you need to see the evidence of it to actually happen. i don't disagree with the pocket, no. >> i agree with him wholeheartedly. it's a zero sum game in currencies. eventually the euro will come back against the dollar. >> good stuff. rob, always good having you. see you soon. does if for us. "power" begins now. scott, gentlemen, thank you very much. welcome, everybody, to "power lunch." along with mandy drury, i'm t r tyler mathisen. the story is about oil, near the $38 a barrel mark. in light of that, check out chevron. the ceo is on "power lunch" tomorrow and exxonmobil today. both of those stocks tanking. gasoline futures also falling. let's take a look at the board there. >> oil and energy, of course, having a big influence on the stock market more broadly. the dow starting the week with a pretty good sized drop, about 1% for the dow and similar for the

other indexes. >> and a new blend. keurig green mountain agreeing to a buyout and those shares are absolutely soaring. let's get straight down to the trading action this hour. bob pisani is joining us from the flor of the new york stock exchange. how much of the stock market's drop is due to what's happening with oil and energy stocks? >> oil and the fed are the two things motivating the market right now, but the problem is there is no trend and that's causing a lot of confusion in the last few days. just look what the dow has been doing since thursday. thursday the dow is down 250 points. friday the dow is up 369 points. today the dow is down maybe 200 points, we don't know where it's going to end up but right around there. is your head spinning? mine is. and the trading community is having trouble figuring out where they want to go. fed and oil two big things. you mentioned some big oil names. they're all down 2%, 3%. but we're hitting a lot of new lows in some of the smaller names, particularly the exploration and production names. your cabots, anadarko

petroleums, chesapeake down 7 approximates. they are new lows and many of them were at new lows even last week. kinder morgan sparked a big discussion friday when they announced they were reviewing the dividend. they didn't cut it. look what's happened again today, still following on, and the problem is a lot of these energy plays are based on the dividend staying or growing. now a big name and this is a pipeline company, not an integrated company, saying the dividend is under review. the problem is this is a high dividend, 13%. chevron, exxon are much smaller. they're an integrated company versus a pipeline company but still across the board people are saying how safe is the dividend in say 2017? two years from now what if oil is still below $40. that's the problem we have. material names also weak right across the board. they're taking down the commodity complex once again. back to you. >> and we have so much more coverage on this topic during

the show. let's get to dominic chu for a market flash. >> mandy, shares of both smith & wesson and ruger up by around 5% to 6% in midafternoon trading. among the catalyst for today's move, the supreme court has declined to hear an appeal to an illinois law that bans certain assault weapons and accessories for those weapons. that may, again may, open the door for legislation of that similar nature in other parts of the country. this comes on the heels of recent mass shootings both here in the u.s. and abroad that involve possibly terrorist gun violence. apparently prompting people to buy guns for self protection or get ahead of the possible tightening of gun laws in the future. but it hasn't just been in the wake of what happened in san bernardino. prior to that law enforcement statistics show there was a surge in background checks tied to gun purchases that on the day after thanksgiving. both stocks are tracking for their fourth straight week of gains. so far this year ruger has gained over 60% and smith & wesson has more than doubled in price. these could both be companies to watch as this national dialogue,

tyler, continues over gun laws. back over to you. >> all right, thank you very much, dominic. to the big deal of the day and it is a big one. shares of keurig green mountain soaring 75%. yes, you heard me right. that is a caffeinated gain. the company being acquired by an investor group for $14 billion. keurig still down more than 30% this year. morgan brennan takes a closer look at what's driving this deal. >> hey, tyler. we're going to call this coffee talk. so keurig green mountain going private in a deal valuing the single pod coffee brewer at $92 a share. that is a heady 78% premium to friday's closing price and it's really not bad for a stock that before today was down over 60% this year. a huge reversal from 2014's 75% run up. so we've seen that due to slumping sales and so far disappointing roll out of keurig's cold brewer but the takeover is being led by jab holding company.

jab managing the multibillion dollar fortune of austria's ryeman family. jab already controls roughly 10% of the global coffee business. that's thanks in part to caribou coffee, pete's coffee and tea and a joint venture with mondelez. this deal is about distribution, potentially accelerating an international roll out of keurig's k-cups and other products. this is good news for keurig's top holder, coca-cola. coke invested $2.4 billion on a 17% stake in the company only to watch keurig stock sink this year and that deal values its stake at 2.4 bltz. that allows coke to break even on this volatile investment. one of the questions analysts are asking now is, does this heady price -- is it warranted. >> exactly. that's a lot of k-cups. thank you very much, morgan. let's just point out before we move on that oil is now at or

near a seven-year low. look at that. $37.58, off 6% today alone. that's more than $2.40 of decline. let's pick up where we just left off and that is with the keurig deal. we bring in caroline levy. welcome to "power lunch." what's the game plan? they have a lot of coffee brands. why this one and do you expect them to do? >> well, this is a very, very shrewd management team at j.a.b., and maybe one of the first things they do is cut the $125 million of losses on the cold initiative at keurig, and that would bring the ebitda multiple down from 13 times to 11.5 and, of course, you can borrow or they can borrow at less than 2% right now. so the timing for this deal is very good for them. >> so is it worth what they're paying for it? even if the financing is good, the interest rates are low, is

it really worth it? >> i'm totally intrigued. this came out of left field. i see it as a private label coffee manufacturer. they may see it as a way to distribute their own strong european brands into the u.s. as well as perhaps be able to use the manufacturing skills on the pod side in europe and the rest of the world. but, again, such shrewd operators and a very sort of low trading ebitda multiple at the time they made the offer, but i still think the keurig shareholders and coke got very lucky here. >> you just answered the last question. we have to go to some breaking news, but obviously you think this -- coke has a sigh of relief here as a result of this? >> absolutely. absolutely. >> caroline, thank you so much. to sue herera we go for breaking news. >> thanks, ty. the ftc is challenging the proposed merger of staples and office depot. they basically say that the

staples proposed $6.3 billion acquisition of office depot would violate antitrust laws by significantly reducing competition nationwide in the market for consumable office supplies sold to large businesses. the ftc goes on to say that in general staples and office depot are the top two bidders most of the time for large business customers so they are filing suit and they are challenging the proposed merger of staples and office depot. office depot, as you can see, now down better than 17%. staples is off about 11.5%. both of these stocks we should note were lower going into this announcement but they have taken a second leg down, mandy, on this news. back to you. >> they certainly have. thank you very much for that breaking news, sue herera. to the ongoing investigation into last week's terrorist attack in san bernardino. cnbc's jane wells joins us now with the very latest. hi, jane. >> reporter: hi, mandy. i'm outside san bernardino police headquarters where in a couple hours police and the fbi

will update us on the investigation, perhaps we can start to learn more about enrique marquez, the man whose home investigators raided this weekend. they believe he legally bought the two rifles used in the shooting. nbc news reports marquez checked himself into a mental health facility since the shooting but has since left. there's a custody hearing over the 6-month-old daughter. the sister and brother-in-law want to adopt the little girl. government facilities here are reopening with higher security, and we heard from the head of the county health department who was at that christmas party when the shooting happened as well as the first doctor on scene, an immigrant from iran. >> i want to thank the incredible outpouring of support nationally and internationally. we have received your words of support, your offers of

condolence, and your offers of help, and we are grateful for them. >> i'm here because i came for democracy and it's sad to see that you come miles from across the world and see something like that happen here. >> there are questions over whether the two killers had help. farook's salary was 50 grand a year yet somehow they had amassed an arsenal worth thousands and thousands of dollars. there are published report the couple had a u.s. bank corp account with $40,000. the bank telling mary thompson we are cooperating with the proper authorities. beyond that i have no further comment. finally the president outlined last night what the u.s. and allies are doing to fight isis and their income streams. there's a report this morning from ihs estimating that isis makes about $80 million a month, most of it not from oil, guys. according to ihs, but from taxes

