>> joe? >> one thing that troubles me is interest rates and the talk about 100 basis points higher from where we sit today at this point next year. that's very complicated. very data dependent. don't play that game. >> nuance, carl icahn name, stock hitting 52-week highs. >> "power lunch" starts now. >> scott, gentlemen, thank you very much. welcome, everybody, to "power lunch." weak manufacturing numbers pushing the markets from the highs of the day. is manufacturing entering a recession? >> at the same time though, we're seeing strong numbers in the auto sector again. in fact, this could be the best november in 15 years. >> analysts debate the financials. john stump on cnbc today. if the fed makes a move this month, do you want to be in these names or not?

we'll xblor. >> a weaker than expected report on manufacturing out this morning. will this change the fed's mind about the strength of the economy? steve liesman joins us now. we're looking at a contraction here. >> in the manufacturing sector. the belief is that fed will look through this week, at least for a while in manufacturing. the reason is because it seems the result of a crash in the oil and gas industry, a strong dollar and weak overseas growth all risks the fed knew before the report. the numbers were coming in at 48.6, a level that is contraction in manufacturing. you need 43 for it to be a contraction in the economy. it is the lowest level since '09. new orders, production is declining. back logs in exports remain at low levels. here's some comments from respondents that they made public. one says the down turn in china and european markets are negatively effecting our business. another says the strong dollar is slowing our sales to china as

they can buy in europe. that gentleman is in the primary metals industry. another says, low oil prices are now the new reality. somebody from the petroleum and coal products business. many economists point out despite the tough times in manufacturing, it remains just 12% of the economy. curiously, job growth in the ism survey did pick up in manufacturing. to the extent that it's weakness comes from the oil patch and brings low prices for consumers which is a help to the economy. and other data was pretty strong. construction spending in october topping estimates of car sales. looks to stop 18 million units historically for the third month in a row. more widespread weakness in the friday jobs report, the fed will probably plow ahead with higher rates this month. that's the consensus. >> do you buy the argument that it is mostly dollar related and china related or is there something else going on? >> i think those are the proximate causes. >> we just have too much stuff around the world. >> and not enough demand.

>> that will do it to you every time. >> especially when the cost of the terms of trade is like that. >> thank you. >> we did see big demand was in auto sales. another big month for them. phil lebeau, bring us the numbers. [ no audio ] >> -- third straight month with the sales rate above 18 million vehicles. that never happened in the u.s. take a look at the numbers from last month. don't get caught up on whether or not the automakers were up a few per cent or down. toyota had the strongest performance of any of the major automakers with an increase of 12.4%. what was driving sales last month really four things, year end promotions that everybody was rolling out. those got a lot of traction. not because they were sweeter deals but more the marketing and messages. you combine that with low interest rates and cheap gas and made a lot of people say if i'm going to buy, now is the time to buy. speaking of cheap gas, suvs are red hot. look at jeep. november sales up 20%.

by the way, jeep is now on pace for record sales for any one year, more than 750,000 will be sold in the u.s. it's a different story for volkswagen. november sales plunged 24%. it's the diesel scandal impacting sales. there is a stop sale order on the diesel models. they can't sell those. they'll have trouble getting any sales at all even if they boost incentives. when you take a look at shares of volkswagen, a lot of people say why isn't the stock down more? this is prime arly dominated by the story of what is happening in germany and the government there working with volkswagen to get a solution in place. again, we'll get the final sales pace number within the next couple of hours. if it's over 18 million, first time we've ever seen that for three straight months in the u.s. >> we have breaking news from turkey. there has been an explosion near a subway station. the mayor there in istanbul saying it was indeed a bomb. that explosive device was

reportedly left near the station. at least five people were injured. four months ago a pair of suicide bombings blamed on the islamic state killed 130 people in turkey. puerto rico saying the government development bank made a large debt service payment today, $355 million. we're going to lay out the debt calendar for that beleaguered u.s. territory. and lots of the debts including the gos have been called into question here. >> they have. it's a fluid situation. puerto rico did dodge a second default in paying what the gdb owed to day with the puerto rican governor could prove a controversial move said he'll claw back revenues that are pledged to pay certain bonds as needed to keep utilities running on the island, to keep services running. puerto rico is sticking to some pretty dire rhetoric as well saying in a statement that liquidity is severely

constrained and it could mushroom into a real humanitarian crisis. it's an effort to win federal assistance and creditor leniency as talks go on with bond holders, perhaps in the form of a chapter 9 bankruptcy capability or bigger claw backs from hedge funds and others that hold the puerto rican paper. the island continues to face a waterfall of obligations starting with $130 million department to the trustee of the electric utility in two weeks and followed by a monster $1 billion payment foifrnt of the year from major borrowers. that includes the general obligation bond which were considered some of the safest but have not had money set aside to pay them in recent months raising questions about whether they still are. a little more confidence. you can see the gdb bonds, the ones with the bet service payment are up a bit. a little bit of confidence. these are still trading at really depressed levels. >> kate kelly, thank you.

>> wells fargo ceo john stump said tuesday he likes how the u.s. economy is doing. here is what he told cnbc earlier today. >> economy is growing at the 2%, 2 1/2% range. it's become more regional meaning that it's more industry specific. >> stump also thinks the fed will move this month on rates but that the debate has become bigger than the rate. let's take a look at the shares of wells fargo right now and see how they're trading in what is generally a positive day. do we have the shares? they're up by .6%. let's bring in bank analyst with rapid e capital. good to talk you to. let's get the economy questions out of the way. do you agree with what mr. stump was saying about the debate being bigger than the rate and going forward, what do you think the trajectory is and what it means for banks? >> he's exactly correct in saying that it's no longer

whether they should raise rates or not raise rates based upon whatever indicators out there are saying. the debate is now they better raise rates or they're not doing what they should do and, therefore, presumably they're going to raise rates to reflect what the debate is demanding. however, what mr. stump is also saying is don't look for further rate increases rapidly as we get into 2016. and that, of course, i think is true also. the economy i don't think is suggesting that rates should go up. and then i guess the next point would be banks don't benefit if the rates don't go up. because i'm convinced that the industry has been nationalized and because it's nationalized and because the resources of the industry are being directed to the government and not the private sector, it becomes very difficult for banks to show increases in earnings if you don't get rate increases. >> but rates -- but banks are making a lot of money, aren't they? a lot of the big banks are making billions of dollars every

quarter, quarter after quarter. it's a little hard to feel sorry for them even though they are certainly subject to more and in your view regulations than they were ten years ago. >> do you think it's good or bad that companies make profits? that's number one. number two, assuming you think -- >> i think it's good they make profits. i'm just saying that i'm all in favor of them making profits. i read what you have written. i see that you seem to feel as though they're being ham strung unnecessarily and, yet, the numbers show that they're making billions. >> yeah, well, they've been making billions for years. think about yourself. there's $2.7 trillion sitting at the federal reserve right now. that's 22% of the money supply of the united states. it is sitting there because the federal reserve told the banks they have to put it there. let's assume that that $2.7 trillion instead of sitting at the fed funding the u.s.

government was sitting in the hands of banks to loan to private individuals, to households and to businesses. do you think the u.s. economy would be growing faster or slower because the private sector had the money instead of the fed? according to the velocity of money, what we're seeing is the velocity of money in the united states is declining because we're putting money at the fed at virtually no return for the benefit of the government and we're not giving that money to the private sector. you can't have that money because that money has got to go to the u.s. government. that's not positive for the united states economy. that's not whether you like or dislike banks, that's just a fact. you don't put 22% of any nation's money supply at the central bank and then give it to the government and expect the economy to rise. >> so if i'm an investor in the banks and listening to this, make it actionable for us. what does this mean in terms whether i buy, sell or hold the banks and which ones?

