some. it's been a home run stock all summer. i'm long the name. i've got a small position. i have no idea what the earnings tonight will be. i do think that there is a five to ten-year runway for this to become a much bigger company. >> thank you. >> thank you. >> power starts now. dwraeed, shake shack is good. i'm tyler mathisen everybody. speaking of shake shack and the like, burgers and bags topping the "power lunch" menu today. what these two things say about you, the american consumer. a solar power disaster du jour. the one stock that is cratering to earth at this hour. and manmade mosquitos, how one company is betting on a zika fix with genetically engineered bugs. "power lunch" starts right now. and welcome to "power lunch." i'm melissa lee. three hours left in the trading session. stocks are headed lower at this

hour the nasdaq now negative for the week putting to danger its six straight weeks of gains. the best performing stock on the s&p 500 right now ralph lauren, the worst is perrigo. much more on both of these names straight ahead. i am brian sullivan, melissa, thank you. the labor department says more jobs were available in america and more workers were hired in june. the monthly jolts job opening and labor turnover survey report says the number of open jobs up 2% from the prior month with hiring up 1.7%. the trial to determine whether aetna's buyout of humana will go through, the judge in the antitrust case says he expects to rule by mid-january. the two companies wanted an earlier trial date. team usa continues to lead the medal count at the rio games. ten of them are gold, some of them are won of course by michael phelps. more on that in a bit.

we have a very busy show ahead when we start with two things saying a lot about you, the consumer. they are burgers, and they are bags. thankfully they are not together. courtney reagan's looking at michael kors. let's kick it off with su san lee and some warning signs from wendy's. susan. >> brian, wendy's getting sold off today on a big miss in same-store sales. wendy's along with mcdonald's burger king all reporting a slowdown in sales growth just in the recent quarter. and it's pretty much a given fact that americans are not eating at restaurants at the rate they used to, which presents a challenging environment for restaurant operators like wendy's, mcdonald's and virtually everybody else. so also hurting wendy's shares they lowered their sales growth guidance for the year which they said on the conference call suggests maybe flat to, maybe being the operative word, to 2% growth in the back half of 2016. what's going on here, cheaper beef, chicken and egg prices means people are buying groceries and eating at home

instead. wendy's president addressing this on the call saying the cost of eating at home versus the cost of eating in restaurants is about three times delta. and when a consumer is a little uncertain around their future, they're not spending as they used to. which is pretty much what mcdonald's ceo said in their recent earnings. back to you. >> susan, thank you. so with seemingly everybody now going after everybody else's burger business, should we expect more sales misses like wendy's? and should you dump these stocks like a two-day old sandwich? let's bring in senior research and restaurant analyst at w wedbush securities. same store sales barely budged, but what happened? >> it's the discounting. they're discounting less than they did earlier in the year, but they're still discounting. they're trying to address that gap between the grocery stores and restaurants by giving away things like four for $4 deal, et cetera. you're seeing it at other

players as well, not just wendy's. but it's not enough. it's dragging down the average check. and so lower average check, more transactions still equals to disappointing sales. >> any sign that trend is going to end? because seems like everybody's in the burger business. you've got the shake shacks, chipotle with their own burger concept coming out, the burger people are starting to get into the sort of the tau coy bell side by launching things like the whopper-rrito, everybody, you'll forgive this, trying to eat each other's lunch. seems like we'll be in this mass i have deflationary environment for months and quarters to come, no? >> the fact the supply of beef, all the metrics around the supply of beef is looking pretty good. so as those herds build, you're going to see a supply of beef increase. you'll see continued tailwinds in the beef market, that means lower prices in the grocery store, that likely means lower prices for longer. and a continued competitive environment in the qsr category in particular. not so much in those fast casual names like shake shack, but definitely in the qsr burger

category. >> what's the tipping point, nick? at some point lower beef prices were a good thing for all of these guys. it meant lower costs and greater margins. at what point does it cross over the edge what price do we need to see it come up where it's actually beneficial for these guys? >> needs to go up, needs to go up year over year so the grocery store isn't discounting the way it is and not taking away that at-home or that away from home transactions. as long as beef prices were to go up, believe it or not in terms of sales it's actually a good thing. even on bottom line, yes, they beat the profitability was ahead of expectations, but everyone's looking at the sales trends for most of these restaurants' names. so as long as there's a decline in beef costs, you're going to see competitive environment and lower sales. >> so are the non-burger burger chains the best performing? that is what it seems like when you look at stocks burger chains like a jack in the box that has

qdoba. burger king has been heavily experimenting with their chicken fried rings or whatever those things are. >> basically french fries made of chicken. >> basically non-burger items, those are the ones that seem to be doing the best, nick. does that keep up? >> i think so. relatively speaking you're going to see those names do better, absolutely. >> quickly, ten-second answer, is dell taco the best stock you cover? >> yeah. it's a small cap, underfollowed. people aren't paying attention to the good things happening there. it's got the most upside in my space. >> nick, thank you very much. appreciate it. guys, i was raised on del taco. it's a west coast company. >> that's what happens when you're raised in del taco. had to say that. >> you become a handsome -- >> exactly. that's what i meant. from burgers to bags, premium handbag makers not happy with department stores, some even pulling out of them. courtney reagan has been keeping track and joins us now with the details. >> hi, tyler. so we've all known for some time

department stores have been struggling. there's lower traffic at the mall, languishes in sales because consumers just aren't that interested in clothing or going to the mall at all right now. so to try to reverse the disinterest department stores do what they do and keep upping the ante on the discounts, dropping prices lower and lower, but that's exactly the opposite of what companies like coach and michael kors are trying to go the other way. they're trying to return to premium brand images, thus storing profits along the way. two department stores in the wholesale channel, half of its sales come from wholesale, so kors is removing itself from all of its retail partners couponing and sales events like the friends and families. now you won't be able to get michael kors on a discount in those locations. in june michael kors also confirmed it was pulling back on the total number of products it sends to department stores hoping the old supply and demand will come back in balance.

less supply will increase demand and thus they'll be able to charge those higher prices. and tuesday coach confirmed that it's taking a step further actually pulling all of its products out of a quarter of its north american department stores. they do say that the stores that they're doing that with are those that have the lowest volume. but they also aren't happy with wh what's going on with the promotional prices. it's confusing the consumer about what they should be paying for a coach bag if it's one price in a coach store and something very different at a department store. tyler. >> courtney, thank you very much. and here's a stat for you, women ages 18 to 45 own on average 13 handbags across seven different brands. so clearly a competitive and sometimes fickle market. let's bring in the marketing and retail expert denise yohn who is the author of what great brands do. denise, welcome to "power lunch." let's talk about a couple of those brands that make handbags, michael kors and coach in particularly. what have they done where

they've lost some of their zing? >> well, as courtney said, they have tied themselves very closely to a channel that is now struggling. and so that's a big part of their problem. at the same time their competitors, you know, younger and newer competitors, even kate spade i would put in that category, have developed their own channel so they've been able to still engage and sell to their customers even though the department channel is suffering. at the same time coach and michael kors i think have had some misses in terms of their styling and their pricing. you know, for a while it was all kind of big bags, the more expensive, the better the perception of the brand. but now it seems that millenial consumers particularly are preferring smaller bags, lower prices, smaller logos, kind of less flashy bags. and i think coach and michael kors have just missed that trend a little bit.

