and that economy doesn't utilize copper, i don't think that's a bad thing. >> i like with opec meeting next week and december 3rd they started with some parties, i think it really gets going on the 4th. i'd watch energy stocks. >> all right. guys, thanks. we'll see you tomorrow. all of you as well. thanks for watching. "power lunch" begins now. scott, gentlemen, thank you very much. along with mandy drury, i'm tyler maststhisemathisen. welcome, everybody to "power lunch." today, leaving the usa, what could the government do to stop american companies from re-establishing a base overseas to cut their taxes? we have five hedge fund favorites. these are stocks being gobbled up by the big money players, but are they right for your portfolio as well? and shut down. brussels, europe's capital, shuttered over terror fears, schools closed, the train system not running. we'll take you live to belgium. >> it's the biggest drug merger

ever. pfizer and allergan coming together in a $160 billion plus deal and shares of both companies are moving down. allergan the single most favored stock owned by hedge funds. it's up 20% this year. what are the other names the smau so-called mart money likes right now? >> the smart money moniker depends on performance but in any case allergan was number one according to the quarterly roster that goldman sachs puts out based on quarterly filings followed in short order by big gainers like facebook and alphabet and amazon up 37%, 47%, and 127% respectively. it was a period in which hedge funds increased their net exposure to the tech sector to nearly 18% and cut their exposure to health care marginally according to goldman basing their findings on a sample of over 800 fundamentally driven stock funds. the troubled valeant pharmaceuticals, one of the most popular from the second quarter

list, was actually dropped altogether in the third quarter and that, interestingly, was before allegations surfaced of accounting and other potential issues. in a similar vein, hca holdings and endo international disappeared from the list. hedge funds leaned on small baskets of top performing stocks to drive returns. with the typical fund in the poll putting 67% of its long fire power into its ten largest positions. naturally, there were also some losers including time warner, which is down notably year-to-date and bank of america which has been more or less flat and is down 1 and change percent today. interestingly, too, the most shorted stock on this list, mandy, is walt disney, although doubts that were there before the end of september when this list was compiled, some of those have dispelled since the last earnings report. >> kate, thank you very much. >> thank you. >> kate kelly reporting. this mega merger between pfizer and allergan putting the spotlight back on the so-called tax inversions.

congress has come under fire for allowing these controversial tax savings strategies and sort of sitting owe on the sidelines and leaving it all up to the treasury department. eamon javers is in d.c. looking at the role of treasury. hi, eamon. >> hi, tyler. we're starting to get some reaction from democrats, including bernie sanders. his senate office putting out a statement opposing this deal. here is what they say. the pfizer/allergan merger would be a disaster for american consumers who already pay the highest prices in the world for prescription drugs. also we're getting reaction from congressman sander levin, the ranking democrat on the tax writing ways and means committee. here is what mr. levin had to say. tax motivated corporate inversions have cost the u.s. tens of billions of dollars and place an increasing burden on american taxpayers. but even as much as democrats might want to stop this deal, it does not appear there's all that much that treasury can do about it. just last week we saw treasury move some incremental changes to policy in what they called a new

notice on tax inversions changing some of the rules around inversions, but already today on our air we have heard from the ceo of pfizer who said they have looked at those recommendations in that new notice and they think this deal will pass scrutiny by treasury under those new terms. so it looks like this deal goes through. the question is, what is congress going todd if anything about the broader erosion of the tax base? >> eamon javers, thank you very much. as the treasury -- let's go to rick santelli. we're going to move on and we'll come back to further discussions about the tax inversion. there is a two-year note auction and rick santelli has the details. hi, rick. >> hi, tyler. let's also keep in mind this is a two-year note auction and the yield at the auction 0.948 was well received when you consider the offer side of the one issue mark, it was 95 basis points. that's the highest yield in an auction since april of 2010 when it was over 1%.

let's go through the internals. the grade you ask, a "b" as in boy and the strength really was in the pricing, 0.948. if you look at the bid to cover, the amount of dollars chasing every dollar's worth of securities available, it was 3.15. sounds pretty good, right? triple subscribe to? but 3.15 outside of our last bid to cover, which was on the light side, 3.01. you have to go back to october of 2014 to find a lower one. 45.7 is the average and the directs were quite strong. 19%. that's the best since june of 2014. dealers take a little over 35% of the auction. so we gave it a "b." tomorrow we will come right back with $35 billion 5s. wednesday, $29 billion 7s anz a and rushed because of the thanksgiving holiday. back to you. >> now as the treasury prepares to tighten the rules on international inversions,

whether they do it efficiently or not as eamon was just describing, will we start to see more companies push business overseas or will u.s. patriotism regain the upper hand here? let's bring in jimmy and jared bernstein. gentlemen, welcome to both of you. as i understand it, you both think that the rules allowing or the laws allowing inversions are not good, but, jimmy, don't we get the tax code that we deserve, the people who come to washington that we choose to send there? >> right. i mean, where is the problem? is it these unpatriotic corporations or the lack of patriotism in washington where inversion after inversion year after year, we do not see corporate tax reform. i keep waiting for the inversions to be action-forcing events. it's not happening. we absolutely need fundamental change to our corporate tax reform, but i think maybe at

some point we need to start thinking about it a lot differently because it's just not happening. the administration has proposals. there's proposals floating around congress. it's not happening. i think we need to think radically different about tax reform. >> jared, has congress not acted to close these gaping holes with respect to inversions because certain parties, factions there, don't want to just do a little fix, they want a big fix and so the perfect is the enemy of the good or what? >> i don't know if it's so much that. i think i know what it is and i'll tell you in a second, but you actually nailed something important there which is that you would really need congress to close what you're calling the gaping holes, some of the rules that would really make these inversions a lot less possible or profitable. all the treasury can do as eamon suggested is put up really pretty minor speed bumps thus far. look, here is the problem with corporate tax reform. there actually are members of

congress, and jimmy and i may come at this from other sides, but there's probably a ton we agree on here, and a member of congress who agrees, too, on what a smart corporate tax reform would looked like. the problem is that if you do that, you have to lower the rate, but you have to broaden the base, and broadening the base means taking away a lot of goodies that industry likes. so closing loopholes is the biggest problem, and there you find the lobbyist infrastructure will block you every step of the way. what we're calling a loophole they're calling their great job creation program. they fund the politicians and that's the jam we're in. >> yeah. enlightened policy. one man's loophole is another person's enlightened policy. jimmy, if we're going to clamp down one way or another on people arbitraging tax rates in different countries, how would you propose to do it? >> listen, i have sort of believed in the idea that -- what jared just said, lower

rates, broaden the base. i think we're at the point where we need to leapfrog over that idea, leapfrog over the lobbyists, and so even though i think it's going to be a big haul, i think what we need to do is move corporate taxation out of companies and down to the individual level. tax shareholders, american shareholders on their capital gains and dividends at ordinary income rates no matter where the investment is located, no matter where the corporate headquarters is located, where management is located. tax these corporate profits at the individual shareholder level, not the corporate level. then you don't have companies playing games, moving from different jurisdictions. you don't have tax authorities trying to figure out where the money is coming from. >> can you -- it sounds intuitively very appealing and i felt for a long time that there ought to be -- income ought to be regardeds as income becauses minute you get away from that is the minute you open the door to all kinds of lobbyists and special interests, but jared,

would the political class agree to something where you would basically say -- as i'm understanding you, jimmy, zero as a corporate rate but tax dividends and capital gains at a regular rate and it's a tax hike on individuals. >> it would be a heavy political lift. i like his idea of leapfrogging a stale and immovable debate, however i think if you zero out the corporate tax then all of a sudden everybody's income becomes s corp income and it's not taxed. here is something you could do that is pragmatic. right now if the shareholders in the new foreign parent from an inversion own 21% of the shares, then the inversion can go forward. if you increase that number from 21% to say 40% or 50%, that

would shut down a lot of this kind of just moving your tax mailbox to another country. so that's an interim intervention i think would help and we should do it. >> two very interesting approaches to it and it is a debate that is certainly going to be there until it's not, until it gets solved. jimmy and jared, we appreciate you being with us. >> thank you, tyler. >> thank you very much, ty. to the american housing market now. sales of existing homes dropping. diana olick is in d.c. with the details. diane? >> we expected a lower october after such a strong september, about you this drop was biwider. sales of existing home down 3.4% for the month nationally. the big drama was out west where sales were nearly 9% lower and that is all about weakening affordability. we've seen the biggest price jumps in the west. now potential buyers are feeling the most pain there as well. equally painful is the lack of homes for sale. listings down 4.5% from a year ago and this is the time of year we usually see supply rise.