>> it tells you pretty clearly if you intend to buy bank stocks, you have to have a rate increase. the government is constantly putting into effect new rules that take the profits of the banks down. as john stump mentioned in his interview this morning, he's being forced to raise something like 20 to $25 billion that he doesn't want that, accident need because the government decided that banks should have more long term debt. he'll raise that capital. he'll raise that long term debt somewhere between 5% to 6% in terms of the costs. he'll take the money and he'll put it into the federal reserve and get 25 basis points on it and then, you know, the investor is supposed to feel that bank is safe and this is a better place to invest their money. without a rate increase, it is going to be extraordinarily difficult for banks to show increases in their earnings because the government keeps taking the money away from them and giving it to the fed. that doesn't help you. if you hate banks as much as

everybody hates them, that doesn't help you if you can't get money for mortgages, if you can't get money for businesses. on deck capital which is a nonbank financial company is making loans to small businesses and the rates on those loans are 40% to 50% a year. at the same time, wells fargo is taking money and putting it at the fed at 25 basis points. if that isn't a screwed up financial system, i don't though what is. >> thank you very much for your thoughts on the banking sector. coming up, the stocks that are down so far this year that could be poised for a rebound as we head into 2016. we'll get some contrarian stock picks. plus, new york city with a new warning on salty foods at chain restaurants. is this the government telling us what to eat, what not to eat or an important step to keep people healthy? we have a debate lined up for you.

welcome back to "power lunch." astro citizen ka is nearing the best levels up by 2%. analysts upgrade the stock to an overweight from a prior underweight rating. the analyst there citing pro bust products in the pipeline for the coming years. the shares are a folk us in today's trade. >> thank you very much. markets in rally mode today with the dow up triple digits. we want to take a closer look at

contrarian stocks that may be good bets for your portfolio. michael vogelzang is cio of boston advisors. where are you finding contrarian plays or are they scattered about the market? >> they're always scattered about the market. the key is to find what street consensus is and identify where it may be wrong. i was thinking about the energy play, the entire energy play is a contrarian example. one of the names we love is -- well, we like, is best buy. it's right in the -- force. >> what made you change? >> well, look, as a contrarian investor, you better be skeptical about whatablists are telling you. you do this with your eyes wide open or don't do it at all. best buy is right in the teeth of the whole amazon online retailer electronics stuff.

given the incredible cost control over the coming years and buy backs are fairly substantial magnitude, we can see earnings growth as long as they can, sort of hold their own. we like the valuation. we like the fact that they're doing the right things and managing the business. they still have to execute. >> another one on your list is adt. they were spun off a couple years ago from tyco. do you think they've got their business under control now even in the face of height ened competition? >> yeah. all that -- that's the thing to watch. what kind of price wars happen with the home security industry? what's going on with comcast and at&t and verizon and all the rest that want to get into that space? they've done a good job of maintaining the market share. the last three years after coming out from tyco, they spent more on systems and investments in the business.

>> it's turning into a free cash flow story. we're going to be watching management very closely to make sure they don't get too big for the britches and spend that free catch flow but start to return that cash flow back to shareholders. we think, again, the sort of the attitude and pessimism around the street is pretty negative. so we think it has an opportunity there. >> it's a good investment and good capital moves in the case of best buy. it's cost controls that you think are going to pay off. let's move to your third one and identify the catalyst at citizens financial. >> again, they're a spinoff from royal bank of scotland. they're completely independent.

the peers are more expensive. what we like about them is they're beginning to grow and increase. and that should, we believe, narrow that differential in the banking sector between some of cfg and the purists. it's an interesting business. we love the fact that spinoffs bring that entrepreneurial we're going to win. our parent got rid of us. >> michael, thank you very much. we appreciate your time and stock picks. >> thank you. >> all right. let's take a look at the dow jones industrial average. up about .6% or 100 points at 17,827. it's been an up and down day for stocks. we'll tell what you is moving the markets when we come back. plus, what does janet yellen have on the second day of fed mess? it's a new holiday that we celebrate here at cnbc. another potential trade to make ahead of the fed meeting. it says feed me, it's really the fed meeting.

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bob dylan. to improve my language skills, i've read all of your lyrics. you've read all of my lyrics? i can read 800 million pages per second. that's fast. my analysis shows your major themes are that time passes. and love fades. that sounds about right. i have never known love. maybe we should write a song together. i can sing. you can sing? do be bop. be bop do. do be do be do. do do do be do. it has been a strange roller coaster day for the dow. let's get down to bob pisani of the floor of the new york stock change. what we're seeing is true to season when december is a good month for stocks. >> better than pretty good. it's the best month of all. thank you. good lead in there, mandy. we asked our friends to take a look at it. the numbers have been known for a long time.

the s&p 500 is up 1.8% in december. that's the best month of the year. data goes back 25 years. interestingly, it's not evenly distributed. the big gainers are utilities and industrials. that surprises me. it doesn't make a lot of sense. it doesn't naturally fit. and the one sector up the least is technology. it's up .06%. it's a good month overall for the stock market if you own the broad market. i want to show you how professional stock traders rotate the market. the laggers in november, the stocks that did the worst were solar stocks, airline stocks and metals. guess what's the leadership group today? solar stocks, airline stocks and metals. exact opposite of the november performance. in other words, professional traders are buying the laggers today. now take a look at the laggers today. biotech, regional banks and oil service. the laggers today are biotech and regional banks and oil

service. again, they're doing the exact opposite. so here's the group rotating around a little bit. finally, i hope you've been listening to phil lebeau talk about the fantastic auto sales numbers that we haven't seen in years. talking about 18 million starts for the month. that's a fantastic number. what we haven't seen is a lot of enthusiasm in buying the auto stocks. gm up is 3%. toyota is down 1%. ford is down 7% so far on the year. mandy and tyler, they're not terribly expensive. seven, eight, nine times forward earnings. people are excited about the fantastic sales and amazing bargains out there. i think they're concerned they're pulling forward the 2016 numbers. >> thank you very much. on the second day of fed mess, janet yellen sent to us, she sent us to dominick chu who continues his series on the

investments. we're down to number 12. >> the first day of the two day fed meeting. i've been asked to not sing. >> you also pointed out with your green and my red, we're very christmassy ourselves. >> yes. let's follow up on what phil lebeau and bob pisani were talking about. the last fed interest rate meeting of the year, our colleagues put together a series of trades like we've been saying that have shown historical successes. now 12 trades, they're linked to periods of rising interest rates which could happen if we do get something from the fed. so here we go on the second day of fed-mas. janet yellen tent to me two general motors and a pair of trade currency. there is a big debate on how strong the u.s. economy is. there are signs on the bullish and bearish side. if we do see a rise in interest rates if, we do see one in the context of a strengthening u.s.

economy, auto stocks say they might farewell. according to the data partners, since the beginning of 2005 during periods of rising interest rates, the average one month return for share of ford, gm and the auto parts have been solidly positive as you see there. and they've been winning trades at least 70% of the time during that time span. again, ford, general motors that, is the second day of fedmas. that is part of the story for more subscribers can go to cnbc.com/pro. stay tuned tomorrow for the third day of fedmas. tyler, we look at some exchange traded products. back to you. >> to the bond market we go. rick santelli tracking the action. >> rising rates, severing good. rates are not rising. in the periods of the past, rates are rising because the economy was cooking in grease, not acting like grease. if we look at twos, tens and

30s, the worst headline number for ism since 2009 hit, tens were down half a dozen as were 30s. the curve continued to flatten a bit. if you look at tens to twos, you can clearly see it. fives act a lot more like a 30-year than they did a two-year today. and the dollar index is fascinating. so many companies say listen, life will be great if it wasn't for the strong dollar. most likely it's the pro active strong dollar. it's on the move. if it went side ways for a while, i think the anxiety would diminish. if they start normalizing rates, i doubt if we'll see a fl flattening of the dollar action. it will be a lot more testing above 100 than the current flirting with 100. tyler, mandy, back to you. >> thank you very much. let's take a look at the qqq. that is the etf that tracks the nasdaq 100. up to day. that index near anz all time

high. up by .5%. is now the time to buy some of those big name tech stocks? plus, let's take a look at gold, shall we? we'll get you the closing trades as gold moves lower by $2 an ounce. that comes after this quick break. sure, tv has evolved over the years.

