual lishgs we still export a lot. the numbers dropped a little bit this week as well on the gasoline, it's what they do, brian. it's what they know how to do. born and raised here this is a wild cater knows how to go look for oil and get it out of the ground. if he's not getting as much per barrel, his mindset he is thooz have more barrels to make up for the loss. it's opec line. >> and given that -- not to get technical, but given that fracked wells drain faster than

traditionally drilled wells, it's been cut from one year ago. when do we start to see the well finally production will come down because the new wells are coming off line thesis playout? >> that -- no doubt that there is very, very steep decline. brian, they keep getting more and more with less and less. they keep -- i mean, baker hughes in the third quarter report said they put an 18,000 foot total well into play from start to spun in 24 days. >> that's unbelievable. >> that used to take a couple months. it's unbelievable. it's truly -- i hate to use the word paradigm shift, but the shale revolution and the technology and what they're doing across this country is truly a paradigm shift. it's just amazinamazing. >> it truly is phenomenal. >> that was oil nerd stuff. >> we keep getting more with

less. >> whether you do oil field pun, that's oil nerd stuff. appreciate it. >> that's it. >> thank you very much. time now for "street talk." we're stock research call in other words. i'm proud. >> me, too. >> sniders lance, the snack food company that bought diamond foods. analysts like the deal. they upped the stock from buy from neutral. they boosts the target, 25% upside. they think we can hit $2 earning of share. >> it comes on the heeflz a weaker than expected earnings report. that's something to keep in mind. you know, people think they're funny. shares may tried side ways on the ceo search. concerns about competitive pressures. the need to spend to improve positions in the overweight position, get this, in the texas market, oil problem here.

but the strong balance sheet and ability to do buy backs does provide support to the stock. the price target goes down to $18. >> this is the second and third drif tim impact we talked b a lot of the oil guys, they'll leave the home for two weeks. work on a rig for two weeks. then go home for two weeks. kind of like pilots in a way. a lot of them are staying in hotels. a lot of the guys are laid off. this is that -- and they also need, by the way, a ceo for them. let's move on. speaking of oil, whiting petroleum. olympic global advisors reiterating overweight. the analyst there says that negativity around the stock is peaking, yes, that quality is junlt valued. $24 target is a 40% upside. this is where you're going to say i know, it was a $90 stock two years ago. >> yes, you know me too well. this is one where you say

negativity is peaking, you always think you reach peak and then there is another peak much that's the problem with this sector. sun power, a big gainer to day. take a look at this stock. up 10.25%. raymond james positive on the stock. $32 price target. expects the analyst day to be yet another catalyst for the stock. that's when the company is expected to get 2016 guidance. >> the stock is now at 40% i think in just within month. >> take a look at that dive at the end. that's why it's been up. it got crushed. >> what do you call it on "fast money," a momo stock? >> in the past month it has been. it lost it on the way down. >> some options people are making money on volume silt. otherwise, wow. nobody can figure out where to go. the last stock, everbank. under the radar name of the day. $2.5 billion market cap. florida-based bank. they boost the target to 22, 20%

upside. the analyst there says recent stock reaction to earning was overdone. they expect a rebound in earning% share. they continue to be strong. the florida real estate and mortgage market is strong. ever banks will benefit. look at that right side. >> yeah, the issue with the stock is it has been underperforming the piers on a year to date as well as 12-month basis. it is underperforming the regional bank index. >> got defense today for what it's worth. there you go. that wraps up "street talk." it is time for "trading nation." let's talk casino stocks rising largely after mgm beat earnings estimates and announced plans to form a reit. harry curtis covers casino names. larry mcdonald is also with us. harry, you know, we know what it means to convert to a reit. what does it mean for mgm shareholders? >> i think that they will get an opportunity to own a company that will be more of a yield vehicle while the original

company will shed some debt and become a legitimate growth company. >> does it matter in and of itself that tax structure is changing, harry? or it is just a headline? i mean do investors need to know something about their holdings and they're going to change funneled. ally? >> the tax structure is interesting. i think there are several other drivers here. the first of which is that las vegas is doing awfully well. that's a primary driver. and then for the reit piece, they trade at a higher multiple. >> all right. larry, we saw -- it was a couple years ago, a bunch of big companies came reits. that slowed down. now you have mgm doing it. is this going to be the start of a new reit run? >> if you look at what's happening over the last three, four years, you have to look at this from a 20,000 perspective. we're in the third or fourth year of 2% gdp growth.

