>> t bills and other government issued securities. the other thing is commercial paper, right, is held in a lot of these prime funds. companies ochbl issue commercial paper for short-term funding. the problem with that ends up being now they're going and issuing long term debt. pay attention to that. >> all right. great to have you on the desk today, kourtney. that does it for us here on "halftime report"." "power lunch" starts right now. i am bring -- brian sullivan. janet yellen, the hawk. a dodd/frank moment for pharma. could the epipen outrage be enough to get the government involved. if you're wondering why we're playing sticks, danger, will robins robinson, because robots are going to take over your salad. we'll explain. "power lunch" starts right now. you got to see these kul

robots. i'm michelle caruso-cabrera. stocks giving up their gains, the dow was up more than 100 points earlier. but we'll show you in a second moving lower in the wake of the fed. the fda says it noi wants all u.s. blood banks, all of them, to start screening for the zika virus. the death toll rising again in central italy following wednesday's massive earthquake. we'll have the latest from the scene straight ahead. we have a big two hours headed your way. first, let's begin with that big aboutface in the markets. bob pisani is live at the nyse. this is about digesting what janet yellen said or didn't say, bob. >> and fisher, even more importantly. let's call it good cop and bad cop. i just want to show you a chart of what happened here. so yellen comes on at roughly 10:00 eastern time. and the important thing for the market overall here was she basically said, look, i believe the case for an increase in the fed funds rate has strengthened in recent months. there's her one hawkish statement, but then threw in a lot of qualifiers that made the

odds of a september hike are not dramatically more. so up eight, nine points. then stan fisher comes on with steve liesman saying yes to both questions and a second rate hike might occur later in the year. well, you'll notice the market dropped twice as much, about 15 points as it went up under yellen. this gives a very clear indication about what the markets' concerns are. we've been saying this for a few days and that is with stocks at new highs, the risk is to the downside that janet yellen's relatively mild comments would only move stocks up a litter. but once stan fisher came out and said september was very, very real and aggressive on his statement, that moved stocks down much more overall here. you can see this as well in the reaction in the two-year note which is generally very sensitive to anything the fed says. you see moving down slightly there. there's your two-year note, thank you. moving down largely sideways, but the moment fisher come out, that was just before 12:00, you see the note moving to the

upside. clear reaction from stan fisher. as for the vix and vix futures, you can see the confusion here. generally moving to the downside, moving to the lows of the day. just as yellen came out. and then as fisher was talking moved up, oh, about a full point and a half overall. let's just call it good cop, bad cop. back to you. >> all right, bob, thank you very much. if it's friday near 1:00 that means the rig counts are out. and after weeks of adding oil rigs, we are unchanged. according to baker hughes there were zero new oil rigs added. oil holding study up 0.3% to 47.47. but no change. first time in a number of chawe we have not seen a jump. let's bring in bill gross, and cnbc contributor ron insana with us as well. bill, janet yellen, what do you think? because it seems the market is just getting more and more frustrated by the fed. are you? >> well, i've been frustrated

and disappointed with the fed for a long time, brian, you know that. i think today in addition to the slight hawkishness of her statement and then the fisher add-on has been just suggested that yellen reinforced the long term view that asset prices rule fed orthodoxy. and she and they should appear renewed qe, including, and this is the important part of her speech, i think, including alternative assets other than bonds. such thinking to my way of thinking stems from a trickledown notion of monetary policy which suggests that the greater financial wealth leads directly to higher investment in the real economy. and i think the evidence of the past 15 years in japan and certainly in the past six years in the united states suggest otherwise. so i continue to be disappointed by her focus on financial markets close to negative interest rates. and now the potential for purchases of corporate bonds and

stocks at some point. >> ron. >> well, i tend to agree with bill. now, i have a slightly different take which i think the markets prior to stanley fisher were actually looking through janet yellen's commentary about the possibility of a near-term rate hike if at all. and instead looking to that next easing that bill was just describing. and the fed also included the notion of using interest on excess reserves held at the fed as a tool to ease monetary policy further, which essentially could take us toward negative interest rates in the next recession. so the initial positive to yellen, i think -- the initial reaction to janet yellen, pardon me, was positive in looking at future easing. >> in other words they didn't think she was that hawkish despite the recent months a strengthening case for rate hike, but you're saying the market didn't believe her at all. >> i'm not saying that. looking at however many rate hikes we have at the next easing level. i think stanley fisher might have complicated that. you saw gold pop, stocks go up and bond yields fall.

>> so you say the market was looking toward an easing, you don't necessarily mean that's the next step? >> no. i mean that would be however much they tighten would be relatively modest and the next move they're contemplating is how to deal with a recession if and when it comes. but the next big move is easing, the next small move may be tightenitigh. >> wow, that's wait ou on the chess board. >> yeah, i'll go with what ron said. tightening the potential for easing. and interestingly enough in terms of prior qes, you know, the long bond has basically gone up in yield based upon inflationary expectations. so i think once observers read the speech that they figured out the potential for the fed joining the ecb, for the fed joining the boj in this what i consider rather desperate struggle to purchase assets to support the real economy.

and ultimately the hope is, or the fear is in terms of the bond market that that creates some inflation. and so we did see a huge selloff in terms of the long bond. it was up at first and now in negative territory. >> but bill, it's like the fed is operating -- i think you were on "squawk box" yesterday, jim pauls sesen investor said we ar crisis rates and so far from a crisis. if you look at gdp, okay, it's not growing. i've made the argument, bill i don't know if you agree, but gdp at this point officially should be worthless. it seems to be so far off what every other data point is telling us. are you a believer in the data? >> well, no, i've always been suspicious of the data. but there's data in terms of inflation, but that in turn is

distorted by what they call e donnic adjustments and same thing with the gdp. so i think what yellen has told us is that she almost entirely focuses on job growth. to the extent that next month we see a decent job growth number, then i think for sure or close to for sure, you know, in september we're going to see a fed hike of 25 basis points and the market hadn't expected that. we'll just have to wait and see. >> where are you on the fed has no idea what they're doing curve? >> i don't believe that at all. >> you know there are large parts of the market that these guys have no idea. they're using outdated mode for monetary policy, for whatever reason because the issues with productivity or the fact that with regulation means the money supply doesn't move around. there's lots of reasons. >> so having said that, i think that is the fed's problem. i don't think they don't know what they're doing. i do think in many cases there are certain old rules that no

longer apply. the phillip's curve, in a closed system, absolutely. we have a bifurcated economy with 5.6 million jobs but people lack the skills to get them? definitely. does gdp represent growth, yes, in the aggregate it does, but since the economy split some people are doing well, some are not, some people benefit from interest rate policy, some people don't. i don't think this is a problem of the fed's making per se, nor do they lack understanding. i think their tools at this juncture are not the right ones to use to fix the problems that exist. >> you know, in the past, bill -- go ahead. >> a little bit different take on that. i do think it is the fed's problem. and they do lack understanding. i think yesterday in "the wall street journal" the op-ed page featured a fascinating piece by former fed official kevin warsh titled, the questioned needs new thinking. today's speech by janet yellen

was not that. questions the ability of the fed to manage three goals at once, the real economy, inflation and financial markets. and he suggests one or two of the three will eventually break lose of moorings only because of free market forces. so i think the fed with their focus on low interest rates is distorting the savings function not only in the united states but on a global basis. and savings of course is connected to investment by the hipbone to the thigh bone and ultimately i think that's what reduces real economic growth going forward. and they don't realize that. >> but i think the hip displace ya we're getting globally is also a function of demographic, technological deflation that is a worldwide phenomenon. as such central banks don't have too many other options but interest rates at their disposal. >> so why do they think they can tinker this and they're going to manage the economy? >> i don't think that's what they -- >> i think so. >> ben bernanke and janet yellen

have both gone before congress and begged for them to take the ball and run with it and provide an alternative form of stimulus. or provide a regulatory framework in which businesses can grow more freely. they're not getting any help, so they're the only game in town. >> and i hear what you're saying. the fed may turn out to be right. they may be right. they may be crazy, but it just might be a lunatic you're looking for. because we don't know. to your point, we have never been here before. >> no, not since the '30s. >> with change and productivity, and ultimately, bill, including the smartest minds in the world are guessing because nobody knows how it's going to go. in the past when the bond market got frustrated by the fed, to quote another song, they went their own way, right? and they were the bond vigilantes. where is the bond market now? is it an impotent bond market? >> it's been killed. >> well, let me address your point about the fed guessing. and the fed doesn't like to guess. the fed likes to model and to use as ron has suggested old