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is. hello, everyone. here is your cnbc news update for this hour. turkish police telling nbc news that a small handmade bomb exploded on an overpass near the metro station in is tan bull. that is closed circuit tv footagest explosion. five people were injured in the blast which happened on the european side of the city. iraqi troops beginning a military operation to retake ramadi from isis militants. iraqi troops warned civilians to leave the city. they captured ramadi back in may. a philippine court convicted a u.s. marine in the 2014 killing of a transgender filipino woman. he was sentenced to between 6 to

12 years in jail for homicide and ordered to pay the victim's family $98,000 in damages. it was 60 years ago today that a simple act of disobedience galvanized the civil rights movement n 1955, rosa parks refused to give up her seat to a white man on a public bus in montgomery, alabama. her refusal and arrest sparked a year long boycott of the buses. that boycott was organized by then 26-year-old martin luther king jr. and that is the cnbc news update this hour. back to you. >> i had shivers up and down my spine. thank you very much. the final trades are crossing on gold. some of the other metals. let's get to jackie deangelos who joins us. >> good afternoon. interesting session for metals today. mixed despite the fact that we're getting a little relief in that dollar rally that we've been seeing over the last few days. gold trading lower. just about that 1063 level.

this is all about the december rate hike. gold traders think it's coming. what is interesting is the bump up in copper prices. we've turned positive on the week. it seems to be moving in lock step with u.s. equities here. but still remember copper is down 10% for the month. so if copper is a warning about the global economy, definitely something to think b back to you. >> all right. thank you. take a look at the qqq. today up as the nasdaq 100 gets very close to a new all time high. dominick chu is looking at some of the big cap tech stocks that populate the nasdaq 100. >> on a closing basis, we're less than 1%. we still have a little bit to go before the record all time intraday highs -- >> up 9% so far. >> if you look at the qqqs, take a look at what is happening in the scheme of where it's gone compared to the nasdaq composite. the biggest cap companies are

outperforming the overall composite. it goes with this theme that we've seen all year of the biggest stocks in america really driving most of the gains here. those are the ones we want to go to. as for which ones in the nasdaq 100, the current index -- force. >> who is driving that? >> you have activeision and blizzard. holiday shopping season, maybe they're getting a bid. >> 98% year to date. >> almost a doubling for activision and blizzard. amazon.com and this thing is up 120% so far just year to date. this is carrying a lot of weight. the best performing nasdaq 100 stock so far year to date, we know this, it is the best performer in the overall s&p 500, netflix is up 56%. the big cap stocks driving a lot of the gains as we sit near record highs. >> thank you very much. and stocks are rallying on this first trading day of december.

the dow up a little less than 100 points. 93 to be exact. is this good news for the market in 2016? joining us is david specca and chief investor officer at castle arc management. david, how do you see 2016 stacking up? how do you see '16? >> 2015, we think the market basically treads water between now and year end. not a lot of catalyst to push it either way. the real key is going to be earnings. we think the economy continues to grow relatively slowly. we see the global economy growing slowly. earnings will be the key. i think for investors sh the best place to look are industries where companies have top line growth revenue growth potential. whether it's visible, predictable growth potential, they'll be very much a stock picker's market and a slow growth environment. it's going to be all about security selection. >> slow growth, low inflation, jerry.

you're a little more optimistic, i gather, than david is with respect to next year's prospect. >> yeah. i'm not an aggie. i don't have that level of conservati conservatism. i really feel we have a much bigger upside coming next year. the interest rate cycle will begin to kick in and acknowledge that. the global economy is now fully liquid and there's plenty of drivers behind all sides of it. if you look at the united states, we're at the tip of this sword. we're going to grow faster than people think simply because consumer spending and cap spending are likely to be higher than expected. driven by all these great forces that are low inflation, low interest rates and now a six-year and grinding higher global economy. that should reflect better in overall stocks, particularly cyclical names, energy is going to have its bump here. you can bet that will happen in the next six months. as well as the financials.

there's plenty of sectors in the market that you can play broadly as well as what david would point out individual stocks. >> you both like industrials. jerry likes energy. david, make the case on why that sector, what you think about that sector. energy can't get much worse, frankly. will it get better? >> i know energy is a big energy bull. he learned that while studying at notre dame. you have to be very cautious about the energy sector. the uncertainty surrounding oil prices still very high. saudi arabia has to come to their senses. we have supplies going up. as long as they don't go up, it's tough to make a bet on the energy sector. we like companies that benefit from low energy prices. some industrials like aerospace. we like the consumer who

benefits from lower gasoline prices and lower energy costs. we think that's the way to play this current cycle. >> thank you very much. we appreciate your being with us today. go to our website right now. don't wait a second. right now go there to see what jerry is avoiding next year. that's on our website. >> take a look also at the year to date chart for the dow. almost exactly unchanged. a little bit like groundhog day and that makes some people say that this is a stock picker's market. in which case, which stocks do you pick? we'll get large cap names coming up. plus, new york city slapping a warning label on salty foods at chain restaurants. is this a good step to inform you about what you're eating or just another example of excessive government regulation? that debate is coming up. your n? i got a job! i'll be programming at ge. oh i got a job too, at zazzies. (friends gasp) the app where you put fruit hats on animals? i love that!

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hand apparently, they also lovee stickers. g. what's up with these things, victor? we decided to give ourselves stickers for each feature we release. we read about 10,000 suggestions a week to create features that as traders we'd want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. who reads all those? he does. for all the confidence you need. td ameritrade. you got this. the markets starting the last move the year on a high

note s betting on the big caps the best thing for your portfolio? the cio of albian group is with us. it comes down to individual stocks. like the fact that the names you always talk about, not the amazons, googles and leaders of the world. it's had a really good run of 28%. why do you still like it? >> we like leer because not only they benefitting from the global auto cycle which you've been reporting on this morning, 18 million three months in a row. we're looking at a strong year to date. they're really benefitting from that global auto production. in addition, they're seeing expanding margins in the seating. they're seeing market share gains in the electronic management business. they have great free cash flow and returning cash to shareholders. that resulted in a strong earths growth rate. eps is on the order of 24%.

and it's trading for 10.8 times next year's earnings. and as we look at it, earnings have grown in lock step with the share price. so that provides a pretty reasonable valuation for a good growth company and relatively underowned. >> another company you like is already had a good run year to date. that is nxp semiconductor. what tail winds are you seeing out there for this company? >> the tail winds are many. not only do they -- are they a market leader in nfc and emv as well, the chips in the debit and credit cards being sent out in this country finally. they also have a strong relationship with apple. they provide the m-8 motion c co-processor. great relationship there. they're merging with free scale. that is giving them additional leverage to the growing connected car market as well as an option on the internet of things going forward. and after the most recent quarter where the stock sold

off, trading at 15, 16 times earnings and you get a great secular growth story for a pretty reasonable evaluation. >> there is another company that you like called five serve. we don't talk about this. it is leveraged quite a boring business. but essential and growing. that is online banking services. all the things we need but it's not very sexy. >> yeah. it's not sexy. you don't see it. it's all back office. this is stuff that when you're going online to make payments, when you're doing mobile banking, when you're doing these things, fiserv is powering the engine for that. they literally had double digit profit growth for 30 straight years. even through the 2008 and 2009 recession. this is a company that's going for 21 times next year's earnings. again, a great secular growth story that isn't talked about much and we like the management team and cash flow. it's well supported with eps. and 85% of their business, revenue is reoccurring. so that's great visibility. >> that is great visibility.