revenue growth in the s&p 500 over the last four years is average 3% to 5%. so companies are under pressure to do something. and if you look at what happens with inversions, you think of the chief legal officer for a company in the casino space. once they see one company go, the other companies typically follow. that's the way we've seen inversions work over the last three, four years from sector to sector. it is a legal risk for any company. and there's a lot of analysis that goes in. once a company goes, most profound fact, the most profound fact is the last eight years we've had 1100 companies, 1100 do some type of inversion or conversion to rei it. s. that's 1100 companies. so it's what's happening in washington is not working. it's forcing companies to really push the envelope. >> yeah. they're getting ahead of congress. one more question before we let you go.

bottom line, i should have asked you this first. it is a good investment, mgm? >> i think. so it's the only company in the casino space that we have a buy rating on. you have a lot of tail wind in las vegas. >> all right. harry, it's a pleasure to welcome you to trading nation. thank you. larry, thank you very much as well. for more "trading nation," head to our website. you may love starbucks coffee and scones and whatever but should you keep loving the already hot stock? we'll debate. plus, gold down big today. we have the ceo of the gold miner on the air about how his company can make money even if gold drops. gold corp ceo is sear next.

bouillon prices and

writedown and decrease in production. revenue rose 19% to $1.3 billion. take a look at shares. they're trading lower. goldcorp ceo is here in a "power lunch" exclusive. great to you have in person. congratulations on ringing the bell and celebrating your 20th anniversary as a listed company. let's talk about the quarter. what really stood out compared to the others in the industry is that your stock went down. and others were clean beats. what happened in this quarter? why you are different from the other senior producers out there? >> first, thanks very much for having me. you know, it's one of those quarters where i guess you call it messy in term of the headline earnings number. there were some noncash issues. impairments based on lower gold price of inventory and writedown that causeded headline number to

be much weaker than was expected. but the important part is that the operations are work veg well. as you mentioned, revenues were up. operations are -- gold production is up. our costs were lower. w we generated great cash free throw. we put money in the bank. so very sound operationally. but it's that gap earnings number that did not meet consensus expectations. >> there is one analyst i report i read and it said that it's interesting because the verdict on your free cash flow is sort of really dispratt on wall street. vmo said it was strong free cash flow. in this particular analyst, mackey, suggested that cash flow is weaker than they had expected which you can correct them. but that it may reflect less an ability to deal with a lower price environment for gold. how you are prepared to deal with lower gold in this

environment? how much longer are you anticipating it to remain this low? >> actually, i think we're as well or better positioned than anybody to weather a low gold price environment. we have the only triple b plus rated balance sheet in the business. we paid off our revolver. we put cash in the bank. we expect to continue to do that. we built two new mines and spent billions of dollars. now we're turning from a net investment environment to generating cash. i think we're in great shape n terms of what we expect, you know, you learn not to make too many prognostications about whether gold price is going up or how much it's going up. it's certainly starting to feel like we're finding a bottom. they say there is no more short money or hot money in the etf.

those who own it to day are long term believers in gold. if you look at the other big side of gold price, it's physical demand. that is going up steadily particularly in asia. i think, you know, we're finding the bottom. then it's a matter of what is that catalyst to take gold price higher? walk me through. now that the fed is saying it could be december, what happens in december? interest rates go up. the dollar presumably goes up. and then gold prices strengthen, they go down. so then what's -- why is that hurting? >> the delay should help. >> it's a short term situation where we've seen for the last couple weeks there was an expectation, perhaps that, the gold -- the fed was going to delay. and they give strong indication that december may be it.

>> i want it done. >> the fact is whether it's a quarter point or a half point, that's going to mean nothing to the opportunity cost for holding gold. it's irrelevant. but it's that uncertainty about what's going to happen and when it's going to happen that has the short term impact on gold price. so we think longer term and certainly longer term those supply and demand funneled. ales are very strong. >> great to see new person. >> pleasure being here. >> did you think the days of people buying houses and flipping them for big property were over? well, they're not. we'll have that story coming up on "power lunch." opportunities aren't always obvious. sometimes they just drop in.