>> i think that would be -- and i go based on what my wife tells me. and i bought a lot of handbags for her. let me tell you that. she likes mz wallace, would you put that in that category of less statement oriented bags? >> yeah, i'm not familiar with that brand, but there's also like a brand called manzur that i think is popular. theory is another brand that's possible. >> melissa's nodding here. >> i'm agreeing. absolutely. >> why are we even in this conversation? >> i don't know why. >> we're not talking about man bags. we're talking about handbags. >> but to your point i think brands can get tired, right? >> yes. >> and when they get a little tired and they have big logos, maybe that's not what you want to buy. >> i think you're right. that combination overemphasizes that these brands have been very popular in the past. and they are probably still esteemed by a lot of consumers. >> right. >> particularly older ones. older meaning boomers.

where i think that the younger consumers are looking for something that expresses their own identity, their own, you know, style, their own fashion. and so they want to be able to discover a brand or at least, you know, use a brand that people are maybe not as familiar with that really allows them to do that. >> how do they get their moe jo back? >> i think pulling back from promotions is key. they kind of almost done a disservice to themselves by allowing themselves to get dr dragged down with department stores. but i think with new styles, new pricing, looking at sub brands that enable them to reach these younger consumers looking for something a little bit different and some innovation in that area would be important as ale. >> denise, thank you so much. denise yohn, we appreciate your joining us. melissa, any thoughts? >> agree in terms of what she had to say, no logos. ten-year notes up for auction. rick santelli's tracking the action. rick, the yield second lowest on

record? >> yep. boy, that should be no surprise considering some of the issues of negative and dropping rates around the globe. 23 billion tens found a new home about ten minutes ago at a yield 1.503. darn close to the bid and trading side of the one issue market. so pricing was about right. 2.43 bid to cover that is the second lowest in a year, the first lowest was our last auction. but the areas that are truly strong in the long end of the market of late are indirect bidders. those are large financial institutions, foreign central entities, banks and of course things like money fund traders. this is important because they need the paper. 72.2. three of the last four have been 70 or higher. there's no other 70s out there on the 30-year or the 10-year, something to pay attention to. a little light on directs at 7.6 due to that large indirect bid

dealers only take 20.2%. i gave it a c, average. and that was because of pricing. tomorrow's the longest maturity in the form of 15 billion 30-year bonds. back to you. >> rick santelli, thank you. still ahead, we're talking netflix shares down nearly 19% just this year alone. why our next guest says now is a perfect time to buy. "power lunch" is back in two.

disney used to own the california angels baseball team. we lifelong angel fans call those the dark years because suddenly they became the anaheim angels. that's kind of like calling the team to our east the forest hills mets. thankfully that ended in 2003. but disney renewing its interest in baseball today making a huge deal to buy a stake in a video streaming company that was created by major league baseball. julia boorstin is live in los angeles, where now the angels are based, with this story. julia. >> well, brian, this is really about disney's $1 billion investment in bam tech with option to buy majority stake. direct to consumer apps for brands across the country starting with an espn branded sports app in partnership with bamtech. >> we think it's a good investment. we love the business model. we think in today's world having the ability to stream on a scale

basis live sports and live programming is a competitive advantage and something that's necessary. >> the upcomie ining espn brand sports app will not span linear existing channels but he says he's open to eventually bringing the core espn business direct to consumer if it makes financial sense. >> if the business model that is supporting these great media property starts to fray in any significant way, we have the ability to pivot quickly and put out a direct to consumer product that could potentially either replace it or supplant it. and that's really important. we're not suggesting that it's going to happen. it's our hope that that doesn't happen. but this certainly puts us in a great position should it happen. >> he also talked with the importance of making sure disney's channels including espn and espn 2 are included in news streaming bundles in the works. and he also said it's important disney earn as much from those

services as they do from traditional paid tv providers. back over to you. >> julia, i'm wondering what your take is on the reaction to disney share. yesterday after session shares pulled back and today they stage a turnaround. what's the take on the street and does it have to do with this deal? >> well, i think there's a lot of enthusiasm on wall street about this deal. it's still very early days. we don't know exactly what disney's options are going to look like. i mean iger said very clearly they want to protect their core business, which is you know espn and all the other cable networks' place in the tv bundle. and i think it will be interesting to see how they experiment. i mean, they'll be offering hockey, maybe baseball, maybe sports like cricket, but is it going to be really a la carte per season? i think analysts think it makes sense to hedge businessny's bets for down the line, but we really don't know yet exactly what the new digital options will look like. >> how do they make money on it? >> direct to consumer.

now disney sells cable channels to cable tv providers or to directv or comcast, these companies that are then the middlemen and sell them straight to us in a bundle. disney's going to be going direct to consumers so theoretically there should be higher margins because you're not paying a distributor. so it would be subscription model and they could also do advertising as well. >> i'll buy it direct from them. i'll buy it direct from them. >> yes, through bamtech. the key thing here is that bamtech already provides the infrastructure to do live streaming. live streaming it's technologically pretty complicated that bamtech has the proven model that works for that. iger said they've tested various different streaming services with espn and said bamtech is the best. the idea this technology would be able to support them whether it's creating new espn service with live streaming or whether it's going to be creating a disney kids app people might pay ten bucks a month for. >> julia, thank you very much.

guys, just quickly, in street talk we have an analyst out with a positive call on disney because of this deal. so we'll get more details on that, but at least one analyst loves this and what disney may now be able to do on the cable side. >> we'll have that for you later on in "power lunch." meantime take a look at netflix. shares down 19% this year. so is this a buying opportunity or should you steer clear? our next guest initiated coverage on netflix with $120 price target last month has since lowered that target on disappointing earnings to 115. joining us now is michael graham, senior equity analyst. you cut the price target on the back of disappointing earnings but still bullish the stock given where it is right now. the big miss on the earnings was subscribers and the number of subscribers it added. that was a primary driver of your initiation at a buy rating. what makes you so confident that it's still on track with your projections in terms of household penetration and total subs? >> yeah, thank you. so we try to be very clear that

q-2 and q-3 were going to be risky in terms of subscribers. called out a number of factors there. one is that the companies going through in the u.s. an ungrandfathering process where they're effectively raising the price. that's leading to a little bit more volatility in the short-term. and then the second thing is we have the rio olympics, which is a live event in q-3 which pulls a lot of viewers away from the streaming and bingeing habits of netflix. so i think both of those things are going to continue to be headwinds as we get through q-3 here. i think the thing to keep in mind though as we look at just longer than one or two quarters is that as we go through the next few years netflix has just launched their service in 130 countries. we haven't really had time to see that -- those launches start to grow the subscriber base yet. >> right. >> and i really think that's going to be an important source of tailwind for the company for the next few years. >> you know, even prior to the big disappointing second quarter results posted in july, there was real skepticism surrounding the stock given its performance

even as the nasdaq was doing decently well. that miss they blame, the subscriber miss, they blamed on the price increases. what makes you so sure that consumers will come around again and that it's not the case and netflix has actually reached sort of this moment of maximum elasticity where they can only raise the price so much before consumers say i don't even need it anymore? >> well, pursuant to the last conversation on disney and live streaming and direct-to-consumer, one of the things that netflix did recently that was really positive was assign a set top box deal with comcast where netflix would be available right on the set top box they already have in their home. i think this is emblematic of sort of the future of pay tv in the united states where a lot of younger people are going to get an internet connection. and they may have a broadband relationship with a cable provider, but they may not get the package channels that we're used to getting in terms of the historical cable subscription and what we'll do instead is

we'll subscribe to netflix, we'll subscribe to hulu and go after that content. the thing that really drives that and where netflix has a big lead over others is in developing original content that consumers, you know, really want to go after. >> michael, great to have you on. thanks so much. michael graham with canaccord, $115 price target on netflix. up next, tiny tablets, tray tables and tighty whiteys, the good, the bad and the ugly. on deck.

welcome back to "power lunch." i'm dominic chu. cliffs down today an offering of $p 00 million worth of common stock. the company going to intend to use proceeds for debt repayments as well as general corporate purchases. those shares fallen about 12% or so this week but caught a bid at least in the near-term, tyler. back to you. folks, you know what this music you're about to hear means. saddle up partners, it's time for the good, the bad and the ugly. haines brands one of the best performers in the s&p 500. maybe you didn't know it was in the s&p 500. the company's ceo just bought 20,000 shares of common stock and 20,000 pairs of briefs. on to the bad, the airlines. the nyse arca airline index troubled today in the red being led lower by american, united

and delta. and southwest. those are the big four. and an ugly, ugly day for perrigo after the drugmaker missed earnings expectations and cut its outlook for the year. that is the good, the bad and the ugly for a wednesday. coming up next, a solar power disaster du jour. why sunpower shares plummeting down to earth. and later, betting mosquitos with mosquitos. one company betting on genetically engineered mosquitos to stop the spread of zika. the ceo joins us exclusively when "power lunch" returns. just. that no one would ever notice me. but i knew i could be more. that one day, i would make people smile. [woman speaking indistinctly]

will your business be ready when growth presents itself? our new cocktail bitters were doing well, but after one tradeshow, we took off. all i could think about was our deadlines racing towards us. a loan would take too long. we needed money, now. my amex card helped me buy the ingredients to fill the orders. opportunities don't wait around, so you have to be ready for them. find out how american express cards and services can help prepare you for growth at open.com. find out how american express cards and services this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision.