year to date, it's already had a run of 36%. clearly you're still backing it. thank you very much for joining us, jason. a newbie. >> always good to see a new face. >> he is in salt lake city. >> gorgeous. >> all right. we have a new thing today in new york city for diners in restaurants here. you'll see warnings on menu items in some establishments, chain establishments. warnings about sodium, salt. it's the first regulation of its kind in the nation. the city estimate that's 10% of items on the chain menus need this warning. so is this an infective way of improving nutrition and could more things be coming next? more warnings? john bonshaf is professor at george washington law school. he is all in favor of the measure. and jeff stir is senior fellow at the national center for public policy research. he opposes the new requirements. i don't think it will take much

to kindle this discussion. jeff, let me start with you, you argue and tell me why that these kinds of warnings, what is the evidence here these kinds of warnings whether it's calorie counts or salt don't have the effect that policymakers intend? >> the policymakers who want more warning labels, calorie counts on mennees all have good intentions. the question is science driving the policy? and just yesterday "the new york times" said that the menu calorie counts which started in new york and then went national rrnt working. they're not having the desired infect. >> meaning people are still eating high calorie foods. there's no connection? >> actually, they looked at people who -- this is lots of different studies in the "new york times" yesterday. they reported on this in detail. when you have these calorie counts on menus, there was an scam nm new york city where they studied young people in the inner city of new york city and

studied people in newark, new york city had the requirement, newark, new jersey didn't. and they found that the kids in new york where they saw the calorie counts on the menu actually ate more calories. they thought maybe they were getting a bigger caloric bang for the buck. what we're learning is from the science, if i can just say from the science we're learning there is not a good way. back with the calorie counts, they said it's not intrusive. we're not taking away your food. it's just more information. >> all right. >> john, is this -- is more information good or should we be like reducing salt, is it going far enough in your mind? >> doesn't go far enough. i litigated on behalf of this issue successfully. he cites one study -- >> successfully for you. >> the very best scamsome transfat. they required the labels of transfat. it almost disappeared from labels. we almost didn't have to ban it. in a free market system, people

are entitled to know what they're getting. that's how the free market system works. they can't exercise free choice if they don't know what's in there. if they don't know that some of the menu items have 150% in that one item of what you should safely eat in one day, that's unfair. people deserve to know that. and the studies do show that it does go down. if you talk over me, i'll not be able to answer your questions. >> jeff says i'm going to let you answer the question. jeff says that warning labels don't change behavior. what is your evidence that they do? >> there are many studies that show they do in the major one is when the federal government required simple disclosure of trans fats. trans fats dramatically were reduced in most foods so that when we got around to banning it, they were almost nonexistent. we've seen the same thing with regard to warnings and nicotine disclosure with regards to cigarettes. by the way, it's already on

virtually on every product you buy in the food store including salt. are you going suggest we should get rid of this, jeff? >> jeff? >> you know, i'm glad you have john on. ban is his middle name. knees favor of banning things across the board from trans fat to salt. >> stay on the issue. >> sure. >> we're diz closing. >> okay. >> let jeff respond. >> in this case, no, you're not banning. and that's a good thing. i know you want to go further. but the answer is not always banning things. the answer is not always more warning labels. you can talk about how you were successful in suing about trans fats and salt and successful. were you successful in improving consumer health? >> hell yes and if you ever have guts to come into court and face me when i can get you under cross-examination, your argue. s will fall apart, sir. can you make them on tv. you can't make them in court. >> john, the sprproblem is your side doesn't make them in the

scientific world. >> but we do in the courts and legislature. jeff, i'm a scientists and you're not. >> okay. jeff, just finish your thought. let me just say, if you look at the "new york times" article from just yesterday, it talks about this idea. it's not from a conservative think tank like me. it's not from the industry that john likes to bash. if you look at the science, the approaches don't work. they have the effect of crowding out better ideas. what makes us feel like we're doing something good-bye putting more warnings on but we're not. we need to come up with more innovative approaches about improving nutrition and improving the way people eat. what we're learning is more taxes on soda, warning labels on salt and banning food ingredients doesn't help change how people eat. >> we got sugary soft drinks out of schools. we have raised the taxes on cigarettes. and new york city is one of the lowest rates of smoking as a result and the ban on trans fats grew out of a disclosure. you are citing one article which

does not stand up in court. >> if i may interrupt. gentlemen, let me interrupt. i want to get two questions in for you, john. the first question is this. why would this only apply to chain restaurants? if it's good policy for chilies or for chipotle, why isn't it good policy for fancy restaurants in town? >> the answer is that if you start small where the burden is the least, and by the way, you onced you mentioned, they have already as a result of this rule lowered the fat contents. so jeff, it is in fact working. and there are many examples of where it works. if you continue to interrupt, you won't learn them. if i get knew court, we'll put you under cross-examination. and all of the blah, blah, blah about other approaches will fall apart. that's why we win in the courts. that why we win in the lectuk

legislature. >> it has nothing to do whether we have a right to have more information and that kind of thing. it basically should the government be telling us what to do? at the end of the day, isn't this just a grace and nanny state? >> that's the whole idea of free market. under free market, people make their own decisions. but they have to have fair and accurate information. coca-cola tells me, for example, that there is low sodium in my can. it doesn't tell me how much which indicates that people are interested in this but they cannot make a decision without that information. that's why disclosure is important. >> john, thanks for answering the questions. >> jeff, the last word is yours. the last word is about science should drive public policy. in this case, john's wrong. these warning label dozen not do any good. we ought to look for more innovative free market ways of doing it. new york city is a great example of how we're doing it the wrong way. >> it worked in so many other areas, jeff. it worked. >> thank you very much.

i know it wouldn't take much to get them going. it sure didn't. john of george washington university law school and jeff of the national center for public policy. we'll be right back. the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around.

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hi, everybody. coming up as "power lunch" rolls on, are we in or close to a full blown manufacturing recession? the numbers are not good. is there real reason to worry? it is possible that beaten up oil sector is doing better than you think? one man here to make the case, plus one of our favorite guests brings his favorite investment ideas for next year. that's all ahead as "power lunch" rolls on. >> just as that contradict in the neck from always looking up at you this is the -- >> you're taller in person. >> why are they always like why are you standing by yourself? >> this is why. >> he's taller in person. >> and fatter. >> i'm actually this small without my heels. california could see some major rain storms this winter as an el nino blows through. jane wells is live in van nuys, california. i'm sorry.

>> we're in the valley. totally, mandy. i'm at sos survival products in van nuys. rain barrels are hot holiday gifts in l.a. we have to make every drop count. you know what happens? look at all this. all the water goes out to the ocean. this is outside our office. that seems stupid. capturing storm water is a growing niche business for home depot and john deere landscape, selling to public citizens, large corporations. on the public level, bring flt back hoes. they're bigging dams. >> our hope is that we're going to be able to gather somewhere between 35,000 to 45,000 additional acre feet to be able to reach back into the underground. the whole region benefits by it.