models including the phillip's curve and taylor model which have been proven up until layman to justify higher or lower interest rates. but once you get into subjective territory like demographics or robotization, which we've talked about before on your program, it becomes very difficult for the fed to guess or be subjective. they're not a subjective body. and that's the problem. going forward they have to begin to make some guesses as to what these structural forces and low interest rates are doing to the economy that didn't happen before and they don't do that. >> that solves it, right? we cleared that one up. >> the last time we had a situation like this of the industrial revolution, we really didn't have a functional fed either. we had a decentralized banking system. if you want to use the model of how technological demographicization, you have to go back to the '70s. >> my argument, and got to go, but i'm not one of these data

conspiracy guys, it's just that the numbers the way the reports are built don't reflect a modern day kmi. >> yeah, gdp has to be updated frequently. >> anyway, that's a different topic. bill gross, have a great weekend, sir. >> you too, brian. >> appreciate it. ron, stick around. >> i will. >> i mean, you have to. >> okay. >> the italians did -- >> they what? >> they added prostitution to -- still to come -- we can talk about productivity levels, all kinds of levels. mylan shares stabilizing but will it lead to a dodd/frank moment for big pharma? first, shares of herbalife getting news of carl icahn wants out. is this the beginning of the end of the company? that's next. thisompany's servers. accessible by thousands suppliers and employeesglobly. but with cyber threats on the rise, ry's data could be under attack. th the help of at&t, ry's data could be under and secu that senses

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what creates the confidence in the company? with carl exiting, i think, the thing's over and over quickly. obviously the sooner he sells the better. >> that was hedge fund manager bill ackman talking herbalife on "squawk box" this morning. ackman saying carl icahn is looking to sell his stake in herbalife because, quote, he knows the company is toast. the stock right now is lower by about 5%. let's bring in cnbc contributor ron insana and herb greenberg also joining us. kate kelly, bring us up to speed. carl icahn apparently wants to sell. how do we know this? >> we know from "the wall street journal" this morning, michelle. what they reported is long-time banker had been shopping this

block of stock at 17 million shares, he's the number one holder of record. so they had been shopping and in recent weeks since this ftc settlement on july 15th with a demand that herbalife change its business practices in a $200 million settlement, apparently icahn wants out. we're not sure of the motivation. they tried to put together a consortium of buyers and along the way approached bill ackman if he would be interested and he briefly considered it. the reason i'm talking to you right now is i got ackman on the phone this morning. he called into "squawk box" and i interviewed him. and he basically said, yes, this is true. and, yes, i considered buying a few million shares, maybe 3 million, because i want carl out. i'm still short the stock. i still think it's going down, if not to zero and if it's a means to an end, i buy a few shares plan to sell the next day just to get carl out, that's great. it's great for the stock. and it says to ackman, anyway, the fact that icahn would want to sell that the stock is toast. >> sure. herb, do you think that's right? does this mean that the stock is -- that's what icahn thinks at this point?

>> look, i don't know what icahn thinks. i know what i would think he would think because at this point as i've said on air and i've said other places, mainly social media, is that i think herbalife with this ftc settlement is a broken business model certainly in the united states. and they say they're rolling this out around the world, i would say around the world. so from this point on at least over the next year it would seem like herbalife is like a biotech stock. it's a speculative stock. they're currently in phase one trials. they're going to be in phase two trials and by the end of the year, 12 months, phase three trials. >> year-to-date still higher by 9.5%, ron. >> yeah, my whole view of herbalife is never has there been such an intense test of manhood over such an inconsequential stock. and i think that's what's been going on between mr. icahn and mr. ackman. it's not a market bellwether. maybe it's a pyramid scheme. maybe it's something that's not --

>> agree, but it's just the people involved, ron. >> yes. and i think that, you know, listen, i don't know why they're so tied up and balled up in this thing because there are plenty of other places you could go and make money. >> can i -- [ overlapping speakers ] >> i was going to say, are we suggesting that, kate, that billionaires with outsized egos might sometimes hang onto something too long just to prove a point? >> i know we would never want to beat a horse to death if we had great video or great sound on cnbc that we wanted to reuse, and the personalities are big. i grant you. but in all seriousness, bill ackman made a pretty brash move here, a pretty aggressive move in terms of a billion dollar short that he's now been in for over four years, saying the company was a pyramid scheme, opening himself up to all sorts of liabilities with that alone. and then icahn taking the other side of it saying it was a great company, winding up on the board, sort of exhorting other people to get involved on the long side. i mean, it may be an inconsequential stock in the scheme of things, ron, but what

these guys did and the capital that they put behind it is really significant. >> well, to me that's the part that i don't understand in a certain sense. and bill ackman, as you discussed with him this morning, kate, his performance since the last year has been abysmal. won the bad bet on valeant, and two the bad bet on herbalife. >> we talked about that and he blames that almost 100% on valeant. said i've never been in such a bad stock position as this in my entire history as an investor as i have with valeant. but by the way he then on the tail end compared the situation with valeant to general growth properties. >> right. >> at the time when it was in bankruptcy or close to it. so obviously he's sort of touting a potentially great outcome there. >> herb, let's talk about in that case general growth properties, he bought low and sold high. herb, right now ackman has bought high, and i don't know if he sold, but he has been obliterated in herbalife. he's been obliterated in valeant. he can blame valeant all he wants. but it's like if you bought exxon the day before the bottom

dropped out of oil, that's what you do as an investor, your entire job is supposed to be smarter than the market. in your long illustrious history, have you ever seen an investor hang onto a position like this? >> yes. he did with nbia. >> yes. i have to tell you we get so used to this short term of focus that there are investor who is have very long term views. and there are investors who maybe -- i was having lunch with a very good hedge fund manager the other day who was in san diego, and we were talking about this. and he has sticky money. and he can take very long term views of things. and if you have a very long term view, you can take whatever view, you can trade around it. but there are -- let me tell you something, on some of these situations the shorts get into are troubled companies, broken business models, other types offiof i issues, sometimes it takes years to play out. but what are you supposed to do --

>> i can agree with your argument. i can agree with herb's argument on the long side because you know your losses. a short investment for a firm that i would imagine like ackman, kate correct me if i'm wrong, probably has pension funds and some public trust money put into it to do a short where your losses are unlimited. >> brian, the story i was doing this morning originally and then sort of i stumbled upon this other situation with herbalife, was about pension funds redeeming from hedge funds, including pershing square, getting some redemption including the illinois state pension, for example. luckily for ackman he has this eight-quarter redemption policy and claims the redemption he's seeing now is not historic -- anyway, i won't go on. but i just think ackman has actually put quite a lot of research into this herbalife short as herb knows very well. i think some people in the investment community think he's actually correct on the merits of his argument. it's just that the ftc

settlement was not as dire for the company as he might have predicted. >> all right. ladies and gentlemen, thanks. herb, sorry, we got to go. sorry. >> sure, okay. >> we'll argue another time. >> because, as kate mentioned, speaking of ackman and icahn and amazing pieces of video, who could forget both of them hugging it out on stage. delivering alpha two years ago. does it look like they like each other? two tall rich guys. icahn will be back at this year's delivering alpha on september 13th in new york city. for more details please head to deliveringalpha.com. you can see the whole lineup there including carl icahn. in the meantime, coming up next, the good, the bad and the downright ugly stocks in today's trading. ♪energ...vel of it's perfoance machi with this gr o inigen.. 's a supercomputer

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welcome back, partners. time to saddle up and hit the good, the bad and the ugly in today's trade. first to the good, auto desk hitting an all-time high after boosting guidance on better than expected results. on to the bad, and i'll get my big bad self out of the way here. the nyse index down, lower led by sky west. and it is the ugly day for ulta salon. stock now about 9% off 52-week high. still, michelle, can't complain too much, ulta salon the best performing s&p 500 stock over the past five years. but today it is ugly. >> yeah, but it has had a great run. thanks, brian. all right, the outrage of the cost of the epipen continues,

but did mylan's ceo blow the lid off a much bigger controversy when she was on cnbc yesterday? do we now need a dodd/frank for big pharma? that discussion next. ere's a loof places u never wao e "$7.95." [ beep ] buyou'll be gl see it here. wherif only the signs were asid ere get out delity's active trader pro can lp you find smter eny and exit points d can he protect your potential profi i'm just a g whs and m just a guy who w to sell him that tru.rk.