sales slow down, more houses sit. not so much right now. it only takes 57 days on average to sell a house. that's five days faster than a year ago and that lack of supply is keeping home prices high. the median price of a home in october sold $219,600. that's up nearly 6% from a year ago and that's the highest october price in a decade. now, one note, those new mortgage disclosure rules that had everyone all panicked about delayed closings in october, the realtors say so far no complaints. kind of a y2k thing. we have more on that on cnbc.com. >> we also have more on that topic later on in this hour, the zillow ceo. he should have some interesting thoughts. thank you very much. let's get to dominic chu for a market flash. >> mandy, we're watching shares of wall street brokerage bgc partners under pressure down by 4.5%. near the lows so far. this after new york attorney general eric schneiderman's office has issued subpoenas to four firms that act as brokers

in the foreign exchange options market. according to a person familiar with the investigation. the inquiry centers around alleged posting of false bids and offers in emerging markets currency options, something known in industry circles as ghosting or flying, similar to spoofing in the futures market. gfi group has also been subpoenaed so says the source here. bg partners, tfsi cap have declined to comment. tyler, a development we'll be watching here on our side. ty, back over to you. >> thank you very much, dominic. security forces carrying out almost two dozen raids across brussels, the belgian capital still in lockdown at the highest terror alert level. we head live to brussels for the latest and we will speak to a person on the ground about what it's like for the average person and businesses in brussels right now. you're watching cnbc, first in business worldwide.

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welcome back, everybody, to "power lunch." the heart of the european union is in lockdown this day. authorities maintaining their highest terror alert in belgium's capital for a third straight day. we are just learning that belgian authorities have released 15 suspects taken into custody earlier. nbc's claudio lavanga is live in

brussels. claudio? >> reporter: we're still waiting for the prime minister to hold a press conference. it was meant to start three hours ago. we're waiting for more information. in the meantime the federal prosecution office has a statement literally ten minutes ago saying that one of the 21 people arrested since last night has been charged with, let me read it to you, participating in activities with a terrorist group in connection to the paris attacks. of course, this is very important information related to the investigation of the paris attacks. another two -- actually three other people that were arrested since last night are still in custody pending further investigation and the judge will rule on them tomorrow but, of course, all the attention right now is on that one person who has already been charged and we are waiting for the prime minister to come out for the press conference to give us more information, tyler. >> thank you very much, claudio. we appreciate that report from brussels. so what is it like living in a city on lockdown?

for that let's bring in tara pal mary, a reporter. she last week broke the news about a day ahead of others that the mastermind, the ringleader, abdelhamid abaaoud had been killed in that raid in saint deny. what is it like on the streets of brussels these days? what do you do? how do you get around? if you have children in that town, it is a holiday for them but hardly a holiday feel. >> right. it's extremely dead on the street. there's just armed guards, military vehicles everywhere. it almost feels like a hurricane is about to hit but it hasn't come yet. you're basically stuck in your home. when you loo he have to get food or do anything you're looking over your shoulder. as a reporter, i still have to work but i walked to work this morning. there was a real sense of insecurity. i think i looked over my shoulder a lot.

i was always looking for two exits wherever i was, if i was in a closed place. so we're all on edge. we're all nervous and, you know, when you can, you want to stay in your home away from a window and just wait until i guess the belgian authorities figure out when this threat is going to happen and stop it. >> have they gone so far as to implement checkpoints in the city, tara? >> there -- i don't believe there are checkpoints yet, but everywhere you go you see lots of -- you hear sirens, you're seeing blue lights. it's like the city is lit up in blue lights. there are cops everywhere. there are military personnel everywhere. in a way you feel a little bit safe because of that, but it's also very alarming. it's quiet and there's -- there are not a lot of people out and obviously brussels is not just a place where people live. it's the capital of europe. i mean, this is where all the bureaucrats live and bureaucrats that are deciding what goes on in europe and so they're working

from home. they're scared as well. i mean, some people did actually come to work today, but there's a sense of panic among everyone. >> just amongst the people you speak to whether they be friends or family or people on the street, tara, do you feel there's been a shift in sentiment, and by that i mean do you notice people becoming more nationalistic or xenophobic even? >> not personally to the people i have spoken with, but i think a lot of people are just really -- they are disappointed in the belgian authorities and how they've handled the situation. it's been over a week, and they still haven't been age to find saleh abdeslam. there's a feeling of when are they going to find him? is this just an act to make it seem like they're doing something? do they have the kind of intelligence that they say they have of an imminent threat because it's been days now and it just seems like it's been a while and they still haven't found him and we're all just waiting and hoping that he doesn't go through with the plan that they believe he wants to go through. >> that's what i want to get to,

tara, if we might. is this lockdown really all about catching the one that got away, salah, and fear that he might blow himself up in a last sort of blaze of glory? i mean he's valuable to the western authorities, but he's also, i gather, someone that isis would like to get their hands on if they could. >> right. he's an infidel. he didn't go through with the plan he was supposed to in france. he was supposed to -- he had a suicide vest that he brought back with him to brussels which concerning to the authorities obviously that he still has a suicide vest on him. but he was supposed to carry out the attacks in paris and he must have gotten cold feet and he went back to brussels. so he can't -- his options are very limited. he either turns himself into the belgian authorities or he kills himself in some sort of spectacular, like you said, end

or -- >> the belgian authorities -- >> isis kills him. nobody is going to protect him for too long. >> right. >> right. he really has very few options. >> all right. just getting a headline in that the belgian prime minister has said that the alert status remains at the highest level, tara, and presumably will remain so for the time being. tara, thank you very much, and as an aside, the father of one of my son's playmates is in a hotel in belgian in brussels right now basically, mandy, not able to leave. >> no. well, i guess that's what happens in that sort of situation, right? >> yeah. >> better safe than sorry. thank you very much. game-changers, our "power lunch" series looking at disruptive new technologist and innovations that are changing the way we live and work. so today artificial intelligence. the companies making big moves into ai. that is next.

welcome back to "power lunch." tyson foods soaring 10%. missing profit estimates but revenue topped exectations. viacom cut from buy to hold. the shares are off by 3% today. and constellation brands upgraded to outperform from market perform. that stock is up more than 40% this year. cheers to that. today it's up by 3.5%.

ty? >> thank you very much. check on the bond market on the back of that two-year auction. rick santelli tracking the action at cme. hi, rick. >> hi, tyler. even though i gave it a "b" and there were aspects of it that were very strong, the intraday two-year doesn't show you a lot of action around 1:00 eastern. if you go to the other end of the curve, 30-year bond yields, well, not a lot of volatility, but they are hovering at the lows. a two-day chart reveals because we're hovering at friday's lows as well. but maybe the chart of the day on this trading floor, we touched 100 on the dollar index. you see it there. it was about a half hour or so before -- actually a little earlier, 11:30 eastern, the auction was at 1:00, because the auction really didn't have an influence on the dollar but why is it so significant? we've done it once in 2015, it was march 13th, but you have to go all the way back to early 2003 as you see in this chart to really see a sustained trade over 100. so many traders, especially with the holidays, maybe fading this area so the closing level could

be quite important technically. mandy, tyler, back to you. >> yeah, significant day for the dollar index. thank you, ricky. baby battle, facebook ceo mark zuckerberg said he's taking two months off when his baby arrives. a stark contrast to the yahoo! ceo marissa mayer who only took two weeks of maternity leave. so who is right? plus, are you behind on your taxes. the irs has a new weapon to come after you and it's pretty outrageous. you've got to stick around to find out what it is. don't go away. why should over two hundred years of citi history matter to you? well, because it tells us something powerful about progress: that whether times are good or bad, people and their ideas will continue to move the world forward. as long as they have someone to believe in them. citi financed the transatlantic cable that connected continents. and the panama canal, that made our world a smaller place.