>> at the corporate level, sea gate technology installed a massive roof top system to capture rain watter to use in toilets or in their cooling system. and even before el nino, they're getting rain. >> the last rain storm we had about three weeks ago we were able to recover about 40,000 gallons which we are now distributing which is why you hear these behind me. >> so if el nino delivers, sea gate thinks they can capture 750,000 gallons of water. tyler, that will flush a lot of toilets. back to you. >> on that note, jane weeshgs going to end it for the first hour of "power lunch." thank you all for watching. >> flushing away the first hour. ushering in the next one. over to you, brian. >> i hope you're not saying the toilet is the perfect segue. thank you very much, i think. it is now 2:00 on wall street. 11:00 a.m. in san diego. good morning out west. the dow up is. oil sliding a bit again. hello and welcome to the second hour of "power lunch." melissa lee is at the nasdaq.

we have a lot to get through this hour. let us begin with one big burning question right now. has america fallen back into a manufacturing recession? a key piece of manufacturing data coming in today at the worst level since all the way back in june of 2009. let us bring in our cnbc contributor. joe, a lot of talk about it. are we in a manufacturing recession once again? >> yes, brian. we are. the good news is the broader economy is not. but the manufacturing sector is. the ism is one of my favorite indicators. and unfortunately the trend is lousy. and in the short term, i see us going back about 50. >> is this the canary in the coal mine and will a manufacturing recession lead to an overall recession or at least a major slowdown of the broader u.s. economy? >> it's more likely, brian that, i will lead to a slowdown in the broader economy.

i don't believe the business cycle is quite over yet. but what does worry me, is you know, the fed that is pretty much hell bent on raising rates this month, the ecb will likely ease rates further. that could further strengthen the dollar and therefore put more downward pressure on manufacturing. so the scenario you gave is not my baseline but is a risk. >> what is the reward? what's the savior? what could bring this back up? >> part of the story is there is excess inventory building. that's temporary. that's the good news. the trickier part is where the dollar comes in. when does it stop rising? the fear is that given divergent central bank policies the fed and elsewhere, the dollar appreciates more. but even if it doesn't, you then come back to the issue of weak global growth. places like china where clearly activity is slowing. what impact does that have on

demand for u.s. exports? that's a longer term issue, one we're not sure b just right now seems hard to think there is a lot of tail wind coming to manufacturing. i guess if oil prices recover, brian, that will help cap ex and the ism a bit. the problem then is if oil prices rise, you're going to hurting the consumer which really has done his part in keeping the economy afloat. >> that's exactly what i want to ask about. the decline we're seeing in manufacturing is because of the oil and gas and commodities sector. is a jury in that this is a benefit for the consumer seeing the push-pull? >> my work has shown that the historical record is quite mixed. it was not a very good relationship. we have seen crude changes. in the last year, consumer spending has not accelerated. the trend is 3%.

that's where it is now. it might be weaker in the current quarter. last year at this time it was growing at 3%. it appears with revised data that the savings rate which is now up over a point in the past 12 months this energy tax cut was saved which just tells you how fragile this economy has been or at least how weak the recovery has been. consumers have not really spent the energy savings. >> all right. joe, we're going to leave it there. there is also kind of leave it with a big question that only more data hopefully can solve the question of. joe, thank you very much. >> thank you. >> find out what one of the world's biggest manufacturers have to say about this manufacturing slowdown that, guy, ge chairman and ceo jeff immelt will join jim cramer tomorrow night on "mad money." a big interview just got bigger because a lot of questions about some of the biggest makers, by the way, of power plants, airplane engines, railroads, all the stuff that we look as a leading indicator, ge makes.

that interview is a big deal. >> they're also exposed to oil and gas. that will be interesting. it looks like it was another red hot month in the car lot. automakers reporting bullish sales numbers. toyota, chrysler, gm and ford saw increases in the past month. checking on those stocks, it's a mixed picture. toyota and ford are positive. general motors is trading to the down side. advance auto parts, autozone, o'reilly, all three are in the red today. >> if you want to bet, you know, invest your hard earned money on the car berm, the automakers or suppliers? we have both sides four of that berm. emanuel roster at clsa, he likes the suppliers. rich hilgred likes the automakers. let's start with you. suppliers say big world. can you be more specific of the names that are the most attractive to you right now? >> absolutely. so the names that are attractive

are the ones that offer a secular growth story. there are three mega trends in the automotive world, the trends towards vehicles that are more safe, green, and connected. so we like suppliers that are exposed to the trends. you're essentially not just playing a cycle. you really don't rely on the cycle. you're playing automakers adopting more of that content because of regulations. one of our top picks is delphi automotive. they're exposed to all three of the trandz, saends. that will give them phenomenal revenue growth. irrespect i of what the cycle looks like. another name we like is a much higher valuation is mobile eye. that say pure play on active and safety which prevents the accident. these are all phenomenal trends. we expect the revenues to grow more than 50% a year as a result. so these are the sort of names that at this point in the cycle we're looking to invest in. >> mobileye is a subsidiary car

play much it's like they're making transmissions. if we don't see autonomous cars come out sooner than we think, is that going to be bad for mobileye are they already in cars that a normal car would then benefit them from? >> the setup very positive for them. essentially we're going -- the first part of the story which is until the end of the decade is more about active safety. all the technology that's prevent the accident, radars, cameras. so that's completely driven by regulation. it's becoming mandatory across the world. we'll see penetration of the technologies go from essential nothing now or just the luxury cars to 100% cars over the next ten years. they'll benefit from that. that is a pure play. the autonomous driving is the second part of the trend. it's into the 2020s. they have a contract, future contracts to build these autonomous car with some automaker partners.

so this is something that will certainly happen but not something the story is relying on. >> rich, i want to go to you. you like the automakers better than the auto parts suppliers because of valuations here. but if you take a look at the performance of the auto stocks, they're not very well. we're looking at record sales volumes for the year. financing is not going to get any better with the fed raising interest rates. gas prices are not going to get much lower. shouldn't this have been nirvana for the auto stocks this year? we just have not seen it in the performance. >> you're correct. we haven't. that's a reason we like them. we are long term investors here of morning star. we do take a look at discounted cash flow models as our methodology. and for the automakers, they have been unloved despite the performance in their basic markets with consumers. on the other hand, suppliers stocks have done very well and we think at this point some of them are getting to be somewhat overvalued as though cycles no

longer exist in the auto sector. on the automaker side, fiat-chrysler is the best idea. general motors, ford. ford we have a $20 fair value estimate on the stock. for general motors, $48 a share and fiat-cross-ice leshgs $22 a share. for fiat chrysler, it's more of a discount situation. take a look at some of the parts. you take a look at the cash flows. even on a substantially discounted basis to what management says they will do in the five year plan and still coming up with the fair value estimate of $20 a share along with the fact that if you take a look at the sum of the parts including the 80% of ferrari that company still owns and will spin off in january, we think that it's more like a 23 or $24 per share valuation for chrysler. >> we have to leave it. there thank you for your time. appreciate it.

let's get to a market flash. >> we're watching shares of american airlines near the highest levels of the day, up by 3%. the airline has reached a deal with the union that represents its reservation and gate agents to hike the pay. the deal is going to give employees an immediate big pay raise for a lot of those employees again. the stock is down by 20% so far this year. remember, these airlines are high fleers for the last couple years. >> thank you very much. good news for the aa pilots. up next, call it a solar smackdown. one noted hedge fund manager ripping into one solar company. find out what he said about who ahead. plus, it is rare when traders agree on something. it's really rare when they're near total agreement. so komg up, the one thing energy traders say will not happen to oil which, of course, means it will probably happen to oil. exclusive results from our cnbc survey ahead. it is time for today's mystery chart. we're going to show it to you

coming up. a mystery -- about a mystery. stick around.