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hi everybody. i'm sue herera. here's your cnbc news update for this hour. the white house says iranian vessels encounters with u.s. warships in the gulf are cause for concern. at a news conference for press secretary josh earnest saying iranian intentions are unclear but the behavior is unacceptable and increases risks of miscalculation. federal police in brazil are urging prosecutors to charge former president lula of money laundering. he and his wife are accused of receiving almost $750 million as part of a kickback scheme centered around petrobras. uber and its ceo lawsuit to put a new york price fixing on hold while judge appeal denial to --

and richard branson suffered a cracked cheek, torn ligaments and severe cuts after crashing his bike in the virgin islands. the billionaire posted those pictures on social media. branson said he thought he was going to die. and that wearing a helmet saved his life. lucky guy indeed. that's the news update this hour. back to you, michelle. >> those photos look awful. >> they do. thanks, sue. death toll rising again after that 6.2 magnitude earthquake in central italy. nbc's lucy kafavnov has the latest. >> reporter: here in amatrice rescuers are focusing on what they call red zones, pockets of rubble they believe people could be trapped underneath. the difficulty has been gauging the number. they're hopeful perhaps they could get lucky and find folks trapped beneath. you can see behind me the state of some of the buildings. people have not been allowed to

return back to their homes. a lot of soul searching also taking place as folks are trying to come to grips with what exactly took place. could authorities have done more to secure the buildings? this area is a known earthquake zone. back in 2009 quake claimed the lives of more than 300 people. were the proper precautionary steps taken? now, this building is a school. back in 2012 authorities here spent roughly $1 million reinforcing it. they said it was supposed to be earthquake proof. you can see behind me now it's turned into a pile of rocks, sand and stone. a lot of school children could have lost their lives. a lot of unanswered questions about what more should have been done. back to you. >> that was nbc's lucy kafanov reporting in italy. let's get back to the market. stocks headed toward session lows, back toward session lows. the dow jones industrial average down 54 points, again, not a big move at all. wieng ere in record territory, michelle, for lack of 1% days. really almost a calendar month and a half without a 1% move.

figure that out. we haven't had this kind of lack of volatility since the mid '90s according to some people who track this kind of data. those people need to do something else. we appreciate them, but that's not the most exciting thing to do. let's get a check on the bond market. this should be a big day given janet yellen was all the focus. her remarks came out today, we didn't see a big move. the 10-year yield, there you see 1.599%. again, not seeing much of a move at all here. yields are, yeah, little changed. there you go. >> 10-year 1.6. holy smokes. haven't seen that in ages. >> it's like the minnesota twins hitting a home run. rare, but exciting. the outrage over mylan hiking epipen prices about 500% since they bought it now leading to questions about the pricing of drugs in general. in exclusive interview yesterday on cnbc with mylan, hceo heathe

bresch explained. >> my frustration is there's a list price of 608. there's a system. i laid out there are four or five hands that the product touches and companies that it goes through before it ever gets to that patient at the counter. no one -- everybody should be frustrated. i am hoping that this is an inflection point for this country. our health care is in a crisis. it's no different than the mortgage financial crisis back in 2007. >> could this be the spark that will force some kind of dodd/frank like rules on big pharma if indeed it is a crisis? joining us former vermont governor howard dean and larry kudlow, gentlemen, good to see you. mr. dean, i'm going to start with you. thinking we may need more regulation? >> well, we may. first this is an outlier ceo, this is more like martin

shkreli. what they did was uncon shscio e unconscionable. this is an outrageous price increase for a drug that doesn't cost any more today than it did in 2007 when they started this. >> so if they're an outlier, does that mean you don't think we need a dodd/frank piece of legislation -- >> well, i certainly don't think we need a dodd/frank. we actually need something far more sweeping. we pay for medicine on a fee for service basis in this country. as long as we keep doing that, we're going to keep encouraging this kind of stuff. you pay us -- remember physician you pay us to do as much as we possibly can whether it works or not. the only way you're going to get budgetary predictability by payers private and public is to get rid of medicine and do all this cap tated basis. cns is the center for medical error and medical reimbursement.

it's the government, medicare and medicaid -- >> no, no, my friend howard dean, my good friend howard dean -- >> go right ahead and interject, larry. i was just waiting for this moment. >> my friend howard dean, dr. howard dean, toii want to say, missing the absolute key point here. and that is we need more competition. we need thorough reform of the fda, which takes years to let these generics in. i mean, just this whole injection business they've stopped a couple generics coming in because of an injection technology that was back in the mid 1970s. that's the log jam here. sure. mylan shouldn't have a monopoly. i'm sure their prices are too high. but the way to deal with that is to have more market entries. >> larry, i disagree with that. because there's a fact you're missing here, that's the patent law. the reason there's not more competition in general is that there are patents on these products. and there should be patents on

these products. so i have to disagree. i think more competition is a good thing. but in this case they still have a patent on the injection portion of this. you're correct about that. that's what the problem is. i'm not in -- >> teva is expected to finally get approval next year. >> then you know what, if you get approval, then a couple of companies will come in. and you're going to see the price come down. that's the easy way out. michelle, i'm absolutely crushed, destroyed when i heard you wanted a dodd/frank for this health care system. >> i didn't write that tease. you know better. we're making cable, larry. we're making cable. >> i feel so much better because the only free market graduate in the history of wellesley college has always been a free market problemsoev solver. by the way, howard dean has free market in him too. two things here, regarding health care system, number one, it's not just the fda long overdue for reforms. but number two, look at

obamacare for heaven sakes. these people that want to use this drug are stuck with high premiums and high deductibles. why? because of obamacare mandates. second point, we are taxing the manufacturers, we are taxing the equipment makers, we are taxing the pharmas all for obamacare. by the way, obamacare is on a death spiral and it's going to have to be completely replaced. so you put it all together. yeah, politically let's blame pharmas. let's blame drug companies. that's what we always do. how about making an analysis? how about using the free market? and how about getting rid of obamacare? >> larry, are you still running for public office in connecticut? >> i am not. i am here. >> okay. >> away on vacation. >> because this sounded like a political speech. obamacare has absolutely nothing to do with. that's the argument -- >> obamacare has everything -- >> the argument -- howard dean, you don't think higher deductibles have anything to do with this? >> they have everything to do with it. >> that's not the excuse for the behavior.

higher deductibles doesn't change the pharmaceutical company. they jacked up rates and say the insurance companies should pay more, all that does is take it out of your pocket at a different time when you pay insurance premiums. [ overlapping speakers ] >> i'm going to get louder and louder, i'm going to jump in, governor. >> go for it. >> i'm not going to defend the price increase, but they were kind enough to sit down with us yesterday. so i'll take the other side. can't compare them to shkreli. mylan has 35,000 employees and makes 14,000 different products. >> i know. >> they're a big company. they fought a teva patent that was an $80,000 a year pill. they got that wiped out. listen, i understand everybody wants to hate them. i get it. not defending the epipen thing, i'm saying let's look at it in the bigger picture. the point mylan was trying to make and let's advance the dialogue, there's too many people involved in the process. everybody's got their hand out, and it shouldn't be this way. amazon knew this about selling books, and now of course everything else. why can't we amazon -- >> distribution. >> the complex distribution

system. >> sully is right about the competition. i assume he means amazon equals competition, but don't forget you can fully writeoff the obamacare piece, howard dean, my friend, but that's not right. you know why? the mandates in obamacare have driven up premiums for those people that would like to use this anti-allergy drug, they've driven up the premiums by 30, 40, 50%. the whole system is crumbling right now because it's going into bankruptcy. and by the way, they've also had to jack up deductibles because of this mandate. so it does matter. for people who are trying to afford the drug, they're getting killed. for people who are trying to make the drug, the fda won't let it through. they've been a pain in the you know what for many years about this. there's no transparency. and on top of that you're taxing the manufacturers, for god sakes. so it's like 0 for 5. >> listen, as you imagine yesterday there was a lot of feedback, a lot of commentary, governor. i spent the whole ride home

speaking with a contact inside an insurance company, not one of the big public companies. not a public company at all. and the complaint was, basically -- well, people say stuff is that true or not everybody politicizes everything these days chrks is terrible. but all these people that aren't sick, they get on a plan and jump off when they're not because it's economically rational thing to do. one insurance company i talked to last night said exactly what's happening. now with these high deductibles people are starting to see, oh, my god, why are drug prices so expensive? >> right. >> do you think at least something good may come of all this? in the longer term? because finally, us, and others are exposing a light on this dark corner of something that we all know about but very few of us fully understand? the drug pricing mechanism. >> first of all, let me just say that mylan is historically a great company. they have a plant in vermont and they employ people here and they're great jobs. but that doesn't excuse this