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welcome back to "power lunch" i'm seema mody. the pfizer al letter again chatter catching the attention of carl icon. icon today tweeting unfortunately my warnings concerning the imminent exodus of many of our best interests is coming true. pfizer confirmed they are planning to move out of the country. the situation is much more dangerous than most people believe and there is no reason congress cannot act now to pass international tax reform. now, today pfizer confirming they are engaging in friendly

talks with al letter again, a mega deal that could result in pfizer moving outside the u.s. >> seema, thank you. home sales may be hitting a little bump in the recovery, but one segment of the makt is coming back strong. diana olick has to tell us it's not dolphins but flippers. flippers are back. diana. >> haha, brian. pending home sales were weaker than expected in september and it was widespread. these are signed contracts, not closings, so it is a future indicator of sales in october/november. overall sales down 2.3% from august but down a steeper 4% in the northeast, the best read was in the best, realtors blame ago lafk inventory and rocky financial markets, higher home prices also a likely culprit. we saw a steeper drop in sales of newly built homes. the one area we are seeing new sales action, though, home

flipping, that is buying and selling a home in the same calendar year. flipping had been falling off with home price gains shrinking but the share of home flips jumped 18% in q3 from a year ago that according to realty track. more demand from entry level buyers looking for starter homes. the average returns on investment for a flip is 34% overall with gross profit at about $62,000. now, more than a third of all flips are being done on homes priced at the very low end of the market. realty track credits also a jump in low down payment fha loans for that i know creased buyer demand on the low end. so where is the best place to flip? st. louis, missouri, gives you the best returns, especially when you are flipping to millennials. interestingly enough. guys. >> kind of a hot actually startup and software town now, st. louis. on deck, a red hot stock that you know well. all right. the graphic gives it away, it's starbucks, but is it time to sell after such a big gain in

year in we will discuss and debate coming up. stick around. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

selling 18 homes? easy. building them all in four and a half months? now that was a leap. i was calling in every favor i could, to track down enough lumber to get the job done. and i knew i could rely on american express

to help me buy those building materials. there are always going to be unknowns. you just have to be ready for them. another step on the journey... will you be ready when growth presents itself? realize your buying power at open.com >> there is a chip blood bath underway led by semi-conductor. tonight on "fast money" at 5:00 we will talk about the trade and in the chip sector overall because we are seeing a lot of these apple suppliers in particular being taken down today. >> we talked about lance foods

but that's a different kind of a chip story. >> that's a different chip play, yes. >> that one has ridges. papa johns up 64% but a close second is starbucks, it is aup 63%. as much as you might like their coffee or scones should you like their stock? matt dee frisco has a buy at a 68 sooipd target. will has an equally weight with a $56 target. mat, let's start with you, great company, howard schultz a great ceo, he has done a lot, but 35 times trailing earnings, a 60% gain this year, why is starbucks still worth our viewers' money. >> i don't see the fundamental story slowing. i think he will be telling tonight at 4:00 or 5:00 on the conference call a story of similar same stores sales if not accelerating. in addition the earnings growth will be in line with what it was in '15 which is high teens,

maybe even 20% given that coffee has fallen back in the context other large cap growth names within the restaurant space specifically have been talk being september and october the consumer was choppy. i think starbucks is well positioned to buck that trend and stick out as certainly a superior fundamental story. valuations always a concern, however, there is increasingly a scarcity of growth certainly among large cap restaurant stocks. >> what is the key number that you are looking for tonight. >> sn what one thing do you want to see? same store sales? >> sure. i'm at 8%. the consensus slightly lower than 7, the stock, those numbers haven't moved in the last month or so although it has been consistently a strong performer. the buy side has creeped up. i think there is a high probability they will come in above an 8% stock number and it should hold its gains and come close to a double dimt comp numbers. >> it is for difficult to grow

revenues than when it was a smaurl company. does the revenue growth justify where it's trading in terms of valuation. >> that's a great we q. he. >> will. sorry. go ahead. >> i think that's a good point. whenever you look at the valuation we are at 19 times ebitda, that's the valuation where it was in '06. i think that's a good point to look at. i do agree with matt, i think tonight is a pretty strong showing but most of that is already factored n expectations being high, valuation is high as well and this being a fairly cloud crowded room we see to the down side. >> if their input costs are down doesn't it make profitability go up? >> i think it does. and i think you've got probably eps growth story of 18, 20% the next 12 months and i'm willing to pay, 20, 25 times for that is correct maybe even more but we are paying a nice premium for that number at this point.

>> thank you very much. melissa, i imagine starbucks will be a hot top i cic for you >> i miss you, brian. good to be back. >> thank you. but you've bean there, done that. >> "closing bell" starts right now. >> such a drip. hi, everybody, welcome to the "closing bell," i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth. gopro, that's one of the highlights or low lights in this case getting slammed hitting all time lows after its ipo, the stock is down nearly 60% over the last three months. you will hear what ceo nick wood man had to say to defend his stock, that's coming up in just a little bit here. >> aetna shares up today on the back of earnings, ceo mark better lenny will join us, he is going to talk about those numbers, the humana acquisition. >> that budget bill that's