because no one knows & like at&t.

hi everyone. i'm sue herera. here's your cnbc news update for this hour. cal cal caleb schwab killed on a water slide was decapitated. caleb was the son of a kansas lawmaker and was killed when shoulder straps snapped or popped off during the ride. two law enforcement officers were shot while responding to a call in western arkansas.

both were taken to a hospital. officers have since surrounded the home after the suspected shooter barricaded himself inside. a study by brazilian scientists suggests a possible link between the zika virus and rare joint deformities in babies. opens up the possibility that microcephaly could be just one facet of a congenital virus syndrome. iraq says an oil well in the nov northern part of the country was sabotaged and now on fire. firefighters fighting the blaze at the well which pumps 2,500 barrels per day. that is the news update this hour. ty, kind of a very depressing news update this hour. >> disturbing story, especially the one about the child in kansas. >> it really is. >> sue, thank you. to the bond market where a ten-year bond auction just wrapped up. let's see how rick santelli grades it. sir. >> well, it was a c and melissa

lee was right second lowest yield on record for the dutch auction, first was july 2012 at 146 and this auction a little over 1.50. and last month at 1.51 was the third. so a little grouping going on there. look at intraday chart, not a big deal but we did slide after the auction because we're already low. one-week chart it jumps out at you. and i started a chart on july 1st just so we can peg on the left side the all-time historic low yield at least going back to the ike administration right around 1.35. we continue to monitor all that as interest rates especially what's going on in the uk and the eurozone as the relative value trade continues to pressure rates lower. back to you. >> rick santelli, thanks so much. shares of sunpower losing about a third of its value today. today alone after posting a wider than expected loss, the company also warning about its outlook and slashing jobs. morgan brennan is covering that story. >> me slis sa, dark day for solar stocks as you mentioned

sunpower. the solar power manufacturer stunning the street with a bleak outlook warning it will now report losses for 2016 and 2017. the company citing challenging conditions in its power plant business, aggressive pricing from new competitors especially chinese, and a slowdown in urgency from u.s. customers to complete installations thanks to the extension of a federal tax credits that rather ironically had sent solar shares -- solar stocks rebounding earlier this year. so sunpower's also cutting 1,200 jobs. that's 15% of its workforce. and ceo tom warner is slashing his salary to $1 for the rest of 2016. needless to say a flurry of analyst downgrades and actually some very strong words from analysts. all of this pressuring other solar stocks as well including firstsolar which shares yield with sunpower, solaredge also reported disappointing results after the bell. canadian solar and the relative

outperformer i say relative because that stock is also down today is solarcity which reported its own better than expected results. melissa, it's a bad day for solar stocks, but if you look at these names year-to-date all of these names down double digit percentages as well. a rough go for the sector in general. >> thank you. raymond james says this is a great time to buy shares. pablo covers the stock for raymond james just reiterated rating of outperform on the stock. pablo, great to have you with us. >> thank you. >> i'm going to ask you straight up because this really caught investors, street and wall street by surprise in terms of guidance cut. does management have a credibility problem? i ask that because guidance for 2017 is not just cut, it's 54% lower than the guidance they gave at their last analyst meeting. they did not warn the street at all that this was coming. even in your note you said the one and done we think guidance cut indicating there's some

question about it. can we believe this management team at this point? >> well, they could have handled the pr better. clearly some of this a lot of the themes they mentioned were already visible three months, even six months ago for example referenced the tax credit and the lack of urgency now that the tax credit's been extended. we've known about that since december. so, yes, they could have handled the pr better. but even in a tough year like 2016, this should be a trough year, they're going to do 300 million of ebitda, this is a company with market cap now is less than 1.5 billion. so 300 million of ebitda is a pretty healthy number. you know, it should be up 15%, 20% in 2017. a lot of the headwinds that are currently being faced, not just sunpower individually but indeed the whole industry, they should subside or at least stabilize in 2017. >> why? didn't management say headwinds will persist through 2017?

>> well, certainly there will still be headwinds in 2017. but let me give you an example. right now u.s. utilities not signing a lot of new large scale contracts because they have five years of running room on the tax credit. but if the next administration in 2017 implements the epa's clean power plan, that will reinvigorate the signing of large scale projects not just in solar but in, you know, u.s. renewable power across the board. that would be a very nice source of uplift in 2017 getting into '18. one i mention about sunpower is a bankruptcy from earlier in the year. it's already bankrupt. so clearly that particular psychology, negative psychology, of course that's going to subside into 2017. in fact, sunpower is probably the one company in the industry that has zero balance sheet

concern and bankability concern because who is -- >> doesn't it have negative operating income, pavel? >> it has negative gap operating income. >> you know, we love you, buddy, but that's not a negative balance sheet concern? negative gap operating income? their sgna costs are higher than operating income. >> no, on a nongap basis it's just -- >> you know that. >> on nongap basis 300 million of ebitda. who is the controlling shareholder, it's 100 billion company, that is a big brother something no one in the industry has. solarcity has tesla -- >> this is different because totale, the big brother, is not going to put a floor on the stock in buying the whole company unless you think that

could happen. >> it could happen. buying the other two-thirds of sunpower at $20 a share and the stock is now at $10, so it could dollar cost averaging, but i'm not assuming that. what i am saying is from a balance sheet perspective, any kind of notion that sunpower has credit risk or bankability, credit worthiness risk, we can set that firmly aside because of who the majority shareholder is. >> so the market has it wrong. is that what i'm hearing you say? >> the market has it wrong. and the seven of my competitors who downgraded it today have it wrong. this is the worst time to be selling this stock. you know, we saw this movie with solarcity in february when they cut guidance. >> or some might say we saw this movie with sun edison. and proven to be a good time to sell even down 30%. >> going farther. >> completely different state of affairs. what killed sun edison was in

fact balance sheet problems. that was a classic over levered story, they went on an m&a shopping spree. sunpower has done nothing along those lines. sun edison ended up with over $10 billion in debt. sunpower has less than 7% of that. even if we ignore the fact that totale is the controlling holder, there's no leverage here. yes, these are industry headwinds. these are not unique to sunpower. their partner in the yield first solar mention many of the same issues last week. that stock had a very rough week too. >> forgive me for not noticing if we disclosed this already, do you or raymond james have any stake in this company? >> we have no stake in sunpower. certainly not me personally. >> okay. great. >> all right. pavel, thank you.

a marijuana store in seattle robbed, and it was all caught on camera. the dramatic video coming up. ♪ approaching medicare eligibility? you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in. like all standardized medicare supplement insurance plans, they could help pay some of what medicare doesn't, saving you in out-of-pocket medical costs. you've learned that taking informed steps along the way really makes a difference later.

that's what it means to go long™. call now and request this free decision guide. it's full of information on medicare and the range of aarp medicare supplement plans to choose from based on your needs and budget. all plans like these let you choose any doctor or hospital that accepts medicare patients, and there are no network restrictions. unitedhealthcare insurance company has over thirty years experience and the commitment to roll along with you, keeping you on course. so call now and discover how an aarp medicare supplement plan could go long™ for you. these are the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. remember, medicare doesn't cover everything. the rest is up to you.