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hello, everyone. i'm sue herera. iran's ayatollah khomeini meeting russian president vladimir putin. he called u.s. policies a threat to both countries. he dismissed the idea of syrian president assad leaving power saying he won a nationwide election. french jets striking islamic state targets in iraq taking off from the charles de gaulle

aircraft carrier for the first time. french president hollande saying last week france would step up its attacks against isis and in france just moments ago an explosive belt without a detonator was found according to police in the southern paris -- southern paris suburb. iraq closed off air flies to flights in concerns russian missiles are flying over that country to target syria. the closing to last at least 48 hours. security measures in paris have increased since the terror attacks ten days ago. an airport restaurant employee says there are more armed forces than customers and when customers order food they leave immediately rather than eat at the restaurant. a lot of nervous people understandably so. that is the cnbc news update this hour. mandy, back to you. >> thank you very much for that. let's take a look at gold prices which are closing right now. let's see how they've been holding up in light of the strong dollar today. not very well is the answer.

they're down by 10 bucks. let's get more on what's happening with gold with jackie deangelis. >> good afternoon. the metals complex down across the board. gold a near $10 loss sitting just under $1,070. it's a dollar issue right now. there are two prongs, concerns about the fed and a rate hike and you have an extremely weak euro as well. in addition we're watching copper, six-year low getting very close to that $2 level. concerns about global growth and this dollar issue weighing copper down. so right now the metals seeing downside momentum here technically speaking. they could press lower. >> thank you for that. stocks are off the highs of the session as we kick off a holiday shortened trading week. what will this week look like and will we have a year-end rally? with me now is chad gmorganlandr and zachary kacarkarabell. chad, i see your near term tactical posture is 45% equities

but 55% bonds. explain this. >> we recently went underweight equities. we believe here in a lower turn environment. the reason is that emerging markets contribute about 75% of global growth and that's decelerating quite a bit. so we would be moving up the quality spectrum, deleveraging or taking risk often of a bit, and, you know, at this point we think that we could see perhaps 5% total return for 2016 and we wouldn't be surprised to see a sell-off at this juncture. >> so sort of scale down our expectations from here on out. would you agree with that, zach? even though last week was the best week we've had so far this year, are you concerned that the leadership is getting narrower and narrower, basically confined to a number of big names that are glamour mega cap stocks? >> so, look, i think it's a good idea to lower our expectations and in some sense companies have been lower expectations for years and then surpassing them

with better-than-expected earnings. i agree we're in a lower return environment because global growth is lower and also inflation is nowhere existent. inflation is a contributor to growth, so in the absence of that you don't have a lot of it. i think the interesting thing about the really narrow leadership and you're kind of alluding to the fact that without things like facebook, amazon, google, ge, the s&p would actually be down this year pretty nicely, about 5%. i think what that means is, you know, this whole stock pickers, find names that are capturing what global growth there is or what pockets there are, i think there's a lot of reason to be in passive vehicles but a purely passive strategy may not capture that kind of unique upside that a lot of dynamic companies are providing. >> so where would you find upside in individual stocks, chad? because i see the names you like, none of them here have done particularly well this year and none of them are in those mega cap blockbuster names we've been talking about. >> so we're looking for companies where we think operating margins are going to

continue to improve. you don't need real vibrant revenue growth. we would look at two tech names, cisco systems. they have about $7 a cash per share on the balance sheet. >> and flat this year. >> they'll earn around 2.25 in the earns. we think the intrinsic value will go higher. the dividend is growing. the other is oracle. our price target is around $45 per share. our price target on cisco was $35. so those are two value stocks, and then when you go on the staples side or health care side, we go for an abbott labs with a price target of $50. >> three names. one last word on what's happening in energy, zach. i know you're still rather cautious of energy and obviously it may be a near term bounce from the saudi comments. do you think the past of least resistance for crude is still down and does that take the market down with it? >> look, you know, everyone has been wrong about the price of crude for years and so i'm not

going to pretend that i have this magic crystal ball that people who claim to be real experts in the field failed to possess. so i think the reality is you have vast supply, you have much more efficient usage of energy, and you see that particularly this china which is growing but it's growing as a consumer economy more than as a raw material industrial economy. and so in a lot of ways, the lower price of energy, the less wallet share of energy globally is negative for the energy space but it's very positive for the consumer space because it gives people and businesses that extra ballast because they're not spending "x" amount on transportation or production costs because energy is lower and they have that much more disposable income. so i think that's going to be a much more powerful theme. the disposable income of the middle class. it's been a theme for a couple years and it's kind of out of favor right now because the emerging market story is certainly hobbled but it's a powerful global team. >> hobbled is a good word for it. chad and zach, good to see you.

thank you for joining us. you can go to powerlunch.cnbc.com to see which consumer names chad likes right now. that's "power luncpowerlunch.cn. ken benson is president and ceo of sifma. you did a simulation very interesting involving dozens, really scores of different market players, companies, and so forth. what did you find? where were the strengths and where were the vulnerabilities? >> this is a process we're going through, it's a top priority for the industry. we've been working on this for many years and we continue to increase the level of resource and commitment to it, and in this most recent exercise where it was a series of attacks on individual firms simulated, of course, as well as an attack on market utilities to try so show if you had a widespread attack

how would the industry attack. it allowed us to understand how you used internal and external playbooks, how you used the information sharing apparatus that exists, the role of market utilities and how the industry interacts with its regulators and our government partners. >> so what went well and what needs improvement? >> well, i think what went well is it showed that there is a good commitment on the part of the industry of having playbooks and protocols and processes to operate on this. i think what we learned is we can do more as it relates to market utilities because of their role, the horizontal review they have of the industry, and a better understanding both on the industry and the government side of the roles that the two sides have to play. and this has been a series of work that we've been doing at sifma with our government partners over the last 18 months. >> for people who aren't quite as familiar as you and i might be with the phrase market utility those would be? >> exchanges, clearinghouses, and the like. >> all right. so did you find, if you had to

put a letter grade on how the operation went and how prepared the industry is, and on the other side of that coin how worried individual consumers and account holders should be, what would that grade be? >> i don't know if i'd use a letter grade. i think the industry is taking great steps to be prepared here. this is a top priority for the industry at the highest levels in the corporate suite, and so i think in terms of making an effort and putting the processes in place, the industry is doing a very good job and we're trying to do it across the industry, not just the largest firms but down to the smallest firms. but at the same time it's an iterative process and what you learn from every exercise, what you learn from previous experience, and we know it's an iterative process from the risk standpoint, that the risk only gets greater. so this is something that the industry is going to have to continue to work on, to continue to develop on an ongoing basis with our government partners, and the government is going to have to work together not just with the industry but amongst

itself. in making sure the coordination is there. >> hackers can do a lot of mischief obviously, to state the obvious. they can steal from accounts or they could manipulate prices. which is the bigger threat? is it fraud or theft or manipulation? >> i think it's fraud, theft, i think it's the destruction of data, i think it's trying to disrupt the markets. so it's not just -- it's not just a criminal exercise that we're concerned about, but it's also a destructive exercise that we're concerned about. so these are all these sorts of things that we try and test for on a regular basis and train for on a regular basis and this most recent exercise was looking at multiple types of attacks, denial of service, domain name poisoning, the stealing of personal identifiable information as well as going after in a destructive way against market utilities and affecting clearing and settling processes. >> so disruption and destruction in addition to just outright

theft or manipulation of prices. ken, thank you very much. great to see you. >> thank you. appreciate it. >> ken bentsen of sifma. >> to julia in brussels with breaking news. julia? >> reporter: thanks so much, mandy. what we've heard in the last few minutes from the prime minister of belgium saying that the city here, brussels, will remain at the highest terror alert level, and it will do so for the next week. they're only going to reassess it in seven days' time. so i think the takeaway from that is clearly the threat of an imminent terrorist attack here in brussels, even a copy of the paris attacks that we saw just over ten days ago, remains a real concern for the authorities here. now, as far as the subways, as far as the schools and universities are concerned, they will all shut, they were all on lockdown today. they will remain so tomorrow. they will only be opened on wednesday of this week and that process may even be staggered. so it's not clear yet whether the subways will be open. we also know that of the 21

suspects arrested overnight, 17 have been released, one man held in connection with the paris terror attacks. so certainly a lot of action going on here with the belgian authorities. guys, back to you. >> it will be a tense seven days, i'm sure. thank you very much for that breaking news live from brussel, julia chatterly. so back home here in the united states, the irs may soon get a new weapon to use against people who are behind on their taxes. we'll tell you what it is and who exactly they're targeting. plus, two big names in tech with vastly different approaches to parental leave. it's mark zuckerberg versus marissa mayer coming up on "power lunch." here at the td ameritrade trader group, they work all the time. sup jj? working hard? working 24/7 on mobile trader, rated #1 trading app in the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of the other competitors do in desktop.