predatory pricing. i don't buy any excuses anybody's given about obamacare or any of this stuff. the other pharmaceutical companies by and large are not doing this. they do have very expensive products, but they don't do this. second of all, let me defend the fda for a minute. the fda is a problem no question about it. they have approved drugs where the professional committee said you shouldn't and vice versa. but it's gotten a lot better since the regulatory act has been properly funded by congress. that's up for reauthorization. so, look thrks is predatory behavior by a particular drug company. there's really not an excuse for it. i don't see other companies doing this -- >> of course they have. look, the word predatory is -- all right, that's a very power charge word. pharmas have to make a buck. pharmas are the guys -- >> i'm not against them making a buck. i'm not against the industry making a buck. but i am against raising your prices 600%. >> all right. but, howard, the disciplinarian

here should not be dodd/frank, should not be the -- >> i agree with that. >> the disciplinarian here should be the market. look, teva has tried to get into this thing. and the fda keeps keeping them out. there's no reason for that. or, if there is a reason, they refuse to give one. so this is why i come down hard on the fda. regarding the other points, i'm sorry, this is related to obamacare. there's so much pressure going on in the health care system from insurance to customers to pharma manufacturers and everybody else. they're being taxed, they're being overregulated. >> and i know -- >> nobody can afford this stuff because of these government rules. >> governor, heather bresch to us yesterday sort of compared this a little to the mortgage crisis. and she took some heat for that, but what she meant as far as i understand it in the 20 minutes or so where we did the interview was that, you know, all this mortgage crap went on for years. and a few people and michelle is

one, i was one, different network, were starting to call attention to this and congress kind of ignored, ignored until it imploded but then congress acted like they knew everything. but the point she's making some point things get so bad finally action is taken. "new york times" had an article in april about all these drug hike rises well before the epipen thing. do you think though this thing, this little epipen, could be the thing that finally gets somebody to act on all the things that we're talking about? the tipping point, the popping of this pharma bubble, if you will. not in terms of the stocks, but just in terms of the fact that americans basically can't afford medicine anymore? >> that's the key point, what you just said there. americans can't afford health care because of government imposed rules, regs and mandates. >> that's absolutely not true. you can't say that with a straight face really. >> i'm going to say it with a straight face. i want to just make another

point on this front. the fda has to be completely reformed. it has to be transparent. they are a frfraid of their own shadow and largely to blame for these price increases also. >> gentlemen, so sorry. looks like we've got some breaking news we have to get to related to a very well-known technology name. it's been a great discussion. governor dean, great to have you on and a doctor, it's great. larry, good to see you. susan lee. >> we have blackberry in a trading halt at this point. news is pending and we are looking at pretty low volume day in terms of number of blackberry shares trading hands. but we have put in a call to the company. still haven't heard anything back, as you know, i don't need to tell you, michelle, that analysts have been saying for a long time now that blackberry might be the target of a buyout in the future still embark in this long turnaround plan they've been on for the last few years. back to you. >> that's immediately what i think a lot of people thought when they saw news alert halted for news pending -- oh, hold on. >> i'm going to pull an audible. excuse me, i'm standing up.

there's a reason for this, jon najarian. >> jon najarian -- >> see, jon sits behind me at the office. and i remember jon i think i heard him say when he wasn't complaining about laguardia traffic blackberry call buying. that there's been a lot of options activity in shares of blackberry over the past month. >> it's amazing people in the options market know things in advance sometimes. >> yeah, so they're going to go grab najarian here. blackberry halted, i'm not suggesting anything, but i do remember jon saying a lot of -- there he is. >> we'll find him. maybe a break in here, guys and get jon on the set. all right. still ahead -- >> amazon doubling down on bet on brick and mortar. will the strategy payoff or is this too much? and we'll get jon's take on this blackberry halt. what could be going onto halt the stock in the middle of a friday? we're going to find out when it's unhalted. what's this music? we're back after this.

all right. welcome back here. we got a news alert on blackberry. we don't know what the news alert is. right now the news alert is that shares of blackberry are halted both here and in toronto. they are of course a canadian company, formerly known as research in motion. you might have seen my inelegant audible as we went into break here spooking everybody out. jon, i believe, people don't realize we sit behind each other you were talking about blackberry options a few weeks ago. >> yep. >> what are you seeing in blackberry option activity? >> ahead of this today, brian, nothing. it's dull as heck -- >> today or in the last couple weeks? >> last couple weeks there was upside. >> that's what i was pointing out couple weeks ago. >> you're 100% right about that. but today frequently going into a weekend we will see people actively speculate on a deal for any rumored stock, whether it's this one or any of the -- go ahead. >> i was going to say there had been speculation earlier in the year in fact earlier this summer that perhaps they were just

going to shut down the hardware division completely. >> right. >> which would lead to less revenue but higher margins, just be a software company. so that, you know, we don't know what the news is so we're speculating on what it could be. >> yep. >> there have been talk there would be deals or patents sold or things like that. >> that wouldn't merit a halt, though. a couple patents, maybe. >> we'll see in the middle of the day, yeah, i don't know. >> and maybe it's virtually all of the patents. >> whatever it is the blackberry activity the past couple of weeks i can look at options activity a little bit. i know a tenth of what you know, if that. could somebody make some coin here? how is it the options pricing on blackberry? >> well, they basically like i said, brian, were pretty dull today. couple weeks ago there was active speculation. and whenever there is the premiums accelerate and they're more expensive. they're more dear because people are saying, wow, seems like somebody knows something. today, 2,000 options, 2100, something like that that's all traded on the call side, only about 600 on the put side.

again, this is not typical of what you would see going into a trading halt like this, all the more reason that people will be watching this one as it comes -- >> it's also just incredibly slow summer friday. so it's weird to see a stock halted. >> yep, absolutely. market cap of $4 billion. wow. i get so nostalgic about blackber blackberry. i remember when i got my first one and you could finally leave your desk and not wait for that e-mail. it was like getting my first cell phone. >> and super secure too. >> yeah. >> still. >> so we'll be watching. thanks. >> okay. >> sorry for the -- >> i'll have more for you later. next, is this what the future of farming looks like? yeah, those are robots who are cutting lettuce. we're going to head live to solinas, california, where robots are running the farm. that's straight ahead.

[rock mus playing] [music stops] [whistle] [rock music playing] [record scratch] announcer: don't let e. coli mosh with your food. an estimated 3,000 americans die from a foodborne illness each year. you can't see these microbes, but they might be there. so, always separate raw meat from vegetables. keep your family safe at foodsafety.gov.

you've heard the predictions robots will take over the world. it appears they are starting on farms. yes, they are picking lettuce. aditi roy is live in salinas, california, with that story. >> reporter: hi, michelle.

we are one hour south of silicon valley here in salinas, california, look how gorgeous it is. we're standing in a field of lettuce that belongs to taylor farms. right now harvest is done for the day, but early, early in the morning they use a vast piece of equipment that really helps them increase their productivity. let's look at pictures of that equipment. it's actually called a water jet knife. and it uses streams of water to cut heads of lettuce in the field. it increases their productivity by 10% and requires half the workers. inside their processing plant for taylor farms, lasers help scan for impurities and robots also help with packing. but taylor farms isn't just using technology, it's also investing in it. the company's headquarters actually house an incubator run by the western growers association with 15 start-ups in the building. among them a start-up called harvest port which allows farmers to rent out idle farm equipment. innovation helps keep costs down. >> farming is a low margin business. and it's a commoditize business,

so farmers can only compete on cost. and so they're really looking for these cost savings to come out of new innovations, new technology. >> reporter: and let's take a look at those numbers. the agtech industry is flourishing with 307 deals and $1.8 billion invested already this year in the sector. the number of investors has risen by 52%. some of them are farmers. in fact, 70% -- 5% of farmers say they plan to invest in agtech in the next three years. that's according to the american farm bureau. guys, back to you. >> fascinating stuff in salinas, california. aditi, thank you very much. coming up, back to the outrage over epipen prices. who exactly is getting a slice in the huge supply chain? and how much are they getting? well, that depends a lot on who you ask. we're going to take a closer look inside this bizarre world coming up. ere's a lot of places you never want tsee "$7.95." [ beep ] but yoll be glad to see it here.