call now, request your free decision guide and start gathering the information you need to help you keep rolling with confidence. go long™. ♪ today, folks, is national lazy day. in case you were too lazy to read the news today, you may have missed this story. a marijuana store in seattle robbed. it was all caught on camera. watch this. fright e frightening stuff. employees closing for the night late sunday when suspects barged in with guns, they stole cash and products. but what the robbers didn't know was that a store manager was watching it all unfold live from home via closed circuit tv, which is protocol during closing time at this impemporium. the owner called the police, provided information in realtime. police surrounded the store did so by the time the robbery was finished and suspects were arrested out in front of the

store. and thankfully no employees injured. >> wow. the owner of the store said in an interview that this was the second burglary in just two weeks and that crimes will continue until the federal government reclassifies marijuana or shops are no longer forced to operate using cash only. so let's talk about that. kate rogers here with a look on where we stand with marijuana banking regulations. >> that's right. the words that best describe where we stand on the marijuana industry and banking it's complicated. so as you mentioned the drug is still federally illegal, which makes institutions big and small weary of doing business with marijuana companies. this means many rely on cash to do business with customers and to pay their bills. they also have to reconcile all of this cash at the end of the day, which is a lot of work. there are roughly 3,700 dispensaries in the u.s., but there is not a hard stat on how many of them actually have bank accounts, according to green wave advisors. this has improved somewhat in recent years with notices from the u.s. treasury and justice

department saying that they'll essentially look the other way so long as institutions are monitoring their clients in the marijuana industry to be sure they're in compliance with both local and federal laws. if you do land a banking relationship, there can be high fees that come along with it. a recent article in american banker pointed out that maintenance fees can be as high as $2,000 a month for marijuana companies that work with banks. many of these banks too important to point out are community banks. >> kate. >> $2,000 a month. that's incredible. >> and for contacts the average small business would pay around $25 to $100 a month depending on their balance. >> this is because of legal jeopar jeopardy, what the banks perceive as high risk. >> exactly. >> let's talk more about this, bring in leslie boxcorp, firm specializing in cannabis related businesses. do we sort of, lesley, operate in this legal limbo, legal in some states, illegal federally, the banking regulations as kate

said are very complicated. where do we stand right now in this business as a business? >> well, right now it's going on is there's a tremendous amount of transition. and we are seeing innovations and opportunities presented as a result of these challenges. we've been seeing people creating new technologies and new methods to be able to handle the issues that come out of this. as well like was just said there are currently about 300 banks at the last report that i was able to read that are doing businesses -- doing business with legal cannabis businesses around the country. and that number is increasing every day. >> it's sort of seems to me, leslie, like going back to the days of prohibition. that was of course federally, you know, made alcohol illegal, but people walking around with sacks of -- i mean, literally burlap sacks filled with cash and a couple tommy guns on their side. how risky is this business right now? >> so risk is one of the things that the cannabis industry's

addressing more than anything else. and candidly it's been more effective at addressing risk than many other industries i've seen because of the method in the way regulators look at dealing with it. for example, what happened in seattle seeing that that shop owner had the surveillance system in place so that the robbers could be caught is not uncommon. here in nevada every facility has constant video surveillance on all the time that's accessible both by the owners and the state. so that you actually have an increased level of surveillance and prevention and risk management that we haven't seen in any other industry before. not even in the casino industry sgr so, leslie, kate mentioned how many banks? >> oh, leslie mentioned about 300. >> 301. >> 301. why are they willing to do it and orthers aren't? and who are they? >> well, nobody knows who they are because they're not publicizing themselves.

and what we find is that -- >> how do you know? >> there was a report that said a certain number of banks because fin sen gave guidance in 2014 that was specific, i believe it was valentine's day 2014 that specifically gave guidance to banks to be able to allow them to have a clear path to do business with legal marijuana businesses that were staying in line with the memo of enforcement priorities the federal government had created for businesses that existed in states with regulatory framework. >> so banking laid out a clear path to allow banks to remain in compliance and do business with cannabis retailers, why don't more do it then? >> because of a combination of perceived risk in terms of the social, political and business risk that's still associated with it. as well primarily with the increased compliance that is required to do business with these businesses.

the banks have an increased level of reporting sdp due diligence they need to do as to regards know your customer that is making it a little bit more expensive than the reward, even with those high fees. >> so they're doing it -- they're not worried about federal regulators or federal law enforcement people coming after them then. because they've basically as you say been given a path to how to do it correctly even at a high cost, right? >> absolutely. that's absolutely correct. as a matter of fact, we are seeing more and more solutions and financial institutions approaching it because of that clear path. it's really just a business issue that's being resolved right now. >> well, i'd like to jump in here and say the relationships i've seen just anecdotally in reporting on this for the past two years or so can be kind of fickle. we profiled a company out in san francisco on "power lunch" actually, and they're the gold standard in security, or so they bill themselves within this industry. they have as a resulvaults upon.

their cash is reconciled two dozen times before it's brought out to a truck. we showed this on our air. we talked about how compliant they are. this company lost their bank, a local bank that monday. we aired this on a friday. so banks aren't -- i know leslie's saying -- >> what did the bank say? >> they dropped their relationship. this happens all the time. >> they clearly knew that they were in the cannabis business. >> absolutely. >> did we mention the bank? >> no, oh, please, none of these companies will ever tell you as leslie mentioned what banks are working with them because they're too scared to lose their relationship. this company didn't even mention the bank. they told us it was a local community bank and the relationship went up in smoke. >> i just want to say this bud's for you. >> i just said went up in smoke so we are both making bad puns here. >> leslie, thank you very much. the most interesting man in cannabis right there, leslie bok sdlpz bokscor, thank you very much. airbnb in brazil, met up

with our carl quintanilla. we're live when "power lunch" returns.

shares of ralph lauren soaring today after first quarter earnings and revenues beat estimate but did report a

loss of $22 million. the brand highly visible at the olympics right now with team usa wearing ralph lauren for the fifth olympics since 2008. and speaking of the olympics, the u.s. is racking up the medals, but there's another winner in rio. airbnb. carl quintanilla is live in rio with that story. hi, carl. >> reporter: hey, melissa. absolutely right. 500,000 visitors in rio for the summer olympics and the city experiencing a major hotel room shortage enter airbnb with a creative solution. on the list of olympic sponsorships, airbnb has a new title, official alternate accommodation service for the games. a big deal in a city that had not enough hotels and with the recession not much appetite to build new ones. >> instead of build iing places more concrete that you know you have a legacy in the city. and sometimes underutilization. >> after the games.

>> after the games. so instead you mobilize the community or have the additional capacity. and then after the games, you know, things will set up normally. >> reporter: four years ago rio was just a sliver of airbnb's global market. today it's their fourth biggest city after paris, new york, and lond london. most of that growth has occurred in just the past 24 months. >> the very first chapter of airbnb in brazil was hosting the world cup, right? and i think the community there really got engaged early on and to open up also their houses for the world cup and they realize it was a very nice experience. i think that was a natural path for two years later the community to grow. >> reporter: airbnb says guests spend an average of $136 a day while in rio, that's separate from housing. that's a lot of fresh spending for a city and a country in the middle of a recession. the olympics have brought a slew of first-time users to airbnb. but with consumers still under financial pressure, the company has added new payment options. for instance, brazilians love to

pay for things in installments. >> we put together project to implement local payment methods in brazil and in 2015 to really pave the road for brazilians seeking airbnb as a place to stay. >> reporter: hey, guys, 66,000 airbnb guests during the olympic games. that's about $25 million in income for hosts, and of course a lot more in residual spending. they're calling this the first major olympics in the sharing economy age. so we may see the companies like airbnb and uber try to leverage that in the years to come. >> you know, carl, you wonder too because i've seen some of the stands have not been exactly full, but yet there also appears to be a shortage of hotel rooms. my guess is there must be a lot of people in brazil hanging around but not necessarily going to the events yet. >> reporter: yeah. they have. you're absolutely right, brian. in fact there were a couple

government mandated holidays last week trying to keep people either off the roads or at least from congesting the city even further. and that's definitely why you're seeing maybe less activity in the stands and more people still though trying to find housing in the city. >> can we ask you, carl, about the zika latest? here it's getting a lot of attention, obviously a serious virus with serious consequences though there have only been six cases locally started here in the united states, how much of it -- and we talk a lot about it. how much is it being discussed where you are? which is supposed to be the sort of ground zero of zika. >> reporter: yeah, to be candid, practically not at all. it's 68 degrees today here. it's their winter season, so mosquito activity is minimal. there were 7,000 zika cases in january. in july there was just over 100, maybe 140. so it's nowhere near the issue that it was six months ago. that said though a lot of

athletes and spectators did come armed with bug spray trying to prepare for the worst. >> we asked you on squawk the other day, are you wearing bug spray, off, whatever it is, and you said no. is that still the case? >> no, no, no. still the case. i haven't had a problem yet, brian. fingers crossed, right? >> danger is his middle name. >> reporter: i'm not wearing bug spray, i've worn a lot of long sleeves. you can see from the crowd here though it's raining today a lot of short sleeves and shorts over the past few days. >> man lives on the wild side. carl quintanilla, it's a pleasure. buddy, we appreciate your reporting. coming up next, we are talking more on zika. our exclusive interview with the intrexon ceo about how they're using mosquitos to fight mosquitos. really cool stuff that exclusive interview coming up. what i love about the tempur-breeze bed

is it's cool. so you're not too hot, too cold, you're just perfect. sleep cooler, wake more refreshed, discover the new tempur breeze. learn how you can change your sleep by requesting a free sample of tempur material. call or click today.