from the territories that they control, and that could be a target much harder to target. back to you. >> jane, thank you very much. left turn now, a big conference down in florida today. it's focusing on closing some of the gaps, income and otherwise, in the american economy. our robert frank is live in palm beach. robert? >> reporter: hey, tyler. well, john scully is of course the former ceo of apple, now an entrepreneur, investor, and mentor in all things tech. john scully, thanks for joining us. i want to ask you about apple and i want to talk about some of your current ventures, but first we just finished talking about san bernardino, and when we look at cyber security and technology, what more of a role could silicon valley play in battling isis and battling terrorism? >> i think you have to have the perspective that crises always create opportunities for innovation in the high-tech world, and i know of a number of cyber security technologies that will move up to the next level,

so i suspect that the conversation today is about getting access to today's devices, but i think you're going to see more and more advancements in cyber security technology over the next year. >> you just sold one of your companies, misfit, that was to fossil last month for $260 million. you've got the obi world phone. now i gather you're into cloud computing. many people say cloud compute something a bubble, there are just too many companies in this space. where do you see an opportunity? >> i'm not investing in the technology of cloud computing because the technology has basically been scaled, it's been vetted, it's been commoditized and that's all because of the tremendous success of silicon valley new kinds of businesses like facebook and snapchat and linkedin and so fort. what i'm focused on is particularly in the health care sector a new company i co-founded which is called rx advance. we're going into the $350 billion pharmacy benefit management industry. so we're taking an existing

industry -- >> and applying cloud. >> we're going to take out the inefficiencies. rx advance we expect we'll do $400 million revenue and probably scale to over $1 billion in 2017. very exciting company. >> i notice you're not wearing an apple watch but you do carry an apple phone. what do you think of apple as an innovative or not innovative company right now. would you buy apple stock right now? >> i think it's a great company. tim cook has been an outstanding ceo. he's different than steve jobs, so he doesn't necessarily invent new products but what he does is run supply chain very complex businesses better than anybody in the world. apple has at least another two years of refreshing its iphone install base, so the outlook for apple over the next couple years is pretty good. >> tyler? >> can i jump in here as well? going back to the original topic. hi there, john. good to see you again. i wonder if you think silicon valley is doing enough to provide backdoor access so the

government can comb data more effectively and if there is a so-called backdoor key, how do you stop people with bad intentions of using that backdoor as well? >> the backdoor issue is not a technology issue. it's clearly an issue about privacy, and obviously these companies are concerned about their customers. that's what it's all about. so there's going to have to be some balance and a lot of conversation beyond what we've had today to figure out how do you keep the country safe? this is obviously a very dangerous time that we live in. at the same time recognize that privacy is something that is well understood and expected by "consumer reports co consumers. >> i wonder how many of them would give up a certain level of their own privacy in return for perhaps the knowledge that the government is doing all it possibly can to keep america safe?

>> well, i think if you were talking to millennials, they have no problem giving up their privacy because the reality is they don't pay a lot of attention to privacy. it's older people who probably pay more attention to privacy and older people tend to be the voters. so we'll just have to see where it goes in a political election year like 2016 will be. but i think realistically i would give more priority to the safety of citizens in the united states and give some backdoor access. >> one last question -- sorry, go ahead, tyler. >> go ahead. i'll jump in if there's time left. >> i just wondered, your panel here is titled moon shot and the ideas here are huge in terms of their ambition. do you think that when it comes to the middle class, mobility, how we deal with technology as a workforce needs a moon shot idea as opposed to what we're seeing now with government which is frankly not much. >> well, first of all, let's

acknowledge the problem. the problem is that wages have gone down in the last 15 years, and this is largely a fact of very cheap capital and capital has been replacing labor, and it's an issue because we have a serious gap. the middle class is really not sustainable in its current form, so what's happened, people have taken on a lot of debt. so i do believe that we've got to think about the implications of technology. i happen to think that there are going to be a lot of jobs in the health care industry because people are going to live longer. by 2030 they will probably live ten years longer on average than they live today. who is going to look after them? who is going to keep them out of assisted living? who is going to keep them out of hospitals? you combine med tech technologies and i'm involved with some with giving people better skills to use these technologies and there will be a lot of jobs out there. the problem is the colleges don't train them. the high schools don't train them. >> it's a skills gap. >> we have people getting out of school, we give them a college degree and a lot of loans that

they have to pay back but we're not giving them any of the vocational skills that they need and that's a real problem and we're addressing that here at this conference. >> mr. scully, somewhat randomly, way tonight get your thoughts on what's going on at silicon valley company yahoo!. you have had experience on the inside of companies that were in distress and in need of turnaround. this one sure seems to be that. so my questions are do you think anyone could turn around yahoo!, and do you think that it will remain, survive as an independent company let's say within two years? >> well, you have to qualify to say i have no inside information. i have never actually met marissa mayer and i hear only good things about her as a very bright woman, but the reality is that you could build an argument that you ought to spin out the old business yahoo! to someone else who could find it perhaps accretive into something they're already doing. and i think what's interesting

is just on the rumors, how many companies have been speculated about that they could actually buy yahoo! that may not be great as a standalone business in this day of -- we're into mobile and into search and they're really a portal. it's an idea of 15 years ago, but it may be a valuable company to a verizon or to a news corp., someone who can tuck it into another business and find value that it can't be able to create on its own. so i don't think it's a criticism of marissa mayer as the ceo. it's saying where does this business as 15 years old, a port, where does it make sense for someone else. >> i'll jump in because i want to show everyone what is going on with crude prices. down by nearly 6%. the august low was $37.75. we are below that level at $37.62. we'll keep on watching crude as the close occurs in the second

hour of "power lunch" at 2:30 p.m. eastern. make sure you stay with us during the course of the show. we'll be back in two minutes.

welcome back to "power lunch." i'm mandy drury. stocks are sinking at this hour. currently sitting around session lows with triple digit losses of 166 points for the dow, but we were down by over 200 points earlier on in trade.

crude oil is also hitting near seven-year lows falling well below the fee $40 mark. brent crude getting slammed hitting a 6 1/2 year low and energy stocks one of the key weaknesses dragging the overall indices down. the dow is off by nearly 1% along with the s&p and the nasdaq. as for individual shares, shares of office depot and staples are sinking as the ftc is filing a lawsuit to block the merger between these two retailers. 9% drop for staples. office depot off by 17%. "power" is back in two. money now, are you investing?ag well, i've been doing some research. let me introduce you to our broker. how much does he charge? i don't know. okay. uh, do you get your fees back if you're not happy? (dad laughs) wow, you're laughing. that's not the way the world works. well, the world's changing. are you asking enough questions about the way your wealth is managed?

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welcome bark to "power lunch." i'm mandy drury with dom chu. we're continuing our countdown to the fed meeting with a big look at the fed related trades. we are the sixth trading day of fedness. >> here is what we have leading up to the big rate decision we have next week. we talk about some of the stocks and assets that might perform well. our colleagues at cnbc pro have taken a look at what could be outperforming trades if we get performance during raising rate periods like we have in the past. on this sixth day of fedness, janet yellen provided or sent to me six etfs of leverage. maybe more like six shares of etf of leverage. we're at the halfway point. what we have according to our data partners at kensho, the ultra bullish direction triple leverage long etf. the ticker is tna. it could be a possibility.

if we get a period of rising rates and things follow historically trading patterns at least since 2005, that fund has gone up an average of 13% during those periods and it's been a winning trade three-quarters of the time. during that span that leveraged long large copticer sso has done well. so u.s. small caps may be a beneficiary. there's a lot of historical performance not necessarily a predictor of future returns. also keep in mind these types of leveraged etfs are geared more towards traders and professional risk managers. they have unique risks associated with them. that's part of the story. for more on this and the previous fedness day trades, subscribers of the cnbc pro can go to cnbc.com/pro. back over to you. >> thank you very much. let's go now to the bond market and rick santelli tracking the action at the cme. hi, rick. >> hi, taylor.