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i'm melissa lee. here's what's on the "power lunch" menu this hour. outrage over epipen prices. we take you inside the money chain. is a big central bank party in the mountains signaling a september to remember? and tricked out trucks of the future. we'll kick the tires take you for an incredible ride. the second hour of "power lunch" starts right now.

you don't have to dance in the dark, we're always going to shine a light on the markets for you. i'm brian sullivan. hey, everybody. check on the markets, dow down little more in fact near the lows of the session. the dow off 80 points right now. stocks in the red. we were down nearly 100 points. it was up triple digit earlier. so the markets really weakening as we head into the weekend. check out the financials. getting a nice lift on the back of some of the janet yellen comments maybe a little hawkish. would love to see higher interest rates. >> they sure would. i'm michelle caruso-cabrera and headlines at this hour apple rushing out a security update to prevent attacks by spyware that exploits flaws in iphones and ipads. the death toll now stands at 267 from the devastating earthquake that hit italy on wednesday. and we're keeping an eye on blackberry shares. they are halted for news pending, still waiting for that news. melissa. thank you, michelle. to the controversy over drug prices, when you walk up to the

pharmacy counter and hand over your insurance card or credit card or both, you're kicking off an incredibly complicated process between the insurance company, pharmacy and a series of middlemen. so who gets how much of your health care dollar? that depends on who you ask. cnbc's pharma reporter meg tirrell is here to help us break it down. very complicated. >> it's very complicated. in this case we asked ever core isi put out a note essentially mylan charging the middlemen are incentivizing rising drug costs. we want to understand exactly what the middlemen are doing and perhaps what they are getting out of the system. say you're a patient, you've been prescribed an epipen, you take that prescription to your pharmacy, maybe a walgreens or cvs. they check your plan and figure out how much your co-pay is going to be. say that's $30. you pay that to the pharmacy. meanwhile your insurer, aetna, cigna, united health, one of these guys credits back through your pharmacy benefits manager, ccs, united health or express

scrips, they credit that back to the pharmacy, then you have to get your drug, the pharmacy pays maybe $500, taking maybe $20 out of their for their own fee. the distributor then goes to get your drug from mylan, the big pharma company, picks up a $20 fee there, maybe passing along $540. so your drug then travels from the manufacturer through the distributor to the pharmacy and back to you. that doesn't sound so complicated, right? but there is actually more. then there's what is the rebating process. so essentially big pharma, the mylan company, pays a rebate through your pharmacy benefits manager, that is basically a discount that the pbm has negotiated on behalf of their client, the insurer, your employer. so they pass that rebate on, maybe taking out 10%, pocketing about $25 if that rebate is perhaps $250. so what does everybody end up with at the end of the day? if the list price of the drug starts out above $600, you have the pharmacy taking the $30

co-pay plus maybe $20 fee for processing. distributor $20 for distributing. pharmacy benefits manager, $25 for negotiating that rebate. and then that rebate is passed on to the insurer, your employer, mylan, the manufacturer left with $290 the net price. >> okay. so what is markedly different from the graphic that we saw yesterday, which was provided by mylan is that in this graphic mylan, or the manufacturer, makes much more than a lot of the other parts of the chain. >> that's right. what mylan was saying is that the drug -- the rest of the drug supply chain was essentially taking out a huge chunk of what -- >> it was 50 to 55% of the list? >> that's right. so this kind of tries to show what actually happened to all of that money in there. and the real murky part of all this is the rebates. because what are public are the list prices $610. when you hear people in the drug industry saying that's not the real price, that's the real price over there. but that doesn't have to be

public. and that's why this is so confusing. >> the other thing that i draw from that when i look at that whole process and i see that $610 which is off screen right now but way to the left over there, it sounds like almost nobody pays that. i mean, mylan ultimately rarely actually gets $610 for the product. it's got to be -- >> they never get that. >> will never get that. if you have insurance, you're not going to pay that amount because the insurance company's getting rebated. this is only -- that price only falls down to somebody who doesn't have insurance and can't get a refund for whatever reason because they didn't bother to file the paperwork with mylan to get the rebate? >> that's right. very, very few people would actually pay the list price here. folks who maybe uninsured and walk in and pay the much higher sticker price. >> we look at insurers too. melissa, you can see behind you another big number which is the insurers. >> right. >> those are the ones we're closer to because we go to get drugs and somebody says you owe $150 out of pocket and you think, well, i have insurance. i'm sorry, mr., mrs. smith, your

co-pay has gone up. if you look at the revenues, insurers, united health group right now $101 billion in 2011, $157 billion in revenue last year. aetna's revenues have doubled over the past five or six years. not picking on the insurance business, but they're not struggling. >> right. to be fair this number that we say is flowing through the insurer, that's coming through your insurer to your employer and you are paying your premiums to your employer for your health insurance. that is kind of what's left over from the rebate that you get from the drug company after the pbm's taken out its cut. >> all right. >> it's not confusing at all. >> not at all. meg's going to stick with us. we're now joined by evercore isi managing partner ross muken joining us on the phone. ross, thank you for joining us. meg walked us through but still kind of confusing. the question i have for you in terms of understanding what the supply chain makes and

specifically for instance pharmacy benefit managers, have what they made either in terms of the absolute dollar amount or the percent in gross margin, has that gone up in a commensurate way with drug prices? >> so when we look at the financials of most of the supply cha chain, margins have not expanded and in many cases have contracted over time. not the best way to gauge the economic health of these businesses. you said before sometimes you get the revenue and no profit associated with it. but the reality is this is sort of an unusual example in terms of epipen, for the most part the supply chain's economic profits are just not that high. most of them have gone through government scrutiny before, their margins are relatively thin. and overall, you know, they're reasonably well-run businesses that obviously try to maximize profit but also keep the consumer in mind. >> so essentially we can cite revenue numbers, et cetera, but it's not nearly the same margin

as say a manufacturer would be making? >> no. i mean, if you look at a distributor for example on some branded drugs, they make 1 or 2% margin, that's gross. so very little profit for them to move all these drugs through our system in an incredibly efficient manner. and, you know, it is confusing because there's all sorts of pricing numbers and there's not a lot of transparency on how all of the mechanics work on the back end. but the reality is the supply chain isn't really responsible. >> and, ross, listen, they shouldn't make as much profit because they're moving boxes around and basically handling logistics. i get it. they make an argument they save people -- they put out a press yesterday they saved people a couple billion in medication, i have no doubt they have. but what does it tell us about the system that the pbms are saving us a couple hundred billion dollars and we still have the most expensive drugs in the world? >> i mean, clearly you make the right point. when you step back, we're going

to be spending 20% of gdp on health care. that's not sustainable. and we're not getting better results, but that's not the fault of the supply chain or the insurers. obviously as you point out it's the system and the way it's set up. hopefully at some point d.c. will spend less time, you know, criticizing folks on epipens and more time actually figuring out how to help health care and bend the cost curve. >> ross, that's something i want to ask you about. in your note today in the last paragraph you say in the bottom line you say there's real risk to drug pricing reform that you think the market has been a bit complacent about. so should people be more concerned about this from folks investing inned pharmacy benefits managers, to folks investing in traditional innovative biotech? >> obviously therapeutics is not my expertise. we have a great team for that. as it relates to the supply chain, our view is that, you know, if we see president clinton and you see a bit more of a mix in the congress, there's real where wiwithal to

something done on the pricing side basically the average american is spending out of pocket on health care than ever intended. they're starting to get frustrated. that's going to make its way to d.c. and hopefully make its way into policy. how that plays out i don't know. the good news for the supply chain is multiples are relatively cheap so these stocks are not expensive so the market's already discounting in some of this risk. >> meg, when you talk about drug price reform, i think what you're implying is a path towards price controls or some kind of government intervention, right? that somehow bends the cost curve forcefully and not necessarily using the market. do i read that correctly? >> the thing that spooks biotech investors is that the government is going to get the ability to negotiate on drug prices. that was the whole scare when hillary tweeted about martin shkreli last year. and people continue to be concerned about that, however there is basically this whole philosophy that congress can't get anything done. so i think that's why i was so interested in ross' note when he said market is being so complacent. >> the other issue with the philosophy is maybe that