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new steps from the irs to help catch people not paying their taxes. robert frank here to tell us what they're doing and who they're targeting. >> if you have a big income, watch out. the irs is watching you more

closely than ever. a new report from the inspector general for tax administration says the irs should spend more time auditing the super rich and less time on those making a mere $200,000 to $400,000. it says audits of people making millions may be more complicated but they generate 20% more recovery. that's greater productivity for auditors and more money for the government. the irs says it will consider raising the definition of, quote, high income, for audit purposes and may index that level to inflation. the irs has already been targeting the rich with is new high wealth s.w.a.t. team as of 2014. those making $5 million or more had a 1 in 8 chance of being audited. that compares with about 1 in 70 chance for those making more than $200,000. if you don't pay your taxes, the state department has a new weapon, taking your passport. under a law likely to take effect in january, americans with, quote, seriously delynn

quint taxes will have their passports suspended. if you're trying to resolve it, but if you've ignored it, you better not travel. >> wow, that's a new weapon. we know breaking up is hard to do. would some big companies be better if they broke up and became smaller companies? we'll discuss some specific names. plus -- >> i'm chief talent officer of horizon media. i'll be giving you a tour of our amazing spiace coming up on -- >> "power lunch"! (exec 1) well, directv beat us in customer satisfaction again for the 15th year in a row. but we have a plan. (exec 2) when our customers are on hold, let's up their satisfaction with some new hold music. ♪ (exec 2) that's glenn from the mailroom. he djs on the weekends. (exec 3) sorry, who is it? (exec 2) it's glenn, from the mailroom. he dj'ed bill's wedding.

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and take them anywhere. ready or not, here i come! (whispers) now hide-and-seek time can also be catch-up-on-my-shows time. here i come! can't find you anywhere! don't settle for u-verse. x1 from xfinity will change the way you experience tv. welcome back to "power lunch." it is the world's largest privately held media services agency servicing clients from corona to geico. horizon media based in new york city is reimagining what an office should look like in an era where businesses want more collaboration and innovation. so we took our cameras inside its manhattan headquarters as part of this week's "office envy." >> hi, i'm eileen benwitt chief

talent officer. this is where we all get to make it happen day in and day out at horizon media, so come on and follow me and i'll give you a tour. we're the largest, fastest growing privately owned media agency in the world. this is where we house our digital practice. we love the openness of this area. we don't want walls. we don't want anybody to feel like they're in a box. this is the dunes. it's a great place to have lunch, to gather for a meeting, or just to hang out. what we love about this space are the amazing views. where in manhattan do you get these kind of views where you're working. food is a huge theme here. we have popcorn, cronuts, bagel fridays and fresh fruit delivered every day. every season we rent a ski house for our employees up in vermont and it's become a tradition year-over-year and every love it is. i tore my acl.

so this is probably one of our most popular spots, the beer taps. at the end of the week, kick back, pour a beer, go hang out on the glorious terrace and get a jump start to your weekend. this is our game room, shuffleboard, basketball. we work hard and play hard. one of our best kept secrets is our very own private screening room. one of the reasons why we have popco popcorn. thanks for coming. i hope you enjoyed the tour. now you got to get out of here because i have to get to work. >> again, i would never get any work done there, ty. draft peer and popcorn and movies? for more inside our series of the coolest offices that we can find, you can head over to powerlunch.cnbc.com. okay, so mark zuckerberg says he's going to take two months off from facebook when his baby is born. yahoo!'s marissa mayer returned to work two weeks after giving birth. what's the best policy for corporations? plus a drop in home sales. are houses just too expensive now ades?

we'll put those questions to the zillow ceo spencer rascoff in an exclusive interview next on "power lunch." some way to say h. switch to t-mobile now and get 4 lines with up to 6gb each, and no sharing. just $30 bucks a line at t-mobile. the great beauty of owning a property is that you can create wealth through capital appreciation, and this has been denied to many south africans for generations. this is an opportunity to right that wrong. the idea was to bring capital into the affordable housing space in south africa, with a fund that offers families of modest income safe and good accommodation. citi got involved very early on and showed an enormous commitment. and that gave other investors confidence. citi's really unique, because they bring deep understanding of what's happening in africa. i really believe we only live once,

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i'm melissa lee. coming up on "power lunch," more on the deal of the day between

pfizer and allergan. one top food analyst is doubling down on chipotle. why now is the time to buy. also the big opportunities in a do-nothing market. later the threat of a 2 billion bailout that some are calling downright nuts. back over to mandy and tyler. to the american housing market with existing home sales fell more than expected in october as home prices continue to climb faster than wages in many markets. is this a troubling sign for the housing market? here for a cnbc exclusive is spencer rascoff, ceo of zillow group, a real estate information marketplace. spencer, good to see you, and we have a lot of topics to get through, but number one, your thoughts on the housing data today. how much of this is an affordability issue and if buying is expensive, renting is even worse, isn't it? >> that really is the story of the u.s. housing market is the rental affordability crisis. americans are spending 30% of their income on rent and historically they spent 21% of their income on rent. and in certain parts of the country like in los angeles or

san francisco, they're spending around 50% of their pretax income on rent. that's completely unsustainable. so that's really the rental affordability crisis that we face. by contrast, buying a home is still very affordable. americans are spending about 15% of their income on mortgages and historically they've spent 25% of their income on mortgages. so buying looks pretty cheap partly because of low mortgage rates. rent something very expensive by comparison. >> isn't the buying question sort of market by market? it is certainly not cheap in manhattan. it's not cheap in san francisco. it's not cheap in downtown d.c. >> it's very much a local market, and you see parts of the country like san francisco where home values, buying is still appreciating about 10% and much of manhattan is appreciating about 10% year-over-year. by contrast, renting is even more expensive. the way we try to discern whether to rent or buy is look at a break even analysis by geography. we put all the data up on the website. so you can actually see based on

how long you intend to live. for example, nationwide the break even is about 1.9 years which means if you're going to live in a home for 2 years or more, you should probably buy it. 2 years or less you should probably rent it. in new york the break even is 4 years. you should probably rent unless you know you want to be in that property for 4 or more years, in which case you should buy it. >> to the parental leave debate, to what degree do you feel mark zuckerberg is taking a stand and a position and a leading voice in the tech community that might set a precedent for other companies? >> he really is taking a stand here. coming out and saying you're going to take two months off, that's very impressive for a technology executive. at zillow we offer two months paid time off for parental leave and four months for maternal leave. but for an executive to come out and say they're actually taking it, that's quite extraordinary and i think he's doing that very d deliberately to lead by examples. all these companies are competing for talent and mark is saying this is the type of

company that values work/life balance. this is the type of place we want you to have a sense of your whole life, not just what you do in your day job at work. >> do you feel more employees want better benefits rather than better pay? >> they do. that's what the data says. it says that employees firstly want to work at a company that's mission oriented where they believe that what the company is trying to do is something good for society. secondly, they want to feel like they're paid fairly and thirdly like they can make a difference and benefits are a big part of that. so i encourage candidates and employees to really think about the types of benefits that the companies offer. if the company is offering free dry cleaning, that says to me you're never going to leave the office. that's the type of place that that's the type of perk. and if the company is offering hack weeks and nursing rooms for mothers and unlimited -- it's paid time off because they view that employees are grown-ups and they should just be left to their own devices, basically to your job, do your best work and then take the type of vacation that works for you and for your