data, who needs data? a lot of central banking microphone activity, we're down seven basis points as you see on the intraday ten. if you look at bunds, maybe they shook their snow globe up a bit more because all the mean reversion has pushed it back down close to ten basis points. do you want to talk etfs? let's talk a couple. lqd, look at the chart. starting in 2011 we're flirting with levels we haven't seen since early '14. look at the more aggressive hyg for the junk, getting close to levels we haven't seen since 2011. pay attention to those two etfs. mandy, tyler, back to you. >> rick, thank you very much. and we're going track this sell-off for you on wall street. as you see about a 1% slide. the dow and s&p giving back half of those big gains from friday. plus, many call it the problem that will start the next financial crisis, a crisis that could do a lot of damage to

anyone holding equities. we'll tell what you it is and what may happen coming up. so what's your news? 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! 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!

hello, everyone. i'm sue herera. here is your cnbc news update for this hour. nbc news has obtained a new photo of the husband and wife couple behind last week's mass shooting in san bernardino, california. this 2014 government photo was taken the day the couple arrived in the united states at chicago's o'hare airport. a memorial service under way in pearl harbor marking the 74th anniversary of the attack on the u.s. navy ship stationed there. that ceremony is being attended by veterans who survived the bombing by japanese fighter planes which killed 2,400 service men. dunkin' donuts joining a list of fast food restaurants using only cage-free eggs. the chain says it plans on making the squiwitch by 2025. mcdonald's and taco bell have made similar announcements. the 2016 grammy nominations

are out and the big winner is den rick lamar. the rapper receiving 11 nods including bun for album of the year. taylor swift and the weekend were tied for second with seven nominations each. and that's the cnbc news update at this hour. mandy, back to you. >> thank you so much for that, sue. stocks are off their session lows now but the dow was down more than 200 points earlier and is still down by triple digits as oil prices tumble. how should investors few the sell-off? joining us is michael congeno and robert. can the stock market advance broadly if energy prices continue to move down? >> well, it can. you're still confident if you look at housing strength and car strength and a lot of times what's missed on the cost of oil going down is that's a raw input cost for a lot of companies,

especially international global conglomerates, so consequently it has a negative effect in some sectors but certainly can have a positive effect in others. >> michael, i know you actually quite like the energy sector. you say it's cheap for a reason, but if you're looking long-term out there, there might be a few names you want to start looking at. before we get to those names, i know you guys aren't oil analysts but nonetheless, how low do you think oil prices could go? that has to be something you factor into your outlook for the stock market as well? >> well, we don't get into predicting prices, but the lower they go, the less likely they're going to fall much further. so, i mean, i think in the longer term we tend to focus long term. we do believe energy is a growth story long term in the globe with economic global economies improving and so this would be a good buying opportunity for a long-term investor with a strong stomach. basically the reasons for the sell-off are real. a strong u.s. dollar, very anemic to negative global growth, and anemic u.s. growth,

and as a result the demand for energy and other commodities just hasn't been there. but we see that as more of a shorter term issue than a longer one. we still think the world needs these products to grow effectively and so, again, for a long-term investor, there's fall there. >> but at the same time there's so much pain being felt in that patch, right, michael, we're starting to see quite a bit of m&a action going on, potential takeover targets being sought out. apache, do you see that as a potential takeover target and is that one of the republicaasons like it? >> it's been talked about as one. we think it's been undervalued just based on its own. we never invest just in m&a. that is an example of one though. the issue -- the reason some of the stocks are trading down is the balance sheets are awful. there's a lot of debt that were banking on haier oi higher oil . the cost to extract and produce and be a viable business is much harder. the assets are still in the ground. you might see a lot of change in

who owns the assets and the what price but the assets are still there. that's why you're seeing a lot of m&a activity. >> do you think it's possible to still get a year-end rally because it feels like so many people are banking on that santa claus rally. i don't know whether it's seasonality or whether they're hoping and crossing their fingers but when you look at friday's rally and the internals were not good on low volume, narrow leadership, do you think a santa claus rally is looking less and less likely? >> i do. if you compare the active versus passing investing, i think if you're fundamental and can look at companies that do have sort of the fundamentals that are continuing to improve, i think you can have that strength lead to a rally and like i said earlier, there's still strength in housing, still strength in cars, and the consumers' confidence is still relatively high. i know the interest rate scenario with the fed increasing the rates is an issue, but that is essentially already baked in

and that's almost symbolic from our point of view, so, yes, we think there's confidence. >> i certainly hope so. >> we hope. >> we need that consumer to come out in the holiday season. you can also go to powerlunch.cnbc.com to see what else those guys like next year. over to you, ty. >> thanks very much, mandy. elections held in venezuela and france over the weekend, and parties that were once on the fringes are making some big gains now. here is our chief international correspondent michelle caruso-cabrera. michelle? >> tyler, we're going to start in france where the national front, that's the extreme right party, did very well in regional elections, much better than they did last time. this is a party that wants much greater control on immigration, on france's borders, and their strong performance clearly a response to what happened november 13th with the terrorist attacks. the woman that you see there is marine le pen.

she is the leader of the national front. why the financial markets would care about the national front is not only is she encouraging more control of borders of france, of immigration, she's also said that if she is ever elected the leader of france, she will get rid of the euro and bring back the french franc. this would be a big negative for the euro. that's something to watch to see how they do in the second round of the elections. moving on to venezuela, the opposition won in a landslide. we're still waiting to see if they got a majority or a supermajority, but there was great celebrations in the street. nicholas marudo in theory could lose a lot of power. he's still in power. these were parliamentary elections but he no longer controls the house over which he sits at this point. we have to watch and see what happens to make sure the opposition, it's possible that the opposition could seize defeat from the jaws of victory because they have been disorganized, splintered, et cetera, but it's clearly

dissatisfaction with what's been going on in venezuela which has been absolutely horrific. take a look -- this is a venezuelan debt due to 2027. what we're showing you at the bottom is a chart of the price. huge rally in the price of venezuelan debt as a result of the outcomes of the elections. >> thank you very much. to dominic chu for breaking news. >> we're watching shares of pet boys because the headline here, carl icahn and his funds are now offering to take over all the shares they don't already own of pep boys for $15.50 per share in cash. that level is now above what bridgestone has proposed it take over manny, mo, and jack, the pep boys for. it's also $2 per share higher than what icahn had previously offered to take over the company's retail operations as well. those shares of pep boys still up by 2%, about $16 per share but carl icahn saying he will now offer $15.50 per share in

cash. this is now higher than what bridgestone has offered to take the company over. we'll see how the shares respond in kind to this particular note and, again, we'll bring you more details as we get more here on the news desk. >> thank you, dominic, very much. many call it the problem that might well start the next financial crisis. where we stand and details on when the danger is most likely to strike. you're watching cnbc, first in business worldwide. 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.

shares of ameriprise financial near their worst levels today down by over a percent. the company did though say it was going to add $2.5 billion to its stock buyback program. its previous plan had about $550 million left on it. the stock is down about 14% so far this year. so, tyler and mandy, interesting moves for ameriprice financial. >> thank you very much. as rates rise do so fears of corporate defaults in a sluggish economy or in certain sectors of

it. today we'll look at a crucial piece of the puzzle, the impact that corporate defaults will have on the stock market and what the bond market is signaling right now to stock market investors. a lot of people, mike santoli, think that the bond market usually gets thingsrighter than the stock market? >> that's the conventional wisdom. just to get into it, high yield bonds or junk bonds have become a leader worry for investors. credit conditions have historically led the equity markets, especially around economic turning points. so with the junk bond market conspicuously weak in recent weeks, stock investors are wondering if a significant economic slowdown is imminent. take a look at the interest rate spread over treasuries of junk bonds. it's near its high for the year and not too far from the post-financial crisis high. there are three main takeaways here to the situation. first, there's the significant risk aversion by credit investors as they demand higher yields to compensate for the hazard of holding them.