at ally bank, no branches equals great rates. it's a fact. kind of like bill splitting equals nitpicking. but i only had a salad.

it was a buffalo chicken salad. salad. i'm melissa lee. here's what's on "power lunch" menu. piling a ton of money into technology, the stocks that should be on your radar. and the one sector getting a whole lot of love on wall street right now, the second hour of "power lunch" begins right now.

you said a whole lolt of love, melissa, so i'll continue the zeppelin theme, with two hours to go until closing bell dow down. disney and walmart trying to help the dow. exxon and intel are holding it back. by the way, if you own ralph lauren stock today, pat yourself on the back it is the best stock performing in the s&p 500. i'm tyler mathisen. welcome everybody. weak demand for the $23 billion worth of ten-year notes sold today rick santelli giving the auction a grade of c. i'm familiar with that. crude oil stockpiles on the rise, that is sending crude prices lower. the final trades ahead at about half past the hour. just over 90% of the s&p 500 companies have reported their

profits for the second quarter. if all remaining companies report earnings in line with estimates, earnings per share will be down 2.5% from a year ago. the newest attempt to combat zika je netly modified my eied s now cleared for expanded tests in the florida keys. we're going to talk to the ceo of the company behind it in a moment. but first to meg tirrell for an update and what's going on with zika. >> this mosquito that carries zika also carries other viruses. areas like key west, florida, have been trying to find new ways of battling it after several years of dealing with outbreaks sporadically of den e dengue. we have locally spread zika in mosquito, not in that area, but in florida health officials are

considering using this new genetically modified approach. it's a male mosquito genetically modified it's supposed to take over the mosquito population. and tests in brazil, cayman islands and panama have shown they can reduce the population by more than 90%. in one trial that translated into reducing incidences of dengue fever as well. so what is the update in the united states? the fda did just find its final report of no significant environmental impact. in the november general election when the residents there vote for president, they're also going to vote on whether to do this test of genetically modified mosquitos. >> where does the pushback come from? >> there's some opposition to the idea of anything genetically modified. >> denying mosquitos the joy of fatherhood? >> their fathers, their kids

just die. >> that's painful. >> that's worse. >> that's right. and so there's some questions about how widespread this opposition is. >> i get it, you're unleashing an unnatural creature into the natural population. i mean, there's probably no risk, but i understand why people would be concerned. what do we know about these mosquitos? what are they ultimately going to do? will they take over the world? it could happen. >> well, i think it's a great time actually -- >> yeah, let's just move on. >> you have a rat problem, you bring in snakes to kill the rats, but you bring in gorillas to kill the snakes, pretty soon -- >> yeah, okay. meg's going to stick around here joining us now for a "power lunch" exclusive is randal kirk ceo and chairman of intrexon. we won't ask you about mosquito overlords, but i want to hit on something very important that meg had mentioned within her report and that is the field test you conducted in brazil found that not only did it reduce the mosquito population, but it also reduced the disease vector, the occurrence of the disease. how commensurate is that

reduction? are we seeing the same -- i mean, i think it was a 91% reduction in the mosquito population. are we seeing a commensurate reduction in disease as well? >> well, yes, that was what was reported, a 91% reduction in the dengue cases. >> can we extrapolate that to zika at this point, or are we getting ahead of our skis? >> well, there's no good epedemia -- it should be in mind disease vector control to deal with these kinds of issues is hardly a new thing. i think most of your viewers are probably unaware that the reason the cdc is headquartered in atlanta is because they were originally called the malaria control board. their primary job in the 1950s in america was to wipe malaria out of the united states. and they succeeded. they succeeded in doing this by wiping out the three species of

mosquitos that were responsible for spreading malaria in the united states. >> i want to ask you, this is meg, i want to ask you about a potential path forward in a regulatory state here. talked about emergency use authorization. can you talk about that potential pathway and whether that could expedite use in other areas in the u.s.? >> we're working very closely with the fda, frankly across my entire career i've always enjoyed a very good relationship with the fda because we're discursive with the fda. i don't understand people who adopt an antagonistic attitude toward their chief regulator. so in the united states our product is subject to an investigational new animal drug application at the present time, which means this is being managed by the u.s. fda. we're in close touch with them. we appreciate their recent finding of no significant impact concerning our technology. and we look forward to rolling this technology out as soon as

possible. >> so meg mentioned the idea that there are some people who oppose the idea of a test in key haven, florida, was that the name of it? i wonder, and whether it's for the reasons that brie an cited which sounds reasonable to me that people don't like the idea of introducing a mutated species into the wild, what would you say to those individuals? >> i would tell them to look at the facts. i understand technophobia, we initially fear that which we don't know. that's been demonstrated throughout the history of man. but the thing to bear in mind is it's not so much people are unaware of the genetic engineering. you can't really expect them to be aware of genetic engineering any more than most people understand how their cell phones work. on the other hand it should be

appreciated that we actually as a species have been doing genetic engineering for at least 12,000 years. and the case of this mosquito, for example, this is not a mosquito that's supposed to be here. this is an invasive species. so we have actually been through the use of pesticides and through other means we've actually been accidentally engineering this mosquito for decades. so it's called the aedes for a reason and that is because originally it was only in northern africa. now it pretty much has a worldwide footprint really everywhere between depending on which data you look -- >> how did it travel? >> man brought it there. >> man brought it. >> absolutely. absolutely. furthermore, we've actually evolved this mosquito through the use of pesticides primarily. we've evolved this mosquito to be, basically, it loves man. this mosquito over the last few decades has become an insect that principally preys on man, which wasn't the case when the mosquito was originally

discovered. it's a day biter instead of a night biter like every other mosquito. it wants to live with us. so fogging down the street and aerial fogging is not really going to work even if the insecticides worked, anymore increasingly they do not, the usual methods of reducing these -- this particular mosquito really don't work. so the way our technology works in response to, i think you've asked it twice now really about releasing a mutant into the wild that will go on forever, that's really what's different about our technology. what we've demonstrated in our field trials in panama and brazil and the caymans is once we cease release, eight months later you can't find any of our mosquitos. >> rj, it's mega. >> yeah. >> i want to ask you one question about the economics here. i know it's too early to talk about pricing because you don't have approval, but what is the potential market size here? some people have put the pesticides for disease carrying bugs at maybe $2 billion. is that what you're looking at for market potential here?

>> i think it's actually significantly more than that. and the reason is it should be bourn in mind that the footprint of this mosquito on a worldwide basis is absolutely enormous now. it's basically everywhere between about 35 degrees -- just an absolutely enormous footprint. it's the largest footprint that this mosquito has ever occupied. when you just look at the health care costs of dengue, i mean, it's many tens of billions of dollars. 390 million people on this planet were infected by dengue last year. so this mosquito, which by the way is only about 1% of the entire mosquito biomass, this mosquito transmit is the chief disease vector for not only zika but also dengue, chickengunya and also maybe others you've never heard of. >> randal, we have to leave it

there. thanks to you and our own meg tirrell. two days after a power outage wreaked havoc with the airline's computer systems, operations are still not fully back to normal, but they're getting there. roughly 150 more flights canceled today, that's down from 800 yesterday. delta says most of that is because of flight crews reaching their maximum allowed work hours. delta hoping to return to normal operation by later today. so let's talk more about this big mess for delta incite now from seth kaplan with airline weekly. seth, delta is generally considered to be fair the best run domestic airline. i'm not sure how much that says, but they do have a lot of brand loyalty. do you believe this will damage that permanently? or will delta customers give them an ultimate pass? >> yeah, brian, if you'd asked me a week ago which airline would probably be least likely to suffer something like this, i might have guessed delta. so one hand comes into this with certain benefit of the doubt that maybe other airlines

wouldn't have had with their passengers, on the other hand there's more risk to delta because, you know, those other airlines aren't earning by delta's estimation billions of dollars extra each year just because of how reliable they are. so a lot of risk there. but, look, if it gets through this, if it handles the aftermath well, then probably next week it will be the most reliable u.s. airline again and i can't imagine people are going to plea for other airlines in the long term just because of what happened this week as long as it does what it needs to do to take care of its customers. >> there have been some changes in the way airlines work together and accommodate one another at times when there are disruptions like this. i think they're called interlined relationships, which is something i know you're familiar with. how -- and those things have withered away in particular between delta and american. they couldn't reach an agreement. how important has the absence or the deterioration of those interline relationships been in making this situation than it