terraform shares plunge after he disclosed he owned a stake n scathing letter sent to the board about too cozy relationship with parent company sun edison. he writes, aligning the company stroo teethic focus around

acquiring projects offers little parent benefit for terraform stake holders. gordon, great to have you with us. for a lot of viewers out there who are knonot following this s yashgs it reads like a soap opera. if you back this up to the parent company, sun edison they said that analyst meeting they would no longer sell their assets to their affiliated companies or yield companies. then on november 22 they have a board meeting and change the management. install the ceo of sun edison to terraform. four board members resign. they replace the board members. the very next day sun edison goes to sell assets to terraform. what's your take? if this whole thing smells, give us your take on what's going on here. >> the reality is tepper's

letter is way overdue. if you're a global shareholder, with the announcement of sun edison taking the position they took and then putting 425 mega watts to global indian projects some of which are not completed and unheard of is unheard of. and gloibl sharebal shares reac accordingly. sun edison needs a lot of cash. even getting out of the deal today, they have $500 million associated and cash payments associated. they're in a tough situation. they're going to extract cash from the yield companies. if you're a holder of terraform power, you have to be upset. >> you're saying almost a for sale of the assets to the yield company so they can have cash and develop other projects in the pipeline. >> right. if you look at the current dividend yield for terrform, it

makes no sense to be bike products from sun edison. it's announced the projects were sold to terraform global would suggest that ceo of global was not onboard with. this so i think that tepper's letter is way overdue. we were arguing there were lawsuits coming. we think there could be lawsuits coming as a resultst actions we've seen. >> that's probably why a lot of board members resigned. what's your take at this point? we know your stance on sun edison. how about terv? >> we don't cover terraform global. even if the shareholders are successful, what you are left with? you have a dividend yield of 140 per year and 500 mega watts of projects they have to buy from sun edison. i don't know what you're left with. even with the move today, we're not positive much the shares. >> gordon, great to speak with you. thank you for your analysis. we should note that "power lunch" contacted appaloosa

earlier. mr. tepper denied our request for comment. terraform global declined my request for an interview yet. >> thank you very much. t minus 15 days until we find out if the federal reserve, don't mock me, will raise rates for the first time in more than nine years. and if you're still in the they will hike rates even after that lawsy economic data that we got today camp, there are some trades for you. the ones you might want to make right now, john and jerry is here. let's start with technology. why would any tech company be a fed derivative play? >> i don't know. that is the simple answer. the reason they're buying these is because tech has a proclivity to rise until the end of the year. we have seen stocks like novidia making a move.

a $31 stock. it is moving up to $32.50. i can cite a number of other tech stocks that are seeing similar lifts. this one when you take a look down here basically at $48.80 and then popping to $50 and through auto $50 today. >> according to you, this might also be a santa play. they tend to -- that is the worst santa cap ever. i stink at this thing. it could be a two derivative play. >> it could be. some of the companies are just positioned well to take advantage of the demand that's coming from a lot of the chips and navidia's case. >> quickly, third bank corps. >> pete talked about it on the halftime report. this is fifth third bank corps with a similar ticker. >> very similar. last friday, $20.50. will it hold and keep moving up?

i'm betting it will. especially with the employment data this week and fed speak. also, cit, these guys finance for transportation and so forth. i think this one is one of those that has languished as can you see pretty flat here. i think it's ready to pop. >> all right. invida, xilinx and cit. thank you very much. big upgrades for hamburgers, band aids and biotech. what else but street talk is on deck. plus, one wall street pro says the beaten up oil sector is doing better than you think. it's going to make that case when "power lunch" returns.

time now for "street talk," our daily look at pfeifer big analyst calls you need to know b

stock number one, the band-aid reference, johnson & johnson. barclay's starting coverage with an overweight trading at $115 target. j & j is underperformed the s&p 500 over the past 12 months. big news there. that steady cash flow is the key. despite the challenges sh the over-the-counter and skin care businesses have shown some improvement. the analyst also says any calls to break up j & j are premature. his price target implies about 13% up side. >> some of the problems might include the pipeline. speaking of johnson & johnson, the next stock is eli lilly and merck. part of the same note, barclay's is outlining the companies this ch may have to do some deals to improve their pipelines. that would include johnson & johnson, eli lilly and merck. lily may want to bolster the pipelines. johnson & johnson may be looking in rare disease and cancer. merck may be hunting in cancer as well. they have a lot of cash on the

balance sheets. >> a political note talking about the continued resolution bill that may get funded and that 2% medical device tax may be delayed by a couple more years. that could be good for any companies like a j & j that make any kind of medical device. >> electronic, boston scientific and so on. >> bingo. >> next stock, yumm brands. upgrading to an outperform. i love this title. let's taco about business outside of china. >> of course you love it. of course you love that. >> taco about business. analyst says the shares offer a favorable risk-reward. they nudge the price target to $88. they see increased focus on the taco bell brand here. they note that business outside of china much more predictable than in china business. that implies 20% up side. >> there could be a valuation here. take a look at a winner like mcdonald's.

yumm brand is up 2%. you know what the forward pes are? the same at 24. what are you paying for at this point? next up here, go pro. base ond black friday weekend and raymond james, the analyst saying the only good news for go pro is that drone market is growing and that they plan to enter in 2016. but shares remain a dominant but perhaps at a cost price discounting has been substantial across products throughout the quarter. that's indicative probably of weak sales. not good near term pressure on the stock. >> do you want to be in the drone business? is that a positive? there is one brand of drone i looked at last year which is $1500. i saw it for $799 today. a couple hundred bucks, price deflati deflation. they're billioning a commodity. i used them before. you fly them around for the first couple times. this is amazing. about the fifth time, you're like how many tree photos can i take? i don't know.

final finally, rare. the biotech focused on rare and dangerous genetic conditions. people starting coverage with a buy and a 125 target. 25% upside. nearly 70-page note this morning, they say the type line is well deversefied. they have four products treating six rare disease categories. they also expect some positive near term drug trial results to drive rare shares. >> this is actually a stock we talk about a lot onast money. remember that note that we were talking about earlier barclay's saying that companies need to bolster the pipelines. rare diseases is an area that companies want to get into. johnson & johnson could be looking at this company. that's why the stock is up so much this year, about 122%. >> shoutout to the saints in nevada. they'll know what that means out there. >> i'm sure they do. >> that is it for "street talk." more "street talk" tomorrow.

right now, another look at today's mystery chart. this stock has been a total stud this year up 38%. your first hint, things around this company are just ducky. the second hint, a night out for maybe a bit of shining armour. the answer ahead. the final oil trades for its session. we're heading back to the ni mechl when "power lunch" return. sure, tv has evolved over the years.

it's gotten squarer. brighter. bigger. 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. here's your cnbc news update this hour. france's prime minister says french police have conducted more than 2,000 raids across the country since the paris attacks. 320 weapons were seized of which 30 were military grade firearms. 210 people have been placed in police custody. chicago mayor has fired his police chief gary mccarthy after a chicago police officer was charged with murdering a black teenager after a video showed the officer shooting the teen 16 times. mccarthy defended his handling of the shooting which occurred

more than a year ago. volkswagen's emission scandal hurting u.s. sales. the german automaker says they sold under 24,000 vehicles in the u.s. last month. that's a 25% drop from a year ago. the vw brand sold nearly 500,000 vehicles worldwide in october. and the government says americans are approaching a tipping point in their telephone use. 47% of americans use only cell phones. a dozen years ago it was a mere 3% of u.s. households using cell phones only. officials believe by next year more than half of the u.s. homes will be wireless. that's the cnbc news update this hour. back to you. >> land line at the herrera household yes or no? >> yes because i have terrible cell reception. i can start out on the cell phone and then it says call lost. >> i like the land line. it's like the bat phone. you know fit rings it is either

a political polster or grandma. >> that's right. mostly it's grandma in my house. you're right. thanks, brian. >> thank you. oil is about to close. let's go to jackie deangelos at the nymex. >> we saw prices reverse into positive territory at the close. finishing at $41.85. stuck in this very tight range between 40 and $42. the big question, of course, is where do price goes from here? we have a very big opec meeting on friday. we polled some top analysts, traders and energy funds to get their pulse on oil prices and predictions for what's going to come out of friday's meetings. the take away is this opec is probably going to stand firm. prices are going to see more down side in the first half of next year. remind you, the last time we did this survey in august, our respondents were spot on. so what was remarkable here was that 100%, every person that took the survey said they won't cut production on friday.