second, the default rate on these riskier bonds has been climbing from low levels with the number of distressed bonds now at a six-year high. and, third, the likelihood of a fed rate hike next week seems to have scared some money out of junk bond funds because no one is quite sure how this sensitive sector of the bond market might respond to a slight change in short-term rates. now, as you can see, the s&p 500 has managed to climb back toward the highs of the area even with today's declines despite the continued pressure on high yield bonds. what has bond investors so anxious? much of the pain is centered in energy bonds. now in distress due to low oil and gas prices. the weakness has begun to extend just a bit. looking past december, investors worry about the maturity clip of bonds set to become due in 2017 and the market has started to sort out how much of that debt might not be paid back. distressed issuers have about $145 billion in bonds scheduled to mature between 2017 and 2021. some issuers whose bonds already

trade at levels implying high risk of default companies like chesapeake and struggling consumer anz industrial companies like eye von and titan international. now, on the other hand note some market handicappers think the junk market is overstating the threat to the stock market. goldman sachs last week said high yield was sending, quote, a false recession signal, and the stock market might not be as oblivious as it seems when it comes to heeding the message of the bond market. energy and industrial stock s, of course, have lagged badly and a small number of stocks leading the s&p higher have been fast growing tech and consumer stocks that aren't reliant on easy credit. tyler, back over to you. >> thanks very much. let's bring in diane vasa to talk more about this. welcome. good to have you here. >> hi, tyler. >> let's do a little basic work. what is the average default rate on bonds broadly speaking? where are we now, and where do

you think we will be a year from now? >> so the average default rate in the u.s. is about 4.5%. >> per year. >> per year. and you can have peaks. so basically post-recessions you're seeing something closer to 12%. where we are right now, we've been ticking up and we're at 2.8%, so we started the year at 1.7%. >> so we have seen more this year and they have been -- and do you expect that that 2.8% is going to rise closer to the average of 4.4% over the next year or two years? >> right. so we forecast 12 months ahead. so each quarter. and currently we have -- so the beginning of fourth quarter 2016 we have 3.3% default rate in the u.s. so what that means is that 60 companies would need to default between now and then for us to get there. now, we have a downside. the downside is 4.8% and that would mean in that same period

87 companies would need to default. >> somewhere between 3.2% and 4.8% if a worst case scenario takes place. most of the defaults that you have seen, that you expect to see are concentrated where but where are other areas where you might expect to see them? >> so 50% of what we've seen in the u.s. this year have been oil and gas and metals and mining. so commodity related -- >> just where we thought they'd be. >> just where we thought we'd be. going forward what do we expect? so we continue to see commodity-related defaults. we monitor companies that we consider the most frail in terms of their credit quality, so those are companies that we rate "b" bimuss mi lunus or lower. 40% of those are in commodity related. >> and where is another big concentration of them? >> okay. >> where else would you expect to possibly see it?

>> so it falls off pretty rapidly after that and not a surprise for those in the high yield market, media and entertainment. it's a broad sector so you have everything from gaming companies to publishing companies but that's about 15%. the reason why i say nobody would be surprised at that, if you look at our rated portfolio, 85% of the companies that we rate in that industry are high yield. >> so at what point do -- you remember back in the mortgage backed security crisis, when some of those securitized mortgages, 6%, 7% went blooey, that's when the thing cracked. at what point do the risk of the high yield default become something that's very worrisome for equity investments or the economy and the market as a whole? >> commodity prices have been at multiyear lows, so it's not a surprise. so asset managers have combed their portfolios. they've looked for those industries, companies, that may

be infected by these lower prices and also those that would benefit like transportation companies. >> they've been bleaching their portfolios? >> correct. and so this is not something that's a surprise to them. >> but at what point does it become really distressing to the markets? is it 6%? is it 12%? >> the default rate? >> yeah. >> the default rate -- once you start to get -- you close in on that average of 4.5%, you know, people certainly stand up and look. >> all right. fantastic. die an diane, thank you for coming. mandy, over to you. >> another big hour of "power" is just ahead. let's get to brian sullivan joining us from the west coast in the l.a. bureau. lucky you. >> thanks very much. we are live in los angeles, and we have another huge pour hour "power." much more on oil's big drop. are there any bargains within the very leaky oil drum? we'll find out. plus, the l.a. based ceo of

live nation and the former ceo of reliance deal are both here with their view of this often confusing economy. and angels great c.j. wilson, by the way, also a big-time car dealer, with his view of the consumer and maybe what he thinks those 30-plus million dollar deals for two pitchers, all that coming up, because why not? we love l.a. we're back right after this.

welcome back, everybody. a look at the dow movers this hour. walmart, p & g, and j & j, the only three stocks on the dow in the green. energy is the biggest loser in trade today. exxon and chevron the dow's biggest drags. chevron's ceo will be joining us on "power lunch" tomorrow. you must watch that, but coming up next, former heavyweight boxing champ mike tyson himself and he's got a lot to say. he's going to say it to us. "power" is back in two. make sure you stay with us. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool.

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welcome back to "power lunch," everybody. thanks for joining us. i'm tyler mathisen. the green institute's closing the gap conference is in full swing down in florida. the goal of the conference is to bring together different voices to explore solutions to increase upward mobility in the u.s. economy. robert frank is live in palm beach, florida, with the former undisputed boxing heavyweight champion mike tyson. >> a lot of very different

voices down here at the green conference. one of those, of course, being iron mike tyson. he's doing books, going movies, cartoons. thank you so much for doing this. >> you're welcome, bobby. >> let me ask you, this is a conference about economic ups and downs, and you have had some ups and downs -- i >> i'm still working ups and downs. when i'm at the top, i'm ready to fall. >> when you were at the peak how much were you worth? >> at my peak? >> $100 million? $50 million? >> at my peak? at least $400 million or $500 million. are you nuts? are you crazy. >> $400 million? >> are you crazy. >> so $500 million -- >> let me -- i'll set the stage. i was a new machine. this guy good the new machine. i'm the new machine doing that stuff, man. everything i have done if anybody copied it they were

successful. >> right. including your tattoo. >> exactly. >> you went from $500 million to bankruptcy. what lessons did you learn from that whole experience? >> i learned to stay out of my way. that i'm very dangerous and toxic sometimes with money and i was just a young baby. i was totally out of my league. didn't know how to handle money, didn't know how to handle people involved with me that were involved with my money. the most beautiful thing about that now is that i'm not with them no more and that i'm bigger now than i ever been in my boxing career and i got more fans than ever in my boxes career. because i have the internet and it showed the 5 million or 6 million people and i didn't know that when i was at the top of my career. >> so are you back to millions? are you a millionaire now? >> yes, a millionaire but still paying my debts though. >> yes. >> still paying my debts. there's no doubt about that. >> let's talk, you got so many things going on. off c-- you have a cartoon, are

you going to do another "hangover" movie? >> if they call me and pay me. >> mandy, jump in here. i don't want to get hit again. >> hello, mike. great to have you on our show. >> hey, mandy. >> how are you doing? >> i'm looking at you, mandy. >> good. i'm looking at you, too. what would be the one piece of advice you would give to a young star boxer or any young successful sports star in how to manage all that success? like how to not lose the money like you did? >> listen, you're going to lose money -- listen, it has nothing -- handling money is an art. if you notice like the robber barons in the first turn of the century, they all made millions, billions and billions, and now the robber barons -- there were hundreds of them, probably only five families now. they didn't understand the art of handling money. they were immigrants and they made mass money and they lost it, the family members, ex

partners, ex-wives, and that's because they had no idea of handling it. rockefeller had problems as well. if he didn't send rockefeller jr. to school and he adapted some kind of form of managing money, he would have been wrecked as well. >> you also made a good point, you said wealth makes people become something that they're not. pretend to be someone that they're not. >> well, listen, this is what's real, right? only thing that's real is what we made. the money is real. the statues are real of course the buildings are real. we're an illusion. what we believe of ourselves are illusions. >> right. but the money does help in that illusion, doesn't it? >> i don't know if you know how to manage it emotionally. it's all about our emotions. it's a false sense of security. i'm looking at you now. >> mike, how are you? i wonder -- >> i love you. >> -- what you think has happened to the heavyweight division or really to boxing.