shouldn't be allowed because if that happens then we're the last advanced economy in the world that is actually paying for research and development, right? those prices are high in part to pay for r & d, right, ross? >> no, that's exactly right. i mean, it's a delicate balance, right? because we clearly don't want to not find a cure for cancer in the next decade because we pulled back on r & d because we really hurt drug prices. but we also need to look at the areas where there should be more competition and there isn't or there's policies in effect that aren't being instituted or aren't being applied and where extra normal process being earned. i think we need to be mindful about what we ask for in some of these instances. >> as you rightly point out we pay more than anybody else in the world. if the solution turns out to be the wrong one where we go more towards -- which i think is the wrong one, which we move more towards what the rest of the world does and you get almost no innovation in the world. >> exactly. and, ross, thank you very much. we'll chat around for a second here. i know there's a lot of people

say look why don't we just import drugs from canada. first off, and i love canada, but they don't have any innovative farm pharma companies. there's some good companies, i'm saying they don't have huge innovative pharmaceutical companies. and also the majority of the pills are from u.s. companies. so if we import from canada, aren't we just basically buying -- they buy our pills, they're subsidized by their taxpayers 30 million canadians, 300 million americans we're going to sell to them and buy our pills back? i don't think the canadian taxpayer is going to be happy to subsidize a tenfold bigger population. >> doesn't solve the problem of higher drug prices in the united states. it's a work around and while some people advocate for doing that i think including donald trump, people don't think it's going to fix the problem. >> you got -- you've been around, i got sick in egypt once a number of years ago. i got really sick. i went to get sipro and paid like $6 cash. >> and you didn't need a prescription.

>> i didn't. and you wonder like why is it a couple hundred here? >> thanks, ross. >> how is it six there? because it's a lower economy. all right. how does this all impact the pharmacy owner at the end of the supply chain? joining us now is brad arthur, owner of blackrock pharmacy in new york and president of the national community pharmacist association. he's also testified before congress on the issue of the pbms. brad, love hearing from the small business owner. it's easy to hear from the corporate have pr message structured and 17 advisors. you're just a pharmacy owner. how does this game work? >> you know, it is a game. and my children's favorite character is pinocchio and they have been having a field day the last two days watching the way this has been characterized by other advocacy groups trying to distract real attention from what the issue is. and this is purely an issue of true competition. and not only competition, but beginning to bring transparency to the manner in which pharmaceuticals are not only priced but paid for in this

country. >> is there an issue with the distributors, the pbms? >> there's a huge issue with the pbms. absolutely i think there's an issue with the pbms. i think the real issue with the pbms is they operate within a sphere of secrecy. and they don't wish to discuss the manner in which they price pharmaceuticals. but let me be clear, the pharmacy sector, the community pharmacy sector, in which i live, at the end of the day operates on very thin margins. i'm not proud to share with you but the average gross margin before operating profits is between 20% and 22%. we have nothing to hide. so the assertion that somehow pharmacies are benefitting from these examples like epinephrine is completely ludicrous. >> you mention that your kids' favorite character is pinocchio implying there's a lot of lying going on. who is lying here? >> i think there's enough blame to go around to be quite frank with you. i think the pbm industry has been hind e hiding behind this notion that they're managing costs on behalf of payers when

in effect they're doing nothing more than preserving their particular segment of the health care with respect to prescription drugs. so we've advocated for greater transparency. and i think it's also important to note that when a prescription drug price goes up like this, and while it's, you know, very offensive to the senses of many particularly as our kids are going off to school, there's a whole other element involved of access to these drugs. i mean, i will be spending hours counselling young parents as their kids go off to school on how to use these very essential medications. >> what's your pbm? how does it -- so you're not a walgreens or a cvs, you're not one of the big guys. so who's your pbm? and how does that relationship work? what do they do for you or not do? >> well, the fact of the matter is it's stores like mine deal with many different pbms. i have probably 18 to 20 that i deal with on a daily basis. so we engage with organizations that hopefully will contract on our behalf.

the reality is that they're unilateral contracts. we in fact have no leverage against these very, very large entities. so they're basically take it or leave it contracts. they tell us how and when we're going to get paid. and as it's a substantial part of my business, i'm not in a position to just say thank you but no thank you. so in effect the pbms exert their leverage on the marketplace at will. the notion that they're bending costs is absurd. and i think they have certainly some explaining to do in this whole discussion about -- >> why do you call it absurd? why do you call it absurd? >> it's absolutely absurd because the notion that a drug product should go from under $100 to $600 and then imply that that's -- that there are marketplace forces that drive competition is not the reality of it. i mean, you have pay to delay schemes, you have other barriers to entry for generic competition. we need true competition in this marketplace. and this is a very unusual -- the health care -- the economy

is very unusual. you have the end consumer of the product, often is not the payer of the product and they don't order the product. i mean, it's just -- >> well, you said branded. what you said, brad, to me, meg, the most egregious thing i can see after digging in for a couple days is this pay-to-delay, what brad just meant. what that means is i have a product, michelle wants to make a product that competes with mine, i pay her a couple hundred million bucks -- >> not to. >> not to. it's like can you imagine if a pharmacy wanted to open up next to yours and you went to that guy and said, hey, dude, here's a million dollars, go away for a few years. how is this happening? >> right. that's called reco in my view. it's patently absurd. it's unbelievable it's allowed to occur. but yet in this marketplace it has been challenges. by the time companies have settled they have raked in hundreds of millions of dollars.

it needs congressional -- it needs some impact by congress. >> one basic question about the epipen. >> sure. >> i assume that you give it out as part of the process at the pharmacy? >> i do, yesterday actually. >> so what percentage are paying that $70 copay that express scripts talked about, what percentage are finding out i've got nothing here and i'm going to have to foot the whole bill? how does that play out at the counter? >> you know what, it's different in different communities. in my particular community here in buffalo i'm serving underserved populations, so most of my folks are covered by a traditional fee for service medicaid program or a medicaid managed care program. so those folks don't see these types of changes in the marketplace. it's not really apparent to them. now, converse to that is if i have folks within my community who i'm taking care of have newer high deductible plans, those folks are paying out of

pocket. so drugs like epipen and others they go up astronomically. they're presenting at the counter and i'm having to explain to them how their copays have gone through the roof. >> they're forced to pay $600 -- they're paying $600 at the counter and then having to apply for the rebate? >> no, no, they can't apply for any rebate. those rebates are negotiated between the pbms and the manufacturing. >> no, the company now has rebates directly to the purchaser of the epipen. >> oh, the copay card. >> no, those are copay assistance subsidies. that's correct. >> right. >> that's slightly different issue. so the pharmacy does routinely process copay assistance cards on behalf of the patients. my question would be why not go back to the manufacturer and just reduce or revisit the policy of raising epipen to some amount that's a little more palatable in the marketplace.

>> thanks for the opportunity. future of trucking is at hand. we're going to dallas live. plus, sometimes it's hard to know who to trust for your investment advice. some on twitter are saying you could do worse than, yep, jose c conseco. >> have you heard about this? >> oh, yeah, it's unbelievable. >> those stories and more straight ahead on "power lunch." , , is the stuffhat matts? the stakes are so high, your finances, your future. how doou solve this? yod't. u partner airm that ses govemes anthe foe 500, and, can deliver insight person what tts to you.rgan stanl.

welcome back to "power lunch."

i'm michelle caruso-cabrera. stocks are sitting at session lows right now. let's find out why. kenny, director of floor operations with o neil securities. kenny, what's going on? is this janet yellen, fisher, is this something else? >> it's all stan fisher. remember when yellen first started talking the market was in fact rallying because she gave indication there's potential for new and other policy tools in part of her commentary this morning. so the market just assumed that meant absolutely no rate hike in september and that was more off to the races. stanley fisher had a fit over the way the market was reacting and had to come out and say, no, no, there's going to be two rate hikes this year alone. so you have to assume september and december. market went from up 14 to minus 6 or minus 7 relatively quickly. but even that being said, i think that's the whole reason the market turned around. i still don't think you're getting a rate hike in september at all. and i think the market's going to continue to churn. we're still in that 2150, 2175 range. haven't broken down or haven't broken up really, therefore the market's just going to continue to churn. >> all right.

kenny, thanks for the info. kenny polcari on the floor. back in two minutes with more "power lunch." don't move. m onlyn my 60's. i'veot a nicng life ahah big plan m onlyn my 60's. i'veso when i found outh mi looked at my options. all my medical expenses, th i got a micarsuppme in. [ male annouer ]f you're eligible for micare, you may know itnly cors about 8 [ male annouer ]f you're eligible for micare, of your part b medical expenses. tcall nownd find outu.