otherwise would have been? >> yeah, tyler, delta took the unusual step last year of canceling its interline agreement with american. and these as you said very basic agreements that even fierce competitors tend to have with each other. fierce competitors because sometimes your fiercest competitor is the airline with whom you have a lot of overlap. think of delta and american at airports like jfk, l.a.x. and others, if something happens with delta, american will be the other airline very often. well, delta took that unusual step of canceling the agreement, took the even more unusual step of publicly criticizing its competitors' operations. it said last year, hey, we're taking care of five times as many american customers as they're taking care of ours. well, here we are on a week where delta could use all the help it could get. it couldn't get any airline to quantify on the record how much that matters, but it is more difficult than it would otherwise be. basically have to buy airline tickets on american to get its passengers. >> if your dog bites you once a week, you're not that surprised

when your dog bites you again. it's a biting dog. >> true. >> are we in a state of air travel now, and i'm asking for a friend, are we in a state of air travel now -- i just had a flight canceled this afternoon. don't go into it. anyway, are we at a state in air travel where it's so bad that people just accept this? that there's really no recourse anyway because if you live in a major city, you're pretty much a sucker for one airline that has a mo nonly in thpli in that cit it really ultimately matter, i'm going to fly them because i have to. >> because you're by newark. if you're in atlanta you'll be flying delta a lot. >> exactly. i hate delta, but i just booked a flight on delta. >> it's true. so on one hand the industry is indisputably less competitive than it was a decade ago. on the other hand if you look at an airline like delta, it has taken some of those profits, to be fair to delta, and reinvested them in the operation. i mean, it is running the most reliable airline in the history

of the world among giant airlines. so you have fewer choices, but at least some of these airlines are doing a better job as a result partly to the running of the organization. they're not running charities, they've given employees big raises and so forth, but at least some of them and the others are slowly catching up. brian, as you know united which was abysmal a few years ago is getting there slowly. and the others up until this week they would publicly say, look, we respect what delta has done and we're going to get there too. so the story generally probably more good than bad from consumers in that respect. >> i guess people, seth, we have to go, but i guess people wonder forget about the airline business, the new york stock exchange power savers all over the place. >> where is the redundancy. >> why not have a generator somewhere in dallas -- >> television networks sure have it. >> yeah. >> we have big operations -- >> lord knows we're critical to running this country.

>> so true. seth, thank you. good to be with you. seth kaplan. s&p 500 falling slightly today. it's been making new highs lots of times driven by a big sector rotation. not a small one, a big sector rotation. >> that's a big sector rotation. >> there's never a dull day on the campaign trail. yesterday controversial comments made by donald trump also a controversial audience member with hillary clinton. what's happening today. we have a live report on the campaign trail. g the oceans. where we explore. protecting biodiversity. everywhere we work. defeating malaria. improving energy efficiency. developing more clean burning natural gas. my job? my job at exxonmobil? turning algae into biofuels. reducing energy poverty in the developing world. making cars go further with less. fueling the global economy. and you thought we just made the gas. ♪ energy lives here.

as the s&p 500 moves to new highs on a seemingly daily basis, money is moving from the safer sectors to what is perceived as more risky ones. bob pisani joins us more now on this great rotation, bob. >> hello, melissa. in addition to the rally in the major indices, market showing classic signs of rotation. in the last several weeks we've seen metals, technologies and banks, they have become new market leaders. earnings of big technology names like microsoft particularly strong beating estimates by much wider margin than analysts had expected. also at the same time prior market leaders like utilities and telecom and consumer staples stocks have been lagging. that's rotation. for everybody wondering why we keep holding up so well, there are several reasons. number one, the u.s. economy while choppy, still the best in the world. and earnings stable everyone if q-3 estimates slipped into negative territory.

crude oil gave everyone a scare two weeks ago is showing stability around $42. and then there's a lot more talk of fiscal stimulus, not just monetary stimulus. in japan, but also the uk, europe and even the u.s. so, melissa, markets at highs with rotation very healthy, there's very little technical deterioration in the market at all. by the way for everyone who keeps complaining why is the vix at 12, the vix is at 12 because the vix looks out one month and everyone's on vacation for the next three weeks. the vix will pick up and traditionally does right after labor day i'm quite sure. back to you. >> actually, i'll pick it up, bob, thank you very much. there's a lot of money pouring into tech right now, but where exactly is it going? check out shares of google, that would be alphabet. it's been a year since the company was relabeled alphabet and shares up more than 20% in that time. also shares of microsoft, amazon and facebook are up significantly over the past 12 months. let's bring in james dicks, senior research analyst at wedbush securities and yousef

squally. you like a lot of these big tech names, right? >> yes, we do. and for good reason. i think, tyler, if you look at the second earnings calls, what really stood out to us is despite the leadership role that all these companies have, whether it's amazon or facebook or google and you look at their growth rate, it actually accelerated last quarter. accelerated last couple of quarters. and that's usually -- that's very unusual for companies that dominate their space. and, you know, as they beat on the top line as they showed acceleration, they also showed nice margin leverage. so the improvement we saw and the run we saw in these stocks i think is very warranted. >> james, do you also see these stocks as core holdings for most portfolios? >> you know, at these prices not necessarily. i focus primarily on alphabet and the names you mentioned. but as youssef pointed out, you

have acceleration at alphabet, for example, which is very surprising over the past year. i mean, if you exclude foreign exchange, the u.s. was growing for alphabet just about as much as the rest of world. so with all the, you know, fast growing areas of the market. the question is how sustainable that is. a lot of that came from changes and monetization at mobile search. >> so if you -- but the spirit of my question is for the long term. >> uh-huh. >> should most people be looking al those kinds of names? whether today is the price point to jump in or not? >> like a widows and orphans stock, like a lifetime holding. >> yeah. or do you think of it that way? >> well, lifetime is a long time, right? microsoft looked probably a lot better ten years ago than it does now. so certainly -- >> in terms of price? >> yeah. in terms of how it's performed, right? you know, it used to be --

>> it was good money forever. >> yeah, basically. with alphabet a company with 90% market share in mobile search. that's a great place to be right now. but in ten years what's mobile search? >> on that point 90% market share in anything sort of, ding, is there a doj put on alphabet? is there always sort of a risk to valuation that somebody some time may come in with an antitrust issue on google? >> well, you've already seen it with the eu. >> well, the eu, but in the united states where it would really matter? because that was to tyler's point, microsoft suffered through that for years. >> yeah. i think there's probably a lot of investors who think chance of the doj coming in, that's almost a buy signal because if you have the chance to invest in a monopoly, why not do it? you know, you can fight those

types of charges, and they can take a long time to play out in the courts. so, yes, it's a regulatory risk. it's a headline risk, but you haven't seen alphabet shares suffer in particular because of what's going on in the eu, for example. >> youseff, jump in here. one of the things when you see a stock like google which is the most valuable company in the world depending on which week you compare it with apple. that's not usually a comfortable place to be. just ask apple or just ask microsoft when a company gets that popular and its value goes up that much, often it turns the other way. >> look, i think you have to look at two things. to answer the prior question, we think google's position is very, very different than a microsoft position. if you're not happy with the google search, you can switch to bing, you can switch to yahoo. yes, they have the largest market share, but the switching costs are effectively zero.

that's not true for you using the microsoft piece of software. >> uh-huh. >> the other thing is, i think, as you look at google or as you look at alphabet, there's a good reason why they change the name of the company. alphabet now is more than just google. yes, google is still the largest piece of it. it's 100% plus profits but what you're seeing is emergence of nonsearch business which is display, which is youtube, which is double click, et cetera, we estimate that business growing somewhere around 25 to 30%. we think that's already at $10 billion business. did not exist six or seven years ago. they have all these other bets. so as you look at google or facebook or ten years from now, you're not going to be looking at the same companies. they will have changed so much. and the question is all these investments that they're making today, will they have positive roi? will they become large enough to sustain the growth rate for a google, for a facebook, and will

they continue to generate the type of profits that the companies generate now? >> thank you so much, gentlemen. appreciate it. >> thank you. >> we want to note right now we've got the s&p as well as the dow close to session lows and this as wti crude is bouncing around session lows. we've got the crude close and much more on "power lunch." we come right back.