when you were the champ, everybody knew who the heavyweight champ was. everybody knew you. everybody knew the champ, ali. they knew fraser. i bet if i asked 100 people today who the heavyweight champion was they would not be able to tell you even though he won just a few weeks ago in a real upset. what's wrong? >> well, really, fighting is much more entertaining and show business than it is real brutality because the act of boxing -- there are guys that are very successful and have long range but they're not excitin exciting. only reason they become exciting and popular is because people are paying to see them get beat not because they're a great guy and they're inspired to be like them even though they're successful and make a lot of money. my objective, you know, is to entertain the people. what the people want to see, they want to see two people hurt each other. my objective is to hurt my

opponent and do it in a s sophisticated way and it's exciting. everybody time they see me they say when do i see that guy again. that's entertainment, it's business. business! >> you have heard it from the business heavyweight champion of the world. back over to you. i just don't want to get hit anymore. >> tell mike he has to get over that enthusiasm problem. once he solves the enthusiasm problem he will probably go. >>. that does it for the first hour. i'm out of here, you're sticking around. >> i'm sticking around with brian. over to you in l.a., sir. >> all right, tyler has been officially knocked out. we are in. it is 2:01 on wall street. 11:01 in los angeles. good morning, everybody. dow and oil are both sinking. i'm brian sullivan. mand, as you heard, sticking around for another big hour. we have the very latest from san bernardino. we have the ceo and former ceo of live nation and reliant steel on, and angels pitcher c.j. wilson will be joining us as well. that's all ahead. but we have got to begin with

oil. it is down big again today. incredibly falling below $38 per barrel. folks, this is not a complicated story. there are 1 to 2 million barrels of oil more per day being pulled out of the ground than the world needs. it's a classic case of over supply and under demand. look at this. 20-year chart of crude oil. the recent nominal lows were $33.55 per barrel hit intraday back in 2009 at the very height of the financial crisis. in today's dollars, that's about 37 bucks and change. in other words, we are nearly at more than a decade low for a barrel of crude oil. unless you are a owner of oil related stocks, probably a win for you because wholesale gasoline prices are also falling. that should put more money into your pockets, but if you are an oil investor, unless you're short, it is a very difficult day. on our screens here, more than 150 oil and gas related names, none are higher. the big goose egg, zilch.

every major oil and gas stock related services, whatever, down. the two big oil etf, the oih, xle, those also getting whacked. that's how a lot of mom and pop investors play the oil markets. exxon, chevron also have a big impact on the overall market as well. that's why we have a dow that's down 156 points right now, and if you look at a list of the worst performers in the broader s&p 500, it is a murderer's row of energy stocks. of the more than 150 oil and gas stocks that we follow here like i said, none of them are down, but here is the thing -- or none of them are up. here is the thing, you're supposed to buy when it's darkest below the dawn. when there is blood in the streets. well, we actually have oil pretty much in the streets right now. let's bring in jason gamell. do you think this is the point finally of maximum pain for oil and energy stocks?

>> well, i think we're not quite at the maximum point yet. as you mentioned earlier, we are still in an oversupplied market. it's about a million barrels a day of oversupply and that probably isn't really correct until the second half of next year. so i think that despite the move we're seeing today it's really too early to be saying we found a bottom in the oil price. >> what has happened, jason? what has everybody gotten wrong? >> i think the big thing we got wrong was the capacity for both iraq and saudi arabia to put more oil into the market, and we had anticipated that 2015 was going to be a pretty tough year, but that incremental oil that the saudis and the iraqis have put in have made the oversupply significantly larger than we had anticipated. had it not been for that incremental production from iraq and saudi over the course of the year, we'd be in a more balanced situation right now and could be talking about a recovering oil price. >> maybe what we got wrong was not that but rather the irrationality of human greed sometimes. let's get to some of the stock picks because at some point some

of these names will be worth buying. when i look at a chevron, it is at a 30-year low on nearly every metric, price po book, price to sales, price to earnings. it's one of the few stocks off buy rating on. >> chevron has the biggest potential for an inflection in its cash cycle. the capital expenditures will be coming down quite a bit over the course of the next year and a half but the production levels are going to be going up. that means they should be able to balance their cash cycle at about $58 a barrel brent. i know that's quite a ways above what we're looking at now. that's amongst the lowest in the sector. the combination of growth and stronger cash flow is what underpins this. i think most importantly that means their dividend, which is currently yielding something like 5.5% should be not only sustainable but progressive. >> you think they could in this environment with layoffs and cost controls, you think they could actually raise their dividend? >> i think they will raise their

dividend over the course of 2016. that probably could be weighted towards the second half of the year when it looks like we have a better chance for a fundamental oil market recovery. >> and is that the only big cap integrated oil stock you are recommending to your clients right now, jason? >> the only other one we are recommending is shell. >> kind of the same basis, cost controls, eventually some sort of recovery being smart with the balance sheet? >> exactly right. and they also with the completion of the bg transaction had the potential for i think a lot more cost synergies than what most of the other companies in the sector have. >> jason, we appreciate your time. thank you for joining us here on "power lunch." >> happy to do it. >> speaking of chevron, tomorrow on "power lunch" a big interview. we are joined in a rare exclusive with that guy, the ceo of chevron john watson will join you exclusively. we'll talk about why oil is so low, why producers are cutting back production, what the impact of oil prices on the u.s. companies in the world will have. the impact of the prices on chevron's business, it's balance

sheet. obviously we'll probably talk to him a little bit about the dividend jason mentioned as well tomorrow in the 1:00 p.m. eastern time hour of "power lunch." we have got a long, rare interview with john watson, the ceo of chevron with everything that's going on in oil today, it is very, very timely. it is not just oil that has been feeling the commodity pain and pinch lately. copper down more than 25% this year. aluminum down more than 15%. other metals too numerous to name also getting slagged. let's talk more about this commodity crunch and the impact on all of it. david hannah, chairman of reliant steel and aluminum based here in l.a. been with the company for more than 30 years. david, thank you for joining us. >> thanks for having me. >> we talk about the energy complex a lot on "power lunch." that is a big part of your in business as well. how is the oil and gas downtourn impacted reliant and the metals

market. >> it's had a significant impact. we've grown in the energy end of our business over the last four to five years. it's been the best performer we've had in our company in the last four years. today it's the worst performer. but what we've tried to do is balance our exposure to different industries over time, so we don't want to get all of our eggs in one basket so to speak. we're exposed to the auto industry, aerospace industry which are doing quite well. >> is that enough to make up for the slowdown in energy in oil and gas when drilling rigs have fallen by 50% in a 12-month period. >> it's not quite but it's close. we have a lot of exposure to nonresidential construction. it's getting slowly better since 2010. >> most ceos and chairmen that i have had the privilege of speaking with over 15-plus years have a hard time saying they got something wrong. i have just sort of noticed that as a trend with all due respect

as do tv anchors by the way. why do you think so many not just with reliance, in so many industries have gotten that oil collapse wrong? >> i wish we knew. it would sure help news the future. >> were you shocked by the magnitude of the declines, the speed of the descent? >> in discussions with our customers, we saw it coming. we started to cut back our inventories, started to cut back our people in reaction to where we thought we were going to be although the magnitude has been quite a bit more than we had expected. at least we started to make the adjustments we needed to make to our businesses ahead of the time. >> so your customers told you in advance they see a downturn coming, so you have got some foresight into the business. are your customers saying that things will turn positive anytime time? >> no. >> what are they telling you? >> i think it's going to be more of the same. in line with your thinking, i think we're -- we might not be at the bottom.