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wall street journal"? according to the journal, twitter's favorite analyst is former major league baseball player jose conseco. over the past year predicted the crash of the british pound before the exit, also japan's move in negative interest rates. he even wrote a haiku comparing japan's central bank head kuroda. >> here it is. >> there it is. read that. my bank of japan haiku, negative interest, next helicopter money, kuroda von mise. >> that's a violation of the haiku. i mean, if it's pronounced -- >> i may be -- my austrian is poor. >> okay. anyway, nobody's disputing or saying he's a great poet. they're saying simply that he has made some bold predictions that have actually been not so bad. >> but you're not even just talking about a regular baseball player here. you're talking about one of -- and i mean this in a nice way

because he'd probably throw me out of a wrestling ring, craziest guys. i mean, he says and does crazy things. but he's making these right predictions. jose conseco is performing better than ackman. >> that's a low bar. >> isn't he bankrupt? >> canseco? >> yeah. >> i don't know. >> he had a lot of money problems. >> yeah. it all comes -- did he date madonna? >> he did. >> he did date madonna. that's right. cuban american jose canseco. >> straight ahead, fed chair janet yellen making waves in jackson hole, wyoming. a september to remember? "power lunch" back in two.

hi everybody. i'm sue herera. here is your cnbc news update at this hour. detectives in the uk say that five men have been arrested on suspicion of terrorism offenses. those arrests took place in the stoke and birmingham areas where police are searching a number of properties as part of an ongoing investigation. 29 companies including general motors, apple and facebook have agreed to sign the white house's equal pay pledge. each of those companies involved have committed to conducting an annual gender pay analysis.

the department of agriculture says a deadly bird flu strain has been found in a wild duck in alaska. it's the same strain that led to the deaths of about 50 million birds in the u.s. last year. and speaking of birds, kfc insists a recipe published in the chicago tribune is not the authentic and secret colonel sanders chicken recipe. an article in the paper included an 11 herbs and spices recipe that the tribune claims is from a sanders family scrapbook. but kfc says its original recipe handwritten by sanders in 1940 is safely locked up in a digital safe. you're up-to-date. that's the news update at this hour. brian, back to you. >> glad to know it's safe. sue, thank you very much. >> you are welcome. finger licking good. >> there you go. extra crispy the way to go. oil market closing for the day. jackie d at the nymex, how do we look this week? >> good afternoon to you, brian. for the week saw a bit of a loss, for the month up about

10%. today a seesaw ending higher around $47.60. so this morning we started on a positive note. we turned negative after yellen. the spike in the dollar was a piece of that. and also the turn lower in equities. but then in the afternoon session we popped back up. we had some comments this morning from the opec secretary general and also the iranian oil minister that were somewhat constructive for the potential for this freeze coming later in september. but also some reports of missiles out of yemen hitting saudi power facilities. so watch for some potentially escalating conflict there that could rile these markets up. but still, we're smack in the middle of the $45 to $50 range once again. this is a volatile trade not for the faint of heart. >> thank you, jackie. stocks meantime on a roller coaster ride, dow was up 100 points following fed chair yellen's speech, but then turned negative by hawkish comments by stanley fisher. dow and s&p down about 0.5%,

nasdaq down about 1%. utilities and telecom seeing most pain in today's reaction. steve liesman is in jackson hole, wyoming. steve. >> reporter: hey, melissa. i'm here with two luminaries from the meeting, susan collins, she's a university of michigan dean of the forward school of public policy. and cardiogrmen rhinehart. tell us what you heard janet yellen say today? >> sure. i heard four key thigpengs say m quickly. one is she reiterated that the evidence has strengthened the case for an increase at some point in the future. she also said that the increase in the federal funds rate is going to be really gradual. and she highlighted that it's going in the long term to a lower rate than had been true historically. more like 3%. she also was really careful not to give any precise information about the timing. and that's very consistent with the message that the fed funds

leaders have given in recent months. >> carmen, do you hear all that and agree with -- but the question i want to ask you is do you also see a rate hike coming in the next several months? >> i think so. i think the takeaway was that a rate hike is in the making. specificity was not there, or at least i didn't hear it. so the odds that between now and december there's a rate hike i think the point was -- >> are you critical of the lack of specificity? should the fed be more specific and provide more details? or is there a lot of volatility because of how the fed is running the show here? >> i think the running theme through chairman yellen's remark was also data dependency. data dependency is necessitated by the fact that reality happens, shocks happen. would we have foreseen brexit? would we have foreseen the volatility in some of the recent labor market data? you know, with may being one thing and june being another.

so i think the specificity would be to some degree false. >> because you can't know what the future -- >> exactly. >> susan, do you think the fed should be raising rates now? >> so my view is that the current data is consistent with them leaving federal funds rates where they are right now in september. >> all right. hold on, we have a 4.79% unemployment rate. we have the current tracking of the third quarter gdp for us the cnbc tracking forecast running at 2.7%. why would you -- why is that consistent with essentially emergency interest rates of 0.25 percentage points? >> couple reasons. from my perspective the risks of moving too quickly are quite a bit higher than the risks of waiting a little bit. if it turns out inflation rates are rising, the fed is well positioned to address that promptly. at the same time, i still see the growth as somewhat fragile. and i think that there is really good news that the stronger

labor market is translating in to helping a wider range of groups of the u.s. labor market. >> all right. carmen, governor collins is associating herself with the dovish wing of the committee. are you similarly there? >> yes, i am. >> really? >> and let me highlight for the following reasons. you know, relative to what other central banks are doing, a rate hike is a far call because we've had a colossal round of monetary easing. >> japan, europe. >> japan, ecb, boe, we can go down the list. >> you also said that really the fed has relatively tightened, four times essentially? >> look, we don't have monetary policy in a vacuum. if you look at what a widening spread between treasuries and bunds imply, it implies a stronger dollar.

that has domestic consequences. by the way, chairman yellen at the beginning mentioned that the strong dollar had been a drag in economic activity. that strong dollar also has disproportionate effects on u.s. manufacturing. >> but also some of the groups that are out there in the united states in terms of unemployment rate, susan, how far should the fed let this notion of what is maximum employment run in your opinion? should they run an experiment with this and see how far they can let it go down without causing inflation? >> so i think that it's a balance. i think that in a data-driven environment they have to be considering the impact of their decisions not only on labor markets but also certainly on what's happening with inflation and also concerns about the financial stability. all of those things have to be balanced. >> give me a number. >> give you a number. >> shoot for 4% and not raise rates? >> i'm not sure that's the right way to think about it. >> okay.

carmen, i have to ask you, we've done fascinating research and we can't get into details, but everybody says the idea of rare, negative rates is unusual, but you've shown research over the last 50 years it is not. >> it is not unusual. it is only unusual if your focus is post 1980. capital markets were liberali d liberalized, inflation stabilization became really first line of policy objectives, real rates were post 1980 fairly high by historic standards. but if you look at the period from the end of world war ii to 1979, real interest rates, short term rates were negative 50% of the time, this was not just a u.s. phenomenon. it was an advanced economy phenomenon. so protracted periods of negative and sustained low real interest rates are not a rarity.