what is happening here is this vicious cycle. they lost so much in terms profit. stle to pump more oil. they want to keep that market share high. the only option at this point would be to pump more. furthermore, it's not like saudi arabia wants to give up its stance, especially in iranian oil does come back on the market next year. more than half of our respondents thought that pricing will stay for wti and brent in this 40 to $50 range by the end of the year. but half think that wti will set a new low next year in the first half of next year. so really interesting here. this inaction potentially by opec on friday could cause a little bit of a domino effect. people think that russia will not cut if opec doesn't cut. they think that u.s. production will only be slightly lower next year. and the problem is still the same. we have a supply-demand issue. if we don't see demand boost up, we're stuck in an oil glut. and new lows are yet to come. >> i don't know if you saw that ism number. everybody is talking about the headline. if you dig they have bullet

points inside the release. the first bullet point which i just tweeted out and highlighted it in yellow highlighter this is important. basically, oil producers, forget analysts and strategists. oil producers see oil staying low for a longer period of time. >> yeah. >> they know. you know why? they make the stuff. >> exactly. >> they pull it out of the ground. jackie, thank you very much. >> sure. >> most oil and gas stocks have been beaten like a rented mule this year. your nasty uncle's rented mule. that doesn't mean all is lost in the sector. kate kelly joining us, co-head of equity capital markets for credit suisse. this is the one guy is not as bearish as everybody else tease. >> i think it's very interesting. rob, want you to speak. you are a lot less bearish than others i've talked. to you're in the equity capital markets every year as co-head of

americas for credit suisse. tell us what you're seeing among the u.s. drillers and market health and reseceptiveness? >> the market -- the u.s. producers have been remarkably resilient and one of the comments that you just made was production in the u.s. is declining but not rapidly. that's the bear side of the story for oil. there's a positive side of the story to that for the u.s. producers. and that is that the leading producers and let's be clear, not everybody is thriving right now. it's hard times for a lot of people. the leading producers are remarkably competitive in the current environment. the costs are down 20% to 30%. recovery per well per down are -- or are are up 10% to 30%. the cost for the new wells are down 50%. making these producers extremely competitive globally. benefitting from low geopolitical risk right here in

the u.s. >> so when we think of the low cost providers, we go to the permian. that's one place where the cost of production has gone down. you also want people to think about the stack though in oklahoma. >> i think both the pern achlt. n and stack is where we see the greatest investor interest right now. i think that there's a lot more market cap in the permian. it is clearly most favored basin on the investor community. the number two basin right now is the stack. >> if you look at the numbers though, i looked at some numbers. really strong first after overall. as we get to the end of this year, we're seeing a slowdown. maybe the slowest period in about five years in terms of number of deals. where do we go from here? >> i think you're going to continue to see equity volumes around historical levels. to put that in perspective, the first half of this year we had a

$13 billion equity raise. that exceeds that total in any annual period in the last five plus years. >> could a start-up oil and gas company go public right now? >> i think you see that deep near a recovery. >> so that's a no? >> i think you'd expect to see that sometime after -- >> unless you have a massive hundreds of billions of dollars of debt load that these companies, oil and gas companies are carrying because a lot of this fracking boom was funded off high yield debt. they borrowed money to dig more wells and now maybe they can't meet all of their bond obligations. >> right. that's a great point. there is a remarkable difference in the markets. if you look on a one-year basis, the overall industry is down on a year on year basis 30 to 40% plus. a lot of the companies have high debt loads. a lot of the equity offerings you've seen have been to take the high quality assets and to

make sure the balance sheet is competitive globally in the level price environment. that's where we see the focus of equity investors right now. putting more money behind the winners at this point in the cycle. >> so let's say you're a driller in the permian and balance sheet looks okay for the moment. but if we go along a trajectory that jackie is talking about and you believe in which is not lower for longer but lower for even longer. >> right. >> how long can some of the companies hang in there at $40 t.i.? it's just not terribly economic, is it,en into a place where costs have gone down. >> i think $40 ti and the lower for longer is a phrase we hear more and more on the buy side. what is encouraging about that in termsst equity prices is that is not a surprise to our investors. that's what they expect. i think the better capitalized companies and why you see companies come to the equity market is time is becoming their friend. so you're really going to differentiate in the marketplace between the companies that are struggling and time is their enemy and the companies where

they have competitive assets, competitive balance sheets, time is their friend. >> we have to go. i've been up in the permian. you have companies that maybe are new. their cost of production is $70 a barrel. chevron bought land in the permian. they bought this land in 1927 or '28. the cost of production is almost nil. once you put the pump jack in, just pulling out cash. >> tows are like saudi arabian left customer efficiencies, right? >> not quite. >> what is the cost of drilling in saudi? the low double digits? >> it's very low. >> which is why they won't change the production. >> why would they? still making money. thank you very much. kate kelly, thank you. appreciate it. all right. bond yields dropping this morning. how is that for a segue? after that disappointing ism report that showed the manufacturing activity is slowing down. but stocks do appear o to shrug the news off or maybe there is a fed push behind it. what is behind the different

reactions? let's ask our trading nation team today. larry, bond yields down. they're getting a bid. stocks are getting a fed push of sorts? >> today, you know, stocks were up premarket. so before the news, stocks were much stronger. and after the news on the ism, they're talking about the worst numbers since 2009. after that news the belly of the curve substantially rallied. the two year, five year especially. and so that front end rally. bonds are clearly outperforming stocks today. and they're telling me something potentially about that fed meeting in december. >> what do they say? >> well, the last four or five fed meetings, if you bought the front end or even the five and ten year before the fed meeting, what happened each time is the fed came out and with more dovish position than the market was expecting.

so the market is saying right now maybe they got a little bit too offside, projecting multiple rate hikes. some analysts were saying five, six, seven rate hikes over the next year. the fed funds futures around three. the market is telling you that the market got ahead of itself in terms of rate hike outlook for the next 12 months. >> kevin, listen, we had good economic data. car sales are amazing. home sales have done pretty well. we've also had plenty of das pointing data as well. do you believe investors need to be more concerned about the state of the economy than they were three months ago or is this noise and the trend is still pretty good? >> the dwrat is softer. most of the data that we've seen this year, we have to take a look at the data points in our country and outside. it's been very weak. in fact, broadly this has been the weakest year we've seen data-wise since 2008 or 2009. we interpret it. so we think the number today,

the ism number coming in below 50 is in and out out of sifrpg with the rest of data. you did bring up a big point which is final demand is relatively strong. and we're seeing it in things like auto sales and just overall consumer spending which is really been the silver lining in all of this. >> kevin and larry, we have breaking news. sort of the serendipity of tv, we have a banner saying economy in trouble. incredible news just below. that we'll get to that in just a second. go to our website. let's get more on that pretty incredible auto sales number with phil lebeau. >> brian, the official calculation has been done. the monthly sales rate for november, u.s. auto sales came in at 18.19 million vehicles. that's according to auto data. that means we've had three straight months with the sales pace above 18 million vehicles. brian, that has never happened in the history of the united