we might be a little bit -- could have a little bit more to go. rig counts is the big deal for us. so when people are drilling, then we're selling them metal, and we don't think -- >> you're not hearing of any turn in drilling rigs? because we've lost like i said 50%, actually more than 50% of our drilling rigs in a 12-month period. >> yeah. and our business related to the energy side from a revenue perspective is down about 60%. >> how do you make up for that? because your margins last quarter increased, david. you raised margins but you're telling me these segments are down 60%. >> well, we do it -- the energy side is about 8% to 10% of our business. so we've got 80% to 90% of our business that's even better. so aerospace is really going very well and we've got good, solid exposure to the aerospace market. we think that's moving along well. nonres construction, 30% of our business. it's getting better. from a demand standpoint is what

i'm talking about. >> okay. >> the challenge that we've had and why maybe our numbers might not look like it's making up for the energy side downturn is because of pricing across all of the metals. you pointed it out on your screen at the beginning. you know, with copper, steel prices, everything is down 30% to 40%. >> and no sign of a turn in those prices either. >> no, no. i think we're positioned to weather it out and our people have done an outstanding job as you said with the margins. >> quickly, last question. are we in an industrial recession? >> i don't think so. from a demand perspective, i don't think so. i think there's part of our economy like the energy side, the mining side, that is definitely in a recession. but i think the other part of the economy is okay. it's not terrific, it's okay. >> just okay. david hannah, reliance steel, we appreciate you coming on the program. thank you very much. >> thank you for having us. certainly, folks, oil is the big story in the markets right now. we are below $38 a barrel for

crude oil. that is a nearly seven-year low. it is nearly a decade low if you adjust for inflation. stocks, as you might imagine, are also down. oil and stocks have been trading pretty much in the same direction constantly. the nasdaq is down 0.8%. biotech stocks are falling sharply as well, and coming up, we are going to speak with the ceo of one biotech whose investors are losing a lot of money today. he will be out defending his company and that stock when "power lunch" rolls on from l.a. stick around. they come into this world ugly and messy. ideas are frightening because they threaten what is known. they are the natural born enemy of the way things are.

yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful.

welcome bark to "power lunch." kinder gor man, another energy company is down big today to the tune of over 6%. also down more than 60% so far this year. our david faber reporting the company's reviewing its dividend. it may cut the payment to save money. soda stream, one stock moving to the upside. it's getting a boost as keurig soars after getting taken private. the stock is, however, still down more than 20% so far this year. and shares of global blood therapeutics, it's falling by 16% today. this is as the data it presented at a conference about its treatment for sickle cell anemia did not look as good as earlier data. blue bird bio also falling sharply on skepticism about its sickle cell treatment. meg terrell is at the hematology conference in orlando, florida, and she's joined now by the ceo

of global blood therapeutics. over to you, meg. >> thanks, mandy. and joining us now is dr. ted love, the ceo of global blood therapeutics. thank you for joining us. >> thank you. >> we are seeing stocks taking a hit over the data out over the weekend. is there something that was negative in our sickle cell program? >> not really. we are seeing small cohorts of patients so it's normal to have some variability but the theme we're seeing is absolutely consistent. the drug dramatically inhibits the disease. red blood cells are not being destroyed and the hem mow globen is going up. we need to dose patients more often but we don't want to make conclusions ahead of the data. but the data net net is very good. >> let's paint a picture of what it looks like to treat sickle cell right now. what's available for patient approximates.

>> that's why i'm doing this job. i decided i wasn't sure if i wanted to run another company but this company was focused on sickle cell and i remember i used to treat these patients and the idea of giving something for these patients was very exciting to me. mostly today we give them pain medications. there is one medication that isn't very effective that many concerns exist around, so it's not widely used, but there really isn't a disease modifying treatment that's widely used the way we hope that this drug could be. >> and so what yours looks to do, it's a pill you take once a day to fix basically the problem that happens in sickle cell. you're trying to undo the sickling you're seeing in red blood cells. >> that's exactly right. >> compare it with a potential gene therapy cure that could come down the line from blue bird. how do you envision the marketplace? >> well, i have said before, i hope that everything that we're doing in this disease for drug development works. we welcome competition. my tragedy when i was practicing is we didn't have much to offer

so the idea of having many options is wonderful to me. i do think that a once a day oral therapy is going to be the preferred therapy by most people, but not everybody will necessarily respond to our drug, so it would be great to have many options for physicians with these patients. >> why do you think that would be a preferred therapy if you could get a one-time cure through gene therapy? do you think most people would want to take one pill for once a day for the rest of their life? >> i think so. gene therapy, transplanting is a fairly big medical procedure with significant risks associated with it. we're hoping our drug continues to be well tolerated and a simple pill. coy perhaps lower your cholesterol with gene therapy but probably cholesterol lowering drugs will continue to be preferred therapy for most people. >> dr. love, thank you so much for joining us. really appreciate it. >> thank you. >> brian, sending it back over to you. >> meg, thank you very much. on deck, oil still remains the story of your money today. crude oil tanking again.

we're below 38 bucks a barrel. the dow industrials down 142 points. a big day, a lot more to do on "power lunch" live from los angeles. we are back right after this. crude oil tanking again. 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.

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we are now just a little more than a week away from the fed's next decision. many think that we are in for the first rate hike in 9 1/2 years. but may i be the first to say let's forget december because a rate hike may already be priced in. the key to your money is what happens after that. joining us now, sre kumar and john bellows who co-managing the western asset fund. good to chat with you both. >> great to be hire and welcome to los angeles, brian. >> thank you very much. you and john see things very differently. you view the bond market and the fed differently. you think the fed is the only game in town. john, you think the fed is part of the game. why do you think it's all about the fed? >> we have had almost ten years of no rate hikes, brian, and we have had seven years of continuing with zero interest rates. the market has got used to this liquidity being available as and when desired.

the fed has stopped quantitative easing before, the stock market went down. they brought it back again, the stock market always rejoices when that happens. the problem here is it is like drug addiction. you go through with that and after a long period of time, that becomes the only thing that motivates a person or keeps a person going. i don't see a quick end to it. i don't see an easiant y anend either. >> here is the heir scary thin john. unless you are over the age of 31 or 32, not you but money managers, have never run money or traded in a rising interest rate environment. >> so, first, let me say i am over 31, so take that off the table. the second is i want to say i certainly agree with sri that the fed can have a big influence. there's been periods recently where the fed has been very much leading asset markets, leading the economy, they're trying to change the mindset, they're trying to change investors'

expectations. the fed can be a leader, but i don't think that's the mode they're in today. i think the fed today wants to follow. they want to be data dependent -- >> follow what though? >> well, i think they want to follow the market. they want to let the market lead them and go where asset prices and the economy direct. i don't think the fed is in the mode of leading the market today. >> but the only thing i will push back on that, john, is that there's a wide school of belief that, yes, the fed may be following the data, but they have built the environment in which the data exists, so really they're trying to say they're following the franken stein of their own creation. >> so i think there's something to that. wint overplay the fed's ability to guide the data right now. we've reached the outer limits of the fed's ability to influence what's going on in the economy, and i think bigger forces are at play. i think the u.s. economy has some momentum here but clearly what's going on in oil markets is a big factor. that's not designed by the fed. what's going on in global markets is not under the fed's control. i think the fed is more of a follower than a leader. >> brian, first of all, it was a

great tweet. you're right, 31 years old and younger, they have not seen anything -- >> never managed money, never traded. if you're a financial adviser, you have never advised your clients in a rising interest rate environment. basically one-third of people running all the money in america have never operated when the federal reserve is raising interest rates and i'm sure they'll do a fine job, but you forgive me for being a little nervous. >> i'm nervous as well for the same reason. the second is the fed's rate hike that you talked about is far from being fully discounted and, again, just look at the oil market today. a drop below $38 and we are continuing to drop. if the fed actually increases december 16th, and let's wait to see if they do it, you have five more days of this kind of a market. the fed may be rethinking its plans completely. >> you complimented me only then to come in and say i was wrong about being discounted. that's beautiful. did you it in such an elegant way. i have never had somebody tell

me i was wrong in a nicer way. you don't think this is already priced in, that a quarter point rate hike is already into bonds and the two-year and the equity market? >> i don't think it is priced in for the simple reason the fed has shown again and again it doesn't have any long-term strategy. remember, two weeks ago janet yellen told us whether she hikes on december 16th or not is data dependent. how can you be data dependent two weeks, three weeks prior to the actual move? if you have a long-term strategy, you should have decided already what it is that you're going to do. that's first problem. the second is that you are looking at oil prices reacting to it, emerging market situation is going to get worse. china just put out a figure a few hours ago showing reserves fell sharply, and that again is going to be a negative which will come back and haunt us in the u.s. >> last word to john. is the market prepared? you run money. are you prepared? >> i think the market is prepared for it. i think anything other than a hike would be inexplicable and

would risk a lot of volatility. >> if we don't get a rate hike, what happens? everyone is like if we get it what happens? what they don't? >> that's a big risk of volatility there. we saw last week with mario draghi when the central bank delivers something other than what's expected, you really see a lot of volatility. >> here we are. next wednesday, folks, is when it is. of course, been the last three meetings too but really this time we meet it. thank you both very much. >> thank you. >> appreciate that. coming up, it is a big day for oil in a bad way unless you are short crude. crude oil is below 38 bucks a barrel. folks, many oil stocks are down double digit percentages just today. we're going to go get the oil close and show you some of the hardest hit stocks on a very, very big day. tough day for oil. stick around.