>> it's not necessarily good, but it's not abnormal. >> it's not. >> okay. carmen reinhart, susan collins, melissa, back to you. >> thank you very much, steve liesman. we've got smartphones, smart tvs, smart cars, what about smart trucks? morgan brennan live in dallas at the great american trucking show with the preview. morgan. >> reporter: hey, michelle. that's right. so we've got new technologies coming in to big rigs like this one all the way down to the engines. this is an x-15 from cummins. we're going to go inside the truck of the future when "power lunch" returns. ay azing is movg li one. real is an al rescue.is closos amg otwenty-seven thousand othem

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welcome back to "power lunch." i'm michelle caruso-cabrera. the great american trucking show underway in dallas, texas. and according to the executives, the suppliers, the hundreds of truckers who are attending the conference, the future of trucking is here. morgan brennan is live at that conference with more on all the cool technology that's going on in the trucking sector. morgan. >> reporter: hey, michelle. and there's some cool technology. i'm going to run you through some of it. let's start with the internet of things. this is not just invading homes and wearable, it's coming into big rigs.

one company focused on that is omni tracks spun out of kwaul k qualcomm. >> we can predict when a vehicle's potentially going to have a failure. we can predict weather patterns or traffic patterns that impact that route and allow us to reroute or dynamically change the route while the truck's in motion to, again, try to predict -- provide predictable delivery of those products and services. >> reporter: so that's one company that's working on tech like that. there's a number of them. this type of technology's already making its way into a number of north american truck fleets. the whole idea here is to boost efficiency, cut costs on things like fuel usage and accidents. you could call this somewhat of a precursor to a fully autonomous truck. in terms of fully autonomous truck, those already somewhat exist. diamler's freightliner has one, a prototype that's already in use. but industry executives here say

that's widespread adoption of technology like that is still really years away. meantime, trucks are getting smarter right now in part because of regulations. just today the d.o.t. actually unveiled proposal to electronically monitor or i guess limit speed limits for trucks. we've also got electronic logging devices that have to be in all u.s. fleets by the end of the year. those are going to log drivers' hours. the other thing, and this is probably save the best for last here, is that you have the epa unveiling fuel efficiency standards basically to cut emissions, greenhouse gas emissions. that's technology that's traveling down into the engine. cummins has actually developed a truck -- or line of truck, engines specifically focused on these new regulations and increasing fuel efficiency and cutting those emissions. we're sitting inside one of these trucks with a cummins engine right now. and actually sitting beside me is a driver who has 1.7 million miles under her belt.

might i note it's a female driver. rock on, women. back over to you. >> cool. >> hey, morgan, can you ask her how many gears that has? i'm curious. seriously. >> reporter: the anchors want to know how many gears this has? >> ten. >> reporter: ten gears. >> a ten-speed. how does that compare to the trucks of five, ten years ago? it's got to be much, much better to drive. >> reporter: how does this compare to the trucks of five or ten years ago? they think -- they assume it must be much easier and much better to drive. >> it's really amazing. the transition between the shifting of the gears is so smooth. the automated transmissions have come a long way. i have driven a manual since i started in '94. but the 9. miles per gallon that this can get me will woo me over to the automated transmissions. it's a smooth ride, really comfortable almost like driving a minivan. >> morgan, people are going to be shocked by this i know 9.8

miles per gallon, that's good for a truck. where was she ten years ago? five miles to the gallon. >> reporter: ten years ago, what were you, five miles to the 2k3w gallon? >> if you're lucky. >> reporter: if you're lucky, she says. >> depends on the weight. >> reporter: she says this depends on the weight. so this is really we're seeing a major transformation with technology in trucks like this. i'd also just mention we've literally been driving around on streets legally. we're going through lights and passing cars and everything else. i mean -- >> which is cool live shot technology we didn't have five years ago. >> that's true. very true. morgan, thanks so much. have fun out there. >> javier's mexican tonight downtown. a font of knowledge. alibaba fell over 16% year-to-date but there may be reasons to stay bullish. we'll bring one analyst take ahead. and janet yellen speech taking the s&p 500 on a rough ride.

we'll ask trading nation traders about their next move straight ahead on "power lunch." gget up to ,000 customer cash gogo opportunityal ent.

back with street talk, analyst recommendations on stocks you need to know about. we kick it off with alibaba.

mkm getting more bullish raising price target to 130 from 95 primarily because of significant upside potential in cloud. chinese cloud over the next five years. china could -- the market could be $20 billion in five years and baba is dominant there already citing the gem of the portfolio. good ipo in the first half of 2017. >> talked about the amazon clone. you can agree or disagree. if they don't amazon with web services -- >> absolutely. >> that would be a very good thing for baba and shareholders. >> express scripts, rebounding a bit from yesterday's steep selloff and jeffries defending the company saying the mylan-related selloff is overblown and the price squeeze is there and not new. most of the pricing problems they argue from the drug manufacturing side and say that customers save about 5% in increase of drug spend and less than most and justifies express script and the pbm business model.

$88 target on express scripts. $72 stock now. >> an analyst yesterday and today. this analyst note. defending express scripts and this part of the supply chain. the issue is not the earnings but the cap on multiples. >> why. >> buft uncertainty. >> the chief medal officer on yesterday, as well. >> exactly. when's considered what looked like a good quarter, selling off hard today down by almost 6%, ulta. raymond james says momentum is good and management executes and reflected in the stock. by the way, the stock up 40% this year. >> yeah. you know, we did kind of a fun thing a couple of weeks ago. what's the best performing s&p stock since the president took office as a marker point, it was ulta up like 4,000%. so all ulta has done is printed millionaires. really. final stock, guggenheim defending the tock that's like a

dropped in water today. down 11%. they note a good quarter, not good enough and the quarter results reinforced the view of the long-term opportunity intact. yet, quote, meaningful underperforming. they reiterate a buy and a $75 target about 25% upside. stock whacked today and gugen time defending it today. i believe it's splunging. >> caving and not throwing a rock in. >> plumbing the depths. >> like it. the earnings made a ripple effect. it is time now for "trading nation" where traders trade better together. let's look at the markets and the seesaw reaction to janet yellen's speech. now we're down. larry mcdonald, nick colos. larry, they're awaiting on

yellen and underwhelmed. >> two big thinged happened today, brian. very, very meaningful. the vix traded today, the volatility index, nearly a 25% range. it's happened very few times this year. it speaks to more volatility coming at us in the short haul and also the 10-year treasury broke a 3-month 150 to 160 band. we're up at 163. bonds are selling off. we made some bearish bond calls here on the show recently. >> a key technical. doesn't sound interesting looking at the chart but you are saying it's key and important. we appreciate that. nick, are we overreliant on yellen? >> we certainly are and seems like the fed gotten so tired of being kicked around that they're coming out swinging today and talking about still having two rate increases on the table and fed funds futures are now saying 30% chance september versus 20% just yesterday and 60% in

december. market does not like that at all. >> yeah. no. it doesn't. do you expect, nick, more jawboning drives us over the next couple of weeks until normalization and traders return from the shore? >> absolutely. the pendulum swung too far in one direction for general criticism of the fed and everybody from bernanke to the journal and "the washington post" coming out saying the federal reserve behind the curve and didn't know how to forecast anything and i think some of that has gotten under their skin and trying to establish a narrative of a continuing normalization of rates but the market won't believe it and won't like it. >> do you have a dream like me, larry? yellen says complain, raise 200 basis points and mike drop and walks off. >> that's a very, very fun day. at the end of the day -- >> not for everybody. >> she is walking a fine line because the fed, hillary clinton is the fed's beloved best friend so they want to talk up the

economy and show that hillary and the democrats have a good chance in november but when they do that, as nick said, they bring in the risks that the dollar strengthens, commodities head south and all that credit risk comes back. >> i pick your seinfeld's dad -- george's dad. you want a piece of me? picture yellen, you want higher rates? you got them. anyway, have a great weekend. for more go to tradingnation.cnbc.com. ♪

naturenounc] ist rcf or a salesvent thsummau salve he. get up to ,00000onusn selectmodels. check please. >> the final "check please" for the week. a serious week and probably more big topics next couple of weeks. i'll end on a fluff entertainment note because my brain is tired. highest paid actor last year is robert downey jr. this year, dewayne johnson, the rock. started with 7 bucks and nothing and a wrestling career. made $70 million last year. rock, you're out there watching cnbc, investing in stocks --

>> all hbo show? >> no. "san andreas." >> i got it. catch up on the rock -- i know what i'm doing this weekend. >> number two, jackie khchan. >> i said it would be the pharmacist but actually it's melissa pointing out that jose conseco didn't get the haiku correct. >> it's five, seven, five. to make that third line he cut off the guy's name. so that makes that six syllables. if you do a haiku, you do it right, jose. hello. >> children, pray to anybody you want to pray to that melissa lee is never your professor. >> fail. >> favorite moment of the weekend. >> we don't have enough homework. >> right. >> that's right. >> this is why. see? america. >> my check please was about the pharmacist talking about how

many people actually come to the counter and have to pay the $600. we never got a clear answer from him and didn't sound like that many ever. the poor get subsidized by medicaid. if you have insurance you don't pay that much and then the uninsured. >> thanks so much for watching. >> "closing bell" starts right now. hi and welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> i'm mike santoli on a day when the markets woke up a little bit. janet yellen's speech arriving today. right around here. at 10:00 a.m. and then a little bit later, after the markets were rallying a little bit, seems like status quo message, our steve liesman interviewed vice chairman stanley fischer right there and the market went down from there. we'll hear more from steve in just a minute. we'll take you to jackson hole for that. >> we'll come back to that pattern. alom