hi everybody. i'm sue herera. here's your cnbc news update this hour. russian president vladimir putin accused ukraine of choosing terror over peace after saying thwarted a series of armed ukrainian raids on crimea. he called kiev's actions stupid and criminal and said there was now no point in holding peace talks on eastern ukraine. a former guantanamo prisoner relocated to uruguay two years ago has been arrested by intelligence agents in venezuela. jihad diba was held for about four years ago in guantanamo. a los angeles woman is pretty lucky she was rescued from her burning home and it was all captured on video. firefighters rescued the woman after hearing her screams for help. she was not, unbelievably, seriously hurt. wow. and chipotle is offering

some alcoholic drink specials in an effort to increase foot traffic. about 300 locations are adding half-price and two for one alcoholic drinks to their menus through september. more than 1,700 chipotles serve alcohol. and that's the news update this hour, guys. send it back to you. thank you so much, sue herera. let's check the markets right now. and we should note stocks are lower right now just off of session lows in fact. the dow and s&p 500 right now we're watching exxon, intel and chevron as the biggest drags there. the oil market, speaking of oil, closing right now. jackie deangelis is at the close. >> we close under $42 and new session lows as we headed into the final minutes of trade. so what happened today, we had a strong inventory report sent us higher, we reversed. that was because the gasoline draw down sent us higher. it looked the gasoline drawdown and crude inventory build and decided the supply/demand

problem is still probably going to continue for some time. meantime these opec rumors of marketplace in meeting in september no one believes them. at the end of the day if there is a meeting you need saudis and iranians to agree to a freeze and that's been the problem all along. finally, u.s. production it was flat this week. it didn't drop. traders were looking for that. that is why these prices took another leg lower. back to you. >> jackie, thank you. lelts get to dom chu for market flash. >> big winners include walgreens, walmart, dr pepper, snapple and monster beverage all up more than a percent in trading so far. sector holding onto gains this week up about a third of a percent. again, keep an eye on staples. more on "power lunch." coming back after the break. keep it right here. oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face.

mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. [indistinct conversations] man: looking for these? you drive buzzed, it could be one very expensive ride. first you got to make bail. then pay me to get your car back. your insurance premiums will go through the roof. and my legal fees just keep adding up.

all told, it could end up costing you $10,000. [siren in distance] announcer: buzzed, busted, and broke. because buzzed driving is drunk driving.

one thing we have learned about this election is that there is never a dull day on the campaign trail. hillary clinton and donald trump both holding rallies this hour. clinton in des moines, iowa. trump in virginia. both of those are big battleground states. john harwood joining us now with the very latest drama from the campaign trail. john. >> brian, donald trump has been campaigning in coal country today. you can see him in this video meeting with business owners. but he's been trailed all day by

the remarks he made yesterday in north carolina about second amendment people trying to rally them into action of some kind. he says it was for voting and affecting the election. the clinton campaign says it was a joking call to political violence. here's the trump comment. >> hillary wants to abolish the second amendment. by the way, if she gets to pick -- [ audience booing ] -- if she gets to pick her judges, nothing you can do, folks. although the second amendment people, maybe there is, i don't know. >> now, i spoke this morning to the advisor to paul ryan and other members of the house leadership and he said he thought it was imperative that donald trump make a crystal clear clarification that he was not talking about political violence. so far donald trump has not said that directly and unequivocally. now, hillary clinton is also on the defensive today because of the disclosure of some e-mails

showing that members of the clinton foundation's staff had communicated with senior aides to hillary clinton at the state department, which suggests a comingling of the business, if not an actual quid pro quo. you look at this e-mail that was from doug band who was leading the clinton foundation, trying to get a wealthy donor in touch with the substance person on lebanon at the state department. that was an e-mail sent to senior aides to hillary clinton. now, the substance person on lebanon told "the washington post" this morning that he was never contacted, never met that wealthy donor. so that contact may not have been facilitated. but hillary clinton might be expected to deal with that issue in some fashion. you can see the video of her appearance in des moines, iowa this afternoon. don't think she's begun speaking yet, but both candidates have got controversies trailing them today, guys. >> john, thank you very much. john harwood reporting from washington. three major indexes are down

today, still near all-time highs. so with the markets at these levels, which sectors are wall street firms telling their clients to put their money into. that story and much, much more market coverage and more coming up on "power lunch." launched yr bank's app. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road, so at cognizant, we're helping banking and financial services companies think digital, be untraditional, and reimagine what the bank of the future can be. our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. we're creating new platforms across channels so customers can effortlessly invest, borrow, lend, transact-wherever-whenever they choose. and we're digitizing the way banks run, driving efficiencies and delivering new value for their customers in return.

digital works for banking and financial services. lets talk about how digital works for your business. ♪ perfect driving record. until one of you clips a food truck. then your rates go through the roof. perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. and if you do have an accident, our claims centers are available to assist you twenty-four seven. call for a free quote today. liberty stands with you™. liberty mutual insurance.

wall street analysts get paid to tell their clients which sectors and stocks to put their money into and which ones to avoid. so dominic chu, who's doing this for you for free, america, well, he's not working for free, but you get the point he's here to give you the same advice, dom. >> yes, i am not working for free but in some way the viewers are helping to pay for my paycheck. let's take you through some of the big overweight and underweight calls where wall street feels the strength could be and where it has been. if you take a look first of all at the technology sector, key sector because it's the biggest one in the s&p 500. overall we've got overweight calls. the ones who say, hey, these are the sectors you want to put more money relatively speaking into, you've got b of a merrill lynch, citi, among those strategists on wall street believe this sector is poised to outperform. the other one that's interesting here is health care. goldman, ubs, b of a, merrill, morgan stanley think health care

is one because interesting health care has been seen in the past as a more defensive sector, less economically sensitive. but now these days with biotech being a bigger part of that story, perhaps a little bit more cyclical. as for underweights, take a look at materials and consumer staples, materials, b of a, goldman, merrill lynch, deutsche bank, all saying materials are places you want to avoid at least relatively speaking to the overall market. and consumer staples, citi, ubs, morgan stanley, deutsche bank all thinking consumer staples, stay away from them. they are showing earnings growth, however maybe the valuations a concern. perhaps some of the thesis goes into earnings beat rates. if you look at overall s&p 500 thompson reuters has compiled all this data and it turns out that health care and technology have both beaten the average analyst estimate this earnings season by at least 75%. so perhaps some of that relative earnings strength, guys, is where that strength is coming from for these sectors. and maybe that's why some of these guys say overweight health care and technology, guys. back over to you.

dom, thank you. wall street's new consensus one-year target for the dow is 20,004, that according to to s&p. how realistic is this? joining us are dan skelly, head of equity model portfolio solutions at morgan stanley wealth management. and bill stone, chief investment strategist at pnc asset management. dan, let me begin with you. >> sure. >> do you buy that idea that 20,000 on the dow is an achievable or maybe a likely point a year out? it's really only 8% or so above where we are. >> yeah, i think that's really not that extreme of an outcome. and i think frankly a lot of it's going to depend on some of the classic fundamental drivers, earnings and gdp growth. on the earnings front we've seen likely the trough in first quarter earnings. it looks like second quarter earnings are an improvement. they're not certainly gangbuster earnings growth like we had three or four years ago, but importantly the rate of change on earnings growth seems to be getting less bad.