welcome back, everybody. oil is a big story today. it is down big below 38 bucks a barrel. let's go to jackie deangelis at the nymex. give us the final trades and the reaction to traders about oil's big drop today. >> good afternoon to you. this was a big blow. i was checking the final prices and seeing we're just about at session lows. the session low was $37.50. looks like we're going to be just above that at the close but still it's about a 6% drop on the day.

wti a 6 1/2 year low. it broke through this year's august low, $37.75 was the level everybody was watching and it took it out. prices seeing pressure after the fallout from the opec meeting, a little trickle down impact here for people to digest the news that production is still going to go up globally. as you know, opec is producing over the quota. in the united states even though we lost ten rigs, production went back up to 9.2 million barrels. the secretary of energy telling our colleagues in cnbc europe that we should expect to see the average around 9 million barrels a day and production will be restored towards those peak levels of 9.6 million barrels. so what's happening here globally? we're awash with oil and the consequence of that, of course, is these lower prices. 36 bucks is the next support level to really watch here, but if we take that out, goldman sachs called for $20 oil earlier this year. it was not the base case but a

lot of people on the trading floor are talking about that again, brian. >> i'll tell what you, jackie, when goldman came out with that note and we had the commodity guy, jeff curry, on the show, everybody was scoffing at him, making fun of goldman sachs saying they're fear mongers, their call is getting more attention. here is the interesting thing, you know the headlines tomorrow will be oil hits seven-year low. it's actually almost a decade low because the prices we hit back in '09, if you adjust for inflation as you always should, we're almost at a 12-year low for the price of oil. >> i saw your analysis. i saw your analysis before and i actually -- i think that's brilliant to put it in those terms and back to the point that you made about goldman sachs, everyone loves to say goldman sachs was wrong last time when they called for $200 oil but that's not to say necessarily they may be wrong again. it's something to think about. we're very close to those levelseslevel levelsleve levels. >> if you say anything else i did was brilliant i'm going to throw the mic down and retire.

appreciate it. here are some of the harder hit of the names that are the bigger of the mid major. you have whiting, off northern oil and gas, you have an petroleum. these stocks are down 12% and 13% in a day. many oil bonds down more than 60% this year. as oil continues to fall as we said, many energy names are getting crushed. let's get though the next move with the "trading nation" team. try to find some opportunity in this dumpster fire that is energy stocks right now. erin gibbs with s&p. ari wald with oppenheimer np any reason to jump in some of these numbers you're supposed to buy when there's blood in the streets? now there's oil. >> particularly after the comments we saw on friday where they're just very clearly stating that they're just going for market share, opec is going for market share. they're going to let prices keep dropping. we really don't see any stop to this oversupply, and i think a

lot of analysts will be revising their estimates even further down. we may see still some very meager growth going into next year. we were looking for that rebound and expecting prices to finally stabilize in 2016. after these comments, it just doesn't look like it's going to happen and i'd say avoid at this point. >> okay. avoid at this point. ari, you just heard jackie talk about -- >> guys, my sound just went out. >> we can still hear you, erin, so it's find. >> you're charting the etf, the xle. it's composed of big energy stocks. any sign of that bottoming out technically? >> brian, we do not see it. we see it as a resumption of xles long-term down trend op our view has been and continues to be to sell energy stocks. there's really four key points here. one, the sector spdr has broken a 12-year uptrend. a 12-year uptrend. the structure is broken. two, the 200-day is still sloped

lower meaning there's no signs of a base here. three, credit markets are still signaling caution. it's the sector with the widest credit spreads and four we think the sector's relative trend continues to be pressured by a secular decline in oil prices. so when you add it up, if there's a q1 correction in the market, we think this is what drags it down. we would continue to recommend selling, underweighting, or avoiding the energy sector. >> technically avoid it, fundamentally erin says avoid it. everybody says avoid. sometimes maybe that makes you think maybe you want to go to the other side. thank you, guys. appreciate it. for more "trading nation" head to the weeb site, tradingnation.cnbc.com. let's get to sue herera with your cnbc news update at this hour. here is what's happening. the chicago police department is now the subject of a federal civil rights investigation. u.s. attorney general loretta lynch announcing that move today saying her department will search for patterns of unconstitutional police practices.

the investigation comes after chicago police released dash camera video showing a white officer fatally shooting a black teenager. "time" releasing the eight finalists for its 2015 person of the year contest. the list includes the leader of isis, black lives matter activists, caitlyn jenner, angela merkel, and viewladimir putin among others. italy's mt. etna erupting overnight spewing fire and lava into the sky. the world's most active volcano has been erupting for three days drawing crowds of visitors. and we're getting to see pluto in a whole new way. nasa's new horizon spacecraft was able to get closer to the dwarf planet than any before it snapping those high resolution pictures as it flew by. great stuff. all right you're up to date. brian, back to you. >> pluto is a planet, then it's not, now it's a dwarf planet.

>> it's in play. pew toe is in play. >> it is in play. thank you very much. it is the company that issues more than $450 million tickets every year for concerts. we are talking about live nation entertainment. they own ticket master, the company has expanded to promote events, managing artists, running their own e-commerce platforms. joining us is michael rapino, the ceo of live nation entertainment. thank you for joining us. >> thank you. >> we talk about the oil pain. you probably love it because the price of gas has gone down. have you noticed any positive change in your business because of what is happening to gasoline and oil? >> not today but i would say to you we're on sale for next year already earlier than usual but that's the way the market is trending and we're coming off a record year in '15 and we're looking at next year as probably being bigger, more shows are going up and the consumer demand is bigger than ever. >> what is making it so big? who is filling the stadiums and the arenas right now?

>> generally the live business disconnected from all of the recorded right stuff that's going on has been a booming business for the last few years. we've been on three record years. why? because live music business in itself, the concert is now global. more shows are happening around the world than ever. emerging markets are booming. consumers, millennials, especially live the experience of a festival and of a concert. we have seen the live show booming, consumer demand bigger than ever and the supply side. artists are making about 95% of their revenue when they get on the road. that means they've got to get on the road. >> i can pull up almost any song by any artist at any time anywhere i want right now, my phone, in the car, doesn't matter. why are so many people going to concerts? >> well, there's never -- you can't replace that two hours of magic. the average customer only goes to three shows a year. >> three a year. >> it's their kodak moment. when you see your wife to see adele -- >> is she going to tour by the way? i know people are still buying

cds. >> she went on sale last week in europe and blew out everything. >> how big is adele going to be in the united states? >> she'll sell out in minutes. >> if i want to see adele, take my wife to see adele, what is a ticket going to cost for that? >> they're still putting together the u.s. plan but it's going to be somewhere between $75 and $125 but it's going to be high demand. they're going to sell out. >> two other quick things. the secondary ticket market, every analyst i talked to prepping for the interview said ask him about that. how big can that be for live nation? >> we think it's a huge opportunity. when we bought ticket master so we could own the end to end experience was being in the technology business. through our investment we've been able to add new products. ticket master plus, the biggest -- we've done a billion dollars in revenue. it's about an $8 billion category. we think we have a long way to go still. >> end it on a serious note. obviously given everything that's going on with san bernardino, with paris, the bataclan hall. that was a music venue.