manager and for your company. those are the types of perks i think are more consistent with the types of jobs that today's employee really is looking for. >> you work in a largely digital company. you must have some views about the valuations on ipos of some of your fellow digital companies. does the market look healthy to you? you're an analyst of markets, too. >> well, the expression in the west coast is now the ipo is the new down round, right? and certainly square was a down round after -- its ipo was a down round after its last private round. increasingly you see the public market investors, the mutual funds, having to mark down the valuations in private companies. and i think what employees are seeing, they're seeing it's not a blurred line between whether i washg at a public company or whether i work at a private company. for zillow group it is absolutely helped our recruiting. we had 64,000 people apply to work at our company last year and it's only getting more

attractive as the private companies, these so-called unicorns, people start to realize that some of them are going to come falling back to forth. >> spencer, thank you very much for being with us. we appreciate it. >> thank you. >> spencer rascoff of the zillow group. >> that's it for the first hour. i'll exit stage left but you're sticking around. >> i will hang around and join melissa lee who is over at nasdaq. >> it's 2:00 p.m. at nasdaq, 7:00 p.m. at allergan's headquarters in dublin. brian sullivan has the week off but no fear, tyler will be with us in just a moment. we begin this hour with the deal of the day and that would be pfizer announcing plans to merge with allergan in an inversion deal valued at around $160 billion. it is officially the biggest drug merger ever. cnbc's meg terrell sat down with the ceos of both companies earlier today and she joins us live from outside pfizer's headquarters in new york city. meg? >> melissa, that's right, as you mention the largest drug deal in history. pfizer offering 11.3 pfizer shares per allergan share

amounting to $363 per allergan share. $160 billion in total deal value. this would create the world's largest drugmaker selling products from the lipitor -- the combined revenue is expected to top $70 billion in 2017 and the two companies are expected to have more than 100 programs in mid to late stage development. of course, it would also establish the combined companies' tax base in ireland. pfizer moving from here in new york over to ireland in terms of taxes and that, of course, is already facing political backlash. democratic presidential candidate bernie sanders calling on the obama administration to block the deal. in our interview this morning, ceo of pfizer ian reid addressed the political implications. >> this is a great deal for america. it allows us to continue to sustain an investment of, you know, approximately $9 billion mainly spent in the united

states. we have 40,000 combined employees in the united states. we've been engaged for the last year and a half in -- with leaders in the congress. we see this deal as being very positive for the united states. >> of course, treasury has proposed new rules to try to block what are known as inversions. analysts saying they don't apply because allergan shareholders would own 44% of the combined company, above the threshold the new treasury rules address. there is a breakup fee of up to $3.5 billion for this deal here. the two companies saying they expect it to close in the second half of 2016, melissa. >> and, meg s a break up or split up of pfizer still on the table even with this deal? >> absolutely. analysts say this only strengthens the splitup hypothesis but they're pushing off the time lines. they say it will decide on whether to split pfizer in new innovative products and older slower growth products by the end of 2018. >> meg terrell, thanks so much.

great interview. meg terrell at pfizer headquarters. a new angle developing in washington as hillary clinton reacting to the deal. eamon javers is in d.c. with the latest. >> reaction continuing to pour in now from democrats to this pfizer/allergan deal you have just been talking about. white house press secretary josh earnest is speaking now to reporters over at the briefing room. just a little while ago he was asked about the deal. he reiterated the president's opposition to this type of a deal which he said is simply unfair and it allows the company to renounce its corporate citizenship and move to another country even though it benefits from the taxpayers of the united states and the infrastructure of the united states. here is the press secretary just a few minutes ago. >> the secretary of the treasury

announced a handful of administrative steps that the treasury department was taking to try to reduce the incentive and lower the benefit for those countries that are seeking to engage in a corporate inversion, and the second is to remind you of the president's long-standing concern and outright criticism of companies that pursue this strategy, that essentially allows them to renounce their citizenship and while continuing to benefit from all that america has to offer. >> we also had reaction now from hillary clinton out on the campaign trail. here is what hillary clinton had to say. this proposed merger, she says, and so-called inversions by other companies will leave u.s. taxpayers holding the bag. and so far just reaction now from one prominent republican, a member of the ways and means

committee. what he has to say is the pfizer inversion is a sad reflection of our broken tax code which is driving businesses away from the united states instead of encouraging them to grow here at home. so guys, a real split between what republicans and democrats are saying about this. republicans view this as an opportunity to have a broader discussion about tax reform. democrats view this as an opportunity to have a discussion about the patriotic obligations of american corporations, tyler. >> eamon, thank you very much. from mega mergers to possible or proposed blockbuster breakups, we're focusing on two different calls on two different companies. first the investor carl icahn out today. he says the insurance giant aig ought to split into three separate conditions. he says aig is too big to succeed. and barron's this weekend published an article saying prokt for a proctor & gamble should break up. they say if businesses split, they could be worth $90 a share.

18% higher than where they trade in now. let's dig into that p & g call. should that company split up? let's bring in shareholder jim russell. you're a cincinnati guy. is breaking up the right thing for p & g to do? obviously they have some revenue growth issues? >> they, he do, tyler. thanks for having me on. first of all, we don't think that a break up of proctor & gamble will really achieve the desired benefit of higher share price. arguably in the current market environment growing your revenue base is one tough thing to do. very few companies are able to pull that off. many in the staples area in particular, including procter & gamble are having a very difficult time, currency, of course pricing, two key headwinds here. we do think that procter should go ahead and divest the brands that they're going to divest. they're going to take the brand count from 200 to 65.

first do that. also have a new management team and then focus on revenue growth. we do not think a breakup of proctor & gamble is the answer that most investors are looking for. >> i guess the counter argument would be if you broke it into three different units as was proposed in that barron's story over the weekend, that those units would in and of themselves be more nimble, more able to change quickly and react to market trends, and that revenue growth would be the derivative of that. you just don't see it that way. >> we don't see it that way. it's a very credible argument. procter has looxd at a breakup of the company in years past. pershing square has take an run at them and suggested a various of different techniques to goose the share price and the revenue growth. we just don't think that a standalone company, whether these two companies, three companies, four companies, the size of proctor & gamble, while

it may be a little more nimble, the issue remains revenue growth is problematic. whether it be at the larger company or the smaller company. growing revenue in the current environment is very, very difficult. >> let me cut to the chase. one word answer, buy the stock if you don't own it, hold it if you do, sell it, what? >> we're holders of proctor & gamble at current prices. we think at 20 times earnings and very low top line growth, very low bottom line growth, that's all you get. >> thanks, jim. jim russell with ball and gainer. melissa? >> you probably noticed pretty good news if you filled up at the pump, aaa puts the national average for a gallon of gas at $20.07 and that-- $2.07 and tha cents lower than a week ago. let's bring in economist mark zandi. falling gas prices putting more cash in the consumers pocket. how much more cash and what are they doing with this cash? >> a lot more. about -- they're going to save,

the american consumer is going to save about $75 billion this year compared to last year on their gasoline bill, so that's about a half a percent of gdp. so that's a lot of money and they're spending it on lots of different things. partly just driving more so people are willing to drive their car longer distances because it's cheaper to do it. but they're buying cars, vehicle sales are at record highs and then restaurant sales are strong, travel is strong. experiences, people are spending a lot more money on experiences. so they're spending it. the saving rate, the personal saving rate has not increased with this decline in gasoline prices and that indicates that consumers are out there spending the gas savings. >> and they've also been paying down debt, correct, mark? >> yeah. less so over the past year actually. household debt growth has picked up, so certainly auto debt but credit card debt is starting to pick up, home equity borrowing. i think less of it has gone into