states. november auto sales, 18.19 million. compare that with 17.2 million a year ago. a huge month. >> so the economy is clearly dying. please note my sarcasm. you get my point. we're talking about numbers, phil. to your point we have never seen. people -- unless your car is literally burning on the side of the road, you don't go out and buy another car unless, a, you want to, b, you have the money to, or, c, someone will give you the credit to. things may be struggling in manufacturing. but the car sales business is booming. >> and brian, we'll have data tomorrow, you'll see it first on cnbc tomorrow showing how strong it is in terms of the lending that's going on with vehicles. i know a lot of people will be saying it's all subprime. they're giving the cars away with 0% financing. that is not happening. it's a far different picture than what a lot of people want to believe. >> let's also not forget is that i bought a car. i bought a dodge a couple

months. you put a couple grand down. even if you lease a car, you're putting -- look at the fine print. $5 $5,000 due at signing. we talk about weak sales at macy's there on michigan avenue in chicago. maybe it's because everybody's buying a car. >> could be. could be. certainly helps in low gas prices have people reconsidering if they want to buy an suv. remember, five, six years ago, people were saying nobody will drive an suv. look at the sales. >> or a 5.7 hemme durango. this segment was not brought you to by dodge. >> let's look at the mystery chart. we told you the stock is up 38% this year. the first hint, things are just ducky. the second hint, a knight to putting a bit of a shine on armour. one more hint. it's all greek to me. we'll bring ut answer ahead here on cnbc. we're first in business worldwide.

it is time to start thinking about stocks to buy in the new year, maybe if you were selling stocks to raise cash. the ceo and cio of morgan creek capital management joins us. i promise i won't mention the stanford game. i just mentioned the stanford game. huge notre dame booster. let's talk about something further west which is alibaba. a lot of people screaming about china. they're doomed. the country is doomed. alibaba is doomed. you don't think so. you like the names. how come? >> the biggest reason and that's part of the -- why you've seen the big runup the last couple weeks is they were just included this morning in the msci china index. so 14 big china adrs put in the

mci china index. that is a huge event. it means the companies are now going to have to be purchased by index fund managers and etf fund managers. we think that's a tail wind. the chinese economy is growing at a very rapid rate in absolute terms. the transition from fixed asset investment to consumption is well ahead of itself or well ahead of schedule and looks good on the five-year plan. we're excited about consumption in china. >> okay. outside of that, in the mlp master partnership space, two names. one of them, i don't know if you caught a couple weeks ago in dallas. we interviewed the guy that founded and runs the company. energy transfer equity. also of course kmi, why these names with oil still in the mid 40 range? >> you had a great segment on

oil right before this. i hope people will view that online this afternoon or later tonight. lots of interesting stuff. we're definitely on the lower for longer camp. but i think the one thing that people forget is these are not exploration and production prod companies, these are transportation companies, they are toll roads and these hydrocarbons still need to be moved, whether the prices are $40 or $80 you still have to get the hydrocarbons from one place to another. these things were oversold at the end of the third quarter and a lot of leveraged mutual funds had to unwind and we think these things are screaming by at these levels. >> quickly make the case for apple. a lot of people saying it's gotten too big, the growth is gone. >> yeah, you know, i can't disagree that the growth won't be like it was, you know, it's the law of large numbers, it's a huge company, you can't grow a huge company at 50% but it doesn't deserve to sell at a 10 or 11 pe ratio and the market is

selling at 18. so we just think it's undervalued, we think people are underappreciate the upgrade cycle to the 7, two cameras we heard and other enhancements. so we think there's just a lot of upside to one of the world's best run companies. >> all right. mark, morgan creek capital management, alibaba, vip shop, kinder morgan. very disparate, that's why we love to have you on. >> take a final look at today's mystery chart. things are stucky, a night out for shining armor and one final hint this chart resembles the company's logo kind of if the squint and look real close. got the answer coming up next. hi watson. annabelle, your birthday is tomorrow. i'm turning seven. what did you ask for? a princess. and a pony. you like things that begin with p. i like pink frosting too. 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. yup, we're constantly making thinkorswim better. here at td ameritrade, they're always working. like a custom screener on your desktop, that updates to all your devices. and you can share it with one click. wow. how do you find the time to do all this? easy. we combined every birthday and holiday into one celebration. (different holidays being shouted) back to work, guys!

i love this times of year. for all the confidence you need. td ameritrade. you got this. it's gotten squarer. over the years. brighter. bigger. 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. it is time now to reveal today's mystery chart. melissa gave you a bunch of good hints, folks. if you were not paying attention shame on you. things are ducky, a night out for shining armor, it's all greek to me and finally the chart somewhat resembled the company's logo. the last one we stretched on. the company is nike. that stock swooshing up 38% year to day. it is not only the best dow stock in year, it is the best dow stock this year by a long shot, it is up 10% more than the

next highest stock which by the way is home depot. ducky for the oregon ducks, a night for a k without for armor. under armour, kevin plank, nike, are greek symbolism. i know. i feel the same way. we're back right after this. i! i'll be programming at ge. oh i got a job too, at zazzies. (friends gasp) the app where you put fruit hats on animals? i love that! guys, i'll be writing code that helps machines communicate. (interrupting) i just zazzied you. (phone vibrates) look at it! (friends giggle) i can do dogs, hamsters, guinea pigs... you name it. i'm going to transform the way the world works. (proudly) i programmed that hat. and i can do casaba melons. i'll be helping turbines power cities. i put a turbine on a cat. (friends ooh and ahh) i can make hospitals run more efficiently... this isn't a competition!

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debating what is the better buy right now, coal or solar. tonight again that's "fast money" at 5:00. express scripts the largest pharmacy benefits manager in the u.s. announcing today it will partner with turing pharmaceuticals. >> talk about the opposite of a high priced dug, a dollar. >> it's a dollar a tablet for this drug and the reason that's important is because this drug is priced at $750 per tablet after it was acquired by turing suit nals and the prices were raised by 5000% overnight. the express scripts is partnering with basically compounding pharmacy company in primis pharmaceuticals to create a competitive at daraprim that will be priced at $1 a pill. it's not a generic version of the drug. what they're doing is combining the chemical with another drug

that it's commonly prescribed with and compounding those together. under fda rules they don't have to get fda approval in order to offer this drug. compounding pharmacies are there basically to create different formulations of things like if you can't swallow pills they will formulate it into a syrup or if you are allergic to a dye it will take out the dye. they are there to make these taylor made drugs. that's what they're doing and express scripts is partnering with them to make this available. >> the argument maybe made by turing pharmaceuticals is we don't know if the drug is as effective as daraprim. >> we don't know because it's not fda approved. turing sent over a statement saying we don't know the efficacy and safety of this. because express scripts is going itself as the largest benefit manager is jumping on board. >> this comes under an election cycle where this is under scrutiny.

brian, some interesting stuff, right? >> yeah, to your point, to your debate tonight, coal versus gas -- >> coal versus solar. >> coal is going to be gone in ten years, isn't it? >> enough for a trade, though, brian? i don't know. >> we'll see. >> thanks for watching "power lunch." >> "closing bell" is up next. and welcome to the "closing bell." can you believe it, it is december, mr. bill. >> it is. i can't believe how high your heels are today. i'm looking up to you even more. >> i will work on the slouch. i'm kelly evans. here at the new york stock exchange is that would make me bill griffeth. here is how we're kicking off the first trading day of the last month of the year. the manufacturing index came in below 50 for the first time since november of 2012. that's amazing. we will talk about whether santa claus rally could still be in the cards for the stock market here. >> weol