how has that changed the way you put on concert. people want to be safe but you also want to make sure you have some freedom of movement, the extra cost your facing, everything else. >> right. you know, overnight we can't solve this. there's just too many small venues, big venues. most big venvenues, festivals, e a sophisticated system, a lot of security, a lot of metal detect yors. i assume they picked that type of target because the smaller the venue the less sophisticat d sophisticated. overnight we made sure we increased security at all of our own venues, increasing our metal detection -- >> but increasing the pay, the quality of the people, do you have to ramp that up as well? maybe part-timers, do you have to pay more and that's going to increase ticket prices? >> i don't see that happening yet. i think the industry in general has looked at this as a one-off. i think the industry in general wants to be better at security but i don't think you're going

to see dramatically overnight the concert business become the tsa. it's just not a cost -- >> that's the thing. you want to go and have a good time, having fun with your family and you want to be safe but you also -- i probably phrase this incorrectly, you don't want to go to a show in a prison basically. harder to get into a rock concert than to get on an airplane. >> exactly. we don't see it headed that way. we're very proud last night we were able to bring u2 back to paris for the first big show. we think rock and roll will continue as is. >> michael rapino ceo of live nation. it was a real pleasure. thank you for joining us. we'll see you soon. two stocks making big moves, first off green mountain, they are going private. that shocked the market this morning. but that is bad news for those shorting green mountain. guys like david einhorn. also, chipotle shares continue to sink on e. coli fears. that stock is down another 3%. how serious of an issue is e.

coli for chipotle or you and your money. you have got apple, alphabet which i still have a problem saying, aka google, microsoft and jpmorgan chase, they're all down. no surprise. we are back on "power lunch" right after this.

not everyone is making money on this deal. hedge fund titan david einhorn has been short on keurig stock. kate kelly is here on more. how bad is he hurting right now, kate? >> well, mandy, it's kind of a mixed bag. einhorn is still in the black on this short trade but by a lot smaller margin than he was as rendly on friday. he got in at an average price of $102 this time around. he's been short it in the past as well which pegs the placement

at around may and it was shaping up to be one of his biggest winners this year, down nearly 50% as of late last week until this morning that is. a surprise announcement that the investment firm j.a.b. holding would buy keurig for a huge premium sent the stock soaring this morning up to about the $90 mark erasing many of einhorn's previous gains but not obliterating them. einhorn is down more than 20% year-to-date through october in his green light capital fund -- i'm sorry, that's true november. he declined to comment on whether he's closed out the keurig position or plans to anytime soon. while it may not longer be an outsized winner, he still made $12 or so per share. eminence capital, the sixth largest overall keurig holder and the largest among hedge funds is up by more than 30% based on rough math from the filings and other hedge funds all of which were long the name appear to be doing pretty well.

einhorn is okay at this jinx to juncture but a lot of others are doing very well. >> now to chipotle where shares are down 30% from its 52-week high. chipotle withdrawing guidance for 2016 and slashing outlook for the current quarter as the e. coli problem is spreading now to nine u.s. states. bob darrington covers chipotle. he lowered his price target to $5.75 from $6.25 but does reiterate his outperform rating. good to see you again. i would imagine that outperform rate something for your investors with a strong stomach but nonetheless, why keep it? >> to be fair, you know, as i have mentioned before, i think ultimately the business will turn. the problem, mandy, is we've seen the turn in the business likely to be elongated from what we previously expected. clearly the fact that the harshness has been magnified by

the users of chipotle, the mill lenell base which chat with their friends literally has turned a relatively regional problem into a national issue. >> basically saying social media is to blame for this elongation of the problem being solved? >> i think it's a contributing factor. if we look back in past times some of the bigger outbreaks were never fanned to the extent this has been. >> also they have this food with integrity slogan. i comment chipotle for really making an effort to source locally and obviously the locally sourced producers are going to be the ones that lose out at the end of all of this, but how much does its slogan actually kind of create a bit of a backlash against the company in the healing process because, you know, now people are saying, well, you know, actually it's got a bit of a problem when it comes to quality? >> that's a very fair statement. ultimately the monkey is on the company's back ultimately to win back over customers over time.

and, you know, mandy, the tough thing about that is it won't happen overnight. there's not a bogo coupon that will instantaneously turn someone who has been affected or squar scared back into a hard core user. >> bob, thank you for your thoughts on the subject and once again your price target is $5.75. brian, back over to you. >> all right, mandy. thank you very much. right on deck on "power lunch," we'll give you more on oil and stocks' big slide. wti crude at $37.58 a barrel. plus, angel's pitcher c.j. wilson in the house. he's also a big time car dealer. we will try to throw him some curveballs coming up.

welcome back to "power lunch." seven months after debuting the latest installment in cnbc's disrupt the 50 list we take a look at how the game changing companies have fared since being named to the list and the growing concerns about surging

c valuations in tech right now. julia boorstin is here. >> so great to be here. despite concerns about mutual funds writing down the value of startups, the valuations of the private companies on cnbc's disrupter 50 list have been surging excluding the two companies that went public, swear and pure storage the values are up 26% since may to $201 billion. listener has more than tripled it's value since may, intarsi therapeuti therapeutics, today it is worth $5.5 billion. then there's draft kings, despite its legal challenges it has nearly quinn tumd in value. today the disrupter list

includes 27 unicorns and there are three more than at the time our list was published. the search for the 2016 disrupter 50 begins in january. follow @cnbc disrupters on twitter for all the latest. >> brian, back over to you, sir. >> i just want julia to know i had a big bowl of lasagna and pizza at her disc just before the show. >> please don't make too much of a mess. >> thank you. i'm kidding. >> all over the keyboard. >> i'm taking care of your desk, don't worry. oil the big story today, getting down to ten year lows if you a just for inflation and we have another huge show from los angeles tomorrow, john watson will join us exclusively. we have a live wide ranging interview, that company fighting like everybody else to deal with these low prices do not miss that tomorrow in the 1:00 p.m. eastern time of "power lunch." we are back with angels pitcher, car dealer and all around good

guy tj wilson.

at ally bank no branches equals great rates. it's a fact. kind of like shopping hungry equals overshopping.

welcome back to "power lunch." let's take a look at the numbers. the dow is currently down by about 160 points, so it's down by triple digits but certainly off the lows of the day when it was down by over 200 points. one of the reasons for the weakness in trade today is what is happening with energy stocks. you can see wti crude at $37.57. today it did settle at the

lowest since february 2009. meantime let's take a live shot of san bernardino in california where they are awaiting a live news conference. we will of course bring that to you in the next few minutes when it is due to start to make sure you do stay tuned for that. brian. >> mandy, thank you very much. special guest right now, angels pitcher, car dealer owner, race team owner cj wilson. you are a car dealer. >> yes. >> we talk about low energy and gas prices what has this meant for you? >> for us we sell motorcycles and the high performance motorcycles are going to fly off the shelves right now. >> they burn fuel. >> they burn fuel. they still get 40 miles to the gallon or something but we are not a truck dealership so we tend to see more economy cars coming through the mazda dealerships. we will retail about 4,000 units so that's pretty good for us. >> i sat next to the ceo of

mazda north america on the flight here and he said tell cj i said hello, he is one of our top car dealers. how well are you doing with the mazda? >> we're probably -- i think we are number one with one of our stores in the midwest and probably number four with our other mid wets store and our one in california we are trying to come in a little bit. it's a cool friday, i'm looking together into other brands, i have other stuff that i'm interested in right now. >> anything you want to tell us? come on. fast, super expensive. >> fast and super expensive, maybe. >> in arizona. >> maybe. >> maybe zach rinky can buy one of them, david price. >> i'm going to have to get david a convertible, he is too tall. >> what do you make of these pitching -- $31 million a year? >> you have guys that finished second in the cy young multiple times as well, those guys are premiere talent, but baseball is flush with cash, the teams are doing well, the balance between

local revenue and centralized revenue is very strong. we have the cba coming up in year. we have to keep going. >> we have to go to san bernardino with a live newscast. >> -- from san bernardino pd. san bernardino city and sheriff john mcmahon from the sheriff's department san bernardino as well as assistant special agent in charge john deangelo from the atf. today we're going to go through a number of things and we are going to answer some of your questions, we are going to open it up for a few questions, but first off i want to talk about the work that the atf has done, the joint terrorism task force and our local and federal partners throughout the weekend. our job is to continue the investigation at breakneck speed as long as we need to do that and we will do exactly that. i want to correct something because it continues to come up.