debt repayment. more gone into consumption. if you look at overall consumer spending, all in, everything we spend our money on, it's strong, it's over 3% year-over-year on a real after inflation basis and that's about as strong as it gets. there's lots of reasons but one of the reasons is lower gasoline prices. >> we have seen the spending on the oogautomobiles in terms of numbers you fount. pointed out and the easy credit available in that market. what does that do to auto sales going forward as we are facing rising interest rates, potentially rising gas prices as well and people have bought cars? >> i think vehicle sales will remain strong for a while. 18 million units. that's an annualized rate. that's about as good as it gets. the thing -- you're right, we'll see at some point gasoline prices rise, at some point interest rates rise. but weighing against that is the better job market. the job market continues to improve. unemployment continues to decline. 5% unemployment rate headed south. the next good thing that's going

to happen is wage growth will kick into a higher gear. all of that should trump the ill effects of the higher gasoline and interest rates and i think we should remain at a very high level of sales at least through 2016 and in '17. at some point we'll see some decline in sales only because at this level it's above what you would consider to be trend given underlying demographics but i think next year should be another good year for the auto sector. >> mark, great to have you with us. thank you. mark stazandi of moody's. the biggest dre esgest drag knowledge. here is on the menu. up next, doubling down on chipotle. why one top food analyst says now is the perfect time to buy this stock. plus it's no fun and games if you're long today's disaster du jour. we have that name. and a story that's downright nuts. why mr. fee ppeanut could be in

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welcome back to "power lunch." shares of drugmaker mallinckrodt enjoying a pop thanks to an increase in specialty drugs. viacom is down 3% on the back of a downgrade at deutsche bank. citing a weak growth outlook. and a bunch of stocks are hitting new all-time highs in today's session including amazon, lowe's, southwest, and chub. shares of chipotle rebounding after seeing a huge semoll-off

late last week after the restaurant said an e. coli outbreak has spread to four different states. bob, really sticking your neck out there today. good to have you with us. you acknowledge in your note, bob, that the upgrade is not without risk. and there are a couple key things we still don't know. we don't know the source of the outbreak and we don't know how many stores might have to close and for how long. why upgrade now? >> well, you know, i guess the assumption that i have got to make at this point in time that i think is reasonable is that the tale of this thing is just about done. we saw one additional i think outbreak that was in early november. if we go the balance of the quarter, that essentially says we begin ultimately the recovery process, melissa. my belief is that, you know, for part of the quarter we were already positive running in that 2% to 3%. the second part of the quarter we will be flat and then when we

take away the stores that were closed and the impact there, we'll probably have a slightly positive comp for the quarter. that's what we're modeling. >> but how do you model the next quarter? i mean, in your note you say that there's likely to be a tale of same-store sales recovery into 2016 dragging down fiscal fourth quarter and slowly improving through 2016 and 2017. that sounds like a long road to recovery. does that mean that you think the stock can recover even if same-store sales numbers don't necessarily reflect a full recovery? >> no. you know, to be fair, we're modeling for same-store sales to build sequentially into the new year however beginning at a lower base because our expectation is that for this company to move forward, clearly, yes, it's building new stores but it also needs same-store sales growth. my expectation is that those stores especially in the pacific northwest, melissa, are going to be the ones most heavily impacted. that's where 22 years ago there was a pretty big e. coli

outbreak then. that really had a really strong impact on the psyche of those consumers. broadly around the u.s., i don't think it will be as negative. >> so let's pencil out though the worst case scenario, bob, because i think your upgrade reflects the best scenario. the worst case is what in terms of new states? i would imagine california and new york are sizable markets for chipotle. >> you know, listen, to be fair we haven't take an worse case scenario perspective on this because realistically you have had one or two -- in a worse case scenario, melissa, we need to see another expansion beyond just a couple of individuals pop up in four new states to really negatively impact the same-store sales in our view. if that happens, you know, clearly all bets are off because our expectation is that we don't see a worse case. otherwise we wouldn't have upgraded the stock. >> bob, great to speak with you

and get your perspective. bob darrington. chipotle shares have rebounded in today's session. >> thanks very much. so much to talk about here with this e. coli outbreak and it has many people asking whether our food is safe and for that we thought we'd ask cnbc contributor restauranteur tim. so many things i want to ask but let me start by asking you what is your best guess of where or how this bacteria got into chipotle's system? >> you know, guessing is pretty tough to do on something that's this kind of major. my thought process would be it came in on some sort of very perishable vegetable or most likely something like sicilantr or tomato. things of that nature that chipotle is going to have a hard time tracing it back. they haven't had an opportunity to narrow it down to what the problem is.

>> why has it only hit chipotle? something to do with the farms they buy from, with their systems, and could it happen to other chains? pick your name. >> well, yeah. i guess, you know, as we always -- the old saying goes, anything can happen, however with a company the size of chipotle, they're probably buying all the tomatoes coming from a particular farmer, all the cilantro from a particular farm. so it affecting other fast food chains in exactly the same way is highly unlikely. however, you know, in looking at chipotle and as quickly as they reacted to clean this up and make it right, we see one or two cases come out and quite frankly i'd be a little speculative on if it exactly came from chipotle these last two cases that came out, although it's possible. you know, the company itself is very self-conscious. i think they're going to be really self-aware of what's happening. >> yeah. is restaurant food as safe as home-cooked food?

>> restaurant food is probably most likely ten times more safe than home cooked food. most -- >> why do you say that? >> most of our home cooks don't clean their food properly. >> right. >> you think about restaurants are very self-aware of how they clean the food, how they take care of the cutting boards. it's regulated. if there's a place in the world that's not regulated, it's going to be your home. you have all kinds of people the way they cut food, clean the cutting boards, the type ever boards they use, how they clean their utensils. all those things come into play and how many times you wash your hands. i mean, i run multiple, multiple restaurants and, i mean, it's like washing your hands can't be emphasized more in restaurant settings. so at home when we cook, especially and get around the holidays -- >> yeah. >> -- you know, that's probably the scariest time there is when aunt jan and uncle steve and all these people bring all these foods over. that's where you need to be aware. >> that uncle steve, he's always making a mess. it's true, at home i use probably -- i'm not going to tell you.

do i clean the cutting board every single time when i move from poultry to something else? i got to tell you, no, i don't. i don't know what i'm -- >> i would guess you probably don't. >> you would be guessing correctly, tim. now, let me ask you this other question and this is a hard one. i was out with my wife and son yesterday. we drove past a chipotle. i don't eat at chipotle very often, but my wife said instantly, who would go to chipotle today? that speaks -- and this is in new jersey. that speaks to a brand damage that's been done here. how does chipotle get that back and there have been no e. coli or salmonella outbreaks in new jersey chipotle. >> that's true, and, you know, that's something they're going to have to face. like i said, you know, chipotle is very adamant about their ingredient sourcing and things like that. so this is a little bit of a blow to them looking at that. however, because you're a little more in the know and driving around with your wife saying, hey, who would go to a chipotle

today, and i promise you if you look out is there around lunchtime, you will see about 45 people in line that will. the brand is very, very strong, and i think, you know, the guy that was analyzing earlier, i think he's got a good point. i think you will see the stock rebound very quickly. as long as they don't have any more extraneous things on the outside, you will see something really special happen in the next couple weeks. >> thank you very much. watch out for uncle steve around thanksgiving time, man. he's trouble. >> you got to watch out. >> mels, taissa. >> watch out for tyler. go clean your cutting boards. >> by the way, clean up that cutting board. that's pretty bad. you don't do that. >> it's pretty bad. >> awful. >> lesson learned, okay. >> thanks, guys. the s&p 500 hasn't done much for your money over the past year but that could be a bullish signal. the upside to a sideways market ahead. plus, one analyst is making a big bet on booze. more on that call ahead. plus, we're keeping an eye on the downturn in the market. stocks are falling to session lows.