which is strong. on global trade i think key to that in global growth is the dollar. the dollar is still off its december highs and it's actually managed to stay towards the low end of the current range. i think that's a positive because that helps alleviate the strain on u.s. exports and actually earnings as well. so i think it's not really that extreme of an outcome. >> so, bill, let me get your perspective on that and whether you think stocks are a little too pricey for your comfort level here. the economy's hardly growing. are stocks as high as they are basically because -- as they are is that the foundation? >> i think it's part of the reason. i think dan's right on one side but i think you're right some stocks are as high as they are because you can call it no other alternative, but you can also say, well, low interest rates and the fact is low interest rates make assets worth more than before and it's just math. it makes us uncomfortable

because, and i say everybody here probably uncomfortable because the absolute valuations are pretty darn high. but just come back and look and say, well, the u.s. treasury's about 1.5%. you can get more than that from the dividend yield of the s&p 500. i think that puts it more in perspective that stocks aren't really, really expensivexpensiv >> dan, let me go to your two choices here and explain your case for them. allergan down 19% this year and blackstone down as well by about 5%. >> sure. i think it's important to highlight or acknowledge that the markets had a really strong run off of the february lows. and so i think at these levels, you know, while we are positive on the broad economy and market here, i think it would actually be more prudent to look at selective laggards. and so within that spectrum or that context, we like allergan which was really weaker since the pfizer deal fell apart. but you've seen really positive updates recently. you've seen pretty decent growth in some of their core assets like botox in the most recent

quarter. and then of course they just got approval from the ftc to divest their generics business to teva, going to enable them to buy back stock, delever and do more acquisition possibly. so we like that as a defensive reliable earnings grower in a world where defensives, to your point earlier, are really trading pretty rich. >> quick thought on blackstone and then i want to turn to bill. >> absolutely. in terms of blackstone another area that's lagged this market is financials. i think when you wlook at the catalyst set for blackstone it's actually pretty robust. i think we'll have a stronger ipo and m&a calendar as we get into the fall. management teams are starting to feel a little bit more optimistic again as markets are hovering around all-time highs. so i think what you really needed is a catalyst. again, the ipo calendar opening up likely in the fall should drive blackstone's stock from here. >> bill, you like sort of what i would call everybody's favorite blue chip and that's johnson & johnson and mohawk which is in the building and flooring segment. >> yeah. i think johnson & johnson social security great, you know, rock

solid balance sheet. probably going to -- always grown dividend, will likely continue. nice diversified health care so going to give you that stability. mohawk's definitely the more cyclical. the interesting thing about that is i think there are a lot of people out there that aren't yet believers that the u.s. housing market is continuing to recover and expand and that the next crisis will -- is highly likely not to be housing and that housing is actually one of the stronger pieces that you ought to look at. so i think it's a nice play on that in terms of the flooring. >> gentlemen, thanks very much. dan, bill, thank you. >> thank you so much, tyler. >> appreciate your time today. thank you so much. go to powerlunch.cnbc.com to see another power stock bill likes. up next, talk michael phelps' favorite commodity. is it water? power is back in two. it's time for the your business entrepreneur of the week. on june 27 dstld became the first fashion company to raise

capital through the newly approved equity crowd funding. customers who love the company were now given the chance to own part of it. find out if the owners raised the money they need. for more watch "your business" sunday mornings at 7:30 on msnbc. brought to you by american express open. visit openforum.com for ideas to help you grow your business. you're here to buy a car

all right. time for our daily dive into the key wall street calls of the day. we call it street talk. so let's do it. stock number one, disney. we referenced this earlier. upgraded to outperform from neutral at macquarie. disney buying one-third stake in bamtech. analyst there talked about this possibility back in july says disney owning this technology gives it the ideal mechanism to

offset cord cutting at espn. adds this gives disney the means to connect directly with consumers better. bamtech by the way 7.5 million paid7.5 million paid subscribers, upping disney targ fret 110 to 95 so upside to where it is right now. >> increasing the price target from 72 to 63 and with large pharma or biotech to make an offer and second quarter report and analyst increasing sales for the prostate cancer drug peak estimated market penetration ramped up 15% with sales reaching $8.5 billion. analysts saying significant upside still remains. >> stock three, sniders lance. yeah. snack food company reiterating one of their top picks and while the quarter is below expectationes this they were encouraged by the fact branded volumes grew 3.1% and like

strong margin execution and in concert with modest increase in guidance on evaluation basis and say that trading at a discount and with $24 will havation target and going from 55 to 60 a share and about 20% upside to the current price and said that any stock drop should be mitigated by the chance lance gets bought. >> i could use a pretzel right now. >> or pop secret. >> yelp getting a lot of love today after bet are than expect earnings. the stock now performing $45 stock price and solid revenue growth and also renew retention is improving and 2016 guidance remains conservative. valuation and analysts attractive at about 15 times 2017. >> stocks basically around where the average target is. so wall street may have to raise their targets or cut rating. you're under the radar called veronous systems. ticker there is vrns.

they've been cautious on this stock since maf last year. but analyst notes a reset in better than guidance results since then and the model continues to grind higher, end quote. but the company apparently didn't benefit from so-called emergency spending on the cybersecurity space. zeller thinks this insulates the company from a need to further reset or lower expectations. about 20% higher than the stock is now on the stock already up about 48% this year. so under the radar call of the day. street talk down. the popular gdx gold miners hitting a three-month high today. that's the subject of your other daily segment. we have dennis and brian kelly from bk capital joining us noup. brian we will start with you. gdx had a big run. >> yes. >> do you think there is more to come? >> i do. the main reason people are

getting into gold at this point in time is because you look around the world and there is negative interest rates. it is a rock you pay someone else to store. now if you put your money in a bank they are actually taking money from you. you are paying someone else to store cash. with gdx and with gold in general you get an appreciating asset and a little bit of a dividend. i think there is a lot more room to come. >> dennis looking at volatility, would you agree or disagree? >> i agree. and exactly what brian said. low to negative interest rates we are seeing right now are driving precious metals higher. not so much in the industrial metals like copper. but the real interest low environment is driving prices higher and in the volatility world it has a knock on effect on the vix. there is an option premium selling in the marketplace to collect a little bit of extra yield on top of your portfolio. >> dennis and brian thank you

both very much. as viewers might remember, at a conference in january, most ceos tell us that cost in production is $1,000 or maybe under $1 thousand per ounce. thank you very much. >> for more, go to cnbc.com. coming up, what stood out to each of us from today's show. we call it check please. quick run with interesting stuff. you will hear it but only if you stick around.

what if a company that didn't make cars made plastics that make them lighter? the lubricants that improved fuel economy.

even technology to make engines more efficient. what company does all this? exxonmobil, that's who. we're working on all these things to make cars better and use less fuel. helping you save money and reduce emissions. and you thought we just made the gas. energy lives here. there were two companies involved this week, jet by one involved in walmart and bam tech the company that dissee in buying. i'm a bit after skeptic, bam tech, the streaming company they are buying a third of it for a billion dollars. i'm a bit of a skeptic that the companies like disney are going to be able quickly to make as much money where they reach over the top and they have to sell to individual consumers.

bam tech has 7.5 million subscribers. that's a lot. i'm surprised that. but they are able to replace the income that they get by going through the cable companies that aggregate large audiences, like us -- >> they aren't the only ones. >> like us -- >> with apple tv you have to download apps or channels. you have to download the cnbc app. you have to download it. we all have a challenge. >> and you have to pay ala cart and i wonder if they can replace the revenue fast enough. >> what i'm watching is shares of tesla, down by about 1.8%. first auto pilot crash in china has been reporting, at least tesla, that reporting last week and no injuries. it happened when the driver side swiped a parked vehicle half on the road and took off the side mirror. tesla said that the driver's

hands were in fact on the steering wheel and the driver made no effort to actually steer the car away from crashing the other vehicle. the driver says it was sold as self driving as eposed to driver assist. that's something we have talked about a lot. the fine line there and what consumers really think this technology is. are they simply thinking that it's -- >> that it does everything. >> everything and protects me in all cases. >> sounds like the driver is paralyzed with fear or something. if your hands are on the wheel, turn the wheel. >> turn the wheel. don't wait for the robots. >> here is another wrinkle though. the driver's wife videotaped the whole thing. so they could have been doing this for effect as well. >> how did she know they were going to get into a wreck? >> my point. >> are they testing the tesla? >> yeah. >> i will end on this note and i know zika is terrible and has bad consequences and we need to remember that there's only six locally transmitted -- a lot more in america that have come in six locally transmitted cases

in the united states all in miami. let's hope it stays there. but again a lot that's come in, but only six locally transmitted. let's keep it at six. thank you all for watching. it's been a pleasure. >> and "closing bell" starts right now. and welcome to the "closing bell." i'm in for sarah evans today. >> you're back. >> i'm back for more. >> i'm bill griffeth. go to twitter, you'll understand. big day for earnings, all sectors today, disney reversing higher today. coors and ralph lauren, moving in opposite directions and wendy's is under pressure and then after the bell more. we've got numbers from shake shack, which is headed lower, ahead of its quarterly reports. we will talk about all of that over the next couple of hours here. >> also