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welcome back to "power lunch." i'm melissa lee. if you invested your money in the s&p 500 a year ago through the sty etf you gained just about 1%. nothing crazy there. but there could be a lot of upside to a sizeways move in the market. cnbc's mike san tolly joins us with more. it's crazy to think given all the volatility we've seen of late that we're basically flat. >> yeah. well, it's very volatile. we obviously had one correction this past late summer, also one october of 2014. you can stretch back to july of 2014, 16 months ago, and basically that's when we first got about this this s&p 500 level of 2,000. if you look back, this isn't terribly unusual. there have been at least six

prior periods when you had at least a 16-month period when the s&p 500 basically stayed within a 10% range as it has now. over that time, you had more often than not this range broke to the upside eventually. doesn't mean it was right at that 16-month mark. it could go on for two years, but the way i read the current environment is that the market has been digesting slowly the big gains from 2012 to 2014. we're up about 15% from election day to middle of last year, and obviously profits have stalled. we've had a global growth slowdown and we're waiting to see what the fed does. all that stuff has created this kind of balanced or indecisive market i guess depending on how you want to describe it. >> have the circumstances or the context of this market stall been the same or similar to the ones in the past that sort of preceded periods of upside? >> to some degree, yes. i will give you one example. there are a couple periods in 1994 and '95. that was when we were kind of waiting for fed policy to shift. you had a recovery that people

didn't quite believe in. they started to believe it in the u.s. i'm not saying we're off to a late '90s-style bull run the way we had then, but there have been some similarities. of course, some were very different. 1976-'77, obviously lots of inflation. the economy wasn't doing great and the market was basically just kind of sitting there for years at a time. >> right. the seasonality certainly lines up right now. thanks for joining us. >> thank you. >> mike santoli. up next, get ready to go nuts. why taxpayers might have to shell out $2 billion to save our nation's peanut farmers. the details ahead. first, the final oil trades are crossing and lets get to jack di can eangleangelis ahead close. >> comments from the saudi oil minister. we'll get into those and the analysis and how the market took them and thinks they'll materialize within the next few days. we have all that coming up on "power lunch." stay with us.

cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. hi watson. stay with us. i'm turning seven. what did you ask for? a princess. and a pony. you like things that begin with p. stay with us. like pink frosting. like pink frosting. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you.

it's gotten squarer. over the years. brighter. bigger. it's gotten thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. hi, everyone. i'm sue herera. here is your cnbc news update at this hour. the belgian prime minister says that the alert level in brussels will remain at the highest level for the time being.

however, schools and the subway will begin to reopen on wednesday. he says the threat is still imminent but asks the population to stay calm. gop presidential candidate marco rubio says he wants to show the world how isis leaders, quote, cry like babies, end quote, when captured. he outlined a strategy to defeat isis during a town hall in iowa. he says showing captured leaders will convince recruits not to join the terror group. pennsylvania firefighters working through the early morning trying to put out a very stubborn fire at an abandoned factory in erie. no word on any injuries. and the los angeles dodgers have hired david roberts as their new manager. he was the bench coach for the san diego padres. roberts becomes the first minority manager in the dodgers' franchise history. and that is the news update this hour. back to you guys, melissa. >> thank you very much, sue herera. let's get to jackie deangelis for the oil close.

jack? >> oil prices turned negative just as clowe finishing at $41.75 after a volatile session. we were higher for most of the day and that was because of support coming from the comments that came out of an energy conference in the middle east from the saudi oil minister. he talked about the stability of the oil market and he also said those efforts to cooperate with both oil producer and exporting countries would continue. but markets turned negative when the analysis came out that, look, the saudis have said this before. saying it and doing it are a different things. most analysts not expecting to see a production cut from opec at the december 4th meeting. this is the kind of stuff that moves the market and it did. it just really didn't have a lot of staying power. the dollar index hitting $100. that's very bearish for oil prices. continue to see these move down if we don't hear anything else. >> jackie, thank you. take a look at aluminum on the london metal exchange. it's down over 15% this year. today sources tell cnbc that one

hedge fund manager is making a major bet on one of the world's largest aluminum producer. david faber, the man who broke the story, joins us with the latest. >> shares of alcoa having a rare good day. the stock down almost as much as 43% in part because of the commodity you just mentioned but this morning as we first reported, elliott management, the large hedge fund run by pull singer taking a 6.4% position in alcoa. in this case though not coming at management. in fact, saying it's supportive of management and supportive of the split that was announced less than a couple months ago by alcoa itself to split itself into it's down stream and upstream assets, if you will. they do take aim, however, at the upstream business, the called eps business which services the aerospace industry, for example, and believes there there could be significant margin improvement, as much as 700 basis points in margin

improvement. they have met with klaus kleinfeld, who runs alcoa, and report those conversations were positive in nature. they do also believe there may be an opportunity for energy assets that are owned by alcoa, not necessarily to be sold but perhaps to be sold in some fashion. alcoa does own assets that produce energy that also produce as much as $200 million to $300 million a year of what elliott calls stable and high multiple ebitda. so all of these things adding up, of course, to a higher stock price to a 13d filing we got from elliott easterly earlier in the day and to the prospect they could get testier. for now they are supportive of klaus kleinfeld. they believe margins can be significantly improved and the stock having a rare good day at least at this point. melissa, somewhat reminiscent at least of that move made on ge where they said we like the strategy, we embrace it, and the

stock price has responded ever since. >> i was thinking of icahn and freeport-mcmor freeport-mcmoran, the idea that financial engineering can offset demand. >> it's not clear that can actually take place. >> exactly. >> in this case you're still talking about the split, by the way, being quite some time away. i think talking second half of next year. we'll see whether those things can come to bear. >> david, thank you. time for "street talk." the analyst recommendations on the stocks you need to know about. first stock here general electric. credit suisse is removing ge from its u.s. focus list. it was added to the list on september 16th but a lot of catalysts highlighted have played out. consensus forecasts look a little high and their industrial estimates are below consensus with ge being no exception. >> and up next, phillips 66 downgraded. goldman sachs slashed a sell rating on the stock and drops

the price target to $85 from $92. goldman says elevated share prices make stock picking critical when it comes to refiners noting that tsx has a below average free cash flow yield. >> all right. stock number three, express. mkm partners is bullish saying it is going to be one of the biggest positive standouts in softline retail in the third quarter. promotional activity less than last year and that's key with select cattory like pants, wear to work, and dressy collections remaining at full price. express reports earnings on december 3rd and the stock is up 20% so far this year. >> next up, constellation brands. upgraded at cowan and company. they see further market share gains to propel the stock higher. cowan also ups the price target there to $170 from $135. constellation, new highs on strong vol in today's session up more than 3%. >> last stock here, amberella,

slashing the price target to $77 from $102. it is sticking with its overweight rating given the rest of its business is growing more than 50% with items like drones, security cameras, and police cameras. that does it for "street talk" for a monday. shares of gamestop plunging after missing earnings estimates. let's get the next move with the "trading nation." erin gibbs with is s&p investment advisory and wari wald. >> i own gamestop in a few portfolios and this miss, it wasn't good, they did miss on earnings, but the good thing to take away was they really reaffirmed their annual earning and half of their earnings comes from the fourth quarter. so clearly they've got a lot of faith in what we're going to do in the fourth quarter. i think their diversification

into more merchandise to mobile phones is moving the concerns away from some of the online gaming competition that we've been seeing, and right now it's trading at 8.5 times earnings. it's been a low for the past year. it was a great entry point last year in december when it got this low and i see this as another good entry point. >> ari, what do you see on the charts? >> potential -- i would guess long story it's difficult to really make the case for this one in the charts. you know, looking long term, here is a stock that had trouble not only getting above where it was back in 2013, but couldn't get above where it was back in 2007 as well. so overall we see a lot more overhead resistance versus the market which is coming off a new all-time high. potentially you have an entry point here. looking at the last couple years, the $32, $33 level has marked support. we're oversold. probably where you see an oversold bounce but not a strong long-term trend that could get us behind it. >> you are on the opposite ends

of the trade. two to make a market. head to tradingnation.cnbc.com. >> just ahead there's a new study out from symantec. it reveals the average cost in money and times for victims of cyber crime. we'll bring you the numbers and what you can do to protect yourself. you're watching cnbc, first in business worldwide.

$358, that's how much an on average a victim of cyber crime pays to fix the problem, not to mention spending nearly a day and consumers are taking note. 4 out of 5 people are worried about being the victim of cyber crime. here to break down the findings is bill rosencrantz. great to have you with us. >> thanks for having me on. >> what's interesting about the study is a lot of people are very aware about the dangers of public wi-fi and being hacked,

et cetera, and yet they're pretty lax about their own cyber security. they share passwords, et cetera. >> what we found in the report is the people have an overconfidence. they believe they're safe. they almost unilaterally grade themselves an "a" if you were to ask all of our consumers around the word and in the u.s. whoo we find out when you dig deeper you find some of the weaknesses you just talked about. one in three don't even put a password on their devices which we found pretty interesting, and one in five actually share their passwords. >> if i'm a consumer, i am a consumer, i'm more worried though about the retailer that i'm doing a transaction at being hacked. you hear about the targets of the world and the home douepotss opposed to somebody hacking my personal account. it is safe or safer for me and my personal account versus using your swipe card at a retailer? >> not really. the gap here is that consumers -- because they're

overconfident, this he seem to feel comfortable when the reality is they own a lot of their personal information. i always say the consumer owes the king to the kingdom. they're the one that controls all their information. we see a lot of attacks where people are clicking on links, putting their information to a place where hackers will get to it. it's really both. consumers need to be conscious of what they control which is how they manage their own information. >> bill, you know, you say seven in ten americans believe using a public wi-fi is riskier than using a public restroom which i guess says that we have conquered the public restroom safety threat in this country or something. i'm not sure what it says. but what are the odds in any given year, bill, that i am going to be a victim of cyber crime? is it 5%, is it 15%, is it 45% and how do you define cyber crime? >> sure. let me start with the how do we define cyber crime. cyber crime is a dynamic definition because hackers are dynamic but it ranges from everything from getting your

e-mail account or social networking account hacked all the way up through full-blown identity theft. in any given year, 50 -- about half of consumers claim they have been impacted by a cyber crime and just in the united states alone 33% of americans said they were impacted by cyber crime in the last year. so it's not a small percentage. >> what are some of the latest and the hottest trends in terms of cyber scams these days? everybody knows not to click on unknown links and attachments and things like that. what's next? >> the big one right now is what we call ransomware. it's up 114% last year and this is on a fairly large base, and this is where somebody -- you actually get some kind of software on your system. someone probably clicked or downloaded it and it holds your computer ransom. you have to pay someone to get access back to your computer. there's one more which is crypto ransomware which encrypts all your data which is harder to control. that's the big trend. they're profiting from getting on your device and force you to pay them to get it back.

>> crypto ransom, scary stuff. thank you for joining us. bill rosencrantz with symantec. >> thank you. >> this is a man who has clearly got a lot to celebrate. look, he's moving, he's styling. he's the president of argentina. conservative opposition candidate macri has promised to set them on a more free market and danceable course after 12 years of populous rule of the government. what will it mean for arjgentin and the global economy. we will debate that when "power lunch" returns in two minutes' time. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.

election results the arj teen raval is trading lower than 5% but bonds moved slightly higher. tim seymour and larry mcdonnell join me at the nasdaq. we can break it down into two things, the eek wit reaction and bond reaction. larry, the bond reaction indicates, what, this is good for argentina's economy. >> a lot has been priced in. since september some of the bonds are up 20 points but if you compare argentina's credit to, say, brazil we are still trading 200 to 300 wider of brazil.

brazil is in a credit downgrade situation. there's still a long way to go on the plus side for the argentina bond market. >> so you see upside for bonds? >> yes. >> you also say a lot has been priced in when you take a look at the stock reaction a prior month before the election. >> september we started to get a sense that at the would be a core contender so you see the marval is at record highs. there's a number of different ways to play this markets if you are a u.s. investor. the key is going to be the currency. so if you are a u.s. emerging market equity investor you are a dollar based investor and there could be significant dee val risks in the argentina pay. that's one of the risks in the short to medium term. >> you throw in a fed rate hike what does that do in your view? >> there is so much stress in that part of the world i don't see there is a big impact on argentina. argentina's external debt is

only 20% debt to gdp, u.s. is over 100. from a credit perspective they can lever off. they can get back to the bond market, that's going to create a ton of positive implications across equities, across many different parts of their economy. the fact that the government is finally going to make whole actually have a positive relationship with investors globally. >> that reminds me of the lead up to the indian elections where we saw this huge run up and then after that it was sort of like, well, show me what you are going to do now. are we at that point? >> i think he has been very i think cautious about what he can do or what's actually going to get done in the short term. i think you have this policy expectation, you had a more market friendly approach with the western creditors, you have a currency that is probably going to weaken but i think arj teen equities at this point look fairly valued except that the

discount rate could fall. i think argentina could be still a pretty interesting place. >> are there specific stocks you are looking at right no. >> if you want to play the consumer in that ward of the world, that to me is interesting because they will ben fit from a lower cost base. ypf which has been under pressure. domestically it will be i think advantaged by this administration into this is the moment really a special moment in history and i think it will have impacts throughout latin america. i think the big winner is going to be brazil. brazil will start to price in a more market friendly income and government. this increases those pronl probabilities. when reagan came into office you had 50, 60% moves heading into the regime change. if that happens that's a

positive for brazil. >> taxpayers get ready to go nuts. jane wells, see jane go nuts. hi, jane. >> see jane almost eat. tyler, once again, we have got be in the wrong business. up next, how to make money even when you lose it when "power lunch" returns.

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. shares of amazon hitting a new 52-week high in today's session. everybody knows about the grinch who stole christmas, why amazon might steal christmas from all

the other retailers tonight that's tonight 5:00 on "fast money." >> u.s. taxpayers may have yet another reason to go nuts, peanuts that is, jane wells with more. >> cross subsidies have been cut but they are still not peanuts except in this case, america has too many nuts or legumes. peanut processing up 24% so prices have fallen by more than a third over the last four years. get this, that same research predicts you the taxpayer may have to pay peanut farmers nearly $2.5 billion over the next four years. unintended consequences of the farm bill which may actually encourage the situation. southern farmers are protrusioning so many peanuts because many switched from cotton where subsidies were cut and in the farm bill passed last year peanut farmers have to get

reimbursed by the government. peanut prices have only reached that threshold twice in the last 13 years, current prices are about $150 more. if prices fall blown $355 a ton they can start repaying loans with actual peanuts. the u.s. government took possession of 133,000 tons of peanuts last year, enough for 20 million americans. the congressional research report suggests these guarantees actually encourage farmers to grow more peanuts regardless of the market. finally, this is the first year peanut farmers can get crop insurance, too, to help cover the revenue losses. >> why would they set the price at $535 a ton if it's only been there twice in 13 years. >> that is the $2.5 well question. that is a price that is very high and seldom met. >> what did the government do with all the peanuts? >> they store them or they --

>> they store them? don't they go ran sid? >> i don't know. i don't know what peanuts do. they've been trying to boost exports to china and one of the times it did make 535 a ton is when exports to china shot up but exports have been dying down even in china because they're starting to grow their own. >> we are on the hook the difference between 535 and 386 a ton. wow. that's amazing. >> what a nutty story, tyler. >> yep. >> brian is not here so i had to throw that in. we should take note that we have off session lows right now but this is a market that we should be watching because we are seeing weakness in technology. the semi-conductor index is down by 1.3%. we're seeing tremendous weakness there and utilities are leaving the market lower, they are down by almost a full percent at this hour. so could be very interesting final hour of trade shaping up here. >> and following on the heels of a very positive week last week. yo-yoing, the week before was

not good, last week was, this week starting off in the red. >> i will see you tomorrow. >> i will be back. >> i will see you guys at 5:00 on "fast money." "closing bell" starts right now. >> welcome to the "closing bell," i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth. a record breaking acquisition in the healthcare space to tell you about in case you hadn't heard already, nearly $160 billion deal between allergan and pfizer. it will allow pfizer to cut its u.s. corporate tax bill, the rate is around 25%, but it will go down to 18% once they domicile in dublin and will bring brands like zoloft, viagra and botox into the same company. we will talk about whether this could pave the way for even more deals in this space. >> and it's the old economy versus the new one, morgan stanley willl